Chapter 11

■ It has adopted direct selling practice.

■ It involves selling physical products directly in place of usual physical
distribution channel involving four practices: producer-wholesaler-
retailer-customer.
■ During 2009-10, the size of direct selling segment in India was worth ₹
3,330 crore.
■ It is growing at the rate of 17% per annum.
■ Amway originally did not rely on advertisement its product. Amway
India has undertaken advertising through only on a modest scale.
■ To make products available throughout the country.
■ It has 55 warehouses and 130 distribution centres.
■ These chains have business partners, each sell directly to friends and
acquaintances and make further business partners. They get commission
in return.
Concept of Marketing
Marketing is the social process by which customers obtain what
they need and want through market offerings having value
relevant to customers.
Features of Marketing
1. Customers needs and wants:
■ Marketing process helps the customers
to obtain products which they need and
want.
■ Need of an individual is his mental
feeling that he is lacking something.
■ Want is a mental feeling of an individual
that he is able to satisfy his particular
need and has resources for this.
■ Wants are converted into demand for
products by marketers through product
offerings.
Features of Marketing
2. Creating a Market Offering :
■ Market offering involves providing products with features
which will satisfy customer needs and wants.
■ Products include both goods which are in physical form and
services which are in non-physical form.
■ Providers of various types of services for their services usually
use the term products even for their services. e.g. Internet
service providers.
Features of Marketing
3. Customer Value :
■ Customer value is in the form of benefit which
the customer derives from using a product.
■ A customer buys a product only when he
perceives that the value of the product is at
least equal to the price he is paying for the
product.
■ Measure of this value is psychological and
therefore, cannot be quantified. Marketers take
the advantage to this phenomenon and add
features in their products which are appealing
to customers, hence increasing the perceived
value.
Features of Marketing
4. Exchange Mechanism :
■ Marketing is a social process as it involves interaction of
buyers and sellers.
■ Marketing process works through exchange mechanism which
is the process through which two parties come together to
obtain the desired product from someone offering the product
by giving something in return.
■ For any transactions the following conditions have to be
satisfied:
Features of Marketing
i. There should be involvement of at least two parties- buyer
and seller.
ii. Both parties must have something valuable for each other.
iii. Both parties are free to accept or reject the offer.
iv. Each party feels desirable to deal with the other.
v. Each party is capable of communication and delivery.
Marketing related terms

Market: Traditionally market Marketer: Marketer offers

was defined as a place where relevant products to customers.
buyers and sellers interact for A marketer may be an
conducting the exchange individual or an organisation. A
process. marketer offers a specific type
In modern terms, market is of satisfaction to its customers.
defined in a broader sense. Thus
market refers to a group of
potential and actual buyers of a
product where the sellers can
approach through various means
of communication.
Marketing related terms

Product: A product is an object

which aims in satisfying the needs
of the users.
1. Goods: Physical form. TV,
toothpaste, etc.
2. Services: Insurance, banking,
etc.
3. Ideas: No smoking etc.
4. Places: visit Agra- city of love
5. Feel good: dinner with SRK
6. Events: Fashion show
7. Financial instruments
8. Information: Export import
procedure
Difference Between Marketing and Selling

Marketing is a broader term which includes selling

Basis Marketing Selling
Scope Broad Narrow
Focus Maximum customer Transfer of product
satisfaction ownership
Means of Profit Maximisation By maximum satisfaction of By maximises sales volume
customers
Emphasis On developing the product On bending customers
according to customer's need according to the product
Start and end of activities Starting with product Starting after product
development and continuing development and ending with
even after the product is sold product sale.
Marketing Management
Marketing management is a process of planning, directing and
controlling the activities related to marketing of products to satisfy the
customers’ needs and achieve organisational objectives.
Marketing Management Philosophies

1. Production Concept:
Some companies believes that it is easy to sell the products when
products are inexpensive and are easily available. So the firms following
production concept focus on lowering the cost of production by means
of mass production and distribution but the drawback of this concept is
that customers don’t always buy the products which are inexpensive
and available.
Main Focus: Large scale production to decrease the cost.
Marketing Management Philosophies

2. Product Concept:
Firms which follow the product concept propose that the way to realise
business goal is by making products that are of high quality. These firms
manufacture the products of superior quality but they must keep in
mind that customers will buy the high quality only when they need or
want it, only quality is not enough force. For e.g the firm is dealing with
a very high quality hair dye but customer will demand it only when
they have grey hair.
Main Focus: Good quality, added features in product.
Marketing Management Philosophies
3. Selling Concept:
The firms which follow the selling concept believe that in order to
make a customer buy a product he or she need to be convinced and
customers can be convinced by undertaking some aggressive selling
and promotional efforts. With selling concept the firm can make a
customer buy something even when the customer has no intention
of buying it. Firms relying on selling concept make use of advertising
powers and other persuasion techniques to influence the customers.
Here product is sold by hook or by crook. The firms following this
concept must know that buyers cannot be manipulated many times.
It can spoil the image of the firm. So this can succeed in short run not
long run
Main Focus: To sell whatever is produced by using intensive
promotional techniques.
Marketing Management Philosophies

4. Marketing Concept:
It concentrates on the need of the customers. This concept says that
product should be designed and produced keeping in mind the need of
the customer and try to satisfy the need better than the competitor so
according to marketing concept the customer’s satisfaction is the
precondition for realising firms goals and objectives. Under marketing
concepts firms don’t sell what they have but they produce and sell
what customers want. The firms adopting marketing concept give
importance to two important market forces. These are customers and
competitors.
Main Focus: Customer satisfaction.
Marketing Management Philosophies
5. Societal Concept:
Although marketing concept is satisfying the needs of
customers in the best possible manner but then also it
has attracted criticism from people who are concerned
about society and environment. They argue that
companies should not blindly follow the goal of customer
satisfaction. This may lead to many social and
environmental ills for example, a customer may want to
have drugs so just to satisfy customer the firms should
not supply him drugs. Some products brig harmful effects
on environment so these should not be supplied only to
fulfil the goal of customer satisfaction. The customer
satisfaction must be within the ethical ecological aspects
of our society.
Main Focus: Customer satisfaction with in ethical and
ecological boundaries of our society.
FUNCTIONS OF MARKETING

1. Gather and analysing market 2. Market Planning:

information After conducting market
It helps the marketer to identify the needs of research the marketer has to
the customers plan the steps necessary to
market research becomes the basis of product achieve marketing objectives
development and to conduct marketer under market planning.
performs SWOT analysis. They make plans to increase
Companies prepare policies and plans to production, increase sales, use
overcome their weaknesses. promotional tools, etc.
Companies uses internet, SMS services to
collect the information or conduct door to
door research.
FUNCTIONS OF MARKETING

3. Product designing and 4. Standardisation and Grading:

development Standardisation means maintaining quality
Every marketer must plan the standards to achieve uniformity in the product.
type of product should be Consumers are assured about the quality of
offered. product, packing, etc.
This includes deciding quality, Grading means classifying the product on some
shape and design, packing, etc. bases. The bases of classification can be size,
quality, etc. Through grading marketer can get
higher price for quality product. Generally
agricultural product.
FUNCTIONS OF MARKETING
6. Branding :
Branding means giving a special name to the
5. Packaging and Labelling: product.
Packaging refers to designing of Companies may decide to sell the product in
packets, wrappers, cartons, etc. company’s name or they may decide a special
which are used to pack the brand name for their product.
product.
e.g. Sony, BPL, etc. are using company’s name
Attractive packaging induces the whereas Airtel, Tide , etc. are using special
customers to buy the product. brand name.
Therefore it is called a ‘silent
salesman’ It should be selected very carefully as the
loyalty depends upon the brand name.
Labelling refers to informative
part of packaging. Through label
important information is given to
customers.
FUNCTIONS OF MARKETING
8. Pricing of Products :
Price means a money which a customer has to
7. Customer support Services: pay to buy a product or a service.
Customer is the king of the It is a most crucial element as customer is
market. So customer satisfaction highly price sensitive, a little variations in price
should be the motto of all firms. may take your customer to competitor’s
Customer support service relates product.
to handling customer complaints, Marketer keeps in mind various factors such as
after sale services, maintenance objective of a firm, demand, competition, etc.
services, customer information,
technical services, etc.
Customer will become your
permanent customer when he is
satisfied with the customer
support service.
FUNCTIONS OF MARKETING

9. Promotion and selling: 10. Physical distribution :

After production of goods the Marketer has to make plans regarding
marketer needs to offer them to distribution of goods or services.
the customers; for this he Physical distribution includes decisions like
performs two basic functions: i.e. choice of channels of distribution, maintaining
Promotion and Selling. inventory, storage, warehouse, etc.
Promotion includes all the
activities which are undertaken to
communicate with the customer
and increase the sale. For
promotion marketer performs
various functions such as
advertisement, sales promotion,
personal selling, publicity, etc.
FUNCTIONS OF MARKETING
12. Storage and warehousing:
Goods are not produced immediately when
11. Transportation : they are produced.. There is a time gap
Goods are not necessarily consumed between production and consumption. So
at a same place where these are goods to be kept safe for protecting from
produced. There is gap between the moisture, insects, thefts, etc.
production and consumption. To So marketer often maintains their own
cover this gap the marketer uses warehouses or uses public warehouses.
various modes of transport.
Even various other inputs are also
needed to transported from their
place of origin to their place of use.
Marketer selects the best and the
most suitable means of transport.
The Marketing Mix:

The marketing mix refers to the ingredients or the tools or the variables
which the marketer mixes in order to interact with a particular market.
Elements of Marketing Mix:
1. Product
2. Price
3. Place
4. Promotion
Product :
A product is anything that can be offered to a market for attention,
acquisition, use or consumption, it includes physical objects, services,
personalities, places, organisations and ideas.
Depending on the nature of the product, these benefits may be of three types:
1. Functional benefits are provided by the basic features of the product, for
e.g. functional benefits of a motorcycle are in the form of speed, fuel
consumption, maintenance cost, etc.
2. Psychological benefits are in the form of mental feeling that the buyer
experiences in having product of a particular company. For e.g. in
motorcycle segment, there are different brands of motorcycle with each
brand having varying degrees of psychological.
3. Social benefits are in the form of wider social acceptance assigned to a
product as being unique in some way. Buyer of such a product is treated
highly by the concerned social group. E.g. Rolls Royce cars costliest in
the world still people buy.
Brand :
Branding is the process of giving a product distinct individually by
affixing a brand.
Based on the branding, there are two types of products in markets:
Branded products and generic products (without brand).
Various terms related to branding are as follows:
1. Brand: A brand is a name, term, sign, symbol, design or some
combination of these which is used to identify products. E.g. Lux, VIP,
etc. are brands. Similarly a symbol through which a product is identified
is also a brand.
2. Brand Name: Part of the brand which can be spoken is brand name.
Brand name is more popular because people generally buy products by
their brand names and not by symbols. There are three methods of
branding:
a) Brands by special name: Maggie, Rasna, Promise, etc.
b) Combining product name and brand name: Taj Mahal Tea, Maggie
Noodles, etc.
c) Combining manufacturers name and product: Tata Tea, Tata Salt,
Dabur Amla Hair Oil, etc.
Characteristics of Brand name:
1. Brand name should be short so as to pronounce, spell, recognise and
remember easily, for e.g. Rin, Vim, Lux, etc.
2. Brand name should convey the benefit that the product offers, for e.g.
Boost, Fair & Lovely, Genteel, etc.
3. Brand name should be distinctive, for e.g. Safari, Sprit, Zodiac, etc.
4. Brand name should be sufficiently versatile to accommodate new
products which are added to the concerned product line, for e.g. Colgate,
Gillette, Nirma, etc.
5. Brand name should have stable life, it should not be affected by change in
people’s lifestyles, for e.g. Saridon, Philips, HMT, etc.
6. Brand name should be attractive to eyes and ears, e.g. Natraj, Dairy Milk,
etc.
7. Brand name should be capable of being registered so as to protect the
interest of its owners.
3. Brand Mark: Brand mark is a symbol through which a product may
be identified. For e.g. star of Mercedes, combination of red and white
balls of Pepsi, etc.
4. Trade Mark: Trade mark is a brand or part of it which has been
registered with the Government under the Trade Mark Act, 1999. In
many cases you will find suffix of TM with the brand usually in smaller
sized letters than the brand letter for e.g. NUTRILITETM
Functions of Branding
1. Product Identification:
Branding helps in identifying a product clearly as customers purchase
the products on the basis of their brand name.
2. Product Differentiation:
Branding differentiates a particular product from other products of the
same line and explains why the product is different than other products
in the market.
3. Assuring Product Quality:
Branding assures product quality because each branded product has
specified type of product quality.
4. Sense of Satisfaction:
Branding offers sense of satisfaction to customers as the tend to feel
assured about the product quality at the time of buying the product.
5. Basis of Product Promotion:
Branding provides basis of product promotion as product brand is
emphasised in all promotional efforts.
6. Winning Loyalty of Customers:
Branding leads to winning loyalty of customers as, satisfied customers
tend to buy product of the same brand repeatedly.
7. Wealth Creation :
Branding leads to wealth creation to the organisation concerned. This
happens in two ways: saving cost of promotion by putting emphasis on
brand and increased sale value of brand if the organisation wants to sell
its brand to another organisation.
1. Product Differentiation :
Advantages of Branding

Branding helps the organisation to differentiate its products from

competitor’s products. This enables the organisation to secure and
control the market.
2. Ease in promotion :
Branding makes promotional efforts easier as whole efforts are
to Marketers

directed to promote the brand. In the absence of branding, the

promotional efforts will be directed to promote generic products
without any specific advantage to the organisation.
3. Differential Pricing :
Advantages of Branding

Branding enables an organisation to adopt differential pricing

through which it may fix higher price of its products because of
customers loyalty to brand.
4. Ease in introduction of new product :
Branding makes introduction of new products easy, particularly
to Marketers

when new products are introduced with an established brand. E.g.

Nestle India has introduced many products under its Maggie
brand.
5. Legal Protection :
Advantages of Branding

If a brand is registered it provides legal protection to the

organisation concerned.
6. High Price of Brands :
Brands command very high price in the market. Therefore the
intrinsic value of an organisation becomes much higher than the
to Marketers

value of its physical assets. In the case of takeover, the previous

owners get much higher price for the organisation due to brand.
1. Ease in Product Identification :
Advantages of Branding

Because of branding customers identify their preferred products

easily. If he is satisfied with a particular brand he can easily
identify the product which he wants to buy.
2. Assured Quality :
With branding quality of different products is assured as a branded
to Customers

product has the same quality in various production lots.

3. Status Symbol:
Buying branded products implies higher status. Some brand have
status symbol e.g. Rolls Royce (car)
PACKAGING

Packaging is designing and producing the container or wrapper of a

product.
In the context of packaging the term packing is also used and sometimes
confusion arises about the relationship between the two. Packing is an
action process of putting goods to be sold onto a package.
Difference between Packaging and Packing:
1. Packaging is a much wider function as compared to packing.
2. Packaging means designing and producing a package which is used for
packing an item in a package.
3. Packaging requires high conceptual skills while packing requires low
manual skills.
LEVELS OF PACKAGING

1. Primary Packaging:
It refers to immediate package of the product. For e.g. toffee in wrapper,
toothpaste in tube, etc. In some cases, primary package is required to
provide longevity to the product.
2. Secondary packaging:
It refers to additional layers of protection to the product. E.g. wrapped
toffees are secured in a secondary package in the form of another package
having 50 or 100 toffees.
3. Transportation packaging: It refers to further packaging components
necessary for storage, identification and transportation. E.g. packages of
toffees are put into corrugated boxes for storing at a manufacturer’s
warehouse and transportation.
FUNCTIONS OF PACKAGING

1. Product Protection:
The basic function of packaging is to provide protection to products.
Therefore, products remain safe for much longer time.
2. Product Identification:
Packaging helps in identifying the products. In most of the cases, even
product features are mentioned on the packages.
3. Preventing Adulteration:
Packaging protects adulteration of products, thereby keeping their initial
features intact. This is the reason that people prefer to buy packaged
goods.
FUNCTIONS OF PACKAGING

4. Convenient Handling:
Packaging results in convenient handling of products. If certain handling
precautions are required these may also be mentioned on the packaging.
E.g. Glass handle with care.
5. Product Promotion:
Packaging is a good tool of product promotion. This function of packaging
is being increasingly emphasised. Many companies are using their
packaging as self advertisement and self salesmanship by making it
attractive to motivate customers to buy.
Labelling
Labelling involves putting identification marks on the package.
A label may be a part of package or it may be a tag attached to the
product. The label describes content, features, producer’s details and
other details which are relevant to the customers.
Functions of Labelling
1. Describes products features:
Labelling helps in describing salient features of a product. These
features are quite helpful to customer, for example how to use the
product.
2. Identification of Product and its Brand:
Labelling helps in identification of the product and its brand name.
This helps a customer to make buying decision quickly and saves his
time and efforts.
Functions of Labelling
3. Grading of Products:
Many products require grading in terms of quantity, weight, size,
price, etc. Since such details are provided on the label, grading of
products becomes quite easy.
4. Help in Product Promotion :
Labelling helps in product promotion by providing salient features,
customers are attracted to buy the product. This is the reason that
many companies mention the product’s salient features in a way
which differentiates these features from other information of the
label, for e.g. using bold and larger sized letters for product features.
Functions of Labelling
5. Providing Statutory Information :
For many products, it is mandatory to provide specific information on
the label, for e.g. manufacturing and expiry dates for medicines,
statutory warning on health hazardous products (for e.g. smoking is
injurious to health) Thus, customers may take precautions in buying
and using these products.
PRICING
Pricing involves determination of price of a product.
FACTORS DETERMINING PRICING
1. Cost of Product:
Cost of a product is one of the most important factors
affecting its price. In the long run, no organisation would
survive if it charges lower price than its product cost. Thus, is
charged on cost plus basis.
2. Product Utility and Demand:
Price of a product depends to a great extent on its utility and
demand. A buyer buys a product when he feels that utility of
the product is at least equal to its price. If demand is high,
high price is likely to be charged. In the case of low demand,
price tends to be lower.
FACTORS DETERMINING PRICING
3. Extent of Competition:
Competition denotes demand and supply balance. In perfect
competition dd-ss pattern is well balanced. Therefore no
competitor will charge higher price. In imperfect
competition, chances of charging higher price exits.
4. Pricing competition:
In general, the basic objective of pricing is profit
maximisation. However depending on the role of
organisation seeks to play in the market, there are three
pricing objectives which are as follows:
FACTORS DETERMINING PRICING
i) Obtaining Market Leadership :
It involves being a leader in terms of market share for a product. In
such a situation an organisation which wants to play the leader’s role
charges a lower price than its competitors.
ii) Surviving in a Competitive Market:
If an organisation is struggling to survive in a competitive market, it
charges a lower price to retain its market share.
iii) Attaining Product Quality Leadership:
When an organisation puts emphases on attaining product quality
leadership through research and development, it charges higher price
in order to recover its research and development cost.
FACTORS DETERMINING PRICING
5. Marketing methods used:
Price fixation is also affected by marketing methods used such as
distribution system, quality of salesmen employed, degree of advertising,
sales promotion efforts, additional benefits offered, etc.
6. Government Regulations:
Government has the power to regulate price fixation mechanism for
essential products. In certain cases, prices are directly fixed by the
mechanism, for e.g. in the case of some petroleum products like petrol,
diesel, kerosene and cooking gas. In some cases, formula for price fixation
is determined by the Government, for e.g medicines.
PHYSICAL DISTRIBUTION

Physical distribution involves activities that are necessary to transfer ownership

of products to ultimate customers and making products available at the right time
and right place.
CHANNELS OF DISTRIBUTION AND ITS TYPES
A channel of distribution consists of a set of people and organisations involved in
the transfer of ownership of a product from its producer to its ultimate customer.
Methods of Distribution channels

I. Direct Channel of Distribution:

Manufacturer Customer

Direct channel is known as zero-level channel because no middleman is involved

in the distribution process, this is known as direct channel of distribution.
(AMWAY)
Methods used for direct distribution are as follows:
1. Manufacturer's own retail outlets
2. Selling through own sales force.
3. Mail order selling
4. Internet selling
This channel has a very serious limitation. Customer from each area particularly
rural areas may not be served. For such customers indirect channel is appropriate.
II. Indirect Channel of Distribution:

1. Manufacturer-Retailers-customers:

Manufacturer Retailer Customer

This is one level channel. In this channel, retailer is the only intermediary
between the manufacturer and customer. This type of the distribution channel
enables the manufacturer to cover a wide geographical area while retaining
control on the channel. Major Indian petroleum companies use this channel.
II. Indirect Channel of Distribution:

2. Manufacturer-Wholesaler- Retailers-customers:

Manufacturer Wholesaler Retailer Customer

This is two level channel. This is the most commonly used channel for
distributing consumer goods, particularly consumer convenience goods adopt
this channel.
II. Indirect Channel of Distribution:

3. Manufacturer-Agent- Wholesaler- Retailers-customers:

Manufacturer Agent Wholesaler Retailer Customer

This is three level channel. In this system an agent appointed in each major
geographical area. A product passes first to the agent and subsequently first to
the retailers and customers located in the concerned area. Though it is a very
lengthy channel, it saves manufacturers from the burden of establishing links
with a number of wholesalers in an area.
Factors affecting Choice of Channels of Distribution.

1. Product related Factors:

a) Unit value and Turnover: When unit value of a products is low its turnover
volume is high, longer distribution channels are more suitable as they cover
much wider areas, for e.g. consumer convenience products. When unit value
is high with low volume, shorter channels are suitable, for e.g. jewellery,
industrial machinery, etc.
b) Product Line: When a manufacturing has a lengthy product line shorter
channels are more suitable e.g. suiting, shirting, dress material, etc., When
there is a single item or limited number of items, longer channels are more
suitable.
Factors affecting Choice of Channels of Distribution.

1. Product related Factors:

c) Product Standardization : Longer channels are suitable for standardisation
products. For custom- made and non-standardised products, shorter channels are
more suitable.
d) Perishability : For perishable products, shorter channels are more suitable.
For non-perishable products, longer channels are more suitable.
e) Bulk and Weight : For bulky and heavy products, shorter channels are more
suitable.
Factors affecting Choice of Channels of Distribution.

2. Company Characteristics:
a) Volume of Production: If a company has high volume of production of
limited items, it can sell directly through its own retail outlets or through
independent retailers. When the volume is low, longer channels are required.
b) Financial Resources: If a company has ample financial resources, it can go
for direct distribution through its own retail outlets. Financially weak
organisations depend on lengthy channels.
c) Desire for Control of channels: If a company desires for control of
channels, it opts for shorter channels or even direct selling. In the alternatives
case, longer channels are used.
Factors affecting Choice of Channels of Distribution.

3. Market Factors:
a) Consumer or industrial market: For a consumer market, longer channels
are desirable while for an industrial market, shorter channels are more
suitable as in this case, retailers are not important.
b) Number of Customers: If number of customers in a market is large, longer
channels are preferable. If number of customer is small, shorter channels are
preferable.
c) Size of Order: For a large order, direct selling is more appropriate. If a
product is sold in small quantities, longer channels are more suitable.
d) Customer buying habits and Expectations: If customers are willing to
spend, desire for credit and personal attention and want one shop buying,
distribution through retailers is more appropriate.
Factors affecting Choice of Channels of Distribution.

4. Competitive Factors:
Choice of channels is affected by the channels used by competitors. Generally
organisation uses same channels which its competitors use. In some case they
may go for different channels also. E.g. when Reliance launched its textile
products under Vimal brand, it opted for selling its products through exclusive
Vimal retailers. At that time the usual channel of textile was manufacturer-
wholesaler-retailer-customer. Similarly many companies have opted to sell their
cosmetic products through medical retail stores.
Factors affecting Choice of Channels of Distribution.

5. Environmental Factors :
Environmental factors also affect the choice of channels. These factors include
economic condition and legal constraints. For e.g. in depressed economic
condition, more emphasis is placed on cost cutting, and minimising distribution
intermediaries. Similarly, Government puts restrictions on channels for
distributing certain essential items.
Components of Physical Distribution

1. Order Processing:
Physical distribution involves processing orders received from buyers quickly and
accurately so that the buyers get products well in time. In order to ensure quick and
accurate processing of orders many organisation have computerize this process.
2. Warehousing: There is a time lag between production of goods and their use. During
this period, goods are stored in warehouses at different geographical locations to carter its
customers more efficiently.
3. Transportation: Transportation involves physical movement of goods from one place
to another. Many products are produced at few locations but these are used may be located
far away from producers. As a result, products have to be moved from producers to users
by using suitable means of transport.
Components of Physical Distribution

4. Inventory control :
Inventory control involves maintaining stock of goods to be sold at optimum level. It
ensures that customer requirements are fulfilled at right time and cost of storing inventory
is optimum. Short inventory leads to non fulfilment of customers’ requirements well in
time while excess inventory leads to increased.
Promotion
Promotion aims at achieving the following objectives:
Promotion consists 1. To provide information about a product to
of activities customers.
through which as 2. To highlight the relevant features and utility of the
organisation product.
3. To differentiate the product from the products of its
communicates to
competitors.
its potential 4. To increase sale of the product.
customers about its
products and
persuades them to
buy the products.
Promotion Mix
Promotion mix is
the combination of 1.Advertising
promotional tools 2.Personal Selling
used by an
organisation to 3.Sales Promotion
communicate and 4.Public Relation
persuade customers
to buy its products.
Role of Advertisement Advertising
1. Creating Demand:
Advertising is an 2. Creating Customer
Advertisement plays a
Loyalty:
impersonal form significant role in creating
Customer loyalty
demand for products by making
of means repeated buying
people aware of new products
of products of the same
communication and new uses of existing
brands. Advertising
products. It attracts people’s
which is paid for creates tis loyalty
attention, creates interest in
through repeated
by its sponsors to them and arouses desire in them
communication of the
for buying. All these lead to
promote product features.
creation of demand.
products.
Role of Advertisement
Advertising
3. Facing Competition : 4. Educating Consumers :
Advertisement helps an Advertising educates consumers
organisation effectively. Each by providing useful information
competitor in the market tries to about how products add value to
position its products in a way them, how products can be used
which puts emphasis on the for better satisfaction, etc.
unique features of the products.
This positioning helps an
organisation to face competition
effectively. Advertisement is the
means for communicating the
positioning.
Role of Advertisement
Advertising
5. Enhancing Customer 6. Supporting Dealers:
Confidence: Advertisement supports dealers
Advertising leads to enhancing by making people aware about
customer in products advertised. positive features of products
Customers feel confident while advertised. Thus, it creates ready
buying advertised products as they market for the dealers and they
are sure about product quality. do not have to make much effort
Because of this confidence from the for selling the products.
products.
Role of Advertisement
Advertising
7. Facilitating New Product 8. Creating Better Organisational
Introduction: Image:
Advertising facilitates introduction Advertising helps in creating better
of new products. When a new organisational image. Through
product is introduced in the market, advertising a message may reach
it is just like an alien to people. people about how an organisation
Through advertising, positive stands for serving the society.
features of newly introduced Creating better organisational
product are communicated making image is a source of satisfaction of
the product acceptable to people. the organisation.
Advertising
1. Increased Product Price: 2. Confusion to Customers:
Advertising ultimately results in Customer gets confused about the
Objections against

increased product price which the most desirable brand of the product
customers have to bear. Advertising because of plethora of
Advertisement

is a costly affair. This cost is added advertisements for a single product

to the product cost. By adopting having different brands. This
cost plus price, manufacturers pass confusion puts them in dilemma.
this cost to ultimate customer.
Advertising
3. Encouraging sale of inferior 4. Advertisements of Bad Tastes:
goods: In many cases, advertisements are
Objections against

Advertising encourages sale of in bad taste. Events, models and

inferior products. In many cases, other features shown in
Advertisement

some product features are over advertisements degrade human

emphasised. These features are not dignity. This is quite painful for
as effective as communicated by human beings.
advertising. Therefore, customers
tend to buy products which are
really inferior to customer
expectations.
Advertising
5. Creating Disproportionate 6. Undermining Social Values:
Demand: Advertising leads to undermining
Objections against

Advertising creates social values by materialistic

disproportionate demand through values. Because of emphasis on
Advertisement

demonstration effect. This effect is materialism, social relationships are

in the form of ‘use what others are distorted which brings social
using’. Because of this effect, disorder.
people tend to buy things which
they do not really need. On this
phenomenon, famous US investor
Warren Buffet has opined, ‘If you
buy things you do not need, soon
you would be forced to sell things
which you need.’
Personal Selling

Personal Selling involves face to face contact between a

seller and a prospective customer with an intention to
selling the products.
Features Personal Selling
2. Development of
1. Personal Form: Relationship:
Personal Selling is in personal form The emphasis on
in which a salesman contacts a Personal Selling is to
customer at his convenient location. develop personal
The salesman presents relevant relationship between
features of the product including salesman and customer
demonstrating how the product to sell the product.
works. E.g. salesman of Eureka 3. Two way Communication:
Forbes demonstrate the working of In Personal Selling the sellers give
relevant products in front of information about the product, at the
customers. same time the buyer gets a chance to
clarify his doubts.
Qualities of a Good Salesman

1. Physical Qualities: 2. Mental Qualities:

Physical qualities of a good Mental qualities, also known as
salesman are good physical health, psychological qualities, of a good
habits and manners, way of dressing salesman are intelligent, sharp
and addressing, good posture, memory, self-confidence, hard
impressive voice and good stamina working, determination, patience,,
to work hard. enthusiasm, imagination, initiative,
adaptability and sound judgement.
Qualities of a Good Salesman

3. Social Qualities: 4. Technical Qualities:

Social qualities of a good salesman Technical qualities of a good
are maturity in behaviour, good salesman are as follows:
manners, sincerity, courage, sound a) Knowledge of Company: A good
character, resourcefulness, pleasing salesman has relevant knowledge of
temperament, cooperative approach, the company for which he works.
tactfulness, effective Knowledge of company includes
communication and respect for knowing history of the company,
others. management pattern, product lines,
policies and any distinguished
achievements. Such knowledge to
answer the queries of the customers.
Qualities of a Good Salesman

b) Knowledge of Products: c) Knowledge of Competitors:

A good salesman has complete A good salesman has relevant
knowledge of products which he knowledge about the competitors.
offers to customers. Knowledge of This includes having knowledge
products includes knowing all the about competitors, strength and
relevant features of the products weaknesses of their products and
handled by the salesman. These prices. Knowledge of competitors is
features include technical relevant for answering queries of
dimensions of the products, their customers about competing
quality, price and any special products.
features which make the products
superior to comparable.
Qualities of a Good Salesman

d) Knowledge of customers: e) Knowledge of Selling

A good salesman has relevant Techniques:
knowledge of customers: their A good salesman has knowledge of
buying motives, likes/dislikes and selling techniques so that he can
attitudes about products offered. adopt a technique which is the most
relevant in the given situation.
Sales Promotion

Sales promotion involves providing short term

incentives to encourage potential customers to buy
a product.
Sales Promotion
Techniques of Sales Promotion:
2. Rebate:
Rebate involves offering
1. Distribution of Samples: products at less than listed
Some organisations distribute price for a specific period or
samples to persons who are on special occasions like
perceived as influential in festivals.
their social groups. The basic
3. Refunds:
logic behind this in that
It involves giving discount to
persons will influence the
the fresh purchase of a
opinions of group members to
product on providing proof of
buy the product.
previous purchase. E.g. giving
discount on purchase of a new
toothpaste tube on giving back
empty toothpaste.
Sales Promotion
Techniques of Sales Promotion:

4. Discount Coupons: 5. Product combination :

Discount coupon is a kind of In this method, on buying a
certificate whose holder is product, another item is either
entitled to get the specified given free or at heavy
product at a discount. discount, e.g. buy 200 gms
Coupons may be given to sauce and get 100gms biscuit
customers on certain free.
purchases and these coupons
may be used for their next
purchase or coupons may be
attached with advertisements.
Sales Promotion
Techniques of Sales Promotion:

6. Quantity gift: 7. Instant Draw:

In this method, on buying a In this method, a buyer get a
specified quantity of product gift if a product has coupon
entitle the buyer to get the for such a gift, e.g. open the
same product free in specified cork of soft drink bottle and
quantity. E.g. buy three soaps get one free.
and get one free.

8. Lucky Draw:
In lucky draw, there is
random selection of customers
who may get specified gifts.
For this purpose purchase
voucher number are used
Sales Promotion
Techniques of Sales Promotion:

9. Contests:
10. Usable Benefit:
In this method, contests are
On buying the products, some
organised and winners are given
usable benefits are given like a
awards in the form of products of
free holiday trip, etc.
organisers.

11. Full Finance at 0%:

In this method, customers are 12. Exchange Offer:
given full financing facility interest It involves exchanging of old
free. They just have to pay product by paying exchange price
instalments on the product price which is lower than the listed price.
without interest.
Public Relations

Public relations is the action of an organisation for

promoting goodwill between itself and the society.
Role of Public Relations
1. Press Relation:
It involves establishing and promoting favourable relationship with
the press. Press includes both print and electronic media.
Organisation communicates needs to communicate relevant
information about it through press in the positive manner.
Information may contain facts, pictures, etc. Since press plays a
very important role in disseminating information, public relations
department should maintain close contact with the press.
Role of Public Relations
2. Product Publicity:
Public Relations help in product publicity,
particularly publicity of new products.
Publicity contains commercially significant
news and editorial comment in the press
about products and organisations. New
products require special effort to publicise
them through specific programmes
involving press like press conference. Public
relation department organises such
programmes.
Role of Public Relations

3. Corporate Communication :
It is a set of activities involving all internal and
external communications. In corporate
communication, emphasis is placed on sharing
relevant important information with employees and
public. This is done through newsletter, annual
reports, broachers and articles and audio visual
materials. Speech of key persons of the organisation
at meeting of trade fair associations are also useful.
All these means are quite relevant for promoting
good public realtions.
Role of Public Relations

4. Lobbying :
Business organisation need to maintain regular contacts with
the government officials, ministers, to get their concerns
addressed. The public relations department has to
proactively engage with these people so that the regulatory
framework does not go against the interest of the
organisation.
Role of Public Relations

5. Counselling:
It involves giving professional advice to someone to resolve
problems. Public relation department advices to top
management on general issues which affect public. Thus the
organisation can build goodwill by contributing money and
time to certain causes like environment, wildlife, children’s
right, education, etc.
Role of Public Relations

6. Image- Building:
It involves creating better image of an organisation. Public
relations department plays a key role in creating better image
of an organisation by maintaining good relations with public.
This image is quite helpful to the organisation to promote its
products as well as to win loyalty of public.
Role of Public Relations

7. Overcoming misunderstanding:
Sometimes misunderstanding can be created in the public
about the organisation or any of its action, particularly
because of adverse publicity of rivals. Such a
misunderstanding may be overcome by communicating facts
on the issues because of which misunderstanding has been
created.
Role of Public Relations

8. Building Creditability :
Creditability is the level of trust that the public has towards
its products. If favourable news and editorial comment come
in the media about the product, creditability of the
organisation goes up and people accept the product easily.
Role of Public Relations

9. Stimulating Sales Force :

Good public relations stimulate sales force as it becomes
easier for the sales force to convince wholesalers and
retailers. Consequently, wholesalers and retailers stock the
product willingly.
Role of Public Relations

10. Lowering Promotional Cost:

Public relations lead to lowering promotion cost as cost of
public relations is much lower than other methods of product
promotion.
Bharatiya Vidya Bhavans,
V.M. Public School
Baroda

Tasneem Hotelwala
PGT Commerce