COURSE MATERIAL

Program : BCOM INDUSTRY INTEGRATED Semester : IV

Course : MARKETING MANAGEMENT Course Code : B19BC3040
Unit. No. : IV
Unit Title : DEVELOPMENTS & ISSUES IN MARKETING
Course Presenter: PROF. ABHISHEK DUTTAGUPTA
Course Mentor: PROF. JOHN PRAVIN

ONLINE MARKETING
Online marketing is the practice of leveraging web-based channels to spread a message about
a company’s brand, products, or services to its potential customers. The methods and
techniques used for online marketing include email, social media, display advertising, search
engine optimization, Google AdWords and more. The objective of marketing is to reach
potential customers through the channels where they spend their time reading, searching,
shopping, and socializing online.

Widespread adoption of the internet for business and personal use has generated new
channels for advertising and marketing engagement, including those mentioned above. There
are also many benefits and challenges inherent to online marketing, which uses primarily
digital mediums to attract, engage, and convert virtual visitors to customers. Online
marketing differs from traditional marketing, which has historically included mediums like
print, billboard, television and radio advertisements.

Why are people going online?

ü For information on a new product, service or location
ü If they have a question
ü If they are looking for help
ü If they want more information on certain individuals or organizations
ü Meeting attendants
ü Business contacts
ü General information (maybe about you…)
ü New employees
ü Available jobs
With the constant growth of the web, and more people getting connected every day, online
marketing has become a necessity for many organizations. This also includes small
businesses that wants to trade online and make a name for themselves on the web.

ONLINE MARKETING OBJECTIVES

One way to make sure you are found on the web is with an optimized online marketing
strategy. Most online marketing strategies and campaigns have following 5 objectives.
ü Reaching the right audience
ü To engage with your audience
ü To motivate your audience to take action
ü Efficient spending on your campaign
ü Return on investment (ROI)

ONLINE MARKETING MERITS

The main advantage of online marketing is that a targeted audience can be reached in a cost-
effective and measurable way. Other online marketing advantages include increasing brand
loyalty and driving online sales.
 Global reach - a website allows you to find new markets and trade globally for only a
small investment.
 Lower cost - a properly planned and well targeted online marketing campaign can
reach the right customers at a much lower cost than traditional marketing methods.
 Trackable, measurable results - measuring your online marketing with web analytics
and other online metric tools makes it easier to establish how effective your campaign
has been. You can obtain detailed information about how customers use your website
or respond to your advertising.
 Personalisation - if your customer database is linked to your website, then whenever
someone visits the site, you can greet them with targeted offers. The more they buy
from you, the more you can refine your customer profile and market effectively to
them.
  Openness - by getting involved with social media and managing it carefully, you can
build customer loyalty and create a reputation for being easy to engage with.
 Social currency - online marketing lets you create engaging campaigns using content
marketing tactics. This content (images, videos, articles) can gain social currency -
being passed from user to user and becoming viral.
 Improved conversion rates - if you have a website, then your customers are only ever
a few clicks away from making a purchase. Unlike other media which require people
to get up and make a phone call, or go to a shop, online marketing can be seamless
and immediate.

ONLINE MARKETING DEMERITS

 Skills and training – You will need to ensure that your staff have the right knowledge
and expertise to carry out online marketing with success. Tools, platforms and trends
change rapidly and it’s vital that you keep up-to-date.
 Time consuming – tasks such as optimising online advertising campaigns and creating
marketing content can take up a lot of time. It’s important to measure your results to
ensure a return-on-investment.
 High competition – while you can reach a global audience with online marketing, you
are also up against global competition. It can be a challenge to stand out against
competitors and to grab attention among the many messages aimed at consumers
online.
 Complaints and feedback – any negative feedback or criticism of your brand is can be
visible to your audience through social media and review websites. Carrying out
effective customer service online can be challenging. Negative comments or failure to
respond effectively can damage your brand reputation.
 Security and privacy issues – there are a number of legal considerations around
collecting and using customer data for online marketing purposes. Take care to
comply with the rules regarding privacy and data protection.

E-TAILER
Electronic retailing (E-tailing) is the sale of goods and services through the Internet. E-tailing
can include business-to-business (B2B) and business-to-consumer (B2C) sales of products
and services. E-tailing requires companies to tailor their business models to capture Internet
sales, which can include building out distribution channels such as warehouses, Internet
webpages, and product shipping centers. E-Tailer is an Online Retailer, a retailer who
engages in online business. A pure play e-tailer uses the Internet as its primary means of
retailing. Some of the pure play e-tailers are Buy.com, Amazon.com, etc. A brick and click e-
tailer uses the Internet to push its goods or service but also has the traditional physical
storefront available to customers.

FDI IN INDIAN E-RETAIL

Ecommerce under the Indian Government’s Policy is defined as buying and selling of goods
and services including digital products over a digital and electronic network. This includes
two prominent models:
i. Inventory based model of ecommerce – Inventory based model of ecommerce means
an e-commerce activity where the inventory of goods and services is owned by
ecommerce entity and is sold to the consumers directly. No Foreign Direct Investment
is permitted in this model
ii. Marketplace based model of ecommerce – Marketplace based model of ecommerce
means providing of an information technology platform by an ecommerce entity on
the internet to act as a facilitator between buyer and seller and the ecommerce entity
providing the platform has no inventory of its own. 100% foreign direct investment
under the automatic route is permitted in this model.

IMPACT OF FDI IN INDIAN E-RETAIL

 No more deep discounts: The new FDI rule is aimed at uplifting Indian sellers,
especially those with physical presence only, but the move is likely to make life
difficult for the regular online shopper. You probably have come across several
unbelievably cheap deals on Flipkart and Amazon but such discounts are set to dip
 sharply on a select range of products. In fact, some prices have been already revised
by the major online marketplaces. New purchases from either Amazon or Flipkart
would also cost you more as the products will be sold directly via a third-party seller,
who is likely to charge more than the existing inventory-based system. A bulk of
customers on e-commerce websites seek to purchase electronic products including
mobile phone, digital camera, laptops, video game consoles but the new FDI rules
may lead to higher prices.

 More options for customers: Government said the move would benefit customers as
well. By preventing exclusive marketing or selling rights in its new FDI policy for e-
commerce, the government has disallowed online marketplaces from exclusively
selling a product. This means manufacturers will have to sell their products to all
markets places. Therefore, a new OnePlus phone is likely to be available on a number
of portals, leaving the customer with more choices. This could happen with a wide
range of products which was either available on only Flipkart or Amazon.

CLOUD MARKETING
Cloud marketing is the process of an organisations efforts to market their goods and services
online through integrated digital experiences, by which they are specialised for every single
end user. The aim is to use advertising methods to target customers via online applications
through social media websites such as Facebook, Twitter and various online portals to target
consumers. Cloud marketing platforms are supported with third parties which maintain the
platform.

Advantages are -
Cost effectiveness : Cloud marketing enables a business to decrease the cost of print
distribution materials such as newspapers, circulars, direct mail, catalogues, and magazines
and instead send strategic promotional content to consumers through digital formats. This
allows a business to send content digitally which is a faster and cheaper approach to engage
with customers. This reduces the printing costs and increases efficiency.
Customisation: Customisation allows a business to creatively use interactive means to create
a relevant and effective advertising approach when targeting a consumer. Customisation
includes social media sites such as Facebook to customise pages to send to friends or the
public over the internet. Marketers can combine data through third party data sources,
including email and surveys, to visualize the consumers experience.
Time: Time is vital for targeting customers. Advertising using traditional methods, such as
posters and surveys, have limited time before they often become invalid. Cloud marketing
enables a business to produce advertising when required. The material can easily be removed
and if a campaign or season is over, the material can be erased from the internet or adapted to
enhance material to the end user, linking with the customization element to ensure the
marketing material is fit for its purpose, and delivered at the correct time.

DISTRIBUTION SYSTEM
A distribution channel (also called a marketing channel) is the path or route decided by the
company to deliver its good or service to the customers. The route can be as short as a direct
interaction between the company and the customer or can include several interconnected
intermediaries like wholesalers, distributors, retailers, etc. Hence, a distribution channel can
also be referred to as a set of interdependent intermediaries that help make a product
available to the end customer. Manufacturers originally bear the responsibility to create the
perfect marketing mix for their production. To create the product so that it responds to the
customer needs and expectations. To carefully manage the price so that it is affordable
enough but prestigious enough to buy that product. To communicate to their customer base
when they have new solutions. And to place the product. To distribute it to end customers.
Based on the scope, the type, and the diversity of your business, you will be faced with the
need to delegate some of those responsibilities to third parties. Based on the time, cost and
know-how it requires, distribution is usually the first one to go.
DISTRIBUTION SYSTEM - PURPOSE
Distribution channels provide time, place, and ownership utility. They make the product
available when, where, and in which quantities the customer wants. But other than these
transactional functions, marketing channels are also responsible to carry out the following
functions:
i. Logistics and Physical Distribution: Marketing channels are responsible for assembly,
storage, sorting, and transportation of goods from manufacturers to customers.
ii. Facilitation: Channels of distribution even provide pre-sale and post-purchase services
like financing, maintenance, information dissemination and channel coordination.
iii. Creating Efficiencies: This is done in two ways: bulk breaking and creating
assortments. Wholesalers and retailers purchase large quantities of goods from
manufacturers but break the bulk by selling few at a time to many other channels or
customers. They also offer different types of products at a single place which is a
huge benefit to customers as they don’t have to visit different retailers for different
products.
iv. Sharing Risks: Since most of the channels buy the products beforehand, they also
share the risk with the manufacturers and do everything possible to sell it.
v. Marketing: Distribution channels are also called marketing channels because they are
among the core touch points where many marketing strategies are executed. They are
in direct contact with the end customers and help the manufacturers in propagating the
brand message and product benefits and other benefits to the customers.

DISTRIBUTION SYSTEM - TYPES

Channels of distribution can be divided into the direct channel and the indirect channels.
Indirect channels can further be divided into one-level, two-level, and three-level channels
based on the number of intermediaries between manufacturers and customers.
Direct Channel or Zero-level Channel (Manufacturer to Customer) : Direct selling is one of
the oldest forms of selling products. It doesn’t involve the inclusion of an intermediary and
the manufacturer gets in direct contact with the customer at the point of sale. Some examples
of direct channels are peddling, brand retail stores, taking orders on the company’s website,
etc. Direct channels are usually used by manufacturers selling perishable goods, expensive
goods, and whose target audience is geographically concentrated. For example, bakers,
jewellers, etc.

Indirect Channels (Selling Through Intermediaries) : When a manufacturer involves a

middleman/intermediary to sell its product to the end customer, it is said to be using an
indirect channel. Indirect channels can be classified into three types:

i. One-level Channel (Manufacturer to Retailer to Customer): Retailers buy the product

from the manufacturer and then sell it to the customers. One level channel of
distribution works best for manufacturers dealing in shopping goods like clothes,
shoes, furniture, toys, etc.
ii. Two-Level Channel (Manufacturer to Wholesaler to Retailer to Customer):
Wholesalers buy the bulk from the manufacturers, breaks it down into small packages
and sells them to retailers who eventually sell it to the end customers. Goods which
are durable, standardised and somewhat inexpensive and whose target audience isn’t
limited to a confined area use two-level channel of distribution.
iii. Three-Level Channel (Manufacturer to Agent to Wholesaler to Retailer to Customer):
Three level channel of distribution involves an agent besides the wholesaler and
retailer who assists in selling goods. These agents come handy when goods need to
move quickly into the market soon after the order is placed. They are given the duty
to handle the product distribution of a specified area or district in return of a certain
percentage commission. The agents can be categorised into super stockists and
carrying and forwarding agents. Both these agents keep the stock on behalf of the
company. Super stockists buy the stock from manufacturers and sell them to
wholesalers and retailers of their area. Whereas, carrying and forwarding agents work
on a commission basis and provide their warehouses and shipment expertise for order
processing and last mile deliveries. Manufacturers opt for three-level marketing
 channel when the userbase is spread all over the country and the demand of the
product is very high.

Dual Distribution: When a manufacturer uses more than one marketing channel
simultaneously to reach the end user, he is said to be using the dual distribution strategy.
They may open their own showrooms to sell the product directly while at the same time use
internet marketplaces and other retailers to attract more customers. A perfect example of
goods sold through dual distribution is smartphones.

Distribution Channels for Services: Unlike tangible goods, services can’t be stored. But this
doesn’t mean that all the services are always delivered using the direct channels. With the
advent of the internet, online marketplaces, the aggregator business model, and the on-
demand business model, even services now use intermediaries to reach to the final customers.

The Internet as a Distribution Channel: The internet has revolutionised the way
manufacturers deliver goods. Other than the traditional direct and indirect channels,
manufacturers now use marketplaces like Amazon (Amazon also provide warehouse services
for manufacturers’ products) and other intermediaries like aggregators (uber, Instacart) to
deliver the goods and services. The internet has also resulted in the removal of unnecessary
middlemen for products like software which are distributed directly over the internet.

MANAGING DISTRIBUTION CHANNELS

Participate in Established Channel Structure: Each region is likely to have many established
distributors. These distributors have been dealing with retailers for a long time and have
developed a working relationship with them. Some of these distributors will have specialized
in certain product categories, but many others would be dealing with varied products. Many
of them would have grown big and now would also be providing carry and forward services.
Making use of their services is a tempting alternative. It would immediately allow you to
access a number of retail outlets and you would be associating with an experienced
intermediary.

Set Up Your Own Intermediaries: A very good alternative is to set up your own
intermediaries. It can even be friends and relatives. There will be some people known to you
who wish to get into the distribution business; they can be persuaded to start with your
product. Now, it should be kept in mind that if you have encouraged someone to start his/her
business dependant on you, your responsibility towards that person is more. Practically
speaking, if anything goes wrong, he/she is going to lay the blame on you. Another way of
doing this is if you have started by going directly to retailers, in time one of the retailers can
be persuaded to take up the distribution function. This will work much better than bringing in
an absolute novice.

Deciding on the Distribution Channel: One of the main strategic decisions to be taken in
relation to the distribution channel is deciding on the intensity of the distribution channels. At
one end, there is the exclusive distribution option, while at the other end, there is the
intensive option. Even though there are a lot of reasons to go for an exclusive channel
strategy, most entrepreneurs do not consider that option seriously. Let us look at the
distribution options available to the entrepreneur.

Exclusive Distribution: Exclusive distribution gives the retailer an exclusive right to sell your
product in a defined area for a period of time. It is usually easier to find a distributor by
offering territorial exclusivity. An exclusive dealership implies greater control over the
activities of the retailer. With exclusivity, it is easier to maintain higher margins for all.
There is less competition at the point of sale. The retailer will be willing to exert effort on
‘pushing’ your products to the consumers.

Intensive Distribution: This is the opposite extreme of exclusivity. Anyone who wishes to
stock your product is encouraged to do so. The objective is to reach the customer in as many
ways as possible. This strategy is best suited for many fast-moving consumer goods (FMCG)
and for many fads. If an FMCG is widely available, the likelihood of sales goes up. Since a
fad is not going to sustain for long, it is wise to cover many retailers and make the product
widely available for its short shelf life.
Selective Distribution: Midway between exclusive and intensive distribution options is
selective distribution. In selective distribution, no single retailer has exclusive rights over an
area, but retailers are not appointed indiscriminately. A few retailers are chosen to stock the
product in a given region. Some of the positive attributes of exclusive distribution such as
control over the retailer and an exclusive image, can be retained without sacrificing too much
of market coverage. Many sellers of consumer durables, apparel, and other relatively high-
value goods use this kind of distribution network.

CHANNEL ALTERNATIVES
After a company has defined its target market and desired positioning it should identify its
channel alternatives by three elements:-
Types of intermediaries:-
 Company Sales force:- Expend the company’s direct sales force. Assign to
contact all prospects in the area. Or develop separate sales force for different
products.
 Manufacture’s Agency:- Hire agencies in different regions sell the equipment.
 Industrial Distributors:- Find distributors in the different regions who will buy
and carry device. Give them exclusive distribution adequate margins and
promotional support.

The number of intermediaries:-

Company has to decide among three strategies while choosing the middlemen at each channel
level. Three strategies are available.
 Intensive Distribution:- Producers of convenience goods etc. typically seek intensive
distribution that is stocking their product in numerous outlets. These goods must have
place utility.
 Exclusive Distribution:- Some producers limit the number of intermediaries handling
their products. Through exclusive distribution the manufacturer hopes to obtain more
 aggressive and knowledgeable selling and more control over intermediaries polices on
prices, promotion, credit and various activities.

Terms and responsibilities of channel members:– The producer must determine the
conditions and responsibilities of the participating channel members. The main elements in
the trade relation mix are price policies, conditions of sale, territorial rights and specific
service to be performed by each party.

FACTORS AFFECTING CHANNEL CHOICE

There are several channels available for the purpose of distribution of goods. Each channel
has its own advantages and limitations and every company has to make difficult choice about
channels of distribution. This decision about choice of a channel of distribution depends on
several factors. A company has to consider all these factors and make an appropriate choice.
The following are the factors:

1. Market Related Factors:

Since the channels of distribution operate in the market. The market related factors are very
important. There are several forces in the market which dictate the choice of channels of
distribution. The following are the market related factors to be considered:
a. Customers: The ultimate purpose of any channel of distribution is to distribute the
goods to the customers. Therefore the requirements and the nature of the customers
should be considered while deciding the channel of distribution.
If the customers are widely scattered the channels must be in a position to reach them
out effectively. This requires appropriate channels but if the customers are not widely
scattered smaller channels would be sufficient. If the customers are very large in
number such as individuals, very wide channels of distribution will be necessary, but
if the customers are small in number and purchase in large quantities such as the
industrial purchasers, small channels or even direct distribution will be sufficient.
b. Competition: One has to consider the channels of distribution arranged by the
competitors. This choice represents the wisdom and experience of the competitors. It
also means that the competitors have been successful in using such channels over the
 long run. A company can adopt such channels of distribution if found suitable to
itself. Unless there are compelling reasons, a company should not try to change the
pattern of distribution as compared with that of the competition.
c. Existing Channels of Distribution: One has to make study of the existing channels
of distribution. The functions performed by these channels, their strengths and
weaknesses, their suitability and such other factors affect the choice of channels.
Their relative advantages must also be studied.

2. Product Factors:
Since it is the product which is to be distributed, the product characteristics also have to be
analyzed while choosing a channel of distribution. Different products are different in nature
and this nature of the products requires different types of channels. The following product
factors have to be considered:
a. Perishability: If the products are highly perishable, the channel must be short or
even direct marketing would be suitable. This is because long channels of distribution
with a large number of intermediaries delay the distribution of goods. Products like
milk, flowers etc. require very fast distribution. b. Nature of the Product:
Consumer goods are purchased by a larger number of people, in smaller quantities
and more frequently. Therefore such goods require longer channels of distribution
which have a wide range. The presence of retailers is a must. Industrial goods on the
other hand are purchased in larger quantities by a smaller number of purchasers and
less frequently. Moreover the industrial goods purchaser is well informed,
knowledgeable and rational. Such goods require shorter channels of distribution.
c. Technicality: Some products are highly technical in nature such as computer
hardware and software, medical diagnostic equipments etc. Such goods require a high
amount of technical support which can be provided only by the manufacturer.
Therefore, such goods are best distributed by manufacturers’ salesmen. Goods which
do not require such technical support, for example-ready-to-wear garments can be
distributed by longer channels of distribution.
d. Seasonality: Some goods have a seasonal nature either in terms of production
(agricultural goods), or consumption (woolen goods) and such goods require different
types of distribution channels.
 e. Variety Offered: If a manufacturer has a wide range of goods, he can opt for direct
distribution of the goods since a large number of products are available. If a
manufacturer has very few products, he has to distribute them through long channels
of distribution.
f. Unit Value: Products of high unit value suit shorter channels of distribution or even
direct marketing, but products of low unit value which are mass consumed require
longer channels of distribution.
3. Company Factors:
A company has to look within and understand itself while choosing a channel of distribution.
It has to understand its requirements, strengths and weaknesses. The following specific
factors have to be understood:
a. Company’s Financial Strength: A financially strong company can design its own
channel of distribution because of its financial strength. It can negotiate with people
and establish an altogether new channel of distribution. A company which is not
financially strong has to settle down for existing channels of distribution because
establishing a new channel of distribution requires huge amounts of money.
b. The Extent of Control Desired: Control desired in this context means the ability of
the company to exercise control over the channels of distribution in matters like resale
price maintenance, territory restrictions etc. Longer the channel, lesser will be the
control.
c. Reputation of the Company: A well-established company with a strong reputation
will find it easy to have longer channels of distribution. This is because channel
intermediaries are generally willing and enthusiastic to be associated with strong
companies.
d. Company’s Marketing Policies: Every company will have policies regarding
marketing and these policies will also lay down norms relating to channels of
distribution and these policies will also have a strong influence on the choice of
channels of distribution.
e. Past Experience: An established company will already have well established
channels of distribution. The company will also have experience in matters of dealing
with such channels of distribution. A company should consider such past experience
while deciding the channels of distribution.
4. Channel Related Factors:
The channels of distribution choosing should be appropriate from the view point of the
company. These channels must be examined and then a proper choice must be made. The
following factors of the channel must be considered:
a. The Ability of the Channels: Well established and strong channels have the ability
to distribute goods effectively over a wide area. They can promote and sell even
unknown products. Newly established channels of distribution however cannot do
these. Therefore a company has to consider the ability of the channels before deciding
on the channels of distribution.
b. The Financial Strength of the Channels: Financially strong channels of distribution
can distribute the goods well and also finance the manufacturers directly or indirectly.
They can lift the goods from the manufacturers by paying cash immediately which
indirectly amounts to financing the manufacturers. Therefore, such financial ability is
also a factor that must be considered by a company regarding choice of channel of
distribution.
c. Ability to Provide after Sales Service: Some products require a long term after sales
service. In such a case it should be decided as to who has to provide the after sales
service whether the manufacturer or a member of the channel of distribution. In such
a case a company has to look into the ability of the channels of distribution to provide
effective after sales service in a sustained manner.

5. Environmental Factors:
A company’s channel choice depends on certain environmental factors. Environment in this
context means the environment within which the company, the channels of distribution, the
customers etc. are present. The following are certain environmental factors which must be
considered while deciding channels of distribution:

a. Economic Situation: The prevailing economic situation in the country affects all the
economic activities. Therefore, a company has to be aware of the prevailing economic
conditions. During an economic boom, the sales of all the products will naturally
good and channels of distribution will be more than willing to take up distribution of
products.
 During a recessionary period, the general sales come down as a result of h which
channels of distribution become reluctant to take up distribution. These are the factors
to be considered by a company while deciding on a channel of distribution.
b. Legal Factors: A company is free to decide about its channels of distribution as
long as its activities are legal. There are certain legal factors however which must be
considered while deciding channels of distribution and arrangements with them.
Certain types of arrangements with the channels of distribution in the form of sole
distributorship and in the cases of certain essential commodities may be objectionable
under law. Therefore, such legal factors are to be considered.
c. Fiscal Structure: Fiscal structure in this context refers to certain indirect taxes
levied by the state governments on products. There is no uniformity in this matter and
clarity is absent in certain cases. Therefore, such matters must also be considered
while deciding on, channels of distribution.

DIRECT MARKETING
A form of advertising in which physical marketing materials are provided to consumers in
order to communicate information about a product or service. Direct marketing does not
involve advertisements placed on the internet, on television or over the radio. Types of direct
marketing materials include catalogs, mailers and fliers. Direct marketing messages
emphasize a focus on the customer, data, and accountability. Hence, besides the actual
communication, creation of actionable segments, pre- and post-campaign analytics, and
measurement of results, are integral to any good Direct Marketing campaign. Direct
marketing uses various advertising media to interact directly with consumers. Mass
advertising reaches an unspecified number of people, most of whom are not in the market for
a product. Direct advertising is used to obtain immediate orders directly from targeted
consumers. Selection of merchandise through the use of a catalogue, ordering through the
mail and delivery by similar means is the major characteristics of direct marketing.

Direct marketing helps the seller build a continuous relationship with each customer. Direct
marketing also provides privacy —the direct marketers offer and strategy are not visible to
competitors.

TYPES OF DIRECT MARKETING

1. Direct Mail Marketing:
Direct mail marketing uses mails and e-mails to promote products and services to the target
customers. The e-mail may contain information regarding offers, announcements or
reminders. This kind of marketing is popular because it provides flexibility and can be
personalized. While developing a direct mail marketing campaign, marketers need an
appropriate and clear objective, justified target customers, offer elements, and have an
optimal way of measuring campaign success.
2. Catalogue Marketing:
Catalogue marketing is a form of direct marketing which uses printed catalogues or e-
catalogues to display all the products and services provided by the company. It is a
replacement to the customer visiting a retail store to check out the relevant products. It helps
the customers to buy directly from the provider.
3. Telemarketing:
Telemarketing is a marketing technique which includes the usage of telephones and call
centers to convey information about products and services to the customers and for providing
proper assistance, by taking orders and answering queries. It is specially used in business-to-
business marketing and consumer marketing.

CHARACTERISTICS OF DIRECT MARKETING

#1. A Set of Database: A database of names (prospects, customers, businesses, etc.), often
with certain other relevant information such as – contact number/address, demographic
information, purchase habits/history, company history, etc., is used to develop a list of
targeted entities with some existing common interests, traits or characteristics. Generating
such a database is often considered part of the Direct Marketing campaign.

#2. Addressing the Listed Customer: Marketing messages are addressed directly to this list of
customer and/or prospects. Direct marketing relies on being able to address the members of a
target market. Addressability comes in a variety of forms including email addresses, phone
numbers, Web browser cookies, fax numbers and postal addresses.

#3. Direct Action Related: Direct Marketing seeks to drive a specific ‘call to action’. For
example, an advertisement my ask the prospect to call a free phone number, mail in a
response or order, or click on a link to website.

#4 Specific Emphasis: Direct marketing emphasizes trackable, measurable responses, results

and costs from prospects and/or customers – regardless of medium. Direct marketing is
practiced by businesses of all sizes – from the smallest start-up to the leaders on the Fortune
500. A well-executed direct advertising campaign can prove a positive return on investment
by showing how many potential customers responded to a clear call-to-action.

E-COMMERCE
Electronic Commerce (EC) is the process of buying, transferring, or exchanging products,
services, and / or information via computer networks, including the internet. EC can also be
benefited from many perspective including business process, service, learning, collaborative,
community. EC is often confused with e‐business. In e‐commerce, information and
communications technology (ICT) is used in inter‐business or inter‐organizational
transactions (transactions between and among firms/organizations) and in business‐to‐
consumer transactions (transactions between firms/organizations and individuals).
Ecommerce is often used to refer to the sale of physical products online, but it can also
describe any kind of commercial transaction that is facilitated through the internet.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers
specifically to the transaction of goods and services.

The history of ecommerce begins with the first ever online sale: on the August 11, 1994 a
man sold a CD by the band Sting to his friend through his website NetMarket, an American
retail platform. This is the first example of a consumer purchasing a product from a business
through the World Wide Web—or “ecommerce” as we commonly know it today.

Since then, ecommerce has evolved to make products easier to discover and purchase through
online retailers and marketplaces. Independent freelancers, small businesses, and large
corporations have all benefited from ecommerce, which enables them to sell their goods and
services at a scale that was not possible with traditional offline retail.

1. Business to Consumer (B2C):When a business sells a good or service to an individual

consumer (e.g. You buy a pair of shoes from an online retailer).

2. Business to Business (B2B):

When a business sells a good or service to another business (e.g. A business sells software-
as-a-service for other businesses to use)

3. Consumer to Consumer (C2C):

When a consumer sells a good or service to another consumer (e.g. You sell your old
furniture on eBay to another consumer).
4. Consumer to Business (C2B):
When a consumer sells their own products or services to a business or organization (e.g. An
influencer offers exposure to their online audience in exchange for a fee, or a photographer
licenses their photo for a business to use).

E-COMMERCE - BENEFITS

Overcome Geographical Limitations:

If you have a physical store, you are limited by the geographical area that you can service.
With an e-commerce website, the whole world is your playground. Additionally, the advent
of m-commerce, i.e., e-commerce on mobile devices, has dissolved every remaining
limitation of geography.

Gain New Customers with Search Engine Visibility

Physical retail is driven by branding and relationships. In addition to these two drivers, online
retail is also driven by traffic from search engines. It is not unusual for customers to follow a
link in search engine results and land on an e-commerce website that they have never heard
of. This additional source of traffic can be the tipping point for some e-commerce businesses.

Lower Costs:
One of the most tangible positives of e-commerce is the lowered cost. A part of these lowered
costs could be passed on to customers in the form of discounted prices. Here are some of the
ways that costs can be reduced with e-commerce:
(i)Advertising and marketing: Organic search engine traffic, pay-per-click, and social media
traffic are some of the advertising channels that can be cost-effective.
(ii)Personnel: The automation of checkout, billing, payments, inventory management, and
other operational processes lowers the number of employees required to run an e-commerce
setup.
(iii)Real estate: This one is a no-brainer. An e-commerce merchant does not need a prominent
physical location.
Provide Comparison Shopping:
E-commerce facilitates comparison shopping. There are several online services that allow
customers to browse multiple e-commerce merchants and find the best prices.

Enable Deals, Bargains, Coupons, and Group Buying:

Though there are physical equivalents to deals, bargains, coupons, and group buying, online
shopping makes it much more convenient. For instance, if a customer has a deep discount
coupon for turkey at one physical store and toilet paper at another, she may find it infeasible
to avail of both discounts. But the customer could do that online with a few mouse-clicks.

Provide Abundant Information:

There are limitations to the amount of information that can be displayed in a physical store. It
is difficult to equip employees to respond to customers who require information across
product lines. E-commerce websites can make additional information easily available to
customers. Most of this information is provided by vendors and does not cost anything to
create or maintain.

Create Targeted Communication:

Using the information that a customer provides in the registration form, and by placing
cookies on the customer's computer, an e-commerce merchant can access a lot of information
about its customers. It, in turn, can be used to communicate relevant messages. An example:
If you are searching for a certain product on Amazon.com, you will automatically be shown
listings of other similar products. Also, Amazon.com may email you about related products.

Remain Open All the Time:

Store timings are now 24/7/365. E-commerce websites can run all the time. From the
merchant's point of view, this increases the number of orders they receive. From the
customer's point of view, an "always open" store is more convenient.

Create Markets for Niche Products:

Buyers and sellers of niche products can find it difficult to locate each other in the physical
world. Online, it is only a matter of the customer searching for the product in a search engine.
One example could be the purchase of obsolete parts. Instead of trashing older equipment for
lack of spares, today we can locate parts online with great ease.

MANAGING RETAILING, WHOLESALING & LOGISTICS

Companies are looking forward to moving away from the conventional supply chain and
moving towards value network. In a value network traditional supplier-wholesaler-retailer are
considered as partners rather than as a customer. Companies designing marketing channel
under the value network principle need to understand the players, role and their importance.

Retailing
The act through which goods and services reach the end customer for individual or business
usage is known as retailing. The players involved in this act are known as retailers. Retailers
can be manufactures, distributors or wholesalers. They can reach the end customer through
the internet or physical stores. Retail organizations are divided into three categories store
retailers, non-store retailers and retail organization. Store retailing, the best example is the
department store like Macy or Sears. Store retailers are further divided on the service level
with self service, self selection, limited service and full service stores. Store retailing
comprises over 90% in way products reach the end customer.

Over the years non-store retailing has garnered a market share. Non-store retailing includes
direct selling, direct marketing, automatic vending and buying service. Avon is an example of
direct selling. Internet retail giant Amzon.com is an example of direct marketing. Soft drink
vending machines are a form of automatic vending. Retail organizations are retailing stores
under direct ownership of corporate. Customer satisfaction and brand management becomes
easier through retail organizations. Corporate chain store like Old Navy and Franchises like
McDonald’s are good examples of retail organizations.

Every retailer needs to have a business or marketing strategy for success. Retailer needs to
analyze its target market and customers for an in-store promotion and product assortment.
Services form a big part of retailing business, so retailers have to finalize level of service.
Services include pre-purchase, post purchase and supporting services. With the advent of
technology and unprecedented economic growth, retailing has its own share of change in
business ways.

Retailing comes at the end of the marketing distributive channel. The word ‘retail has
been derived from the French word “retaillier” and means ‘to cut a piece’ or ‘to break bulk’.
It covers all the activities involved in the sale of product and services. Retailing is a
highintensity competition industry and second largest globally. The reason for its popularity
lies in its ability to provide easier access to a variety of products, freedom of choice, and
many services to consumers. The size of an average retail store varies across countries
depending largely on the level of a particular country’s economic development. The largest
retail store in the world is Wal-Mart of USA. Retailing is the world’s largest private sector
contributing to 8% of the GDP and it employs one sixth of the labor force. The estimated
retail trade is expected to be 7 trillion US $. Many countries have developed only due to
retailing and presently we see there is a vast change in the retail industry. As far as India is
concerned it contributes to 14% of our GDP and it is the second largest sector next to
agriculture which provides employment to more number of persons.

According to Phillip Kotler: "Retailing includes all the activities involved in selling goods
or services to the final consumers for personal and non-business use."

Global Retail Scenario

Retailing has become an intrinsic part of our daily lives. Nations that have enjoyed the
greatest economic and social progress have a vibrant retail sector. Retailing is one of the most
important industries in the world and plays a predominant role in economic development of
the country. Globally, retailing is the largest revenue generator and employment provider
next only to agriculture. Retail industry is predominant in developed countries like USA, UK
etc. In India it is an upcoming industry. Organized sector accounts for over 50% of retail
sales in most developed countries including USA, UK, Germany, France etc. Even in
developing countries like Brazil, Mexico and China the share of organized retail is much
higher than in India. Following are the five largest retailers in the world

As retail chains expand and spread their operations they are focusing on development
of private brands. Private brand is the licensed brand of a retailer. These are exclusive and
only available at outlets of a specific retailer. Marks & Spencer stores for example carry St
Michael brand. In India West Side has emphasized private brands while Shoppers Stop
focuses more on manufacturers brand or brands available across retail chains.
However, Shoppers Stop has also developed private brands like Stop and Kashish.
Super markets like Food World and Trinetra have also branded grocery products. The use of
private brand enables retailers to maintain an image of exclusiveness and develop a loyal
clientele. It also enables them to quote lower price since retailers do not have to promote or
spend heavily on advertisement of private brands whose circulation is limited to the chains.

EVOLUTION OF RETAIL IN INDIA

The origin of retailing in India can be traced back to the emergence of Kirana stores
and mom-and-pop stores. These stores used to cater to the local people. Eventually the
government supported the rural retail and many indigenous franchise stores came up with the
help of Khadi & Village Industries Commission. The economy began to open up in the 1980s
resulting in the change of retailing. The first few companies to come up with retail chains
were in textile sector, for example, Bombay Dyeing, S Kumar's, Raymonds, etc. Later Titan
launched retail showrooms in the organized retail sector. With the passage of time new
entrants moved on from manufacturing to pure retailing. The evolution of retailing in India
can be better understood as:

Early Eighties
'Retailing' in India was synonymous with peddlers, vegetable vendors, neighborhood kirana
stores (small grocery stores) or sole clothing and consumer durable stores in a nearby town.
These retailers operated in a highly unstructured and fragmented market. Very few retailers
operated in more than one city.

Before 1990
Organized retailing in India was led by few manufacturer owned retail outlets, mainly
from the textile industry, Ex: Bombay Dyeing, Raymonds, S Kumar's, and Grasim. Later,
Titan successfully created an organized retailing concept and established a series of
showrooms for its premium watches

Nineties:
Liberalization of the Indian economy led to the dilution of stringent restrictions. Entry of few
multi-national players like Nanz into the Indian market. Changing profile of the Indian
consumers, increasing wages of the employees working in Greenfield sectors with higher
purchasing power. Setting up of retail chains by domestic retailers like Cotton World
(Mumbai), Nirula's (Delhi) and the Viveks and Nilgiris in the South. The latter half of the
1990s saw a fresh wave of entrants with a shift from Manufactures to Pure Retailers. For e.g.
Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music World in
music; Crossword and Fountain head in books.

From 1995 onwards saw an emergence of shopping centers, mainly in urban areas,
with facilities like car parking targeted to provide a complete destination experience for all
segments of society Emergence of hyper and super markets trying to provide customer with
3 V’s - Value, Variety and Volume.

The concept of retail as entertainment came to India with the advent of Shopping
malls. Shopping malls emerged in the urban areas giving a world-class experience to the
customers. Eventually hypermarkets and supermarkets emerged. The evolution of the sector
includes the continuous improvement in the supply chain management, distribution channels,
technology, back-end operations, etc. this would finally lead to more of consolidation,
mergers and acquisitions and huge investments.

Retailing is considered to be the largest private sector in India and moreover, it is second to
agriculture in terms of provision of employment. Indian retailing provides employment to
more than 4 crore people. The retail industry is divided into two sectors namely, organised or
formal and unorganised or informal. In simple terms, it could be said that organised retailing
is one in which the trading or merchandising is carried out by licensed or authorized retailers
who are registered for sales tax and other taxes. The companies owned super markets, hyper
markets; retail chains and other privately owned retail stores or departmental stores come
under this organised retailing. The revenue, generated by these enterprises is accounted for by
the Government. It is worth to mention few brands and companies that are presently
marching in the Indian organised retailing. They are, namely Foodworld, Spencers daily,
More super markets, Big Bazaar, Hypercity, Shoppers stop, Khadims, Lifestyle, Pantaloons,
Westside, Trent, Reliance super, Reliance trends, Reliance footprints, and entertainment
chains like, Adlabs, Fame, PVR, Inox and Fun Republic. To spell out few Indian companies
that have invested a big money in Indian organised Retailing are namely, Reliance, Future
Group, Aditya Birla Group, TATA, and Bharti etc. Regarding the unorganised retailing, it
stands for 95% of the Indian retailing and is occupied by the sole-owner managed general
provision stores, paan shops, convenient stores, hand cart and pavement vendors etc. In
relation to the provision of employment, the organised sector has employed 50 lakh people
whereas, the unorganised has employed 3.5 crore people in India. It is found that India has
highest density of shops in the world (AC Nielson and KSA Technopark, India). It is also
estimated that the retail contributes about 10-11% to the GDP of India. The value of the
organised retail is Rs. 35,000 crores and of the unorganised is Rs. 9,00,000 crores
approximately.

The organised retailing is growing at a rate more than 30%. It implies that slowly the
unorganised segment is being converted into organised. Regarding the investment, made by
some of the Indian giants, it is learnt that Reliance has already invested $3.4 billion and
emerging as the largest contemporary Indian conglomerate; Hyper city Retail of K.Raheja
group plans to open up 55 hypermarkets before 2015; Bharti enterprises plans to spend $5
billion by 2015 in their retail business. The present state and future plans of companies in this
Indian retail industry will certainly ensure an abnormal growth rate than the present.
According to AT Kearney’s Annual Global Retail Development Index for 2010, it is found in
the annual study, made among 30 Countries based on their retail investment attractiveness,
India has been placed at third rank which is ahead of Brazil, Saudi Arabia and others. The
Indian retail industry is divided into organized and unorganized sectors. The Indian retail
sector is highly fragmented, with a major share of its business is being run by unorganized
retailers like the traditional family run stores and corner stores. The organized retail however
is at a very nascent stage, though attempts are being made to increase its proportion bringing
in a huge opportunity for prospective new players.

RETAIL DISTRIBUTION SYSTEM IN INDIA

Indian retail industry is one of the fastest growing in the world. According to Invest India, the
overall retail market is set to cross the $1.75 trillion mark by 2026 from $795 bn in 2017. The
Indian retail e-commerce market, which amounted to $30 billion in 2019, is also set to grow
at an annual growth rate of 30% for a gross value of goods of $200 billion by 2026. Retail is
India's largest industrial sector, currently accounting for over 10% of India's GDP and 8% of
total employment.

Most Indian manufacturers use a three-tier selling and distribution structure that has evolved
over the years. This structure involves redistribution stockists, wholesalers, and retailers. As
an example, an FMCG company operating on an all-India basis could have between 40 and
80 redistribution stockists (RS). The RS will sell the product to between 100 and 450
wholesalers. Finally, both the RS and wholesalers will service between 250,000-750,000
retailers throughout the country. The RS will sell to both large and small retailers in the cities
as well as interior parts of India. Depending on how a company chooses to manage and
supervise these relations, its sales staff may vary from 75 to 500 employees. Wholesaling is
profitable by maintaining low costs with high turnover, with typical FMCG product margins
anywhere from 4-5%. Many wholesalers operate out of wholesale markets. In urban areas,
the more enterprising retailers provide credit and home-delivery. Now, with the advent of
shopping malls, companies talk of direct delivery and discounts for large retail outlets.
Wholesaling
The act of purchasing goods for consumer and industry for further resale is referred to as
wholesaling. Here, manufactures and farmers are not considered as wholesalers. Wholesaler
is an important part of the marketing channel. Wholesaler increase reach of the company
products and the risk of selling to the customers. Wholesaler can store inventory of various
assortment of product thus helping cost for company and time for customers. Wholesaler can
serve as ears and eyes for the company in understanding competition and customer.

Marketing Logistics
The supply chain management is essential for companies to improve productivity and reduce
costs. The purpose of marketing logistic is to design and implement infrastructure, which will
deliver goods from the point of origin to point of sell in an effective and least cost manner.
This objective mix of high customer satisfaction and lowest cost possible are asymmetrical.
The major decision involved with marketing logistic relate to order processing, warehousing,
inventory and transportation.

Companies look forward to shortening order to payment cycle. A long cycle will lead to
decrease in customer satisfaction and company’s profit. Companies have to set benchmarks at
each level from sales people receiving orders to receiving payment from creditors.

Warehousing for finished goods is another important hub for companies. There has to be a
right balance between sales order and quantity of finished goods. Warehousing at strategic
locations increases timely delivery of goods and reducing in inventory. Technology has
helped in improving warehousing standards. Piled up inventory is not a good sign for the
company. Inventory management involves making decision with time and quantity of raw
materials for matching customer requirements. Management principle like Just In Time (JIT)
are used for better inventory management. In JIT focus is to develop well time flow of raw
materials and finished goods. Transportation and freight cost plays an important role in final
pricing, delivery and condition of raw materials as well as finished products. Here companies
need to make the decision, whether to use a private carrier (company ownership), contractual
(Outside agency) or common carrier (service shared at standard rates).

Retailing, wholesaling and logistic decision are very important to deliver value to end
customers.