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 Marketing Management – I (Marketing Strategies)
SYLLABUS
1. Product Planning and development: Meaning, Characteristics, classification Product mix
strategy, New Product development process, Product life cycle, Branding-types-brand equity
– Packaging, labelling.

2. Pricing Strategy: Factors affecting pricing decisions, - pricing objectives – pricing policies-
New product pricing strategies.

3. Marketing Channel Decision: Nature and importance channel levels – factors affecting
channel selection - wholesaler and retail marketing-Marketing logics.

4. Promotion Mix Strategy: Meaning and importance – types of promotion mix – selecting a
promotion mix strategy – personal selling – importance.
m
c o
.
5. Social Responsibility of Marketing: Marketing ethics – consumerism – environmentalism,
societal marketing. a
m
DEFINITION OF MARKETING:n
a
y for the purpose of selling the product or service.
- Marketing is the process of communicating the value

d
of a product or service to customers,

According to Dr. t
u
Philip kotler defines marketing as “The science and art of exploring,
S value to satisfy the needs of a target market at a profit.”
creating and delivering

MARKETING MANAGEMENT: - Is the organizational discipline which focus on the

practical application of marketing orientation, techniques and methods

Marketing management is a purely business process

Page 1
1. Product Planning and development:

Meaning: - Product Planning is the on-going process of identifying and articulating market
requirements that define a product's feature set. Product planning serves as the basis for
decisions about price, distribution and promotion.

Product planning is the process of creating a product idea and following through on it
until the product is introduced to the market. Additionally, a small company must have an
exit strategy for its product in case the product does not sell. Product planning entails
managing the product throughout its life using various marketing strategies, including
product extensions or improvements, increased distribution, price changes and promotions.

Characteristics of Product Planning

Product investigation

The process of product planning starts with the systematic and scientific investigation

m
undertaken by the business enterprise with a view to know the needs and preferences of

o
consumers regarding quality, size, design, colour, brand, packaging, shape and price etc.,
c
.
a
Product modification

m
The product planning of business enterprise ensures the modification of existing products to
a
yn
meet the changing demands of consumers, which in return increases the customer satisfaction
and maximizes the profit of an enterprise.
d
tu
Product elimination

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When a product reaches at the decline stage of its life-cycle or there may be acute
competition in case of some product or its cost of production is rising and profits are
declining, then it becomes necessary for the enterprise to take a decision of modification of
existing products or elimination of such products and to divert the resources of the enterprise
in producing some new products.

Possibility of the production of product

The marketing manager has to determine the production possibility of the product and has to
decide whether the production is possible or not. If possible then whether it suits the business
or not.

Page 2
Importance of Product Planning

The importance of Product Planning can be understood by the following facts:

Starting point of Marketing Planning

The product planning involves decision-making regarding the products to be produced

by the enterprise and accordingly prepares the marketing programmes for it. According to
William J. Stanton, “Product Planning is the Starting point for the entire marketing
programme of the firm”. Thus, it is necessary that product planning must be completed
before preparing marketing programme.

Indicator of managerial ability

Product planning is the centre of all marketing activities. It is a process which adopts

m
all the efforts of an enterprise to forecast different aspects of product planning viz. can the

o
product satisfy the needs and wants of consumers? Can the product face the competition? Can
c
.
the consumers pay the price for the product? Can the enterprise earn desired profits? If the
a
reply to all the questions is affirmative, the decision is taken to produce the product is
m
a
decided.

Importance from social viewpoint

yn
d
tu
The product planning is an important means to fulfil the social responsibilities of the

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business. It can be achieved by providing employment opportunities to the local public, by
providing higher standard of living, by fulfilling social expectations of consumers, etc. These
are all possible through proper planning.

Helpful in facing competition

Product planning is regarded as a competitive weapon by making effective decisions

regarding product attributes, price, customer service, promotional techniques, etc. The
success of marketing efforts depends upon the extent to which the products of the firm can
face the competition in the market.

Page 3
Product mix strategies:-
Also known as product assortment refers to the total number of product lines that a
company offers to its customers. For example, a small company may sell multiple lines of
products. For ex: - PATHANJALI, HUL, SAMSUNG, SONY, ECT..
Many strategic decisions must be made to manage a company's assortment of products
effectively. To start, a firm must select strategies regarding its product mix. One decision is
how to position the product relative to competing products and other products sold by the
firm.
Another strategic decision is whether or how to expand the product mix by adding items to a
line and/or introducing new lines. Altering the design, packaging, or other features of existing
products is still another option among the strategies of selecting the best mix. The product
mix also can be changed by eliminating an entire line or by simplifying the assortment within
a line. Alternatively, management may elect to trade up or trade down relative to existing
products.
m
o
Major Types of Product Mix Strategies

c
. mix by increase the number
a
1) Expansion Strategy: A firm may decide to expand its present

m
of lines or the depth within the lines. Now lines may be related or unrelated to the present
products. The company may also increasea
n
the number of items in its product mix.

2) Contraction Strategy:d
y
tuor by simplifying the assortment with in a line. The objective is to
Another product strategy is to narrow the product mix, either by
eliminating entire line
S products and to get more profit from fewer products.
eliminate low-profit

3) Alteration of existing product: Sometimes organization instead of developing a complete

new product improves and establishes product that can be more profitable and less risky than
developing completely new one. For material goods, especially, redesigning is often the key
to products, and renaissance packaging has been a very popular area for product alteration,
particularly in consumer products.

4) Positioning Strategy: Positioning of product in the market is a major determinant of

company profits. A product position is the image that the product projects in relation to
competitive product and to other products marketed by the same company.

Page 4
New product development (NPD)

covers the complete process of bringing a new product to market. New product
development is described in the literature as the transformation of a market opportunity into
a product available for sale.

The product can be tangible (something physical which one can touch) or intangible
(like a service, experience, or belief). A good understanding of customer needs and wants, of
the competitive environment and of the nature of the market represents the top required factor
for the success of a new product.

Eight Simple Steps For New Product Development

#1. Idea Generation
The development of a product will start with the concept. The rest of the process will ensure
that ideas are tested for their viability, so in the beginning all ideas are good ideas (To a
certain extent!)
m
c o
Ideas can, and will come, from many different directions. The best place to start is with a
SWOT analysis, (Strengths, Weaknesses, Opportunities .
current market trends. This can be used to analysea
and Threats), which incorporates
your company’s position and find a
m
In addition to this business-centred n
a
direction that is in line with your business strategy.
activity, are methods that focus on the customer’s needs
y
and wants. This could be:
dresearch

t u
Under-taking market

S
Listening to suggestions from your target audience – including feedback on your
current products’ strengths and weaknesses.
 Encouraging suggestions from employees and partners
 Looking at your competitor’s successes and failures
#2. Idea Screening
This step is crucial to ensure that unsuitable ideas, for whatever reason, are rejected as soon
as possible. Ideas need to be considered objectively, ideally by a group or committee.
Specific screening criteria need to be set for this stage, looking at ROI, affordability and
market potential. These questions need to be considered carefully, to avoid product failure
after considerable investment down the line.

Page 5
#3. Concept Development & Testing
You have an idea and it’s passed the screening stage. However, internal opinion isn’t the
most important. You need to ask the people that matter – your customers.
Using a small group of your true customer base – those that convert – the idea need to be
tested to see their reaction. The idea should now be a concept, with enough in-depth
information that the consumer can visualise it.
#4. Business Analysis
Once the concept has been tested and finalised, a business case needs to be put together to
assess whether the new product/service will be profitable. This should include a detailed
marketing strategy, highlighting the target market, product positioning and the marketing mix
that will be used.
#5. Product Development
If the new product is approved, it will be passed to the technical and marketing development
stage. This is when a prototype or a limited production model will be created. This means you
m
o
can investigate exact design & specifications and any manufacturing methods, but also gives

. c
something tangible for consumer testing, for feedback on specifics like look, feel and
packaging for example.
a
#6. Test Marketing
m
a
yn
Test marketing (or market testing) is different to concept or consumer testing, in that it
introduces the prototype product following the proposed marketing plan as whole rather than

d
u
individual elements.

t to validate the whole concept and is used for further refinement of all
This process is required
S
elements, from product to marketing message.
#7. Commercialisation
When the concept has been developed and tested, final decisions need to be made to move
the product to its launch into the market. Pricing and marketing plans need to be finalised and
the sales teams and distribution briefed, so that the product and company is ready for the final
stage.
#8. Product Launch
A detailed launch plan is needed for this stage to run smoothly and to have maximum impact.
It should include decisions surrounding when and where to launch to target your primary
consumer group. Finally in order to learn from any mistakes made, a review of the market
performance is needed to access the success of the project.

Page 6
Product life cycle
The product life cycle describes the period of time over which an item is developed,
brought to market and eventually removed from the market. The cycle is broken into four
stages: introduction, growth, maturity and decline. The idea of the product life cycle is used
in marketing to decide when it is appropriate to advertise, reduce prices, explore new markets
or create new packaging.

PRODUCT LIFE CYCLE STAGES EXPLAINED

The product life cycle has 4 very clearly defined stages,
each with its own characteristics that mean different things
for business that are trying to manage the life cycle of
their particular products.
Introduction Stage – This stage of the cycle could be the most expensive for a company
launching a new product. The size of the market for the product is small, which means sales

m
are low, although they will be increasing. On the other hand, the cost of things like research

o
and development, consumer testing, and the marketing needed to launch the product can be
c
very high, especially if it’s a competitive sector.
.
a
Growth Stage – The growth stage is typically characterized by a strong growth in sales and
m
a
profits, and because the company can start to benefit from economies of scale in production,

nmoney in the promotional activity to maximize the

the profit margins, as well as the overall amount of profit, will increase. This makes it
ymore
d
possible for businesses to invest

Maturity Stage – t
u
potential of this growth stage.

S During the maturity stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have built up. This is probably the
most competitive time for most products and businesses need to invest wisely in any
marketing they undertake. They also need to consider any product modifications or
improvements to the production process which might give them a competitive advantage.

Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s
known as the decline stage. This shrinkage could be due to the market becoming saturated
(i.e. all the customers who will buy the product have already purchased it), or because the
consumers are switching to a different type of product. While this decline may be inevitable,
it may still be possible for companies to make some profit by switching to less-expensive
production methods and cheaper markets.

Page 7
BRANDING

The American Marketing Association defines a brand as “A name, term, design,

symbol, or any other feature that identifies one seller’s good or service as distinct from those
of other sellers. The legal term for brand is trademark. A brand may identify one item, a
family of items, or all items of that seller. If used for the firm as a whole, the preferred term is
trade name.”

ESSENTIALS OF GOOD BRANDS

1. Should be easy to pronounce

2. It should be easy to remember
3. Able to attract the attention
4. Should suggest the company or product image
5. Should easy to recognize
m
o
6. Brand identity should be very clearly
7. The brand name should be registered
. c
a
8. Should suggest the product benefits or suggest its usage

m
Types of brand
a
ybiken
d
 Individual products:- car, etc.

t u
 Product ranges: - Mercedes Benz, Audi etc.

S
 Services: - hospital educational etc.
 Organizations: - Company etc.
 Individuals: - celebrity, actors etc.
 Groups: - pop group, rock group etc.
 Events:-Olympics, car racing etc.
 Geographic places: - Country, state, city etc.
 Private label brands: - Mineral water brands etc.
 Media brands: - Channels etc.
 E-brands: - Flipkart, Amazon etc.

Page 8
'Brand Equity'

Brand Equity is the value and strength of the Brand that decides it’s worth. It can also
be defined as the differential impact of brand knowledge on consumer’s response to the
Brand Marketing. Brand Equity exists as a function of consumer choice in the market
place. The concept of Brand Equity comes into existence when consumer makes a choice of a
product or a service. It occurs when the consumer is familiar with the brand and holds some
favourable positive strong and distinctive brand associations in the memory.

Brand equity refers to a value premium that a company generates from a product with a
recognizable name, when compared to a generic equivalent. Companies can create brand
equity for their products by making them memorable, easily recognizable, and superior in
quality and reliability. Mass marketing campaigns also help to create brand equity.

Brand equity has three basic components: consumer perception, negative or positive effects,

m
and the resulting value. First and foremost, brand equity is built by consumer perception,

c o
.
which includes both knowledge and experience with a brand and its products.

Packaging a
m
a
n
Packaging is the technology of enclosing or protecting products for distribution, storage, sale,

y
and use. Packaging also refers to the process of designing, evaluating, and producing
packages. Packaging can d

tulogistics, sale, and end use. Packaging contains, protects, preserves,

be described as a coordinated system of preparing goods for
transport, warehousing,
S and sells. In many countries it is fully integrated into government,
transports, informs,
business, institutional, industrial, and personal use.

Packaging has to fulfill a number of important functions, including

 communicating the brand and its benefits;

 protecting the product from damage and contamination during shipment, as well as
damage and tampering once it’s in retail outlets;
 preventing leakage of the contents;
 presenting government-required warning and information labels.

Sometimes packaging can fulfill other functions, such as serving as part of an in-store display
designed to promote the offering.

Page 9
Labelling
Sellers must label products. The label may be a simple tag attached to the product or
an elaborately designed graphic. The label might carry the brand name or a great deal of
information. Labels identify the product or the brand. Eg. The name frooti is stamped on
Mango Juice.
The label might grade the product, they might describe the product, who made it, where it
was made when it was made, expiry date, what it contains, how it is to be used. Finally the
label Marketing Management should promote the product through graphics. It is mandatory
to print MRP on all packaged products

CHAPTER 2.

PRICING STRATEGIES

m
Price is the quantity of payment or compensation given by one party to another in return for
goods or services.
c o
.
a
In modern economies, prices are generally expressed in units of some form of currency.

m
a
A business can use a variety of pricing strategies when selling a product or service.

y n
The price can be set to maximize profitability for each unit sold or from the market overall. It

d market from new entrants, to increase market share within a

can be used to defend an existing
market or to enter at umarket.
new
S
Pricing is one of the most vital and highly demanded components within the theory of
marketing mix. It helps consumers to have an image of the standards the firm has to offer
through their products, creating firms to have an exceptional reputation in the market. The
firm's decision on the price of the product and the pricing strategy impacts the consumer's
decision on whether or not to purchase the product.

Factors affecting pricing decision

Factors affecting pricing divided into two groups:

(A) Internal Factors and

(B) External Factors.

Page 10
(A) Internal Factors:
1. Organisational Factors:
Pricing decisions occur on two levels in the organisation. Over-all price strategy is
dealt with by top executives. They determine the basic ranges that the product falls into in
terms of market segments. The actual mechanics of pricing are dealt with at lower levels in
the firm and focus on individual product strategies. Usually, some combination of production
and marketing specialists are involved in choosing the price.
2. Marketing Mix:
Marketing experts view price as only one of the many important elements of the
marketing mix. A shift in any one of the elements has an immediate effect on the other
three—Production, Promotion and Distribution. In some industries, a firm may use price
reduction as a marketing technique.
Other firms may raise prices as a deliberate strategy to build a high-prestige product line. In
either case, the effort will not succeed unless the price change is combined with a total
marketing strategy that supports it. A firm that raises its prices may add a more impressive
looking package and may begin a new advertising campaign.
m
o
3. Product Differentiation:

. c
The price of the product also depends upon the characteristics of the product. In order

a
to attract the customers, different characteristics are added to the product, such as quality,

m
size, colour, attractive package, alternative uses etc. Generally, customers pay more prices for

a
the product which is of the new style, fashion, better package etc.

yn
4. Cost of the Product:

d
Cost and price of a product are closely related. The most important factor is the cost

tu
of production. In deciding to market a product, a firm may try to decide what prices are
realistic, considering current demand and competition in the market. The product ultimately
S
goes to the public and their capacity to pay will fix the cost, otherwise product would be
flapped in the market.
5. Objectives of the Firm:
A firm may have various objectives and pricing contributes its share in achieving such
goals. Firms may pursue a variety of value-oriented objectives, such as maximizing sales
revenue, maximizing market share, maximizing customer volume, minimizing customer
volume, maintaining an image, maintaining stable price etc. Pricing policy should be
established only after proper considerations of the objectives of the firm.

Page 11
(B) External Factors:
1. Demand:
The market demand for a product or service obviously has a big impact on pricing.
Since demand is affected by factors like, number and size of competitors, the prospective
buyers, 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 results 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 other hand,
if demand is elastic, the firm should not fix high prices, rather it should fix lower prices than
that of the competitors.

2. Competition:

Competitive conditions affect the pricing decisions. 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 no case, be lower than that of the competitors.
m
3. Suppliers:
c o
. a significant effect on the price
a
Suppliers of raw materials and other goods can have

manufacturers. Manufacturers, in turn, pass it m

of a product. If the price of cotton goes up, the increase is passed on by suppliers to

a
on to consumers.

y n appears to be making large profits on a particular

Sometimes, however, when a manufacturer

d product is intimately linked up with the price of the raw

product, suppliers will attempt to make profits by charging more for their supplies. In other

materials. Scarcity t u
words, the price of a finished
or abundance of the raw materials also determines pricing.
S
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. To meet the changes in demand, price etc.

Several pricing decisions are available:

(a) Prices can be boosted to protect profits against rising cost,

(b) Price protection systems can be developed to link the price on delivery to current costs,

(c) Emphasis can be shifted from sales volume to profit margin and cost reduction etc.

Page 12
5. Buyers:

The various consumers and businesses that buy a company’s products or services may
have an influence in the pricing decision. Their nature and behaviour for the purchase of a
particular product, brand or service etc. affect pricing when their number is large.

6. Government:

Price discretion is also affected by the price-control by the government through

enactment of legislation, 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. The marketers obviously can exercise substantial control over
the internal factors, while they have little, if any, control over the external ones.

Pricing Objectives:
Pricing can be defined as the process of determining an appropriate price for the
product, or it is an act of setting price for the product. Pricing involves a number of decisions
related to setting price of product.
m
c o
.
a
m
a
yn
d
tu
S

1. Profits-related Objectives:
Profit has remained a dominant objective of business activities.

Company’s pricing policies and strategies are Aimed at following profits-related

objectives:
i. Maximum Current Profit:
One of the objectives of pricing is to maximize current profits. This objective is aimed
at making as much money as possible. Company tries to set its price in a way that more
current profits can be earned. However, company cannot set its price beyond the limit. But, it
concentrates on maximum profits.

Page 13
ii. Target Return on Investment:
Most companies want to earn reasonable rate of return on investment.

Target return may be:

(1) fixed percentage of sales,
(2) Return on investment, or
(3) A fixed rupee amount.
Company sets its pricing policies and strategies in a way that sales revenue ultimately
yields average return on total investment. For example, company decides to earn 20% return
on total investment of 3 crore rupees. It must set price of product in a way that it can earn 60
lakh rupees.

2. Sales-related Objectives:
The main sales-related objectives of pricing may include:
i. Sales Growth:

m
Company’s objective is to increase sales volume. It sets its price in such a way that

c o
more and more sales can be achieved. It is assumed that sales growth has direct positive
.
impact on the profits. So, pricing decisions are taken in way that sales volume can be raised.
a
Setting price, altering in price, and modifying pricing policies are targeted to improve sales.

m
a
ii. Target Market Share:

n
A company aims its pricing policies at achieving or maintaining the target market
y
dshare is a specific volume of sales determined in light of total
share. Pricing decisions are taken in such a manner that enables the company to achieve

sales in an industry. u
targeted market share. Market
t For example, company may try to achieve 25% market shares in the

S
relevant industry.

iii. Increase in Market Share:

Sometimes, price and pricing are taken as the tool to increase its market share. When
company assumes that its market share is below than expected, it can raise it by appropriate
pricing; pricing is aimed at improving market share.

3. Competition-related Objectives:
Competition is a powerful factor affecting marketing performance. Every company
tries to react to the competitors by appropriate business strategies.

With reference to price, following competition-related objectives may be priorized:

Page 14
i. To Face Competition:
Pricing is primarily concerns with facing competition. Today’s market is
characterized by the severe competition. Company sets and modifies its pricing policies so as
to respond the competitors strongly. Many companies use price as a powerful means to react
to level and intensity of competition.

ii. To Keep Competitors Away:

To prevent the entry of competitors can be one of the main objectives of pricing. The
phase ‘prevention is better than cure’ is equally applicable here. If competitors are kept away,
no need to fight with them. To achieve the objective, a company keeps its price as low as
possible to minimize profit attractiveness of products. In some cases, a company reacts
offensively to prevent entry of competitors by selling product even at a loss.

iii. To Achieve Quality Leadership by Pricing:

Pricing is also aimed at achieving the quality leadership. The quality leadership is the
image in mind of buyers that high price is related to high quality product. In order to create a
positive image that company’s product is standard or superior than offered by the close
competitors; the company designs its pricing policies accordingly.
m
iv. To Remove Competitors from the Market:
c o
. the competitors away from
a
The pricing policies and practices are directed to remove
the market. This can be done by forgoing the current profits – by keeping price as low as
m
possible – in order to maximize the future profits by charging a high price after removing
a can remove weak competitors.
yn
competitors from the market. Price competition

4. Customer-related Objectives:
d
t u
Customers are in centre of every marketing decision.

S
Company wants to achieve following objectives by the suitable pricing policies and
practices:
i. To Win Confidence of Customers:
Customers are the target to serve. Company sets and practices its pricing policies to
win the confidence of the target market. Company, by appropriate pricing policies, can
establish, maintain or even strengthen the confidence of customers that price charged for the
product is reasonable one. Customers are made feel that they are not being cheated.

ii. To Satisfy Customers:

To satisfy customers is the prime objective of the entire range of marketing efforts.
And, pricing is no exception. Company sets, adjusts, and readjusts its pricing to satisfy its
target customers. In short, a company should design pricing in such a way that results into
maximum consumer satisfaction.

Page 15
5. Other Objectives:
Over and above the objectives discussed so far, there are certain objectives that
company wants to achieve by pricing.

They are as under:

i. Market Penetration:
This objective concerns with entering the deep into the market to attract maximum
number of customers. This objective calls for charging the lowest possible price to win price-
sensitive buyers.

ii. Promoting a New Product:

To promote a new product successfully, the company sets low price for its products in
the initial stage to encourage for trial and repeat buying. The sound pricing can help the
company introduce a new product successfully.

iii. Maintaining Image and Reputation in the Market:

Company’s effective pricing policies have positive impact on its image and reputation
m
o
in the market. Company, by charging reasonable price, stabilizing price, or keeping fixed

c
price can create a good image and reputation in the mind of the target customers.
.
iv. To Skim the Cream from the Market:
a
m
This objective concerns with skimming maximum profit in initial stage of product life
a
cycle. Because a product is new, offering new and superior advantages, the company can

yn
charge relatively high price. Some segments will buy product even at a premium price.

v. Price Stability:
d
tu
Company with stable price is ranked high in the market. Company formulates pricing

S
policies and strategies to eliminate seasonal and cyclical fluctuations. Stability in price has a
good impression on the buyers. Frequent changes in pricing affect adversely the prestige of
company.

vi. Survival and Growth:

Finally, pricing is aimed at survival and growth of company’s business activities and
operations. It is a fundamental pricing objective. Pricing policies are set in a way that
company’s existence is not threatened.

Page 16
Pricing policy
Pricing is an important aspect of Marketing. So it needs to be done carefully. That is
why organizations formulate pricing policies and strategies to fix the price of their products.
Pricing affect the sales as well as the profit of the company. It is an important task. It is a
factor which determines the acceptance of the product in the market thereby it determines the
future of the product in the market.
Price is an important element in the marketing mix;
A price policy is the standing answer of the firm to recurring problem of pricing. It provides
guidelines to the marketing manager to evolve appropriate pricing decisions, it competition is
mainly on price basis, and then each company generally prices its products at the same level
as its competitors. If there is non-price competition, each marketer chooses from among the
three alternatives
1. Price in line (Pricing at the market): The sale at current market price is desirable
under free competition and when a traditional or customary price level exists. It is
preferable when product differentiation through branding is minimum, buyers and
sellers are well informed, and we have a free market economy.

m
2. Market-plus (Pricing above the market): The sale above the market prices under
o
free competition is profitable only when your product is distinctive, unique and it has
c
.
prestige or status in the market. Customer is inclined to put a greater value on the

a
product if the package is very good or the brand is well-known. Otherwise, it will be

m
killing price policy.

a
3. Market-minus (Pricing below the market): The sale below the market price,

yn
particularly at the retail level, is profitable only to large chain stores, self-service

d
stores and discount houses. These large retailers can sell well-known nationally

tu
advertised brands 10 to 30 per cent below the suggested retail prices, list prices or
fixed rescale prices by the manufactures.
S
One price policy
A pricing strategy in which the same price is offered to every customer who
purchases the product under the same conditions. A one price policy may also mean that
prices are set and cannot be negotiated by customers.
A one price policy is the opposite of a differential pricing approach, in which prices may vary
based on location, promotional offers, method of payment, or other factors.

Variable pricing
Variable pricing is a pricing strategy where a business offers varying price points at
different locations or points-of-sale. This is a common approach used by retailers when the
costs of offering certain goods and services and the level of market demand justify it. The
objective is to optimize overall profit by offering the best prices at each point-of-sale.

Page 17
Explain the New product pricing

Price skimming
One of the most commonly discussed strategies is the skimming strategy. This
strategy refers to a firm’s desire to skim the market by selling at a premium price. This
strategy delivers results in the following
a. When the target market associates quality of the product with its price, and high price is
perceived to mean high quality of the product.
b. When the customer is aware and willing to buy the product at a higher price just to be am
opinion leader
c. When the product is perceived as enhancing the customer’s status in society.
d. When competition is non-existent or the threat from potential competition exists in the
industry because of low entry and exit barriers.
e. When the product represents significant technological breakthroughs and is perceived as a
‘high technology’ product. m
c o
.
In adopting the skimming strategy the firm’s objective is to achieve an early break-even point

a from a niche.
and to maximize profits in a shorter time span or seek profits

m
a
As opposed to the skimmingn
Penetration pricing

y strategy, the objective of penetration price strategy is to

dcompetitive market. The objective of this strategy is to attain

tupenetration. Here, the firm prices its product lower than the others in
gain a foothold in a highly
market share or market
Sstrategy delivers results in the following situations:
competition. This
a. When the size of the market is large and it is a growing market.
b. When customer loyalty is not high; customers have been buying the existing brands more
because of habit rather than for a specific preference for it.
c. When the market is characterized by intensive competition.
d. When the firm uses it as an entry strategy
e. Where price-quality association is weak.

Page 18
 CHAPTER-3 Marketing Channels

Introduction
Of the four elements of marketing mix viz., product, price, promotion and
distribution, distribution [i.e., the channels of distribution and physical distribution] is the
most important element. The success or failure of a firm depends largely upon the efficiency
of distribution

CHANNELS OF DISTRIBUTION
MEANING
The term channel‘ is derived from the French word canal‘ meaning artificial water
way for transportation or irrigation so, channel of distribution refers to the pathway, path or
route taken by goods as they flow or move from the point of production to the point of
consumption or use.
m
c o
In the words of Prof. W. Stanton ―channel of distribution is the route taken by the goods as
. user‖
a
they move from the producer to the ultimate consumer or industrial

m
According to Philip kotler ―every producer
a seeks to link together the set of marketing

nchannel or channel of distribution]‖

intermediaries that best fulfill the firm‘s objective. This set of marketing intermediaries is
ytrade
d
called the marketing channel [also

t u
S
Levels of Channels
By channel level we mean how many intermediaries are there between the producer
and consumer. Distribution channels are usually of two types, namely zero level channel or
direct marketing channel and indirect marketing channel.
Direct Marketing Channel or Zero Level Channel
This type of channel has no intermediaries In this distribution system, the goods go from the
producer direct to the consumer. Companies use their own sales force to reach consumers.
Eg. Eureka Forbes which markets water purifiers in Indian market, Dell Computers.
cc Producer Consumer

Zero Level Channel

Page 19
 Indirect Marketing Channel – These are typical channels in which a third party is involved
in the distribution of products and services of a firm. It can be classified into following
categories:

 One-Level Channel- In this type of channel there is only one intermediary between
producer and consumer. This intermediary may be a retailer or a distributor. It is used
for specialty products like washing machines, refrigerators, Automobiles etc.

Producer Distributor / Consumer

Retailer

 Two-Level Channel – This type of channel has two intermediaries, namely,

wholesaler/distributor and retailer between producer and consumer. It can be seen in
pharmaceuticals, liquor, expensive readymade garments.
m
c o Consumer
Producer Wholesaler Retailer
.
a
m
a
y n
 Three-Level channel – This type of channel has three intermediaries namely

dand retailer. This pattern is used for convenience products like

distributor, wholesaler

tuicecreams, soft drinks etc.

soaps, toothpaste,
S
Producer Agent Wholesaler Retailer Consum
er
Factors affecting the choice of channels are as follows
It is a firm and its customer oriented and it should be proper.
1. Market considerations:
a. Type of the market
b. Number of potential customers
c. Geographic concentration of the market
d. Order size.

Page 20
2. Product considerations
a. Unit value
b. Perishability
c. Technical nature

3. Middlemen considerations
a. Services provided by middlemen
b. Availability of desired middlemen
c. Producer’s and middlemen’s policies

4. Company considerations
a. Desire for channel control
b. Service provided by seller
c. Financial resources.
m
c o
Retailing
.
a
Includes all activities involved in selling goods or services directly to final consumers
m
a
for personal, non-business use. A retailer or retail store is any business enterprise whose sales

yn
volume comes primarily from retailing.

 Specialty Store – d
Major Retailer Types

u
t Store.
Narrow product line with a deep assortment. Eg. Park Avenue

S
Men’s Clothing
 Department Store – Several product lines-typically clothing, home furnishings and
household goods-with each line operated as a separate department managed by
specialist buyers. Eg. Shoppers Stop, Pantaloons
 Supermarket – Relatively large, low cost, low margin, high volume, self-service
operation designed to serve total needs for food, laundry and household products. Eg.
Food World, Food Bazaar, Reliance Fresh etc.
 Convenience Store – Relatively small store located near residential area, open long
hours, seven days a week and carrying a limited line of high-turnover convenience
products at slightly higher prices. Nearby Mom n Pop Stores in the residential area..
 Discount store – Standard merchandise sold at lower prices with lower margins and
higher volumes. Eg. Wal-Mart, Metro

Page 21
  Hypermarket – Large sized store and product assortment includes furniture, large
and small appliances, clothing and many other items. Eg. Spar Hypermarket.

Wholesaling
Includes all the activities in selling goods or services to those who buy for resale or
business use. Buy from manufacturer and sell to retailers.
Functions –
 Selling and promoting – Wholesaler’s sales force helps manufacturers reach many
small business customers at a relatively low cost. Wholesalers have more contacts,
and often buyers trust wholesalers more than they trust a distant manufacturer.
 Buying and assortment building – Wholesalers are able to select items and build the
assortments their customers need, saving the customers considerable work.
 Bulk breaking – Wholesalers achieve savings for their customers through buying in
large carload lots and breaking the bulk into smaller units.
m
o
 Warehousing – Wholesalers hold inventories, thereby reducing inventory costs and

c
risks to suppliers and customers.
.
a
 Transportation – Wholesalers can often provide quicker delivery to buyers because
they are closer to the buyers.
m
a
yn
 Financing – Wholesalers finance customers by granting credit, and finance suppliers
by ordering early and paying bills on time.
d
u
 Risk bearing – Wholesalers absorb some risk by taking title and bearing the cost of
t spoilage and obsolescence.
SInformation – Wholesalers supply information to suppliers and customers
theft, damage,
 Market
regarding competitor’s activities, new products, price developments and so on.
 Management services and counseling – Wholesalers often help retailers improve
their operations by training sales clerks, helping with store layouts and displays and
setting up accounting and inventory control systems.

2. Warehousing

A warehouse is a place. Here, surplus goods can be kept safely for future use. Modern
warehouses are equipped with latest equipment‘s and facilities for the safety of goods from
theft, sun, moisture, rats etc. Warehousing has removed the obstacle of time in the smooth
flow of trade. It helps in storage of goods until they are demanded for further use or sale. It

Page 22
has proved to be a boon to the manufacturers and trades by helping them to store and
accumulate goods.

Functions of warehousing

1. Storage:- This is the basic function of warehousing. Surplus commodities which are
not needed immediately can be stored in warehouses. They can be supplied as and
when needed by the customers.
2. Price stabilization:- Warehouses play an important role in the process of price
stabilization. It is achieved by the creation of time utility by warehousing. Fall in the
prices of goods when their supply is in abundance and rise in their prices during the
slack season are avoided.
3. Risk Bearing:- When the goods are stored in warehouses they are exposed to many
risks in the form of theft, deterioration, exploration, fire etc. Warehouses are

m
constructed in such a way as to minimise these risks. Contract of bailment operates
when the goods are stored in wave-houses.
c o
4. . keeper against the goods stored
Financing:- Loans can be raised from the warehouse
a keeper. Similarly, banks and
by the owner. Goods act as security for the warehouse
mloans against warehouse receipts. In this
a
other financial institutions also advance

yn
manner, warehousing acts as a source of finance for the businessmen for meeting
business operations.
d
5.
t u
Grading & Packaging:- Warehouses nowadays provide the facilities of packing,

S
processing and grading of goods. Goods can be packed in convenient sizes as per the
instructions of the owner.

Types of warehousing

 Private warehousing:- The private warehouses are owned and operated by big
manufacturers and merchants to fulfil their own storage needs. The goods
manufactured or purchased by the owner of the warehouses have a limited value or
utility as businessmen in general cannot make use of them because of the heavy
investment required in the construction of a warehouse, some big business firms
which need large storage capacity on a regular basis and who can afford money,
construct and maintain their private warehouses.

Page 23
  Public warehousing :- A public warehouse is a specialised business establishment
that provides storage facilities to the general public for a certain charge. It may be
owned and operated by an individual or a cooperative society. It has to work under a
license from the government in accordance with the prescribed rules and regulations.
 Bonded warehousing:- Bonded warehouses are licensed by the government to
accept imported goods for storage until the payment of custom duty. They are located
near the ports. These warehouses are either operated by the government or work under
the control of custom authorities.

The warehouse is required to give an undertaking or ‘Bond’ that it will not allow the
goods to be removed without the consent of the custom authorities. The goods are
held in bond and cannot be withdrawn without paying the custom duty. The goods
stored in bonded warehouses cannot be interfered by the owner without the
permission of customs authorities. Hence the name bonded warehouse.

m
o
 Government warehousing:- The Government warehouses are owned and operated
c
.
by Governments for the purpose of storing government products.
a
Logistics:-
m
a
y n
Logistics is generally the detailed organization and implementation of a complex

dand the point of consumption in order to meet requirements of

operation. In a general business sense, logistics is the management of the flow of things

u The resources managed in logistics can include physical items

between the point of origin
t
customers or corporations.
S
such as food, materials, animals, equipment, and liquids; as well as abstract items, such as
time and information. The logistics of physical items usually involves the integration of
information flow, material handling, production, packaging, inventory, transportation,
warehousing, and often security.

Functions of logistics

Page 24
Order processing

It is an important task in functions of logistics operations. The purchase order placed

by a buyer to a supplier is an important legal document of the transactions between the two
parties. This document incorporates the description or technical details of the product to
supply, price, delivery period, payment terms, taxes, and other commercial terms as agree.

Inventory control

Inventory management is to keep enough inventories to meet customer requirements,

and simultaneously its carrying cost should be lowest. It is basically an exercise of striking a
balance between the customer service for not losing market opportunity and the cost to meet
the same.

Warehousing
m
c o
Warehousing is the storing of finished goods until they are sold. It plays a vital role in
.
logistics operations of a firm. The effectiveness of an organization’s marketing depends on
the appropriate decision on warehousing. In today’s acontext, warehousing is treated as
mwarehousing management. Warehousing
a
switching facility rather than a storage of improper
is the key decision area in logistics. n
y
The major decisions in warehousing are:

d


u
Location of warehousing facilities
t
S
Number of warehouses
 Size of the warehouse
 Warehouse layout
 Design of the building
 Ownership of the warehouse

Transportation

For movement of goods from the supplier to the buyer, transportation is the most
fundamental and important component of logistics. When an order is placed, the transaction
is not completed till the goods are physically moved to the customer’s place. The physical
movement of goods is through various transportation modes. In logistics costs, its share
varies from 65 to 70 percent in the case of mass-consumed, very low unit-priced products.

Page 25
Material handling and storage system

The speed of the inventory movement across the supply chain depends on the material
handling methods. An improper method of material handling will add to the product damages
and delays in deliveries and incidental overheads. Mechanization and automation in material
handling enhance the logistics system productivity. Other considerations for selection of a
material handling system are the volumes to be handled, the speed required for material
movement and the level of service to be offered to the customer.

Logistical packaging

Logistical or industrial packaging is a critical element in the physical distribution of a

product, which influences the efficiency of the logistical system. It differs from product
packaging, which is based on marketing objectives. However, logistical packaging plays an
important role in damage protection, case in material handling and storage space economy.
m
o
The utilisation of load has a major bearing on logistical packaging with regard to the

c
packaging cost.
.
a
Information
m
a
n
y system plays a vital role in delivering a superior service
Logistics is basically an information-based activity of inventory movement across a

d
supply chain. Hence, an information
to the customers.
t u
S
Use of IT tools for information identification, access, storage, analysis, retrieval and decision
support which is vital among the functions of logistics is helping business firms to enhance
their competitiveness.

Types of logistics

1. Road (on surface)

2. Rail
3. Water ways
4. Air ways

Page 26
 CHAPTER-4 PROMOTION MIX STRATEGY

In marketing, the promotional mix describes a blend of promotional variables chosen

by marketers to help a firm reach its goals. It has been identified as a subset of the marketing
mix. It is believed that there is an optimal way of allocating budgets for the different elements
within the promotional mix to achieve best marketing results, and the challenge for marketers
is to find the right mix of them.

Promotion mix:

It refers to all the decisions related to promotion of sales of products and services. The
important decisions of promotion mix are selecting advertising media, selecting promotional
techniques, using publicity measures and public relations etc.

There are various tools and elements available for promotion. These are adopted by firms to

m
carry on its promotional activities. The marketer generally chooses a combination of these

c o
.
promotional tools.

a
m
a
yn
Elements of promotion mix:

1. Advertising
d
2. Sales promotion
tu
S
3. Personal selling

4. Public relation

1. Advertising:

Advertisement can be defined as the “paid form of non-personal presentation and

promotion of idea, goods or services by an identified sponsor”.

It is an impersonal presentation where a standard or common message regarding the merits,

price and availability of product or service is given by the producer or marketer. The
advertisement builds pull effect as advertising tries to pull the product by directly appealing
to customer to buy it.

Page 27
From the above definition we can find that the three distinct features of advertising are:

1. Paid Form:

The sponsor has to pay for advertising he has to bear a cost to communicate with customers.

2. Impersonality:

There is no face to face contact between customers and advertiser. It creates a monologue and
not a dialogue.

3. Identified Sponsor:

Advertisement is given by an identified company or firm or individual.

Features of Advertising and Advantages/Merits of Advertisement:

m
(i) Reach:
c o
.
a
Advertising can reach a large market. As through various media of advertising there is

m
benefit of mass reach for example, any message given on All India Radio or TV can reach in
a
n
different corners of the country wherever TV and Radio network is available.

y
(ii) Choice: d
t u
S
There is wide variety of media available for advertising for video, audio, visual audio,
print media etc. Under each category large variety is available for example, in print media we
can select from magazines, newspaper, banner etc. This variety or choice helps the marketer
to select the media, keeping in mind the target customer.

(iii) Legitimacy:

In advertisement the messages regarding the product or service are given publicly to
customers so there is always a proof for it and customers believe that publicly the company
will not give false information of the product. The customer feels comfortable to buy a
product which is widely advertised.

Page 28
(iv) Expressiveness:

Advertising provides enough opportunities to marketers to dramatize the message

with the help of drawings, colours, pictures, music, dance etc. They can easily express the use
of product through various techniques, and can add multimedia effect also.

(v) Economy:

It is always felt that advertising increases the cost of product or service but advertising
is considered economical as compared to other promotional techniques because it reaches
masses and if we calculate cost per customer it is very low or nominal.

(vi) Enhancing Customer Satisfaction and Confidence:

Customer feel more assured about quality and feel more comfortable if sponsors claim

m
these benefits in advertising.

c o
Disadvantages of Advertising:
.
a
m
(i) It is an Impersonal Communication/Less Forceful:

a
n
In advertising there is no direct communication between the customer and marketer.
The marketer assumes that the y
not pay any attention u
d message is communicated but the audience or customers do

t to impersonal messages conveyed through advertising. The response of

S
customer cannot be known in advertising.

(ii) Advertising is less effective:

In advertising there is only one way communication i. e., communication from seller
only, but two way communication is always more effective as in two way communication the
customer gets chance to clarify his or her queries. Sometimes customers have many doubts
regarding the use of product, these doubts can be clarified only when there is two way
communication.

Page 29
(iii) Difficulty in Media Choice:

In advertising various media are available. Each media have its own advantages and
disadvantages. So the effectiveness of advertisement depends to a great extent on the right
choice of media. When choice of media is faulty or wrong no matter how good the
advertisement is it will not reach the target customer.

(iv) Inflexibility:

It is very difficult to change advertisement as companies use standardised messages

which cannot be changed according to the need of customers.

(v) Lack of Feedback:

The evaluation of effectiveness of advertisement is very difficult as there is no

m
immediate and accurate feedback given by the customers.

c o
2. Sales Promotion:
.
a
m
Sales promotion refers to short term use of incentives or other promotional activities

a
that stimulate the customer to buy the product. Sales promotion techniques are very useful
because they bring:
yn
d
tu
(a) Short and immediate effect on sale.

S
(b) Stock clearance is possible with sales promotion.

(c) Sales promotion techniques induce customers as well as distribution channels.

(d) Sales promotion techniques help to win over the competitor.

Sales Promotion Techniques for Customers:

Some of the sales promotion activities commonly used by the marketer to increase the sale
are:

Page 30
(i) Rebate:

It refers to selling product at a special price which is less than the original price for a
limited period of time. This offer is given to clear off the stock or excessive inventory for
example; coke announced 2 liter bottles at Rs 35 only.

(ii) Discounts:

This refers to reduction of certain percentage of price from list price for a limited
period of time. The discounts induce the customers to buy and to buy more. Generally at the
end of season big companies offer their products at discounted price to clear off the stock
e.g., season’s sale at Snow-White Jain Sons, Paul Garments, Bhuvan Garments, etc.

(iii) Refunds:

m
This refers to refund or part of price paid by customer on presenting the proof of

o
purchase for example, Rs 2 off on presentation of empty pack of Ruffle Lays.
c
.
(iv) Premiums or Gifts/or Product Combination:
a
m
a
These are most popular and commonly used promotion tool. It refers to giving a free
n
ywith Bourn vita, Shaker free with Coffee, Toothbrush free
gift on purchase of the product. Generally the free gift is related to product but it is not

d
necessary for example, Mug free
with Toothpaste, etc. u
t
S
(v) Quantity Deals:

It refers to offer of extra quantity in a special package at less price or on extra

purchase some quantity free for example, buy three get one free e.g., this scheme of buy three
get one free scheme is available on soaps.

(vi) Samples:

It refers to distribution of free samples of product to the customers. These are

distributed when the seller wants the customer must try the product. Generally when a new
product is launched for example, when Hindustan Level launched Surf Excel it distributed the
samples as it wanted the customers to try it.

Page 31
(vii) Contests:

It refers to participation of consumers in competitive events organised by the firm and

winners are given some reward for example, Camlin Company organizes painting
competition, Bourn vita quiz contest and some companies organise contest of writing slogans
and best slogan is awarded prize.

(viii) Instant Draws and Assigned Gifts:

It includes the offers like ‘scratch a card’ and win instantly a refrigerator, car, T-shirt,
computer etc.

(ix) Lucky Draw:

In this draws are taken out by including the bill number or names of customers who

m
have purchased the goods and lucky winner gets free car, computer, A.C., T.V., etc. Draw
can be taken out daily, weekly, monthly, etc.
c o
.
(x) Usable Benefits:
a
m
a
This includes offers like ‘Purchase goods worth Rs 5000 and get a holiday package’

yn
or get a discount voucher, etc.

d
tu
(xi) Full Finance @ 0%:

S
Many marketers offer 0% interest on financing of consumer durable goods like
washing machine, T.V. etc. e.g., 24 easy installments 6 paid as front payment and remaining
18 with post-dated cheques. In these types of scheme customers should be careful about the
file charges etc.

(xii) Packaged Premium:

In this type of sales promotion the free gift is kept inside the pack. The gift is kept in
limited products but the excitement of getting the gift induces the customer to buy the
product for example, gold pendant in soap, gold coin in Tata tea etc.

Page 32
(xiii) Container Premium:

This refers to use of special container or boxes to pack the products which could be
reused by the customer for example, Pet Bottles for Cold Drinks. This bottles can be used for
Steering Water, Plastic Jars for Bourn vita, Maltova, etc. which can be reused by the
housewives in kitchen.

Merits of Sales Promotion:

1. Attention Value:

The incentives offered in sales promotion attract attention of the people.

2. Useful in New Product Launch:

m
The sales promotion techniques are very helpful in introducing the new product as it induces

o
people to try new products as they are available at low price or sometimes as free sample.

c
.
3. Synergy in Total Promotion Efforts:
a
m
a
Sales promotion activities supplement advertising and personal selling efforts of the

y n
company. Sales promotion adds to the effectiveness of advertisement efforts.

4. Aid to other Promotiond

t u Tools:

Stechnique makes other promotion techniques more effective. Salesmen find

Sales promotion
it easy to sell products on which incentives are available.

Demerits of Sales Promotion:

1. Reflect Crisis:

If firm is offering sales promotion techniques again and again it indicates that there is no
demand of product which can create crisis situation.

Page 33
2. Spoil Product Image:

Use of sales promotion tool may affect the image of product as buyer feel that product is of
low quality that is why firm is offering incentives.

3. Personal Selling:

Personal selling means selling personally. This involves face to face interaction
between seller and buyer for the purpose of sale.

The personal selling does not mean getting the prospects to desire what seller wants but the
concept of personal selling is also based on customer satisfaction.

Features of Personal Selling:

m
(i) Personal Interaction:

c o
.
In personal selling the buyers and sellers have face to face interaction. This closeness allows

a
both the parties to observe each other’s action closely.

m
(ii) Two Way Communication:
a
yn
In personal selling the sellers give information about the product, at the same time the buyer
d
u
get a chance to clarify his doubts. It is suitable for sale of complex products where buyer
t the manufacturer.
S
wants to interact with

(iii) Better Response:

When seller is personally explaining the utilities of product to the customers then customer
do pay some attention and listen to the information.

(iv) Relationship:

When the seller and buyer come together this may improve relation between the customer
and seller. Salespersons normally make friendly relations with the customers.

Page 34
(v) Better Convincing:

Personal selling is most effective form of promotion because with this the sales person can
convince the buyer by demonstrating the use of product and making changes in the product
according to the need of customer.

Qualities of a Good Salesman:

The qualities which are commonly found among effective salesman are described below:

1. Physical Qualities:

A salesman must have good health and pleasing personality. He must be well built
and free from physical defects. A pleasing and charming personality boosts self-confidence.
Good grooming, appropriate dress, clean and tidy appearance and a good posture will go a

m
long way in creating a first impression. More importantly, a salesman must always have a
cheerful smile on his face.
c o
.
2. Social Qualities: a
m
a
A salesman must have good manners, courtesy in dealing with customers. The

y n
practice of greeting and thanking customers, using polite expression are necessary for success

dnot be shy or reserved but an extrovert and a good listener. He

in personal selling. He should

tusay the proper things and do the right thing without offending others.
must have the ability to
S
3. Mental Qualities:

A good salesman must have a high degree of intelligence, initiative and foresight. He
must be intelligent and imaginative enough to understand the customer quickly and read his
mind accurately.

Salesman must have two basic qualities i.e., empathy and ego drive. Empathy means he must
have ability to understand the problem from customer’s point of view. Ego drive means
salesman must pursue sale not just for money but for recognition and personal success. A
good salesman must have presence of mind and good common sense.

Page 35
4. Technical Quality:

The salesman must have full technical knowledge about the product.

5. Other Qualities:

Other qualities, a salesman must possess, are:

(i) A salesman must have a good power of memory and observation.

(ii) A salesman must be honest and should not try to win the customer through false and
misleading representation.

(iii) A salesman must be a man of sound character, loyal and dependable. He must perform
his duties sincerely.

m
o
(iv) The salesman must have wide knowledge about the product he is selling and company he
is representing.
. c
a
m
(v) He must have capacity to inspire trust.

a
yn
Role of Personal Selling:

d
u
Personal selling plays a very important role in marketing of goods and services. It is
t
S
important tool for businessmen, customers and society.

1. Importance to Businessmen:

Personal selling is an important tool to increase the sale. It is important for businessman due
to following reasons:

(i) Effective Promotion Tool:

Personal selling is an effective tool to increase the sale of product. Salesmen explain the
merits of products to customers.

Page 36
(ii) Flexible Tool:

Personal selling efforts can be changed according to the type of customer salesmen are
attending. They may change the offer in varying purchase situations.

(iii) Minimum Wastage of Efforts:

As compared to other methods of promotion in personal selling the wastage of efforts is

minimum.

(iv) Consumer Attention:

Through personal selling it is easy to get the attention of customer as there is face to face
interaction between salesman and customers.

(v) Relationship:
m
c o and sales-persons
Personal selling helps to create lasting relationship between customers
.
a
which help in increasing sale.

m
a
(vi) Personal Support:

Through personal selling salesmen n

y can create personal support with the customers. This can
dof organisation.
u
improve competitive strength
t
S to Introduce New Product:
(vii) Very Effective

Personal selling is very effective to introduce a new product as salesman can explain the
merits, show the demonstration and clarify the doubts of customers.

Importance to Customers:

Personal selling is very important from customer’s point of view, as customers can get
required information about the product from customers. Customers are benefits by personal
selling in the following ways:

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1. Helps in Identifying Needs:

Salesmen help the customers to discover their needs and wants and they also help customers
to know how these needs and wants can be satisfied.

2. Latest Market Information:

In personal selling salesmen provide information regarding the new products available in
market, uses of those products etc.

3. Expert Advice:

Customers can get expert advice and guidance in purchasing various goods and services.

4. Induces Customers:

m
Personal selling induces customers to buy products for satisfying their needs.

c o
Importance to Society:
.
a
m
Personal selling brings following positive effects for society
a
y n
1. Converts Latest Demand into Effective Demand:

d demand which results in increasing sale and more income.

With more incomet
u
Personal selling creates effective

growth.
S there will be more products and services which in turn bring economic

2. Employment Opportunities:

Unemployed youth can work as salesman and earn their livelihood.

3. Career Opportunities:

Personal selling offers attractive career with job satisfaction and security.

4. Mobility of Sales Persons:

Sales people move from one place to other, this promotes travel and tourism industry.

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5. Product Standardisation:

With the help of personal selling there can be uniformity of consumption by supplying
standardised products.

4. Public Relations:

Apart from four major elements of marketing mix, another important tool of
marketing is maintaining Public Relations. In simple words, a public relations means
maintaining public relations with public. By maintaining public relations, companies create
goodwill.

Public relations evaluate public attitudes; identify the policies and procedures of an
organisation with the public interest to earn public understanding and acceptance.

Role, Significance, advantages of public relations:

m
c o
Public relations are significant in the following ways:
.
a
m
1. Help to convey the policies and programmes of the organisation.
a
y
2. Help to collect information aboutn public opinion about the organisation, management
activities etc.
d
3. To overcome thet
u
S complaints and dislikes of public.
4. To mould people’s attitude in favour of organisation.

5. To maintain goodwill and understanding between organisation and public.

6. To build an image of the organisation.

Ways/Methods and Tools of Public Relations:

The companies can use the following tools to improve their relations with public:

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1. News:

Sometimes companies get involved in such kind of activities or make such policies so that
they get some positive coverage in news. For example, a company’s name may be covered in
news for reservation of jobs for women or for introducing new technology etc.

2. Speeches:

The speeches given by the leaders of corporate sectors influence various members of public
specially banks, shareholders etc. Public relations department creates occasion when the
speeches are delivered by the leader of company.

3. Events:

Events refer to organizing press conferences, multimedia presentation, matches, stage shows

m
etc.

c o
.
4. Written Materials:

a
m
Sometimes written materials such as Balance Sheet, Annual Reports, Special documents,

a
Brochures etc. are circulated to various parties to improve and maintain public image of the

yn
company.

d
tu
5. Public Service Activities:

S
Big business houses often associate themselves with various social service projects such as
women welfare programmes, charity shows, up-keeping of parks, planting trees on road side,
training schools, running schools, colleges, hospitals etc.

What is 'Direct Marketing'

Direct marketing is a form of advertising which allows businesses and non-profit

organizations to communicate directly to customers through a variety of media including cell
phone text messaging, email, websites, online adverts, database marketing, fliers, catalogue
distribution, promotional letters and targeted television, newspaper and magazine
advertisements as well as outdoor advertising. it is also known as direct response.

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CHAPTER-5- Social responsibility of marketing
Socially responsible marketing is critical of excessive consumerism and
environmental damages caused by corporations. It is based on the idea that market offerings
must not be only profit-driven, but they must also reinforce social and ethical values for the
benefit of citizens.

The idea of socially responsible marketing is sometimes viewed as an extension of the

concept of Corporate Social Responsibility (CSR). CSR is promoted as a business model to
help companies self-regulate, recognizing that their activities impact an assortment of
stakeholders, including the general public.

CSR is sometimes described in terms a pyramid, starting

With economic as its base, then legal, ethical and philanthropic

Actions at the top. It is in the last two layers of the CSR

Pyramid, ethical and philanthropic, that socially responsible

m
c o
.
Marketing opportunities appear the greatest. Meeting the first

a
Two layers, economic and legal, are necessary for a business

m
a
To thrive in order to engage in the latter two

yn
Socially Responsible Marketing and Ethics
d
between the two t
u
Social responsibility in marketing is often discussed with ethics. The difference
is that what’s considered ethical in terms of business, society and
Snot be the same thing––nor do all business actions necessarily have to be
individually may
socially responsible in order to be considered ethical. Some viewpoints of socially
responsible behavior espouse that the qualifying marketing actions not simply meet the
minimum ethical guidelines of business, but voluntarily exceed them.

Marketing ethics is an area of applied ethics which deals with the moral principles
behind the operation and regulation of marketing. Some areas of marketing ethics (ethics of
advertising and promotion) overlap with media ethics.

Ethical marketing is less of a marketing strategy and more of a philosophy that informs all
marketing efforts. It seeks to promote honesty, fairness, and responsibility in all advertising.
Ethics is a notoriously difficult subject because everyone has subjective judgments about
what is “right” and what is “wrong.” For this reason, ethical marketing is not a hard and fast

Page 41
list of rules, but a general set of guidelines to assist companies as they evaluate new
marketing strategies.

Basic principles and values that govern the business practices of those engaged in promoting
products or services to consumers. Sound marketing ethics are typically those that result in or
at least do not negatively impact consumer satisfaction with the goods and services being
promoted or with the company producing them.

Principles of ethical Marketing

 All marketing communications share the common standard of truth.

 Marketing professionals abide by the highest standard of personal ethics.
 Advertising is clearly distinguished from news and entertainment content.
 Marketers should be transparent about who they pay to endorse their products.
 Consumers should be treated fairly based on the nature of the product and the nature
m
of the consumer (e.g. marketing to children).

c o

.
The privacy of the consumer should never be compromised.

a
Marketers must comply with regulations and standards established by governmental
and professional organizations.
m
a
n
 Ethics should be discussed openly and honestly during all marketing decisions.

y
d
Types of unethical advertising
t u

S
Surrogate Advertising – In certain places there are laws against advertising products
like cigarettes or alcohol. Surrogate advertising finds ways to remind consumers of
these products without referencing them directly.
 Exaggeration – Some advertisers use false claims about a product's quality or
popularity. A Slogan like “get coverage everywhere on earth” advertises features that
cannot be delivered.
 Puffery – When an advertiser relies on subjective rather than objective claims, they
are puffing up their products. Statements like “the best tasting coffee” cannot be
confirmed objectively.
 Unverified Claims – Many products promise to deliver results without providing any
scientific evidence. Shampoo commercials that promise stronger, shinier hair do so
without telling consumers why or how.

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  False brand comparisons – Any time a company makes false or misleading claims
about their competitors they are spreading misinformation.
 Children in advertising – Children consume huge amounts of advertising without
being able to evaluate it objectively. Exploiting this innocence is one of the most
common unethical marketing practices.

Ethical consumerism (alternatively called ethical consumption, ethical purchasing, moral

purchasing, ethical sourcing, ethical shopping or green consumerism) is a type of
consumer activism that is based on the concept of dollar voting. It is practiced through
'positive buying' in that ethical products are favoured, or 'moral boycott', that is negative
purchasing and company-based purchasing

Consumerism is an organized social movement intended to strengthen the rights and

power of consumers relative to sellers—alert marketers view it as an opportunity to serve

m
consumers better by providing more education, information, and protection •

c o
.
Area of consumerism

a
m
Environment:- Environmental reporting, Nuclear power, Climate change, Pollution& Toxics.

a
n
People:- Human rights, Workers rights, Supply chain policy, irresponsible marketing
y
Animals:- Animal testing, d
u
Factory forming, Other animal rights.
t
S
Political:- Political activities, Boycott call. Company ethos

Product sustainability:- Organic, fair-trade, positive environmental features.

Environmentalism:- It concern about and action aimed at protecting the environment

An organized social movement seeking to minimize the harm done to the environment
and quality of life by marketing practices; came in three waves

First, driven by environmental groups and concerned consumers

Second, federal government that passed laws and regulations

Third, companies are now accepting responsibility

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 for doing no environmental harm Companies are now adopting policies of
environmental sustainability —developing strategies that both sustain the environment and
produce profits for the company Both consumerism and environmentalism are important
components of sustainable marketing

Under the sustainable marketing concept, a company’s marketing should support the best
long-run performance of the marketing system Five sustainable marketing principles guide
the sustainable marketing concept:

Consumer-oriented marketing: a company should organize its marketing activities from the
consumer’s Point Of View

Customer-value marketing: a company should put most of its resources into customer-
value-building marketing investments

m
Innovative marketing: requires a company seek real product and marketing improvements

c o
.
Sense-of-mission marketing: a company should define its mission in broad social terms
rather than narrow product terms a
m
a
n
Societal marketing

Societal marketingd
y
is a marketing concept that holds that a company should make
marketing decisions u
t by considering consumers wants the company’s requirements and
society’s longSterm interests.

 Deficient products: products that have neither immediate appeal nor long-run benefits

 Pleasing products: products that give high immediate satisfaction but may hurt consumers
in the long run

 Salutary products: products that have low appeal but may benefit consumers in the long
run

 Desirable products: products that give both high immediate satisfaction and high long-run
benefits

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