1

MARKETING MANAGEMNT

Definition of Marketing Mix

The marketing mix is defined by the use of a marketing tool that combines a number of
components in order to become harden and solidify a product’s brand and to help in selling the
product or service. Product based companies have to come up with strategies to sell their
products, and coming up with a marketing mix is one of them.

What is Marketing Mix?

Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the
market and sell it. It is about positioning a product and deciding it to sell in the right place, at the
right price and right time. The product will then be sold, according to marketing and promotional
strategy. The components of the marketing mix consist of 4Ps Product, Price, Place, and
Promotion. In the business sector, the marketing managers plan a marketing strategy taking into
consideration all the 4Ps. However, nowadays, the marketing mix increasingly includes several
other Ps for vital development.

What is 4 P of Marketing
Product in Marketing Mix:

A product is a commodity, produced or built to satisfy the need of an individual or a group. The
product can be intangible or tangible as it can be in the form of services or goods. It is important
to do extensive research before developing a product as it has a fluctuating life cycle, from the
growth phase to the maturity phase to the sales decline phase.

A product has a certain life cycle that includes the growth phase, the maturity phase, and the sales
decline phase. It is important for marketers to reinvent their products to stimulate more demand
once it reaches the sales decline phase. It should create an impact in the mind of the customers,
which is exclusive and different from the competitor’s product. There is an old saying stating for
marketers, “what can I do to offer a better product to this group of people than my competitors”.
This strategy also helps the company to build brand value.

Price in Marketing Mix:

Price is a very important component of the marketing mix definition. The price of the product is
basically the amount that a customer pays for to enjoy it. Price is the most critical element of a
marketing plan because it dictates a company’s survival and profit. Adjusting the price of the
product, even a little bit has a big impact on the entire marketing strategy as well as greatly
affecting the sales and demand of the product in the market. Things to keep on mind while
determining the cost of the product are, the competitor’s price, list price, customer location,
discount, terms of sale, etc.,

Place in Marketing Mix:

2

Placement or distribution is a very important part of the marketing mix strategy. We should
position and distribute our product in a place that is easily accessible to potential
buyers/customers.

Promotion in Marketing Mix:

It is a marketing communication process that helps the company to publicize the product and its
features to the public. It is the most expensive and essential components of the marketing mix,
that helps to grab the attention of the customers and influence them to buy the product. Most of
the marketers use promotion tactics to promote their product and reach out to the public or the
target audience. The promotion might include direct marketing, advertising, personal branding,
sales promotion, etc.

What is 7 P of Marketing:
The 7Ps model is a marketing model that modifies the 4Ps model. As Marketing mix 4P is
becoming an old trend, and nowadays, marketing business needs deep understanding of the rise in
new technology and concept. So, 3 more new P’s were added in the old 4Ps model to give a deep
understanding of the concept of the marketing mix.

People in Marketing Mix:

The company’s employees are important in marketing because they are the ones who deliver the
service to clients. It is important to hire and train the right people to deliver superior service to the
clients, whether they run a support desk, customer service, copywriters, programmers…etc. It is
very important to find people who genuinely believe in the products or services that the particular
business creates, as there is a huge chance of giving their best performance. Adding to it, the
organisation should accept the honest feedback from the employees about the business and should
input their own thoughts and passions which can scale and grow the business.

Process in Marketing Mix:

We should always make sure that the business process is well structured and verified regularly to
avoid mistakes and minimize costs. To maximise the profit, It’s important to tighten up the
enhancement process.

Physical Evidence in Marketing Mix:

In the service industries, there should be physical evidence that the service was delivered. A
concept of this is branding. For example, when you think of “fast food”, you think of KFC. When
you think of sports, the names Nike and Adidas come to mind.

Marketing Mix Example:

This article will go through a marketing mix example of a popular cereals company. At first, the
company targeted older individuals who need to keep their diet under control, this product was
introduced. However, after intense research, they later discovered that even young people need to
have a healthy diet. So, this led to the development of a cereal’s product catered to young people.
In accordance with all the elements of the marketing mix strategy, the company identified the
product, priced it correctly, did tremendous promotions and availed it to the customers. This
marketing mix example belongs to Honeycomb, one of the most renowned companies in the
3

cereal niche. Following these rules clearly has managed to make the company untouchable by all
the other competitors in the market.
This makes Honeycomb, the giant we know and love today to eat as morning breakfast!

Marketing Mix Product

All products can be broadly classified into 3 main categories. These are :

1. Tangible products: These are items with an actual physical presence such as a car, an electronic
device, and an item of clothing or a consumer good.
2. Intangible products: These are items that have no physical presence but can be felt indirectly.
An insurance policy is an example of this. Online items such as software, applications or even
music and video files are also intangible products.
3. Services: Services are also intangible products but they are the result of an economic activity that
does not result in ownership. It is a process that creates benefits for customers. Services depend
highly on who is performing them and remain difficult to reproduce exactly.

Importance of Marketing Mix

The marketing mix is a remarkable tool for creating the right marketing strategy and its
implementation through effective tactics. The assessment of the roles of your product, promotion,
price, and place plays a vital part in your overall marketing approach. Whereas the marketing mix
strategy goes hand in hand with positioning, targeting, and segmentation. And at last, all the
elements, included in the marketing mix and the extended marketing mix, have an interaction with
one another.

1. Market Analysis and Selection

The full segmentation, targeting and positioning process is the fundamental concept in the
understanding of marketing strategies of the firm. Following are the main steps of segmenting,
targeting and positioning:

 Defining the market: the definition of the total market is necessary for segmenting it. When the
market is segmented, each segment should be decided such a way that each segment has same
type of customers whose needs and requirements are same.
 Creating market segments: Different variables and segments of the markets are to be studied
which are important for the segmentation of the market.
4

 Evaluating segments for marketing: after the segmentation of the markets, the important step comes is to
evaluate the segments using a set criterion so as to analyse whether it is usable and logical. The various
segments to be checked are whether the products are as per the needs of the customers, the customers are
approachable, and so on.
 Constructing segment profile: after evaluation of the segments, segment profile is constructed. Segment
profiles are the detailed description about the numerous customers to be covered, their needs, preferences,
behaviors, demographics, shopping styles and so on.
 Evaluating the effectiveness of each segment: the available market data and consumer research findings are
then added to the description of the segments. Using the combined information, the firm then analyses each
segment on the basis of the overall attractiveness of the segment.
 Selecting target market: using the detailed information available for each segment, then the company
decides to use the appropriate one for each segment. The numerous factors to be considered while choosing
the target markets are firm strategy; attractiveness of segment, firm’s ability to firmly compete and so on.
 Developing positioning strategy: firms have to make strategies for launching its product in the target market.
 Developing and implementing marketing mix: after deciding the positioning strategy the firm ha to
implement it. For implementation, marketing mix is developed which supports the position of the product in
the market. This consists of designing of suitable products, setting up suitable prices, deciding suitable
channel of distribution and effective promotional program.
 Review of the performance: after a period of time, the firm has to review its performance regularly. In this
changing marketing environment, the marketer has to continuously monitor its marketing mix so that the
necessary changes could be made in it.

For example: the small car segmentation for the Indian Automobile industry to make a big roar globally. The
small cars segment in India is reviving up for bigger and better things. Gone are the days when Indian roads
were populated with the Ambassadors or the Premier Padmini. Now the roads are mainly filled with the
small car segments. All the major car manufacturing companies are launching small cars. Tata launched the
world’s cheapest car “Nano” with 33 bhp petrol engine to grab the market.

Market segmentation, targeting, and positioning are three key concepts in marketing that are used to identify
and target specific groups of consumers with tailored marketing messages. Here's a detailed explanation of
each concept, along with an example:

Market segmentation

Market segmentation involves dividing a large, heterogeneous market into smaller, more homogeneous
groups of consumers who share similar needs, preferences, and characteristics. The goal of segmentation is
to identify specific customer segments that a company can target with customized marketing strategies.
Market segmentation can be based on a wide range of factors, including demographics (age, gender,
income), psychographics (values, interests, lifestyle), geographic location, and behavior (purchase history,
product usage).

Example: A company that sells athletic footwear may segment its market based on demographics, targeting
younger consumers who are more likely to engage in sports and physical activity. It may also segment its
market based on psychographics, targeting consumers who are health-conscious and value fitness and
exercise.

Targeting

Once a company has identified specific market segments, it must decide which segments to target with its
marketing efforts. Targeting involves evaluating the attractiveness of each segment and selecting the
5

segments that offer the greatest potential for profitability and growth. Factors to consider when evaluating
market segments include size, growth potential, competition, and fit with the company's strengths and
resources.

Example: Based on its market segmentation analysis, the athletic footwear company may decide to target
the younger demographic segment that is interested in sports and physical activity. It may also target
consumers in certain geographic regions where there is a high demand for athletic footwear.

Positioning

Once a company has identified its target market segments, it must develop a positioning strategy that
differentiates its products or services from those of its competitors. Positioning involves creating a unique
value proposition that resonates with the target audience and communicates the benefits and advantages of
the company's offerings. Effective positioning can help a company establish a strong brand identity and
build customer loyalty.

Example: The athletic footwear company may position its products as high-quality, durable, and designed
specifically for athletes and fitness enthusiasts. It may emphasize the features and benefits of its products,
such as advanced cushioning technology, breathable materials, and superior performance. It may also use
marketing messages that resonate with its target audience, such as "Unleash your inner athlete" or "Take
your workouts to the next level with our cutting-edge footwear."

In summary, market segmentation, targeting, and positioning are key concepts in marketing that are used to
identify and target specific groups of consumers with customized marketing messages. By focusing on the
needs and preferences of its target audience and developing a unique value proposition, a company can
increase its chances of success and build a loyal customer base.

What is Consumer Buying Behavior?

Definition of Buying Behavior:

Buying Behavior is the decision processes and acts of people involved in buying and using products.

Need to understand:

 why consumers make the purchases that they make?

 what factors influence consumer purchases?
 the changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze
buying behavior for:

 Buyer’s reactions to a firm’s marketing strategy have a great impact on the firm’s success.
 The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility
to) customers, therefore need to analyze the what, where, when and how consumers buy.
 Marketers can better predict how consumers will respond to marketing strategies.

Stages of the Consumer Buying Process

6

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only
one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always
include all 6 stages, determined by the degree of complexity...discussed next.

The 6 stages are:

1. Problem Recognition(awareness of need)--difference between the desired state and the actual condition.
Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat.
Can be stimulated by the marketer through product information--did not know you were deficient? I.E., see
a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.
2. Information search--
o Internal search, memory.
o External search if you need more information. Friends and relatives (word of mouth). Marketer dominated
sources; comparison shopping; public sources etc.

A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

o chinese food
o indian food
o burger king
o klondike kates etc
3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not
want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, indian
gets highest rank etc.
If not satisfied with your choice then return to the search phase. Can you think of another restaurant? Look
in the yellow pages etc. Information from different sources may be treated differently. Marketers try to
influence by "framing" alternatives.
4. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made
the right decision. This can be reduced by warranties, after sales communication etc.
After eating an indian meal, may think that really you wanted a chinese meal instead.

Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:

 Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular
situation.
 Buyers level of involvement determines why he/she is motivated to seek information about a certain
products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the
higher the risk the higher the involvement. Types of risk:

 Personal risk
 Social risk
7

 Economic risk

The four type of consumer buying behavior are:

 Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items;
need very little search and decision effort; purchased almost automatically. Examples include soft drinks,
snack foods, milk etc.
 Limited Decision Making--buying product occasionally. When you need to obtain information about
unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for
information gathering. Examples include Clothes--know product class but not the brand.
 Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought
products. High degree of economic/performance/psychological risk. Examples include cars, homes,
computers, education. Spend alot of time seeking information and deciding.
Information from the companies MM; friends and relatives, store personnel etc. Go through all six stages of
the buying process.
 Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from
one category to the next.
For example:
Going out for dinner for one person may be extensive decision making (for someone that does not go out
often at all), but limited decision making for someone else. The reason for the dinner, whether it is an
anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision
making.

Categories that Effect the Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following three factors:

1. Personal
2. Psychological
3. Social

The marketer must be aware of these factors in order to develop an appropriate MM for its target market.

Personal

Unique to a particular person. Demographic Factors. Sex, Race, Age etc.

Who in the family is responsible for the decision making.
Young people purchase things for different reasons than older people.

Psychological factors

Psychological factors include:

 Motives--

A motive is an internal energizing force that orients a person's activities toward satisfying a need or
achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better
8

develop a marketing mix.

MASLOW hierarchy of needs!!

o Physiological
o Safety
o Love and Belonging
o Esteem
o Self Actualization

Need to determine what level of the hierarchy the consumers are at to determine what motivates their
purchases.

Handout...Nutrament Debunked...

Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at consumers that needed to
receive additional energy from their drinks after exercise etc., a fitness drink. It was therefore targeted at
consumers whose needs were for either love and Belonging or esteem. The product was not selling well, and
was almost terminated. Upon extensive research it was determined that the product did sell well in inner-city
convenience stores. It was determined that the consumers for the product were actually drug addicts who
couldn't not digest a regular meal. They would purchase Nutrament as a substitute for a meal. Their
motivation to purchase was completely different to the motivation that B-MS had originally thought. These
consumers were at the Physiological level of the hierarchy. BM-S therefore had to redesign its MM to better
meet the needs of this target market.
Motives often operate at a subconscious level therefore are difficult to measure.

 Perception--

What do you see?? Perception is the process of selecting, organizing and interpreting information inputs to
produce meaning. IE we chose what info we pay attention to, organize it and interpret it.
Information inputs are the sensations received through sight, taste, hearing, smell and touch.

Selective Exposure-select inputs to be exposed to our awareness. More likely if it is linked to an event,
satisfies current needs, intensity of input changes (sharp price drop).

Selective Distortion-Changing/twisting current received information, inconsistent with beliefs.

Advertisers that use comparative advertisements (pitching one product against another), have to be very
careful that consumers do not distort the facts and perceive that the advertisement was for the competitor. A
current example...MCI and AT&T...do you ever get confused?

Selective Retention-Remember inputs that support beliefs, forgets those that don't.
Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30 minutes-60% of
purchases are unplanned. Exposed to 1,500 advertisement per day. Can't be expected to be aware of all these
inputs, and certainly will not retain many.

Interpreting information is based on what is already familiar, on knowledge that is stored in the memory.
9

Handout...South Africa wine....

Problems marketing wine from South Africa. Consumers have strong perceptions of the country, and hence
its products.

 Ability and Knowledge--

Need to understand individuals capacity to learn. Learning, changes in a person's behavior caused by
information and experience. Therefore to change consumers' behavior about your product, need to give them
new information re: product...free sample etc.

South Africa...open bottle of wine and pour it!! Also educate american consumers about changes in SA.
Need to sell a whole new country.

When making buying decisions, buyers must process information.

Knowledge is the familiarity with the product and expertise.

Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of a
product.
Non-alcoholic Beer example: consumers chose the most expensive six-pack, because they assume that the
greater price indicates greater quality.

Learning is the process through which a relatively permanent change in behavior results from the
consequences of past behavior.

 Attitudes--

Knowledge and positive and negative feelings about an object or activity-maybe tangible or intangible,
living or non- living.....Drive perceptions

Individual learns attitudes through experience and interaction with other people.
Consumer attitudes toward a firm and its products greatly influence the success or failure of the firm's
marketing strategy.

Handout...Oldsmobile.....

Oldsmobile vs. Lexus, due to consumers attitudes toward Oldsmobile (as discovered by class exercise) need
to disassociate Aurora from the Oldsmobile name.

Exxon Valdez-nearly 20,000 credit cards were returned or cut-up after the tragic oil spill.

Honda "You meet the nicest people on a Honda", dispel the unsavory image of a motorbike rider, late 1950s.
Changing market of the 1990s, baby boomers aging, Hondas market returning to hard core. To change this
they have a new slogan "Come ride with us".

Attitudes and attitude change are influenced by consumers personality and lifestyle.

Consumers screen information that conflicts with their attitudes. Distort information to make it consistent
and selectively retain information that reinforces our attitudes. IE brand loyalty.
10

There is a difference between attitude and intention to buy (ability to buy).

 Personality--

all the internal traits and behaviors that make a person unique, uniqueness arrives from a person's heredity
and personal experience. Examples include:

o Workaholism
o Compulsiveness
o Self confidence
o Friendliness
o Adaptability
o Ambitiousness
o Dogmatism
o Authoritarianism
o Introversion
o Extroversion
o Aggressiveness
o Competitiveness.

Traits effect the way people behave. Marketers try to match the store image to the perceived image of their
customers.

There is a weak association between personality and Buying Behavior, this may be due to unreliable
measures. Nike ads. Consumers buy products that are consistent with their self concept.

 Lifestyles--

Recent US trends in lifestyles are a shift towards personal independence and individualism and a preference
for a healthy, natural lifestyle.

Lifestyles are the consistent patterns people follow in their lives.

EXAMPLE healthy foods for a healthy lifestyle. Sun tan not considered fashionable in US until 1920's. Now
an assault by the American Academy of Dermatology.

Handout...Here Comes the Sun to Confound Health Savvy Lotion Makers..

Extra credit assignment from the news group, to access Value and Lifestyles (VALS) Program, complete the
survey and Email [email protected] the results. This is a survey tool that marketers can use to better understand
their target market(s).
Return to Contents List

Social Factors

Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family, reference groups,
social class and culture.
11

 Opinion leaders--

Spokespeople etc. Marketers try to attract opinion leaders...they actually use (pay) spokespeople to market
their products. Michael Jordon (Nike, McDonalds, Gatorade etc.)

Can be risky...Michael Jackson...OJ Simpson...Chevy Chase

 Roles and Family Influences--

Role...things you should do based on the expectations of you from your position within a group.
People have many roles.
Husband, father, employer/ee. Individuals role are continuing to change therefore marketers must continue
to update information.

Family is the most basic group a person belongs to. Marketers must understand:

o that many family decisions are made by the family unit

o consumer behavior starts in the family unit
o family roles and preferences are the model for children's future family (can reject/alter/etc)
o family buying decisions are a mixture of family interactions and individual decision making
o family acts an interpreter of social and cultural values for the individual.

The Family life cycle: families go through stages, each stage creates different consumer demands:

o bachelor stage...most of BUAD301

o newly married, young, no children...me
o full nest I, youngest child under 6
o full nest II, youngest child 6 or over
o full nest III, older married couples with dependant children
o empty nest I, older married couples with no children living with them, head in labor force
o empty nest II, older married couples, no children living at home, head retired
o solitary survivor, in labor force
o solitary survivor, retired
o Modernized life cycle includes divorced and no children.

Handout...Two Income Marriages Are Now the Norm

Because 2 income families are becoming more common, the decision maker within the family unit is
changing...also, family has less time for children, and therefore tends to let them influence purchase
decisions in order to alleviate some of the guilt. (Children influence about $130 billion of goods in a year)
Children also have more money to spend themselves.

 Reference Groups--

Individual identifies with the group to the extent that he takes on many of the values, attitudes or behaviors
of the group members.

Families, friends, sororities, civic and professional organizations.

Any group that has a positive or negative influence on a persons attitude and behavior.
12

Membership groups (belong to)

Affinity marketing is focused on the desires of consumers that belong to reference groups. Marketers get the
groups to approve the product and communicate that approval to its members. Credit Cards etc.!!

Aspiration groups (want to belong to)

Disassociate groups (do not want to belong to)
Honda, tries to disassociate from the "biker" group.

The degree to which a reference group will affect a purchase decision depends on an individuals
susceptibility to reference group influence and the strength of his/her involvement with the group.

 Social Class--

an open group of individuals who have similar social rank. US is not a classless society. US criteria;
occupation, education, income, wealth, race, ethnic groups and possessions.

Social class influences many aspects of our lives. IE upper middle class Americans prefer luxury cars
Mercedes.

o Upper Americans-upper-upper class, .3%, inherited wealth, aristocratic names.

o Lower-upper class, 1.2%, newer social elite, from current professionals and corporate elite
o Upper-middle class, 12.5%, college graduates, managers and professionals
o Middle Americans-middle class, 32%, average pay white collar workers and blue collar friends
o Working class, 38%, average pay blue collar workers
o Lower Americans-lower class, 9%, working, not on welfare
o Lower-lower class, 7%, on welfare

Social class determines to some extent, the types, quality, quantity of products that a person buys or uses.

Lower class people tend to stay close to home when shopping, do not engage in much prepurchase
information gathering.
Stores project definite class images.

Family, reference groups and social classes are all social influences on consumer behavior. All operate
within a larger culture.

 Culture and Sub-culture--

Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people
and transmitted to the next generation.

Culture also determines what is acceptable with product advertising. Culture determines what people wear,
eat, reside and travel. Cultural values in the US are good health, education, individualism and freedom. In
american culture time scarcity is a growing problem. IE change in meals. Big impact on international
marketing.

Handout...Will British warm up to iced tea?

No...but that is my opinion!!...Tea is a part of the British culture, hot with milk.
13

Different society, different levels of needs, different cultural values.

Culture can be divided into subcultures:

o geographic regions
o human characteristics such as age and ethnic background.

IE West Coast, teenage and Asian American.

Culture effects what people buy, how they buy and when they buy.

Organizational buying, also known as business-to-business (B2B) buying, refers to the process by which
organizations and businesses purchase goods, services, or raw materials to support their operations. It
involves purchasing decisions made on behalf of the organization rather than for personal use.
Organizational buying is characterized by several key aspects:

 Buying Objective: Organizational buying is driven by the objective of meeting the needs and requirements
of the organization. The primary goal is to support the organization's operations, improve efficiency, and
achieve specific business outcomes, such as reducing costs, increasing productivity, or enhancing
competitiveness.

 Complex Decision-Making Process: The decision-making process in organizational buying tends to be

more complex compared to consumer buying. It often involves multiple stakeholders, including various
departments within the organization, such as procurement, finance, operations, and user departments. The
decision-making process may follow a formalized procedure with evaluation criteria, negotiations, and
approvals.

 Rational Decision-Making: Organizational buying decisions are typically rational and based on a thorough
evaluation of alternatives. These decisions focus on factors such as quality, price, reliability, compatibility
with existing systems, after-sales support, and supplier reputation. Emphasis is placed on the value and
benefits that the product or service can provide to the organization.

 Long-Term Relationships: Organizational buying often involves establishing long-term relationships

between the buying organization and the supplier. These relationships are built on trust, reliability, and
mutual understanding. Continuous support, after-sales service, and customization are crucial elements in
fostering these relationships.

 Volume and Frequency: Organizational buying involves larger quantities and higher frequency of
purchases compared to consumer buying. Organizations often require ongoing supplies of products or
services to support their operations. This leads to a higher demand volume and the need for consistent and
reliable delivery.

 Professional Buyers: Organizational buying is typically carried out by professional buyers or procurement
specialists who have in-depth knowledge of the organization's requirements, industry trends, and supplier
capabilities. These buyers have a strong focus on negotiating the best terms, managing supplier
relationships, and ensuring that the organization's buying objectives are met.
14

Differences from Consumer Buying

Organizational buying differs from consumer buying in several keyways:

 Buying Purpose: Organizational buying is driven by the need to support the organization's operations,
enhance efficiency, and achieve specific business objectives, whereas consumer buying is driven by personal
needs, preferences, and desires.

 Decision-Making Complexity: Organizational buying involves a more complex decision-making process

with multiple stakeholders, formalized procedures, and evaluation criteria. Consumer buying decisions are
generally simpler and more influenced by personal preferences, emotions, and individual needs.

 Relationship Focus: Organizational buying emphasizes long-term relationships between the buying
organization and the supplier. In consumer buying, relationships are generally more transactional and less
focused on long-term partnerships.

 Volume and Frequency: Organizational buying involves larger quantities and higher frequency of
purchases compared to consumer buying, which often involves smaller quantities and less frequent
purchases.

 Information Sources: Organizational buyers rely heavily on formal information sources, such as supplier
evaluations, specifications, and industry reports. Consumer buyers, on the other hand, may rely on various
sources, including personal experiences, recommendations from friends and family, online reviews, and
advertising.

Understanding the characteristics and differences between organizational buying and consumer buying is
crucial for marketers to develop effective marketing strategies and tailor their approach to meet the specific
needs and preferences of each buying context.

What is the consumer decision-making process?

The consumer decision-making process involves the following:

 Figuring out what they need.

 Gathering information.
 Weighing their options.
 Deciding what to buy

Consumer behavior can be affected by economic and psychological factors and environmental factors like
social and cultural values.

Consumer decision-making is a complicated process that involves everything from recognizing a problem to
doing things after buying something. Every consumer has different needs in their daily lives, and these needs
cause them to make other decisions.

Depending on what a consumer feels about a specific product, making decisions can be challenging because
It involves comparing, evaluating, choosing, and buying from a wide range of products.
15

Marketers need to understand and realize the basic problem of how consumers make decisions to make their
products and services stand out from others in the market.

5 important stages of the consumer decision-making process

We will look at the five stages of a consumer’s decision. There are many changes have happened, but the
five steps are surprisingly the same. Let’s take a look:

Stage 1: Need recognition

The first stage in the consumer decision-making process for a consumer is to figure out what they need. The
most important thing that leads someone to buy a product or service is their need for it. All buying decisions
are based on what people need.

Finding out what the customer needs is the first move to evaluating the Consumer Decision Making Process.
Finding out what needs and wants the target market has can help with many marketing decisions.

Stage 2: Searching and gathering information

People are usually skeptical when they have to choose between options. So they need all the facts before
they spend their money. After figuring out their need, the potential consumer moves on to the second stage:
searching for and gathering information.

The buyer considers all the benefits and drawbacks of the purchase at this stage of their decision-making
process. Because of changing styles and online shopping sites, consumers know much more about what they
want to buy and can make better choices.

Consumers can get information from many different places, like books, magazines, the Internet, and reviews
of products by other people. It’s important to make a purchase decision, so the consumer shouldn’t be in a
hurry when learning about the products and brands on the market.

Here are some places where you can find information:

 Commercial Information Sources: Important types include digital media, newsletters, TV ads,
salespeople, and public displays.
 Previous Purchase Experiences: It is consumers’ past experiences with using a product.
 Personal Contacts: This is a very reliable source of information and impacts the consumer’s mind the most.
Consumers usually talk to their friends, family, coworkers, and acquaintances about their needs and interests
in different products and then use their advice to decide what to buy.

Stage 3: Considering the alternatives

The third stage in the consumer decision-making process is to carefully look at all the alternatives and
substitutes on the market. Once consumers know what they need and where to get it, they will start looking
for the best deals or options.
16

At this stage, the consumer compares options based on price, product quality, quantity, value-added features,
or other essential factors. Before choosing the product that best meets your needs, look at customer reviews
and compare prices for the alternatives.

After finding helpful information, the consumer chooses the best product on the market based on their taste,
style, income, or preference.

Stage 4: Buying the product or service

After going through the above stages, the customer decides what to buy and where to buy it. The consumer
makes a smart choice to buy a product based on his needs and wants after he has looked at all the facts.

Needs and wants are often sparked by marketing campaigns, recommendations from friends and family, or
sometimes by both.

Stage 5: Post-purchase evaluation

In the last stage of the consumer decision-making process, the consumer evaluates or analyzes the product
they bought. They look at how helpful the product is, how satisfied they are with it, and how much it is
worth to meet their needs.

If consumers know that the product they bought was worth what they paid for and met their expectations,
they will stick with that product.

Module 2

Product Line Length and Depth

Companies typically sell many products, some of which are singular and some of which are part of a larger
category of offerings. So let’s start with a product item, a particular good that a company sells. For
example, Domino’s Pizza sells its original hand-tossed pizza as a product item on its menu.

A company will also sell a product item as a part of a broader product line. A product line is a set of
products that are similar or complementary. For example, Domino’s sells crunchy thin, handmade pan,
Brooklyn style, and gluten-free crust along with its hand-tossed pizza crust as a part of a product line.

A product mix contains all the products that a company sells. In addition to pizza, Domino’s sells salads,
sandwiches, appetizers, pasta, desserts, and beverages. These products make up the product mix for
Domino’s

There are benefits to brands in organizing into product lines and mixes. For example, if you have ever added
a chocolate lava cake to your Domino’s order, you know firsthand that products within a mix are easily
cross-sold. You may have also seen a commercial where Domino’s promotes its product mix, creating
efficiencies in its media advertising spend. In addition, breadth of products provides some assurance that
competitors will not compete in the same space. Finally, you may have noticed that some appetizers and
desserts are packaged in the same box, creating supply efficiencies.
17

On the flip side, if product offerings are too similar, they may cannibalize (or steal from) the original
product, resulting in lower profitability. For example, if Domino’s had 30 types of pizzas, the stores might
have to stock extra ingredients to make those pizzas, but Domino’s might not sell more pizzas as a whole
because the product line offerings are too similar.

A product item, like a pizza from Domino’s Pizza, is part of a company’s product mix—all of the products it
sells.
Product Line Depth and Product Mix Width

Product line depth refers to the number of products in the line. Using our previous example, Domino’s
carries five products in the pizza product line. Meanwhile, the product mix width refers to the number of
product lines a brand carries. Domino’s offers seven product lines within its product mix (pizza, salads,
sandwiches, appetizers, pasta, desserts, and beverages).

The product line depth and product mix width allow a company to diversify its offerings to maximize
customer loyalty and mitigate risk. For example, if a customer enjoys Domino’s Pizza, they may extend
their order to include one of the other offerings in the product mix. On the flip side, if a customer has a bad
experience with the pizza, they might try chicken or pasta instead next time. However, it is essential to note
that too many offerings can cannibalize one another and drive up the cost of goods sold because of the
variations that each product requires.

Product Line Filling and Product Line Stretching

One of the reasons for an ample product line is to leave no room for competitors to solve a customer’s need.
Companies use a product line filling strategy when they add products to the product line to ensure that
competitors do not enter their market. If you wonder why Domino’s has so many pizza toppings, consider
that it might be product line filling at work.

On the other hand, it might make more sense for a company to add product lines. The addition of product
lines is a practice called product line stretching. There are three main ways to stretch a product line:

1. Stretching Downward. A brand introduces a product line that is less expensive than its current offering.
This may open a new target market or change a brand’s positioning in a competitive market. However, it is
essential to consider whether stretching down might shift the brand’s perception or take share from other
product lines. Tesla introduced its Model 3 following its more expensive Model S, following the stretching
downward strategy.4
2. Stretching Upward. A brand introduces a product line that is more expensive than its current offering. This
may increase profitability or reposition the brand. First, however, it is essential to determine whether the
brand has equity in the upward market. Godiva introduced its gold collection to stretch its product line
upward.
3. Stretching Up and Down. A brand can stretch up and down simultaneously. While this has the potential for
great rewards, it also introduces a fair amount of risk. Dell utilizes a strategy to stretch up and down with its
everyday access laptops, creator laptops, and all the way up to its immersive gaming laptops.

Suppose Domino’s wanted to join the wood-fired pizza trend. It could employ an upward product line
stretching strategy to introduce Domino’s to a more upscale market that appreciates wood-fired pizza.

Definition: Product Decision in marketing refers to the company’s mindful decisions, major or minor
regarding their product. It ranks first among the 4Ps of Marketing- Product, Price, Place and
18

Promotion. Organizations take these decisions to attain their objectives and become profitable in the long
run.

Product Decisions are vital marketing decisions to be made at various levels. These decisions broadly cover:

 New Product Development

 Modification or Elimination of existing ones
 Variants and Visual elements
 Product Mix and Line, etc.

However, Warehousing is an activity that does not come under the span of product decisions. This is
because its core function is the storage of goods for selling and distribution as and when required.

The factors affecting product decisions are:

1. Growth
2. Market-share
3. Cash flow
4. Profitability

What is a product?

Anything of value that fulfils the requirement of the end-user is known as a Product. It can be goods or
services, tangible or intangible, physical or psychological. The customers and competitors largely depend
upon the products offered by the company.

Layers or Levels of Product

1. Core or Generic Product

It is the raw product that satisfies the customer’s primary need. The core product is at its raw form, not
bearing any brand name and remains undifferentiated.
For example: – Wheat is a grain that one can consume.
2. Basic Product
The core products differentiated from the rest become the basic product. It adds some necessary features to
the products like Brand Name, Packaging and Label, etc.
For example: – Fortune Chakki Fresh Atta (wheat flour).
3. Expected Product
These products include the key features that customers look forward to. It also contains standard
features that a product should have.
For example: – Chapati is prepared from wheat flour.
4. Augmented Product
To differentiate products from competitors, companies add distinctive features to them. These additions
depend on the market survey conducted for the product. They try to create a Unique Selling Proposition
(USP) for their products.
For example -Brown Bread and Cookies.
5. Potential Product
It refers to all the possible features that a product can have in the future. These features depend on the
market conditions and economic changes.
19

Major Product Decisions

The major product decisions, which are also the types of product decisions, are discussed briefly below:

New Product Decision

A new product incorporates the elements of newness and varies from the existing ones. It may include new
features, qualities or be introduced differently. Besides, adding new products can result in growth,
profitability, increased market share and more.

To remain profitable and maintain sales, organizations need to launch new products. However, the products
may fail, so the marketers must take new product decisions wisely.

The product decisions may include:

1. Original Product
2. Improved Product
3. Modified Product
4. Development of Product
5. Launching Products, etc.

Product Mix

It refers to the aggregate range of products that a company owns. In other words, the total number of
products that a company offers for sale is the product mix of the company.

Product mix decisions depend upon the following four characteristics:

1. Length
2. Width
3. Depth
4. Consistency

There are various decisions the marketers have to take regarding the product mix. It may include:-

1. Expansion
2. Contraction
3. Product Differentiation
4. Deepening and Alteration, etc.

Product line

This refers to a range of closely-related products belonging to the same class. They are sold to the same
customers, having identical attributes marketed by the same distribution channel but for different segments.

The product decision relating to a product line are:

1. Line Stretching
2. Line Filling
20

Design

It indicates the appearance or personality of the product. The marketers have to decide whether to go for
the standard design or the creative design.

Changing the product’s design may be effective but can be risky too. The customer may or may not like the
design and face problems while using the product.

Branding

Branding is one of the vital decisions taken under product decisions. It involves the visual and symbolic
elements of the product.

Branding helps in monitoring the Brand Image, Loyalty and Acceptance.

The marketers distinguish the product using:

1. Band Name
2. Trade Marks
3. Logo
4. Brand Marks, etc.

Packaging

Packaging is the outermost covering of the product. It enables product protection, conveys
information and creates sale appeal. And is not restricted to just the safety of the product.

Packaging has evolved as the medium of marketing. Marketers use packaging

to reposition or renovate their products.

Packaging decisions include:

1. Size
2. Design
3. Innovation
4. Aesthetics
5. Convenience
6. Material
7. Environmental factors

Labelling

The label is a part of the packaging. It contains all the essential details about the product in written form.
Also, it conveys information regarding performance, features, quality and price, etc.

The marketers must perform an in-depth analysis at the time of Labelling. It is a medium of communicating
with customers. Vital decisions based on labelling are:

1. Brand Label
2. Descriptive Label
21

3. Grade Label
4. Informative Labels

Positioning

Positioning builds a unique image of the product in the target audience’s mind. Also, it differentiates
products from others using benefits and attributes in the customer’s mental space.

The product decision concerning positioning are:

1. Segmentation
2. Differentiation
3. Aggregation

Support

Support or Customer Support is the company’s added benefit for the customers. It may be offered to the
end-user by after-sale services, grievances management, and so on. It assists in creating loyal customers and
recurring sales.

Different customer support services possess varied cost structures. Therefore, marketers must make
decisions to reduce costs and improve customer experience.

Product Marketing Ethics

Product marketing ethics is a minor term than Marketing ethics. The marketers must pay attention to the
following ethical issues while marketing:

 Deceitful Practices: The marketers often put faulty or low-quality products for sale without informing
customers. They also ask for additional charges in the name of customer services.
The customers acknowledge it while consuming and are left with no other option than to pay for it.
 Ecofriendly Products: The companies must carry out production considering the statutory guidelines for
pollution control. The product must not harm the environment at any stage, from production to post-
consumption.
The marketers should convey instructions on the packaging about product disposal.
 Quality Products: The companies should produce quality products and disclose complete details. They
should contain important information like ingredients, uses and precautions.
Also, the packaging must mention all the areas of concern related to the product.

Final Words

While market planning, product-related decisions are vital decisions the marketer makes. It includes all the
critical decisions for existing and new products, from development to launch.

The marketers must decide the compelling product mix, packaging, branding, labelling and positioning. It
enables organizations to remain competitive and thrive in the long run.
22

The Concept of Branding

Branding is a type of marketing practice where a company creates a name or a symbol or even a design that
can be easily identifiable, about the belonging of the company. The brand acts as a true representation of the
individuality of the business, and the way the business wants to flourish, this can be perceived from the
brand of that particular company.
A brand concept consists of the core ideas behind a company's branding that pull together its purpose and
goals. A brand concept is all about how a brand makes you feel, which becomes the base to build an entire
brand and marketing strategy.

Branding - “A brand is a name, term, design, symbol, or any other feature that identifies one seller’s good
or service as distinct from those of other sellers” - American Marketing Association.

A brand can be conceived as an idea or an image that people will have in their minds when they think about
specific products and services or even the activities that are associated with the company.

Therefore, this is just not about the physical feature which creates a brand but moreover, it impacts the
feelings of the consumers who develop belief and trust towards the company or in its product. This physical
and emotional sign is triggered when they visualize the name, the logo, the identity, or even listen to the
message communicated.
There are many identical products that flood the market, but brands are always unique. For example, Coke,
Himalayan Products, products of Amul, there are similar, but not identical products of these ‘brands.’
“Branding is endowing products and services with the power of a brand” - Kotler & Keller.

Branding is identified as a process of giving meaning to a specific organization, company, product, or

service by creating and designing an impact in the minds of the consumers. This is actually a strategy that is
designed by the organizations which helps people to quickly identify and experience their brand, which
eventually gives them a reason to choose their products over the competitor’s product.

Features of Branding

The features of Branding are as follows

Competitiveness

For a brand to truly be successful the needs are required to be focused as being competitive in today’s world
is very important. A company has an entire team who is working behind a brand, to make that a hit. A
successful brand goes beyond consumer expectations to give a competitive edge cutting to the industry.

Distinctiveness

To create an identity of the brand, the creation needs to be highly distinctive from the other. The world’s
most popular brands, like Apple, Starbucks, or the BMW cars have successfully created this impact in the
minds of the customers. Take for instance the Apple product which is renowned for its technical approach to
design and technology gets appreciation for the innovation in its products. Starbucks promises services
across the globe. Hence, we see that brands have a distinctive approach always.
23

Consistency

Being consistent is always the catch. It is highly important for the company to remain consistent with the
devotion it does to create the brand. They should maintain the flow of efforts. Consistency will help the
customers be familiar with the brand.

Leadership

The greatest brands in the world are always supported by the leaders who have the power to inspire and
continually aspire for their greatness. This works the same for a sports team, and hence also for a large
corporation or a small business, the most successful business ought to have an influential leader backing
them.

Functions of Branding

The functions of Branding are achieved by a consistent effort. There is a whole team backing up the process
of Branding and making efforts to keep a continued effect on the minds of the customers. Branding is totally
a mind’s game hence; it is the mind that will help the branding to achieve its function effectively.

The features of branding are the actual function of branding as well, as the concept of branding is only
dedicated as an overall process. The functions done by branding are as follows –

1. Differentiation.
2. Authenticity.
3. Value Setting and Centring.
4. Unification.

Importance of Branding in Today’s Age

Any company needs Branding so as to survive in the market and its credibility is built only because of
branding. A product can be differentiated on the basis of brandings such as a bar of chocolate belonging to
two different brands, hypothetically speaking Nestle and Cadbury. Branding is more psychological than
physical as it leaves a deep impact on the consumers. The better a company is able to build its brand, the
more chances are of it retaining its credibility in the market. Branding is one of the most important aspects
of any company, no matter how big or small.

Packaging and Labelling

The packaging is the science, art, and technology of enclosing or protecting products for distribution,
storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of
packages. Packaging can be described as a coordinated system of preparing goods for transport,
warehousing, logistics, sale, and end-use. Packaging contains, protects, preserves, transports, informs, and
sells. In many countries, it is fully integrated into government, business, institutional, industrial, and
personal use. Package labeling or labeling is any written, electronic, or graphic communications on the
packaging or on a separate but associated label. Packaging and Labeling is one of the key functions of
marketing.

The purposes of packaging and package labels

24

Packaging and package labeling have several objectives.

 Physical protection – The objects enclosed in the package may require protection from, among other
things, mechanical shock, vibration, electrostatic discharge, compression, temperature, etc.
 Barrier protection – A barrier from oxygen, water vapor, dust, etc., is often required. Permeation is a
critical factor in design. Some packages contain desiccants or Oxygen absorbers to help extend shelf life.
Modified atmospheres or controlled atmospheres are also maintained in some food packages. Keeping the
contents clean, fresh, sterile, and safe for the intended shelf life is a primary function.
 Containment or agglomeration – Small objects are typically grouped together in one package for
reasons of efficiency. For example, a single box of 1000 pencils require less physical handling than 1000
single pencils. Liquids, powders, and granular materials need containment.
 Information transmission – Packages and labels communicate how to use, transport, recycle, or
dispose of the package or product. With pharmaceuticals, food, medical, and chemical products, some types
of information are required by governments. Some packages and labels also are used for track and trace
purposes.
 Marketing – The packaging and labels can be used by marketers to encourage potential buyers to
purchase the product. Package graphic design and physical design have been important and constantly
evolving phenomenon for several decades. Marketing communications and graphic design are applied to the
surface of the package and (in many cases) the point-of-sale display.
 Security – Packaging can play an important role in reducing the security risks of shipment. Packages
can be made with improved tamper resistance to deter tampering and also can have tamper-evident features
to help indicate tampering. Packages can be engineered to help reduce the risks of package pilferage: Some
package constructions are more resistant to pilferage and some have pilfered indicating seals. Packages may
include authentication seals and use security printing to help indicate that the package and contents are not
counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID tags, or electronic article
surveillance tags that can be activated or detected by devices at exit points and require specialized tools to
deactivate. Using packaging in this way is a means of loss prevention.
 Convenience – Packages can have features that add convenience in distribution, handling, stacking,
display, sale, opening, re-closing, use, dispensing, reuse, recycling, and ease of disposal.
 Portion Control – Single serving or single dosage packaging has a precise number of contents to
control usage. Bulk commodities (such as salt) can be divided into packages that are a more suitable size for
individual households. It also aids the control of inventory: selling sealed one-litre-bottles of milk, rather
than having people bring their own bottles to fill themselves.

Packaging types
Packaging may be looked at as being of several different types. For example, a transport package or
distribution package can be the shipping container used to ship, store, and handle the product or inner
packages. Some identify a consumer package as one which is directed toward a consumer or household.

Packaging may be described concerning the type of product being packaged: medical device packaging,
bulk chemical packaging, over-the-counter drug packaging, retail food packaging, military materiel
packaging, pharmaceutical packaging, etc.
25

It is sometimes convenient to categorize packages by layer or function: "primary", "secondary", etc.

1. Primary packaging is the material that first envelops the product and holds it. This usually is the
smallest unit of distribution or use and is the package that is in direct contact with the contents.
2. Secondary packaging is outside the primary packaging, perhaps used to group primary packages
together.
3. Tertiary packaging is used for bulk handling, warehouse storage, and transport shipping. The most
common form is a palletized unit load that packs tightly into containers.
These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink wrap can be
primary packaging when applied directly to the product, secondary packaging when combining smaller
packages, and tertiary packaging on some distribution packs.
Most physical products must be packaged and labelled. Some packages such as coke bottles are world-
famous. Many marketers have called packaging the fifth P, along with price, product, place, and promotion.
Packaging is the science, art, and technology of enclosing or protecting products for distribution, storage,
sale, and use. The packaging is the activities of designing and producing the container for a product.

Purposes of Packaging

1. Physical protection - The objects enclosed in the package may require protection from, among other
things, shock, vibration, compression, temperature, etc. Eg: Egg, Bottles
2. Barrier Protection - A barrier from oxygen, water vapor, dust, etc., is often required. Controlled
atmospheres are also maintained in some food packages, keeping the contents clean & fresh. Eg: Fruits,
Vegetables
3. Containment or Agglomeration - Small objects are typically grouped together in one package for
reasons of efficiency. Eg: Chocolates, Biscuits
4. Marketing - The packaging and labels can be used by marketers to encourage potential buyers to
purchase the product. Package graphic design and physical design have been an important phenomenon. Eg:
Chips, Biscuits
5. Security - Packages can be made with improved tamper resistance to deter tampering and also can
have tamper-evident features to help indicate tampering. Eg: Coke drinks, water bottles
6. Convenience - Packages can have features that add convenience in distribution, handling, stacking,
display, sale, opening, re-closing, use, dispensing, and reuse. Eg: Sauce, Jam
7. Portion Control - Single-serving packaging has a precise amount of contents to control usage.
Commodities can be divided into packages that are a more suitable size for individual households. Eg: Milk,
Ice creams.

Labeling

Labeling is any written, electronic, or graphic communications on the packaging or on a separate but
associated label. Display of information about a product on its container, packaging, or the product itself.

1. Brand Identification - Labeling helps in the identification and principal place of business of the
person by or for whom the prepackaged product was manufactured, processed, produced, or packaged for
resale
26

2. Description - Labels provide information regarding the food product. It describes the contents,
nutritional values, cost, product usage methods, shelf life, etc.
3. Promotion - Finally labels help in promoting the product through attractive and bright graphics
replacing paper labels glued on cans and bottles.
It is very important to the identification of a product with the brand name and description. Labeling may
help to become unique in the target customer audience and market the product directly to the customer. As
well as it may include measures, ingredients, health and safety instructions, production and expiration dates,
brand ownership, and contact information to communicate with the customer straightly. This guidance is
very important to maintain customer service as a key function of marketing.

Discount and Rebates

Maximization of sales is the primary business objective, for which various strategies are followed by the
company. One of those strategies is providing a discount or rebate to the shoppers to induce them buy more
quantity of goods. The discount is a most common strategy used by the entities to enhance its sales, in
which a deduction is made in the price of the product.

On the contrary, the rebate is a particular kind of discount or say partial refund of the product price by seller
to the buyer, allowed to those customers whose purchases reach the specified volume or quantity.

Whenever, people get a reduction in the price at the time of purchases, it is a discount, but in reality it is
rebate. So, every customer and seller, must be known about the differences between discount and rebate.

Comparison Chart
BASIS FOR
DISCOUNT REBATE
COMPARISON

Meaning A deduction in the purchase price The rebate is the amount of the purchase
given to the buyer, by the seller for price refunded by the seller to the buyer,
various reasons, is known as when the quantity purchased reaches the
discount. specified limit.

Type of strategy Marketing strategy Sales promotion strategy

When is it When advance is paid or payment is At the time of making full payment.
provided? made in time.

Available to All the customers Specific customers

Given on Each item purchased by the Only if the value of goods or quantity
customer. purchased reaches the specified limit.

Definition of Discount

The concession allowed by the seller to the buyer on the par value of the invoice is known as Discount. It is
given on the gross amount of the product, and the buyer has to pay the net amount of it which is equal to
gross amount less discount.
27

Discount is allowed to all the customers, to induce them to make earlier payments or to make payments
within a short period. Sometimes, it is provided to increase sales volume or to reward the old customers.
There are two types of discount:

 Trade Discount: The discount which is allowed on the list price is known as Trade Discount. It is given to
all the customers, whether they are making credit purchases or cash purchases. It is allowed to the customers
to encourage sales in large quantities. The rate of discount varies according to the order placed by the
customers.
 Cash Discount: The discount which is allowed to the customer only if he makes a cash payment for the
items purchased is known as Cash Discount. It is granted only to the customers who makes immediate
payment. The discount is shown in the books of accounts.

Definition of Rebate

The rebate is a type of allowance provided to customers on goods purchased as a deduction in the catalogue
price and to the assessee for tax paid or to the tenant for rent paid for the amount paid more than the amount
needs to be paid.

The rebate is allowed to customers, when their purchase in quantity or in value, reaches a specified limit.
The amount returned to the buyer by the seller, at the time of making complete payment for the purchases is
known as a rebate. It is a tool used by the sellers to promote sales in large quantities. The amount of rebate
provided to the buyer is pre-decided by the seller.

The rebate is also allowed to the assesses if they pay taxes more than the amount to be paid. It is the money
refunded by the tax authorities to the assessee. Similarly, in the case of rent and utility bills, the rebate is
allowed.

Key Differences Between Discount and Rebate

The following are the major differences between discount and rebate:

1. The discount is a reduction in the face value of the goods allowed to the customers for making payment in
stipulated time or purchasing products in big lots. Rebate, on the other hand, is a special kind of discount
allowed to the customers when the purchases made by the buyer crosses the defined limit, in the specified
period.
2. The discount is a marketing strategy, but Rebate is a sales strategy.
3. Discount is allowed when the payment is made in time, whereas rebate is allowed when the full payment is
made to the seller for purchases.
4. Discount is available to all the customers. Conversely, Rebate is available to those customers who fulfil the
specific criteria.
5. Discount is given for each item purchased by the customer; however, the rebate is given as a deduction in
the list price provided the required conditions are satisfied.

Conclusion

Therefore, from the above discussion, it is quite clear that the discount and rebate are two very different
things. Discount is a very common tool for raising sales. It is frequently given to the shoppers, to retain them
for a long period. Rebate is occasionally given, only to those customers, which fulfils the specific criteria.
So, the rebate is not open for every person, but the discount is available to all the customers.
28

What is a Distribution Channel?

A distribution channel is a path or route decided by the company to deliver its good or service to the
customers. The route can be as short as a direct interaction between the company and the customer or can
include several interconnected intermediaries like wholesalers, distributors, retailers, etc.

Hence, a distribution channel can also be referred to as a set of interdependent intermediaries that help make
a product available to the end customer.

Functions of Distribution Channels

In order to understand the importance of distribution channels, businesses need to understand that it doesn’t
just bridge the gap between the producer of a product and its user.

Distribution channels provide time, place, and ownership utility. They make the product available when,
where, and in which quantities the customer wants. But other than these transactional functions,
distribution channels are also responsible to carry out the following functions:

 Logistics and Physical Distribution: Distribution channels are responsible for the assembly, storage,
sorting, and transportation of goods from manufacturers to customers.
 Facilitation: Channels of distribution even provide pre-sale and post-purchase services like financing,
maintenance, information dissemination and channel coordination.
 Creating Efficiencies: This is done in two ways: bulk breaking and creating assortments. Wholesalers and
retailers purchase large quantities of goods from manufacturers but break the bulk by selling a few at a time
to many other channels or customers. They also offer different types of products in a single place which is a
huge benefit to customers as they don’t have to visit different retailers for different products.
 Sharing Risks: Since most of the channels buy the products beforehand, they also share the risk with the
manufacturers and do everything possible to sell it.
 Marketing: Distribution channels are also called marketing channels because they are among the
core touchpoints where many marketing strategies are executed. They are in direct contact with the end
customers and help the manufacturers in propagating the brand message and product benefits and other
benefits to the customers.
Types Of Distribution Channels

Channels of distribution can be divided into direct channel and indirect channels. Indirect channels can
further be divided into one-level, two-level, and three-level channels based on the number of intermediaries
between manufacturers and customers.

Direct Channel Or Zero-level Channel (Manufacturer to Customer)

Direct selling is one of the oldest forms of selling products. It doesn’t involve the inclusion of an
intermediary and the manufacturer gets in direct contact with the customer at the point of sale. Some
examples of direct channels are peddling, brand retail stores, taking orders on the company’s website, etc.
Direct channels are usually used by manufacturers selling perishable goods, expensive goods, and whose
target audience is geographically concentrated. For example, bakers, jewellers, etc.
29

Indirect Channels (Selling Through Intermediaries)

When a manufacturer involves a middleman/intermediary to sell its product to the end customer, it is said to
be using an indirect channel. Indirect channels can be classified into three types:

One-level Channel (Manufacturer to Retailer to Customer)

Retailers buy the product from the manufacturer and then sell it to the customers. One level channel of
distribution works best for manufacturers dealing in shopping goods like clothes, shoes, furniture, toys, etc.

Two-Level Channel (Manufacturer to Wholesaler to Retailer to Customer)

Wholesalers buy the bulk from the manufacturers, break it down into small packages and sell them to
retailers who eventually sell them to the end customers. Goods that are durable, standardised and somewhat
inexpensive and whose target audience isn’t limited to a confined area use two-level channel of distribution.

Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to Customer)

Three-level channel of distribution involves an agent besides the wholesaler and retailer who assists in
selling goods. These agents come in handy when goods need to move quickly into the market soon after the
order is placed. They are given the duty to handle the product distribution of a specified area or district in
return for a certain percentage of commission.

The agents can be categorised into super stockists and carrying and forwarding agents. Both these agents
keep the stock on behalf of the company.

Super stockists buy the stock from manufacturers and sell them to wholesalers and retailers in their area.
Whereas, carrying and forwarding agents work on a commission basis and provide their warehouses and
shipment expertise for order processing and last-mile deliveries.

Manufacturers opt for a three-level channel when the userbase is spread all over the country and the demand
for the product is very high.

Dual Distribution

When a manufacturer uses more than one distribution channel simultaneously to reach the end-user, he is
said to be using the dual distribution strategy. They may open their own showrooms to sell the product
directly while at the same time use internet marketplaces and other retailers to attract more customers.

A perfect example of goods sold through dual distribution is smartphones.

Distribution Channels for Services

Unlike tangible goods, services can’t be stored. But this doesn’t mean that all the services are always
delivered using the direct channels.
30

With the advent of the internet, online marketplaces, the aggregator business model, and the on-demand
business model, even services now use intermediaries to reach the final customers.

The Internet as a Distribution Channel

The internet has revolutionised the way manufacturers deliver goods. Other than the traditional direct and
indirect channels, manufacturers now use marketplaces like Amazon (Amazon also provide warehouse
services for manufacturers’ products) and other intermediaries like aggregators (Uber, Instacart) to deliver
the goods and services. The internet has also resulted in the removal of unnecessary middlemen for products
like software which are distributed directly over the internet.

Factors Determining the Choice of Distribution Channels

Selection of the perfect distribution channel is tough. It is among those few strategic decisions which either
make or break a company.

Even though direct selling eliminates the intermediary expenses and gives more control in the hands of the
manufacturer, it adds up to the internal workload and raises the fulfilment costs. Hence these four factors
should be considered before deciding whether to opt for the direct or indirect distribution channel.

Market Characteristics

This includes the number of customers, their geographical location, buying habits, tastes and capacity and
frequency of purchase, etc.

Direct channels suit businesses whose target audience lives in a geographically confined area, who require
direct contact with the manufacturer and are not that frequent in repeating purchases.

In cases of customers being geographically dispersed or residing in a different country, manufacturers are
suggested to use indirect channels.

The buying patterns of the customers also affect the choice of distribution channels. If customers expect to
buy all their necessities in one place, selling through retailers who use product assortment is preferred. If
delivery time is not an issue, if the demand isn’t that high, the size of orders is large or if there’s a concern
of piracy among the customers, direct channels are suited.

If the customer belongs to the consumer market, longer channels may be used whereas shorter channels are
used if he belongs to the industrial market.

Understanding consumer behaviour is essential for deciding the most effective distribution channel for the
business.

Short Channels Long Channels

The offering is targeted at business users. The offering is targeted to consumers and non-business
31

Short Channels Long Channels

users.

The customers are geographically concentrated. The customers are geographically dispersed.

Customers require extensive technical knowledge. Customers don’t require extensive technical knowledge.

Regular servicing is required for the offering to Regular servicing is not required for the offering to
operate. operate.

The order quantity is large. The order quantity is small.

Product Characteristics

Product cost, technicality, perishability and whether they are standardised or custom-made play a major role
in selecting the channel of distribution for them.

Perishable goods like fruits, vegetables and dairy products can’t afford to use longer channels as they may
perish during their transit. Manufacturers of these goods often opt for direct or single-level channels of
distribution. Whereas, non-perishable goods like soaps, toothpaste, etc. require longer channels as they need
to reach customers who reside in areas that are geographically diverse.

If the nature of the product is more technical and the customer may require direct contact with the
manufacturer, direct channels are used. Whereas, if the product is fairly easy to use and direct contact makes
no difference to the number of sales, longer channels are used.

The per-unit value of the product also decides whether the product is sold through a direct channel or
through an indirect channel. If the unit value is high like in the case of jewellery, direct or short channels are
used, whereas products like detergents whose unit value is low use longer channels of distribution.

Short Channels Long Channels

Product is perishable. Product is durable.

Product is complex. Product is standardised.

Product is expensive. Product is inexpensive.

32

Short Channels Long Channels

Competition Characteristics

The choice of the distribution channel is also affected by the channel selected by the competitors in the
market. Usually, the firms tend to use a similar channel as used by the competitors. But some firms, to stand
out and appeal to the consumer, use a different distribution channel than the competitors. For example, when
all the smartphones were selling in the retail market, some companies partnered with Amazon and used the
scarcity principle to launch their smartphone as Amazon exclusive.

Short Channels Long Channels

The competitor uses the direct channels and the The competitor uses indirect channels and the
manufacturer is satisfied with its performance. manufacturer is satisfied with its performance.

The competitor uses indirect channels and the The competitor uses the direct channel and the
manufacturer thinks choosing short channels would manufacturer thinks choosing indirect or long channels
be more beneficial. would be more beneficial.

Company Characteristics

Financial strength, management expertise, and the desire for control act as important factors when deciding
the route, the product will take before being available to the end-user.

A company having a large amount of funds and good management expertise (people who have sufficient
knowledge and expertise of distribution) can create distribution channels of its own but a company with
low financial stability and management expertise have to rely on third-party distributors.

The companies who want to have tight control over the distribution prefer direct channels. Whereas, those
companies to whom such control doesn’t matter or those who are just interested in the sales of their products
prefer indirect channels.

Short Channels Long Channels

Company believes that it’s important to control the

Company believes that channel control isn’t important.
channels.

Company has a broad product line. Company has a narrow product line.
33

Short Channels Long Channels

Company has adequate resources to perform channel Company lacks adequate resources to perform channel
functions. functions.

Channel intermediaries are the groups and individuals who make it possible for consumers to have access to
products. A product's distribution process can vary based on the company that owns the item and the
delivery method used to deliver the product to customers. Understanding what parties handle this process
and how they distribute products can be helpful to anyone interested in working in marketing or distribution.
In this article, we define channel intermediaries and intermediary marketing channels and list the main types
of both.

What are channel intermediaries?

Channel intermediaries are the external groups, individuals and businesses that help a company deliver its
products to customers. They act as agents between the original creator of the merchandise and the consumer
who makes the last purchase. Companies need channel intermediaries in order to deliver goods to their
customers, making them a vital part of the distribution process.

Who uses channel intermediaries?

Companies and product manufacturers use channel intermediaries to deliver their products to consumers
without owning or being otherwise responsible for a supply train. With channel intermediaries, they can
make a profit from their product before the final buyer purchases the item. These intermediaries provide
logistic support and ensure that all buyers receive their products according to schedule.

What are the types of channel intermediaries?

There are four main types of channel intermediaries, including:

Agents

Agents act as an extension of the original manufacturers and represent the product's producer when trying to
make a sale. Agents can be individual salespeople or entire companies. They work directly with customers
to sell products and services. Agents do not possess any ownership in the original companies or the products
they sell for them. Instead, they earn commissions from each sale they make.

This process sometimes includes convincing a consumer to buy the product by explaining its benefits and
using other forms of persuasion. An example of an agent would be a car salesperson or a real estate agent.
34

Wholesalers

Wholesalers buy a company's products in bulk and resell them. Unlike agents, wholesalers own the products
they sell and make money by selling them to others. Often, wholesalers can make a profit because of the
discount they receive for buying a bulk amount of products. They rarely interact with the final buyer of a
product. Instead, wholesalers sell the goods to other merchants at a higher price point than what they spent
to get the items.

Distributors

Distributors have a business relationship with manufactures and have partial ownership of the product they
sell. Some distributors buy exclusive rights to buy a company's product to ensure that they are the sole
distributor of that product in the area. Distributors often sell to wholesalers and retailers, creating minimal
contact with the final buyers.

Retailers

Retailers purchase products from other channel intermediaries, such as wholesalers and distributors, to sell
directly to consumers. Retailers can be small or large for-profit companies. They usually buy smaller
quantities of products than wholesalers and distributors. Examples of retailers include grocery stores and
department stores.

What are intermediary marketing channels?

While intermediary channels cover who delivers products to consumers, intermediary marketing channels
explain how companies and intermediaries actually deliver the products. Essentially, intermediary marketing
channels are methods of distribution. They typically refer to the business arrangement that manufacturers
and intermediaries have with each other regarding the physical distribution of goods.

What are the types of marketing channels?

Types of marketing channels vary based on their method of distribution and who they involve in the process.
The marketing channel that a company chooses can affect the availability and profit of its products. A
company might make its decision based on a product's size, manufacturing process and cost of distribution.
Typically, when the producers use more intermediaries in their distribution process, they are obligated to
pay more fees.

Here are four common types of marketing channels that companies can use to distribute their products:

Direct selling

Direct selling refers to arrangements where the production company serves as its own intermediary. In this
type of marketing channel, consumers order products directly from the manufacturer. Direct selling is a
personal approach to selling products, as the manufacturer delivers products to consumers without a third
party working as a liaison between them.

Examples of companies that use direct selling as a marketing channel include restaurants and locally owned
farmers markets. Some online stores can also sell directly to consumers if the owner is the producer of the
product they sell, such as an artist selling their artwork.
35

Indirect selling

Indirect selling is when a company uses an intermediary to distribute and sell its product. Indirect selling
marketing channels can use varying amounts of intermediaries. In the most direct distribution route, the
manufacturer can sell their product to an intermediary who then sells the product to a consumer. However,
they may sometimes involve more than one intermediary in the distribution of a product.

This marketing channel encompasses many of the examples of intermediary channel uses, including
shopping malls and chain retailers.

Dual distribution

Dual distribution is a marketing arrangement where the manufacturer uses an intermediary to sell their
product while simultaneously selling it themselves. This marketing channel can give a manufacturer
additional opportunities to make a profit from their product because they use multiple distribution channels.

An example of dual distribution is business franchising. This is when a company allows individuals to buy
the rights to use their company name, reputation and business idea and run the business at a different
location.

Reverse channels

A reverse channel refers to the intermediary marketing channel that repurposes used goods. In this scenario,
the product originates from consumers. A company collects these goods from consumers and produces
something new or refurbishes them for profit or another benefit. Companies that use reverse channel
marketing can involve intermediaries in the distribution process or interact directly with consumers.

Thrift stores use this intermediary marketing channel. Another example of a reverse channel is a company
that recycles goods to make new products, such as using recycled bottles to make plastic benches.

What is the Difference Between Wholesale and Retail

In the supply chain industry, wholesale and retail are two major components of the distribution process.
When a company manufactures any products it is first sold in bulk quantity to the wholesaler, who then sells
it to the retailer and further the retailer sells it to the ultimate customers. In simple words, a wholesaler buys
the product in bulk from the manufacturer and sell it to the retailer, who then sells it to the end-users.

Wholesaler’s main aim is to sell goods to businesses or retailers and they sell it further. On the other hand, a
retailer targets the audience is the final consumer and only sell goods only to them.

These two-business links are important mediators of the marketing channel. If any of these links are absent,
the entire supply chain will get disrupted. In this article, we will explain the significant differences between
wholesale and retail.

Also Read: Difference between Wholesaler and Distributor

Wholesale vs Retail:
36

Wholesale is selling of goods in bulk to the retailers and businesses at cheaper rates. The wholesaler buys
the products in bulk, breaks it into small parts, repacked, and sells it to the retailers. The wholesaler sells
only specific items and is least interested in the location of the shop, packaging, and display of the goods.
They are more interested in the quantity not the quality of a product.

For wholesale business, considerable investment is required, and not the promotion and advertisement. The
customers of the wholesale are spread in various cities, town, and different states. Most of the purchases are
sold through credit to the customers.

A wholesale shop should have a license to sell the goods only to the retailer and usually not available to the
customer. However, if the customer wants to buy a product from the wholesaler directly them they will be
charged higher as compared to the retailer. Usually, a wholesaler sells only one product or a category of
products, so that they can focus on one kind of business for their goods

What is Wholesale?
Wholesale is selling of goods in bulk to the retailers and businesses at cheaper rates. The wholesaler buys
the products in bulk, breaks it into small parts, repacked, and sells it to the retailers. The wholesaler sells
only specific items and is least interested in the location of the shop, packaging and display of the goods.
They are more interested in the quantity not the quality of a product.

For wholesale business, considerable investment is required, and not the promotion and advertisement. The
customers of the wholesale are spread in various cities, town, and different states. Most of the purchases are
sold through credit to the customers.

What is Retail?
When buyers buy a product and sell it to the final customers for their consumption, and not for any resale,
this is known as Retail. The retailers are the mediator between wholesaler and customers. They purchase
goods from the wholesaler and sell them to the ultimate customers in small quantity.

The profit margin in the retail business is high as the retailer buy goods at cheaper rates and sell them to the
customers at a higher price. The final price in which the retailers sell the product includes expenses such as
rent, electricity, salaries of workers, etc.,

This article is ready to reckoner for all the students to learn the difference between Wholesale and Retail.

Wholesale Retail

Definition

Sale of goods in bulk but cheaper rates Sale of goods to the end-users in higher rates and
limited quantity

Cost

Less High
37

Business size

Large Small

Capital

Higher Less

Business outreach

Spread across the state, different state Limited space

Art of selling

Not required Required

Promotion

Not required It is important

Attractive display to good

Doesn’t matter It is required to attract the customers

3 Types of Wholesalers

 Merchant Wholesaler-This type of whole selling involves the purchase of a product in larger quantity,
stock it, and sell it smaller batches or quantities. This smaller portion of selling is also known as wholesale;
however, they are broken up for retailers to purchase in smaller batches.
 Agent/Brokers- They don’t own the goods they’re selling but bargains on behalf of the wholesaler so that
they get the best price possible and they get the commission for each sale.
 Sales and Distribution for Manufacturing – They are a sales team and distributors representing the
manufacturers in getting goods out in the wholesale market.

3 Types of Retailers
38

There are different types of retailers that can be determined by the business size and by the nature in which
they sell their goods. However, the top three types of retailers are.

 Department Store – They offer an extensive range of goods and act as a combination of small retail stores
operated by one group.
 Supermarkets – They focuses only on providing a range of food and beverage goods. They supply goods
related to fashion, home, and electrical products, etc.
 Convenience Retailer – These are located in a residential area and provides a limited variety of goods at
premium prices because of the added value of convenience.

Promotion Decisions

Every company has to invest in marketing activities. That's what helps ensure better sales. It allows for
grabbing a bigger audience. Also, competition survival becomes easier with the right marketing strategies. A
business has to find what works for them. There are multiple marketing methods. Among them, promotion
decisions in marketing are necessary. It helps correct marketing and communication. Companies can
understand how to spread the word about their products. A business has to follow a detailed process for
promotion decisions. These steps involve the top management and the employees. It helps set company
goals. Also, a budget is necessary for this. Thus, a company must invest resources to understand this step
better.

What is Promotion Decision?

Promotion refers to the communication between the sellers and the buyers. Seller companies use promotion
methods to market their products. They communicate about their new products, features, offers, etc. Some
facts about the promotion decision have been stated below for better understanding of the topic.

o Making promotion decisions is necessary for a company. It helps influence the customers. The right
communication induces customers to buy.
o Promotion decisions strategy is based on communication. Sellers communicate with potential
customers. They tell you about the company, products, and offers.
o It helps bring an interest in the buyer. They become aware of the company. Also, promotion decisions
help increase the loyal customer base.
o The promotion decisions refer to choosing the best strategy. Different methods like advertising,
direct sales, and discounts are available.
o The company can use trial and error for promotion decisions. These methods require constant
evaluation. The management must compare results from different methods. It helps develop long-
term marketing strategies.

Promotion decisions are necessary for marketing. It is present in the marketing mix. The company has to
decide on promotion, product, price, and place. The importance of promotion decisions helps companies
survive in competition.

Examples

Read below the examples for promotion decisions. It helps understand how a company makes these
marketing decisions.
39

o A company has to decide its promotion method. It is a clothing company. After evaluation, it chooses
the advertisement model. The company uses social media to target advertisements for users. It offers
discounts and targets the same advertisements.
o A company can increase sales during festive times. Using the buy one and get one offer. Thus,
customers prefer the company over other alternatives.

These examples help one understand how a business makes promotion decisions. A company must weigh
promotion pros and cons before implementation.

Types of Promotion Marketing

A company must check and compare the different promotion types. The promotion decisions are dependent
on these types. The business managers must evaluate the budget. It should also check similar businesses and
their promotion methods. It will help them choose the best measure. Read about the different types below.

Advertising

Advertisement is a paid promotion type. The company pays a platform or a business. The business displays
the company information. The advertisement model has been a traditional promotion decision. It includes
television, print, internet, or media advertisements. For example, a business running ads on television
channels. The advertisement model helps reach a large audience. Many people will become aware of the
company. The company carefully decides on the message. It should be crisp, entertaining, and promotional.

Direct Promotion

Many companies directly approach customers. It is through calls or emails. The agents often start a
conversation. Direct promotion happens when there are no middlemen. The company staff directly talks
with the clients. For example, the company team calls the customers. They inform you about the ongoing
offers. It starts a conversation. The agent can explain the business operations easily. Also, it helps get
feedback on the spot. New businesses can benefit from this measure. It includes emails, calls, fliers, etc.

Sales Promotion

It isn't easy for every company to stand out. It becomes trickier when it's a new brand. Further, companies
have to stay relevant in the market. Sales promotion decisions help in this. The goal is to increase the
demand or awareness. It is possible through campaigns. Many businesses sponsor major events. Companies
often sponsor cricket tournaments or concerts. It helps in creating awareness. Other measures are coupons or
contests. Companies can organize online giveaways to engage more users. These promotions are for a
shorter period. But they help increase the user database and get better leads.

Self-Promotion

Several consumer brands send their staff to customers. They sell products door-to-door or in public places.
Such companies invest in self-promotion. Self-promotion decisions have been around for many years. It is
a traditional marketing method. Agents target areas and work to promote the company. It helps answer all
customer queries. Also, it can lead to more sales. The company also receives feedback for the product. They
can use this survey for product improvement. Self-promotion also includes selling discounted products
directly. The agents report back with the sales. The business may use its team or outsource to another
business.
40

Public Relations

Public relations refer to a brand's image. It includes how the public perceives the company. It should have a
positive image to promote sales. PR promotion decisions are integral. They're primarily intrinsic and don't
require third parties. Examples can be the promotion of the company's donations. Businesses should follow
ethical practices. This promotion should not seem like paid advertising. That's what makes PR different. It
should be more about a company's work and goodwill. Every large business has a PR team to manage
promotions. They're also responsible for controlling the company image if there are no issues or cases.

These different promotion decisions are available for a company. It should understand the budget
considerations to follow the best measure. It will help improve brand awareness and company goodwill.

Strategies Promotion Decisions Characteristics

Promotion decisions are a crucial element of the marketing mix, focusing on how companies communicate
and promote their products or services to target audiences. These decisions involve various strategies and
characteristics that impact the success of a promotional campaign. Here are some key characteristics of
promotion decisions and strategies:

o Integrated with Marketing Objectives: Promotion strategies should align with the broader marketing
objectives of the company. Whether the goal is to increase sales, build brand awareness, or launch a
new product, promotional activities should support and reinforce these objectives.
o Target Audience Identification: Effective promotion begins with a clear understanding of the target
audience. Companies must identify and segment their audience based on demographics,
psychographics, behavior, and preferences to tailor their messages appropriately.
o Message Clarity and Consistency: Promotional messages should be clear, concise, and consistent
across all communication channels. A unified message helps in creating brand recognition and avoids
confusion among consumers.
o Choice of Promotion Mix: The promotion mix includes various promotional tools and tactics, such
as advertising, public relations, sales promotions, personal selling, and digital marketing. Companies
must select the mix that best suits their goals and target audience.
o Timing and Scheduling: Timing is critical in promotion decisions. Companies need to determine
when to launch promotional campaigns to maximize their impact. Seasonality, market trends, and
competitive factors can influence timing decisions.
o Budget Allocation: Allocating a budget for promotional activities is essential. Companies must
decide how much to spend on advertising, promotions, and marketing campaigns while considering
their financial resources and expected returns on investment.
o Creative Content and Design: Creative and visually appealing content can capture the audience's
attention. Companies should invest in compelling visuals, copywriting, and design elements that
resonate with their target market.
o Measurable Objectives: Promotion decisions should include specific, measurable, achievable,
relevant, and time-bound (SMART) objectives. These objectives enable companies to track the
effectiveness of their promotional efforts.
o Feedback and Analytics: Continuous monitoring and analysis of promotional campaigns are crucial.
Companies should use data and analytics to assess the performance of their promotions, identify
areas for improvement, and make data-driven decisions.
o Multi-Channel Approach: Leveraging multiple communication channels can enhance reach and
effectiveness. Companies often employ a multi-channel approach, utilizing both online and offline
platforms to engage with their audience.
41

o Adaptability and Flexibility: The marketing landscape is dynamic, and promotional strategies may
need to adapt to changing consumer behaviors, market trends, or unforeseen circumstances (e.g., a
crisis or pandemic).
o Ethical Considerations: Ethical promotion is essential to maintain trust with customers. Companies
must ensure their promotional practices are transparent, honest, and comply with legal and ethical
standards.
o Competitive Analysis: Understanding the competitive landscape is crucial. Companies should assess
how competitors are promoting their products or services and differentiate their own promotional
efforts accordingly.
o Long-Term Brand Building: Some promotion decisions focus on long-term brand building rather
than immediate sales. Building a strong brand image can have a lasting impact on consumer loyalty
and market positioning.
o Feedback Loop: Establishing a feedback loop with customers allows companies to gather insights,
address concerns, and improve their promotional strategies based on customer feedback.

Promotion Marketing Strategy

Promotion decisions include selecting the strategy type. The business must compare the different
promotion strategies. It helps choose the best for the company budget and stage. Find below the different
promotion strategies.

o Push Strategy: This strategy includes pushing the product to the customers. The producer uses
marketing communication to reach intermediaries. These middlemen then push the messages to the
customers. This strategy helps spread the message to the customers. Examples can be direct selling
or telemarketing. The company itself reaches out. They promote the business and tell more about the
products.
o Pull Strategy: This strategy also involves reaching the customers. But, the methods are less intrusive
or pushy. It is a general promotion instead of directly talking with the customers. The end goal of
reaching out and communicating remains the same. For example, television campaigns or sales
promotions.
o Mixed strategy: This method has features of both pull and push. It ensures that the company reaches
the potential customers.

The pull promotion decisions are often for big brands. The pull measures require a big investment. Small
businesses often use direct selling promotion decisions.

Promotion Decision Process

Read to understand the promotion decision process.

o Defining the problem: The business has to understand the need. It can consider the audience,
product, or service for promotion. The promotion decision solves this problem.
o Decide objectives: The company should then set goals. These objectives are the end goals of the
promotion decisions. It can increase sales or brand awareness.
o Promotion mix: The management must decide the strategies. The promotion mix has details about
techniques the company follows. It can be advertising or direct selling.
o Promotion program: The management decides the scope of the program. It considers the budget,
period, and resources. The result depends on the promotion duration.
42

o Pre-testing: The company should test on a small scale. This testing helps understand customer
feedback. It is before a large-scale launch.
o Implementation: The company should understand the pre-testing results. It should make any
required changes. After that, the program should be fully implemented.
o Monitoring and evaluation: The management must monitor the program. It will help make the
changes. Also, they will understand customer needs. It is essential for product upgrades. It should
measure the performance as per the goals.

Importance of Promotion Marketing Strategies

Every brand has to invest in promotions after a stage. That's what helps sustain and increase sales. Read
below the importance of promotion decisions.

o Product awareness: Promotion decisions help in quick product awareness. Potential customers can
learn about the company. They can clear doubts and understand product features. It is necessary for
new companies. This awareness increases the overall customer base.
o Sale of goods: Promotion decisions aim at increasing sales. The companies invest in advertising or
sales promotions. The customers learn about the services. The agents also go door-to-door for better
customer convenience. These strategies help in better sales. Companies looking to increase revenue
should boost promotions. It can help in getting a better market share.
o Sales support: Promotion also requires following up. Customers often receive calls from businesses
after sales. They can give reviews and resolve issues. This sales support helps build loyal customers.
They should easily be able to contact the company after buying.
o Manufacturer and consumer gap: The manufacturer can communicate with the customers through
promotion. They can create an advertisement or promotional message. It helps fulfill the gap.
o Facing competition: Markets like consumer goods have high competition. It is not easy to sustain
without promotions. That's why the correct promotion decisions help face and overcome market
competition.
o Large-scale selling: Promotion allows brand awareness on a large scale. The company can run
international campaigns. It will help increase sales multifold.

Promotion decisions are necessary for every business. Its importance ranges from revenue increase to
company goodwill.

Ethical Issues in Promotion Decisions

Promotion should be an ethical practice. But, several businesses engage in unethical practices as follows.

o False claims: Companies often tell false features to lure customers. They find out the claim only
after the sales.
o Bait and swap: Companies often inform customers about low-priced goods. But, they keep a low
stock. The companies instead sell a higher-priced item when the customer visits.
o Special prizes: Many frauds happen with prize claims. Companies inform customers they've won a
contest. But, they are often required to buy something to claim it. It results in fraud.
o Sale price manipulation: Companies increase the marked price. They further show discounts to sell
the products. The final price remains the same as the original product rate.
o Pressurizing customers: Door-to-Door salespersons often pressurize customers. They disturb them
and often use emotional techniques to sell goods.
43

Conclusion

The promotion decisions in marketing help companies understand where and how to market their product.
Businesses should follow ethical methods. That's what will help build goodwill and a loyal base. Engaging
in unethical practices only leads to short-term profit. Such businesses don't survive the competition and
sustain in the market.

Basic Model of Communication

1. Sender – A sender is also referred to as a source and is the one who has a message to convey. For
example, a company or a brand manager can be considered as a Sender. In a marketing process, it is
important to ensure that the source or the sender is realistic and trustworthy. Also, source can be direct or
indirect.

2. Encode – The sender encodes ideas into a message. A brand manager, for example, decides to advertise a
new product.

3. Message – Based on the ideas given by the sender, the marketer creates an effective message that is clear
and effective enough to achieve the communication objectives.

4. Receiver – The receiver is the person or group of people with whom the sender tries to communicate and
share the message. For example, customers are the receivers for a company.

5. Decode – On receiving the message from the sender, the receiver decodes it. It I important here that the
sender and the receiver have common experiences in order to decode the message at the receiver’s end as it
was intended to be.

6. Feedback – Feedback is considered as examining and evaluating how precisely the intended message is
being received by the receiver. Marketing research can be a way to collect feedback from the receivers.

Essentially, it involves asking receivers if they have seen the message, whether they remember the message,
and their attitude towards the message (product).

What Is the Promotion Mix?

We are all consumers, and we have all been the target of promotional campaigns. To connect with
consumers of a target market, companies conduct extensive market research so that they may better
understand the consumer. When companies understand the consumer, they can better structure a message to
appeal to the consumer and also find the best channels for reaching the customer.

The created messages aim to get consumers’ attention. Sometimes they create awareness of a new event, a
new product, a new idea, or a place to visit. Sometimes they are asking consumers to make a purchase.
Marketing promotion is all around us.

According to the marketing firm Yankelovich Inc., the average digitally connected person is exposed to
around 5,000 ads per day.4 Among the biggest promotional spenders in the United States is Disney.5 Disney
produces ads for everything from its movies and toys to its vacation clubs and theme parks. While we should
be flattered that these companies are thinking of us and trying to figure out how to reach us and what
messages they should send, many consumers are busy trying to figure out how to shut out the messages.
44

When you sit down to watch television, you are typically exposed to ads that a company believes that you
will respond to based on the research it has done about the audience watching the show you tuned in to
watch. During your time scrolling through your news feed on Facebook, you are being served ads that
correspond to your Internet search history and even products you may have mentioned while your phone
was on and your news feed open. Digital advertising relies heavily on algorithms of your search history and
site visits.

As recipients of these marketing messages, many consumers believe that marketing is only advertising or
sales. However, advertising and sales are simply two options in a marketer’s arsenal of communication tools
used to connect with the target market. Developing a marketing communications strategy is something
marketers should only do after they have developed the rest of the marketing mix.

In fact, marketers have a wide variety of strategies to use from the overall promotional mix . Most
companies choose to use a combination of the promotional mix methods to create an integrated marketing
communication message that reaches the customer in many different ways. When the messaging is
integrated, the consumer receives the same message no matter which method of promotion is chosen. If the
consumer is watching the news and hears a story about the company or product, public relations has
impacted them. If they then scroll through their social media accounts at the end of the day and they see an
ad for the same product, advertising has impacted them. When they sort through their email and have a
message from the company, they have received a direct marketing communication.

No longer does promotion need to rely heavily on just one method of marketing communication. Marketers
can be much more targeted and more cost-effective in the promotional methods they choose. Using a
combination of methods to send the same message allows the marketer to be more strategic in their
messaging and in their budgeting.

The best products are nothing until the consumer knows about them. Without good promotion, the best
products are just secrets. We all have things we want to say, and on any given day we make phone calls,
create Instagram posts, upload TikTok videos, send emails, shoot off text messages, and talk face-to-face
with people. And just like us, marketers also have things to say. Usually, they want to tell consumers about
their new brand extension of Reese’s, a trade-in allowance for a new Toyota Camry that just hit the car lot,
or even a buy-one-get-one-free promotion for your Starbucks latte. How marketers decide to say and send
the message is the promotion mix.

The promotion mix is the set of strategies marketers use to communicate with their customers. With
combined strategies, the promotion mix creates a powerful method of connecting with the customer and
conveying all the other marketing mix elements for a holistic marketing approach. The promotion mix
allows marketers to reach customers in many different ways, ensuring that the message is seen, heard, and
understood. After determining and defining the target market, creating a good product, selecting a pricing
strategy and optimal price, and deciding on the distribution method, the marketer is ready to communicate
with the customer.

Messages sent by multiple methods provide a better opportunity for consumers to see and hear the message
and make the connection back to the company. When a message is only sent by one method, the potential
for interference, noise, and avoidance is more likely to occur. Marketers use a multichannel approach to
send an integrated message.
45

Promotion Mix Defined

The full set of strategies that combine to make up the promotion mix include advertising, sales promotion,
personal selling, public relations, direct marketing, and Internet/digital marketing. Each of these methods is
intended to produce different results when used. Combining the elements creates an overall integrated
message designed to reach consumers at various points in their path to purchase. Marketers call this
integrated messaging integrated marketing communications.

The Importance of the Promotion Mix

Of all the marketing mix variables, the promotion mix can be further divided into different message
channels that allow for connection and communication with the customer. When the promotion connects
with the customer, it is the moment when all the marketing activities come together. When the messaging
and method of delivery reach the customer and create the desired result, the marketing has achieved its
purpose.

The strategies in the promotion mix provide the marketer with an arsenal of methods to achieve their
marketing objectives, such as increasing sales or introducing a new product. However, consumers are
bombarded with marketing messages throughout the day, and these are combined with the business of
everyday life events like news, music, work, chores, family, and friends. With this busy pace and activity,
the consumer is very difficult to reach. For the busy consumer, one communication method alone is not
likely to cut through the clutter and noise to reach them and make an impact. Marketers must combine the
various communication elements to connect with the customer and meet the communication objective.

Elements of the Promotion Mix

When analyzed individually, each of the promotional mix elements is powerful. They each have a part to
play in the overall success of a company. When combined and carefully executed, they create powerful
brands with legions of loyal fans and followers—the consumers. What do each of these promotional mix
elements do, and how do they contribute to the whole process of connecting with the consumer?

Advertising

Advertising is a multibillion-dollar industry. According to Statista, in 2020 alone, worldwide advertising

spending reached $586 billion. Advertising is paid, nonpersonal communication from an identified source
that allows for creative messaging about all aspects of a product, service, idea, person, or place. Consumers
are able to quickly point to advertising as a form of promotion. It is perhaps the element of the promotional
mix that we are most familiar with and the one we have been most exposed to throughout every phase of our
lives.

From our very first commercial showing how much fun it is to build with LEGO to imagery of a toddler
walking the Disney streets with a costumed princess and Cinderella’s castle in the foreground, we know
what advertising looks like. And while advertising can take many forms, it is important to note that
advertising consists of carefully designed messaging from the company to the consumer. Advertising is
meant to produce a response in the viewer. And advertising is all about what the company wants to tell us.

Advertising can be the pop-up window while we are doing a Google search. It can be the Chick-fil-
A billboard we pass every day on our way to work. Advertising can be the trailer we watch before our movie
starts. And advertising can be the fun Doritos spots we look forward to during the annual Super Bowl.
46

While advertising can be a costly means of communication with the customer, it is relatively inexpensive
based on the number of people reached. When NBC priced the 2021 Super Bowl at $6 million for a 30-
second spot, with a record 96 million viewers, the price averaged out to around $0.06 per person reached.
Advertising is effective based on the frequency with which it is usually viewed. And because of the media,
the advertising message can usually be repeated many times, depending on the budget. Due to its
repeatability, production costs have a better return on investment (ROI) the more an ad is used, and the
recall of the ad increases significantly.

Sales Promotion

Most consumers love a sales promotion. It creates a feeling of excitement and often includes a bit of a
gaming experience into the purchase decision. Marketers value the benefits of sales promotions because the
results are immediate and they have a wide variety of options when using this promotional mix element. A
sales promotion is a method for a marketer to induce sales in the short term. Sales promotion is not a long-
term strategy but is geared toward specific calls to action, typically aimed at getting the consumer to buy
something immediately or enter a sweepstakes or contest .

Using sales promotions can be an effective method of getting the consumer to try a product or buy more of a
product, or it can be a way to quickly deplete an inventory to make way for new products.

While sales promotions have many tactics that the marketer can employ, several commonly used examples
of sales promotion include the following:

 Buy One Get One (BOGO). When Domino’s Pizza offers the customer a free pizza when they buy a
medium one-topping pizza, this BOGO deal is used to get an immediate increase in sales for Domino’s
pizza. Consumers may buy Domino’s over other pizza brands because they can get more pizza for their
money.
 Enter to Win. PepsiCo needed to gain traction with the millennial audience. It needed to boost
the Lay’s brand of potato chips and compete with new flavorful organic chips that were getting market share
in the category once dominated by Lay’s. To generate new interest in its brand, Lay’s launched a campaign
for consumers to create a new flavor. New flavors could be entered, Lay’s would create samples, and the
winner of the new chip flavor would win $1 million.
 Coupons. This method of promotion has come a long way with the use of technology. While consumers are
still able to “clip” coupons and redeem them at the point of sale to receive savings on the products they are
buying, many companies are making coupons available through mobile apps and discount codes to apply at
the point of sale through an e-commerce store. Using coupons is a great method of inducing trial of a new
product and increasing market share.

For National Ice Cream Day, Cumberland Farms wanted to increase the sales of its house brand of ice
cream, Ultimate Scoop. It offered consumers a digital coupon for $1 off a pint of the ice cream. Cumberland
Farms’ existing customers received their coupon via text message, and new customers could text in to get
the coupon.

 Rebates. Companies offer rebates to induce purchase and generally to receive something in return besides
the sale. When a rebate is offered for the purchase of an Energy Star–certified product, the consumer gets a
designated dollar amount off the price of the product, and in turn they must submit the proof of purchase
along with identifying information about themselves.
47

Personal Selling

Personal selling is one of the most expensive forms of promotion because it is a one-on-one, person-to-
person form of communicating with the customer. The role of the salesperson is to inform and persuade the
customer. This is usually done in what is termed an exchange situation. The salesperson is exchanging
knowledge and something of value, while the customer is exchanging money for the item of value. Personal
selling is ideal for products that can be customized, are complex, and have a relatively high price point.

Typically, personal selling is most often used in business-to-business (B2B) markets. Business buyers have
longer buying cycles, more complex buying situations, and larger budgets. The pharmaceutical industry is
well-known for using personal selling. Company representatives must have a high degree of training and
knowledge about the products they are selling to physicians and hospitals. It is also very common to have a
sales force to sell equipment and machinery to manufacturing plants. Businesses rely on the knowledge and
service of the sales force selling them products.

In the business-to-consumer (B2C) market, personal selling is used for items that cost more or items that
have a high degree of variation. We find sales representatives when we buy automobiles, home
improvement products, and insurance. The job of the sales representative is to determine our needs and
provide solutions that fill those needs.

When compared to advertising, which has a very general message directed to a very large audience, personal
selling is an individualized message for one or several people within the buying group. When evaluating the
costs of personal selling, it is typically hundreds to thousands of dollars per person reached.

The process of personal selling can be time-consuming. The process of selling and the tasks of the sales
force can be complex. The sales professional is tasked with prospecting to identify the right customers and
then qualifying them to make certain they are a good fit for the product.

It is not uncommon to hear people say, “You talk a good game. You could sell to anyone.” In reality,
salespeople do not want to talk people into a product. Good sales force only wants to sell to customers who
want and need the product. The best sales force knows that when the customer is a good fit, they will bring
repeat business and good word of mouth.

While some salespeople have a natural inclination for selling, others are highly skilled with the technical
knowledge of the products they are selling. Understanding customers, the buying situation, and the product
being sold are a few of the skills needed to master the art of selling. Good sales professionals know that the
real work of the sale is to service the needs of the client long after the sale has been made.

Public Relations

Public relations is a nonpaid, nonpersonal form of promotion. Because it is nonpaid, it has a high degree of
credibility and is beneficial because a typically credible, non-biased third party is the messenger. While
there are many tactics that marketers might use for public relations, some of the most commonly used
include press releases, press conferences, events, and annual reports.

Many of the other promotional tools focus specifically on communication with the customer. By contrast,
public relations include efforts to work with the community where it operates, media, government officials,
educators, and potential investors.
48

When Nordstrom opened its flagship store in Manhattan, it unlocked the doors a few days early for a VIP
celebration that included Vogue’s editor, Anna Wintour, along with actresses, models, and designers. Some
of the noted attendees included Zoe Saldana, Katie Holmes, Olivia Wilde, Karlie Kloss, Joan Smalls,
Winnie Harlow, Tory Burch, Tommy Hilfiger, and Stacey Bendet of Alice + Olivia. Guests formed long
lines around the store in an attempt to access the party.

TOMS shoes has long been a leader in cause marketing. When you buy from TOMS, one-third of the
profits go to Grassroot Good. TOMS’ annual report highlights the people the company helps and how it
helps them. Investors and any interested parties receive the annual report that details the work TOMS does
right along with the profits it is making.

When celebrities wind up in the news, it is public relations, and it works to keep their name before the public
and their fans. So, the headline that hits the front page of the New York Times or is a leading story on the
NBC nightly news both create publicity for the celebrity. Businesses also use publicity. A business might
have a product as part of a movie, such as BMW vehicles showing up in 37 of the highest-grossing movies
of 2018.

Public relations can also include crisis communication when negative issues occur. One of the biggest public
relations issues happened in 1982 to Tylenol. A malicious person or persons in the Chicago area tampered
with a few bottles of Tylenol Extra Strength capsules by replacing the actual capsules with cyanide-laced
capsules. Consumers who unwittingly bought the Tylenol ended up dead. Johnson & Johnson, the maker of
Tylenol, was facing issues that could easily have destroyed its business. The issue was the leading story for
every news outlet.

Johnson & Johnson faced the issue head-on and made the bold move to have Tylenol removed from all
shelves. The recall resulted in the removal of 30 million products from store shelves. In the end Tylenol was
a hero and won the trust of a nation.

Direct Marketing

Direct marketing allows for direct communication with the customer. Messages can be tailored to specific
market segments and even personalized toward individual consumers. Early tactics of direct marketing
included telephone and mail; however, technology has allowed for new methods of connecting with the
customer to include text messaging and email marketing.

In 2019, the Data & Marketing Association (DMA) reported that the direct mail industry was valued at
$44.2 billion. It’s the second largest channel for ad spend in the United States, and it continues to grow.
Transformed by technology, direct marketing is finding new methods to connect with the customer. Most
connection includes a call to action that provides for immediate feedback on the effectiveness of the method.

Internet/digital marketing includes uses of technology to reach customers at many different points of
interaction. Marketers have at their disposal a variety of methods to reach their customers and brand
products. Some of the tools include websites, landing pages, social media pages, widgets, and customer
relationship management (CRM) systems. All the digital properties work together to drive traffic to the
branded properties and engage the consumers.

Digital marketing is geared toward very specific market segments and is primarily interactive. Think of
digital marketing as the mechanism that produces the immediate interaction with the customer and produces
some type of feedback. Digital is considered two-way communication between the company and the
49

customer. During the early stages of launching the SPANX brand, Sara Blakely primarily used digital
marketing with a heaving emphasis on social media.14 She involved her women friends who were in her
target market demographic and had them post about the brand through their social media.

By contrast, Internet marketing is sending a message to a mass audience. The Internet is used to for digital
marketing and includes websites and digital ads as well as the two-way communication of social media.
Other forms of digital marketing include mobile technology such as SMS and mobile apps.

When a consumer completes a Google search for shoes and then jumps to Facebook to scroll their feed and
are served shoe ads from Nordstrom, Macy’s, and Steve Madden, they have been targeted by these shoe
companies. The targeting, immediacy, and changeability of the messaging makes digital a quick and
efficient method of reaching consumers. Digital promotional tools are extremely effective and can cut
through the clutter and reach the consumer when they are in the demand phase of the buying process and
have signaled an intent to purchase.

According to a 2020 chief marketing officer (CMO) survey from Gartner, two-thirds of promotional budgets
are being spent on digital. Because of the tremendous analytics available, marketers are able to assess the
effectiveness immediately. Messages can be tested for effectiveness and quickly changed if they are not
producing results. It is very difficult to get the same quick feedback with any of the other forms of
promotion. Through careful tracking and robust customer relationship management (CRM) systems,
marketers are quickly able to promote products, increase brand awareness, and move consumers down the
sales funnel to instantly purchase through online e-commerce sites.

Utilizing mobile app technology, marketers are able to push promotions to customers while segmenting
them by their behaviors and simultaneously filling their CRM with insights and analytics that can help drive
promotions and sales.

What is Sales Promotion?

Sales promotion is a marketing strategy where a business firm uses short-term strategies (incentives) to
stimulate customers’ demand for its products or service.

Sales promotion is one of the important tools of the promotion mix. It is temporary in nature, which aims to
drastically increase the demand for products by applying customers oriented strategies and making offers
look more attractive so that customers feel they are getting the best deal.

It includes marketing activities other than advertising, personal selling, or public relation that influences
consumers purchases and dealer effectiveness. The sales promotion can be done through trade shows,
coupons, demonstrations, rebates, samples, contests, and many additional activities that bridge advertising
and personal selling.

The tools of sales promotion are of a short time nature which is designed to stimulate the quicker and greater
purchase of goods and services. The use of sales promotion has been increasingly increased in the modern
business, due to competition in the market. Sometimes, thus it is also called “aggressive marketing.

Features

The salient features of sales promotion are mentioned as below,

50

Short Term In Nature. As mentioned above, sales promotions are done only for a limited time period i.e.
short time period. Usually, such promotions are only for up to a day, a week, to a maximum of three months.

Provides Incentives. It offers certain benefits to the target customers to attract them towards the companies’
offerings. The benefits it offers may include, price off, free gifts, free samples, containing more products in a
package than before, coupons for bulk purchases, etc.

Aims At Quick Response. Its tools are offered for short period, hence always aim at the quick response
from the target customers. If the marketers do not get quick responses, they think their sales promotion
efforts become ineffective and try for another.

Primarily Directed At Target Customers. The primary and ultimate goal of employing sales promotion
tools is to uplift sales. So it is always directed at target customers, who consume goods, traders who resale
goods, and sales force who helped in personal selling.

Sales Promotion Tools and Techniques

The major sales promotion tools and techniques are of three types first is for consumer promotions, trade
promotions, and third is for salesforce promotions. They are explained as follow,

Consumer Promotion Tools

When the sales promotion tools are used to stimulate the final consumers, they are called consumer
promotion tools. The most popular sales promotion tools and techniques targeted to final consumers are
mentioned below,

i. Price-Off Promotion. The price-off promotion tool involves the temporary price reduction of the product
or service, it can be written on the package like “Save Rs. 5 or 10”. Which is generally done to attract
customers’ attention.

ii. Rebate. Rebate is a price reduction to include immediate purchase, to sell off-season products, or to move
inventory off the marketer. If the consumers already pay the full price they may get money back from the
manufacturer.

iii. Coupons. The coupon is a great sales promotion strategy popularly used these days. A coupon is a
certificate a buyer gets and later he can claim the discount or the prodcut. Coupons are provided by both
producers and retailers. The coupon may be inserted into the package, or it may be made available upon the
purchase made on a specific occasion, etc.

iv. Samples. To promote newly launched products a sample is given to the customers for the trial. If the
customers are satisfied with the trial after using it, they will go for buying that product or service.

v. Premiums. Premiums are gifts given to consumers freely or at a relatively low cost as an incentive to
purchase a particular product.

vi. Prizes. Prizes are also offered to the consumers on the basis of purchases they made or contests,
sweepstakes, or games. Prizes are offers to win cash, or additional prodcut, or merchandise as a result of
51

purchasing something. Consumers may compete for prizes by answering questions (contests), filling out
forms for random drawings (sweepstakes), or playing bingo, or missing letters (games).

vii. Point-of-Purchase Displays and Demonstrations. Products are displayed and demonstrated where the
potential buyers are to create their desire for products. Such activities can be organized during,

 the anniversary of the manufacture, during some of the national festivals,

 The opening of a new branch of the company.
viii. Product Warranties. Product warranty is an assurance to the consumers that the prodcut will do what
it is supposed to do for a specified period, during which the manufacture provides services free of charge.

viii. Trade Shows and Exhibitions. Sometimes manufacturers organize trade shows and exhibitions for
consumers, especially for the promotion and sale of consumer products and home appliances.

Moreover, the above-mentioned sales promotion tools and techniques targeted to consumers are not limited,
as per the need and situation other several tools and techniques are also can be applied.

Trade Promotion Tools

When the sales promotion is directed at resellers, channel members, agents, or dealers, they are known as
trade promotion tools. It is important that channel members, resellers also need to be motivated to increase
sales.

It is necessary that middle channels are to be provided incentives otherwise they will divert to the competitor
product.

The popular sales promotion tools and techniques targeted to traders are mentioned below.

i. Sales Contest. To boost up sales, sometimes producers organize sales contests among the resellers. Under
this contest, usually, the reseller who makes a huge sales than others will be rewarded with a cash prize or
another kind. However, for the participation of such an event, the producer may specify some conditions.

ii. Credit Facilities. To help the resellers in making better and increased sales, sometimes a producer
provides a special credit facility or an extended credit facility to his traders for a certain period of time. And,
when the traders became successful to make more sales and profit, such credit facilities are withdrawn by
the producers.

iii. Push Money. Push money represents special bonuses paid by a producer or marketer to an intermediary
salesforce because of selling more products through the distribution channel. This type of promotion is
offered in the marketing of medicines and medical products.

iv. Cooperative Advertising. Cooperative advertising is when producers, wholesalers, and retailers jointly
sponsor advertising to promote a brand. For this, the producer makes available to the wholesaler or the
retailer through a fund intended to help cover their cost spent in advertising.
52

SalesForce Promotion Tools

A salesforce is a staff who is appointed by the manufacturer to sell manufactured products to the resellers
and customers through personal selling. Salesforces establish direct contact with customers, persuade them
and sell the products.

Effective sales through salesforce are possible only when the salesforces are motivated. Dissatisfied and
lacking communication skills salesforce cannot motivate the customers to purchase any products.

Sometimes manufacture thus offers sales promotion tools directed at salesforce. Some of the popular sales
promotion tools directed at salesforce are mentioned as below,

i. Sales Contest. In a sales contest, the sales personnel who makes more sales than other salesforces in a
specified period is rewarded cash, even gifts, travels opportunity inside and outside the country.

ii. Bonus and Commission. Companies also include bonuses and commissions to the salesperson who
results in the maximum volume of sales over a given period of time. Bonuses and commissions may include
cash or a certain percentage of sales.

iii. Gift Items. To motivate salesforce, the marketer also provides some gift items like mobile, watch, pen,
diary, and other motivating and helping gifts.

iv. Trade Shows and Conventions. Similarly, so the companies organize trade shows and conventions
outside the country. Due to this, salesforce gets a chance to travel the outside country with their spouse
which is a great incentive to the sales personnel. For example, most of the Indian companies organized
meetings and conferences in five-star hotels in Nepal.

Objectives of Sales Promotion

The primary objectives of sales promotion can be mentioned as follows,

Attract New Customers. One of the primary objectives of sales promotion is to get the attraction of new
customers. With the help of various tools and techniques, a company can attract and make them buy even
they hadn’t used that company’s products before.

Reward Loyal Customers. Another significant objective of sales promotion is to reward loyal customers.
Loyal customers are the most valuable asset of any marketing company. With various incentives the loyal
customers are rewarded, which is done to maintain the market and hope the loyal customers also influence
the potential customers.

Encourage Impulse Purchase. Many customers purchase products and services without any plan. If these
customers are convinced about the prodcut, they can buy at any instant. Sales promotion exactly does that.
Through different tools, it encourages impulse purchase.

Create Excitement. It also aims to create a sense of excitement in customers’ minds towards the products.
Through various offers, firms lure customers and make them believe that they are getting the best deal.
53

Promote Off-Season Products. One of the major objectives of sales promtion is to promote off-season
products. Through various sales promotion tools and techniques, marketers create a market for an off-season
product. The reasons for doing is twofold, first, it creates longevity of the product, second, it helps to clear
out the stock.

Examples

Sales promotion can be done in various ways and its examples are found all around us. Simply, when
someone offers you as, if you buy one apple, you will get one at free of cost.

In addition, other examples may be discounts, black Friday sales, buy 1 get 1 free, coupons, free samples,
gifts, etc. but these offers are only for a short period of time.

According to American Marketing Association, “Marketing Research is the function that links the consumer,
customer and public to the marketer through information-information used to identify and define marketing
opportunities and problems, generate, refine and evaluate marketing actions; monitor marketing
performance; and improve understanding of marketing as a process.”

Marketing Research is systematic problem analysis, model building and fact finding for the purpose of
important decision making and control in the marketing of goods and services.

Marketing Research is a well-planned, systematic process which implies that it needs planning at all the
stages.

It uses scientific method. It is an objective process as it attempts to provide accurate authentic information.

Marketing Research is sometimes defined as the application of scientific method in the solution of
marketing problems.

Marketing Research plays a very significant role in identifying the needs of customers and meeting them in
best possible way. The main task of Marketing Research is systematic gathering and analysis of information.

Before we proceed further, it is essential to clarify the relationship and difference between Marketing
Research and Marketing Information System (MIS).

Whatever information are generated by Marketing Research from internal sources, external sources,
marketing intelligence agencies-consist the part of MIS.

MIS is a set of formalized procedures for generating, analyzing, storing and distributing information to
marketing decision makers on an ongoing basis.

1. While Marketing Research is done with a specific purpose in mind with information being generated when it
is conducted, MIS information is generated continuously.
2. MIS is continuous entity while Marketing Research is an ad-hoc system.
3. While in Marketing Research information is for specific purpose, so it is not rigid; in MIS information is
more rigid and structured.
54

Marketing Research is essential for strategic market planning and decision making. It helps a firm in
identifying what are the market opportunities and constraints, in developing and implementing market
strategies, and in evaluating the effectiveness of marketing plans.

Marketing Research is a growing and widely used business activity as the sellers need to know more about
their final consumers but are generally widely separated from those consumers. Marketing Research is a
necessary link between marketing decision makers and the markets in which they operate.

Marketing Research includes various important principles for generating information which is useful to
managers. These principles relate to the timeliness and importance of data, the significance of defining
objectives cautiously and clearly, and the need to avoid conducting research to support decisions already
made.

Marketing Research is of use to the following:-

1. Producers
a. To know about his product potential in the market vis-a-vis the total product;
b. New Products;
c. Various brands;
d. Pricing;
e. Market Structures and selection of product strategy, etc.

2. Business and Government

Marketing Research helps businesses and government in focusing attention on the complex nature of
problems faced by them. For example:
a. Determination of Gross National Product; Price indices, and per capita income;
b. Expenditure levels and budgeting;
c. Agricultural Pricing;
d. The economic policies of Government; and
e. Operational and planning problems of business and industry.

3. Market Research Agencies

Marketing Research is being used extensively by professionals to help conducting various studies in
Marketing Research. Most prominent agencies being:-

a. Linta India Ltd;

b. British Market Research Bureau (BMRB);
c. Hindustan Thompson Associate Ltd;
d. eSurveysPro.com;
e. MARG
4. Managers

The 6 steps in the marketing process

55

The market research process is designed to paint a thorough picture of a company’s marketing plan, helping
to identify where the weaknesses and strengths exist. The first step in the marketing research process is
defining the problem or the question your research is trying to answer, followed by developing a research
plan to answer that question, collecting and analyzing the data, and then producing a report.

1. Identify the opportunity

The first step is to define the problem you’re aiming to solve. Asking specific questions will help pinpoint
the most pressing needs or reveal the biggest opportunities to reach your research objectives. Questions you
might ask in this initial stage include:

 How many of our recent buyers are first-time customers?

 How can we turn them into repeat customers?
 Why are sales lower than last quarter?
 Are our prices too high?
 Why do customers put items in their shopping cart but don’t complete the purchase?
 How can we make our checkout flow more efficient?

2. Develop a research plan

A marketing research plan can help a business outline how to find the ways to address the questions it seeks
to answer or the problems it wishes to solve. How you plan and design this research depends on the budget
available, the research method chosen to source data, and the scope of the project.

There are two main research methods you can use to collect your data: primary research and secondary
research. Each pulls information from different sources to provide a clear snapshot of your marketing
research plan.

 Primary research. Primary research involves gathering original data through collection methods such as
surveys or in-person interviews, then synthesizing that data into a report. Although potentially time-
consuming and costly, it may be among the best ways to accurately collect answers to your questions.
 Secondary research. Secondary research data involves gathering and synthesizing information gleaned
from other sources, such as research reports, websites, or government files. Most research plans start
with secondary data since it’s usually less expensive and readily available. You can use the information you
gleaned using secondary data to inform how you will approach your primary research.
The scope and budget for the plan will likely influence the time it takes to complete the research. A smaller
sample size, for example, may only need a few weeks, while a larger, complex research project may take
months (and more money) to collect the necessary information.

3. Collect the data

After identifying objectives, it’s important to start collecting information. There are several different data
collection methods that you can use to source information.
56

 Surveys. Conducting a survey is an effective primary research method that can provide valuable feedback
about business practices, marketing tactics, and product demand. Unbiased survey research can help capture
the thoughts and feelings of a particular demographic.
 A/B testing. This research methodology compares two or more versions of a variable— say, two layouts of
the same website (version A and B)—to collect information to test which would result in better outcomes
and consumer engagement. In this scenario, the goal may be to see which site attracts more direct traffic to
increase the number of monthly visitors.
 Social media polling. Setting up a social media poll can be an effective and inexpensive way to collect user
data. Polling current and potential customers gathers insight from your target audience, which can impact
how the company curates its products and user experiences.
 Interviews. Face-to-face or phone interviews can help companies assess consumer expectations from a
brand. During these interviews, participants may be asked questions like: How long have you been a
customer? Or: Why did you choose this brand over the competitor?
 Focus groups. Focus groups gather a select group of people together based on demographics, buying
history, or other factors to collect non-numerical (qualitative) data about a particular product or service.
With focus groups, moderators can capture a variety of opinions and emotions via open-ended conversation
or lines of questioning to capture the feelings potential (or current) customers have toward a product or
service.

4. Analyze your data

Analyzing data is a way to uncover trends or patterns within the company or in the marketplace that can
impact a business’s market performance. Data analysis transforms raw metrics into digestible information to
provide the answers to your initial research questions.

There are four main types of analysis you can use to evaluate data:

 Descriptive analytics. Analysis tools that lay out data in charts and graphs, for example, so you can see the
big picture are known as descriptive analytics. This type of analysis presents a snapshot of performance in
numbers, such as unique users or page views.
 Diagnostic analytics. Analysis tools that provide more than a general overview can help you find the “cause
and effect” of a problem. For example, if the number of visitors to your website has decreased by 15%
within the last six months, you’ll want to investigate why. Are too many pop-ups making it more difficult for
users to navigate the site, or is the page load speed too slow and users are clicking out to another website?
 Predictive analytics. Based on existing data, predictive analytics help companies establish predictive
models to forecast future outcomes more accurately. For instance, if data points to a correlation between the
start of the school year and increased clothing sales, your ecommerce company may need additional
solutions to help take care of increased web traffic during this time of year.
 Prescriptive analytics. This analytics tool combines descriptive, diagnostic, and predictive analytics
methods to help companies optimize their best course of action. For example, if predictive analytics show
clothing sales go up at the beginning of the school year, prescriptive analytics would assist in prescribing a
solution—in this case, finding web hosting plans that upgrade site bandwidth to accommodate increased
web traffic.
57

5. Present your results

Once you’ve done the research and analyzed the data, you can build a research report to present your key
findings. You can present your report in a slideshow format, as an illustrated book, as a video, or in an
interactive dashboard that allows users to look at the data in different ways. The emphasis should be to
present the information in a way that is comprehensible and accessible.

Marketing research reports contain, at minimum, key company-specific details like customer profiles, target
audience buying habits, and market competitors, and address the questions your research sought to answer.
Beyond that, reports typically present the findings from the research in a narrative format that incorporates
visuals, like charts and graphs, alongside “real people” feedback. You’re not looking to present a stack of
numbers—you want to establish a story about real people, how they behave, and their desires (as they
pertain to the company or product). The report also needs to present the solutions to these problems—how
the company should tailor its strategies to optimize its marketing and target its consumers better.

Other information to include in your report is how you arrived at these conclusions. Which research
methods did you use? How long did it take? How big were your sample groups? Once the report is
compiled, share these results with all necessary parties, like relevant stakeholders such as the marketing
team, company managers, or other people this proposed shift in strategy might affect, like engineering.

6. Incorporate your findings

Once you’ve presented your data, it’s time to develop actionable plans that put your findings into play,
whether it’s developing brand-new strategies or improving existing ones. Some findings may result in big
shifts to your marketing plans or small improvements that can help you optimize your company strategy
overall.

For instance, if your marketing report points to an issue with retaining a younger audience, you may need to
redesign your entire social media campaign to accommodate a wider demographic. Or, you might only need
a smaller shift, like offering extra promotions through social media accounts to entice current young
customers to stay loyal. An ever-changing market means that your data won’t stay relevant forever, so
turning your info into action can help you improve your business when it counts.

What is marketing operations management?

Marketing operations management is a process that includes the planning, organizing and overseeing
of all marketing activities. The MOPs team is a central part of a marketing department in any-sized
company. It involves creating strategies for reaching goals, allocating resources, tracking progress, and
ensuring compliance with standards. The goal is to optimize the efficiency and effectiveness of marketing
initiatives so that better results can be achieved in a shorter amount of time.

"Marketing operations management is a process that includes the planning, organizing and overseeing of all
marketing activities. The MOPs team is a central part of a marketing department in any-sized company.”
58

For example, suppose you're running an email marketing campaign. In that case, your marketing operations
team is responsible for creating and maintaining the campaigns, analyzing data from previous campaigns,
monitoring analytics to measure success, and making necessary changes.

Why is marketing operation so important?

Optimizing your MOPs can help you improve customer service, increase sales and revenue, reduce
costs, and better understand your target audience. It can also help you become more agile and responsive
to changes in customer buying behavior—ultimately creating a better customer experience.

By taking a strategic approach to managing your MOPs, you create an efficient system for your marketing
strategy that will drive results for your brand. With the right tools in place, you'll be able to track progress
and adjust your campaigns as needed.

What systems do marketing operations encompass?

Marketing operations management covers a wide range of systems, including:

 CRM (customer relationship management) software

 Analytics and reporting tools

 Social media management platforms

 Content management systems (CMS)

 Email marketing platforms

 Lead generation tools

As businesses continue to expand, the need for efficient marketing operations management is ever-
increasing. Without it, enterprises could quickly become chaotic and disorganized. Marketing operations
management helps streamline marketing workflows by unifying team members, departments,
deadlines, and goals—all in one place.

Here are a few ways to leverage this powerful tool to maximize success in your marketing processes.

Skillsets to optimize your marketing operations

To get the most out of your marketing operations management, here are some skills your team members
should possess:

1. Technical skills
Your marketing ops team must be tech-savvy. From SEO to spreadsheet optimization and website
analysis, they should have a broad range of technical skills depending on the role. Additionally, they must be
well-versed in any software programs used for marketing purposes—comprehension at both fundamental
and advanced levels is vital for success.
59

2. Strategy skills
When crafting the necessary infrastructure for their marketing team, MOPs teams must take a strategic
approach. It's essential to consider all the other departments they support and how to construct an effective
framework that assists these teams in achieving their objectives.

3. Data management
Data management is an essential skill for any marketing team, requiring the collection and organization
of data in a dashboard or tool to be shared with everyone at your company. A skilled MOPs team will help
you set up connections between various data sources that can then be used to analyze the performance of
campaigns.

4. Marketing automation
Bigger teams often depend on marketing automation software to facilitate their marketing efforts. A
successful marketing operation professional must understand how to utilize the technology and guide
data in the right direction for maximum efficiency.

5. Customer relationship management

Connecting with customers is a critical responsibility for all marketing and sales teams. By forming an
alliance between the two teams, both will benefit from having access to information about prospects in order
to create effective strategies that convert leads into paying customers.

How to create a strategy for marketing operations

Creating an effective marketing operations strategy will help ensure success. Here are some steps you can
take to create an effective strategy:

1. Define the needs and goals of your business

When forming a plan for your MOPs team, it’s crucial to be aware of the expectations and aspirations set by
key stakeholders and to get their buy-in. The MOPs department plays an invaluable part in backing up
the overall performance of the marketing sector.

For example, let's say that you work in an e-commerce business. The growth marketing team wants to
attribute some of their sales to social media ads, so they meet with your MOPs team to discuss how this can
be achieved using the existing marketing tools. With everyone on board, it is now possible for them to track
and quantify the success of these campaigns accurately and efficiently.

2. Create an action plan

The marketing operations department will then collaborate with stakeholders to design a plan of action.
Though commonly, a stakeholder might expect something your current marketing infrastructure cannot
deliver, it's up to the MOPs team to know both the capabilities and restrictions of your current
technology, so you can collaborate for an ideal course forward.

This plan should include how to measure and monitor progress, a timeline for completion, and specific roles
and responsibilities for each marketing function.
60

3. Develop the necessary teams and systems

Once you have an action plan, it's time to implement your strategy. This can involve developing new teams
or systems, such as social media content calendars and reporting systems. Additionally, the MOPs team can
help identify areas where improvement is necessary and put solutions that will improve performance into
play. The ultimate role of marketing operations is to ensure a streamlined effort across all teams to
ensure the best customer journey possible.

When implementing, it's important to be transparent with stakeholders and ensure everyone is aware of the
progress. You should create a communication plan to ensure that all stakeholders are informed and up to
date. A project management tool can keep track of progress and measure results..

4. Track progress, measure results, and adjust strategies

Finally, you should constantly monitor and track your progress and metrics, making any necessary
adjustments along the way. Keep track of KPIs, compare them to benchmarks, and identify areas for
improvement.

Additionally, look at successes and failures to learn what works and what doesn’t. Make sure to
communicate any successes with stakeholders so they can see the value and impact of your efforts. As the
business evolves, so should its strategies and tactics. Ensuring that processes are up to date is essential.

By creating an effective strategy and following these steps, you will be able to optimize the
performance of your marketing operations team, resulting in increased sales, better ROI, and
stronger customer relationships.

Marketing operations toolset

To ensure that MOPs teams can work effectively, a range of marketing tools are available. And
with marketing management technology solutions growing at a rate of 15.2%, it's time to get on board.
Some of these tools include:

 Project management tools track progress and manage tasks between team members

 Analytics platforms provide visibility into data to uncover insights and inform decision-making

 Reporting tools measure and report on key performance indicators

 Automation tools enable teams to automate processes and save time

 Collaboration tools help teams collaborate more effectively, regardless of location or time zone

 Content operations systems help teams store, organize, and collaborate on content operations across
multiple teams

 CRM systems store customer data and provide insights into customer behavior

By leveraging these tools, MOPs teams manage marketing operations efficiently and effectively. With
the right strategies in place and the right marketing technology, your team can optimize performance across
all aspects of marketing.
61

At its core, marketing operations is all about bridging the gap between strategy and execution. It
ensures that teams are aligned and processes are efficient. By combining the right people, processes, and
technology, MOPs teams can help to drive meaningful results for any business.

For companies that want to remain competitive in today’s digital landscape, having a well-oiled MOPs team
is essential. With the right strategies in place and the right technology, your team can optimize performance
across all aspects of marketing. By streamlining your workflow, you can create clarity and transparency
throughout the organization, resulting in increased efficiency and improved results.

When you're ready to implement a content operations management system that can streamline and manage
your MOPs, we recommend GatherContent—and not just because it's ours. GatherContent is perfect for
organizations that need to centralize editorial and marketing efforts, collaborate across teams and create
content efficiently.

Marketing is considered an economic activity as marketing is an economic process by means of which goods
and services are exchanged and their values are determined in terms of money prices. Business organisations
are performing this job by sensing, serving and satisfying individual as well group consumers want. Now the
question arises whether marketing may keep its conceptual and functional activities limited to consumer or
group of consumers or to a target market. Modern thinkers believe that marketing should extend its
functions to satisfy the needs of society. Such thoughts. giving a new dimension to marketing emerged into a
new concept of Social Marketing.

In social marketing concept the marketing concept side steps the potential conflicts among consumer wants,
consumer interests and long run societal welfare.’ The techniques of marketing are used to achieving
society’s satisfaction as a whole.

1. Social Marketing: Though marketing aims at satisfying human needs its stress is always on sale of
product. In social marketing the needs of the customer are satisfied taking into considering the needs and
conditions in society. Selling of cigerattes, wine near college boundaries may be considered unethical from
social point of view.
In book ‘Marketing Management’ Philip Kotler has given an example of a fast-food industry that offers tasty
but unhealthy food. The hamburgers supplied by them have high fat content. The other product that the same
fast food company markets ‘fries and pies’ both high in starch and fat. According to Philip Kotler in
satisfying human wants these restaurants may be hurting, consumer health and environmental problem.

Social Marketing concept involves that marketing must develop a social consciousness. It is based on the
thinking that marketing should be involved in vital social issues like removal of poverty, unemployment,
environmental deterioration, populations growth etc.

Philip Kotler has defined his social marketing concept as, “a management orientation aimed at generating
consumer satisfaction and long run consumer and public welfare as the key to satisfying organisational goals
and responsibilities.”
The advocates of social marketing lay emphasis on achieving society satisfaction as a whole. According to
them marketing must include more and more amount of services for the benefits of society and humanity.
62

Marketing has laid its hands very successfully in some area relating to social uplift. Marketing of family
planning has taken up another issue “donation of eyes and removal of blindness. Undoubtedly marketing
efforts and techniques will prove more effective and persuasive.

Ethical Aspect: This is another aspect which marketing must keep in view. Profit maximization must not
lead to consumer exploitation.
Advertising sometimes has a corrupting influence on young minds and encourages immorality. This
adversely affects the social values. Introduction of new products sometimes destroys the utility of existing
products even before their usefulness is over. It also promotes artificial living as people are forced to buy
things beyond their means. Marketing has to avoid such practices.

Legal Aspect: This is another aspect which marketing has to consider. While making strategies it must be
ensured that limits of laws and regulations are not crossed.
Delivering the goods, more especially necessities like sugar, pulses, curd etc. in polythin bags is very
common these days. You never know how hazardous are these bags which are infusing some amount of
poision in our edibles every day. Moreover these polybags when thrown carelessly on the roadsides increase
pollution every where. That is why the advocates of social marketing keep the society infront and the
consumer behind.

Social marketing is the extension of ideas on marketing to social fields. It is the marketing which should
come in the fore front to fight the social evils like dowry, widow marriage, unemployment illiteracy,
population growth etc.

What is Service Marketing?

Service marketing is simply the process of promoting and selling a service or an intangible good to a
specific group of people. It is a new way of marketing that has become very popular and helps companies all
over the world promote their services.

It looks at how a certain kind of service is advertised in the market. Though service marketing is a unique
idea, it needs a way to represent goods that can’t be seen (services).

Service marketing is different from product marketing, which involves promoting a product that can be seen.
Instead, service marketing involves promoting a service that can’t be seen but is still sold to customers.
Services are just things that are given to customers as a commodity. Customers can choose from a wide
range of services.

Eventually, the global sphere has become a service hub that offers many services to customers all over the
world.

Services Marketing Examples

Healthcare industry
Doctors, nurses, surgeons, and other people who work in hospitals are great examples they sell their health
services by seeing and taking care of their patients.
63

Hospitality industry
The hospitality industry is made up of places like hotels and restaurants that serve food, rent rooms, give
massages, and do other things for their customers.

Professionals services
Accountants, lawyers, teachers, writers, masons, carpenters, chefs, electricians, and plumbers are all
examples of service-based jobs. Depending on the job, they may offer more than one service to their clients.

International marketing is the application of marketing principles by industries in one or more than one
country. It is possible for companies to conduct business in almost any country around the world, thanks to
the advances in international marketing.

In simple words, international marketing is trading of goods and services among different countries. The
procedure of planning and executing the rates, promotion and distribution of products and services is the
same worldwide.

In recent times, companies are not restricted to their national borders, but are open for international
marketing. With the increasing change in customers’ demands, choices, preferences and tastes, the
economies are expanding and giving way to more competitive marketing. Thus, organizations need to
respond rapidly to the demands of the customers with well-defined marketing strategies.

International Marketing − Overview

The word ‘International Marketing’ is defined as the exchange of goods and services across national borders
to meet the requirements of the customers. It includes customer analysis in foreign countries and identifying
the target market.

The major participants in international marketing are as follows −

 Multinational Corporations (MNCs) − A multinational corporation (MNC) is an organization that ensures
the production of goods and services in one or more countries other than its home country. Such
organizations have their offices, help desks or industrial set-up across nations and usually have a centralized
head office where they co-ordinate global management.
 Exporters − They are the overseas sellers who sell products, and provide services across their home country
by following the necessary jurisdiction.
 Importers − They are the overseas buyers who buy products and services from exporters by complying with
the jurisdiction. An import by one nation is an export from the other nation.
 Service companies − A service company generates revenue by trading on services and not on physical
commodities. A public accounting company is the best example of a service company. Revenue here is
generated by preparing returns of income tax, performing audit services, and by maintaining financial
records.

Many companies believe that their targets are limited if they only concentrate on a single market like the
U.S. Market and Global marketplace is competitive. Thus, to enrich their market presence such companies
are always on a lookout for better opportunities worldwide.

Green marketing
64

When it comes to buying products on the internet, customers are becoming more aware of the products
they buy. More importantly, sustainable practices are on the rise, meaning customers today closely
evaluate their favourite company’s environmental impact. This is why most successful global companies
are implementing green marketing techniques to adopt such new trends and, in turn, acquire new
customers.

What is green marketing definition? Green marketing, in simple terms, is creating and advertising eco-
friendly products. This enhances the brand’s image and allows the company to attract new customers
while contributing to the well-being of nature. Providing environmentally sustainable products can make
a brand stand out from its competitors. This is especially true as more and more people are becoming
conscious of the environmental effects.

What is Green Marketing?

Green marketing is the process of using and promoting environmentally sustainable products and
services. Additionally, it refers to a wide range of sustainable strategies and practices. Let’s take a look at
such practices briefly:

1. Create environmentally sustainable products.

2. Come up with environment-friendly packaging ideas using recycled substances.
3. Minimisation of greenhouse gas emissions while the products are manufactured.
4. Implement environmentally sustainable business strategies.
With our planet experiencing the effects of climate change, green marketing is becoming more and more
popular. A 2020 study shows that almost 77% of global consumer s consider a company’s sustainability
and responsibility towards the environment while choosing their favourite brands.

Green marketing is typically more expensive than traditional marketing, but it does not mean that making
profits is difficult. Especially due to the increased demand for such practices and market trends. The
meaning of green marketing is to assimilate environmentally conscious practices and simultaneously
improve the brand image by developing and showcasing eco-friendly products.

For example, the local workforce is generally more expensive than using cheap labour overseas. But it
results in the production process having a much lower carbon footprint. Some companies even go a step
further by allotting a portion of their revenue to environmentally friendly initiatives such as planting
trees.

Let’s go over the different types of green marketing strategies that are widely used in the market today.

Key Green Marketing Strategies

Here are four green marketing strategies and techniques that marketers use to create a sustainable brand
that helps our planet:
65

1. Sustainable designing:

Using eco-friendly stickers on product packages is not enough. Paying attention to all of the details in
different business sectors is necessary. For example, marketers and business owners should check in with
the material supplier and the workers to use resources efficiently.

Additionally, businesses must limit the amount of waste that is generated. Green marketers must consider
many factors that affect our environment to develop the best sustainable business model.

2. Brand responsibility:

Be ready to experience a lot of changes if you want to create a sustainable business model. Green
marketing is reacting to heavy pollution and harsh climate changes. Being socially responsible can show
customers that a company truly cares about the current state of our planet.

3. Sustainable packaging system:

In 2022, most of the world’s pollution will be caused due to over-usage of plastic materials. According to
a recent study, almost 8.5 billion tonnes of plastic materials have been produced since the 1950s, among
which only 9% were recycled. Consumers are becoming more conscious of the environmental impacts
and avoiding plastic materials. Therefore, consider creating packages that are made from either recycled
materials or biodegradable substances.

4. Right pricing:

Environmentally sustainable products have a massive value in the market these days. It is such because
of the more costs involved in creating a sustainable business model. Therefore, marketers must provide
every little detail about the production process and other specifics to prove to customers the high price is
justified. Remember that the bigger the brand mission is, the greater the chances of your business getting
noticed for its inventiveness.

Now that we’ve gone over some types of green marketing let’s go through some green marketing ideas.

Major Green marketing ideas

Several sustainable brands admit the fact that green marketing and sustainable business measures have
allowed their company to attract new customers and make more revenue. However, businesses should
still be open to new green marketing ideas and initiatives. Let’s take a look at some of them below:

1. Categorise eco-friendly products and feature them exclusively:

If a brand uses environmentally friendly practices such as coordinating with sustainable suppliers or
using recycled materials from paper and electronic goods. The task of a green marketer here is to inform
the public about it. This will allow a business to attract customers who believe in sustainability. For
example, a shopper can easily find all the necessary information about the environmentally sustainable
measures taken by Dr Scholl’s Shoes on their website.
66

2. Using recycled material:

Try to use as many recycled items as possible during production. Recycling involves refining various
materials, and it aids in reducing water and air pollution levels. This ultimately results in lessening the
effects of greenhouse gasses and their emissions.

For example, Mush is an eco-friendly company from India that uses bamboo to create towels and other
products.

3. Utilising email service to target customers

Newsletters and email notifications effectively reach new customers and the target audience. Retargeting
old customers through the mail is more accessible as it does not require any promotional flyers. This
allows a brand to cut down on its usage of paper. Nevertheless, email marketing is more efficient in
getting valuable feedback from customers.

Using tools like Sendpulse, you can send many emails and operate email campaigns for your existing
customer base. They extend several features, like the drag-and-drop editor, which curates unique emails.

4. Optimize supply and delivery system:

The vehicles companies use to carry and deliver goods and products make a critical difference to the
environment. Spending to upgrade equipment and vehicles is innovative as it can significantly decrease
the company’s carbon emission levels.

Several companies are optimizing delivery systems with electric vehicles. Several companies favour this
as it reduces air pollution to a great extent. An efficient green marketer must use such examples for green
marketing and feature these facts on the website to garner more traffic.

Examples of brands utilizing green marketing

Here are a few examples of some socially responsible brands that utilize green marketing to support a
sustainable production system:

1. Starbucks

This multinational company is one of the very few companies that have advocated for sustainable
production methods for a long time. This company uses solar power for all its electrical usage. Besides,
they’ve started using eco-friendly materials in their outlets. This example of green marketing was loved
and cherished by everyone all over the globe.

Their next green marketing initiative is to make recyclable cups to decrease the amount of garbage
production. Currently, Starbucks is working to implement a similar framework outside of the US. They
aim to convert 10,000 stores by 2025. Additionally, they also run campaigns on various social media
platforms to promote planting trees. The eco-friendly campaigns and the initiatives taken by Starbucks
are the definitions of effective green marketing.
67

2. Unilever

Another example of a company that uses green marketing is Unilever, which has implemented several
eco-friendly practices. Unilever utilises recycled materials. Almost 75% of the production waste is sent
to recycling centers. They have a target to emit zero waste across the globe by the year 2039.
Additionally, they have shown interest in reducing the levels of GHG emissions.

By implementing such eco-friendly marketing measures, Unilever is not only boosting its brand image
but also increasing environmental consciousness around the world. Implementing such green marketing
strategies can attract new customers and increase sales.

3. H&M:

H&M has made many changes in environmental policies and procedures to create a
“Conscious collection’. This made them recognizable as one of the most environmentally responsible
companies worldwide. They are famous for creating almost 50% of their clothing products from eco-
friendly materials.

H&M also introduced a recycling program that allows consumers to return old clothes. Some of H&M’s
clothes are created with recycled polyester and organic cotton.

Cyber marketing has now become an indispensable segment of e-commerce as well as the internet and
World Wide Web related topics. Cyber marketing simply refers to a technique of attracting potential
customers by advertising your products or services through such means as websites, emails, and banners.

In other words, cyber marketing is a blend of internet technology and direct marketing principles that is
adopted by business owners to find profitable customers and to interact with them in order to enhance their
business activities, thereby ensuring improved ROI (Return on Investment.) A number of activities are
involved in cyber marketing such as online marketing, fax direct marketing, canvassing, call center direct
marketing, and mobile phone marketing via SMS (Short Message Service.)

Benefits derived from the adoption of cyber marketing techniques are immense. First of all, it enables to
minimize business costs and helps you to reach a substantial number of customers and that too within
minimal time frame. Another great benefit of cyber marketing is that it allows you to cost-effectively reach
in any type market, let it be regional, national, and international.

Also, a significant benefit of cyber marketing is that it enables you to win profitable customers.
Exceptionally low marketing costs, high profit margin, increased customer loyalty, round the clock services,
and expansion in customer base are the other obvious benefits of cyber marketing.

However, it is not as easy you think to enhance your business profitability via cyber marketing techniques.
In other words, in order to employ this marketing technique, it is important that business owners and other
people engaged in the internet field such as ecommerce and marketing professionals must possess adequate
skills.

Hence, on recognizing the growing importance as well as the increased application of cyber marketing
techniques, many learning centers spread across the world now offer specialized courses for cyber
marketing. Cyber marketing courses are considered highly beneficial for such people working in arenas
68

including marketing, e-commerce, sales and operations, strategic planning, general management, support
marketing, e-business programs, Product, brand, e-marketing, and personnel engaged in assessment of
consumer profitability as well as analysis of sales.

Cyber marketing courses are divided into a number of modules such as:

-Overview of E-Business technology

-E-Business Communication

-E-Business Distribution Systems

-E-Business Value Strategies

-E-Business Strategy

-E-Business Management

-Individual as well as the diffusion of innovations

-How to gather and use information

-The Political, Legal, and Ethical Environment

All of these modules together impart training on a number of aspects of cyber marketing such as:

-Strategies as well as tactics involved in online marketing

-Role of E-business in restructuring the traditional distribution systems

-Way of designing advertising campaign and advertising banner

-How to employ email marketing, blog advertising, viral marketing, and Google advertising

-What is search engine optimization (SEO) and how to increase web visitor count through SEO?

-How to develop contents that should be included in a website

-Web analysis

-Aspects covering ethical, legal, and political sides of cyber marketing

-Cyber marketing tools

Cyber marketing courses also provide special training on

-How to gain the attention of audience through an effective website

69

-How to use gathered information to discover new knowledge

-How to enhance the value of your business using management systems

-How to organize E-Business strategies to compete with your rivals

-How to employ different data to gain competitive benefits

Apart from class learning, in most cases, latest case studies and practical workshops also form part of the
cyber marketing courses. The duration of this class is usually 24-30 hours.

However, in order to attend this course, it is necessary that candidates must have at least two years
experiences in any of the disciplines such marketing, e-commerce, sales and service promotion, strategic
planning and general management, brand or product promotion, e-marketing, advertising, and online media
industry. On successful passing of a two hours online examination, the candidate will be given EC-Council's
Certified E-Business Professional (CEP.)

With scores of learning centers in the scenario, it has now become quite easy to procure skills in cyber
marketing techniques. However, an investigation must be undertaken with regard to the reputability as well
as the way they render the classes. It would be even better if the learning center you have chosen is the
member of some international organizations.

What is relationship marketing?

Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer
loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and
individual sales. The goal of relationship marketing (or customer relationship marketing) is to create strong,
even emotional, customer connections to a brand that can lead to ongoing business, free word-of-mouth
promotion and information from customers that can generate leads.

Relationship marketing stands in contrast to the more traditional transactional marketing approach, which
focuses on increasing the number of individual sales. In the transactional model, the return on customer
acquisition cost may be insufficient. A customer may be convinced to select that brand one time, but without
a strong relationship marketing strategy, the customer may not come back to that brand in the future.

While organizations combine elements of both relationship and transactional marketing, customer
relationship marketing is starting to play a more important role for many companies.

Effective relationship marketing involves a variety of overlapping strategies and technologies that help
foster a deeper, long-term relationship with current and prospective customers.
Why is relationship marketing important?
Acquiring new customers can be challenging and costly. Relationship marketing helps retain customers over
the long term, which results in customer loyalty rather than customers purchasing once or infrequently.
70

Relationship marketing is important for its ability to stay in close contact with customers. By understanding
how customers use a brand's products and services and observing additional unmet needs, brands can create
new features and offerings to meet those needs, further strengthening the relationship.

Reasons to implement a relationship marketing strategy

Relationship marketing is based on the tenets of customer experience management (CEM), which focuses on
improving customer interactions to foster better brand loyalty. While these interactions can still occur in
person or over the phone, much of relationship marketing and CEM has taken to the web.

With the abundance of information on the web and flourishing use of social media, most consumers expect
to have easy, tailored access to details about a brand and even expect the opportunity to influence products
and services via social media posts and online reviews. Modern relationship marketing involves creating
easy two-way communication between customers and the business, tracking customer activities and
providing tailored information to customers based on those activities.

For example, an e-commerce site might track a customer's activity by allowing them to create a user profile
so that their information is conveniently saved for future visits and so that the site can push more tailored
information to them next time. Site visitors might also be able to sign in through Facebook or another social
media channel, allowing them a simpler user experience and automatically connecting them to the brand's
social media presence.

This is where CRM and marketing automation software can support a relationship marketing strategy by
making it easier to record, track and act on customer information. Social CRM tools go further by helping to
extend relationship marketing into the social media sphere, allowing companies to more easily monitor and
respond to customer issues on social media channels, which in turn helps maintain a better brand image.

Benefits of relationship marketing

The benefits of relationship marketing include the following:

 Higher customer lifetime value (CLV). Relationship marketing creates loyal customers, which leads to
repeat purchases and a higher CLV. In addition, loyal customers are likely to become brand advocates
or ambassadors, recommending products and services to friends, family and business associates.
 Reduction in marketing and advertising spend. Spending on marketing and advertising to acquire new
customers can be expensive. Relationship marketing causes customers to do the marketing for a brand in
what's called buzz marketing. Customers tell others about a brand's products and services, which can drive
sales. Brands with exceptional relationship marketing programs spend little to no money on marketing or
advertising.
 Stronger organizational alignment around the customer. Organizations that emphasize relationship
marketing have a stronger organizational alignment around an exceptional customer experience. The teams
work together to create satisfied and happy customers over the long term.
Examples of relationship marketing
There are several types of activities brands can use to facilitate relationship marketing:

 Provide exceptional customer service, as customers who are consistently impressed by a brand's customer
service are more likely to remain loyal to the brand.
71

 Thank customers through a social media post or with a surprise gift card.
 Solicit customer feedback through surveys, polls and phone calls, which can create a positive impression
that customer opinions are valued and help to create better products and services.
 Launch a loyalty program that rewards customers for their continued patronage.
 Hold events to connect with customers and build a community.
 Create customer advocacy or brand advocacy programs to reward customers who provide word-of-mouth
advertising on a brand's behalf.
 Offer discounts or bonuses to long-time or repeat customers.

What Is Advertising Effectiveness?

Advertising is a critical component of marketing. It is the process of communicating information about

products, services, brands, or ideas to persuade a target audience to take a specific action, such as purchasing
a product or subscribing to a service. Understanding advertising effectiveness can help you determine how
to allocate advertising budgets and which strategies are likely to be most effective in achieving desired
objectives. In this article, we answer the question, "What is advertising effectiveness?", explain how to
measure it, provide the factors that influence it, discuss tips for improving it, highlight the best metrics to
use, and review some common challenges.

What is advertising effectiveness?

The answer to "What is advertising effectiveness?" involves understanding what advertising is and what
objectives it achieves. Advertising is a form of marketing communication that employs paid media to deliver
a message to a target audience. In business, its purpose is to persuade consumers to purchase or use a
product or service. Advertising effectiveness is the extent to which an advertisement can achieve its
objectives and deliver a return on investment. For example, if an ad increases brand awareness, the extent to
which it increases consumer knowledge of and interest in the product measures its effectiveness.

How to measure advertising effectiveness

Here's how you can measure advertising effectiveness:

1. Set a goal

Every advertisement may have a specific goal. Whether it is to increase brand awareness, generate leads, or
promote a sale, determine what you want your ad to achieve before you try and measure its effectiveness.
Some brands also use advertising to build brand equity or create an emotional connection with consumers.
Your goal depends on your business objectives and what you want to achieve with your advertising
campaign.

2. Develop metrics

Metrics are the indicators that you can use to measure progress towards your campaign goals. Goals may be
specific, measurable, attainable, relevant, and time-bound (SMART). For example, if your goal is to increase
brand awareness, you can measure the number of times your audience sees or shares your ad. If your goal is
to generate leads, you can measure the number of clicks on your ad or the number of people who sign up for
your e-mail list. It's essential for the metric you choose to align closely with your advertising objectives.
72

3. Collect data

Data collection involves tracking the progress of your ad campaigns and measuring the metrics you have
selected. You can gather this data through surveys, customer feedback, or marketing automation software.
Note that it's important to establish a baseline before you begin advertising to track progress. It's also
important to ensure that you collect data consistently to draw accurate conclusions.

4. Analyze data

Data analysis involves looking for trends and patterns in the data and determining whether your ad
campaigns meet your desired objectives. If they don't, you can adjust your strategy. For example, if you
notice that the number of consumers viewing your ad is lower than planned or expected, you can increase
your ad spend or adjust your targeting.

What factors influence advertising effectiveness?

Several factors can influence the effectiveness, including:

Quality of the ad

Ad quality refers to how well your ad can deliver its message and persuade consumers to take action. To
create an effective ad, ensure it is well-written, visually appealing, and relevant to your target audience. It's
also essential to ensure you format it properly for the chosen media and that it meets legal requirements.

Placement of the ad

Ad placement refers to where your ad appears and how consumers can access it. For example, ads placed on
websites with high traffic are more likely to be seen by consumers than those placed on less popular
websites. Similarly, ads that appear in prime-time slots on television are more likely to be seen than those
airing late at night.

Frequency of the ad

Ad frequency is the average number of times your ad is shown to a unique user. Ads shown more often are
more likely to be seen and remembered by consumers than those that appear less often. If frequency
becomes excessively high, it can also lead to ad fatigue, which often decreases the effectiveness of an ad. If
this occurs, reducing ad frequency or rotating the ad with other ads may be necessary.

Target audience

The target audience is the group of people most likely to be interested in the advertised product or service.
When choosing a target audience, it's important to consider factors such as age, gender, location, and
interests. You can use market research to learn more about your target audience and how to reach them.

Media used

The media used refers to the platform on which the ad appears. The most common media types include
television, radio, print, online, and out-of-home (OOH). When selecting a media platform, it's important to
consider the target audience and the campaign's objectives.
73

Timing of the ad

The timing of the ad refers to when you show it. For example, you may show ads for seasonal products or
events before or during the relevant period. It's essential to show your ad when the target audience is most
likely to be exposed to it.

Tips for improving advertising effectiveness

There are several ways you can improve the effectiveness of your advertising, including:

 Develop a clear and concise message: Make sure your ad includes a clear and concise message that's easy
for consumers to understand. The message may apply to your target audience and align with your marketing
objectives.
 Use strong visuals: As strong visuals are more likely to gain the attention of consumers and communicate
your message, use high-quality images that apply to your product or service and appeal to your target
audience.
 Test your ad: Use A/B testing to compare different ad versions and see which performs better. You can also
use this method to test unique elements of your ad, such as the headline, copy, and call-to-action (CTA).
 Monitor your analytics: Analytics tools help you track ad performance and ensure that it meets your
objectives. These tools can help you monitor reach, impressions, clicks, and conversions.

Best metrics for advertising effectiveness

Many metrics can be used to measure the effectiveness of advertising, including:

 Reach: Reach is the number of people who see your ad. This metric is important to consider when assessing
the overall exposure of your ad.
 Impressions: Impressions refer to the number of times your audience sees your ad. This metric can measure
the reach of your ad.
 Clicks: Clicks refer to the number of times consumers click on your ad. This metric can measure audience
engagement and the effectiveness of its CTA.
 Conversions: Conversions are the number of people who take the desired action after seeing your ad. This
metric can measure the effectiveness of your ad in achieving results.

Challenges to advertising effectiveness

Several challenges can affect the effectiveness of advertising, including:

 Ad blockers: Ad blockers are software programs that prevent ads from being shown on websites, which can
reduce the reach of your ad and make it less effective. To combat this, you can use native advertising or
create compelling content that's less likely to be blocked.
 Ad fraud: Ad fraud is online fraud that occurs when advertisers get charged for ads not seen by consumers.
You can use trusted ad networks and monitor your campaign closely to prevent ad fraud.
 Ad overload: Ad overload occurs when consumers are exposed to an excessive number of ads, which can
lead to ad fatigue. To combat this, you can use frequency capping or create an ad schedule that spaces out
the showing of your ad.
74

Stages in the Adoption Process

Consumers go through five stages in the process of adopting a new product.

Let’s look at each of these stages in the consumer adoption process (often referred to as the “hierarchy of
effects model”) in some detail.

 Stage 1: Product Awareness. The first stage in the consumer adoption process is simply creating awareness
that the product is available, so the company develops a successful marketing strategy to make customers
cognizant of the new product. This strategy might include creating a strong presence for the product in social
media, for example. The goal here is to reach as many customers as possible at a relatively low cost. Let’s
assume for a minute that you’re watching a football game on Saturday afternoon, and you see a television
commercial for a mouthwash that whitens your teeth while you rinse. You’re now aware of the product,
thanks to that commercial!
 Stage 2: Product Interest. In this stage, consumers are aware of the product, and it has piqued their interest.
The company should guide consumers by providing easily accessible information on the product, such as a
website, blog posts, tutorials, or instructional videos. Let’s go back to our mouthwash example. You’re
intrigued with the concept that a mouthwash can whiten your teeth, so you call your brother who’s a dentist
to ask if he’s familiar with the product and what he has to say about it. That’s product interest.
 Stage 3: Product Evaluation. Before they buy it, consumers will typically examine, compare, and evaluate
the product. They haven’t purchased it yet, and they often look to social media channels, such as online
reviews and recommendations, to see how other consumers feel about the product or service. Think about it:
How many times have you viewed customer reviews on Amazon prior to purchasing a product? In our
example of the mouthwash, you might do an Internet search to read reviews of the product before you
actually purchase it. That’s product evaluation.
 Stage 4: Product Trial. This is the stage in the consumer adoption process where the consumer actually
tries the product out. It might be a free sample in a retail store or a “100 percent money-back guarantee” trial
purchase of an online product. This is also the stage in which marketers are hoping that the product will
deliver on consumer expectations.
 Stage 5: Product Adoption. When consumers enter this phase, they’re ready to buy, whether it’s online or
in a retail store. As a marketer, hopefully you’ve made the acquisition and payment process as seamless as
possible so that your customers can easily obtain your product.

It should be noted that there are five characteristics of innovation, and each affects the rate of adoption
differently. This is also known as the process of diffusion of innovation—the process through which new
products are adopted (or not) by customers. Let’s take a look:

 Relative Advantage: How much is the new product “better than” what it replaces? This is, of course, based
entirely on a consumer’s perception, but as a general rule, the easier it is to recognize the advantages of
using the product, the more quickly it will be adopted.
 Compatibility: This is the level at which the innovation fits into a specific society due to economic,
lifestyle, and cultural reasons. For example, PCs were very compatible with middle-class lifestyles, so the
product was quickly adopted. On the other hand, the diffusion of birth control in parts of the world is not
compatible with social mores due to religious beliefs and cultural values.
 Complexity: How difficult is the new product for the adopter to understand and use? If the difficulty level is
too high, it is less likely that adoption/diffusion will take place. Think about your own experiences: Have
you ever returned a product because it was too complicated to use?
75

 Divisibility: Divisibility is the ability to give the product a “test run” before putting down your hard-earned
cash. For example, in no small part due to the COVID-19 pandemic, some online car sellers
like Carvana and Shift, as well as some car dealerships, have adopted touchless test drives. The car is
brought to the shopper’s home, it’s wiped down with disinfectant, and the consumer takes the car for a test
drive alone while the delivery person waits.

 Communicability: You may know your product is great, but you need to be able to effectively
communicate to your audience. Communicability is the ability to effectively communicate the benefits and
results of using the product, and when those benefits and results are both observable and describable to
others. Let’s imagine for a moment that you’ve purchased an expensive Peloton bike to get in shape after the
new year. Would you continue to use it if you didn’t see the desired results? Perhaps even more importantly
in terms of communicability, would you be willing to share your results with others if those results weren’t
favorable?

It was first thought that diffusion was a one-step process: from mass media (i.e., advertising) to the
individual. Marketers now recognize that it is a two-step process, and the second step is personal influence
—that is, communication between individuals in which individuals can affect the purchasing decision of
others because of their authority, knowledge, or position. For example, Kylie Jenner is a powerful social
media influencer with over 250 million followers on Instagram.

New Product Adopter Categories

Consumers adopt new products at their own speed. Some want to have the “latest and the greatest” as soon
as it is available. If you doubt that, just look at the lines around any Apple store on the day of a new product
release. Others tend to wait a while before buying. Scholar and professor of sociology at The Ohio State
University Everett Rogers is credited with introducing the diffusion of innovation theory in 1962, in which
he explained how a product or idea gains momentum and spreads through a population or society. In his
theory, he identified five adopter categories :

Let’s look at each of these categories in a little more depth.

 Innovators: Innovators are the risk-takers in the market. As a general rule, they have higher-than-average
income and are typically well-educated. They enjoy the “rush” of taking risk but are also willing to accept
the consequences of failure. It’s the innovators who buy new products as soon as they hit the market.
 Early Adopters: Early adopters are actually the best target market for new innovations. These people tend
to be well-educated “opinion leaders” with neighbors and friends, and their product advice is generally
accepted more readily than product advice provided by innovators.
 Early Majority: The early majority typically look to the innovators and early adopters to determine if the
new product meets expectations because they don’t want to take the risk of being the first to adopt the new
product, but they do accept innovation before the “average person.” This group of consumers is typically
above average in terms of education and income but also tend to be “followers” in their social group.
 Late Majority: Consumers in the late majority category are typically slow to catch on to the popularity of
new services, products, ideas, or solutions. About 34 percent of the population will buy a new product only
after about half of the population does. They’re not interested in the “bells and whistles” (i.e., functionality
and benefits) of the “latest model” and want simple, cost-effective products that focus on specific uses. As a
general rule, their income and education are limited, and they’re typically unwilling to take a chance with a
new product unless the majority of consumers has already adopted the innovation.
 Laggards: Laggards are more in tune with the past than the future, and they’re leery of new ideas. By the
time they adopt a product, there’s probably already a new version or innovation taking its place.
76