1

Sahyog College of Arts, Commerce and Science

Bachelors of Business Administration

Principles of Marketing Management

Semester- III

1
2

Syllabus

Unit I : 20 Marks

Marketing :Definition, nature, scope & importance, Marketing Management, Core concepts
of marketing, selling concept, production concept, modern marketing concept. 20 Marks

Unit II : 20 Marks

 Segmentation: Concept, basis of segmentation, Importance in marketing;

 Targeting : Concept Types, Importance;
 Positioning: Concept, Importance, Brand positioning, Repositioning.
Unit III : 20 Marks

Marketing Mix:

Product: Product Mix, New Product development, levels of product, types of product,
Product life cycle, Branding and packaging,

Place: Different types of distribution channels.

Unit IV: 20 Marks

Price: Meaning, objective, factors influencing pricing, methods of pricing.

Promotion: Promotional mix, tools, objectives, media selection & management. Process &
Scope

Marketing Information Systems: Meaning Importance and Scope

Consumer Behavior: Concept, Importance and Factors influencing consumer behavior.

---------------------------------------------------------------------------------------------------------------------

2
3

UNIT I

Marketing

Marketing is the business function that controls the level and composition of demand in the
market. It deals with creating and maintaining demand for goods and services of the
organization.

Marketing refers to activities a company undertakes

 to promote the buying or selling of a product or service,
 to draw in customers and maintain relationships with them.
 marketing seeks to match a company's products and services to customers who want access
to those products. Matching products to customers ultimately ensures profitability.
 Marketing includes advertising, selling , promotion and delivering products to consumers or
other businesses.
Marketing is a process which involves a spectrum of activities carried out by the enterprise so as
to promote the company’s sales of product or service. The process begins with identifying the
needs of the customers, meeting those needs profitably by creating, communicating and
delivering the offerings, in exchange for a price, that is valued by the customers.

It is a means to create the interest of the target audience in the company’s offerings. All the
activities which attempt to draw the attention of the customers towards the company’s offerings
and to retain them are covered under the term marketing, such as market research and analysis,
product development, promotion, distribution methods, sales and after-sales service.

In finer terms, whatever strategy or activity the company applies so as to communicate with the
target customers in order to instigate them to buy the company’s offerings will be termed as
marketing.

Marketing is about what you convey about your offering, how you communicate the value of
your offering to the target audience and why customers should pick it out of all the available
options in the market. It is a promotion of the offering through ads using various platforms, such
as newspaper, televisions, pamphlets, social media, such as Facebook page, Instagram account,
Twitter account, etc.

Definition of Marketing

Dr Philip Kotler

3
4

“The science and art of exploring, creating, and delivering value to satisfy the needs of
a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines,
measures and quantifies the size of the identified market and the profit potential”

The American Marketing Association

“The activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large”

Difference between Marketing and selling

Sales is nothing but the primary aim of any business enterprise, in the sense that all the activities
of a company are directed towards the increase of sales. Marketing aims at winning and retaining
the customers for the long term. These two often share a common goal of increasing the
company’s revenue but differ in their functions and process.
Basis for
Sales Marketing
Comparison
Sales refers to the process of selling, Marketing is understanding the
whereby product is offered for sale to requirements of the customers in such a
Meaning
the customer at a certain price and at a way that whenever any new product is
given period of time. introduced, it sells itself.
Orientation Product-oriented Customer-oriented

Focus Company needs Market needs

Duration Short-term Long-term

To instigate shoppers in such a way that To identify the needs of customers and
Objective
they turn out as buyers. create products to satisfy those needs.
Advertisement, Sales, Research,
Scope Selling of the product. Customer satisfaction, After sales
services etc.
Involves exchange of goods for Entails identifying and satisfying
Process
adequate consideration. customer's needs.

4
5

Customer relationship through

Price promotion, Discounts and Special
Technique integration of organization with the
offers.
needs of customers.
Skills
Selling and Conversational skills Analytical skills
required
Profit maximization through sales Profit maximization through increased
Aims at
maximization. consumer satisfaction and market share.

Nature / Features of Marketing

1. Systematic Process
2. Ideas, Goods and Services
3. Target Markets
4. All Pervasive
5. Customer Satisfaction
6. Competitive Advantage
7. Corporate Image
8. Expansion of Business
9. Organizational Objectives
10. Marketing Environment
11. Integrated Approach
12. Societal Interest
1. Systematic Process

Marketing is systematic in nature. The main aim of marketing is to satisfy the needs and wants
of the customers by bringing into the right products. The following is the process of marketing
involves:

5
6

 The product is design as per customer requirements.

 The right price of product is fixed.
 Effective promotion strategy of the product is defined.
 Distribution of the products at the right place and at the right time is planned.

The marketing process is taken on to accomplish organizational objectives (profits, market share,
etc.), and to generate customer satisfaction.

The marketing process is continuous in Nature. Firstly, it starts with the marketing research.
Then after the sale of the product it comes on to customer feedback and later on sales and
services of the product.

2. Ideas, Goods and Services

Marketing sells new ideas and it also sells goods and services. The marketing process involved
following things:

 Goods - The perceptible goods like FMCG products and consumer durables are
dispensed and plan by the marketers.
 Services -Airlines, hotels, insurance, banks, etc. are sold by the marketers.
 Ideas -Furthermore, ideas are marketed by social and Govt. organizations, which
includes campaigns relating to anti-drugs, AIDS awareness, anti-corruption, etc. In fact, every
market offering includes a basic idea. A marketer of a face cream sells the idea of a beautiful
person and that of a soft drink sells the idea of refreshment.

3. Target Markets

Marketing is bothered with target markets. No one can sell everything to anyone. Therefore, the
marketer should be conclusive in selecting the targeted clients or buyers. A marketer needs to
design goods and services to a particular target segment or market.

Examples A marketer cannot design and sell a particular model of a car to all prospective
buyers. He has to design distinct models to different segments of the market depending upon
their income, status, preferences, etc.

4. All Pervasive

Marketing process is not only applicable to business organization but as well as to non-business
organizations.

Examples - An educational institution may adopt marketing approach to:

 Suggest the right courses to the students (product).

 Charge the appropriate fees to the students (price).

6
7

 Promotion of courses to the students (if so required).

 Provide the courses to the student at the right time and place.

5. Customer Satisfaction

These days marketer plans to target on customer satisfaction. It has an association between
product performance and customer expectation.

 When product performance matches with customer expectation,the consumers gets

pleased
 When product performance is below customer expectation, the customers are
dissatisfied.
 When product performance exceeds customer expectation, the customers are delighted.
 When product performance exceeds very much more than expectation, the customers get
astonished.

These days the customers are given excited offer and value-added services. The main focus of
today's marketers is customer satisfaction. Customer value can be enhanced by providing
additional facilities at little or no extra cost, such as extension in after-sale-service and
warranties, free delivery and installation, etc. If possible, marketers need to astonish customers
by providing services, which are very much more than their expectations.

Examples - Federal Express has created customer value by: It allows customers to track
packages through the company's web site. By connecting to the FedEx site and by entering the
airway bill number, customers can locate a package in transit. After the package has been
delivered, they can even identify the name of the person who signed for it. This service is free of
charge. This facility has enhanced the customer value and loyalty.

6. Competitive Advantage

The marketers should find unique ideas and innovation to compete in today's market. The
marketers should be proactive and should have decision-making skills. They should come with:

 New innovative designs or models.

 Advanced Creative promotion plans.
 Effective customer relationship techniques, etc.

The pro-active decisions give the competitive advantage to professional marketers.

7. Corporate Image

 Because of effective marketing strategy, the firm's turnover in terms of profit, share and
sales in the market improves.

7
8

 An effective marketing strategy ensures the development of the firm, and it also improves its
corporate image in the society , in the minds of Employees, Customers, Dealers,
Suppliers, Shareholders and other stakeholders.

A good corporate image in the minds of stakeholders helps a firm to expand and grow.

For instance, firms that have good corporate image:

 Develop trust and confidence of the customers.

 Get support from the Shareholders and financial institution.
 Get cooperation from dealers and suppliers, etc.

8. Expansion of Business

Marketing facilitates expansion of the firm. Due to effective marketing, the performance of the
organization improves in terms of sales, profits and market share. Therefore, a firm may adopt
expansion strategy. For expansion, the firm undertakes various activities such as:

 Market Penetration: increase in marketing activities in the existing market.

(Same product , same market , increase customer)
(same customer , increase purchase )
 Market Development: entry into brand new marketplaces.
 Product Development: development of new products for existing / modern markets.

9. Organizational Objectives

Organizational objectives are achieved due to efficient marketing.

The marketing objectives are as follows:

 Increase in the profits of the firm.

 Increase in the market share, improves corporate image.
 It enhanced the brand loyalty of the customer and also improves the brand image of the
firm.

8
9

10. Marketing Environment

Marketing is affected by number of factors such as:

 Government policies,
 Economic conditions,
 Customer preferences,
 International environment,
 Competitors strategies,

Marketers should actively scan the environment.

For instance, a marketer must analyze the marketing-mix adopted by the competitors.
Accordingly, he has to design products that offer a differential advantage to the consumers,
which may bring higher returns to the firm.

11. Integrated Approach

Marketing needs to integrate with the other functional areas of the organization. There is a need
for integration of various departments such as finance, production, human resources, etc. All
functional areas should interact and interlink to achieve the firm's overall objectives.

For instance, a decision to increase advertising would require support from the finance
department. And a decision to introduce a new model requires active coordination between the
production and marketing department.

9
10

12. Societal Interest

Advanced marketing intends to maintain social interest of the society . There should be always
balance between public interest and customer's satisfaction by the marketers.

For instance, professional marketers undertake research and development to develop products,
which are eco-friendly and also generates customer satisfaction. And at the same time brings
higher profits to the organization.

Scope of Marketing

1. Study of Consumer Wants and Needs

Goods are produced to satisfy consumer wants. Therefore study is done to identify consumer
needs and wants. These needs and wants motivates consumer to purchase.

2. Study of Consumer behavior

Marketers performs study of consumer behavior. Analysis of buyer behavior helps marketer in
market segmentation and targeting.

3. Product planning and development

Product planning and development starts with the generation of product idea and ends with the
product development and commercialization. Product planning includes everything from
branding and packaging to product line expansion and contraction.

4. Pricing Policies
Marketer has to determine pricing policies for their products. Pricing policies differs from
product to product. It depends on the level of competition, product life cycle etc.

5. Distribution
Study of distribution channel is important in marketing. For maximum sales and profit goods are
required to be distributed to the maximum consumers at minimum cost.

6. Promotion
Promotion includes personal selling, sales promotion, and advertising. Right promotion mix is
crucial in accomplishment of marketing goals.

7. Consumer Satisfaction
The product or service offered must satisfy consumer. Consumer satisfaction is the major
objective of marketing.

8. Marketing Audit
Marketing audit is done to control the marketing activities.Marketing audit is done to improve

10
11

the company’s marketin g performance.It is a periodic examination of a company’s

marketing strategies, objective and activities.

It gives the answer of why we are successful or fail.

Importance of marketing

11
12

In the absence of marketing, many businesses would fail to exist. The prime object of production
is to distribute goods and services by using effective marketing.

Businesses could have the most amazing products or services, but if no one knows it exists then
businesses will not be able to sell them. There is a need to use marketing to promote business.
Without marketing, it is difficult to reach potential customers.

In the olden days, the role of marketing was only to communicate the product to the consumers,
but this is not the case today. The role of marketing is too diverse in the modem world. Effective
marketing helps organizations to survive in competitive environments.

Importance to Society

I1) Increase in Standard of Living

The prime objective of marketing is to provide goods and services to the customers to satisfy
their needs.

Paul Mazur defined marketing as, “The delivery of standard of living to the society“.

 Marketing helps to identify the needs of the customers and take an initiative to provide
quality goods at cheaper prices. This will help to increase and maintain the standard of
living of the customers.

 In modern times, large-scale production of goods and services reduced its prices due to
which even the poorer sections of society can attain a reasonable level of living.

2) Provides Employment

Modern marketing is a total system that covers almost all functions of organization such as
buying, selling, financing, transport, warehousing, risk bearing, research, and
development, etc.

To run this system there is a need of people. Thus, marketing gives job opportunities to people.
In the modern era of automation, lesser employments are available in the production function
and the role of marketing has widened. It gives more opportunities of employment in marketing.

Converse, Huegy, and Mitchell have rightly pointed out that “In order to have continuous
production, there must be continuous marketing, only then employment can be sustained and
high level of business activity can be continued“.

3) Decreases Distribution Costs

12
13

Marketing activities help to provide cheap goods and services to society. Effective utilization of
channel of distribution can help in reducing the cost prices of the products and services.

Reduction of cost will help to increase the potential consumers for the products or services. It
also assures timely availability of the product.

4) Consumer Awareness

Marketing helps society by informing and educating consumers. The function of marketing is to
fulfill the needs of the consumers. Marketing helps consumers to know about new products and
services available in the market and its usefulness to the customer.

Marketing provides satisfaction to society by supplying relevant information, goods, and services
to the people of society according to their demands and taste. Marketing can also include more
practical information to assist in making a purchase, such as addresses, phone numbers, product
release dates, store hours, and Web addresses.

5) Increase in National Income

Every economy revolves around marketing, production, and finance to the industry. The
scientifically organized marketing activities help in the economic development of the country.
Effective marketing of products and services result into industrialization, more job, and
makes the economy stronger and stable. Marketing can bring about rapid development of the
country by integration of agriculture and industry.

6) Managing Consumer Expectations

Marketing research helps organizations to understand the needs of the consumers. It helps in
developing products that fulfill customers’ expectations. Customers’ reviews collected through
different sources can help the organizations to make necessary changes in the products.

Businesses use marketing to make consumers aware of major changes, such as mergers and
transfers in ownership that affect product offerings or seek to improve quality. Government
regulations prevent marketers from making false or misleading claims.

Importance to Firm

1) Increases Awareness

Marketing helps in creating awareness about the existing products, new arrivals as well as the
company which sells a particular product in the market. This raises awareness among the
potential consumers. It creates brand image among the consumers.

2) Increases Sales

13
14

Once marketing creates awareness about the products or services among the consumers, it
attracts them to purchase the same. A successful marketing campaign helps to increase the
sales of the organization. An increase in sales generates profit for the organization.

This income and profit are reinvested in the business to earn more profits in the future. In
modern business, the survival of the organization depends on the effectiveness of the marketing
function.

3) Creates Trust

People want to buy from a business that has a trustworthy reputation. Creating trust among the
customers is a time-consuming process. Creating trust among the consumers helps the business
to earn loyal customers. Once your business can establish this trust with your clients, it creates
customer loyalty. Happy customers enhance the brand image in the market.

Effective marketing plays an important role in building a relationship between the

customers and the organization. Effective pricing policy and timely after-sales services
improve the image of the organization. A majority of the activities of the marketers are directed
towards building the brand equity of the business.

4) Basis for Making Decisions

From the inception of an idea to delivering the final product to the customer, a businessman has
to take several decisions. The businessman has to look after many problems such as what, how,
and when. how much and for whom to produce? As the scale of operation increases, these
decisions become more complex. Marketing helps to take right decision at right time.

5) Source of New Ideas

 Marketing helps businesses to understand the needs of the consumers.

 Feedbacks from the consumers help in the improvement of the existing products.

 There is a rapid change in the tastes and preferences of people. Marketing helps in
understanding these changes.

 It helps to understand new demand patterns that emerged in the market. The research
and development department develops products accordingly.

The 4p’s of marketing mix i.e. product, price, place, and promotion play a huge role in product
development. Inventions and innovations are taking place as per the need of the Research and
Development team of the business.

6) Tackling the Competition

14
15

There is increasing competition in almost all sectors of the economy. It is difficult for any
business to create a monopoly for their products and services. The role of marketing is important
to create a positive brand image in the minds of potential customers.

Marketing not only helps to communicate the products and services to the consumers but
also motivates them to buy the same. Sound marketing strategies can portray a better image of
the business than the competitors. Businesses can make use of modern technology for effective
marketing.

Importance to Consumers

1) Promotes Product Awareness:

Through different marketing activities, companies promote their products and services. This
helps consumers to know about different products and services available in the market. It helps
the consumer in making buying decisions.

It also creates awareness among the consumers about different brands and features of the product
available in the market. A consumer can compare product features, price, availability, and other
essentials because of marketing. Marketing helps to improve the quality of life of the consumer.

2) Provides Quality Products

There is increasing competition in the market. Consumers are getting easy access to information
about the products and services available in the market.

It creates moral pressure on businesses to provide quality goods to consumers. Supplying

defective products may create a negative image of the business which affects the consumer’s
loyalty.

3) Provides a Variety of Products

Marketing creates awareness among the consumers about the product. At the same time, it
attracts consumers to buy the same. With the customer population and preferences becoming
wider, and the competitive options becoming more available, market segmentation has become
critical in any business or marketing plan.

In fact, businesses launch products keeping market segmentation in mind. A businessman needs
to provide a variety of goods to cater to the needs of the different market segments of the
consumers. Variety may change according to the price, size, and quality of the product.

HUL Products :-

Dove , Lux, Lifebuoy

15
16

Surf excel, Rin, Wheel

Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,
Simple, Love Beauty Planet, TRESemmé, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s,
Horlicks and Pureit.

4) Helps in Selection

A variety of products with different brands is available in the competitive markets. Marketing
helps the consumer choose the best products and services from the different options available.

Watches :- Titan , A/E , Rolex , Tissot

5) Consumer Satisfaction

 The first and foremost objective of any sound marketing policy is to satisfy the consumers
with an assurance of good quality products.

 When an offering meets the customer’s expectations, the customer is satisfied.

 Marketing leads to consumer satisfaction through honest advertising, assurance of quality

products, and availability of innovative products.

 Thus, marketing takes every effort to satisfy the consumer.

6) Regular supply of goods

 Through efficient distribution channel of marketing regular supply of goods is possible.

 It helps to maintain the balance between demand and supply. It results into stable prices.

16
17

Marketing Management

 Marketing Management performs all manageria l functions in the field of marketing.It

is the process of decision making, planning, and controlling the marketing aspects of a
company in terms of the marketing concept, somewhere within the marketing system.
Marketing management is “planning, organising, controlling and implementing of
marketing programmes, policies, strategies and tactics designed to create and satisfy
the demand for the firms’ product offerings or services as a means of generating an
acceptable profit.”

 Marketing Management identifies market opportunities and comes out with appropriate
strategies for exploring those opportunities profitably. It deals with creating and regulating
the demand and providing goods to customers for which they are willing to pay a price
worth their value.

 Marketing management aims at efficient operation of marketing activities.

 Marketing management smoothen the process of exchange of ownership of goods and

services from seller to the buyer. Marketing management, like all other areas of
management comprises of the function of planning, organising, directing coordinating and
controlling.

Definition of Marketing Management

Institute of Marketing Management, England, has defined Marketing Management as “Marketing

Management is the creative management function which promotes trade and employment by
assessing consumer needs and initiating research and development to meet them. It co-ordinates

17
18

the resources of production and distribution of goods and services, determines and directs the
total efforts required to sell profitably to ultimate user”.

According to Philip Kotler, “Marketing Management is the art and science of choosing target
markets and building profitable relationship with them. Marketing management is a process
involving analysis, planning, implementing and control and it covers goods, services, ideas and
the goal is to produce satisfaction to the parties involved”.

Core concepts of marketing, selling concept, production concept, modern marketing

concept.

Businesses will design strategies that satisfy customers’ needs, increase sales, maximize profit
and beat their competition. That is a nice truth and statement, but many might ask, “what
philosophy is the best for a company in setting marketing strategies?”
Well, in this article we will discuss 5 different concepts of marketing that each have a specific
function in a holistic marketing strategy.

The concepts ar e:
• The Production Concept
• The Product Concept
• The Selling Concept
• The Marketing Concept
• The Societal Marketing Concept
• Holistic marketing.

The Production Concept

 This concept came into existence after the industrial revolution in England. (in the
mid-1950s)

 It holds that consumers will prefer products that are widely available and
inexpensive. It speaks to the human truth that we prefer products that are easily available
and inexpensive.

 Managers focusing on this concept concentrate on achieving high production

efficiency, low costs, and wide distribution coverage. They assume that consumers are
primarily interested in product availability and low prices.

 This orientation makes sense in developing countries, where consumers are more
interested in obtaining the product than in its features.

 The basic idea of this concept is that businesses will want to produce widely cheap
products in maximum volumes to maximize profitability and scale.

18
19

 Businesses assume that consumers are primarily interested in product availability and low
prices while customer’s needs might not be fully addressed.

The Product Concept

 This concept came into existence in the early 20th century.

 This orientation holds that consumers will favor those products that offer the most quality,
performance, or innovative features.

 Some of the features of product concept include :-

 Emphasis on research and development to improve quality of product which will increase
sales
 Emphasis on profit motive
 Lack of emphasis on marketing research
 Lack of emphasis on customer relation

 Excessive attention is given to the product and ignoring the customer

The Selling Concept

 This concept gained importance after the great depression of 1930s.

 This concept places emphasis on promotional efforts to expand the business.

 The selling concept assumes - consumer will prefer those products which are aggressively
promoted with the help of publicity, advertising, salesmanship and sales promotion.
 Some of the features of selling concept include
 Focus on promotion mix
 Greater emphasis on profits and market share
 Lack of emphasis on marketing research
 Lack of emphasis on customer relation

 This concept is aggressively used by sellers of unsought goods (Insurance policy , magazine
subscription )

The Marketing Concept

 This concept came into existence in the 1960s due to large scale competition .
 This concept is also known as customer - oriented concept. The target customer becomes the
focus of all marketing decision .
 This concept assumes that - The success of the organization largely depends on customer
satisfaction .

19
20

 The marketing concept consider four factors :-

 Target customer
 Integrated approach
 Customer satisfaction
 Emphasis on profits

 The main features of marketing concept:-

 Emphasis on marketing research
 Focus on research and development
 Balancing profits with customer satisfaction
 Integration of all functional areas
 Emphasis on customer relation .

The Societal Marketing Concept

 This concept emerged in 1980s and 1990s

 This concept assumes that a company can prosper, if it strikes a balance of three element

Society’s Welfare + Customer Satisfaction + Company’s Profit

 Some of the features of Societal Concept are :-

 Emphasis on conservation of environment

 Focus on marketing research
 Emphasis on profit as well as customer satisfaction
 Focus on research and development to produce “Green Goods ” (environment friendly
goods)

For example, McDonald’s and other fast-food restaurants and not really getting this
“societal marketing thing…” Most fast-food companies offer tasty but unhealthy food. (The
bane of our existences)

20
21

The food typically will have high fat content and will then supplement those meals with fries,
pies and soda which also are not healthy choices either. The food is then wrapped in convenient
packing which most times ends up on the ground somewhere as waste.

Now, I love McDonald’s food

and a lot of people enjoy what
fast-food chains offer therefore
satisfying consumer wants but at
what cost? These companies,
although making customers
happy, may be hurting consumer
health and causing
environmental problems.

Holistic marketing.

 Philip Kotler introduced the Holistic concept of marketing.

 The holistic marketing concept consists of four elements :-

Integrated Marketing - all elements of marketing mix are integrated to deliver superior
customer value.

Relationship marketing - efforts are made to build , maintain and enhance long - term
relationship with customers , dealers , suppliers and stakeholders.

Internal marketing - The employees of the organization are treated as internal customer ,
so that they serve the external customer (real customer) more effectively .

Performance marketing - Emphasis is placed on profits as well as customer loyalty ,

customer satisfaction , market share , product quality etc.

Examples of Holistic Marketing

Apple is one example of a company that successfully uses holistic marketing. Everything from
how the products are developed with the customer in mind, to the stores being branded in a
recognizable fashion, to the customer service being extremely quick, efficient and polite, Apple
could be considered a master in using this strategy.

Heineken is another example of a brand that used this approach to successfully reinvent its
image. Rather than focusing on the beer, Heineken centered its marketing efforts around four
themes – engagement, exposure, interaction and relationships, including promoting its eco-
friendly approach to brewing beer.

21
22

Conclusion

All of these marketing concept mindsets can help you achieve organizational goals depending on
if you understand the needs and wants of your target market while delivering quality products
people prefer.
Under the marketing concept, customer focus and value are the routes to achieve sales and
profits.
The marketing concept is a customer-centered “sense and responds” philosophy. The job is not
to find the right customers for your product but to find the right products for your customers.

22
23

UNIT – II

Marketing Segmentation

 Market segmentation is a marketing concept

 which divides the complete market set up into smaller units comprising of consumers
with a similar taste, demand and preference.
 A market segment is a small unit within a large market comprising of like minded
individuals.
 One market segment is totally distinct from the other segment.
 A market segment comprises of individuals who think on the same lines and have similar
interests.
 The individuals from the same segment respond in a similar way to the fluctuations in the
market.
 Market segmentation is the best strategy to increase the conversion rate and cut down on
the product cost. It helps marketers to always target niche market and attain your
objectives.

23
24

Examples of Market Segmentation

 Market segmentation is the most common activity of every business organization.
 Marketers and Business owners cannot focus on mass marketing with one marketing
strategy.
 Here are a few examples of market segmentation for better understanding this point.

Fast food restaurant should target teenagers and younger couples if target older people it
will be a mistake and will affect their revenue generation.

Beauty products like “Lakme 9 to 5” focus on young, successful and working-class

women.

Sports brand, for example, Nike and Lululemon segment the market and target health
conscious, athletes, gym lovers and sportsmen and sportswomen.

Definition of Segmentation

According to Schiffman and Kanuk, “Market Segmentation can be defined as the process
of dividing a market into distinct subsets of consumers with common needs or
characteristics and selecting one or more segments to target with a distinct marketing
mix”.

As per SJ.Skinner, “Market segmentation is the process of dividing a total market into
groups of consumers who have relatively similar product needs.”

According to R. S. Davar, “Grouping of buyers or segmenting the market is described as

market Segmentation.”

Bases of Market Segmentation

The firms can segment the market on the following bases:

24
25

A)Geographical Segmentation:

Here, the segmentation is done on the basis of the geographical location of the customers. Home
addresses are one example, but depending on the scope of your business, you could also use:

 Country (if your business is international)

 State
 City
 Locality
 Region
 Rural / Urban

Geographic segmentation relies on the notion that groups of consumers in a particular

geographic area may have specific product or service needs. The geographical segmentation is
based on the premise that people living in one area have different purchasing or buying habits
than those living in other areas of the country.

For example, the banking needs of people living in rural and urban areas are different and.
Therefore, different banking products and services are designed keeping in mind the different
preferences of each customer group. Also, the factors like Density , climatic zone, state, region,
constitutes geographic segmentation.

For example, the people in snowy locations will choose sunny locations for tours. This
information can yield a better profit for tourism, airline, and other sectors.

B)Demographic Segmentation:

The demographic segmentation means dividing the customer market on the basis of several
variables such as age, gender, occupation, income, education, marital status, family size,
community, social status, etc. Such segmentation is based on the premise, that customer’s buying
behavior is very much influenced by his demographics, and moreover, these variables can be
measured easily as compared to the other factors.

 Gender
The marketers divide the market into smaller segments based on gender. Both men and
women have different interests and preferences, and thus the need for segmentation.

25
26

Organizations need to have different marketing strategies for men which would obviously
not work in case of females.
A woman would not purchase a product meant for males and vice a versa.
The segmentation of the market as per the gender is important in many industries like
cosmetics, footwear, jewellery and apparel industries.
Example :- HUL markets fairness cream for both men and women - fair & glow and fair
& handsome
For example, a product such as perfume, while they undergo segmentation based on
demographic variables, a separate perfume for men and women will evolve.
 Age Group
Division on the basis of age group of the target audience is also one of the ways of
market segmentation.
The products and marketing strategies for teenagers would obviously be different than
kids.
Example (1)
Junior Horlicks Stage-1
Junior Horlicks has been specialised for infants of two-three years old. The product ensures
healthy weight gain, brain development. It helps a child to meet the daily nutritional
requirement. It is available in two flavours (classic malt, chocolate).
Junior Horlicks Stage 2(4-6 Year Old)
Offering specialised nutrition for children, this nutritional food powder ensures a balanced
diet to meet your child’s nutritional requirement. Protein milk, calcium, and immune
nutrients help in gaining height.
Horlicks Lite
Horlicks Lite comes with zero cholesterol and no added sugar. This drink is specially made
for active adults. It also ensures cell growth with high protein and anti-oxidant nutrients to
support the defence-mechanism of the body.

Example (2)

Age group (0 - 10 years) - Toys, Nappies, Baby Food, Prams

Age Group (10 - 20 years) - Toys, Apparels, Books, School Bags

Age group ((20 - 30) - Cosmetics, Magazines, apparels and so on

Age group ( 30 and above)- Anti-Ageing Product, hair Dye, fitness products

26
27

Example (3)

A liquor vendor, for instance, might want to target its marketing efforts based on the results of
Gallup polls, which indicate that beer is the beverage of choice for people under the age of 54—
particularly in the 18 to 34 range—whereas those aged 55 and older prefer wine.

 Income group
Marketers divide the consumers into small segments as per their income. Individuals are
classified into segments according to their monthly earnings.
The three categories are:

High income Group

Mid Income Group

Low Income Group

Stores catering to the higher income group would have different range of products and
strategies as compared to stores which target the lower income group.
Pantaloon, Carrefour, Shopper’s stop target the high income group as compared to Vishal
Retail, Reliance Retail or Big bazaar who cater to the individuals belonging to the lower
income segment.
Example :- Tata Nano
Tata Tiago
Tata Tigor
Tata Naxon
Tata Jaguar
 Marital Status
Market segmentation can also be as per the marital status of the individuals.
Example :- Travel agencies would not have similar holiday packages for bachelors and
married couples.

 Occupation (Artist , Doctor , Mechanic , accountant , Engineer )

27
28

Office goers would have different needs as compared to artist and doctors.

Demographic segmentation is usually the most important criterion for identifying target
markets, which means that knowledge of demographic information is crucial for many
businesses.

C)Psychographic Segmentation:

The psychographic segmentation relates to the personality and lifestyle of the individual. It is
believed that the consumer buying behavior can be determined by his personality and lifestyle.

 The personality refers to the traits, attitudes and habits of an individual and the market is
segmented according to the personal traits such as introvert, extrovert, ambitious,
aggressiveness, etc.
 The lifestyle means the way a person lives his life and do the expenditures. Here the
companies segment the market on the basis of interest, activities, beliefs and opinions of the
individuals.

D)Behavioral Segmentation:

based on intensity of product use, brand loyalty, user behaviour, price sensitivity, technology
adoption.

Readiness Stage :- Here, the marketer segments the market on the basis of the individual’s
readiness to buy the product . Some people are well informed and have knowledge about the
product and are interested to buy the product. Some other may be well informed but not
interested to buy the product .

Users Status :- Also, there are buyers who can be called as ex-users, potential users, first-time
users and regular users; the marketers can segment the market on this classification.

Usage Rate :- Often, the market is segmented on the basis of the usage rate of the customers,
such as light, medium and heavy users.

Thus, market segmentation helps the companies to divide the prospective customers into small
groups who have similar needs and plan the marketing strategies accordingly. This enables a
firm to concentrate more on a specific group and earn more profits rather than catering to the
needs of the entire market who have different needs and desires.

28
29

Importance of Market Segmentation

 Market Expansion

With geographic market segmentation, market expansion is possible within no time. When
a company understands its segments and marketing role in a particular location, it can
expand its business immediately to another location. If segmentation is based on
demographics variables, then once the organization finds out their demographic market
segments, they can expand the sales of that specific product based on that.

 Increased resource efficiency. Marketing segmentation allows management to focus

on certain demographics or customers. Instead of trying to promote products to the
entire market, marketing segmentation allows a focused, precise approach that often
costs less compared to a broad reach approach.

 Stronger brand image. (An overall perception of a brand and the characteristics
of its product )

Marketing segment forces management to consider how it wants to be perceived by a

specific group of people. Once the market segment is identified, management must
then consider what message to craft. Because this message is directed at a target
audience, a company's branding and messaging is more likely to be very intentional.
This may also have an indirect effect of causing better customer experiences with the
company.

 Greater potential for brand loyalty.

Marketing segmentation increases the opportunity for consumers to build long-term

relationships with a company. More direct, personal marketing approaches may resonate with
customers and foster a sense of inclusion, community, and a sense of belonging. In addition,
market segmentation increases the probability that you land the right client that fits your
product line and demographic.

 Stronger market differentiation.

Market segmentation gives a company the opportunity to pinpoint the exact message they way
to convey to the market and to competitors. This can also help create product differentiation by
communicating specifically how a company is different from its competitors. Instead of a

29
30

broad approach to marketing, management crafts a specific image that is more likely to be
memorable and specific.

 Better targeted digital advertising.

Marketing segmentation enables a company to perform better targeted advertising

strategies. This includes marketing plans that direct effort towards specific ages, locations,
or habits via social media.

Target Marketing

 Target market refers to a specific and well defined consumer segment to which company
wants to sell its product.

 Once the marketer creates different segments within the market, he then devises various
marketing strategies and promotional schemes according to the tastes of the individuals
of particular segment. This process is called targeting. Once market segments are created,
organization then targets them.
 Targeting is the second stage and is done once the markets have been segmented.
 Organizations with the help of various marketing plans and schemes target their products
amongst the various segments.
 Instead of trying to reach an entire market, a brand uses target marketing to put their
energy into connecting with a specific, defined group within that market.
 Target Marketing involves breaking a market into segments and then concentrating your
marketing efforts on one or a few key segments consisting of the customers whose needs
and desires most closely match your product or service offerings.

 It can be the key to attracting new business, increasing sales, and making your business a
success.

Example

 Nokia offers handsets for almost all the segments. They understand their target
audience well and each of their handsets fulfils the needs and expectations of the
target market.
 Tata Motors launched Tata Nano especially for the lower income group.

30
31

 Makeup companies market nearly exclusively to women, companies that sell

construction tools or automobile parts market nearly exclusively to men, cigarette
companies used to market specifically to teenagers so that they could become
lifetime customers, and so on.
 Kellogg’s K Special mainly targets individuals who want to cut down on their
calorie intake. The target market in such a case would be individuals who are
obese.
 The target market for Zodiac Clothing Company Limited or Louis Philippe would
be the office goers whereas the target market for Levi’s would be the school and
college kids.

Types/Strategies/approaches of target marketing

1. ) Undifferentiated marketing:-

 It is also known as mass marketing.

 In this type of marketing the firm ignore market segment differences and appeal the whole
market .

 A firm offers only one product and draws the attention of the consumer with only one product
for which the firm uses mass advertising.

 Normally, only one marketing mix is developed - one product , one price , same promotion
and distribution channel in the entire market.

 Mass marketing refers to the strategy of targeting the entire potential customer market by
means of a single marketing message.

 The marketing strategy used in this type of target marketing does not target the specific
requirements or needs of customers.

31
32

 Mass marketing strategy, instead of focusing on a subset of customers, focuses on the entire
market segment that can be a probable customer of a product.
 An example of mass marketing strategy is of Baygon cockroach spray or Mortein mosquito
repellent coils that target all its potential customers through a single marketing message, phone
, sim , lux soap.

2. ) Differentiated marketing:-

 It is also known as segmented marketing.

 Here the firm divides the market in different segments and offer different kind of products for
different segment.

 Segment marketing refers to a strategy where the company divides its target audience into
different segments based on their unique needs and requirements.

 This way the company targets different messages to different segments, appealing them
towards the unique features the product offers.

 This strategy creates product differentiation for customers with similar needs and
preferences, based on their gender, age, income and location.

 Like Maruti udhyog ltd. offer different brands of cars to suit every class of buyer , Tata ,
Nokia etc

3. ) Concentrated marketing:-

 This kind of marketing is also called niche marketing.

 Here the company tries for a larger share of small market or niche because it gives more profit
to the firm.

 This strategy of marketing focuses on a narrower customer segmentation.When companies move

forward and develop highly specialized products to offer these customers their specific needs, they
offer distinct products in a market that caters to specific customer segments only.

 Example -Mountain bikes are an example of a niche marketing segment. where the market
segmentation will be individuals interested in mountain biking only. Since not every bike
manufacturing company caters to mountain bikers, it is a niche segment. Companies that produce
mountain bikes target the niche segment of mountain bikers and cater to their specific needs,
preferences and requirements.

32
33

 An example -of niche marketing is luxury cars that are very high priced and offer exceptional features
such as high speed, customized look, etc.

4. ) Micro marketing:-

 It is also known as local or individual marketing.

 This kind of marketing satisfies individual or local needs. Like boutiques provide service to
the customers as per their needs,Hair Stylist

 Micro marketing is marketing strategy in which Marketer targets to a specific group of

customers within a niche market.

 With micro marketing, products or services are marketed directly to a targeted group of
customers.

 In traditional marketing Micro marketing is difficult but in Digital Marketing is easy because
most of digital marketing platforms such as Facebook Ads and Google Ad words provides
Micro Marketing Targeting Options.

 Micro marketing strategy is the most personal one. Going beyond the tight focus of the niche
marketing, this approach determines the wants of individual customers within a specified
group of people. Companies are using this technique to develop stronger connections with
their customers and expand their client base.
 A good example of micro marketing can be found in the real estate industry.

Importance of Targeting in Marketing.

Targeting in marketing is important because it’s a part of a holistic marketing strategy. It
impacts advertising, as well as customer experience, branding, and business operations. When
your company focuses on target market segmentation, you can do the following:
Speak directly to a defined audience. Marketing messages resonate more deeply with
audiences when readers can relate directly to the information. Brands that have a large, varied
market of customers often struggle with creating marketing campaigns that speak directly to
their audience. Because their viewers are very different, few slogans or stories can resonate
with each person on a personal level. Through target marketing, you can alleviate this problem
and focus on crafting messages for one specific audience.
Attract and convert high-quality leads. When you speak directly to the people you want to
target, you are more likely to attract the right people. Your marketing will more effectively
reach the people most likely to want to do business with you. When you connect with the right
people, you are then more likely to get high-quality, qualified leads that will turn into paying
customers.

33
34

Differentiate your brand from competitors. When you stop trying to speak to every
customer in your market and start focusing on a smaller segment of that audience, you also
start to stand out from competitors in your industry. When customers can clearly identify with
your brand and your unique selling propositions, they will choose you over a competitor that
isn’t specifically speaking to or targeting them. You can use your positioning in marketing to
make your brand more well-known and unique.
Build deeper customer loyalty. The ability to stand out from competitors by reaching your
customers on a more personal, human level also creates longer-lasting relationships. When
customers identify with your brand and feel like you are an advocate for their specific
perspectives and needs, they will likely be more loyal to your brand and continue to do
business with you over a longer period of time.
Improve products and services. Knowing your customers more intimately also helps you
look at your products and services in a new way. When you have a deep understanding of your
target audience, you can put yourself in their shoes and see how you can improve your
offerings. You can see what features you can add to better serve your customers.
Stay focused. Finally, the benefit of using targeting in marketing is that it also serves to help
your brand and team. Target marketing allows you to get more specific about your marketing
strategies, initiatives, and direction of your brand. It helps you clarify your vision and get
everyone in the organization on the same page. You have more direction when it comes to
shaping upcoming plans for both marketing and the business as a whole. A focused approach
helps you fully optimize your resources, time, and budget.

Product Positioning /Brand positioning

Product positioning is a form of marketing that presents the benefits of your product to a
particular target audience. Through market research and focus groups, marketers can determine
which audience to target based on favorable responses to the product.

Research can also determine which product benefits are the most appealing to them. Knowing
this information helps streamline marketing efforts and create effective marketing messages that
drive more leads and sales. It also helps differentiate the product or service from the competition
in the marketplace.

Product positioning is an important component of any marketing plan, but it doesn’t have to be
limited to one audience. For example, a product may have a main target audience and also a
secondary audience that is also interested in the product, but perhaps in a different way. Each
audience will find the product appealing for different reasons, which is why it’s important to
tailor marketing messages to focus on the benefits each audience values most.

34
35

Defined as the space a company owns in the mind of a customer and how it differentiates
itself from competitors, brand positioning is a marketing strategy that helps business set
themselves apart. From cell phone manufacturers to online retailers to even nonprofits, brand
positioning helps customers instantly recognize and connect with a company. One of the most
important factors of success is how well, and how many, people know your brand. It’s not enough
to set up a generic website and hope people flock to it by the millions. In fact, no company is able
to truly thrive in the marketplace without an established brand position.
The process of creating an image / space of a product in the minds of the consumers is
called as positioning.
Positioning helps to create first impression of brands in the minds of target audience.
In simpler words positioning helps in creating a perception of a product or service amongst
the consumers.
Example

Nike started their product with a focus on performance and innovation. They invented the waffle
shoe and built their brand targeting serious athletes. Their product offerings have now moved
beyond shoes, and they offer athletic attire that enhances performance.

Their branding and messaging focuses on empowerment, from their tagline “Just Do It” to
their namesake, the Greek Goddess of Victory. Their models and athletes aren’t smiling and
happy, they’re doing physical activities with their game faces on.

Nike’s brand is focused on the concept of innovation for serious athletes to help you perform at
your best every single time.

Tesla is a luxury brand that’s more expensive than its competitors. Because of that, they leave
price out of their branding and instead focus on the quality of their vehicles. Tesla cars are long-
range, eco-friendly and electric — in addition to being luxury vehicles.

Tesla differs from other gas-powered luxury vehicles because their cars are electric. They
differentiate themselves from the standard electric vehicles because their cars are of higher
quality and have a longer range.

.Apple builds beautiful, innovative computers that are different than anything else you’ve
experienced and markets them to resonate with their consumers.

Apple’s message highlights the same qualities in their consumers that they do in their products:
if you are an Apple person, you are also innovative, imaginative and creative.

The brand “Bisleri” stands for purity.

The brand “CeatTyre” stands for better grip.
Product Positioning Strategies

35
36

The manufactures design and choose the Product Positioning Strategies according to the
manufactured products and the unique features of that product. Choosing the right strategy for
the product is crucial for the brand Success.

1. Competition Strategies

 These Product Positioning Strategies requires a unique or a superior product attribute in

regard to a competing product.
 In some cases , a reference may be made directly or directly to one or more competitors.
 Positioning a Product against the Competitors product requires a claim of superiority.
 It helps brands distinguish their products and show their uniqueness.

Examples

 A very good example to understand this concept is of Avis Rental Cars. The superiority
claim was, “We are number two. We try harder” BMW vs Audi, Snapdeal vs Flipkart.
 In its ads, Citibank VISA compares itself directly with American Express, saying,
“You’d better take your VISA card because they don’t take American Express.”
 Tata salt

2. Product Benefits Strategies

 In this Product Positioning Strategies the company focuses on defining and communicating
the product benefit, unique features that the product offers to the targeted customers.
 In this strategy the companies emphasizes on the various product benefits.
 The product features include durability, availability, economy or reliability can be illustrated
in this type of product positioning.

Example :-Eno is positioned as a product which provides relief from acidity.

Peps Flouride prevents tooth decay.

Hero Honda – Better in mileage

3. Product Attributes Strategies

Brands give certain characteristics to their products that aim at creating associations. It’s done to
make consumers choose based on brand image and product characteristics. Positioning a product
based upon a specific attribute (feature/characteristics)can also be compelling to the targeted
audience.

36
37

Example :-

 Let’s take the automobile industry, for example. A person who worries about safety will
probably choose Volvo because of the brand’s positioning. At the same time, another
customer who pays attention to reliability would prefer Toyota.
 Oppo F1 – positioned itself on its selfie feature.
 Sunsilk keeps hair soft and shining.
 Saffola – No cholesterol

4. Use or application Approach

 This types of Product Positioning Strategies is done intentionally to expand the market for
a particular brand.
 Introducing new and different uses of the same product will automatically expand the
horizons for the product, increase the market share and will lead more sales.

Example :-

 Kailas Jeevan - Multi purpose cream -Burn , cracked heels, eaching

 The ads for sugar free suggest it as not just an alternative to sugar for diabetic patients, but
as health product to keep the body slim.
 Dettol, an antiseptic lotion, must be found in every house, is now shown as a cleaning agent
to give a germ free environment in the house.

5. Quality - Pricing Approach

Using the price and quality approach to position a product can ensure easy sales of a product. In
this concept the marketers play with human perception and the thinking of associating quality
with price. The customer often perceives that there is direct relation in quality and price i.e.
the higher the price the greater the quality of the product. The Marketers use this Price –
quality approach to position the products and can easily charge higher margins of profit.

Example :-Lakme , BMW cars , Baggit bags.

6. Product Users strategies.

Under this strategy , the firm attempts to associate a product with a user or class of user.

Example :-

 Bournvita is positioned as a product for growing children.

37
38

 Business Today - Business magazine ….read by business managers or useful for business
managers

Importance of Market Positioning

Product positioning is an important element of a marketing plan. Product positioning is the

process marketers use to determine how to best communicate their products' attributes to their
target customers based on customer needs, competitive pressures, available communication
channels and carefully crafted key messages. Effective product positioning ensures that
marketing messages resonate with target consumers and compel them to take action.

 Positioning Makes Buy easy for Customers

Consumers want easy solutions and options to make purchase decisions. And positioning triggers
an emotional response from your target audiences, giving them a quick way to trust you and
increase the interest level of customers and increase sales numbers.

 Develops Corporate Image

Product positioning creates an image of the company’s products in the mind of consumers,
highlighting the most important benefits that differentiate the product from similar products in
the market.

 Facilitates Customer’s Choice

Consumers differ in terms of their expectations from the product. Some want durability; some
want unique features; some want novelty; some wants safety; some want low price; and so on. A
company, by promoting different types of competitive advantages, can attract different types of
buyers.

Consumers want easy solutions and options to make purchase decisions. And positioning triggers
an emotional response from your target audiences, giving them a quick way to trust you and
increase the interest level of customers and increase sales numbers.

 To Face Competition

This is the fundamental use of product positioning. Company can respond strongly to the
competitors. It can improve its competitive strength.

 It allows to differentiate brand. A company's brand is its identity. That is why knowing
what makes your business unique is crucial to capturing the attention of those interested
enough to take action. Brand positioning creates clarity around who you serve. It also

38
39

explains to your target audience why you are the best company for them and what sets your
products or services apart.
 It helps to justify pricing strategy. The positioning of the brand can be used to justify a
pricing strategy. In other words, when the price of the products is high because of the quality
and exclusivity, and the brand positioning emphasizes these factors, the cost automatically
becomes reasonable in the eyes of the customers. This also applies to products on the more
affordable side.

 Market Differentiation with Positioning – Positioning breaks the clutter of noise

The are plenty of products, and the number of firms delivering them is several. Positioning will
help a firm to stand out in the crowd of sellers. A clear Brand Position enables you to efficiently
and effectively communicate and reach your target audience. Clear market positioning makes the
brand and its product visible and attractive to the customers.

Repositioning.
Repositioning refers to the process of altering the existing space a brand occupies in the brains
of the customers.

After they are initially introduced to the market, products, services, and brands are constantly
being repositioned as a result of changes in competitive and market situations. Repositioning
involves changing the market’s perceptions of an offering so that it can compete more effectively
in its present market or in other target segments. This typically includes changes to the
marketing mix, such as product, place, price and promotion. Repositioning is done to keep
up with consumer wants and needs. Repositioning can be done by changing the target
market, or changing the product features and benefits, or sometimes both.

Generally, it is good to consider repositioning when you see the need or opportunity to improve
demand for the offering. Perhaps sales have slowed down, your target segment is getting smaller,
or you’ve developed a new innovation you’d like to introduce to the product.

Specific factors that can trigger the decision to reposition a product, service, or brand
include the following:

 Competition: New competitors entering or leaving the market; competitors joining forces;
a competitor’s innovation that threatens to make your offering obsolete; competitive
pricing strategies
 Market environment: Economic slow-down or recovery; changes in consumer
confidence, the political climate, or social forces like the movement around social
responsibility and sustainability
 Consumer trends: Changing tastes and preferences; evolving attitudes and behaviours
such as how consumers use technology to learn about, acquire, or interact with your
offering; new segments emerging as targets for your offering
 Internal environment: Changes in organizational leadership and strategy; acquisition or
development of new technology; introduction of innovation that offers new competitive
advantages and differentiators

39
40

Example
 Colgate started off by selling soap, candles, and starch. It later repositioned itself as a
toothpaste brand.
 Nintendo was started as a playing card company in 1889 before becoming the video game
pioneer as we know it today.
 Google started off as just a search engine before it repositioned itself as an internet giant.
 Cinthol - Alive is awesome,15th aug 1952,male appeal 2012 - youth

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

40
41

Unit – III

Meaning of Marketing Mix

 Neil Borden in the year 1953 introduced the term Marketing mix, an extension of the work
done by one of his associates James Culliton in 1948.

 A mixture of several ideas and plans followed by a marketing representative to promote a

particular product or brand is called marketing mix.

41
42

 Several concepts and ideas combined together to formulate final strategies helpful in making
a brand popular amongst the masses form marketing mix.

Elements of Marketing Mix

The elements of marketing mix are often called the four P’s of marketing.

1. Product
 Goods manufactured by organizations for the end-users are called products.
 Products can be of two types - Tangible Product and Intangible Product (Services)
 In this element different decisions related to product are taken .
 It is the basic element of marketing Mix because all other element is required only when
there is product.It is the centre of all the marketing activities
 It is a means by which consumers can satisfy their needs .
 Ideally, a product should fulfill an existing consumer demand. Or a product may be so
compelling that consumers believe they need to have it and it creates a new demand.
 For example, Apple was the first to create a touchscreen smartphone that could play
music, browse the Internet, and make phone calls.

42
43

2. Price

It is another important element of marketing mix , it is considered as very critical element

.Price can be defined as Economic value of product normally expressed in form of
money. The price of a product should be et in such a way that buyers can pay and
company can earn profit .The money which a buyer pays for a product is called as price
of the product. The price of a product is indirectly proportional to its availability in the
market. Lesser its availability, more would be its price and vice a versa.

Retail stores which stock unique products (not available at any other store) quote a higher
price from the buyers.

43
44

3. Place

Place , another key element of marketing mix , includes the various activities the
company undertakes to make the product accessible and available to target customer.
Buyers can purchase products either from physical markets or from virtual markets. In a
physical market, buyers and sellers can physically meet and interact with each other
whereas in a virtual market buyers and sellers meet through internet.

44
45

4. Promotion

Promotion refers to the various strategies and ideas implemented by the marketers to
make the end - users aware of their brand and to inspire them to purchase , to increase
sales volume. It is a tool for establishing long term relationship with customer .
Promotion includes various techniques employed to promote and make a brand popular
amongst the masses.

 Sales promotion

45
46

Even though customer satisfaction has become the top priority for businesses, there are times
when they need to stimulate demand and increase sales of their products for short-run. This is
where sales promotion comes into play.

Sales promotion is a part of the promotional mix where the business uses many short-term
customer-oriented strategies to stimulate the demand for its product by making it look more
attractive and/or worthy.

1) Identify the method of sales promotion in the following cases

1. A mobile company offers a discount of rupees 1,000 to clear of excess inventory . -

rebate

2. A customer gets rupees 5 off on return of an Empty wrapper while making a new purchase of
the same product . - Refund

3. A company offers a pack of half kg of sugar with the purchase of a 5 kg bag of wheat - product
Combination

4. A company offers 40% of extra shaving cream in a pack of 500 grams

Quantity gift
5. Scratch a card and get a gold coin with the purchase of a cold drinks.
Instaant draw and assigned gifts.

6. Purchase goods worth rupees 50000 and get a holiday package worth rupees 10000 free . –
Advertising
Usable benefit.
Print media, Television, radio are effective ways to entice customers and make them
aware of the brand’s existence.

Billboards, hoardings, banners installed intelligently at strategic locations like heavy

traffic areas, crossings, railway stations, bus stands attract the passing individuals
towards a particular brand.

Taglines also increase the recall value of the brand amongst the customers.

 Word of mouth

One satisfied customer brings ten more customers along with him whereas one
dis-satisfied customer takes away ten more customers. That’s the importance of
word of mouth. Positive word of mouth goes a long way in promoting brands
amongst the customers.
Lately three more P’s have been added to the marketing mix. They are as follows:

 People - The individuals involved in the sale and purchase of products or services
come under people.
 Team

46
47

 Process - Process includes the various mechanisms and procedures which help the
product to finally reach its target market
 Physical Evidence - With the help of physical evidence, a marketer tries to communicate
the USP’s and benefits of a product to the end users

McDonalds 7Ps of Marketing

This is a detailed analysis of the marketing mix of McDonald’s. It explores the 7Ps (Product, Price,
Place, Promotion, Process, People, and Physical Environment) of McDonald’s and explains its
business & marketing strategies. McDonald’s, a fast food restaurant, was founded in USA in 1940. It
opened its first restaurant in the UK in 1974.

There are over 14,000 McDonald’s restaurants in the USA and 1,270 across the UK and Northern
Ireland. McDonald’s is renowned for being the pioneer of the Drive Thru restaurant concept and is the
UK and world leader in this sector. As a franchising organisation, around 70% of McDonald’s
restaurants in the UK are owned and operated by local businessmen and women. The company invests
£43 million on employee training and development every year in the UK (McDonald’s, 2020).
McDonalds 7Ps of marketing comprises elements of the marketing mix that consists of product, place,
price, promotion, process, people and physical evidence.

47
48

Product. McDonald’s sells a wide range of fast food products such as hamburgers and
cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken
sandwiches, Chicken McNuggets, wraps and french fries. The company also offers salads,
oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé
beverages and other beverages.[1] Although, the company has long announced its pledge to
increase the nutritional value of its meals, McDonald’s foods widely remain to be perceived as
unhealthy.

McDonald’s is one of the world’s leading fast food restaurants. It primarily sells breakfast,
burgers, fries, chicken & sandwiches, snacks & sides, desserts & shakes, salads, and drinks. It
provides customers with a variety of options. For example, Egg McMuffin, Egg White Delight
McMuffin, Hotcakes, Hash Browns, Quarter Pounder with Cheese, Double Quarter Pounder with
Cheese, Hamburger, Cheeseburger, Double Cheeseburger, Vanilla Shake, Vanilla Cone, Hot
Fudge Sundae, Kiddie Cone, Hot Caramel Sundae, Strawberry Sundae, Baked Apple Pie,
McCafé Chocolate Shake, McCafé, and McCafé Frappé Mocha are some of the products offered
by McDonald’s.
Prices and pricing strategies of McDonald’s
 Companies use a wide range of pricing techniques to sell their products. Value pricing,
going rate, cost plus pricing, price discrimination, and loss leader are some of the popular
pricing techniques.
 The overall aim for each individual McDonald’s restaurant is to provide food at a
competitive value driven price for the customers.
 Prices vary slightly between different McDonald’s restaurants according to a number of
factors. The restaurant set prices with a demand-based methodology and does not prescribe
pricing to franchisees who can set their own price structure as they see fit in their local
market (McDonald’s, 2020). However, franchisees need to offer a competitive value driven
price for their customers.
Place. There are 36,258 McDonald’s restaurants in 119 countries.[2] According to its aggressive
expansion business strategy, the company aims to establish its presence in urban, as well as, in
rural areas. The company states that “McDonald’s looks for the best locations within the
marketplace to provide our customers with convenience. We build quality restaurants in
neighbourhoods as well as airports, malls, tollways, and colleges at a value to our
customers”.[3]. Generally, major fast food restaurants tend to cluster and in most locations,
where there is a McDonald’s, there is also a Burger King right across the street.[4]

Place refers to distribution. Distribution strategies are the ways in which a company gets its
products to its customers. McDonald’s have different distributions strategies in different
countries. The restaurant offers home delivery in some countries; however, this service is not
available in many countries. For instance, McDelivery is now available in many cities in the UK.
This has been made possible as the restaurant signed a home delivery contract with UberEats in

48
49

2017 (Rodionova, 2017). A similar contract with UberEats has made home delivery possible in
thousands of locations in the USA as well.
Many of the McDonald’s restaurants are open 24 hour a day. This is an example of intensive
distribution which means making products available for sale through all possible channels of
distribution. This helps the restaurant increase its sales and eventually the total revenues.
Promotion strategies of McDonald’s
McDonald’s advertisements are the most notable among its promotion tactics. The restaurant
uses television, newspapers, magazines, the Internet and other media outlets to communicate
with its customers. The company uses ‘sales promotion – techniques of sales promotion’ as well.
For example, if customers buy six cups of tea/coffee and collect six stickers, they become
eligible to have a cup of tea/coffee free. The restaurant also offers discount coupons and freebies
for certain products.
Processes in McDonald’s
Process refers to a set of activities performed in order to achieve something. McDonald’s
undertakes a number of activities to deliver its products to customers. For example, food
preparation is an important activity in the overall process. The food preparation at McDonald’s is
completely transparent i.e. the whole process is visible to the customers. Other aspects of the
process include but not limited to how customers place their orders, how long they wait for their
food, and how they are treated by the customer care assistants.
People of McDonald’s
McDonalds is one of the biggest employers both in the USA and the UK. Approximately
120,000 people work in McDonald’s in the UK and Northern Ireland. 70% of McDonald’s
restaurants in the UK are owned and operated by local businessmen and women. The restaurant
invests £43 million on employee training and development every year in the UK. The main
objective in the discussion of People aspect of the marketing mix is to address issues concerning
both customers and employees. If employees are not happy, they are more likely to deliver poor
customer service. This may frustrate customers who may never come back again. It is therefore
very important for any company to devise appropriate strategies to address the needs and wants
of both employees and customers.
Physical evidence of McDonald’s
The last element of the marketing mix of McDonald’s is physical evidence which refers to the
elements of the physical environment visitors and customers experience. The physical evidence
impacts not only on the impressions of the customers of the restaurant, but also the way
McDonald’s functions. McDonald’s interiors are attractive and the restaurant maintains clean
and hygienic interiors of its outlets.

49
50

Product

A product is the item offered for sale. A product can be a service or an item. It can be physical or
in virtual . Every product is made at a cost and each is sold at a price. The price that can be
charged depends on the market, the quality, the marketing and the segment that is targeted. Each
product has a useful life after which it needs replacement, and a life cycle after which it has to be
re-invented. In FMCG parlance, a brand can be revamped, re-launched or extended to make it
more relevant to the segment and times, often keeping the product almost the same.

Product Line

A product line is a group of related products all marketed under a single brand name that is
sold by the same company. Companies sell multiple product lines under their various brand
names, seeking to distinguish them from each other for better usability for consumers.

It is a group of products that are clearly related because they function in similar manner, are sold
to the same customer groups, are marketed through the same types of outlets, or fall within given
price range.

Product lines can vary in quality, price, and target market. Companies use product lines to
gauge trends, which helps them to determine which markets to target

Example :- Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company, with
leadership in Home & Personal Care Products and Food & Beverages. HUL's brands are spread
across 20 distinct consumer categories and touches the lives of two out of three Indians.

50
51

HUL Products

Company :- Hindustan Unilever

Product Line –Home care products , personal care product , food products

Personal Care products like

 Soaps (Lux, Lifebuoy,etc.),

 Deodorants,
 Cosmetics,
 Skin Care products
 hair care products.

Home Care products like

 Washing powders (Surl Excel, Rin,etc.),

 water purifiers

The food products provided by Hindustan Unilever are

 Tea (Brooke Bond, Lipton),

 Coffee (Brooke Bond Bru),
 Foods (Kissan, Annapurna, Knorr)

51
52

 Ice Cream (Kwality Wall's).

Product line length: - Number of items in the product line.

A company can lengthen its product line in two ways: - By line stretching or by line filling.

Product line Stretching: - It occurs when a company lengthens its product line . It is possible
for the company to stretch its line upward and downward or both ways. Example: - Maruti can
stretch its product line upward by introducing a luxuary car for the rich customers, or a cheaper
small car for the lower income groups , which will be downward extension

Product line Filling:-

 It involves addition of new items within the existing range of product line.
 It is done to get extra profit, to satisfy dealers , use excess capacity , and plugging holes
to keep out competitors. If line filling is overdone , it may result in cannibalism and
customer confusion .
 The marketershould also ensure that new items added are noticeably different from
existing products.
 Example :- Maruti Suzuki had launched Alto in the year 2000 which was a product
between two other modles of Maruti - Maruti 800 and Maruti Zen

Product Mix in Marketing

Product mix, also known as product assortment, is the total number of product lines that a
company offers to its customers. The product lines may range from one to many and the
company may have many products under the same product line as well. All of these product lines
when grouped together form the product mix of the company.

The product mix is a subset of themarketing mix and is an important part of the business modelof
a company.

52
53

The product mix has the following dimensions

Width
The width of the mix refers to the number of product lines the company has to offer.

For e.g., If a company produce only soft drinks and juices, this means its mix is two products
wide. Coca-Cola deals in juices, soft drinks, and mineral water and hence the product mix of
Coca-Cola is three products wide.

Length
Length of the product mix refers to the total number of products in the mix. That is if a
company has 5 product lines and 10 products each under those product lines, the length of
the mix will be 50 [5 x 10].

53
54

Depth (size , flavour)

The depth of the product mix refers to the total number of products within a product line. There
can be variations in the products of the same product line. For example – Colgate has different
variants under the same product line like Colgate advanced, Colgate active salt, etc.

Consistency
Product mix consistency refers to how closely products are linked to each other. Less the
variation among products more is the consistency. For example, a company dealing in just
dairy products has more consistency than a company dealing in all types of electronics.

54
55

Product life cycle

 The term product life cycle refers to the length of time a product is introduced to consumers
into the market until it's removed from the shelves.

 The life cycle of a product is broken into four stages—introduction, growth, maturity, and
decline.

 Introduction
 Growth
 Maturity
 Decline

 Each stage is associated with changes in the product's marketing position. You can use
various marketing strategies in each stage to try to prolong the life cycle of your products.

Product introduction strategies

During the introduction stage, you should aim to:

55
56

 establish a clear brand identity

 This phase generally includes a substantial investment in advertising and a marketing

campaign focused on making consumers aware of the product and its benefits.

 connect with the right partners to promote your product

 set up consumer tests, or provide samples or trials to key target markets
 price the product or service as high as you believe you can sell it, and to reflect the
quality level you are providing
You could also try to limit the product or service to a specific type of consumer - being selective
can boost demand.

Product growth strategies

 If the product is successful, it then moves to the growth stage.

 Growth stage is when you should see rapidly rising sales, profits and your market share.

 This is characterized by growing demand, an increase in production, and expansion in its

availability.

Marketing strategies used in the growth stage mainly aim to increase profits. Some of the
common strategies to try are:

improving product quality

 adding new product features or support services to grow your market share
 enter new markets segments
 keep pricing as high as is reasonable to keep demand and profits high
 increase distribution channels to cope with growing demand
 shifting marketing messages from product awareness to product preference
 skimming product prices if your profits are too low.
Product maturity strategies
 When sales peak, product will enter the maturity stage.

 This often means that market is saturated and may find need to change marketing tactics to
prolong the life cycle of your product.

 This is the most profitable stage, while the costs of producing and marketing decline.

Common strategies that can help during this stage fall under one of two categories:

56
57

market modification - this includes entering new market segments, redefining target
markets, winning over competitor's customers, converting non-users
 product modification - for example, adjusting or improving your product's features,
quality, pricing and differentiating it from other products in the marking
Product decline strategies
 During the end stages of your product, you will see declining sales and profits.
 This can be caused by changes in consumer preferences, technological advances and
alternatives on the market.

 A product takes on increased competition as other companies emulate its success—

sometimes with enhancements or lower prices. The product may lose market share and begin
its decline.

At this stage, you will have to decide what strategies to take. If you want to save money, you
can:

 reduce your promotional expenditure on the products

 reduce the number of distribution outlets that sell them
 implement price cuts to get the customers to buy the product
 maintain the product and wait for competitors to withdraw from the market first
 harvest the product or service before discontinuing it

Another option is for your business to discontinue the product from your offering. You may
choose to:

 sell the brand to another business

 significantly reduce the price to get rid of all the inventory

NOTE - Many businesses find that the best strategy is to modify their product in the
maturity stage to avoid entering the decline stage.

57
58

New product development

 New product development (NPD) is the process of bringing a new product to the
marketplace.
 Business may need to engage in this process due to changes in consumer preferences,
increasing competition and advances in technology .
 Innovative businesses thrive by understanding what their market wants, making smart
product improvements, and developing new products that meet and exceed their customers'
expectations.
 NPD is not limited to existing businesses.
 New businesses, sole traders or even freelancers can forge a place in the market by
researching, developing and introducing new or even one-off products.
 Similarly, you don't need to be an inventor to master NPD. You can also consider
purchasing new products through licensing or copyright acquisition.

'New products' can be:

Invention- Creation of a new product.,

Innovation- Adding value to something already existing.

 products that your business has never made or sold before but have been taken to market
by others
 product innovations created and brought to the market for the first time. They may be
completely original products, or existing products that you have modified and improved.

The need for new product development

a. Putting All Eggs in One Basket: (One should not concentrate all efforts and
resources on one product)

If an organization depends on only one product to get all the business and profits, it faces the
danger of losing everything in one stroke.

 E.g. Automobile Products of India (API) selling Lambretta scooters lost its business to
Bajaj Auto and it had no option but to close down.

 Similarly, Amrutanjan, India’s number one pain balm, a single product company, and
Vazir Sultan Tobacco Company, manufacturer of the largest selling cigarette, closed
when they lost business to rival products.

58
59

b. Creating New Avenues for Growth:

The market is always evolving itself and newer consumer needs and demands are created. To
take care of such situations, organizations must come out with new products that will create new
avenues for the growth of organizations. Organizations that are slow in creating new avenues fall
behind others in business.

Example :- Godrej, the only organization manufacturing refrigerators in India (GEC, the other
brand used to be imported), did not come out with smaller refrigerators to take care of the middle
class willing to buy them and lost business first to Kelvinator/Leonard/Gem (all manufactured by
Kelvinator but marketed by self/Blue Star/Voltas) and then to Hyderabad Alwyn and now
Whirlpool/LG etc.

c. Giving Choice to Consumers for Selection:

The consumer needs and demands keep changing and upgrading/downgrading and organizations
should create products in both upward and downward changes.
E.g. Maruti launched its 800 and van initially and then went on to introduce Zen, Esteem, 1000,
Swift, Swift Dezire, WagonR, Ecco, SX4 etc., to give the consumers various choices and keep
them tied to its own products.

d. Multiple Attacks on Competition:

When competition is the market leader, organizations introduce multiple products to corner small
portions of the competitor’s market share and collectively win a larger market share.

E.g. Vadilal ice-cream introduced as many as 24 flavours to beat Quality Ice-cream and become
the market leader (Quality sold out to Walls to become Quality Walls, a HUL company).

e. Cater to New Tastes of Consumers:

Consumers keep changing their expectations and the organization needs to give them newer
products to take care of new needs. E.g. Introduction of dish washers and food processors in
India by most of the electronics companies.

f. Taking Advantage of Market Fads/Fashion:

There are many fads and fashions that rule a particular time and organizations need to take care
of them by introducing products for such fads/fashions. E.g. KeMnator had introduced

59
60

refrigerators with various scenes like the Taj Mahal on Its door. It became an instant success and
was followed by all the other companies.

5 Reasons for Failure of a New Product

Some of the reasons for failure of a new product are as follows:

1. Lack of product uniqueness:

Any product that does not satisfy a unique need of consumers, fails to dislodge more established

brands available. Customers must comprehend the new product’s advantages. Unless sound

communication strategies support the introduction of a new product, failure usually follows.

A product is likely to be perceived as unique if it satisfies a new function; if it satisfies an

existing function in a new ways; if its price and performance give it an advantage over the

competitive products. It should be distinctive in one way or the other.

2. Poor planning:
Companies must have a game-plan that carries them through every stage and aspect of

product’s life. The plan is to care for consumers. Many forces are at work that alter consumer’s

needs and wants for products; life- styles change populations, age and preferences change;

similarly needs of industrial buyers are affected by changing business opportunities shortage of

energy and material, technological advance and so on.

The market potential of the product and the nature of competition must be determined

beforehand.

3. Poor timing:
The market success depends, to a large extent, on the ability of the company to launch the

product at a time when consumer demand is at its highest. Though it may not always be

desirable to be the first to enter the market, undue delay or un-opportune time may mean that the

demand for the product demonstrated during consumer testing phase might vanish by the time

60
61

the product is launched in commercialization period. Hence, appropriate time has its strategic

importance in product success.

4. Misguided enthusiasm:
On several occasions, it so happens that there will be either an under-estimation of the strength

of competitors or an over-estimation of one’s own capabilities resulting in over-optimistic

calculations which will be shattered very soon by the actual product performance. This can

happen when executives want to market a particular product because; it is tied with their

personal ambitions in the company.

Therefore, planners should rely on only authentic and unbiased information for reading the future

which is uncertain.

5. Product deficiencies:
Many a times, technical product deficiencies are the common cause of new product failure.

Engineers and product technocrats are capable of giving the best laboratory products by over-

engineering. This is a good so far as technical superiority is concerned over competitors.

However, an ‘over-engineered’ product costs a lot to the firm and finally to the consumers where

competitors have an edge over the firm in question. Technical deficiencies are to be removed

but too much should not cost much.

Five Product Levels (Kotler)

The Five Product Levels model was developed by Philip Kotler in the 1960s.

The Five Product Levels are given in the diagram below:

61
62

1. Core Benefit

The core benefit is the fundamental need or wants that the customer satisfies when they buy the
product.

For example, the core benefit of a hotel is to provide somewhere to rest or sleep when away from
home.

2. Generic Product/Basic Product

The generic product is a basic version of the product made up of only those features necessary
for it to function.

In our hotel example, this could mean a bed, towels, a bathroom, a mirror, and a wardrobe.

3. Expected Product
The expected product is the set of features that the customers expect when they buy the product.

In our hotel example, this would include clean bedsheets, fresh towels, Wi-fi, and a clean
bathroom.

62
63

4. Augmented Product

The augmented product refers to any product variations, extra features, or services that help
differentiate the product from its competitors. Augmented products meets the customers’
desire beyond their expectations

Example - A hotel can augment its product by including a remote control television set, fresh
flowers, rapid check in , express checkout or a free map of the town in every room.

5. Potential Product

The potential product includes all augmentations and transformations the product might undergo
in the future. In simple language, this means that to continue to surprise and delight
customers the product must be augmented.

In our hotel, this could mean a different gift placed in the room each time a customer stays. For
example, it could be some chocolates on one occasion, and some luxury water on another. By
continuing to augment its product in this way the hotel will continue to delight and surprise the
customer.

Five Product Levels Example: Coca-Cola

1. Core Benefit

The core benefit of Coca-Cola is to quench a thirst.

2. Generic Product
The generic product is a burnt vanilla smelling, black, carbonated, and sweetened fizzy drink.

3. Expected Product

The expected product is that the customer’s Coca-Cola is cold. If this isn’t the case then
expectations won’t be met and the drink will not taste its best in the mind of the customer.

63
64

4. Augmented Product

Coca-Cola’s augmented product is that it offers Diet-Coke. How does Coca-Cola exceed
customers expectations with this product? By offering all the great taste of Coca-Cola, but with
zero calories.

5. Potential Product

One way in which Coca-Cola delights customers is by running competitions. The prizes in these
competitions are often things that, “money can’t buy”, such as celebrity experiences. To continue
to delight customers over time the competition prizes change frequently.

Branding – Packing and packaging – role and importance

Packaging and branding are two of the most important aspects that go into marketing, and should
be strategized thoughtfully. In a world that revolves around brands, it’s important to determine
how your business will stand out. Packaging and branding help build a concise brand
personality,attract new customers and keep loyal customers.

Brand Personality

 It is a set of human characteristics that are attributed to a brand name .

 It is an efective way to increase brand equity.

 Branad personality and their attributes

64
65

Sincerity

Down to earth - Economical

Honest - Expected value is achieved , whatever is claimed is justified

Cheerful - Satisfied

Example - Alto

Excitement - youth example Dew

Competence - Example Samsung , iPhone , Apple

Sophistication - Example BMW

Ruggedness - Example Nike , mountain bikes and Jeeps

Branding, by definition, is a marketing practice in which a company creates a name, symbol or

design that is easily identifiable as belonging to the company. This helps to identify a
product and distinguish it from other products and services. Branding is important because
not only is it what makes a memorable impression on consumers but it allows your customers
and clients to know what to expect from your company. It is a way of distinguishing yourself
from the competitors and clarifying what it is you offer that makes you the better choice. Your
brand is built to be a true representation of who you are as a business, and how you wish to be
perceived.

There are many areas that are used to develop a brand including advertising, customer
service, promotional merchandise, reputation, and logo. All of these elements work together
to create one unique and (hopefully) attention-grabbing professional profile.

Role of Branding

1. Branding is a marketing practice that a company exhibits in creating its name, symbol or
logo, and overall design that is readily identifiable as the company itself.
2. It gives your business its characteristics and persona.
3. It also helps to represent what you offer as a business, what you sell, and how different
you are from other products or services.
4. Your brand is like the public face and personality of your company.
5. Branding is not limited to logos, designs, and company colour palette.
6. It also includes every part that completes your business — from colour combinations and
typography styles(typography is the art of arranging letters and text in a way that makes the copy
legible, clear, and visually appealing to the reader.) to the packaging of your products and the

65
66

overall presentation of the company when in a pitch presentation.(A pitch deck is a

presentation deck that is used to pitch your idea or company to any number of audiences, generally
investors. )
7. Branding is the physical image and personality of who you are as a business and how you
target to be recognised.

Important of Branding

Branding is absolutely critical to a business because of the overall impact it makes on your
company. Branding can change how people perceive your brand, it can drive new business and
increase brand awareness.

Branding Gets Recognition

The most important reason branding is important to a business is because it is how a company
gets recognition and becomes known to the consumers. The logo is the most important
element of branding, especially where this factor is concerned, as it is essentially the face of the
company.

This is why a professional logo design should be powerful and easily memorable, making an
impression on a person at first glance.

Branding Generates New Customers

A good brand will have no trouble drumming up referral business. Strong branding generally
means there is a positive impression of the company amongst consumers, and they are likely
to do business with you because of the familiarity and assumed dependability of using a name
they can trust. Once a brand has been well-established, word of mouth will be the company’s
best and most effective advertising technique.

Improves Employee Pride And Satisfaction

When an employee works for a strongly branded company and truly stands behind the brand,
they will be more satisfied with their job and have a higher degree of pride in the work that they
do. Working for a brand that is reputable and help in high regard amongst the public makes
working for that company more enjoyable and fulfilling. Having a branded office, which can

66
67

often help employees feel more satisfied and have a sense of belonging to the company, can be
achieved through using promotional merchandise for your desktop.

Creates Trust Within The Marketplace

A professional appearance and well-strategised branding will help the company build trust with
consumers, potential clients and customers. People are more likely to do business with a
company that has a polished and professional portrayal.

Being properly branded gives the impression of being industry experts and makes the public
feel as though they can trust your company, the products and services it offers and the way
it handles its business.

Branding Supports Advertising

Advertising is another component to branding, and advertising strategies will directly reflect the
brand and its desired portrayal. Advertising techniques such as the use of promotional products
from trusted companies such as Outstanding Branding make it easy to create a cohesive and
appealing advertising strategy that plays well into your branding goals.

Packaging

https://kullabs.com/class-12/marketing/product/meaning-function-types-importance-features-of-
packaging

Meaning, Function, Types, Importance & Features of Packaging

 It is a SILENT SALESMAN .

 Packaging involves the development ,designing and

producing the container or wrapper for the product.

 It is an important and effective sales tool for encouraging the

consumers for buying.

 It is powerful medium for sales promotion.

 It is the best method for attracting the consumers for buying

the products

67
68

Functions of Packaging

Packaging should serve the following basic functions:

Protects the contents:

 The basic function of packaging is to protect the contents

from damage, dust, dirt, leakage, pilferage, evaporation,
watering, contamination and so on.

 Packaging helps in the protection of the contents of the

products.

 Seasonal fluctuations in demand may be smoothed out

through packaging.

 Packaging helps to protect the contents of all the available

products.

Provides product density:

Packaging helps to provide product density. It implies selecting such

package materials, design, and shape that helps to use the limited
space in the best way. It improves relations with common carriers,
permits better use of space in storage and usage and increases the
grace and poise of arrangement.

Act as promotional tool:

 Good packaging can sell the product more easily and quickly
as it works as a promotional tool.

68
69

 As a promotional tool, it does self- advertising , displaying,

publishing and acts as an advertising medium.
 It is the package, size, design, color combinations and graphics
that decide its ability to attract the valuable attention of
customers or the prospects.

Provides user convenience:

Packaging helps to provide the user convenience.The good

packaging does this in a greater degree. As a result, the marketing
functions of the transportation, storage, and handling are performed
with ease and without wastage. Consumers are greatly assisted so
long as the product is in usage. Neat packaging has brought a home
reduction in inventory costs, packaging costs, space and time costs.

Facilitates product identification

Packaging helps to facilitate the identi cation of the product. This

process of product differentiation is furthered by effective product
identi ers; one is branding and another is packaging. The product
package identi es the product no matter where you see it, under
what circumstances you see it, or when you see it. A package is
product’s personality, its reality. Product identi cation goes easy
with distinguished packaging as it adds to its personality or image.

Importance of Packaging

The importance of packaging are as follows:

Creation of demand:

Packaging plays an important role in the creation of demand by

attracting the consumers. The customers become known with the
product through advertising. It helps to increase the demand of the

69
70

customers.

Protection of the product:

Packaging helps to protect the product from heat, light, moisture,

evaporation, dust etc. during its long passage from the factory to the
target customers. It protects the products from breakage, leakage
spoilage etc.

Transportation:

Packaging facilitates transportation of products from one place to

another. It ensures easy transportation and better handling of
products in transit.

Guidelines to customers:

Packaging helps as a guidelines for the customers.From the

informative literature regarding the quality and use of the product,
the customers get the guidelines. The customers are ensured about
the quality of the products.

Better storage:

Packaging acts as a better storage of the products.Goods with good packages can be
stored in the retail shop also in lesser price.

Facilitates for carrying:

Packaging plays an important role in carrying the goods in transit and from one
place to another It is made in different sizes and it

Economy:

Packaging helps to reduce the cost of marketing the goods by

reducing losses from damages. As packaging is helpful for

70
71

sales promotion, so it helps to attain economy in the cost

structure of the producers and marketers.

differentiated with each other products in the market. The customers

can easily identify their product of choice at the time of purchase.
This helps the customers to prevent substitution of goods by other
customers.

Different types of distribution channels

 The goods are produced at one place but the customers are scattered over a wide
geographical area. Thus, it is very difficult for a producer to distribute his products all
over the country. Therefore, he takes the help of some intermediaries to distribute his
goods.

 A channel of distribution or trade channel is the path or route along which goods
move from producers to ultimate consumers or industrial users. It is the
distribution network through which a producer puts his products in the hands of
actual users.

 Channel of distribution refers to those people, institutions or merchants who help in

the distribution of goods and services.They help to cover a vast geographical area and
also bring efficiency in distribution including transportation and warehousing. Retailers,
Wholesalers are the common channels of distribution.

 Channels of distribution provide convenience to customer, who can get various

items at one store. If there were no channels of distribution, customer would have
faced a lot of difficulties.

 For example, Maruti cars are manufactured at Gurgaon but are available all over the
country with the help of intermediaries.

Some main definitions of distribution channels are as under:

 Philips Kotler defines channel of distribution as “a set of independent organisations

involved in the process of making a product or service available for use or consumption”.

 According to John A. Haward – “Marketing channels are the combinations of agencies

through which the seller, who is often, though not necessarily, the manufacturer, markets
his product ultimate user.”

71
72

 According to W.J. Stanton, “Channel of distribution or trade channel for a product is the
route taken by the title of the goods as they move from the producer to the ultimate
consumers or industrial user.”

Consider following two diagrams:

A Customer wants to purchase toothpaste, salt and wheat.

Types of marketing channels

Definition: Marketing channel refers to the means through which the physical distribution of
goods takes place from the manufacturer to the customers, either directly or through
intermediaries. The manufacturer can also adopt Multi-Channel marketing if he finds it suitable
for his product and the business.
In simple words, marketing channels are a medium to facilitate the active physical exchange of
goods or services.
Various Channels of Distribution

The different types of marketing channels or channels of distribution have been identified based
on the number of intermediaries or the levels the goods or services passes through to reach the
customers.

These marketing channels are bifurcated into the following two categories:

Direct Marketing Channel

Direct selling is that medium of distribution in which there is no middle person involved, and the
manufacturer directly sells the goods or services to the customer. It is also termed as ‘zero-level
channel’.

72
73

 This type of channel is popular among the services industry. Most of the services
like travel, catering, salons fall under the direct marketing channel.

 Even when the products are complicated to use like the industrial machinery
require direct selling and support from the manufacturer.

 The small manufacturer of general goods finds this channel more profitable and
cost-efficient since they cannot afford giving margin to the intermediaries.

For Example; In restaurants, the food is prepared as well as served to the consumers.

Indirect Marketing Channels

In this channel of distribution, the goods produced by manufacturing units passes through
different intermediaries to reach its final consumer.

The indirect channels can be further classified into the following types, each of which is
supported by an example:

One-Level Channel

The single-level channel involves only one middle person, i.e. the retailer who purchases the
goods from the manufacturer and sells them to the customer.

 The shopping malls and marts use this channel

for acquiring products at a low price and selling them to customers at a reasonable price.

 Also, the manufacturers of some specialise products like furniture, clothing, footwear,
etc. preferably go for the one-level marketing channel.

 For Example; Big Bazaar is a retail mart which buys the products directly from the
manufacturer and makes it available to the consumers.

Two-Level Channel

73
74

The wholesaler buys the goods in large quantity from the manufacturers and supplies it to the

various retailers in small amounts. The retailers to

the customers then sell these goods.

 This channel is preferred by the manufacturers who want to sell their products to obtain
market share.

 It eliminates the expenses which the manufacturer incurs on the sales force,
warehousing of goods and other retail selling practices.

 It also facilitates mass production and a high volume of sales by increasing the
scalability of the manufacturers.

 For Example; Rice yield by farmers is purchased and stored in bulk quantity by the
wholesalers. The retailers then buy the rice in small portion from the wholesaler and sell
it to the customers.

Three-Level Channel

 The manufacturer appoints agents or gives the goods to agencies which further distribute
the products to selective wholesalers in large quantity.

 The wholesalers then sell to the retailers in smaller amount who finally sell it to the
customer

 This is one of the most commonly used channels of distribution for confectionery
products.

 It is used by the manufacturers who look forward to capturing a massive market by

reaching the consumers scattered over a vast geographical area. For instance;
in rural marketing.

 Even the perishable goods manufactured in large quantity need to be distributed through
this medium since the manufacturers can’t acquire customers more quickly through any
other channel.

74
75

 For Example; Tata Tea manufactured by the company is sold to the agencies in different
regions; these agencies sell it to the wholesalers of their respective areas. The wholesaler
further sells it to the retailers from where it reaches the customers

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Unit – IV

Price

Pricing

Price is the amount that consumers will be willing to pay for a product. Marketers must link the
price to the product's real and perceived value, while also considering supply costs, seasonal
discounts, competitors' prices, and retail markup.

In some cases, business decision-makers may raise the price of a product to give it the
appearance of luxury or exclusivity. Or, they may lower the price so more consumers will try it.

Marketers also need to determine when and if discounting is appropriate. A discount can draw
in more customers, but it can also give the impression that the product is less desirable than it
was.

Objectives of pricing

The objectives of pricing should be clearly defined because without clear cut objectives a sound
price structure cannot be developed. In practice very few firms define their pricing objectives in
unambiguous terms. The specific objectives of pricing may vary from firm to firm and even for
the same firm at different points of time. Most firms have multiple pricing objectives.

The main objectives of pricing followed by different firms are as follows:

1. To achieve target rate of return on investment;
2. To stabilize prices;
3. To maintain or improve share of the market;
4. To meet or prevent competition;
5. To maximize profits; and

75
76

6. To improve public image.

Objective # 1. Target Rate of Return:
Firms following this objective design their pricing strategy in such a way that will yield desired
return on total investment (ROI). Rate of return refers to the amount of net profits divided by
investment or capital employed. This goal often leads to cost plus pricing. The price of a
product or service is determined by adding the expected margin of profit to the cost of
production and distribution.

In order to fix the price, the firm estimates the amount of total profit required to earn the
expected rate of return. The figure of total profit divided by the average sales volume gives profit
margin per unit. Suppose, for instance, that a company wants to earn a return of 20 per cent
(before taxes) on its total investment of Rs.50 lakhs. The annual sales volume on an average is
anticipated to be 50,000 units and the total cost per unit is Rs.80.

Objective # 2. Price Stabilization:

This goal is adopted in industries having a few firms. In an oligopolistic situation where one firm
is very big and all others are small, the big firm acts as the price leader and other firms follow it.
All the firms try to avoid price wars. No firm is willing to cut its prices for fear of retaliation by
other firms.
In order to avoid fluctuations in prices, they may even forgo maximizing profits during the
period of scarce supply or prosperity. This objective is followed in case of products which are
vulnerable to price wars or which are advertised at the national level. Price stability helps in
planned and regular production in the long run. However, it may create rigidity in pricing.
Objective # 3. Target Share of the Market:
In an expanding market, market share is a better indicator of a firm’s success than the target rate
of return. When the market has a potential for growth, a firm earning the target rate of return
may, in fact, be decaying if its share of the market is decreasing. Therefore, maintenance or
improvement in the market share is a more worthwhile objective in growing markets. Market
share measures a firm’s sales vis-a-vis the sales of its competitors.

Objective # 4. Facing Competition:

 Under conditions of intense competition, a firm may seek to meet or prevent competition.

 It may fix prices at a very low level (even below cost) to eliminate its competitors or to
prevent the entry of new firms in the market. Some firms follow this practice while

76
77

introducing a new product. This goal is not very popular and cannot be adopted on a
regular basis.

 In the long run, a firm cannot survive if it continues to charge less than the cost of the
product or service.

Objective # 5. Profit Maximization:

Traditionally, profit maximization is considered to be the objective of pricing. The classical
economic theory suggests the fixation of prices in such a way that the marginal cost is equal to
marginal revenue where profits are maximized. Even today some firms are not very conscious of
social responsibilities and try to maximize profits. But in recent years there has been a change in
the philosophy of business and profit maximization is not considered rational business
behaviour. In practice, no firm states explicitly that profit maximization is its pricing objective
due to the fear of public criticism and government regulation.
Objective # 6. Improving Public Image:
 Another objective of pricing may be to enhance the firm’s public image. The firm may
launch a premium product at a high price for this purpose. Alternatively, it may offer
the new product at a low price to appeal to the common buyer.

 The pricing policy should be consistent with the established reputation of the firm.

Factors influencing pricing policy

A company has to keep in mind various factors while determining the price of a product. Some such
important factors are given here.

1] Cost of the Product

 The most important factor affecting the price of a product is the product cost. The same
principle also applies in case of services. The product cost will be inclusive of the cost of
production, the distribution costs and the selling and promotion costs. This cost will act as
a benchmark for setting the price.

 In the long run, the company will obviously try to cover the entire cost of the product. And in
addition, it will set for itself a profit margin over and above such cost.

 But perhaps in the short run, the company may set a price lower than the cost of the product.
This is a marketing strategy to boost sales and capture a share in the market. But in the long

77
78

run, no company can survive unless the prices of the products/services do not even cover their
costs.

2] The Demand for the Product

The cost of the product will only give you a benchmark to determine the price. The upper limit of
the price range will depend on the utility the product has and hence its demand in the market. So the
cost of the product is the seller’s concern. The buyer’s concern is the utility of the product. The
demand for the product will depend on its utility and its price. The law of demands states that
lower the price higher the demand.

Another factor to consider when determining the price is the elasticity of demand. This means
the corresponding change in demand to the change in the price of a product. If the demand is
inelastic then the company can charge a higher price for their products.

3] Price of Competitors
One factor that affects price termination is the price the competition charges for their product. Not
only their price but their products, its features and other factors
like distribution channel, promotions etc. should also be studied.

In a market, with free competition, the prices have to be very competitive. You cannot risk pricing
yourself out of the market. But on the other hand, if your products have special r additional features
this must be reflected in the price.

4] Government Regulation
The government has a duty to protect its citizens from unfair practices and pricing. So it may
impose certain laws and regulations with regards to the pricing of a product. It can even regulate the
prices of goods that it considers essential goods.

This generally happens in the pharmaceutical industries. Manufacturers charge exuberant prices for
life-saving drugs and the buyers have no choice but to pay. In such cases, the government may step
in and regulate the prices of these essential medicines.

Pricing Strategies

The pricing of any product is extremely complex and intense as it is a result of a number of
calculations, research work, risk taking ability and understanding of the market and the
consumers. The management of the company considers everything before they price a product,
this everything includes the segment of the product, the ability of a consumer to pay for the
products, the conditions of the market, action of the competitor, the production and the raw
material cost or you can say the cost of manufacturing, and of course the margin or the profit
margins.

78
79

Pricing a product is one of the most important aspects of your marketing strategy. Generally,
pricing strategies include the following five strategies.

1. Cost-plus pricing—simply calculating your costs and adding a mark-up

2. Competitive pricing—setting a price based on what the competition charges
3. Value-based pricing—setting a price based on how much the customer believes what you’re
selling is worth
4. Price skimming—setting a high price and lowering it as the market evolves
5. Penetration pricing—setting a low price to enter a competitive market and raising it later

1. Penetration Pricing or Pricing to Gain Market Share

 A few companies adopt these strategies in order to enter the market and to gain market
share.

 Some companies either provide a few services for free or they keep a low price for their
products for a limited period that is for a few months.

 This strategy is used by the companies only in order to set up their customer base in a
particular market.

For example

 France telecom gave away free telephone connections to consumers in order to grab or
acquire maximum consumers in a given market.

 Similarly the Sky TV gave away their satellite dishes for free in order to set up a market
for them. This gives the companies a start and a consumer base.

In the similar manner there are few companies that keep their product cost low as their
introductory offer that is a way of introducing themselves in the market and creating a consumer
base. Similarly when the companies want to promote a premier product or service they do raise
the prices of the products and services for that particular time.

2. Skimming strategy: high price is charged for a product till such time as competitors
allow after which prices can be dropped. The idea is to recover maximum money before
the product or segment attracts more competitors who will lower profits for all
concerned. Example: the earliest prices for mobile phones, VCRs and other electronic
items where a few players ruled attracted lower cost Asian players.

3. Value-Based Pricing

79
80

 Value-based pricing is a strategy that uses the value customer’s gain from the
product or service as the basis for the cost, ignoring the cost of production.
 This strategy works well when your product or service is innovative and
can’t be easily swapped with an alternative.
 Example :- The early year’s of iPhones are a great example of this: the cost to
manufacture the phones are significantly less than the market price, but because
none of the existing smartphones at the time had a similar functionality, Apple
was able to set a high price and establish what the “value” of touch screen
smartphones was.

 Value-based pricing can also be used when your product or service is

significantly better than alternatives that can accomplish the same function.
 For example, the true cost of production for software development is really
minimum wage for the developer plus the cost of the equipment and software
involved in the development process. However, app programmers are paid more
than that because they have a highly desirable skill set and hiring someone else to
do the work is more effective and efficient than learning to code and trying to
create an app by yourself.

4. Cost-plus pricing

Cost-plus pricing is a basic strategy that works by considering the total cost of making a product
and adding a markup to that to determine the price of a product. This is a good strategy in the
long term. A business owner needs to first understand the costs involved in production: material,
labor, warehousing, machinery, utilities and such. The markup price that is added to the top of
production cost is what the company makes in profit.

5. Competition based pricing utilizes competitor’s pricing data for similar products to set a
base price for their own products. Rather than focusing on production costs or the value of the
item, this pricing method relies heavily on market data.

Promotion

Meaning of Promotion
 Promotion is a marketing tool, used as a strategy to communicate between the sellers and
buyers.
 Through this, the seller tries to influence and convince the buyers to buy their products
or services.
 It assists in spreading the word about the product or services or company to the people.
 The company uses this process to improve its public image.

80
81

 This technique of marketing creates an interest in the mindset of the customers and can also
retain them as a loyal customer.

Promotion is a fundamental component of the marketing mix. Some methods of this procedure
contain an offer, coupon discounts, free sample distribution, trial offer, buy two items in the
price of one, contest, festival discounts, etc. The promotion of a product is important to help
companies improve their sales because customers reaction towards discounts and offers are
impulsive. In other words, promotion is a marketing tool that involves enlightening the
customers about the goods and services offered by an organization.
Promotional Mix
In marketing, the promotional mix describes a blend of promotional variables chosen by
marketers to help a firm reach its goals

Types / Tools of Promotion:

Advertising-
Advertising is a form of communication used to persuade mass audience to take some action.

It is a paid form of communication

4 types of advertising

Print Advertising (newspapers, magazines, direct mailers)

Broadcast Advertising (television, radio)

Outdoor Advertising (billboards and transit advertising)

Digital Advertising (online display ads, search engine marketing, social media ads)

Definition: Advertising is a paid promotional tactic that aims to sell a product or service to a target
audience.

Direct Promotion-
It is that kind of advertising where the company directly communicates with its customers.
This communication is usually done through various new approaches like email marketing, text
messaging, websites, fliers, online adverts, promotional letters, catalog distributors, etc.

81
82

Sales Promotion-
A sales promotion is a marketing strategy in which a business uses a temporary campaign or offer to
increase interest or demand in its product or service.

However, it is for a limited time, used to expand customers demand, refresh market demand and
enhance product availability

Free trial or demo

Flash sale or limited-time price reduction

Competitions and giveaways

Self-promotion-
It is a process where the enterprises send their agents directly to the customers to pitch for
their product or service. Here, the response for the feedback of the customer is prompt and
therefore, easy to build trust.

Public Relation-
Popularly know as PR is exercised to broadcast the information or message between a company
(NGO, Government agency, business), an individual or a public. A powerful PR campaign can
be valuable to the company.

Online Promotion-
This includes almost all the elements of the promotion mix. Starting from the online promotion
with pay per click advertising. Direct marketing by sending newsletters or emails.

Key Points of Promotion

 It is a communication tool that incorporates all the elements used to spread awareness and
convince customers to buy good and services
 It is applicable only for short term sales
 It is one of the variables of the marketing mix
 The effect of promotion is short term
 The result or outcome of the promotion is immediate
 It is an economic marketing tool as compared to advertising

82
83

 It can be used for all sorts of businesses irrespective of the size, brand of a company

Objectives of Promotion

1. To Stimulate Demand:
It is the primary objective of market promotion. Through the use of appropriate means of market

promotion, such as advertising, sales promotion, personal selling, and so forth, the company can

stimulate demand for the product. Market promotion efforts convert potential buyers into

actual buyers. Company, by highlighting product benefits, tries to match the product with

needs, wants, and expectations of buyers. As per need, various means of market promotion are

used to establish the information link with the target customers.

2. To Inform Consumers:
Promotion is aimed at informing consumers about features, qualities, performance, price, and

availability of firm’s products. Market promotion is also a valuable means to inform consumers

the changes made in the existing products and introduction of new products. In the same way,

market promotion, by various tools of market communication, is used for communicating the

special offers, price concession, utility of products, and incentives offered by the company.

3. To Persuade Consumers:
Market promotion is an effective way to persuade consumers the superiority of product over

competitors. A firm can communicate competitive advantages the product offers to distinguish it

from competitors’ products. Obviously, market promotion can assist the firm to convince buyers

that the firm’s product is the best solution to their unmet needs and wants. Advertising is one of

the most effective tools to distinguish the product from competitors’ products.

4. To Promote a New Product:

In a large and decentralized market, market promotion is an inevitable medium to promote a new

product. By suitable promotional strategies, a company can successfully introduce a new product

in the market as against existing products. Company can inform about availability, distinct

83
84

features, and price of newly launched product. In every stage of consumer adoption of a new

product, market promotion has critical role to play.

5. To Face Competition:
Market promotion enables the firm to face competition effectively. In today’s market situation, it

is difficult to stand without the suitable promotional efforts. In short, it can be said that marketer

can fight with competitors effectively, can prevent their entry, or can throw the competitor away

from the market by formulating and implementing effective market promotion strategies.

6. To Create or Improve Image:

Advertising, personal selling, and publicity and public relations – all promotional tools – are

capable to create or improve image and reputation of the firm. Many companies have become

popular in the market due to effective market promotion. Company can reach the customers at

every corner of the world through market promotion.

Brand image is purely an outcome of promotional efforts. For example, Hindustan Unilever,

Colgate Palmolive, Sony, Philips, Hero Honda, Ambuja Cement, and many national and

multinational companies have made their permanent place in the market due to successfully

launching of market promotion programmes.

Thus, market promotion can help company realize various objectives. Company can increase

sales, improve its image, and maintain close and live contact with the market by suitable

promotional efforts. A company’s survival, growth, and development are based on how

effectively it communicates with the market.

Marketing Information System

84
85

The Marketing Information System is a platform for the systematic collection, analysis,
interpretation, storage and dissemination of the market information, from both the internal and
external sources, to the marketers on a regular, continuous basis.
The marketing information system distributes the relevant information to the marketers who can
make the efficient decisions related to the marketing operations viz. Pricing, packaging, new
product development, distribution, media, promotion, etc.

85
86

Every marketing operation works in unison with the conditions prevailing both inside and
outside the organization, and, therefore, there are several sources ( viz. Internal, Marketing
Intelligence, Marketing Research) through which the relevant information about the market can
be obtained.

Definition: -

“A marketing information system consists of people, equipment and procedures to gather, sort,
analyze, evaluate and distribute needed, timely and accurate information to marketing decision
makers.’ Defined by… (Philip Kotler)

According to Cundiff, Still, and Govoni, the Marketing information system is a set of procedures
in an organized way, routines of information handling, and reporting methods that are designed to
provide the required information for the marketing decision-making process.

Nature of MIS

1. Systematic process: -MIS operates in a rational and systematic manner and provides
required information. MIS is a systematic of collecting and maintain a record of marketing
information. The MIS process consists of;

v Gathering of marketing information.

v Sorting /classification of data.

v Analyzing of marketing data.

v Transmitting the data to marketing decision makers.

2. Components of MIS: - MIS consists of four components

Internal Records: -It provides current data on internal marketing environment such as
sales, costs, inventories, cash flow and accounts receivable and payable.

Marketing Intelligence System: - The marketing intelligence system supplies marketing

mangers with everyday information about developments in the external marketing
environment.

Marketing Research: -Besides, internal records and marketing intelligence, marketing

managers may often conduct marketing research to solve specific problems.

86
87

Marketing Decision support system (MDSS): -A MDSS is a set of statistical tools and
decision models with supporting hardware and software available to marketing
managers to assist them in analyzing data and making better marketing decisions.

3. Unified and centralized making: -There are several information components (internal records,
marketing research, etc.) in every MIS. Also, there are several activities in each component-
collection of data, processing, storing and transmission. The components and the activities must
be integrated into a unified system. The unified system managed at a centralized place.In other
words , information collected by different individuals or sections must be integrated and stored at
a central place.

4. Facilitates Decision making: - MIS aids in decision making relating to various elements
of marketing mix such as product-designing, pricing, promotion and distribution. By making
available timely information, which is relevant and reliable, MIS aids marketing managers to
take effective decisions to achieve objectives of the marketing and that of the organization. MIS
acts as a data bank and facilitates prompt decision-making by manager.

5. Cost-effective information: -There is no sense in collecting whatever information that is

available in the market. MIS facilitates the collection of only relevant information. Efforts are
made to collect not only relevant data but also cost effective.

6. Future oriented: - To manage the business well, marketing managers should be future
oriented. Therefore, MIS should be in a position to provide information to solve problems that
may crop up in future. More emphasis must be placed on future oriented information rather than
past information.

MIS is future-oriented. It anticipates and prevents problems as well as

it solves marketing problems. It is both a preventive as well as curative process in
marketing.

7. Regular Supply of Information: -There is a constant and continuous need to make

marketing decisions. This is because if the constant and continuous changes in the business
environment. Therefore, to make effective decision. MIS should supply information regularly on

87
88

a continuous basis. Management gets a steady flow of information on a regular basis —

the right information, for the right people, at the right time and cost.

8. Use of Latest Techniques: -Management should use of latest techniques such as sophisticated
(classy) computers, micro-films etc., to collect, store and process meaningful information. The
gathered data is processed with the help of operations research techniques. Modem
mathematical and statistical tools are available for problem-solving in the field of
marketing

9.Marketing Information System stands between the marketing environment and

marketing decision-makers. Marketing data flows from the environment to the
marketing information system. Marketing data is processed by the system and
converted into marketing information flow, which goes to the marketers for decision-
making.

88
89

Components of Marketing Information System

1. Internal Records: The Company can collect information through its internal records comprising
of sales data, customer database, product database, financial data, operations data, etc. The
detailed explanation of the internal sources of data is given below:

 The information can be collected from the documents such as invoices, transmit copies, billing
documents prepared by the firms once they receive the order for the goods and services from the
customers, dealers or the sales representatives.
 The current sales data should be maintained on a regular basis that serves as an aide to a the
Marketing Information System. The reports on current sales and the inventory levels help the
management to decide on its objectives, and the marketers can make use of this information to
design their future sales strategy.
 The Companies maintain several databases such as*Customer Database- wherein the complete
information about the customer’s name, address, phone number, the frequency of purchase,
financial position, etc. is saved.
 *Product Database- wherein the complete information about the product’s price, features,
variants, is stored.

*Salesperson database, wherein the complete information about the salesperson, his name,
address, phone number, sales target, etc. is saved.

89
90

 The companies store their data in the data warehouse from where the data can be retrieved
anytime the need arises. Once the data is stored, the statistical experts mine it by applying several
computer software and techniques to convert it into meaningful information that gives facts and
figures.

2. Marketing Intelligence System: The marketing intelligence system provides the data about the
happenings in the market, i.e. data related to the marketing environment which is external to
the organization. It includes the information about the changing market trends, competitor’s
pricing strategy, change in the customer’s tastes and preferences, new products launched in the
market, promotion strategy of the competitor, etc.
In order to have an efficient marketing Information System, the companies should work
aggressively to improve the marketing intelligence system by taking the following steps:

 Providing the proper training and motivating the sales force to keep a check on the market
trends, i.e. the change in the tastes and preferences of customers and give suggestions on the
improvements, if any.
 Motivating the channel partners viz. Dealer, distributors, retailers who are in the actual market
to provide the relevant and necessary information about the customers and the competitors.
 The companies can also improve their marketing intelligence system by getting more and more
information about the competitors. This can be done either by purchasing the competitor’s
product, attending the trade shows, reading the competitor’s published articles in magazines,
journals, financial reports.
 The companies can have an efficient marketing information system by involving the loyal
customers in the customer advisory panel who can share their experiences and give advice to the
new potential customers.
 The companies can make use of the government data to improve its marketing Information
system. The data can be related to the population trends, demographic characteristics,
agricultural production, etc. that help an organization to plan its marketing operations
accordingly.
 Also, the companies can purchase the information about the marketing environment from the
research companies who carry out the researches on all the players in the market.
 The Marketing Intelligence system can be further improved by asking the customers directly
about their experience with the product or service via feedback forms that can be filled online.

90
91

3. Marketing Research: The Marketing Research is the systematic collection, organization,

analysis and interpretation of the primary or the secondary data to find out the solutions to the
marketing problems.Several Companies conduct marketing research to analyze the marketing
environment comprising of changes in the customer’s tastes and preferences, competitor’s
strategies, the scope of new product launch, etc. by applying several statistical tools. In order to
conduct the market research, the data is to be collected that can be either primary data (the first-
hand data) or the secondary data (second-hand data, available in books, magazines, research
reports, journals, etc.)
The secondary data are publicly available, but the primary data is to be collected by the
researcher through certain methods such as questionnaires, personal interviews, surveys,
seminars, etc.

A marketing research contributes a lot in the marketing information system as it provides the
factual data that has been tested several times by the researchers.

4. Marketing Decision Support System: It includes several software programs that can
be used by the marketers to analyze the data, collected so far, to take better marketing
decisions.With the use of computers, the marking managers can save the huge data in a tabular
form and can apply statistical programs to analyze the data and make the decisions in line with
the findings.
Thus, the marketers need to keep a check on the marketing environment, i.e. both the internal
(within the organization) and the external (outside the organization, so that marketing policies,
procedures, strategies can be designed accordingly.

Importance or benefits of Marketing Information

System

91
92

 Helps in the prediction of customer demand

 Identification of market complexity
 Keeps organization up-to-date on changing economic or market conditions
 Competitor analysis
 Provides the latest information on technology advancements
 Smooth flow of information for better consumer relation and service
 Facilitates marketing planning activities

Consumer Behaviour :

Concept

Consumer buying behavior refers to the study of customers and how they behave while deciding
to buy a product that satisfies their needs. It is a study of the actions of the consumers that drive
them to buy and use certain products.

In marketing, understanding consumer behavior has become very important for businesses.
Consumer behavior refers to the study which analyzes how consumers make decisions about
their wants, needs, buying or act with respect to a product, service or organization. It is very
critical to understand the behavior of consumers to analyze the behavior of potential consumers
towards a new product or service. It is also very useful for companies to identify opportunities
which have not yet been met. Understanding the behavior of consumers allows pro-active
companies to increase their market share through anticipating the shift within the consumer
choice.

92
93

An example in the aspect of consumer behavior is the change in eating habits which drastically
increased the demand for gluten-free products. Businesses which have identified this market gap
have produced gluten-free products and have tapped this market aspect as well.

An example of a new trend developing in society is children’s influence on their parents’

purchases. Kids today are major factors in the purchase of expensive products. In fact, many
parents today will not purchase a car if their children do not like it. This was not the case forty
years ago.

Importance

Understanding consumer behavior is essential for a company to find success for its current
products as well as new product launches. Every consumer has a different thought process and
attitude towards buying a particular p roduct. If a company fails to understand the reaction of a
consumer towards a product, there are high chances of product failure.
Due to the changing fashion, technology, trends, living style, disposable income, and similar
other factors, consumer behavior also changes. A marketer has to understand the factors that are
changing so that the marketing efforts can be aligned accordingly.
What is the importance of consumer buying behavior? This article outlines several of them.
1. Consumer Differentiation:
In marketing, consumer differentiation is a way to distinguish a consumer from several other
consumers. This helps to make a target group of consumers with the same or similar behavior.
Though you have a targeted customer demographic in your business, you can still have
variations between individual customers. Each group of consumers are different and their needs
and wants differ from other groups. When a marketer is knowledgeable about differentiation of
each group of consumers, he can design separate marketing programes.
Consumer differentiation will help to tailor your strategies to the needs of varying customer
groups. When consumer differentiation is done, you can expand the width and breadth of your
services. You will be able to effectively serve a wider group of people.
2. Retention of Consumers:
“Consumer behavior is of most importance to marketers in business studies as the main aim is to
create and retain customers” says Professor Theodore Levitt (Kumar, 2004).
Consumer behavior is not just important to attract new customers, but it is very important to
retain existing customers as well. When a customer is happy about a particular product, he/she
will repeat the purchase. Therefore, marketing the product should be done in such a way that it
will convince customers to buy the product again and again.
Thus, it is very evident that creating customer and retaining them is very important. This can be
done only by understanding and paying attention towards the consumer’s buying behavior.
3. Design Relevant Marketing Programe:
Understanding consumer behavior allows you to create effective marketing campaigns. Each
campaign can speak specifically to the separate group of consumers based on their behavior.
For example, while targeting kids market, you may have to look out for venues such as TV ads,
school programes and blogs targeting young mothers. You will need to take different messaging
approaches for different consumer groups.

93
94

A study of consumer behavior enables the marketers to understand what motives consumers to
make purchases. Furthermore, the same motive can be utilized in advertising media to stir the
desire to make a purchase. Moreover, marketers should take decisions regarding the brand logo,
coupons, packing and gifts on the basis of consumer behavior.
4. Predicting Market Trend:
Consumer behavior analysis will be the first to indicate a shift in market trend. For
example, the recent trend of consumers is towards environment friendliness
and healthy food. This changing market trend was observed by many brands
including McDonalds. Based on the consumer behavior, McDonald’s brought healthy food
options.
By conducting consumer behavior study, a company saves a lot of resources that might
otherwise be allocated to produce a product that will not be sold in the market. For example, in
summer a brand will not waste its resources for producing a product that will not sell in summer.
Based on consumer behavior the company decides on production strategy which will save on
warehouse costs and marketing costs.
5. Competition:
One of the most important reasons to study consumer behavior is to find out answers to some of
the questions:
 Is the customer buying from your competitor?
 Why is a consumer buying from your competitor?
 What features attracts a consumer to your competitor products?
 What gaps are your consumers identifying in your products when compared to your
competitors?
Studying consumer behavior facilitates in understanding and facing competition. Based on
consumers’ expectations, your brand can offer competitive advantages.
6. Innovate New Products:
We all know some of the big names such as New Coke, Crystal Pepsi, Colgate Kitchen Entrées,
Earring Magic Ken Doll, and Wheaties Dunk-a-Balls Cereal. Can you see the similarities in
these products? Yes, they all failed!!
The sad truth is that most new products and new ideas end up in failure. There is an estimate of
new product failures – they range from 33% to 90% based on the kind of industry.
Companies consistently strive hard to improve the success rate of their new products or new
ideas. One of the most important ways is to conduct sound and thoughtful consumer behavior
study.
With the help of consumer behavior analysis, Nike realized that most of its target audience is not
professional athletes, but many of them were striving to be more like them. So at the 2012
Olympics in London, Nike introduced a campaign to encourage athletics called ‘Find Your
Greatness’. It aimed to promote the aspirations of being an athlete, not just with high-performing
athletes, but wanted to include all people regardless of their physical capability. The campaign
was well planned and was data-driven, of course, carefully analyzed before taking any
action. This message inspired many consumers and had enormous appeal for target consumers.

94
95

7. Stay Relevant in the Market

When the world is changing as rapidly as it is happening today, the biggest challenge we all face
is staying relevant to our target market. And do you know what is the main reason behind the
rapid changes? It is the ever-changing behavior of our customers.
Today’s consumers have greater choices and opportunities, which means they can easily switch
to a company that offers better products and services.
“The pre-eminent skill required to shift ahead in the twenty-first century is the ability to see and
seize.” -Adamson and Steckel, authors of Shift Ahead.
Losing relevance will only cost the company its market share. Haven’t we seen Sony
Walkman failing to stay relevant in the digital music era, and the taxi industry doom with no
preparedness to battle the UBER uprise!!
8. Improve Customer Service
Consumers require different levels of customer service, and understanding the differences within
your customer base will help you provide the most appropriate service for individual needs.
For example, if you own an electronics store, high school or college students who buy a new
laptop are more likely to understand the features they’re looking for than a person buying his
first computer. With the first demographic, your service goal will be to provide information
about the latest trends in technology, while with the second demographic, you’ll need to spend
more time educating the customer, finding out what his specific needs are, and even teaching
him how to use the features of his new electronic device.
Conclusion
Leading companies such as The Coca-Cola Company and Barclays, have constantly improved its
existing products and focused on developing new products. The Coca-Cola Company aligns its
corporate strategy of ‘refreshing everyone who is touched by our business’, by conducting
market research to identify consumer behavior. Similarly, Barclays conducted consumer
behavior study to better understand the needs of this target market.
Consumer behavior analysis has emerged as an important tool to understand your customers. By
looking into consumer psychology and the forces behind customer buying behavior, companies
can craft new products, marketing campaigns and increase profitability.
Companies should talk to consumers, watch out for frustrations, and most importantly, identify
their needs and expectations!

Factors influencing consumer behavior

1. Psychological Factors
2. Social Factors
3. Cultural Factors
4. Personal Factors
5. Economic Factors

Consumer behavior is influenced by many different factors. A marketer should try to understand
the factors that influence consumer behavior. Here are 5 major factors that influence consumer
behavior:

95
96

1. Psychological Factors
Human psychology is a major determinant of consumer behavior. These factors are difficult to
measure but are powerful enough to influence a buying decision.
Some of the important psychological factors are:

i. Motivation
When a person is motivated enough, it influences the buying behaviour of the person. A person
has many needs such as the social needs, basic needs, security needs, esteem needs and self-
actualization needs. Out of all these needs, the basic needs and security needs take a position
above all other needs. Hence basic needs and security needs have the power to motivate a
consumer to buy products and services.
ii. Perception
Consumer perception is a major factor that influences consumer behavior. Customer
perception is a process where a customer collects information about a product and interprets the
information to make a meaningful image about a particular product.
When a customer sees advertisements, promotions, customer reviews, social media feedback,
etc. relating to a product, they develop an impression about the product. Hence consumer
perception becomes a great influence on the buying decision of consumers.
iii. Learning
When a person buys a product, he/she gets to learn something more about the product. Learning
comes over a period of time through experience. A consumer’s learning depends on skills and
knowledge. While a skill can be gained through practice, knowledge can be acquired only
through experience.
Learning can be either conditional or cognitive. In conditional learning the consumer is exposed
to a situation repeatedly, thereby making a consumer to develop a response towards it.

96
97

Whereas in cognitive learning, the consumer will apply his knowledge and skills to find
satisfaction and a solution from the product that he buys.
iv. Attitudes and Beliefs
Consumers have certain attitude and beliefs which influence the buying decisions of a consumer.
Based on this attitude, the consumer behaves in a particular way towards a product. This attitude
plays a significant role in defining the brand image of a product. Hence, the marketers try hard to
understand the attitude of a consumer to design their marketing campaigns.
2. Social Factors
Humans are social beings and they live around many people who influence their buying
behavior. Human try to imitate other humans and also wish to be socially accepted in the society.
Hence their buying behavior is influenced by other people around them. These factors are
considered as social factors. Some of the social factors are:
i. Family
Family plays a significant role in shaping the buying behavior of a person. A person develops
preferences from his childhood by watching family buy products and continues to buy the same
products even when they grow up.
ii. Reference Groups
Reference group is a group of people with whom a person associates himself. Generally, all the
people in the reference group have common buying behavior and influence each other.
iii. Roles and status
A person is influenced by the role that he holds in the society. If a person is in a high position,
his buying behavior will be influenced largely by his status. A person who is a Chief Executive
Officer in a company will buy according to his status while a staff or an employee of the same
company will have different buying pattern.
3. Cultural factors
A group of people are associated with a set of values and ideologies that belong to a particular
community. When a person comes from a particular community, his/her behavior is highly
influenced by the culture relating to that particular community. Some of the cultural factors are:
i. Culture
Cultural Factors have strong influence on consumer buyer behavior. Cultural Factors include the
basic values, needs, wants, preferences, perceptions, and behaviors that are observed and learned
by a consumer from their near family members and other important people around them.
ii. Subculture
Within a cultural group, there exists many subcultures. These subcultural groups share the same
set of beliefs and values. Subcultures can consist of people from different religion, caste,
geographies and nationalities. These subcultures by itself form a customer segment.
iii. Social Class
Each and every society across the globe has form of social class. The social class is not just
determined by the income, but also other factors such as the occupation, family background,
education and residence location. Social class is important to predict the consumer behavior.
4. Personal Factors
Factors that are personal to the consumers influence their buying behavior. These personal
factors differ from person to person, thereby producing different perceptions and consumer
behavior.
Some of the personal factors are:

97
98

i. Age
Age is a major factor that influences buying behavior. The buying choices of youth differ from
that of middle-aged people. Elderly people have a totally different buying behavior. Teenagers
will be more interested in buying colorful clothes and beauty products. Middle-aged are focused
on house, property and vehicle for the family.
ii. Income
Income has the ability to influence the buying behavior of a person. Higher income gives higher
purchasing power to consumers. When a consumer has higher disposable income, it gives more
opportunity for the consumer to spend on luxurious products. Whereas low-income or middle-
income group consumers spend most of their income on basic needs such as groceries and
clothes.
iii. Occupation
Occupation of a consumer influences the buying behavior. A person tends to buy things that are
appropriate to this/her profession. For example, a doctor would buy clothes according to this
profession while a professor will have different buying pattern.
iv. Lifestyle
Lifestyle is an attitude, and a way in which an individual stay in the society. The buying behavior
is highly influenced by the lifestyle of a consumer. For example when a consumer leads a
healthy lifestyle, then the products he buys will relate to healthy alternatives to junk food.
5. Economic Factors
The consumer buying habits and decisions greatly depend on the economic situation of a country
or a market. When a nation is prosperous, the economy is strong, which leads to the greater
money supply in the market and higher purchasing power for consumers. When consumers
experience a positive economic environment, they are more confident to spend on buying
products.
Whereas, a weak economy reflects a struggling market that is impacted by unemployment and
lower purchasing power.
Economic factors bear a significant influence on the buying decision of a consumer. Some of the
important economic factors are:
i. Personal Income
When a person has a higher disposable income, the purchasing power increases simultaneously.
Disposable income refers to the money that is left after spending towards the basic needs of a
person.
When there is an increase in disposable income, it leads to higher expenditure on various items.
But when the disposable income reduces, parallelly the spending on multiple items also reduced.
ii. Family Income
Family income is the total income from all the members of a family. When more people are
earning in the family, there is more income available for shopping basic needs and luxuries.
Higher family income influences the people in the family to buy more. When there is a surplus
income available for the family, the tendency is to buy more luxury items which otherwise a
person might not have been able to buy.
iii. Consumer Credit
When a consumer is offered easy credit to purchase goods, it promotes higher spending.
Sellers are making it easy for the consumers to avail credit in the form of credit cards, easy
installments, bank loans, hire purchase, and many such other credit options. When there is higher
credit available to consumers, the purchase of comfort and luxury items increases.

98
99

iv. Liquid Assets

Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid assets are
those assets, which can be converted into cash very easily. Cash in hand, bank savings and
securities are some examples of liquid assets. When a consumer has higher liquid assets, it gives
him more confidence to buy luxury goods.
v. Savings
A consumer is highly influenced by the amount of savings he/she wishes to set aside from his
income. If a consumer decided to save more, then his expenditure on buying reduces. Whereas if
a consumer is interested in saving more, then most of his income will go towards buying
products.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

99