DEPARTMRNT OF BUSINESS ADMINISTRATION (SF)

II BBA(SF)

MARKETING MANAGEMENT STUDY MATERIAL

COURSE CODE : 231803302

Prepared by

Dr.VE.SANTHI

Assistant Professor

Department of Business Administration (SF)

NMSSVN College

Nagamalai
UNIT – I

Fundamentals of marketing – Role of Marketing – Relationship of marketing with other

Functional Areas – Concept of Marketing Mix – Marketing Approaches – Various
Environmental factors Affecting the Marketing functions.

Marketing Meaning

Marketing is the process of creating, communicating, and delivering products or services to

customers. Its goal is to satisfy customer needs and wants and to build a profitable business. Marketing
identifies value creation and provides value to customers to meet their needs and wants.

Marketing Definition

Marketing refers to all business activities that advertise its products and services to prospective
customers. This includes market research, pricing, branding, advertising, and sales promotion. It aims to
acquire, engender, and retain customers that will yield the greatest profit for the business.

Fundamentals of Marketing:

1. Product.
2. Price.
3. Promotion.
4. Place.
5. People.
6. Process.
7. Physical Evidence.

Product:

Marketers should be familiar with all the features and specifications of the
products they sell, especially when using tools for startups to optimize their
strategies.

Price:

To determine how much your product should cost, you’ll need to do some research.
Learn how your competitors price their offerings, and understand how much consumers
are willing to pay.

Promotion:

These days, marketers have many channels through which to promote their
products. From radio ads to social media marketing, you’ll need to decide which is right
for your brand.

Place:
Your customers need to be able to find and purchase your product. Can they buy
your product online? Do they need to visit a store? Additionally, you’ll need to consider
how much inventory to hold and where to keep it.

People:

Optimal customer service is going to get you return customers and referrals, both of
which can ultimately convert sales.

Process:

Creating and promoting a valuable product is essential, but the delivery process is
almost just as critical for ensuring your competitive advantage.

Physical Evidence:

We work from a digital ecosystem, which means that having a physical store or
office outside of your home isn’t as common as it used to be. But having physical
evidence of your brand is key.

Role of Marketing:

 Understanding Customer Needs:

Marketing research helps businesses understand what customers want and need, both now and
in the future.
 Developing Products and Services:
Marketing plays a role in developing and refining products and services to better meet customer
needs.
 Creating a Brand Identity:
Marketing develops a brand image that represents the company and its values.
 Promoting Products and Services:
Marketing uses various channels, including advertising, social media, and content creation, to
promote products and services to the target audience.
 Building Relationships with Customers:
Marketing aims to build strong relationships with customers through personalized
communication, customer service, and engagement.
 Driving Sales:
By effectively reaching and engaging the target audience, marketing helps drive sales and
generate revenue.
 Adapting to Market Trends:
Marketing constantly monitors market trends and adapts strategies to stay relevant and
competitive.
 Evaluating Customer Experiences:
Marketing analyzes customer experiences to identify areas for improvement and ensure a
positive brand perception.
 Analyzing Strengths and Weaknesses:
Marketing analyzes the organization's strengths and weaknesses to develop effective strategies.
 Creating a Sustainable Competitive Advantage:
Marketing helps create and maintain a sustainable competitive advantage by differentiating the
brand and building loyalty.

Relationship of marketing with other functional areas

Marketing interacts with various functional areas within an organization to achieve

business objectives. Key relationships include coordination with research and development
(R&D) to ensure product development aligns with customer needs, collaboration with
production to meet demand and maintain quality, and collaboration with finance to manage
costs and pricing effectively. Effective communication and cooperation across these
departments are crucial for successful product development, marketing campaigns, and
overall business performance.
Here's a more detailed look at the relationships:
1. Research and Development (R&D):
Marketing helps guide R&D by providing insights into customer needs, preferences, and
market trends, ensuring new products meet customer expectations.
R&D contributes to the development of innovative products and features that marketing can
then promote effectively.
This collaboration leads to the creation of products that are both technically sound and appeal
to the target market.
2. Production:
Marketing communicates customer demand and desired product specifications to the
production department, ensuring that the production process is aligned with market needs.
Production ensures that products are manufactured to the required quality and meet delivery
schedules, supporting marketing's promotional and sales efforts.
Effective communication and collaboration between marketing and production minimize
delays and ensure that products are readily available to customers.
3. Finance:
Marketing works with the finance department to develop and implement pricing strategies
that balance profitability with market competitiveness.
Finance provides insights into the financial implications of marketing campaigns and helps
optimize marketing budgets.
Collaboration on pricing and resource allocation ensures that marketing activities are
financially sustainable and contribute to the overall profitability of the business.
4. Human Resources (HR):
Marketing informs HR about new product launches or changes in customer needs, helping to
ensure that the workforce has the skills and knowledge necessary to support these initiatives.
HR provides marketing with insights into employee needs and motivations, helping to
develop effective recruitment and retention strategies.
This collaboration ensures that the organization has the right people in the right roles to
support marketing activities.
5. Sales:
Marketing provides sales teams with the information and resources they need to effectively
sell products and services, including marketing materials, sales presentations, and customer
insights.
Sales teams provide valuable feedback to marketing, helping to refine marketing strategies
and ensure that they are effective in generating leads and driving sales.
Close collaboration between marketing and sales is essential for achieving sales targets and
building strong customer relationships.
6. Information Technology (IT):
Marketing relies on IT to manage its digital marketing channels, websites, and customer
relationship management (CRM) systems.
IT provides marketing with the technical infrastructure and expertise needed to conduct
online marketing campaigns and analyze customer data.
This collaboration ensures that marketing can effectively reach its target audience and track
its performance.

Marketing Mix:
The marketing mix is a strategic framework that businesses use to reach their target
audience and achieve their marketing goals. It involves a combination of marketing elements,
commonly known as the 4 Ps: product, price, place, and promotion.

1. Product:
This refers to the goods or services being offered to the market. It includes aspects like the
product's features, quality, design, branding, and packaging.
2. Price:
This involves determining the price of the product, considering factors like cost, competition,
and customer perception of value.
3. Place:
This refers to the distribution channels used to make the product available to customers, such as
physical stores, online platforms, or other distribution methods.
4. Promotion:
This involves communicating the value of the product to the target audience, using various
marketing channels and strategies, including advertising, sales promotions, public relations, and
social media.

Marketing Approaches
Marketing management involves various approaches to understand, reach, and engage
target audiences. These approaches range from focusing on specific products or functions to
considering the broader societal impact of marketing activities. Some key approaches include
the product/commodity approach, institutional approach, functional approach, managerial
approach, societal approach, and digital marketing.

1. Product/Commodity Approach:
This approach focuses on the specific product or commodity being marketed, examining
its characteristics, production, distribution, and consumption. It analyzes the flow of goods from
the producer to the consumer.

2. Institutional Approach:
This approach examines the various organizations and institutions involved in marketing,
such as retailers, wholesalers, and advertising agencies. It looks at their roles, functions, and
relationships in the marketing process.

3. Functional Approach:
This approach analyzes the specific functions that are performed in the marketing
process, such as buying, selling, transportation, storage, and financing. It explores how these
functions contribute to the overall marketing system.

4. Managerial Approach:
This approach focuses on the decision-making processes involved in marketing
management. It examines how marketing managers plan, organize, direct, and control marketing
activities to achieve organizational goals.

5. Societal Approach:
This approach considers the broader social and ethical implications of marketing
activities. It emphasizes the importance of satisfying customer needs and wants while also
considering the well-being of society.

6. Digital Marketing:
In today's world, digital marketing is a crucial approach. It encompasses strategies like
social media marketing, content marketing, search engine optimization (SEO), and online
advertising.

7. The 4Ps:
The 4Ps (product, price, place, promotion) represent a fundamental framework for
marketing management. It helps businesses make decisions about product development, pricing
strategies, distribution channels, and promotional activities.

8. The Marketing Concept:

This modern marketing management concept emphasizes understanding and fulfilling
customer needs and wants as the primary path to achieving organizational goals.

Various environmental factors affecting the marketing functions

The environmental factors that are affecting marketing function can be classified into :

1) Internal environment and

2) External environment

Internal Environment of Marketing :

This refers to factors existing within a marketing firm. They are also called as controllable
factors, because the company has control over these factors :

a) it can alter or modify factors as its personnel, physical facilities, organization and function
means, such as marketing mix, to suit the environment.

There are many internal factors that influence the marketing function, they are :

Top Management : The organizational structure, Board of Director, professionalization of

management..etc..Factors like the amount of support the top management enjoys from different
levels of employees, shareholders and Board of Directors have important influence on the
marketing decisions and their implementation.

Finance and Accounting: Accounting refers to measure of revenue and costs to help the
marketing and to know how well it is achieving its objectives.Finance refers to funding and using
funds to carry out the marketing plan. Financial factors are financial polices, financial position
and capital structure.

Research and Development : Research and Development refers to designing the product safe
and attractive. They are technological capabilities, determine a company ability to innovate and
compete.
Manufacturing : It is responsible for producing the desired quality and quantity of
products.Factors which influence the competitiveness of a firm are production capacity
technology and efficiency of the productive apparatus, distribution logistics etc.,

Purchasing : Purchasing refers to procurement of goods and services from some external
agencies. It is the strategic activity of the business.

Company Image and Brand Equity : The image of the company refers in raising finance,
forming joint ventures or other alliances soliciting marketing intermediaries, entering purchase or
sales contract, launching new products etc.

In organization, the marketing resources like organization for marketing, quality of marketing,
brand equity and distribution network have direct bearing on marketing efficiency. They are
important for new product introduction and brand extension, etc..

External Environment of Marketing.

External factors are beyond the control of a firm, its success depends to a large extent on its
adaptability to the environment.
The external marketing environment consists of :

a) Macro environment, and

b) Micro environment

a) Micro environment: The environmental factors that are in its proximity. The factors
influence the company‟s non-capacity to produce and serve the market.The factors are :

1) Suppliers: The suppliers to a firm can also alter its competitive position and marketing
capabilities. These are raw material suppliers, energy suppliers, suppliers of labor and
capital.According to michael Porter, the relationship between suppliers and the firm epitomizes a
power equation between them. This equation is based on the industry condition and the extent to
which each of them is dependent on the other.

The bargaining power of the supplier gets maximized in the following situations:

a) The seller firm is a monopoly or an oligopoly firm.

b) The supplier is not obliged to contend with other substitute products for sale to the buyer
group.

c) The buyer is not an important customer.

d) The suppliers‟ product is an important input to the buyer‟s business and finished product.

e) The supplier poses a real threat of forward integration.

2) Market Intermediaries : Every producer has to have a number of intermediaries for
promoting, selling and distributing the goods and service to ultimate consumers. These
intermediaries may be individual or business firms. These intermediaries are middleman
(wholesalers, retailers, agent‟s etc. ), distributing agency market service agencies and financial
institutions.

3) Customers : The customers may be classified as :

1) Ultimate customers: These customers may be individual and householders.

2) Industrial customers: These customers are organization which buy goods and services for
producing other goods and services for the purpose of other earning profits or fulfilling other
objectives.

3) Resellers: They are the intermediaries who purchase goods with a view to resell them at a
profit. They can be wholesalers, retailers, distributors, etc.

4) Government and other non-profit customers: These customers purchase goods and services
to those for whom they are produced, for their consumption in most of the cases.

5) International customers: These customers are individual and organizations of other

countries who buy goods and services either for consumption or for industrial use. Such buyers
may be consumers, producers, resellers, and governments.

6 )Competitors: Competitors are those who sell the goods and services of the same and similar
description, in the same market. Apart from competition on price, there are like product
differentiation. Therefore, it is necessary to build an efficient system of marketing. This will
bring confidence and better results.

7) Public: It is duty of the company to satisfy the people at large along with its competitors and
the consumers. It is necessary for future growth.The action of the company do influence the
other groups forming the general public for the company. A public is defined as „any group that
has an actual or potential interest in or impact on a company‟s ability to achieve its objective.‟
Public relations are certainly a broad marketing operation which must be fully taken care of.

Macro Environment:

Macro environment factors act external to the company and are quite uncontrollable. These
factors do not affect the marketing ability of the concern directly but indirectly the influence
marketing decisions of the company.

These are the macro environmental factors that affect the company‟s marketing decisions :

a) Demographic Forces: Here, the marketer monitor the population because people forms
markets. Marketers are keenly interested in the size and growth rate of population in different
cities, regions, and nations ; age distribution and ethnic mix ; educational levels; households
patterns; and regional characteristics and movements.
b)Economic Factors: The economic environment consists of macro-level factors related to
means of production and distribution that have an impact on the business of an organization.

c) Physical Forces: Components of physical forces are earth‟s natural renewal and non-renewal
resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non-
renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components
quite often change the level and type of resources available to a marketer for his production.

d) Technological Factors: The technological environment consists of factors related to

knowledge applied, and the materials and machines used in the production of goods and services
that have an impact on the business of an organization.

e) Political and Legal Forces: Developments in political and legal field greatly affect the
marketing decisions. sound marketing decision cannot be taken without taking into account, the
government agencies, political party in power and in opposition their ideologies,
pressure groups, and laws of the land. These variables create tremendous pressures on marketing
management. Laws affect production capacity, capability, product design, pricing and
promotion. Government in almost all the country intervenes in marketing process irrespective of
their political ideologies.

f) Social and Cultural Forces: This concept has crept into marketing literature as an alternative
to the marketing concept. The social forces attempt to make the marketing socially responsible. It
means that the business firms should take a lead in eliminating socially harmful products and
produce only what is beneficial to the society. These are numbers of pressure groups in the
society who impose restrictions on the marketing process.
UNIT – II

What is a Product:
A product is anything offered for sale to a market to satisfy a need or want, encompassing
tangible goods, digital items, and services.

Definitions of Product:

Philip Kotler:

“Product is anything that can be offered to someone to satisfy a need or a want.”

Characteristics of Products

1. Customer Satisfaction:

Products are the means through which customers fulfill their needs and wants. It serves as a
medium through which business offers service to customers for satisfying their requirements.

2. Exchange value:

The product should have an exchange value in monetary terms for which it is exchanged with

people. This enables the exchange of products between the buyer and seller possible. 3.

Tangibility:

It is one of the important features of the product. The product should have tangible attributes like
it should be seen, touched or should have a physical presence.

4. Intangible at ributes:

Product may be intangible which means that it does not have any physical presence. In the case
of availing services like banking, repairing, and transportation, a product is intangible.

5. Associated at ributes:
The product should have differential and unique features that make its identification and
acceptance by buyers quite easy. It helps in product differentiation and creating a better image.

Classification of product

1. Consumer Goods: Consumer goods of different classes are discussed below.

a) Convenience Goods: Convenience Goods, usually of semi-durable nature, refer to those

comparatively high value items which the customers buy after paying consideration as to quality,

price, design, etc. The buying motives of the customers exhibit a high degree of differentiation in
the purchase of these i Examples are; shoes, ready-made garments, cosmetics, etc.

b) Specialty Goods: Specialty Goods refer to those items which possess unique characteristics

and/or brand identification and for which a significant group of buyers are habitually willing to

make a special purchasing effort. These are usually of durable nature and high unit value, and the

customers‟ brand preferences dictate their buying motives. Examples are; T.V., radio,
refrigerators, steel furniture, etc.

2. Industrial Goods: Industrial Goods refer to those goods which are destined to be sold

primarily for use in producing other goods or rendering services as contrasted with the goods

destined to be sold primarily to the ultimate consumers. Industrial goods of different classes are
discussed below:

a) Raw Materials: Raw materials may be agricultural items (e.g. cotton) or items of semi-

finished nature (e.g. steel) or parts for the finished product to be assembled (e.g. parts of a motor
vehicle).
b) Equipments: Equipment‟s may be basic installations (e.g. boiler, turbines) or accessory

products (e.g. calculator, time clocks). These items move directly fromthe producers to the
industrial users.

c) Fabricated Items: Fabricated items consist of those parts that are used in the assembly of
finished goods like automobiles, etc.

d) Operating Supplies: Operating supplies such as fuel, coal, etc. neither form a part of nor
enter into the product but are necessary for the running of industries.

New product development process

When a company develops a new product, it cannot just hope that the product will be a success

in the market. It is essential for the company to understand its customers, markets, and

competitors before developing a product to deliver superior value to customers. For this, the

company must carry out a strong new product development process. The eight major steps of the
new product development process are as follows:

1. Idea Generation: Idea generation refers to brainstorming new product ideas or strategies to

innovate an existing product. The different internal and external sources through which a

company generates ideas for a new product are customers, distributors, suppliers, competitors,

etc. Before creating any product, companies evaluate market conditions, perform studies,
understand the users‟ wants and needs, and then suggest possible solutions.

2. Idea Screening: The second stage is called Idea Screening. This stage involves screening and

reviewing all of the ideas generated in the first step and selecting only those with the best

probability of success. Many factors are kept in mind while deciding which ideas to accept and

which to reject. These factors include projected advantages to consumers, necessary product
innovations, technical viability, and feasibility for marketing. The stage of idea screening is best
performed within the company.

3. Concept Development and Testing:

After all the ideas pass through the stage of idea screening, these ideas are evolved into concepts.

A product concept is a detailed version of the product idea and contains a precise explanation of

the idea. It should highlight the target audience, the pricing for the product, and the
characteristics and advantages of the product that could be valuable for the customers.

4. Marketing Strategy Development:

Once a concept is selected and well- validated, it is essential to develop a preliminary marketing

strategy to launch the product to the market based on the product concept and assess the worth of

the product from a business point of view. The marketing strategy helps in deciding pricing,
positioning, and promoting the product. A marketing strategy statement includes three parts:

a. The first part of the statement describes the target market, the firm‟s planned value
proposition, and its sales, market share and profit goals for the first few years.

b. The second part of the statement includes the product‟s planned price, its distribution, and
marketing budget for the first year.

c. The last part of the statement consists of the planned long-run sales, marketing mix strategy,

and profit goals. Once the marketing strategy has been developed, product management can
assess the economic desirability of the product.

5. Business Analysis: Once the marketing strategy has been developed it is important to assess

the worth of the product from a business point of view. An assessment of the sales projections,
estimated expenses, and anticipated profits are included in the business analysis.
6. Product Development: The next stage is Product Development. In this stage, the R&D or

engineering department converts a product concept into a physical product. This step involves a

huge jump in investment as it shows whether or not the product idea can be turned into a
workable product.

7. Test Marketing: The next step is Test Marketing. Test Marketing refers to the process of

testing the product and marketing program in realistic market settings. With this step, the

marketer can have the experience of marketing the product in the market at a small scale before
spending huge money on its full introduction.

8. Product Launch: At the final stage, companies are now prepared to launch the new product

onto the market. For a successful launch, a company must ensure that the product, marketing,

sales, and support teams are well-placed and should keep good track of its performance.

Companies must frequently monitor and evaluate the success of the product launch and make
modifications if it fails to accomplish the expected goals.

Product Life Cycle.

The term product life cycle refers to the length of time from when a product is introduced to

consumers into the market until it's removed from the shelves. This concept is used by

management and by marketing professionals as a factor in deciding when it is appropriate to

increase advertising, reduce prices, expand to new markets, or redesign packaging.

1. Introduction Stage:

The introduction phase is the first time customers are introduced to the new product. A company

must generally includes a substantial investment in advertising and a marketing campaign

focused on making consumers aware of the product and its benefits, especially if it is broadly
unknown what the item will do. During the introduction stage, there is often little-to-no
competition for a product, as competitors may just be getting a first look at the new offering.

2. Growth Stage:

If the product is successful, it then moves to the growth stage. This is characterized by growing

demand, an increase in production, and expansion in its availability. The amount of time spent in

the introduction phase before a company's product experiences strong growth will vary from

between industries and products. During the growth phase, the product becomes more popular
and recognizable.

3. Maturity Stage:

The maturity stage of the product life cycle is the most profitable stage, the time when the costs

of producing and marketing decline. With the market saturated with the product, competition

now higher than at other stages, and profit margins starting to shrink, some analysts refer to the

maturity stage as when sales volume is "maxed out". Depending on the good, a company may

begin deciding how to innovate its product or introduce new ways to capture a larger market

presence. This includes getting more feedback from customers, and researching their
demographics and their needs.

4. Decline Stage:

As the product takes on increased competition as other companies emulate its success, the

product may lose market share and begin its decline. Product sales begin to drop due to market

saturation and alternative products, and the company may choose to not pursue additional

marketing efforts as customers may already have determined whether they are loyal to the
company's products or not.
Concept of product mix

Product mix, also known as product assortment or product portfolio, refers to the complete set of

products and/or services offered by a firm. A product mix consists of product lines, which are
associated items that consumers tend to use together or think of as similar products or services.

1. Branding:

Branding is the process of creating strong awareness of a product or service in the market

through the use of a logo, design, symbol, or slogan and using them for advertisement. It helps in
effective communication and creates a substantial and positive impact on the customer‟s mind.

The company uses logos or symbols to create a unique identity, which helps distinguish it from

its competitors. Branding also gives a sneak peek into the product‟s vision and mission. For

example, a catchy slogan or design makes the product appealing and memorable to customers.

The process significantly evolved over the years, making branding an essential part of business
strategy.

2. Packaging:

Packaging is the act of enclosing or protecting the product using a container to aid its

distribution, identification, storage, promotion, and usage. According to Kotler – Packing

constitutes all the activities of designing and producing the container for a product. In simple

terms, packaging refers to designing and developing the wrapping material or container around a
product that helps to

1. Identify and differentiate the product in the market,

2. Transport and distribute the product,

3. Store the product,

4. Promote the product,

5. Use the product properly

Functions Of Packaging

Packaging plays a crucial role from the time a product is developed to the time a product is fully
consumed. These functions of packaging include:

1. Contains the product:

Most products need to be contained either during transportation, storage, or consumption. Packaging
makes sure the product is contained as and when required.

2. Protects the product:

Packaging protects the product and its quality, features, utility, etc. from being damaged or contaminated
during transportation, storage, and consumption.

3. Aids product handling and usage:

Proper packaging aids product handling and makes it easy to transport, ship, and even use the product.

4. Differentiates the product and makes it stand out:

Packaging makes it easier for the customer to identify and differentiate it from other products. Moreover,
attractive packages have a property to stand out and attract customers towards it.

5. Forms a part of product marketing strategy:

An attractive and/or informative package makes the product stand out and have a promotional appeal.
Packaging also acts as the final touch point that helps in product promotion and sale.

6. Provides customer convenience:

Packaging is also a convenience tool that makes it convenient for the customer to carry, transport, and use
the product.

7.Acts as a communication medium:

Packaging along with labeling helps communicate the brand identity, brand message, and product and
company information to the customer.

8. Adds to the aesthetic value:

Packaging can make a simple product look attractive or a unique product look ordinary. It‟s an important
aesthetic touch point that can make or break a sale.

Labeling:
Labeling is a component of the product mix in marketing that involves designing and preparing labels for
the outermost part of the product package which displays information and/or essential characteristics
about the product.

Three functions of labeling are as follows :

(i) Labeling identifies the product :

A label helps in popularizing the product and its brand name by specifying it in a unique design and
style.

(ii) Labeling grades the product :

Labeling suggests the quality of the product and grades, in terms of the performance and utility.

(iii) Labeling describes the product :

A label introduces the product by describing its name/brand, composition/ingredients, features, usage,
approaches, expiry date, warnings, manufactured/registered date, instructions on how product should be
used etc.

Pricing

Pricing is one of the most important aspects of launching a new product. If you price too high, you may
not get the sales you need to make your product profitable. On the other hand, if you price too low, you
may sell many units but not make enough profit to sustain your business. Market maturity is one key
factor.

Factors affecting the price of a product

The following are the factors that affect the determination of the price of a product or a service.

1. Cost of Product:

Cost of the product plays an important role in determining the price. It comprises of cost involved in
production, distribution and sale of the product. Cost of product can be classified into three broad
categories, namely, fixed cost, variable cost and semi variable cost. Fixed cost refers to those cost that do
not vary with the level of output produced. For example, for the production of a good, a firm incurs cost
on the purchase of machinery, land, etc

2. Demand for the Product:

While determining the price, a firm must also consider the demand for its product. Herein, the elasticity of
demand plays an important role. Elasticity of demand refers to the proportionate change in demand due to
a given proportionate change in price. If due to small proportionate a change in price, the demand changes
by a larger proportion, the demand is said to be elastic..

3. Degree of Competition in the Market:

Generally, higher the competition in the market, the lower is the price that a firm can charge for its
product. This is because in case of high competition, if a firm attempts to charge a high price, it would
lose its customers to the competitors. On the other hand, if a firm faces very little competition for its
product then it has the freedom of charging a higher price.

4. Government Regulations:

At times to protect the interest of public at large, the government intervenes in the determination of price.
For example, in case of essential commodities, the government can declare a maximum price that can be
charged.

5. Objectives of Pricing:

Every firm has various pricing objectives which it considers while deciding a price. The following are
some of the objectives of pricing.

i. Profit Maximization:

Every firm aims at profit maximization. However, if the firm aims at maximizing profits only in the short
run, then it may decide to charge a higher price and increase its revenue. On the other hand, if the firm
aims to maximize profit in the long run, it would charge a lower price so as to acquire a greater share of
the market and benefit from larger sales.

ii. Acquiring Market Share:

If a firm desires to capture a greater market share, it would charge a lower price so as to attract a greater
number of customers towards its product.

iii. Surviving Competition:

In face of high competition, a firm would keep the price for its product lower. This is because if it
charges a higher price, it would lose its customers to the competitors.

iv. Focus on Quality:

If the firm emphasis on enhancing the quality of the product, it charges a higher price to cover the
additional cost incurred.

6. Method of Marketing:

Methods of marketing used by the firm such as distribution, advertisement, customer services, branding,
etc. also affect the determination of prices. For example, if the firm uses intense advertising for the
promotion of the product, the nit would charge a higher price.

Market segmentation

Market segmentation is one of the most interesting and useful tools in marketing management. In modern
economics, no company sells its products to individual customer because of mass production techniques.
Goods and services are mass marketed.
Basis of Market Segmentation

(i) Gender

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

Organizations need to have different marketing strategies for men which would obviously not work in
case of females.

A woman would not purchase a product meant for males and vice a versa.

The segmentation of the market as per the gender is important in many industries like cosmetics,
footwear, jewellery and apparel industries.

(ii) Age Group

Division on the basis of age group of the target audience is also one of the ways of market segmentation.
The products and marketing strategies for teenagers would obviously be different than kids.

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

 Age Group (10 – 20 years) – Toys, Apparels, Books, School Bags
 Age group (20 years and above) – Cosmetics, Anti-Ageing Products, Magazines, apparels and so
on

(iii) Income

Marketers divide the consumers into small segments as per their income. Individuals are classified into
segments according to their monthly earnings.

The three categories are:

 High income Group

 Mid Income Group
 Low Income Group

Stores catering to the higher income group would have different range of products and strategies as
compared to stores which target the lower income group.

Pantaloon, Carrefour, Shopper‟s stop target the high income group as compared to Vishal Retail,
Reliance Retail or Big bazaar who cater to the individuals belonging to the lower income segment.

(iv) Marital Status

Market segmentation can also be as per the marital status of the individuals. Travel agencies would not
have similar holiday packages for bachelors and married couples.

(v) Occupation
Office goers would have different needs as compared to school / college students. A beach house shirt or
a funky T Shirt would have no takers in a Zodiac Store as it caters specifically to the professionals.

Need for market segmentation:

1) Precision in Marketing

Market segmentation allows businesses to target their messages precisely. Rather than adopting a
one-size-fits-all approach, they can tailor their offerings and communication to specific
segments, improving the overall effectiveness of their marketing campaigns.

2) Better Customer Understanding

Understanding your customer is key to any successful business. Through segmentation, a

business can better understand the needs, desires, and behaviors of its target market, thereby
enhancing customer satisfaction and loyalty.

3) Efficient Resource Allocation

With the right segmentation, you can ensure your resources are allocated effectively. Marketing
budgets can be used optimally, targeting those segments that are most likely to yield a return on
investment.

4) Competitive Advantage

Market segmentation can also provide a competitive advantage. Understanding the unique
characteristics of your market segments allows you to offer tailored products or services that
meet their specific needs, differentiating your business from competitors.

5) Improve Product Development

By understanding the different segments, businesses can improve their product development
process. They can develop products that specifically cater to the needs and preferences of each
segment.

6) Enhance Customer Retention

Customer retention is often enhanced when a business can meet its customers‟ specific needs.
Market segmentation allows for this by enabling businesses to identify the unique needs and
wants of different customer groups.

7) Increase Profitability
Customizing your offering to meet the needs of different market segments can lead to increased
sales and profitability. Each segment will perceive a higher value in products or services tailored
to their specific needs.

8) Better Communication

Through segmentation, you can communicate more effectively with your target market. You can
tailor your marketing messages to resonate more deeply with each specific segment.

9) Foster Customer Relationships

Market segmentation can help foster stronger customer relationships. By understanding and
meeting the unique needs of each segment, businesses can build deeper and more meaningful
relationships with their customers.

10) Innovation and Growth

Finally, market segmentation can be a springboard for innovation and growth. By identifying
new segments or spotting unmet needs within existing segments, businesses can explore new
product development opportunities or enter new markets.

What is Targeting?
The process of evaluating market segments and choosing the best to target comes under
Market Targeting.
Market Targeting undertakes the decision of choosing the best target audience and the
degree to which the target market should be targeted. In simple terms, it is a process of
choosing the best target audience for the product/service and declaring the other segments
to be useless for a particular kind of product/service.
A business must determine the target audience after thorough research; otherwise, the
business is going to end up wasting time and resources with no return on investment.
Generally, a new product/service is first made available to a single target, and if it remains
optimal, the business takes up other segments as well. Market targeting also depends on the
size of the company. Besides, the more the target markets, the more will the cost of
targeting.
For example
Nike's target market includes those people who are interested in getting fitter.
What is Positioning?
The activity of positioning involves placing the product/service in the minds of the target
customers and making the image of the product/service superior as compared to other similar
products. Various factors affect the process of positioning such as:
 The larger the size of the target market, the more it will be difficult to position the
product/service.
 If there is no competition in the market, then the business can create a completely different
and new market positioning strategy.
 If the product has already a good brand value, then it will be of advantage to the business to
position any new product/service.
 If the company decides to offer fewer prices for its product/service than the rival firms,
then the business can have an advantage in market positioning.
For example
Starbucks wanted to make itself 'The Third Home' between home and work so that people can
come and relax whenever they are tired. They decided to target customers with medium and
high-level income. Starbucks uses the following taglines to strengthen its positioning in the
market:
 100% Recycled Paper Use
 The Finest Milk Use
 The Best Coffee
 Rich & Smooth Flavours
 Natural & Clean