Marketing Management

Contents

BLOCK 1 : UNDERSTANDING MARKETING, ITS STRATEGIES,

ITS PLANS, ITS RESEARCH
Unit 1 : Overview of Marketing
Introduction, Introduction to Marketing, Definition of Marketing,
Scope of Marketing, Fundamentals of Marketing Concepts,
Philosophy of Marketing, Emerging Trends in Marketing
Unit 2 : Marketing and Customer Value, Strategic Planning
Introduction, Marketing and Customer Value, Value Delivery
Process, Strategic Planning, Marketing Planning, Marketing
Plan, Formulating Marketing Strategies, Types of Marketing
Strategies
Unit 3 : Marketing Research
Introduction, What is Marketing Research ?, Objective of
Marketing Research, Scope of Marketing Research, Steps
Involved Marketing Research, Application of Marketing
Research, Limitation of Marketing Research, Ethics in Marketing
Research

BLOCK 2 : CRM, GATHERING INFORMATION AND

FORECASTING DEMAND, CONSUMER AND
BUSINESS MARKET
Unit 1 : CRM
Introduction, Customer Relationship, Different Types of
Customer, Orientation of Customer, Customer Relationship
Management & its Importance, Features of CRM,
Misunderstanding of the CRM, The Benefits of CRM Solutions,
Challenges of CRM Implements, The Future of CRM in India
(a) Important Role of CRM in Banking Sector (b) Issues &
Challenges of CRM in Banking Stream (c) Benefits of CRM
in Banking Sector (d) Future Perks of CRM in Banking Industry
Unit 2 : Marketing Information System
Introduction, Basics of MIS, Marketing Environment,
Component of Marketing Environment, Forecasting and Demand
Management, Concept for Demand Measurement, Methods of
Forecasting
Unit 3 : Consumer Behaviour
Introduction, What is Consumer Behaviour ?, Factors Influencing
Consumer Behaviour, Five Stage Model of Buying Process
Unit 4 : Overview of Various Types Market
Introduction, Business Market, Buying Situations, Business
Buying Behaviour, Institutional and Government Market,
Managing B2B Customer Relationship

BLOCK 3 : STP, GROWTH STRATEGIES, NEW PRODUCT

OFFERINGS, GLOBAL MARKET AND HOLISTIC
MARKETING
Unit 1 : STP, PLC, Dealing with Computation and Competitive
Strategies
Introduction, Basis of Market Segment, Types of Market
Segmentation, Steps in Market Segmentation, Target Market,
Positioning, Brand Mantra, Designing a Brand Mantra, Steps
to Product Positioning, Competition and Driving Growth,
Competitive Strategies for Market Leaders, Other Competitive
Strategies, Product Life Cycle, Extending The Product Life
Cycle, Shapes of Product Life Cycle, Stages of Product Life
Cycle, Product Strategy for Life Cycle Stages
Unit 2 : New Product Development (NPD)
Introduction, Definition and Classification of NPD, Significance
of New Product Development, New Product Development
Process, Consumer Adoption Process
Unit 3 : Global Market and Managing Holistic Marketing
Management
Introduction, Introduction to Global Market, Modes of Entry
to Foreign Markets and Risks Involved, Product and
Communication, Counterfeit Goods, Country of Origin Effect,
Managing Holistic Marketing, Components of Holistic
Marketing, Importance of Holistic The Marketing, Holistic
Marketing Framework
BLOCK 4 : PRODUCTS, BRANDING, PRICING STRATEGIES,
MANAGING SERVICE, MARKETING CHANNELS
AND IMC
Unit 1 : Setting Product and Branding Strategies & Building Brand
Equity
Introduction, Product Levels, Classification of Products, Product
Differentiation, Product Mix, Co–Branding, Packaging, Labeling,
Warranties and Guarantees, Brand Equity, Branding Strategy
Unit 2 : Services Marketing
Introduction, Services Marketing – Meaning, Definition,
Concepts, Characteristics of Services, Importance of Marketing
of Services, Categories of Offerings, Classification of Services,
Differentiation in Service, Maintaining and Improving Service
Quality, Marketing Mix – 7 Ps
Unit 3 : Designing Marketing Channels, Managing Retailing,
Wholesaling and Market Logistics
Introduction, Channel Marketing, Kinds of Intermediaries,
Different Types of Channels, Channel Strategies, Steps Involved
in Designing A Marketing Channel, Managing Retailing,
Wholesaling and Market Logistics, Market Logistics : Objectives
and Decisions
Unit 4 : Integrated Marketing Communications
Introduction, Advertising – Definition, Nature, Advantages and
Disadvantages, Types of Advertising, Managing the Developing
Advertising Program, Steps in Developing a Creative Advertising
Strategy, Managing of Sales Promotions, Managing of Sales
Force, Managing of Public Relations (PR), Managing Direct
Selling, Managing Event, Integrated Marketing Communications
(MC)
Dr. Babasaheb BBAR-201/ DBAR-201
Ambedkar
OpenUniversity

Marketing Management

BLOCK-1 UNDERSTANDING MARKETING, ITS

STRATEGIES, ITS PLANS, ITS RESEARCH

UNIT 1
OVERVIEW OF MARKETING

UNIT 2
MARKETING AND CUSTOMER VALUE; STRATEGIC PLANNING

UNIT 3
MARKET RESEARCH
BLOCK 1 : Understanding Marketing, Its Strategies, Its Plans, Its
Research
Block Introduction
Block Introduction In this block you will get a broad look on the
concept of marketing. There are traditional and modern definitions of the
marketing given with the understanding what is Marketing Management.
The concept is also cleared on the basic human requirements of needs,
wants and demands and the market environment in which the product and
services are to be marketed.
The block will also give an insight of the emerging trends in
marketing, especially advertising as the technological changes are fast
adopted by the young generation.
Reaching out to customers have evolved over time. The approach
has changed from selling of what is produced, to, producing only what the
customers' needs, and lately caring about the environment while producing
and marketing the products and services

Block Objectives
After learning this block you will be able to understand :
• Define, Scope and Understand the Concept of Marketing
• The Evolving New Trends of Marketing
• Strategic Planning, Marketing Planning and Marketing Plan
• Porter Five Force Model
• What is Market Research ?, its importance and its process, Application
and Ethics

Block Structure
Unit 1 : Overview of Marketing
Unit 2 : Marketing and Customer Value; Strategic Planning
Unit 3 : Market Research
Unit OVERVIEW OF MARKETING
1

: UNIT STRUCTURE :
1.0 Learning Objectives
1.1 Introduction
1.2 Introduction to Marketing
1.3 Definition of Marketing
1.4 Scope of Marketing
1.5 Fundamentals of Marketing Concepts
1.6 Philosophy of Marketing
1.7 Emerging Trends in Marketing
1.8 Let Us Sum Up
1.9 Answer to Check Your Progress
1.10 Glossary
1.11 Assignment
1.12 Activity
1.13 Case Study
1.14 Further Readings

1.0 Learning Objectives :

After learning this unit, you will able to understand basic of
Marketing :
• Definition of Marketing and utility value it creates for the customer.
• Understand the Scope of Marketing
• How Marketing concepts have evolved ?
• Recent trend and future of Marketing

1.1 Introduction :
This unit concentrate on making you familiar with the basic concept
of marketing. We have tried to acquaint you with the different definition
of the marketing given by various authors which talks about traditional
and new definition. Authors had talked about the various fundamental
concepts and philosophy of marketing and what are the recent trends
in Marketing. The main purpose of the author is to make you familiarize
with the fundamental of the marketing and to develop interest in further
studies.

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Marketing Management 1.2 Introduction to Marketing :
The term Marketing is mainly a concept of customer orientation.
Mahatma Gandhi has also preached this concept, that the customer is
a king. What this implies is that product/service are brought by the
customer not merely because of their qualities, packaging or brand name,
but because they satisfy a specific need of a customer. Marketing is
critically important for any organisation, because understanding and
responding to the customer needs is a prerequisite for any organization
success. Suppose all concerned components of a product are perfect –
design, raw material, manufacturing, quality etc., but the organisation does
not do proper marketing of that product, then this product will not survive
in the market for long. The success of the organisation depends upon
the marketing. Marketing management today is the most important function
in a commercial and business enterprise. Marketing department in an
organisation promotes business and drive sales of its product or services.
Providing value and satisfaction to the customer are the very heart of
modern marketing thinking and practice. Marketing is not one–time
activity but it is an on–going strategy that helps businesses flourishes.

1.3 Definition of Marketing :

Let's study various definition of marketing given by various
authors
In the words of Cundiff and Still "Marketing is the term used to
describe collectively those business functions most directly concerned
with the demand stimulating and demand–fulfilling activities of the business
enterprise"
According to Ben M.En "Marketing management is the process of
increasing the effectiveness/efficiency by which marketing activities are
performed by individuals or organizations."
According to Hansen "Marketing is the process of discovering and
translating consumer needs and wants into product and service
specifications, creating demand for these products and services and then
in turn expanding this demand."
• According to Philip Kotler : Marketing is defined as "a social and
managerial process by which individual and groups obtain what they
need and want through creating and exchanging products and value
with other".
• American Marketing Association defines Marketing as "the
performance of business activities that direct the flow of goods and
services from producers to customer or user."
The traditional definition has undergone various changes and new
definitions emerged :
• Philip Kotler brought social function of Marketing in society
"Marketing is a societal process by which individuals and groups
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obtain what they need and want through creating, offering and freely Overview of Marketing
exchanging products and services of value with others."
• American Marketing Association redefined it as : "Marketing is
an organisational function and set of processes for creating,
communicating and delivering value to customers and for managing
customer relationships in way that benefit the organisation and its
stakeholder".
Check Your Progress – 1 :
1. Who brought social function of Marketing in Society ? _________
(a) Philip Kotler
(b) Peter Druker
(c) American Marketing Association
(d) None of the above
2. __________ redefined it as : "Marketing is an organisational function
and set of processes for creating, communicating and delivering
value to customers and for managing customer relationships in way
that benefit the organisation and its stakeholder".
(a) Philip Kotler
(b) Peter Druker
(c) American Marketing Association
(d) None of the above

1.4 Scope of Marketing :

What is Marketing and Marketing Management ?
Let's us first define Marketing :- Marketing in simple term
means that "meeting the needs of the customer by earning profit".
The scope of marketing can be understood in terms of functions
that an entrepreneur has to perform. These include the following :
a. Functions of exchange : which include buying and assembling
and selling ?
b. Functions of physical supply : include transportation, storage
and warehousing
c. Functions of facilitation : Product Planning and Development,
Marketing Research, Standardisation, Grading, Packaging, Branding, Sales
Promotion, Financing.
Marketing Management, includes managing the need or the demand
which in turn involves Managing Customer Relationship.
Marketing Management thus helps the organisation to achieve its
goals by seeking to affect the level, timing and nature of demand. Simply
put, marketing management is demand management.

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Marketing Management Therefore, Marketing Management is defined as "art and science
of choosing target markets and getting, keeping, and growing customers
through creating, delivering, and communicating superior customer value".
A word of caution here is that 'marketing' should not be equated
as 'selling.'
Check Your Progress – 2 :
1. The scope of marketing can be understood in terms of functions
that an entrepreneur has to perform.
(a) Functions of exchange (b) Functions of facilitation
(c) Functions of physical supply (d) All of them
What is Marketed ?
Few entities marketed are explained by E.g. :
Goods : Tangible itemsthat can be perceived by touch is known
as goods.Physical goods constitute the bulk of most countries' production
and marketing effort. In developing nations, goods particularly food,
commodities, clothing, and housing–are the mainstay of the economy. E.g.
Refrigerators, Television Sets, Food Products, Machines etc.
Services : As economies advance, a growing proportion of their
activities are focused on the production of services.Products that have
intangible properties such as Working of Airlines, Hotels, Car Rental
Firms, Barbers, Beauticians Etc. and Professionals such as, Accountants,
Bankers, Lawyers, Engineers, Doctors, and Software Programmers etc.
are termed as services
Experience : Marketers create experiences by offering a mix of
both goods and services. A product is promoted not only by communicating
features but also by giving unique and interesting experiences to customers.
For example water park, and theme parks provide experience marketing.
Another different real life experience is been enjoyed by customers at
modern retail outlets. Now retailing is not an activity involved in just
selling goods to the customers, it has now become an experience. Shopping
in a mall where the delightful experience comprises of not only shopping
but also, spending time with family and friends, eating out, watching
movie and enjoying the day.
People : Marketing can help people to market themselves. Due to
a rise in testimonial advertising, celebrity marketing has become a business.
Cricketers, film stars, authors, painters, musicians and sportsperson market
themselves. Some of the well–known personalities are Amitabh Bachchan,
Sachin Tendulkar, Salmaan Khan etc. These people are not only successful
in marketing themselves but also they lent their names to products like
perfumes (Shilpa Shetty), retail stores by the name of true blue (Sachin
Tendulkar), and clothes and accessories by Salman Khan with the name
of 'Being Human'.

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Places : Cities, state and nation can be marketed to the consumers. Overview of Marketing
Place marketers include real estate developers, commercial banks,
businesses etc. The tourism ministry is also aggressively promoting tourist
spots locally and globally. One cannot forget the incredible India campaign
by Indian government to market India as tourist spot. In India, Bangalore
is known as the silicon valley of India. Kerala is known as God's own
country. Madhya Pradesh is known as "Heart of incredible India". A
campaign by Amitabh Bachchan for "Khushoo Gujaratki" (https://
www.youtube.com/watch?v=45Djyuzk9fI)
Organizations : Organizations actively work to build image in the
minds of their customers. The PR department plays an active role to
create a unique and favourable image in the eyes of customers. Marketers
of the services need to build the corporate image, as exchange of services
does not result in the ownership of anything. The organization's goodwill
promotes trust and reliability. The organization's image also helps the
companies in the smooth introduction of new products.'Tata
group'comprising of multiple brands, stands for trust and quality globally.
Philips advertises with the tag line, "Let's Make Things Better" promise
its customers, products that are technologically advance and hassle free.
So its marketing campaign is based on sense and simplicity platform.
Property : Properties are intangible rights of ownership of either
real property (real estate) or financial property (stocks and bonds). Properties
are bought and sold, and this occasions a marketing effort by real estate
agents (for real estate) and investment companies and banks (for securities).
Properties, whether tangible like real estate or intangibles like stocks can
be marketed to the customers. Properties are bought and sold and this
exchange process seeks the role of marketing. Real estate developers
(DLF, Unitech, and Supertech) develop property and seek buyers for the
same. Same is the case with any investment company that wishes to
sell its securities to individuals as well as institutions.
Events : Marketers promote different events from time to time to
their customers. These events can be for individuals or organizations.
Commonwealth games, Cricket World Cup Series, Musical Concert,
Awards, and Fashion shows, etc are events
Information : Information is basically produced and marketed and
distributed by universities, schools, colleges, newspapers, magazines,
books etc to the customers at a price. The customers here might be
parents, students and communities.
Ideas : Every marketer offers some idea. Some offer it for money
others do it for society in general. Marketers make profit from society
and they shall also give back to the society. Social marketing comprises
of creating awareness on ideas like Family Planning, AIDS awareness,
discouraging–smoking, child labour, domestic violence, wearing of helmet
while driving, blood and eye donation etc.

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Marketing Management "A Market consists of all the potential customers sharing a
particular need or want who might be willing and able to engage in
exchange to satisfy that need or want".
In marketing, market does not mean the shopping zones or places
where goods are sold and bought. Here, the seller and marketer are treated
as the industry and buyer as the market.Examples are the general consumer
market, business market, global market and specific markets like teenagers
market, children's market etc. It means that market is the set of actual
and potential buyer, with purchasing power. For example, the market for
cell phones consists of the present and potential user of the device. Buyers
or customers share a particular need or want that can be satisfied through
exchange relationships. The size of the market will depend upon the
number of people who exhibit the needs, have the buying power, and
are willing to exchange their resources for what they want.
Marketer : A marketer is someone who seeks the response –
attention, a purchase, a vote, a donation – from a prospect. Marketers
work to understand the needs and wants of specific market and to select
the market that they can serve best.In turn they develop products and
services that create value and satisfaction for customers in thesemarkets.The
result is profitable long–term customer relationships.
Check Your Progress – 3 :
1. What is marketed ?
a. Goods b. Service
c. Both d. None of the above
2. A Market is a place where sellers and buyers gather and exchange
______ and ______.
a. Goods and Services b. Only Services
c. Only Events d. None of the above
3. A ______ is someone who seeks the response – attention, a purchase,
a vote, a donation – from a prospect
a. Marketer b. Seller c. Buyer d. Kirana Stores

1.5 Fundamental Marketing Concepts : :

Needs, Wants, Demand
Need : A human need is a state of felt deprivation of some basic
satisfaction. People require food, clothing, shelter, safety, belonging, esteem
and few other things for survival It includes needs that are physiological,
safety, social, esteem, and self–actualization. These needs are not created
by their society or by marketers; they exist in the very texture of human
biology and the human condition.
We need to understand what type of need the prospect customer
has ? Is it explicit, mentioned clearly or is it implicit, not expressed or
unspoken.
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There are five types of needs. Overview of Marketing
Types of Need Definition Examples
Stated Need What the customer asks The customer wants and
for ? Inexpensive car
Real Need What the stated needs The customer wants a car
actually means ? whose operating cost, not
initial price, is low
Unstated Need What the customer also The customer expects
expects but does not ask good service from the
for ? dealer
Delight Need Needs that are not The customer would like
Secret Need essential but would delight the dealer to include an
if met on-board GPS(navigation)
system
Needs that the customer The customer wants to be
does not express often seen by friends as a savvy
intangible in nature. consumer.
Wants : Wants are desires for specific satisfiers of these deeper
needs. A Gujarati needs food and want "Khichdi, Khaman & Khakhara",
need clothing's and wants saree, salwar suit (for ladies) and kurtapiyama,
shirt and pants (for gents) for office wear, chaniyacholi (for girls) and
kediyu (for boys) for social occasions like garba, and needs leisure by
travelling. In another society, those needs are satisfied differently :
Malays, in Malaysia and Singapore satisfy their hunger with local food,
their clothing needs on special occasions with the bajukurong or kebaya,
and their leisure needs are satisfied through shopping and movie watching.
Human wants are continually shaped and reshaped by social forces and
institutions such as religious groups, schools, families and business
corporations.
Demands : Demands are wants for specific products that are backed
by an ability and willingness to buy them. Individual wants become
demand when supported by a purchasing power. There are many people
who want a Macbook, but only a few are able and willing to buy one.
Companies must therefore measure not only how many people want their
product but, more important, how many would actually be willing and
able to buy it.
There are eight types of Demands
Negative Demand Consumers dislike the product and may even
pay to avoid it
Nonexistent Demand Consumers may be unaware of or
uninterested in the product
Latent Demand Consumers may share a strong need that
cannot be satisfied by an existing product.
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Marketing Management Declining Demand Consumers begin to buy the product less
frequently or not at all.
Irregular Demand Consumers purchase vary on a seasonal,
monthly, weekly, daily or even hourly basis
Full Demand Consumers are adequately buying all products
put into the marketplace
Overfull Demand More consumers would like to buy the product
than can be satisfied
Unwholesome Demand Consumers may be attracted to products that
have undesirable social consequences
Segmentation, Target Market, Positioning (STP)
Every individual has different choices for different things, so every
customer cannot be served by the same marketing mix. But again it is
not economically viable to have a tailored marketing mix for each
customer. Segmentation can be understood as the process of clubbing
together similar customers in a group. The groups are smaller and more
homogeneous, so that they can be served by a marketing mix especially
designed for the group or segment. Segmentation can be viewed as the
vehicle for entering a market. Market segments the buyer by demographic,
geographic, psychographic and behavioural difference between them.
1. Demographic segmentation means an audience bifurcation on the
basis of age, race, gender, family size, income or education.
2. Geographic segmentation means dividing by location, city, state,
region or country.
3. Psychographic segmentation is done on the basis of customer
personality traits, attitudes, interests, values, and other lifestyle
factors.
4. Behavioural segmentation is done on the basis of customer's
purchase behaviour, customer loyalty, occasions based and benefits
needed (quality, performance, customer service, special features)
A firm carries out quite a few other tasks in addition to segmentation
while choosing the target market. Segmentation is just the prelude, the
means, or the tools; choosing the target market is the ultimate purpose
and result. Then through developing market offerings, it strives to take
position in the mind of the target customer, by delivering key benefits
to him.
Offering and Brand :
Companies provide 'Offerings', a set of benefits to satisfy the needs
of customers. It can be in the form of product, services, experience etc.
'Brand' is the offering from the known source. E.g. : Apple Products,
Le–Meridian Hotel etc.

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Marketing Channels : There are three types of marketing channels. Overview of Marketing
They are Communication, Distribution and Services Channels
• Communication Channels : Deliver marketing messages to potential
customers. E.gs : television, radio, magazines, newspapers, hoardings,
webpages, direct mailers and email.
• Distribution Channels : Distribution channels are the delivery
method for products. It helps display, sell or deliver the products
or services to the user. These channels may be direct via the Internet,
mail or mobile phone or telephone and the indirect channels via
distributors, retailer, wholesaler or intermediaries.
• Service Channels : Service Channels up companies in carrying
out business transactions.E.gs. Warehouses, Transportation
Companies, Bank and Insurance Companies.
Paid Media is one in which marketer have to pay fee and get
their offerings marketed. The Platform includes TV, magazine and
advertisement, paid search and sponsorship.
Owned Media is media which is owned by the company like
website of the company, Blog, face book page or a corporate
brochure.
Earned Media is types of media in which your offerings are
communicated by customer, media by word of mouth, buzz or viral
marketing.
Impression and Engagement : Impression refers to the number
of times an advertisement, Face book post, tweet, or any other
digital content is served up to the audience.
Engagement : Refers to active involvement of the customer with
the communication of the company. Online measures of engagement
are comments, likes, shares, clicks, re–tweets or any other measurable
interaction with your digital content. If the content is good, then
more audiences are likely to engage.
Value and Satisfaction : Value means consumer look on for the
good deal from the company offerings. Satisfaction on the other
hand, means that customer after purchase of the product, uses that
product, and if the performance of that product matches the
expectation than customer is satisfied. Otherwise, the customer is
disappointed. If the performance exceeds the expectation than the
customer is delighted.
Supply Chain : According to the Philip Kotler, Supply Chain is
a channel stretching from raw materials to components to finished
product carried to final buyers.
Competition : means the rivalry between companies selling similar
products and services with the goal of achieving revenue, profit,
and growth in market share.

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Marketing Management Market Environment : There are internal and external factors that
surround the business and influence its marketing operations. Internal
factors include employees, customers, shareholders, retailer,
distributors and the external factors includes political, legal, social,
technological and economical conditions.
"A company's marketing environment consists of the actors and
forces outside of marketing that affect marketing management
ability to build and maintain successful relationships with target
customers". – Philip Kotler
Check Your Progress – 4 :
1. _______segmentation includes age, race, gender, family size, income
or education.
a. Behavioural b. Geographic c. Demographic d. Psychographic
2. ________segmentation includes location, city, state, region or country.
a. Behavioural b. Geographic c. Demographic d. Psychographic
3. _________ segmentation includes customer personality traits,
attitudes, interests, values, and other lifestyle factors
a. Behavioural b. Geographic c. Demographic d. Psychographic

1.6 Philosophy of Marketing :

There are five concepts under with organisation conduct their
marketing activities :
1. Exchange Concept : This concept holds the central idea in marketing
is exchange–exchange of product between the seller and the buyer.
Some firms operate with the idea that marketing is simply a matter
of giving a product to someone in exchange of money. Marketing
is broader than exchange. Marketing includes concern for customer,
generation of value satisfaction, creative selling and integrated action
for serving the customer. Exchange covers the physical aspects and
the price mechanism involved in marketing. Exchange concepts is
the least evolved view on marketing.
2. Production Concept : This is the oldest concepts guiding sellers.
In this concept, firm believes that business can be managed by
maximizing production, so that unit cost of the product will be low.
Firm works on the MANTRA "Maximising output, with lower unit
cost and selling the product to the customer with a low price".
Here production dominates and the marketing is given less importance.
It is assumed that the low price of the product will attract the
customer. In practice, however, it does not happen because customer
are motivated by various other factors other than price.
3. Product Concept : In this concept consumer will prefer the product
that offers quality, performance, new product, ideally designed and
engineered products and innovative features. Managers in these
product oriented organizations achieve success by focusing their
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energy on making superior products, emphasis on quality assurance, Overview of Marketing
and product attributes. They spend most of their time and money
on research and development and bring out many products. They
produce the quality products but fail to the determine consumer
needs and satisfaction. Hence this cannot achieve great marketing
success.
4. The Selling Concept : In this concept firms believe that main
marketing concern is to aggressively push the product and persuade
the customer to buy the offered product. However, the consumer
will only buy the product if the organisation undertakes a large–
scale selling, heavy advertising, extensive sales promotion and
substantial price discounts as the tools of sales concepts. The
concept is unlikely to succeed as it assumes that selling is synonymous
with marketing.
5. Marketing Concept : There are firms that believe that the customer
is central to their business. This concept holds that achieving the
organisational goals depends on determining the needs and wants
of target markets and delivering the desired satisfactions more
effectively and efficiently than the competitors do.
Starting point Focus Means Ends
Selling Factory Products Selling and Profits through
Concept Promoting sales volume
Marketing Target market Customer Coordinated Profits through
Concept needs marketing customer
satisfaction.
(Adopted from Marketing Management : An Assam Perspective
: 8th Edition)
Check Your Progress – 5 :
1. _________ holds that achieving the organisational goals depends
on determining the needs and wants of target markets and delivering
the desired satisfactions more effectively and efficiently than
competitors.
a. Selling Concepts b. Product Concepts
c. Marketing Concepts d. Production Concepts
Marketing Mix :
James Culliton : a noted marketing expert, who coined the
expression, "marketing mix."
According to Philip Kotler Marketing Mix is the set of controllable,
tactical, marketing tools that the firm blends to produce the response
it wants in the target market. The 4Ps classified by McCarthy make up
a typical marketing mix – Price, Product, Promotion and Place. However,
nowadays, the marketing mix increasingly includes several other Ps like
Packaging, Positioning, People and even Politics as vital mix elements.
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Marketing Management Below is a given complete picture of the different tools under marketing
mix variables.
Product Price
(Variety, Quality, (List Price, Discounts,
Features, Brand Allowances, Payment
Name, Packaging Target Periods, Credit Terms)
services) Customers
Intended
Place
Promotion Positioning (Channels, Coverage,
(Advertising,
Assortments, Locations,
Personal Selling,
Inventory, Transportation,
Sales Promotion,
Logistics)
Public Relations)

(Source : Philip Kotler, Principles of Marketing, Pearson/PHI)

Product : Means goods and the services which are offered by the
company to the target market, to satisfy needs and wants.
Price : Means the money which customer has to pay to buy a
product or service.
Promotion : Refers to activities of personal selling, advertisement,
and communicating product benefits and attributes to target consumers
to persuade them to purchase.
Place : Stands for Physical distribution activities through which the
product moves from the factory to the customer. Channels include
distribution, logistics, warehousing, transport, etc.
In order to achieve the corporate objectives, the marketing
programmes have to blend the four Ps into the ideal integrated action
plan.
The above mentioned 4Ps relate to the seller perspective of the
market. There are four Cs from the consumers view–point also.
Fours Cs
• Customer solution
• Customer Cost
• Convenience
• Communication
To be effective, marketing people have to consider the four Cs first
and then build the four Ps based on the requirements.

1.7 Emerging Trends in Marketing :

I. CAUSE RELATED MARKETING :
Formulating and implementing marketing activities that are
characterized by an offer from the firm to contribute a specified
amount to a designated cause
Many believe companies should prioritize support of issues that
affect the quality of life on a local, national and global level.
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Employees want to get involved in their company's cause–related Overview of Marketing
efforts mainly through matching grants.
E.g. – When someone buys a pair of TOMS shoes in the US, the
company donates a pair of shoes to a child in a poor country like
Haiti.
Benefits of Cause Marketing :
• increasing exposure and awareness of company for–profit or non–
profit organisations
• enlargement in brand loyalty
• boost up in employee morale and loyalty
• growth in sales
• company reviews as well as positive press coverage
• respected and accepted business practice
• materials a corporate PR officer
• develops goodwill
• increasing reputation
• differentiating from the competition
• increases in donations through greater exposure
• greater public awareness of the cause, its supporters, and the
activities undertaken to advance the cause.
Concerns :
• long–term sustainability of the cause may be threatened if funding
sources dry up and the company pulls out of the partnership
• there is an ethical and moral issue about a shift from the intrinsic
motivation of a company towards social responsibility to using
social causes as an instrument to increase profitability and market
share
• may risk alienating certain consumers that may be hostile to certain
social causes
II. EXPERIENTIAL MARKETING :
Experiential marketing is a strategy that engages consumers using
branded experiences. The idea is to create a memorable impact on
the consumer.
It is a also called as "live marketing" or "event marketing experience."
These experiences could include an event, a part of an event, or
a pop–up activation not tied to any event.
It is marketing strategy that engages the consumer and creates real–
life experience that will be remembered. This type of marketing
focuses on getting the consumer to experience the brand. The
experience that will inspire them to share with their friends both
online and off.
13
Marketing Management E.g. – In the opening of France's IKEA store, the Swedish furniture
company installed a vertical rock–climbing wall covered with IKEA
furniture
Importance :
The goal of experiential marketing is to create lasting impressions
on consumers that they want to share with others and that, ultimately,
lead to brand loyalty.
The organisation is not advertising a product. It is just letting
consumers see and feel what their lives would be like with it.
Direct Reach :
This is when your campaign aims to interact directly with audience.
E.g. – Using augmented reality applications to show customers what
their chosen piece of furniture would look like when placed in their
living room.
Indirect Reach :
This is when your target audience is primed to find out about your
campaign through other media platforms as opposed to directly
interacting with it.
These are bold campaigns that rely on word of mouth, creating a
viral marketing campaign around an event that everyone would talk
about for ages to come
E.g. – Red Bull sponsored Austrian skydiver to freefall from an
altitude of 39 kilometers and then parachuted back to Earth. This
ambitious project was named Red Bull Stratos. It was something
the world had never seen before. Red Bull branded attempt was
live streamed in 50 countries, across 80 TV stations, racked up a
8 million simultaneous viewers on YouTube, and watched live by
a total of 52 million viewers.
III. GREEN MARKETING :
Negative impact of human activities over environment is a matter
of great concern today.
There are many alternate names given to Green Marketing :
Sustainable marketing, Environmental marketing, Green advertising,
Eco–marketing, and Organic marketing.
Definition : "Marketing products and services based on environmental
factors or awareness. Companies involved in green marketing make
decisions relating to the entire process of the company's products,
such as methods of processing, packaging and distribution".
Green marketing is essentially a way to brand your marketing
message in order to capture more of the market by appealing to
people's desire to choose products and services that are better for
the environment.

14
There are many environmental issues that have impacted by the Overview of Marketing
production of goods and services.
Green marketing can appeal to a wide variety of these issues : an
item that can save water, reduce greenhouse gas emissions, cut toxic
pollution, clean indoor air, and/or be easily recyclable.
We can express green products which are : Originally grown,
Recyclable, reusable and biodegradable, with natural ingredients,
recycled with non–toxic chemical, under approved chemical usage,
with eco–friendly packaging i.e. reusable, refillable containers
Also, the products that do not harm or pollute the environment.
IV. GUERRILLA MARKETING (GM) :
Guerrilla Marketing is an advertising strategy that focuses on low–
cost unconventional marketing tactics that yield maximum results.
The term GM was inspired by guerrilla warfare is a strategy used
by armed warriors against larger armies, tactics includes ambushes,
sabotage, raids and elements of surprise.
Guerrilla marketing uses the same sort of tactics in the marketing
industry.
This alternative advertising style relies heavily on unconventional
marketing strategy, high energy and imagination.
GM is about taking the consumer by surprise, make an indelible
impression and create copious amounts of social buzz. It is said
to make a far more valuable impression with consumers in
comparison to more traditional forms of advertising and marketing.
This is because most GM campaigns aim to strike the consumer
at more personal and are memorable.
GM originally was a concept aimed towards small businesses with
a small budget, but this didn't stop big businesses from adopting
the same ideology.
Larger companies have been using unconventional marketing to
complement their advertising campaigns.
It can be used for promotion on the streets, shopping centres, parks,
beaches or other public places getting the attention of the public.
Advantages :
Cheap to execute. Whether using a simple stencil or a giant sticker,
GM tends to be much cheaper than classic advertising.
Allows for creative thinking. With GM, imagination is more
important than budget.
Grows with word–of–mouth. It relies heavily on word–of–mouth
marketing, considered by many one of the most powerful weapons
in a marketer's arsenal. There's nothing better than getting people
to talk about your campaign on their own accord.
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Marketing Management Disadvantages :
Mysterious messages can be misunderstood. While there is a sense
of mystery, it can often go wrong for the lack of clarity.
Authority intervention. Some forms of guerrilla marketing, such as
non–permission from authorities.
Unpredicted obstacles. Many guerrilla marketing tactics are susceptible
to bad weather that could easily threaten to undermine an entire
campaign.
V. RURAL MARKETING :
Rural marketing is now a two–way marketing process. There is
inflow of products into rural markets for production or consumption
and there is also outflow of products to urban areas.
The rural market has been growing steadily over the past few years
and is now even bigger than the urban market. About 70 per cent
(more than 800 million) of India's population lives in villages. 'Go
rural' is the marketer's new slogan. Indian marketers as well as
multinationals, such as Colgate–Palmolive, Godrej and Hindustan
Lever have focused on rural markets since long.
Thus, looking at the opportunities, which rural markets offer, the
future is very promising.
Indian villages had the concept of village markets popularly known
as the village haats. The haats are basically a weekly gathering of
the local buyers and sellers. The barter system was quite prevalent,
which still continues in a number of places even today.
Definitions :
Identifying the needs of customers and potential customers, providing
products/services that satisfy their needs, and developing efficient
processes or systems to deliver product/service to the market when,
where, and how consumers want it.
Features of Rural Marketing :
The main reason why the companies are focusing on rural market
and developing effective strategies is to tap the market potential,
that can be identified as :
1. Large and scattered population : With 70 per cent of India's
population living in rural areas (6 lakh villages) it holds a
big promise for the marketers.
2. Higher purchasing capacity : Purchasing power of the rural
people is on rise. Marketers have realized the potential of rural
markets, and thus are expanding their operations in rural India.
In recent years, rural markets have grown as there is overall
growth of the economy. It has resulted into substantial increase
in purchasing power of rural communities.

16
3. Market growth : The rural market is growing steadily over Overview of Marketing
the years. Demand for traditional products such as bicycles,
mopeds and agricultural inputs; branded products such as
toothpaste, tea, soaps and other FMCGs; and consumer durables
such as refrigerators, TV and washing machines has also
grown over the years.
4. Development of infrastructure : There is development of
infrastructure facilities such as construction of roads and
transportation, communication network, rural electrification
and public service projects in rural India, which has increased
the scope of rural marketing.
5. Low standard of living : The standard of living of rural areas
is low and rural consumers have diverse socio–economic
backwardness, because of low literacy, low per capita income,
and low savings.
6. Traditional outlook : The rural consumer values old customs
and traditions. The changes are accepted slowly with changes
in demand pattern.
7. Marketing mix : The urban products cannot be dumped on
rural population; separate sets of products are designed for
rural consumers to suit the rural demands. The marketing mix
elements are to be adjusted according to the requirements of
the rural consumers.
VI. VIRAL MARKETING :
Definition :
Viral marketing refers to a technique in marketing a product or
a service where users help in spreading the advertiser's message
to other websites or the users create a scenario leading to multi–
fold growth.
Viral in literal sense means anything which spreads fast (across
users). This term is symbolically used in context with the web or
mobile domain.
It is a marketing strategy which inspires users to spread or share
the message to other users which can lead to multi–fold growth.
E.g. – Gmail, when launched as a free web–based email service,
was by invitation only at first which helped create curiosity among
the users. The users who got a Gmail account could then send an
invite to other users to create an account, and the chain continued.
There are various elements for effective marketing strategy which
can make it viral.
Firstly, product or services should be 'free' for all, and should have
easy accessibility.

17
Marketing Management Next important element is the transferability part, which simple
means that the message can be easily transferred or shared via email,
WhatsApp, networking websites, etc. The message should be simple
to understand and at the same time it should be short.
Another element is that the message should be interesting and
intelligently placed. Users should be able to identify with the
message.
Viral Marketing is that which is able to generate interest and the
potential sale of a brand or product through messages that spread
like a virus, that is from person to person.
The idea is that for the users themselves that delide to share the
content.
Due to their speed and ease to share, social networks are the natural
habitat of this kind of marketing.
E.g. – in recent times is the creation of emotional, surprising, funny
or unique videos on YouTube, are shared on Facebook, Twitter and
other channels.
However, virality can be a double–edged sword.
In this type of campaign, a large part of the control falls into the
hands of the users, and there is a risk that the message can be
misinterpreted.
On the other hand, a successful viral campaign can work miracles
for a brand.
Viral marketing campaign is very simple to carry out : create a
video or another type of content which is attractive to your target,
put it on the internet and promote it. From there on, all you can
do is wait for users to start sharing like crazy.
Low cost. What characterizes viral campaigns is that the users do
a significant part of the work for the brand, which drastically cuts
down the costs of dispersion.
Potential of great reach. A viral video on the Internet has the ability
to reach a huge international audience without having to invest a
huge sum of money or make any extra effort.
It is not invasive. As the user is making the decision to participate
and share content, so it lessens the possibility of the brand coming
across as invasive.
It helps build up your brand. If we really hit the bull's–eye in terms
of creativity, it is creating content so incredible that users themselves
decide to share it and, hence create a personal connection with the
brand.

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VII. INTERNET MARKETING : Overview of Marketing
Internet marketing refers to marketing that occurs only online. In
other words, marketing efforts that businesses do solely over the
Internet.
Internet marketing involves several methods to drive traffic to the
advertiser's website. It also includes marketing efforts to drive traffic
to websites where consumers can purchase the advertiser's products.
Digital marketing is similar, but also includes some non–Internet
electronic marketing.
Marketing over the Internet is a rapidly growing business as people
use Internet daily and more often. It is also expanding rapidly
because more people are purchasing goods and services online.
Although the aims of traditional marketing and online marketing
are the same, marketers' actions are quite different. Before the
advent of the Internet, marketing moved at a much slower pace
than it does today.
Internet marketing – SEO :
SEO, is Search Engine Optimization. It is the process of getting
more internet traffic. Specifically, getting more traffic because a
website is good rather than paying for it. With a successful SEO
strategy, a website's ranking with search engines improves in
Google, Yahoo, and Microsoft Bing. They have primary search
results, where web–pages and other content are ranked according
to what they consider most relevant to users. Other content includes
videos or local listings.
SEO comes under the field of internet marketing. It involves
improving a website rather than selling more products.

Internet marketing – online advertising :

Online advertising has been around for more than two decades.
It forms part of Internet marketing and refers to using websites
and other online venues as an advertising medium. In other words,
online advertising means advertisements on the Internet.

19
Marketing Management Advertisers place promotional messages on the screens of
smartphones, tablets, laptops, desktops, and televisions. We refer
to televisions with internet access as 'Smart TVs.'
We also use the terms web advertising, digital advertising, online
marketing, and Internet advertising with the same meaning as online
advertising.
"A major advantage of online advertising is the quick promotion
of product information without geographical boundary limits."
"A major challenge is the evolving field of interactive advertising,
which poses new challenges for online advertisers."
The adverts may also appear in mobile apps, i.e., apps people have
in their smartphones.
The Internet has changed the way we work, learn, interact with
others, shop, and have fun. It has also changed the way marketing
people work.
Advertising channels – 'places' or locations where advertisements
appear are :
Text ads :
A text ad consists of some written text with a hyperlink. If clicked
on the hyperlink or link, it will go to specific website – called web–
page the advertiser's landing page.
Text ads generally appear within the texts of blog posts. For E.g.
– Online news articles may have text ads.
A text ad may also appear on its own, i.e., as a stand–alone piece
of text.
Display ads :
Display ads appear next to online content. They may, for example,
appear next to a news article. Display ads are common in web–
pages, apps, and emails.
Banner ads :
Banner ads appear prominently on web–pages. In the early days
of Internet marketing, they were extremely popular than today as
advertisers overused banner ads.
In other words, banner ads lost much of their effectiveness because
advertisers overused them.
Native ads :
Native ads are subtle pieces of writing that look like part of the
online text. They may look like, for example, part of a news article.
However, they are paid ads that the advertiser places.
On most blogs, the native ad has an indication that it is an ad.
Next to the text, for example , one can see the phrase Sponsor's
Message.
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Affiliate links : Overview of Marketing
Affiliate links are specific Uniform Resource Locators (URLs) that
have the affiliate's username or ID. An advertiser typically uses
affiliate links to record traffic from promotional campaigns.
In affiliate marketing, advertisers recruit affiliates to sell their
products or services online. They also recruit affiliates to send leads
to them. 'Leads' means potential buyers.
There is a difference between URL and Domain Name. A domain
name is part of a URL.
E.g. :
{– – –Domain Name– –}
http://www.xxyyzz.com/domain–names/online/index.xhtml

URL

In–app ads :
These advertisements appear in software apps. They may appear
in the form of display ads, text ads, or native ads. Advertisers may
also use a combination.
Over the past five years, this type of Internet marketing approach
has become increasingly more popular.
Video ads :
Before watching a video footage online, we may have to sit through
a ten–twenty second ad.
Online video ads are more advantageous than TV ads for advertisers
because they can monitor their effectiveness more easily.
When somebody has watched a TV ad, the advertiser is unaware
about it. On the other hand, with online video ads the advertiser
knows when the viewer has clicked on it.
If the person has clicked on the ad, the advertiser knows whether
they bought anything. The advertiser also knows how long the
viewer remained on the landing page.
Having more data about consumer behaviour is one of the main
differences between Internet marketing and traditional marketing.
With Internet marketing, you have much more data.
Email ads :
An email ad may appear either as a display ad, native ad, or text
ad.
For the promoter of the product, having a direct line of
communication with specific individuals is great. That is why, in
the world of Internet marketing, email advertising is the most
effective form of advertising there is.
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Marketing Management VIII. SOCIAL MEDIA MARKETING :
Social media marketing is a powerful way for businesses of all sizes
to reach prospects and customers. If the customers are already
interacting with brands through social media, and if there is no
interaction directly with audience through social platforms like
Facebook, Twitter, Instagram, and Pinterest, then the business is
surely missing out something useful.
Great marketing on social media can bring remarkable success to
the business, creating devoted brand advocates and even driving
leads and sales.

What Is Social Media Marketing ?

Social Media Marketing, is a form of internet marketing that involves
creating and sharing content on social media networks in order to
achieve marketing and branding goals.
Social media marketing includes activities like posting text and
image updates, videos, and other content that drives audience
engagement, as well as paid social media advertising.
Some questions to ask when defining social media marketing
goals :
• What is that is hoped to be achieve through social media
marketing ?
• Who is the target audience ?
• Where would the target audience go and how would they use
social media ?
• What message do is to be send to the audience with social
media marketing ?
For E.g., an e–commerce or travel business, being highly visual,
can get a lot of value from a strong presence on Instagram or
Pinterest. A business–to–business or marketing company might find
more leverage in Twitter or LinkedIn.
Social Media Marketing can help meet Marketing Goals :
• Increasing website traffic
• Building conversions
• Raising brand awareness
• Creating a brand identity and positive brand association
• Improving communication and interaction with key audiences
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The bigger and more engaged your audience is on social media Overview of Marketing
networks, the easier it will be to achieve marketing goals.
How to choose the Best Social Media Platforms for Marketing
Social media should be used for marketing according to each
platform's unique user base and environment.
Using Facebook for Social Media Marketing

Facebook's casual, friendly environment requires an active social

media marketing strategy – starting with creating a Facebook Business
Fan Page. Special attention is to be given to layout, as the visual
component is a key aspect of the Facebook experience.
Using Pinterest for Social Media Marketing

Pinterest is one of the fastest growing social media marketing

trends. Pinterest's image–centred platform is ideal for retail, but
anyone can benefit from using Pinterest for social media purposes
or sales–driving ads.
Pinterest allows businesses to showcase their product offerings
while also developing brand personality with eye–catching, unique
pinboards. When developing Pinterest strategy, it is to be remember
that the social network's primary audience is female.
Using Twitter for Social Media Marketing

Twitter lets broadcast the updates across the web.

Mix up of official tweets about specials, discounts, and news with
fun, can do wonders with brand–building. One has to be sure to
retweet when a customer has something nice to say.
Using LinkedIn for Social Media Marketing

LinkedIn is one of the more professional social media marketing

sites. LinkedIn Groups is a great place for entering into a professional
dialog with people in similar industries and provides a place to
23
Marketing Management share content with like–minded individuals. It's also great for posting
jobs and general employee networking.
Using YouTube for Social Media Marketing

YouTube is the number one place for creating and sharing video
content, and it can also be an incredibly powerful social media
marketing tool.
Many businesses create video content with the aim of having their
video "go viral."
IX. BLOG MARKETING :
A weblog, also called a blog, is a journal that is maintained by
a blogger and contains information that is instantly published to
their blog website.
Blogging is a very popular activity. The number of online users
creating and maintaining blogs continues to increase dramatically.
The number Internet users who read these blogs has also shot up,
with some blogs boasting thousands, even millions of daily dedicated
readers.
Blog marketing is any process that publicises or advertises a website,
business, brand or service via the medium of blogs. This includes,
but is not limited to marketing via ads placed on blogs,
recommendations and reviews by the blogger, promotion via entries
on third party blogs and information across multiple blogs.
Blog Advertising :
Ads on blogs can be in the form of banners, text links, streaming
video, audio clips, flash animation and even plain text. Most blog–
based advertising involves payment in some way or the other to
the blog owner. Owners of popular blogs will typically capitalise
on their readership numbers via a combination of ad formats and
Google AdSense ads.
A recommendation from a trusted blogger can result in considerably
higher sales. Trusted figures in industry, popular product reviewers
and critics often maintain blogs where they provide information
about their experiences with some products and services.
Readers tend to trust these reviewers and critics more as they are
often unbiased. Businesses, however, do pay popular bloggers to
review or mention their products.
Advantages of Blog Marketing :
New content : to draw people, and offer a way for consumers and
businesses to interact.

24
Inexpensive to Start and Run : only the cost of a domain name Overview of Marketing
and web hosting.
Easy to Use : many a times it is just copy, paste, type, drag and
drop, and upload.
Builds Website Traffic : Offering tips, updates, and other new
content
Improves Search Engine Ranking : Google, in particular, likes
to find and rank new content. For that reason, many entrepreneurs
use blogging specifically for SEO.
Allows to gain trust and credibility..
Disadvantages of Blog Marketing
Can Be Time–Consuming : creating new content and updating.
Needs a Constant Stream of Ideas : thinking of new content ideas.
It Can Take Time to See Results : it will not necessarily get
traffic immediately.
It Needs to Be Marketed Too : for it to work, people need to
know about it, which means one has to find target market and lure
them to the blog.
X. SOCIAL MEDIA INFLUENCERS : MEGA, MACRO, MICRO
OR NANO :
Social media influencer marketplace can be split into four categories :
Mega–influencers, Macro–influencers, Micro–influencers and Nano–
influencers.
Mega–Influencer :
Mega–influencers are the highest–ranking category of social media
influencer, they typically have more than a million followers. They
often have a very diverse audience with different topics of interest.
Their relationships with the individual members of their followership
tend to be more distant. They are not necessarily subject matter
experts but they definitely provide a lot of reach in one hit.
In having a substantially large following, mega–influencers provide
brands with a notably greater reach, but at a very high cost.
Mega influencers do not have real converting influencer power.
Macro–Influencer :
Macro–influencers are a level down from mega–influencers. Macro–
influencer followers' count is between 100,000 and one million
followers.
Macro–influencers usually gained fame through the internet itself
– through blogging, or by producing funny or inspiring content.
If there is specific type of customer, but still want to reach the
masses, then a macro–influencer might be more useful than a mega–
influencer.
25
Marketing Management Micro–Influencer :
A micro–influencer is someone who has between 1,000 to 100,000
followers. Micro–influencers focus on a specific niche or area and
are generally regarded as an industry expert or topic specialist.
Micro–influencers often cost far less than macro–influencers. At the
same time, micro–influencers that have high levels of engagement,
especially on Instagram, charge a hefty fee.
Nano–Influencer :
Nano–influencers are a relatively new breed of influencer. They tend
to have a smaller number of followers in comparison to micro–
influencers, less than 1,000 followers.
A nano–influencer is someone who has influence within their
community, local neighbour–hood.
Check Your Progress – 6 :
1. 4Ps of the Marketing Mix does not includes
a. Product b. Place c. Packaging d. Promotion
2. ___________ is a strategy that engages consumers using branded
experiences.
a. Social marketing b. Internet marketing
c. Experiential marketing d. Blog marketing
3. ___________ is an advertising strategy that focuses on low–cost
unconventional marketing tactics that yield maximum results.
a. Guerrilla Marketing b. Viral Marketing
c. Rural Marketing d. Social Marketing
4. _________ refers to a technique in marketing a product or a service
where users help in spreading the advertiser's message to other
websites or the users create a scenario leading to multi–fold growth.
a. Social Marketing b. Viral Marketing
c. Rural Marketing d. Green Marketing

1.8 Let Us Sum Up :

By studying above unit, we came to know that marketing plays an
important role in success of any organisation. It depends how well you
identify the needs and satisfies that needs of the customer. Marketers use
various tactic in order to influence the customer.

1.9 Answer to Check Your Progress :

Check Your Progress – 1 :
1. a 2. c
Check Your Progress – 2 :
1. d
26
Check Your Progress – 3 : Overview of Marketing
1. c 2. a 3. b
Check Your Progress – 4 :
1. c 2. b 3. d
Check Your Progress – 5 :
1. c
Check Your Progress – 6 :
1. c 2. c 3. a 4. b

1.10 Glossary :
Marketing Management : is defined as "art and science of choosing
target markets and getting, keeping, and growing customers through
creating, delivering, and communicating superior customer value".
A Market : "A Market consists of all the potential customers
sharing a particular need or want who might be willing and able to engage
in exchange to satisfy that need or want".

1.11 Assignment :
1. Differentiate between selling concept and marketing concept. Give
Examples.
2. Explain the core marketing concepts.
3. 'The Marketing Mix is one of the major concepts in modern
marketing'. Justify the statement.

1.12 Activities :
Select any four companies. Describe the marketing mixes used by
each of the organisation. For information, you might check general
business publications, websites, advertising etc. Specifically, what is each
company's approach to product, price, place, and promotion ?

1.13 Case Study :

Case Study – 1
Bhavesh, Sanjay and Umang, friends for a long time, were doing
different businesses. They regularly met and discussed their business ideas
and exchange notes on customer satisfaction, marketing efforts, product
designing, selling techniques, social concerns etc.
Bhavesh drew the attention of Sanjay and Umang towards the
exploitation of consumers. He told that most of the sellers were exploiting
the consumers in different ways and were not paying attention towards
the social, ethical and ecological aspects of marketing, as he was doing.
Sanjay told that he was under pressure to satisfy the consumers,
but stated that the consumers would not buy or not buy enough unless
they were adequately convinced for the same.
27
Marketing Management Umang stressed that he could not achieve his objectives without
understanding the needs of the customers. It was his duty to keep
consumer satisfaction in mind because business is run by the resources
available to him by the society. He further stated that he himself was
taking into consideration the needs of the customers.
Identify the concepts / philosophies that guided Bhavesh, Sanjay
and Umang in their efforts of their business.
Hint : Concepts – Societal, Marketing, Selling
Case Study – 2 :
Skin Care Products, ventured into business of skin care product for
both men and women. The company uses a natural and ethical beauty
brand for offering organic beauty products for men and women.
The company uses natural materials for its products and is set to
be considered the top beauty brand in the country. The company not only
satisfies its customers but also believes in the overall protection of the
planet.
Identify the marketing management philosophy of 'Beauty Product
Ltd'.

1.14 Further Reading :

Kotler, P., Leong, S. M., Ang, S. H., Tan, C. T., (1994), Marketing
Management (8th Ed.) Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G., Kotler., P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.
Karunakaran,K.,(2010),Marketing Management(1st Ed.)Himalaya
Publishing House
McDaniel, C., Lamb, C. W., Hair, J. F., (2008), Principles of
Marketing (1st Ed.) Cengage learning
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.)
Pearson.
V. S. Ramaswamy., S. Namakumari., (2009), Marketing Management
(4th Ed.) Macmillian

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Unit MARKETING AND CUSTOMER
2 VALUE, STRATEGIC PLANNING

: UNIT STRUCTURE :
2.0 Learning Objectives
2.1 Introduction
2.2 Marketing and Customer Value
2.3 Value Delivery Process
2.4 Strategic Planning
2.5 Marketing Planning
2.6 Marketing Plan
2.7 Formulating Marketing Strategies
2.8 Types of Marketing Strategies
2.9 Let Us Sum Up
2.10 Answer to Check Your Progress
2.11 Glossary
2.12 Assignment
2.13 Activity
2.14 Case Study
2.15 Further Readings

2.0 Learning Objectives :

After learning this unit, you will able to understand :
• What are Values and its Delivery Process
• Porter Five Force Model
• Understand how strategic planning is done at various level
• To understand Marketing Plan : blueprint governing all of a firm's
marketing activities.

2.1 Introduction :
It is said, "Politics without principles is a sin and Knowledge
without wisdom is useless". All businesses organisation have certain set
of values on which they lay their foundation.
While earlier the aim of seller used to be to just sell what he had
produced. The buyer had to purchase what the seller was offering without
choice. As competition intensified, more and more sellers entered into
the market, changing the older concept.
A more 'customer–oriented marketing strategy' was adopted where
products were produced as per the requirements of customers. Companies
29
Marketing Management now see themselves as a 'value delivery processes,' that is, to develop
strategies for promoting products in order to meet the needs of the target
market.

2.2 Marketing and Customer Value :

Customer Value is the sum total of benefit that customers will accrue
from a service or product in relation to its cost. The Customer Value
Proposition (CVP) would be the total amount of benefits offered by the
seller in return of payment for the goods or services. It is a defined
statement that is formulated to convince customers that this particular
product will add more value than competitor's product.
Conceiving and delivering excellent customer value is most essential
for all kinds of business organizations in today's competitive business
environment. Delivering value requires a deep insight into the art of value
creation, by choosing the best value for its customers and delivering that
value in an effective and efficient manner.
Find out more :
Creating good value proposition for its customers is also vital for
an organisation to differentiate its product from the competitor's products
and achieve sustainable competitiveness. A good understanding of customer
needs and requirements are important aspects here.
Example of CVP :
BMW's value proposition is "the ultimate driving machine," making
luxury cars. When direct competition came in this segment, BMW felt
the need for differentiating its product. They added a customer value
proposition 'No cost maintenance,' for the first four years / 100000 kms.

2.3 Value Delivery Process :

Previously, marketing was taking place during the selling process.
– As different individuals have specific wants, perceptions, preference
and buying criteria, a smart company must design and deliver offerings
for well–defined target markets. This inspired a new view that marketing
should take place at the beginning of planning. Companies instead of
emphasizing on making and selling, should now see themselves as a value
delivery process.
Value Creation and Delivery sequence should be divided into
three phases
• First Phase : Before any product comes into the market, marketer
must segment, target the market and develop the offerings value
positioning.
• Second Phase : Marketer must identify the specific features of
product, price and distribution.
• Third Phase : In the third phase marketer must communicate the
value of the product through various means.
30
The value delivery process begins before the product exists, continues Marketing and Customer
through development and after launch. Each phase has cost implications. Value, Strategic Planning
Core Competencies : "C. K. Prahlad and Gary Hamel" were the
first to establish this business concept in 1990. According to them, it
is a unique set of skills and resources that a company is able to utilize
more effectively and efficiently than its market competitors. In a nutshell,
core competencies are what make a company stands out from the crowd.

2.4 Strategic Planning :

Strategic Planning :
Strategic Planning is a systematic process of predicting the long
term goals of an organisation and identifying the best approach for
achieving it.
Preparing effective marketing strategies requires understanding of
the strategic planning process – corporate policies, objectives, and business
plans.
A strategic plan defines the organisations strategy. The existing
situation and possible opportunities need to be analysed to determine the
right direction for the organisation. This has to be done along with the
firm's competencies, its competitive advantage, its weaknesses, and the
business that they want to be in.
The uncertainty and risk in business environments makes it necessary
for firms to focus on competitive strategic plans. The well studied guide–
map on directions that it should take, in definitely preferred than treading
on an ambiguous path. This enables the firm to respond to entirely
unexpected developments in their internal and external environments.
Strategic plan, where the most significant decisions are taken, helps
keep firms well ahead of competition and to realise its mission in the
long run as well as the firm's well–being and growth.
Stages of Strategic planning process :
I. Defining the business
II. Defining the mission statement
III. Setting up Strategic Business Units (SBUs)
IV. Environmental scanning
V. Strategy formulation
I. Defining the Business :
Defining the firm's business is the focal point of strategic planning.
It is a crucial factor that enables the firms in selecting appropriate
opportunities for leading the firm in the right direction.
Management experts Peter Drucker and Theodore Levitt stressed
on the basic questions which every firm needs to find answers to. That
has to be done on a continuous basis.

31
Marketing Management What business are we in ? Whom do we intend to serve ? Do we
accurately define our business ? Do we know our customers ? What brings
us to this particular business ? What would be the nature of this business
in future ? What business would we like to be in future ? What are
our basic strengths and competencies to pursue the current business or
enter into a desired business ?
The Strategic Planning, Implementing and Controlling Process

Once the business is defined, the next step

would be to define the organisation missions.
II. Defining the Mission Statement :
A mission statement defines the purpose of the company's existence.
The mission statement should be able to guide the actions of the
organization, set its overall objectives, provide a route map, and guide
decision–making. The mission provides a framework, on the basis of
which the company's strategies are formulated.
Every organisation develops its unique mission statement which it
communicates to its stakeholders, so that they can understand the purpose
of firm's existence. A common mission statement provides a sense of
integration within the organisation and emphasises focus on realising the
organisational goal.
Mission statements are again guided by the vision of the organisation.
Vision is what the organisation wishes to achieve over a period of time,
say in two decades.
Examples of Mission statements :
"McDonald's vision is to be the world's best quick service restaurant
experience. Being the best means providing outstanding quality, service,
cleanliness, and value, so that we make every customer in every restaurant
smile."
"Amazon's vision is to be earth's most customer centric company;
to build a place where people can come to find and discover anything
they might want to buy online."
Apple is dedicated to making innovative, high–quality products.
Ideally Mission statements should focus on fewer goals and should
32
define firms major areas needing focus. Mission statements usually Marketing and Customer
remain unchanged over a period of time and would generally be changed Value, Strategic Planning
only when it loses its credibility or significance.
Corporate objectives of the firm are guided by its mission statements.
Once the mission statement has been defined, the organisation can
then plan to set up its Strategic Business Units (SBUs).
III. Setting up of Strategic Business Units (SBUs) :
SBUs are essentially for multi–product organisations. SBU can be
defined as an independent organizational unit, small enough to be flexible
and large enough to have a control over most of its activities and
decisions.
A SBU can also be called a profit centre or responsibility centre
that concentrates on a particular product offering for a particular market
segment. They typically have an independent marketing plan, competition
analysis, and marketing campaign, though they may be a part of a larger
business organisation.
Generally SBU's would display the following characteristics :
1. It could be a set of businesses which can operate separately from
the rest of the organisation.
2. It has its own competition.
3. It has separate manager who is responsible for the overall functioning,
decision making, strategic planning, performance and profit
management of the firm.
Once the strategic business units are set, the organisation would
go in for the environmental scanning to find out the opportunities and
threats that existing, as well to uncover the strengths and weaknesses
that lie within the organisation.
IV. Environmental Scanning :
No firm can function in isolation; it operates in an environment
known as the business environment, consisting of various factors that
influence the business policies and decisions.
The business environment can be divided into : Internal environment
and External environment.
Internal environment are internal to the firm and would consist
of the factors such as internal policies of the firm, the management, its
employees etc.
An external environment would be external to the firm and would
consist of factors such as the competitors of the firm, market, consumers,
technology, government policies etc. The external environment can be
further divided into micro and macro environments.
The overall environment has a significant impact on the strategies
of an organisation, many times the changes in the environment determines
33
Marketing Management or leads to changes in its strategic plans. The external and internal
environment when scanned thoroughly reveals available opportunities,
hidden threats, its own weaknesses and competitiveness/ strengths.
Once the environmental scan is carried out, the firm is in a position
to formulate its strategies.
V. Strategy Formulation :
Organisations have a hierarchy of interrelated strategies, with different
strategies formulated for different levels of the organisation.
1. Corporate Strategy
2. Business Unit Strategy
3. Functional Strategy
1. Corporate Strategy : Is concerned with meeting the stakeholder
expectations and delivering value to the stakeholders, mainly
influenced by investors in the organisation and acts as a guideline
for strategic planning throughout the organisation. Corporate strategy
is often incorporated in a "mission statement".
2. Business Strategy : Is more concerned with the functioning and
competitiveness of a business for a particular market. It would
usually be concerned with strategic decisions regarding the choice
of products, delivering customer value, gaining competence, finding
and exploring or generating new opportunities.
3. Functional strategy is concerned with how each functional area
is organised to deliver the corporate and business–unit level strategic
direction. Under functional strategy we would concentrate on
marketing strategy.
Check Your Progress – 1 :
1. Strategic planning does not include.
a. Statement of Problem b. Defining the business
c. Environmental Scanning d. Strategic formulation
2. The first stage of strategic planning process is _______.
a. Defin the mission statement b. Define the business
d. Environmental Scanning d. Strategy Formulation

2.5 Marketing Planning :

The marketing planning process steps :
1. Goal setting.
2. Scanning the market environment and analysing of market
opportunities.
3. Internal scanning.
4. Developing Marketing Objectives.

34
1. Goal setting : Marketing and Customer
As mentioned earlier, marketing strategy is derived from the business Value, Strategic Planning
strategy as well as the corporate strategy. Marketing objectives would
be set according to the goals that have been set at the higher hierarchies.
For example : If the corporate objective of the firm is to maximise
the market share then the marketing objective would also focus on
achieving the same objectives.
2. Scanning the Market environment for finding opportunities and
threats :
The major reason market scan is done is to find the opportunities
and threats that exists in the environment.
The scanning done in strategic planning and marketing planning
are almost similar. The major difference being that the marketing scanning
involves scanning the environment of a specific business unit with a
specific business purpose, whereas environmental scanning under strategic
planning would entail the overall environment of the organisation.
The business unit would analyse the environment and gather
marketing information. It would also assess opportunities existing in the
environment, study consumer behaviour and product in question.
A vital aspect in environmental scanning is to understand the
competition and all factors on competition. Other than the competition
itself, there are other important factors too that shape the competition.
Porter in his article (1979) has suggested five major forces that
shape and decide the nature and intensity of competition.
– Existing competition
– Threat of new entrants
– Threat of substitute products
– Bargaining power of customers
– Bargaining power of suppliers
The intensity of competition depends on the size of the entrants,
bigger the new entrants, the more intense would be the competition.
A threat of substitute products with an improvement in its
performance or price differentiation can change the industry's competitive
scenario.
Collusion of customer groups can gain considerable bargaining
power as to exert pressure on the organisation regarding quality, price
and output of the products.
The same would hold true for suppliers where the sources of supply
are limited and product supplied are specialised in nature.
3. Internal Scanning :
Internal scanning is done to analyse the firm's competencies and
weaknesses. The firm needs to find where its competitive advantages
35
Marketing Management lies, whether it's the product design, service or distribution. This evaluation
is required in order to ascertain how equipped a firm is to face the market
competition.
4. Developing Marketing Objective :
The next step is formulation of marketing objective. The broad
outline of marketing objectives would be derived from the corporate
objectives of the related business. Corporate strategy would have already
defined the direction for each business.
Once the marketing planning is done, the next step would be
developing the contents of a marketing plan.
Check Your Progress – 2 :
1. _______ is done to analyze the firm’s competencies and weakness
a. Internal Scanning b. External Scanning
c. Both a and b d. None of them

2.6 Marketing Plan :

A Marketing Plan is a brief summary of objectives and
recommendations. It may be part of an overall business plan. While a
marketing plan contains a list of actions, a marketing plan without a sound
strategic foundation is of no or little use.
Contents of a marketing plan are :
Executive Summary : It is a brief summary of major objectives
and recommendations, giving the management an overall view of the
major purpose of the plan. (Table of content would follow the executive
summary).
Situational Analysis : It portrays the significant data on sales, costs,
profits, markets, competitors etc. This data is further used for doing the
SWOT analysis (Strength, Weaknesses, Opportunities and Threats).
SWOT Analysis : The management needs to evaluate the
opportunities in SWOT analysis and any factors affecting achievement
of objectives.
Objectives : This stage outlines the financial and marketing objectives
like sales volume, market share, profitability etc.
Marketing Strategy : Here the target segments are defined for
whom the market offering is focused on. The products positioning is
planned with the help of input received from related functional areas such
as purchase, finance, sales departments.
Action Program : (The operational marketing plan itself, for the
period under review) the marketing program is specified which would
be used to achieve the set objectives.
Financial Forecast : It would generally be the overall budgeting
– on the revenue side the sales forecast and average price would be

36
depicted, on the expense side it would show the estimated expenses. The Marketing and Customer
difference between revenue and expenses would be the estimated profit. Value, Strategic Planning
Controls : This final stage of the marketing plan would outline
controls for monitoring the implementation of the plan. There would be
a periodic review of the results and corrective measures would be
recommended as required.

2.7 Formulating Marketing Strategy : :

The marketing strategy would be a proper outline of the game plan
of the organisation.
Main elements involved in formulating the marketing strategy are :
1. Selecting the Target Market
2. Formulating the Marketing Mix
The essence of marketing strategy of a firm is felt from its target
market and marketing mix. The target market would be to whom the
firm intends to cater and the marketing mix would determine how the
products will be offered to the target market.
1. Selecting Target Market Target market is the market that one
would want to cater to. Selecting the target market is a significant
part of developing a marketing strategy.
2. Marketing Mix can be defined as the effective combination of the
Ps of marketing to formulate a unique selling proposition for the
product. Every firm would have a different combination of the
marketing mix as per its individual requirements.
Marketing Mix is also known as the 4 Ps of Marketing – Product
mix (eg, frozen foods along with a variety of fresh fruits), Place mix
(eg, chain of whole–sellers, retailers, along with events), Price mix (eg,
extra filled packs, say 20% extra, along with special promotional price
for trials) and Promotion mix (eg, above–the–line, say TV, along with
below–the–line promotions, say direct mail or events).
Additional 3 Ps of marketing applicable to services – Physical
evidence, People and Process
Every business due the difference in its nature and situation uses
different marketing strategy styles, which ever best suits them. There are
four broad strategy types which are used by firms as follows :

2.8 Types of Marketing Strategies :

Market Leader Strategy : Market leader strategy is also known
as offensive or confrontation strategy. Generally employed by firms who
are currently not the leaders in the market but aspires to be the market
leader. The firm tries to expand his market share by using all the
marketing mix elements, the target of attack would be the market leader.
The firm tries to expand its market and increase its consumer base by
offering competitive prices, superior service, improving quality of products,
37
Marketing Management enhancing features of its existing products, finding new uses of existing
products or by entering newer market segments.
Market Challenger – Marketing Strategy : This strategy would
focus on gap analysis. The gap analysis can be done by comparing the
performance of competitors existing products in the market with the actual
expectation of the consumers regarding the product. The firm can then
strive to bridge the gap by providing products as per customers' expectation
leading higher customer satisfaction levels. In this strategy, competitors'
weaknesses are taken as opportunities for the firm.
Niche Market – Marketing Strategy : Niche markets are small
differentiated markets where no other firms have thought of entering into.
Generally these markets are too small to attract large number of
competitions. Niche may serve some specific customer or some specific
area. Eg., companies focused on adventure sports, trekking; or travel
companies concentrating on a specific segment of pilgrims.
Market Follower – Marketing Strategy : The market follower
depends on its competitors to identify markets. As a follower, the firm
needs to be keen on its competitor's weaknesses and try improving on
them. This marketing strategy saves the firm on cost arising from having
to carry out research because it only has to work on its competitors
weaknesses to better its products.
Types of Marketing Strategies

1. Concept "It is a unique set of skills and resources that a company

is able to utilize more effectively and efficiently than its market
competitors" is established by_______.
a. Philip Kotler
c. C. K. Prahlad and Gary Hamel
b. Michael Porter
d. American Marketing Association
38
2. Content of Marketing Plan does not include : Marketing and Customer
a. SWOT b. Mission & Vision Value, Strategic Planning

c. Executive summary d. Objectives

2.9 Let Us Sum Up : :

Customer needs the value for its time and money which he spends
while purchasing the product or services. Ultimate goal of any organisation
is to retain the customer rather than acquiring the customer. Organisation
at various levels shall frame the strategies in order to achieve the goal
of an organisation.

2.10 Answer to Check Your Progress :

Check Your Progress – 1 :
1. a. 2. b.
Check Your Progress – 2 :
1. a
Check Your Progress – 3 :
1. c 2. b

2.11 Glossary :
Marketing plan is overall document that outlines a company's solid
marketing strategy.
Strategic marketing planning involves setting goals and objectives,
analysing internal and business factors, product planning, implementation,
and tracking your progress.

2.12 Assignment :
1. How does marketing affect consumer values ?
2. What does Marketing Plan include ?

2.13 Activities :
Select any Organisation and develop a Marketing plan.

2.14 Case Study :

Starbucks :
The Starbucks journey began with a single store in Seattle in the
year 1971 to become one of the most recognized brands globally. Starbucks
mission is, per its web site, "to inspire and nurture the human spirit –
one person, one cup and one neighbourhood at a time."
The logic behind value chain is a series of activities or processes
is simple; the more value a company creates, the more profitable it is.
When more value is created, the same is passed on to the customers
and thus further helps in consolidating a competitive edge.

39
Marketing Management Business's inbound logistics, operations, marketing and sales,
outbound logistics, and service are considered as primary activities in
value–chain as they are involved in value creation in a direct manner.
Support activities in value creation, on the other hand, include
infrastructure, human resources management, and procurement.
PRIMARY ACTIVITIES :
Inbound Logistics :
The inbound logistics for Starbucks refers to selecting the finest
quality of coffee beans by the company appointed coffee buyers from
coffee producers in Latin America, Africa and Asia . In the case of
Starbucks, the green or unroasted beans are procured directly from the
farms by the Starbucks buyers.
Can the company outsource procurement ?
Hint : Assurance of high quality standards of selection of coffee
beans – compromised ?
Operations :
Starbucks operates in 65 countries with direct stores – more than
21,000 stores internationally.
According to its annual report, the company generates 80% of the
total revenue from its company operated stores while the licensed stores
accounted for balance 10% of the revenue.
Should the company be looking towards opening of more licensed
stores ?
Outbound Logistics :
There is very little or no presence of intermediaries in product
selling. Majority of the products are sold in their own or licensed stores
only.
Should the company launch a new range of coffee to be sold
through leading retailers ?
Marketing and Sales :
Starbucks invests in superior quality products and high level of
customer services than aggressive marketing.
Should the company indulge in need–based marketing activities
during new products launches in the form of sampling around the
stores ?
Service :
The retail objective of Starbucks is, as it says in its annual report,
"to be the leading retailer and brand of coffee in each of our target markets
by selling the finest quality coffee and related products, and by providing
each customer a unique Starbucks Experience."

40
What steps you think Starbucks can take to enhance building Marketing and Customer
customer loyalty ? Value, Strategic Planning
Source : Investopedia

2.15 Further Reading :

Kotler, P., Leong, S. M., Ang, S. H., Tan, C. T., (1994), Marketing
Management (8th Ed.) Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G., Kotler., P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.
Karunakaran, K., (2010), Marketing Management (1st Ed.) Himalaya
Publishing House
Mc Daniel, C., Lamb, C. W., Hair, J.F., (2008), Principles of
Marketing (1st Ed.) Cengage learning
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.)
Pearson.
Porter, Michael E., "Competitive Advantage". 1985, Ch. 1, pp 11–
15. The Free Press. New York.
Rowe, Mason, Dickel, Mann, Mockler; "Strategic Management :
a methodological approach". 4th Edition, 1994. Addison – Wesley. Reading
Mass.

41
Unit MARKETING RESEARCH
3

: UNIT STRUCTURE :
3.0 Learning Objectives
3.1 Introduction
3.2 What is Marketing Research ?
3.3 Objective of Marketing Research
3.4 Scope of Marketing Research
3.5 Steps Involved Marketing Research
3.6 Application of Marketing Research
3.7 Limitation of Marketing Research
3.8 Ethics in Marketing Research
3.9 Let Us Sum Up
3.10 Answer to Check Your Progress
3.11 Glossary
3.12 Assignment
3.13 Activity
3.14 Case Study
3.15 Further Readings

3.0 Learning Objectives :

After learning this unit, you will able to understand :
• What is Marketing Research, Objective and Scope
• Steps involved in Market Research Process
• Application of the Marketing Research
• Limitation of Marketing Research
• Ethics in Marketing Research

3.1 Introduction :
We know that the needs and wants of the consumers becoming
complex and competition is also getting hard/rigid, the role of marketing
research is also becoming significant and growing very fast. Marketing
Research activities are now expanding their activities for insurance, bank,
airlines, credit and debit cards, etc. apart from usual consumer products
and service industries. There is no area of marketing that does not benefit
from marketing research. We know that marketing is an expansive affair.
Failed marketing efforts can cause severe loss and damage to a firm.
Marketing research reduce this risk. Before understanding Marketing
42
Research in detail let's differentiate Market Research and Marketing Marketing Research
Research. In simple terms Market Research studies a target market. It
collects data about that market place and the consumers within it. It deals
with only one P of Marketing–Place. Place in this context means a
specific market or segment. Whereas marketing research is much broader
concept. It deals with all four Ps of Marketing–including Place.

3.2 What is Marketing Research ?

Let's us understand Marketing Research with few definitions.
MR is the systematic, objective and exhaustive search for and study
of the facts relating to any problem in the field of marketing
– Richard Crisp
MR is the systematic gathering, recording and analysing of data
about problems relating to the marketing of goods and services
– American Marketing Association.
MR is the systematic and objective search for and analysis of
information relevant to the identification and solution of any problem
in the field of marketing – Green and Tull
MR is the systematic study and evaluation of all factors bearing
on any business operation,which involves the transfer of goods from a
producer to a consumer – A. G. Delens.
Above definitions bring out three key ideas regarding marketing
research.
(1) MR is concerned with studying numerous problems in marketing.
(2) Purpose of MR is to help decision–making in the marketing field.
(3) Systematic gathering and analysis of information is its route in
achieving its purpose.
With increasing complexity of business operations, marketing research
too has been growing in complexity and has emerged as highly specialised
functions. Today, carrying out marketing research, whether relating to the
customer, product, or market, necessitates specialized skills and involves
sophisticated techniques.

3.3 Objective of Market Research :

• Marketing Research is used in the information of all marketing
plans, programmes, procedures, policies and strategies.
• It helps in obtaining customer opinion about existing products and
develops new products. It gives information in relation to product,
brand, and packaging, also in relation to consumers and their needs
and wants.
• It helps the marketing department to focus on consumers' needs
and wants and their perceptions and evaluation of existing product
and level of customer satisfaction.
43
Marketing Management • It helps in understanding consumers buying motives, motivation and
attitude towards products and services, corporate image and services,
corporate image and brands.

3.4 Scope of Market Research :

Marketing Research includes all the activities that enable organisation
to obtain market information. Market researcher needs to make decision
about it environment, marketing mix and present or potential customer.
Marketing research plays an important role in planning, implementation
and evaluation of marketing management process.
Marketing Manager makes use of four main sources of decision
making.
1. Syndicate Service : Marketing research firm produce and sell these
scheduled reports. The report contains valuable information. E.g.
Survey of Indian Industry, Chambers of Commerce and Industry.
2. Marketing Information System (MKIS) : This is an internal
activity where standardized reports are generated on regular basis
or it is generated on demand also. E.g. Sales Reports, inventory
amounts, production schedules and also purchased information. We
can track the sales performance and the changing taste of consumer
also through MKIS.
3. Decision Support System : DSS is the interactive system in the
company. It permits the decision maker to interact directly with data
through a PC to answer specific questions. The difference between
MKIS and DSS is that while former only provides information on
the basis of which decision is taken, the latter provides answers
or decisions appropriate to a situation.
4. Market Research Projects : It is done to find out specific problems
to in the market. It is done by the employee of the company or
outsourced to external agencies.
Check Your Progress – 1 :
1. Marketing research is concerned with
a. numerous problems
b. decision making
c. systematic gathering and analysis
d. all of them
2. Main source of decision making are.
a. Syndicate Service b. Decision Support Service
c. Market Research Projects d. All of the them

44
3.5 Steps involves in Marketing Research : Marketing Research

In order to do marketing research, the researcher goes through

several steps, depending upon the problem, time, costs and benefits some
of the steps are compressed. There are five steps in the market research
process.
Presenting
Develop the Analyzing
Define a Statement of the findings
Research the
Problem Objective and taking
Plan information
decision
I. Defining the problem : The first and the key step to marketing
research process is to define a problem for which research is to
be conducted. Problems which need to solve will require collecting
of relevant initial information and from where this information will
be available and how this information will affect decision making
process. Once the problem is defined precisely and the need of
research is discussed, the further process could be conducted in
an efficient manner.
II. Statement of Objective : One the problem is defined, the next
logical step what the researcher wants to achieve. This statement
is objective. The objective should be specific, attainable and
measurable. The purpose of these objectives is to act as a guide
to the researcher and help him in maintaining a focus all through
the research.
III. Developing the Research Plan :
Research Design : It is the blue print of the research project. It
indicate the method of research is deciding the research design.There
are three types of research design.
1. Exploratory
2. Descriptive
3. Causative
1. Exploratory : Exploratory research is mainly used to explore the
insights of the general research problem. It is conducted when the
researcher does not know how and why a certain phenomenon
occurs. The goal of this research is to know the unknown, this
research is unstructured. Exploratory research methods are Secondary
data analysis, Expert Survey, Focus group interviews, Depth interview,
Case analysis, Projective techniques. Example : How does the
customer evaluate the quality of a bank, hotel or an airline, where
there are no tangible.Several researchers have conducted focus
group discussion to identify these quality parameter. (Zeithamal,
Parsuraman and Berry identified variables which they clubbed under
five groups)
2. Descriptive : This research is conducted to describe the business
or market characteristic. Descriptive research mainly answers who,
45
Marketing Management what, when, where and how kind of questions. Descriptive research
methods are cross sectional research and longitudinal study.
Examples : a consumer durable company had conducted a descriptive
research to understand the consumption pattern for its product.
Descriptive research has revealed that 50% of the customers are
government employees, 40% are businessmen, and the remaining
10% are scattered in different segments of society. The research
has also revealed that 60% of the customers are men and 40% are
women.
3. Causal Research : Causative Research is done to establish a cause
and effect relationship, for example, the influence of income and
lifestyle on purchase decision. Here the researcher may like to see
the effect of rising income and changing life style on consumption
of select products. He/She may test the hypothesis that as
incomeincreases or life–style changes, more elite and state–of–the
art products are likely to be bought.
Sources of Data : Once the research design has been decided, the
next stage is that of selecting the sources of data. There are two sources
of data or information – Secondary and Primary.
• Primary Data : Primary data are the firsthand information, which
is collected by the researcher. It requires technical expertise. Survey,
Experiment and interview are the examples of it.
• Secondary Data : Secondary data are collected by some other
researcher. Secondary data can be of two types. Internal and external.
o Internal Secondary Data : We know that organization always
possess a great deal of internal secondary data with them. E.g.
Sales statistics constitute the most important component of
secondary data in marketing and the researcher uses it
extensively. All the output of MIS researcher gets constitute
internal secondary data.
o External Secondary Data : Newspapers, magazines, technical
journal, trade publications, directories, government publications,
committee reports, reference books, balance sheets of companies
and syndicated and published research report by various MR
agencies are sources of the external secondary data.
Data Collection : The researcher is now reader to take a plunge.
But still he or she needs to be clear about the :
(a) Procedure of data collection
(b) Tools for data collection
(a) Procedure of Data Collection : Data can be collected from any
or combination of the following techniques.
• Observational Research : Observational research is the type of
approach in which researcher collect the data by observing consumer.
Sometime CCTV, or Photography is also done to observe and collect
46
detail information. Example : What customer is buying and doing Marketing Research
in the store,behave in shopping area,dresses up etc.
• Ethnographic Research : In this type of research, researcher
observes and interacts with the respondent (participants) in the
reallife environment. Researcher often lives among the group or
society in order to learn about them.
• Focus Group Research : In Focus group research sample of 6
to 10 people are selected for demographic, psychographic, or other
consideration and are asked to discuss various topic. A professional
moderator asks questions and probes based on the Marketing
Manager's agenda. Focus Group Discussion sessions are recorded
and Marketing Manager will observe from the behind two–way
mirror.
• Survey Research : Survey research is defined as "The collection
of information from a sample of individuals through their responses
to questions" (Check & Schutt, 2012, p. 160). Questions are asked
either in person, by phone or online.
• Behavioral Research : Behavioral Research Analysis how people
make choices. When consumer actually purchase product or services,
their preference is reflected which is often more than the statement
they offer to the market research.
(b) Tools for Data Collection : The tools which can be used for data
collection are as follows :
Questionnaire : A questionnaire is a research instrument that
consists of a set of questions that are presented to the respondent
for collecting information. There are two basically types of
questionnaire structured and unstructured questionnaire. A mixture
of these both is the quasi–structured questionnaire that is used
mostly in social science research.
Structured questionnaires include pre–coded questions with well–
defined skipping patterns to follow the sequence of questions. Most
of the quantitative data collection operations use structured
questionnaires. Fewer discrepancies, easy to administer consistency
in answers and easy for the data management are advantages of
such structured questionnaires.S tructured questionnaire collects
quantitative data.
Close–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.
Types of questions in close ended are Dichotomous, Multiple
Choice, Likert Scale, Semantic differential, Importance Scale, Rating
Scale, Intention to buy scale.
Unstructured questionnaires include open–ended (are ones that
require more than one word answers) and vague opinion–type
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Marketing Management questions. May be questions are not in the format of interrogative
sentences and the moderator or the enumerator has to elaborate the
sense of the question. Un–structured questionnaire collect qualitative
data. The answers could come in the form of a list, a few sentences
or something longer such as a speech, paragraph or essay. Researcher
is not aware of the phenomenon or behaviour well and need to
probe for this, and then open ended questions are used. Type of
Questions in open ended are completely unstructured, word
association, sentence completion, story completion, picture, Thematic
Apperception test.
Qualitative Measures : Various Popular methods used in the
qualitative techniques are
• Word Association : To identify the range of possible brand
associations, ask the subject what comes in mind when they hear
the brand's name.
• Projective Techniques : Give subject an incomplete or ambiguous
stimulus and ask them to complete or explain it.
• Visualization : Visualization requires people to create a collage
from magazine photos or drawings to depict their perceptions
• Brand Personification : Here the subjects are asked what do they
think if the brand were to come alive as a person; what it would
be like; what it would do; where it would live; what would it talk
about ?
• Laddering : Ask "why" you want to purchase a particular brand
only. Why questions can reveal consumer goals.
Certain Steps are to be followed while designing Questionnaire
Step 1 Preliminary issue like research objectives, target respondents,
etc.
Step 2 Decision on issues to be probed/asked
Step 3 Decision on response format, i.e. whether close–ended or
open–ended response
Step 4 Wording/Style of the questions and what to avoid
Step 5 Sequencing the questions
Step 6 Conditions of questions
Step 7 Pre–test, revise (if need be), and finalize.
Check Your Progress – 2 :
1. From the below mentioned which is not the research design ?
a. Exploratory b. Descriptive c. Causative d. Experimental
2. Various source of collection of data are.
a. Primary b. Secondary
c. tertiary d. Both (a) and (b)
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3. A _______ question is one where the respondent has to select a Marketing Research
response from one among the multiple choices offered to him or
her.
a. close ended b. Open ended c. Both d. None of them
4. ______________ Questionnaire that is used mostly in social science
research.
a. Structured b. Unstructured
c. quasi–structured d. none of them
Sampling : Sampling is nothing but selection of the accurate
representation of a unit, group or sample from a population of interest.
The process of selection or the drawing of the accurate representation
of a unit, group or sample from a population of interest is called as
sampling. Sampling can be done through various sampling techniques
in accordance with the nature of the sample as well as the subject matter
of the study. It is the Sampling procedure, which will decide the accurate
representation of the sample selected for the study as well as the relevance
of generalization made from the research
Population : Population is also referred as universe. Broadly,
Population can be explain as a comprehensive group of individuals,
institutions, objects and so forth which have a common characteristics
that are the interest of a researcher. The common characteristics of the
groups distinguish them from other individual, institutions, objects and
so forth. Example : Researcher proposed to conduct a study on awareness
and use of ICT among the secondary school teachers in Ahmedabad, the
entire secondary school teaching community in Ahmedabad constitutes
as the population of the study. Population can be finite and infinite.
Population which can be easily counted is known as finite and the
unknown and limited number of population is known as infinite. Example :
Medical Student of Ahmedabad District is finite population and the
adolescents, youths in Ahmedabad can be treated as examples for infinite
population, though they can be counted but in complex procedure.
Sample : It is a part of the population or universe. In marketing
research projects, practically it is not possible for a researcher to approach
all the individuals\elements in a population for the purpose of data
collection. Instead they select and approach a representative group of
individuals/elements who falls under the particular population to collect
needed information regarding the group. Based on the results, the researcher
generalizes the characteristics of the representative group as the
characteristics of population. This small group or representative group
from a population is called as sample. So sample can be defined as the
small portion of a population selected for a particular study. The sample
should clearly represent the characteristics of intended group. According
to Young "A statistical sample is a miniature picture of cross selection
of the entire group or aggregate from which the sample is taken".
The process of conducting a survey to collect data from a sample is
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Marketing Management called sample survey. The value which is identified or measured from
the characteristics of the sample can be termed as statistic.
Developing sample design has the following components
• Choosing the Sampling Unit : Whom should we survey ? (who
all among the elements of the population are to be surveyed)
• Choosing Sample Size : How many people should we survey ?
• Choosing Sampling Procedure : How to ensure that those who
are to be questioned get included in the sample)
• Choosing the Sampling Media : how to reach the respondents in
the sample–through mail interview,personal interview, or telephone
interview
Sampling Methods : Broadly two methods, fall under two broad
categories Probability/Random sampling and Non–Probability/Non
Random Sampling :
Probability/Random sampling : In Probability/Random sampling,
samples are selected at random. Random means selecting the units "free
of bias" Random sampling follows a precisely specified system, where
there is no scope for any biased selection of the sample unit. Randomness
ensures that the selection of the units takes place by sheer chance. It
means that every member of the population has equal chance or probability
of being selected. Example : in a population of 1000 members, every
member will have a 1/1000 chance of being selected to be a part of a
sample. Probability sampling eliminates bias in the population and gives
all members a fair chance to be included in the sample.
Non–Probability/Non Random Sampling : Non random sampling
techniques are the techniques in which the researchers select the samples
from the population without randomization. Here the samples might have
selected at the discretion of the researcher. In this sampling there is no
means of judging the probability of the element or group of elements,
of population being included in the sample.
Let's study different methods of probability sampling :
• Simple random sampling
• Systematic random sampling
• Stratified sampling
• Cluster sampling
Simple Random Sampling : All items of the population have equal
chances of being selected in the sample. Lottery is one of the methods
of selecting a simpler random sample. Example, in an organization of
500 employees, if the HR team decides on conducting team building
activities, it is highly likely that they would prefer picking chits out of
a bowl. In this case, each of the 500 employees has an equal opportunity
of being selected.

50
Systematic sampling : Systematic sampling involves selecting Marketing Research
every nth unit form the population after the beginning unit is selected
at random. The interval n is fixed by dividing the population by sample
size. Example, if the population of 500 members and a sample of 50
members is required, interval will be fixed as 500/50 = 10. Thus, every
tenth unit from the previously ordered population will be taken to get
the systematic sample of 50 elements. Normally, the start is fixed by
selecting a random number – in the above case, between l and 10, if
happens to be 5, every tenth number from it, i.e 15, 25, 35 and so on
would be selected to get the systematic random sample required. Systematic
sampling can increase the sample's representativeness when the population
elements can be ordered in some pattern, with regard to the characteristic
being investigated.
Stratified sampling : In stratified random sampling,elements are
in the population are divided into homogeneous group called strata. Then,
researchers use the simple random sampling method to select a sample
from each of the strata. Each group is called stratum. In stratified random
sampling, stratum should be relatively homogenous and the strata should
contrast with each other. This process of dividing heterogeneous populations
into relatively homogeneous groups is called stratification
Cluster sampling : Cluster sampling is a method where the
researchers divide the entire population into sections or clusters that
represent a population. Clusters are identified and included in a sample
based on demographic parameters like age, sex, location, etc. This makes
it very simple for a survey creator to derive effective inference from
the feedback. Example, if the United States government wishes to evaluate
the number of immigrants living in the Mainland US, they can divide
it into clusters based on states such as California, Texas, Florida,
Massachusetts, Colorado, Hawaii, etc. This way of conducting a survey
will be more effective as the results will be organized into states and
provide insightful immigration data.
Non–Probability/Non Random Sampling : Non–probability
methods of sampling are of the following types :
• Convenience sampling
• Quota sampling
• Judgement sampling
• Panel sampling
Convenience Sampling : Here sample is selected on the convenience
of the researcher. Quite often accessibility decides the selection of the
sample For example an investigator who is doing research on the topic
of awareness of ICT of students of class X and he may take students
of same class as sample for his study, because he has been the teacher
of the same class and happens to be friendly with the class. This is what
is called as convenience sampling. Such samples are easily available and

51
Marketing Management economical but it makes systematic errors and may leads to false
generalizations. Convenience sampling is also called as haphazard as well
as accidental sampling.
Quota Sampling : It is also an example of non probability sampling.
Under quota sampling the interviewers are simply given quotas to be filled
from the different strata, with some restrictions on how they are to be
filled. In other words, the actual selection of the items for the samples
is left to the interviewer's discretion. This type of sampling is very
convenient and is relatively inexpensive. For example, consider the situation
where an interviewer has to survey people about a cosmetic brand. His
population is people in a certain city between 35 and 45 years old. The
interviewer might decide they want two survey subgroups – one male,
and the other female – each with 100 people. (These subgroups are
mutually exclusive since people cannot be male and female at the same
time.) After choosing these subgroups, the interviewer has the liberty to
rely on his convenience or judgment factors to find people for each subset.
For example, the interviewer could stand on the street and interview
people who look helpful until he has interviewed 100 men and 100
women. Or he can interview people at his workplace who fit the subgroup
criteria.
Judgement Sampling : Judgmental sampling, also called purposive
sampling or authoritative sampling. In this sampling researcher relies on
his or her own judgment when choosing members of population to
participate in the study. Researchers often believe that they can obtain
a representative sample by using a sound judgment, which will result
in saving time and money". Example : TV reporters stopping certain
individuals on the street in order to ask their opinions about certain
political changes constitutes the most popular example of this sampling
method. However, it is important to specify that the TV reporter has to
apply certain judgment when deciding who to stop on the street to ask
questions; otherwise it would be the case of random sampling technique.
Panel Sampling : In this method,members are selected to a panel
and they become an almost permanent sample for drawing specific
information on selected subjects. There can be many kinds of panels such
as consumer panels, expert panels, etc. Panel members are approached
either personally or through mail for elicitinginformation. Panel members
are recruited consciously; they are not selected at random. In this sense,they
cannot accurately represent a whole market.Where the purpose does not
call for randomness of respondents,the use of panels will be in order.
Panels are widely used to measure shifts in buying patterns, brand loyalties
etc.

52
Contact Methods : Market Researcher must decide how to contact Marketing Research
the subjects via mail, telephone, in person or online.
Check Your Progress – 3 :
1. _____________ is nothing but selection of the accurate representation
of a unit, group or sample from a population of interest
a. Sampling b. Sample unit
c. Sampling frame d. None of them
2. Which is not the probability sampling method ?
a. Simple random sampling b. Systematic random sampling
c. Stratified sampling d. Convenience sampling
4. Which is not the Non–probability method of sampling ?
a. Quota sampling b. Judgement sampling
c. Panel sampling d. Cluster sampling
III. Collecting the information : Collecting information is very
expensive and an error prone. As subject may be living far, away
from home, or inaccessible, they must be contacted again or changed.
Sometime respondent do not cooperate or give dishonest answers.
IV. Analysing the information : In this step, findings are extracted
by tabulating data and developing summary measure. Some statistical
techniques and decision models are also applied.
V. Presenting the findings : Here data and information are translated
into insights and recommendation for Marketing and Chief Executives
of the Company.
Without doing research organisation will not succeed. In order to
know the customer formal research is conducted by the marketer.
Check Your Progress – 4 :
1. In ______________ type of research, researcher observes and interacts
with the respondent (Participants) in the reallife environment
a. Observational Research b. Ethnographic Research
c. Focus group Research d. Survey Research
2. __________ is not a qualitative technique.
a. Word Association b. Visualization
c. Projective Techniques d. Questionnaire

53
Marketing Management 3.6 Application of the Marketing Research :
Marketing research finds application in a variety of business situations.
Some examples are given below
Types of Research Areas of Application
Consumer Research Consumer Behaviour
Buying influences
Consumer Profiles
Consumer database
Brand Switching
Motivation
Satisfaction Studies
Market/Demand Research Market potential.size
Market profile
Market share
Market segments
Market Surveys
Sales forecasting
Demand Survey
Product/Brand research Product usage study
Product line, design
Testing new products
Brand tracking
Brand Preference
Competition research Competition analysis
Competitive Structure
Competitors product, prices,
promotion, channel policies and
selling methods.
Distribution research Efficacy of various types of
marketing intermediaries
Dealers reaction to the company
and its products
Efficacy of different modes of
transportation warehousing
efficiency study
Distribution cost analysis

54
Price research Evaluation of pricing strategy Marketing Research
Assessing pricing pattern of the
industry/competitors
Measuring price elasticity of
demand
Advertising and Media research
promotion research Appraisal of ad campaigns
Motivation research
Efficacy of sales promotional
measures
Sales Methods Research Testing new sales programmes
Analyzing sales problems
Sales territory analysis
Effectiveness of sales force
Sales compensation study
Target fixation
Testing sales forecasting and
budgeting methods
(Source : Marketing Management by V. S. Ramaswamy and
Namakumari, Macmillan 2002)

3.7 Limitation of Marketing Research :

Marketing research has some limitations, which must be kept in
mind by marketing people and researchers. The limitations are given
below :
1. Marketing research provides only the indicators. It does not by itself
provide the final solution to the problems. It also qualifies its final
findings with assumptions.
2. There are chances of errors creeping in the findings of marketing
research. Errors can creep in at various stages of the research in
the sampling procedure, in the choice of research methodology and
in the research design itself. Errors can also occur at the computation
and analysis stage.
3. Very often it is found that the marketing research process is very
expensive unaffordable to many small companies.
4. Marketing research has a limitation in terms of the time factor.as
well. The nature of marketing in a competitive world calls for quick
decision and solution. If Marketing research involves undue delays
and time lags, then the solutions obtained become irrelevant in the
changed scenario.

55
Marketing Management 5. Research findings are made with reference to a given marketing
effort, known performance of competitors, known policies of
government, etc. lf any one or more these factors change, the result
of the research may become invalid.
6. Marketing research often has the tendency to overrate the usefulness
of its own findings.As in statistics all numerical data have their
limitations. Also, there are many qualitative and subjective factors
which cannot be quantified.
7. Sometimes the person interviewed may not furnish the correct
information or may refuse to cooperate.

3.8 Ethics in Marketing Research :

The way marketing research is conducted and the reasons for
conducting research could raise many ethical issues.
Privacy : Data collection could become an invasion of privacy.
People are observed using hidden cameras, purchase behaviour studied
using scanner data and credit' card use data, and Internet activity is tracked
using 'cookies'. There is always strong temptation for managers to misuse
access to private information. Similarly, customer databases provide
businesses and could be sold for a profit.
Intrusion : Collection of information could be annoying and
inconvenient for respondents. Often, interviews, both personal and over
telephone, become intrusive.
Deception : Occasionally, researchers use deception to collect data.
Acting as potential customer falsely, some persons collect data from
businesses. Other researcher pretends to be shoppers and ask fellow
shoppers their opinions of products or brands.
False Representation : Practices called "sugging", i.e., selling under
the guise of research and "frugging",i.e., fund–raising under the guise of
research are very common, which tarnish the image of legitimate researchers.
In order to avoid such unethical practices and safeguard the public,
marketing research ethics (code of conduct} have been drawn up by the
American Marketing Association which covers the following areas;
o Privacy of data to be ensured.
o Prohibiting selling or fund–raising under the guise of conducting
research.
o Maintaining research integrity by avoiding misrepresentation and
omission by pertinent data.
o Treating outside clients and suppliers fairly.
The area of ethics in marketing research is very important and
concerns the rights of number of parties. Marketing researchers should
be conscious of and respect the right of research subjects as well as the
general public.
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Check Your Progress – 5 : Marketing Research
1. In which area consumer research can be applied
a. Consumer Behaviour b. Buying Influences
c. Motivation d. All of them
2. In which area product/brand research is applied.
a. Product usage study b. Productline, design
c. Brand Tracking d. All of them
3. Which are the limitation of Marketing Research ?
a. Provides Indicators Only b. Expensive
c. Limited Time d. All of them

3.9 Let Us Sum Up :

In this unit we have studied about The Marketing Research in detail.
Marketing Research will help to Sport Out Business Opportunities whils
lowering the Business risks. It will also help to set better goals for an
Organisation / Business.

3.10 Answer to Check Your Progress :

Check Your Progress – 1 :
1. d 2. d
Check Your Progress – 2 :
1. d 2. d 3. a 4. c
Check Your Progress – 3 :
1. a 2. d 3. d
Check Your Progress – 4 :
1. b 2. d
Check Your Progress – 5 :
1. d 2. d 3. d

3.11 Glossary :
Marketing Research can be defined as systematic design, collection,
analysis, and reporting of data and findings relevant to a specific marketing
situation facing the company.
Syndicate Service : Marketing research firm produce and sell these
scheduled reports.
Primary Data : Primary data are the first–hand information, which
is collected by the researcher. Survey, Experiment and interview are the
examples of such data.
Secondary Data : Secondary data are collected by some other
researcher. Secondary Data includes Scholarly articles, Annual reports,
Thesis, Dissertation etc.
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Marketing Management Ethnographic Research : In this type of research, researcher observes
and interacts with the respondent (Participants) in the real life environment.

3.12 Assignment :
1. Explain Marketing Research and its process(steps) ?
2. What is the Scope of Marketing Research ?
3. Describe Ethics in Marketing Research ?

3.13 Activities :
Select any title, develop objectives for it and frame questionnaire
(Open–Ended and Closed Ended)

3.14 Case Study :

McDonald's :
McDonald's is one of the largest fast food chains in the world. In
order to continue this trend, McDonald's uses ongoing marketing research.
In their marketing research, they have narrowed their focus onto
four different questions :
1. Which products are most popular ?
2. What prices are acceptable to consumers ?
3. What mass media do the consumers read and view ?
4. Which restaurants are most visited ?
Through research, McDonald's is able to determine whether their
target customers are growing or not ?
According to you…
1. McDonalds' collection of data is mainly through – Primary data or
Secondary data ?
2. Which kind of research approach is used by McDonalds ?

3.15 Further Reading :

Kotler, P., Leong, S. M., Ang, S. H., Tan, C. T., (1994), Marketing
Management (8th Ed.) Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G., Kotler., P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.
Karunakaran, K., (2010), Marketing Management (1st Ed.) Himalaya
Publishing House
Mc Daniel, C., Lamb, C. W., Hair, J. F., (2008), Principles of
Marketing (1st Ed.) Cengage learning

58
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.) Marketing Research
Pearson.
BipabBose (2009), Marketing Management, Himalaya Publication
House
Naval Bajpai (2018), Business Research Methods (2nd Edition),
Pearson
V. S. Ramaswamy, S. Namakumari (2009), Marketing Management
(Global Perspective Indian Context), Macmillan

59
Marketing Management BLOCK SUMMARY
There are several new concepts that been introduced in this Block :
– Basic Marketing concepts, Fundamentals, Marketing Mix (in brief)
and Emerging Trends in Marketing
– Marketing and Customer Value, Strategic Planning – its stages,
Marketing Planning and Marketing Plan, Formulation of Marketing
Strategies and their types.
– The importance of Marketing Research has been dealt with, along
with the methods, process and applications of research.

BLOCK ASSIGNMENT
Short Answer Questions :
1. Define Marketing as mentioned by American Marketing Association.
2. What the five types of Needs ?
3. What does 'Scanning the market' mean ?
4. What is Executive Summary ?
5. What is the difference between Social Media marketing and Internet
marketing ?
6. What are the research Instruments available do conduct research ?

Long Answer Questions :

1. Give a list of entities, with examples, that can be marketed.
2. Write one paragraph on each of the emerging trends in Marketing ?
Give examples on each.
3. Write brief notes on Mega Influencer, Macro Influencer, Micro
Influencer and Nano Influencer.
4. What are the stages of Strategic Planning ?
5. What are the Contents of a Marketing Plan ?
6. What are the types of Marketing Strategies ?
7. Explain various application of Marketing Research.

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 Enrolment No. :
1. How many hours did you need for studying the units ?

Unit No. 1 2 3

No. of Hrs.
2. Please give your reactions to the following items based on your reading
of the block :

3. Any other Comments

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61
Dr. Babasaheb BBAR-201/ DBAR-201
Ambedkar
OpenUniversity

Marketing Management

BLOCK-2 CRM, GATHERING INFORMATION AND

FORECASTING DEMAND, CONSUMER AND
BUSINESS MARKET

UNIT 1
CRM

UNIT 2
MARKETING INFORMATION SYSTEM

UNIT 3
CONSUMER BEHAVIOUR

UNIT 4
OVERVIEW OF VARIOUS TYPES OF MARKETING
BLOCK 2 : CRM, Gathering Information and Forecasting Demand,
Consumer and Business Market
Block Introduction
In this Block you will learn about the most intriguing part of
marketing – Consumer behaviour. The marketers have to manage the
consumers' mind to get the best desired response. It is called as Customer
Relationship Management (CRM). The needs of the customers are sometimes
stated and many a times implicit. The more the marketers understand the
hidden motives of the prospective customers, the more will be the benefit
to the organisation in real terms.
The data gathered from the market through various sources are
arranged in a manner that is easy to comprehend and act upon – this is
Marketing Information System (MIS).
The MIS not only feeds the critical information about the changes in
the market place but also give an insight of future trend that may creep in
in near predictable future.
The Business to Business clients have their own set of rules to make
purchase decisions. It is done in more impartial method than as in consumer
behaviour. To bolster the revenue of your company a different kind of
Customer Relationship need to be developed to get fruitful results.

Block Objectives
After learning this block you will be able to understand :
• Understanding Customer Relationship Management
• Understanding Marketing Information System, Marketing Intelligence
System,
• Understanding Consumer Buying Behaviour
• Understanding Business Markets, Institutional and Government
Market,

Block Structure
Unit 1 : CRM
Unit 2 : Marketing Information System
Unit 3 : Consumer Behaviour
Unit 4 : Overview of Various Types of Marketing
Unit CRM
1

: UNIT STRUCTURE :
1.0 Learning Objectives
1.1 Introduction
1.2 Customer Relationship
1.3 Different Types of Customer
1.4 Orientation of Customer
1.5 Customer Relationship Management & its Importance
1.6 Features of CRM
1.7 Misunderstanding of the CRM
1.8 The Benefits of CRM Solutions
1.9 Challenges of CRM Implements
1.10 The Future of CRM in India
(a) Important Role of CRM in Banking Sector
(b) Issues & Challenges of CRM in Banking Stream
(c) Benefits of CRM in Banking Sector
(d) Future Perks of CRM in Banking Industry
1.11 Let Us Sum Up
1.12 Answer to Check Your Progress
1.13 Glossary
1.14 Assignment
1.15 Activity
1.16 Case Study
1.17 Further Readings

1.0 Learning Objectives :

After this unit you will able to understand :
• To learn the important aspects of Customer Relationship Management
• To learn the relationship between Customer Relationship Management
and Marketing
• To understand why Customer Relationship Management is an integral
part of Marketing.
• Major aspects of Customer Relationship Management

62
1.1 Introduction : : CRM

Every organisation emphasizes on building a longterm relationship

with customers to nurture its stability in today's market. Customers want
to receive exactly what they demand and in a quick time. CRM is the
strategy to build strong relations with customers and at the same time
reducing cost and enhancing productivity and profitability in business.
A system is vast and significant, but it be can implemented for small
business, as well as large enterprises also as the main goal is to assist
the customers efficiently. Usually an organisation consists of various
departments which predominantly have access to customer's information
either directly or indirectly. A CRM system loads this information centrally,
examines it and then makes it addressable within all the departments.
CRM is a platform for all business units to interact with their
clients. It is very difficult to manage relationship with the customer. It
majorly depends on how the systematically and flexibly a CRM system
is implemented or integrated. But once it's accomplished it serves the
best way in dealing with customers. In turn customers feels gratitude
of self–satisfaction and loyalty which results in better bonding with
supplier and hence increasing the business. A CRM system is not only
used to deal with the existing customers but is also useful in acquiring
new customers. CRM strategies have given a new outlook to all the
suppliers and customers to keep the business going under an estimable
relationship by fulfilling mutual needs of buying and selling.

1.2 Customer Relationship :

We talk about the relationship between supplier and buyer is not
a personal relationship or one–time relationship. E. g. : A customer buys
a product from the outlet is not called a relationship. Relationship is
when two parties are involved in an interaction and transaction happen
many a times. This relationship only exists when the two parties diverge
from a state of autonomy to mutual or interdependent. If the customer
returns to a café and orders the same tea again because he likes the
environment and taste or the method of making tea, it more looks like
a relationship.
We can say that there is change is relationship with the customers
from time to time as environment is very dynamic. Below mentioned
are the few stages from where the relationship with customers can evolve–
• Exploration – In this stage a customer tries to investigate the
supplier's competency and they cross verify the product or brand
usefulness for them. If the test results fail to satisfy customer's
demands, the relationship canend.
• Awareness – Awareness is the process when the customer understands
the motivational values of supplier or the products he sells.

63
Marketing Management • Expansion – Here supplier wins customer's faith and customer falls
under the interdependence of the supplier. Supplier’s business gets
expanded and does business with the particular customer.
• Commitment – Commitment is a powerful stage when suppliers
learn to adapt business rules and goal to excel.
• Dissolution – Dissolution is a stage when customer requirement
suddenly changes and he looks for better perspectives. This sudden
change is the end of relationship.
There are various reasons due to which relationship comes to
an end.
1. Customer is not satisfied with the productor the service of the
supplier
2. Customer may diverge to other better brands and products
3. Suppliers can also prefer to break relationships due to customer
failing to to increase sales volume
4. Suppliers are entangled with fraud cases
Trust and commitment are the two attributes which can develop
a strong relationship between supplier and customer. Relationship is
always mutual or reciprocal so it is important for both supplier and
customers to stick to common guidelines to attain sustained relationship
with each other. There is lot of involvement of cost, efforts and time
in developing relationships between the two parties but the outcome is
unpredictable.
Check Your Progress – 1 :
1. From the below mentioned option which is not a stage from where
the relationship with customer evolve.
a. Exploration b. Adaptation c. Awareness d. Expansion

1.3 Different Types of Customers :

Customer is the king. Customer use products and services and then
judges its quality. Customers are the responsible for the profit of the
organisation. Hence, it's important for an organisation to retain customers
or make new customers and flourish business.
Customers can be of following Types :
1. Loyal Customers – They are less in numbers, promote sales and
profit, are completed satisfied with the product and service of the
organisation, frequently visit the organisation. They want individual
attention and demand politeness and respect from the supplier.
Hence it is crucial to interact and keep in touch with them on a
regular basis and invest time and effort with them.
2. Discount Customers – They are frequent visitors but they visit only
when the discounts are provided on regular products and brands.
If more discounts are provided, they purchase more. Focus on these
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types of customers is important as they also promote distinguished CRM
part of profit into business.
3. Impulsive Customers – This type of customer do not have any
specific item in their product list but they urge to buy what they
find good and productive at that point of time. Handling these
customers is a challenge as they are not particularly looking for
a product and want the supplier to display all the useful products,
in front of them to choose from. If impulsive customers are treated
accordingly then there is high probability that thay could be a
responsible for high percentage of sales.
4. Need Based Customers – Means that customer purchase that
product or service which they are in need of and only tend to buy
items to which they are habitual. These are frequent customers but
do not become a part of buying most of the times so it is difficult
to satisfy them. These customers should be handled positively by
showing them ways and reasons to switch to other similar products
and brands and initiating them to buy. These customers could
possibly be lost if not tackled efficiently with positive interaction.
5. Wandering Customers – These are the least profitable customers
as sometimes they themselves are not sure what to buy. These
customers are normally new in industry and most of the times visit
suppliers only for confirming their needs on products. They investigate
features of most prominent products in the market but do not buy
any of those or show least interest in buying. To grab such customers,
they should be properly informed about the various positive features
of the products so that they develop a sense of interest.
Check Your Progress – 2 :
1. ________ are less in numbers, promote sales and profit, they are
completed satisfied with the product and service of the organisation.
a. Need–based Customers b. Loyal Customers
c. Impulsive Customers d. Discount Customers
2. _________ donot have any specific item into their product list but
urge to buy what they find good and productive at that point of
time.
a. Loyal buyers b. Frequent buyers
c. Faithful buyers d. Impulsive buyers

1.4 Orientation of Customer :

Orientation of customer means how the customer's preferences are
possessed or in what areas of business the customers are conscious. A
customer can be cost oriented, value oriented or technology oriented as
discussed below :
• Cost Oriented Customers : Customer focuses on low cost product
and is ready to compromise on efficacy, performance and quality.
65
Marketing Management If the problem arises in the product, they blame the supplier instead
of blaming themselves as they have selected the cheap product.
• They try to get problems fix by the local vendor as the product
is a low–cost one. These vendors work with marginal profit, so
accountability is low. What they do is not quality work as they are
not actual manufacturer of that particular product and may lack
many aspects in repairing the machine. In case the machine fails
again, these customers blame the original supplier and he then has
reimburse. In some cases, these customers are ready to buy second
hand products and expect it to perform as a new one. Hence the
suppliers should focus on strategies which are not only performance
or quality driven but also self–driven, otherwise they will find
themselves in payment problems for which they have to put extra
effort and cost of recovery of payment from these customers.
• Value Oriented Customers : These type of customer prefer efficient
and high performing products rather than low–cost ones. They are
aware that in a long run it would be a profitable deal. They believe
in one time investment and repair free benefits in future. These
customers tend to maintain a healthy relationship with suppliers as
they are the satisfied customers.
• Technology Oriented Customers : These types of customers are
interested in making use of best technology good quality and
performance. They feel that using the latest technological products,
they can sustain in the dynamic environment. Supplier who are
developing new technological product can do business by capturing
these types of customer. They also have a tendency for experimenting
with new things and do interact with people of same nature. The
suppliers are helped by them in creating new referrals and increase
the business. These customers are also satisfied customers and end
up by making worthy relationships with suppliers.
It is important for the supplier to study orientation of the customer.
It will help them to identify specific customer needs and transact accordingly.
They can develop strategies to grab customer by fulfilling their aspirations
and turn them to satisfied customer.

1.5 Customer Relationship Management & its Importance :

CRM is the final goal of a new trend in marketing that focuses
on understanding customers as individuals instead of as part of a group.
Marketer makes there communication more customer specific.
Importance of CRM : CRM plays an important role in maintaining
and creating relationships with customers. To develop good Customer
relationship is a business nonetheless it also ideates strong personal
bonding within people. CRM drives business to new levels of success.
Once the bonding is established it is easy for any organisation to identify
the actual needs of customer and help them to serve them in a better
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way. It is a belief that more the sophisticated strategies involved in CRM
implementing the CRM, the more strong and fruitful is the business.
Most organisations have dedicated world class tools for maintaining CRM
systems in their workplace.
Now, look at some broader perspectives given below from which
we can easily determine why a CRM System is always important
for an organisation.
1. A CRM system consists of a historical view and analysis of all
the acquired or to be acquired customers. This helps in reduced
searching and correlating customers and to foresee customers' needs
effectively to increase business.
2. CRM contains every bit of details of a customer, hence it is very
easy to track a customer accordingly and can be used to determine
which customer can be profitable and which may not be.
3. In CRM system, customers are grouped according to different
aspects, the type of business they do or the physical location. They
are allocated to different customer managers often called as Account
Managers. This helps in focusing on each customer separately.
4. A CRM system is not only used to deal with the existing customers
but is also useful in acquiring new customers. The process starts
with identifying a customer and maintaining all the corresponding
details in the CRM system which is also called an 'Opportunity
of Business'. The Sales and Field representatives then try getting
business out of these customers by rigourougly following up and
converting them into a winning deal. This is very easily and
efficiently done by an integrated CRM system.
5. The strongest aspect of CRM is that it is cost–effective. The
advantages of implemented CRM system are that there is less need
of paper and manual work which means lesser staff to manage and
lesser resources to deal with. The technologies used in implementing
a CRM system are also not costly.
6. All the details in CRM system are kept centralized which is anytime
on fingertips. This reduces the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what
they actually need increases the customer satisfaction. This increases
the chance of getting more business which ultimately enhances
turnover and profit.
8. If the customer is satisfied, they will be loyal and will remain in
business forever resulting in increasing customer base and ultimately
enhancing net growth of business.
In today's commercial world, practice of dealing with existing
customers and thriving in business by getting more customers into loop
is predominant. Installing a CRM system can definitely improve the
situation and help in challenging the new ways of marketing and business
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Marketing Management in an efficient manner. Hence every organisation should be recommended
to have a full–fledged CRM system to cope up with all the business
needs.

1.6 Features of CRM :

Customer Relationship Management is primarily entangled with
following features :
1. Customer's Needs – It is very important for the organisation to
identify the customer needs by knowing the customers (likes and
dislike), interviewing them, thereby enabling organisation to satisfy
their needs. Without identifying the needs, it is an arduous task to
serve the customer effectively and maintain a long–term deal.
2. Customers Response – means Organisation reactions towards the
queries and activities of the customer. It is very important for the
organisation to deal with these queries in a competent way in order
to minimize misunderstanding. Success of the organisation depends
on the how tactfully they deal with these queries and provide the
best solution. If the supplier solves customers' queries proficiently,
he can able to succeed in developing professional and emotional
relationship with him.
3. Customer Satisfaction – Customer satisfaction is defined as a
measurement that determines how happy customers are with a
company's products, services, and capabilities. In today's competitive
business marketplace, customer satisfaction is an important
performance exponent and basic differentiator of business strategies.
Hence, the more is customer satisfaction; more is the business and
the bonding with the customer.
4. Customer Loyalty – This type of customer is loyal towards supplier
and buy products on the regular basis. If the customers are satisfied
with the service of the supplier, then they visit the organisation more
frequently or he rebuys a particular product or brand many times
by that supplier. To continue the customer loyalty the most important
aspect an organisation should focus on is customer satisfaction.
Hence, customer loyalty is an influencing aspect of CRM and is
crucial for business success.
5. Customer Retention – Customer retention is a strategic process
to retain the existing customers and not letting them to diverge or
defect to other suppliers or organisation. Usually a loyal customer
is tended towards sticking to a particular brand or product as far
as his basic needs continue to be properly fulfilled. He does not
opt for taking a risk in going for a new product. More is the
possibility to retain customers, the more is the probability of net
growth of the business.
6. Customer Complaints – Always there exists a challenge for suppliers
to deal with complaints raised by customers. Normally raising a
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complaint indicates the act of dissatisfaction of the customer. There CRM
can be several reasons for a customer to lodge a complaint. A
genuine reason can also exist due to which the customer is dissatisfied
but sometimes complaints are lodged due to some misunderstanding
in analysing and interpreting the conditions of the deal with the
supplier. Handling these complaints to ultimate satisfaction of the
customer is important for any organisation. Hence it is essential
to have predefined set of process in CRM to deal with the complaints
and efficiently resolve it quickly.
7. Customer Service – It is the process of delivering information and
services regarding all the products and brands. Customer satisfaction
depends on the quality of the service delivery. If the quality and
trend of service go beyond customer's expectation, the organisation
is supposed to have a good business with customers.
Check Your Progress – 3 :
1. _________is a new trend in marketing that focuses on understanding
customers as individuals instead of as part of a group.
a. CRM b. Value Oriented Customer
c. Cost Oriented Customer d. Technology Oriented Customer
2. _________the process of delivering information and services
regarding all the products and brands.
a. Customer Need b. Customer Loyalty
c. Customer Service d. Customer Satisfaction

1.7 Misunderstanding of the CRM :

Many companies have misconceptions about CRM in regard to
assessing customer satisfaction in order to enhance business. There are
several misunderstandings in CRM to be checked otherwise these may
cost the organisation revenue and profits.
1. Identifying CRM with a software system – Three important
aspects plays important role in the success of CRM business
strategy – people, business process and technology. It is not possible
to implement the CRM successfully without these three. So, CRM
is not an IT issue only to be simply equated to software. It would
be improper to have a successful business purely 'technology–
centric' ignoring the importance of people and processes. Software
is only an enabling or a facilitating device. The process is
implemented and enabled by the software only when it is properly
designed and developed by people. Only then it can deliver customer
and company value. Therefore, the right implementation sequence
has to be followed and it must include proper competencies and
people's attitudes, the right business strategies and then the right
IT implementation.

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Marketing Management 2. CRM is a complicated system, difficult to understand – The
meaning of CRM is simple – to fetch customers, retain them and
maximize profitability. Because of the fast–developing technology
there is pressure on IT professionals to cope up with the new
developments. So, the 'how' part of implementing CRM may be
felt difficult. But the 'why' part of the CRM concept is also not
difficult to understand. If we look back when there was no IT
implementation, customer relationships were being managed then
by keeping in mind a customer database. Presently, with advanced
technology the quality of customer management has entirely changed.
But the core of CRM and the target remain the same – to maximize
business profits. Keeping this perspective in mind, proper techniques
must be employed to access its utility.
3. CRM is expensive and unaffordable by small enterprises – It
is a myth that IT maintenance cost is unaffordable by small and
medium class entrepreneurs. Nowadays Application Service Providers
with simple and limited functions provide CRM at affordable prices.
Its operation is easy without involving expensive IT professionals.
Therefore, to target good results emphasis should be on people and
procedure strategies and in the end utilize software.
4. Wrong assessment for the Return on Investment in CRM – In
CRM implementation, Return on Investment means the evaluation
of returns with the costs incurred. CRM is sometimes regarded as
giving a poor ROI. In fact, the probability of poor ROI is more
if CRM is not deployed and the opportunity is lost. The main causes
of poor ROI are ignoring people and procedure strategies, absence
of quantified benchmarking to measure the results, lack of vision
in strategic gain of opportunities etc. These are the points to ponder
before implementing a CRM.
5. Who is responsible for CRM implementation – The Marketing,
Sales, Customer Service, or IT officials ? – It is not advisable
to lay the responsibility on all. The result will be that none of them
will feel responsible. The ultimate responsible person should be the
CEO as he formulates and manages the business strategies. In order
to have a better success index, the CEO and his immediate deputy
should be educated and trained for implementation of CRM.
A better understanding of different dimensions of CRM therefore
is a must to potentially enhance the benefits of CRM implementation.

1.8 The Benefits of CRM Solutions :

There are many benefits of CRM or Customer Relationship
Management software. Let's discuss one by one in detail.
1. Better Customer Service : There are various functions of the CRM
software, but the main function for which it is created is to improve
business customer relationship. All the information of your customer
70
is stored at one place, which makes CRM software most power CRM
tool. The type of Information stored are like contact's full name,
email address, telephone number, postal address, website and social
media accounts. Also such critical business facts are stored as a
contact's position in the company, his/her relations to other contacts
in your database, the language they speak, and even their birthdays.
This information is accessible to anyone in your company who
needs it. All the information is available at the fingertips of your
employee which makes his communication with a customer easy.
CRM also helps to save all the activities, projects, sales, live chat
messages, email exchanges, etc. CRM allows you to know your
customer better.
2. Better Customer Segmentation : Every business wants to deal
with the perfect audience. List of the contact may be enormous
and large. It makes it difficult for the employee to decide whom
to contact on the basis of criteria. For example, how do you know
which customers want to see your email about your new in–store
product ? CRM allows you to break down data by categories and
criteria, making it easy to create focused lists. Used in sales and
marketing, such segmented lists allow you to run specific customer
marketing campaigns (and account–based marketing campaigns)
and analyze your sales process and lead pool. When you know
whom you're addressing, you can consciously tailor your offer, your
tactics, and even your sales pitch!
"Automation actually allows the marketer to have a more meaningful
understanding of the customer and have more valuable interaction
when they do interact because of it, " Philips said.
CRM system helps you know better who is really interested in what
you have to offer, who is still sitting on the fence, and who is
cold as ice.
3. Increased Sales : In order to streamline your sales process CRM
will provide your sales team with one place where they can track
leads, prospects, and customers over any duration of time, automate
key tasks and analyze all of your sales data, potentially increasing
sales and productivity in one centralized place. A CRM helps you
establish a step–by–step sales process that your employees can rely
on every time and that you can easily tweak as issues arise. Sales
managers can then use this data to identify patterns and see which
sales processes are working for their team and which ones could
be improved. This is how your sales team can use information
stored in the CRM to scale your processes as your business grows.
4. Improved Customer Retention : CRM plays a very important role
to keep your customer happy. CRM will help you to keep the
promises by reminding you about appointments or when to send
follow up emails. It also helps you to reach those customers who
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Marketing Management have been neglected or not contacted for a long time. The CRM
will provide sentiment analysis, automated ticketing, customer support
automation and user behavior tracking to help you determine problems
and quickly address them with your customers.
5. Better and Speedier Communication : Without wasting time of
the customer and giving them a prompt reply is the sign of the
professionalism. CRM helps to save your time and your customer
time, as it offer customizable ready to use various types of templates
like letters, documents, proposals, quotes, etc. A CRM automatically
manages the process, sending your employees alerts when they
should reach out to the prospect and tracking every interaction, from
emails to phone calls.
6. Better Anticipation of Needs : CRM system helps salespeople to
sell more and sell faster, because they have access to history (buying
habits) of the entire customer journey which allows them to anticipate
customer needs. If you know the buying habits like what they
bought, what contracts they were offered, you can be more proactive
and come up with new or better offers at the right time. Just with
a few clicks and you would know whether a contact had any
problems with your product, how their service requests were handled,
and whether they were satisfied or not. And if they had past
complains – it's your chance to redeem your reputation and offer
a much better customer experience.
There are many others benefits of CRM but the key benefits are
as discussed above.
Check Your Progress – 4 :
1. Which is not the benefit of the CRM solutions ?
a. Better customer service b. Better customer segment
c. Better customer target d. Increased sales
2. Three important aspects play important role in the success of CRM
business strategy is _______, ________ and _________.
a. people, business process and technology
b. people, customers and business.
c. Loyal customers, customer base, and technology
d. none of the above

1.9 Challenges of CRM Implements :

CRM necessitates a substantial financial investment, so companies
must make the requisite investments and wait for the benefits to materialise
rather than being impatient and expecting immediate solutions. In terms
of CRM implementations, there is the slip between the cup and the lip.
This refer to a lack of cooperation between businesses and vendors, which
typically results in specifications not being met because vendors do not
72
fully comprehend the requirements and organisetions pressurise vendors CRM
for quicker implementations and results.
Apart from these difficulties, users must be properly educated,
which is an aspect that does not get the attention it deserves. This is
because there are likely to be mismatches between user expectations and
the reality of the implementation. Therefore the users must be well
educated in using the CRM programme.

1.10 The Future of CRM in India :

CRM has become an important component of every enterprise, from
small businesses to multinational corporations. Sales and marketing teams
are using CRM to optimise consumer interactions, attract and retain
customers, and gain new customer–centric insights that are enhancing
their businesses.
Let us study the CRM from the banking perspective :
(a) Important Role of CRM in Banking Sector :
Despite the fact that many banks are struggling to make a profit,
they hardly pay attention to improve their consumer strategy. Today,
literally, those days are gone where people had a misunderstanding about
banks being okay with not getting enough customers. The banks are now
focused on attracting customers and growing market share. CRM Solution
is almost likely to take off in the coming years. Technology and relationship
marketing are two influential development in the current Indian banking
scenario such that they are focal points for new practices and policies.
CRM software, according to Philip Kotler's papers, is the method of
carefully monitoring the comprehensive details for each and every individual
customer and all customer touch points to optimise the loyalty of the
customer.

New generations of private sector banks and several international

banks have entered the market due to the rise in globalisation, bringing
many useful and innovative products. Banks must distinguish themselves
by delivering value–added services and maintaining long–term relationships
with their customers. They must provide a positive customer experience
by providing more customised products, increased value offerings,
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Marketing Management personalised services, and improved accessibility. Money–related rebuilding
and authoritative adjustment are the management's catchphrases for dealing
with the emergence of globalization–related difficulties. According to
reports, Yes Bank has developed a collaborative CRM solution, called
YCCRM, to forther its ‘customer first’ policy; Punjab National Bank
(PNB) has deployed CRM software services with modules of prospect
management, lead management, and activity management; and ICICI Bank
has identified functional areas that are integrated on core businesses.
(b) Issues & Challenges of CRM in Banking Stream :
The following are the impediments to CRM implementation services :
1. Technology Issues : The majority of officers believe that technology
is only used to record customer information and transactions. The
use of technology to process and disseminate more sophisticated
information is not yet complete. Multiple integration channels use
the latest technologies in customer interface, service, and sales at
the same time.
2. People Issue : It refers to a lack of understanding and ability to
convert data into customer knowledge. There is a lack of motivation
to fully utilise the CRM software solution's potential. Decision–
making authority is limited or non–existent, and performance
management parameters are inadequate. Enough decision–making
power is required to provide customised, responsive, and proactive
services in order to apply the CRM concept to customer centricity.
3. Process Issue : Because CRM is an organizational–wide strategy,
the entire process must be aligned in an ineffective manner. In terms
of shared values, vision, and mission, CRM implementation
necessitates a shift in organisational culture. The success of CRM
software is dependent on its adoption by all departments, with
marketing playing a strategic role in bringing all efforts together
to improve customer service.
(c) Benefits of CRM in Banking Sector :
For the banking industry, CRM software is the most effective
business management tool. Appropriate customer experience management
is the primary determinant and capable of transforming the face of any
service–based company. Great solutions can assist any industry in attracting
new clients, closing deals, and delivering exemplary customer service.
Following are the few key benefits of CRM software in the Banking
industry.
Improved Customer Retention : For banks, attracting new customers
is a challenge. Retaining current customers too is a challenge in this tough
market. Customer retention can be achieved by improved customer
satisfaction and loyalty.
Boosted Sales : With the advancement of CRM, sales have become
a vital component of banks. With the sales modules, CRM software
74
implementation helps banks in sales management. It also assists in the CRM
acquisition of potential customers by aiding in the detection and conversion
of leads into prospective customers.
More Effective Marketing Efforts : CRM services help marketing
departments to be more creative and profitable. It produces a report that
illustrates consumer experiences and data points, purchasing activity,
communication platforms, and more. It also assists the marketing
department in the identification of new marketing opportunities for
interaction and retention.
Increased Productivity : Bankers now spend more time on
improving their customer relationships rather than collecting and arranging
data because they have all of their customers' data easily accessible. It
improves efficiency while decreasing costs by reducing or removing
repetitive activities.
Personalized Relationships : The ultimate aim of CRM software
is to treat customers on a personal level. Keeping track of and following
up on each individual customer's data, as well as looking at trends, is
a challenging job. It also assists in the resolution of problems by allowing
bankers to provide customised services to each client.
(d) Future Perks of CRM in Banking Industry :
As the banking industry strives to replicate the digital experience
of customer–centric companies such as Uber, Apple, Facebook, Amazon,
and others, the banks are usually unable to leverage the insights on
customers, to their the advantage. Despite general consensus that the
banking industry needs to develop its data usage in order to provide a
better customer experience and lower the cost of technology to do so,
advanced analytics remains a low priority, according to the Digital
Banking Survey, State of Financial Marketing. While the banking industry
players suggest that they need to provide real–time insights to customers,
only about 20% of the players are currently capable of doing so, according
to the reports. More worrying, a rough estimate of 40% of all but a
small number of major financial institutions' stories puts them in the
"Static Self Appraisal Category." Banks can be more effective in achieving
their revenue, marketing, and customer targets to the custom CRM
Program. Banks can enhance their lead conversion and customer retention
efficiency on a regular basis. Customers can simply pick and choose
where they will obtain advice, invest their money, take loans, and buy
financial products because there are many choices available in the ever–
changing market. Consumers have suggested that they want their banking
experience to be seamless and almost invisible in their everyday lives,
according to Accenture. In order to remain ahead of the competition in
this segment, the CRM in financial service institutions must have brand
authority in market, demonstrating that yours is the only choice. The
market has changed drastically since the introduction of the drive–up
teller, credit and debit cards, ATMs, and direct deposit, among other
75
Marketing Management developments. The elimination of frictions from the customer journey was
the second most reported prediction by nearly 100 financial service
industry leaders surveyed in recent annual reports by digital banking. For
the first time ever, according to J. D. Power, the biggest banks have the
highest customer satisfaction ratings, posing a challenge to small businesses.
Effective CRM software has a range of advanced features that allow
banks to communicate with their customers and create long–term
relationships, which makes them stand out from the competition. CRM
is no longer a choice for banks; it is crucial to their survival. So, with
optimum CRM implementation, it's time to be the bank your customers
love.

1.10 Let Us Sum Up :

CRM helps business to gain an understanding into the behaviour
of their customer like purchasing habits, opinions and preferences and
then modify their business operations to ensure that customer are served
in the best possible way. The better you understand your customer, the
more responsive you can be to their needs.

1.11 Answer to Check Your Progress :

Check Your Progress – 1 :
1. b
Check Your Progress – 2 :
1. b 2. d
Check Your Progress – 3 :
1. a 2. c
Check Your Progress – 4 :
1. c 2. a

1.11 Glossary :
• Exploration – In Exploration customer tries to investigate the
supplier's competency and they cross verify the product or brand
usefulness for them. If the test results fail to satisfy customer's
demands, the relationship can drastically come to an end.
• Awareness – Awareness is the process when the customer understands
the motivational values of supplier or the products he sells.
• Expansion – Here supplier wins customer's faith and customer falls
under huge interdependence of the supplier. Suppliers business gets
expanded and does business with the particular customer.
• Commitment – Commitment is a powerful stage when suppliers
learn to adapting business rules and goal to excel.
• Dissolution – Dissolution is a stage when customer requirement
suddenly changes and he looks for better perspectives. This sudden
change is the end of relationship.
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• CRM is the final goal of a new trend in marketing that focuses CRM
on understanding customers as individuals instead of as part of a
group.

1.12 Assignment :
1. Explain Customer Relationship and different types of customer
2. Explain CRM and its Importance
3. What will be the future of the CRM ?

1.13 Activities :
Visit the call centre of any organisation to understand the nuances
and note down the various functions performed.

1.14 Case Study :

Customer Relationship Management (CRM) in Banking : A
Case Study of ICICI Bank
Focus on ICICI Bank's Initiatives
The use of Customer Relationship Management (CRM) in banking
has gained importance with the aggressive strategies for customer
acquisition and retention being employed by banks in today's competitive
milieu. This has resulted in the adoption of various CRM initiatives by
these banks to enable them achieve their objectives.
The steps that banks follow in implementing Customer Relationship
Management (CRM) are :
• Identifying CRM initiatives with reference to the objectives to be
attained (such as increased number of customers, enhanced per–
customer profitability, etc.),
• Setting measurable targets for each initiative in terms of growth
in profits, number of customers, etc. and
• Evaluating and choosing the appropriate Customer Relationship
Management (CRM) package that will help the company achieve
its CRM goals (a comparison of pay–offs against investments could
be carried out during the evaluation exercise).
Customer Relationship Management (CRM) has been deployed in
retail banking. The challenges in managing customer relations in retail
banking are due to the multiple products being offered and the diverse
channels being used for the distribution of the products. Customer
expectation from banks can be summed up as :
"Any time anywhere service, personalized offers, and lower payouts".
Aggressive marketing and promotions on the part of the banks have
resulted in most customers happily switching loyalties to enjoy better
privileges, thereby making the task of retaining them more difficult for
the banks.

77
Marketing Management The use of Customer Relationship Management (CRM) in banking
has been essentially done for the following purposes :
Targeting Customers : It is necessary for banks to identify potential
customers for approaching them with suitable offers. The transactional
data that is generated through customer interactions and also by taking
into account the profile of the customer (such as the lifecycle stage,
economic background, family commitments, etc.) needs to be collated
into one database to facilitate its proper analysis. For example, a customer
interacts with the banks for savings accounts, credit cards, home loans,
car loans, demat accounts, etc. the data generated through all these
services needs to be integrated to enable effective targeting. After the
integration is done, a profitability analysis of the customer needs to be
undertaken to acquire an understanding of the profit–worthiness of the
customer before targeting him with new offers.
Sales Reference Material : A consolidated information database
on all products, pricing, competitor information, sales presentations, proposal
templates and marketing collateral should be accessible to all the people
concerned. These prove to be very helpful in Sales Force Automation
(SFA) wherein the salesperson gets instantaneous access to all relevant
material as and when it is required (especially when he/she is in a meeting
with a client. )
Consistent Interface with Customers : The communication to
customers from various departments like sales, finance, customer support,
etc. should be consistent and not contradictory. Therefore, all departments
should be privy to a unified view of the customer to enable a consistent
approach. Removal of inconsistencies is necessary to ensure that customers
are not harassed and frustrated owing to poor internal co–ordination. This
is bound to enhance customer satisfaction. The contact centres used to
interface with customers should ensure consistency in customer interaction,
irrespective of the medium used for the interaction such as telephone,
Internet, e–mail, fax, etc.
Banks can use the data on customers to effectively segment the
customers before targeting them. Proper analysis of all available data will
enable banks to understand the needs of various customer segments and
the issues that determine "value" for that segment. Accordingly, suitable
campaigns can be designed to address the issues relevant for that segment
and to ensure higher loyalty from these customers. When data analysis
is done in the right manner, it helps in generating opportunities for cross–
selling and up–selling.
ICICI Bank's CRM Initiatives :
ICICI Bank has to manage more than 13 million customers. The
bank has over 550 branches, a network of 2025 ATMs, multiple call
centres, Internet banking and mobile banking. Its customers often use
multiple channels, and they are increasingly turning to electronic banking

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options. Business from the Internet. ATMs and other electronic channels CRM
now comprise more than 50 per cent of all transactions.
In the process of making its business grow to this level, ICICI Bank
has distinguished itself from other banks through its relationship with
customers.
The Teradata solution focuses on a Customer Relationship
Management (CRM) platform. Information from various legacy and
transaction systems is fed into a single enterprise called wide data
warehouse. This allows the bank to generate a single view of its customers.
The warehouse has the capability to integrate data from multiple sources
comprising Oracle and flat files. The Behaviour Explorer enables profiling
of customers and querying on various parameters. These enable the bank
staff create suitable campaigns for targeting individual customers on the
basis of their requirements.
The logistics in the system have also led to other benefits like
interactive reports, unearthing cross–selling opportunities as well as finding
out about the channel usage undertaken by a segment. The data access
was facilitated through the use of Cognos Power Cubes.
The Benefits of CRM :
Customers' Usage Pattern : ICICI's CRM data warehouse integrates
data from multiple sources and enables users to find out about the
customer's various transactions pertaining to savings accounts, credit
cards, fixed deposits, etc. The warehouse also gives indications regarding
the customer's channel usage.
New Product Development : Analysis at ICICI guide product
development and marketing campaigns through Behaviour Explorer,
whereby customer profiling can be undertaken by using ad hoc queries.
The products thus created take into account the customer's needs and
desires, enabling the bank to satisfy customers through better personalization
and customization of services.
Central Data Management : The initial implementation of CRM
allowed ICICI to analyse its customer database, which includes information
from eight separate operations systems including retail banking, bonds,
fixed deposits, retail consumer loans, credit cards, custodial services,
online share trading and ATM.
Some Noteworthy CRM Initiatives of ICICI Bank
Mobile ATMs : Customers of ICICI Bank can access their bank
accounts through mobile ATMs. These ATMs are kept in vans and parked
at locations that have a high traffic of bank customers such as the
commercial areas in a city or upmarket residential areas ICICI Bank now
provides standard ATM facilities through ATM vans. This facility has
been tried at Mumbai, Chandigarh and various places in Kerala during
specified timings.

79
Marketing Management Bulk Deposits : The ICICI Bank's Bulk Deposit ATMs enable
customers to deposit large amounts at one time. Unlike conventional
ATMs, which are able to accept only 30 notes at a time, these ATMs
allow the deposit of huge amounts. The Bulk Deposit ATM is available
in Mumbai's Vashi sector branch office of ICICI. The bulk deposit facility
can be availed of by select customers who need to deposit huge amounts
of cash. ICICI Bank issues a special card called the `Deposit Only Card'
to facilitate this service. This card allows for deposit transactions only.
The service is further facilitated by the provision of special bags at ATMs
in which a customer can put his money. After the deposit slip is filled,
the bag can be inserted in the ATM. The transaction slip is then generated
by the ATM as an acknowledgement of the deposit. ICICI Bank also has
cash pick–up service for business customers under the business banking
segment.
ATMs for the Visually Challenged : ICICI Bank has launched
ATMs with special voice–guided systems, which guide a visually challenged
person to access ATMs without any help. The jack on the terminal enables
headphones to be connected to it and voice commands enable the customer
to transact business. Customers may choose a suitable language to get
voice commands. After the language selection is done, the customer is
guided to ensure that the ATM card is inserted in the right slot and
thereafter, guidance is provided for entering the PIN by using the keypad.
A raised button is provided on number 5 to enable users to identify the
numbers easily through touch. The slot for cash collection has such raised
`pips' that enable easy identification through touch.
Other Services Through ATMs : Apart from the usual transactions
involving the bank, some other services can also be availed of by ICICI
Bank customers. These include :
• Prepaid mobile recharge
• Buying and renewing Internet packs
• Making donations for TirupatiTirumalaDevasthanams, Nathdwara
temple and Shri Mata Vaishnodevi shrine.
• Mutual fund transactions, and
• Bill payments
Mobile Phone as a Virtual Wallet : The mobile phone has been
transformed into a virtual wallet – a new innovation in mobile commerce.
On September 19, 2005, Airtel, ICICI Bank and VISA announced the
launch of mChq – a revolutionary new service – which is a credit card
using the mobile phone. This is the first mobile–to–mobile payment option
which enables Airtel customers and ICICI Bank Visa cardholders to pay
for their purchases with their Airtel Mobile phones. The service has
eliminated the need for carrying physical cash for making a purchase and
also the problems associated with the point of sale (POS) terminal since
the mobile phone services as a secure POS and a payment mechanism.

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Social Events : ICICI Bank organized the largest domestic invitational CRM
amateur golf event for HN1 (high–net–worth individuals) customers. This
nation–wide golf tournament had over one lakh high–net–worth clients of
ICICI Bank's private banking division participating in the event.
Mobile Banking Benefits : Mobile banking enables the customer
to avail of many facilities by just sending an SMS. These facilities, which
are currently offered free of cost, are as follows :
• Locating ATM
• Locating branch
• Locating drop box
• Alert facilities like salary credit, account debit/credit, cheque bounce,
etc., and
• Queries on banking, cards and demat account
Questions :
1. Explain the initiatives take by ICICI Bank to promote Customer
Relationship Management (CRM).
2. Discuss the benefits of the initiatives taken by ICICI Bank to
promote Customer Relationship Management (CRM).
3. What should be the core elements of CRM that ICICI bank in your
opinion should follow, besides what they are already following to
make themselves a distinct bank from their competitors
4. Outsourcing CRM is one activity that most organizations follow.
Is it a viable option. Give your views keeping in mind the cost
involved in implementing CRM and enhancing business also.

1.15 Further Reading :

Kotler, P., Leong, S. M., Ang, S. H. , Tan, C. T., (1994), Marketing
Management (8th Ed. )Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G. , Kotler., P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.
Karunakaran, K. , (2010), Marketing Management (1st Ed. ) Himalaya
Publishing House
Mc Daniel, C., Lamb, C. W., Hair, J. F., (2008), Principles of
Marketing (1st Ed.) Cengage learning
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.)
Pearson.
https://managementstudyguide.com/what–is–crm.htm
https://www.mbaknol.com/management–case–studies/customer–
relationship–management–crm–in–banking–a–case–study–of–icici–bank/
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Unit
MARKETING INFORMATION SYSTEM
2

: UNIT STRUCTURE :
2.0 Learning Objectives
2.1 Introduction
2.2 Basics of MIS
2.3 Marketing Environment
2.4 Component of Marketing Environment
2.5 Forecasting and Demand Management
2.6 Concept for Demand Measurement
2.7 Methods of Forecasting
2.8 Let Us Sum Up
2.9 Answer to Check Your Progress
2.10 Glossary
2.11 Assignment
2.12 Activity
2.13 Case Study
2.14 Further Readings

2.0 Learning Objectives :

After this unit, you will understand :
• To understand Marketing Information system and its components
• To study the Marketing Environment
• To study thevarious Forecasting methods and the measures of demand.

2.1 Introduction :
According to Philip Kotler "A marketing information system is a
continuing and interacting system of people, equipment's, and procedures
to gather, sort, analyse, evaluate, and distribute the pertinent, timely, and
accurate information for use by marketing decision–makers to improve
their marketing planning, implementation, and control. " An organisation
is also affected by various environmental factors which surround the firm.
These environmental aspects have influence over the decision making of
an enterprise. Therefore, as definable by Edeling& Fischer (2016), the
surrounding and influencing factors collectively make up a marketing
environment.

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2.2 Basics of MIS : Marketing Information
System
The Marketing Information System refers to the systematic
compilation, review, interpretation, storage and distribution of market
information to marketers on a daily and continuous basis, both from
internal and external sources.
The marketing information system distributes the related data to
marketers who can make appropriate marketing decisions, such as pricing,
packaging, production of new goods, delivery, media, promotion, etc.
Each marketing activity functions in unison with both within and
outside the organization's prevailing circumstances, and therefore there
are many sources (e. g. Internal, Marketing Intelligence, Marketing
Research) from which the appropriate consumer information can be
accessed. Ideally, however, a marketing information system should include
the following components :

Internal Records :
With its internal records of sales data, customer database, product
database, financial data, operational data, etc., the Organization will
collect information. A comprehensive explanation of the internal data
sources is given below :
Information may be obtained from records such as invoices, copies,
billing documents prepared by businesses upon receipt of the order for
products and services from consumers, distributors or sales representative
The latest sales information that acts as an assistant to the Marketing
Information System should be maintained on a regular basis. Present sales
and inventory level reports help managers decide on their objectives, and
marketer may use this data to design their potential sales strategy.
Companies maintain many databases, such as the Consumer
Database, in which the full information on the name, address, phone
number, purchasing frequency, financial status, etc. of the customer is
kept.
Product Database–in which full information about the price, features,
variations, of the product is stored.
Salesperson database, wherein the complete information about the
salesperson, his name, address, phone number, sales target, etc. is save
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Marketing Management In the data warehouse, the companies store their data from where
the data can be retrieved whenever the need arises. When the data is
stored, it is mined by statistical experts by applying many computer
software and techniques to turn it into usable meaningful information that
offers facts and figures.
Marketing Intelligence System : The marketing intelligence system
provides data on market events, i. e. marketing environment–related data
that is external to the organisation. It includes information on changing
market trends, the pricing strategy of the competitor, changes in the tastes
and preferences of the customer, new products launched on the market,
the competitor's promotion strategy, etc.
In order to have an effective marketing information system, companies
should work aggressively by taking the following steps to enhance the
marketing intelligence system :
• Providing the right training and encouraging the sales force to keep
track of market trends, i. e. changing customer tastes and preferences,
and providing suggestions for improvements, if any.
• Motivating the partners of the channel, i. e. dealers, distributors,
distributors in the real market to provide the appropriate and required
customer and competitor details.
• Companies can also strengthen their system of marketing intelligence
by having more and more competitor knowledge. This can be
achieved either by buying the product of the competitor, visiting
trade shows, reading the written papers of the competitor in magazines,
journals, financial reports.
• By including loyal customers in the customer advisory panel who
can share their insights and provide advice to new potential customers,
through this businesses can provide an effective marketing information
system.
• In order to enhance the marketing information system, businesses
should make use of government data. The data can relate to population
patterns, demographic characteristics, agricultural production, etc.,
which allow a business to plan its marketing activities accordingly.
• Companies may also buy knowledge about the marketing landscape
from research firms that carry out research on all industry participants.
• The Marketing Intelligence framework can be further strengthened
by specifically asking customer about their product or service
experience through feedback forms that can be filled out online.
Marketing Research : The Marketing Research is the systematic
collection, organization, analysis and interpretation of the primary or the
secondary data to find out the solutions to the marketing problems. By
applying various statistical instruments, businesses perform marketing
research, including shifts in the tastes and desires of the client, competitor
tactics, the reach of new product launch, etc. The data, which can be
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either primary data (first–hand data) or secondary data(second–hand data, Marketing Information
available in books, magazines, research reports, journals, etc. ), must be System
obtained in order to perform market research.
Marketing Decision Support System : It requires many software
programmes that can be used to evaluate the information gathered so
far by marketers to make better marketing decisions. The marking managers
can save the huge data in a tabular form with the use of computers and
can apply statistical programmes to evaluate the data and make decisions
in line with the results.
Therefore, marketers need to check the marketing environment, i.
e. both the internal (within the organisation) and the external (without
the organisation), so that it is possible to plan marketing practises,
processes, strategies accordingly.
Check Your Progress – 1 :
1. Marketing information system should include the following
components :
a. Internal records b. Marketing Research
c. Both d. None of them

2.3 Marketing Environment :

"A company marketing environment consists of the actors and
forces outside marketing that affect management's ability to build and
maintain successful relationships with target customer" – Philip Kotler
We are very well aware that marketing activities does not take place
in isolation; in fact it takes place in dynamic, highly complex and
changing environment. It is utmost important for the company to constantly
scan the environment in order to know what's happening in the market,
identify significant changes or trends in the marketing environment.
Marketing Research and Marketing Intelligence System are used by the
marketer to scan the environment to gather relevant information. Marketer
shall adapt to environmental changes in order to prepare new marketing
strategies to meet the challenges and opportunities. In other words,
Marketing Environment is the combination of external and internal factors
and forces which affect the company's ability to establish a relationship
and serve its customers. The marketing environment of a business consists
of an internal and an external environment.
• The internal environment is company–specific and includes owners,
workers, machines, materials etc.
• The external environment is further divided into two components :
micro & macro.
The micro or the task environment is also specific to the business
but is external. It consists of factors engaged in producing, distributing,
and promoting the offering.

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Marketing Management The macro or the broad environment includes larger societal forces
which affect society as a whole. It is made up of six components :
demographic, economic, physical, technological, political–legal, and social–
cultural environment

2.4 Component of Marketing Environment :

There are two major parts pertaining to the environment
(a) The mega/macro environment and
(b) The environment that is specific to the business firm is engaged
in.
Simply we can say there are two kinds of environment i. e. Internal
and External. Internal can be controlled by the business but the external
environment cannot be controlled by the business.
Let's us discuss the component in detail.
(a) Mega/Macro Environment :
The sequence of the PEST is reversed to TSEP. TSEP better reflects
the components in the contemporary context. Technology has today become
the prime component of the macro–environment.
Technological Environment : The technological environment
constitutes innovation, research and development in technology,
technological alternatives, innovation inducements also technological
barriers to smooth operation. Technology is one of the biggest sources
of threats and opportunities for the organization and it is very dynamic.
In the corporate sphere, production controls, logistics, communication,
information processing all have been revolutionized by technology.
Technology affects not only its final products but also its raw materials,
processes operations and customer segments of the business. Rapid changes
are taking place in the technology in several sectors. Best Examples are
IT and Telecom. Technology has drastically changed our lives. Previously,
when we wanted to shop, we used to go physically. Now the trend has
changed. Working women, teenagers, and mind set of many consumers
have changed, when they prefer to do online shopping. Marketer should
keep an eye on the new trends available in the technology, the government
enforcement in technology and the technology environment. Then select
technologies that will be appropriate for the firm and the given product
market situation.
Socio–Cultural Environment : Socio culture has two main parts
a. Culture
b. Social Class :
Culture : It is the combined result of factors like religion, language,
education and upbringing. In any given society, some of the cultural values
are deep–rooted; they do not change easily and are termed as core cultural
values. There are other values, which are known as secondary values,
which can be changed and manipulated relatively more easily.
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Social Class : It is another important concept in socio–cultural Marketing Information
environment. Social class is determined by income, occupation, location System
of residence, etc. of its members. Each class has its own standards with
respect to lifestyle, behavior etc. These are known as class values or
class norms. The values/norms have a strong bearing on the consumption
pattern and buying behavior of the members of the class. Shift in class
values do take place over time owing to several factors.
Economic Environment : Market requires people who have buying
power. The economic environment consists of the various factors that
affect buying and spending pattern of the consumer. Factors to be covered
under economic environment are General Economic Conditions, Economic
conditions of different segments of the population; their disposable income,
purchasing power, etc. Rate of growth of the economy, rate of growth
of each sector of the economy (agriculture, industry, consumer goods,
capital goods, services, infrastructure, imports, exports, Income, price,
and consumption expenditure(size and patterns), Credit availability and
interest rates, saving rate/capital formation, inflation rate, behavior of
capital markets, foreign exchange reserves, exchange rates, tax rates, price
of important materials Energy outlook (cost, availability, etc), Labour
represetation (cost, skill availability, etc.). If there is change in economic
policies like change in interest rate, business cycle, changes in income
levels etc. are important factors affecting marketing.
Political Environment : Mostly marketing decisions are affected
by the political environment, stability and the type of government. The
political environment consists of laws, government agencies and pressure
groups that influence or limit various organizations and individuals in
a given society. Various laws are enacted in order to protect business,
consumers, society from unfair trade practices.
Natural Environment : It serves as a raw material for the production
of different products. For the production of its goods, every organization
consumes natural resources. Organizations are aware of the problem of
resource depletion and try their best to use these resources judiciously.
Therefore, some companies have indulged in de–marketing their products.
For example, Indian Oil Corporation (IOC) tries to reduce the demand
for its products by promoting advertisements, such as Save Oil, Save
India.
Demographic Environment : In terms of elements, such as age,
gender, education, employment, income, and location, the demographic
environment is the scientific study of the human population. It also
includes women and technology's increasing role. Such components are
also known as demographic variables. A marketer collects the data before
marketing a product to find the appropriate market for the product.
The demographic environment is responsible for the variation in
individual tastes and preferences and purchasing patterns. An organization
is persuaded by changes in the demographic environment to modify
marketing strategies to address customers' changing needs.
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Marketing Management Legal Environment : From time to time, legislative changes occur.
The business environment is affected by many of these modifications.
For example, if a regulatory body establishes a regulation for industries,
that law would have an effect on industries and business. Therefore,
companies should also analyze the legal developments in their respective
settings.
Some legal factors you need to be aware of :
• Product regulations
• Employment regulations
• Competitive regulations
• Patent infringements
• Health and safety regulations
Check Your Progress – 2 :
1. Internal environment is company–specific and includes
a. Owners b. workers c. machines d. All of them
2. In TSEP abbreviation "s" stands for
a. Socio–culture b. Society c. Social d. None of them
(b) Environment Components specific to the business concerned :
The different elements related to mega–environments that need to
be studied as part of environmental science have been explored in depth.
Now, lets us turn to the environmental factors that are unique to the
business concerned.
Market/Demand : It is the first in this category. The aspects to
be studied here include.
• Nature of the Demand
• Size of the Demand, present, potential
• Changes taking place in demand
• Invasion of substitute products
• Changes taking place in consumption pattern/buying habits.
In all its particulars, a business must first track demand in its sector.
It must collect valuable clues on aspects such as demand existence,
demand scale, consumption trends, purchase habits, substitute product
invasion, etc. In fact, those specifics are the ones that show the industry's
attractiveness. All business decisions such as entry into the sector, expansion,
divestment etc. and marketing plan decisions require demand–related
information. Fortunately, this is an area where data support is commonly
accessible to an organisation via the routine demand assessment
process(demand measurement) and sales forecasting.
Consumer :
The effective business strategy requires the design of goods and
marketing campaigns that integrate attributes, which provide value to
88
consumers according to their perceptions. Companies can perform their Marketing Information
business/marketing planning effectively only by researching consumer– System
related factors. Consumer tastes and desires in many sectors continue
to fluctuate. And consumer brand loyalty continues to evolve, too.
Customers today may want a cheaper version of a given product, but
tomorrow they may be more concerned with quality and may therefore
go after certain particular brands. Examples include sectors such as
cosmetics, personal care goods, garments, and entertainment products.
Therefore, a perpetual customer research process is required to make
marketing planning efficient. Changes in client preferences can sound
the death knell of a company if left unmonitored. At the same time,
they also end up as enticing business opportunities, if properly monitored.
Only by keeping track of changing consumer requirements can one catch
the environmental opportunities that are emerging.
Factors to be monitored are :
• Who are the consumers of the firm ? (number, location, etc.)
• According to the firm, what is the basic need its product serves ?
• According to the consumer, what need does it serves ?
• Is there a gap in these two perceptions ?
• What benefits do the consumers look for in the product ?
• Of the many benefits they look for, what are their preferences,
priorities/ranking ?
• What is their assessment of the value of the company's offer ?
• Purchasing power of the consumers.
• Buying behaviour, buying motives, buying habits
• Personality traits/attributes
• Lifestyle and needs–present position and trends
• Brand loyalty
• Reasons/motives for customer patronage of specific brands.
Industry and Competition : Another big component under the
head is business and competition. In order to build a marketing strategy,
knowledge of business and competition is a fundamental prerequisite.
Building a competitive advantage often relies on a proper understanding
of the position of the industry and competition.
Government Policies : The way company works is substantially
influenced by government policies. In addition to impacting the
environment, government policies have a profound effect on the particular
industry/business environment. This is especially true of economies that
are regulated to a significant degree. Government policies are a significant
factor even in market economies, although their restrictive effect is
comparatively less. Government do play roles which have a bearing on
the functioning of firms, For Example :
89
Marketing Management • Government are often large purchasers of goods and services
• Government subsidies select firms and industries
• Governments ban fresh entry in select industries
• Governments ban off and on, certain technologies and products
• In some cases, governments happen to be producers, and therefore,
function as competitors.
Supplier related factors : Another essential component of this
environment is suppliers. In every market, suppliers constitute one of the
five forces shaping competition. They have their own negotiating power;
they control a company's cost of raw materials and other inputs, and
thereby affect the company's profits. It is in this sense that the trade–
off between integration vs. outsourcing of supplies assumes significance.
The decision on this has both cost and quality consequences. In their
products, procedures and business practises, manufacturers often continue
to make regular improvements. Suppliers often unexpectedly become
direct competitors to a business, becoming the end–product producers on
their own. Companies obviously have to closely track the world of
suppliers.
Check Your Progress – 3 :
1. Government do play roles which have a bearing on the functioning
of firms
a. Government are often large purchasers of goods and services
b. Government subsidies select firms and industries
c. Government can fresh entry in select industries
d. All of them

2.5 Forecasting and Demand Management :

Meaning and Important : Every company is curious to know the
existing status of its product, prospects and during the specific time period
who is there customer, whether there are chances to increase the sales
and market share in the market.
Sales forecast can be defined as an estimate for sales in terms of
monetary and volume, for a specific period, with a selected marketing
plan, under an envisaged economic and marketing environment. Sales
forecasting serves as the starting point for all business activities of a
company. Based on sales forecasting following decisions are taken :
• Number of Salesmen required in achieving sales quotas or objective
• Allocation of sales quota to each salesman.
• Determinations of sales force compensation plan.
• Determination of sales territories based on market potential
• Advertising and sales promotion programmes
• Physical distribution and channel selection.
90
• Pricing decisions and strategy Marketing Information
• Production plan System

• Inventory control and purchasing

• Estimating standard costs
• Budgeting and controlling expenses
• Planning Requirements
Marketing mix revolves around the sales forecasts made by the
company for its product.
Measure for Market Demand :
Sales forecast can be based on market demand. According to Kotler,
Kevin and Keller, 90 different type of demand estimates could be prepared
by a company for its products. A company can measure demand for six
different product levels, five different space levels and three different
time levels. Each serves a specific purpose. A company might forecast
short–run demand, plan production, borrow cash and also forecast regional
demand.
Market is dynamic and forecasts depend on the type of market.
The market could be broken down in many productive ways.
1. The potential market is the set of consumers who have interest
in a market offer; but their interest is not enough to define the
market unless they acquire sufficient income and access to the
product.
2. The available market is the set of consumes who have interest,
income, and access to a particular offer.
3. The qualified available market is the set of consumers who have
interest, income, access and qualification for the market offer.
4. The target market is the part of qualified available market the
company decides to pursue.
5. The penetrated market is the set of consumers who are buying
the company's product
Check Your Progress – 4 :
1. __________ is the set of consumers who are buying the company's
product
a. Target market b. Available market
c. Penetrated market d. Qualified market
2. __________ is the set of consumes who have interest, income, and
access to a particular offer
a. Target market b. Available market
c. Penetrated market d. Qualified market

91
Marketing Management 2.6 Concept for Demand Measurement :
Market Demand : In order to find the Total market demand,
Marketer needs to evaluate the opportunities available in market. Market
demand for the product is the volume that would be bought by a target
group of customers in a target geographical area in a specific time period
in a specified marketing environment under a specific marketing programme.
Market Forecast : Only small amount of marketing expenditure
and efforts will actually occur. The market demand corresponding to this
level is called the market forecast.
Market Potential : Market potential is the highest limit approached
by market demand as industry marketing expenditures approach infinity
for a given marketing environment.
Company Demand : Company demand is the company's estimated
share of market demand at alternative levels of company marketing efforts
in a given time period. This share will depend on how its products,
services, prices, communications, etc. are perceived by consumers relative
to the competitors.
Company Sales Forecast : This is the expected level of company
sales based on a chosen marketing plan and an assumed marketing
environment. Related to the company sales forecasts, there are two
additional concepts involved. First is a "sales quota, " which is the sales
goals set for a product line, company division, or sales officer. Generally,
sales quotas are set slightly higher than estimated sales to stretch the
sales forces' effort. Second is a "sales budget", which is a conservative
estimate of the expected volume of sales and is used for making current
purchasing, production, and cash flow decisions. The Sales budget is
based on the sales forecast and the need to avoid excessive risk. Sales
budgets are generally set slightly lower than the sales forecast.
Company Sales Potential :
This is the sales limit approached by company demand as the
company's marketing efforts increases relative to that of competitors. The
absolute limit of company demand is, of course, the market potential.
For estimating current demand, companies estimate total market
potential, then analyse and determine the area market potential (territory–
wise), industry sales and market shares.

2.7 Concept for Demand Measurement :

Opinion of Executives : This is one of the oldest methods where
executive in charge of the business makes assumptions for future sales
based on the personal knowledge based on market information, through
customer contacts or by reading published data. Weakness of this method
is that it lacks of scientific validity and subjectivity.
Sales Force Composite Method : Many organisations make their
sales forecast on the basis of the estimate given by salesmen. Sales
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manager prepares the consolidated sheet territory or region wise according Marketing Information
to the estimate given by each sales person. As sales persons are in direct System
contact with the customers they can provide first–hand information.
Customer's Expectations : (or survey of buyer's intentions) :
Customers can be requested to communicate their buying intentions in
a coming period. This is suitable for businesses selling products to a
few key customers (like in industrial marketing). If the customers'
expectations are accurate, sales forecasts will also be accurate.
Statistical Sampling : Sampling can be used to get total sales
estimate. Based on sample survey done in representative sub–groups of
territories, data can be extended or generalized to get total sales forecast.
Time Series Analysis : This is the mathematical projection of future
sales. It involves projection of past sales trends into the future (trend
extrapolation). To predict future sales, an analysis of four kinds of
historical sales variations is done
• Seasonal Variations
• Business Cyclical variations (depression, boom, slump, etc.)
• Long term trends of sales
• Irregular or unexplained variations
By isolating variations in sales, an analyst can estimate with accuracy
the sales forecast.
Correlation Analysis : When there is a close relationship between
sales volume and a well–known economic indicator or index, a correlation
study can be done. A high correlation means that the extrapolated index
values will indicate future sales volume. E. g. : Sales of petrol are related
to automobiles sales.
The Delphi Method : This is also a form of expert opinion method
used especially for working out broad–based, futuristic estimates rather
than sales forecast. In this method, a panel of experts in the field is
interviewed with the help of questionnaire and their reactions and opinions
recorded. An analysis of the result gives the final estimates.
Since no single sales forecasting method is perfect, companies and
marketers generally use a combination of forecasting methods to ensure
that they get reliable estimates.
Check Your Progress – 5 :
1. ______________ is the mathematical projection of future sales
a. Customers' expectation b. Co–relation analysis
c. Delphi Method d. Time Series Analysis

2.8 Let Us Sum Up :

In this unit we have studied MIS and scanning of environment.
We have got an understanding the MIS helps to identify emerging market
segments, and the monitoring of the market environment for changes in
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Marketing Management consumer behaviour, competitors' activities, new technologies, economic
conditions and governmental policies.

2.9 Answer to Check Your Progress :

Check Your Progress – 1 :
1. c
Check Your Progress – 2 :
1. d 2. a
Check Your Progress – 3 :
1. d
Check Your Progress – 4 :
1. c 2. b
Check Your Progress – 5 :
1. d

2.10 Glossary :
MIS consist of people, equipment, and procedures to gather, sort,
analyse, evaluate and distribute timely and accurate information to marketing
decision makers.
Micro Environment : There are various stakeholders who are close
to the company and plays role in developing relationship of the company
with the customer. Stakeholders are Company, Suppliers, Marketing
Intermediaries, Customer, Competitors, Public.
Macro Environment : consists of the uncontrollable like
demographics, economic, natural, technological, political, legal, and cultural
factors. Company operates in this micro environment which shape
opportunities and threats to the company.

2.11 Assignment :
1. What is Marketing Information System ? Explain its role.
2. Explain two major type of Marketing Environment in detail.
3. What is Forecasting ? Explain step in forecasting.

2.12 Activities :
1. Explain why it is important for a business to study its competition
2. Name some factors that are part of the legal environment

2.13 Case Study :

Pizza Hut claims to have the largest fast–food customer data
warehouses in the world, with 40 million U. S. households or between
40 to 50% of the US Market. The millions of customer records are
gathered from point–of–sale transactions at its restaurants. Pizza Hut can
extract data by favourite toppings, date of the last order, or by whether
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you order a salad with your pepperoni pizza. Pizza Hut has not only Marketing Information
been able to curtail expensive duplicates from its direct–mail campaigns, System
but can also target its marketing to find the best coupon offers for each
household and predict the success of campaigns.
Elaborate of how Pizza Hut used the database, data warehousing
(compilations from various sources) and data mining (meaningful data),
and made it as a useful MIS.

2.14 Further Reading :

Kotler, P., Leong, S. M., Ang, S. H., Tan, C. T., (1994), Marketing
Management (8th Ed.) Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G., Kotler, . P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.
Karunakaran, K., (2010), Marketing Management (1st Ed.) Himalaya
Publishing House
Mc Daniel, C., Lamb, C. W., Hair, J. F., (2008), Principles of
Marketing (1st Ed.) Cengage learning
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.)
Pearson.

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Unit CONSUMER BEHAVIOUR
3

: UNIT STRUCTURE :
3.0 Learning Objectives
3.1 Introduction
3.2 What is Consumer Behaviour ?
3.3 Factors Influencing Consumer Behaviour
3.4 Five Stage Model of Buying Process
3.5 Let Us Sum Up
3.6 Answer to Check Your Progress
3.7 Glossary
3.8 Assignment
3.9 Activity
3.10 Case Study
3.11 Further Readings

3.0 Learning Objectives :

After this unit, you will able to understand :
• To understand the consumer buying behaviour and influencing factors

3.1 Introduction :
We know that the aim of marketing is satisfied the needs and wants
of the customer. But understanding and knowing is not that easy. As
customer have deep motivation in their mind and may change it at the
last moment. Nevertheless, marketer study the customer want, needs,
perception, preference and shopping behaviour. Once they study they will
get a clue for developing the required product.

3.2 What is Consumer Behavior ?

Consumer Behaviour is also known as buyer behavior. It is defined
as how customer search for, purchase, use, evaluate and disposed of
purchased products and services. Consumer behavior focuses on how they
make the purchase decisions to spend their available resources (Time,
Money, Efforts). That includes Questions like what they buy, why they
buy, when they buy, where they buy, howoftentheyuse it, how they
evaluate it after the purchase and the impact of such evaluation on future
purchases and how they dispose of it.

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Check Your Progress – 1 : Consumer Behaviour
1. _____________ is also known as buyer behavior
a. Customer's expectation b. Customer behaviour
c. Customer's purchase d. None of the above

3.3 Factors Influencing Consumer Behaviour :

Influencing factors are as below :
Cultural Factors :
• Culture : Culture is an important characteristic of a society that
distinguishes it from other societal groups. Culture influences the
behavior of the can be seen in that transmits from one generation
to another. Culture diversity operates in dress, food habits, marriage
practices and almost all matters of the individual's life. It manifests
through various symbols and ritual which are unique to the society.
Example : The Turban is a symbol of Sikh culture, a kumkum/
bindi the symbol of Hindu women. The do's and don'ts listed by
culture impact the individual's lifestyle and consequently his buying
behavior. The intensity of the impact will vary from society to
society or group to group.
Understanding of the culture is helpful to the marketer in–sizing
up segments of buyers on the basis of cultural attributes. It helps
culture specific marketing effort, which usually produces better
results.
• Subculture : The Culture includes smaller groups of sub–culture
which is formed on the basis of demographic characteristics,
geographic regions, national and ethnic background, political beliefs
and regional belief. Subculture is the homogeneous group of people
who shares the elements of the overall culture as well as cultural
elements unique to their own group.
• Social Class : Social Class of people, who are equal in status.
These people socialize among themselves both formally and
informally and who shares behavioral norms. Social class is
determined by occupation, income, education etc.
Social Factors :
• Reference Group : A person's reference group are all the group
that have a direct (face to face) or indirect influence on their attitude
or behavior. "Reference Group is a group that serves as a reference
point for an individual in the formation of his/her beliefs, attitudes
and behaviour. "Reference groups are basically small in size and
differ from one individual to another. Family members, relative,
friends, colleagues and other close acquaintance are usually termed
as reference group. Marketers frequently advertise their products
in a group setting – the family eating breakfast cereals, the neighbor
admiring the paint of the house.
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Marketing Management Primary Group (small,
informal) family, friends,
Direct Influence, neighbour and co-workers
Face-to-face,
membership Secondary Group
(large, formal) religious,
professional, trade union
Reference groups
Group
Aspirational Group are
those a person hopes
to join
Indirect Influence,
Non-membership Non-Aspirational
Group that someone
wants to avoid being
identified with.

Primary Groups : Primary groups are basically ones whose members

are closely knit. Family and relatives fall in this group. These people
from primary groups may have a direct and strong impact in your lives
and your buying decisions since they are very significant to you. Primary
groups make you comfortable and give you a feeling that they are with
you when you are confused about a purchase. These people give you
very honest and clear advices as they are so close to you, due to which
you could be more confident about the purchase.
Secondary Groups : Secondary reference groups are usually formal
and they speak less frequently. They may be membership in clubs where
the meeting may happen only once a while. In secondary reference groups
the power to influence people is quite less as compared to primary
reference groups as people in these groups are not that comfortable in
sharing their thoughts or views on the purchase.
Aspirational Groups : Aspirational group is the one to which a
person may want to become part of. They currently are not part of that
group but wish to become and get with that group. For doing the same,
they try to dress, talk, act and even think the way the members of that
group do.
For example, people who like Madhuri Dixit wish to become like
her and meet her and so start purchasing and using all those products
that she endorses.
Non–Aspirational Groups : The people in these groups are totally
opposite to the people in the aspirational group. Here people deny of
becoming or getting connected to a particular group. They just hate being
related to that group.
For example, if people don't like a particular community, they would
never like being connected to them. So they would try all the possible
ways to avoid the way in which they dress, think or act.

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Thus marketers need to understand the likes and dislikes of the Consumer Behaviour
consumers and also the groups to which they belong. Marketers should
recognize the extent to which a reference group influences the consumer
and he should also understand out of all the groups which group influences
him the most.
Opinion Leader : is the person who offers informal advice or
information about a specific product or produce category, such as – which
brands is best or how a particular product may be used.
• Cliques : Are small groups, whose members interact frequently.
They are similar and their closeness facilitates effective
communication but also insulates the clique from new ideas. The
challenge is to create more openness so cliques exchange information
with others in society. This openness is helped along by people
who function as liaisons and connect two or more cliques without
belonging to either and by bridges, people who belong to one clique
and are linked to a person in another.
• Family : Family members are the most influencing factor in consumer
buying behavior. In a family parents and siblings are considered
most influential. E.g. : A family that strongly values good health
will have a grocery list distinctly different from that of a family
that views every dinner as a gourmet event. Moreover, the family
is responsible for the socialization process, the passing down of
cultural values and norms to children. Children learn by observing
their parents' consumption patterns, and so they will tend to shop
in a similar pattern.
Following are the roles in the family decision making process ?
• Influencers : Influencers are the ones who give ideas or information
about the product or service to the consumer.
• Gate Keepers : Gatekeepers are the family members who usually
panel the information. They can be our parents or siblings too who
can in any form provide us the information about the product.
• Decision Makers : Family or our parents who usually have the
power to take decisions on our behalf are the decision makers. After
completing the research they may decide to purchase the particular
or dispose it.
• Buyers : Buyer is the one who actually makes the purchase of
the product.
• End Users : The person who finally uses the product or consumes
the service is the ultimate consumer also called as End user as
per the context.

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Marketing Management Check Your Progress – 2 :
1. ________________ is the person who offers informal advice or
information about a specific product or produce category.
a. Reference person b. Social person
c. Opinion Leader d. None of the above
2. __________ is an important characteristic of a society that
distinguishes it from other societal groups
a. Family b. Culture
c. Clique d. None of the above
Personal Factors :
• Gender : There is physiological difference between men and women
and because of which they have different needs. For Example :
Health and beauty product. Men and Women plays a distinct cultural,
economic and social role in the society and this have effect on their
decision–making process also.
• Age and life cycle : At all stage in life people buy or prefer goods
and service. Depending on the age of a consumer, it is a general
indication on what product he or she may be interested in purchasing.
Consumer tastes in food, clothing, car, furniture and recreation are
often age related.
• A bachelor would prefer spending lavishly on items like beer,
bikes, music, clothes, parties, clubs and so on. A young single
would hardly be interested in buying a house, property, insurance
policies, gold etc. An individual who has a family, on the other
hand would be more interested in buying something which
would benefit his family and make their future secure.
• Occupation : According to occupation the preference changes.
Occupation affects the person choice in selection of product and
services. Blue–collar workers tend to buy more rugged work clothes;
whereas white–collar executives buy more business suits. A company
can even specialize in making products needed by a given occupational
group.
• Ramesh was working with an organization as Chief Executive
Officer while Jayesh, Ramesh's friend now a retired professor
went to a nearby school as a part time faculty. Ramesh always
looked for premium brands which would go with his designation
whereas Jayesh preferred brands which were not very expensive.
Ramesh was really conscious about the clothes he wore, the
perfume he used, the watch he wore whereas Jayesh never
really bothered about all this.

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That is the importance of one's designation. As a CEO of Consumer Behaviour
an organization, it was really essential for Ramesh to wear
something really elegant and unique for others to look up
to him. A CEO or for that matter a senior professional can
never afford to wear cheap labels and local brands to work.
• An individual's designation and his nature of work influence
his buying decisions. You would never find a low level worker
purchasing business suits, ties for himself. An individual
working on the shop floor can't afford to wear premium
brands to work.
• College goers and students would prefer casuals as compared
to professionals who would be more interested in buying
formal shirts and trousers.
• Personality : Personality defined in terms of traits like self–
confidence, dominance, autonomy, deference, sociability,
defensiveness and adaptability. Brands also have personality and
consumers are likely to choose brand which matches there personality
consistent with actual self–concept.
• Lifestyle : Life means a person pattern of living. Though people
came from same culture, sub–culture, social class or occupation
but their pattern of living may be different. Lifestyle can be expressed
in terms of person's activities, interest and opinions. For example
when a consumer leads a healthy lifestyle, then the products he
buys will relate to healthy nearishments.
Psychological Factors : An individual's buying decisions are further
influenced by psychological factors : Perception, motivation, learning,
belief and attitude.
Perception : A stimuli is any unit of input affecting one or more
of the five senses : sight, smell, taste, touch, and hearing. The process
by which we select, organize and interpret these stimuli into a meaningful
and coherent picture is called perception. In essence, perception is how
we see the world around us and how we recognize that we need some
help in making a purchasing decision.
For E.g., when a retail clothing store has displayed clothes in
crowded racks using low quality plastic hangers, customers get a perception
that it is a low–quality brand. But when the same clothes are presented
well with back–lit mannequins, neatly arranged, good quality attractive
hangers, etc. the customers build a different perception about the brand.
Motivation : When you buy a product, you usually want to fulfil
your some kind of need. These needed becomes motive when aroused
sufficiently. E.g. : Suppose you are hungry and you stop to have Vadapav.
In this case, you are motivated by hunger to stop at Vadapav shop.
Motives are the driving force that causes a person to take action to satisfy
specific needs. Maslow's hierarchy of needs, which has arranged needs

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Marketing Management in ascending order of importance physiological, safety, social, esteem,
self–actualization needs.
Physiological needs : Are basic needs like hunger, thirst, shelter.
Advertisements showing pizza and juice after marathon are examples of
appeals to satisfy hunger and thirst.
Safety needs : includes security and freedom from pain and
discomfort. E.g. : Aware of the aging population health fears, there
medical centre advertises that they offer consumers a full body scan for
early detection of chronic diseases.
Social needs : includes sense of belonging, love. Advertisements
for clothes, cosmetics and vacation package suggest that buying the
product can bring affection.
Esteem needs : include self–respect and sense of accomplishment,
prestige, fame and recognition. Esteem needs are the basis for the human
desire we all have to be accepted and valued by others. Mont Blanc pens,
Mercedes–Benz automobiles stores all appeal to esteem needs.
Self–Actualization : Self–actualization needs are the highest levels
in Maslow's hierarchy, and refer to the realization of a person's potential,
self–fulfilment, seeking personal growth and peak experiences. Even so
advertisement may focus on this type of need. E.g. : Microsoft appealed
to consumers' needs for self–actualization when it chose "Your Potential
our passion" as the windows XP slogan.
Learning : Consumer behaviour is the results from learning, which
is the process that creates changes in behaviour through experience and
practice. It is not possible to observe learning directly, but we can infer
when it has occurred by a person's action. E.g., suppose you see an
advertisement of a new improved headache medicine, you go to the store
that day and buy that medicine. We infer that you have learned something
about the medicine. There are two types of learning :
Experiential Learning : Experiential learning is a type of learning
when experience changes your behaviour
Conceptual Learning : It is a second type of learning, which is
not acquired by direct experience. Imagine that you are standing near
chocolate vending machine and have notice diet chocolate with no sugar
content. As someone has told you that diet chocolate leaves a bad after–
taste, you choose a different chocolate. You have learned that you would
not like new sugar free chocolate without ever trying it.
Emotions : Companies develop advertisements that are emotional
which invoke different kind of feelings. Consumer response is not always
cognitive or rational. Cadbury's advertisements are very emotional and
touches ones' heart. An emotion–filled brand story has been shown to
trigger's people desire to pass along things they hear about brands, through
either word of mouth or online sharing.

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Belief : is an organized pattern of knowledge that an individual Consumer Behaviour
holds as true about his or her world. A consumer may believe that Apple
i–phone is durable, touch screen is smooth, and is reasonably price
according to its features. This belief is based on the knowledge and faith
the consumer has for the product. Consumer tends to develop belief about
the product attributes and then, through these beliefs, form a brand image–
a set of beliefs about a particular brand. In turn, the brand images shape
consumers attitudes towards the product.
An Attitude : is a learned tendency to respond consistently towards
a given object, such as a brand. Attitudes rest on the individual value
system, which represents personal standards of good and bad, right and
wrong, therefore, attitude tend to be more enduring and complex than
beliefs. E.g. : Attitude towards using credit card for purchase across
world.
Check Your Progress – 3 :
1. Physiological needsare _________ from the below
a. hunger b. Shelter c. thirst d. All of them
2. _________ type of learning is not acquired by direct experience.
a. Conceptual b. Emotion c. Belief d. All of them

3.4 Five Stage Model of Buying Process :

The below mention five stage which consumer goes through while
making purchase.

Need Recognition : Consumer will not able to purchase the product

unless they know what are their needs or want. If they know that they
require a particular product then only consumer will buy that product.
Need arises when there is a problem. E.g. : If you break your laptop
which you were using it daily, a need arises to purchase new laptop.
Want arises because you are influenced by some external factors.
E.g. : If you find your friend using an Apple Laptop, and you might
have seen its reviews on Internet, you feel you want to upgrade to an
Apple laptop, though you may already have a Dell laptop.
In this case marketer should identify the needs of the consumers
and offer the products based on the Desire.
Information Search : After need recognition consumer are aware
of their need or want. They know that what product they will buy which
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Marketing Management will solve their problem. Therefore, he wants to know more about the
product and does information search.
When consumers want to buy a laptop, they look for its features,
price, discounts, warranty, after sales service, insurance, and other important
features. Here, a marketer must offer a lot of information about the product
in the form of informative videos, demos, blog, how–to–do videos, and
celebrity interviews.
Evaluation of Alternatives : In first and second stage, consumers
have done lots of research about the product need and have collected
information about the product. Information gathered from various sources
is used in evaluating alternatives. There are many products available in
the market which can solve the consumer problems. Hence, it is the
consumers who have to make a choice after evaluating the various
available alternatives.
Purchase Decision/Purchase : In this stage consumer is deciding
whether to buy the product or not. Yes, even at this stage consumer can
drop the purchase and walk away.
Philip Kotler (2009) says, the final purchase decision may be
'interrupted' by two factors. Customer may get a negative feedback from
friends or other customers who have bought it earlier. E.g., a customer
shortlists a laptop, but his friend gives a negative feedback. This will
make him to change his decision. Secomdly, the decision to buy a laptop
itself might change. E.g., sudden change in business plans, financial
crunch, unexpected higher prices, etc. might lead the consumer to drop
the idea of buying a laptop.
The Consumer chooses the product that he wants to buy, but many
times, he may not actually buy it for various reasons. At this stage, a
marketer should find out the various reasons due to which the consumer
is hesitating to buy. The reasons could be price, value, and change in
the needs of the consumer.
Marketer needs to step up the game. Marketer may start reminding
the customers the reason behind their decision to buy the product.
Furthermore, give as much information regarding your brand, reiterating
that you are the best provider of the product that can fulfill his needs.
Re–targeting by simple email reminders can enforce the purchase
decision.
Post–Purchase evaluation : After the purchase, a consumer always
compares products with their expectations. There can be two outcomes;
consumer may be either satisfied or dissatisfied. If the product satisfies
the need of the consumer then, they are happy. Otherwise, the consumer
will be dissatisfied, and they feel that they have taken incorrect decision.
So, he may want to return of the product or exchange it. Even though
customer is satisfied, there is no guarantee that the customer might come
again to purchase another product.

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A marketer has to make sure that the consumer is satisfied with the Consumer Behaviour
product so that his experience will lead to repeat purchase by customers.
Brands need to be careful to create positive post–purchase experience.

3.5 Let us Sum Up :

Consumer behaviour encompasses all the actions involved in
selecting, purchasing, using and disposing of goods and services. Whenever
you watch a commercial on television, buy a new pair of shoes, read
a book or recycle soft drink cans, you are engaging in consumer behaviour.
Consumer buying behaviour refers specifically to the actions consumers
take when deciding what to buy and when to buy at the time of actual
purchase. You have studied social, psychological, personal, economic
factors influencing the buying behaviour of consumers. Now, it is possible
for you to understand them easily with the help of Maslow's Need of
Hierarchy Model. You should be mentally ready to give the right and
logical advice to the customer who seeks your help in decision–making.
You have observed that the purchaser passes through five distinct stages
while taking a decision for purchasing a particular commodity. They are
: need arousal, information search, evaluation behaviour, purchase decision,
post purchase feelings. It was indeed a great learning experience for you
to know your potential customer better than ever for your career growth.

3.6 Answer to Check Your Progress :

Check Your Progress – 1 :
1. b
Check Your Progress – 2 :
1. c 2. b
Check Your Progress – 3 :
1. d 2. a

3.7 Glossary :
• Culture : Elements of every culture are the value, myths, language,
custom, rituals and law that shape the behavior of the people that
transmit from one generation to another.
• Subculture : The Culture includes smaller groups of sub–culture
which is formed on the basis of demographic characteristics,
geographic regions, national and ethnic background, political beliefs
and regional belief.
• Social Class : Social Class of people, who are equal in status.
These people socialize among themselves both formally and
informally and who shares behavioral norms. Social class is
determined by occupation, income, education etc.
• Perception : A stimuli is any unit of input affecting one or more
of the five senses : sight, smell, taste, touch, and hearing.

105
Marketing Management • Personality defined in terms of traits like self–confidence, dominance,
autonomy, deference, sociability, defensiveness and adaptability.

3.8 Assignment :
1. What do you understand by buyer behavior ?
2. What is importance of buying behavior in marketing Planning ?

3.9 Activities :
Describe the impact of digital revolution on marketing and on
consumer behavior.
Study different factors affecting consumer Behaviour for specific
products of your choicse

3.10 Case Study :

Cereal manufacturing industry in US produced cereals of various
shapes, flavors and colors and the advertisements directed at children.
The leading manufacturers are Kellogg's, General Mills, General Foods,
Quaker Oats, and Champion.
When Kellogg's share was depleting, they introduced new cereals
for adults, as mostly others were targeting children. So, Kellogg's developed
a cereal which would be tasty, nutritious, free of sugar and made of grain,
and called it "Nutrigrain". These were available in four flavours – Nutrigrain
Corn, Wheat, Barley and Rye.
These were introduced together, and no test marketing was done
to avoid competition. These Products were advertised heavily and targeted
at adults. There were discount coupons that were freely distributed, giving
30 percent on the MRP as well as coupons were also inserted in the
Nutrigrain boxes' for repeat purchases. A lot of information and advantages
of consuming Nutrigrain was printed on the packages for the consumers.
Proper display in the shelves of stores was also taken care of.
Though there was an initial growth in sales, mainly due to promotional
efforts, after some time, the sales declined because there were very few
repeat purchases. This started the extensive thinking as to where they
had gone wrong. Consequently, they withdraw two of their brands–Barley
and Rye. These were replaced by raisin and wheat varieties.
It was later found that the adults had very little breakfast time, which
prevented them from having cereals. Also, they also found out that though
adults were demanding for sugarles scereals, but they loved to satisfy
their palates with sugar coated cereals.
Questions :
1. Should Kellogg's have done test marketing and gradual product
introduction ?
2. How can you comment on the habits of the consumers and their
preferences ?
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3.10 Further Reading : Consumer Behaviour

Kotler, P., Leong, S. M., Ang, S. H., Tan, C. T., (1994), Marketing
Management(8th Ed.)Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G., Kotler, . P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.
Karunakaran, K., (2010), Marketing Management (1st Ed.) Himalaya
Publishing House
Mc Daniel, C., Lamb, C. W., Hair, J. F., (2008), Principles of
Marketing (1st Ed.) Cengage learning
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.)
Pearson.

107
Unit
OVERVIEW OF VARIOUS TYPES MARKET
4

: UNIT STRUCTURE :
4.0 Learning Objectives
4.1 Introduction
4.2 Business Market
4.3 Buying Situations
4.4 Business Buying Behaviour
4.5 Institutional and Government Market
4.6 Managing B2B Customer Relationship
4.7 Let Us Sum Up
4.8 Answer to Check Your Progress
4.9 Glossary
4.10 Assignment
4.11 Activity
4.12 Case Study
4.13 Further Readings

4.0 Learning Objectives :

• Buying Situations in Business Markets.
• Characteristics of Business Markets.
• Managing Customer Relationship in B2B

4.1 Introduction :
Any company doing business organisations not only sells but also
buys material for manufacturing and business services. Government and
Institutional buyers have a large part in B2B business.

4.2 Business Market :

Organisations are buyers as well as sellers.
The Business Markets includes organisations that buy products on
large scale either for production of another product or for their own use.
Buying for producing for consumers
Organisations buy products and add value to the same for selling
to Consumers. These organisations are end users, buying products and
services for their operations from suppliers. For E.g., an ice cream
producer needs to buy materials to produce (milk, sugar, preservatives),
to package (wood, paper) the ice cream bar for consumers.
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Buying for own use Overview of Various
Organisations also buy products and services for their own Types Market
consumption instead of adding value to them for selling. For E.g., air
conditioners, stationary, insurance for the company and employees, etc.
These also include wholesalers and retailers that acquire good for
reselling them at profit.

4.3 Buying Situations :

There are three major types of buying situations.
1. New Task :
The purchase is done for the first time with no purchasing experience,
and extensive search is done to evaluate options. Expertise of decision–
making in participants will be very crucial as there is great risk involved.
For E.g., for the first time, an organisation buying chemicals to
manufacture paints.
2. Modified Rebuy :
Due to change in preferences or entry of a substitute product in
the market, organisations are forced to modify an existing product to
suit the target market. The modifications can be change in product
characteristics, price, quality, suppliers, etc.
This process is less risky and less time consuming as compared
to "New Task" buying situation as the information is gathered on
alternatives.
E.g. A school may purchase a bigger school bus to add to the
existing fleet of mini–buses. The supplier of the bigger bus is the same
who had earlier supplied mini–buses to the school.
3. Straight Rebuy :
In this buying the organisations rebuy products and services from
the same suppliers. Suppliers usually visit the organisations to take the
orders in advance to maintain their market share. The people involved
in the buying process have relatively good experience of buying and need
no additional information on products and services. There is no risk
involved because of past experience of purchasing the same products
and services.
E.g. A paint manufacturer who buys chemicals repeatedly from the
same suppliers to meet the production demand will be a straight re–buy.
In this cases the specifications of the required chemicals, price, delivery
period etc., must remain the same.

4.4 Business Buying Behaviour :

Business buying behaviour refers to the actions of employees of
an organisation to buy products and services for the organisation which
includes the decision–making process of selection of suppliers and bearing
post purchase consequences.
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Marketing Management Steps in Buying Behaviour
There are common steps involved in Business buying though each
organisation has its own way of making decision for buying products.
The process may also differ for all the three buying situations :
1 New Task,
2. Modified Rebuy and
3. Straight Rebuy.
Steps in Business Buying Process :
1. Need / Problem Recognition :
In business buying the need or problem arises for a product required
by operation of the business. It is essential that businesses make decisions
to buy products that will enhance their operations in some way. Before
making a purchase decision, businesses must identify a true need of their
company. For example, purchasing new software may improve inventory
management, or adding a printer might increase productivity.
Often, employees present their needs while at other times, employers
have to recognize a need after reviewing work flow and business goals.
Business buyers buy products either to take advantage of new
opportunities in the market or to find a solution for any issues related
to operations.
Situations may be – new machinery required, old machinery break
down, new inventory for production, instrument with better technology.
Understanding the buying needs helps business marketers to plan
suitable marketing programs. For E.g., in machinery breakdown, the
suppliers can provide free repairs, offer buy back options against new
machinery, etc.
In situations like Straight Rebuy, organisations usually have a contract
for a certain period of time to supply the already purchase products at
specified quantity, rate and within a time frame. For E.g., cement required
regularly by a construction company.
The need recognition is complicated in New Task and Modified
Rebuy situations.
2. Need / Problem Description :
When there are many individuals involved in the decision process,
a clear draft outlining the problem, quality and quantity of products written
down for the discussions and approval by the concerned authorities.
For E.g., the school that is in need of bigger school buses requires
inputs from drivers and the administration staff. The need description for
this case may include – AC / Non–AC, training for drivers, number of
buses required.
In this scenario, a driver highlighted the need wherein a child with
special needs should be able to board the school bus. This resulted in
110
a specification written which could have been overlooked and would have Overview of Various
resulted in grievance issues at a later stage. Types Market
3. Information Search :
Use the product specifications to search for viable options. The
vendors and suppliers have to be found who offer the product that meets
the specifications. It will be worthwhile to consider vendors who have
supplied in the past, or those who have sales or offer discounts to
businesses like yours
For Straight and Modified Rebuy the purchasing department already
has information on the existing suppliers. In New Task situations, technical
staff will have to give inputs. If the search is informal, the purchasing
team may seek contact information from advertisements in trade journals,
internet search, visit trade shows, or scan any proposals sent by suppliers
in the recent past.
For formal search, site visits of suppliers, analysis of product
characteristics, sample test of the product, etc. maybe essential.
Suppliers maybe rejected, if they have bad image in the industry,
high price, erratic delivery schedule, or quantity and quality discrepancy
etc.
4. Supplier Evaluation and Selection :
Narrow your search and identify the best options for your business.
Work with the purchasing team to identify the pros and cons of each
option. Consider costs, features, maintenance, delivery times, payment
options, customer service and vendor reputation.
Additional information on suppliers is needed to further verify,
evaluate and select the suppliers. The organisation asks the shortlisted
suppliers to send proposals or formally meet or make presentations.
The final negotiations could be based on price and quality before
final selection. Many organisations select more than one supplier to
overcome any hurdles like a strike, etc. This gives advantage for
negotiations on price, etc.
As organisations are in the business for making profits, most of
the negotiations are around the price of the product. Once a contract
is mutually agreed upon, the final order is made listing the product
specifications, delivery terms, payment terms, after sale services, etc.
5. Make The Purchase :
Determine how your company plans to pay for the purchase and
identify the purchasing team member to finalise the purchase. Contact
the vendor who provides the product you want to buy and make your
purchase.
6. Post Purchase Evaluation :
Once the products are used in the production department,
organisations assess if the supplier has fulfilled all the terms of the
111
Marketing Management agreement. This process is formal as compared to consumer post purchase
evaluations.
A questionnaire may be sent to the production team for getting a
clear picture on the product bought. The feedback on the purchase will
determine if changes need to be made to the specifications if the product
or software must be updated in the future.
The suppliers also follow this activity to ensure the buyers are
satisfied so as to continue the business.
A dissatisfied buyer may make demands for corrections or may even
switch to other supplier.
The Purchase Department :
The Purchase Department has individuals and groups who participate
in the purchasing decision making process, who share some common goals
and the risks arising from the decisions.
Seven roles performed in the purchase decision process.
1. Initiators : those who request for purchase. They are the actual
users of the product or item. On some occasions, it may be top
management, maintenance or engineering department.
2. Users : those who will use the product or service. They are R &
D, engineering – those who play a vital role in buying process.
3. Deciders : people who decide on product requirements or on
suppliers. In most cases, the purchase executive may be the decider.
For high value and technically complex products, senior executives
are the deciders.
4. Approvers : people who authorizes the proposed actions of deciders
or buyers. They could be personnel form top management or finance
department or the user.
5. Buyers : people who have formal authority to select the supplier
and arrange the purchase terms. Buyers may help shape product
specifications, but they play their major role in selecting vendors
and negotiating. In more complex purchases, the buyer might include
high level managers participating in the negotiations.
6. Gate keepers : people who have the power to prevent sellers from
reaching users or deciders. They may be purchasing agents,
receptionists etc. They are closest to the action, purchasing executive
or the person involved in the buying centre. It generally happens
that information is usually routed through them.
To target the efforts properly, vendors have to sort out : who are
the major decision participants in the organisation ? What decisions do
they influence ? What their level of influence ? What evaluation criteria
do they use ?

112
Characteristics of Business Markets : Overview of Various
Fewer buyers : the business marketer normally deals with far fewer Types Market
buyers than the consumer marketer does. For E.g. : MRF Tyres largely
depend on orders from Maruti Ltd and Honda.
Large buyers : do most of the purchasing in such industries as
aircraft engines and defense equipment.
Supplier–Customer relationship : because of the smaller customer
base and the importance and power of the larger customers, suppliers
are frequently expected to customize their offerings to individual business
needs. Sometimes the buyers require the sellers to even change their
practices and performance.
Geographically concentrated buyers : Large group of business
buyers in India are concentrated in major cities : Mumbai, Delhi, Kolkata,
Chennai, Hyderabad, Pune and Ahmedabad. The geographical concentration
of producers helps vendors to focus and reduce selling costs.
Derived demand : the demand for business goods is ultimately
derived from the demand for consumer goods. For this reason, the
business marketer must closely monitor the buying patterns of ultimate
consumers.
Inelastic demand : the total demand for many business goods and
services is inelastic that is, not much affected by price changes. Shoe
manufacturers do not buy more leather if price of leather fall or vice
versa.
Demand is especially inelastic also because producers cannot make
fast changes in production methods.
Fluctuating demand : the demand for business goods and services
tends to be more volatile than the demand for consumer goods and
services. A small percentage increase in consumer demand can lead to
a much larger percentage increase in the demand for plant and equipment
necessary to produce the additional output.
Professional Purchasing : business goods are purchased by trained
purchasing agents, who have to follow the organisation's purchasing
policies, limitations, and requirements.
Several buying influence : Purchasing committees consisting of
technical experts and even senior management are common in the purchase
of major goods. Vendor marketers have to send well–trained sales –
representatives and often sales teams to deal with the well senior executives.
Multiple sales calls : because more people are involved in the
selling process it takes multiple sales calls to get business orders. On
an average, it takes more than four calls to close an average industrial
sale. In the case of capital equipment sales for large projects, it may
take multiple attempts to fund a project, and the sales cycle–between
quoting for a job and final delivery of the product – is often measured
in a number of months.
113
Marketing Management Direct purchasing : business buyers often buy directly from
manufacturers rather than through intermediaries, especially items that are
technically complex or expensive.
Reciprocity : business buyers often select suppliers who also buy
from them. An E.g. a paper manufacturer will buy chemicals from a
chemical company that buys a considerable amount of its paper.
Leasing : many industrial buyers lease instead of buy heavy equipment
like machinery and trucks. The lessee gains a number of advantages :
conserving capital, getting the latest product, and receiving better service.
The lessor often ends up with a larger net income and the chance to
sell customers who could not afford outright purchase.

4.5 Institutional and Government Markets :

The business–to–business market has a focus on products, goods
and services that are typically sold to other businesses rather than direct
to consumers. Examples include office furniture, corporate accounting
services and conference and exhibit supplies. Many business–to–business
markets have some overlap with consumer markets, for example, a
cleaning company may provide both residential and commercial services.
Institutional Markets :
The institutional market consists of schools, colleges, hospitals,
nursing homes, prisons and other such institutions that must provide goods
and services to people. Many of these organisations are characterized by
low budgets and captive clienteles.
For E.g., hospitals have to provide hygienic food for their patients.
The buying objective being not profit, but part of the total service package.
The objective is also not cost reduction because poor food will harm
the patients and hurt the hospital's reputation. The hospital purchasing
agent has to search for institutional food vendors whose quality meets
a certain minimum standard. Many food vendors setup a separate division
to sell to institutional buyers because of these buyers' special needs and
characteristics.
Thus, organisations will produce, package, and price their products
differently to meet the different requirements of hospitals, colleges, and
prisons.
Government Markets :
In most countries, government organisations are a major buyer of
goods and services. Government organisations typically require suppliers
to submit bids, and award the contract generally to the lowest bidder.
Governments will also buy on a negotiated contract basis, primarily
in the case of complex projects involving major R & D costs and risks
and in cases where there is little competition.
Government organisations tend to favour domestic supplies over
foreign suppliers. A major complaint of multinationals operating in Europe
114
was that each country was favouring its nationals in spite of superior Overview of Various
offers that were available from foreign firms. . Types Market
As their spending decisions are subject to public review, government
organisations require considerable paperwork from suppliers, who often
complain about excessive paperwork, bureaucracy, regulations, decision–
making delays, and frequent shifts in procurement personnel.

4.6 Managing Business–To–Business Customer Relationship :

A seller in B2B market has to maintain relationships with its buyer.
He has to formally use distributors and sales people, through
informal networks consisting of personal contacts and good relationships
between supplier's and the customers' employees.
Many suppliers and buyers have long term relationship that has
many advantageous, like reduced risk, for both buyer and seller.
Improved communication and joint problem solving and designing
of components can take place in B2B relationship.
New product development can also benefit from such relationships.
Sellers gain through closer knowledge of buyer requirements and by
gaining the trust of the buyer, an effective barrier to entry for competing
firms may be established.
Buyers treat their trusted suppliers as strategic partners, sharing
information and drawing on their expertise when developing cost efficient,
high quality new products.
Relationship managers maintain a open line of communication with
the buyers as they have to co–ordinate between departments of their own
companies and departments of buyer companies to ensure customer
satisfaction.
An in–depth understanding of buyer's decision–making unit is
developed by sales people. The sales team should be able to develop
a relationship with a large number of individual decision makers.
Building Relationships :
A seller has to take a decision on the type of relationships it will
pursue with its buyers, and the amount of time, effort and resources it
will spend in building and maintaining such relationships.
Some buyers prefer casual relations as they prefer to buy on price
and do not perceive major benefits accruing from closer relationships.
They may see good relationships with suppliers as a hindrance in extracting
more concessions from them.
Methods of improvement by suppliers to customers at zero or
nominal cost :
1. Technical support : The seller helps to improve the operations
and better use of the machine by the buyer. It is a form of technical
co–operation between the two, followed by after sales service, and
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Marketing Management providing training to customer's employees, thereby enhancing the
customer's know–how and productivity.
2. Expertise : A supplier can provide expertise to the buyer including
designing components and equipment for the buyer, thereby improving
its competitiveness.
3. Resource support : A supplier can support resource base of its
customers by extending credit facilities, giving low interest loans,
co–operative promotion of the buyer's products, and accepting
reciprocal buying practices where the supplier agrees to buy products
from customers.
4. Service levels : A supplier can improve the level of service by
providing more reliable delivery, setting up computerized reorder
system, offering fast, accurate quotes and reduce defect levels.
Hence, change of suppliers will be costly for the buyer.
5. Risk reduction : A supplier offers free demonstration, products for
trial at zero or low cost to customer, product and delivery guarantee,
preventive maintenance contracts, swift complaint handling and
proactive follow up.
These services provide a customer the reassurance that the supplier
is willing to extend itself to serve him.
Benefits of positive customer relations :
• Customer retention : When your customers know they will have
a positive experience with the business, and it's very difficult for
a competitor to woo them away.
• Customer loyalty : Having positive relationships with the customers
inspires a type of loyalty that overcomes many common reasons
why customers defect, including cost and convenience.
• Customer acquisition : The satisfied customers recommending to
others to buy and write positive blogs.
• Customer satisfaction : Most customers stop patronizing a business
rather than complaining, positive customer relations make it easier
to get customer feedback.
Check Your Progress :
1. The _______ market consists of schools, hospitals, and nursing
homes
a. Institutional b. Business c. Consumer d. Government
2. The Business Markets are characterized as _______
a. Geographically concentrated b. Geographically dispersed
c. close to market d. continuous demand
3. Managing B2B customer relationship has _______
a. Low communication b. Short term relationship
c. hardly developed d. Long term relationship
116
4. _______are products bought by individuals and organisations for Overview of Various
further processing or for use in Types Market
a. Personal products b. Consumer products
c. Specialty products d. Industrial products
5. Long term business relationship in B2B helps in _______
a. Cost efficiency b. New products
c. Gain Trust d. All the above

4.7 Let Us Sum Up :

B2B have fewer buyers and sellers compared to B2C. In business
market there is a closer relationship with the customers and are more
physically closer to each other.
There is large portion of B2B business in institutional market
(schools, hospitals etc) and government organisations. The business with
these two entities entails need for social attention for following laid down
procedures.

4.8 Answer to Check Your Progress :

1. a 2. a 3. d 4. d 5. d

4.9 Glossary :
B2B – Business to Business
Modified – transform from its original form during evolution
Initiator – a person or thing that initiates someone or something
Derived – base a concept on an extension or modification of
(another concept).
Reciprocity – the practice of exchanging things with others for
mutual benefit,

4.10 Assignment :
Explain the different buying situations in B2B market.
What steps are undertaken in the buying process ?
How do purchases happen in Government and Institutions ?

4.11 Activity :
Visit an industrial unit and assess their buying resource pattern over
last two years.

4.12 Case Study :

Krishna was working as a purchase managerin a company, where
raw materials and other products were purchased solely at his discretion.
Later Krishna changed his job to a bigger company as head of the
purchase department. As the procedures of the purchases made by this
117
Marketing Management new company were different from those of the earlier company, it took
him quite some time to get familiar with the new system.
It so happened that once, he had to place an urgent order worth
approx. Rs 4 lakhs as the material was critical to the manufacturing shop
floor.
He placed the order knowing the ordering situation was urgent
without following the laid–down procedures. There was no problem in
supply, but he was criticized as he had taken the decision alone.
Krishna was very disturbed about the situation and wanted to explain
his position to the manager.
Questions :
1. Where did Krishna go wrong ?
2. How can you help him to reply to the manager ?

4.13 Further Reading :

Principles of Marketing, 1999, Second European edition, Philip
Kotler Gary Armstrong, John Saunders, Veronica Wong, Prentice Hall
Europe
Marketing Management, 15th edition (2014), Philip Kotler and
Kevin Keller, Pearson Education.
https://courses.lumenlearning.com/boundless–marketing/chapter/
business–markets/
https://www.abcofmarketing.com/explain–detail–industrial–business–
buying–process/

118
BLOCK SUMMARY Overview of Various
Types Market
In this Block you have learned about the importance of implementing
the cost–effective CRM in your organisation. As a strategy through CRM,
planning can be done for building relations with customers as well as save
cost and time.
MIS scans the environment for the managers and gives smart analysis
on new segments cropping up and the changes in consumersbehaviour.
One of the most important study in marketing is the in–depth
knowledge of the consumers' mind, especially his buying pattern, decision
making process and buying behaviour.
There is a large market potential in B2B business which focusses on
government and institution buying, which cannot be ignored.

BLOCK ASSIGNMENT
Short Answer Questions :
1. What are the different types of customers for B2C ?
2. What are the misconceptions about CRM's implementation ?
3. Give the benefits of CRM.
4. What are the environments in which a Company works ?
5. Briefly describe the stages of buying process.
6. What do you understand by B2B market ?

Long Answer Questions :

1. What is CRM ? Describe its features.
2. How can a Marketing Manager get the advantage of MIS in his / her
Company ?
3. What are the methods of forecasting the potential of market ?
4. What factors influence buying behaviour in B2C ?
5. What steps are essential for the buying process in B2B ?
6. How does a seller maintain and build business relationship in B2B ?

119
Marketing Management  Enrolment No. :
1. How many hours did you need for studying the units ?

Unit No. 1 2 3 4

No. of Hrs.
2. Please give your reactions to the following items based on your reading
of the block :

3. Any other Comments

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120
Dr. Babasaheb BBAR-201/ DBAR-201
Ambedkar
OpenUniversity

Marketing Management

BLOCK-3 STP, GROWTH STRATEGIES, NEW

PRODUCT OFFERINGS, GLOBAL MARKET
AND HOLISTIC MARKETING

UNIT 1
STP, PLC, DEALING WITH COMPUTATION AND COMPETITIVE
STRATEGIES

UNIT 2
NEW PRODUCT DEVELOPMENT

UNIT 3
GLOBAL MARKET AND MANAGING HOLISTIC MARKETING
MANAGEMENT
BLOCK 3 : STP, Growth Strategies, New Product Offerings, Global
Market and Holistic Marketing
Block Introduction
Marketers need a group to cater to. The grouping has to be made on
some basis for easy comprehension and understanding by all concerned in
the organisation. The base of grouping or differentiating customer can be
broadly done to address them with the right marketing mix. It is called
segmenting and targeting. Once that is done, the marketers have to position
their product smartly to get the best response. That is positioning.
Innovations have to be done constantly with time and newer technology.
This is done by new products development by the organisation. If there is
no R & D the product will decline from the growth stage into a loss–making
product.
The world is yours to conquer if there is the ability, keenness,
resources and risk–taking abilities. Companies fight for the market share
not only in the domestic market from local competitors but also from global
players in the international arena. The risk–taking ability will also depend
on the skills possessed and acquired by the entrepreneurs and the path
chosen by him / her to go global.

Block Objectives
After learning this block you will be able to understand :
• Segmentation, Targeting and Positioning
• Product Life Cycle
• New Product Development
• Modes of Entry into foreign markets.
• Concept and Components of Holistic marketing

Block Structure
Unit 1 : STP, PLC, Dealing with Computation and Competitive Strategies
Unit 2 : New Product Development and Marketing
Unit 3 : Global Market and Managing Holistic Marketing Management
STP, PLC, DEALING WITH
Unit COMPUTATION AND
1 COMPETITIVE STRATEGIES

: UNIT STRUCTURE :
1.0 Learning Objectives
1.1 Introduction
1.2 Basis of Market Segment
1.3 Types of Market segmentation
1.4 Steps in Market Segmentation
1.5 Target Market
1.6 Positioning
1.7 Brand Mantra
1.8 Designing a Brand Mantra
1.9 Steps to Product Positioning
1.10 Competition and Driving Growth
1.11 Competitive Strategies for Market Leaders
1.12 Other Competitive Strategies
1.13 Product Life Cycle
1.14 Extending The Product Life Cycle
1.15 Shapes of Product Life Cycle
1.16 Stages of Product Life Cycle
1.17 Product Strategy for Life Cycle Stages
1.18 Let Us Sum Up
1.19 Answer to Check Your Progress
1.20 Glossary
1.21 Assignment
1.22 Activity
1.23 Case Study
1.24 Further Readings

1.0 Learning Objectives :

At the end of this unit, you will able to understand.
• Concept of STP
• Various competitive strategies
• Stages of Product life cycle.

121
Marketing Management 1.1 Introduction :
Segmentation, Targeting and Positioning (STP) is an approach that
you can use to identify your most valuable market segments, and then
sell to them successfully with carefully targeted products and marketing.
We will also study growth and various competitive strategies. Further,
we will learn what does Product Life Cycle (PLC) mean. Every product
has its life. Industrial goods may have a longer life than consumer goods.
When a product is commercialised, the product enters into the market
and competes with the rivals, for making sales and earning profits. The
product life–cycle may be short for some products and long for others.
The PLC may differ from product to product. Every product passes
through certain stages, collectively known as product life–cycle stages.
Market Segmentation : Market segmentation means how the
organisation divides customer into the smaller group which is relatively
similar and identifiable. The main purpose of the marketing segmentation
is to meet the needs of the one or more specific segments.
• Identifiable : differentiating attributes of segments must be
measurable so that they can be identified.
• Accessible : the segments must be reachable through communication
and distribution channels.
• Substantial : the segments should be sufficiently large to justify
resources required to target them.
• Unique needs : justify separate offering, segments must respond
differently to different marketing mixes.
• Durable : the segments should be relatively stable to minimize the
cost of frequent changes.

1.2 Basis of Market Segment :

• Gender : The world market is basically divided into two parts i.e.
Male and Female on the basis of gender. As preference of both
male and female are different, so marketer needs different strategies
for both. E.gs. : Cosmetic, Apparel, Jewellery Industries.
• Age Group : The choice and preference change according to age.
For E.g. : Teenagers likes fashionable cloth, whereas the adult like
simple and sober clothes.
• Income : There exist various income groups of people in the society.
Their choice and preference varies on the basis of the income they
earn. The ones that fall under high income, prefer to purchase a
branded product and live a very lavish life. Whereas, the ones who
earn mid income may not be able to afford the branded things.
Marketers has to keep both type of customers in mind while defining
their strategies.

122
• Marital Status : Bachelor has different preference and married STP, PLC, Dealing with
couple have different choice. For E.g. : Travel Packages for both Computation and
status will be different. Competitive Strategies
• Occupation : According to the occupation, the preference also
differs. People in Blue Collar job and White Collar job have
different choices for the clothes. Office goers and school children
have different choices.

1.3 Types of Market Segmentation :

• Geographic : Division of the market is on the basis of region or
area. People residing in two different region have different choice.
Marketers have to design strategy keeping two different areas in
mind. For E.g. : McDonald's in India do not sell beef products
as it is against the religious beliefs of the majority of the countrymen,
whereas in US it freely sells and promotes beef products.
• Psychographic : The basis of segmentation is done on the basis
of social class, lifestyle, or personality. Eg., Women making heavy
use of Credit Card are said to be leading an active lifestyle.
• Behaviour : The segmentation is done on the basis of how loyal
customer is towards brand. Eg., Airline travellers can be segregated
by offering them cards – blue, silver, gold etc.
Check Your Progress – 1 :
1. What are the bases of Market Segment ?
a. Occupation b. Marital Status
c. Gender d. All of them
2. What are the types of Market Segment ?
a. Geographical b. Psychographically
c. Behaviourally d. All of them

1.4 Steps in Market Segmentation :

Select a Market/Identify the target market : In this step, Market
and should be identified. It may be the market in which the firm already
competes, a new but related market or a totally new one. The marketers
must be very clear to whom they should includ in a segment, making
sure the individuals have something in common.
Identify the expectations of Target Audience : In this step it is
essential to find out the needs of the target audience. The marketers
interacts with the target audience in order to identify the needs, demand
and interest.
Create Subgroups : Once the target market is identified create
a subgroup within the group. For E.g., In India girls between 20–25 years
focus more on fairness creams and lotions, whereas girls between 25
to 35 years are keen to reduce the signs of ageing. Marketers will have
to have cosmetics for both the categories.
123
Marketing Management Review the needs of the target audience : It is essential for the
marketer to review the needs and preferences of individuals in each
segment and sub–segment. The consumers of a particular segment must
respond to similar fluctuations in the market and similar marketing
strategies.
Name your market Segment : In this step, marketer should give
proper name to each segment, which helps to implement strategy easily.
Marketing Strategies : Relevant strategies should be devised in
order to promote brands amongst each segment. Same Strategies cannot
be used for all the segments. Marketer should make sure that there is
a connect between the product and the audience.
Review the Behavior : Marketer should keep on reviewing the
behavior of the target audience as the needs keep on changing and
individual would not have same requirement throughout the year.
Size of the Target Market : It is essential to know the target market
size. Collect necessary data for the same. It helps in saler planning and
forecasting.

1.5 Target Market :

Target market is set of buyers who have share common needs or
characteristics that the company decides to serve. After the firm has
identified its market segment opportunities, it must decide how many and
which buyers to target. A firm can adopt any one strategy from the
following :
1. Undifferentiated Marketing : In this strategy, whole market is
considered ignoring the market segment. Here the firm will design
a product and programme that will appeal to the whole market. The
focus is on the common needs of the whole market. Most modern
marketers have doubts about this strategy.
2. Differentiated Marketing : In this strategy, firm decides to target
several markets and design separate offers for each. For E.g. : Maruti
Car Caters to every "purse, purpose and personality". Most of teh
firms firm adopt differentiated marketing.
3. Concentrated Marketing : A concentrated marketing strategy goes
after the large share of one or a few submarkets. This strategy is
very appealing when the firm have limited resources. In single
segment, it can concentrate on understanding the needs, motives,
and satisfactions of that segments members and on developing and
maintaining a highly specialized marketing mix. E.g., the manufacturer
of Rolex watches chose to concentrate on the luxury segment of
the watch market.

124
Check Your Progress – 2 : STP, PLC, Dealing with
1. Firm use which strategy to target market. Computation and
Competitive Strategies
a. Undifferentiated Marketing b. Concentrated Marketing
c. Differentiated Marketing d. All of them

1.6 Positioning :
Positioning can be defined as the place occupied in consumers mind
regarding the firm’s product(s) or brand(s), distinguishing on the basis
of products attributes.
Positioning can also be defined as the act of designing a company's
offering and image to occupy a distinctive place in the mind of the target
market. The goal is to place the brand in the minds of consumers to
maximize the potential benefits to the firm.
For example : A handbag maker may position its brand as a luxury
status symbol.
• A car maker may position itself as fuel efficient and innovative
design.
• A hotel may position itself as the provider of economy room with
free breakfast.
A well–positioned brand should be distinctive in its meaning and
execution. A good positioning should also keep future positioning in
mind. Marketer should define and communicate similarities and differences
between their brand and its competitors.
For creating Effective Positioning Strategies following steps are
to be followed.
1. Identifing Competitors
2. Analysing Competitors
3. Identifying Potential Points of Difference and Points of Parity
4. Brand Mantra
1. Identify Competitors : In this step identify who all are your
competitors. A Product or set of product that brand competes and
function as close substitutes.
For example :
Pepsi–Co and Coca–Cola, Starbuck and Café Coffee Day
2. Analysing Competitors : In this step companies needs to gather
information about each competitor and their strengths and
weaknesses.
3. Identifying Potential Point of Differentiation, Point of Parity
(POP) and Point of Association :
a. Points of differentiation : are the attributes that make your brand
unique. It is your brand's value proposition, its competitive advantage.
The points of differentiation are the reasons why consumers should
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Marketing Management choose your brand over competition. These attributes must be
consistently reflected in the brand slogan, and advertising. The
attributes or benefits that consumers strongly associate with a brand,
and evaluate that they could not find the same attributes in a
competitive brand are the points of differentiation.
b. Points of Parity (POP) : Points of parity are the "must–haves"
of any brand to be considered a legitimate competitor in its category.
Points of parity are the reasons consumers add your brand to the
list of alternatives for consideration. The attributes or benefits are
not necessarily unique to the brand but may in fact be shared with
other brands.
c. The Point of Association : The Point of Association comes in three
basic forms Category, Correlation, and Competitive Point of Parity.
• Category POP : Category means attributes and benefits that
consumers view as essential to a legitimate and credible offering
within a certain product or service category. Eg., Consumer might
not consider a travel agency truly "a travel agency" unless it is able
to give the entire package of air and hotel reservations, as will as
advice about leisure packages, and ticket payment options.
• Correlation POP : are potentially negative associations that arise
from the existence of positive associations for the brand. If your
brand is good in one feature, such as being inexpensive, consumers
cannot see it as also good at other thing, like being of "the highest
quality". Warranty coverage beyond the typical 3 years, at no extra
cost is another example of correlation POP.
• Competitive POP : are associations designed to overcome perceived
weaknesses of the brand in light of competitor point of difference.
Eg., Alloy wheels provided for better fuel average in car vs. the
better average giving engines offered by competitors.
Case 1 : A split air conditioner for residence purpose, Brand 1 is
a world leader. Brand 2 is a new entrant. Brand 2 should ensure that
it positions itself firstly to the category POP to be considered by consumers
for purchase.
Usage of Cooper coiled condensers used to be a Point of Difference
for ACs and the top manufactures used to boast it as a POD. It is now
become mandatory for the category. Your brand will be out of Consideration
list from the customer if you do not have copper coil in your condenser.
So, as a brand you should be aware of what is the minimum POP's
required in a category to make yourself relevant in the category. When
entering a category or segment make sure that the product is positioned
on the category POP's first.
Case 2 : Competitive POPs are designed to negate a competitor's
Point of Difference. Many brands have, for example, the problem that
their offer is perceived as inferior in quality in comparison to the

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competition. In the 90s, Hyundai built cars of low quality. When the STP, PLC, Dealing with
quality problem was resolved around ten years later, the customers Computation and
continued to forgo the brand, as the image of poor quality. It took Hyundai Competitive Strategies
years, but eventually with different communication programs using a
variety of channels, the company succeeded to communicate the new
level of quality and could catch up in this point with the competition.
The quality was at least perceived as good enough to draw attention to
PODs, such as price, design, gas mileage and warranty.

1.7 Brand Mantra :

A brand mantra is three to four words that encapsulate the entire
positioning platform (the competitive frame of reference, the Points of
Difference, the Points of Parity) and everything else about your brand
into one thought. The purpose of the brand mantra is to ensure that all
stackholders understand what the brand most fundamentally represent,
so all can adjust their actions accordingly.
Dr. Kevin Keller has shared his favorite brand mantras which are
as :
Nike : Authentic Athletic Performance
One of the best brand mantras of all time was developed by Nike's
marketing guru Scott Bedbury in the late 1980s (he later become Starbucks'
marketing guru). Bedbury coined the phrase “brand mantra”. It did
everything you would want a brand to do–kept the Nike brand on track,
differentiated the brand from its main competitor at that time (Reebok),
and genuinely inspired Nike employees.
Disney : Fun Family Entertainment
Adding the word “Magical” would have probably made it even
better, but this brand mantra–also created in the late 1980s–was crucial
in ensuring the powerful Disney marketing machine didn't overextend
the brand. Establishing an office of brand management at that same time
with a mission to "inform and enforce" the brand mantra gave it real
teeth.
Ritz–Carlton : Ladies & Gentlemen Serving Ladies & Gentlemen
The Ritz–Carlton brand mantra has a clear internal and external
message, especially important consideration for services brands. It is
simple but universally applicable in all that Ritz–Carlton does and highly
aspirational.
BMW : Ultimate Driving Machine
BMW's brand mantra is noteworthy in two ways. One, it reveals
the power of a straddle branding strategy by combining two seemingly
incompatible sets of attributes or benefits. When launched in North
America, there were cars that offered either luxury or performance, but
not both. Two, it is also good example of how a brand mantra can be
used as a slogan if its descriptive nature is compelling enough.
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Marketing Management 1.8 Designing a Brand Mantra :
There are three criteria for designing a brand mantra
1. Communicate : A good brand mantra should clarify what is unique
about the brand, defined categories of business for brand, and set
the brand boundaries.
2. Simplify : Brand Mantra should be crisp, short and vivid
3. Inspire : Brand Mantra should be meaningful and relevant to as
many employees as possible.

1.9 Steps to Product Positioning :

Following are the steps which marketers have to follow in order
to create a unique identity of the product or services in the mind of
customers.
1. Identify your target audience : In this step marketer need to
identify the target audience to understand their needs and preference.
What is the customer expectation from you ?
2. Identify the product features : Marketer must be aware of the
product and service benefit and features then only they can sell the
product and service efficiently. If one is convinced with the product
than he will have more confidence to sell. If a marketer is using
Apple iphone then be can sell it with more confidence as he is
fully aware about the product.
3. Unique Selling Propositions : The organisations must create USPs
of their brands and effectively communicate the same to the target
audience.
Let see few examples :
Anti–Dandruff Shampoo : People purchase this particular type
shampoo to get rid of dandruff. This is how the product is positioned
in the minds of the individuals.
Dabur Chyawanprash : "to strengthen their body's internal defense
mechanism and fight against germs, infections and stress." That's
the image of Dabur Chyawanprash in the minds of consumers.
It is very important for the marketer to communicate the USP to
the audience by advertising, slogans, hoardings etc.
4. Know your competitors : Marketer must know who are their
competitors, and what they are offering ? How different is your
product than the competitor's ? Marketer must also try to distinguish
their product from their competitors, without underestimating then,
and observing them regularly.
5. Ways to promote brands : There are several ways through which
brands can be promoted. Marketer must select right theme, catchy
taglines, and highlight the benefits of the products.

128
6. Maintain the position of the brand : Marketer must fulfil the STP, PLC, Dealing with
expectation of the consumer. It must never compromise on quality Computation and
or drastically fluctuage the price of products. Competitive Strategies
Check Your Progress – 3 :
1. A ________ is three to four words that encapsulate the entire
positioning platform into one thought.
a. Brand Mantra b. Brand
c. All of them d. Brand Slogan
2. Which criteria are used for designing the Brand Mantra ?
a. Communicate b. Simplify
c. Inspire d. All of them

1.10 Competition and Driving Growth :

Growth is an important function of marketing which drive growth
in sales and revenue for a company.
Phil and Milton Kotler stress the following strategies
• Grow by building your market share
• Grow by developing committed customers and stakeholders
• Grow by building a powerful brand
• Grow by innovating new products, services, and experiences
• Grow by international expansion
• Grow by acquisitions, mergers, and alliances
• Grow by building an outstanding reputation for social responsibility
• Grow by partnering with government and NGOs
Growing the Core : Means focusing on their most successful
existing products and markets. It can be less risky alternative than
expansion into new product categories. Marketing Guru David Taylor
advocates three main strategies.
• Make the core of the brand as distinctive as possible
• Drive distribution through both existing and new channels
• Offer the core product in new formats or versions.
Almost every firm is seeking success by focusing on their core
business. Growth Strategies are not necessarily "either/or" propositions.
A focus on core business does not mean foregoing new market
opportunities.

1.11 Competitive Strategy for Market Leaders :

Expanding Total Market Demand : When the total market expands,
the dominant firm usually gains the most. In general, the market leader
should look for new customers or more usage from existing customers.

129
Marketing Management New Customers : A company can search for new user among three
groups : those who might use it but do not (market penetration strategy),
those who have never used it (new market segment strategy) or those
who live elsewhere (geographical–expansion strategy). In targeting new
customers, the firm should not lose sight of existing ones.
More Usage : Marketer can try to increase the amount, level, or
frequency of consumption. They can sometimes boost the amount through
packaging or product redesign. Larger package sizes increase the amount
of product consumers use at one time. Consumers use more of impulse
products such as soft drinks and snacks when the product is more
available.
Another Opportunities to use the brand : Marketer Programme
can communicate the appropriateness and advantage of using the brand.
Provide consumers with better information about when they first used
the product or need to replace it or gauge of the current level of product
performance.
New ways to use the brand : This approach to increasing frequency
of consumption is to identify completely new and different applications.
Protecting Market Share : While trying to expand total market
size, the dominant firm must actively defend its current business. Most
constructive response is continuous innovation. The front runner should
lead the industry in developing new products and customer services,
distribution effectiveness and cost cutting. Comprehensive solutions increase
competitive strength and value to customers so they feel appreciative or
even privileged to be a customer as opposed to feeling trapped or taken
advantage of.
Proactive Marketing :
To satisfy customer needs, a distinction can be drawn between :
Responsive Marketing, Anticipative Marketing and Creative Marketing.
Responsive Marketing : A responsive marketer finds a stated need
and fills it.
Anticipative Marketing : A anticipative marketer looks ahead to
needs customers may have in near future.
Creative Marketing : A creative marketer discovers solutions
customers did not ask for but to which they enthusiastically respond.
Creative marketers are the proactive market driving firms, not just market
driven ones.
These Proactive Companies create new offers to serve 'unmet' or
even 'unknown–to–consumer' needs.
Defensive Marketing : The aim of defensive strategy is to reduce
the probability of attack, divert attacks to less–threatened areas, and lessen
their intensity. A leader would like to do anything it legally and ethically
can to reduce competitors' ability to launch a new product, secure
distribution, and customer awareness, trial and repeat. A dominant firm
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can make use of the six defense strategies. Decision about which strategy STP, PLC, Dealing with
to adopt will depend in part on the company's resources and goals and Computation and
its expectations about how competitors will react. Competitive Strategies
Position Defense : means occupying the most desirable position
in consumers mind, making the brand almost impregnable.
Flank Defense : The market leader should erect outposts to protect
a weak front or support a possible counter attack.
Pre–emptive Defense : A more aggressive manoeuvre is to attack
first, perhaps with guerrilla action across the market–hitting one competitor
here, another there–and keeping everyone off balance. Another is to
achieve broad market envelopment that signals competitors not to attack.
Counteroffensive defense : Is the exercise of economic or political
clout. The leader may try to crush a competitor by subsidizing lower
prices for a vulnerable product with revenue from its more profitable
product, or it may prematurely announce a product upgrade to prevent
customers from buying the competitors product.
Mobile defense : In mobile defense, the leader stretches its domain
over new territories through market broadening and market diversification.
Market broadening shifts the company's focus from the current product
to the underlying generic need. Market diversification shifts the company's
focus into unrelated industries.
Contraction defense : Sometimes large companies can no longer
defend all their territory. In planned contraction they give up weaker
markets and reassign resources to stronger ones.
Increasing Market Share : Increased share does not automatically
produce higher profits, however–especially for a labour–intensive company
that may not experience many economies of scale. Much depends on
the company strategy. Because the cost of buying higher market share
through acquisition may far exceed its revenue value, a company should
consider four factors first.
• The possibility of provoking antitrust action
• Economic cost
• The danger of pursuing the wrong marketing activities
• The effect of increased market share on actual and perceived quality

1.12 Other Competitive Strategies :

Firm can attack the leader and other competitors in an aggressive
bid for further market share as market challengers, or they can choose
to not "rock the boat" as market followers
Market Challenger Strategies : Many market challengers have
gained ground or even overtaken the leader. Challenger set high aspirations,
while market leaders can fall prey to running business as usual. Challenger
can also tap into public perceptions that they are the underdog. Let's
examine the competitive attack strategies available to them.
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Marketing Management Defining the strategic objective and opponents : A market
challenger must first define its strategic objective, which is usually to
increase market share. It then must decide whom to attack.
• It can attack the market leader
• It can attack firms its own size that are not doing the job and are
underfinanced.
• It can attack small local and regional firms
• It can attack the status quo
Choosing a General Attack Strategy :
Frontal Attack : The attacker matches its opponent's product,
advertising, price and distribution. The principle of force says that the
side with the greater resources will win. A modified frontal attack, such
as cutting price, can work if the market leader doesn't retaliate and if
the competitor convinces the market its product is equal to the leaders.
Flank Attack : A flanking strategy is another name for identifying
shifts that cause gaps to develop in the market, then rushing to fill the
gaps. Flanking is particularly attractive to a challenger with fewer resources
and can be more likely to succeed than frontal attacks. Another Flanking
strategy is to uncover the market needs.
Encirclement Attack : Encirclement attempts to capture a wide
slice of territory by launching a grand offensive on several fronts. It makes
sense when the challenger commands superior resources.
Bypass Attack : By passing the enemy altogether to attack easier
markets instead offers three lines of approach : diversifying into unrelated
products, diversifying into new geographical markets and leapfrogging
into new technologies. In technological leapfrogging, the challenger patiently
researches and develops the next technology, shifting the battleground to
its own territory where it has an advantage.
Guerrilla Attack : Consist of small, intermittent attack, conventional
and unconventional, including selective price cut, intense promotional
blitzes, and occasional legal action, to harass the opponent and eventually
secure permanent footholds. A guerrilla campaign can be expensive,
though less so than a frontal, encirclement or flank attack, but it typically
must be backed by a stronger attack to beat the opponent.
Choosing a Specific Attack Strategy : Any aspect of the marketing
program can serve as the basis for attack – such as – lower–priced or
discounted products, new or improved products and services, wider variety
of offerings, and innovative distribution strategies. A Challenger's success
depends on combining several, more specific strategies to improve its
position over time. Once successful, a challenger brand must retain a
challenger's mentality even if it becomes a market leader, highlighting
the way it does things differently.

132
Market Follower Strategies : According to the Theodore Levitt, STP, PLC, Dealing with
strategy of product imitation might be as profitable as a strategy of Computation and
product innovation. In "innovative imitation", the innovator bears the Competitive Strategies
expense of developing the new product, getting it into distribution and
informing and educating the market. The reward for all this work and
risk is normally market leadership. However, another firm can come along
and copy or improve on the new product. Although it may not overtake
the leader, the follower can achieve high profits because it did not bear
any of the innovation expense. Many companies prefer to follow rather
than challenge the market leader. Market follower should hold current
customers and win a fair share of new ones. Each follower tries to bring
distinctive advantages to its target market–location, services, financing–
while defensively keeping its manufacturing cost low and its product
quality and service high. It must enter into new markets as they open
up.
Followers must define a growth path, but one that doesn't invite
competitive retaliation. We distinguish into three broad categories.
1. Cloner : Cloner emulates the leader's products, name, and packaging
with slight variations. Eg., timesjobs. com is an imitator of naukri.
com, but then timesjobs. com has its own unique product
characteristics as well.
2. Imitator : Copies something from the leader but differentiates on
packaging, advertising, pricing, or location. The leader doesn't mind
as long as the imitator doesn't attack aggressively. Eg., Tata Sky
brought digital TV revolution to India but was soon imitated by
Airtel and Reliance.
3. Adapter : The adapter takes the leader's products and adapts or
improves them. The adapter may choose to sell to different markets,
but often it grows into a future challenger. Eg., Cars like Maruti
800, Alto, Zen, Brio, are adapters and they adapt the best qualities
from each other by changing the style of the automobile.
4. Counterfeiter : The best example of counterfeiting is selling the
originals via piracy. The best example is DVD's and CD's of music
and movies.
Market –Nichers' Strategies :
An alternative to being a follower in a large market is to be a
leader in a small or niche market. Smaller firms normally avoid competing
with larger firms by targeting small markets of little or no interest to
the larger firms. Firms with low shares of total market can become highly
profitable through smart niching. They know their target customers so
well they can meet their needs better than other firms by offering high
value. They can also charge premium price, achieve lower manufacturing
costs, and shape a strong corporate culture and vision. The nicher achieves
high margin, whereas the mass marketer achieves high volume. Nichers
have three tasks : Creating niches, expanding niches, and protecting
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Marketing Management niches. The risk is that the niche might dry up or attacked. The company
is then stuck with highly specialized resources that may not have high–
value alternative uses. Because the niche can weaken, the firm must
continually create new ones.
Check Your Progress – 4 :
1. Phil and Milton Kotler stress the following strategies
a. Grow by building your market share
b. Grow by building a powerful brand
c. Grow by international expansion
d. All of them.
2. David Taylor advocates following main strategies.
a. Make the core of the brand as distinctive as possible
b. Drive distribution through both existing and new channels
c. Offer the core product in new formats or versions.
d. All of them
3. A responsive marketer ______
a. Finds a stated need and fills it.
b. Looks ahead to needs customers may have in near future.
c. Discovers solutions customers did not ask for but to which they
enthusiastically respond.
d. All of them
4. The attacker matches its opponent's product, advertising, price and
distribution.
a. Frontal Attack b. Encirclement Attack
c. Bypass Attack d. Guerrilla Attack

1.13 Product Life Cycle :

Introduction :
The idea of product life cycle is borrowed from biology and an
analogy is drawn with the life of an organism. As a living being progresses
through the stages of birth, growth, maturity, decline and death, so also
a product passes through similar stages during its market entry and exit.
Product life cycle theory is one of the first analytical attempts to
determine marketing strategies at different product market situations. The
product life cycle concept describes the stages in the sales (market
response) history of a product. The basic features of this theory have
propositions that a product has a limited life and a product's sales generally
follow an 'S' curve until sales eventually start declining

134
STP, PLC, Dealing with
Computation and
Competitive Strategies

Product Life Cycle

Source : www.economicshelp.org

The concept of product life cycle creates distinct stages in product

performance in market place as introduction, growth, maturity, saturation
and decline phase. An introduction phase is known as lag phase, the
growth phase as exponential phase, growth and maturity as stationary
phase and decline as a down turn phase. These are the different stages
in a typical product lifecycle.

1.14 Extending the Product life Cycle :

For successful products, a business wants to do all it can to extend
the growth and maturity phases of the life cycle, and delay the decline
phase.
What can businesses do to extend the product life cycle ?
To do that, it may decide to implement extension strategies– which
are intended to extend the life of the product before it goes into decline.
Extension strategies are :
1. Advertising – Try to gain a new audience or remind the current
audience.
2. Price Reduction – More attractive to customers
3. Adding value – add new features to the current product, E.g.
improving the specifications on a smartphone.
4. Explore new markets – Selling the product into new geographical
areas or creating a version targeted at different segments.
5. New packaging – brightening up old packaging or subtle changes

1.15 Shapes of Product Life Cycle :

Products go through different life cycle patterns. There are several
shapes that can be observed in practice. The shapes commonly reported
are classical bell–shaped curve, growth–slump–maturity pattern, cycle–
recycle pattern, scalloped pattern; style, fashion and fad.
Growth–slump maturity pattern, exhibits an initial growth for the
product, followed by a decline in sales and subsequent stability for fairly
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Marketing Management long time. Growth–slump–maturity pattern displays a multi– modal shape
due to the different promotional mechanisms adopted by the marketers
at different points of time.

Shapes in PLC
Source : chriswilliamsoncvt.blogspot

There are actually four different life cycle curves for the four
different types of products : high–learning, low–learning, fashion, and fad
products. Each curve tends to have it's own marketing strategy.
High–learning – product is one that requires significant customer
education and the introduction stage is extended. You could say that the
GPS was a high–learning product. This is because when the GPS first
came out, most people were used to either relying on maps or the
directions of others. When the GPS first came out, many people were
not sure how to exactly use it. Now, most people always have GPS with
them because they come standard in almost every smartphone and new
car.
Low–learning – products are different because their sales begin
very quickly due to the simplicity of the product. This allows consumers
to understand the product almost right away. Often competitors can easily
copy the low–learning products. This forces companies to broaden their
distribution channels quickly.
Fashion Product – These products change with the style of the
times and the life cycles frequently appear in apparel. They usually go
from the introduction stage right to the decline and then eventually
reappear. This does not mean that each fashion product has the same
life cycle.
FAD Products – These fad products experience rapid sales during
the introduction phase and then they decline at almost the same speed.
These products tend to be novelties with a short life cycle.

1.16 Stages of Product Life Cycle :

Products follow certain kinds of life cycle patterns. Whether the
pattern is like that of an S–shaped curve or modifications as we have
136
shown in previous pages, we need to understand the relevance of the STP, PLC, Dealing with
product life cycle concept in the context of making strategic decisions Computation and
and making marketing forecasts. Competitive Strategies
While some products fail immediately on birth or a little later,
others may live long enough. BPL television launched Picture–in–Picture
(PIP) television, which was eliminated at the introduction stage itself.
Pagers had a grand launch in the market but got eliminated as the next
better product of communication in the form of mobile phones entered
the market. The innovation of a new product and its degeneration into
a common product is termed as the life cycle of a product. This often
helps competitors to benchmark against the available technology and
develops better products compared to the current one so as to take away
the market share from the market leader. There are four distinct stages
in the life cycle of a product as shown below :
Introduction Stage :
Research or engineering skill leads to new product development.
The product is put on the market at the stage of commercialization. The
concept of product life cycle starts from the 'commercialization' stage
of new product development. At this stage, product awareness and
acceptance among prospective customers are minimal. As the sales are
low, there are high promotional costs.
This is due to the fact that the company has to spend money for
advertising, sales promotion and other forms of promotion. The major
obstacle to rapid market penetration at this stage is poor distribution
strategy. Many retailers will not support a new product launch and will
wait till they hear well about the brand.
E.g. : Holographic projection technology allows consumers to turn
any flat surface into a touchscreen interface. With a huge investment
in research and development, and high prices that will only appeal to
early adopters, this is another good example of the first stage of the
cycle.
Growth Stage
This stage begins when demand grows rapidly. In the case of repeat
buying situation, the innovators move from trial purchase to adoption
stage If the innovators are satisfied with the products, they influence other
buyers through word–of– mouth and referral communication. Deeper
penetration in market by intensive distribution strategy and increase in
store visibility and usage tend to bring new buyers in the market. The
competitors also start their advertising and sales promotion making the
total category demand to increase in the market. Growth stage also
contributes in increasing profit. .
E.g. : With advanced technology delivering the very best viewing
experience, Blue Ray equipment is currently enjoying the steady increase
in sales that's typical of the Growth Stage.

137
Marketing Management Organic food is another product which is gaining momentum in
the market and is in the growth stage and it has not gained deeper
penetration in the market place yet.
Maturity Stage :
Sales growth continues, but at a diminishing rate, because of the
declining number of potential customers who remain unaware of the
product or who have taken no action.
E.g. : Introduced a while back, manufacturers of DVDs, and the
equipment had established a strong market share. However, they still had
to deal with the challenges from other technologies. That are characteristic
of the Maturity Stage.
Decline Stage :
Eventually, sales start declining due to multiple reasons. Changes
in customer preferences, competition in the market, technology and other
environmental forces lead to the decline of sales. Sales begin to diminish
as the customers begin to get bored with the product.
E.g. dial telephones and petrol jeeps led to eventual dropping of
the product by the firms. The product decline happens due to entry of
new competitors with advanced technology; and reduction in consumer
interest. The marketer is left with an option of price reduction, putting
pressure on the profit margins and leading to deletion of products.
E.g. : Typewriters, and even electronic word processors, have very
limited functionality. With consumers demanding a lot more from the
electronic equipment they buy, typewriter is passing through the final stage
of the product life cycle.
Check Your Progress – 5 :
1. Which one is not the part of the extension strategy before it goes
to decline ?
a. Price Reduction b. Price Increase
c. New Packaging d. Explore new markets
2. How many stages are there in Product Life cycle
a. 5 b. 4 c. 6 d. 3
3. Which of the following is not a characteristic of "Market Introduction
Stage" in PLC ?
a. Demands has to be created
b. Costs are low
c. Makes no money at this stage
d. Slow sales volume to start
4. Product Life Cycle begins with……. . ?
a. Decline stage c. Introduction Stage
b. Growth stage d. Mature stage
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1.17 Product Startegy For Life Cycle Stages : STP, PLC, Dealing with
Computation and
Characteristics and Marketing Strategies at Introduction Stage Competitive Strategies
The product life cycle begins with the introduction stage when the
product is launched. At this stage :
• Sales are low. This stage involves high distribution and promotion
expenses; profits are found to be negative or low. Since it is too
early for improvements, basic versions of the product are sold.
• The second possible alternative strategy is low price and promotion.
This will help in cornering a bigger market share and faster market
penetration. This strategy is possible when the size of the market
is big and buyers are sensitive to price.
• The marketer passes the economy of scale of operation to customer
and follows a low cost per unit production process.
• At this stage, since the product is new, all focus is on building
distribution network and product awareness.
Characteristics and Marketing Strategies at Growth Stage
Charactistics and Marketing Strategies of Growth Stage :
• This stage is most rewarding for the marketer, if the new product
is considered to be satisfactory by the market. The characteristics
of this stage include a very sensitive market response where sales
climb rapidly.
• The growth stage has two distinct sub–stages – early and late
growth. In the early growth stage, the sales increase at an increased
rate and in the late growth stage it increases at a decreasing rate.
• At the growth stage, the marketer follows different kinds strategies
compared to the earlier stage of product life cycle.
• Increased emphasis on promotions will play a very important role
in educating the market as well as in meeting the challenges of
the competition.
Characteristics and Marketing Strategies at Maturity Stage
At the end of a responsive growth stage, begins a stage of maturity.
• In this stage despite higher spending on the marketing program there
is no substantial growth in sales volume and the market is flooded
with many competing products.
• In this stage, though the sales growth slows down, the stage itself
continues for a long period. Therefore, it poses a strong challenge
to Marketing Managers.
• The market experiences commoditization and competition brings
down the prices, putting pressure on the profitability and liquidity
of the firm. In the late maturity stage, the profits drop sharply.

139
Marketing Management • Due to intense competition and falling profits, not many companies
can survive this stage. Thus, a number of proactive steps are needed
to stay profitable.
• A market modification strategy, the companies have goals to increase
the consumption; hence the companies look for new users, new
market
• The other alternative strategy is to bring product modifications like
improvement in quality, features and style.
Characteristics and Marketing Strategies at Decline Stage
• There is a saying that "nothing lasts forever" or "all good things
must come to an end". This is also applicable to successful products
and services in the market.
• The sale of any product eventually dips. The plunge continues for
some years. This indicates the stage of decline.
• This is the stage when the product is left with very few customers
and these customers are called laggards. This is a stage when many
of the existing customers switch to newer and better brands in the
market
• The firm reaches this stage due to lack of strategies. A company
may have a number of products introduced simultaneously where
the extent of decline may not be the same for all the products.
• The company can decide to follow a strategy to maintain its position
in the market in territories where it is doing well.
• Alternatively, the company can decide to harvest the market. This
strategy is aimed at reducing the overall costs including production,
maintenance, advertising and sales force management costs and
hoping that the product sales will be profitable for some time more.
• Eventually the firm will decide to drop the product from its portfolio.
This is the end of the line for a particular product. However, it
may be sold to another company if there is a buyer.

1.18 Let Us Sum Up :

A product is the offer that the consumer ultimately owns in the
exchange process. Each product offers some level of core, tangible and
augmented benefit to consumers. The functional utility of the product is
an explanation of the reason 'why' of buying. Products have different
layers like core, basic, expected, augmented and potential levels.
The position of a product manager has come to stay as a strategic
one in marketing. He takes key decisions related to the product offer
in the market. Product Mix is an assortment of all related and unrelated
product that the company offers in the market place. Product mix has
got four important elements like width, depth, length and consistency

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Product life cycle can be viewed from different levels of products, STP, PLC, Dealing with
like core product, product category, brand and soon. In marketing literature, Computation and
several prescriptions have been proposed for using product life cycle for Competitive Strategies
formulating marketing strategy.

1.19 Answer to Check Your Progress :

Check Your Progress – 1 :
1. d 2. d
Check Your Progress – 2 :
1. d
Check Your Progress – 3 :
1. a 2. d
Check Your Progress – 4 :
1. d 2. d 3. a 4. a
Check Your Progress – 5 :
1. b 2. b 3. b 4. c

1.20 Glossary :
1. Market Positioning : Positioning refers to the user's perceptions
of the place a product or brand occupies in a market segment or
how the company's offering is differentiated from the competitions.
2. Market Segmentation : The process of subdividing a market into
distinct subsets of users that behaves in the same way or have
similar needs.
3. Product Life Cycle : The market response to a new product idea
after the product is commercialized and till it eventually goes out
of the market.

1.21 Assignment :
1. What do you understand by the Segmentation, Targeting and
Positioning (STP) strategies ?
2. Explain various competitive Strategies.
3. Explain the Product life cycle in detail.

1.22 Activities :
A mobile manufacturer realizes that she is operating in the market
for machines which allows each one to communicate very easily.
a. How should this market be segmented ?
b. Identify the key segmentation variables that are relevant to this
market

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Marketing Management 1.23 Case Study :
Product Life Cycle
Stage 1 : Introduction Stage – examples
Biotech
Cyber Media
Green Products (Eco Friendly)
Organic Foods services
Stage 2 : Growth Stage – examples
Automobile
Information Technology
Pharmaceutical
Primary Education
Stage 3 : Maturity Stage – examples
Manufacturing
Textile
Steel
Oil and gas business
Stage 4 : Decline Stage – examples
Print Media
Cotton textiles
Paper and pulp Industry
Metallurgical Industry
There are some examples given above of the various stages of
Product Life Cycle.
1. Add two examples in each stage.
2. In each stage, give the conditions, such as demand, revenue, profit,
expenditure etc.

1.24 Further Studies :

Kotler, P., Leong, S. M., Ang, S. H., Tan, C. T., (1994), Marketing
Management(8th Ed.)Prentice Hall
Saxena, R., (2009), Marketing Management (4th Ed.) McGraw Hill
Evans, J. R., Berman, B. (1995), Principles of Marketing (3rd Ed.)
Prentice Hall
Armstorng, G., Kotler, . P, (2000), Marketing an Introduction, (5th
Ed.) Pearson Education.

142
Karunakaran, K., (2010), Marketing Management (1st Ed.) Himalaya STP, PLC, Dealing with
Publishing House Computation and
Mc Daniel, C., Lamb, C. W., Hair, J. F., (2008), Principles of Competitive Strategies
Marketing (1st Ed.) Cengage learning
Kotler, P., Lane, K., (2016), Marketing Management (15th Ed.)
Pearson.

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Unit
NEW PRODUCT DEVELOPMENT (NPD)
2

: UNIT STRUCTURE :
2.0 Learning Objectives
2.1 Introduction
2.2 Definition and Classification of NPD
2.3 Significance of New Product Development
2.4 New Product Development Process
2.5 Consumer Adoption Process
2.6 Let Us Sum Up
2.7 Answer to Check Your Progress
2.8 Glossary
2.9 Assignment
2.10 Activity
2.11 Case Study
2.12 Further Readings

2.0 Learning Objectives :

• To grasp the intricacies of developing a new product.
• Understand the way consumer will adopt the new product

2.1 Introduction :
New–product development has significant role in the growth of the
company. It is a process through which new product is introduce in the
market. Every business has to go through this process as due to advances
in technology, increase in competition, consumer preference, or to capitalise
on a new opportunity. An innovative product can become the flag bearer
of the organisation.

2.2 Definition and Classification of NPD :

New Product Development (NPD)
Definitions and Meaning of NPD :
"By new product we mean original products, product improvements,
product modification and new brands that the firm develops through its
own research and development efforts".
A new product will be considered anything which is perceived by
the consumer or with which the firm has no previous experience.

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From a firm's point of view, a product is new when existing New Product
products are improvised, capacity or life is enlarged or more satisfying Development (NPD)
ingredients are added to the existing products. A firm in order to deliver
a new product faces the problems as that of releasing totally new product
to the market.
It could also be that a product is new to the firm but not new
to customers or the product may be new to customers but not new to
the company.
Classification of the New Products : by BAH (Booz, Allen &
Hamilton)
1. Continuous Innovations :
Continuous innovation is adding / removing features in the products
to suit changing consumer needs.
Here, the following types are involved :
(a) Cost Reductions :
These new products are developed by reducing the production cost
by applying new technology. E.g. changing over to plastic moulded parts
in automobiles has considerably reduced the cost of manufacturing and
raw materials. This has also helped reduce the weight of the automobiles,
increasing fuel efficiency.
(b) Repositioning (also called Re–Launching, Re–Staging or Re–
Marketing) :
This happens whenever a product is re–positioned to include different
segments of consumers, or is re–launched for a different use, or is being
re–marketed after its temporary withdrawal. E.g. Tata's Ace (Chhota–
Haathi) was launched as mini truck and with its success, it was re–
positioned and launched as a new product, Ace – Magic, a passenger
version.
(c) New and Improved Products (Next Generation Products) :
Whenever a company launches a product with improvements in its
features and benefits, it is also called a new product. E.g. Tata Indica
was launched as a new product with improvements as Indica Vista.
(d) Additions to Existing Product Lines :
Additions to existing product lines are derivatives or variations of
existing products. E.g. Coke – Diet Coke, Horlicks – Elaichi Horlicks,
Chocolate Horlicks, Junior Horlicks etc.
If these variations are launched with another brand name, they are
called flankers. E.g. Pepsi – Mountain Dew, Coke – Sprite, Rin –
Sunlight, Wheel etc.
(e) New Product Lines (New to the Company) :
When products new the company are launched but brand exists
in the market through other products it is called new product lines. E.g.
Cadbury's launching cookies (existing line – chocolates and Bournvita),
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Marketing Management Horlicks launching biscuits and oats (existing line – health foods), HUL
launching water purifiers (existing lines – cosmetics, personal products,
soaps/detergents)
When new product lines are launched under the same brand name
it is called brand extension.
2. Dynamically Continuous Innovations :
(a) Major Additions to Existing Product Lines :
When the company makes major additions to an existing product
line that is affecting the total behaviour of the customer towards the
company, it is major additions to existing product line. E.g. Banks going
in for ATM machines, online and mobile banks etc.
(b) New to the World Product Lines :
When a company comes up with a completely revolutionized version
of an existing product that is new to the world or comes up with a totally
new concept, it is a new to the world product. E.g. Electric car.
3. Discontinuous Innovations :
Discontinuous Innovations are products perceived by customers to
be radically new, causing buyers to significantly alter their behavioural
patterns, and also usually entailing extensive technological breakthroughs.
OTT (Over–The–Top) are purchased differently than DVDs were
bought or rented. Electric cars requiring battery recharge.
Product Failure : There are number of reasons that change consumer
preferences on the products. Lifestyle, age, and preferences seldom remain
constant. Shorter product life cycles, increasing costs, government policies,
threat from rival organisations, technological changes – all affect the
success of a new product in the market.
Factors that pose Major Risk :
1. Long time duration between research on new product and its
introduction in the market. By the time it reaches the market,
consumer preferences get changed to more advanced product which
is already in the market.
2. Research data from the market has defects or is inadequate.
3. Product defects also result in negative perception of the product.
For E.g., new software in car results in withdrawal from the market.
4. Different features of a new product appeal to different markets. The
same product cannot be launched in a different market unless the
preferences of the consumers are the same. For E.g., McDonald's
modify their offerings on the basis the local culture.
5. The new product is incorrectly positioned in the market.
6. Products also fail if the management fails to create a proper balance
among the 4Ps of marketing. For E.g., keeping the price too high
or too low.
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7. Insufficient distribution channels to support the promotion activities. New Product
8. New technology that reduces the total cost of production. If Development (NPD)
organisations don't tap this opportunity, the competition will.
9. Lack of coordination between different departments within the
organisation hampers the flow of ideas and proper feedback received
from the market.
10. Products also fail if the new product does not offer a USP as
compared to other brands.
11. Customers should be aware about the benefits of the new product,
ie. Failure if not supported by effective communication strategy.
Check Your Progress – 1 :
1. New Product, we mean
a. Original Product b. Product modification
b. product improvement d. All of them

2.3 Significance of New Product Development :

Whatever may be nature of operation of a concern, product planning
and development is necessary for its survival and growth in the long
run. Every product has a life cycle and become obsolete after the
completion of its life cycle. Therefore, it is essential to develop new
products and alter or improve the existing ones to meet the requirements
of customers. One of the most common products – planning problems
relates to the addition of new products to the existing product line.
Addition of new products involves generation of new product ideas,
appraisal of various possibilities, economic analysis, product development,
product testing, test marketing and developing markets. Another important
problem of product planning is modification or elimination of existing
products. The need for continuous of the product is great because society's
needs are always changing and improved products must be introduced
to fulfill them. All products have certain deficiencies, as they are the
result of great many compromises. The perfect product has yet to be
made. Research makes possible the reduction of these deficiencies and
brings about improved products.

2.5 New Product Development Process :

Developing a new product is a key to organisations' survival in
the ever–changing marketing environment. Some organisations set a price
limit while others focus on adding value, and making the existing product
better than before. They do this with price factor coming at later stage.
Depending on the organisations size and past experience, the new product
development process may vary. We will look at the commonly accepted
process –

147
Marketing Management 1. New Product Strategy :
The corporate strategy and objectives give guidelines for new product
development by assessing organisational expertise and external
opportunities.
SWOT analysis gives inputs for emerging markets and emphasis
is given to the threats and opportunities.
The same are aligned with the strengths and weaknesses of the
organisation. This gives direction as well as boundaries to the top
management for new product development.
2. Idea Generation :
Sources for idea generation include employees, customers,
competitors, distributors, entrepreneurs and suppliers. R & D team members
too can be source of ideas. The organisation should encourage ideas by
rewarding employees.
Customer surveys are important when developing a new product.
By direct observation or conducting a brainstorming session with potential
customers, organisations get an insight into the buying behaviour, needs,
and wants of the target market.
Besides this, inputs from the suppliers, sales representatives,
distributors, and retailers who serve the competitor also contribute largely
to idea generation.
Entrepreneurs, University students and Inventors are also source of
ideas of new inventions outside organisation.
The organisation should have a designated Manager or Idea Committee
to compile ideas from different sources.
3. Idea Screening :
The process relies mostly on the experience of the members in the
top management and their judgement. Not all the ideas are good ones,
and this process is to ensure mistakes are avoided at the early stage.
Key factors to be considered are new product's value to the customer,
expertise available within the organisation, stipulated time for manufacturing
the product, scope for promotion activities, financial feasibility (cost and
profit margin), sustainability in the market and customer service if needed
(after sales service).
The basis the new product strategy or SWOT analysis is done and
the best idea is selected.
Most of the organisations are more successful with products for
which they have the expertise.
4. Concept Development and Testing :
Some organisations conduct concept testing by discussing the concept
of the new product with few potential buyers through discussion in focus
groups or individual interviews and their reaction is recorded. For E.g.,
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virtual reality programs use computers and system by which customers New Product
can experience driving an automobile or wear an attire via simulation. Development (NPD)
The inputs from consumers help organisations assess the customer
appeal, customer expectations, target customers etc.
5. Business Analysis :
It refers to the detailed study of economic feasibility of the new
product ideas. The management prepares the sales, costs and profit
projections to assess if the new product should be introduced. It gives
a clear picture on whether to continue with the development and evaluation
process or drop the idea.
The costs include promotion activities, R & D, distribution,
production, and associated services like consulting, accounting, legal, etc.
The organisation then arrives at the attractiveness of the new product
in relation to the target market.
6. Product Development :
The product in the form of concept – word description, drawing
– takes the form of a prototype. Few physical versions of the product
are made.
This stage provides information on the costs of manufacturing,
distribution, and packaging. If the estimates are not feasible to the
organisation technically, or more modifications need to be done that are
undesirable, the product idea may be dropped.
If the firm wishes to go ahead with the production, supporting
strategies are also developed at the same time like packaging, labelling,
brand names, etc.
7. Market Testing :
This stage thoroughly evaluates the market acceptance through
market research before complete product introduction in the market.
The product is introduced in a small section of the market, which
represents the whole market to test products acceptability. The test results
from market testing help organisations to estimate the projections.
The most serious problem of conducing market testing is a competitor
discovering the same and monitoring the results.
If the product has not been patented, the competitor may launch
identical product much earlier.
8. Commercialization :
The new product after successfully passing the test marketing stage
is launched in the entire market with all the related decisions like
distribution, packaging, after sales service, etc. Contracts with suppliers
are signed, channels of distribution are selected, and manufacturing
facility and supporting services are set into operation on full scale.

149
Marketing Management Timing of product introduction is critical to firms. If the organisation
learns that a competitor is on the verge of developing a similar product,
the organisation has to make a decision like Early entry (enables a firm
to have a strong distribution network and gain a reputation), Parallel entry
, or Late entry (firm saves the cost of educating the consumer about the
market – promotion activities).

2.5 Consumer Adoption Process :

• Customers learn about new products, try them, buy or reject them.
Adoption is the decision of an individual to use the product; while,
diffusion / distribution / circulation is the collective spread of
individual adoption decisions throughout a market.
• Thus, adoption process is concerned with the individual whereas
the diffusion process is concerned with the aggregate behaviour.
• The fundamental reason for studying the diffusion and adoption
processes is to increase the level of understanding of how ? When ?
And why ? New products are accepted or rejected.
Five Stages to the Consumer Adoption Process
• product awareness
• product interest
• product evaluation
• product trial
• product adoption.
Stage 1 – Product Awareness
• This first stage is about creating awareness that your product is in
the market. It is important that your company develops a successful
avenue for your consumers to become aware of your product.
• If consumers do not know your product exists, than it might as
well not exist! Create marketing material. These can be one–sheets,
video teasers, images, and landing pages. Make these marketing
materials easily accessible.
• In the era of social media, many tools are available in the market
that provide companies with the techniques and methods to increase
product awareness through social channels – enabling them to reach
a large number of customers at a low cost!
Example : Movie Teasers. Movie teasers are designed to inform
the audience without providing them in–depth information about the
movie.
Stage 2 – Product Interest
• In this stage consumers are ready to learn more about your company's
product and / or service.

150
• Organization must guide the consumer through the interest stage New Product
by providing easily accessible information on your product. Development (NPD)
• Among the methods used in the today's business landscape include
a website describing the product, blog posts, tutorial or instructional
videos, white papers, and other sources of info that the potential
consumer can discover and review.
Example – Apple utilizes its product launch to provide information
and insight into its latest product. With well–designed and organized
speech, scripted presentation, and balanced use of technical and
non–technical vocabulary, Apple delivers information eloquently
and successfully to broad range of customers.
Stage 3 – Product Evaluation
• Prior to purchasing, consumers examine, compare and evaluate the
product. Such behavior increases in intensity and need once the
item in question is more expensive, sophisticated and complex, or
critical.
• Consumers go online and utilize social media channels to ask other
individuals about your product or service. In addition, they find
online reviews and recommendations.
• It is advisable in creating information that outlines the difference
between your product and competitive products, on features and
services.
• Another great system to utilize is the webinar. This platform allows
you to communicate with potential customer in depth information
about your product and provides time for Q&A.
Example – PCMag is a world–renowned website for comparing
gadgets and computers. They are notable for their reliable reporting,
comprehensive evaluation editorials, and categorization of different
gadgets based on their qualities.
Stage 4 – Product Trial
• This is the stage where the consumer "kicks the tries".
• Nothing helps a consumer make a decision about your product more
than actually trying your product out! There are many ways this
is accomplished.
• A free trial or a proof of concept campaign. In this stage it is very
important to set the customer expectations correctly and deliver on
said expectations
Example – Lux shampoo. HLL often gives free samples with the
morning newspapers in a small sachets.
Stage 5 – Product Adoption
• When the consumer enters the product adoption phase, he/she is
ready to purchase your companies product. This is the critical stage
that businesses need to get their consumers to.
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Marketing Management • When the customer is here, you need to make the payment process
simple, intuitive, and pain free. In addition, you need to ensure that
the consumer can easily obtain the product. If you make it to and
through this last phase successfully, than you can take money to
the bank.
Whether you have a new business or an existing business, a product
built for the enterprise or a product built for a consumer; the consumer
adoption process is the same.
Some customers buy products more quickly than others and vice
versa. An individual can be categorised into different groups depending
on how quickly they adopt a new product.
Adopter groups are :
1. Innovators – they are willing to try new ideas. They help to get
the product exposure.
2. Early adopters – these people adopt new ideas early but cautiously.
They serve as the opinion leaders.
3. Early majority – these adopt a new product earlier than an average
consumer.
4. Late majority – these people buy the product only after majority
of the market has bought the product. They do not want to take
risk.
5. Laggards – these are the people who mostly resist change and adopt
a product only once it is not considered an innovation. They are
tradition bound and buy the product as a tradition.
Check Your Progress – 2 :
1. The prospect seeks information about the product and wishes to
explore the benefits of the product.
a. Awareness b. Interest b. Evaluation c. Trial
Advantages of Market Testing
• Data provided is from actual customer spending
• Reduces the risk of a full–scale launch – if the product fails a test
then significant costs may be saved
• Provides a way to tweak the marketing mix before full launch
• Can create a promotional "buzz" which supports the main launch
• Easy and less risky to do variations to the marketing mix elements.
• Helps define target group and buyer behavior
• Realistic market response obtained
• Limited investment needed
• Forecast of Sales, Costs and profits of the total market is possible.

152
Disadvantages of Test Marketing New Product
• Danger of the competition learning about the product and coming Development (NPD)
up with a response before the full launch
• Test market may not be representative of the full target market,
leading to inappropriate decisions
• Delays in full launch may limit the revenue opportunity in markets
subject to rapid change
• Costly and time–consuming to administer
Check Your Progress – 3 :
1. ____ is the reason for failure in "New Product Development Strategy"
a. Poor product design b. Market size overestimated
c. Price too high d. All of the above
2. Encourage all stakeholders to send ideas and formally recognize
the program is characteristic of which stage in the NPD
a. Idea generation b. Idea screening
c. Testing d. Evaluation
3. Systematic search for new–product ideas is characteristic of which
stage in NPD process ?
a. Business analysis b. concept development and testing
c. Idea generation d. idea screening

2.6 Let Us Sum Up :

For a new product to germinate in an organisation an effective
process for managing the development needs to be established.
The NPD process goes through various stages of process before
its acceptance. The consumer–acceptance too will depend on factors that
may not be controlled by the marketer.

2.7 Answer to Check Your Progress :

Check Your Progress – 1 :
1. d
Check Your Progress – 2 :
1. b
Check Your Progress – 3 :
1. d 2. a 3. c

2.8 Glossary :
NPD – New Product Development
Innovation – a new method, idea or a product
Screening – the evaluation of something as part of a methodical
survey, to assess suitability for a particular role or purpose.
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Marketing Management 2.9 Assignment :
What are the different processes of developing a new product ?
Under what circumstances do products fail ?

2.10 Activity :
Pick out a product that you think has not done well or failed soon
after launch. Find the reasons for its failure.

2.11 Case Study :

A Ski gear company traditionally designed ski and shoes for men
and smaller version for women.
However, the research data showed a big number(39 percent of skis
and 43 percent of alpine boots) were purchased by women.
The company for these gears looked hard at the data and decided
to shift its manufacturing focus to meet the demand
What steps the company should do for the new product development ?

2.12 Further Reading :

Marketing Management, 15th edition (2014), Philip Kotler and
Kevin Keller, Pearson Education.
Marketing Management, Indian Context – Global Perspective, 6th
edition, (2018), V S Ramaswamy, S Namakumari, SAGE publications
India Pvt. Ltd.
A Glossary of Marketing Terms, American Marketing Association,
Chicago, IL : American Marketing Association, 1960
https://www. business. qld. gov. au/running–business/growing–
business/becoming–innovative/developing–products/new–products

154
GLOBAL MARKET AND
Unit MANAGING HOLISTIC
3 MARKETING MANAGEMENT

: UNIT STRUCTURE :
3.0 Learning Objective
3.1 Introduction
3.2 Introduction to Global Market
3.3 Modes of Entry to Foreign Markets and Risks Involved
3.4 Product and Communication
3.5 Counterfeit Goods
3.6 Country of Origin Effect
3.7 Managing Holistic Marketing
3.8 Components of Holistic Marketing
3.9 Importance of Holistic The Marketing
3.10 Holistic Marketing Framework
3.11 Let Us Sum Up
3.12 Answer to Check Your Progress
3.13 Glossary
3.14 Assignment
3.15 Activity
3.16 Case Study
3.17 Further Readings

3.0 Learning Objectives :

• Entry into international business
• Communicating messages and Designing products for international
markets
• Understanding the implication of Holistic Marketing

3.1 Introduction :
Holistic marketing has evolved with collaboration between all the
activities undertaken by an organisation with clear objectives.
Organisations deciding to explore markets internationally need to
clear the steps in that direction. The international growth objectives and
policies need to be established

3.2 Introduction to Global Market :

The firms do not generally move out of domestic market especially
if the local market is booming. The managers remain comfortable in
opportunities and challenges in the domestic market. They feel safe.
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Marketing Management Moving out of the domestic boundaries, the business managers will
have to learn different languages, deal with strangers, face the chaos in
exchange rates of various currencies, newer political and legal arena, and
adapt to products that are acceptable to the needs of people from different
nationality.
In today's business environment, the firms do not ignore international
markets as :
1. Each nation is dependent on the other for goods and services.
2. There is more awareness about the goods available across the world
due to extensive travel by people and media coverage.
3. Many companies now look at the entire world as a global market
place with abundance of opportunities.
4. The local market is drying up.
5. The large international companies and ease of trade have brought
competition in their own backyard.
6. The time and distance have shrunk due to inexpensive communication
(internet), and easy availability of transportation.
7. The liberalized economies have enabled flow of financial funds.
8. The Products developed elsewhere are accepted everywhere.
Doing business internationally globally still involves risks, which
cannot be ignored.
What are the risks ?
1. Political : The firms face the risks of doing business in countries
that may not have stable governments and who do not believe in
smooth transfer of power if so mandated.
2. Regulatory : All countries have different types of regulations for
doing business. Such regulations may not be favourable if there are
irregular changes or uncertainties. Google, Uber and Airbnb are
current examples of entrepreneurial efforts that are struggling with
government regulations in new markets.
3. Cultural : There are bound to be differences in cultural, especially
concerning customer preferences, tastes, values and beliefs. The
local culture affects not only the decisions an entrepreneur must
make, but also how a market views the company. The best strategy
is to engage people in the local market to manage your business
there.
4. Managerial : The management practices are culture–bound, so the
managers may not be suitable in culturally different working
environment, especially in human resource aspects.
5. Currency : The exchange rate of one currency with another may
be volatile and may not be in favour of one party. The potential
for large currency swings may change the way you need to manage
transactions, specify contract terms, and project futures.
156
6. Credit : The risk is serious if the buyer in another country goes Global Market and
bankrupt and the seller faces risk of loss due to non–payment. Managing Holistic
7. Transport : The goods despatched through sea, air and long road Marketing Management
distances are exposed to many types of additional risks.
8. Market : The competition in international business is from the local
as well as from other global companies. The intense competition
may also face change in market conditions. It is common mistake
is overestimating a particular market's potential, based on your
domestic context. Foreign markets typically have less information
available and more variability in sales estimates, which is a setup
for failure.
9. Foreign Country's Rules : Firms often face rules imposed by the
foreign government concerning working practices, ownership, local
nationals, local purchase, amount of profits that sent from the
country.
10. Factor in basic infrastructure quality and services. The cost of
doing business in any market is heavily dependent on local
transportation, energy, technology, and financial services. These
components can totally change your customer value proposition,
or the business model that you have honed. Re–validate your
business model in every market.
11. Assume large and frequent economic swings. The inability to
accurately predict or prepare for sudden changes in the local economic
environment creates risks for the markets you know, but can wreak
havoc for global initiatives.
Therefore, the companies eyeing to do business internationally must
weigh their options impartially before committing to go–ahead.
When the firms finally make up their mind to do business
internationally, there are three questions that need to be thought through :
A. Which markets to enter ? (Marketing objectives)
B. How many markets to be entered ? (Approaches)
C. How to enter the designated market ? (Mode)
A. Which markets to enter ? (Marketing objectives)
The firm has must systematically work out the market size, expected
growth, cost of doing business, competitive advantage and risks.
Inwardly, it must clear its international objectives and policies.
Then, it must answer :
1. How much foreign sales it is targeting ?
Will it be equal or more than domestic business ?
2. Which types of country it wants to enter ?
It will depend on the product attractiveness, geographical,
demographical and economic factors including political climate.
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Marketing Management 3. It must forecast the potential of each such market and the ROI.
B. How many markets to be entered ? (Approaches)
1. The seller may prefer certain country or group of countries.
2. Mostly, the firm operate in fewer countries with deeper penetration
in each.
There are two approaches in the entry methods :
a. Waterfall approach : is gradual entry in to countries in sequence.
The firm starts with developed countries and slowly move to the
developing countries. E.g. Benetton, The Body Shop, BMW etc.
b. Sprinkler approach : is when a firm enters many countries at one
go. This approach holds especially true for techno–firms like Apple,
Microsoft etc.
C. How to enter the designated markets ? (Modes of entry)
Once a firm decides to enter into international business, it has to
work out the appropriate mode of entry. The various modes range from
indirect export to direct investment.
Each mode of entry has to be evaluated in terms of money allocated,
return on investment, product lines, risk and control.
As in any business, here too, the more the investment, the greater
is the risk but with better control and more profit. On the other hand,
less the money allocated, the risk is minimal but so is the control and
profit.

3.3 Modes of Entry to Foreign Markets and Risks Involved :

MODES OF ENTRY INTO INTERNATIONAL MARKET

Indirect
Export Direct
Intra company transfer

Licencing

Contract manufacturing
Join ventures
Management contracting

Joint ownership

Franchising

Greenfield investment

Direct investment Strategic alliance

Merger & Acquisition
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Indirect Export Global Market and
The easiest way to enter an overseas market is through export. A Managing Holistic
firm may change the products(s) home country to suit the foreign markets. Marketing Management

In this mode, there is low–risk, but least market–control. The firm

does not engage in international marketing as there are no sales personnel
of the exporting firm.
Direct Export
Sellers then move to direct exports. The firm does its own distribution
of goods or set up an overseas branch that handles sales, distribution
and promotion. It can do distribution through a firm of the host (another)
country on commission basis or fee charged. Direct exporting is selling
the products to a country directly.
Intra–Company Transfers
Intra–Company transfer is selling of product by a company to its
affiliated company in host (another) country. It is treated as exports in
home (own) country and imports in host country.
This generally happens in large multi–national companies that have
manufacturing units in several places around the world.
Joint Ventures (JVs)
Another method of entering a foreign market is through joint
ventures. A firm joins hands with a foreign company to produce or market
the products or services. There direct investment in the association formed
between the two entities. The reasons for joint venture may be required
for : finances, political obligation, managerial resources, or government
regulations.
• Through joint ventures, foreign investors have access to distribution
channels, financial resources, and contacts of the Indian partners.
• Corporate joint ventures are regulated by the Companies Act, 2013
and the Limited Liability Partnership Act, 2008.
There are four types of Joint Venture : Licensing, Contract
Manufacturing, Management Contracting and Joint Ownership.
Licensing :
The firm issues a license to another firm in foreign country to
manufacture or use of trademark for an agreed payment or royalty.
The licensee firm stands to advantage in getting product expertise
of famous brands, while the licensor reduces its risk in entry in foreign
market.
Contract Manufacturing
Another possibility is contract manufacturing. A firm hires a
manufacturer in foreign country to produce its product or give service.
The advantages are that it gets faster start, with less risk. The
weakness is that the licensor reduces its control on actual manufacturing.
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Marketing Management Management Contracting
A firm enters into management contract with another firm in foreign
country for sharing the management expertise for a fee. The licensee in
the foreign country does capital investment.
Management contracting is a low–risk method with income to the
domestic firm from the very launch.
Joint Ownership
Joint–ownership Ventures is when a firm agrees with investors to
generate a local business with joint ownership and control.
The venture could be formed by a firm buying an interest in a local
firm, or when the two firms get together to get into a new business
venture.
The reasons for Joint ownership Venture are : economic needs,
political compulsion or conveyances, foreign government condition.
The drawbacks are that the associates may disagree over various
aspects of the business. For long term partnership, both parties must have
clarity on goals and the distribution of profits.
Franchising
A firm has the choice of entering oversees market through franchising,
which is another form of Licensing.
The franchiser offers a complete brand concept that it has elsewhere
in the world. It imparts training, standards of services to maintain quality
and operating system. Also, it gives the authority to the franchisee to
use logo, trademark, brand name and symbols.
The franchisee does the investment in the business and pays an
agreed amount to the franchisor.
The franchiser demands to maintain the same standard across the
world, allowing the product or service to adapt to the local taste.
Direct Investment
The firm has to study the existing economic, political and market
conditions before committing itself into capital investment.
E.g. Apple investments of R&D work in China.
Direct Investment can be done through :
A. Greenfield investment
B. Strategic Alliance
C. Merger and Acquisition
A. Greenfield investment
The investing firm makes full and direct investment in a production
unit in a foreign market, thereby fully owning the company. The firm
can do the construction of the new plant. This type of investment and

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commitment generally happens from a company in developed country Global Market and
into developing country. E.g. Mercedes Benz putting a plant near Pune Managing Holistic
It is called wholly owned subsidiary or the Greenfield investment. Marketing Management

B. Strategic Alliance
Strategic Alliances happen when there is a co–operativeapproach.
Strategic Alliances are a strategy to explore a new market when one
company is unable to penetrate the market objectives alone. E.g. ICICI
Bank with Vodafone for m–pesa
Many firms are entering into Strategic Alliances to achieve good
results in short time.
C. Merger and Acquisition (M&A)
Mergers and Acquisitions have gained popularity due to Globalisation
and Financial Reforms happening worldwide.
The purpose of M&A is to get some strategic benefits in the markets
of a particular country. With M&A, multinational companies can enjoy
achieve economies of scale by speedy growth. E.g. Vodafone with Idea
(mobile service providers)
M&A inspire Foreign Direct Investment (FDI).
The laws regarding M&A need to be updated regularly by the
investing firm.
Advantages of Direct Investment
1. The firm can have healthy relation with the government and local
customers that enables it to align the product and service to the
local needs.
2. It can procure material from local sources at a cost that may be
more cost effective.
3. It can take the benefit of government tax, subsidies and other
incentives.
4. It can provide employment to the local public.
5. It has total control on all the aspects of manufacturing and service
operations keeping its international norms intact.
Disadvantages of Direct Investment
1. The risk of capital investment is totally borne by the investor.
2. The volatility of currencies may bring unanticipated loss.
3. The political situation may change and there may be public unrest.
4. The shutting down of the entire business may be quite costly.

3.4 Product & Communication :

Product & Communication – adapt or extend ?
Ford and Toyota selling their India that are designed for a low–
cost cars, now wants to sell this versions globally. Nestle's high–nutrient
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Marketing Management and low–cost variant of Maggi noodles, a product developed for India
and Pakistan, is on its way to Australia and New Zealand
Companies can have five different strategies to venture in foreign
markets. The focuses on changes are based mainly on product and
communication strategy to be used internationally.
The adaptation and / or extension on the two focal aspects are based
on the needs and wants of its foreign customers. Another alternative is
to adopt an invention strategy, where products are newly designed.
1. Product and Communications Extension : A firm may opt for
marketing a standardized product using a uniform communications
strategy. Small firms or firms that are new in international business
generally go for this approach.
This option is less costly for the firm, as the products do not have
to be customized products and the packaging and advertising
campaigns remain the same as in host country.
This strategy is product–driven rather than market–driven. However,
there are likelihoods that's the customers may not want to shift from
the products in host country.
2. Product Extension – Communications Adaptation : Here, a firm
keeps the same product as in–home country but changes to customized
advertising campaigns for the host country. The reason is that the
benefits sought differ for the same product in various parts of the
world due to differences in the cultural environment.
3. Product Adaptation – Communications Extension : The firms
might adapt their product as per the requirements of host country
but use same communications strategy. The local confrontation is
not there as the product is localized.
In case there is acquisition of a local company, the firm adds the
brands to the overall product portfolio. The buying behaviours
among consumers using their familiar product suits communications
strategy.
4. Product and Communications Adaptation : In this strategy, to
suit the cultural and physical environments, the firm goes for dual
adaptation – of the company's product as well as its communication.
5. Product Invention : Here, a firm goes for innovative products
which have a worldwide appeal which offers large market
opportunities.
There are global plans, resources, direction and support given by
the highest authorities in the company to go in for this approach.

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3.5 Counterfeit Goods : Global Market and
Managing Holistic
What are counterfeits ? Marketing Management
Counterfeits goods trick consumers by placing familiar brand names
or logos on fake goods that are not produced by the brand owner. These
goods are manufactured and sold illegally.
Innocent customers seeking particular brands with certain product
features and quality are not actually getting the product they wanted in
the first place.
There are many counterfeit products that can actually harm
consumers. For E.g. – medicine, personal hygiene products may contain
toxic materials endangering lives. Phone chargers and batteries can start
fires or explode, and car parts can fail driving.
Such dubious businessmen have fake goods with familiar brand
names and logos and certification marks. They even copy packaging
design of the original goods.

3.6 Country of Origin Effect :

The consumers associating brands with countries and making buying
decisions is called as Country of Origin Effect.
As the consumers form brand and country association and brand
recall is made accordingly, it becomes hard to change the perceptions
afterwards.
In other words, the products and brands from certain countries are
purchased or discarded depending upon our perceptions of the value
associated with these countries. For E.g., Switzerland's watches (Swatch).
USA's fast–foods (McDonalds & Donimos).
Marketers have to take be cautious about the country's name when
used in communication.
Current business trends :
1. Robots taking our jobs : Probably the biggest change that is
affecting our businesses is how machines are taking over tasks
ranging from window cleaning to inventory management. Anyone
with a transaction based job or business will be having a forced
career change before the end of the decade.
2. The Internet of machines : Those robots and computers are talking
to each other which speeds up business decisions and will strip
layers of management from organisations.
3. Flatter organisations : A consequence of those faster decisions
is the need for less management. Organisations need to be flatter
in order to process information faster unless they want to risk
nimble competitors seizing business opportunities.
4. 3D printing : One of the most exciting, and business changing,
technologies is 3D printing which allows you to print a coffee cup
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Marketing Management at your desk, help robots construct new buildings and a give a little
boy a set of fingers.
5. Nano–technology : The 3D printing is happening alongside biological
engineering. By the end of the decade, we'll be able to print our
own skin. By 2030, we'll be printing replacement body parts like
heart valves.
6. Mobile apps redefining service industries : The mobile phone app
is currently booming but the real effects of these mobile services
will be felt on industries as diverse as the taxi industry to the mining
and agricultural sectors.
7. The fight for control of the mobile payments system : An upshot
of the app economy is the question of who processes, and makes
money, from online payments. The battle between banks, credit card
companies, telcos and software companies is going to be a major
business story of the decade.
8. Reinventing entertainment : Apps and connected machines are
going to change consumer behaviour and nowhere is this more
notable in the entertainment industries which are being revolutionised
by tools like Google Glasses and social media.
9. The fall and rise of social media : Like many innovations social
media was greatly hyped and now we're seeing the backlash of it
being oversold. Over the rest of the decade organisations are going
to figure out how to use social media services effectively and
profitably without hype.
10. Newspapers cease to exist : One of the effects of social media,
mobile phone apps and the pervasive internet is the coming to the
end of newspapers.

3.7 Managing Holistic Marketing :

According to Philip Kotler, "A holistic marketing concept is based
on the development, design, and implementation of marketing programs,
processes, and activities that recognize their breadth and interdependencies.
Holistic marketing recognizes that 'everything matters' with marketing and
that a broad, integrated perspective is necessary to attain the best
solution."
What is Holistic Marketing ?
The holistic approach to marketing is based on the ground that the
whole is greater than the sum of its parts.
For example, a vehicle's different parts (engine, wheels, the exhaust
system etc) should function properly for the smooth running of the vehicle.
Holistic marketing has a similar approach in running of a business
organisation.

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Earlier, various departments, such as Marketing, Finance, Global Market and
Administration, HR, etc., worked independently. Under the holistic Managing Holistic
marketing approach, all the departments within the organisation work Marketing Management
together towards the common goal of the organisation.
Therefore, the tactic is to have positive brand image, make product
attractive enough for purchase, and have integrated marketing
communications for the success of a business.
Requirements for Holistic Marketing approach to give customer
great experience :
• A common goal : All features of the business should work towards
one common goal.
• Aligned activities : All business activities, processes, communication
and services should be united towards that common goal.
• Integrated activities : All activities and processes should be
combined in such a way that they provide a consistent, uniform
and continuous customer experience.
Internal Marketing
When all employees in various departments accept the concepts
and goals of marketing and realize their prime purpose is to satisfy
customers does the company become truly effective.
The Marketing Departments are be organized to work effectively
with other departments, to bring in creative marketing philosophy across
the organisation.
Organizing the Marketing Department
Marketing departments can be organized as :
A. Functional Organisation
B. Geographic Organisation
C. Product Organisation
D. Market Centred Organisation and
E. Matrix Organisation.
A. Functional Organisation
There are three methods in which the sales force may be organized
for direct selling :
The product or service can be sold directly to customers or to
distributors, wholesalers, retailers or to other middlemen (for indirect
selling).
B. Geographical Organisation
When there is a single product is to be sold in scattered markets,
the sales personnel's area is divided on a geographical basis.

165
Marketing Management C. Product Organisation :
If there are different products to be sold, the sales force is organized
for each product or the product's group. The bifurcation can be done on
the basis of the technical process of the product.
D. Market–Centered Organisation
Changing the focus from products to customers, firms group together
customers' needs and divide the sales people.
E. Matrix Organisation
Firms cater differently, when
– There are different products for different markets (E.g. Product range
of ITC – cigarettes, soap, cookies, flour, note books etc)
– There are same products for different markets (E.g. Cannon –
photocopiers to retail market and government organisations)
– There is the same customer with different needs (E.g. Johnson &
Johnson selling different numerous items to children category)
In such cases there may be need to have separate manager for each
product. Or, a unique buyer may require the full attention of one sales
person.
Therefore, the solution lies in a matrix organisation, where
responsibilities may be given on the basis of : functions and products;
functions and markets; functions, products and markets.

3.8 Components of Holistic Marketing :

Courtesy Philip Kotler and Kevin Keller. There are five different
components that merge to represent the firm's brand image.
1. Relationship Marketing
This component of holistic marketing is focused on building strong
relationships with all stakeholders (including the customers, employees,
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shareholders, suppliers, channel partners, regulatory bodies, and financial Global Market and
institutions) who can directly or indirectly influence the success of the Managing Holistic
business. Marketing Management
The aim of relationship marketing is to focus on marketing activities
that create an emotional bond between the business and stakeholders.
The emotional tie brings loyalty that are likely to convert to purchase
of the firm's products and projects a positive brand image even when
they are outside the office.
2. Integrated Marketing
All marketing communication – sales promotions, advertisements,
digital marketing, print advertising, direct marketing, public relations, etc.
– are integrated to give customers same experience with similar messages.
Using an integrated communication strategy means choosing
communication options that reinforce and complement each other.
3. Internal Marketing
In this approach the organisation's employees are to be treated as
internal customers – fully aware about the products and services of the
organisation. Employees of all departments need to be involved in the
marketing process.
The organisation has to ensure the satisfaction of its employees,
through proper training and motivation, and coach them for the
organisation's business values.
The internal marketing safeguards against any personal or
departmental conflicts.
4. Socially Responsible Marketing

Holistic Marketing requires the responsibility of the organisation

to be extended socially – that is all its activities should be guided by
laws, business ethics, society, and environment.
Also, the organisation can indulge in socially responsible marketing
through Corporate Social Responsibility (CSR) and philanthropic activities,
helping the community as well as improving the organisation's brand.
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Marketing Management 5. Performance Marketing
This marketing is focused on the returns of marketing activities to
the business.
Marketers can show a return on investment on the funds spent on
marketing and subsequently its effect of these marketing activities.

3.9 Importance of Holistic The Marketing :

The holistic marketing approach has a number of benefits. These
include :
1. Brand Building
A company's brand as well as other intangible assets is a large
percentage of the company's market value. As time passes it grows.
Also, consumers' approach to shopping constantly changes.
Today, customers pay more attention to the brand than the product.
This shows that there is need to put greater focus on brand building.
The holistic marketing approach helps build a stronger brand by
projecting a positive and unified image among all the company's
stakeholders and across all the touch points through which customers
interact with the brand.
2. Consistency
Consistence is vital for any brand that wants to remain relevant
in the long term.
Today, people are conscious on their money spent. Before making
any purchase decision, consumers take a lot of care to ensure that they
are getting their money's worth.
Without directly engaging the company, consumers research the
company and the product both online and offline.
During this research phase, it is crucial to ensure that the customer
experience is consistent across all the channels the customer might opt
to learn from. Any fault here, the customers might be lost without the
organisation even knowing about it.
Holistic marketing also ensures that all touch points through which
customers interact with your business are integrated such that they provide
a seamless experience to the customer regardless of where the customer
is interacting with your business.
This consistency helps build customers' confidence and trust in the
brand.
3. Efficiency
One of the foremost aims of holistic marketing approach is to ensure
that all the aspects of the business are working together in harmony
towards a common goal.

168
When there is such alignment, it becomes a lot easier to ensure Global Market and
that resources are deployed where they will be most effective. Managing Holistic
Having all the aspects working in harmony also reduces the likelihood Marketing Management
of duplication of effort, making business processes more efficient and
helping the organisation to save money and time.
Finally, when all aspects and departments are working in cohesively,
it becomes easier to spot opportunities and take advantage of them, and
identify potential risks and address them.
4. Effectiveness
The holistic marketing approach focuses on the bigger picture rather
than on the smaller details.
This bird's eye view creates a powerful synergy that effectively
enhances your brand positioning and brand messaging in the eyes of your
customers.

3.10 Holistic Marketing Framework :

The holistic marketing framework is a process that helps organisations
use the holistic marketing approach and the interactions between the
organisation's various stakeholders and collaborators to create, renew and
maintain customer value.
The holistic marketing framework is comprised of three value–
based activities :
1. Value Exploration
This is the process through which organisations identifies new
opportunities for value creation. Here, the organisation needs to have
an understanding of how the following three spaces interact together :
(a) The consumer's cognitive space – refers to your customers' existing
and latent needs, as well as other customer dimensions such as
the need for freedom, stability, participation and change.
(b) The organisation's competence space – refers to the organisation's
capabilities.
(c) The collaborators resource space – refers to the ability of the
organisation to partner with other organisation's to either serve the
organisation's value creation or to exploit market opportunities.
By evaluating how the relationships between these three spaces and
how they interact with each other, business can easily identify new
opportunities for value creation.
2. Value Creation
After identifying value creation opportunities during the value
exploration stage, the organisation needs to develop value creation skills
to take advantage of the opportunity.
In order to do this, marketers need to determine any new benefits
the customers want from the customer's point of view, and then use the
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Marketing Management organisation's core competencies and strategic partnerships with
collaborators to deliver these benefits.
The key thing during this step is to get into the customers minds
and understand how they think.
This can be done by observing who the customers interact with,
who they admire, and the people that hold the greatest influence over
the customers.
3. Value Delivery
Finally, the organisation needs to actually deliver value to the
customers.
In most cases, this requires the organisation to make huge investments
in both infrastructure and capabilities.
The organisation will also need to become competent in managing
customer relationships, internal resources, and business partnerships.
This makes it easier for the business to properly respond to customer
opportunities. Therefore, the organisation need to be able to able to
manage the resources and processes involved in delivering value to the
customers.
Finally, the organisation needs to be able to manage any business
partnerships it will enter into in the delivery of value to customers.
Summary
With the changing face of the business environment and increased
competition, the holistic marketing concept has emerged as one of the
greatest ways for businesses to remain competitive.
Under the holistic marketing approach, marketing is not viewed as
an isolated element of business.
Instead, holistic marketers understand that marketing is most effective
when all aspects and elements of the business work together towards a
common goal of selling products and delivering an exceptional customer
experience.
Check Your Progress :
1. Under which mode of entry, does a manufacturer give the right to use
intellectual property such as patent and trademark to a manufacturer
in a foreign country for a fee
a. Contract manufacturing b. Licensing
c. Joint venture d. None of these
2. When two or more firms come together to create a new business
entity that is legally separate and distinct from its parents it is known
as
a. Contract manufacturing b. Franchising
c. Joint ventures d. Licensing

170
3. Which one of the following modes of entry permits greatest degree Global Market and
of control over overseas operations ? Managing Holistic
a. Licensing/franchising b. Wholly owned subsidiary Marketing Management

c. Contract manufacturing d. Joint venture

4. Holistic marketing does not include :
a. Internal Marketing b. Integrated Marketing
c. Performance Marketing d. Financial Marketing
5. Holistic marketing benefits in :
a. Consistency b. Brand Building
c. Efficiency d. All the above

3.8 Let us Sum up :

Organisations require cohesiveness between R&D, procurement,
production, marketing, and finance. The activities carried out by all
departments need to be monitored.
The products and services developed in one country may or may
not find acceptance in other country. The products need to be carefully
aligned to the market need abroad then product extension or product
adaptation can happen successfully.
The products have to be seen in light of 'grey market' existence
and 'country–of–origin' perceptions that can affect can affect consumers
and businesses.

3.9 Answer to Check Your Progress :

Check Your Progress :
1. b 2. c 3. b 4. d 5. d

3.10 Glossary :
Regulation – a law, rule, or other order prescribed by authority,
Designated – given a specified status or name to.

3.11 Assignment :
1. Investment can be done through Greenfield, Strategic and Merger
and Acquisition. Explain all three types of investments.
2. In international markets, explain the effects of low risk and low
investment against high risk and high investment.

3.12 Activity :
Name a few counterfeit products available in the market ? How
are they harmful to the consumers as well as to the agents ?

171
Marketing Management 3.13 Case Study :
Globalisation at a glance
Dabur has
Presence in more than 50 countries, manufacturing plants in 5
locations outside India Offices in Russia, UK and USA
Independent team based in Dubai & Delhi to handle international
operations Chyawanprash, Vatika and Hajmola well–known brands in
international markets
Product–specific strategy followed in international markets –
Ayurvedic supplements and private label in developed markets, personal
care in Middle East, toothpaste and soap in Africa, healthcare and personal
care in Bangladesh
Future plans
Dabur has formulated structured strategies to enter into the
international market and has identified focus countries where it is evaluating
the need for having a manufacturing facility or marketing presence.
According to Mr. Sunil Duggal, CEO, Dabur India, "We have
identified 7 focus markets and 8 potential markets where we will invest
managerial and monetary resources and set up local manufacturing facilities
if the situation demands. A state–of–the–art production facility is being
planned in Dubai in addition to a product development cell that will
develop products to cater to local consumer needs".
As a part of this strategy the company is also looking at a large
market for herbal–based therapeutic products amongst the mainstream
population in developed markets, dealing primarily with lifestyle ailments.
The focus of this initiative would be to cater to this market in UK through
OTC products.
Entry strategies are being developed to enter the US supplements
market.
According to you…
1. Which mode of entry is to be adopted for developed markets ?
2. Do you think capital investment is advisable ?
Source : www. dabur.com

3.14 Further Reading :

International Business, Text and Cases, P. SubbaRao, 3rd revised
and enlarged edition
International Marketing, Dr Roger J Best

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BLOCK SUMMARY Global Market and
Managing Holistic
There is hardly any situation where the company gets monopolistic Marketing Management
market. Competition is everywhere. A company takes up positions to
counter the strategies of the competition. There are various strategies
adopted to counter the competition.
You have also learned in this Block, how the product or service is
similar to the life cycle stages of human being. At each stage a company
adopts several approaches to extend it life time in that period.
The key to survive and grow in the market place lies in continuous
innovation of the product and service offered. Therefore, the organisation
sets an acceptable process right from germination of an idea to ultimately
commercialise the product or service.
In the international arena there are risks involved which are created
due to several influences. The company willing to venture abroad for
business primarily decides on its own objectives, then the approach to the
international affairs and finally takes up the mode to enter the international
market.

BLOCK ASSIGNMENT
Short Answer Questions :
1. What is the type of market segmentation that can be done ?
2. What are the steps to be taken for product positioning ?
3. What are the new types of product or services that can be launched
by a company ?
4. What are the factors that lead to product failure ?
5. Are there risks in doing international business ? Enumerate them.
6. What are the approaches in the entry method to international
business ?
7. What is the meaning of 'Holistic Marketing Framework' ?

Long Answer Questions :

1. What is the various basis of segmenting of market ?
2. What is the competitive strategy for Market leaders ?
3. Explain the commonly acceptable New Product Development Process.
4. Describe the modes of entry to international business.
5. Elaborate the direct investment methods – Greenfield, Strategic
Alliance, Mergers and Acquisition.
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Marketing Management  Enrolment No. :
1. How many hours did you need for studying the units ?

Unit No. 1 2 3

No. of Hrs.
2. Please give your reactions to the following items based on your reading
of the block :

3. Any other Comments

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174
Dr. Babasaheb BBAR-201/ DBAR-201
Ambedkar
OpenUniversity

Marketing Management

BLOCK-4 PRODUCTS, BRANDING, PRICING

STRATEGIES, MANAGING SERVICE,
MARKETING CHANNELS AND IMC

UNIT 1
SETTING PRODUCT AND BRANDING STRATEGIES & BUILDING
BRAND EQUITY

UNIT 2
SERVICES MARKETING

UNIT 3
DESIGNING MARKETING CHANNELS, MANAGING RETAILING,
WHOLESALING AND MARKET LOGISTICS

UNIT 4
INTEGRATED MARKETING COMMUNICATIONS
BLOCK 4 : Products, Branding, Pricing Strategies, Managing Service,
Marketing Channels and IMC
Block Introduction
In this block you will get an insight into the concept which has
withstood the test of time – 'Marketing Mix. ' The concept clarifies how
a Marketer tweaks the Ps of marketing to achieve the Company's objectives.
Service Marketing has occupied the lion's share in India's GDP.
Therefore, it is essential to learn the nuances of this rapidly growing
industry.
The distribution channel is one of the most important of component
of the marketing system as it not only provides the logistical link to
ultimately reach the consumer but also adds value to the system.
The communication message that reaches the customer through
various vehicles lures him / her to build an image in the minds of the
consumers about the product or service or the company – thus vital cog in
the wheel of Marketing Management.

Block Objectives
After learning this block you will be able to understand :
• Product lines, levels, extension and mixes.
• Concept of service industry
• Marketing Mix – the Ps of marketing and their use.
• Marketing Channel – Selection and Designing
• Managing Wholesalers and Retailers.
• Advertising program
• Integrated Marketing Communication

Block Structure
Unit 1 : Setting Product and Branding Strategies & Building Brand Equity
Unit 2 : Services Marketing
Unit 3 : Designing Marketing Channels, Managing Retailing, Wholesaling
and Market Logistics
Unit 4 : Integrated Marketing Communications
SETTING PRODUCT AND
Unit BRANDING STRATEGIES &
1 BUILDING BRAND EQUITY

: UNIT STRUCTURE :
1.0 Learning Objective
1.1 Introduction
1.2 Product Levels
1.3 Classification of Products
1.4 Product Differentiation
1.5 Product Mix
1.6 Co–Branding
1.7 Packaging, Labeling, Warranties and Guarantees
1.8 Brand Equity
1.9 Branding Strategy
1.10 Let Us Sum Up
1.11 Answer to Check Your Progress
1.12 Glossary
1.13 Assignment
1.14 Activity
1.15 Case Study
1.16 Further Readings

1.0 Learning Objectives :

• To learn the product lines, levels, extension and mixes.
• Differentiating the product from others
• Branding the product, the core element

1.1 Introduction :
Of all the Ps of Marketing Mix, the core and the vital component
is the Product.
The manufacturer of the product has not only to maintain the
product quality and grow but also extend the product line to get market
leadership in the category. The product can be tangible or intangible
provided by the service provider.
The product has to be differentiated from the clutter in the market
by branding. The customer will respond more positively to a well–known
brand adding more revenue and more customers along the way.

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Marketing Management 1.2 Product Level :
Marketers must plan about the product on different levels, starting
with "What is the buyer really buying" ? At the first level when on buying
a product, it is only problem–solving core benefits that consumers seek.
The product planner must build levels around the core product.
Philip Kotler attributed five levels to products raising the product benefits
to match the satisfaction of the consumers.
The products may have as many as five characteristics : a quality
level, features, styling, a brand name and packaging.
Levels of Product

1. Core benefit :
The fundamental need or want that satisfies the consumers when
on buying a product or service. For E.g., the need to process digital
images.
2. Generic product :
A version of the product containing only some attributes or
characteristics that are necessary for its functioning.
For E.g., the need to process digital images could be a generic,
low–end, personal computer using free image processing.
3. Expected product :
The set of attributes or characteristics that buyers normally expect
on purchasing a product.
For E.g., the computer processor delivers fast image with high–
resolution and accurate colour screen.
4. Augmented product :
The inclusion of additional features, benefits, attributes or related
services that serve to differentiate the product from its competitors.
For E.g., the computer is loaded with high–end image processing
software at no extra cost or incremental cost.

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5. Potential product : Setting Product and
In the next step, all the augmentations and transformations are Branding Strategies &
studied that can be provided in the product in future. The customer Building Brand Equity
needs to be surprised and delighted in future for retaining loyalty.
For E.g., the customer receives image processing software upgrades
with new features.

1.3 Classification of Products :

Goods or products are divided into two categories – consumer and
industrial products
A. Consumer Products :
Products that are purchased by consumers or users to satisfy their
personal needs are called consumer products. E. gs. are – cold drinks,
eatables, clothes, toothpaste etc.
Consumer products can be distinguished on the basis of shopping
efforts, and durability of product.
Products are further classified into categories :
a. Convenience Products
b. Shopping Products
c. Specialty Goods
d. Unsought Goods
a. Convenience Products :
These are goods purchased frequently, and with least time and
efforts. Convenience in making a purchase is the main criterion. For E.g.,
availability of product and nearness of shop etc.
These goods are regular and continuously in demand. They are
essential for a consumer who buys in small units. Branded and standardized
products are sold easily with hardly any enquiry about quality and price
due to customer's habitual purchases. There is severe competition due
to which many advertisements are given. There are sales promotions
schemes, discount offers, gift offers, etc.
Types of Convenience Goods :
(1) Staples : For purchasing staple goods, consumers do not spend least
time possible. These items are bought frequently for immediate
consumption. E.g., milk, bread, grocery items.
(2) Impulse Goods : These goods are picked by shopper on sudden
desire, without planning. E.g., gift items, etc. Window displays are
essential to draw the attention of consumers.
(3) Emergency Goods : Some products are purchased on some urgent
need. E.g. umbrella due to sudden rains, pain reliever for headache
etc. Customers do not waste time on the price or quality of such
products.
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Marketing Management b. Shopping Products :
Shopping goods are due diligence. The customers studies in detail
about the product's quality, price, suitability, competitive products, substitutes
of product and the brands available in different stores.
The goods are durable with high unit price. There is a gap between
decision to buy and actual buy requiring indulgence of sales person.
Service and warranty work are often important considerations as well.
E.g. – Readymade Garments, shoes etc.
c. Specialty Goods :
When consumers extensively search and research for a product, it
is a Specialty Good. These are products have high brand loyalty. E.g.
– high–end audio system. These goods have high unit value and purchased
infrequently.
d. Unsought Goods :
These are products are purchased only when there are problems.
E.g. emergency automobile tools, specialized medical treatment. Consumers
generally are generally unaware of these products or their importance till
they realize it.
B. Industrial Goods or Products
Industrial products are primarily goods used as inputs in producing
other goods. E.g. – raw material, machines tools etc.
The derived demand arises due demand of end products. E.g.
demand for leather is derived from demand for shoes. The demand is
raised by technicians and advised by experts like engineers, production
managers etc. The selling may happen through direct selling by
manufacturers and many a times customized as per buyers' specifications.
The limited buyers are generally concentrated in specified geographical
area.
Major Categories of industrial goods are :
(i) Raw–materials E.g., natural rubber, cotton, agricultural products,
mines etc.
(ii) Component parts and materials E.g., tyres and batteries for cars etc.
(iii) Accessory items E.g., machine tools etc.
(iv) Installations E.g., overhead cranes etc.
(v) Supplies E.g., fuel, coal, cleaning materials, lubricating oil, electric
power etc.
(vi) Business Services E.g., consultants, advertising agency etc.
(vii) Semi–finished–goods, supplied by another industrial unit for further
processing.
(viii) Production Facilities & Equipment E.g., Buildings, Equipment,
Furniture etc.
(ix) Materials used in administration E.g., Stationery etc.
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1.4 Product Differentiation : Setting Product and
Branding Strategies &
The customers are offered many choices of products and services Building Brand Equity
from various manufacturers in the market. It is therefore necessary to
distinguish from the competition to remain in business and grow.
The differentiation can be through pricing or product.
What is Product Differentiation ?
Product differentiation is a marketing process of differentiating a
product or service from others in the market, to make it more appealing
to the target audience.
Marketers would involve defining unique position for the product
or service in the market by explaining the unique benefits – its unique
selling proposition (USP).
It's important to differentiate the product from competition not only
for better market share but also for survival.
Importance of Product Differentiation :
• Translates the product attributes into benefits.
• Answers the customers for – 'What's in for me ?'
• Gives the customers reasons to purchase and repurchase the brand.
• Increases the recall value of the product.
• Increases brand loyalty and builds brand equity.
• Attribute–based differentiation is important to defend higher price
from competition.
Types of Product Differentiation
1. Horizontal differentiation : Distinctions in products that cannot
be evaluated in terms of quality. E.g. : Mineral water brands.
2. Vertical differentiation : Distinctions in products that can be
evaluated in terms of quality. E.g. Duracell batteries over others,
believing it last longer.
3. Simple (or mixed) differentiation : Differentiation based on
numerous characteristics. E.g. iPhone over an Android considering
status symbol. Order on line on Amazon rather than visit store for
convenance.
Basis of Product Differentiation :
• Price : It is the most common determinant to attract target group
to a brand. It separates the premium product from others products.
E.g. High–priced 'Forever 21' products.
• Features : Features like size, shape, ingredients, origin, etc.
differentiate products in the same price spectrum. They also help
the brand to back their high pricing.

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Marketing Management • Performance & Quality : A good quality product always stands
apart from others. E.g. Duracell AAA batteries that lasts longer.
• Reliability : Some products are famous to be more reliable than
others.
• Looks : Appearance play an important role especially in case of
garments and other luxury products.
• Channels of Distribution : Channels of distribution are also crucial.
E.g. Tupperware has a selective distribution strategy.
• Complexity : The level of complexity of usage of a product is
important factor in differentiating products, especially in the
technology industry.
• Location : Manufacturer's location – country of origin of the product
and retailers' location play an important role in differentiating a
product from its competitors.
• Marketing efforts : Marketing efforts gives good brand image.
Other marketing efforts like sales promotion act as an add–on to
differentiation strategy.
• After–sale services : Good after sale services make the customers
assurance in the brand.
Basis of Service differentiation :
(1) Ordering ease : how easily the customer is able to place an order
with the company for E.g. ICICI's Home loan.
(2) Delivery how well the product or service is delivered to the customer
for E.g. Pizza for Pizza Hut.
(3) Installation : the work done to make a product operational in its
planned location or E.g. Installing Compaq's computers, LG's air
conditioners.
(4) Customer training : getting the employees of the customer trained
in the use of vendor's equipment for example training hospital staff
before installing GE's X–ray equipment.
(5) Repair : quality of repair service available to buyers of the company's
product for example LG's home appliances, Samsung's electronic
items etc.
Product differentiation advantages :
• Creates Value : Product differentiation gives a reason to the customers
to choose the brand over others.
• Defends high price : It gives reasons the product is high priced.
• Non–price competition : It allows to compete in areas other than
price.
• Brand loyalty : A successful brand loyalty is created.
• No close substitutes : A perception is created that there is no
substitute available.
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Product differentiation disadvantages : Setting Product and
• Added pressure on the manufacturers : The manufacturer has Branding Strategies &
to decide which attribute could possibly turn out to be the USP Building Brand Equity
for that product.
• Can increase prices : The production and marketing costs can be
transferred to the end–users.
• Increased Revenue Not Guaranteed : There is no guarantee that
the USP will generate more revenue.

1.5 Product Mix :

The set of all products of a company needs to be related to each
other to take advantage of the total offerings to the market, and branding
of the company itself.
Product Hierarchy :
We need to understand the product hierarchy which stretches from
satisfying the basic need of the customer to higher levels.
Need–Family :
It is a core need that underlies the existence of a product family.
These products satisfy a core need of an individual. E.g. Hunger.
Product–Family :
All the product classes that can satisfy a core need with reasonable
effectiveness are included here. It comprises of varieties of product within
this group, which compete with one another to satisfy the same need.
E.g. snacks, thali system of eating out.
Product Class :
It is a group of products within the product family of products
recognized as having a certain functional coherence, similar characteristics.
E.g. Fast Foods.
Product Line :
It is a group of products within a product class which are closely
related to each other since they perform a similar function, are sold to
the same customer groups, are marketed through the same outlets or
channels, or fall within the given price ranges. A product line may consist
of different brands, or a single–family brand, or individual brand that
has been line extended. E.g. Food outlets.
Product Type :
It is a group of items within a product line that encompasses one
of several possible forms of the product. E.g. Burger, Pizzas.
Item (Product Variant) :
It is a distinct unit within a brand or product line which is
distinguishable by size, shape, price, appearance, or some other attribute.
E.g. Burger King's Jumbo Chicken burger.
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Marketing Management The Product Mix
The product mix is a combination of products manufactured or sold
by the same organisation. Mostly, firms offer an assortment of products
to the markets instead of focusing on a single product to strengthen their
presence in the market and increase profitability.
Smaller or medium firms usually offer products that are related to
each other while bigger ones go for large scale diversified product range.
For E.g. – Ayur Herbals, a comparatively smaller enterprise basically
deals with cosmetics and beauty products while giants like ITC group
have their presence in fields in Cigarettes, Food, Lifestyle, Personal Care,
Stationary, Safety Matches and Agarbatties. Multiple products also spread
the risk as well as enables a firm to expand its customer base with various
offerings.

(i) Product Line :

Product line is a group of products that are closely related because
they satisfy a class of need, or used together, are sold to the same customer
group, are marketed through the same types of outlets, or fall within given
price ranges. As the organisation can have a number of different types
of products, it will have similar number of product lines. Thus, in Nestle,
there are milk based products like Milkmaid, Food product line like
Maggi, Chocolate product line like Kitkat and other such product lines.
Thus, Nestle's product mix will be a combination of the all the product
lines within the company.
(ii) Product Item :
It is a unit within the product line that is separate from others on
basis of colour, size, price or other attributes. E.g., Vivel soap of ITC
is a product unit distinguishable from other items in the product range.

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Product Item – ITC – Vivel Soap Setting Product and
Branding Strategies &
Building Brand Equity

Structure of Product Mix

The product mix has width, length, depth, and consistency.
1. Width :
Width of the product mix means the number of different product
lines found within the company. Thus, breadth is measured by the number
of product lines carried. E.g., ITC Group has a number of subsidiaries
producing wide range of products.
Width of ITC Group (partially shown below)

2. Depth :
Depth of the product mix refers to the average number of items
offered by the company within each product line. It is measured by
assortment of sizes, colours, models, prices and quality offered within
each product line. E.g., ITC offers a number of variants of Engage Deo.
Depth of Engage Deo of ITC

3. Consistency :
The consistency of product mix points out how closely related the
various product lines are in terms of consumer behaviour, production
requirements, distribution channels or in some other way. E.g., General
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Marketing Management Electric have an overall consistency in that most products involve electricity
in one way or the other.
According to Philip Kotler, all three dimensions of product mix have
a market rationale.
'By increasing the width' of the product mix the company hopes
to capitalise on its good reputation and skills in present markets.
'By increasing the depth' of its product mix, the company hopes
to entice the patronage of buyers of widely differing tastes and needs.
'By increasing the consistency' of its product mix, the company
hopes to acquire an unparalleled reputation in a particular area of endeavour.
PRICING THE PRODUCT MIX :
The strategy for setting a product's price often has to be changed
when the product is part of a product mix. The company looks for a
set of prices that will maximize profits on the total product mix, instead
of on the individual product.
The various products in the mix have related demand and costs,
but face different degrees of competition, pricing is difficult. Therefore,
we have to examine the five major product mix pricing strategies (or
situations).
Product Mix Pricing Strategy
1. In product line pricing, the firm must determine the price steps
between various products in a product line based on cost differences
between the products, competitors' prices, and, most importantly,
customer perceptions of the value of different features. E.g., for car
brand Audi, pricing has to be seen in relation between the other
models' price.
2. Optional product pricing is the pricing of optional or accessory
products along with a main product. E.g. GPS purchase with new
Audi car.
3. Captive product pricing is when companies make a product that
has to be used along with the main product. E.g., Razor blade
cartridges and printer cartridges. Producers of the main products
– razors and printers often price them low and set the supplies price
high. Sometimes, consumers are trapped into buying expensive
captive products could resent the brand later.
4. By–product pricing refers to setting a price for by–products to
make the main product's price more competitive. Often, these by–
products would not have much value and getting rid of them is
costly. E.g. By–product of petroleum and other chemicals.
5. Product bundle pricing is combining several products and offer
the bundle at a reduced price. E.g., Fast food outlet offers a bundle
consisting of a burger, fries and a soft drink at a reduced price.
However, the combined price must be low enough to get consumers
184 to buy the bundle instead of a single product.
1.6 Co–Branding : Setting Product and
Branding Strategies &
Co–branding is the utilization of two or more brands so as to create Building Brand Equity
a new product. This can be of the same company or from two distinct
companies. There should be complete harmony between the brands.
Co–branding is done to create larger customer base which combines
the existing customer base of the brand pairs.
Co–branding can be defined as a partnership between the marketing
activities of at least two or more different brands which are also independent
providers of products and services. This type of marketing strategy can
involve various types of marketing activities like advertisements or
sponsorships. This association should be beneficial for all the brands
involved when they are aligned rather than when those products are
promoted individually.
(A) Ingredient Co–branding :
Ingredient co–branding makes use of a popular brand to serve as
an important element in the production process of the other popular brand.
The underlying constituent brand is a subordinate to that of the primary
brand.
E.g., Dell computers utilize a co–branding strategy with Intel
processors.
This arrangement, the company can produce products of better
quality and gain more access to distribution channels, implement superior
promotional activities and earn more profits.
(B) Composite co–branding :
This type of brand strategy utilizes two renowned brand names in
such a way that they collectively provide a distinctive product or service
which could have been very difficult to produce individually.
E.g., Nike and Apple. Nike found that their customers (runners)
like to listen to music when they exercise or want to track their progress.
This led the company to form a partnership with Apple. Apple manufactured
a chip that is fitted in the shoes for recording the progress of the user
when it is activated on their iPhone or iPod. This microchip display user
statistics like time, distance and speed along with the number of calories
burned.

1.7 Packaging, Warranties, Labelling, and Guarantees :

Many marketers call packaging as the fifth P, along with price,
product, place, and promotion. However, packaging and labeling can be
considered as elements of product strategy. Warranties and guarantees
can also be an important part of the product strategy.

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Marketing Management PACKAGING
Packaging includes all the activities of designing and producing the
container for a product. Packages might have up to three layers : a primary
package inside a secondary package, with another packaged units sent
in a shipping package.
Packaging is important because it is the buyer's first encounter with
the product. A good package draws the consumer in and encourages
product choice.
The objectives of Packaging must achieve a number of objectives :
(1) identity of the brand,
(2) convey descriptive and persuasive information,
(3) facilitate product transportation and protection,
(4) assist at–home storage, and
(5) aid at–home consumption.
Functionally, structural design is crucial. Aesthetic considerations
relate to a package's size and shape, material, color, text, and graphics.
The packaging elements must blend with each other and with pricing,
advertising, and other parts of the marketing program.
Packaging updates and redesigns can keep the brand contemporary,
relevant, or practical, but not confusing. Companies must also consider
environmental and safety concerns about excess and wasteful packaging.
Factors that contribute to the growing use of packaging as a
marketing tool :
Self–service. Numerous products are sold from self–serve
supermarkets. As the purchases are made effective package must perform
the task of sales, describing the features of the product, attract attention,
and create favorable confidence in the consumers.
Consumer Affluence : Consumers are willing to pay a slightly
higher price for the convenience, appearance, dependability, and prestige
of better packages
WARRANTY :
Need for Product Warranty
Many products come with elaborate mechanism which is complicated
making it difficult for an average consumer to grasp it totally.
The Sale of Goods Act has given legal protection in the form of
implied conditions and warranties. A warranty is an obligation of the
producer and seller to stand behind the product and assure the buyer that
he will derive certain services and satisfactions from the product. The
product warranty must be clear, unambiguous and meaningful.
It has become an important selling point and a means of product
differentiation in a competitive market. Warranties are also considered

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as promotional devices. Full disclosure of warranty information will Setting Product and
ensure the consumer's "right to know." Branding Strategies &
LABELLING Building Brand Equity

Packaging, Branding and Labelling go together and constitute an

integral part of product. The purpose of labelling, like the purpose of
branding, is to give the consumer information about the product he is
buying and what it will and will not do for him.
A label is also a part of a package or it may be attached directly
to the product. Label is anything – may be a piece of paper, printed
statement, imprinted metal, leather – which is either a part of a package
or attached to it indicating contents, price names of product and produces
and such useful information beneficial to the consumer.
They give helpful information on the Brand name, name and address
of producer, weight, measure, count, ingredients by percentages where
possible, directions for the proper use of the product, cautionary measures
concerning the product and its use, special care of the product, if
necessary, date of packing and date of expiry, retail price, and unit price
for comparison.
GUARANTEE
Guarantee is a step ahead of warranty wherein the company is so
confident of their product, that they offer repair or replacement of the
product. In short, if there is any problem in the product, the company
will first try to repair the product and then if not repaired, it will offer
free replacement.
Companies like Cross pens or Mont Blanc have lifetime guarantee
of their products. They offer free replacement to the end customer if
a problem is not resolved. These companies have to factor in profit for
the replacements.
The difference between Warranty and Guarantee stands as differences
in legal propositions. While a customer can claim repair of the product
for free, he cannot claim the replacement of the product because the
company is not legally obligated for a guarantee / replacement.
However, most companies know that it is cheaper to replace a
product rather than getting into legal hassles and avoiding word of mouth
negative publicity.
Thus, many companies do provide free replacements if the customer
is very unhappy with the product or if there is an escalation. At all times,
warranties and guarantees have been established to raise the trust level
of customers and to provide them with assurance.
At the same time, if the customer is misusing the product and not
following the terms set by the company, the warranty and guarantee can
be termed void.

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Marketing Management Overall, above were the key differences between warranty and
guarantee.
It is important to read the documentation accompanying the warranty
or guarantee to understand what is covered under warranty and what is
covered in guarantee.

1.8 Brand Equity :

American Marketing Association has defined brand equity as –
"The value of a brand. From a consumer perspective, brand equity
is based on consumer attitudes about positive brand attributes and favourable
consequences of brand use. "
Philip Kotler has defined brand equity as –
"The positive differential effect that knowing the brand name has
on customer response to the product or service. "
David Aaker defined brand equity as –
"A set of assets and liabilities linked to a brand, its name and
symbol, that adds to or subtracts from the value provided by a product
or service to a firm and/or to that firm's customers. "
Brand equity is the value of the brand that it offers to the customer
considering that a well–known brand name will generate more revenue
to the manufacturer as compared. A customer will have preference of
a particular brand over another product from a different brand basis its
brand equity.
A strong brand equity or positive brand equity in the market will
have :
– brand awareness (customer's ability to identify),
– brand recognition (consumers correctly identify brand based on
visual indicators),
– brand preference (choose a company's product when others, equally
priced are available), and
– brand loyalty (consumers continuously purchase one brand's products
over another).
This will have an upper edge in the market relative to other brands
which will result in high revenues and high market share.
A positive brand equity helps an organisation in many ways like
financial benefits, easy prediction of revenue, ease on entering new
markets, introduce new products, etc. The customers loyal to a brand
mostly overlook the shortcomings in the long term for a product from
that brand
Similarly, a brand with high and strong equity saves costs as there
is less need to promote the product. Mostly communication on product
availability and its features in the target market does the job of making
a product successful with strong brand equity.
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Brand equity is an intangible asset of great value to the company Setting Product and
which is generally an approximate value. Branding Strategies &
Brand Equity can be viewed from different perspectives : Building Brand Equity

• Organisations level – the premium that an organisation can demand

from the customer basis its brand value.
• Product level – the flexibility with which a product line or product
mix can be extended basis the brand value. It is easier for an
organisation to introduce new products under the same brand.
• Consumer level – the attributes, awareness of brand image in the
minds of customers. Brands with high awareness, loyalty, and strong
and favourable associations are considered as high equity brands.
Factors considered for selecting and combining brand elements ?
(1) Brand awareness improves when brand names are selected basis
of :
• Brand name should be easy to pronounce, spell, and remember.
• Brand name should be strongly unique, interesting, and fun.
• Brand name should suggest something about the product
benefits
• Brand name should be transferable to a variety of products
or product lines.
• It could be used across geographical locations.
(2) Logos and Symbols – Logos help recognition by means of symbols.
Logos indicate origin and ownership of a product. They can be
corporate names or trademarks written in distinctive forms, pictures,
mascots, designs, plain alphabets or even splash of colours.
(3) Characters – Companies sometimes use characters as brand symbols.
They help in brand awareness as they are unique and attractive.
(4) Slogans – Slogans are short phrases that communicate information
about the brand.
(5) Packaging – Good packaging which aims at avoiding damage of
the product can act as a good advertisement place.
All the above brand elements contribute to brand identity which
helps in creating favourable impression for customers during shopping.

1.9 Branding Strategy :

Branding involves cost as well as risk of losing reputation if it
fails to click in the target market. Marketers need to assess various options
and make strategy when branding a product.
Key Decisions for Brand Strategy :
Brand–sponsor decisions :
Whether to launch the product as –

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Marketing Management (a) Manufacturer brand – It involves building brand identity by
applying the company's / manufacturer's brand to products.
(b) Distributor's brand or Private brand – It involves a channel
member using its brand name or image on the product.
(c) Licensed brand – it involves manufacturers paying royalties to
obtain licenses for using successful brand names.
Brand name decisions :
There are different brand name strategies –
(a) Individual brand names – It involves giving separate brand names
for each product. It is used to better position products in individual
target markets when the product mix is fairly large. The main
advantage is that even if the product fails it doesn't have a negative
effect on company's image.
(b) Family brand name – It involves establishing brand for individual
product lines. This strategy is used by manufacturers when the brand
equity is high for their products. As there is no need to research
on brand name, promotion efforts and costs related to it are minimised.
(c) Separate family name – A separate family name is chosen for each
product family. When the organisation is into different businesses
it is better to use different brand names.
(d) Corporate name along with individual product names – it involves
combining the company's trade name with their different products.
Brand strategy decisions
A company considers the below choices when it comes to brand
strategy –
(a) Line Extension – It involves introducing additional items in the
same product category under the same brand name such as new
flavours, added ingredients, package sizes.
(b) Brand extension – It involves a company deciding to use an
existing brand to launch a new product in a new category.
(c) Multi brands – It involves introduction of additional brands in the
same product category. For E.g., HUL soaps, P&G detergents. Here
a failure of one brand does not affect the company's image. The
firm through this strategy targets different buying motives of
customers.
(d) New brands – when an organisation manufactures a product in a
new category it is sometimes difficult to use it existing brand name.
For E.g., it is unlikely for Apple to introduce bathing soaps with
its brand name if it considers to get into manufacturing of soaps.
(e) Co–brands – also known as dual branding, this concept is gaining
momentum in modern times. For E.g., mobile buyers may insist
on buying mobile phones with snapdragon processors. So many
mobile manufacturers do advertise their offerings being built with
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snapdragon processor. The organisation believes that the brand Setting Product and
sponsor will strengthen its image in the target market. Branding Strategies &
Brand Repositioning Decisions Building Brand Equity

Under influence of competition and changing consumer preferences,

an organisation faces a challenge to reposition its brand. A competitor
may launch a product similar to the organisations brand. This will eat
into the organisations market share. The company considers following
two factors when repositioning its brand :
(a) Cost involved in repositioning the brand in the market segment.
(b) Sales and profits that the brand will earn basis the number of buyers,
competitors and price range of other brands in that segment.
Cases in Points on "Brand Feelings" :
Brand Feelings : are consumers' emotional responses and reactions
with respect to the brand. These feeling could be milk or intense and
can be positive or negative. A firm depending on the kind of associations
it would like its brand to have can choose any of the following brand
feelings
a. Warm : This appeal makes consumers feel calm and peaceful,
reflecting warmth, sentiments and affection. ICICI's, 'Hum hai na'
and Complan, which showed a small boy gaining strength to the
extent of even carrying his mother on his bicycle are some such
examples in this category.
b. Fun : 'Happy days are here again', was a line of Thumbs Up. This
ensures that the consumer becomes light hearted, cheerful and
amused.
c. Excitement : The campaign of Bajaj for its 'wind' bike, which has
a focus on the special experience associated with the bike's
performance, is an example of this feeling being used by a brand
d. Security : This feeling gives rise to reassurance and safety from
the viewpoint of consumers.
e. Social Approval : Consumers are conscious of what others feel
about them. Anti–wrinkle creams, two–wheelers are some of the
categories that make use of this appeal
f. Self–Respect : A feeling of pride, accomplishment and fulfilment
are associated with this appeal.
Check Your Progress :
1. The goods that are purchased on a regular basis are :
a. Convenience goods b. Staples
c. Impulse goods d. None of the above
2. The first level in the customer value hierarchy is __________
a. Core benefit b. Basic product
c. Expected product d. Augmented product
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Marketing Management 3. When it is about fourth level of customer value hierarchy, marketers
need to design__________ that exceed customers' expectations.
a. Expected product b. Augmented product
c. Basic product d. None of the above
4. An organisation with several product lines and mixes is called _____
a. Product mix b. Brand mix
c. Consumer mix d. Packaging mix
5. At the fifth level, marketer gets a _____ that has all the transformations
and augmentations the offering or product might undergo in the
future.
a. Expected product b. Augmented product
c. Basic product d. Potential product
6. What is more important in brand equity ?
a. Quality b. Quantity
c. Customer perception d. None of the above
7. ____________ includes all that is linked up in memory about the
brand. It could be specific to attributes, features, benefits or looks
of the brand.
a. Brand attitude b. Brand Associations
c. Brand relationship d. Brand image

1.10 Let Us Sum Up :

You can design and change the product matrix to suit your Company's
capabilities as well as the market. The products line can be extended
or withdrawn.
One brand can be clubbed with another for marketing strength to
suit the strategy at the market place.
Good packaging, labelling and warranty serve as effective tools in
marketing, especially at the time of closing of a sale.

1.11 Answer to Check Your Progress :

Check Your Progress :
1. b 2. a 3. b 4. a
5. d 6. a 7. b

1.12 Glossary :
Generic – something that is common to the whole class
Augmented – add in size or number or strength.
Differentiation – distinguishing between two or more things
Ingredient – things combined to make a whole
Composite – made up of several parts or elements.
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1.13 Assignment : Setting Product and
Branding Strategies &
1. Discuss various pricing strategies. Building Brand Equity
2. What are the Branding strategies adopted by a large company in
India ?

1.14 Activities :
1. Study the products of two MNC companies in India. Draw a chart
of their product line, width and depth. What do you think both
the companies need to do for their product extension to fill gaps,
if any ?
2 Pick up four products of your choice to show how two separate
co–brandings are possible.

1.15 Case Study :

Crackers Ltd., a fire–cracker manufacturing company launched
some new products on eve of Diwali which attracted many buyers. To
meet the increased demand, the company employed many people from
nearby villages.
The product was in great demand, and sold in great numbers.
However, the appropriate safety warnings for use were not mentioned
on the packets that led to many accidents.
Identify the important product–related decision that was not taken
into consideration by the company.

1.16 Further Reading :

Marketing Management, 14th edition (2013), Philip Kotler, Kevin
Keller, Abraham Koshy and MithileshwarJha, Pearson.
A Glossary of Marketing Terms, American Marketing Association,
Chicago, IL : American Marketing Association, 1960
Marketing and Branding : The Indian Scenario, (2007), by S Ramesh
Kumar, Pearson Education.
Managing Brand Equity, Aaker, David A. 1991, NY : The Free
Press, New York.
https://courses.lumenlearning.com/boundless–marketing/?s=levels+of
+product

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Unit SERVICES MARKETING
2

: UNIT STRUCTURE :
2.0 Learning Objectives
2.1 Introduction
2.2 Services Marketing – Meaning, Definition, Concepts
2.3 Characteristics of Services
2.4 Importance of Marketing of Services
2.5 Categories of Offerings
2.6 Classification of Services
2.7 Differentiation in Service
2.8 Maintaining and Improving Service Quality
2.9 Marketing Mix – 7 Ps
2.10 Let Us Sum Up
2.11 Answer to Check Your Progress
2.12 Glossary
2.13 Assignment
2.14 Activity
2.15 Case Study
2.16 Further Readings

2.0 Learning Objectives :

• Grasp the concept of service industry
• Understand the differentiation in services
• Know why Marketing Mix extended for Services to 7Ps from 4Ps.

2.1 Introduction :
Service industry has grown over the past three decades. It is now
holds 55% of the GDP in India. Services are basically intangibles that
does not give essentially intangible and does not pass proprietorship, like
in case of products.
It may be stand alone or may be associated to a physical product.
Servicing can be improved by matching it with what the customers are
expecting, and even exceeded quickly with self–service technologies

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2.2 Services Marketing – Meaning, Definitionh, Concepts : Services Marketing

Services – Meaning
Marketing, on the whole, can be divided into goods marketing and
services marketing. Although according to Philip Kotler, besides goods
and services, a marketer also markets eight other entities like Events,
Experiences, Persons, Places, Properties, Organisations, Information and
Ideas; yet it is generally clubbed together and is widely known as goods
and services.
In marketing, services marketing essentially deals with the products,
which are intangible in nature. Services are created through a direct
interaction between the service provider and the customers.
Goods are physical, tangible articles, while Services are nonphysical
and intangible in nature and can also satisfy a need like goods. Financial
services, Telecom, Courier, Hotel, Airline, Multiplex, Train, Doctors,
Lawyers, Healthcare and Management Consultancy are all examples of
services.
Services – Definition
'A service is any activity or benefit that one party can offer to
another, which is essentially intangible and does not result in the ownership
of anything. Its production may or may not be tied to a physical product.
' – Kotler, Armstrong, Saunders and Wong
In view of the difficulty of quality assessment of the services it
is always risky for the customer to purchase the same.
The services are largely delivered as per the customer's prescription
unlike products which are often standardized. The interior consultants,
tailors, restaurants etc. render customized services.
However, there are some services that have standardized deliveries
like ATM services of banks.
Service – Concepts
Services are the major component and somehow influenced by the
service motives of any business. The service is much needful to develop
and make safeguards of customers interest. Moreover, services are
complementary and decisional part of marketing.
According to Philip Kotler :
"A service is any activity or benefits that are being an offer to
another that is essentially intangible and does not result in the ownership
of anything. "
The concepts of Services are :
• It is a core area or an activity or a task of business,
• It is a major component in the size of business,
• It may be collateral activity with supplementary service to support
the core area of business,
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Marketing Management • A service is an act or performance offered by one party to another
• It is an ideology or concept or an approach based on customers'
orientation,
• It is an economic activity that creates values and provides benefits
for customers,
• The service process may be tied to a physical product and the
performance is temporary,
• Services are based on the concepts of rational behavior and the
norms of ethical values,
• It is prominent task to serve at the input as well as output stages
in any value creation process,
• It is provided by a person who processes a particular skill, quality,
competencies and learning aspects,
• Services having the continuous process within their performance,
• Services may be characterized as intangibleness, inseparability,
perishability, heterogeneity in nature and does not normally result
in ownership of any resource,
• Service is based on different environmental factors.

2.3 Characteristics of Services :

Services require to be studied separately due to its distinctive
characteristics.
Intangibility :
Services cannot generally be seen, tasted, felt, smelt, heard before
being bought. The potential customer's is unable to perceive the service
before the service delivery. E.g., Computerised representation of hairstyle
to prospective client.
Sometimes the customer may have difficulty in knowing what is
on offer before and even after in receipt of the service. E.g., Maintenance
service of a vehicle.
Service cannot be stored. When more in demand, it is likely to
be sold at higher price. E.g., Hotel room rent in peak season. Services
cannot be readily displayed or easily communicated to customers, so
quality may be difficult for consumers to assess.
Advertising and other promotional campaigns are challenging task
for services.
The actual cost is difficult to be determined and so price quality
relationship is complex.
Levitt suggested that there are no so such things as service industries,
only industries where the service components are relatively greater than
those in other industries.

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Shostackargued that there are few industries or activities that are Services Marketing
purely goods based or a purely service based, and presents a variety from
tangible dominant goods to intangible dominant services.
Kotler identifies four distinct categories of offerings, ranging from
purely tangible goods, to tangible goods with accompanying services, to
a major service with some accompanying goods, to pure services.
Inseparability :
Goods and Service have difference in the sequence of production
and consumption. While the goods are first produced, stored and finally
sold and consumed, Services are first sold then produced and consumed
simultaneously.
For some services, the customer must be present. E.g., counselling,
rail travel, etc.
For some others, services are produced and delivered in the absence
of customers. E.g., plumbing, etc.
Proper selection and training of customer contact personnel are
necessary to ensure the delivery of quality of services.
Service encounters involves an appreciation of a complex set of
behaviours on the part of all involved in them. Like – waiting time,
personal interaction, expectations and perceptions – of service adequacy
and quality.
Variability :
A variability in performance of a service creeps in, depending on
who provides it and how it is provided. E.g., An employee may be
courteous and helpful, while others may be inefficient and rude. This
unsuitable personality trait in an employee is difficult at to assess at the
time of recruitment.
For services variability may also occur during the process of
production. For marketers, brand building in services possesses bigger
challenge than tangible goods as it is often difficult to obtain standardisation
of output in services.
Perishability :
Services cannot be stored for later use. E.g., unoccupied hotel
rooms, unpurchased airline seats cannot be reclaimed later. If demand
exceeds supply it cannot be met, even if capacity exceeds demands, the
revenue is lost.
An airline has to fly at the scheduled time even its few seats are
empty. This characteristics of the perishability results in greater attention
on scheduling services. Pricing and promotion are two of the tools usually
adopted to tackle this situation.

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Marketing Management Heterogeneity :
Though ensuring to bring a standardisation, it is actually difficult
to ensure the same level of output in terms of quality. From customers
viewpoint also it is difficult to judge quality without using it.
Capacity levels should be available to meet demand before service
levels falls. Equal attention has to be given in times of low levels of
usage to manage the spare service, for E.g., different programmes can
be adopted to compensate for uneven demand in theatre halls.
Heterogeneity clearly has wide–ranging implications for the
operational side of service provision :
i. Service Personnel – highly dependent upon the activities and
actions of those members of staff in the "front–line."
ii. Service Standards – must be established and made clear, to assist
quality control and more effective management of service encounters.
Lack of Ownership :
Lack of ownership is the basic difference between a service industry
and a product industry is that a customer gets an access for a service
after paying for it but not owns it. E.g., hotel rooms, hospitals beds, etc.
Service industry should offer easier payment terms in order to facilitate
better growth.

2.4 Importance of Marketing of Services :

1. A Key Differentiator : Marketers can leverage on the service
offering to differentiate themselves from the competition and attract
consumers.
For E.g. – In case of two competing fast–food chains, serving similar
product, more than the product it is the service quality that
distinguishes the two brands from each other.
2. Importance of Relationships : The need to listen to the needs of
the customer and fulfil them through the appropriate service offering
and build a long–lasting relationship which would lead to repeat
sales and positive word of mouth.
3. Customer Retention : Since services are usually generated and
consumed simultaneously, they actually involve the customer. Thus,
they offer greater scope for customization according to customer
requirements thus offering increased satisfaction and higher customer
retention.
4. Relationships are Key : In service marketing, because there is no
tangible product, relationships are key. Service marketers must listen
to and understand the needs of customers and prospective customers
to build loyalty and trust. Ultimately, effective relationships in
service marketing will lead to repeat sales and positive word of
mouth.

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5. Multiple Touchpoints : Service marketing involves many interactions Services Marketing
with multiple people and experiences that are less tangible than
when buying an actual product. These touchpoints work together
to establish a perception in the consumer's mind.
6. Services Proliferate : Consumers have many service options –
competitive serve providers to choose from, and because the product
is intangible, the challenge for the service marketer is to somehow
make their services stand.
7. Feedback Improves Service : As the customer is engaged in the
process and contributes to a positive outcome. For this reason, it
is important to seek consumer feedback and to use that feedback
to improve service marketing effectiveness.
8. Technology Impacts : Technology has a major impact on the
service economy – streamlining service activities and provide do–
it–yourself options for consumers. Internet–based services, for
example, allow consumers to participate actively in the service
marketing process, often never involving contact with another human
being – ATMs, Internet Banking.

2.5 Categories of Offerings :

Any offering in the market can be for physical goods, or services,
or a combination of both.
PhilpKotler has listed five categories of offerings :
(1) Pure Tangible Good – This offering is a pure physical product
like toothpaste, packaged food, soaps, sugar, etc. There is no service
associated except the courteous response and help from the sales
people.
(2) Tangible Good with accompanying services – The tangible offering
is made available along with few services for a better customer
experience. Most of the technologically advanced products have
quality services associated with their sale. Like – free installation,
free servicing for a certain period. Mobile manufacturers emphasise
the number of service centres.
(3) Hybrid – The offering is an equal combination of the tangible good
and the intangible service. For E.g., a premium restaurant with
quality food and service, and a fast–food centre offering with free
delivery within promised time.
(4) Major Service with accompanying minor Goods and Services
– In this category a major service is provided along with some
additional service and/ or goods. For example, travel by airline or
a first–class train travel accompanies food, drinks, books, magazine,
internet, etc. The passenger pays for the transportation and these
additional / complementary food items and services from the staff
enhance the travel experience of the passenger.

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Marketing Management (5) Pure Service – The offering is purely a service provided without
any accompanying tangible product or additional service. For E.g.,
Courier Service, Financial Consultant etc.

2.6 Classification of Services :

There are different ways of classification of services. Services are
bought differently by different buyers in different ways. The presence of
a buyer is sometimes needed and sometimes not. Similarly, the service
can be provided by the seller or by a machine.
(1) People based and Machine based :
People based service refers to the presence of a human being with
skills in providing the service. For E.g., a doctor needs to be present
with the patient. Similarly, a carpenter, barber, with their clients.
Machine based service is provided by ATM machines or robots
doing car wash or vending machines for soft drinks. The presence of
the seller is not required.
(2) Consumer services and Industrial or Business services :
The users of Consumer services are individual buyers and households
in consumer market. E.g., Hotels, Life insurance, Repairs, Education,
Personal security, etc.
In Business, services are provided to firms involved in production
of products for end users. E.g., Advertising, Consultancy, Market Research,
Transportation, Training etc.
Many services like Financial, Transportation, Consultancy,
Engineering, Hotel, Food, etc. are sold and provided to both consumer
as well as business markets.
(3) Buyer's presence and Buyer's absence :
There are services that can be provided only in the presence of
the buyer like a Haircut, Hospital, Education etc.
Certain services don't require the presence of the buyer of that
particular service. For E.g., car repairs, gardening, courier, market research,
promotion services, etc.
(4) Services for Non–Profit and Services for Profit :
There are services from individuals as well as organisations that
are inclined towards social cause and not for profit alone. Like NGOs
in Education offering services free of charge. Services which are offered
firms in 'Services–for–profit' category. E.g., Entertainment, Tourism,
Housekeeping, etc.

2.7 Differentiation in Service :

A customer can travel by any airline basis the lowest airline fare.
There could be a competitive edge when airlines would differentiate their
offering – quicker check in, smooth seating sequence etc. An organisation
200
can differentiate its offering, its delivery, and brand image and Services Marketing
communication. This way the organisations avoid price wars.
Offering
The effort should be to have uniqueness in the service offering
– doing things differently. HDFC Bank offers its customers a dedicated
personal Relationship Manager (RM) for its long–tie customers. RM
ensures that the customer does not have to go to the bank, to get many
services.
Effective Delivery
Factors like personal touch, immediate delivery or delivery as
promised, attitude of the people and quality of service all go a long way
in making a business successful. E.g. – Domino's commitment on delivering
the product in 30 minutes.
Brand Image and communication
An organisation can create its band logos and symbols that confer
an image of high quality and professionalism. E.g., McDonald's, FedEx,
Blue Star are international and well recognised brands.

2.8 Maintaining and Improving Service Quality :

There are two ways in maintaining and improving service quality :
Internal setup – The organisation should set systems in place
internally to constantly monitor and improve on the service.
(i) Setting high standards – The organisation should build a culture
for constant improvement in its quality of service as well as its
delivery. E.g. – customer emails to be answered within hours of
being received.
(ii) Conducting surveys – The data through surveys and questionnaires
helps analyse the needs and wants of the target audience or launch
a new offering.
(iii) Gap analysis – The management may have certain perception about
a service quality which may be not matching to customer expectation,
delivery, etc. Identifying various gaps in service delivery and
improving on them.
(iv) Motivating and training employees – a satisfied employee working
for an organisation helps make business grow. A well trained and
loyal employee gets loyal customers.
External inputs – The organisation may receive customer complaints
through employees or from other sources. The communication channel
from customer to managerial staff can help resolve issues fast.
The customer level of satisfaction can be measured with the help
by recording telephone calls for better understanding the customer's needs
and expectations.

201
Marketing Management Similarly, emails with customers can be audited by the quality team
to ensure high quality of service and regular training of the employees.
Marketing Mix is about putting the right product in the place, at
the right time, and at the right price.
Marketing mix is predominately associated with :
Traditional – 4 Ps of Marketing

Extended further to 3Ps of Service Marketing.

2.9 Marketing Mix – 7 Ps :

The 7 Ps of marketing give the framework needed to attract the
people ready to buy the product.
1. Product (or Service)
Customer cares foremost about : what the product or service can
do for them. Therefore, the manufacturer has to prioritize making the
product the best he can.
In a marketing mix, product considerations involve every aspect of
what is being sold :
• Design
• Quality
• Features
• Options
• Packaging
• Market positioning
Five components to successful product–led marketing :
1. Let the product or service sell itself – let them try what is being
offered.
202
2. Know the customer's needs – use that knowledge to help communicate Services Marketing
the product's value.
3. Always be helping – creating informative content that meets the
target customers' needs.
4. Share authentic stories – encourage happy customers to share their
experiences.
5. Grow a product mindset – focus on product development and
quality.
2. Price
Factors go into a pricing strategy. Brands may :
• Price a product higher than competitors creating impression of a
higher–quality offering.
• Price a product similar to competitors, then draw attention to
features or benefits other brands lack.
• Price a product lower than competitors to break into a crowded
market or attract value–conscious consumers.
• Plan to raise the price after the brand is established or lower it
to highlight the value of an updated model.
• Set the base price higher to make bundling or promotions more
appealing.
Some questions to ask :
1. Will it have higher–end offer at an additional cost ?
2. Should the cost be covered right away, or can it be set at a lower
price and consider it as an investment in growth ?
3. How low can it go without people questioning the quality ?
4. How high can it go before customers think it is overpriced ?
5. Is it being perceived as a value brand or a premium brand ?
3. Promotion
Promotion is the part of the marketing mix that the public notices
most. It includes television and print advertising, content marketing,
coupons or discounts, social media strategies, email marketing, pay–per–
click ads, digital strategies etc.
All these promotional channels tie the whole marketing mix together
into a strategy that creates a unified experience for the customer.
For E.g. : A customer sees an in–store promotion and uses their
phone to check prices and read reviews. They view the brand's website,
which focuses on a unique feature of the product. The brand that has
solicited reviews addressing that features, appear on high–ranking review
sites.
The customer buys the product and the seller sends a 'thank–you–
email' using marketing automation.
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Marketing Management Ways that the channels together :
• Make sure all the channels are known and available.
• Grip the move toward personalized marketing.
• Segment the promotional efforts based on the customers' behavior.
• Test responses to different promotions and adjust the marketing
spend accordingly.
4. Place
Where is the product being sold ?
Some considerations when it comes to place :
• Where will people be looking for the product ?
• Will they need to hold it in their hands ?
• Will there be more sales by marketing directly to customers from
the e–commerce website, or will buyers be looking on third–party
marketplaces ?
• Does the product require conversation directly with the customers
as they purchase ?
5. People
People refers to anyone who comes in contact with the customer,
even indirectly. It is therefore, essential to recruit the best talent at all
levels, including customer service.
To ensure the people are making the right impact on the
customers :
• Develop the marketers' skills so marketing mix strategy can be
effective.
• Think about company culture and brand personality.
• Hire professionals to design and develop the products or services.
• Focus on customer relationship management, which creates genuine
connections and inspires loyalty on a personal level.
6. 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
receiving a "physical product" by this definition.
7. Process
Prioritize processes that overlap with the customer experience. The
more specific and seamless the processes are, the more smoothly the staff
can carry them out.

204
Some processes to consider : Services Marketing
• How are the scheduling and delivery logistics ?
• Will the third–party retailers run out of product at critical times ?
• Is there enough staff to cover busy times ?
• Do items ship reliably from the website ?
On getting a complaint about any process, how soon can it be fixed
?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.
Are there any more Ps ?
In some spheres of thinking, there are several other Ps added in
the Marketing Mix :
• Packaging – designing, innovation opportunity
• Productivity – better quality, cleaning service
• Portfolio – wide range, tap different markets
• Payment – choice of payment methods
• Profit
• (and even) Politics
Contribution by some Major Service Industries
Traditionally, India had six major industries. These were Iron and
Steel, Textiles, Jute, Sugar, Cement, and Paper. To this was added
Petrochemical, Automobile, Information Technology (IT), and Banking
& Insurance. These industries are important for India's economy.
Information Technology (IT) Industry
One of the latest entrants to the list, the IT industry has spread
fast. Many US and EU firms working with contract agencies in India
for IT software and services, outsourcing has acquired an international
dimension.
This is a win–win situation since the US firms save around 58%
of its costs by outsourcing work to India and the local economy benefits
from global exposure.
Banking and Insurance Industry
Banking
Over the years, as technology advanced, the banking industry
absorbed the changes with open arms. From Electronic Funds Transfer
to online banking, it was a new era for the industry. Currently, in India,
there are different types of banks :
• Savings Banks

205
Marketing Management • Commercial Banks. These are of the following types :
o Scheduled Banks
o Public Sector Banks
o Private Sector Banks
o Foreign Banks
o Non–Scheduled Commercial Banks
• Industrial or Development Banks
• Land Mortgage or Land Development Banks
• Indigenous Banks
• Central or Federal or National Bank (Reserve Bank of India)
• Cooperative Banks
• Foreign Exchange Banks
• Consumer Banks
Check Your Progress :
1. The promotion "P" of marketing is also known as ________
a. Cost b. Distribution
c. Marketing Communication d. Product Differentiation
2. Further 3Ps are included in the marketing mix for Service industry :
a. Physical evidence, process, and price.
b. Process, people and promotion.
c. Physical evidence, people and production
d. Physical evidence, process, and people.
3. Promotion in Ps included :
a. Sales promotion. b. TV advertisements
c. Print advertisements d. All the above
4. People in Ps refer to are :
a. Distributors b. Employees c. Shareholders d. All the above
5. Lately there is debate to add more Ps. These are :
a. Portfolio b. Politics c. Profit d. All the above

2.10 Let Us Sum Up :

Each characteristic of Services, like intangible, inseparable has
potential for marketing strategies. Each one can be a source of improving
the productivity of service providers.
The service mix includes both pre–sale services and post–sale
services.

206
2.11 Answer to Check Your Progress : Services Marketing

Check Your Progress :

1. c 2. d 3. d 4. d 5. d

2.12 Glossary :
Perishability – liable to spoil or decay
Heterogeneity – diverse in character or content.
Proliferate – increase rapidly in number; multiply
Hybrid – a thing made by combining two different elements.

2.13 Assignment :
1. What is the significance of marketing of Services ?
2. What can be done to improve the service quality ?

2.14 Activity :
Pick out a Company which has made good use of 'people' and
'process' to gain market share in Service industry in India.

2.15 Case Study :

A popular cereal company initially targeted older individuals for
their popular cereals, for their diet control. However, after intense research,
they discovered that even young people need to have a healthy diet. So,
this led to the development of a cereal product catered to young people.
In accordance with all the elements of the marketing mix strategy,
the company made tremendous efforts to reach their newly identified
target customers.
State the right marketing mix for the target market.

2.16 Further Reading :

Marketing Management, 14th edition (2013), Philip Kotler, Kevin
Keller, Abraham Koshy and MithileshwarJha, Pearson.
Fundamentals of Marketing, 2007, Marilyn A. Stone and John
Desmond, Routledge Taylor & Francis Group
https://www.britannica.com/topic/marketing/Services–marketing
https://courses.lumenlearning.com/boundless–marketing/chapter/
marketing–mixes–for–services/

207
DESIGNING MARKETING
Unit
CHANNELS, MANAGING RETAILING, WHOLESALING
3 AND MARKET LOGISTICS

: UNIT STRUCTURE :
3.0 Learning Objectives
3.1 Introduction
3.2 Channel Marketing
3.3 Kinds of Intermediaries
3.4 Different Types of Channels
3.5 Channel Strategies
3.6 Steps Involved in Designing A Marketing Channel
3.7 Managing Retailing, Wholesaling and Market Logistics
3.8 Market Logistics : Objectives and Decisions
3.9 Let Us Sum Up
3.10 Answer to Check Your Progress
3.11 Glossary
3.12 Assignment
3.13 Activity
3.14 Case Study
3.15 Further Readings

3.0 Learning Objectives :

• Selection of a Marketing Channel
• Designing effective Marketing Channel
• Managing Wholesalers and Retailers.

3.1 Introduction :
Goods produced at the manufacturers premise travel through
intermediaries to reach the users. There are various types and layers of
doing variety of functions.
It is critical decision to finalize Marketing channel as it will have
deep impact on many other marketing decisions.

3.2 WHAT IS CHANNEL MARKETING ?

Channel marketing focuses on the distribution of products from the
manufacturer to the consumer. It is part of the distribution ("place")
component in the four P's of the "marketing mix" – product, pricing,
promotion, and place.

208
Most manufacturers do not sell directly to end user. There are a Designing Marketing
set of intermediaries performing a variety of functions called as Marketing Channels, Managing
Channel, also called Trade Channel or Distribution Channel. Retailing, Wholesaling
Channel marketing is usually applied to products, it can also be and Market Logistics
used to market ideas and services.
Marketing channels help organisations expand their reach and their
revenue. However, each marketing channel offers a different combination
of coverage and performance, and so they are used in combination.

3.3 Kinds of Intermediaries :

Intermediaries, also known as middlemen and re–sellers. These can
be organisations as well as individual business men.
There are two types of middlemen, one those who take title to
the products (merchant middlemen), and others who just facilitate the
sale and purchase of product without taking title of them (agent middlemen).
I. Merchant Middlemen
1. Wholesalers –
These are the organisations that buy and resell products to other
resellers like retailers, other merchants or to industrial buyers, and not
in significant amount to end users. They take title to the products, buy
in large quantities and break down the bulk as required by retailers, etc.
Three categories of wholesalers
(a) Full function wholesaler – after buying sell them to other resellers
like retailers, traders, etc. below the marketing or distribution
channel.
(b) Converter wholesaler – process them before selling them to the
following channel members. (textile bleaching before selling).
(c) Industrial wholesalers – they sell the products to manufacturers
instead of retailers.
(d) Drop shipper wholesaler – They take orders and coordinates with
the manufacturer to deliver the goods directly to the retailer or other
merchants in the channel (like coal).
2. Retailers
Retailers sell products / goods to final consumers. Retailers buy
the products from different sources like manufacturers, wholesalers, traders,
etc. They are considered the final link with the consumer in the marketing/
distribution channel.
Retailers can be broadly classified as small–scale retailers and
large–scale retailers.

209
Marketing Management
Comparison Chart

BASIS FOR
WHOLESALER DISTRIBUTOR
COMPARISON

Meaning A wholesaler implies a A distributor is someone

trader, who purchase who is engaged in
goods in large quantities supplying goods and
and sell them in relatively services to various
smaller units. businesses and customers

Contract Do not enter into contract Enter into contract with

with manufacturers. manufacturers.

Channel of Present in both two level Present in three level

distribution and three level channel. channel only.

Serving area Limited Large

Customers Retailers Wholesalers, retailers and

direct consumers.

Promotion Do not involve in Promotes product to

promotional activities. increase sales.

Small scale retailers :

(a) Unit stores – are general stores or single line stores (clothes, gift
shops, grocery stores)
(b) Street traders – sell products on streets, footpaths. (mobile
accessories, gloves)
(c) Market traders – have a fixed location and arrangement made for
selling like a selling van, setting a kiosk, outlet, etc. on a fixed
location (farmers market).
(d) Hawkers and Peddlers – sell goods door to door on their cart,
bicycle, etc. They carry items as per the demand of different products
(woollen clothes in winter).
(e) Cheap jacks – have a specific place in a locality but do change
locations (unbranded items like clothes, plastic items, kitchen utensils).

210
Large scale retailers Designing Marketing
(a) Departmental stores – has wide variety of products being sold Channels, Managing
under one roof. They sell a particular specialised product or an Retailing, Wholesaling
entire product line. and Market Logistics

(b) Discount store – sells standard items at lower prices. The business
is done on higher sales and lower profit margins (Wal–Mart).
(c) Chain stores – these are stores near residential areas selling the
same kind of products in different localities. These can be in the
entire region, state or nation. (Nike stores, Raymond, Big Bazaar).
These centrally owned and managed. They mostly deal in same
products across all chains like, fast food chains, Nike products, etc.
The items for sale are bought centrally and sent across to all the
chains. Since it operates under the same brand, the prices and
quality are standardised. For E.g., a McDonald's outlet will have
same kind of price range, and feel and appearance of the store
in different locations.
(d) Mail order houses – shares information about the product via
different means like advertising, press, post, catalogue, tele–calling,
etc. The buyer doesn't visit the seller but orders the product and
receives it via post, courier, etc. The product is not inspected by
the customer.
(e) Super market – sells a variety of consumer goods with self–service
(food items and articles of daily needs like, cold cream, bakery,
vegetables).
(f) Super stores – oversize department stores and also known as
hypermarkets. They carry a wide range of general merchandise. A
customer can get services like haircuts, restaurants.
(g) Convenience stores – These are small stores that deal in limited–
line of high selling goods at a higher price. They are like mini–
supermarkets.
(h) Consumer cooperative – It is an association of consumers who
buy products in large bulk for members as well as non–members.
The consumers or locality residents themselves manage all the
activities from designating a manager to setting the policies of the
store.

211
Marketing Management II. Agent middlemen
They facilitate the sale and purchase of product without taking title
of them. They negotiate the sales between sellers and buyers, and generally
receive commission for their service.
Classification of Agent Middlemen :
(a) Commission agent – do not assume any risk of the products and
receives a fixed rate of commission for his service. They are expert
in dealing with the commodities they deal in and have knowledge
about the market trends and the producers. They take orders and
arrange the transport, delivery and payment transactions. He may
or may not take possession of goods.
(b) Brokers – they are agents who do bargains and arrangements
between parties and receives a compensation known as brokerage.
They bring the buyers and sellers on one platform for discussion.
(c) Forwarding and Clearing Agents – fulfil the responsibility of
collecting and delivering of products on behalf of others. They are
mostly dominant in export and import business.

3.4 Different Types of Channels :

Conventional marketing channel
Members work independently with each other and no member has
control over other member. It comprises on autonomous / independent
manufacturer, wholesaler and retailer. Each member is concerned about
increasing the profits of its business and not the profit of the entire
channel.
Manufacturer performs the function of product development, branding,
pricing, promoting and selling. Wholesaler performs its function of buying,
stocking, promoting, displaying, selling, delivering, finance, etc.
The decision making resides in each firm and there is lack of proper
planning to achieve the objectives of the entire channel.
Vertical marketing channel
Manufacturer, wholesaler and retailer working as one system. They
formally agree to cooperate with each other, through contractual agreement.
They work in cohesion, and generally without conflicts.
Once the channel operates as a one system and managed by one
member, there is much clarity and coordination among channel members
to achieve the channel objectives.
Multiple marketing channel
Manufacturer utilises two or more marketing channels in the target
market. This channel can be planned and implemented for more market
coverage by targeting additional segments.
For E.g., with ecommerce a segment of consumers that like home
delivery, a manufacturer can open a company store in the target market.
212
Customers would prefer a company store rather than an intermediary Designing Marketing
because of reasons like brand image, etc. and the firm saves on the Channels, Managing
margins that it shares with the channel members. Retailing, Wholesaling
If the firm is a market leader, it will cut out the additional channel and Market Logistics
which also brings competition among the intermediaries.
This provides proper education, and service for complex products
to the customer and a reliable feedback to the organisation.

3.5 Channel Strategies :

Organisations, depending on their marketing strategy, decide on the
number of channel members.
There are three channel strategies that organisations choose from.
1. Exclusive distribution
In exclusive distribution, a firm selects only one or few intermediaries
for product distribution. This leads to a strong relationship and support
between the manufacturer and the intermediary, becoming highly dependent
on each other.
Manufacturer requires the knowledge and distribution expertise of
the intermediary. The intermediary promotes the product as they get
higher sales.
If the manufacturer contracts with another intermediary, the
relationship between intermediary and the manufacturer hits a low.
Intermediaries may block the sale of products at its outlet.
TV series sign exclusive contracts with networks for exclusive
premier on certain TV channels.
2. Intensive distribution
Here, a firm sells product through as many outlets as possible. The
products which can be easily accessed by customers without much effort.
For E.g., newspapers, milk, soaps, etc. These products do not
require much additional services from intermediaries apart from handling
and assigning shelf space.
The consumers can get these products when and where they are
needed. These are mostly for FMCG products. This strategy provides
great brand exposure and consumer convenience is given high priority.
3. Selective distribution
In selective distribution, the manufacturer opts to distribute products
at select outlets and in select regions. The product distribution is the
main difference between Selective distribution and Intensive distribution.
Selective distribution gives more market coverage than Exclusive
distribution and better control on the marketing channel than Intensive
distribution.

213
Marketing Management The intermediary may be required to add value in some way like
outlet ambience, customer education before and after the sale of the
product, etc. This channel is especially appealing to expensive products.
For E.g., Cannon cameras can be found in many outlets but some
models are sold at select outlets appealing to different customers in the
target markets.
Factors that affect the Selection of A Marketing Channel
A detailed study needs to be done for selecting a marketing /
distribution channel as it affects the marketing strategy, and the
intermediaries in the channel.
Therefore, it is essential that a right channel if chosen.
Factors that influence the choice of the channel –
1. Product
The first factor to be considered is the product category. A FMCG
product will require different distribution than an automobile. Similarly,
the channel of distribution for making a specialised industrial product
will be shorter as compared to a consumer product like Shampoo.
Some consumer goods need immediate availability, like perishable
bakery items for the risk of shorter life. Similarly, a fragile product will
need careful handling by the intermediaries requiring shorter channel. A
technical product will need selling from knowledgeable sellers providing
demos, etc.
Complexity of product and level of sales service also decide the
selection of the intermediary.
2. Customer
There is a difference in buying behaviour of consumers and a
business buyer. They have to be sold through different channels.
A consumer may want to personally inspect vegetables and fruits
bought for home consumption. A business buyer (hotel owner) will expect
a dealer, company supplier, agent, or a reseller to contacting him for
regular supply for a certain period.
Similarly, the buying style for consumer and a business buyer will
vary like buying on credit, demo by sales team, etc.
3. Type of market
A large market will require increase in channel members. If the
number of buyers is large, it is better to have local presence to understand
the pulse of the market. If the market is small, direct selling can be
utilised.
Number of buyers in the market and their frequency of buying the
product affect the choice of channel member.

214
4. Organisations objectives and resources Designing Marketing
To ensure complete control on the quality, price and after sales Channels, Managing
service, the organisation with huge resources may sell directly to consumers Retailing, Wholesaling
through its own exclusive outlets. and Market Logistics

An organisation with less financial resources are dependent on the

intermediaries to sell their products. They rely on the experience and
expertise of the channel members.
5. Marketing environment
Economic environment affects the choice of marketing channels.
For example, a fall in the dollar or euros value will result in increase
of product imported from other countries. Similarly, at the time of high
inflation, cheaper intermediaries are chosen. The organisations try to
shorten the channel to reduce costs.
Technological advancements have given consumers options to buy
products through internet. The organisations can control product prices
as well as track the number of potential buyers who visited their sites
for the product.
6. Availability of intermediary
The availability of the preferred intermediary influences the selection
of the channel member. In their absence, the organisation may opt for
an intermediary that is available or invest to open their own stores.
7. Channel partner capabilities
For a new gadget like mobile phone, a manufacturer can sell it
through internet, but a consumer may want to physically inspect it, then
the producer will need to make it available at stores with the salesman
will be able to educate and influence the sale of the product.
Sometimes, the customer is more inclined to buy from a store to
ensure easy return and after sales service.
8. Cost
There is cost in distributing products in the market through
intermediaries as they are given a share of the profit for their services.
Organisations strive to make the channel network as efficient and effective
as possible to reduce the costs. The organisations select a channel network
that generates high sales with minimum costs.
9. Competitors control and choice of intermediaries
Sometimes the market leaders control the intermediaries, and threaten
to withdraw their products for selling competitors' products. To avoid
conflicts, a firm can sell products directly to consumers if the competitor
sells through retailers. If the rival firms sell through the same retailer,
intermediaries are often influenced by whoever gives them higher profit
margin.
Selecting the best channel is critical for the success of the product
in the target market. The above factors play a critical role in selection
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Marketing Management of intermediaries. Organisations need to balance the factors carefully to
design an effective and efficient marketing channel.

3.6 Steps Involved In Designing A Marketing Channel :

A marketing channel not designed effectively will even an excellent
product.
Steps for Designing a Marketing Channel
1. Analysis :
A channel design starts with analysing the market requirements.
– Basis the customer, product category, and marketing environment,
the organisation has to choose matching channel strategy – Exclusive
distribution, Intensive distribution and Selective distribution.
– Availability and capability of the intermediary from wholesaler,
retailer, sales personal, agents and brokers, etc. preferred by producer
for selling to target market. If not, the organisation will have to
opt the second choice of intermediaries.
– Open own stores for direct selling, etc.
– Functions necessary should be clearly defined that the firm can
perform by itself like storage, transportation, after sales service, etc.
2. Evaluation
– Evaluation process involves study of costs involved, time constraints
relevant to channel development, availability of channel members,
political and legal constraints, functions and control of the channel
members.
– This critical process requires expert planning. For E.g., in intensive
distribution at retail outlets, the costs may go up but there is also
a great possibility of high sales turnover. In contrast, in the presence
of a broker, the organisation will need to invest in promotion
activities to create awareness. Personal selling gives the organisation
control on its selling efforts.
– Channel implementation takes a long time to generate the desired
results. The firm has to decide on a channel that can be developed
in the shortest period.
3. Control
– In Vertical Marketing System, the member which has authority over
all the member can be the manufacturer, wholesaler or the retailer.
If any independent members try to force influence, there will be
conflicts.
– The manufacturer–controlled channel gives the manufacturer control
over the prices, customer service, market coverage, etc.
– Sometimes the market leaders control the intermediaries, and threaten
to withdraw their products for selling competitors' products.

216
– If both the rival firms sell through the same retailer, intermediaries Designing Marketing
often influence sale of a product that gives them higher profit Channels, Managing
margin. Retailing, Wholesaling
4. Legal and Political and Market Logistics

– Legal and political constrains need careful consideration for channel

development. Every state has local laws that can interfere with the
channel functions. Similarly, the firm has to outline the terms and
conditions on various aspects of rights that can be given to the
intermediaries.
5. Channel Selection
– An organisation can select one or more channel alternatives. Two
factors that affect the final selection are – the reach of the
intermediaries to the customers in the target market and economic
viability in the channel.
Intermediaries considerations for relationship with a producer :
– Profit margin
– Effect on or reaction from other channel members.
– Manufacturer's brand image and relationship with other members
in the market
– Costs involved in functions like storage, promotion, etc.
It requires careful consideration of various factors before final
channel selection as the intermediary is the face of the manufacturer.
Customers create an image about the manufacturer through the service
they receive from the intermediaries.
An organisation has to constantly revise its channel strategies and
make changes as per the change in needs and wants of customers.

3.7 Managing Retailing, Wholesaling and Market logistics :

The Retailers classifications are given above under "Kinds of
Intermediaries" i.e. Small Scale Retailers – Unit stores, Street traders,
Market traders, Hawkers and Peddlers, Cheap jacks and Large–Scale
Retailers – Departmental stores, Discount store, Chain stores, Mail order
houses, Super market, Super stores, Convenience stores, and Consumer
cooperative.
Managing Major functions of retailers
1. Buying and Assembling
A retailer deals with different kind of products from different
manufacturers and brands. They buy these products from the most
economical source, different wholesalers and store them in their shops
or stores to be bought by the consumers for profit.

217
Marketing Management 2. Warehousing and storing
Retailers assemble products from different suppliers and store them
to be supplied to the consumers on time. They keep enough supply stored
with them so as to meet the demand in the market.
3. Selling for final consumption
Retailers sell products to final consumers for use and consumption.
They are the final link in the distribution channel.
4. Promotion of brands
The manufacturers and wholesalers encourage retailers to display
their products on shelves and selling counters to increase sales. Retailers
help a brand in getting exposure in the market. Manufacturers try to give
higher profit margins to retailers for meeting certain sale targets. Retailers
try their best to make sales through salespersons, display on shelves,
window displays etc. to maximize sale of products that gives them higher
profits.
5. Credit facilities
Many a times, retailers sell products on credit to buyers. They try
influencing buyers by accepting payments on installments, etc. and bear
the risk of bad debts.
6. Risk bearing
Like wholesalers, retailers also bear the risk of handling the purchased
products. They carefully handle products in their stores till the product
is made available to the consumers. For E.g., Perishable commodities
like milk and bread need to be sold before the expiry date and fragile
products like glass and television sets needs careful handling.
Customer preferences also change so the already purchased products
with retailers may have a reduced demand in the market. If these products
are not sold the retailer has to bear the risk.
7. Grading and packaging
Many a times the products which are not graded or packaged by
wholesalers are packaged by the retailers for convenient selling. The
products are packed in small containers of packages with proper information
for the convenience of the customers.
8. Source of market information
Since the retailers are in constant touch with the consumers, they
are the best source of information for doing market analysis by the
manufacturers and wholesalers. They have ready some data available
regarding the product's sale, feedback and preferences of consumers.
9. Customer education
Manufacturers ensure that the retailers are well educated about their
products. Sometimes they even have their representatives sent to retailers
for answering queries. Retailers play a big role in passing on the information
218
to the customers about the functions, benefits, utility, and characteristics Designing Marketing
of a product. Channels, Managing
10. Cater to the needs of all kinds of customers Retailing, Wholesaling
and Market Logistics
Retailers cater to the needs of all kinds of customers' basis their
financial as well as social status. Retailer's advice consumers about
products that suits their needs. For E.g., a clothes merchant will advice
a rich person to go for a particular branded jeans, while a customer will
less paying capacity will be advised for a much cheaper option.
Managing Major Functions of Wholesalers.
The Wholesalers classifications are given above under "Kinds of
Intermediaries" i.e. Full function wholesaler, Converter wholesaler,
Industrial wholesalers, Drop shipper wholesaler.
1. Buying and assembling
The wholesalers buy products from various manufacturers and
assemble them for supply to retailers. They store these products in their
warehouses, and ensure supply of product as per demand in particular
region.
2. Warehousing
The quality of the products is kept intact in the warehouse. The
products are shipped to retailers on time, basis the demand ensuring the
time lag between manufacturing and consumption is efficient and effective.
The products reach the consumers as intended by the manufacturer
without wear and tear.
3. Breaking the bulk
The job of breaking the bulk is done by wholesalers as the consumers
buy products for household purposes in small quantities. This helps
retailers in storing products in small quantities.
4. Dispersing of products to retailers scattered in the target market
The wholesalers help in dispersing the products all over the market
to the retailers. The wholesaler becomes a source of all buying for the
retailers. The retailers do not have to contact the manufacturer.
5. Source of market information
The information about demand, competitors, customer preferences
as well as substitute products is available with wholesalers from the
retailers. They also disperse information from the manufacturers to retailers.
For E.g., launch of a new product by a manufacturer, market position
of a manufacturer, etc.
6. Financing
The wholesalers do business on credit with retailers as well as
manufacturers. The retailers receive the goods on credit which helps new
retailers in the market who cannot buy products in cash. Similarly,
wholesalers give advance money to the manufacturers. This function helps
219
Marketing Management in easy flow of products even when the money is not immediately
exchanged.
7. Grading and Packaging
The wholesalers not only break the bulk, but also package the goods
in small quantities and grade the quality on the packaging.
8. Transportation
The wholesalers buy products from wholesalers and ship them to
their warehouses and go–downs. From there, the products are supplied
to the retailers, etc. They may employ their own vehicles for transportation.
As the wholesaler is in touch with the retailers, the supply is also done
effectively (on time) and efficiently (lowest cost possible).
9. Risk bearing
Products are exposed to many risks like destruction – natural as
well as unnatural disasters. They can get spoiled during transportation,
climate change or may even get spoiled if not sold before the expiry
date. The wholesaler also bears a risk of not sold because of less demand,
reduced prices of competitor or substitute products. As the manufacturer
has already sold the product to the wholesaler, this risk is borne by the
wholesaler. To avoid such risks wholesalers carefully buy products in right
quantities.
10. Advertising
The wholesalers also do advertising of new products via pamphlets,
hoardings, mouth publicity, etc. This helps manufacturers in market growth.

3.8 Market Logistics : Objectives and Decisions :

Some of the major Market Logistics objectives of a company are
as follows :
(a) Logistics Decisions
(b) Market Logistics and Cost
(c) Market Logistics Decisions.
Market Logistics objectives can be described as "getting the right
goods to the right places at the right time for the least cost. " This means
a market logistics system has to simultaneously provide maximum customer
service at the minimum distribution cost.
Maximum customer service implies large inventories, premium
transportation and multiple warehouses, all of these raise market–logistics
costs. A company cannot achieve market–logistics efficiency by asking
its logistics manager to minimize the logistics costs.
For E.g., rail shipment to a distant warehouse is preferred due to
lower costs. At the same time, the railways are slower, rail shipment ties
up working capital longer, delays customer payment, and might cause
customers to buy from competitors with faster service.

220
(a) Logistics Decisions : Designing Marketing
Market logistics activities involve strong trade–offs, decisions must Channels, Managing
be made on a total system basis. Retailing, Wholesaling
and Market Logistics
Suppliers desire to meet emergency needs, and re–supply defective
pieces to customers quickly at their costs, besides the normal on–time
delivery,
A company must then research the relative importance of these
service outputs. For E.g., for a photo copier machine, the least service–
repair time is very important.
(b) Market Logistics and Cost :
Let us consider, a machine manufacturer has established the following
service standards :
– To deliver at least 95 percent of the dealer's orders within 7 days
of order receipt.
– To fill the 'dealer's orders' with 99 percent accuracy.
– To answer 'dealer inquiries' on orders with 99 percent accuracy.
– To answer 'damage to goods in transit' does not exceed one percent.
Given above market–logistics objectives, the company must design
a system that will minimise the cost of achieving these objectives.
(c) Market Logistics Decisions :
Four major decisions must be made with regard to market logistics :
– How should orders be handled ? Order Processing
– Where should stocks be located ? Warehousing
– How much stock should be held ? Inventory
– How should goods be shipped ? Transportation
Check Your Progress :
1. Delivery channels means
a. Maternity wards
b. Handing over the products to the buyers
c. Place where products are made available to the buyers
d. All of these
2. Amway, and Tupperware use which of the following forms of
channel distribution ?
a. direct marketing channel b. indirect marketing channel
c. forward channel d. fashion channel
3. Makers of televisions, cameras, furniture etc. normally use which
of the following distribution channel forms ?
a. direct marketing channel b. indirect marketing channel
c. horizontal channel d. synthetic channel
221
Marketing Management 4. A ______________ is a set of interdependent organisations involved
in the process of making a product or service available for use of
consumption by the consumer or business user.
a. retailer b. wholesaler
c. distribution channel d. middleman
5. Which is the first step in Designing a Marketing Channel
a. Analysis b. Legal and political constrains
c. Evaluation d. Control

3.9 Let Us Sum Up :

The operation of channels in the logistic process of reaching the
ultimate user has functions such as possessing and passing of goods,
negotiation, optimum ordering, title transfer etc.
A long–term partnership benefits all parties concerned.

3.10 Answer to Check Your Progress :

Check Your Progress :
1. c 2. a 3. b 4. c 5. a

3.11 Glossary :
FMCG – Fast Moving Consumer Goods

3.12 Assignment :
1. What are the major Market Logistics objectives of a company ?
2. Explain the roles of Merchant Middlemen and Agent.

3.13 Activity :
How would design a Marketing Channel for a company manufacture
Furniture in a metro city to reach eventual users in 20 cities spread across
India ?

3.14 Case Study :

Case Study – 1
A company dealing in medical equipment for testing sugar level
in human beings. The company imported 25000 units of equipment that
could do sugar level test without taking blood samples. The CEO called
for a meeting with the marketing head of different zones to decide the
marketing strategy.
In the meeting, Mihir, the North Zone Marketing Head, suggested
that as the equipment were sophisticated, it needed to be personally
explained to the concerned staff at the hospital. Later, additional trained
people may also be recruited for the same.

222
Karan, another Zonal Head, added that since the import amount Designing Marketing
was heavy, the company was short of funds it could not hire additional Channels, Managing
staff as suggested by Mihir. Retailing, Wholesaling
Raju, Zonal Head, South Zone suggested that since the size of the and Market Logistics
order is not large, a detailed study of the factors determining the choice
of channels of distribution is required before making the right choice.
Identify the factors influencing the choice of "channels of distribution"
which were discussed in the meeting.
Case Study – 2
It is a common phenomenon that when you visit a different town
far from your own city, people ask you to bring them the local made
famous food item from your home. Eg. khakra or pickles.
Two females decided to make this craving of food items as their
business. They launched a Facebook page, and asked people what they
wanted. They soon got a long list of items. They tied–up with two dozen
vendors from 50 towns. They serviced people from Jaipur who wanted
spices from Kerala; people from Panipat who wanted halwa from Jammu
and people from Delhi who ordered fresh tea leaves from Darjeeling.
Through their business, they wished to bridge the gap between
sellers and buyers. The business grew by leaps and bounds.
Explain any two important activities that the entrepreneurs got
involved in for making the goods available to customers at the right place,
in the right quantity and at the right time.
Hint : Physical distribution, transportation, warehousing.

3.15 Further Reading :

Marketing Management, 14th edition (2013), Philip Kotler, Kevin
Keller, Abraham Koshy and MithileshwarJha, Pearson.
Marketing Management, Indian Context – Global Perspective, 6th
edition, 2018, V S Ramaswamy, S Namakumari, SAGE publications India
Pvt Ltd

223
Unit INTEGRATED MARKETING
4 COMMUNICATIONS

: UNIT STRUCTURE :
4.0 Learning Objectives
4.1 Introduction
4.2 Advertising – Definition, Nature, Advantages and Disadvantages
4.3 Types of Advertising
4.4 Managing the Developing Advertising Program.
4.5 Steps in Developing a Creative Advertising Strategy
4.6 Managing of Sales Promotions
4.7 Managing of Sales Force
4.8 Managing of Public Relations (PR)
4.9 Managing Direct Selling
4.10 Managing Event
4.11 Integrated Marketing Communications (MC)
4.12 Let Us Sum Up
4.13 Answer to Check Your Progress
4.14 Glossary
4.15 Assignment
4.16 Activity
4.17 Case Study
4.18 Further Readings

3.0 Learning Objectives :

• Various advertisement channels and vehicles
• Developing and handling Advertising Programs
• Managing Public Relations.
• Significance of IMC

4.1 Introduction :
It is crucial for Companies to communicate worthwhile message
to the public; and even more significantly 'what to say', 'how and when
to say it', 'to whom', and 'how often. '
There are several modes of communication to be studied and
develop effective communications.

224
4.2 Advertising – Definition, Nature, Advertisement and Integrated Marketing
Disadvantages : Communications

Advertising is an audio or visual form of non–personal and paid

marketing communication about an organisation or product directed towards
target audience through mass medium.
The communication is through non–personal, paid media. The
audience clearly know the source of the message – which organisation
or company the message is from.
Advertisements includes :
(1) An audio or visual form – the communication with the audience
is through audio or visual form.
It may be a message –
– in a newspaper, flyer, magazine, hoarding, packaging logo, or a
sign.
– a commercial on a television, radio, internet video ad, etc.
(2) Non–personal – the communication is not person–to–person. It is
addressed to masses. This aspect leaves out the personal selling
form of promotion.
(3) Paid communication – advertising has to be paid for.
(4) Organisation or its products – the audience can trace the message
back to the sponsor. The sponsor pays for the advertisement.
(5) It is a marketing communication tool directed towards masses to
convince them to (generally) buy the products and services of the
sponsor.
(6) As it is directed towards the masses, it helps an organisation to
produce a similar product for a large audience by generating demand.
(7) It is economical as a single message is delivered to large audience.
(8) It is also efficient as it targets a large audience within the same
time frame.
(9) It gives identity to the organisation via brand logos and company's
name.
Advantages of Advertising
• It can reach large number of audiences at low cost.
• It helps in the pull strategy – creates demand, and buyers regularly.
• It enhances and creates awareness about the organisations brand,
name, etc.
• It helps seller in highlighting product features and educating buyers.
• It helps organisations sales people by creating awareness.
• Gives organisations options to utilise visual as well as audio tools.
• It helps consumers in making right decisions.
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Marketing Management • It saves consumers time that is usually wasted comparing similar
products in stores.
Disadvantages of Advertising
• The cost for advertising can go high in case of advertising on TV
during prime time, premium magazines.
• A single message is communicated for all buyers. Some contents
are inappropriate for children.
• Difficult to analyse the feedback from the audience and the process
of feedback is slow.
• It is less effective than personal selling in persuading consumers.
• Advertising in newspapers, etc. can be easily overlooked by buyers
because of advertisement clutter (too many).
• Regularly changing channels on television, lack of attention on the
advertising media also result in the advertising effort lost.
• From consumer's perspective, advertising creates needs and wants.
It creates a desire for products that are not actually a necessity in
life.
• Creates monopoly as not all organisation can afford advertising.
Consumers are unaware about similar products available at lower
price.
• Many a times misleading claims from manufacturers are done to
push sales.
• Hoarding, neon lights, electronic displays at busy roads often distract
drivers.

4.3 Types of Advertising Media or Tools :

In advertising the channels of communication are newspapers,
magazines, television, radio, etc. It is a medium or a vehicle utilized by
advertisers to convey their message to a mass audience.
Important channels of Advertising (advantages and disadvantages).
(1) Newspapers – there are loads of people habitual to reading the
newspaper in the morning to keep them updated about the happenings
around the world. Newspapers remain as the most reliable message
career as it is a mode that educates and entertains.
Advantages –
(i) Wide reach – Newspapers are read by almost literates across the
country.
(ii) Ease of preparing and releasing the message – It is quite easy to
release coloured advertisement and various promotion programs.
(iii) Local coverage – It is easy to communicate within the geographically
segmented market. An organisation can choose a particular newspaper
depending on its circulation.
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(iv) Less expensive – Newspaper advertising is cheaper as compared Integrated Marketing
to TV or magazine advertising. Communications
(v) Easy reference for audience– Long and lengthy content can be
elaborated.
Limitations –
(i) Overlooked by buyers – As newspapers contain many advertisements
from different organisations, there are high chances that the
advertisements can go unnoticed.
(ii) Short life – The newspaper advertisement in today's newspaper will
not be of any use tomorrow as readers read only the latest edition
for news updates.
(iii) Poor quality – As compared to magazine, the paper quality is poor
and the reproduction of advertisement is poor.
(iv) Advertising position – Newspapers charge different rates for the
different position on the paper. Usually front–page advertising is
very expensive as against inside pages.
(v) Not suitable for illiterate people.
(2) Magazines – Magazines are both regional as well as national. They
are published weekly, fort–nightly, monthly, quarterly, bi–annually,
or annually. There are magazines for general reading and on special
subjects like trade, finance, economics, etc.
Advantages –
(i) High quality visual display – They are mostly in coloured form
and in good quality paper which gives the advertised product nice
depiction and appeal.
(ii) Longer life – They are usually read at leisure and there are less
chances of advertisements (going unnoticed as compared to
newspaper advertisements. Magazines have longer life than
newspapers.
(iii) Specific advertisements for specific audience –As magazines service
specific demographic variables as well as specific class of people,
marketers can reach a particular segment basis its business strategy.
(iv) Reliability – Magazines are considered more reliable and credible
based on its respective field.
Limitations –
(i) Lesser flexibility –The advertisement copy needs to be sent to the
publishers well in advance within specific timelines.
(ii) Lesser frequency – Unlike newspapers, advertisements in magazines
can be done weekly, fort–nightly, and so on. For E.g., a sales
advertisement for few days cannot be done in a magazine. The
advertisement can be done in magazine with higher frequency for
"reminder advertising".
227
Marketing Management (iii) Some waste circulation – Advertisement can be done in a national
magazine may not appeal to all the regions in which the magazine
is circulated.
(iv) High cost – It is more costly as compared to newspapers, etc.
(3) Television – Television has fast grown as a medium of advertising
that provides audio visual experience leaving a lasting impression
on the mind of the viewer.
Advantages –
(i) Audio visual medium – Because of combination of sound as well
as display it is very effective in attracting attention. Computer
animations have made this medium even more appealing. The
customers view the product and its demonstration.
(ii) High reach – The television has reach rural and urban areas – it
has high reach in the target market.
(iii) High appeal – It represents the product in life like presentation
combined with sound, motion and sight. It is more believable
medium as compared to print and radio advertising.
Limitations –
(i) High cost – it is costly to make a message to be telecast and to
buy spot time from various TV channels.
(ii) Multiple channels – Many times people switch channels. There is
high possibility of the advertisement being missed during channel
swapping.
(iii) High clutter – Too many commercials during breaks between
television programs reduces the effectiveness of the advertisement.
(iv) Time consuming process – Producing a message for television
commercial as well as reaching the producers in advance to book
for the commercial is time consuming.
(v) Less audience selectivity – A marketer cannot appeal to specific
target segment as television is viewed by all class of people
irrespective of age group.
(4) Radio – Radio advertising is very popular now a days. Most of
the population in rural areas rely on Radio for entertainment and
news. The introduction of radio stations which play the latest songs
with entertainment programs and news broadcast are popular among
youth also. The advertising can be done in regional languages. Most
of the people in cities listen to radio while driving cars or travelling
by bus, etc. This gives a marketer a great opportunity to advertise
products to masses.
Advantages –
(i) Low cost – It is more economical as compared to television, etc.

228
(ii) Mass coverage – It reaches every kind of listener. Unlike television Integrated Marketing
it is a mobile medium and can be listened to while travelling. Communications
Marketers take this opportunity in popularising a product.
(iii) Selectivity according to demography – A marketer can communicate
in the area he/ she desires to reach. The stations, programs, time,
etc. can be selected by the marketer.
(iv) Easy to make and alter the message – Unlike television or road
side hoardings which require time to prepare and alter, radio message
can be easily edited.
Limitations –
(i) No visual presentation – It is not possible to illustrate or demonstrate
a product.
(ii) Less attention by listener – There is high possibility of message
being unheard by the listener as radio is usually listened to while
performing another activity.
(iii) Unstructured rates – As there is high possibility of message being
unheard, the advertiser has to increase the frequency of the message
for effective reach. For different timings the rates are different with
limited time availability.
(5) Film advertising – It is similar to television advertising that
combines audio visual and motion facilities for greater impact. The
advertisement films are made and sent to different cinema houses
to be shown before the movie show or during intermission. Because
of life size display the message has greater impact on the audience.
Advantages –
(i) Captive audience – There is higher degree of impact of the message
as there is less distraction and audience come prepared to watch
shows.
(ii) Selectivity – A marketer has the flexibility of communicating with
certain audience basis the show and the region. Certain shows
appeal to certain selective audience.
(iii) Less clutter – There is less advertisement clutter in cinema halls
and booking time for advertisement in cinema halls is also less
expensive.
Limitations –
(i) High film making costs – The cost of making a film for cinema
advertising is costly as it requires proper filming. Only large
organisations go for cinema advertising.
(ii) Time consuming process – Making a cinema advertisement is a
time–consuming process, and it is not easy to make changes to
the message.
(iii) Limited coverage – The message coverage is limited to the audience
visiting cinema halls.
229
Marketing Management (6) Outdoor advertising – Outdoor advertising is referred to as literally
"out–of–door" or OOH "out–of–home". This type of advertising is
aimed at catching the attention of the passer–by on road. It includes
– posters, electric/ neon signs, sky writing, sandwich men, transit
displays, and painted displays.
Posters and placards are pasted on road sides, railway stations, or
bus stands. These are usually made of thick paper sheets, wooden
or metal plate. The message is usually in big letters and attention
seeking that can be read from a distance.
Electric/ Neon signs are permanent on a place and utilise attractive
light effects. These are placed in places where large number of
people gathers in the evening or night.
Sky lighting is utilised to advertise the message across the sky by
way of balloons, search lights, small aircrafts, or giant kites. The
airplane pilots utilise smoke or illuminations for communicating the
message.
Sandwich men move from street to street carrying posters or messages
dressed in colourful and bright costumes. Men or women who do
this job are sandwiched between posters, etc. and shout slogans to
attract attention towards the posters.
Transit displays are referred to all kinds of displays used in buses,
trains, taxis, and any kind of transportation vehicle.
Advantages –
(i) Geographic selectivity – Changes can be done as required to target
a particular segment.
(ii) Longer life – the outdoor advertising stay unless removed by the
advertiser.
(iii) Flexibility – high flexibility to highlight the local address and names
of sellers, middlemen, etc. A marketer can have different message
for different locality or region.
(iv) Low cost – the cost is low as compared to television, cinema or
magazine advertising.
Limitations –
(i) Limited exposure – There is limited audience who get exposure
to the outdoor message.
(ii) Non–selective demographically – people of all age groups, social,
economic, etc. background get exposed to the same message.
(7) Direct mail – It refers to all forms of printed advertising delivered
directly to potential buyers by post. These can take different forms
like post cards, envelop enclosures, booklets and catalogues, sales
letters, gift–novelties, package inserts, store publications.
Envelop enclosure can be a circular. These papers posted to buyers.

230
These are sent with the purpose of generating reader's interest in Integrated Marketing
the product. Communications
Booklets and catalogues contain detailed information about the
products and their prices. Gift novelties like pens, wallets, calendars,
etc. are imprinted with the sales messages.
Advantages –
(i) Audience selectivity – The marketer can clearly define and target
its prospective buyers.
(ii) High flexibility – The message can be easily altered and changed
as required as the designing and delivering of the message is in
the hands of the marketer.
(iii) Option of personal touch – Some messages can be directly addressed
to the receiver like sales letters, etc.
(iv) Effective – The marketer can make the message and delivery as
effective as possible as there is no competition or clutter.
Limitations –
(i) High cost – The cost of sending individual messages is higher as
compared to a message communicated via newspapers, etc.
(ii) Post being considered junk – Nowadays people in metros receive
lot of post from different organisations. People tend to consider
most of it as trash and show less interest.
(8) Display advertising – In this advertising, the sellers display the
products in shop windows, counter displays, shelf displays, floor
displays, etc. It is aimed at generating interest and impulse buying
especially when most of the stores have "self–service" options.
For this to be an effective tool, the advertisers need to ensure that
the products are displayed artistically in the shop window, on the
shelves, counters, cupboards, racks, stands, etc.
Products should be regularly rearranged to generate interest and give
a feel of freshness to the buyers.
(9) Trade shows, Exhibitions and Fairs – These are organised on
large scale wherein various manufacturers and traders sell their
products to the buyers who attend the trade show or exhibition.
The manufacturers buy or rent a space for demonstration of products.
The sellers give out free brochures or sample of products to the
visitors. It benefits the buyers to a great extent as they get the
opportunity of inspecting the product from among a variety available.
In international exhibitions, traders from different parts of the world
assemble at one place.
(10) Internet advertising – Internet advertising has gained lot of
momentum in recent times as most of the regions in the world
have access to internet. Advertisers look for the most accessed
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Marketing Management websites to advertise their products. The internet sites take fees for
giving space on their web page. The cost of preparing an internet
advertisement is also less as compared to TV.
As online shopping gains ground, online advertisement takes the
interested buyers directly to the shopping webpage. The advertisers have
to ensure that the content of advertisement is attractive and appealing
to the site visitor.
Internet advertising is growing at a fast pace, slowly replacing TV
viewing through cable operators or dish TVs.
The internet advertising is not restricted geographically or has time
constraints. Customers also have greater control of closing the advertisement
or accessing it.
Online advertising is of different types like – Display advertising,
sponsorship, Affiliate marketing, search engine marketing, keyword
advertising, Search engine optimisation (SEO), and "pop ups".
In Display advertising or Banner advertising on internet, an advertiser
charges some amount to display an advertisement banner for a certain
period. It is aimed to tempt visitors to visit the advertiser site.
Advertisers have to study the websites on which they can place
their advertisement banners to ensure majority of the people visiting these
sites are prospective buyers.
In Sponsorship, the marketers sponsor a section of a website and
integrate their advertising message there. This gives more exposure to
the visitors as compared to display advertising on internet.
In Affiliate marketing, the marketers place their advertisements with
different websites and the fees is paid basis the traffic received by the
advertisement.
Search Engine Marketing refers to the advertisements a visitor
comes across when checking the search engine results.
Through Keyword advertising, the advertiser pays a search engine
or a website to have his/ her link to the site when a visitor types the
search words for accessing a site. If someone it typing "times", the options
that the person may get will be of some advertiser's site on the top of
search.
Search engine optimisations (SEO) is done to allow search engines
to rank the advertisement a high result in search engine results. The
websites visibility is increased in the search results.
In "pop–up" advertising, an advertisement opens in a new window.
So, when the visitor closes the site, the advertisement is seen. These are
mostly not opted for as these are irritating and most of the web browsers
have "pop–up blockers" preinstalled.

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Advantages of internet advertising Integrated Marketing
High flexibility of giving personal touch, can be made as interactive Communications
as possible, less costly as compared to television advertising, magazine
advertising, etc.
Limitations of internet advertising
Not everyone accesses internet. There are internet challenges in
developing countries, frustrating for some visitors. Culturally and
linguistically different regions will need to have advertising message
accordingly created.

4.4 Managing The Developing Advertising Program :

Organisation allocate and spend crores of rupees for advertising.
It is important that the marketers effectively use the advertising resources
to make the marketing effort successful.
There are five major steps that organisations can take in developing
an advertising program.
(1) Mission/ Objective
(2) Budget
(3) Message
(4) Media plan
(5) Evaluation
(1) Advertising mission/ objective
The advertising objective refers to the specific goals an organisation
wants to achieve in a specified time with specified audience.
The marketing strategy which specifies the target market, marketing
positioning and marketing mix elements, gives direction to the advertising
objectives.
The planning which is done for the steps in making decisions for
promotion activities form the basis of each promotion tool.

233
Marketing Management Advertising objectives could be : to inform, developing awareness,
influencing buyers to try the product, and generating positive attitudes
and emotions towards the products, and not solely to meet sales objectives.
Therefore, we have :
Informative advertising – creating awareness about new products
or new features of existing products.
Persuasive advertising – creating preference for the company's product.
Reminder advertising –asking customers to regularly use the products.
Reinforcements advertising – convincing existing users that they
have made a right choice.
(2) Determining the advertising budget
The management has to decide on the right amount to be allocated
so that less amount should not result in ineffective advertising and excess
amount should not raise the expenditure.
Some company's rely on a predetermined percent of sales for
advertising.
Factors can be considered when deciding on the advertising budget–
(a) Stage of product in product life cycle – New products require intense
advertising, whereas products in maturity stage have less advertising
expenses.
(b) Market share and consumer base – Brands with high market share
usually require less budget, whereas a brand which wants to increase
its market share, will need to invest heavily in advertising.
(c) Competition and clutter – A brand trying to be a leader in cluttered
in the target market, will need to invest heavily.
(d) Advertising frequency – Marketers need to be aware of the frequency
of the advertisements by competition in the target market.
(e) Product substitutability – Highlighting product features to differentiate
it from substitute products in the market will need advertising
regularly.
(3) Advertising message
The most creative part in advertising is working on what to say
to the target audience and how to say it so that the buyers will listen,
understand and remember the message when making buying decisions.

4.5 Steps in Developing a Creative Advertising Strategy :

(a) Message generation – There are many theories proposed by advertisers
for creating an effective message – one is link the brand to a single
benefit.
(b) Message evaluation and selection – The advertiser should consider
the whether the advertising is highlighting something interesting,

234
the exclusiveness of the productor, or the message should be Integrated Marketing
believable. Communications
(c) Message execution –Creative advertising can be presented in Style
– lifestyle, musical, fantasy, technical expertise, mood or image,
scientific evidence, testimonial evidence. Tone – positive, humorous,
informative, self–deprecating. Words – attention getting and
memorable.
Moreover, other aspects of advertising that the marketers should
study are – the format (ad size, colour and illustration), and how the
slogans make the advertisement more effective and catchy.
(4) Deciding on the Media
The next step after finalising the message is to select the most
effective (high impact) and efficient (less costly, within the budget) media
for communicating the message to the masses.
It is a challenge to decide on the media vehicle as each one of
them have advantages as well as disadvantages – construct an optimum
media mixie. a combination of TV, Radio, outdoor, newspapers, etc. The
marketers consider the reach, frequency and impact of each media tool.
Factors considered are –
(i) Target audience media habits – Internet advertising on websites and
mobiles if best vehicle to reach the teenagers.
(ii) Product characteristics – For demonstration of the product features
TV would have both visual and motion elements.
(iii) Message characteristics – if a product is to be launched then
advertising on TV as well as magazines may be required. But a
discount sale will need immediate communication in the target
market, therefore outdoor advertising, newspapers, radio, etc. are
preferred.
(iv) Cost – creating an advertisement to be telecast on TV is costlier
than an advertisement created for newspapers, radio, etc.
The marketer should consider the limitations and advantages of
various media types to create effective media mix and media schedule.
Similarly, the Geographical Allocation of the media is considered
to target specified regions and territories.
(5) Media Evaluation
An organisation should have effective planning and control on the
advertising program to measure its effectiveness.
Most commonly used methods for measuring the effectiveness are
(a) Communication–effect research – There are three methods under
this.
(i) In Consumer feedback method for its effectiveness.

235
Marketing Management (ii) The effectiveness of the ad is calculated basis the recall of the
contents of the ads when a customer is shown various ads.
(iii) Laboratory tests use equipment to check the consumer's physiological
reactions like heartbeat, pupil dilation, heartbeat, etc. when exposed
to the ad.
(2) Sales effect research – Organisations measure the effect of advertising
expenditure on the sales, which is difficult because of price changes,
changes in competition, changes in economic conditions, etc. Majorly
two approaches are followed to measure the sales effectiveness.
(i) Historical Sales is analysed between the changes in sales and the
advertising expenditure in that period.
(ii) Experimental studies – To understand the relation between
advertisement and its influence on the sales, experimental studies
can be used. One such method is test market approach. The effect
on sales is measured in few cities where consumers are exposed
to advertisements and also in cities where no advertisement is run.

4.6 Managing of Sales Promotions :

Sales Promotion includes those sales activities that supplement both
Personal Selling and Advertising and co–ordinates them and helps to make
them effective, such as, displays, shows and expositions, demonstrations
and other non–recurrent selling efforts not in the ordinary routine.
Most of the organisations adopt sales promotions as it is less costly
as compared to the increasing Television advertising and personal selling
costs. Sales promotion is widely used for creating brand awareness and
liking among consumers.
Consumers are lured by the incentives of buying through various
sales promotion activities like discounts, rebates, contests, coupons, product
samples, price promotion signs, coupons, exhibitions, setting kiosks in
malls, displays, free samples, gifts, etc.
The customer who buys a product sees an extra value in the purchase
like a discount, etc.
Risks Involved :
Giving discounts, free samples, deals, etc. sometimes gives an
impression that the brand is not of high quality and not being bought
by majority of buyers. Sales promotions most of the time fail to attract
long–term brand loyal customers. It mostly appeals to buyers who look
for deals and value at a lower price. Hence it becomes important to support
sales promotion activities with strong advertising messages.
Sales promotion employs tools for Customer Promotion, middlemen,
and Company's sales force (discussed below).
If the target audience is large, the company can use different
activities at the same time. For E.g., a newly launched hair strengthening
shampoo may give out free sachets of the product along with discounts
236
on the standard package. A consumer who is not brand loyal but is seeking Integrated Marketing
a low–price good quality product is likely to try a product under this Communications
activity.
Objective of sales promotion for consumers –
Sales Promotion attracts new customers to try the product,
• Reward existing customers
• To increase repurchase of the product by occasional buyers.
• It attracts customers who are not brand loyal and often look for
additional value.
• It generates a short term demand for the product in the target
market.
• Luring buyers away from competitors
• Switch brands
Objective of sales promotion for middlemen
The manufactures are dependent on the middlemen (retailers and
wholesalers) for the sale of their products. The manufacturers help the
middlemen in many ways like dealer contests, training of the dealers,
supply display material, designing the middlemen's stores, etc. to gain
their co–operation in the company's marketing effort.
• Encourage off–season buying
• Encourage stocking of company's products
• Discourage competitor's stocking and display of products
• Gain entry into new retail stores
Objective of sales promotion for sales force
Sales promotion that is aimed at the sales force is to motivate and
encourage the sales force to increase the selling effort in the target market.
For E.g., offering a paid–vacation to a sales personal who has achieved
certain sales target.
• Encourage extra effort
• Encourage support for a new product or service
• Stimulating off season sales.
What are the different Sales Promotion tools ?
Sales Promotion tools are different and specific for three groups :
I. Consumers (Consumer promotion tools)
II. Dealers or middlemen (Trade promotion tools), and
III. Sales force.
I. Sales promotion tools for consumers (Consumer promotion tools)
The marketers need to choose the right sales promotion tool to
reach its audience. Below are the major promotion tools directed towards
consumers –
237
Marketing Management (1) Free samples – The manufacturer offers free samples to consumers
in various ways doing door–to–door visits, at retail stores, malls,
attached to another product, etc.
(2) Exchanges – Customer are asked to submit the old product (of
same brand or sometimes any brand) and a new product is offered
at a new price.
(3) Sales promotion letters – Sent to buyer's homes and offices giving
information on promotion activity or information on the products.
(4) Coupons – These are certificates by which a buyer can buy a
product at a reduced price. These are mailed, accompanied with
other products, with newspapers or magazines, or sent by direct
mail.
(5) Cash refund offers or rebates – Manufacturer gives a certain
percentage of refund as part of the deal for buying a product.
(6) Point–of Purchase displays – The customers are exposed to
company's product at the POP to ensure its awareness to maximum
people visiting the store.
(7) Demonstrations – Demonstrations are done at retail stores and
malls or even at residences, with permissions. For E.g., sales people
at malls and retail stores demonstrate perfumes, cosmetic products,
small electronic items, etc.
(8) Gifts or Premium – Products are offered free or at a low cost
for buying a particular product. For E.g., buy one get one free, book
a flat with no EMI for first year, etc.
(9) Frequency program – The consumers are rewarded for making the
purchase of the product regularly. The aim is to ensure the customer
doesn't switches brand.
(10) Free trials – Potential buyers are invited to try the new product
for free. For E.g., new cola, flavoured packaged water, etc.
(11) Contests, games, sweepstakes (prizes) – These are opportunities
for the buyers to win cash, trip, or a product when making a certain
purchase. Contest asks consumers to submit entries that may win
the deal communicated from a panel of judges.
(12) Product warranties and guarantees – The manufacturers make
a promise to the buyer that the product will be repaired free of
cost, replaced, or money refunded if it doesn't performs as promised
for a certain period.
(13) Promotion along with other brands – Two or more manufacturers
advertise each other's products.

238
Integrated Marketing
Communications

II. Sales promotion tools for middlemen/dealers (Trade promotion

tools)
Below are the major trade promotion tools–
(1) Attractive terms of sale – buy back offers, credit facility, price
discount or allowance like free or extra units of the product.
(2) Dealer contests – Dealers with maximum sales or window display
are rewarded.
(3) Services to dealers – Manufacturers help in designing and
arrangement of the goods in the store. Training and sale techniques
coaching given to the dealers' staff free of charge.
III. Business and Sales force promotion tools
(1) Manufacturer organise sales contests wherein the winners are
rewarded by way of money, incentives, trips, gifts, etc.
(2) Trade shows – Trade shows are organised to meet new customers,
introduce new products, educating customers about the new as well
as existing products. These help the manufacturers come in direct
contact with the buyers.

4.7 Managing of Sales Force :

Sales Force management is the planning, analysis, implementation
of the plan and evaluation of the sales force functions in the target market.
The major steps involve
(1) Designing sales force objective and strategy
(2) Sales force size
(3) Recruitment and selection
(4) Training and motivation
(5) Compensating
(6) Supervising
(7) Evaluation and control of sales people
239
Marketing Management (1) Designing sales force structure and strategy
The objectives give foundation to the individual objectives of the
salesmen. The objectives layout details on what the organisations focus
will be.
It can be focusing on new customers, new product, existing customers
or existing products. Not only should the management focus on sales
targets, but also market performance, customer relations and service,
supporting the marketing functions.
The objectives give platform for measuring the performance of the
sales function and the salespeople. Today the sales people are not just
responsible for generating sales but are the "account managers" who are
a single point of contact for an existing customer with the organisation.
(2) Sales force size –
The size of the sales force is determined based on the market
attractiveness, competition, budget allotted to sales function and other
environmental factors. Basis these influences, the management can make
changes to the salespeople deployed.
(3) Recruitment and selection –
For a successful sales function it is imperative to have good
salespeople. A perfect sales person can increase the customer base and
profits for the organisation.
The recruitment is done through company's website, print ads,
recruitment agencies, etc. The selection process mostly focuses on the
enthusiasm and self–confidence of the applicant. The person should have
a pleasing personality and should be always ready to get into a conversation.
The customers trust a person who is knowledgeable, helpful and appears
trustworthy.
(4) Training, Supervision and motivation –
It is important that the salespeople are given adequate training not
only on the product but also on how the organisation functions. Once
a salesperson associates him/ her with the organisation, they need to
identify with the organisation.
The training should be effective to ensure the salesman is
knowledgeable about the company's product and the competition in the
market. They need to be well versed in making sales pitch, handling
customer's queries and their key perform
The management has to direct and motivate the sales force to give
it right direction.
Mostly financial rewards are considered the best rewards to keep
the sales people motivated. These could be also be recognition or a
promotion.

240
(5) Compensating – Integrated Marketing
To ensure right sales people get selected there should be an Communications
appropriate compensation plan. Compensation involves elements like –
fixed salary, variable components like commission, rewards, bonus, etc.,
expenses incurred in the field, and fringe benefits like health benefits,
company vehicle, club membership, etc.
It should justify the efforts and results given by the salesman and
his/ her team.
(6) Evaluation and control of sales people –
The management has to evaluate and control the entire sales function
as well as individual salespeople. If the results are not been met, an
analysis needs to be done to ensure the correct strategy is being followed.
For individual salesperson's evaluation, the organisation should
maintain a database on the performance of individual salesperson as well
as the team against standard determined by the management.
Else the organisation stands a risk of losing a quality salesperson
to a competitor with better compensation criteria. The communication
should always be open between the management and the sales people
for proper exchange of feedback and solutions.

4.8 Managing of Public Relations (PR) Marketing :

The management has to work on the Public Relations Marketing
through proper planning to get effective results. The management must
have clear idea on the objective it wants to achieve, finalise the public
relations message and tools, implementing the plan and evaluation.
(1) Marketing objectives –
The announcement through PR campaign of a launch of a new
product creates lot of awareness in the market place. Even before
advertisements or other promotion tools are utilized, PR can create lot
of excitement about a product, etc. in the market place.
It can be an editorial in a leading newspaper that will boost the
dealers, shareholders, sales force, business partners, and public at large.
For E.g., Reliance Jio created lot of news through its PR campaign
of cheapest call and internet service provider resulted in major players
in the Indian market to change their plans and strategies.
This way the organisation creates news stories in the market even
without advertising, sales promotion, direct marketing, or personal selling.
The organisation saves its costs without much investment in these
promotion tools.
The advertising for Apple products is mostly done by its
intermediaries like ecommerce sites, network carriers, etc. It relies on
its product and pricing strategies and publicity gained through trade shows
and media relations.

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Marketing Management (2) Selecting the message and tools
The organisation has to first select the message and then the tools
available at its disposal. Below are the commonly used PR tools –
1. Press Releases – Writing article for the editorial page in a newspaper
or a magazine – guest editorial, letters to the editor, etc.
2. Organisations publications – Annual reports, brochures, articles,
newsletters, magazines, etc. Public relations team personally create
these messages for a positive impact.
3. Organising events – organising news conference, seminars, trade
shows, competitions, etc. that will reach the masses.
4. Sponsorship – Sponsoring sports, cultural programs, music
competitions, educational workshop, or other events that are followed
by majority of the audience.
5. Product placements – Placing a company's product on Television
shows, movies, special events, video games, or book is product
placement.
6. Speeches – Executives from the organisation often address media
or give talks at various shows like trade shows, discussion forums,
etc. This builds the company's image and value.
7. Cause–related marketing/Public–Service activities – contributing to
marathon events, blood donation events, raising awareness for about
breast cancer, AIDS, etc.
8. Social media marketing and blogging

4.9 Managing Direct Selling :

Independent sales people use direct selling to sell their products
and services directly to customers in meeting places such as homes, offices
and cafes, instead of in retail outlets. Direct selling allows you to avoid
expensive overheads, reduce advertising costs and run your businesses
flexibly.
Customers also benefit from the convenience and personal attention
they receive from direct salespeople. However, there are disadvantages
to direct selling.
Direct salespeople can find it hard to reach new customers and can
spend a lot of time on customer interactions to make sales.
Types of direct selling
Direct selling methods include :
• person–to–person sales – through individual appointments with
customers to make presentations, demonstrate new products
• door–to–door sales – approaching homes and businesses by
appointment or unannounced to leave catalogues and offer products
or product demonstrations

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• in–home presentations – arranging at–home gatherings to present Integrated Marketing
products Communications
• online shopping – using websites and email lists to build customer
networks and offer online ordering facilities
• venue sales – setting up booths or kiosks at events to generate
new leads and promote sales
• network marketing – recruiting other sellers into a network to
'duplicate' your product sales role, earning a percentage of their
sales revenue and expanding your product reach.
How to manage direct selling ?
1. Focus on growing relationships first, not sales. Encouraging your
customers to give you their time and attention is your first goal.
Create a rapport and identify the prospects needs, then match
products to those needs.
2. Know your products and have confidence in their ability to meet
your customers' needs. Salespeople who are passionate about their
products sell more.
3. A detailed customer database helps build and track customers and
is an invaluable source of information that can be used for
communication and distribute marketing material such as e–
newsletters and event or product updates.
4. Organise your sales environment. Arrive early and carefully plan
product display, presentation space and seating position. Choose a
layout that will help your customers maintain eye contact with you
rather than each other. Consider ways to remove distractions in the
room.
5. Build networks to grow your business. Build strong, mutually
beneficial relationships with your direct marketing colleagues to
share your selling tips.
6. Polished sales skills – conversation, listening skills and well–
developed approach to communication to build lasting customer
relationships and grow a rewarding business.

4.10 Managing Event :

What Is Event Management ?
Event management includes a variety of functions for executing
large–scale events, which might include conferences, conventions, concerts,
trade shows, festivals, and ceremonies.
It involves handling the overall logistics of the event, working with
staff, and conducting project management of the event as a whole.
Additional duties might include managing the budget and the teams
of people responsible for each function, as well as overseeing the execution
of the event. Event managers also supervise the services of all outside
vendors and professionals, including event planners. 243
Marketing Management Managing the responsibilities by an Event Manager :
• Selecting and reserving venues
• Coordinating outside vendors
• Engaging speakers or entertainment
• Arranging for transportation and parking
• Obtaining necessary permits and appropriate insurance
• Compliance with health and safety standards
• Developing emergency contingency plans
• Crisis and situation management at the event
• Designing a security plan
• Monitoring the event
Role of Event Management Services
Event management firms are frequently hired to plan and execute
large–scale company meetings and special events. Also, weddings, concerts,
sporting events, reunions, and large parties are events for an event
management company.
Government entities, non–profits, associations, and corporations all
utilize event management companies to coordinate important events and
meetings.
Skills to Succeed
Excellent organisational skills are prerequisite to succeed. The ability
to multitask and juggle many moving parts is essential and, efficient time–
management skills.
Being able to prioritize and stay on task is what leads to a successful
event. Event management requires seeing the vision for the event through
to execution, which calls for persistence, creativity, and flexibility.
Because project management is a key element and involves managing
not only functions but teams of people, interpersonal skills are also
important. Interaction with individuals at all levels of an organisation is
part of the job, so being comfortable, personable and a strong communicator
will go a long way in developing those relationships.

4.7 Integrated Marketing Communications (IMC) :

To understand integrated marketing communication, let us first
understand what does brand communication mean ?
Brand communication goes a long way in promoting products and
services among target consumers. The process involves identifying target
consumers and promoting the brand among them through :
• Advertising
• Sales Promotion
• Public Relation
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• Direct Marketing Integrated Marketing
• Personal Selling Communications

• Hoardings, Banners
• Social media, and
• PR activities
Managing Integrated Marketing Communication
In integrated marketing communication, all aspects of marketing
communication work together to promote brands more effectively among
end–users and also for better results.
Brands are promoted through advertising, sales promotions, banners,
hoardings, public relations, social networking sites etc. simultaneously
to increase brand awareness among potential end–users.
The first step towards managing integrated marketing communication
is to identify the target audience – understanding their needs and
expectations.
The second step is to know what is intended to be communicated.
No brand promotion tools would help, unless it is really sure of what
is that is to be shared with your potential and existing customers.
The third step is to identify the various channels of communication
carefully.
The fifth step is to allocate right resources for brand promotion.
Decide how much can you spend on various marketing and promotional
activities between various tools available.
The next step is to measure the results of integrated marketing
communication. Find out whether the combination of all marketing tools
has actually helped reach a wider audience and promote your brands more
effectively.
In other words, IMC means integrating all the promotional tools
mix in the most effective way.
IMC goes beyond the basic communications tools.
Levels of integration such as Horizontal, Vertical, Internal, External
and Data integration are strengthened in Integrated Communications.
Horizontal Integration occurs across the marketing mix and across
business functions for E.g., production, finance, distribution and
communications should work together and be conscious that their decisions
and actions send messages to customers.
Vertical Integration means marketing and communications objectives
must support of the corporate objectives and corporate missions.
Internal Integration requires internal marketing – keeping all staff
informed and motivated about any new developments from new
advertisements, to new corporate identities, new service standards, new
strategic partners and so on.
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Marketing Management External Integration, requires external partners such as advertising
and PR agencies to work closely together to deliver a single seamless
solution – a cohesive message – an integrated message.
Benefits of IMC
Though IMC requires a lot of effort it delivers many benefits.
1. Helps customers to move through the various stages of the buying
process.
2. Creates competitive advantage by protecting customers to switch
brands.
3. Organisation consolidates its image, develops a relationship with
customers.
4. Relationship with customers and build loyalty
5. Increases profits through increased effectiveness.
6. Unified message has more impact than disjointed and numerous
messages.
7. Sales is boosted by stretching messages across several communications
tools for more avenues for customers to become aware, aroused,
and ultimately, to make a purchase.
8. Helps buyers by giving timely reminders, updated information and
special offers
9. Consistent messages make them more credible
Finally, IMC saves money as it eliminates duplication of graphics
and photography as they can be shared and used in advertising, exhibitions
and sales literature.
If there is a single advertising agency – it saves time in giving
briefs, meetings and discussions. At the same time, it reduces stress of
Marketing personnel dealing with advertising agencies.
Check Your Progress :
1. In Integrated marketing communication, all aspects of marketing
communication ________ to promote brands more effectively among
end–users.
a. are separated b. work together
c. are disintegrated d. are collapsed
2. Advertisement through radio was very popular till the middle of
last century because of ____________
a. effectiveness b. More popular than newspaper
c. Mass reach d. None of these
3. TV Ad production cost is generally __________________
a. High b. Low c. Medium d. None of this

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4. _________ is helpful in promotion of services through networking Integrated Marketing
sites like Facebook, Twitter etc. Communications
a. Social media b. Email c. Radio d. Television
5. Several short–term incentives given to promote trial buying is _____
a. Sales promotion b. Direct marketing
c. Events and experiences d. Advertising
6. Programs, articles, lobbying that are planned to protect or promote
a company's image or its products is known as ____________
a. Sales promotion b. Direct marketing
c. Events and experiences d. PublicRelations
7. People–to–people oral, electronic or written form of communications
that associate with experiences of buying or using services or
products is ____________
a. Interactive marketing b. Direct marketing
c. Personal selling d. Word–of–mouth marketing
8. Digital Marketing is similar to _______
a. Online marketing b. Cold calling
c. Web designing d. Outdoor marketing

4.12 Let Us Sum Up :

We have learned the message strategy – what to say, the creative
strategy – how to say it and the message source – who should say it.
Role of IMC is vital as it recognises value of a plan, evaluates
all communications, and combines them to provide unified integration
of messages.

4.13 Answer to Check Your Progress :

Check Your Progress :
1. b 2. c 3. a 4. a
5. a 6. d 7. d 8. a

4.14 Glossary :
Stimulating – encouraging or enthusiasm
EMI – Equated Monthly Installment
Compensating – (typically money) in recognition of suffering or
loss incurred
Integrated – various parts or aspects linked, coordinated
PR – Public Relations

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Marketing Management 4.15 Assignment :
1. If there is small business, example a 'beauty parlour' in your
neighbourhood, , what communications tools would you recommend
to the proprietor that can be used ?
2. What is the role of PR in communication ?

4.16 Activity :
Pick up any two Companies in India and show how they have used
IMC effectively over the past few years.

4.14 Case Study :

Case Study – 1
An insect was found in a tetra–packed fruit juice manufactured by
a reputed company. The aggrieved customer showed it to the shopkeeper
from whom the pack was purchased who directed her to call up the
customer care centre.
After several failed attempts, the customer went to a consumer
forum and sought their advice. The forum decided to impose restrictions
on the sales by the firm's products of the particular batch and urged the
customers to refrain from buying the products of the company.
The Company lost its image in the market. The CEO gave the
responsibility of bringing back the lost image of the company to the
Manager.
Identify the concept of marketing management which will help the
Manager to get the firm out of the above crisis.
Case Study – 2
Dhruv and his son, were shopping in a Mall. Dhruv wanted to give
a birthday present – a trouser and a shirt to his son. He was happy when
on payment of Rs 5000 for the purchase, he got a discount voucher of
20% for the next purchase he would do at the shop, as well as a meal
voucher of Rs. 500 in a nearby eating joint.
Identify the which type of advertisement was used by the shop in
this case.
Case Public Relation : Earth Hour 2010. Brand : WWF India
Back in 2010, WWF India launched the campaign against Climate
Change to switch off all non–essential lights at 8. 30 pm, on 27th March
for an hour. That year, 128 cities across India joined in with over
7 million people pledging to switch off.
With Abhishek Bachchan and then Chief Minister of Delhi, Smt.
Sheila Dikshit as the leader in the movement, the places that went dark
for the hour were : India Gate, Chhatrapati Shivaji Terminus, ITC Grand
Maratha, Shivaji Park, Taj Lands' End, and Bandra Worli Sea Link in
Mumbai, Victoria Memorial in Kolkata and Husain Sagar in Hyderabad.
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The campaign left an indelible mark in the mind of millions of Integrated Marketing
people. Earth Hour is observed in India (and over the world) every year, Communications
diligently. Every child, man, and woman knows about it. By the time
2017 reeled in, 30 million people in the country were participating. So
much so, that #EarthHour began to trend on social media. And it is the
reason why we give the campaign one of our top positions.
Fantastic PR campaigns translate into results that amplify with
passing years.

4.18 Further Reading :

Marketing Management, 15th edition (2014), Philip Kotler and
Kevin Keller, Pearson Education.
Fundamentals of Marketing, 2007, Marilyn A. Stone and John
Desmond, Routledge Taylor & Francis Group
Marketing Management, Indian Context – Global Perspective, 6th
edition, 2018, V S Ramaswamy, S Namakumari, SAGE publications India
Pvt Ltd
Principles of Marketing, 1999, Second European edition, Philip
Kotler Gary Armstrong, John Saunders, Veronica Wong, Prentice Hall
Europe
A Glossary of Marketing Terms, American Marketing Association,
Chicago, IL : American Marketing Association, 1960
Marketing Myopia, Levitt, Theodore, Harvard Business Review
(July Aug 1960).

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Marketing Management BLOCK SUMMARY
In this block you have learned how a Marketer uses the knowledge
about his organisation, product, market and competition with effect using
the tools of product mix and marketing mix – the Ps. The traditional 4 Ps
used in a firm producing goods, are extended to 3 more Ps in Service
industry.
The distribution channel is crucial as the last leg in reaching to the
customers through channel strategies, Logistics Decisions and Market
Logistics.
The most visible aspect of a firm is advertisement. The choice of
communication message reaching the prospective audience is of immense
importance. It creates the first image about the offers of the product / service
in question and lays an impression in the consumers' mind. The cost control
of the advertisement spent has to be closely monitored and its effectiveness
measured.

BLOCK ASSIGNMENT
Short Answer Questions :
1. What are product lines ?
2. What the levels of product ?
3. Briefly explain the width, depth and length of product line.
4. What is the difference between 'guarantee' and 'warrantee' ?
5. What are the characteristics of 'Services" ?
6. What are the channels of marketing ?
7. What is the difference between 'advertising' and 'sales promotion' ?

Long Answer Questions :

1. What is product and service differentiations ? What are their advantages
and disadvantages ?
2. What is product mix ? Explain how product mix is used for pricing
strategy ?
3. Explain what are the choices available for brand strategies and brand
repositioning ?
4. What can be done to maintain and improve 'Services Quality' ?
5. What are the managing functions of retailers and wholesalers ?
6. Give details of the types of advertising tools available to marketers ?
State the advantages, disadvantages and limitations of all vehicles.
7. How do you manage 'Integrated Marketing Communication' in a
Company ?
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 Enrolment No. :
1. How many hours did you need for studying the units ?

Unit No. 1 2 3 4

No. of Hrs.
2. Please give your reactions to the following items based on your reading
of the block :

3. Any other Comments

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DR.BABASAHEB AMBEDKAR
OPEN UNIVERSITY
'Jyotirmay' Parisar,
Sarkhej-Gandhinagar Highway, Chharodi, Ahmedabad-382 481.
Website : www.baou.edu.in