SYBBA

Sem – III
304
Marketing Management
SYBBA (SEM-III)
MARKETING MANAGEMENT-I
Unit 1 Introduction of Marketing (25%)
Nature, Scope and Importance of Marketing, Evolution of Marketing; Core marketing
Concepts; Company orientation - Production concept, Product concept, Selling concept,
Marketing concept, Holistic marketing concept. Marketing Environment: Demographic,
Economic, political, legal, socio cultural, technological environment (Indian context),
Segmentation, Levels of Market Segmentation, Basis for Segmenting Consumer Markets,
Targeting and Positioning Variables

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Chapter-1
Introduction to Marketing Management

1. Introduction:
Concept: Market: It is a place where seller and buyer meet for transaction of goods and
services.

Major types of Market: 1. Consumer Market 2. Business Market 3. Government Market 4.

Global Market

Meaning of Market:
1. There are at least two parties.

2. Each party has something that might be the value of other party.

3. Each party is capable of communicating and delivering.

4. Each party accepts or rejects the exchange offer.

5. Each party believes it’s appropriate or desirable to deal with other party.

Marketing: It is a societal process by which individual and groups obtain what they need and
want though creating, offering and freely exchanging products and services of value with
others. Marketing is the process by which companies create value for customers and build
strong customer relationships in order to capture value from customer in return. It is the art of
selling the products. The aim is to know and understand the customer so well that the product
or services fits him and sells it. E.g. Sony designed its Walkman.
Definition:
 According to American Marketing Association (2004) - "Marketing is an
organisational function and set of processes for creating, communicating and
delivering value to customers and for managing relationships in a way that benefits
both the organisation and the stakeholder."

 AMA (1960) - "Marketing is the performance of business activities that direct the
flow of goods and services from producer to consumer or user."

 According to Eldridge (1970) - "Marketing is the combination of activities designed

to produce profit through ascertaining, creating, stimulating, and satisfying the needs
and/or wants of a selected segment of the market.“

 According to Kotler (2000) - "A societal process by which individuals and groups
obtain what they need and want through creating, offering, and freely exchanging
products and services of value with others."

Marketing Management: It is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational objectives. It can be seen as the art and science of choosing
target markets and getting, keeping and growing customers through creating, delivering and
communicating superior customer value.
2. Nature of Marketing:
1. Marketing is an Economic Function:

Marketing embraces all the business activities involved in getting goods and services ,
from the hands of producers into the hands of final consumers. The business steps
through which goods progress on their way to final consumers is the concern of
marketing.

2. Marketing is a Legal Process by which Ownership Transfers:

In the process of marketing the ownership of goods transfers from seller to the
purchaser or from producer to the end user.

3. Marketing is a System of Interacting Business Activities:

Marketing is that process through which a business enterprise, institution, or

organisation interacts with the customers and stakeholders with the objective to earn
profit, satisfy customers, and manage relationship. It is the performance of business
activities that direct the flow of goods and services from producer to consumer or
user.
4. Marketing is a Managerial function:

According to managerial or systems approach - "Marketing is the combination of

activities designed to produce profit through ascertaining, creating, stimulating, and
satisfying the needs and/or wants of a selected segment of the market."

According to this approach the emphasis is on how the individual organisation

processes marketing and develops the strategic dimensions of marketing activities.

5. Marketing is a social process:

Marketing is the delivery of a standard of living to society. According

to Cunningham and Cunningham (1981) societal marketing performs three
essential functions:-

 Knowing and understanding the consumer's changing needs and wants;

 Efficiently and effectively managing the supply and demand of products and
services; and

 Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and

satisfaction

7. Marketing had dual objectives - profit making and consumer satisfaction

3. 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 behaviour:

Marketers perform study of consumer behaviour. Analysis of buyer behaviour helps

marketer in market segmentation and targeting.

3. Production planning and development

Product planning and development starts with the generation of product idea and ends
with the product development and commercialisation. 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,
marketing goals and objectives, 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 Control

Marketing audit is done to control the marketing activities.

4. Importance of Marketing:
1. Marketing Widens the Market:

Marketing draws out the hidden wants of consumers, creates new demand, locates the
untapped areas and finds out the possibilities of selling new products. It thus enlarges
the market and enables the producers to increase production and earn more profits

2. Marketing Facilitates Exchanges in the Ownership and Possession of Goods

and Services:

It creates time, place and possession utilities for the goods and services. It is helpful to
both producers and consumers. Producers come to know about the specific needs and
preferences of the people and the customers about the products that manufacturers can
offer.

3. Marketing Helps in Optimal Utilization of Resources:

As the marketing efforts widen the area of market, the producers can utilize their
resources, otherwise remaining partly utilized, to the maximum. This optimum use of
resources reduces the total cost per unit.
4. Marketing Accelerates Other Activities:

Because of marketing so many other activities such as banking, transport, insurance,

warehousing, etc. get a boost as they are needed more to help in the marketing
process.

5. Marketing Increases the National Income:

National income is the sum total of goods and services that a nation possesses. The
net effect of all marketing efforts is a rise in production of existing industries,
investment in new industrial units and provision of more services. The nation
becomes richer with the increase in its national income and there is a rise in per capita
income. The economy rises from underdeveloped stage to developing stage and then
marches towards a developed economy.

6. Marketing Raises the Standard of Living:

With the provision of more items of necessities, comforts and luxuries, cheaper as
well as costly and with more services and amenities as its disposal, the community
enjoys a higher standard of living. Even the poorer sections of society find many more
things within their reach because of lowering of costs of commodities and services.
Paul Mazur says “marketing is the delivery of a standard of living to society”. Prof.
Malcom Me Nair added further that “marketing is the creation and delivery of
standard of living to society.”

7. Marketing Provides Gainful Employment Opportunities: Marketing creates a

climate for more production and services. It also results in more social overhead as
more roads, more warehousing facilities, more transport and communication, more
banks, more training and technical institutions, more manpower is needed for the
same and the avenues of employment increase. Moreover, marketing is a complex
mechanism involving a number of functions and sub-functions which call for different
specialized personnel for employment. It is estimated that 30 to 40 per cent of total
population is engaged in direct or indirect marketing activities.

8. Marketing Stabilizes the Economic Conditions:

Marketing not only sets the economy revolving but also provides steady and stable
economic conditions where all are happy. It bridges the gap between producer and
consumers. It is a connecting belt between the two wheels of the economy of a nation,
i.e., the production and the consumption. Marketing by balancing production with
consumption, provides stable prices, full employment and a strong economy.

9. Marketing Acts as a Basis for Making Decisions:

An entrepreneur is confronted with many problems as to what, how, when, how much
and for whom to produce? In the past, there were lesser problems on account of local
markets and direct link between the producers and the consumers. But in modern
times, marketing has become very complex and tedious. It has emerged as a new
specialized activity along with production. As a result, producers are largely
dependent upon marketing mechanism to decide which, how when and how much to
produce.

10. Marketing Provides Maximum Satisfaction of Human Wants: It serves as an

effective link between the business and the society, removes hindrances of
knowledge, educates people, cultivates their minds, lures them to buy the best and
thus enables ultimately to get maximum satisfaction.

5. Evolution of Marketing:
Marketing has changed over the centuries, decades and years. The production centred
system systematically changed into relationship era of today and over the period; the
specializations have emerged such as sales versus marketing and advertising versus
retailing. The overall evolution of marketing has given rise to the concept of business
development. Marketing has taken the modern shape after going through various
stages since last the end of 19th century. The Production oriented practice of
marketing prior to the twentieth century was conservative and hidebound by rules-of-
thumb and lack of information. Science & technology developments and specially the
development of information technology have now changed the way people live, the
way people do business and the way people sell and purchase. Following is a short
summary of the various stages of evolution of marketing.
6. Company Orientation:
1. Production Concept:

It holds that consumers will prefer products that are widely available and
inexpensive. Consumer favor products those are available and highly affordable.
Company wants to expand the market so improve production and distribution. It
focuses on high production efficiency, low cost and mass distribution.

2. Product Concept: It holds that consumer will prefer those products that offer
most quality, performance or innovative feature. Company focusing on making
superior products and improving them over time. Concept says that a good
product will sell itself.

3. Selling Concept: Consumers will buy product only if the company promotes/
sells these products. Creative advertising and selling will overcome consumers’
resistance and convince them to buy. Company’s aim is to sell what they make
rather than make what the market want.

4. Marketing Concept: Instead of the “market and sell “philosophy, business

shifted to a customer-centered, “sense and sell” philosophy. Company not trying
to find the right customer for its product rather trying to find right products for its
customers. Focuses on need, wants of target markets and delivering satisfaction
better than competitors. The consumer is King! Find a need and fill it.

5. Societal Marketing Concept: It holds companies marketing decisions by

considering consumers’ wants the company’s requirements and society’s long-
term interest. It is also known as relationship marketing where companies create
long-term relationship with customers and other partners lead to success. For E.g.
Videocon.

6. The Holistic Marketing Concept: It means it is concerned with everything

that matters with marketing.(Wholesome) Components of Holistic marketing are:

1. Relationship Marketing: It includes Customers, Channels and Partners.

2. Integrated Marketing: It includes Communications, Product & Services and

Channel

3. Internal Marketing: It includes marketing department, Senior Management

and Other department.

4. Social Responsibility Marketing: It includes Ethics, Environment, Legal and

Community.

7. Core Marketing Concepts:

1. Need: It describes human requirements. Ex- food, air, water, clothing &
shelter.

2. Wants: Needs becomes wants when they are directed to specific objects. Ex-
need is food but want is pizza.

3. Demand: Demands are wants for a specific product backed by an ability to

pay. Ex- many people want Mercedes, only few can able & willing to buy.

4. Value: It is a ratio between what the customer gets = benefits and what he
gives = cost. (Benefit: cost)

5. Cost: It is a bundle of cost that customer expect from his true income in
evaluating, obtaining, using and disposing of the given market offerings.
(Market offering: Product, Services and Experience)

6. Satisfaction: It’s a person feeling of pleasure or disappointment resulting

from comparing a product’s perceived performance in relation to his or her
expectation.

If performance not match with expectation customer feel dissatisfaction, if

performance match with expectation customer is satisfied and if performance
is higher than the expectation then customer will highly satisfied or it is called
delighted customer.

7. Brands: Brand is a Name, Term, Sign, Symbol or Design, or a combination

of them, intended to identify the goods or services of one seller or group of
sellers and to differentiate them from those of competitors.

8. Brand Equity: It is added value endowed to products and services. This value
may be reflected in how the consumers think, feel and act with respected
brand, as well as prices, market share of a particular firm.

Brand reveling 6 levels of meaning:

i) Attribute

ii) Benefits

iii) Values

iv) Culture

v) Personality

vi) User

9. Company can keep brand name in following ways:

a) Functions: BOOST, ALL OUT, AQUA GUARD

b) Use of Acronyms: HMT, MRF

c) Specialty: Zen ( Continues Improvement)

d) Use of Company name: Sony, Bata, LG.

10. Competition: Competition includes all the actual & potential rival offerings &
substitutes that a buyer might consider which are available in market.

Four types of competition can be seen in the market:

o Brand Competition: A co. seeks its competition and other company

offering similar products and services to the same consumer at a similar
price. EX- Maruti Swift major competition with grandi-10

o Industry competition: A co. seeks its competitor as all company

making the same class of product. EX- Maruti Swift can compete with
all high price automobiles like, Audi, Mercedes etc.

o Form Competition: A co. seeks its competition as all company

manufacturing producing that supply the same services. EX- Maruti
Swift seeks its competition not only from car but also from moped,
bikes, and trucks.

o 4. Generic Competition: It means competition among products that are

different, but solve the same problem or provide the same benefit. It
means company seeks all other company are compete further some
consumer rupees/money. EX- Fevistick & Gluestick.

8. Marketing Environment:
Definition: According to Philip Kotler: “Marketing environment refers to external
and internal forces and factors that affect the company’s ability to develop and
maintain successful relationships with its target customers.”

Factors affecting to Institute’s Marketing Environment:

(i) Demographic

(ii) Economic

(iii) Political/Legal

(iv) Social and Cultural

(v) Technological

(vi) Natural

1. Demographic Environment

Demography means the study of the population - as people makes the market study about the
people has drawn the attention in the competitive environment.

The population in the country and its growth rate, the trend towards urbanization, the vast
untapped rural market with peculiar characteristics, the unemployment level, the technical
manpower, the managerial manpower, the brain drain, the ratio of men to women, the
occupational and age wise composition of population, the consumption pattern and reading
habits of the population, the labor market and its unionization, the lifestyle of people- all
these demographic aspects of population greatly influence the decision maker in a business
enterprise.

When operating in India a marketer should have the knowledge of Indian demography.
Indian Demography:

It may appear unrealistic but it is true that India is not a nation but it’s a continent in itself
because of its diversity in all field either religion, culture, language or even a fashion trends.
It is truly said success is not guaranteed in India even you have succeeded in most of the
nation of the world because its diversified culture but once you succeed in India success in
other nation is guaranteed. It is like winning a test against Australia in Australia and success
in all other country is guaranteed.
The distinct characteristics of Indian Demography are as follows.

 India is the second largest country in Asia. She is also the second most populous
country in the world growing at 2%.

 Over 80% of the people are Hindus.

 More than 70 languages and dialects are spoken including 15-scheduled language
from which Hindi is widely understood language (40%).

 India has the third largest technical manpower. Average literacy rate is 53%.

 Indian middle class is about 150 million with a significant buying power- constituting
a larger market than many European countries.

 India’s rural market of 6 lakhs villages and small towns has become an important
segment for the sale of pre-packed consumer goods. Apart from this consumer
market, there are opportunities in capital goods market and service market.

 India has a vast pool of scientific and technical talent, a dynamic entrepreneur class
and well-developed managerial base. India has both technical non-technical labor
bases.

2. Economic environment.

The broad characteristic of the economic system in which the business operates constitutes
the macroeconomic environment.

Today’s economic environment is complex where business interfaces with the government,
the capital market, the household sector and the foreign sector.

Purchasing power is as important as one who makes purchase. Marketer is interested in

knowing the purchasing power of the people of respective market in which they operate.
Purchasing power depends on current income, savings, credit availability and occupational
structure of the people.
Another thing marketers are concerned about is Income distribution.

Income distribution:

60% of population in India engaged in agriculture, but the contribution of Agriculture to the
Indian GDP is not more than 25%. So very vast scope for industrialization is there in India,
which is desirable also.

India is mixed economy, where private and public sector co-exist. Indian economy is being
more liberalized after [Link] and foreign investment in sectors like Finance, Petroleum,
Automobiles, Telecom, Aviation and InfoTech allowed today is more than past. Private bank
have been given licenses.

The combined effects of these factors had lead the GDP (gross domestic product) of India at
8% for three consecutive years and we are aiming at achieving 10% in the 10th five year plan
which is not so difficult if synergic efforts are made.

HRD has received more attention, which highlights the importance of change in Labour
management.

3. Political and Legal environment

It is composed of laws, government agencies and pressure group that Influence and limit
business.

Right from the time of locating the business, till the distribution of dividends amongst the
shareholders, the activities are controlled and regulated. Some of the Legislation an
organization should keep in mind while operating in India are; The companies Act, 1956,
Trade Union Act, 1969, The Factories Act, Bonus Act, 1961, Consumer Protection Act,
Managerial Remuneration, Essential Commodities Act, 1974, Social Security Enhancement
etc.

4. Socio Cultural Environment

Culture is a sub part of the social environment of business. Business cannot afford to neglect
cultural trends. Culture differs over space, time and societies.

Culture is a complex wholly made up of knowledge, belief, art, morals, laws, customs and
conventions other capabilities and habits. Culture is acquired by mans as a member of
society.

Core culture values have high persistence many belief and values of people are not equally
important. Those that are steadfastly followed can be called their core beliefs and values and
a high degree of persistence. E.g. Core values of Indian culture are Family Orientation,
Working for livelihood, getting married, giving in charity and being religious.

Secondary Beliefs and values Secondary Beliefs and values are subject to change in the
wake of new social forces. Believing in institution of marriage is a core belief but believing
people ought to marry within caste is a secondary belief.

It is advisable for the marketer not to violate core belief but they can modify the Secondary.

Secondary Cultural values go undergo shifts through time.

We have seen long hair, jeans life style, over a period of time; these life styles have changed,
leading to changes in behavior.

Culture Shows Preferences

Society decides which things in life are attractive and unattractive as objects of desire. This
is called preferences. Preference changes culture-to-culture, time-to-time and region-to-
region. Culture decides our taste standards.

Each culture consists of sub culture

Sub cultures within culture display somewhat different systems belief and values. E.g. Ethnic
group, Caste group, Life style group

Culture pattern

Individualism is now more persistence than collectivism. Women are more empowered
today. Customs have become more flexible.

Education and Culture

Spread of education also helps in developing sound business ethics but it also leads to more
economic offences, computer frauds etc.

5. Technological Environment:

Keep eye on accelerating rate of technology change. The correlation of growth rate of
economy and technological innovation will be established in the coming years. Thus the
technological forecasting is thus of crucial importance. New technology creates some major
long run consequences that are not always foreseeable.

Rate of technological change Because of high R&D budget and improved facilities provided
by the big MNCs today’s technology is very rapidly changing compare to the past scenario.
TV took 45 years to spread in 80% of the home all over the world but mobile took less then
15 years to spread all over the world, this shows the speed at which technology is changing.

Unlimited innovation opportunities because of high Research &Development Budgets

there are no of opportunity for the innovation in the area of transportation, energy, life
extension research, new materials, instrumentation etc.

Concentration on minor improvement rather major Discoveries

Always it is not possible to come out with new product you can increase your market share
just by making some minor or major modifications in the existing product and its more
feasible while operating at large scale because of factors like cost, time, labor etc.

Increased regulation on technology change

Due to its adverse effects many countries has started banning some of the technologies like
use of silicon in Barbie doll in America and European countries because of its adverse impact
though in India it’s allowed.

6. Natural Environment:

It is pointed out that there is environmental damage to water, earth and air caused by
industrial activity of certain kinds. This has led to formation of various groups of
environmentalists.

Ironically, the efforts to protect the environment often run counter to the attempt to generate
more employment and increase economic growth. Management must be alert to that
regulatory development and the opportunities that open up with the efforts to protect the
natural environment.

9. Difference between Marketing and Selling:

Many amongst us are still confused about the distinction between marketing and selling.
Many tend to equate these terms, as if they are synonymous. These two concepts have exactly
opposite connotations.

Selling concepts comes in when a product is first made and then an attempt is made and then
an attempt is made to sell it by various methods so as to motivate the people to buy it.
Company tries to manipulate the demand in such a way that it suits the supply made available
it.
Under the marketing concept, the company first identifies its customers or its target market
and then identifies what these customers want. The product is developed so that it satisfies
these wants and still yields profit.

Selling Marketing

1. Emphasis on the needs of the seller. 1. Emphasis on the needs of the buyer.

2. Emphasis on the Product. 2. Emphasis on the Customer’s wants.

3. Sales are the primary motive. 3. Satisfaction of customer is the

primary motive.

4. External, Market orientation.

4. Internal, Company orientation.
5. Buyer’s need is motive.
5. Company’s need is motive.
6. First, target market and its wants are
6. First, a product is made. Then efforts
identified. The product is made to
are taken to sell it.
satisfy these wants.
7. Cost determine price.
7. Consumer determines prices.

8. “Marketing views the customer as

8. “Selling” views customer as the last
the very purpose of the business.
link in the business.
9. It is a function that converts the
9. Activity that converts goods into cash.
consumer needs into products.
10. Short-term results are expected from
10. Long run strategic planning. New
planning. Only current products and
products and new markets are
markets are considered.
considered. Future growth is an
ultimate aim.
[Link], Targeting and Positioning

I) A) Definition of Segmentation:
Segmentation: “The process of dividing the market into homogenous group based on similar
need based on some variables is known as segmentation.”

For E.g, An Automobile Company will segment the market into 4 categories:

1. Those looking for basic transportation

2. Those looking for high performance

3. Those looking for luxury

4. Those looking for safety

B) Levels of Marketing Segmentation:
1. Mass Segmentation: In mass marketing the seller produces and sells only one
product for all the buyers. For ex; Henry Ford used strategy of mass marketing when
he offered model T ford car (Black color) to all the buyers. He said that the consumer
will definitely buy this car since only black car was there to buy for them. They did
not have any other color choice. The reason for using this strategy for mass marketing
is that when you produce only one type of product for all buyers, it reduces cost and
hence increases the profits for company. This also helps in setting up distribution
channel and a common promotion policy.

2. Segment Marketing: A market segment means a group of people having similar

need. Market segmentation is done because company believes that consumer differ in
their wants, purchasing power, geographical location, buying attitude, habits. For
E.g., An Automobile Company will segment the market into 4 categories:

1. Those looking for basic transportation

2. Those looking for high performance

3. Those looking for luxury

4. Those looking for safety

The consumer belonging to a particular segment to believe to be quite similar in their

needs and wants segment marketing has fewer benefits over mass marketing.

1. Company can offer better product to each segment

2. Choice of distribution channel and communication becomes easier

3. Company may have fewer competitors

3. Niche Market: At times there can be a group of consumers whose needs may vary
from other consumers within the same segment. For E.g., Cigarette has following
segment:

A Occasional Smoker

B Regular Smoker

C Heavy Smoker

Now whiten heavy smoker market there may be some consumers having heart
problems. If a company comes up with a product especially for heavy smoker having
heart diseases then it is a said that the company doing Niche Marketing. The benefit
of Niche market is that the consumer may ready to pay higher price to their product.
Hence the profit margin is huge for the company.

4. Individual Marketing: If company or a firm produces different product for each and
every consumer then it is said to be individual marketing. This type of marketing is
also called mass customization. For example: Tailor preparing different cloths for
different consumers. Another example: Roles Royse provide Cars for Luxury
segment. But within that segment also there are different needs of the consumers.
Alike color, interior etc. so for this reason, Roles Royse provide 40000 color
combination for consumer selection.

5. Self-Marketing: Here, individual consumer takes more responsibility for determining

which product and brand to buy. For example: Consider 2 purchasing agents with 2
purchasing style. The first may see several sales people who may try to persuade him
to buy their product. The second one needs no sales person, but he logs on the internet
to look for the information. On the bases of the information, he will decide which
product or brand to buy. Hence the second purchasing agent in practicing self-
market.

C) Basis for Segmenting Consumer Markets:

Basically, there are many variables used to segment the market. These variables can be
grouped into two categories: 1. People Oriented Approach (Geographical Segmentation,
Demographic Segmentation, Psychological Segmentation) 2. Product Oriented Approach
(Behavioral Segmentation)

1. Geographical Segmentation: It calls for dividing the market into different

geographic units such as nations, states, regions, countries and cities. The
company can operate in one or few geographic areas or operate in all but pay
attention to local variations. For example: Region:- North, South, East, West. The
coffee manufacturer keeps high level of “Chicory” for South India Market and
low for North and Western Market of India.

2. Demographic Segmentation: In this market is divided into groups on the basis of

variables such as age, family size, lifecycle, gender, income, occupation,
education, religion, nationality, social class etc. These variables are the most
popular basis for distinguishing customer groups. One reason is that consumer
wants, preferences, usage rate are often associated with demographic variables.
Another reason is that demographic variables are easier to measure. For example:
Age: - Cadbury Manufacturers manufacture Pop-ins for small children, Dairy
Milk for adults etc.

3. Psychological Segmentation: Psychographic variables used to segment market

are Personality, Lifestyle etc. 1) Personality means the totality of traits like
aggressiveness, achievement, motivation etc. companies manufacturing has try to
segment the market on the basis of personality of the consumer. 2) Lifestyle like
busy or leisure etc. shows the manner in which persons live and spend time and
money. For example: Microwave oven manufacturer services opens for people
whose lifestyle is very busy. This is because it saves time.

4. Behavioral Segmentation: Product oriented approach tells us something about

the behavior of the consumers i.e.; the benefits expected by them in the product.
Their loyalty, status etc. Here in product oriented approach, the companies try to
segment the market on the basis of product use pattern, benefits, brand loyalty,
attitude etc. For example: Benefits. This segment is on the basis of wants and
desires of consumers. It is because that the consumer looks for benefits in any
product, market exists people buy product to secure benefits. Hence customers
satisfaction depends upon product benefit like economy, performance, style,
durability, status, product appearance, taste, flavor etc. e.g.; Cars.
II) Targeting:
A) Meaning: Once the company has completed the segmentation of the market it
will have to select one or more segment. Select and producing for this segment is
known as target marketing.

B) Process of Target Market: 1. Evaluating the Market Segment, 2. Selection

of the Market Segment: (Target Market strategy) 3. Segment-by-Segment Invasion
Plan

1. Evaluating the Market Segment:

A) Overall attractiveness of the segment: It can be determine on the basis of the

size, growth rate, purchasing power, profitability etc.

B) Company’s objectives & resources: It can be determine on the basis of

company’s objective and resources like; profit making, increasing market share,
goodwill, customers’ satisfaction, technical know-how, machineries, equipment,
financial resources, physical resources, human resources etc.

2. Selection of the Market Segment: (Target Market strategy):

 Single Segment Concentration

 Selective Specialization

 Product Specialization

 Market Specialization

 Full Market Coverage

After evaluating the entire market segment the company now has to select the segment to
which it is going to serve. In other words, it must decide which segment to target. For
example, Let us consider that laboratory instruments manufacturing company has segmented
the market in to following 3 segments.

M1 (1st Market Segment)--------University Lab

M2 (2nd Market Segment)-------Government Lab

M3 (3rd Market Segment)--------Commercial Lab

Consider the company can produce any or all the following products:

P1= Microscope

P2= Chemical Apparatus

P3= Weighing Scale

The company must consider from the following above 5 pattern of the target market
segmentation:

1. Single Segment concentration: The advantages which a firm can gain are;
when a firm commits all of its marketing resources to serve a single market segment.
Firm gain strong knowledge about the segment needs, achieve a strong market
presence, specialization in production, distribution and promotion, segment leadership
and high return on investment. Disadvantage can be like, competition may capture the
segment.

For Example: P2 i.e.; Chemical Apparatus for market M1, i.e.; University Lab only.
This pattern of targeting the market is called single segment concentration. Hence in
this strategy, the company focuses on only one product and only one market.

2. Selective specialization: A firm selects a numbers of segments, each objectively

attractive and appropriate. No synergy among segments but all are money maker.
Advantages like; there may be little or no similarities between the segments, Multi
segment strategy, diversify the firm risk etc.
For example: Here the company selects only that product and market which is more
attractive, for each of the products. The most attractive market segment is selected. Hence the
diagram shows that for a company, M1 segment is the most attractive segment for product
P2. Similarly M3 is the most attractive segment for P1 and M2 for P3.

3. Product Specialization: The firm makes a certain product that it sells to

several different market segments. And the risk is product may become obsolete by
new technology.
For example: Here the company specializes in only one product for all the market segments
i.e.; the company produces only P2 for Market M1, M2 and M3. This type of strategy is
known as product specialization because the company is specializing in only one product in
all the market.

4. Market Specialization: The firm concentrates on serving many needs of

particular customer group.
For example: Here the company specializes in only one Market for all the products i.e.; P1,P2
and P3. Hence this type of strategy is which in the company specializes in only one market is
known as Market Specialization.

5. Full Market Coverage: The firm attempts to serve all customer groups with all
the products they might need. Here the company produces all the products for all the
market segments. Only large firms can undertake full market coverage strategy.
Hence this type of strategy of targeting the market is known as Full Market Coverage.

For example: Large firms like ACER (Computer Market), PEPSI (Non-alcoholic
drinks).

Large Firms can cover a whole market in 2 broad ways:

 Undifferentiated Marketing: When a firm produces only one product or

product line and promotes it to all customers with a single marketing mix. For
Ex- Henry Ford used strategy of mass marketing when he offered model T ford car
(Black colour) to all the buyers.

 Differentiated Marketing: When a firm produces numerous products and

promotes them with a different marketing mix designed to satisfy smaller
segments. For Ex-HUL.

3. Segment-by-Segment Invasion Plan: A company would be wise to enter one

segment at a time. Competitors must not know to what segment the firm will move
next. Segment-by-segment invasion plan give idea about how company are making
their movement plan form one segment to other.
Segment by Segment invasion plan is a process of market segmentation in which the
existing company prepare a proper plan and choose the other target market based on
their quality to sell their products. If a company want to expand its business then it
will first choose or target that area or region where its products will be consumed,
then after having a product specialization and it will be choosing new market for
different products.

The company should not enter directly in the Super Segment. Super Segment is a
form of different sub-segmentwith similiarity. (1) For example: The Toothpaste
Manufacturer wants to enter in to the super segment, then we can say that, it has three
basic features, i.e.; Anticavity Protection, Whiten Teeth and Freshness of
Breathes.

Now company will first enter into first segment then into second and afterwards into
third segment. This is called Segment by Segment invasion plan.
Company will enter in to first segment and hide its grand plan from its compettitors
who are in same field. Here in this situation competitors should not aware about the
company’s grand plan. For example: The Toothpaste company first enter into the
Anticavity Protection Segment, then invade to second segment i.e.; Whiten Teeth
and then third segment i.e.; Fresher Breathes.

This movement of segment by segment to reach the Super Segment is called

Segment by Segment invasion plan.

(2) For Example: Toyota come-up with first Small Car ( Terela), then Mid Size car (
Avalon) and the Luxuries Car ( Lexus).

III) Market Positioning:

(A) Meaning:
Beyond deciding which segments of the market it will target, the company must
decide on a value proposition on- how it will create differentiated value for targeted
segments and what positions it wants to occupy in those segments. A product position
is the way the product is defined by consumers on important attributes- the place
the product occupies in consumers’ minds relative to competing products. Product are
created in the factory, but brands are created in the mind.

The positioning is an act of designing the company’s offering and image so that they
occupy a meaningful and distinct competitive position in the target consumers’ mind.
Product positioning is an act of promoting superior aspects or the key
differentiations of products in the mind of the target market.

 Tide  As Powerful all-purpose Detergent.

 Ariel  Gentle Detergent for fine washable and baby cloths.

 Surf Excel

 Tate Indica & Maruti Suzuki 800  Economy Car

 Mercedes &Cadillac  Luxury Car

 BMW & Audi  Best Performance Car

 Volvo  Powerfully on Safety

 Toyota  Fuel-efficient
(B) Definition of Differentition: Differentition is an act of designing a set of
meaningful difference to distinguish the company’s offer from competitor’s offer. In
industry, where there is a lot of competition, a company will have to given an offer which is
different from that of the competitors. This means that the company has to diferntiate its offer
from that of the competitors. Some of the Differential Variables are mentioned below:

1. Product Differentiation: To provide better product

2. Service Differentiation: To provide better service

3. Personnel Differentiation: To provide better trained personals

4. Image Differentiation: To provide better created image

5. Channel Differentiation: To provide better sreached distribution channel

1. Product Differentiation: ( Products are of two types)

a) Standardized Products: Where little differentiation is possible. For ex; Aluminium.

b) Customized Products: Where much of an differentiation is possible. For ex; Furniture.

Brands can be differentiated on the basis of a number of different product or service

dimensions: Product form, Features, Performance, Conformance, Durability, Reliability,
Reparability, Style, Design etc.

[Link] Differentiation:

A firm can also differentiate its services when the physical cannot easily differentiated. The
key to competitive success often lies in providing better services through: Easy Ordering,
Delivery, Installation, Customer Training, Customer Consulting, maintenance and Rpair,
Miscellaneous Services etc.

[Link] Differentiation:

Companies can gain a strong competitive advantage through hiring and training better people
than their competitors do. For example, Singapore Airlines enjoy an excellent reputation in
large part because of the beauty and grace of the flight attandants (Air Hostess). Better
trained personnel exhibit six characteristics: Competence (Skill & knowledge), Courtesy
(friendly, respectful), Credibility (trustworthy), Reliability (consistently & accurately),
Responsiveness (respond quickly), Communication.

[Link] Differentiation:

Companies can differentiate its offering on the bases of Image also. For example; Marlboro
Cigarettes’ enjoy a worldwide market share of 60% just on the bases of its cow-boy image.
Image is the way a consumer perceives the company or its products. An image cannot be
built overnight but requires huge effort. All media should be used for this purpose. The
message in all media should be expressed in symbols, writing and audiovisual media,
atmosphere and behaviour.

[Link] Differentiation:

Companies can achieve competitive advantage through the way they design their distribution
channels’ in a differentiate manners like; Coverage, Expertise, Performance.

1) For example: Parle G, Balaji, Domino’s pizza.

2) For example: DELL Computers have developed the new strategies of omitting the channel
partner. By this they wanted to pass the margin directly to the consumer.

3) For example: Amway is concentrating on its channel partner, they have developed the
MLM (Multi-Level-marketing), and by this channel they have created self-marketer. There
are two benefits from this; advertising cost has gone down and mouth publicity has been
increased as they give share to their consumer cum distributer on making new channel
partner.

C) Point-of-Difference (POD): How the Brand is Different from

their Competitors.
Point-of-difference are attributes or benefits consumers strongly associate with a brand,
positively evaluate and believe that they could not find to the same extent with a competitive
brand.

Strong, Favorable and Unique brand associations that make up point-of-difference may be
based on virtually any type of attribute or benefits.

 E.g. FedEx  Guaranteed overnight delivery

 Nike  Performance

 Lexus  Quality

D) Point-of-Parity (POP): How the Brand is Similar to these

Competitors.
Point-of-parity are associates that are not necessarily unique to the brand but may in fact be
shared with other brands. These types of associations come in two basic forms:

 Category Point of Parity: Those associations consumers view as essential to be a

legitimate and credible offering within a certain product or service category.

 Competitive Point of Parity: Those associations designed to negate competitors’

point-of-difference. E.g. Dettol & Savlon, 7up & Sprit.
Chapter-2
Buying Behaviour
Content:
(A) Consumer Buying Behaviour: Meaning, Factors affecting
consumer behaviour, buying behaviour process (five steps).
(B) Industrial Buying Behaviour: Meaning, Difference between
Consumer markets Vs. Industrial markets, Factors affecting
Industrial buying, Buying behaviour process (eight steps)

(A) Consumer Buying Behaviour:

I) Meaning
Behaviour is the response to any external stimuli, which is targeted towards any of
our five senses i.e.; eyes, tongue, skin, nose and ear.

Consumer Behaviour is the consumer‟s response to the marketing stimuli i.e.;

product, price, place and promotion and the response to the modifying marketing mix.

Consumer buying behaviour is an action which is the result of the attitudes,

preferences, intentions and decisions made by the consumers in a marketplace before
buying a product or a service.

The study of consumer buying behaviour is an interdisciplinary subject area drawing

widely from sociology, psychology, anthropology etc.

Consumer behaviour study is the how consumer select, buy, use and dispose the
product or services.
II) Factors Affecting Consumer Buying Behaviour

1. Culture Factors: It is the fundamental determinant of a person‟s wants and behavior.

For eg; the growing child acquires a set of values, perceptions and behaviors through his
family and other key institutions.

Each culture consists of smaller subcultures that provide more specific identification and
socialization from their member. Eg; Burkha in Muslims.

Subculture: It includes nationalities, religions, geographic regions etc. Eg; Vibrant Gujarat.
(Diversity marketing)

Social Class: They are relatively homogeneous and enduring divisions in a society, which
are hierarchically ordered and whose members share values, interest and behavior. It not only
reflect income, but also reflect other indicators such as occupation, education and area of
residence. It also differ in dress, speech patterns, preferences and etc. Eg: Car

2. Social Factors: It is related to society.

Reference Group: A person‟s reference group consist of all groups that have direct(face to
face) of indirect on the person‟s attitude and behavior. So it can say that any group that
people use as a point of comparison to form their own attitudes, values, beliefs, and
behaviours.

Family: The family is the most important consumer buying organization in society and
family member constitute the influential primary reference groups. Family consists of parents
and siblings.

Roles and Status: A role consist of the activities a person in expected to perform. Each
role carries a status. For eg; A Supreme Court justice has more status than a sales manager,
and a sales manager has more status than a office clerk. So marketers must be aware of the
status-symbol potential of product and brand.

3. Personal Factors:

Age and Stages in Life Cycle: People buy different goods and services over a lifetime.
They eat baby food in the early years, most foods in growing and mature years and special
diets in the later years. Taste and preference in clothes, furniture and recreation is also age
related. Marketers often choose life-cycle groups as their target markets. For example,
marketers pay close attention to changing life circumstances-divorce, widowhood, remarriage
and their effect on consumption.

Occupation and Economic Circumstances: Occupation also influences consumption

patterns. For Example, A blue-collar worker will buy work clothes, work shoes and
lunchbox. Whereas a company president will buy expensive suits, air travel and country club
membership.

So marketers try to identify the occupational groups that have above-average interest in their
products and services. A company can even tailor its products for certain occupational group:
computer softer ware companies, for example, design different products for brand managers,
engineers, lawyers and physicians.

Life Style: A life style is a person‟s pattern of living in the world as expressed in activates
interest and opinion. Lifestyle portrays the “whole person” interacting with his or her
environment. So marketers search for relationship between their products and lifestyle
groups. For example, computer manufacturer might find that most of the computer buyers are
achievement-oriented, so the marketer may then aim the brand more clearly at the achiever
lifestyle.

Personality and Self Concept: Personality is often described in terms of such traits as
self-confidence, dominance, autonomy, defensiveness, adaptability, sociability and so on.
Self-concept means your own identity. You are aware about yourself more as compare to
others. Normally people like to purchase the brand, which suits to their personality. So there
should be a match between the individual‟s personality and brand personality. For example,
Nike (Athletic, Sporty etc), Pepsi (Youth).
4. Psychological Factors:
Motivation: There are two types of need; 1. Physiological need like related to body.
Example; hunger, thirst, uneasiness, discomfort etc. 2. Psychological need like related to
mind. Example; recognition, esteem, belonging, love etc.

A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a

need that is sufficiently pressing to derive the person to act. A motive person is ready to act
as per his perception of the situation.

Perception: Perception is the process by which an individual receive, selects, organizes and
interprets information inputs to create a meaningful picture of the word. People can emerge
with different perceptions of the same objects because of three perceptual processes:
Selective attention, Selective Distortion and Selective Retention. Because a person cannot
possibly attend to all of these, most stimuli will be screened out a process called selective
attention.

Learning: Learning involves changes in an individual‟s behavior arising from experience.

Most human behavior is learned.

For example, once you bought a computer as product from IBM and you are satisfied with it.
So next time when you want to purchase printer then definitely you will first give the
preference to IBM, because you had a very good experience from your past purchase.

Belief and Attitude: A belief is a descriptive thought that a person holds about something.
People‟s belief about a product or brand influences their buying decisions. An Attitude is just
the liking and disliking of people towards the products and brands. For example, marketers
found that on brand beliefs, consumers were equally split in their preferences for Diet Coke
vs. Diet Pepsi when tasting both on blind basis. So, Marketers are interested in the beliefs and
attitude of people carry in their minds about their products and brands.
III) Consumer Buying Behaviour Process

[Link] Recognition
This is often identified as the first and most important step in the customer‟s decision process.
A purchase cannot take place without the recognition of the need. The need may have been
triggered by internal stimuli (such as hunger or thirst) or external stimuli (such as
advertising or word of mouth).

2. Information Search
Having recognised a problem or need, the next step a customer may take is the information
search stage, in order to find out what they feel is the best solution. This is the buyer‟s effort
to search internal and external business environments, in order to identify and evaluate
information sources related to the central buying decision.

Your customer may rely on print, visual, online media or word of mouth for obtaining
[Link] type of Arousal customers are there; (a) Milder search/Heightened
attention And (b) Active Information Search.

The consumer sources of information are: Personal, Commercial, Public and

Experiential sources.
3. Evaluation of Alternatives
As you might expect, individuals will evaluate different products or brands at this stage on
the basis of alternative product attributes – those which have the ability to deliver the benefits
the customer is seeking. A factor that heavily influences this stage is the customer‟s attitude.
Involvement is another factor that influences the evaluation process.

For example, if the customer‟s attitude is positive and involvement is high, then they will
evaluate a number of companies or brands; but if it is low, only one company or brand will be
evaluated. Continued…

Basic concepts will help us understand consumer evaluation processes:

-The consumer is trying to satisfy a need.

-The consumer is looking for certain benefits from the product solution.

-The consumer see each product as a bundle of attributes.

Consumers vary as to which attribute they see as the most important one and which the least
important one.

For Example: Television – Criteria

-Price (0.15)

-Reputation of the company (0.20)

-Size (0.25)

-After sales service (0.30)

-World of mouth from friend and relatives (0.10)

4. Purchase Decision

The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the
final purchase decision may be „disrupted‟ by two factors: negative feedback from other
customers and the level of motivation to accept the feedback. For example, having gone
through the previous three stages, a customer chooses to buy a new telescope. However,
because his very good friend, a keen astronomer, gives him negative feedback, he will then
be bound to change his preference. Furthermore, the decision may be disrupted due to
unforeseen situations such as a sudden job loss or relocation.

5. Post-purchase Behaviour
In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can
greatly affect the decision process for similar purchases from the same company in the future,
having a knock-on effect at the information search stage and evaluation of alternatives stage.
If your customer is satisfied, this will result in brand loyalty, and the Information search and
Evaluation of alternative stages will often be fast-tracked or skipped [Link] the basis
of being either satisfied or dissatisfied, it is common for customers to distribute their positive
or negative feedback about the product. This may be through reviews on website, social
media networks or word of mouth. Companies should be very careful to create positive post-
purchase communication, in order to engage customers and make the process as efficient as
possible.

So, three points comes under Post- purchase behavior; a) Post Purchase Satisfaction, b)
Post Purchase Action and c) Post Purchase Use and Disposal.

(B) Business Buying Behaviour:

I) Meaning:
Business Buying Behaviour refers to the buying behaviour of the organizations that buy
goods and services for use in production of other products and services that are sold, rented,
or supplied to others. Business buying process is the process where business buyers
determine which products and services are needed to purchase, and then find, evaluate, and
choose among alternative brands.

II) Definition:
III) Difference between Consumer Market Vs. Industrial Market
Consumer buying behaviour is based on perceived characteristics such as style, fashion or
peer acceptance. Emotional factors play a big part in consumers' purchase decisions.

Business buyers are less emotional and more task oriented. It's simply a matter of finding the
supplier who can best fulfil that need.

So, the differences are as follows:

Difference between Consumer Market Vs. Industrial Market (in detail)

1. Business Needs vs. Consumer Wants: Most consumer goods are discretionary products
people may want but don‟t necessarily need, for example entertainment services, consumer
electronics or vacation travel. Consumer buying behaviour is based on perceived
characteristics such as style, fashion or peer acceptance. Emotional factors play a big part in
consumers‟ purchase decisions. So consumer marketing focuses on stimulating discretionary
buying behaviour through persuasive messaging and media investments to generate demand.

In contrast, businesses usually come prepared to buy a solution to a need – products that are
required for daily operations, or to solve a specific business problem. Their need pre-exists.
Product performance characteristics are far more important than the image of the product.
Business buyers are less emotional and more tasks oriented. It‟s simply a matter of finding
the supplier who can best fulfil that need.

2. Smaller & Highly Specialized Markets: Business marketers generally sell to narrower
vertical markets substantially smaller than most consumer markets. B2B marketers may
target only a few hundred prospects but consumer markets can number in the millions. Due to
the smaller size it‟s often possible to identify and profile all the prospects within a particular
business market and approach each with customized marketing communications and in-
person sales contact.
3. Individual Business Buyers Represent Higher Value: Business marketers focus on
fewer, more intimate and longer-term customer relationships. Sales involve significantly
higher average dollar amounts to smaller groups of customers with exponentially greater
lifetime values. A few large customers can easily account for the majority of a B2B
company‟s revenue. Due to the significantly higher transaction amounts and lifetime values,
B2B tactics can accommodate a higher marketing investment per contact.

4. Closer Proximity & Higher Degree of Independence: In consumer marketing, the

relationship often ends with a remote transaction made through a retailer. The manufacturer
rarely makes personal contact with the consumer. In business marketing, the buyer-seller
proximity is reversed. In most cases the supplier visits the customer in person and establishes
a true one-to-one relationship with the customer over an extended period of time.

5. Product Importance: The physical product is of greatest importance in consumer

markets. In B2B markets, the purchase extends beyond the product and includes an array of
economic, technical and personal relationships between buyer and seller.

While the product quality is important, this must be matched by quality and reliability of the
relationship. The buyer depends on the supplier for many things beyond the product itself,
including an assured supply of materials, service, efficient order handling, delivery, and often
extension of credit. These factors can have more influence than having the perfect product,
since supply chain complications cost the customer in terms of stock, downtime, lost orders,
etc.

6. More Complex Products Requiring Customization: Many business products are

specialized and require a high degree of technical customization for specific applications.
Even everyday products tend to be more complicated because of their use and application in
specialized business processes. The widely varying need of business customers dictates
highly personalized marketing, including customized products, services and prices. Even
meeting buyers‟ basic operational buying needs typically requires some level of
customization to logistics quantities, delivery and invoicing.

While the product quality is important, this must be matched by quality and reliability of the
relationship. The buyer depends on the supplier for many things beyond the product itself,
including an assured supply of materials, service, efficient order handling, delivery, and often
extension of credit. These factors can have more influence than having the perfect product,
since supply chain complications cost the customer in terms of stock, downtime, lost orders,
etc.

6. More Complex Products Requiring Customization: Many business products are

specialized and require a high degree of technical customization for specific applications.
Even everyday products tend to be more complicated because of their use and application in
specialized business processes. The widely varying needs of business customers dictate
highly personalized marketing, including customized products, services and prices. Even
meeting buyers‟ basic operational buying needs typically requires some level of
customization to logistics quantities, delivery and invoicing.
7. Stronger Customer-Centric Focus: B2B marketing requires that all parts of the business
be customer-oriented and that all marketing decisions are based on a complete and accurate
understanding of customers‟ needs. B2B companies are usually closer to their customers and
more knowledgeable about their needs than the typical consumer company.

8. Expert Buyers & Multiple Decision Makers: Consumer purchases typically involve an
individual decision maker in a single-step transaction. Compared with consumer decision
making, business buying behaviour is characterized by a formal multi-step process conducted
professionally over a period of time, involving many people interacting within a formal
organization.

9. Customers’ Product Knowledge: Consumer marketing is aimed at a mass market and

doesn‟t require deep knowledge of the product or supplier to make a purchase decision.
Business buyers are comparatively more sophisticated and educated than consumers. The
business customer has years of training in his or her field and often knows more about the
product and its application than the B2B marketer.

The expertise of business buyers falls into two categories: buying process or technical
expertise. Procurement managers are buying experts whose sole function is to procure
products and services on behalf of the company. Technical experts and users possess a strong
understanding and interest in the problem to be solved and the product being marketed as the
solution. And throughout the sales process business buyers continue to learn about a
supplier‟s cost structures, production methods, development expertise and financial viability.

10. Longer & More Formal Buying Process: Every business organization has formal
purchasing policies, procedures and levels of purchasing authority that don‟t exist for
consumers. Business buying processes are complex and highly structured requiring multiple
steps drawn out over a period of time and involving a wide range of individuals representing
various areas of expertise or interest from within the organization.

Marketers must recognize when it‟s time to stop nurturing leads through marketing channels
and hand those prospects off to the sales team. Conversely, sales must recognize when to
recycle dormant leads back to marketing for further nurturing.
IV) Factors Affecting Business Buying Behaviour

1. Environmental Factors
1. Economic Factors: It includes the demand, economic condition, competition, change in
technology, trade cycle etc. the change in the general economic condition of market affects
the demand for organizational; products which is related to the demand for consumer
products. So, any change in the economic condition of a country affecting consumer demand
is likely to influence the demand for organizational products.

2. Technological Factors: It includes the development of e-commerce, development of

information, development of the internet have brought changes in institutional buying and
inventory management, production process, distribution management, etc.

3. Political and Legal Factors: Institutions may be affected by political and legal factors.
Every organization has to operate their activities according to the rules and regulation of the
nation so while buying goods and services organization should study about the political
system, political situation, political ideology, government policies etc.
4. Social Responsibilities: It is also affects the organizational buying behavior. Institutions
have to consider the things like protect the environment and meet community needs. While
buying goods and services, the organization has to consider about the social well-being.

2. Organizational Factors
1. Buying Objectives: The different organization has different buying objectives. Some
organizations give priority to the low price than high quality and some organization gives
priority to the high quality than the low price.

2. Buying Policies: Some organizations have adopted centralized purchase policy and other
organizations have adopted decentralized purchase policy. Organization‟s buying policies
favoring reciprocity principle will narrow down the range of suppliers.

3. Buying Process: Buying process is also differing from organization to organization. The
government market requires sealed bids and tenders for every large purchase. Most business
buying is based on past relationships with the suppliers.

4. Buying Organizations: Due to Centralized buying and decentralized buying system, the
organizational buying can differ to a large extent. If large purchase committees are involved
then the buying will become complex.

3. Interpersonal Factors
1. Authority: The staffs of the organization have different authority. Due to style and process
of using authority by the staff involved in the organization, it affects the buying process and
makes easy, quick or slow and complicated.

2. Interest: there are differences between the interests of the people involved in the
organizational buying process. The production manager may be interested in quality and
consistency of the supply of production input while the finance manager may be interested in
lower price.

3. Status: The buying group may be represented by personnel working at different levels of
the organizational hierarchy. The person who gives order and the person who purchases
goods may not be same in the organization. Due to this, the selection of goods and services
can be affected.

4. Personal/ Individual Factors:

1. Age: Age of an individual directly affects organization‟s buying. Young buyers tend to
favor building a relationship with the new suppliers whereas older buyers tend to maintain a
relationship with the established suppliers.

2. Education: The educated buyer is able to evaluate the existing options and give continuity
to the buying. But the uneducated buyer is not able to select the supplier carefully. Therefore,
the educations of buyer also affect the organizational buying.
3. Job Position: The position of the individual in the organizational hierarchy determines to
what extent the individual is likely to influence the selection of suppliers. Buyers involved in
the purchase may have a high-level or low-level position.

4. Risk -taking: Every person has different risk attitudes. In this case, low-risk takers tend to
favor doing business with established suppliers while high-risk takers constantly search new
sources supply.

5. Personality: The personality of the buyers determines the level of influence in buying
decisions. The one having tough personality are expected to change their brand according to
the time. And some of the buyers have much brand loyalty.

5. Cultural Factors
Culture of the nation and culture of the organization both affects buying decisions. The
company with high moral and ethics won‟t work with lower ethical standard company.

V) Business/Industrial Buying Behaviour Process:

1. Problem Recognition
In the first stage of the business buying process, a certain problem is recognized by someone
in the organization, so that it can be solved through the purchase of any new product or
service. The external or internal stimuli result in the creation of such a recognized problem.

In the case of internal stimuli, the management of the organization may determine to
manufacture a new product or any production machine become damaged that needs certain
new parts. Another internal reason may be that the supplier is not providing effective goods at
a fair price.

On the other hand, the external elements may be in the form of any new idea of a product at
a trade show or seeing new advertisements or any favourable offering by a salesperson, etc.

2. Description of General Need

This stage starts when a clear need has been identified by the organization. In this step
description about the general need has been prepared which shows general characteristics and
the quantity of the required product.

In the case of simple items, this process is linear whereas in the case of complex items in the
process involves a team of buyers, engineers, and other professionals who work together to
agree on the desired product. The significance of reliability, price, durability, and other
features are ranked for the desired product or service by the team.
3. Specification of the Product
In this stage, the organization that is involved in the business buying process prepares a
detailed list of the technical specifications of the desired product through value analysis
conducted by the engineering team.

In value analysis, careful studies are made to determine the cost reduction production process
for the redesigning or standardization of the desired product or service. The professional team
covers the best features and characteristics required in purchasing the product. The selling
organizations can also use this step to increase their sales.

4. Search of Supplier
In this step of the business buying process, the buying organization searches the suppliers in
order to make a purchase with the best one. For this purpose, a list of competitive vendors is
prepared by the buying organization through the use of supplier directories, the aid of a
computer (internet), or contacting other organizations for obtaining recommended names.

The internet is increasingly becoming a platform for such searching nowadays as most of the
organizations are entering into this virtual world. In the case of buying new and expensive
products, the more time is consumed in searching for suitable suppliers that can best meet the
specifications of the required product.

The suppliers should keep themselves enrolled in the relative directories to make their good
reputation in the market. Moreover, the salesperson should also target the supplier searching
organizations in the business market. So in short, identify the most appropriate supplier.

Sources of Information-

-Trade directories,

-Contact other companies for recommendations,

-Watch trade advertisement

-Internet and

-Attend trade shows

So, buyer‟s task is to get listed the available supplier either online or offline.

5. Proposal Solicitation
In this stage, the suppliers are asked to submit their proposals. In some cases, some suppliers
send only their salespersons or simple catalogues. But when the desired product is expensive
and complex than proper formal presentations and detailed written proposals are required
from the qualified suppliers. The marketers of business organizations should also be skilful in
writing and presentation of business proposals to the buying organizations.
6. Selection of Supplier
At this stage, the final supplier is selected from the list of potential suppliers who have
submitted their proposals to the buying organization. The selection team of the buying
organization reviews the proposals of all suppliers and list the offered attributes on the basis
of the rank of importance. The following are some of the main attributes that serve as the
basis for the selection of potential suppliers.

 Quality of product

 Delivery time

 Ethical corporate behaviour

 Reasonable price

 Honest communication

 Past performance and reputation

 Repair and maintenance services etc.

For Example: MCA College wants to buy 100 computers for the college.

7. Order-Routine Specification
The order-routine specifications are prepared in this step which contains the order having a
final list of the specifications, the selected supplier, delivery time, quantity required, price
and repair and maintenance services, etc.

Or in other hand it can say that; after selecting the suppliers, the buyer will negotiate the
final order, listing the technical specifications and quantity needed, expected time of
delivery, return policies, warranties and so on.

A Blanket Contract is the one in which the supplier promises to resupply the buyer as
needed, at agreed upon prices, over a specified period of time.
It is also called as Stockless purchase plan.

8. Performance Review
This is the last stage of the business buying process in which the performance of the supplier
is reviewed by the buying organization. For this purpose the buying organization contacts
with the customers or users of the purchased product and ask them to provide their
experience of using that product.

Mainly the Consumer Behaviour or the satisfaction level of users serves as the basis of the
performance reviewing factor for the product purchased from business supplier. The
performance review helps in the future decisions of the business buying process in the form
of straight rebuy, modified rebuy, or new task buying. The selling organization also takes into
account the same factors that would affect the performance review by the buying
organization.

___________________________________________________________________________
Marketing Management

Chapter – 1: Marketing Mix

Content:
Product Decisions: Definition, Product Classification, Product
Line Decision, Product Mix Decision, Concept of Product Life
Cycle (PLC), PLC marketing strategies, Packaging & Labelling.
______________________________________________________

Marketing Mix

Introduction:
Marketing mix is the policy adopted by the manufacturers to get success in the field of
marketing. Those days, when goods were matched with the market, have gone. The
modern market concept emphasizes the importance of the consumer‟s preference.

Marketers make use of market information to analyze the situations. Therefore, a

manufacturer first analyses the nature of the consumer‟s needs and then plans his
product to give satisfaction to the consumers. All the marketing effort focuses attention
around the consumer‟s need. The management therefore is concerned with the markets
and market behaviors to identify the target groups of consumers through market
information. Then the management plans to meet the consumer‟s needs and to face the
competitors.
Marketing planning need analysis of the market to take a decision and forecast the
future needs of the public. Marketing departments perform the operations and the
market offering mix is the result.
Thus, the identification of demand and supply involves functions of marketing to
attain success in the market and the combination of these functions is known as
marketing mix.

Definition
According to Neil Borden, “The marketing mix refers to the appointment of efforts.
The combination, the designing and the integration of the elements of marketing into a
program on mix which on the basis of an appraisal of the market forces will best achieve
an enterprise at a given time”.
According to Stanton, “Marketing mix is the term used to describe the combination of
the four inputs which constitute the core of a company‟s marketing system the product,
the price structure, the promotional activities and the distribution system”.

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Thus marketing mix is the combination of the product, the distribution system, the price
structure and the promotional activities. The term marketing mix is used to describe a
combination of four elements- the product, price, physical distribution and promotion.
These are popularly known as “Four Ps”. These four elements or sub-mixes should be
taken as instruments by the management, when formulating marketing plans.
The marketing mix will have to be changed at the change of marketing conditions like
economic, political, social, etc. marketing mix is developed to satisfy the anticipated
needs of the identified markets. A brief description of the four elements of marketing
mix (Four Ps) about the products is:

1. Product:
The product itself is the first element. Products must satisfy consumer needs. The
management must first decide the products to be produced by knowing the needs of
the consumers. The product mix combines the physical product, product
services, brand and packages. The marketing authority has to decide the quality,
types of goods or services which are offered for sale. A firm may offer a single
product (manufacturer) or several products (seller). Not only the production of right
goods but also their shape, design, style, brand, package, etc. are of importance.
The marketing authority has to take a number of decisions as to product additions,
product deletions, product modification, on the basis of marketing information.

2. Price:
The second element the volume of sales is price. The marked or announced amount
of money asked from a buyer is known as basic price-value placed on a product.
Basic price alteration may be made by the manufacturer in order to attract the
buyers. This may be in the form of discount, allowances etc. Apart from this; the
terms of credit, Liberal dealing will also boost sales.

3. Promotion:
The product may be made known to the consumers. Firms must undertake
promotion work-advertising, publicity, personal selling etc, which are the major
activities. And thus the public may be informed of the products and be persuaded
by the customers promotion is the persuasive communication about the products,
by the manufacturer to the public.

4. Distribution (place):
Physical distribution is the delivery of product at the right time and at the right
place. The distribution mix is the combination of decision relating to marketing
channels, storage facility, inventory control, location, transportation
warehousing etc.

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Marketing Management

Marketing Mix

Product Price Promo- Distri-

tion bution

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Marketing Management

Chapter No. 1 (a) Product

Concepts & Levels of Product – The customer value hierarchy

Potential product

Augmented Product

Expected Product

Basic product

Core Benefit

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Marketing Management

In planning its marketing offering, the marketer needs to address 5 product levels :-

Each level adds customer value

 Core benefit:- The service or benefit the customer is really buying.

For example:- hotel guest :- buying “rest & sleep
For example:- drill purchaser is buying “Holes”

 Actual / Basic Product: - core benefits turned to a basic product ex: - hotel
room includes: - bed, bathroom, towels, desk, etc.

 Expected Product: - a set of attributes & conditions buyers normally expect

when they purchase the product.
Ex: - Hotel guest expect clean bed, fresh towels etc.

 Augmented Product: - this exceeds customer expectations. Brand positioning &

competition take place at this level.
Ex: - complimentary fruits, drinks etc.

 Potential Product: - comprises of all possible augmentations & transformations

the product or offering might undergo in the future.

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Marketing Management

Product Classifications:
DURABILITY AND TANGIBILITY

1. Nondurable goods :- soap

2. Durable goods :- Refrigerator, machine tool
3. Service :- Haircuts, legal advice

CONSUMER GOODS CLASSIFICATIONS

1. Convenience goods :-
a. Staple Goods :- For Example Consumer buys Pepsodent monthly
b. Impulse Goods:- E.g. you buy éclairs chocolate when you are left with
change
c. Emergency Goods: - Band-aid, OTC medicine in urgency.

2. Shopping Goods: - Furniture, Bed sheets, cloths etc.

3. Specialty Goods: - Marriage Suit, Car.
4. Unsought Goods: - Insurance, Plots, Death Ceremony products

INDUSTRIAL-GOODS CLASSIFICATION

1. Material and Parts

a. Raw-material
i. Farm Products (Wheat, cotton, fruits, vegetables)
ii. Natural products (iron ore, petrol)
b. Manufactured material & parts
i. Component material ( Yarn, Cement, wires)
ii. Component parts ( small motors, tires)
c. Capital items
i. Installations (Buildings, Generator, Lifts, photo copy machines)
ii. Equipments ( Computer, Mini trucks, Desk)
d. Supplies and Services
(MRO)
i. Maintenance and Repair Items ( Paints, Nail)
ii. Operating Supplies ( Pencils, Pen, Paper, coal, Lubricants )
iii. Maintenance and Repair Service (Window Cleaning, Housekeeping,
Photocopy Repair)
iv. Business Advisory Services (Legal Service, Human Resource
Consultancy, Advertising agency service and Management
Consultancy)

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Marketing Management

Product line and Product Mix

Product Mixes: - is the set of all products & items a particular seller offers for sale. A
product mix consists of various product lines. Ex: - LG: - refrigerators, stoves, washing
machines.

Product Mix Of Dabur Company

<-----------PRODUCT MIX---------->
PL1 PL2 PL3 PL4 PL5 PL6
HAIR HEALTH ORAL BABY FOOD DIGESTIVES
CARE CARE CARE CARE
Vatika Hair Chvayan Red Lal Tail Real Juice Hajmola P
oil Prakash Toothpaste R
Vatika Glucose Lal Dant Baby Honey Hajmola O
Heena –D manjan olive oil Candy D
conditioning U
shampoo C
Amla Hair Shankh Babool Ghutti Masala Pudin Hara T
oil pushpi Toothpaste
Anmol Binaka Capsicum Dabur hingoli L
Shampoo Brush I
Miswak Lemoneez N
Promise E
Red Gel

1. Width of a product mix

The width of the product mix refers to how many different product lines. The
company carries, in the above table, Dabur carry SIX product line, therefore the
product mix width of dabur is Six.
2. Length of Product Line
The length of the product line is decided by the number of item in the line.
Dabur products line- hair care comprises of 4 items, therefore the length of the
product HAIR CARE will be 4.
3. Depth of the product line
Depth of the product line denotes their total number of items under each brand in
the line, in terms of variants, shapes, model, pack size.
For Example- Vatika shampoo is avail in 3 size & 2 variety, then depth of these
would be (3X2) = 6

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4. Product Mix consistency

It refers to how the various product lines are in end use, product requirements,
distribution channel or some other way. Dabur‟s Product line is consistent. In so
far as they are consumer goods that go through the same distribution channels.

Major Product Mix Strategies

A company has several major strategies at its disposal, with respect to the width,
length, depth and consistency of its product mix. One major management aspect
involved in product policy is the decision concerning product mix. The product
mix is one of the elements in the product policy. This is more important now a
day since most of the manufacturers are diversifying their products.
The products or wholesaler of the product generally employs the following
strategies:
1. Expansion of Product Mix.
2. Contraction of Product Mix
3. Alteration of Existing Products
4. Positioning the Products
5. Trading Up and Trading Down.

 Expansion of Product Mix

It is also referred to diversification. A firm may expand its present product mix by
increasing the number of product lines or increasing the number of product items
within the same line. New lines may be related or unrelated to the present
products. For instance, a provision stores may add drugs, cosmetics, baby foods,
dry fruits etc.

 Contraction of Product Mix (Product line contraction)

In certain circumstances, the management has to drop the production of
unprofitable products. A firm may either eliminate an entire line or simplify the
assortment within a line; this is termed as contraction of product mix.
This is also termed as simplification. It is opposite to product diversification.

 Alteration of Existing Products

As an alternative to developing a completely new product, management should
take a fresh look at the company‟s existing product. Often, improving an
established product can be more profitable and less risky than developing a
completely new one. Alterations may be made in the designs size, color,
packaging, quality etc.

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 Positioning the Product

When a product can offer satisfaction in the manner the buyer gets, a strong
position is created in the market. The product‟s position is the image, which that
product projects in relation to rival products. A product‟s features will attract the
customers or prove attractive to the customers.

 Trading Up and Trading Down

Both trading up and trading down involves bringing out changed versions of a
product and altering the nature and direction of promotion. Trading Up refers to
adding of higher priced and more prestigious product to their existing line, in the
hope of increasing the sales of existing new priced products. For instance, a
factory marketing terry cotton is trading up by introducing polyester. Trading
Down refers to adding lower prices product to the existing line.

Product –Line analysis:-

In offering a product line, companies have to meet different customer

requirements. Product line managers have to take decisions that which item to
build, maintain, harvest or divest.

Product Line Decision

A product line is a group of products that are closely 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.

The major product line decision involves:

 Product line length: The number of items in the product line. The line is short
then manager can increase profits by adding items and if the line in long the
manager can increase profits by dropping items. Manager need to analyze their
product lines periodically to assess each product item‟s sales and profits and to
understand how each item contributes to the line‟s overall performance. Product
line length is influenced by company objectives and resources.

A company can expand its product line in two ways:

 Product line filling involves adding more items within the present range of the
line. Reasons for it: reaching for extra profits, satisfying dealers, using excess
capacity. Line filling is overdone if it results in customer confusion.

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Marketing Management

 Product Line Stretching occurs when a company lengthens its product line
beyond its current range. The company can stretch its line downward, upwards
or both ways.

1. Companies located at the upper end of the market can enlarge their lines
downward.

2. Companies can also stretch their product line upward. Sometimes, companies
stretch upward in order to add prestige to their current products. They used entirely new
names rather than the old name to launch it in upward market.

Companies in the middle range of the market may decide to stretch their line in both
directions.

PRODUCT LIFE CYCLE

As every being has life, a product has its life. Industrial goods may have a longer life
than consumer goods. When a product idea is commercialized, the product enters into
the market and competes with the rivals, for making sales and earning profits. Products,
like human beings have length of life. This has been described as life cycle in human
beings and when applied to products, it is called as product life cycle. The product life
cycle is generally termed as product market life cycle, because it is related to a
particular market. For instance, an old product in the market of Bombay may have a
new life in a remote village. The product life cycle may be short for some products and
long for some other products. The period may differ from product to product. But the
product passes through the stages, collectively known as product life cycle. The chart
below gives the life cycle of a product.

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Marketing Management

Introduction: Product is new: awareness in market is low: cost of marketing is

high profits are low.

Growth: The product has given satisfaction to the first buyers. Others follow:
sales increase rapidly and product starts generate profits.
Competitors notice the success and start planning competitive
offering.

Maturity: The product reaching its maturity and sales are good. But battle for
market share is about to begin.

Saturation: Total sales are not growing any more. The battle for market share
is difficult. Try for strong brand loyalty and reduced price.

Decline: Sales and profits are starting to fail and future of the product does
not look healthy. Remedial strategy modifying, repositioning or
even deleting the product is needed.
Every product moves through a life cycle, having five phases and they are:
1. Introduction
2. Growth
3. Maturity
4. Saturation
5. Decline

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Marketing Management

1. Introduction:
This is the first stage in the life of a product. This is an infant stage. The
product is a new one. The new product means “a product that opens up an
entirely new market replaces an existing product, or significantly broadens the
market for an existing product”. The initial stage needs greater amount for
investment. In this case, the product is introduced into the market and made
available to the customers with the slow rise in sales. The profit may be low
because of heavy advertising and sales promotion in order to stimulate the
demand.

2. Growth:
The product satisfies the market. In this stage, a product gains acceptance
from the part of consumers and businessmen. Sales of the product increase.
Profit also increases. This is the stage where competitors appear along with
substitute products in the large numbers. Previous buyers continue in their
purchase and new buyers appear. Firms may find it difficult to meet the demand.
The success of firm depends upon the efficient manufacturing and distributing
systems of the product.

3. Maturity:
At this stage, keen competition increases. Sales continue to increase for a
while, but at a decreasing rate. Competitors go for mark- down price by
increasing advertising deals. Market expenses increase even after mark- down
prices, which enable to face competition. Thus, profit is thinned. Additional
expenses are involved in product modification and improvement in the marketing
mix or/ and product mix or style changes, to attract the consumers and retain the
market. Overall marketing effectiveness becomes the key factor in this stage.

4. Saturation:
In the saturation stage, the sales are at the peal and further increase in
not possible. The demand for the product is stable. The rise and fall of sales
depend upon supply and demand. At this stage, a replacement of product is
needed because the sale of the existing product cannot be increased.

5. Decline:
When sales start declining, buyers go for newer and better product. This is
because of many reasons- technological advances, consumers shift in tastes,
increased competition, etc. at this stage, the product cannot stand in the market,
many firms withdraw from market when sales and profits decrease. Price

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Marketing Management

becomes the competitive weapon. Under such a situation, firms shift their
attention to other products. The product becomes out of date and fashion. Then
the firm will drop the product from the product line.

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Management (Strategies) of PLC

The marketing manager should manage the life cycle of the product towards better
progress and for a healthy growth of the firm. A marketing manager, while forecasting
the PLC must also anticipate the limitations and other drawbacks. Thus he may be able
to chalk out programmes more successfully. We discuss how the PLC is managed
under various stages.

I. Management of introduction stage

There are a high percentage of product failures in the first stage. When a product
is first introduced at the pioneering stage, since the product is new profits are
negative or low because of low sales and heavy distribution and promotion
expenses. There is very little direct competition. The promotional program is
designed to stimulate demand. By looking ahead one can know that competition will
enter sooner or later and cause prices and its market share to fall. Once the product
gains consumer acceptance the sales go up in growth stage. The PLC is the result
not the cause of marketing strategies chosen by the firm: Since “the first impression
is the best impression” The marketing manager should:

1. Make proper advertising before the products released in the market.

2. Shorter the period of introduction as far as possible.
3. Formulate new pricing and marketing strategies.
4. Undertake large scale promotion work.
5. Give proper attention to the distributor aspects.

II. Management of growth stage

This stage is marked by a rapid climb in sales. Potential buyers start buying the
product. Buyers compare this product with the rival product, because new
competitors enter the market with new product features and thus competition
increases. The numbers of outlets are increased. Companies maintain their
promotional expenditures at the same or at the slightly raised level to meet
competition. Since this is a crucial stage, the marketing manager should:

1. Improve product quality.

2. Add new product features and improved styling.
3. Enter into new market segments.
4. Enter into new distribution channels.
5. Reduce the price to attract buyers.
6. Increase promotional activities.

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Marketing Management

III. Management of maturity stage

During this stage, a manufacture gets maximum profit through maximum sales.
Price competition becomes increasingly severe. A novel method of purchasing sales
as creative selling is called for. The sales and profits start scale down as the
products gradually lose their significance in the presence of better good substitute.
For an effective management, the marketing manager should:
1. Improve the quality of the product.
2. Give proper attention to increase the usage among the current customers.
3. Try to convert non users into users of the product that is creating new buyers.
4. Give proper emphasis to advertisement and promotional programs.
5. Try to discover new uses for the product.
IV. Management of saturation stage
This is a stage where manufacturer finds it difficult to expand the sales volume
beyond a particular point, that is, sales are at the peak and further increase is not
possible. Since the sale of product cannot be increased, the marketing manager
should:
1. Introduce new models.
2. Pursue new uses for the product.
3. Introduce new package and reprising.
4. Middlemen‟s margin is to be increased.
5. If the price is heavy, offer the product on installments basis.
V. Management of decline stage
This is the last and most crucial stage. Sales may decline for a number of
reasons- technical advances, arrival of new product at low cost, changes in fashion,
consumer preference, etc. Sales and profits continue to fall at this stage. If the
substitutes are more attractive and in latest fashion, buyers may turn their eyes
toward them. At this stage, cost control is increasingly important to generate the
profits by the following alternatives:

1. Improve the product in a functional sense, or revitalize it in some manner.

2. Make sure that the marketing and production programs are as efficient as
possible.
3. Streamline the product assortment by pruning out unprofitable sizes and models.
Frequently, this tactic will decrease sales and increase profits.
4. “Run out” the product, which is, cut all costs to the bare minimum level that will
optimize profitability over the limited remaining life of the product.
5. Abandon the product.

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Packaging & Labelling

A) Packaging:
The packaging of a consumer product is an important part of the marketing plan.
There are many factors to be considered while designing a package. Ex; a good
number of companies adopt square packages in place of round packages, which
save space. Lipsticks and eyebrow cosmetics are designed as pencil to carry in
ladies purse or handbags.
Packing means wrapping of goods before they are transported or store or
delivered to a consumer. On the other hand, packaging is the sub-division of the
packing function of marketing. „Packaging‟ has been defined as “an activity,
which is concerned with protection, economy, convening and promotional
consideration.”
Many marketers have called packaging a fifth „P‟ along with four Ps i.e.; Price,
Product, Place, Promotion. Thus packaging is one among the activities of
designing and producing or wrapper for a product. The wrapper or the container
is called package.

The Reason for Growth of Packaging:

1. Self-Service: A number of products are being sold year after year, through the
supermarkets, on a self-service basis. Thus, they are packed and kept ready for
sale. Packages attract attention, telling product features, create overall
impression and win consumer‟s confidence. So good package is must. Experts
tell packaging performance last to second of salesmanship.

2. Consumer Affluence: consumers are willing to pay a little or more for

conveniences, appearance, dependability and prestige of better packages.

3. Company and Brand Image: To enjoy a distinctive attention, there must be a

good brand and packaging.

4. Innovation Opportunity: Innovating Packaging can bring large benefits to

consumers and profit to producers. Eg; Kinder Joy Packaging.

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Functions of Packaging:

1. Product Protection: Package protects the products and its fundamental idea.
Their journey from manufacture to consumer is facilitated. Package prevents
breakage, defect, chemical change, pest attack etc.

2. Product Contain: Package means using just the space in which a product will
be contained. Ordinary packaging is in form of throwaway containers.

3. Product Attractiveness: The size and shape of the package, its color, printed
matter on it etc. must make package attractive to look at. The psychological
feeling is that a good package contains good quality product in it. Attractiveness
is a major consideration in modern packaging. A pictorial label on the package
plays a role of silent salesmen.

4. Product Identification: Packages differentiate similar products. Packaging

and labeling are inseparable and are closely related to branding. Package has
more significant when the product cannot be seen by the buyer- packed milk,
fruit-juice etc. Buyers depend the package label in understanding the product in
the package. An attractive label is a mean of success in marketing.

5. Product Convenience: The purpose of packaging is not only confined to

consumer‟s service. The design and size of package must be in accordance with
the contents, i.e.; product; it must be convenient to the ultimate customers.
Package, which can be easily handled, opened, moved etc. is appreciably
favored by customers.

6. Effective Sales Tool: A good package stimulates or influence sales; a design

and attractive package invites customers. As the product, so as the package.
Many people think that a good package, taller in size, not shorter, contains bigger
products. Women likes round on curved shape of packages. Packaging,
attractive and innovated, has value as many people buy the products for the sake
of containers.

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Marketing Management

B) Labeling:

“Label is a part of product, which carries verbal information about the product or
the seller. It may be a part of package, or it may be a tag attached directly to the
product.”
Label may be a small slip or it may be a attached to the product. It conveys
verbal information about the product and seller. The producer gives necessary
information to the consumer through the label. The act of attaching or tagging the
label is known as labeling.

Label is of three types:

1. A Brand Label: It is simply popularizing the brand name of the product. It

gives only brand names.

2. AGrand Label: It is simply popularizing the quality standards

or grades as A, B, C or 1, 2, 3 etc. in another word it identifies the quality. E.g.
Mercedes E Class.

3. A Descriptive Label: It gives written or illustrative objective information about

the use, care, performance and other features of the product. E.g; Magi 2
minutes Noodles.

Functions of Labeling:

1. It enables the producers to give clear instructions about the uses of the product.
2. Price variation caused by the middlemen is avoided because price is printed and
maintained.
3. Manufacture-buyer relation is established.
4. It encourages producers to make only standard products.
5. Buyers can easily identify the products.

A complete label gives the following information:

1. Brand name.
2. Address of the producers.
3. Gross and net quantity of the content.
4. Ingredients in the products.
5. Direction for the use.
6. Precautionary measures.
7. Nature of the product.

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Marketing Management

8. Date of packing and expiry.

9. Maximum Retail Price.

Advantages of Labeling:
1. It grades the product.
2. It facilitates buyers to pay the right price.
3. It helps in avoiding confusion.
4. It brings home the characteristics of a product.
5. It helps advertising activity.
6. It gives all needed information to buyers.
7. It gives guarantee for the standard.
8. Label is one of the media to popularize the product.

Disadvantages of Labeling:
1. It is no use to ignorant or illiterate population.
2. It increases the cost of the product.
3. Labeling must be preceded by grading and standardization.
4. It aims mainly popularizing the product rather than giving information to the
consumers.

______________________________________________________________________

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Chapter-2 (B) PRICING

Content: Determinants of Price, Pricing Methods (Non-

mathematical treatment), Discriminatory pricing
________________________________________________________________________

I) What is price?

According to Seller, Price may be defined as “the value of product attributes expressed in money
terms which a consumer pays or expected to pay in exchange of the offered product”.

Economist define price as “the exchange value of a product or service always expressed in
money terms to the consumer, the price is an agreement the buyer and the seller regarding what
each is going to receive from each other. Price can also be defined as the amount charged for the
product or service.

II) What is Market Price?

The market price is the price determined by demand and supply. The market price of a product
affects the price paid to the factors of production i.e. rent for land, wages for labor, and higher
interest for capital and profit for enterprise.

For example, when the price of the product increases, we shall have higher wages for labor,
higher interest for capital and so on.

Since market price is determined through demand and supply, the seller has no control over
prices and the actual market price at any given, time may vary depending upon the demand and
supply conditions.

1
III) Pricing Objectives

To perform the marketing job efficiently, the management has to set goals first. Pricing is no
exception. Before determining the price itself, the management must decide the objective of
pricing. These objectives are logically related to the company’s overall goal or objective. The
main goals in pricing may be classified as follows:-

1. Pricing for Target Return (on Investment) (ROI):-

Business needs capital i.e., investment in the shape of various types of assets and working
capital. When a businessman invests capital in a business, he calculates the probable return
on his investment. A certain rate of return on investment is aimed. Then, the price is fixed
accordingly. The price includes the predetermined average return. This is seller-oriented
policy. Many well-established firms adopt the objective of pricing in their investment or on
sales. The target of a firm is fixed in terms of investment. For example, a company may set a
target at 10 or 15% return on investment. Further, this target may be for a long term or short
term. Wholesalers and retailer may follow the short term usually a year. They charge certain
percentage over and above the price, they purchased, which is enough to meet operational
costs and a desired profit. This target chosen can be revised from time to time. This objective
of pricing is also known as pricing for profit. Certain firms adopt this method as a
satisfactory objective, in the sense they are satisfied with a certain rate of return.

2. Market Share:-
The target share of the market and the expected volume of sales are most important
consideration in pricing the products. Some companies adopt the main pricing objective so as
to maintain or to improve the market share towards the product. A given market shares in
better indication of progress. For this, the firm may lower the price of comparison to the rival
products, with a view to capture the market. By reducing the price, customers are not
exploited, rather benefited. The management can compare the present market share with the
past market share and can know well whether the market share is increasing or decreasing.
When the market share is decreasing, low pricing policy can be adopted by large-scale
manufacturer. Who produce goods needed daily by the consumers? So margin of profit
comes down because of low price, but the competitors are discouraged from entering the
market. By low pricing policy, no doubt, market share can be increased, besides attracting
new users.

3. To meet or prevent competitors:-

The pricing objective may be to meet or prevent competitors. While fixing the price, the
price of similar product, produced by other firms, will have to be considered. Generally,
producer is not a haste or fix a price at which the goods can be sold out. One has to look at

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the prices of rival products and the existing competitors and draw out proper price policy so
as to enable to face the market competitors. At the time of introduction of new product to the
market, a low price is likely to attract customers and can establish a good market share. The
low price policy discourages the competitors.

4. Profit Maximization:-
Business of all kind is run with an idea of earning profit at the maximum. Profit
maximization can be enjoyed where monopolistic situation exists. The goal should be to
maximize profits on total output, rather than on every item. The scarcity conditions offer
chances for profit maximization by high pricing policy. The profit maximization will develop
on unhealthy image. When a short-run policy is adopted for maximizing the profit, it will
exploit the customers. The customers have a feeling of monopoly and high price. But a long-
run policy to maximize the profit has no drawbacks. A short-run policy will attract
competitors, who produce similar goods at low cost. As a result, price control and
government regulations will be introduced.

5. Stabilize Price:-
It is a long-time objective and aims at preventing frequent and violent fluctuations in
price. It also prevents price war amongst the competitors. When the price often changes,
there arises no confidence on the product. The prices are designed in such a way that during
the period of depression, the prices are not allowed to fall below a certain level and in the
boom period, the prices are not allowed to rise beyond a certain level. The goal is to live and
let live. Thus firms forego maximum profits during periods of short supply of products.

6. Customer’s Ability to Pay:-

The prices that are charged differ from person to person according to his capacity to pay.
For example, doctors charge fees for their services according to the capacity of the patient.

7. Resource Mobilization:-
This is a pricing objective, the products are priced in such a way that sufficient resources
are made available for the firm’s expansion, developmental investment etc.

Marketers are interested in getting back the amount invested as speedily as possible. A
product may have a short PLC. The management may fix a higher price and this trend will
invite competitors with low price similar products.

8. Market Penetration:-
One of the objectives of pricing decision may be capturing the market. A big company at
the time of introducing the product in the market fixes comparatively lower prices for its
products, keeping in view the competition position with an objective of capturing a larger

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market share. Sometimes, the prices are fixed at the lowest who may calculate a loss to the
business but the main aim is to capture the market even at a loss at the initial stage.

9. Margin of profit to Channel member:-

Pricing of the product should be made keeping in view that the channel members receive
a fair return on selling the company’s product. Otherwise they will lose interest in selling
company’s product.

IV) FACTORS AFFECTING PRICING

The pricing decisions are influence by many factors. The price policies should be consistent with
pricing objective. The influencing factors for a price decision can be divided into two Groups:
(A) internal factors and (B) external factors.

(A) Internal factors

1. Organizational factors:-
Pricing decisions occur on two levels in the organization. Overall price strategy is deal by
top executives. They determine the basic ranges that the product fall in terms of market
segments. The actual mechanics of pricing are deal at lower levels in the firm and focus on
initial product strategies. Usually, some combination of production and marketing specialists
are involved in choosing the price.

2. Marketing mix:-
Marketing experts view price s only one of the many important elements of the marketing
mixes. A shift in any one of the elements has an immediate effect on the other three
productions, promotion and distribution. In some industries, a firm may use price reduction
as a marketing technique. Other firms may raise prices as deliberate strategy to build a high-
prestige product line. In either case, the effort will not succeed unless the price change is
combined with at total marketing strategy that supports it. A firm that raises its prices may
add a more impressive looking package and may begin a new advertisement campaign.

3. Product differentiation:-
The price of the product also depends upon the characteristics of the product. In order to
attract the customers, different characteristics are added to the product. Such quality, size,
color, attractive package, alternative uses, etc. Generally, customers pay more prices for the
product. Which is of the new style, fashion, better packages, etc.?

4
4. Cost of the product:-
Cost and price of a product are closely related. The most important factor is the cost of
production. It deciding to market a product, a firm may try to decide what prices are realistic,
considering current demand and competitors in the market. The product ultimately goes to
the public and their capacity to pay will fix the cost; otherwise product would be flapped in
the market.

5. Objective of the firms:-

A firm may have various objectives and pricing contributes its share in achieving such
goals. firms may find a variety of value-oriented objective, such as maximizing customer
volume, minimizing sales revenue, maximizing market share, maximizing customer volume,
minimizing customer volume, maintaining an image, maintaining stable price, etc. pricing
should be established only after proper consideration of the objective of the firm.

(B) External factors

1. Demand:-
The market demand for a product or service has a big impact on pricing. Since demand is
affected by factors like, number and size of competitors, the potential buyer, their capacity
and willingness to pay, their preference, etc. are taken into account while fixing the price. A
firm can determine the expected price in a few test-markets by trying different prices in
different markets and comparing the result with a controlled market in which price is not
altered. If the demand of the product is inelastic, high prices may be fixed. On the order
hand, if demand is elastic, the firm should not fixed high price, rather it should fix lower
prices than that of the competitors.

2. Competitors:-
Competitive conditions affect the pricing decision. Competition is a crucial factor in price
determination. A firm can fix the price equal to or lower than that of the competitors,
provided the quality of product, in one case, be lower than that of the competitors.

3. Supplier:-
Supplier of raw materials and other goods can have a significant effect on the price of a
product. If the price of cotton goes up, suppliers pass on the increase to manufacture.
Manufactures, in turn, pass it on to consumer. Sometimes, however, when a manufacturer
appears to be making large profit on a particular product, suppliers will attempt to cash the
profits by charging more for their supplies. In other words, the price of a finished product is

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linked up with the price of the raw materials; scarcity abundance of the raw materials also
determines pricing.

4. Economic Conditions:-
The inflationary or deflationary tendency affects pricing. In recession period, the prices
are reduced to a sizeable extent to maintain the level of turnover. On the other hand, the
prices are increased in boom period to cover the increasing cost of production and
distribution.

5. Buyers:-
The various consumer and businesses that buy a company’s products or service may have
an influence in the pricing decision. Their nature and behavior for the purchase of a particular
product, brand or service, etc. affect pricing when there number is large.

6. Government:-
Price decision is also affected by the price-control by the government through enactment
of legislation (law of government), when it is thought proper to arrest the inflationary trend in
prices of certain products. The prices cannot be fixed higher, as government keeps a close
watch on pricing in the private sector.

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V) Adapting the Pricing
Price Discounts & Allowances

Most of the companies will adjust their list price and give discounts and allowances for early
payment, volume purchases and off-season buying. Discount pricing has become the modus
operandi of a surprising number of companies. It may make company loss in long period of time.
Consumer may always wait for such options of offer and discounts for whole year. It can lose the
normal sale during the year. But its reverse in branded product, as a research says that only 15 to
35% of consumer are price sensitive, rest customer are ready willingly ready to pay high price
for branded product if getting the higher value for the product. Thus company can use the
discounting policy to attract that segment of customers who are waiting for certain discounts.
This decisions are precious in nature, hence are to be taken with due care.

The different types are: -

 Cash Discounts: It is a price reduction to buyers who pay their bills promptly

 Quantity discounts: It is a price reduction to those buyers who large volumes

 Functional discounts: Also called trades discounts. These are offered by a manufacturer to
trade-channel members if they will perform certain functions, such as selling, storing and
record keeping. Manufactures may offer different discounts to different channels.

 Seasonal discounts: It is a price reduction to buyers who buy merchandise or services out of
season.

 Allowances: These are extra payment designed to gain reseller participation in special
programs. Trade-in allowances are price reductions granted for turning an old item when
buying a new one.

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VI) Differentiated Pricing
Discriminatory Pricing

It occurs when a company sells a product or service at two or more prices that do not reflect a
proportional difference in costs. In first-degree price discrimination, the seller charges a separate
price to each customer depending on the intensity of his demand. In second-degree, the seller
charges less to buyers who buy the larger quantity. In third degree, the seller charges different
amount to different classes of buyers, as it the following cases. (For Example; Military, handicap
person are getting discount in railways).

 Customer-segment pricing: Different customer groups are charged different prices for the
same product or service. (Students are given discounts in Gym).

 Product-form pricing: Different versions of the product are priced differently but not
proportionately to their respective costs. ( Diet Coke and Diet Pepsi)

 Image pricing: Some companies price their products at two differential levels based on
image differences. (Glass bottle of Pepsi VS CAN)

 Location pricing: The same product is priced differently at different locations even though
the cost of offering at each location is the same.

 Time pricing: Prices are varied by season, day, or hour. ( Hotel charges less on weekends).

 Channel Pricing: Kinley Bottle carries a different price depending whether it is purchased
from local retailer or from a Movie Theater.

For price discrimination to work, certain conditions must exist. First, the market must be
segment able and the segment must show different intensities of demand. Second, members in
the lower-price segment must not be able to resell the product to the higher-price segment. Third,
competitors must not be able to undersell the firm in the higher-segment. Fourth, the cost of
segmenting and policing the market must not exceed the revenue derived from price
discrimination. Fifth, the practice must not breed customer resentment and ill will. Sixth, the
particular form of price discrimination must not be illegal.

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VII) Pricing Method (Non-mathematical treatment)

There is no specific method for setting the price. Producer used for setting a specific price
vary under different competitive conditions. Complexity of the pricing policy has led to the
development of many approaches for pricing setting. The following are the basic method
generally recognized for pricing:-

Marginal cost
Pricing

Target Rate of
Cost Based
Return

Demand Bsed
Absorbtion
Method
Methods of
Pricing
Premimum
Pricing Method

Competition Discount
Based Pricing Method

Parity Pricing
Method

1. Cost based
2. Demand based
3. Competition based

1. Cost Based:-
The price determination of a product, under cost-based method, is made on the basis of
cost of production plus an additional margin of cost, i.e., selling price is equal to cost of
production plus anticipated profit. When the management adds to this cost some amount of
referred mark up, this method is also called cost plus or target pricing method. Here, the cost
of manufacturing serves, as a base, for price fixation. Cost based price or floor price, sales
below the floor price will be a loss to the firm. For example, cost of production is Rs. 100,
the profit aimed (mark up) is Rs. 25 or the percentage mark up on cost is 25%, then the
selling price will be Rs. 125. In India, a large number of companies follow this policy.

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a) Absorption
b) Mark up Pricing
c) Marginal cost Pricing

Advantages:-
a. Simple system
b. Socially fair
c. No price war among competitors
d. Safe recovery of cost guaranteed
e. Reasonable system in changing situation.

Disadvantages:-
a. Demand ignored
b. Future cost not considered
c. Unaccounted competition
d. Inefficiency during manufacturing stage, not considered
e. Profitability of every product ceases initiation.

2. Demand (customer/market) Based:-

Weakness of the above cost based pricing is to determine the prices on the basis of that
the firm does not fix a price, but charges what a buyer can pay. Price is fixed by simply
adjusting it to the market condition. The price varies from consumer to consumer. A high
demand is followed by a high price and a low demand is followed by a low price. Another
method is that the management may enter into test marketing, through different prices and
select the price, which ensures that maximum revenue. In certain cases, the management may
forecast prices on the bases of historical data available.

Advantages:-
a. Consumer’s price elasticity and preferences are considered.
b. Inefficiency is penalized
c. New product pricing is facilitated

Disadvantages:-
a. It is socially unfair.
b. It does not ensure competitive harmony.
c. Consumers are at a disadvantage.

For a real price, both cost and demand are taken into account. Cost serves as a floor and
demand serving as ceiling. The actual price lies in between these two.

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3. Competition Base:-
In a competitive economy, in most industries, competition-oriented pricing methods are
common. The methods in this category rest on the principle of competitive parity in the
matter of pricing. Competition-based pricing or competitive parity pricing however, does not
necessarily mean matching competition in price. Three policy options re-available to the firm
under this pricing method:
 Premium pricing
 Discount pricing
 Parity pricing/going rate pricing

For all of them, a competitor’s price serves as the reference point. Premium pricing means
pricing above the level adopted by competitors; discount pricing means pricing below such level
and parity pricing means matching competitors pricing. Where supply is more than adequate to
meet demand and market remains competitive in a stable manner, and where the channel and
consumer are well aware of their choices, parity pricing can be the answer, with the intention of
stabilizing the price, the smaller firms in the industry may have to go in for parity pricing.

______________________________________________________________________________
______________________________________________________________________________

11
Chapter-3 (D) Place (Marketing Channels)

Content: Channel functions, Channel Levels, Types of Intermediaries:

Types of Retailers & Their Marketing Decisions, Wholesalers & Their
Functions, Marketing- Logistics Decisions.

(I) What is Distribution channel?

Distribution channel can be defined as a set of inter dependent institution participating in the
marketing activities involved in the flow of goods and services from the manufacturer to
consumer.

Marketing institutions which are considered as channel components are:

1. All merchant middlemen such as wholesalers and retailers.
2. All agent middlemen such as commission agents and brokers.
3. All other facilitating agencies e.g., advertising agency.

These components are linked in the channel system by one or more marketing flows such as
transfer of ownership of goods, physical movements of goods, transmission of marketing
information and flow of money in the form of payments. The channel members right from the
producer up to the consumer are interrelated and they form a total distribution system.

(II) Factors affecting selection of distribution channel:-

Marketing channel decisions considerably influence all other marketing decisions such as
pricing and promotion. Channel decisions also require special attention as it involves long term
commitments to other firm with whom marketer enters into a contract. The problem of selecting
the most suitable channel of distribution for a product is complex. The most important factor for
channel choice is cost and profit. However, channel decisions are not made only on the basis of
cost and profit, we also have to consider number of other factors such as the nature of the
product, market trend, competition, consumer needs and wants as well as the company itself.

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The following are the critical factors affecting choice of distribution channel:-

1. Nature of product:-
The type of product has direct influence on selection of suitable channel:

a. Perishable Product: Perishable product require more direct marketing because of

danger associated with delays and repeated handlings. The product gets destroyed
very soon. Hence the shortest channel rate is needed for such type of product e.g.,
milk and food.
b. Size: Products that are bulky (e.g., iron and steel) usually need short channels so
that the transportation distance from the producer to the consumer is received.

c. Style: Manufacturers prefer selling direct to retailers when the style of the goods
changes fast e.g., clothes.

d. Unit value: Product of high unit value are often sold through companies own
sales force and not through middlemen e.g., Eureka Forbes Diamonds.

2. Market:-
For consumer market, there is an indirect channel where as in business market there is a
direct channel. If the market is large we may have many channels where as in small market direct
selling is profitable. For highly concentrated markets, direct selling is enough but for highly
scattered market, we must have many channels.

3. Competitors:-
Marketers closely watch the channels used by the competitors. Many times similar
channels may be desirable to distribute the products. However sometimes marketers avoid
channels which are used by competitors and try to adopt different channel strategy. E.g.,
company may by-pass retail store channel usually used by competitors and try to adopt door to
door selling where there is no competition. E.g., Eureka Forbes Vs BPL (vaccum cleaner).

4. Business Environment:-
Business environment can also influence the channel decision. During recession and
depression period, cheaper channel is preferable. In times of prosperity, we have a wider choice
of channel alternatives.

5. Technological inventions:-
Technological invention also has an influence on the selection of particular type of
channel. The distribution of perishable product can become reality even distant markets due to

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cold storage facilities. Hence there is an expanded role of intermediaries in distribution of

perishable products.

6. Company:-
A company with large financial resources will not depend too much on the channel
members and they can afford to reduce the level of distribution. A weaker company has to
depend on middlemen to get financial and warehousing relief. New companies depend heavily
on the channel members due to lack experience and ability of management. A company desiring
to exercise greater control over the market will prefer a shorter channel as it will facilitate better
co-ordination, communication and control.

7. Cost of channel:
The cost of distribution is reflected in price of the product. Direct marketing is generally
costlier and distribution through middleman is more economical at times. Moreover, direct
market would involve the manufacturer to always keep sufficient fund in order to distribute the
product to the market.

8. Consumers buying habits:

On the basis of buying habits following patterns in channels are suggested:

a. Size of the average sale: When the quantity sold is small, the channels should be
longer. If direct selling is followed then the cost will tend to be high.
b. Concentration of consumers: If the market for the product is fully concentrated
and localized, direct selling would be beneficial.

9. Middlemen:
The choice of channel also depends on the strengths and weaknesses of various types of
middlemen performing various functions. Their behavioral differences, product lines, location
and size differ and affect the design of the channel:

a. Service provided by middlemen: Services provided by the middlemen may

affect the choice of channel. If middleman can provide the services to the
customers who the company requires to provide, the middleman can be appointed
otherwise the company will sell the product direct to the customers.
b. Attitude if Middlemen: The attitude of middlemen towards company policies
may affect the channel decision. E.g., some middlemen desire to fix their own
price for the product and the company, if agrees to allow them to do so, they can
very happily agree to sell the products of the company.

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Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

(III) Types of Distribution Channel:-

a) DISTRIBUTION CHANNEL FOR CONSUMER PRODUCTS:-

The most common channels used for bringing the products in market from producer to
consumer are as follows:

1. Manufacturer-Consumer Channel [Direct Channel] or ZERO LEVEL CHANNEL:-

In this type of channel there are no channel members involved in between the
producer and the consumer. The channel is also called zero level demand. There are 3
alternatives in direct sale to consumers.

(a) Selling through mail [Link]. Asian Sky Shop.

(b) Selling through travelling sale force (house to house selling) e.g. Eureka Forbes.
(c) Sale to retail shops which are owned by the manufacturers. E.g. Bata Shoes Shop,
etc.

This is a shortest channel where a product can flow to the market. Usually we have large number
of consumers who buy in small quantities. Hence this channel is not preferred for a wider
market.

2. Manufacturer- Big retailer- Consumer channel [Indirect channel] or ONE LEVEL

CHANNEL:-

This channel is preferable when buyers are large retailers e.g. department stores, super
market, co-operative stores etc. the wholesaler can be rejected in this type of trade channel. It is
also suitable for those products which are perishable in nature and where speed is essential. Here,
the manufacturer has to perform all the functions of the wholesaler such as storage, insurance,
financing of inventories, etc.

3. Manufacturer- Wholesaler- Consumer channel [ONE LEVEL CHANNEL]:-

In this type of channel the wholesaler by-pass the retailer when there are large and
institutional buyers. E.g. Business buyers, government, consumer co-operatives, educational
institutes, hospitals, etc.

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4. Manufacturer- Wholesaler-Retailer- Consumer channel [TWO LEVEL

CHANNEL]:-

This is a normal regular and popular channel used in groceries, drugs, etc. this channel is
suitable for a producer under the given conditions:

a) The manufacturer has limited finance.

b) Wholesalers are specialized and they can provide strong promotional support.
c) Products are durable and do not get physically damaged.

5. Manufacturer- Agent-Wholesaler-Retailer- Consumer channel:-

In this type of channel the manufacturer uses the services of an agent for the initial
distribution of goods. The agent in turn may distribute to wholesalers in who in turn send to the
retailers. Many textile units have agents for distribution. They may have a large national
distributor such as acting as sales agent for manufacturer. Agent middle men generally operate at
the whole-sale level. They are common in agricultural marketing. Agent middlemen are usually
used by the manufacturer to make them free from marketing task. An agent middleman sells on
commission basis directly to channel members. E.g. Brokers.

Zero level One level Two level Three level

Manufacturer Manufacturer Manufacturer Manufactuer

Consumer Big Retailer Wholeseler Wholeseler

Consumer Retailer Agent

Consumer Retailer

Consumer

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(IV) Importance (or) Functions of Distribution channel:-

The following are certain functions which are generally and more often performed by different
channel of distribution (or) by middlemen:

1. Help in production function:-

The producer can concentrate on the production function leaving the marketing problem to
middlemen who specialize in the profession. Their services can best utilized for selling the
product. The finance required for organizing marketing can profitably be used in production
where the rate of return would be greater.

2. Matching Demand and Supply:-

The chief function of intermediaries is to assemble the goods from many producers in such a
manner that a customer can purchase with easy and variety.

3. Financing the producer:-

Middlemen collect huge orders and purchase products in bulk from the manufacturers in
cash. This enables the producers to undertake large-scale production and adopting better
techniques of production because they have no problem for finance. Sometimes manufacturers
appoint stockiest and distributors and collect deposits from them as security. Finance problem is
thus solved by channels of distribution.

4. Aid in Communication:-
The middlemen are connecting link between producers and buyers. Middlemen have
complete knowledge of consumer behavior and the market and they communicate the necessary
information to the producer so that they may produce according to the needs f the consumers.

5. Stabilizing the Prices:-

The middlemen help to stabilize the prices. By stocking goods, constant flow of goods to the
market is assured. They make the goods available at a place where they are wanting and at a
proper time. Thus, middlemen create place and time utilities to the products and maintain the
prices.

6. Promotional activities:-
Middlemen also perform various promotional activities like advertising, personal selling and
sales promotion. Sometimes wholesaler does it alone for the producer. Retailer also performs
such activities by displaying the product in his window which attracts the customer.

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7. Routinisation of Decisions:-
Channels of distribution routinize the sale of the producer. Once the route for reaching the
goods is fixed, the problem for selling is automatically solved. It reduces the cost of distribution
as well.

8. Pricing:-
In pricing a product, the producer should invite the suggestions from the middlemen who are
very close to the ultimate users and know what they can pay for the product. Pricing may be
different for different markets (or) products depending upon the channel of distribution.

9. Other functions:-
i) They help forecasting the demand.
ii) They are source for information at time of market research.

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(V) PHYSICAL DISTRIBUTION

Definition-

According to Philip Kotler, “Physical distribution consist of tasks involved in planning

and implementing the physical flow of material and finished goods from the points of origin to
the points of use (or) consumption to satisfy the needs of customers at a profit”.

From the above definition we can say that physical distribution involves the actual movement of
goods from the manufacturer to the consumer. Hence, the physical distribution includes activities
like transportation, storage and inventory control. These activities are performed by
manufacturers, wholesalers, retailers, etc. Various decisions involved in physical distribution are;

1. Size of inventory
2. Storage and its location
3. Modes of transportation
4. Material handling
5. Order size.

(VI) Why physical distribution (OR) objectives (OR) importance of

physical distribution:-

The activity of physical distribution is necessary in the modern marketing due to following
reasons:-

1) Control on distribution Cost:-

If physical distribution is made efficient, it reduces transportation and storage costs. As a
result of this, distribution cost decreases. This results in the decrease of the price of the
finished goods.

2) Less worries for customers:-

If the customer is given the assurance of regular supply of products, then the customer
will not hold more quantity of stocks. On the other hand, the company can produce more
with the same amount of finance because of low inventory and reduction in distribution cost.

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Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

3) Co-ordination of demand and supply:-

Physical distribution facilitates the co-ordination between demand and supply. Two main
factors involve in the process i.e., time factor and place factor.

The industries producing articles having seasonal demands e.g., woolens or fans are
produced throughout the year only because modern storage facilities are available and are
supplied in the sufficient quantity in the season. Likewise where production is seasonal such
as sugar or wheat in order to maintain their supply throughout the year, storage facility plays
a dominant role. This is the fact as to all the commodities are available in all the seasons
throughout the year.

Quick and modern transportation system makes it possible to transport even the perishable
goods to the consumer place in no time. Sea foods are made available to distant places fresh
only because of efficient transport systems. In this way an efficient physical distribution
system establishes equilibrium between demand and supply at reasonable rate.

4) Stabilization of prices:-
Control over supply position may help in stabilizing the prices in the market. If at any
time demand exceeds the supply available in the market, additional supply can be released
from the warehouses. On the contrary, if supply position improves, the production may be
kept in storage in order to stop the fall in price.

Transportation system also helps in maintain price level. The supply can be transported from
the places of abundance to the place of shortage which equalize the price of two places.

5) Effect on product planning:-

Activities of physical distribution affect the product planning. While taking a decision
regarding size, weight, packing, price, etc. Transportation and storage facilities- their type,
nature and place- are considered strictly.

6) Effect on distribution channel:-

Physical distribution system also effects the decision on distribution channel. If the
product requires storage, it should be sold out through whole sellers who own their own
godowns (or) storing facilities. If company decides to manage their own warehouses, it
should decide the points where to establish the warehouses. What type of transport facility
should be arranged to carry to goods to the warehouses of its own (or) of middlemen. These
factors should be considered while taking the decision on distribution channel.
7) Effect on size of inventory:-
If physical distribution facilities (storage and transport) are short, heavy stock of raw
materials shall be preserved to maintain continuous flow of production. As against this, if

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transport facilities are good, the size of inventory kept at low level because it can be
purchased as and when it is required.

Does, the development of physical distribution facilities have made the production possible
throughout the year at lower cost of production and distribution.

(VII) Channel Management Decision (OR) activities in physical

distribution:-

In order to achieve the various objectives and advantages of physical distribution, various
decisions are to be taken by the management. These decisions are:-

1) Inventory:-
Inventories are stock of goods kept. Inventories are helpful in case the demand for
product increases. The production department increases the level of inventories whereas sales
department reduces the inventory level by selling the products. Hence there is always a
fluctuation in the level of inventories with every unit of product produced and every unit of
product sold. Therefore, it becomes necessary for the company to decide about the size (or)
the level of inventory to be kept. If more inventories kept, it increases the storage cost and if
less inventory is kept, it increases the cost of storage of products.

From this, it is clear that while deciding the size on inventory, company has to think on to
important factors (a) Sales (b) Cost.

2) Decision on storage and inventory location:-

The next decision regarding physical distribution is the decision on storage and inventory
location. This decision closely relates to the decision on inventory size. A need of reduction
in the size of inventory will require less storage space. Marketers use three important storage
decisions:

(a) Geographic deployment of inventory

(b) Ownership of warehouse facilities
(c) Number and location of warehouses.

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[Link] Institute of Management, Amroli
Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

(a) Geographic deployment of inventory:-

There are two decisions alternative on geographic deployment of inventory:
(i) Concentration at (or) near the plant (or) at some other location.
(ii) Dispersion at several distribution points located in (or) closer to main market.

(b) Ownership of warehouse facilities:-

Where the manufacturer decides for the dispersion of inventories, he may choose
between maintaining their own warehouses (or) using public warehouses. The choice
depends upon the various factors, viz., amount of sales originating in particular market, fixed
and variable warehouses costs, degree flexibility, relative warehousing efficiency and the
market channel. These factors are interrelated to each other. If the volume of goods moved is
more with little seasonal and fluctuation, the manufacturer should prefer the owned
warehouses.

Public warehouse can be preferred only when less goods are handled (or) large volume of
goods are handled through seasons because the public warehouses charge on the basis of time
taken and space occupied.

(c) Number and location of warehouses:-

The decision about the number and locations of warehouses is influenced by several
important variable including customer buying pattern and delivery expectation, freight rate
structure, transport service available warehousing costs, location of factories, production
capacities, product mix, suitable renting of warehousing in different localities.

3) Transportation:-
Decision on modes of transportation largely depends upon th size of inventories and the
location of the storage. Economy in transportation charges may increase the storage cost (or)
vice-versa. Thus, the overall cost of physical distribution should be kept in mind and not only the
cost of one aspect.

With the increase in transportation services the manufacturer should take a decision regarding
the mode of transportation, i.e., road, rail, air, (or) sea, taking into account their comparative
freights and other related costs, time factor should also not be ignored. Thus, in deciding the
mode of transportation, cost and time factors should be considered well.

Material handling in the area of physical distribution has experienced the greatest change and
improvement in efficiency. Two major changes took place in this area:-

i) Elimination of man handling.

ii) Containerization.

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[Link] Institute of Management, Amroli
Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

i) Eliminating of man handling:-

The first improvement was the replacement oh=f man handling by machine handling but still
it is used in retail of final buyer stage. Improved conveyer systems and equipment has changed to
total mechanization.

ii) Containerization:-
The second improvement in material handling was containerization. It is a method by which
a large number of units of a product are combined into a single compact unit for storage and
transportation. It reduced material handling cost and time spent.

Material handling decisions and costs are also interrelated with other decisions and costs. Used
of improved handling equipment and containerization will naturally increase the efficiency and
reduce the wastage and costs.

4) Order Processing:-
This is a complicated problem in physical distribution decisions. Orders of less quantity (less
than a container) will increase the cost of handling because the handling process will be done
entirely by hand instead of machines. It will increase the cost of storage and inventory control
and add to their complexity. It may also affect the cost of transportation because transportation
charges will be lower for bulk quantity. Hence, management must make order size decisions
concerning minimum order sizes.

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[Link] Institute of Management, Amroli
Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

(VIII) Wholesaler Marketing Decisions:-

Wholesalers have to take certain important decisions regarding the following:-

[A] Target Market Decision:-

Wholesalers should define their target markets. They should not try to serve everyone.
They should choose a target group of customers (i.e. retailers) according to size criteria (e.g. only
large retailers), according to the need for service (e.g. Retailers who need credit) (or) some o
criteria. Within the target group, they can identify the more profitable customers and build
relationships with them. Wholesalers can encourage less profitable. Customers by asking them to
buy in cash in large orders etc.

[B] Product Assortment:-

Wholesalers are under great pressure to carry all the product lines of the company and
maintain stock of all product lines. But this can kill profits. Wholesalers nowadays choose to
carry only those product lines which are profitable. They are grouping their products on ABC
analysis. „A‟ stands for most profitable item and „C‟ stands for least profitable. All groups of
items (i.e. A, B and C) are carried by wholesalers with different inventory level.

[C] Pricing decision:-

Wholesalers also have to decide regarding the margin they are going to expert on per unit
of the product. Certain products brings better profit margin while other bring less. Some part of
the margin charged goes in the distribution expenses. Remaining part is profit. Wholesalers
might think of cutting their margin to win important customers.

[D] Promotion Decision:-

Wholesalers generally depend more on the company and the retailers for advertisement of
product. But the wholesalers have to build its image through advertising, publicity and sales-
promotion activities.

[E] Place Decision:-

Wholesalers also have to decide about the location from where they can conduct their
business. They generally locate themselves n low-rent, low tax area and invest less money in
their physical setting and offices. The latest development in wholesaling business is the
mechanical materials handling system and computerized order-processing system. More and
more wholesalers now are using computers to perform accounting, biting, and inventory control
and forecasting.

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[Link] Institute of Management, Amroli
Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

[F] Services Decision:-

Wholesalers nowadays need to build relationship with their customers. Therefore they
have to examine which services are more valued by customers and on the basis of this
information; they have to decide about the services to be offered to their customers (retailers).

(IX) Retailing

Definition:-
“Retailing includes all the activities involved in selling goods and services directly to
final consumers”.

Any organization that does this type of selling- whether a manufacturer (or) retailer- is doing
retailing. It does not matter how the goods (or) services are sold- by persons, does not matter
here they are sold.

(X) Retailer Market Decision:-

Retailers face number of marketing decisions in the field of target market, product, price,
place, promotion, etc.

(a) Target- Market Decision:-

A retailer most important decision is about the selection of target market. The retailers
have to make decisions regarding to whom they should sell their products that is to rich,
lower, middle classes, etc. retailers also have to decide regarding the variety of products to be
sold to each class of customers. It is very important for the retailers to know the profile
(characteristics) of its market to be targeted. If the retailers cannot clarify their target market,
they won‟t be able to satisfy their target market.

(b) Product:-
One of the most important decisions for the retailer is to decide the breadth and depth of
product mix to carry in his shop. Retailer has to decide whether to keep narrow or wide range
of products in his shop. The decision of the retailer is based on the expectation of the
customers. The retailer‟s real challenge begins after the product width and depth decision is
taken by him. The challenge is because there will always be competitor with the same range
of products in their store. Hence the retailer will have to develop a strategy to fight against
his competitors. Some of the strategies to be used are,
i) Sell more exclusive national brands that are not available at competing retailers.
ii) Try to change products, in stores as per the changing needs or fashion.
iii) Bring the latest and newest product first.

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[Link] Institute of Management, Amroli
Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

(c) Price decisions:-

The retailers prices are a key factor and must be decided keeping in mind the target
customers and competition. Some retailers like to change bigger margin but then their
volume of sales remain lower. Some other retailers who changes lower margin gets higher
volume of sales. Hence the decision to be taken by the retailer is to change higher or lower
margin because this will decide the volume of sales. Retailers must pay attention to the
pricing strategy. Most retailers will change lower prices on some items and higher on some
other items. E.g., shoe retailers expect to sell 50% of their shoes at normal margin and 50%
at some other rate (lower or higher).

(d) Promotion decision:-

Retailers use a wide range of promotion tools to increase their sales. They place
advertisement in newspapers, cable tv, etc, issue money saving coupons, run contests, scratch
and win program, etc. each retailer must use these promotional tools that support their sales
and image. Retailers carefully train their sales people in how to greet customers, find their
needs and handle their complaints.

(e) Place decision:-

Where to locate the stores is also one of the most important decisions faced by the
retailers. Location of the stores is important because customers generally try to purchase
from their nearest store. Departmental stores, super market and other large retailers must be
very careful in selecting the location. For stores- larger retailers have to decide whether to
locate several small stores in many locations. To decide this, cost- benefit analysis is to be
made.

(f) Service decision:-

Retailers should also decide regarding what services they will provide to their customers.
Following table shows an example of the possible services that retailers provide to its
customer;

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[Link] Institute of Management, Amroli
Marketing Management, 3rd Semester. Dr. Sudhadhara Samal

Retailer Service
Before Purchase After Purchase Additional Service

1. Accepting telephone 1. Name delivery. 1. Free parking.

orders. 2. Gift wrapping. 2. Repairs and maintenance
2. Accepting mail orders. 3. Tailoring. credit.
3. Advertising. 4. Installing products at 3. General information and
4. Window display. home. knowledge.

______________________________________________________________________________
______________________________________________________________________________

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[Link] Institute of Management, Amroli
Chapter-3 (C) Promotion Mix
Content: Promotional Mix Tools, Developing effective communication
(eight Steps)

I) Promotion Mix

(i) Meaning:
The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion,
Public Relations and Direct Marketing. The marketers need to view the following
questions in order to have a balanced blend of these promotional tools.

The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on
creating the awareness and persuading the customers to initiate the purchase. The several
tools that facilitate the promotion objective of a firm are collectively known as the
Promotion Mix.

The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion,
Public Relations and Direct Marketing. The marketers need to view the following
questions in order to have a balanced blend of these promotional tools.

 What is the most effective way to inform the customers?

 Which marketing methods to be used?

 To whom the promotion efforts are directed?

 What is the marketing budget? How is it to be allocated to the promotional tools?

(ii) Definition:
The Promotion Mix refers to the blend of several promotional tools used by the business
to create, maintain and increase the demand for goods and services.
(iii) Elements of Promotion Mix or Promotional Mix Tools:

1. Advertising: The advertising is any paid form of non-personal presentation and

promotion of goods and services by the identified sponsor in the exchange of a fee. Through
advertising, the marketer tries to build a pull strategy; wherein the customer is instigated to
try the product at least once. The complete information along with the attractive graphics of
the product or service can be shown to the customers that grab their attention and influences
the purchase decision.

2. Personal Selling: This is one of the traditional forms of promotional tool wherein the
salesman interacts with the customer directly by visiting them. It is a face to face interaction
between the company representative and the customer with the objective to influence the
customer to purchase the product or services.
3. Sales Promotion: The sales promotion is the short term incentives given to the
customers to have an increased sale for a given period. Generally, the sales promotion
schemes are floated in the market at the time of festivals or the end of the season. Discounts,
Coupons, Payback offers, Freebies, etc. are some of the sales promotion schemes. With the
sales promotion, the company focuses on the increased short-term profits, by attracting both
the existing and the new customers.

4. Public Relations: The marketers try to build a favourable image in the market by
creating relations with the general public. The companies carry out several public relations
campaigns with the objective to have a support of all the people associated with it either
directly or indirectly. The public comprises of the customers, employees, suppliers,
distributors, shareholders, government and the society as a whole. The publicity is one of the
forms of public relations that the company may use with the intention to bring newsworthy
information to the public.

E.g. Large Corporates such as Dabur, L&T, Tata Consultancy, Bharti Enterprises,
Services, Unitech and PSU’s such as Indian Oil, GAIL, and NTPC have joined hands with
Government to clean up their surroundings, build toilets and support the swachh Bharat
Mission.

5. Direct Marketing: With the intent of technology, companies reach customers

directly without any intermediaries or any paid medium. The e-mails, text messages, Fax, are
some of the tools of direct marketing. The companies can send emails and messages to the
customers if they need to be informed about the new offerings or the sales promotion
schemes.

E.g. The Shopperstop sends SMS to its members informing about the season end sales and
extra benefits to the golden card holders.

Thus, the companies can use any tool of the promotion mix depending on the nature of a
product as well as the overall objective of the firm.
(vi) Developing Effective Communication:

1) Identity, market audience :-

The first step is to know the target audience. Here the marketers have to know the
following before evolving a communication strategy.

a) Demographic and psychographic profile :-

The target audience demographic characteristics are important in deciding the
message. For example, education of the target audience will influence the content of
the message. To further illustrate this, it has been observed the customers who are low
on education; need to be told the full story with conclusion drawn for them. But the
same is not true when the marketer is communicating with a more literate and
educated customers.

b) Media habits :-
The characteristic to be studied is the media habits of target audience. For example: -
it is important to study whether the target audience watches TV, listens to radio, reads
the daily newspapers and magazines. It is also important to study the frequency with
which these are being watched or listened to or subscribed. For example: - Does the
target audience see the TV programs daily, every alternate day, weekends, or as and
when the individuals get the time. When does the individual watch the programmes?

An analysis of media habits can help in selecting the right medium and also placing
the message at an appropriate place in it.

c) Level of awareness :-
Another characteristic to be studied is the level of target audience’s awareness of the
product and the organization. A target market that is unaware of the product or brand
or the organization will require an intensive communication, like the microwave
cooking. Likewise, if the target audience has a negative image of the product or brand
and the organization, then the firm has to invest more sources over a long time to
change this perception. Japanese product has an inferior image in 1960s and early
1970s. The image was so low and negative that they were the benchmarks of
inferiority. It is not so today.

2) Developing communication objectives :-

Based on the levels of target audience’s awareness of the product (or) brand (or)
organization, the marketer can determine his communication objective. The most
commonly used model is the “AIDA” models as describing in figure:-

Awareness

Interest

Desire

Action
The above model suggests that before actually taking the purchase decision, the target
customer has to be aware of the brand or product.

3) Message consideration :-
What is said, how it is said and who says it makes a world of a difference to any
communication effectiveness, all individuals selectively listen or see the messages,
selective attention, selective distortion and selective retention occurs every time a
person exposed to a message.

In deciding on the message, the marketer has to consider its content, the structure,
format and the source.

a) Message content :-
In deciding the right content, the marketer has to choose words and the appeal or the
theme or an idea or any other unique proposition.
Words play a key role. It is important that the marketer uses words which have the
same meaning to the target audience as to the marketer. This is because the same
word may have different meanings in different cultures and with different customers
groups.

b) Appeal :-
There are different appeals that a marketer can use to communicate his ideas. To a
very large extent, the choice of appeal depends on the nature of the product. For
example, a serious issue like AIDS or Cancer requires a more serious treatment then
soft drinks or any other non-durable products. The options here are:-
i) Humor
ii) Fear
iii) Emotional
iv) Rational
v) Ethical

i) Humor:
It is a common style adopted by several consumer product companies.
The marketer may either use humorous character (or) play with words.
Consider the example of the strepsils ads, using a lion that could not roar
because of a sore throat and how with a strepsil he regains his lost power.

ii) Fear:
“Cease fire commercial that shows a fire in the house and house wife
getting trapped and urging the men folk that you could not be there to save her
but cease fire can” is one such message. Other examples are that of the close
up and Clearasil ads showing loss of friendship (or) association because of bad
smell and pimples respectively. Fear can be instilled in the minds of target
audience in following way:-
 Loss of property (or) physical belongings.
 Loss of the audience health.

iii) Emotional Appeals:

These are the messages that appeal to human beings emotions.

iv) Rational Appeals:

These are appeals that are directed at the logical thinking. Computer
companies and automobile firms are users of this appeal.

v) Ethical Appeals:
Statements like “if it is not fare to you, it is not to us too” are used by
sales people to present their package in an ethical manner to the customers.

c) Message structure :-
This refers to body of the message. Will it be one sided, that is tell only the marketers
part of the story or a two-sided, that is compare with competition?
Conclusion drawing messages are those which raise an issue or a question or and then
answer it also. This type of a message, as mention earlier, works well in a market
which is either unaware of the issue or the product. Issues like AIDS awareness, or
fight against drug abuse or technology products require messages that draws the
conclusion for the customer.

One or two sided arguments refer to whether it is advisable for the marketer to only
talk about his or her product or service or also compare it with competition. The next
issue in the message structure is the order of presentation, which is what should be
said at the beginning and at the end. For example, should the company tell the target
audience that it is first to get ISO 9000, international quality certification at the
beginning or at the end of the message.

d) Message format :-
The marketing communicator has to now decide on the format of his message.
Message format is the creative part of marketing communication and involves
decisions like headlines, text color and visuals for a print copy. In the case of audio, it
involves selecting the announcer with good or the right voice required to make the
product or brand stand out in the competition. In the audio or radio commercials,
words have to be chosen and said in such a manner that the listener is able to mentally
visualize the brand and gets desirous to buy it.

e) Source of the message :-

In communication, the source or the person communicating the message is of great
importance. The source of the message places a key role in determining its
effectiveness. For example, in a TV commercial for shampoo, it is necessary to show
an attractive woman with long flowing hair.

4) Media Decisions :-
Once the firm has researched its target market and developed message, it has to
decide on the appropriate channel or the media. One has to also consider the noise on
different channels- the noise created by competition- and how to overcome it. Media
consists of print (newspapers, magazines, etc) audio (radio lately now even the audio
cassettes), television and video (video cassettes and video discs) and internet. The last
three are referred to as the electronic media. If one were to just open a magazine or a
newspaper or switch on a television one will find that there are so many ads that are
not noticed. This is referred to as the noise in the media.

To overcome this noise and communicate the desired message to the target audience,
the marketers have been exploring newer channels. For example, a firm like Johnson
and Johnson maintained excellent and clean gardens and has a pure white building in
Mulund, Bombay.

5) Established Budget:-
For communication tools company have to decide the budget for expenditure. For
that company can adopt any one of the method for establishing budget for its
communication tool. The methods are as follows:
1. Maximum expenses Method;
2. Affordable Method;
3. Percentage-of-sale Method;
4. Competitive-parity Method;
5. Objective-and-task Method.

6) Decide Communication Mix:-

Company has to decide which communication mix it has to use for its product
promotion. As there are so many promotional tool or in other words communication
mix tools like; Personal Selling, Advertising, Sales Promotion, Publicity and Public
relation and Direct Marketing.

7) Measuring the effectiveness of marketing communication :-

Finally the marketer has to know whether the communication has been effective. The
marketer may check out customers on whether they tried the product or brand and if
so their experience or satisfaction with it. Also whether they liked the brand and
recommended it to others. Repeat purchase will strengthen the company’s image and
hence goodwill.

8) Manage IMC ( Integrated Marketing Communication):-

Integrated Marketing Communications (IMC) is a concept under which a company
carefully integrates and coordinates its many communications channels to deliver a
clear and consistent message. It aims to ensure the consistency of the message and the
complementary use of media. The role of integrated marketing communication is
to ensure the synergic effect between the brand positioning and values, obtaining a
common message of all communication techniques, sent on a special tone, meant to
make the difference among products.
The Components of IMC include: the foundation, the corporate culture, the
brand focus, consumer experience, communications tools, promotional tools, and
integration tools.
For example; Southwest Airlines Transfarency. Southwest Airlines has launched
an integrated marketing campaign called “Transfarency.” The airline uses
television, radio, print and digital assets to demonstrate how customers will pay for
things like checked bags, flight changes and snacks and drinks.

_____________________________________________________________________
_____________________________________________________________________
Unit 4
Digital
marketing

1
Introduction
Digital marketing is revolutionizing the marketing scene. As consumers spend
more and more time online, marketers are shifting their budgets to digital
marketing to communicate with the consumers. Some of the defining
characteristic of digital marketing are as follows:
◆Two way communication
◆Targeted
◆Push and pull
◆Measurable
◆Multi-channel
Meaning of digital marketing
Digital marketing is also called “internet marketing”, “web marketing" or "online
marketing."
Digital marketing is the use of the internet, mobile devices, social media, search
engines and other channels to reach consumers.

DEFINITION
According to Philip Kotler:
"Digital marketing can be defined as a form of direct marketing which links
consumer with sellers electronically using interactive technologies like emails,
websites, online forums and newspapers, interactive television, Mobile
communications, etc."

3
History of digital marketing
• The term digital marketing was first invented and used in the year [Link]
that time web 1.0 platform was developed which help user to find out their
necessary information. But it did not allow them to share this information
over the web. This time the marketers and the experts are unaware the uses of
digital marketing. They were not sure whether their strategies would work or
not because at that time the internet had not yet seen widespread
deployment.
• Then, in 1993, the first clickable web ad banner went live. At that time,
hotwired purchase of you banner ads for their promotion and advertising. This
mark the beginning of the digital marketing era.
• Hence the origin of digital marketing can be traced to 1994 when the first
banner ad appeared on the first commercial, hotwired (now [Link]).
• In 1994, the new (first e commerce transaction was done over the internet)
one invented and entered the market with the new.
• Yahoo was also launched in this year.
• Within one year of its launching, it received 1 million hits. Yahoo has changed
the definition of digital marketing and the companies have tried to optimize
their website so that they can get a better rank in search engine.
• In a 1996, some more search engines and tools like hotbox, look smart, and
Alexa were launched.
• In 1997, the first social media site [Link] was launched.
• 1998 was the golden year for digital marketing as Google was launched in this
year. Moreover, in this year also Microsoft launched MSN, and Yahoo launched
Yahoo web search.

• In 2000
• Internet bubble burst
• [Link] shutdown
• Smallest search engine wiped out

4
• In 2001
• First mobile marketing compaign (universal music)

• In 2002
• Launch of LinkedIn

• In 2003
• WordPress released
• Launch of Myspace

• In 2004
• Gmail launches
• Google goes public
• Facebook goes live

• In 2005
• Launch of YouTube

• In 2006
• Microsoft launches MS live search
• Twitter launches
• Amazon e commerce sales cross 10 billion split testing in market

• In 2007
• Launch of Tumblr
• Web streaming device Hulu founded
• I-Phone launches

5
• In 2008
• China overtake us in number of internet user
• Spotify launches
• Group on goes life

• In 2009
• Google launches instant for real-time search engine result
• Google affiliate network shutdown

• In 2010
• Google buzz launches
• WhatsApp launches

• In 2011
• Google Buzz shutdown
• Launch of Google Plus and Google panda
• Web use over text figures for TV viewership among youth

• In 2012
• Social media budgets up to 64%
• Google knowledge graph launched

• In 2013
• Yahoo acquires Tumblr

• In 2014
• Mobile exceeds pc internet usage

6
• Facebook Messenger, tailored as on LinkedIn, iWatch and Facebook look
back launched
• Facebook acquires WhatsApp

• In 2015
• Snapchat launches discover feature
• The rise of predictive analytics, wearable tech and content marketing
Facebook launches 'instant articles'.

• In 2017

• Popular networking site app, Facebook, YouTube, Instagram, Twitter,

WhatsApp, reddit, etc.

7
8
9
Emergence of Digital Marketing as a
Tools
• Emergence of digital marketing in coming year
• Not everybody plans to start a big business right away; a business becomes
big, step by step from a plan to initiate with a small one. Small businesses are
privately owned corporations or partnership entities that have government
support and relaxed tax policies depending on the rules of the country. People
often start from a small business with less capital as there is less risk and
uncertainty. Well, may it be a small business or a big, every business needs to
market its name and product so as to emerge out in the industry.
• Well, everybody must be aware of Digital Marketing, it is the most interactive
and easiest way to market products and services using digital technologies.
Digital Marketing activities include search engine optimization, search engine
marketing, content marketing, influence marketing and many more using the
means of the internet.

• A business cannot work without marketing its goods and service, but who
wants to follow those traditional techniques? Well, of course, nobody wants to
tire oneself all day long going door to door promoting goods when there is a
much better option available.

10
Drivers of New Marketing
Environments
• With mobile technology evolving in a smartphone tethered society, it’s no
surprise digital marketing success has become a focal point for many
companies looking to drive business with an online presence. Digital
marketing offers a world of opportunity, but is becoming highly
competitive in an increasingly cluttered space. Marketing is no longer
about repetition, where the company with the biggest advertising
presence (or budget) triumphs, and has shifted towards developing
personal connections with a product or service through the quality of brand
exposure.
• Customizing the user experience is not an easy task, but can lead to great
success when executed correctly. Although, before success can be
measured, there are three fundamental aspects a digital marketing
strategy should cover: research before creating content, choose the right
digital platforms for your brand and audience, and clearly define your
goals/manage your campaigns so they’re always working and improving.
[Link] Mobility & Responsive Design
Information used to be trapped on desktop computers or within corporate
networks. Then, laptops freed us from our desks – but often with limited
capabilities. Today, laptops, mobile phones and tablets all provide identical
capabilities. In fact, in some cases mobile and tablet applications are faster or
more powerful than their desktop counterparts.

One powerful solution is to provide a dynamic online experience for your

prospects and customers through responsive design. Responsive design
allows you to deliver web experiences to any range of devices and screen sizes
without losing quality. The content elements resize and reconfigure
dynamically to meet each device’s needs, rather than being fixed or unsuited
for a given device.
[Link] Blogging
Customers today have many, many questions and what they need most are
answers, fast. Answers can come from you – or your competitors. The choice

11
is yours. Business blogging is a formal process of ramping up the role of your
website blog from being an also-ran tool for occasional commentary, into a
powerful and mission-critical resource for your customers and prospects. Build
a team of key employees and practice writing content regularly – daily and
weekly, not just monthly or quarterly. Content that answers questions,
explains complex issues and educates your audience on key issues is the most
valuable.
[Link] authorship
Google has developed and deployed a dynamic process that regular online
content writers can use to establish their formal ‘credentials’ online, and tie
the disparate content they publish, and places in which they publish it,
together. Using Google+ allows content writers (i.e. you, your executives, and
your technical experts) to become recognized online leaders in a range of
content areas, and in turn boost the search engine benefits back to your
business.

[Link] Optimization
Content optimization is one of the most powerful, newly emerging trends in
the digital marketplace. Content optimization takes the content that today is
static (words on a page, related resources, media and links), and adjusts them
for each user, based upon that individual’s previous activity and current
interests. Think of it as applying the dynamism of a Google search to every
page in a website – automatically.

[Link] Marketing
Bringing many of these concepts together is an essential task, otherwise the
work of implementing each tactic will interfere with the overall business
strategy and objectives. After all, powerful marketing must begin with a
powerful strategy that aligns your products and services with market needs.

The inbound marketing methodology brings together business blogging,

content optimization, responsive design, social media and more under one
framework, so that you can achieve success without becoming lost in the
details of tactics and technology.

12
Digital Marketing Marketig Management

Digital marketing strategy

1. Goals And Objective
Okay! Do not raise your eyebrows. This suggestion or advice might seem
certain that does not need any special mention. However, we have seen
many marketers who are eager to get into the nuts and bolts of postings
and campaigns without any prior plan which is necessary for a productive
outcome. As a business holder, you should be clear of what your goal is.
Whether you want to mark your presence in the neighbouring state or rank
higher in the Search Engine Results Page? The end objective can be
determined by your current business standards and how you want it to be
in the long run.

2. Identify “Your” Customers

One of the vital things to be contemplated during any digital marketing
strategy is that you need to identify your customers.

See, if you do not know who you are marketing to, what is the point of
discussing a “great strategy? “Isn’t it? With the available digital channels,
you sure can REACH people, but the question is WHICH people? Identifying
the target audience is not rocket science if you could create the fleshed-out
persona. And a persona is something that gives a detailed description of
your audience. Get started with their gender, age, and location. Then dig
deeper to identify their hobbies, interests, occupation, emotional desires,
goals, etcetera. Google Analytics can help you determine such factors and
whom you should actually target.

3. Competitor Research

13 Dr. SudhaDhara samal| V.B. Shah Institute Of Management

Digital Marketing Marketig Management

It is essential to get the current online landscape in terms of

competitiveness. Analyse what the competitors are doing. It could help
you in discovering the areas you need to hone up. Create a spreadsheet
and note their every single activity on every single channel. With the help
of SEO services companies and tools, you can discover the keywords which
are driving the high volume of traffic to their site.

4. Search Engine Marketing

Search Engine Marketing (SEM) is a way of internet marketing which is
basically the promotion of your website. It improves the site visibility in
search engines by bidding on search terms. SEM enables businesses to get
precise success tracking and in-depth campaign analysis too. You can get
to know how much value you are generating which further helps in making
educated decisions.

On the other hand, Search Engine Optimization (SEO) is a component of

Search Engine Marketing. SEO’s ultimate aim is to increase the number of
visitors to your website. It includes on-page and off-page optimization that
helps in maximizing the visitor count.

5. Social Media Marketing

Social Media Marketing (SMM) is a form of internet marketing that
includes composing and sharing content on social media channels or
networks. The primary activities involve in SMM are posting any kind of
media such as text, image, videos, memes, and updates that drive user
engagement. Social Media Marketing is mostly executed on Facebook,
Instagram, Twitter, LinkedIn, and YouTube.

6. Email Marketing
You might be wondering why we set down Email Marketing as a separate
tile amidst the resounding cry that email marketing is dead. But, it is not. It
is still one of the effective ways of sending a commercial message for a
group of people that actually matters. As a matter of fact, 72% of people

14 Dr. SudhaDhara samal| V.B. Shah Institute Of Management

still prefer email communication instead of chat. Besides email marketing,
you can also integrate the best live chat software into your website to
convert visitors into business clients.

7. Content Marketing
Content Marketing is a form of marketing that primarily focused on
creating, publishing, and distributing content for the target audience
through online medium. It is implemented to increase brand awareness
and credibility through constant blogging, press releases, guest blogging,
webinars, eBooks, and articles etcetera.

8. Mobile Marketing
It is also a form of online marketing technique to reach the target audience
on smartphones, mobile phones, tablets, or any other related device.
Whether you are a product or service provider, mobile marketing is
beneficial since it is the gateway to interactive multichannel promotion.

Now you are familiar with the strategies and mediums to achieve them.
Well done! But executing these actions and relaxing on the couch is not
done. You need to measure the performance.

9. Measure Results
You need to get an idea of the outcome, what went wrong, what had hit
the bull’s eye, which channel generated the productive outcome, which
medium betrayed, and everything that defines your strategy. All you
should do is keep on exploring, experiment, and executing your
conventions

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The P.O.E.M Framework
• POEM stands for Paid, Owned, and Earned Media, all of which serve as a
framework for your digital marketing strategies.
• Knowing more about POEM will help you come up with better marketing
strategies. That includes utilizing excellent marketing techniques, such as
paid, owned, and earned media.

Paid Media
• In digital marketing, ads and commercials are examples of paid media, a form
of advertising that utilizes different channels, such as social media and search
engines.
• The goal of paid media marketing is to deliver paid or sponsored ads to reach
the right audience. In many ways, it’s similar to traditional advertising,
wherein you’ll place ads in different media, such as newspapers, billboards,
television, and radio. However, the difference is that paid media usually
involves digital marketing platforms—like social media platforms and
websites, for instance
Strategies to Boost the Effectiveness of Paid Media
• Social Media Marketing
• Social media marketing is one of the best ways to reach your target
audience. Once you deliver your ads on social media platforms such as
Facebook, Twitter, and Instagram, you’ll reach your target audience as
soon as possible.
• Deliver your paid ads on networking sites that will benefit you the most.
For instance, Facebook offers a variety of marketing tools that will let
you define your target market, analyse your performance, and share
links to your website. On the other hand, Instagram is perfect for
publishing images and videos to showcase your brand and increase
brand awareness.

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Digital Marketing Marketig Management

• Email Marketing
• Email marketing has made its return this 2020, and it remains to be one
of the most effective digital marketing strategies to date. The goal is to
send emails to your customers. However, to do so, you must create a list
of subscribers who’ll receive your emails. These subscribers can be
existing customers, people who’ve subscribed to your website, or
followers on your social media page.
• While building your email list, you should also utilise efficient pay-per-
click (PPC) ads. Your PPC ads will help you target and reach the right
audience so your email list can grow.

• Pay-Per-Click Marketing (PPC)

• As mentioned earlier, incorporating PPC ads in your email marketing is
a tried-and-tested formula. But PPC marketing is also excellent for
boosting your site’s search engine rankings in an instant. By using a paid
search ad, Google will display a link to your website on the search
results page, depending on the user’s queries and keywords.

Owned Media
• Owned media refers to your possessions and assets. Examples include your
website, social media page, blog posts, articles, case studies, and many more.
• The goal is to provide quality content for your audience. Videos, images,
articles—utilise these to your advantage so you can establish your reputation
and grow your customer base. Not to mention, doing so is much more cost-
effective compared to acquiring new customers, which can be costly in the
long run.
• Examples :
• Blog page
• Social media page
• Emails

17 Dr. SudhaDhara samal| V.B. Shah Institute Of Management

• Online forums and communities
• Website

Earned Media :
• While owned media is the organisation of your assets, earned media refers to
the activities involving such possessions. In short, utilising your owned media
channels—website, blog page, social media account—is the definition of
earned media.
• With earned media, your objective is to create content that you can use for
your website. As such, one of the perfect ways to generate leads is to build a
blog page. On your blog, you can post articles and infographics related to your
line of work. Afterwards, you can share your posts on social media to attract
new customers and engage with existing ones. That way, you can increase
your customer base while expanding your audience reach.
• Some examples of earned media tactics include:
• Content marketing
• SEO
• Influencer marketing
• Social media marketing

Digital Landscape
A digital landscape is a collective name for websites, email,
social networks, mobile devices (tablets, iPhone, and
smartphones), videos (YouTube), etc. These tools help
businesses sell their products or services

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What is a digital marketing
plan?
• A digital marketing plan is a document sharing the details for all the planning
for your digital marketing campaigns or actions. It details, among other
things: - Short, medium and long term business goals. - The strategies to
achieve the goals at the digital level.
• How to create digital marketing plan?

Create a Digital Marketing Plan in 6 Steps

• Define your brand. The first step to driving success with your digital
marketing plan is defining your brand. ...
• Create buyer personas. You can't create an effective digital
marketing plan without knowing who you're trying to reach. ...
• Set your goals. ...
• Choose your digital marketing methods. ...
• Set your budget. ...
• Measure results.

Elements of a Successful Digital Marketing Plan

1. Online adverting
• One of your first steps should be to spend more of your marketing
budget on online ads.
• If you’re new to digital advertising, it can be confusing getting a grasp
on the variety of online ads available.
• We’ve compiled a short list of the primary online adverts:

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• Google AdWords: These are online ads created within Google’s
AdWords platform using targeted keywords. If the words typed into
Google match your keywords, your ad can appear above the search
results. Read our 14 Killer AdWords tips to help you get started.

• PPC Ads: With pay-per-click advertisements the cost of advertising is

determined by the number of clicks your ad receives. Check out our
article about PPC.
• Display Ads: Image based advertising that often appears on the side,
top or bottom section of a website. Below is an example of a top and
side display ads.

2. Search Engine Optimisation

• Search engine optimisation (SEO) increases your brand’s online visibility
through successful search marketing. You need to use on-page
optimisation techniques and keyword strategies to get your brand in front
of the people interested in your products.
• In the past, SEO helped sites rank higher, sometimes in unethical ways.
Today, SEO helps legitimise your website(s) and should be used to benefit
the consumer.
• Small and medium companies can do quite well in search engine listings,
and receive a considerable return on investment on their SEO efforts.
• For example, the figure below shows a search engine results page for the
query ‘boat manufacturers’.
• The top organic result is evidence of the companies search’s status. “Hardy
marine”, Warrior boats and Fair line are the top three businesses found in
our search query.

3. Online Content And Blogging

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Digital Marketing Marketig Management

• Blogging, along with other forms of content distribution has moved into
the mainstream. The lines between blogging and traditional media have
blurred. Establish a blog on your company website to help project personal
and corporate messaging.
• Brown, Broderick, and Lee (2007) found that blogs are the most trusted
information source, secondary only to newspapers. Use your blog as a tool
to facilitate your relationship with customers.
• Ford way Solutions, an IT Infrastructure, Consultancy and Cloud company
with 60 employees, use their blog to share information and educate
customers around new IT solutions and services.

4. Web PR
• Online press release distribution improves online visibility and will help you
connect with your target audience. Press releases can be used effectively
as part of an integrated link building strategy. However, utilise your press
releases only when the content is truly worth sharing.
• For example, [Link] published a release by Lion Hudson plc,
regarding the retirement of their company’s MD Nick Jones. This release is
newsworthy in the book publishing community and thus appropriate
content to share within said industry.
• Another example, is a press release published by Horticulture Week,
featuring the Online Excellence Award being given to [Link], an
online plant sales business. Not only is this a great media piece, it also talks
about [Link] redesigning their website to include rich content and
videos, improvements resulting in double-digit conversion growth. Have a
look at their website for inspiration.

5. Social Media Management And Listening

• Social media has become a significant source of interaction between
consumers and their favourite brand. Use this medium to have a
conversation with your customers.

21 Dr. SudhaDhara samal| V.B. Shah Institute Of Management

• Connect Catering has both a LinkedIn company page
and Facebook business page which they use to publish updates regarding
their business and interact with their customers.
• The digital age have modified consumers’ expectations of branded
communication.
• The result is that consumers expect your brand to interact with them in a
medium where the consumer controls every aspect of the conversation;
the timing, the channel, and the content.
• Establish some social media pages of your own and appoint somebody
within your company to use a social media monitoring tool to find out what
people are saying about you, so that you can respond in a timely manner.

6. Email And Online Newsletter Marketing

• As long as they’re permission-based, email campaigns can be highly
effective.
• Milton Sanford Wines is a good examples of a company that creates highly
effective email campaigns to bring communities together, while
stimulating their business.
• Follow their example and prompt customers to subscribe to your
newsletter. You’ll get their email address and an open channel to
communicating with them.
• Email is one of the best forms of digital marketing as its cheap, direct,
instantaneous, and easy to track, and it pushes your message to your
audience. Be sure to customise your messaging and segment your email
list.

7. Mobile Marketing
• Mses can access a wider audience through their mobile devices.
• The use of mobile phones as a marketing medium is quickly gaining
popularity.

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• More businesses are gaining access to mobile phone numbers and using
SMS to advertise their products and services.
• Another factor is the growth of mobile web usage. Locally-based
advertising also involves mobile devices and GPS. It exploits the knowledge
about where a mobile device user is located. Users searching online for a
product or service will get a list of options within their location.
• For example, if you were in Oxfordshire and searching for a car dealerships
using your phone, a below list would have popped up on your search
screen.

8. Web Analytics
• Use web analytics, like Google Analytics, to measure your digital
marketing effectiveness and record online customer behaviour.
• By using analytics you’ll gain a better understanding of your target
audience.
• This deeper analysis allows managers to better understand variations in
message performance based on time of day, day of week, audience, and
engagement metrics.

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Digital Marketing Model
• Choosing the right digital marketing model to suit your business is
imperative! We cover 10 different marketing models across audit, planning,
and strategy, including Smart Insights’ own RACE Planning Framework!
• We also have a guide on the different marketing models, how to use them and
practical advice to implementing them in your business. See digital marketing
models.
1. Audit Models
• Forrester’s 5Is
• Lauterborn’s 4Cs
• Ten C’s of Marketing

2. Planning models
• 6Cs of customer motivation
• Hofacker’s 5 stages of information processing
• RACE planning Technology acceptance model
• Technology acceptance model

3. Strategy models
• 4Cs for marketing communications
• McKinney’s consumer decision journey
• The Honeycomb model

1) Forrester’s 5Is
• The Is stand for the level of involvement,
• Interaction,
• Intimacy,
• Influence an individual has with a brand over time.

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2) Lauterborn’s 4cs
• Consumer wants and needs - corresponding to Product in the Marketing
Mix
• Cost to satisfy - corresponding to Price
• Convenience to buy - corresponding to Place
• Communication - equivalent to Promotion

3) Ten C’s of Marketing

• The 10Cs considers each element of an online marketing framework.
This could be internal and used to review an organisation’s website and
related marketing communications and how they are managed, or it
could be used as an external tool to audit competitor’s activities. The
customer is placed in the centre and each element is reviewed to see
how well this meets customers’ needs.

4) 6Cs Of Customer Motivation

• The 6Cs of motivation is a recognised tool used in higher education and
looks at ways to improve classroom motivation and student
participation.
• In 2004 Dave Chaffey suggested the 6Cs of customer motivation in a
world where the online offer was developing. The aim was that a model
of customer motivation would help define the Online Value Proposition.

5) Hofacker’s 5 Stages Of Information Processing

• It was intended to help marketers and advertisers consider how well
their websites and adverts/promo panels communicated value to
website visitors.
• 5 stages:-

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• Exposure,
• Attention,
• Comprehension and perception,
• Yielding and acceptance,
• Retention

6) Race Planning technology Acceptance Model

• The RACE mnemonic summarizes the key online and multichannel
marketing activities that need to be managed as part of digital
marketing

7) Technology Acceptance Model

• The technology acceptance model (TAM) is an information
systems theory that models how users come to accept and use a
technology.
• Perceived usefulness (PU) – This was defined by Fred Davis as "the
degree to which a person believes that using a particular system would
enhance his or her job performance". It means whether or not someone
perceives that technology to be useful for what they want to do

8) 4cs For Marketing Communications

• The 4Cs (Clarity, Credibility, Consistency, Competitiveness) is most
often used in marketing communications and was created by David
Jobber and John Fahy in their book ‘Foundations of Marketing’ (2009).
Once a business has segmented its marketing and identified the target
audience, the next stage is to position the business. To successfully
achieve this, the 4Cs is a useful tool to create a positioning statement or
to build an online value proposition.

9) Mckinsey’s Consumer Decision Journey

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• They recommended a loop model instead of the usual straight line
approach from awareness, purchase and loyalty.
• This was a dramatic change although many companies are still, many
years later, working on the usual linear approach in a non-linear world.
• This is one of the most widely referenced digital marketing models
mentioned by brands and agencies, so we use it to start this section. It
has spawned many imitators including Google’s ZMOT.

10) The Honeycomb Model

• The idea behind the honeycomb model is that of t

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Introduction of Social
Marketing
➢ Social media marketing is a formof INTERNET MARKETING that utilizes
social marketing website marketing tools.
➢ These social media have become basic pillars for business branching and it’s
has implemental various media networks in order to achieved the interaction
with people in the whole the world and bounding the last between people.
➢ The social media is a virtual element for the online business.
➢ Such of producing traffic to site for generating business through online social
group.
➢ Used as a branding tools and can increase conversion, sales packing, page
views and exposure.
➢ Simple and low cost way to increasing sale and to bring traffic to the website
o Twitter
o Facebook
o LinkedIn
o Other media (faves, delicious, etc.)

Goal for Social Media Marketing

o Brand management.
o Drive traffic to our website.
o Generate new leads.
o Grow revenue.
o Boost brand engagement
o Build community around our business.
o Effective social customer service
o Increase mentions in the press
o Never miss a mention through social listing.

1. Increase Brand Awareness

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According to our State of Social Media 2016 survey, brand awareness is the
top reason marketers use social media. It’s easy to understand why: The
average person spends nearly two hours on social media every day, and
therefore social media is one of the best places to grab consumers’
attention.

Social media has also enabled marketers to have a more quantitative

understanding of their brand’s presence and reach in the online world. And
now most social media platforms provide data on the reach of your
content, allowing you to report your online presence more accurately.

2. Drive Traffic To Your Website

One step further from having a brand presence on social media is driving
visitors to your website or blog, who might turn into your customers.

Three in five marketers use social media to distribute their content and
drive traffic to their sites. A team at HubSpot, for instance, grew their
monthly blog traffic by 241% over eight months through social media
experiments.

3. Generate New Leads

Lead generation is typically used by companies with a long sales process,
such as enterprise software companies.

According to HubSpot,
“It’s a way of warming up potential customers to your
business and getting them on the path to eventually buying.”

This “path” is essentially your sales funnel. With the huge number of
people you can reach, social media can be a great tool for getting people to
the top of your funnel (or warming them up to your business).

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The definition of a lead is quite broad, but it usually means that the person
has provided your company with some form of information about
themselves such as their name, email address, and similar. There are many
ways to track your social media lead generation efforts and the list below
includes a few of the more common metrics to track to quantify your social
media leads.

4. Grow Revenue (By Increasing Signups Or Sales)

If you don’t have a long sales process, you can use social media to turn your
audience into paying customers directly. For example, social media
advertising, such as Facebook ads, is a becoming an increasingly popular
strategy to boost sales.

5. Boost Brand Engagement

Engagement is the second top reason why marketers use social media. And
research has found that social media interactions improve brand
perception, loyalty, and word of mouth recommendations.
Furthermore, social media platform’s algorithms, such as those on
Facebook and Instagram, are prioritizing posts with higher engagement on
their feeds due to the belief that users will be more interested in seeing
highly engaging content.
To summarize, if you want people to see your social media posts, you have
to produce engaging content and respond to your community.

6. Build A Community Around Your Business

Tracking audience numbers such as total followers and fans is great, but
we’ve also noticed a rise in the number of closed communities and chats
business have been focusing on over the past year-or-so. For example, we
run #Buffer chat every week on Twitter, we also have a Slack
Community (and some businesses are even experimenting with Facebook
groups, too.)

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The types of goals you want to set for these communities may feel very
different to your overall fan / follower growth goals and of course, the type
of community you choose to build will have an effect on the metrics you
choose to measure success by.

7. Effective Social Customer Service

Having a good customer service on social media can help to increase
revenue, customer satisfaction score, and retention. But in our State of
Social Media study, only one in five respondents (21%) said that they use
social media for customer support.

The trend of people turning to social media for customer support will likely
continue, and we think there’s still a huge opportunity for businesses to
differentiate themselves from their competitors with great social media
customer service.

8. Increase Mentions In The Press

Despite the fact that social media has enabled companies to own their
news and share stories directly with their fans and followers across social
media, the press and media can still drive significant results and PR still
plays a key role in many businesses’ marketing strategies.

This makes it easier to build relations with relevant publication journalists

for getting press mentions and to build thought leadership in the industry.

9. Never Miss A Mention Through Social Listening

Social media has brought businesses and their customers closer and now it
is much easier for customers to share their feedback with companies than
it ever has been before.

It has become a common trend for customers to air their thoughts about
products and companies on social media. By catching and replying to these
posts, your customers will feel heard.

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Scope of Social Media Marketing
➢ 94% of all business with a marketing department used social media as part of
their marketing platform.
➢ Almost 60% of marketers are devoting the equivalent of a full work day to
social media marketing development and maintenance
➢ 43% of people aged 20-29 spend more than 10 hours a week on social media
sites.
➢ 85% of all businesses that have a dedicated social media platform as part of
their marketing strategy reported an increase in their market exposure.
➢ 58% of businesses that have used social media marketing for over 3 years
reported an increase in sales over that period.

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Penetration
• India is one of the most populated countries in the world, with a population of
1.2 billion as of June 2014.

• The penetration of Internet is around 20 % in India, which is less compared to

the US which has 80% internet penetration and China which has up to 50%.
But 20% 0f 1.2 billion people makes it 25 corer internet users and is having
global rank 3 in Worldwide Internet users ranking. We are giving these stats to
give you a glimpse of how big our target audience is and these numbers are
only increasing with time for good companies of digital marketing in India

5 reasons why investing in social media is crucial for

market penetration

1 } A branding platform
o Your social media presence tells your brand story to new client and
display your business personality to potential client.

2 } A platform to study and understand your audience

o You read there, you take part in their discussion, they comment on
your social media post, and you engage them privately via direct
[Link] the end of the day you gain in men's insights into how they
perceive your product and how they rate your product quality against
your close competitors.

3 } Proving the authenticity of your business

o If you’re social media post are formal, witty, and friendly, your company
passes as a professional organization that is out to do serious business.
Mix that with a few casual and funny posts: the target audience start
seeing the human side of your company. Then spice things up with a

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few post behind the scene, letting your followers get a glimpse of what
transpires through the production/manufacturing/packaging processes.
People find your business authentic when you interact with them at
such an intimate level.

4 } Cultivating brand loyalty

o When customers are able to reach out to you and interact with you on a
personal level they become loyal. They form a strong bond with you and
your [Link] is always easier to retain a customer who ask question
all time then a customer who disappears and never come back to drop
feedback. And because people find email link and calling, they prefer to
give their feedback on social media.

5 } Social media marketing attracts more sales

o Increase customer engagement and more consumer loyalty breeds
more sales.

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Characteristics ofDigital
Marketing
1 ) Measurable (Big Data)
o Digital Marketing has to be all about “digital”, in which “digit” what is
you really have to aware of. In this sense, Digital Marketing campaign
has to be highly measurable.
o No matter you are putting your content online on social media, or you
are trying to create an offline event that invites your clients to play
around the installation, you need to be aware of the data you can
gather.
o The data you are going gather will eventually be your marketing assets
as they can tell you what you have done right or wrong and even give
you insights on what you may do next. To be measurable, these data
have to be meaningful.
o Define clearly what are the valuable conversions in your campaign
before launching it.

2 ) Targeted
o An effective Digital Marketing campaign has to be targeted. The
content you are presenting should focus on a group of people.
Sometimes we define them as a Persona who would have a specific
personality. The content should specifically deliver a useful message to
the target audience. This can increase the engagement of the target
audience.

o When the content is attracted to the target audience, the message

behind can be effectively delivered. Imagine an office lady who is
planning her next vacation. One day when she is browsing the timeline
on Facebook and she read a piece of content about holiday package

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from an airline, she will be happy to read along no matter it is an organic
or sponsored story.

3 ) Remarketing
o An effective Digital Marketing campaign should be able to remarket
the interested audience. You have already targeted the vacation-
sassy office lady on Facebook.
o She has already clicked and read your content about the holiday
package. It is a strong signal that this Facebook user has a high
interests to the holiday package but she didn't ordered the package
the first time she read the content.
o Why not showing her the content again and persuade her to
complete the order? Your package might not be the best choice to
her but buying or not is all about the moment. Give her enough
impressions and make her become your customer.

4 ) Adapted
o An effective Digital Marketing campaign should be adapted to the
situations of the target audience. Now the office lady has visited your
holiday package website again and has already put the package into the
shopping cart.
o However, she received a call from her boss and she didn't checkout and
complete the order.
o It would be nice if you can remarket her and show her the information
of the holiday package again but would it be better if you can ask her to
check out the shopping cart with a direct link? Try to track all these
different buying signals and create adapted call-to-action messages.
Customers would be to be served and communicate with reasonable
responses.

5 ) Multi-channel
o An effective Digital Marketing campaign should be using multi channels
to syndicate the message. Your target audience would access
information from different devices and from different media.

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o Would it be even greater if the office lady read your call-to-action
message when she is browsing some websites?
o Isn't it great if she receives a reminder email with a direct checkout link?
o Can she scan a QR code on a magazine to visit the holiday package website
again to complete the checkout?
Think of how your target audience would access the content you are
providing and make them easy to response in different ways.

6 ) Capable To Deliver Desired Service

o Choose an agency that delivers the desired service. If your requirement
is to get more visitor then hiring a firm which is an expert in designing a
website won’t work. Be sure an agency has the capabilities to meet your
marketing goal.

7 ) Simple And Clear Process

o A digital marketing agency should be capable to clearly lay out and
explain the digital methodology to prospect. It must be able to clearly
show you in which order things will take place and the amount of time
and resources required in every step. The real efficiency of an agency
can be tested in this way, it shows the agency has the capability to
deliver the desired result.

8 ) Measurable
o A marketing agency must be capable to track all campaigns and report
regularly. Progress made towards your goal should be measured at
every stage. A good marketing agency is one who has the capability to
check its work and take corrective action as and when required.

9 ) Cost-effective
o A digital marketing agency must be cost-effective. It must be able to
work on a low budget. A person prefers that agency who can provide

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good service at cheaper price. Cost-cutting is one thing an agency must
be good at.

10 ) A Website Optimized For Inbound

o Chooses an agency that uses the same service in which it deals. A good
digital marketing agency should be its own best case study. Before
selecting do research what is it (agency) own social media presence,
accordingly, you can figure out about an agency.

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