CHAPTER-11 (Marketing management)

Marketing: it is the process of exchange of goods and services for money or something of value to
them. It is done in such a way that maximises satisfaction of consumer needs the basic role of marketer
is to identify the needs and fulfill it. The marketers not only consider the existing consumers but also
the prospective consumer. Marketing includes all those activities which are related to the flow of goods
and services from producers to consumers like product packaging transportation , production etc. It is
not merely post production activity.
According to Phillip Kolter , it is “a social process by which individual groups obtain what they need
and want through creating offerings and freely exchanging products and services of value with others”.
Features
1) Needs and wants
The focus of marketing process is on satisfaction of the needs & wants. A marketer’s job in an
organization is to identify needs and wants of the target consumers and developing goods and services
that satisfy such needs and wants.
2) Creating a market offering
After analyzing needs and wants of the buyer , a good market offering is developed it may be a good or
service. Eg. for the satisfaction of customers , a cellphones have good memory , camera at a price of
Rs.20000. A good market offer is the one which is developed after analysing needs & preferences of the
potential buyers.
3) Customer value
The purpose of marketing is to generate customer values at a profit . A product will be purchased only if
it a perceived to be giving greatest benefit or value of the money therefore , the marketer will add to the
value of the products , so that the customers prefer it in relation to the competitor’s products.
4) Exchange Mechanism
As marketing involves exchange of goods and services for some value , it is considered as the essence
of marketing conditions which should be satisfied for exchange to take place are:
1) Involvement of two or more parties
2) Each party should be capable of offering some value
3) Each party should have the ability to communicate and deliver the product and services
4) Each party should be free to except or reject
5) The party should be willing to enter into transaction
Marketing Management:- It refers to planning , organizing , directing and controlling the market
activities which facilitate exchange of goods and services between providers and consumers. The main
focus of marketing management is an achieving exchange with the objective of customers satisfaction.
Marketing management philosophies
1. Production concept / philosophy / thinking
This concept emphasis on the production at a large scale. According to it , profits can be
maximised by producing at a large scale which will reduce the cost of the production. Therefore
,its main focus is quantity / volume of product. Thus, availability and affordability of the
product were considered to be the key to success of a firm. This concept prevails when number
of producer was less.
2. Product concept
This concept focus on the production of quality goods with better performance and innovative
features. It emphasis on quality of product rather than quantity. This philosophy concentrate on
making superior quality product which may also render high price. Thus, Product improvement
become the key to profit maximization of a firm. This concept came into existence when
number of producers increased.
3. Selling concept
It is the concept that emphasis on attracting and convincing customers. It considers aggressive
selling and promotional efforts like advertising, sales promotion etc. The firms when practice
this concept focus on selling what they produced i.e. the existing product by using aggressive
selling techniques with a view to persue, lure or coax the buyers. Therefore , its objective is to
maximize profit to through sales.
4. Marketing concept
According to this concept , the marketer should have the objective of profit maximisation by
satisfying customers needs. This starts from market i.e even when the product is not produced.
The marketer first identify the needs of the customers and produce accordingly. In other words,
customer satisfaction become the focal point of all decision making in the organization.
5. Societal marketing concept
According to this , the marketer should not only emphasis on customer satisfaction but also give
priority to social welfare. The concept expects the marketers to fulfill the needs and social
responsibilities. It includes all the activities that are performed for customers satisfaction
keeping in mind the social welfare. Apart from customer satisfaction, it pays attention to the
social, ethical & ecological aspects of marketing.
Function of marketing
1. Gathering and analysis market information
The main function of marketer is to gather and analysis the market information to achieve the
marketing objective. The marketer makes a SWOT analysis i.e. analysis of strength,
weaknesses, opportunities and threats. This is necessary to identify the needs of the customers
and take various decisions for the successful marketing of the products and services. It helps in
deciding what opportunities can best be pursued by it.
2. Marketing planning
After conducting marketing analysis , another step is to devlop suitable marketing plan so that
marketing goals of the organization can be achieved. The marketer makes appropriate plans to
increase production , sales etc. and specify the action programmes to achieve these objectives.
3. Product designing and development
Another important marketing activity relates to designing and developing the product in such a
way that attract the targeted customers. Product designing includes decisions related to quality
standards, shapes or design , type of packaging etc. A good design can improve performance of
a product and also give it a competitive advantage in the market.
4. Standardization and grading
Standardization is a process of producing goods according to pre-determined specification or
standards so as to achieve uniformity and consistency in the product. Buyers do not have to
inspect or check quality of the standardized product
Grading is the process of classification of products into different groups, on the basis of some
of its important characteristics such as quality, size, etc. Grading is particularly necessary for
products which are not produced according to predetermined specifications.
5. Packing and labelling
They are considered to be pillars of marketing. Packaging refers to the act of designing the
package or wrapper or the container of the product so as to protects it. It also serves as
promotional tool. Labelling refers to act of designing the labels to be put on package of the
product. The label identifies the product or brand. It provides the content of the product, its
price etc. which is required by the law.
6. Branding
It is the technique of giving name, sign, symbol etc. to the product. The main objective of
branding a to create different image of the seller and the product in the market. It provides a
basis for distinguishing the product of a firm with that of the competitor, which in turn, helps in
building customer’s loyality and in promoting its sale. For eg:- adidas, bata etc
7. Customer support services
It is one of the important function of marketing where various customer support services are
provide like after sales services, handling customer complaints, product related information etc.
These services aim at providing maximum satisfaction to the customer which help in promoting
repeat sales and developing brands loyalty.
8. Pricing
The amount of money paid by the buyer or the amount received by the seller in considerations
of the purchase of a product or a services. Price is an important factor affecting the success or
failure of a product in the market. The marketers have to properly analyse the factors
determining the price of a product.
9. Promotion
It means providing information to the customers about the product its feature etc. and
persuading them to purchase these products. The main tools of promotion are:- advertising ,
sales promotion personal selling and public relation.
10. Physical distribution
It is concerned with making goods and services available at the right time , right place and in
right quantity so that consumers can purchase the same. It involves the decisions like selecting
the channels of distribution storage , warehousing etc. The important decision under physical
distribution include managing inventory (levels of stock of goods), storage and warehousing and
transportation of goods from one place to the other.
11. Transportation
It involves physical movement of goods from one place to another it is required because place
of production and place of consumption are different. A marketing firm has to analyse its
transportation needs after taking into consideration various factors such as nature of the
product, etc.
12. Storage and warehousing
Usually there is a time gap between production of goods and their sale or use. Warehousing
makes the goods available in right quantity to the consumer. Further, there is a need for storage
of adequate stock of goods to protect against unavoidable delays in delivery or to meet out
contingencies in the demand.
Marketing mix: - It is a set of marketing tools that a firm uses to achieve a marketing objective. In a
target market, it is a combination of 4Ps which are product, price, place and promotion. Thus, marketing
mix refers to combination of various tools of marketing in such a manner that there will be maximum
profit. They are also known as controllable variables.
Elements of marketing mix
1. Product:
It includes any good or services or anything of value. Product mix refers to activities relating to
satisfaction of customer’s needs and includes product planning, after sale services, handling
complaints etc. It involves planning, developing and producing the right type of product and
services that can be marketed by the organization. It includes packaging, labelling and
branding.
2. Price
It is the amount paid by the buyer for the consideration of the products. Price mix refers to all
important decisions relating to fixing the price of the product. These include policies related to
price level, price strategies and price change of the product.
3. Place: -
It refers to all the important decisions relating to the physical distribution of product. In other
words, place mix is concerned with making the product available at right place so that
consumer can purchase the same according to their convenience. It includes two decisions
regarding physical movement of goods from provider of the product to the consumer and
decision of channels of distribution.
4. Promotion: -
It refers to all marketing activities that aim at increasing the volume of the sale of the product of
an enterprise. It includes activities related to availability and communicating to the consumers
etc. of the product. By this, the seller persuade the buyer to buy their product. Various
promotional activities such as advertising, sales promotion, personal selling and public relation
can be taken in the promotion mix. These are the communication tools used by the enterprise to
motivate consumers to buy the product.
Product Mix
Components of products mix
1) Branding:- It is the process of giving name or sign or symbol etc. to a product in order to
identify it and differentiate it from the competitors product. Various terms related to branding
are: -
(a) Brand :- It is a name, sign, symbol, etc. or combination of these. It is used to identify the
product and differentiate it from others.
Brands includes Brand name and Brand Mark
(b) Brand name :- It is the part of brand which can be spoken or which is utterable.
(c) Brand mark:- It is that part of brand which can be reconised but can’t be spoken. It appears
in the form of symbols, designs or different or different colours etc. eg:- Nike.
(d) Trade mark:- Any part of Brand that can be legal protected against its use by other firms is
called trade mark. The firm which got its brand registered gets the right of its use and no
other firm can use such name in market.
Advantages of Brandings
1) To Marketer
1) Enable product differentiation :- Brandings helps a firm in distinguishing its product from
that of its competitions. Marketers use the branding so as to show that their product is
different from that of its competitors. Marketers use the brand i.e. either name or mark in
the promotion of the product so as to differentiate.
2) Ease in introduction of new product: - If a new product of a known brand is launched , it
will get on excellent start because the consumers or already aware about the brand and its
product. There is no need to spend more time and efforts in promotion.
3) Differential pricing:- It enables the firms to charge higher price for its product then its
competitors because its consumer likes the brand and become habitual of it. They do not
mind paying a higher price for it.
4) Help in advertising and display program :- It helps the firms in advertising and display
program activity. Without the brand name, the advertisers can only promote generic name
which does not promote sales.
2) To consumer
1) Helps in product identification: - It helps the customers in identifying the product. It helps
the customer to choose the product easily as the brand which give them more satisfaction
can be selected easily over the product of the competitors.
2) Status symbol:- Use of some brands become status symbol due to their superior quality.
Customers of these brand declare with pride that they use branded products. This show the
standards of the product and also reflect identity of the product.
3) Ensure Quality:- It ensure particular level of quality. If there is any defect in the quality, the
consumers can make a complaint to the manufacturer. Consumers buy branded products
without any hesitation regarding quality and price so, manufacturer of such products make
best possible efforts to ensure quality.
Characteristics of a good brand name
1. Brand name should be short, easy to pronounce, spell, recognized, remember etc. e.g. Vim ,
Bin etc.
2. It should be suggestive. It must suggest the product benefits and qualities.
3. It should be distinctive. Eg:- Zodiac etc.
4. It should be sufficiently versatile to accommodate to the product lines. E.g. Maggi ,
Samsung etc.
5. Brand name should be adaptable to packaging, labelling and different advertising media
and different languages. E.g:- ‘NOVA’ brand name given to a car means “do not go”, such
kind of names should be avoided
6. It should be capable of been registered and protected legally
7. Chosen name should have staying power. It should not get out of date.
2. Packaging :- It refers to the act of designing and producing the container or the wrapper of the
product. It not only protects the product but also serves as a promotional tool.
# Level of packaging
1. Primary package: - It refers to products’ immediate container. In few cases , the primary
package is retained till the product is ready to use and sometimes it is kept throughout the
whole life. Eg:- toothpaste tube.
2. Secondary package: - It refers to additional layers of protection that are kept till the product is
ready for use. Such package is retained till the consumer wants to. For eg. Cardboard box of the
toothpaste.
3. Transportation package
It refers to further packaging components necessary for storage and transportation,.e.g.
toothpaste manufacturing companies packs the toothpaste in corrugated boxes containing
10/20/100 units
Functions of packaging
1. Product identification:- With the help of packaging , product can be easily identified. The
colour of packaging helps us to identify the products even without reading labels E.g. green
colour of uncle chips, Maggi noodles is yellow colour etc.
2. Product protection:- The most important function of packaging is to ensure protection of a
product from spoilage and keep it healthy for use. It also ensure effective protection during
storage and transportation of a product. For eg:- Airtight container and packs are used for
chips , biscuits , jams etc.
3. Product promotion :- Important function of packaging is to promote the product by attractive,
colourful and innovative packing. It is the first thing that buyers observe which helps in
converting into sales. Therefore , it also plays the role of silent salesman.
4. Facilitation use of product or easy handling :- The size and shape of the package should be such
that it should be convenient to open, handle and use for the consumers. Cosmetics, medicines
and tubes of toothpastes are good examples of this. So, packaging should be convenient
according to the nature of the product
Importance of packaging:
1. Rising standards of health and sanitation :- Due to high standard of living , consumers have
started purchasing packed goods because of minimum chances of adulteration. It ensures
quality of goods and makes it healthy to eat.
2. Product differentiation :- It creates product differentiation. The colour, size, material etc. of the
package makes real difference in perception of the consumers about the quality of product .
e.g. While looking at the package of the product , say chocolate, one can make judgement about
the product containing the package.
3. Self Service Outlets: The self service retail outlets are becoming very popular, particularly in major
cities and towns. Because of this, some of the traditional role assigned to personal selling in respect of
promotion has gone to packaging.
4. Innovational opportunity :- The area of packaging have completely changed the marketing scene in
the country. For example, milk can now be stored for 4-5 days without refrigeration in the recently
developed packing materials. Similarly, in the area of pharmaceuticals, soft drinks, etc., lots of new
innovations have come in respect of packaging. As a result, the scope for the marketing of such
products has increased.
3. Labelling :- It refers to designing the label to be put on the packet of the product labels provide
detailed information regarding the product, its price , weight , MRP etc,. The label helps in
identification the product brand.
Functions/importance of labelling
1) Describe the product and specify the content :
One of the important function of labelling is to describe the product, its usage, manufacturing
date, precautions and specify its content like ingredients, net weight when packed etc. e,g.
package of maggi describe the procedure of cooking noodles .
2) Identification of product or brand :-
It helps the customer to identify the product or brand from the variety available. A person can
easily identify dairy milk chocolate from various chocolate kept in the shop by the colour of its
label. It should include MRP, name and address of manufactures
3) Grading of product :-
It helps in grading the product into different categories on the basis of different characteristics
like quality, quantity, etc. For e.g:- Panteen shampoo for normal hair , oily hair , dry hair etc.
4) Helps in promotion of product:-
It plays an important role or sales promotional schemes launched by the company are
mentioned on the labels of the package and the tag lines are also mentioned which helps in
attracting customers and inducing them to buy. For e.g. Buy 1 get 1 free, 20%extra etc.
5) Providing information required by the law:- The last important function performed by labelling
is to provide information required by the law. For eg statutory warning that “smoking is
injurious to health” is to be mentioned on the packet of cigarette. Similarly appropriate safety
needs must be put on the labels.
Price mix
Factors affecting prices
1) Product cost:- The most important factor affecting price of the product is its cost. It includes
cost of processing, distribution and selling the product. It is the total of fixed, variable, semi-
variable cost. It is the minimum level, or the floor price at which the product can be sold. Price
which is fixed should recover fixed and variable coast and a margin of profit over and above the
cost.
2) Extent of competition in the market:- The next important factor affecting the price for a product
is the nature or degree of competition in the market A firm can fix any price for its product if
the degree of competition is low, on the other hand, when the level of competition is very high
the price of product is determined on the basis of competitors price of the product , there
features , quality etc.
3) Utility and demand :- The utility provided by product and intensity of the buyer sets the upper
limit of price which he or she is willing to pay. When the demand of the product is elastic more
price should not be charged because a little variation in price may result in larger change in
demand, however, if the demand is inelastic the firm can change high price because the change
in price does not affect not affect the demands.
4) Pricing objectives
Usually, the objective of any business is to maximize profits. During short run a firm can earn
maximum profit by charging high price but if the firm wants to maximize profits and in the
long run the firm reduce the price so as to capture demand /whole market. Apart from profit
maximisation, the pricing objectives of a firm may include:
(a) Obtaining market share leadership: - If the firm’s objective is to obtain a larger market share, it
keeps the price per unit to be low , so there is increase in sales.
(b) Surviving in a competitive market:- If the firm is not able to face the competition and is finding
difficulty in surviving in the market , it will charge lowest possible price and give discounts etc.
(c) Obtaining product quality leadership:- Generally, a firm charges high price to cover high
quality and high cost by spending money on research and development etc.
5. Government and legal regulations :- The firm which have monopoly in the market usually charge
high price for there products , in order to product the interest of public the govt. intervenes and
regulates the price of commodity .for this purpose , it declares some products as essential
commodities.
e.g:- For medicine , petrol etc. a firm cannot charge there rice.
6. Marketing method used:- the various marketing methods such as distribution system , quality of
advertising , customer service etc. also affects the price of the products
Eg:- A firm will charge high price if its is using high quality of packaging , labelling etc.
 Place Mix:-it is concerned with making the goods and servicing right place , in the right
quantity at the right timeso that consumer can purchase the sense . it is required because the place of
production and consumption are different. . two important decisions taken under this element are:-
a) Selection of channels of distribution
b) Physical movement of goods & services from the place of production to the place of
consumption
*Channels of distribution :- It is the set of firm and distributors in transferring tittle of a particular
good or a service from producer to the consumer they are simply intermediaries between the
producer and the consumer. E.g. wholesalers and retailers
Types of channels of distribution
1. Direct or zero level channel:- when the producers or the manufacturer directly sales the goods
to the customer without involving any intermediary , it is known as direct channel . it is the
shortest mode of channel. E.g. door to door selling , internet ordering , television , mc donalds ,
bata etc.
Manufacturer  consumer
2. Indirect channel :- When a producer employees one or more intermediaries to distribute goods ,
it is known as indirect channel . types :-
1. One level channel:- this channel involves the use of one intermediary i.e. the retailer who
intern sells these goods to the ultimate customers.e.g. Tata sells cars through company approved dealer.
Manufacturer retailerconsumer
2. Two level channels:- under this channel , wholesaler and retailor act as a link between the
manufacturer and the consumers this is the most commonly used channel for distributing
consumer goods like chocolate , soap , rice etc
Manufacturer wholesalerretailorconsumer
3. Three level channel:- this level comprises of there intermidiaries i.e. agent , wholesaler ,
retaiolor . the manufacturer supply goods to there agents , who intern supplies them to
wholesalers and retailers . this level’s usaually used when the manufacturer deals in limited
products and yet wants to cover wider market.
# Components of physical distribution
1. Order processing :- it refers to placing order by the customer to the manufacturer through
channel members . Accurate and speedy processing of ordering is necessary to ensutimely
delivery of goods to the customers in right quantity and specifications. Order to payment period
should be small so as to increase company’s profit and consumer satisfaction.
2. Transportation :- it refers to the mode of carrying goods and raw material from the place of
production to the place of consumption. It is the most important element of physical distribution
of goods . it also adds value to me goods by ensuring there availability at the right time at right
place. It removes the windrance of place
3. Warehousing :- there is a time gap between the production and the consumption of goods thus ,
it becomes essential to store them therefore, warehousing is referred to the art of storing and
assorting products in order to create time utility in them. Its purpose is to arrange placement of
goods and provides facilities to store them. It also protects the stock of goods.
4. Inventory control :- inventory refers to the level of the stock to be maintained if a company
maintains a high level of inventory it will increase the cost of maintainance and higher level of
service to the customers it also increases the cost following factors should be considered to
maintained inventory level:-
a) Firms policy towards customer services (higher inventory
b) Degree of accuracy of sales forcast(accurate estimate less inventory)
c) Cost of inventory (high cost low inventory)
d) Responsivness of distribution system(quick supply use inventory)
Promotion mix
It refers to the combinations of various promotional to be used by an organization to provide
information the customers about the product following are the elements of promotion mix:-
1. Advertising :- It can be defined as the paid form of impersonal communication.It is done
by identified sponsors. Following are the features of advertising :-
a) Paid form :- It is the paid form of communication as the advertising cost is paid by the
seller but borrow by the buyer in the form of increasing prices.
b) Impersonal form :- There is no face to face contact between the buyer and the seller
c) Identified sponsors:- An individual ; firm or a company given an advertisement to increase
the sales.
2. Personal selling:- It is the personal form of communication where the face to face contact
takes place between the buyer and seller for the purpose of exchange of goods and services.
The sales person has to play 3 different roles i.e. persuasive role , personal role and
informative role.
# features of personal selling
(a) It is personal form of communication as it involves face to face contact between the sales
person and prospective buyers.
(b) It ensures development of relationship with the customers which will lead to repeated sales
(c) It is the flexible tool as the sales person will deal differently with different customers
(d) It also ensures feedback and the solving of queries of the customers.
3. Sales promotion :- It refers to the use of short term incentives convincing the users to
purchase the goods and services. These techniques are used to boost the sales of the firm. It
is generally combined with advertising and personal selling.
4. Public relation:- It refers to those programs that are designed to promote a company ‘s
image and its products. Successful companies always take adequate steps to maintain
harmonious relationships with public. It includes a wide variety of programs like , speech
by company leader , events like seminars , conferences , game shows , publication of
companies news letters , magazines , sponsorships etc.