What is marketing?

According to Kotler and Armstrong, "Marketing is the process by which

companies create value for customers and build strong customer
relationships in order to capture value from customers in return."
Marketing starts with creating value for customers. It involves
understanding the needs and wants of customers and designing products
to satisfy such needs and wants. The products offered denote 'market
offering' which is provide intended to total satisfaction to the
customers. The marketer's association with the customers continue
even after the sale of the product which leads to building strong
customer relationships. The end result of marketing is capturing
value from the customers in the form of sales, market share and
profits.
Process of marketing:
 Understand the market and customer needs and wants.
 Design the product to satisfy customer needs and wants.
 Develop an integrated marketing program that delivers superior
value to the customers.
 Build profitable relationships with customers and offer ‘customer
delight’.
 Capture value from customers to rate profits and customers loyalty.

Nature of marketing:
1. Customer focused -> marketing is defined as customer centered
2. Based on systems approach -> the coordination between 4ps are
required in marketing
3. Integrated process
4. Mutually beneficial exchange
5. Interaction with external environment.
6. Creative.
7. Multi-disciplinary discipline.

Scope of marketing:
Scope of marketing is not restricted to business organization but it
is expanded into all sectors or any non- business organization. The
scope of marketing is determined by the market offerings an
organization has to offer. Marketing offering doesn’t have to be the
physical goods only it can be of many types some are mentioned below
1. Goods -> bread, butter, etc.
2. Services -> banking, insurance, etc.
3. Ideas -> anti-smoking campaign
4. Persons -> actors, painters, politicians
5. Organizations -> educational, social
6. Places -> Taj mahal, Kashmir, Europe

Functions of marketing:
1.Functions of research:
i. Marketing research: It means the intelligence service of an
organization. It helps in analyzing the buyer’s wants,
attitudes and behavior, relative popularity of a product,
effectiveness of advertisement media, etc. its major task I to
provide the marketing manager with timely and accurate
information so that better decisions could be made.
ii. Product design & development: a product is something which
a business offers to its customers to satisfy their needs. When
marketing research has done its work to find the information
regarding the requirements and wants of a customer now its tie
for the product design and development to create product
accordingly. Product design and development involves a number
of decisions, namely, what to manufacture or buy, how to have
its packaging, how to fix its price and how to sell it. The
production department will be guided by the requirements of the
users.

2. Functions of exchange:
i. Buying and assembling: Raw materials are purchased for
production by the industrial enterprises and finished good
are purchased for resale by the commercial enterprises. It is
the marketing department which supplies the information
regarding the needs and tastes of the customers. Buying is
different from assembling. Buying involves determination of
requirements, ending the sources of supply, placing the order
and receiving the goods. But assembling means collection of
goods already purchased from different sources at a common
point. It is also used in another sense. Raw materials are
purchased and assembled in order to produce goods and
services.
ii. Selling: this is an important aspect of marketing under which
ownership of goods is transferred from the seller to the
buyer.

3.
 Importance of marketing:
 Benefits to the firm- Efficient marketing management is a pre-
requisite for the successful operation of business any
enterprise. A business organization is differentiated from other
organizations by the fact that it produces and sells products.
The importance of marketing in modern business is discussed
below:
 Marketing is the beating heart of the business firm: The chief
executive of a business cannot plan, the production manager cannot
produce, the purchase manager cannot purchase, and the financial
controller cannot budget until the basic marketing decisions have
been taken. Marketing function is rightly considered the most
important part of management.
 Marketing gives top priority to the needs of customers: Quality of
goods, storage, display, advertisement, packaging, etc. Are all
directed towards the satisfaction of customer
 Marketing helps in the creation of place, time and possession
utilities: place utility is created by transporting the goods from
the place of production to consumption center. Time utility is
created by storing the goods in warehouses until they are demanded by
customers possession or ownership utility is created through sale of
goods. The significance of marketing lies I the creation of these
utilities to satisfy the needs of the customers and thereby earn
profit. It’s a firm ability to satisfy its customer, it will have
better chances of survival and growth even in the fast-changing
environment.
 Marketing generates revenue for the business firm: Marketing is an
important activity these days, particularly in the competitive
economies. Marketing generates revenue for the business enterprises.
No firm can survive in the long run unless it is able to market its
products. In fact, marketing has become the nerve center of all human
activities.

 Benefits to the customers-

 Provision to information: Marketers provide important information
to people about the availability of their products in the market
and their usefulness for the buyers.
 Satisfaction of needs and wants: marketing helps the customers in
procuring goods and services to satisfy their needs and wants.
 Wilder choices: marketing helps in creating competition among the
marketers who come out with new improved products for the
customers. Thus, the customers get a wide choice.
 Improvement in standard of living: by providing a variety of goods
and services, marketers help in improving products for the
customers. Thus, the customers get a wide choice
 Time and place utility: marketers create utility by providing
goods to consumers when they need the same. Similarly, they create
place utility by providing the goods to consumers at the place they
prefer.

 Benefits to the society:

 Satisfaction of society’s needs: marketing determines the needs of
the people in the society and sets out the pattern of production of
goods and services necessary to satisfy such needs.
 Improved standard of living: marketing helps in improving the
standard of living of people. It does so by offering a wide variety
of goods and services with freedom of choice. Marketing treats the
customer as the king around whom all business distribution of
products is carried out to satisfy the customer.
 Generation of employment: marketing generates employment for
people. A large number of people are employed by modern business
houses to carry out the functions of marketing. Marketing also give
an impact to further employment facilities. In order to ensure that
the finished product reaches the customer, it passes through
wholesalers and retailers and in order to perform numerous jobs,
many people are employees.
 Better utilization of resources: marketing helps in better
utilization of the scarce resources of the society as each firm
tries to produce the goods and services economically and
efficiently.

 Evolution of market concepts and philosophies-

1. Production concept- This philosophy is based on the belief that
high production efficiency and mass distribution would sell the
product offered to the market. mass production and distribution
are the essence of the production concept. It applies the best
when demand exceeds the supply or product cost is high that can
be brought down by mass production.
 What is a product?
A product can be defined as a bundle of utilities consisting of
various product features and accompanying services. The bundle of
utilities or the physical and psychological satisfaction that the
buyer receives is provided by the seller when he sells a particular
product. The customer does not buy merely the physical and chemical
attributes of a product. He is really buying want satisfaction. He
will buy a product which can offer him expected satisfaction. In
other words, what a buyer buys are a mixture of expected physical and
psychological satisfactions. Therefore, the term product' does not
mean only the physical product but the total product including brand,
package, label, status of manufacturer and distributor and services
offered to the customer, in addition to the physical product. The
term product is inclusive. It means not only physical goods such as
bike, AC and music system, but also services (travel agent, property
dealer retailer), credit cards, financial services, persons (artist
or politician), places (hotels, flats, private bungalows),.
organizations (State Bank of India, world Health Organization), and
ideas (neighborhood watch scheme, pollution control and No smoking
zones)
Product level:
1. Core level- The first and the basic level is the core
product/benefit the customers look at. It is the basic good or
service purchased, aside from its packaging or accompanying services.
We buy a product first because of its core or fundamental benefit –
the problem it solves or the need it satisfies.

From a bar soap, for example, the core benefit we look at is: it
cleans our skin. While the purchaser of a cosmetic item buys beauty,
the purchaser of a lottery ticket buys hope, and so on. A core
product’s benefits range from tangible to intangible.

2. Basic product- The benefits that customers look at must be turned

into a basic product by the marketer. A calculator, for example,
includes plastic, metal, electronic circuits, and a liquid display
crystal. The most fundamental level is the basic product, which seeks
an answer to the question: What is the buyer really buying? The basic
product forms the nucleus of the total product. It constitutes the
problem-solving features or basic benefits that consumers seek when
they acquire a product. A person buying a car acquires mobility,
which enables him to move from one place to another. Theodore Levitt
has pointed out that buyers “do not buy quarter-inch drills; they buy
quarter-inch holes.”

3. Expected product- The next level is the expected level. It

includes a set of attributes and conditions that the buyer expects
which marketer should provide for purchase to take place. In the case
of a calculator, the buyers expect it to be handy, easy to operate,
and so on.

4. Augmented product- The Fourth Level of a Product is the Augmented

Level or the augmented product. The augmented product is what the
customer is really buying. It is a good, service, or an idea enhanced
by its accompanying benefits. It is a combination of what the seller
intends, and the buyer perceives. An augmented product gives
customers more than they expect. People do not buy products; they buy
the expectations of benefits. The marketing view demands the active
recognition of this and acts accordingly. Modern-day marketers
compete with each other through the augmented product. A marketer
deciding to augment his product should be well aware of the total
consumption system of buyers. Understanding the total consumption
system means identifying the tasks customers perform through the use
of the product. Identifying this will give him leads on which he can
augment his product. In formulating the product augmentation policy,
the marketer should take note of a number of things. Since
augmentation requires the company substantial costs, it should know
whether customers will be willing to take this load. After getting
the augmented benefits for sometimes, customers start thinking those
as rights, i.e., they consider those benefits as expected, not
augmented. The company should, therefore, look for additional
benefits to offer. The company should also note that soon after it
offers augmented products at a premium price, some competitors may
start offering the basic or expected product at a much lower price.
This will obviously pull a significant number of customers, thus
causing the firm a fall in sales. The company should therefore remain
ever alert so that augmentation yields the desired result.
5.Potential product- The last level of a product is the potential
product. It encompasses all the augmentations and transformations
that the product might ultimately undergo in the future’.
Augmentation, you know, is concerned with what the product includes
in the present term, where the potential product is concerned with
what may be added to the product in the future to make it more
desirable. The potential product is aimed at not only satisfying the
customers but present the product that delights and surprises the
customers.

Product attributes:
As the product moves away from it core level t needs some attributes
to make it different from the products that are already existing in
the market. These attributes include a variety of additional
features, quality finishing design, branding packaging, customer
service etc. in each case attributes should be developed to meet the
needs of the target market and provide a competitive advantage for
the product.
I) Product Quality II) Product Features
III) Product Design

 PRODUCT MIX: It involves planning developing and producing the

right type of products and services for the customers. It deals with
the product range, durability and other qualities. Apart from
producing the right product, emphasis should also be laid on its
proper branding, packaging color, and other product features. In
short, product planning and development involves decisions about: ()
quality of the product, (ii) size of the product, (iii) design of
the product, (iv) volume of production, (v) packaging, (vi) branding
(vii) warranty and after sale services, (viii) product testing, (ix)
product range, etc. the product is not mere a physical product but
it’s a bundle of satisfaction. That is why, product mx is great
importance to cater to the requirements of different kinds of
customer.

 Product item: It means a specific version of a Product that has a

separate designation in the seller's list. It refers to specific
model brand or size of a product that a company sells. For example,
Videocon Refrigerator.

 Product line: Product line refers to a group of products that are

closely related because they satisfy a class of needs, are used
together, are sold to the same customer groups, are marketed through
similar channels.

 Product Width and Depth: The width of the product mix of a firm is
determined by the number of different product lines offered by a
firm. It is a measure of diversification of the activities of the
firm. The depth of a product line depends upon the number of product
items offered in the line. It reflects the firm's segmentation
approach and marketing orientation.

Product Consistency: Consistency of product mix refers to the

uniformity and stability in the range of products offered by a
company. It involves maintaining a balanced and coherent assortment
of products that align with the company's overall strategic
objectives. Consistency in the product mix is crucial for several
reasons, and it impacts various aspects of a business. Here are some
key points to understand:
1. Strategic Alignment:
 Consistency ensures that the products in the mix align with the

company's overall business strategy, mission, and values. This

alignment is critical for creating a strong and coherent brand
image.
2. Customer Expectations:
 Customers develop expectations based on a company's product

offerings. Consistency helps in meeting and sustaining these

expectations, fostering trust and loyalty among consumers.
3. Operational Efficiency:
 A consistent product mix often leads to operational efficiencies.

Manufacturing, inventory management, and distribution become more

streamlined when dealing with a stable set of products with common
components or production processes.
4. Market Positioning:
 A consistent product mix helps in defining and maintaining a clear

market position. Whether a company focuses on premium, mid-range,

or budget products, consistency reinforces the intended
positioning in the minds of consumers.
5. Brand Image and Recognition:
 Consistency contributes to a strong and recognizable brand image.

When consumers can easily identify and associate a particular set

of products with a brand, it enhances the brand's visibility and
recognition in the market.
6. Supply Chain Management:
 Managing a consistent product mix simplifies the supply chain.

Suppliers, distributors, and retailers can better plan and

optimize their operations when dealing with a stable assortment of
products.
7. Marketing and Communication:
 Consistency aids marketing efforts by allowing for focused and

targeted messaging. When a company consistently promotes a

specific product mix, it reinforces its value proposition and
messaging across various marketing channels.
8. Risk Mitigation:
 A diversified but consistent product mix can help mitigate risks

associated with market fluctuations or changes in consumer

preferences. If one product faces challenges, a well-balanced
product mix provides a buffer against potential downturns.
9. Product Life Cycle Management:
 Consistency in the product mix involves actively managing the life
cycles of different products. This includes introducing new
products, updating existing ones, and phasing out obsolete ones to
maintain a fresh and relevant assortment.
10. Customer Satisfaction:
 Offering a consistent product mix ensures that customers can find

the products they expect and appreciate. This leads to higher

customer satisfaction and repeat business.
In summary, consistency of product mix is about creating a stable and
harmonious assortment of products that align with the company's
strategy, meet customer expectations, and contribute to operational
efficiency. It is a fundamental aspect of effective business
management and brand building.

 Factors influencing the product mix:

1.Change in market demand: the change in the demand of a product
(due to change in habits, fashion, purchasing power, income,
attitudes and preferences of consumers) affects the decision of
product mix.
2.Cost of production: if the company can develop a new product with
the help of the same labor force, plant and machinery and techniques,
it can decide to start the production of that product at lower cost.
3.Quantity of production: if the production of new product is
considered to be at a large scale and the company can add one more
item to its product line just to get the economics of large-scale
production. Keeping in view its production capacity and other
factors.
4.Advertising and distribution factors: Advertising and distribution
factors may be the one of the reasons for the changes in production
mix. If the advertising and distribution factors organization are the
same, the company may take the decision to add one more item to its
product line.
5.Use of residuals: if residual can be used gainfully, the company
can develop it's by products into the main products. For example, a
sugar mill can profitably develop the production of paper card board
or wine from biogases.
6.Change in company desire: keeping in mind the objectives of the
firm, maintaining or increasing the profitability of the concern, the
firm may eliminate some of its unprofitable processes or may start a
new more profitable product. In this way, the firm tries to make its
product mix an ideal one.
7.Competitions actions and reactions: the decision of adding or
eliminating the product may be the reaction of competitor's actions.
If company thinks that it can meet the competition well by making
necessary changes in the size, color, packing or price, it can make
such changes.
8.Change in purchasing power or behavior of the customers: if the
numbers of customers are increased with the increase in their
purchasing power or with the change in their buying habits, fashion,
etc. the company may think of adding one or more product keeping mass
production or increase in profitability in the mind.
9.Full utilization of marketing capacity: if the company is not
getting desired results from the market, it can decide to stop the
production of such a product and divert its resources to produce a
new product or improve the existing product, according to the needs
of the consumers.
10.Financial resources: finance is the life blood of the firm.
Availability of the finance may necessarily some changes in the
product of the company. If the company is short of finance or if the
product is continuously going into loss the company may decide to
drop such production similarly, if the company has sufficient funds,
it may improve its products
‘
 Product Standardization and Simplification:
Product simplification and standardization are two distinct
strategies that companies employ to enhance efficiency, reduce costs,
and improve overall effectiveness. While they share some common
goals, they involve different approaches and focus on different
aspects of a product or a process. Here's a brief overview of the
differences between product simplification and standardization:
1. Definition:
 Product Simplification: This involves streamlining a product by

reducing its complexity, features, or variations. The aim is to

make the product easier to manufacture, assemble, and use.
 Standardization: This involves establishing and adhering to a set

of guidelines, specifications, or protocols to ensure consistency

and uniformity across products or processes.
2. Focus:
 Product Simplification: The primary focus is on the product
itself, aiming to make it less complex, with fewer components or
variations.
 Standardization: The focus is on establishing uniformity and

consistency across a range of products, processes, or components.

3. Variability:
 Product Simplification: Aims to reduce variability by minimizing

the number of components, features, or options, leading to a

simpler and more straightforward product.
 Standardization: Aims to eliminate or control unnecessary

variability by setting standards and ensuring that products or

processes adhere to these predefined specifications.
4. Customization:
 Product Simplification: May limit customization options to achieve

simplicity and cost-effectiveness.

 Standardization: Often restricts customization to maintain

uniformity and reduce the complexity of managing diverse product

variations.
5. Benefits:
 Product Simplification: Can lead to cost savings in manufacturing,
inventory management, and maintenance. It may also enhance user
experience by reducing complexity.
 Standardization: Promotes economies of scale, reduces production

costs, and facilitates easier quality control. It can also

simplify supply chain management.
6. Examples:
 Product Simplification: Streamlining a smartphone design by

reducing the number of buttons, features, or components.

 Standardization: Using common components across different models

of a product line to simplify production and maintenance.

In practice, companies often use a combination of product
simplification and standardization based on their specific goals and
industry requirements. Both strategies contribute to operational
efficiency, cost reduction, and improved product quality, but they do
so through different means.

 STRATEGIES OF PRODUCT MIX:

1. Expansion of Product-Mix. Expanding the product line may be a
valid decision if it is in an area in which consumers traditionally enjoy
a wide variety of brands to choose from and are accustomed to switching
from one to another; or if the competitors lack comparable product or if
competitors have already expanded into this area themselves. However, the
main limitation in expansion is the availability of sufficient finance,
time and equipment Expansion in the present product-mix may be done by
increasing the number of lines and/or the depth within a line. Such new
line may be related or unrelated to the for present products. example, the
large provision stores may add drugs, cosmetics and house wares while
(width) at the same time increasing their assortments of dry fruits, baby
foods, detergents (depth),
2. Contracting. Or Dropping the Product. This is rather more difficult,
because much capital has already been invested in its production
facilities. In practice, products are allowed to linger on for long until
they incur a marginal loss. When contraction is decided upon, various
alternatives are available to the marketers. The product may be
consolidated with several others in the line so that fewer styles, sizes
or added benefits are offered. Or, the position can be simplified within a
line. Even then if product fails, the company may drop it altogether.
3. Alteration of the Existing Product. Sometimes, experience may show that
improving an existing product may be more profitable and less risky than
developing and launching a new product. Alterations may be made either in
the designs, size, color, texture, or flavor, or packaging or in the use
of raw materials or in the advertising appeal, or quality may be changed.
This strategy has to be constantly followed regardless of the width and
depth of product-mix.
4 Development of New Uses for Existing Products. The company may find out
new uses for the existing products as when Surf may be used not only for
washing, clothes but also for cleansing the floor, utensils, and glass
products
5 Trading Up and Trading Down. It involves expansion of the product lines
as well as the promotional strategies. Iraang up rejers to the adding of
higher priced prestige product to the CXIstng lne with the intention of
increasing sales of the existing low-priced product. Under trading up, the
seller continues to depend upon the older, low priced product for the
major portion of the sales. Ultimately he may shift the promotional
emphasis to the new product so that larger share of sales may go to new
products.
Trading down refers to the adding of the low priced items to its line of
prestige product, with the expectation that the people who cannot buy the
original product may buy they new ones because they carry some of the
status of the higher priced goods. An instance on the point is that of
Voltas which attempted to broaden its market for refrigerators by
introducing five sizes in an attempt to compete at all price levels.

 BRANDING: Branding is the process of stamping a product with

some identifying name or mark or a combination of both. In other
words, branding means giving a distinct individuality to a product.
 Brand name: A brand name is something that can be vocalized it
consists of words, letters, or number.
 Brand Mark: A brand mark is the part od brand which appears as
symbol, design or distinctive coloring or lettering which cannot be
vocalized and is recognized by sight.
 FUNCTIONS of BRANDING:
1. Distinctiveness
2. Publicity
3. Protection of goods
4. Consumer protection
5. Wide market
6. Customer loyalty
 Brand Name Strategies:
1. Individual brand name: giving different names to its products
 PRICING: The term ‘price’ denotes money value
of a product. It represents the amount of money for which a
product can be exchanged. In other words, price represents the
money which the buyer pays to the seller for a product. In
actual business situations, it is very difficult to define the
price of a product. When a person is buying a product, he may
buy certain services also along with the product. The more the
number he wants to get, the more price he will have to pay.
Thus, in pricing we must consider more than the physical
product alone.
A seller prices a combination of the physical product plus several
and benefits along with the product including warranty promise,
repair facilities, package, free home delivery service and credit
facilities. The price a buyer has to pay will depend upon the
number of services he requires along with the product. In the light
of this discussion, we may define price as the amount of money
which is charged by a seller from a buyer for cobined assortment o
a production its accompanying services.
 SIGNIFICANCE OF PRICING:
1. PRICINIG IS AN IMPORTANT ELEMENT OF MARKETING MIX OF A FIRM.
2. PRICING POLICY OF A FIRM IS A MAJORDETERMINING OF ITS SUCCESS.
3. PRICING DECISIONS AFFECT THE COMPETITIVE STRENGTH OF THE FIRM IN
THE MARKET.
4. PRICING OF DIFFERENT GOODS IS ALSO IMPORTANT FROM THE POINT OF
VIEW THE CUSTOMER.

 OBJECTIVES OF PRICING:
1. PROFITABILITY OBJECTIVES:
1.1 TARGET RATE OF RETURN ON INVESTMENT
1.2 MAXIMATION OF PROFIT

2. MARKET RELATED OBJECTIVES:

2.1 METTING OR PREVENTING COMPETITION IN THE MARKET
2.2 MAINTAINING OR IMPROVING MARKET SHARE.
2.3 PRICE STABILISATION.

3. PUBLIC RELATION OBJECTIVE:

3.1 ENHANCING PULIC IMAGE OF THE FIRM.

 FACTORS INFLUENCING PRICING DECISION:

1. INETNAL FACTORS:
1.1 OBJECTIVES.
1.2 ROLE OF TOP MANAGEMENT.
1.3 COST OF THE PRODUCT.
1.4 PRODUCT DIFFERENTIATION.
1.5 MARKETING-MIX.

2. EXTERNAL FACTORS:
2.1 COMPETITION
2.2 BUYERS
2.3 INPUT SUPPLIERS
2.4 DEMAND
2.5 ECONOMIC CONDITION
2.6 GOVERNMENT REGULATION

 PRICING POLICIES: Pricing policies constitute the general

framework within which pricing decisions should be made in order to
achieve the pricing objectives. They provide guidelines within
which pricing strategy is formulated and implemented.

 TYPES OF PRICING POLICIES & DECISIONS:

1. DEMAND-ORIENTED PRICING: Demand-oriented pricing, also known as

customer-driven pricing, is a pricing strategy that considers the
level of demand for a product or service as a primary factor in
setting its price. This approach takes into account customer
perceptions, preferences, and the perceived value of the product to
determine the optimal price point. Various demand-oriented pricing
strategies are used to align prices with customer expectations and
market conditions. THE PRICES ARE DECIDED ACCORDING TO SURPLUS AND
SJORTAGE.

2. COST-ORIENTED PRICING: Cost-oriented pricing, also known as

cost-based pricing, is a pricing strategy where the selling price
of a product or service is determined by adding a markup to the
cost of producing or acquiring the product. This approach relies on
the expenses associated with manufacturing, distributing, and
selling a product, and it aims to ensure that the business covers
its costs and generates a desired level of profit. TYPES OF COST
PLUS PRICING:

A) COST-PLUS PRICING: Cost-plus pricing is a straightforward pricing

strategy where a business sets the selling price of a product by
adding a markup to the cost of production. The cost considered in
this pricing model typically includes the total expenses associated
with manufacturing or acquiring a product, such as direct costs
(materials, labor) and a portion of the overhead costs (rent,
utilities, salaries).
1. Cost Calculation:
Identify and calculate the total costs associated with producing
or acquiring the product. This includes direct costs (variable
costs) and a share of fixed costs (overhead).
2. Markup Determination:
Decide on the desired profit margin or markup percentage that the
business aims to achieve. This is the additional amount or
percentage added to the total cost to arrive at the selling price.
3. Selling Price Calculation:
Calculate the selling price by adding the determined markup to the
total cost per unit.
Formula: Selling Price = Cost per Unit + (Cost per Unit × Markup


Percentage)
For example, if the total cost per unit is $50, and the desired
markup is 20%, the selling price would be $60.
$50 + ($50 × 0.20) = $60


4. Advantages of Cost-Plus Pricing:

Simplicity: Cost-plus pricing is straightforward and easy to
calculate, making it accessible for businesses of all sizes.
Cost Recovery: Ensures that all costs, both variable and a portion
of fixed costs, are covered by the selling price.
Profit Control: Provides a clear method for businesses to control
and adjust their profit margins by changing the markup percentage.
5. Disadvantages of Cost-Plus Pricing:
Ignores Market Conditions: This pricing strategy does not consider
external factors such as customer demand, competitor pricing, or
market conditions.
Lack of Flexibility: Cost-plus pricing may lack flexibility in
responding to changes in the market or shifts in customer
preferences.
Potential for Overpricing or Underpricing: Depending solely on
cost-based calculations may lead to overpricing or underpricing if
the perceived value in the market differs significantly from the
cost-based selling price.
6. Different Types of Cost-Plus Pricing:
Full Cost-Plus Pricing: Considers both variable and fixed costs
when determining the selling price.
Variable Cost-Plus Pricing: Considers only the variable costs
(direct costs) when determining the selling price.
7. Use Cases:
Cost-plus pricing is often used in industries where products are
standardized, and competition is based on price rather than
differentiation.
It is commonly found in manufacturing, construction, and retail
industries for products with relatively stable demand and known
production costs.
While cost-plus pricing provides a clear and structured method for
setting prices, businesses need to complement this approach with
market-oriented strategies to remain competitive and responsive to
changing market dynamics. Combining cost-plus pricing with market
research and understanding customer value perceptions allows for a
more comprehensive pricing strategy.

 PPRICING STRATEGIES:
1. COMPETITIVE PRICING- In this method price determined by the firm
based on the competitive level of the market. This method is used
when the market is highly is competitive and the product is not
differentiated significantly from the competitive product. This
situation resembles the perfect competition under which price are
determined by the forces of supply and demand. This method is also
used when a prevailing or a ‘customary price level’ exists.

2. Penetration Pricing: It is a pricing strategy on which a company

sets a relatively low initial price for a product or service with
the intention of quickly gaining a large market share. The id5ea is
to attract a significant number of customers by offering a product
at a lower price than competitors. The goal is to penetrate the
market deeply and establish the product or brand as quickly as
possible. Penetration pricing is commonly used in industries such
as technology, consumer electronics, and fast-moving consumer goods
(FMCG), where rapid market adoption and capturing a significant
customer base quickly are crucial for success. It is important for
companies to carefully plan and execute penetration pricing,
considering factors such as competition, production costs, and
long-term pricing strategies.
CONDITIONS IMPLIED:
1. HIGH ELESTIC DEMAND OF PRODUCT
2. LARRGE SCALE PRODUCTION TO CUT DOWON THE COST OF PER UNIT
PRODUCTION.
3. STRONG COMPETITION IN THE MARKET.
MERITS:
1. HIGHER SALES VOLUME
2. DEVELOPMENT OF BRAND PREFERNECE
3. DISCOURAGEEMENT OF NEW SUBSTITUES
4. BRING DOWN THE MAIN COMPETITOR
LIMITATIONS:
1. HIGH LEVEL DEMAND WHICH MAKES THE FIRM INCOMPTETENET TO FULFIL
IT
2. DOUBT OF LOW-QUALITY CAUSE OF THE LOW PRICE
3. WHEN COSTS ARE UNDERESTIMATED IT WILL GET TO COVER THE UNFORSEEN
COSTS
 MARKET SKIMMING PRICING: Market skimming, also known as price
skimming or skim pricing, is a pricing strategy where a company
sets a high initial price for a product or service and then
gradually lowers it over time. This strategy is often used when a
new product is introduced to the market, especially if it offers
unique features or has a competitive advantage..
MERITS:
1. PROFIT MAXIMIZATION
2. RECOVERY OF DEVELOPMENT COSTS
3. PERCEIVED VALUE
4. BRAND IMAGE
5. RISK MITIGATION ALLOWS THE FIRM TO TEST THE MAKRET AND GAUGE
COUSTMERS.
6. COMPETITIVE ADVANTAGE BY ESTABILISHING THE PRODUCT AT THE
PREMIUM CHOICE IN THE MAKRET.
LIMITATIONS:
1. NOT SUITABLE WITH INTENSE MARKET COMPETITION OR WHERE ARE
PRICE-SENSITIVE
2. TIME SENSITVE TIME IS A CRUCIAL FACTOR AND QUICK MARKET MIGHT
BE NECESAARYY
3. HIGHLY DEPEANDENT ON MARKET DEMAND
4. MIGHT HURT THE BRAND IMAGE DUE TO THE OVERPRICING
 PENETRATION PRICING Vs SKIMMING PRICING:
1. PENETRATION PRICING IS FOLLOWED BY THE FIRMS TO ENTER THE
MARKETV SUCESSFULLY AND GENERATE HIGHER SALES VOLUME WHEREAS
SKIMMIN PRICING IS USDED WHEN THERE IS NO COMPETITION I.E. NO
SUBSTITUES ARE AVAILABLE IN THE MARKET.
2. PENETRATION IS SUITABLE WHEN CUSTOMERS ARE PRICE SENSTIVE BUT
SKIMMING ISNOT SUITABLE FOR THE SAME.
3. PENETRATION IS FOLLOWED WHEN THE PRODUCT IS NOT DIFFERENTIATED
WHEREAS SKIMMING IS FOLLOWED WHERE THE PRODUCT IS DIFFERENTIATED
4. PENETARTION IS USED IN COMPETITIVE MARKET WHEREAS SKIMMING IS
USED WHEN THERE IS NO COMPETITION IN THE MAKRET

 KEEP OUT PRICING: IT IS THE PRE-EMPTIVE METHOD OF PRICING IN

WHICH FIRMS KEEP THEIR PRICE LOW AT THE BEGINNING TO DISCOURAGE
THE ENTRY OFNEW COMPETITION TO OFFER SUBSTITIUES. IT IS A VERY
RISKY VENTURE AND SHOULD BE FOLLOWED FOR ONLY ONE PRODUCT OF THE
FIRM ESPECIALLY WHEN THE PRICE IS NOT COVERUNG THE ACTUAL COST OF
PRODUTION AND DISTRIBUTION. BUT ONCE THE PRICE IS FIXED AT LOWER
RATES IT IS DIFFICULT TO INCREASE THE PRICE AS THERE IS A FEAR OF
OTHERS INTRODUCING THE SUBSTITUES.
 FOLLOW THE LEADER PRICING: IT IS A PRICING STRATEGY IN WHICH A
COMPANY SETS ITS PRICES IN LINE WITH THE PRICE ESTABLISHED BY A
MARKET LEADER R DOMINANT COMPETITOR. INSTEAD OF INDEPENDENTLY
DETERMINING ITS PRICING BASED ON ITS COSTS OR UNIQUE VALUE
PROPOSITION, A BUSINESS EMPLOYING THE FOLLOW THE LEADER PRICING
STRATEGY LOOKS TO THE PRICES SET BY A COMPETITOR AND MIRRORS THEM.
IT IS A STRATEGY WHERE A COMPANY BASES ITS PRICING DECISIONS ON
THE ESTABLISHED THAT AIMS TO BENEFIT FROM THE PERCEIVED SUCCESS OF
THE LEADER’S PRICING DECISIONS.

 DISCRIMINATRY OR DUAL PRICING: "Dual pricing" typically refers to

a strategy where a company sets different prices for the same
product or service in different markets or for different customer
segments. This approach is often used to maximize revenue based on
the willingness and ability of customers to pay, taking into
account various factors such as geographical location,
demographics, or purchasing power. While dual pricing can be an
effective strategy to optimize revenue and respond to market
conditions, companies need to carefully consider the potential
impact on customer perceptions and brand equity. In some cases,
dual pricing practices may be viewed negatively by consumers,
especially if they perceive the pricing as unfair or
discriminatory. Transparency and communication are crucial to
managing customer expectations when implementing dual pricing
strategies. Additionally, businesses must comply with relevant laws
and regulations, as certain jurisdictions may have restrictions on
pricing practices.
PREMIUM OR PRESTIGE PRICING: Premium pricing is a pricing strategy in
which a company sets higher prices for its products or services
compared to the prices of competing products. This strategy is based
on positioning the product as having higher quality, offering unique
features, or providing a superior value proposition that justifies
the higher cost. Premium pricing is often associated with the idea
that customers are willing to pay more for perceived added value.
Examples of industries where premium pricing is commonly employed
include luxury goods, high-end technology, gourmet foods, designer
fashion, and upscale automobiles.
In summary, premium pricing is a deliberate strategy to position a
product or service as high-quality, exclusive, and worth a premium
price. It involves creating a strong brand image, offering unique
features, and delivering an overall customer experience that
justifies the higher cost. EXAMPLE CAN BE LUXIORY CARS.
LEADER PRICING: Leader pricing is a strategy where a company, often a
market leader or dominant player, sets its prices with the intention
of influencing the overall pricing behavior in the market. This
company takes a proactive stance in establishing prices that
competitors are likely to follow. Example: Apple Inc. and the iPhone
Pricing
Apple Inc. is often considered a market leader in the smartphone
industry, and its pricing strategy for the iPhone is an example of
leader pricing. It's important to note that while Apple's iPhone
pricing is an example of leader pricing, the success of this strategy
depends on various factors, including brand strength, product
differentiation, and market dynamics. Other industries and companies
may employ leader pricing in different ways, adapting the strategy to
their specific market conditions and competitive landscape.

 PYSHOLOGICAL PRICING: Psychological pricing is a pricing

strategy that involves setting prices to influence consumer
perception and behavior. This strategy takes into account the
psychological and emotional responses of consumers to certain price
points, rather than relying solely on cost or market conditions.
The goal is to create a perception of value, affordability, or
exclusivity that aligns with the psychological tendencies of
consumers. TECHNIQUES USED:

A) Charm pricing involves setting prices just below a round number,

often ending in ".99" or ".95." For example, pricing a product at
$9.99 instead of $10.00. Consumers tend to perceive prices ending
in .99 as being significantly lower than the next whole number.
B) Odd-even pricing involves using odd numbers for less expensive
products and even numbers for more expensive products. This
technique is based on the idea that odd prices signal value and
affordability, while even prices suggest quality and exclusivity.
C) Odd-even pricing involves using odd numbers for less expensive
products and even numbers for more expensive products. This
technique is based on the idea that odd prices signal value and
affordability, while even prices suggest quality and exclusivity.

 ONE PRICE VERSUS VARIABLE PRICE POLICY: Under a One Price

Policy, also known as a fixed or uniform pricing strategy, a
company sets a single, consistent price for a product or service.
This price is applied uniformly to all customers, regardless of
variations in demographics, geographic location, or purchase
quantity.
Variable Price Policy, also known as dynamic pricing, involves
setting different prices for the same product or service based on
various factors. These factors may include customer segmentation,
location, time of purchase, demand fluctuations, and other market
conditions.
The choice between a One Price Policy and a Variable Price Policy
depends on factors such as the nature of the product or service,
the target market, competitive dynamics, and the company's
strategic objectives. Some industries or products may benefit more
from one approach over the other, and companies may even use a
combination of both strategies in different contexts or for
different product lines.

 PRICE LINING: IT IS UDESD EXTENSIVELY BY RETAILERS. THE

RETAILERS USUALLY OFFER A GOOD, BETTER AND BEST ASSORTMENT OF
MERCHANDISE AT DIFFERENT PRICE LEVELS. For example, a retailer of
readymade shirts may sell shirts at three prices:790,7 160and 250.
The first price stands for the economy choice, the second for the
medium quality and the third for the super-fine quality Price
lining simplifies pricing decisions in the future as retail prices
are already set. This helps the retailer to plan his purchases to
suit his price lining, It also simplifies pricing decisions in the
future as retail prices are already set. This helps the retailer
to plan his purchases to suit his price lining. It also simplifies
buying by the customers.

 RESALE PRICE MAINTENANCE: RPM IS THE POLICY UNDER WHICH A

MANUFACTURER FIXES THE PRICE OF HIS PRODUCT BELOW WHICH HIS
PRODUCT WOULD NOT BE SOLD TO BE CONSUMERS OR DISTRIBUTORS. It's
essential to note that the legality and acceptance of Resale Price
Maintenance can vary by jurisdiction, and businesses engaging in
such practices should be aware of and comply with relevant
antitrust and competition laws in the regions where they operate.

 PRICE ADJUSTMENT STRATEGY: IT IS DESIGNED TO ACCOMDATE CUSTOMERS

UNDER CERTAIN CIRCUMSTANCES BY ADJUSTING THE PRODUCT PRICE. IT IS
DONE BY ALLOWING CERTAIN DISCOUNTS AND ALLOWANCE TO CUSTOMERS.
1) DISCOUNTS AND ALLOWANCES: IT IS PROVIDED TO PROVIDE SOME
DISCOUNT ON PRODUCTS IT IS USUALLY EXPRESSED IN PERCENTAGE. TRADE
DISCOUNT IS ALLOWED WETHER GOODS ARE SOLD FOR CASH OR ON CREDIT
BASIS. CASH DISOCUNT IS ALLOWED TO ENCOURAGE THE BUYER TO MAKE
PAYMENT PROMPTLY.
2) TRADE DISCOUNT: It is given to those buying for resale, e-g,
wholesaler or retailer, in payment for marketing functions which
these traders are expected to perform. Sellers quote price less
discount rather than net price. Thus, trade discount is a deduction
made from the quoted price of an article. It is stated as a certain
percentage of the quoted price and is deducted from the quoted
price in the invoice. It is allowed to every purchaser, whether the
purchase is made in cash or on credit. The actual rate of trade
discount is not fixed, but varies widely. The advantage of allowing
trade discount is that catalogues need not be printed afresh every
time prices fluctuate, as the fluctuations can be taken into
account by varying the rate of trade discount.
3) QUANTITY DISCOUNT: IT IS A DISCOUNT OFFERED BASED ON THE QUANTIY
PURCHASED. SUPPOSE THE INTIAL DISCOUNT IS 10% BUT IF THE QUANTITY
PURCHASED EXCEEDS THE AMOUNT OF 2L THE SELLER MIGHT GIVE AN EXTRA
DISCOUNT OF 2.5%.
4) CASH DISCOUNT: IT IS ALLOWED WHEN PAYMENT IS MADE ON OR BEFORE A
PARTICULAR DATE. IT IS IN ADDITION TO THE TRADE DISCOUNT AND NOT IN
PLACE OF IT. If the goods are sold for Rs. 1,000 on which trade
discount is to be allowed @ 15% and a cash discount@ 10% if the
payment is made within a week, then the buyer will have to pay Rs.
765.00 only.
5) SEASONAL DISOUNT:, It is the deduction allowed over and above the
trade discount in cases of products which have seasonal demand.
Manufacturers of electric fans, coolers or refrigerators may allow
a seasonal discount of, say 10%, if an order is placed during the
slack season, say from November to January and 5% during February.
This type of order placing enables the manufacturer to level out
his production schedule and make better use of his facilities.
6) ALLOWANCE: THE manufacturer may ofer allowance to distributions
for promotional activities, e.g, advertising allowance, window
display allowance, free sample allowance, etc. It amounts to a
contribution to the amount spent by the distributors for
promotional.

 PRODUCT LIFE CYCLE AND PRICING: THERE ARE FIVE STAGES OF THESE:
A) PRICING AT THE INTRODUCTION STAGE (PRICING OF NEW PRODUCTS):
WHEN NEW PRODUCTS IS INTRODUCED THERE IS NO SUCH INFO FOR THE
RESEARCHERS ABOUT TRENDS AND CUSTOMER REACTION. HERE TWO STRATEGIES
ARE USED: a) SKIMMING PRICE & b) PENETRATION PRICING.

2) PRICING AT THE GROWTH STAGE: DURING THE GROWTH STAGE, IF

SKIMMING IS USED AT INITIAL STAGE THEN THE FIRM MIGHT USE THE
PENETRATION METHOD OR REDUCE THE PRICE AS MORE COMPETITION ENTER
THE MARKET. AT THIS STAGE COMPETITION INCREASE NOT JUST OF THE
PRICE ONLY.

3) PRICING AT THE MATURITY STAGE: AT THISSTAGE THE SALES INCREASE

AT DIMNISHING RATE. CUSTOMERS STARTS TO MOVE TWRDS OTHER
SUBSTITUES. PRICES ARE DECIDED ACCORDING TO THE MARKET
CONDITIONS.OLIGOPLOSTIC PRICING IS POSSIBLE ONLY WHEN THE ENTRY TO
MARKET IS RESTRICTED AND THERE ARE A SMALL NUMBER OF SELLERS.
Before making any change in the price, the oligopolist will have to
consider the prícing strategies of competitors Generally, the
marketers do not like to make changes in price.. If the conditions
of monopolistic competition exist during the maturity stage, the
marketers will fix their prices on the basis of cost rather than on
competitor's prices. The firms may resort to product
differentiation. Some firms raise their prices through product
improvement and product differentiation. Some others may reduce the
price to push up sales.

4) PRICING AT THE DECLINING STAGE: During this stage, the total

sales show a declining trend. It may ultimately touch a very low
level This happens due to many reasons such as new technological
innovation, change in consumer taste and habits, etc. At this
stage, the company should adopt break even point pricing policy so
that it may continue its production activities. In other words, the
company should use marginal cost or incremental cost pricing to
stay in the market. If possible, price discrimination may also be
adopted. As a final step, attempts should be made to cut costs of
production, promotion and distribution.

5) PRICING AT THE ABANDONMENT STAGE: This is the last stage of a

product. At this stage, there is almost no sale of the product as
it has been rejected in the market. Thus, production of such a
product should be discontinued and the resources employed in its
production should be diverted to the production of other goods and
services. Attempts should be made to sell the remaining stock at
throw away prices or disposed off as junk.

 PRICING POLICIES:
1) DEMAND

 CHANNELS OF DISTRIBUTION: Channels of distribution, also known

as marketing channels or distribution channels, refer to the
pathways through which products or services move from the
manufacturer or service provider to the end consumer. These
channels are crucial for the efficient distribution and delivery of
goods and services, and they play a significant role in the overall
marketing strategy of a business. Different types of channels
exist, and the choice of distribution channel depends on factors
such as the nature of the product, target market, and business
objectives. Here are common types of distribution channels:
1) DIRECT CHANNEL: In a direct selling channel, the manufacturer or
service provider sells directly to the end consumer without
intermediaries. This can occur through company-owned stores, e-
commerce websites, or direct sales representatives. METHODS INCLUDED
ARE:
A) RETAIL STORES AS LIBERTY, NIKE, BATA
B) DOOR TO DOOR SELLING AS EUREKA, FORBES
C) MAIL OREDER SELLING AS SALE OF BOOKS. MEDICINES
D)SELLING THROUGH INTERNET AS SALE OF ELECTRONIC ITEMS AND HELTH
PRODUCTS
E) SELLING THROUGH TV CHANNELS AS NAPTOL
Direct selling has gained popularity because of high costs of
distributing the goods and services through middlemen. Direct selling
is generally employed to sell industrial goods of high value to the
industrial users and to sell consumer goods such as cloth, cosmetics,
hosiery products and shoes. Small producers and producers of
perishable commodities also sell directly to the local consumers.
Under direct selling, all the marketing activities are performed by
the producer or the manufacturer himself.

2) INDIRECT CHANNELS: Under indirect channel, a producer sells his

products indirectly to the comsumers through mudlemen. A producer may
use the services of any or all of the agents, wholesalers and
retailers
One Level Channel: Producer, Retailer and Consumer. This is one stage
distribution d'annel having one middleman ie., retailer. Under this,
the manufacturer sells to the retailers who in tum sell to the
ultimate consumers. This channel of distribution is very popular
these days because of the emergence of departmental stores, super
markets and other big retail stores. The retailers purchase in large
quantities from the manufacturer and perform certain marketing
activities in order to sell he product to the ultimate consumer.
* Two Level Channel: Producer, Wholesaler, Retailer and Consume. This
is a traditional two stage channel of distribution for the sale of
consumer goods. There are wo middlemen in this channel, namely,
wholesaler and retailer. This channel is most suitable for the
products with widely scattered market.
* Three Level Channel: Producer, Wholesaler, Agent, Retailer and
Consumer. This is three stage channel of distribution under which a
mercantile agent establishes a link between the wholesaler and the
retailer. This channel is used where the wholesaler is not able to
keep contacts with a large number of retailers.

 DISTRIBUTION FOR INDUSTRIAL PRODUCTS: DIRECT CHANNEL IS VERY

POPULAR FOR SELLING OF INDUSTRIAL PRODUCTS SINCE INDUSTRIAL USERS
PLACE ORDERS WITH THE MAUFACTURERS OF INDUSTRIAL PRODUCTS
DIRECTLY. Direct marketing of industrial productsis generally
followed in local markets and in cases the producers have
facilities to despatch the products to industrial users
directly. ) Big producers and industrial retailérs make use of the
services of merçantile agernts and even wholesalers to distribute
their products to the industrial users. They do so because they
want to concentrate on production and keep themselves fully free
from the'problems of distribution, or they do not have facilities
for the distribution of their products.

 FUNCTIONS OF CHANNEL DISTRIBUTION:

I. PROCUREMENT AND SORTING: The wholesalers procure supplies of goods from a number of
sources and the goods are often not of the same quality, nature, and size. For example, a wholesaler
of cashew nuts may procure a large quantity from different cashew nut producing areas, which
would contain nuts of varied quality and sizes. He will sort the nuts into homogeneous groups on
the basis of the size and quality and pack them on the basis of quality specifications.
II. ACCUMLATION: THE MIDDLEMEN UNERDTAKE ACCUMLATION OF GOODS INTO
LARGER HOMOGENOUS STOCK. THIS HELPS IN MAINTAINING COTINOUS FLOW OF
SUPPLY.
Facilitating Product Flow: Channels of distribution provide a pathway for the
physical movement of products from the manufacturer to the end consumer. This
involves transportation, storage, and logistics to ensure products are available
when and where they are needed.
Breaking Bulk: Products are often produced and transported in large quantities.
Channels of distribution break down these bulk quantities into smaller, more
manageable units for distribution to retailers or end consumers.

Creating Assortments:
Description: Channels help create assortments by bringing together a variety
of products from different manufacturers or suppliers. This allows consumers to
have a wide range of choices in one location, such as a retail store.

Providing Storage:
Description: Distribution channels often involve warehousing and storage
facilities where products can be held until needed. This helps manage
inventory and ensures a steady supply to meet demand fluctuations.
Risk Assumption:
Description: Distribution channels assume certain risks associated with
product distribution, such as damage, theft, or obsolescence. This risk
absorption helps reduce the financial burden on manufacturers.

Providing Market Information:

 Description: Channels of distribution serve as a valuable source of market
information. Intermediaries are often in direct contact with consumers and can
provide feedback on consumer preferences, market trends, and competitive
intelligence.

Negotiation and Risk Taking:

Description: Intermediaries in the distribution channel negotiate terms of
sale, pricing, and other conditions with manufacturers. They also assume
certain risks, such as price fluctuations and market uncertainties.

Adapting to Local Requirements:

Description: Channels of distribution can adapt products to meet local
requirements, preferences, and regulations. This localization ensures that
products are suitable for specific markets.

Adding Value:
Description: Channels add value to products by providing convenient access,
timely delivery, and additional services. This added value contributes to the
overall customer experience.
 DISTRIBUTION CHANNEL LOGISTICS:

Distribution logistics, also known as distribution management, refers to the

planning, implementation, and control of the efficient movement and storage of
goods, services, and related information from the point of origin to the point of
consumption. It is a critical component of the broader supply chain management
process and plays a crucial role in ensuring that products are delivered to
customers in a timely and cost-effective manner. Distribution logistics
encompasses various activities and functions that contribute to the effective
distribution of goods. Here are key aspects of distribution logistics:
1. Order Processing:
 Description: Order processing involves receiving and managing customer
orders, including order entry, verification, and confirmation. Efficient order
processing is essential for accurate and timely fulfillment.
2. Inventory Management:
 Description: Inventory management focuses on maintaining optimal levels of
stock to meet customer demand while minimizing carrying costs. It includes
activities such as stock replenishment, cycle counting, and safety stock
management.
3. Warehousing:
 Description: Warehousing involves the storage of goods in distribution
centers or warehouses. It includes functions such as receiving, storing, picking,
packing, and shipping products. Warehousing aims to facilitate efficient order
fulfillment and reduce lead times.
4. Transportation:
 Description: Transportation is a key component of distribution logistics,
encompassing the physical movement of goods from the manufacturer or
distribution center to the end consumer. Modes of transportation may include
trucks, trains, ships, airplanes, or a combination of these.
5. Packaging:
 Description: Packaging plays a crucial role in protecting products during
transportation and storage. Effective packaging ensures that products arrive at
their destination in optimal condition while minimizing damage and waste.
6. Reverse Logistics:
 Description: Reverse logistics involves the management of product returns,
recycling, or disposal. It addresses the flow of goods from the end consumer
back to the manufacturer or designated return centers.
7. Information Systems:
 Description: Information systems and technology support various logistics
activities by providing real-time visibility into inventory levels, order status, and
transportation routes. Advanced technologies, such as RFID and GPS, enhance
tracking and monitoring capabilities.
8. Cross-Docking:
 Description: Cross-docking is a logistics strategy where products are
transferred directly from inbound transportation to outbound transportation
with minimal or no storage. This approach reduces handling and storage costs,
improving efficiency.
9. Route Optimization:
 Description: Route optimization involves planning the most efficient delivery
routes to minimize transportation costs, reduce fuel consumption, and enhance
delivery speed. It considers factors such as traffic, distance, and vehicle
capacity.
10. Supply Chain Visibility:
 Description: Supply chain visibility refers to the ability to track and monitor
the movement of goods throughout the distribution network. Visibility allows
for better decision-making, improved responsiveness, and the ability to address
potential disruptions.
11. Collaboration and Coordination:
 Description: Collaboration and coordination involve working closely with
suppliers, distributors, and other stakeholders in the supply chain to optimize
processes, share information, and enhance overall efficiency.
12. Performance Measurement:
 Description: Performance measurement involves assessing the effectiveness
and efficiency of distribution logistics processes. Key performance indicators
(KPIs) such as on-time delivery, order accuracy, and inventory turnover are
monitored to evaluate performance.
Effective distribution logistics is essential for meeting customer expectations,
minimizing costs, and gaining a competitive edge in the marketplace. Businesses
often strive to optimize their distribution logistics processes to enhance overall
supply chain performance.
OBJECTIVES OF MARKETING LOGISTICS: The broad objectives of marketing logistics are to
ensure flow of materials to the production system and to move products to other channel members
and to consumers in the efficient way that is consistent with the level of service that customers
require. The other objectives are as follows:
A) TO REDUCE COSTS
B) TO PROVIDE BETTER CUSTOMER SERVICE.
C) TO INCREASE SALES
D) TO ESTABLISH COMPETITIVE ADVANTAGE
E) TO DEVELOP EFFECTIVE COMMUNICATION SYSTEM

 MAJOR LOGISTICS FUNCTION:

1) NETWORK DESIGN: Manufacturing planis, warehouses, materials handling, distribution and
after-sale services are typical logistics facilities. Network design is one of the prime responsibilities
of logistical management. It is required to determine the number and location of all types of
facilities required to perform logistics operations) The selection of a superior locational network can
provide the first-step towards competitíve advantage. Logistical efficiency directly depends on the
proper design of network and infrastructure.

2)
 DEMOGRAPHIC SEGMENTATION:
AGE
GENDER
MARTIAL STATUS
EDUCATIONAL
FAMILY SIZE
INCOME
OCCUPATION
ETHINICITY & CULTURAL

 GEOGRAPHICAL SEGMENTATION:
REGIONS
URBAN VS RURAL
LINGUISTIC
LEGAL AND REGULATOR DIFFERENCES
ECONOMIC
CLIMATE
TIME-ZONE
COMPETITIVE LANDSCAPE
INFRASTRUCTURE AND ACCESSIBILITY

 PSYCHOGRAPHIC SEGMENTATION:
LIFESTYLE
VALUES & BELIEFS
PERSONALITY TRAITS
INTERESTS & HOBBIES
ATTITUDES & OPINIONS
BEHAVIORAL PATTERNS
DECISION MAKING STYLE
ASPIRATIONS AND GOALS
 BEHAVIORAL SEGMENTATION:
PURCHASE BEHAVIOR
BRAND LOYALITY
USAGE RATE
ATTITUDE TOWARDS PRODUCTS
USER STATUS
READINESS TOADOPT NEW PRODUCT

 VALUE-BASED SEGMENTATION:
CUSTOMER VALUE
SEGMENTS BASED ON PERCEIVED VAUE
DYNAMIC NATURE
IMPLEMENTATION
RESEARCH ANALYSIS
 VOLUME SEGMENTATION: IS THE PRACTICE OF DIVIDING A ARKET INTO
SEGMENTS BASED ON THE VOLUME OR QUANTITY OF PRODUCTS OR SERVICES
CONSUMED OR PURCHASED BY CUSTOMERS WITHIN ECH SEGMENTS

Difference between consumer & customer?

BASIS CONSUMER CUSTOMER
Meanin The end user of gods The purchaser of goods or
g and services. In other services is known as
words, it is the person customer. In other words,
who uses a product it is the one who buys the
after the purchase. product. They may or may
not be the consumer.
Paymen
t

what is consumer behavior?

Consumer behavior is the study of consumers and the processes they use to choose, use(consume), and
dispose of products and services, including consumers’ emotional, mental, and behavioral responses.
Understanding consumer behavior is crucial for businesses to create effective marketing strategies
that can influence consumers’ decision-making processes. It incorporates ideas from several sciences
including psychology, biology, chemistry, and economics.

By understanding consumer behavior, businesses can tailor marketing efforts to target specific
groups, improve brand loyalty, and identify emerging trends. This knowledge can also help businesses
stay ahead of their competition and adapt changes in consumer behavior. In conclusion, understanding
consumer behavior is vital to any successful marketing strategy. By analyzing the factors that
influence consumer behavior, businesses can develop effective marketing campaigns that cater to the
needs and wants of their target audience.