INTRODUCTION TO MARKETING

DR. SUHAS PAI

DR. RITU SINHA
DR.NEERAJ DIXIT
DR. MOHAN B. RAO
CHAPTER NO. CHAPTER NAME PAGE NUMBER

1 Defining market for the 21st century 1

2 Market planning 9

3 Understanding buyer 24

4 Marketing research 32

5 STP ( Segmentation, Targeting, Positioning) 41

6 Product management and decisions 45

7 Branding 54

8 Pricing 56

9 Marketing channel 65

10 IMC ( Integrated marketing communications) 71

11 CRM ( Customer relationship management ) 76

12 Global Marketing 82

13 Rural marketing 87

14 Green marketing 91
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CHAPTER 1- DEFINING MARKET FOR THE 21ST CENTURY

Marketing is for Everybody

Marketing is as old as civilization. It was also used as a synonym for the art of selling in the past.
Even today much confusion exists between marketing and selling. This unit is an attempt to
clarify the doubts regarding what marketing is; how marketing has evolved over a period of time
and what is known as modern marketing concept.
Marketing is a process that aligns the needs and wants of customers with desired products,
goods, and services. Therefore, marketing is a solution-driven process that benefits both the
customer and the business owner. Hence, it is an ancient art which is becoming an omnipresent
entity. Can we say that
Business = Marketing
Marketing is something companies do, and it is also a characteristic of our society. “It is both a
set of activities performed by organizations, and a social process”.
To most people, marketing is basically the process of buying, selling and advertising. But in
this constantly dynamic business world, marketing has come to have a more complex
definition. However, the simplest definition of marketing in one given by Philip Kotler:
Marketing is managing profitable customer relationships.
But for a workable definition, Marketing is a social and managerial process by which
individuals and groups obtain what they need and want through creating and exchanging
products and value with others.
From the above definition, it is very clear that more than all business functions, marketing deals
directly with customers and should therefore be given the necessary importance it deserves.
Importance of Marketing
Marketing is a core business discipline. According To Peter Drucker, Business has just two
basic functions: Marketing and Innovation.
The study of marketing is important to the basics of running a business, big or small. When you
buy a product - the cost of marketing amounts to 40-60% of the total. For example, if we buy
shoes for INR 700, INR 350 of that 700 has been spent on marketing (including advertising,
market research, development etc.)
Perspectives on Marketing
Marketing is the basic reason for the existence of a business organization. In the age of fast
changes, marketing is springboard of all business activities. It works as the guide for all
business/non-business organization. It is a powerful mechanism which alone can satisfy the
needs and wants of consumers at the place and price they desire. Marketing is said to be the
eyes and ears of a business organization because it keeps the business in close contact with its
economic, political, social and technological environment, and informs it of events that can
influence its activities as per requirements of the market.
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Marketing as an Exchange process

■ Marketing is a process of exchange between the buyer and seller.
■ It means offering something and getting something in return.
■ Transaction takes place as per agreed upon conditions.
■ Marketing emphasises on the mutual satisfaction of both—the buyer and the seller.
■ Development of a long-term relationship between them.
Production Concept
This concept believes that business can be managed by the maximization of production and the
resultant lower unit cost. They assume that the lower cost and price will automatically lure the
customers.
Product Concept
This concept believes in excellent product and tries to achieve business success through product
attributes. These attributes could relate to new product, improved product or ideally designed
and engineered product.
Marketing Myopia
It refers to a phenomenon when companies fail to properly identify extent of their competition.
Marketing expert Theodore Levitt coined term “marketing myopia” to describe companies that
incorrectly identify their competition. He explained this term as ‘a colored or crooked
perception of marketing and a short sightedness of business.’ This concept goes hand in hand
with Product concept. He believes that by giving excessive emphasis to the product, the firms
almost tend to forget that the product is merely a means for satisfying a particular need of the
customers. For example, passenger train industry made mistake of restricting competition to
other railroads, instead of all mass transit transportation alternatives, including automobiles,
airlines, buses.
Today we see same mistake being made by companies in entertainment industry (movie
theaters, restaurants, & resorts), who assume their only competition is like-titled organizations.
Some giant company like Coke & Pepsi, McDonald’s & Burger King, & Ford & General
Motors, have been competing for so long that result stalemate. The competitive intelligence is
solution for marketing myopia.
Sales Concept
These firms believe that marketing’s major concern is to aggressively push the products and
lure the customers to buy the offered product. Personal selling, heavy advertising, large scale
promotion and heavy price discounts are tools of Sales concept.

Marketing Definition Timeline

According to AMA, the original definition of marketing is dated back to 1935, when the
NAMT (National Association of Marketing Teachers) conceived the original definition.
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■ 1935
Marketing is the performance of business activities that direct the flow of goods and services
from producers to consumers.
■ 1985
Marketing is the process of planning an executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational needs.
■ 2004
Marketing is an organizational function and set of processes for creating, communicating and
delivering value to the customers and for managing customer relationships in ways that benefit
the organization and stakeholders.
■ 2007
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering and exchanging offerings that have value for customers, clients, partners and society
at large.
What does Marketing do?
■ Analyzing the needs of the people
■ Trying to guess what types of products they want
■ Meeting latent and future Needs
■ Meetings needs at Profit
■ Being empathetic to Customer

The Needs, Wants & Demands of a Customer

The concept of marketing is essentially a concept of customer orientation. Even Mahatma
Gandhi believed that the customer is king. It implies that products/services are bought not
merely because of their quality, packaging or brand name, but because they satisfy a specific
need of a customer. It also means that marketing means understanding and responding to
customer needs, a prerequisite for any organization’s success. Successful marketing companies
continuously monitor customer needs, wants and preferences.
Needs are basic human requirements and state of felt deprivation. They are triggered by
internal or external factor and it is the consumer’s desire for product or services specific
benefit, whether that be functional or emotional. The customer decision process starts with
Need recognition and occurs when consumer identifies need & thinks of product that might
meet this need. The companies customized their offering to meet the customer needs.
Wants are the desire for products or services that are not necessary, but consumers wish for.
Consumers want may not be what they need, but it is important to understand both. For
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instance, cellphone Need vs. Want: Customers who in 1997 said that they would not place any
value on Internet browsing capability on mobile phone might say something different today.
marketer needs to discern what customers would want in spite of what they might say. Food is
consumer need whereas a five-course sumptuous meal may be considered as consumer want, as
these things are not necessary in order to live.
Demand is want accompanied by buyer’s ability to pay. The economic principle describes the
consumer’s desire, willingness & ability to pay price. Demand is difficult to forecast. vary by
season, time of day, business cycle. As demand fluctuates, it’s very difficult to maintain quality
service. For example, to offset high demand during tourist season, many hotels hire more
employees. During seasons of bad weather, manager find himself with too many staff. For
example, weather effects demand for lime juice at roadside.
Market offerings refers to the combination of products, services, information, experiences
offered to market to satisfy need or want. It delivers value to its customers and includes
services, activities, people, places, information, ideas. product benefits, technological
characteristics as compared to competitors’ market offerings & prices.
Markets, Market Place, Virtual & Meta Markets
■ Market is a set of existing & potential buyers for a defined product or service. Limits of the
market are often defined by geography and is invariably time specific.
■ Market place is a place where one goes for shopping.
■ Virtual market is digital in nature.
■ The convergence of suppliers of all complementary products and services that are closely
related to a product in consumer’s mind. For example, when a consumer buys a house, he needs
finance, furnishings, household goods, interior designing, a construction firm and a dealer. When
all come together, a meta market is created.
The crux of Marketing Process is the identification and serving of consumer needs.
Value
Value has many different meanings. It can be price (what is the value of this car?), benefit (the
value I got from this car), worth of something. The dictionary meaning includes the importance,
worth, or usefulness of something. Customer Value is the perception of what a product or
service is worth to a customer versus the possible alternatives.
Customer Value is Benefits-Cost (CV=B-C)
Customer Value is the customer’s willingness to pay for product and depends on customer’s
perception of product’s worth rather than its intrinsic value. From customer’s point of view,
value is sole justification for price. It can be worth of goods & services as determined by
markets. Zara Fashion House is good example of how marketing adds value. It’s known for
quality, luxury custom-made cloths, & handbags whereas the value of Zara is more than any
fashion house. The value can be based on following features
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Source: https://simplicable.com/new/value-in-marketing

Marketing as a Managerial Function

a) Understanding consumer needs
b) Environmental scanning and market opportunity analysis
c) Development of competitive marketing plan and strategy such that an organisation is able to
satisfy not only the consumer needs but also achieve its objectives
d) Implementation of marketing plan and development of tactical plans to overcome problems
at the market place; and
e) Development of control mechanisms.
Difference between Selling and Marketing
✓ Selling
■ Selling starts with seller
■ Emphasis is on saleable surplus available with the corporation.
■ Company manufactures the product first and then decides to sell it
■ Management is sales volume oriented.
■ Views business as a goods producing process
■ Emphasis on exchange concept.
■ Emphasis is on staying with existing technology and reducing costs
■ Different departments work in highly separate water tight compartments
■ Planning is short-run-oriented, in terms of today’s products and markets
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✓ Marketing
■ Marketing starts with buyers.
■ Emphasis is on identification of a customer need/market opportunity to convert customer
needs into products.
■ Company first determines customers’ needs and wants and then decides on how to deliver a
product to satisfy these wants
■ Management is profit oriented
■ Views business as a customer satisfying process.
■ Emphasis on value satisfaction
■ Emphasis is on innovation in every sphere, on providing better value to the customer by
adopting a superior technology
■ All departments of the business operate in an integrated manner, the sole purpose being
generation of consumer satisfaction.
■ Planning is long-run-oriented, in terms of new products, tomorrow’s markets and future
growth
Aim of Marketing
The aim of marketing is to make selling superfluous. This essentially means that the marketers
do not have to do much of selling, if they are able to identify unfulfilled needs of customers and
satisfy them
What is Marketed?
■ Goods
■ Services
■ Events
■ Experiences
■ Persons
■ Places
■ Properties
■ Organizations
■ Information
■ Ideas
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Role of Marketing
Customer acquisition and retention
▪ The biggest challenge was to expand the reach and thereby provide access to customers
across the country.
▪ Data mining technology to be used.
▪ Empower the frontline staff to resolve customer problems.
▪ Customer to be delighted with the experience.
▪ Customer complaints to be handled proactively.
▪ Analyze factors leading to customer attrition.

Tracking Competition
▪ Create a differentiation in the product or service.
▪ Create a sustainable and difficult to imitate scalable business model.
▪ Preempting competition.
▪ The goal of marketing plan and strategy is to position the brand at the top of the mind.
▪ Integration of technology in the marketing plan.
▪ Data mining, warehousing and CRM needs to be integrated

Expanding the Horizons of Marketing to Non-Profit and Social Causes

Non-profit marketing is the use of marketing tactics by a non-profit organization. Marketing
goals may include promoting the organization and its message, raising funds, encouraging
membership, engaging volunteers, and driving political or social change. It can be challenging,
as the organization must convince their audience to give money without getting anything
concrete in return. It calls for deep understanding of traditional marketing techniques. There are
many free and inexpensive marketing platforms out there, and non-profit should use a variety
of them to create an effective marketing mix.
▪ Preservation of environment.
▪ Acceptance of a girl child as equal to that of a male child.
▪ Gender bias
▪ Avoid usage of plastics which are likely to damage environment
▪ Avoid or discontinue risky practices like, smoking, drug abuse, or unsafe sex
▪ Assist police in controlling the crime in neighbourhood etc.
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Cause Marketing
The principles of cause marketing refer to aligning a brand with a cause to produce profitable
and societal benefits for both parties. These mutual benefits can include the creation of social
value, increased connection with the public, and the communication of shared value, as well as
profit. It is a relatively new field in the marketing arena, introduced in 1976 through a
partnership between Marriot Corporation and the March of Dimes. Cause marketing has the
unique potential to build loyalty for the brand. This can make customers more likely to keep
shopping and may even recommend the brand throughout the years. Such dedication is valuable
in the constantly changing online marketplace. It is a win-win for business and not-for-profit
causes. For-profit and not-for-profit companies can team up to provide marketing benefits and
increased profits for both.
Procter & Gamble Hygiene and Health Care India has smartly marketed its corporate social
responsibility initiatives. For P&G, the approach to cause-related marketing is not to look at its
various CSR as a separate entity from its main operations but to integrate with active part of its
product offerings and advertisement strategy. The initiative weds the concept of philanthropy to
make a brand choice. When you buy any of the P&G products like Tide, Ariel, Head &
Shoulders, Vicks, Whisper, Gillette and Pampers, the company contributes to the Shiksha
initiative. The initiative has its own logo and a popular tagline ‘Padhega India, Badhega India.’
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CHAPTER 2 – MARKET PLANNING

Planning is deciding now what we are going to do later, including how and when we are going
to do it. Without a plan we cannot accomplish anything effectively and efficiently because we
do not know what needs to be done or how to do it. There are three levels of planning:
• Strategic Planning
• Marketing Planning
• Tactical Planning

Strategic Planning
This type of planning covers the company’s long-term goals and determines the direction for all
departments and divisions within the company. It establishes goals and strategies, delineates
activities and assigns responsibility for every facet of the organization. It is concerned with the
growth and future of the business enterprise. It salient features are
• Provides direction to the firm and serves as a road map
• Prepares the firm to face future
• Brings forth the strategic decisions concerning firm
• Helps acquire competitive advantages
• Ensures optimum utilization of resources
• E.g. Tata

Marketing Planning
It is the operational plan for a particular product or product line. It outlines the detailed scheme
of the marketing strategies and activities associated with each product’s marketing mix.
Tactical Planning
A tactic is a means by which a strategy is implemented. It relates to the specific details which
pertain to the organization’s activities for a specific period of time, usually a year. It is more
specific, detailed course of action than a strategy. E.g. Company’s promotion towards teenagers
Tasks in Strategic Planning
 Mission of the Firm
 Objectives
 Strategic Business Units
 Strategic Planning Tools
 Marketing Plans
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Mission
A mission statement defines the scope of the industry within which the firm will operate, range
of products and applications that a firm wish to supply along with range of core competencies.
It affirms about the customers it serves, what need it satisfies and what types of products it
offers. It serves as a guideline for the organization’s decision-making for both short term and
long term. It provides direction to the strategic planning and marketing planning processes. For
example,
 HUL
We meet every day needs for nutrition, hygiene and personal care with brands that help people
feel good, look good and get more out of life.
 Cadbury
‘Cadbury means quality’; this is our promise. Our reputation is built upon quality; our
commitment to continuous improvement will ensure that our promise is delivered’.
 Mc Kinsey & Co
Our aim is to help clients make distinctive, lasting and substantial improvements in their
performance and, just as importantly, to build a great firm that is able to attract, develop, excite,
and retain exceptional people.
Objectives
An objective is simply a desired outcome. They are specific, actionable targets that need to be
achieved within a smaller time frame, such as a year or less, to reach a certain goal. It describes
the actions or activities involved in achieving a goal. An organization’s mission statement is
turned into supporting objectives for each level of management. For example, profit can be
improved by increasing the sales or reducing costs. The sales can be increased by entering new
global markets. It can be short term and long-term objectives. The short-term objectives
generally have 3 to 5 years of duration whereas long term objectives have a duration of more
than 5 years. For example, short-term objectives can be
 Improving networking and communication skills
 Change the job
 Improving the work-life balance

Concept of SBU
A SBU is a group of related business that can be treated as a unified entity for the purpose of
strategic planning. Here each SBU act as a fully-functional separate unit of a business that has its
own vision and direction. It reports to the headquarters about the status of its operation. This
approach works well for organizations that have multiple product structure. The examples of
SBU are companies like Proctor and Gamble, LG etc. These companies have different product
categories under one roof. For example, LG as a company makes consumer durables. It makes
refrigerators, washing machines, air-conditioners as well as televisions. These small units are
formed as separate SBUs so that revenues, costs as well as profits can be tracked independently.
Once a unit is given an SBU status, it can make its own decisions, investments, budgets etc. It
will be quick to react when the product market takes a shift or changes start happening before the
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shift happens. Similarly, HMT, a large public sector undertaking with multiple production units,
divisions and multiple products can group its product into following five SBU groups.
 Machine Tools
 Consumer Products
 Tractors
 Engineering components
 Technology and Information systems

Strategic Planning Tools

A variety of tools and techniques have been developed to help managers to deal with strategic
planning decisions in multi-business enterprises. These techniques help managers to gather
information required for taking suitable decisions and actions. For instance, the firm has to
decide which products or SBUs most or least deserve additional investments. The benefits of
these tools include: increasing awareness about the business environment, strategic issues,
opportunities and threats which helps reduce the risk involved in making certain decisions.
There are more than 30 strategic planning tools and techniques but the most commonly used are
SWOT, PESTLE, Marketing Mix, BCG and Ansoff Matrix.

Source: https://www.academia.edu/548197/The_use_of_strategic_planning_tools_and_techniques_by_hotels_in_Jordan

Purpose of Marketing Environment Analysis

The term 'marketing environmental analysis' refers to a strategic analysis tool that helps in
identifying internal and external environmental factors that affect the organisation's abilities to
work properly. Managers develop the organisation's structure, culture as well as policies to give
clear guidelines to employees. It also helps in observing the opportunities, threats and sizing up
the events and trends happening in the environment. It helps in formulating an appropriate
overall marketing strategy in line with the trends in the environment.
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Macro Environment: It consists of the larger societal forces that affect the micro-
environment.
Micro Environment: It consists of the actors close to the company that affect its ability to
serve its customers.
Company’s Macro-environment (PESTEL)
The Sequence is Reversed; PEST Becomes TSEP
 Technology Environment
 Socio-Cultural Environment
 Economic Environment
 Political Environment
 Demographic Environment
 Natural Environment
 Legal Environment/ Business Legislation

Technology Environment
 Options available in technology
 Government’s approach in respect of technology
 Technology selection
 Spheres where technology breakthroughs are happening
 Technology breakthroughs in ICE
 Digital revolution
 Homes go digital- digitalization of entertainment
 TV becomes smarter
 Digital cameras and E-cinema
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 The Convergence Phenomenon

• Convergence of IT and CT brings forth ICT

• Convergence of ICT and Entertainment technologies brings forth ICE
• Devices too are converging
• PC journeys from a utility device to a connectivity device to an entertainment device
• Processors, protocols and standards too converge

Socio-Cultural Environment
 Culture
 Social class
 Developments on the global socio-cultural scene
 The ‘Techno intoxication’ of consumer communities
 Spread of consumerist culture and Americanisation
 Pace of life gets ever more rapid.
 The New iGen and the New Tweens

Economic Environment
 General Economic Conditions
 Income, prices and consumption expenditure
 Credit Availability
 Saving rate/capital formation
 Inflation Rate
 Foreign Exchange reserve
 Exchange rates
 Tax rates
 Energy Scene (cost, availability)

Political Environment
 Economic environment is often a by-product of the political environment.
 Form of Govt. a major factor
 Political stability another
 Includes elements like social and religious organisations, media, pressure groups and lobbies
of various kinds.

Demographic Environment
 Size of Population
 Growth Rate
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 Age Distribution
 Religious Composition
 Literacy Levels
 Composition of Workforce
 Household Patterns
 Regional Characteristics
 Population Shifts

Natural Environment
 Finite non-renewable natural resources
 Energy crisis
 Water, Sound and air pollution

Legal Environment/ Business Legislation

 Corporate affairs
 Consumer protection
 Employee protection
 Sectoral protection
 Corporate protection
 Protection of society as a whole against unbridled business behaviour
 Regulations on products, prices and distribution
 Controls on trade practices
 Protecting national firms against the onslaught of foreign firms

Actors in Microenvironment
 Market/Demand
 Customers
 Industry and Competitors
 Government Policies
 Suppliers related factors
 The Company

Market/Demand
 Nature of demand
 Size of demand
 Patterns of consumption
 Buying habits
 Invasion of substitute products

Consumer
 Tastes
 Preference of the consumer keep fluctuating
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Industry and Competition

 Knowledge about industry and competition is a fundamental requirement for Strategy

Government Policies
 Profoundly affect the specific environment of any industry/ business

Supplier Related Factors

 Suppliers constitute one of the five forces shaping competition
 Their Bargaining power affects costs and profits of the firm

SWOT Analysis
A SWOT analysis is a strategic planning model that helps organizations identify where they’re
doing well and where they can improve, both from an internal and an external perspective.
SWOT is an acronym for “Strengths, Weaknesses, Opportunities, and Threats.”
• Strengths and weaknesses are internal factors (things you can control), like team members,
software, and geographic location.
• Opportunities and threats represent external factors (things you can’t control), such as
competitors, regulations, and economic trends.
This analysis helps organizations to identify their future course of action leveraging on their
strengths and minimizes risks. For example, Minute Maid is a brand that sells beverages in the
form of fruit juices and is available in a variety of flavours. The most popular flavours are
lemon and orange. The brand is owned by Coca-Cola and is differentiated by its texture which
comprises of the fruit pulp and not just the juice. The closest rival for Minute Maid is
Tropicana, Onjus, Delmonte Juice and others. SWOT Analysis is a proven management
framework which enables a brand like Minute Maid to benchmark its business & performance
as compared to the competitors and industry.
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Minute Maid Strengths

• Top Brand
• Excellent branding and advertising
• Excellent distribution and availability
• Differentiation, more pulp than juice.
• Backing of Coca-Cola
• Multiple variants, mixed fruit and mixed vegetable pulpy drinks.

Minute Maid Weaknesses

• Slightly higher price
• Weak flavoring
• Weak advertising
• Internal competition from internal brands of Coca-Cola like Maaza, Sprite, Fanta, and Coca-
Cola
• Lower shelf coverage, affects its visibility

Minute Maid Opportunities

• Leverage successful brand Coca Cola
• Growing demand for fresh juices
• Juice and Breakfast
• Tie-ups with cafes and bars
• Advertise more
• Buy out competition
• More Brand recognition

Minute Maid Threats

• Threat from other drinks competitors
• Threat from substitutes like fruit juices
• Growing concerns about health, high on sugar and calories, eat fruit than drink juice

Porter’s Five Forces

Porter's Five Forces Framework is frequently used to identify an industry's structure to
determine corporate strategy in wake of competition. It helps in determining the industry's
weaknesses and strengths and can be applied to any segment of the economy to understand the
level of competition within the industry and enhance a company's long-term profitability. The
Five Forces model is named after Harvard Business School professor, Michael E. Porter.
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Barriers to Entry
 Large capital requirements or the need to gain economies of scale quickly.
 Strong customer loyalty or strong brand preferences.
 Lack of adequate distribution channels or access to raw materials.

Power of Suppliers
 A small number of dominant, highly concentrated suppliers exists.
 Few good substitute raw materials or suppliers are available.
 The cost of switching raw materials or suppliers is high.

Power of Buyers
 Customers are concentrated, large or buy in volume.
 The products being purchased are standard or undifferentiated making it easy to switch to
other suppliers.
 Customers’ purchases represent a major portion of the sellers’ total revenue.

Substitute products
• The relative price of substitute products declines.
• Consumers’ switching costs decline.
• Competitors plan to increase market penetration or production capacity.

Rivalry among competitors

• The number of competitors increases or they become equal in size.
• Demand for the industry’s products declines or industry growth slows.
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• Fixed costs or barriers to leaving the industry are high.

As rivalry among competing firms intensifies, industry profits decline, in some cases to
the point where an industry becomes inherently unattractive.

Porter’s Five Force Model

5 Forces Analysis

Rivalry among the competitor • Reliance Retail, Aditya Birla Group,

Vishal Retail’s, Bharti and Walmart, etc

Threat of entrants • FDI policy not favorable for international

players.
• Domestic conglomerates looking to start
retail chains.
• International players looking to foray
India.

Bargaining power of supplier • The bargaining power of suppliers varies

depending upon the target segment.
• The unorganised sector has a dominant
position.
• There are few players who have a slight
edge over others on account of being
established players and enjoying brand
distinction.

Bargaining power of buyers • Consumers are price sensitive..

• Availability of more choice.

Threat of substitutes • Unorganized retail

Source: https://www.business-to-you.com/bcg-matrix/
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Ansoff Growth Matrix

Ansoff presented a matrix that served as a planning strategy as well as a communication tool
that helps in the growth of the firm. It was proposed by Igor Ansoff in the year 1957 and also
known as product/market expansion grid. This document suggested that the strategy for
marketing products or services emanated from a synergy between four growth sectors. It
focused on the firm’s present and potential products and markets (customers). This theory
suggested that organization should rethink from the long-term perspectives and strive to find
out new ways to increase their profits and reach new customers.

Source: https://www.amigamag.com/growth-strategy-for-business/

1. Market Penetration
The first element of the Ansoff matrix is market penetration. Under this strategy, the company
offers its existing products to its existing customers by actively promoting their products or
services within the existing customer base rather than seeking any new customers. This is the
low cost and low risk option for the company, known as depth strategy. For example,
telecommunications companies with similar tariff plans cause intense competition. In this
context, companies can compete with innovative ideas to increase their market share by offering
introductory prices, running promotion campaigns, increasing their distribution channels through
supermarkets, bundling their subscription plans with hardware, etc. To penetrate & grow its
customer base in the existing market, the firm may:
• Decreasing prices to attract existing or new customers
• Improve its distribution network
• Invest more in marketing, esp. promotions
• Acquiring competitors operating in the same markets
• Increasing its production capacity

2. Market Development
Market development is the second component in the Ansoff matrix. Under this strategy, the
company markets its existing product or services into a new market to acquire market share on
which it does not exist. The product remains the same, but it is marketed to a new audience by
targeting new geographic areas. Here the cost of sales goes up and have high ongoing operational
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cost. For example, large companies like Apple, Nike, IKEA or Macdonald’s etc have extended
their brands to new global markets. For a small business, this strategy would be to target another
market where their product is less subject to competition. This strategy can be executed in
several ways, such as:
• Catering to a different customer segment
• Entering into a new domestic market (expanding regionally)
• Entering into a foreign market (expanding internationally)

3. Product Development
Under this strategy, the company offers a new product to be marketed to the company’s existing
customers. The company come up with new product or offerings to replace existing ones and
then are marketed to the existing customers. This is important for those companies that are well
established and hold substantial market shares. To continue to grow, these companies, therefore,
need to develop new products and target new segments. Product development is essential when
the company’s product has reached its maturation phase and begins its decline. A classic
example of product development is Apple launching a brand-new product each year. Similarly,
automotive companies keeping on adding new models/electric cars to meet the changing needs
of their existing market as consumers are becoming more environmentally conscious. The
product development strategy can be implemented in several ways:
• Investing in R&D to develop new products to cater to the existing market
• Acquiring a competitor’s product that better meets the need of the existing market
• Joint venture with other firms to merge resources to develop new products
• Strategic partnerships with other firms to gain access to each partner’s distribution channels
or brand.

4. Diversification
Under this strategy, a firm enters a new market with a new product. This strategy is the riskiest
among the strategies in the Ansoff matrix as it requires, both market and product development
activities. There are two types of diversification, namely related and unrelated diversification.
• Related diversification: There are potential synergies between the existing business and the
new product/market. For example, a leather shoe producer that starts a line of leather wallets or
accessories is pursuing a related diversification strategy

• Unrelated diversification: There are no potential synergies between the existing business and
the new product/market. For example, a leather shoe producer that starts manufacturing phones
is pursuing an unrelated diversification strategy

Marketing Mix
Marketing mix represents the firm’s market offer to their customers. It consists of a product, its
price, places and the way it is promoted. They are also referred as the 4 Ps constitute the
marketing mix. James Culliton coined the expression ‘marketing mix’ and described the
marketing manager as a ‘mixer’ of ingredients. Neil H. Borden popularized the term. 4 Ps is an
expression coined by Jerome McCarthy, who classified marketing mix variables under four
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heads, each beginning with ‘P’: product, price, place (referring to distribution) and promotion.
Marketing mix and 4 Ps are used synonymously. Marketing is a ‘value game’; each element of
the mix is used to carry value. It is the visible part of marketing strategy and used as a toolkit for
tackling the environment.

• Product - The Product should fit the task consumers want it for, it should work and it should
be what the consumers are expecting to get.
• Place – The product should be available from where your target consumer finds it easiest to
shop. This may be High Street, Mail Order or the more current option via e-commerce or an
online shop.
• Price – The Product should always be seen as representing good value for money. This does
not necessarily mean it should be the cheapest available; one of the main tenets of the marketing
concept is that customers are usually happy to pay a little more for something that works really
well for them.
• Promotion – Advertising, PR, Sales Promotion, Personal Selling and, in more recent times,
social media are all key communication tools for an organization. These tools should be used to
put across the organization’s message to the correct audiences in the manner they would most
like to hear, whether it be informative or appealing to their emotions.
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In the late 70’s it was widely acknowledged by Marketers that the Marketing Mix should be
updated. This led to the creation of the Extended Marketing Mix in 1981 by Booms & Bitner
which added 3 new elements to the 4 P’s Principle. This now allowed the extended Marketing
Mix to include products that are services and not just physical things.

Extended 7 P’s:
• People – All companies are reliant on the people who run them from front line Sales staff to
the Managing Director. Having the right people is essential because they are as much a part of
your business offering as the products/services you are offering.

• Processes –The delivery of your service is usually done with the customer present so how the
service is delivered is once again part of what the consumer is paying for.

• Physical Evidence – Almost all services include some physical elements even if the bulk of
what the consumer is paying for is intangible. For example, a hair salon would provide their
client with a completed hairdo and an insurance company would give their customers some form
of printed material. Even if the material is not physically printed (in the case of PDF’s) they are
still receiving a “physical product” by this definition.

Though in place since the 1980’s the 7 Ps are still widely taught due to their fundamental logic
being sound in the marketing environment and marketers’ abilities to adapt the Marketing Mix to
include changes in communications such as social media, updates in the places which you can
sell a product/service or customers’ expectations in a constantly changing commercial
environment.
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Is there an 8th P?
In some spheres of thinking, there are 8 P’s in the Marketing Mix. The final P is Productivity and
Quality. This came from the old Services Marketing Mix and is folded in to the Extended
Marketing Mix by some marketers so what does it mean?
The 8th P of the Marketing Mix:
• Productivity & Quality - This P asks “is what you’re offering your customer a good deal?”
This is less about you as a business improving your own productivity for cost management, and
more about how your company passes this onto its customers.
Even after 31 years (or 54 in the case of the original P’s) the Marketing Mix is still very much
applicable to a marketer’s day to day work. A good marketer will learn to adapt the theory to fit
with not only modern times but their individual business model.
Marketing Plan
A marketing plan is a written document containing the guidelines for the business centre’s
marketing programs and allocations over the planning period. The objectives of a marketing plan
are as follow:

1. Define the current business situation.

2. Define problems and opportunities facing the business.
3. Establish objectives.
4. Define the strategies and programs necessary to achieve the objectives.
5. Pinpoint responsibility for achieving product objectives.
6. Encourage careful and disciplined thinking.
7. Establish a customer/competitor orientation.
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CHAPTER 3 – UNDERSTANDING BUYER

A. CONSUMER BUYER BEHAVIOUR

A consumer is a person or a group who intends to order, orders, or uses purchased goods,
products, or services primarily for personal, social, family, household and similar needs, not
directly related to entrepreneurial or business activities. Consumer buyer behaviour is the
buying behaviour of the final consumers: individuals and families who buy goods and services
for personal consumption. All these consumers determine the consumer market.

Scope of Consumer:

• What they buy?

• Why they buy?
• When they buy?
• Where they buy?
• How often they buy?
• How often they use?

Various cultural, social, personal, and psychological factors strongly influence consumer
purchase decisions. Factors influencing consumer behavior include-
 cultural factors (culture, subculture, and social class)
 social factors (family, groups, and social roles)
 personal factors (age and life-cycle stage, occupation, economic situation, lifestyle,
personality, and self-concept)
 psychological factors (motivation, perception, learning, and beliefs and attitudes)
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Cultural factors
Culture is the set of basic values, perceptions, wants and behaviours learned by a member of
society from family, society, and others. It also includes subculture which is a group of persons
with shared value systems based on common experiences and situations. Also includes social
classes which are relatively permanent and ordered divisions in a society whose members share
similar values, interests and behaviours.

Social factors
Groups are two or more persons who interact to accomplish individual or mutual goals. Many
small groups influence a person’s behaviour. Among others there are membership groups and
reference groups.
Word-of-mouth influence of friends and other consumers generally has an influence on buying
behaviour. An opinion leader is a person within a reference group who, because of skills,
knowledge, personality or other characteristics, exerts social influence on others. Marketers try to
identify the opinion leader and aim their marketing efforts towards this person. Buzz marketing
involves creating opinion leaders to serve as brand ambassadors. Online social networks are
online communities, such as blogs, social networking sites or even virtual worlds, where people
socialize or exchange information and opinions.
Family can have a strong influence on buying behaviour as well. Buying role patterns in families
change with evolving consumer lifestyles. A person belongs to many groups beside the family,
also clubs, organization and online communities. The position of a person in a group is defined
in terms of role and status. A role consists of the expected actions of a person. People usually
choose products appropriate to their role and status.

Personal factors
Personal characteristics also have an influence on consumer buyer behaviour. These
characteristics can be the person’s age and life-cycle stage, the person’s occupation and economic
situation, but also lifestyle and personality. Lifestyle is a person’s pattern of living as expressed
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in his or her activities, interests and opinions. Personality is the unique psychological
characteristics that distinguish a person or group. It can be said that brands also have
personalities. A brand personality is the mix of human traits that may be used to describe the
brand. There are five general brand personality traits: sincerity, excitement, competence,
sophistication and ruggedness.

Psychological factors
Buying behaviour is influenced by four major psychological factors: motivation, perception,
learning and beliefs and attitudes. Motive (drive) is a need that is sufficiently pressing to direct
the person to seek satisfaction of the need.
Motivation research refers to qualitative research designed to find consumer’s hidden
motivations. Maslow’s hierarchy of needs categorizes needs into a pyramid, consisting of
psychological needs, safety needs, social needs, esteem needs and self-actualization needs.

Perception is the process by which people select, organize and interpret information to form a
meaningful picture of the world. People form different perceptions of the same stimulus because
of three perceptual processes: selective attention, selective distortion and selective retention.
Learning describes changes in an individual’s behaviour arising from experience. A drive is a
strong stimulus that calls for action. Cues are minor stimuli that determine how a person
responds.

A belief is a descriptive thought that a person holds about something. An attitude is a

person’s consistently favourable or unfavourable evaluations, feelings and tendencies toward an
object or idea. Attitudes can be difficult to change, because they are usually part of bigger
pattern.

There are different types of buying decision behaviour. Complex buying behaviour is
characterized by high consumer involvement in a purchase and significant perceived differences
among brands. The buyer will pass through a learning process, developing beliefs and attitudes
and then a purchase choice will follow. Dissonance-reducing buying behaviour is consumer
buying behaviour characterized by high involvement, but few perceived differences among
brands.

Habitual buying behaviour is consumer buying behaviour characterized by low consumer

involvement and few significantly perceived differences. Repetition of advertisements can create
brand familiarity (but not conviction), which can lead to habitual purchases. Variety-seeking
buying behaviour is consumer buying behaviour characterized by low consumer involvement,
but significant perceived brand differences.
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5 Stages of Consumer Adoption Process (Buyer Decision Process for New Products)

It is interesting how consumers learn about products for the first time and decide whether to
adopt them. The adoption process for a new product is the mental process through which an
individual pass from first learning about an innovation to final adoption” and adoption as the
decision by an individual to become a regular. The buyer decision process has five stages.

1.Need recognition is the first stage, in which the consumer recognises a problem or need.

2. Information search is the stage in which the consumer is aroused to search for more
information, the consumer may simply have heightened attention or may go into active
information search. Information can be obtained from personal sources, commercial sources,
public sources and experiential sources.

3. Evaluation of alternatives. Alternative evaluation is the process in which the consumer

uses information to evaluate alternative brands in the choice set.

4. Purchase decision is the buyer’s decision about which brand to purchase. Both the attitude
of others and unexpected situational factors can influence the ultimate decision.

5. Post-purchase behaviour is the stage of the buyer decision process in which consumers
take further action after purchase based on their satisfaction or dissatisfaction with a purchase.
Cognitive dissonance is buyer discomfort caused by post-purchase conflict.

The buyer decision process can be different for new products. A new product is a good, service
or idea that is perceived by some potential customers as new. The consumer must decide to
adopt them or not. The adoption process is the mental process through which an individual pass
from first hearing about an innovation to final adoption. There are five stages in the adoption
process: awareness, interest, evaluation, trial and adoption

CONSUMER PROFILE:
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B. ORGANISATION / BUSINESS MARKETS

Business buy behaviour of organizations that buy goods and services for use in the production of
other products and services that are sold, rented or supplied to others. The business buying
process is the decision process by which business buyers determine which products and services
their organizations need to purchase and then find, evaluate and choose among alternative
suppliers and brands. The business market is bigger than the consumer markets, and differs in
many ways.

The business markets consist normally with less, but larger buyers than consumer markets.
Business demand is derived demand: business demand ultimately derives from the demand for
consumer goods. Business markets’ demand is more inelastic and is less affected by short-term
price changes, while demand also fluctuates more quickly.

The nature of the buying unit involves more decision participants and a more professional
purchasing effort. The business buyers’ decisions are often more complex and formalized.
Finally, buyer and seller often work on long-term relationships. Supplier development is the
systematic development of networks of supplier-partners to ensure an appropriate and
dependable supply of products and materials for use in making products or reselling them to
others.

There are three types of business buying situations. A straight rebuy is a business buying situation
in which the buyer routinely reorders something without any modifications. A modified rebuy is
when the buyer wants to modify the product specifications, prices, terms or suppliers. A new task
is a business buying situation in which the buyer purchases a product or service for the first time.
Systems selling (or solutions selling) is buying a packaged solution to a problem from a single
seller, thus avoiding all the separate decisions involved in a complex buying situation.

There are multiple participants in the business buying process. The buying centre are all the
individuals and units that play a role in the purchase decision- making process.

- Users are members of the buying organisation who will actually use the purchased product
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or service.

- Influencers are people in an organisation’s buying centre who affect the buying decision,
they often help define specifications and also provide information for evaluating alternatives.

- Buyers are the people in an organisation’s buying centre who make an

actual purchase.

- Deciders are people who have formal or informal power to select or approve the final
suppliers.

- Gatekeepers are people in an organisation’s buyer centre who control the

flow of information to others.

The buying centre is a set of buying roles assumed by different people. There are a lot of things
that can influence the business buyer, such as environmental factors. These can include the
economic environment, the supply of key materials and culture and customs. Organizational
factors such as objectives, systems and policies can also have an influence. Also interpersonal
factors, such as authority, status and persuasiveness can exercise their influence. Lastly
individual factors, such as age, income, education and risk attitudes can play a role in the
decision of the business buyer.

The business buying process

The business buying process has eight stages.

1. Problem recognition: someone in the company recognises a problem or need that can be
met by acquiring a good or a service.

2. General need description is the stage in the business buying process in which a buyer
describes the general characteristics and quantity of a needed item.
3. Product specification is the stage in the business buying process in which the buying
organisation decides on and specifies the best technical product characteristics for a needed item.

4. Supplier search is the stage in which the buyer tries to find the best vendors.
5. Proposal solicitation is the stage in which the buyer invites qualified suppliers to submit
proposals.
6. Supplier selection is the stage in which the buyer reviews proposals and select a supplier or
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suppliers.

7. Order-routine specification is the stage in which the buyer writes the final order with the
chosen supplier(s), listing the technical specifications, quantity needed, expected time of
delivery, return policies and warranties.
8. Performance review is the stage in which the buyer assesses the performance of the
supplier and decided to continue, modify or drop the arrangement.

E-procurement involves purchasing through electronic connections between buyers and sellers,
usually online. This can be via reverse auctions, trading exchanges, company buying sites and
extranet links. Benefits of e-procurement are lower transaction costs and efficient purchasing.

The institutional market consists of companies, hotels, educational institutions; hospitals and
other institutions that provide goods and services to employees/ stakeholders. These markets can
be extensive and are often characterized by low budgets. Government markets consist of
governmental units (federal, state and local) that purchase or rent goods and services for carrying
out the main functions of government.
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COMPARSION BETWEEN INDUSTRIAL & CONSUMER MARKETS

Characteristics Industrial Markets Consumer Markets

Market Structure • Geographically concentrated *Fewer Buyers*

Oligopolistic Competition • Geographically dispersed
• *Mass markets
• * Monopolistic Competition
Products *Technology dependent* Customised* Services very *Standardized* Services not too critical
important

Buyer Behavior * Rational *Technically competent* Functional involvement;

* Emotion / Social * Family involvement
Relationship critical;

* Non-personal relationship.

Decision Making *Process oriented *Related to structure and * Consultative* Unobservable &
personalities* Group decisions

complex mental stages* Family involvement.

Channels Shorter and more direct

Promotion *Personal selling *Word of mouth *Indirect *Multiple linkages

Advertising & promotion.

Price *Bidding oriented*Negotiation possible*Related to other
terms
*List price oriented * Fixed terms
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CHAPTER 4 – MARKETING RESEARCH

Marketing research is an area of applied data analysis whose purpose is to support marketing
decision making. It is done by systematic gathering, recording and analysis of data about
problems relating to the marketing of goods and services. As markets evolve and competition
intensifies, marketing research helps in making effective and speedy decision making in order to
• Reduce the cost of wrong decision
• Reduce time to market
• Find ways of keeping the customer

Johnson & Johnson's Band-Aid

When Johnson & Johnson’s introduced the ‘wash and dry’ plastic version of their Band-Aid
adhesive bandages, the original version of the brand had held sway in the market for a very long
time. There was no user dissatisfaction, and market shares in the region of 80% and above.
However, research revealed that for a middle-class house-wife who was often getting her hands
wet doing household chores and for children who often get cuts and scratches that require
covering for two or three days at a stretch and who could not be expected to keep their wounds
dry, the brand did suffer from the limitation that it frayed frequently and came off when it got
wet. A plastic Band-Aid with better adhesion and better aesthetics was the company’s solution
to the problem that had not yet been articulated by the users.

Need for Marketing Research

The basic function of all information gathered through market research is to reduce risk.
Whenever there is lots of uncertainty involved in marketing decisions, there is a greater need of
the information. For example, customers have their preferences towards various soft drinks like
Coke, Pepsi or Thums up etc. The marketing researchers can explore various questions like
• Who are my customers?
• Who else should be my customers?
• Who are my competitors’ customers?
• Where is my product positioned relative to my competitors’ products?
• Why is my product positioned there?
• How can I reposition my existing products?
• What new products should I create?
• What audience should I target for my new products?
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Allen Solly
When Allen Solly considered launching women’s western wear, they needed to answer all
these questions: should they target the product at women executives who have already adopted
western wear or should they try to change the taste of women who currently wear salwar-kameez
to work? Which age group, income group, and educational background should be targeted?
What brand characteristics should they emphasize? What positioning would be most suitable?
Should they make it available through the Allen Solly retail showrooms, or place it in multi-
brand department stores? How often were women consumers likely to buy such garments? All
these, and a host of similar questions essential to determining the market feasibility of the brand,
could only be answered through research.

Role of MR in Strategic Decision-Making

• Project feasibility Studies
• Branding and Positioning
• Diversification
• Market Development
• Measurement and forecast of market trends
• Customer satisfaction surveys

Some Examples
 A study of consumer buying habits for detergents-frequency, pack size, effect of
promotions, brand loyalty.
 To find out the potential demand of ready-to-eat chapattis in Mumbai.
 To determine which of the three proposed ingredients- tulsi, coconut oil or neem, the
consumer would like to have in a toilet soap.
 To find he customer satisfaction level among consumers of an Internet service provider.
 To find out the effectiveness of the advertising campaign for a new brand of a car.

Marketing Experiment
Mr. Saxena, the brand manager for Company A’s largest selling brand of detergents ‘Bright’, is
faced with the problem of falling brand sales in the first two quarters of the current year. He is
aware that this situation has arisen because of acute shortage of soda ash, one of the major
ingredients of the product, at the beginning of the financial year. The shortage had continued for
almost the entire first quarter due to a strike in a major supplier’s factory. The decline in sales
has not been uniform across all states. He needs to decide what kind of marketing support to
provide to the brand in order to make up for lost sales, now that the soda ash problem has been
solved. In order to decide on the quantum of support required by various states, he needs to
determine the state-wise loss in sales of Bright.
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Let us now assume that Mr Saxena has received data on the state-wise pattern of decline in
sales of Bright and is planning a strategy to provide support to marketing effort through one of
three methods: sales-promotion drive, stepped-up media advertising, or door-to-door
marketing. Because of a limited budget, he has to choose one of the three. Since the brand is
not new, the major purpose of the exercise is not to increase awareness, but to increase demand.
This is a situation requiring marketing research or, more specifically, a marketing experiment,
which is one method of research in marketing. He would need to choose three matched regions,
try one of the three alternative methods in each simultaneously for a defined period of time, and
compare the increase in sales in the three regions in order to decide the most effective method.

Steps Involved in Marketing Research

 Defining the Marketing Problem and identifying the MR Problem
 Assessing and Specifying the Information Requirement
 Developing the Research Design, Procedure, and Instruments
 Data Collection
 Analyzing and Interpreting the Information
 Summarizing the Findings/ Preparing the Research Report

Define the Marketing problem

The researcher or consultant analyze the given situation and define the problem to be
addressed. He may be helped by the marketing Deptt. maintaining MIS that provides a
continuous and systematic flow of information for the use in marketing related decisions. Many
times, firms with inadequate information find it difficult and time consuming to define the
problem accurately. A good research on the wrong problem is a waste of money and efforts.

Research Objectives
To design a promising research project, we need to refine a broad, indefinite problem into a
precise researchable statement.
• Who are our customers?
• Who are the customers of the competing brands?
• What do these customers like and dislike about us and the competitors?
• How are we currently perceived among customers?
• What must we do to clarify and improve the customer’s existing perception?
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Marketing Problem
 Whether to or not to introduce a smaller pack?
 Optimum size of smaller pack?
Research Problem
 What would be the annual demand for smaller cigarette pack?
 What would be the optimal size of such pack?
Sub-problem
 Definition of Small pack as perceived by smoker
 Target consumer section
 Likely price that smokers will be willing to pay for the small pack
 Probability of small pack cannibalizing the sales of the regular packs and the probable extent
of cannibalization
 Chances of loose-cigarettes buyer upgrading to the small pack and thus contributing to
increased sales.
 Chances of the factors such as brand loyalty, limiting the switch by the smokers of other
brands to the small pack

Design Research Project

It refers to the specification of methods for gathering and analyzing the data necessary to
facilitate identifying or reacting to a problem. The users of research and those that conduct the
research both should be aware why research is being conducted. Also there is need to check the
validity and reliability of data used for the research. Researches could be divided in three
categories:
• Exploratory Research
• Descriptive Research
• Casual or Experimental Research

Data Collection Approach

There are four basic methods for collecting data in marketing research.
• Secondary Data
• Observation data
• Survey data
• Experimental data
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Sources of Data
• Primary Data
• Secondary Data
• World wide web

Primary Data
Primary data is collected specifically to address the problem in question and is conducted by the
decision maker, a marketing firm, a university or researcher etc. It can be collected through
surveys, focus groups or in-depth interviews, or through experiments such as taste tests.

Surveys
Surveys are perhaps the most common method of primary data collection. There are a variety of
different survey collection methods:
• Mail surveys,
• Telephone surveys,
• Face-to-face (in-person) interviews,
• Internet surveys,
• Less formal surveys methods may also include observation and informal interviews.

The choice of which survey method to use depends on many factors, including the number of
respondents the surveyor desires, the time frame in which the data must be collected, the
characteristics of the population to be surveyed, and, of course, the budget.

In-Depth Interviewing
In-depth interviews are useful for learning about the perspectives of individuals. They are an
effective qualitative method for getting people to talk about their personal feelings, opinions, and
experiences and gain insight into how people interpret and order the world. It consists of tape
recordings, typed transcripts of tape recordings, and the interviewer’s notes. In-depth interviews
are usually conducted face-to-face and involve one interviewer and one participant.
Focus Groups
Focus groups are made up from a number of selected respondents based together in the same
room. Highly experienced researchers work with the focus group to gather in depth qualitative
feedback. Groups tend to be made up from 10 to 18 participants. Discussion, opinion, and beliefs
are encouraged, and the research will probe into specific areas that are of interest to the company
commissioning the research.
Projective Techniques
Projective techniques are borrowed from the field of psychology. They generate highly
subjective qualitative data. There are many examples of such approaches including: Inkblot tests
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- look for images in a series of inkblots Cartoons - complete the 'bubbles' on a cartoon series.
Sentence or story completion Word association - depends on very quick (subconscious)
responses. These techniques are useful in giving respondents opportunities to express their
attitudes without personal embarrassment. These techniques help the respondents to project his
own attitude and feelings unconsciously on the subject under study.

Sources of Secondary Data

1.Organizations, journals and newspapers
2.Company’s Internal Database

• The most common source of internal database is the sales call report, sales territory
information system and brand score cards.
• The fastest growing usage of an internal database is database marketing.

Database marketing can assist in:

• Identification of most and least profitable customers.
• Identification of attractive market segments and target efforts with greater efficiency and
effectiveness.
• Evaluation of sales territories
• Identification of new market opportunities.
• Evaluation or modification of marketing programmes.

Questionnaire Design
Close-ended v/s Open-ended Questions
A close ended question is one where the respondent has to select a response from one among the
multiple choices offered to him or her. Such a questionnaire can be easily tabulated and
analyzed. But can be used only when the researcher understands customer behaviour well. If the
behaviour is unknown and researcher wishes to probe, open ended questions will deliver results.

Measurement of Attitudes- Most research exercises measure attitudes of individuals. The attitude
of a consumer towards a particular brand of a product or service is a function of –
• The number of consumers of that brand.
• At a specific time & in a given geographical area, who are
• Personally interviewed, using a
• Specified attitudinal scale, to obtain
• The response information provided by the attitude scale.
Consumer’s attitude may be understood as numerical ratings on a like and dislike scale.
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Data Analysis
Raw data has no usage in marketing research. Most elementary method is arithmetical analysis
using percentile and ratios. Statistical analysis like mean, median, mode, percentages, standard
deviation and coefficient of correlation can be used. Today increasing use of marketing decision
support system (MDSS). It is a system that consists of data collection tools and techniques for
analysis with supporting software & hardware. This is used by an organization to gather and
interpret relevant information from its environment and convert it into a basis for marketing
actions.

Benefits from Marketing Research

 A failed marketing efforts can cause severe loss and damage to a firm whereas MR reduces
this risk.
 Markets and market segment
 Marketing Mix
 Competitive Analysis
 Expectations and Satisfactions
 Channel decisions

Exercise
• Prepare a Questionnaire for measuring Customer Satisfaction Survey for the services that you
had received from Whirlpool.
• Measuring Financial Literacy among College Students
• Performance-Based Highway Maintenance and Operations Management
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Netnography: A Tool for Understanding Customers

Netnography is an online research method originating in ethnography, is understanding social

interaction in contemporary digital communications contexts. Netnography is a specific set of
research practices related to data collection, analysis, research ethics, and representation, rooted
in participant observation. This research method is novel and continues to evolve. Netnography
aims at mapping consumer behavior in an online and easily accessible way. Information is
gathered in a non-artificial environment through simulations using real stories and purchasing
situations. Perceptions are collected in an informal way (even though this strategy also has
disadvantages).

Anonymity provides a ‘cloak’ for users who do not necessarily share the truth about real
situations on the internet, and who sometimes engage in extreme behavior. Some individuals
live a virtually separate life online: they complain more and use less sophisticated expressions
than they do in “normal” life. Accordingly, researchers should evaluate and screen the data they
obtain. Another problem is that there is a significant proportion of individuals who do not
undertake any activity on the internet at all.

Netnography’s roots can be traced back to ethnography and social studies. Kozinets (1998,
2002) provided the basis for the method in research into electronic society. So-called “speaking
wallpaper” as Dörnyei and Mitev (2010) define it, can be used to create a picture-series of the
feelings and perceptions of individuals. All online platforms can be interesting for researchers,
allowing preliminary insight into topics of interest and helping define research questions, or
even helping with the determination of target populations. However, data collection is not
representative in most cases, and not only because of the nature of the samples, which represent
the online community, but also because of the methods that are employed. There are ways of
enhancing the level of representability - for example, not all comments must be taken into
account (e.g. only every tenth, using the “every n-method”).

One advantage of using this method is that time and money can be saved by collecting
information via the internet, thus the data collection process can be significantly shortened.
However, there are ethical considerations, such as in which circumstances can the data be used.
In most cases, ‘interviewees’ are not aware that they are being observed. If they knew, they
would not necessarily behave exactly like they do, or might not even share any comments. A
disadvantage of netnography is when research questions cannot be addressed exactly by the data
entries. Sometimes researchers create new Facebook or blog entries to generate more specific
dialogues, but in this guided case, the researcher influences the topic.
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Forecasting and Demand Measurement

Which Market to measure in terms of

•Potential i.e., total number of consumers
•Available Group of consumers who has interest
•Qualified like consumers who have money and interest
•Target like company wants to attract
•Penetrated like consumers who are buying companies product

Market Demand
Market demand is the total volume that would be bought by a defined customer group:

•Market demand function: It is the difference between potential, forecasted and actual sales.
•Market forecast: Demand estimates
•Market potential: Limit of market demand
•Company demand: Company’s market demand in a given time period
•Company sales forecast: Expected sales level of the company
•Company sales quota: Defining and stimulating sales
•Sales budget: Expected sales volume and current purchasing, production and cash flow
decision

Estimating Future Demand

•Survey of Buying Intentions/Purchase Probability Scales
•Sales Force Composites/opinions
•Expert Opinions
•Past-Sales Analysis
▪Time series analysis
▪Exponential smoothing
▪Statistical demand analysis
▪Econometric analysis
•Market Test Method
•New product introduction
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CHAPTER 5 – STP ( SEGMENTATION, TARGETING, POSITINING )

SEGMENTATION- It is the process of dividing market into distinct sub-groups of consumers

who might require separate marketing mixes.

Types of segmentation- Different types of segmentation are,

1.Geographic segmentation
2.Demographic segmentation
3.Behavioural segmentation
4.Psychographic segmentation

1.Geographic segmentation-Here segmentation is done on the basis of divisions of

consumers as per their countries , states, cities etc. 4 major strategies used are,

a)Local market straegy

b)Regional market strategy
c)National market strategy
d)International market strategy

a)Local market straegy-Here focus is on the local area of customers.e.g.- Kirana stores.
b)Regional market strategy- Here a firm tries to cater to 2 or more states.e.g.-Mysore Sandal
soap catering to Southern region of India.
c)National market strategy- Here a company tries to cater to a particular country.e.g.- Maruti
Suzuki has maximum sales in India.
d)International market strategy- Here a company’s focus is across the world.e.g. Unilever.

2.Demographic segmentation- It is segmentation on the basis of age,gender, income etc.

a)Age
b)Gender
c)Income
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a)Age- Various age groups are babies,kids, youth,senior citizens etc.e.g.- Mothercare, a high
end UK retailer sells babycare products.
b)Gender- Men & women differ substantially in their buying behaviour.e.g. Femina is a
magazine covering articles which women enjoy.
c)Income- Purchasing capacity is very important parameter for customers to buy the
products.e.g.-Luxury cars Mercedes- Benz, BMW focus on rich people.

3.Behavioural segmentation- Here segmentation is done as per behaviour patterns of

customers. Some of the patterns are,
a)Benefits sought
b)Occasion
c)Customer loyalty

a) Benefits sought- Customers may look at specific benefits in a product. e.g. P&G has 2
shampoo brands. Pantene talks about strong hair. Head & Shoulders talks about dandruff
removal.
b) Occasion- Peole sometimes may use brands during specific occasions.e.g.-Moti soap is
perceived as a soap for special occasion like Diwali.
c) Customer loyalty- Loyal customers are very important for a company.It is said that 80% of a
firm’s sales come from 20% of customers.e.g.-First Citizen is a loyalty card programme from a
retailer Shoppers Stop.

4.Psychographic segmentation- Here segmentation of customers is done on the basis of,

a)Motive
b)Lifestyle
c)Personality

a) Motive- Here rational & emotional motives of customers are taken into consideration.e.g.
Casio digital watch talks about accuracy i.e. functional benefit. Rolex talks about achievement
i.e. emotional benefit.
b) Lifestyle- Here customers are segmented on the basis of how they live.e.g.- Frozen yoghurt
is marketed to health conscious people.
c) Personality- Marketers try to segment the customers on the basis of similar traits.e.g.-
Marlboro, a cigarette brand tries to cater to macho people.
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TARGETING- After segmentation , next step is to choose 1 or more target markets. Firms
choose following strategies.
1.Concentrated targeting
2.Undifferentiated targeting
3.Differentiated targeting
4.Micro marketing

1. Concentrated targeting ( Niche marketing ) – Here a firm concentrates on only one segment.
e.g.- Burnol is a specialist for curing burns.
2. Undifferentiated targeting ( Mass marketing ) – Here a focus is to produce one product to all
customers.e.g.- Parle-G biscuits.
3. Differentiated targeting ( Multisegment marketing ) – Here a firm targets 2 or more segments
each with a unique marketing mix.e.g.- Tata’s have different brands of watches like Sonata,
Titan, Xylys etc.
4. Micro marketing ( Customized marketing ) - Here acompany alters its marketing mix as per
need of an individual customer.e.g.- Dell making personals customers as per individual needs of
a consumer.

POSITIONING- Here a marketer decided how its brand should be perceived by the target
audience through a distinct communication.
PERCEPTUAL MAPPING- It is a plotting of a company’s brand on 2 or more dimensions in
comparison to competitors’ brands as perceived by customers.
CASE STUDY- PERCEPTUAL MAPPING OF BATHING SOAPS
What are learnings for the companies on the basis of above perceptual map ?
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REPOSITIONING- It is changing the existing positioning of a brand to increase sales in slow

markets.e.g.- Gems was initially only for kids.Afterwards in India through its ‘Raho Umarless’
campaign it tried to target adults also.
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CHAPTER 6 – PRODUCT MANAGEMENT AND DECISIONS

PRODUCT- It can be defined as anything that is offered to a market for a consumption to

satisfy a need.
Classification of products - Different types of classifications are,

1.According to benefits
2.According to customer involvement

1.According to benefits -Here there are 2 types of benefits offered.

a) Functional benefits
b) Emotional benefits

a)Functional benefits -These are the benefits which are related to the specific performance
of the product.e.g.- People buy Casio digital watches for their accuracy.
b)Emotional benefits- These are the benefits which appeal to psychological factors of the
customers.e.g.- People buy Rolex watches for status rather than accuracy.

5. According to customer involvement- Here there are 2 types of involvements.

•Low involvement products

•High involvement products

•Low involvement products- Here customers do not think too much before buying the products
because there is not much risk involved as a result of which decision making is much
faster.e.g.- Buying a chewing gum.
•High involvement products- These are the products which are not bought frequently & for
which a buyer spends considerable time & money.e.g.- Buying a house.
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PRODUCT LEVELS – They provide a way to show different levels of need of customers for
that product. The levels are,

1.Core benefit
2.Basic product
3.Expected product
4.Augmented product
5.Potential product

1.Core benefit- This is a basic benefit a customer is looking for.e.g.- Basic benefit customers
look for in airlines is going from one place to another.
2.Basic product ( Generic product ) – Marketer turns core benefit looked by a customer into a
basic product.e.g.- Airline have planes as a basic product.
3.Expected product- These are minimum expectations a buyer has from a product. e.g.-
Customers expect timely departure & arrivals from airlines.
4.Augmented product- Here marketers try to exceed customer expectations.e.g.-Virgin Atlantic
provides free transports to airports, free haircut/pedicure, free shower etc. for business class
passengers.
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5.Potential product- This is a product offering of a company in the future.e.g. Virgin Atlantic
was thinking of having a shopping mall & a casino in 600 passengers plane.

PRODUCCT MIXES ( PRODUCT ASSORTMENTS )- It is a set of products that a particular

company offers for sale.Product mix has several product lines.e.g.- ITC has multiple product
lines like cigarettes, hotels,bathing soaps , clothing, notebooks etc. A company’s product mix
has,
1.Product mix breadth
2.Product mix length
3.Product mix depth

1.Product mix bradth ( width ) – It is total number of product lines for a company.
2.Product mix length- It is a total number of brands a company sells.
3.Product mix depth- It is total number of SKU ( Stock Keeping Unit ) i.e. variants of each
brand.

EXAMPLE- Penmart is a exclusive reatiler of only fountain pens. Retailer keeps only
following brands i.e. Camlin , Lamy, Sheaffer & Waterman. Each type of fountain pen offers 3
kinds of nibs i.e. fine, medium & broad. Calculate product mix breadth , length & depth of
fountain pens at Penmart.

PRODUCCT LINE DECISIONS- It refers to addition , deletion or modification of products

in the product mix to increase sales & maximize the profits.It consists of ,
1.Line stretching
2.Line filling
3.Line modernization
4.Line featuring
5.Line pruning

1.Line stretching ( scaling )- Here a company increases product line beyond its current
range.Here there are 3 types.
a)Downward stretching
b)Upward stretching
c)Two way stretching
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a)Downward stretching- Here a lower priced version is offered. It can be a sub-brand or a new
brand.e.g. Mercedes C class by Mercedes and Wheel by HUL.
b)Upward stretching-Here a higher priced version is offered.e.g. Lexus by Toyota.
c)Two way stretching- Here lower & higher priced brands are offered at the same time.e.g.-In
2008, Tata Motors acquired JLR ( Jaguar Land Rover ) & in 2009, introduced lower priced Tata
Nano.
2.Line filling- It is adding products to an existing product line so that competitors may not
enter.e.g. Maruti- Suzuki has Maruti Alto 800 , Maruti Celerio, Maruti Wagon R , Maruti Ignis
in the similar price range.
3.Line modernization- Here a company keeps on introducing better versions of the product.e.g.-
In 2007 , Apple introduced iPhone.In 2020, Apple introduced its 29th improved version called
iPhone 12 Pro Max.
4.Line featuring- This talks about highlighting few brands from the product portfolio.e.g.-
Maruti-Suzuki has started featuring premium car brands like Ignis, Baleno.Siaz etc. through its
Nexa showrooms.
5.Line pruning- A company must review its product lines & rationalize few items.e.g.- In 2000,
Unilever announced that it would prune 1200 brands out of 1600 brands existing globally to
focus on 400 power brands.
PRODUCCT LIFE CYCLE ( PLC ) – It is a life cycle through which a product goes through
from development, introduction & eventually decline.It operates on following 3 assumptions.

1.Product has a limited life.

2.PLC goes through different stages where profits rise & fall.
3.Product requires different strategies during different stages.

PLC has following stages.

1.Development
2.Introduction
3.Growth
4.Maturity
5.Decline
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1.Development – This is a incubation stage of PLC. Here a firm tries to introduce a product &
there are no sales.
2.Introduction- Here a product is introduced. Following strategies can be used by the
companies.

a)Product- A company can be a first mover for a particular product.

b)Place- Distribution is selective in nature.
c)Price- Here penetration pricing may be used to get established in the market. Skim pricing
also may be used for higher profit margins.
d)Promotion- Promotion is aimed at building brand awareness.

3.Growth-Here there is a sales growth & improvements in the profit. Here a firm uses following
strategies.

a)Product- A company goes for line modernization i.e. better versions of products are introduced.
b)Place- Distribution is more intensive.
c)Price-Skim pricing is used & then slide down pricing can be used.
d)Promotion-It shifts from brand awareness advertising to brand preference advertising.

4.Maturity-Here there is slowdown in sales & profits stabilize or decline.Here a company uses
following strategies.
a)Market modification
b)Marketing mix modification
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a)Market modification- Here a market can be expanded by concentrating on ,

1.Increasing users
2.Increasing usage rate per user

1.Increasing users- A firm can look beyond present users.e.g. Revital which was originally for
men also came out with Revital for women.
2.Increasing usage rate per user- Here frequency of use by user can be increased.e.g.- A
communication was sent by Aspirin saying that it can be consumed daily for reducing chances of
stroke.

b)Marketing mix modification- Here a firm may alter its 4PS. Strategies used are,

1.Product- A new improved product may be introduced.e.g .- In 2021, Maruti- Suzuli was
planning to launch 7 door Wagon R.
2.Place- Here more incentives can be given to dealers.
3.Price- Penetration pricing & bundled pricing can be used.
4.Promotion- Sales promotion can be increased.
5.Decline- Here sales drop & profits erode.Following strategies are used by a firm.

a)Discontinuing the product

b)Milking
c)Divesting
d)Merging

a)Discontinuing the product- Here companies discontinue the products. e.g. In 1985 , Coca-
Cola came out with sweeter version of their drink called New Coke.The American people
reacted negatively. New Coke was discontinued.

b)Milking ( Harvesting )- Here following strategies can be used.

1.Reducing number of models.
2.Eliminating small customers.
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3.Reducing or severly curtailing investments i.e. No advertising.

e.g. Presently in India HUL is milking Hamam.

c)Divesting- Here a division or brand is sold to other companies.e.g. In 2016,

Lafarge divested its entire cement business to Nirma.
d)Merging- Here a company merges its 2 brands or merges with another company.e.g. In 2007 ,
HUL merged Rin Supreme bar with Surf Excel.

BCG MATRIX- BCG matrix has 2 axis. On horizontal axis there is Relative market share
which talks about market share relative to market leader. On vertical axis there is market growth
rate . It is annual growth rate of market in which the business operates.A market growth rate
above 10% is considered high.It has 4 types of funding decisions.BCG matrix tells which
businesses to fund & which to sell.

1.Question marks- They are new products with potential for success but need lot of cash for
development.e.g.- Apple TV.
2.Stars- They are market leaders typically at the peak of their product life cycle & are able to
generate enough cash for the company.e.g.-iPhones for Apple.
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3.Cash cows- They bring far more money than what is needed to maintain their market
share.These products are milked for cash to be invested in question marks.e.g.-iTunes of Apple.
4.Dogs- They are unattractive products without significant market position.They have to be
managed carefully for a small amount or should be sold off.e.g.iPods of Apple.

SERVICE- An act where one party offers to another which is intangible & doesn’t result in
ownership of anything.

ADDITIONAL 3P’S IN SERVICES MARKETING- They are,

1.People
2.Physical evidence
3.Process
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1.People- They are involved in delivering the service. People are very critical here because
behaviour of people determine experience of customers.

2.Physical evidence- It is a place where service is delivered. It includes,

a)Buildings
b)Equipment
c)The company’s website
d)Business cards

3.Process- It refers to flow of activities that happen when customer & business interact with
each other. e.g.- When a customer books a room in a hotel a process is initiated. When a
customer checks out another process is triggered.
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CHAPTER 7 – BRANDING

BRAND- Origin of the word brand comes from the word Brandr means to burn.In ancient
times farmers use to stamp their cattle to differentiate them from others.

CHARACTERISTICS OF A STRONG BRAND-They are ,

1.Brand name should be short & easily pronounced.

2.Brand name should be unique.e.g.- monster.com is very different from naukri.com,
hotjobs.com etc.
3.Brands should have emotional benefits rather than functional benefits.e.g.-In China,
Starbucks is a popular place for business meetings because host is perceived international &
sophisticated.
4.Customers should be ready to pay premium prices for certain brands.
5.Brands should be legally protected in terms of name, colour, logo etc.

BRAND ELEMENTS- Elements used to identify & diffrentiate a brand are called as brand
elements. Different brand elements are,

1.Brand name
2.Urls
3.Logo & symbol
4.Brand character
5.Tagline
6.Jingle
7.Packaging
8.Product design
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1.Brand name – There are 3 types of brand names.

i)Descriptive brand name

ii)Suggestive brand name
iii)Abstract brand name

i)Descriptive brand name- Here a name is fully described.e.g.- Indian Airlines.

ii)Suggestive brand name- Here a name is partially described.e.g.- Go.
iii)Abstract brand name- Here nothing is described about the brand.e.g.- Kodak.

2.Urls- It is about location of pages on the Web & is also called as domain names.
3.Logo & symbol- Logo is a name of a company written in a typical way.e.g.- Coca-Cola
written in red colour. Symbol is a non word logo. It is also called as a abstract logo.e.g.- Star of
Mercedes-Benz car.
4.Brand character- It is fictional character associated with the brand.e.g.- Amul girl is a brand
character for Amul butter.
5.Tagline- It is a short phrase which is used by a brand..e.g.Nike’s tagline- Just Do It.
6.Jingle- It is a musical message written around a brand.Some of the famous jingles are,

i)Nirma- Doodh si safedi Nirma se aaye.

ii)Lifebuoy- Tanduroosti ki raksha karta hai Lifebuoy.

7.Packaging-It is a container or wrapper of the brand.It is also called as a permanent media or

the last salesman.
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CHAPTER 8 - PRICING

A price is the amount of money charged for a product or a service, the sum of the values that
customers exchange for the benefits of having or using the product or service. Price is the only
element in the marketing mix that produces revenue, all others are costs. Setting the right price is
one of the most complex tasks. Good pricing starts with customers and their perception of the
value of the product.

Company has several objectives to be achieved by the sound pricing policies and strategies.
Pricing decisions are based on various factors which include:

I. Factors to Consider When Setting Prices:

 Internal

 External

 Positioning objectives

 Target market

II. External factors affecting pricing decisions depend on type of markets:

 Pure competition

 Monopolistic

 Oligopolistic

 Pure Monopoly
Pricing can differ in different types of markets. In pure competition markets, there are numerous
buyers and sellers that all have little effect on the price. In monopolistic competition, there are
many buyers and sellers who trade over multiple prices. In an oligopolistic competition market,
there are few sellers who are highly sensitive to each other’s pricing strategies. In a pure
monopoly, the company is the only seller and can set any price it desires.
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III. Internal factors affecting pricing decisions depend on:

 Marketing mix

 Marketing objectives

 Costs

 Organisation considerations

IV. Marketing Objectives that affect pricing decisions:

 Survival
 Current profit maximization
 Market share leadership
 Product Quality leadership

Broadly the objectives are related to profitability, sales related, competition and customer.

A. Profits-related Objectives:
Profit has remained a dominant objective of business activities. Company’s
pricing policies and strategies are aimed at following profits-related objectives:

i. Maximum Current Profit:

One of the objectives of pricing is to maximize current profits. This objective is aimed at
making as much money as possible. Company tries to set its price in a way that more current
profits can be earned. However, company cannot set its price beyond the limit. But, it
concentrates on maximum profits.

ii. Target Return on Investment:

Most companies want to earn reasonable rate of return on investment. Target return may be:

(1) fixed percentage of sales,

(2) return on investment, or

(3) a fixed rupee amount.

Company sets its pricing policies and strategies in a way that sales revenue ultimately yields
average return on total investment. For example, company decides to earn 10% return on total
investment of INR 10 crores. It must set price of product in a way that it can earn INR 1 crore.
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B. Sales-related Objectives:
The main sales-related objectives of pricing may include:

i. Sales Growth:
Company’s objective is to increase sales volume. It sets its price in such a way that more and
more sales can be achieved. It is assumed that sales growth has direct positive impact on the
profits. So, pricing decisions are taken in way that sales volume can be raised. Setting price,
altering in price, and modifying pricing policies are targeted to improve sales.

ii. Target Market Share:

A company aims its pricing policies at achieving or maintaining the target market share. Pricing
decisions are taken in such a manner that enables the company to achieve targeted market share.
Market share is a specific volume of sales determined in light of total sales in an industry. For
example, company may try to achieve 25% market shares in the relevant industry.

iii. Increase in Market Share:

Sometimes, price and pricing are taken as the tool to increase its market share. When company
assumes that its market share is below than expected, it can raise it by appropriate pricing; pricing
is aimed at improving market share.

C. Competition-related Objectives:

Competition is a powerful factor affecting marketing performance. Every company tries to react
to the competitors by appropriate business strategies. With reference to price, following
competition-related objectives are:

i. To Face Competition:
Pricing is primarily concerns with facing competition. Today’s market is characterized by the
severe competition. Company sets and modifies its pricing policies so as to respond the
competitors strongly. Many companies use price as a powerful means to react to level and
intensity of competition.

ii. To Keep Competitors Away:

To prevent the entry of competitors can be one of the main objectives of pricing. The phase
‘prevention is better than cure’ is equally applicable here. If competitors are kept away, no need
to fight with them. To achieve the objective, a company keeps its price as low as possible to
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minimize profit attractiveness of products. In some cases, a company reacts offensively to

prevent entry of competitors by selling product even at a loss.

iii. To Achieve Quality Leadership by Pricing:

Pricing is also aimed at achieving the quality leadership. The quality leadership is the image in
mind of buyers that high price is related to high quality product. In order to create a positive
image that company’s product is standard or superior than offered by the close competitors; the
company designs its pricing policies accordingly.

iv. To Remove Competitors from the Market:

The pricing policies and practices are directed to remove the competitors away from the
market. This can be done by forgoing the current profits – by keeping price as low as possible –
in order to maximize the future profits by charging a high price after removing competitors from
the market. Price competition can remove weak competitors.

D. Customer-related Objectives:
Customers are in center of every marketing decision. Company wants to achieve following
objectives by the suitable pricing policies and practices:

i. To Win Confidence of Customers:

Customers are the target to serve. Company sets and practices its pricing policies to win the
confidence of the target market. Company, by appropriate pricing policies, can establish,
maintain or even strengthen the confidence of customers that price charged for the product is
reasonable one. Customers are made feel that they are not being cheated.

ii. To Satisfy Customers:

To satisfy customers is the prime objective of the entire range of marketing efforts. And,
pricing is no exception. Company sets, adjusts, and readjusts its pricing to satisfy its target
customers. In short, a company should design pricing in such a way that results into maximum
consumer satisfaction.

E. Other Objectives:
Over and above the objectives discussed so far, there are certain objectives that company wants
to achieve by pricing. They are as under:
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i. Market Penetration:
This objective concerns with entering the deep into the market to attract maximum number of
customers. This objective calls for charging the lowest possible price to win price-sensitive
buyers.

ii. Promoting a New Product:

To promote a new product successfully, the company sets low price for its products in the
initial stage to encourage for trial and repeat buying. The sound pricing can help the company
introduce a new product successfully.

iii. Maintaining Image and Reputation in the Market:

Company’s effective pricing policies have positive impact on its image and reputation in the
market. Company, by charging reasonable price, stabilizing price, or keeping fixed price can
create a good image and reputation in the mind of the target customers.

iv. To Skim the Cream from the Market:

This objective concerns with skimming maximum profit in initial stage of product life cycle.
Because a product is new, offering new and superior advantages, the company can charge
relatively high price. Some segments will buy product even at a premium price.

v. Price Stability:
Company with stable price is ranked high in the market. Company formulates pricing policies
and strategies to eliminate seasonal and cyclical fluctuations. Stability in price has a good
impression on the buyers. Frequent changes in pricing affect adversely the prestige of company.

vi. Survival and Growth:

Finally, pricing is aimed at survival and growth of company’s business activities and
operations. It is a fundamental pricing objective. Pricing policies are set in a way that company’s
existence is not threatened.

Now let’s look at frequently used basis for setting prices:

I. Customer value-based pricing: setting price based on buyer’s perceptions of value rather
than on the seller’s cost. The value customers attach to a product might be difficult to measure,
so the company must work hard to establish estimates. There are two other types of value-based
pricing: good-value pricing and value-added pricing. Good-value pricing means offering the
right combination of quality and good service at a fair price. Value-added pricing means
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attaching value-added features and services to differentiate a company’s offers and charging higher
prices.

II. Cost-based pricing means setting prices based on the cost for producing, distributing and
selling the product plus a fair rate of return for effort and risk. There are two forms of costs: fixed
costs (overhead) are costs that do not vary with production or sales level. Variable costs are
costs that vary directly with the level of production. Total costs are the sum of the fixed and
variable costs for any given level of production.

III. Competition-based pricing means setting prices based on competitor’s strategies, prices,
costs and market offerings.

Beyond customer value perceptions, costs and competitor prices, the firm must also think of other
factors. Price is only one element of the marketing mix and the overall marketing strategy must be
determined first. Target costing is pricing that starts with an ideal selling price and then targets
costs that ensure the price is met. Good pricing is based on an understanding of the relationship
between price and demand for the product.

Pricing strategies can be challenging. There are two broad strategies.

Market-skimming pricing (price skimming) means setting a high pricefor a new product to
skim maximum revenues layer by layer from the segments willing to pay the high price, the
company makes fewer but more profitable sales.

Market-penetration pricing means setting a low price for a new product to attract a large
number of buyers and a large market share.

There are five product mix pricing situations.

1.Product line pricing: setting the price steps between various products in a product line based
on cost differences between the products, customer evaluations of different features and
competitor’s prices.

2.Optional product pricing: the pricing of optional or accessory products along with a main
product.

3.Captive product pricing: setting a price for products that must be used along with a main
product.
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4.By-product pricing: setting a price for by-products to make the main

product’s price more competitive.
5.Product bundle pricing: combining several products and offering the bundle at a reduced
price.

There are also seven price adjustment strategies that can be used.
1. Discount: a straight reduction in price on purchases during a stated period of time or of
larger quantities. Allowance is promotional money paid by manufacturers to retailers in return for
an agreement to feature the manufacturer’s products in some way.

2. Segmented pricing: selling a product or service at two or more prices, where the difference
in prices is not based on costs. Customer-segment pricing involves different types of customers
paying different pricing. Product- form pricing involves different prices for different versions of
the same product. Location-based pricing involves different prices for different locations, while
time-based pricing involves different prices for different moments in time.

3. Psychological pricing: pricing that considers the psychology of prices, not simply the
economics, the price says something about the product. Reference prices are prices that buyers
carry in their minds and refer to when they look at a given product.

4. Promotional pricing: temporarily pricing products below the list price, and sometimes even
below cost, to increase short-run sales.

5. Geographical pricing: setting prices for customers located in different parts of the country
or world. This can be FOB-origin pricing: a geographical pricing strategy in which goods are
placed free on board a carrier, the customer pays the freight from the factory to the destination.
Uniform-delivered pricing: a geographical pricing strategy in which the company charges the
same price plus freight to all customers, regardless of their location. Zone pricing: the company
sets up two or more zones. All customers within a zone pay the same total price, the more distant
the zone, the higher the price. Base-point pricing: a pricing strategy in which the seller
designates some city as a base point and charges all customers the freight cost from that city to
the customer. Freight-absorption pricing is a strategy in which the seller absorbs all or part of
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the freight charges to get the desired business.

6. Dynamic pricing : It means adjusting pricing continually to meet the characteristics and
needs of individual customers and situations.

7. International pricing: charging different pricing for customers in different countries.

After setting prices, there are often situations in which companies need to change their prices.
Sometimes, the company finds it desirable to initiate price cuts, for instance when demand is
falling, or price increases to improve profits. Consumers can react differently to changes in prices,
as well as competitors. When competitors change prices first, the firm has to respond. There are as
many as four responses, namely: the firm can reduce its price, maintain its price but raise the
perceived value of the product, improve the quality and increase the price or launch a low-price
fighter brand to compete with the price change.
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UNDERSTANDING PRICING OBJECTIVES AND STRATEGIES

*https://extension.psu.edu/understanding-pricing-objectives-and-strategies-for- the-value-added-ag-
producer
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CHAPTER 9 – MARKETING CHANNEL

Distribution Channels
A marketing channel is a set of processes undertaken to transfer the ownership of products,
from the point of production to the point of consumption.
A marketing channel is a set of interdependent organizations involved in the process of
delivering the goods and services to the end-user. It is also called a distribution channel.

Marketing-channel decisions have a direct impact on other marketing decisions. The pricing of
a product is influenced by the marketing channel as to whether the company distributes it
through high-quality specialty stores, national discount chains, or sells directly to consumers
online. The company’s sales promotion and marketing decisions will vary depending upon its
channel partners. Even the launch of new products in the market will be influenced by the
capabilities of the channel members.

Definition of Distribution Management- Broad range of activities concerned with the efficient
movement of finished products from the end of the production line to the consumer.
For a company the Distribution Channel Members should be as important as the Customers.
Ideally speaking Suppliers (vendors), Customers, Channel members & Company’s own internal
Customers (employees) should be treated equally.

Functions of Distribution Channel Members

1. Providing for storage & physical movement of goods.
2. Placing orders to the producers for the goods for delivery to customers/consumers.
3. Canvassing the sales of the products they handle. In many cases they do the actual “selling”.
4. They are the link for transfer of ownership of the goods from the producer to customer.
5. Financing the inventories after the goods leave the manufacturer till they reach the end user.
6. Collection of information about the customers, competitors for the company’s Marketing &
sales Departments.
7. Provide credit facilities to their buyers.
8. Help the manufacturers to effectively run trade & consumer promotions.
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Value Networks
A supply chain view of a firm sees markets as destination points and amounts to a linear view
of the flow. The company should first think of the target market, and then design the supply
chain backward from that point. This view has been called demand chain planning.
An even broader view sees a company at the center of a value network—a system of
partnerships and alliances that a firm creates to source, augment, and deliver its offerings.
A value network includes a firm’s suppliers, its suppliers’ suppliers, its immediate customers,
and their end customers. A company needs to orchestrate these parties to enable it to deliver
superior value to the target market. Demand chain planning yields several insights Firstly the
company can estimate whether more money is made upstream or downstream. Secondly the
company is more aware of disturbances anywhere in the supply chain that might cause costs,
prices, or supplies to change suddenly. Third Companies can go online with their business
partners to carry on faster and more accurate communications, transactions, and payments to
reduce costs, speed up information, and increase accuracy. Managing this value network has
required companies to make increasing investments in information technology (IT) and
software. Marketers have traditionally focused on the side of the value network that looks
toward the customer. In the future, they will increasingly participate in, influence their
companies’ upstream activities, and become network managers.

Channel Levels
The producer and the final consumer are part of every channel. Most producers do not sell their
goods directly to the final users; between them stands a set of intermediaries performing a
variety of functions. These intermediaries constitute a marketing channel (also called a trade
channel or distribution channel).
A zero-level channel (also called a direct-marketing channel) consists of—a manufacturer
selling directly to the final consumer.
Example- Amway selling directly to consumers
HP, IOC company owned petrol pumps selling directly to consumers
A one-level channel contains one selling intermediary—such as a retailer/Chemist.
Example: Automobile Dealerships of Maruti, Hyundai etc. selling directly to consumers
A two-level channel contains two intermediaries—Dealer/Stockiest and a retailer/Chemist.
Example: Multi-brand electronic goods showrooms
A three-level channel contains—Distributor, Dealer/Stockiest and retailers/Chemist.
Example: FMCG & Pharma companies selling goods to consumers through 3 level channel.
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Channel Management Decisions

After a company has chosen a channel alternative, individual intermediaries must be selected,
trained, motivated, and evaluated. Channel arrangements must be modified over time. There are
4 channel management decisions
a.Selecting Channel Members
b.Training Channel Members
c.Motivating Channel Members
d.Evaluating Channel Members
Selecting Channel Members
Companies need to select their channel members carefully. To facilitate channel member
selection, producers should determine what characteristics distinguish better intermediaries.
They should evaluate the:
1) Number of years in business.
2) Other lines carried.
3) Growth and profit records.
4) Financial strength.
5) Cooperativeness.
6) Service reputation.

Training Channel Members

Companies need to plan and implement careful training programs for their intermediaries.
• Ex- Microsoft requires third party service engineers to complete a set of courses & take
certification exams.
Training the channel member starts at the time the channel member is recruited and continues
right the time that the channel member is associated with the company.
Motivating Channel Members
A company needs to view its intermediaries in the same way it views its end users.
A company needs to determine intermediaries’ needs and construct a channel position such that
its channel offering is tailored to provide superior value to these intermediaries. Stimulating
channel members to top performance starts with understanding their needs and wants. The
company should provide training programs and market research programs to improve
intermediaries’ performance. The company must constantly communicate its view that the
intermediaries are partners in a joint effort to satisfy end users of the product. Producers vary
greatly in skill in managing distributors. Producers vary in their in their ability to attract
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qualified intermediaries. Ex- Fiat relatively unattractive performance in India has forced it to
revamp its dealership network.
Channel power can be defined as the ability to alter channel member’s behavior so that they
take actions they would not have taken earlier.
Manufacturers can draw on the following types of power to elicit cooperation:
– Coercive power.
– Reward power.
– Legitimate power.
– Expert power.
– Referent power.
– Support Power
Evaluating Channel Members
Producers must periodically evaluate intermediary’s performance against standards such as
a. Sales quota attainment,
b. Average inventory levels,
c. Customer delivery times,
d. Treatment of damaged and lost goods, and
e. Cooperation in promotional and training programs.
f. Productive calls per day
g. Number of servicing complaints attended to
h. Outstanding position
i. Frequency of Coverage
j. Extent of Credit to be extended in the market
k. Width & Depth of coverage of markets

Channel Systems- VMS, HMS

A marketing channel system is the particular set of marketing channels employed by a firm.
Two major types of Channel systems are Vertical Marketing systems (VMS) and Horizontal
Marketing systems (HMS)
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In a Vertical marketing system various parties like producers, wholesalers and retailers act as a
unified system to avoid conflicts. This improves operating efficiency and marketing
effectiveness.

Vertical Marketing System is of three types

– Corporate
– Administered
– Contractual

Corporate
Combines successive stages of production and distribution under single ownership
Examples:
– Bata, Bombay Dyeing, Raymond
– Sears, Goodyear
– Suppliers of food items could be also their own supplying firms - like Nilgiris

Administered
Co-ordinates distribution activities. It Gains market power by dominating a channel. This is
usually true of dominant brands like GE, Kodak, Pepsi, Gillette, Coke and HUL in certain
locations. They command high level of co-operation in shelf space, co-operation from resellers,
displays, pricing policies and promotion strategies

Contractual
In Contractual VMS, Independent producers, wholesalers and retailers operate on a contract
This could take the forms of:
– Wholesaler sponsored voluntary chains
– Retailer co-operatives
– Manufacturer sponsored retail or wholesale franchise
– Franchise organizations
– Service firm sponsored retail franchise

Horizontal Marketing Systems

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HMS is defined as a system where two or more unrelated companies join together to pool
resources and exploit an emerging market opportunity. Examples are
– In-store banking in hotels, big stores
– Retail outlets in petrol bunks
– Coffee Day outlets in airports
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CHAPTER 10- IMC ( INTEGRATED MARKETING COMMUNICATIONS )

WHAT IS IMC- It integrates i.e. combines all forms of communications like advertising, sales
promotion, public relations, direct marketing etc.

Steps in developing effective communications- Different steps are,

1.Identify the target audience

2.Determine the objectives
3.Design the message
4.Select channels
5.Establish budgets
6.Decide on communication mix
7.Measure results
8.Manage IMC

1.Identify the target audience- This is the most important step of IMC . A firm should decide
who is its target audience.e.g.- Target audience for Pepsi is people who are young at heart.
2.Determine the objectives- Here following types are communications can be used.
a)Informative communication
b)Persuasive communication
c)Reminder communication
d)Reinforcement communication

a)Informative communication- When a company is launching a product informative

communication can be used.
b)Persuasive communication- Here comparative advertising may be used.e.g. Cola companies
like Coca- Cola & Pepsi use this communication.
c)Reminder communication- Here a company may be well known & it keeps reminding its
customers through consistent advertising.e.g.- Nike’s ‘Just Do It’.
d)Reinforcement communication-This reminds customers that they may have made the right
chice.e.g.-HUL ( Hindustan Unilever ) using Canon Pav bhaji owner endorsing Vim bar.
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3.Design the message-Here a company decides if it wants to communicate functional benefits

or emotional benefits.e.g.- Casio digital watch talks about accuracy while Rolex talks about
achievement.
4.Select channels- Different communication channels used are TV , Radio , Newspapers,
Hoardings, Digital marketing etc.
5.Establish budgets- A company has to decide how much it is going to spend on its
communication. Following 4 methods are used to decide the budgets.

a)Affordable method
b)% of sales method
c)Competitive parity method
d)Objective & task method

6.Decide on communication mix- A company decides what combination of following

communication mix has to be used. i.e. Advertising, Sales promotion, Public relations, Direct
marketing etc.
7.Measure results-
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Blue figures indicate awareness, trial & satisfaction.

What is your observation about communication for Brand A & B?

8.Manage IMC – If there are deviations from decided results a firm has to take corrective
actions.

ADVERTISING- Advertising is a component of a IMC used to promote a product or a service.

Objective of advertising- It can be explained with the help of AIDA model.

AIDA model- It is a acronym identifying 4 responses a consumer will have after seeing a brand
message. Four responses are,
a)Attention
b)Interest
c)Desire
d)Action

a)Attention- A consumer becomes aware about a brand through the advertising.

b)Interest- Looking at brand benefits a consumer may be interested.
c)Desire- A consumer develops positive feelings about the brand.
d)Action-A consumer intends to purchase, tries a product or makes a purchase.

Media scheduling- It is a time- table of a company which decides,

a)When to advertise?
b)How much to advertise each time?
c)How many times in a year to advertise in each media?
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Different methods of media scheduling are,

1.Continuous schedule
2.Flighting schedule
3.Pulsing schedule

1.Continuous schedule- Here advertising runs steadily throughout a given period. e.g.- Bathing
soaps.
2.Flighting schedule- It is a combination of periods of advertising & periods of no advertising.
e.g.-Umbrellas.
3.Pulsing schedule- Here advertising is low throughout the year but is heavy during a peak
period. e.g.- Heavy advertising for cold drinks during summers.

SALES PROMOTION- It is a IMC function that offers tangible added value to motivate &
accelerate a purchase. 2 types of sales promotion tools are,
1.Consumer promotion
2.Trade promotion

1.Consumer promotion- It is for end consumers. e.g.- Price reductions, samples, contests &
sweepstakes etc.
2.Trade promotion- It is for channel partners. e.g.- Cash discounts, dealer contests, dealer
loaders etc.

PUBLIC RELATIONS- It is the planned & sustained effort by a company to establish &
maintain a goodwill and understanding with its public. Different PR components are,

1.Publicity
2.Employee relations
3.Media relations
4.Investor relations
5.Corporate communication
6.Crisis management
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DIRECT MARKETING- It is a process of selling products or services directly to the

customers. Different techniques of direct marketing are,

1.Direct mail
2.Direct response TV marketing
3.Email marketing
4.Fax marketing
5.Telemarketing
6.ATM
7.Kiosk marketing
8.Direct selling
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CHAPTER 11 - CRM (CUSTOMER RELATIONSHIP MANAGEMENT)

I.STATISTICS ABOUT CRM

• CRM software is now the biggest software market in the world and the growth isn't
slowing down. In fact, CRM is now expected to reach more than $80 billion in revenues by
2025.
• From customer service and email marketing to personalization, companies now expect
to be able to connect platforms and technologies with customer data, in order to provide a
more personalized experience

II.EVOLUTION OF CRM

It is believed that “CRM originated in early 1970s when the business units had a proposition that
it’s advisable to become ‘customer focussed’ rather than ‘product focussed’. Other aspects which
helped CRM evolve are:

• Realization that “Achieving customer satisfaction would be impossible without a well-

defined process for focusing the entire organization on the customer”.

• Impact of “Total Quality” and “Just In Time” movements.

• Growing de-intermediation process due to IT.

• Direct Marketing tools to individualize marketing effort.

• Growth of “services economy”.

• Inter-dependent roles of Buyer & Seller and increased “relational intensity”.

• “Hyper” competition resulting in need for customer retention, integration & loyalty.

• Impact of “Globalization” & “Internet”

• The pressure to contain costs and grow revenue is a real one.

• Customers do not tolerate inefficiency.

• Client facing personnel need to have “real information” at their disposal to deliver “real
client value”.
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• Relationship development has become the name of the game.

Traditionally Customer Relationship Management, known as Relationship Marketing, was based

on three major principles- protecting the current customers, developing new customers and
enhancing value of one’s own business as also of the customers. With the advent of CRM which
has high end software and technology, business perspectives are totally changed. A CRM system as
one sees it, consists of tonnes of information which is depicted in a user friendly manner to
increase profits, customer satisfaction and loyalty, as also reduce costs and investment.

III.HISTORY OF CRM

IV.Definitions of CRM:
-CRM is a business strategy with outcomes, that optimise profitability, revenue and
customer satisfaction by organizing around customer segments; fostering
customer-satisfying behaviors and; implementing customer-centric processes.
– CRM is a strategy used to learn more about customers' needs and behaviors in
order to develop stronger relationships with them.
– More widely accepted definition-
• CRM is a Comprehensive Strategy and Process of Acquiring ,
Retaining, and Partnering with “Selective Customers” to create
Superior Value for the Company and Customer.
V.THE ELEMENTS OF CRM
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VI.FEATURES OF CRM

1. Customers Needs- \
2. Customers Response-
3. Customer Satisfaction
4. Customer Loyalty
5. Customer Retention
6. Customer Service

VII.CRM CYCLE
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VIII. IMPORTANCE OF CRM

1. A CRM system consists of a historical view and analysis of all the acquired or to be
acquired customers.
2. CRM contains each and every bit of details of a customer, hence it is very easy for track
a customer accordingly and can be used to determine which customer can be profitable
and which not.
3. In CRM system, customers are grouped according to different aspects according to the
type of business they do or according to physical location and are allocated to different
customer managers often called as account managers.
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4. A CRM system is not only used to deal with the existing customers but is also useful in
acquiring new customers.
5. All the details in CRM system is kept centralized which is available
6. Efficiently dealing with all the customers and providing them what they actually need
increases the customer satisfaction.
7. If the customer is satisfied they will always be loyal to you and will remain in business
forever resulting in increasing customer base and ultimately enhancing net growth of
business.

IX.CRM AND MARKETING

1. Web Marketing
2. Email Marketing
3. Analyzing customers buying behaviour
4. Forecasting future marketing strategies
5. Building business impact models

X.ADVANTAGES OF CRM:

• While company is quickly growing, customers are more satisfied as well

• Service provided in a better way, and a quicker way

• Sales force automated

• Integrated customer information

• Operation cost cut, and time efficient

• Brand names more quickly established

• A central database so that everyone in the company can keep track of customer contacts

• Sales and marketing teams can benefit from having all this inside knowledge about
customers

XI.DISADVANTAGES OF CRM
▪Organizational wise change of priority to customers.
▪Significant investment of time and money.
▪Threatens management’s control/power struggle.
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▪Heightens people’s resistance to change.

▪Inappropriate integration leads to disaster.

XII. CRM APPLICATIONS

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CHAPTER 12 – GLOBAL MARKETING

International marketing is the performance of business activities designed to plan, price,

promote, and direct the flow of a company’s goods and services to consumers or users in more
than one nation for a profit.
The only difference between the definitions of domestic marketing and international marketing
is that in the latter case, marketing activities take place in more than one country. Marketing
concepts, processes, and principles are universally applicable, and the marketer’s task is the
same.
Global Marketing and International Marketing words are used interchangeably and mean the
same.

Cultural dynamics in Assessing Global Markets

Culture can be defined as a society’s accepted basis for responding to external and internal
events. Three topics are important in understanding Cultural Dynamics in assessing global
markets. They are

1.Historical Perspective in Global Business

2.Geography and Global Markets
3.Dynamics of Global Population Trends

Historical Perspective in Global Business

Understanding the history of a country is important for understanding attitudes about the role of
government and business, the relations between managers and the managed, the sources of
management authority, and attitudes toward foreign corporations. History helps define a
nation’s “mission,” how it perceives its neighbors, self, and place in world. Studying a nation’s
culture includes studying its history.

During the early 1800s, the British taste for tea was creating a huge trade deficit with China.
The English East India Company’s determined that opium was easy to ship, high value to
volume and weight ratios, and addicting to customers—what a great product!

At the time, the best opium came from British India, and once the full flow began, the tea-
caused trade deficit disappeared fast. But when the Chinese emperor ordered the destruction of
inventories in Canton, the trade died. Ultimately the Opium War became about foreign access
to Chinese trade.

Geography and Global Markets

Geography is study of Earth’s surface, climate, continents, countries, peoples, industries, and
resources. Geography imposes limitations on marketing products, Impacts society’s culture and
economy and affects nations’ ability to supply citizens’ needs. International Marketer should
study the geography of a country when evaluating market potential. The tendency is to study
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the aspects of geography as isolated entities rather than as important causal agents of the
marketing environment. Geography is much more than memorizing countries, capitals, and
rivers. It also includes an understanding of how a society’s culture and economy are affected as
a nation struggles to supply its people’s needs within the limits imposed by its physical
makeup.

Altitude, humidity, and temperature extremes are climatic features that affect the uses and
functions of products and equipment. Products that perform well in temperate zones may
deteriorate rapidly or require special cooling or lubrication to function adequately in tropical
zones. Within even a single national market, climate can be sufficiently diverse to require
major adjustments. (General AC is preferred in Middle east because it can cool till 55 degrees)

Mountains, oceans, seas, jungles, and other geographical features can pose serious impediments
to economic growth and trade. Geographic hurdles have a direct effect on a country’s economy,
markets (Ex. Nepal is landlocked country). As countries seek economic opportunities and the
challenges of the global marketplace, they invest in infrastructure to overcome such barriers.

In Sao Paulo, Shell Company sells two kinds of fuel: alcohol made primarily from sugarcane
and gasoline made from dirtier fossil fuels. Flexible-fuel engines in Brazilian cars can burn
either kind of fuel or any mixture of the two. Although the price per liter is quite different, so is
the mileage per liter. Brazilians make their choice of fuel based on the kind of driving they
anticipate, city versus highway.

Dynamics of Global Population Trends

Current population, rural/urban population shifts, rates of growth, age levels, and population
control help determine today’s demand for various categories of goods.

Although not the only determinant, the existence of sheer numbers of people is significant in
appraising potential consumer markets.

Changes in the composition and distribution of population among the world’s countries will
profoundly affect future demand. Moreover, it now appears that demand for goods worldwide
can affect migration patterns.

Global Market Entry Strategies

A company has four different modes of foreign market entry from which to select: exporting,
contractual agreements, strategic alliances, and direct foreign investment.
There are four broad modes of foreign market entry
1. Exporting
2. Contractual agreements
3. Strategic alliances
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4. Direct foreign investment

The different modes of entry can be further classified on the basis of the equity or nonequity
requirements of each mode.
The amount of equity required by the company to use different modes affects the risk, return,
and control that it will have in each mode.

1. Exporting
Exports are goods and services that are produced in one country and sold to buyers in another.
Exports, along with imports, make up international trade. Exporting has less risk because less
amount of capital is invested. Companies export products and services for a variety of reasons.
Exports can increase sales and profits if the goods create new markets or expand existing ones,
and they may even present an opportunity to capture significant global market share.
Exporting is of 4 types
a.Direct exporting- Company sells to customer in another country

b.Indirect exporting- Company sells to importer or distributor in another country (Ex. Mahindra
appointed a Distributor in USA to sell Scorpio SUV)

c.The Internet- Many exporters use internet to sell software services and various other products.

d.Direct sales- This may involve establishing office in foreign country. It is particularly used
for high-tech and big-ticket industrial products
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2. Contractual agreements are long-term, nonequity associations between a company and

another in a foreign market. Contractual agreements generally involve the transfer of technology,
processes, trademarks, and/or human skills. In short, they serve as a means of transfer of
knowledge rather than equity. Research has shown that when legal systems differ substantially
across partners’ countries, informal aspects of business relationships will be more important.
There are mainly two types of Contractual Agreements:
a.Licensing
b.Franchising
Licensing involves rights granted to foreign company. They are
• Patent rights
• Trademark rights
• Rights to use technological processes; aids in production and distribution of imported
products
Licensing is less risky strategy to establish foothold in foreign market. It does not involve large
capital outlays and is favored by small and medium-sized companies.
Example-In May 2018, Nestle and Starbucks entered into a $7.15 billion coffee licensing deal.
Nestle (the licensee) agreed to pay $7.15 billion in cash to Starbucks (the licensor) for
exclusive rights to sell Starbucks’ products (single-serve coffee, teas, bagged beans, etc.)
around the world through Nestle’s global distribution network. Additionally, Starbucks will
receive royalties from the packaged coffees and teas sold by Nestle.
Franchising involves skill centralization and operational decentralization. The Franchiser
provides standard package of products, systems, management services. The Franchisee
provides market knowledge, capital, and personal involvement in management. The Key
factors that influence success are monitoring costs (based on physical and cultural distances),
The principal’s international expense and the brand equity in the new market. Examples of
franchising is McDonalds, Subway, Dominos, KFC, Baskin Robbins, Taco bell and our own
home grown brand Jumbo Vada Pav.

3. A strategic international alliance (SIA) is a business relationship established by two or more

companies to cooperate out of mutual need and to share risk in achieving a common objective.
Strategic alliances have grown in importance over the last few decades as a competitive
strategy in global marketing management. Strategic international alliances are sought as a way
to shore up weaknesses and increase competitive strengths—that is, complementarity is
key. Firms enter into SIAs for several reasons: opportunities for rapid expansion into new
markets, access to new technology, more efficient production and innovation, reduced
marketing costs, strategic competitive moves, and access to additional sources of products and
capital. In the Star Alliance strategic alliance, Lufthansa and Thai Airlines share several aspects
of their operations, including ticketing and reservations, catering, cargo, and airport slots. An
Example of Strategic alliances is International Joint Ventures in which two or more companies
create a separate legal entity. There is an acknowledged intent by partners to share in
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management. International joint ventures are done between legally incorporated entities and not
individuals in which Equity positions are held by both partners.

4. Direct Foreign Investment- This is the riskiest strategy as it involves investing large capital
in a foreign country. The reasons to invest in foreign country are to capitalize on low-cost
labour, avoid high import taxes, reduce high costs of transportation to market, gain access to
raw materials and technology and gain market entry. Samsung has invested around $500
million to build TV tube plants in Tijuana, Mexico to feed the already huge NAFTA TV
industry centred there.
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CHAPTER 13 – RURAL MARKETING

Importance
The Census of India (2001) defines any habitation with a population density of less than 400
per sq. km, where at least 75 per cent of the male working population is engaged in agriculture
and where there exists no municipality or board, as a rural habitation.
The rural population consists of 800 million inhabitants, accounting for 70 per cent of India’s
population.
Depending on their requirements, different organizations ascribe different meanings to the term
rural.
LG Electronics, for instance, defines any population centre other than the seven metros as semi-
urban or rural. This definition is in stark contrast to that of the Census. It is important for a
marketer to look beyond these definitions at the underlying limitations of each
The Fast-Moving Consumer Goods (FMCG) sector in rural and semi- urban India is estimated
to cross US$ 100 billion by 2025
The rural FMCG market is anticipated to expand at a CAGR of 17.41 per cent to US$ 100
billion during 2009–25. Rural FMCG market accounts for 40 per cent of the overall FMCG
market in India, in revenue terms.
Amongst the leading retailers, Dabur generates over 40-45 per cent of its domestic revenue
from rural sales. HUL rural revenue accounts for 45 per cent of its overall sales while other
companies earn 30- 35 per cent of their revenues from rural areas
Rural India consist of about 650,000 villages. These villages are inhabited by about 850 million
consumers making up for about 70 per cent of population and contributing around half of the
country's Gross Domestic Product (GDP). Consumption patterns in these rural areas are
gradually changing to increasingly resemble the consumption patterns of urban areas. Some of
India's largest consumer companies serve one-third of their consumers from rural India. Owing
to a favourable changing consumption trend as well as the potential size of the market, rural
India provides a large and attractive investment opportunity for private companies.

Facts about Rural markets

Market research firm Nielsen expects India’s rural FMCG market to reach a size of US$ 100
billion by 2025. Another report by McKinsey Global Institute forecasts the annual real income
per household in rural India to rise to 3.6 per cent 2025, from 2.8 per cent in the last 20 years.
Success stories
Companies like HUL, ITC, Nirma, Dabur, Godrej, Coca-Cola, Pepsi, LG, Samsung, Maruti,
Hyundai, Bharti Airtel, Idea Cellular and many others have succeeded by using innovative
strategies. Some of the success stories are as follows:
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• Hindustan Unilever, the Mumbai-based local unit of Unilever, sells its products through6.3
million shops, reaching eight out of 10 households in India. Its Project Shakti is a resounding
success.
• ITC revolutionized village life by starting e-choupals.
• Reader’s Digest has 0.6 million customers in rural and semi-urban areas.
• Bharti Airtel started focusing on rural markets in 2007 and gained 60 per cent of its customer
base in rural areas within two years.
• Hero Honda launched its rural vertical “Har gaon, Har Angan” and its sales went up.

Rural marketing requires an understanding of the environment in which companies have to

operate to deliver products and services. Various environmental factors impact marketing
decisions related to demand estimation, segmentation and targeting, and also the design of the
marketing mix of the 4 P’s.
When we examine the social environment, we find 732 million people living in 144.5 million
households, most with 5–6 members, with 1.43 earning members per household, in rural areas.
More than half the population (493 million) is in low-income states with per capita income
below Rs 10,000 per annum. Males form 51.8 per cent of the total population and females, 48.2
per cent. However, in south India, males and females are almost equal in number. In fact, the
female population is larger in Kerala. The percentage of illiterate heads of households is about
37.2. Among the 62.8 per cent educated population, only 7 per cent are graduates.
Media-reach analysis indicates that television has a low reach at 38 per cent. The radio has a
reach of 18 per cent, print of 15 per cent and cinema of 5 per cent. There are 3.3 million active
Internet users.
Self-employed in agriculture (41.3 per cent) and labour (34.6 per cent) constitute the majority
of earners in rural areas. About 70 per cent of workers are farmers, fishermen, hunters, loggers
and related workers. About 40 per cent of households are landless with family size of 4.68
persons and per capita income of Rs 8,000. At the bottom of the pyramid, in the income bracket
of less than Rs 75,000 per annum, we find 428 million people. Educated rural people have
larger incomes but their urban counterparts are much better off indicating that opportunities
play a bigger role in this regard. Rural people spend 75 per cent of their income and save the
remaining. Savings are larger among those whose annual earrings are in the range of 75 k to
150 k. Rural expenditure on food is 55.4 per cent and the remaining is distributed among
various items like housing, transport, etc. In non-routine expenditure, the major share goes to
ceremonies. Rural credit is institutionalized but non-institutional sources showed an increase in
popularity after the economic reforms. In providing credit, co-operatives played a big role.
NABARD has a significant role in financing rural projects. Lifestyle analysis shows that a large
segment of rural people exhibits the conservative, price conscious, economy-oriented lifestyle
of mid- and low-income segments of urban people.
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Rural Consumer
Let us now understand the characteristics and classification of rural consumers.
The rural consumers are classified into the following different groups based on their economic
status −
The Affluent Group
They are mostly cash rich farmers and are very few in number. They have affordable but do not
form a demand base large enough for marketing firms to depend on — wheat farmers of Punjab
and rice merchants of Andhra Pradesh fall in this group. In Terai area in UP, which is bordering
Nepal you will find affluent farmers owning 3-4 SUVs in every house.
The Middle Class
This is one of the largest segments for manufactured goods and is fast expanding — farmers
cultivating sugar cane in UP and Karnataka fall in this category. These farmers also rear cattle
along to supplement their income.
The Poor
This constitutes a huge segment. Their Purchasing power is less, but strength is more. They
receive the grants in various ways from government and reap the benefits of many such
schemes and may move towards the middle class. The farmers of Bihar and Orissa fall under
this category. These poor people often work in Government schemes like MGNREGA.
Changing Profile of Rural Consumers
Rural consumers are mostly dependent on agriculture and were not very literate about products
and services available in the market till some time back. This scenario is slowly changing due
to an increase in literacy and disposable income.
Long ago, rural consumers went to a nearby city to buy branded products and services. Only
selected households used branded goods, be it tea or jeans. Earlier, big companies flocked to
rural markets to establish their brands.
Rural markets are these days very critical for every marketer, may be it for a branded shampoo
or a television. Earlier marketers thought of van campaigns, cinema commercials and a few
wall paintings to entice rural masses under their folds. Today a customer in a rural area is quite
literate about branded products that are on offer in the market place, thanks to television and
telecommunication media.
There is minimal brand loyalty in rural consumers. This is mainly due to a bigger problem of
brand recognition. There are a lot of looks alike in the rural market. The challenge is to create
communication that would help the rural consumer in recognizing brands, logos, visuals,
colours, etc., so that he or she actually buys the actual brand and not something else.

Desh Ki Dhadkan – Hero Honda

In late 2007, Hero Honda started putting emphasis on the rural markets.
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To strengthen its network in rural areas, the company started sales, servicing, and spare part
outlets in several small towns and villages across the country. The company recruited local
people as sales executives and trained them to market its products to rural consumers.
In the fiscal year 2008-09, the sales of Hero Honda from the rural market amounted to 40
percent of the total sales compared to 35 percent during the fiscal year 2007- 08. Today also
Hero MotoCorp is most recognized brand name in rural India. Despite the challenging
conditions, Hero MotoCorp sold a total of 563,426 units of motorcycles and scooters in the first
quarter of Financial Year (April-June) 2020-21. A major part of the market demand for Hero
Motocorp is coming from the rural and semi-urban markets

Chik Shampoo Sachet Success Story in Rural India

The Chik shampoo story is said to be a popular case study in management schools across the
world today. India’s first shampoo to be launched in sachet form was thought up in Puducherry
by CK Ranganathan, one of the sons of an agriculturist and small-scale pharmaceutical
packaging entrepreneur named Chinni Krishnan.
From salts and talcs to shampoo in sachets was a natural step for him; but it was his son who
made the sachet revolution one to reckon with, taking away the ‘elite’ tag associated with
shampoo use. When his father passed away and his brothers took over running the small family
business to repay bank loans, he gladly joined them.
Several dissensions later, he took the bold step of quitting his safe job, left home and with just
₹15,000 saved from his salary, and opened his own shampoo manufacturing unit nearby —
setting himself up in direct competition with his brothers, whose ‘Velvette’ brand of shampoo
was doing well in the market.
The rest, as they say, is history. His company ‘Chik India’ launched its first product ‘Chik’
(named after his father) shampoo in 1983. It mainly targeted the rural market, still largely
untapped by MNCs.
The low pricing and innovative sachet packaging made it affordable for even for the poorest of
the poor, who had till then not even dreamt of using shampoo for their hair.
Mahindra Bolero Success story in Rural India

In its 21th year, the Mahindra Bolero remains the dominant market leader in the sports utility
vehicle segment with a market share of 29 per cent. Since 2006-07, the brand has out-
performed the passenger hard tops category with a CAGR of 23 per cent (category CAGR 7 per
cent). What is interesting is that about three-fourth of Bolero sales comes from smaller towns
and rural India. The dominance of the rural and semi-rural areas in the overall sales of the
Bolero is also due to M&M's long association in the tractor and agricultural equipment
segment. Most of the Boleros are owned by senior villagers like a Sarpanch or farmers who
hold large tracts of farming land. This vehicle proves to be their status symbol and this further
helps drive the aspirational value.
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CHAPTER 14– GREEN MARKETING

Green is the New In

Green business, commonly known as sustainable business, is one of the fastest growing
businesses in the world. Environmental sustainability has entered the agenda of policymakers
in many countries after the first United Nations Conference on the Human Environment held in
Stockholm in 1972. To address environmental sustainability, the firms are choosing clean
technologies and pollution prevention by adopting two kinds of environmental strategies, viz.,
process-oriented and organization-oriented.
• Process-oriented environmental strategies are focused on clean technologies including
cleaner production, material eco-efficiency, material saving, renewable energy technologies,
and efficient energy utilization.
• Organization-oriented strategies include extending environmental strategies to the supply
chain.
The concept of triple bottom line incorporates social, financial and environmental concerns in
establishing business practice. The approach of triple bottom line reflects the commitment not
only towards the financial success, but also to the success of the surrounding community and
the environment. The focus is not solely on making money, but being socially and
environmentally responsible.
Green marketing offers excellent opportunities to gain market footholds and expand the
consumer base. For example, exemplary green marketing and sustainable business concepts has
helped Whole Foods Market to enjoy double digit growth in an otherwise flat grocery market.
Even among the consumer’s, a product’s “greenness” is becoming a strong qualifier for
consumer purchases. In the green market, the businesses based on green products or services
have an advantage of first movers. These businesses are more likely to capture the attention of
those consumers and create long-term consumers. Even the investors have noticed this trend
and are ready to invest in the next wave of big business. Consumers with green interest will
gravitate towards the products or services that meet their interest. For instance, Toyota
introduced the Prius, the first mainstream hybrid car, and has enjoyed success with the model,
as well as being the most recognizable hybrid model.
Example: Samsung Refrigerator being sold in India has a prominent label, “CFC free”. Many
other products have come to market that claim to be using recycled products. Many fuel-
efficient cars and appliances have been claimed. The consumers are increasingly becoming
aware about these and should prefer to buy eco-friendly products. The consumers express their
concern about environment through market behaviour. Therefore, the business has to keep this
in mind when it devises its promotional campaign. The companies have to make truthful
environmental claims while marketing their products.

Green Products
Green refers to environmentally-preferable attributes of a product, service, and/or technology.
By the late 1980s and 1990s, the notion of “green” products became somewhat trendier, and the
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practice of marketing green products became trends in niche markets. Green products are those
products that have lower environmental impacts. They are defined as products with an
alternative design using fewer physical resources during its life cycle. They are typically
durable, non-toxic, made of recycled materials, or minimally packaged. The characteristics of
green products are
• Energy efficient, durable and often have low maintenance requirements.
• Free of Ozone depleting chemicals, toxic compounds and don’t produce toxic by-products.
• Often made of recycled materials or content or from renewable and sustainable sources.
• Obtained from local manufacturers or resources.
• Biodegradable or easily reused either in part or as a whole.

Green Product Certification

In the context of green products, the label of “earth friendly,” “eco-friendly,” “biodegradable”
and many other words. However, this could be false. So, it is been suggested to look for the
certification labelling.

Green Consumers
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People embrace the green they can live with – with leads to various types of green consumers.
It is important to understand these types of consumers in order to brand the product
accordingly.
Behavioural Green Consumers – These are green to the core. They are a segment of
consumers who buy only products which have a neutral or positive impact on the planet, and
will go far as to spread the word about products – both positively are negatively. They have
negative attitudes towards products that pollute the environment and incorporate green
practices on a regular basis.
Think Green Consumers – Consumers in this group try to act green when they can, but if it is
not convenient or doesn’t’ fit some other personal criteria, such as budget, they will buy a
nongreen product. Consumers who think like green consumers but don't always necessarily act
green.
Potential Green Consumers – Basically on the fence about whether they care enough about
green issues, these consumers can be encouraged to buy green products, as long as it is easy
and fills there need. This is a segment of consumers who don't behave or think along
environmentally conscious lines but remain on the fence about key green issues.
True Brown Consumers – These consumers generally ignore environmental issues, and may
go as far as to avoid companies who market their product with a heavy green focus. This is a
segment of consumers who aren't environmentally conscious and may actually have negative
attitudes towards media with a heavy environmental focus.
Recent researches have reflected that shopper are receptive to environmentally oriented
marketing appeals and are motivated by a desire to keep their loved ones free from harm.

Designing greener products: A life-cycle approach

Green product design, also known as design for environment (DfE), design for eco-efficiency
or sustainable product design, is a proactive business approach for addressing environmental
considerations in the earliest stages of the product development process. It aims at minimizing
the negative environmental impacts throughout the lifecycle analysis of the product. The
approach of sustainability explores the true short-term and long-term impacts of a business
activity. Life cycle thinking has emerged as a useful tool in sustainability to consider the total
impacts of an activity, product, or service from its origin to its end. LCA is an analysis to trace
the flows of energy, raw materials, and waste streams that were, required to create, use and
dispose of the product. It is a systematic tool for assessing the environmental impacts
associated with a productor service system.
Marketing Strategies
Environmental issues are gaining more media exposure than ever, making green marketing a
bedrock of many brands modern marketing strategies. There are some business processes
whose environmental impact cannot be reduced yet they take action to offset them with
external green actions. The most notable use of this green issue is carbon offsetting with many
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brands doing their bit to counteract their damage to the environment. The marketing strategies
for green marketing include: -
• Marketing Audit (including internal and external situation analysis)
• Develop a marketing plan outlining strategies with regard to 4 P's
• Implement marketing strategies
• Plan results evaluation
Challenges in Green Marketing
It is found that only five percent of the marketing messages from “Green” campaigns are
entirely true and there is a lack of standardization to authenticate these claims. There is no
standardization to authenticate these claims. There is no standardization currently in place to
certify a product as organic. Unless some regulatory bodies are involved in providing the
certifications there will not be any verifiable means. A standard quality control board needs to
be in place for such labelling and licensing. the other challenges include:
• Green products require renewable and recyclable material, which is costly
• Requires a technology, which requires huge investment in R & D
• Water treatment technology, which is too costly
• Majority of the people are not aware of green products and their uses
• Majority of the consumers are not willing to pay a premium for green products

Greenwashing
Greenwashing is the practice of conveying a false impression or providing misleading
information about the company's green products. The company spends more time and money
on marketing themselves as environmentally friendly rather than minimizing their
environmental impact. It is a deceitful advertising gimmick intended to mislead consumers who
prefer to buy goods and services from environmentally conscious brands. This phrase usage
started in a 1986 essay about the hotel industry that promoted the reuse of towels to save the
environment.
Barriers to Green Buying
Availability
Consumers are constantly looking for the most convenient option. This desire can explain
superstores such as Wal-Mart. Home Depot was able to sell a large amount of eco-products
because of the availability and mass marketing. Concurrently, online stores experience high
sales because consumers are able to shop and gather all products at once, which may lead them
to purchasing more eco-products due to convenience.
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Understanding
Currently, many consumers do not understand the benefit of more ecologically friendly
products or services. To overcome this issue, the sellers must explain their product’s benefit in
a manner which is easily understandable to the consumer.

Cost
In perhaps the most important barrier, the increased cost of green products leads many
consumers to purchase less expensive products. To overcome this hurdle of higher cost, a
company should be readily able to show the consumer the quality of the product or service
warrants the higher price.

Present Trends in Green Marketing in India

Organizations perceive environmental marketing as an opportunity to achieve its business
objectives. Firms have realized that consumers prefer products that do not harm the natural
environment as also the human health. Firms marketing such green products are preferred over
the others not doing so and thus develop a competitive advantage, simultaneously meeting their
business objectives. Organizations believe they have a moral obligation to be more socially
responsible. This is in keeping with the philosophy of CSR which has been successfully
adopted by many business houses to improve their corporate image. Firms in this situation can
take two approaches:
• Use the fact that they are environmentally responsible as a marketing tool.
• Become responsible without prompting this fact.
Governmental bodies are forcing firms to become more responsible. For example, Tata Motors,
under its environment related CSR, Vasundhara programme, makes concentrated efforts to
increase the green cover. The company has planted 1,24,548 saplings across locations and
ensured their survival rate is significantly high. At few locations, these places have turned into
microhabitats which host varied species of flora and fauna. The environmental awareness
programmes aim to sensitise young children, and able to reach to 91,025 persons, making these
one of the dynamic green initiatives by corporates in India.In most cases the government forces
the firm to adopt policy which protects the interests of the consumers. With cost cutting
becoming part of the strategy of the firms it adopts green marketing in relation to these
activities. It may pursue these as follows:
• Develops a technology for reducing waste and sells it to other firms.
• Waste recycling or removal industry develops.
• Innovate for sustainability
• Communicating sustainability with impact
• Establishing credibility and avoiding greenwash
To be effective, green marketing programme requires top management commitment, company
environment to encourage green marketing, rewarding employees for reducing waste,
developing new environment of friendly products, and making them available to consumers at
reasonable prices.
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Task: State Bank of India recently became signatory to the Carbon Disclosure Project as a part
of their green marketing initiative. Find out more about Carbon Disclosure Project and its
benefits.
Tata Group has been pioneering the path of sustainability. This led to the formation of a new
organization, the Tata Sustainability Group (TSG) in 2014. Besides partnering Tata companies
on their ongoing CSR initiatives, TSG has evangelized volunteering across the Tata group
through Tata Engage, which now delivers over a million volunteering hours a year. Discuss
some of the initiatives taken up by the company that justifies the tag.