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B19BC3040 - Marketing Management - Unit 1
B19BC3040 - Marketing Management - Unit 1
MARKETING
The word marketing has been defined in different ways by several authors and scholars. The
following are some of the definitions which have been given;
1. American Marketing Association – A.M.A. (1964)
Marketing is the process of planning and executing the conceptions, pricing, promotion and
distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational
goals.
2. Kotler and Armstrong (2010)
Marketing is a societal process by which individuals and groups obtain what they need and want
through creating, offering and freely exchanging products and services of value with others
Marketing is the bridge between production and consumption. Marketing forms the vital link between
people’s needs and means of satisfying them. Marketing is an activity that satisfies human needs
through exchange processes. Marketing is merely a civilized form of welfare in which battles are won
with words, ideas and disciplined thinking.
1. Needs:
Existence of unmet needs is preconditioned to undertake marketing activities. Marketing tries to
satisfy needs of consumers. Human needs are the state of felt deprivation of some basic satisfaction. A
need is the state of mind that reflects the lack-ness and restlessness situation. Needs are physiological
in nature. People require food, shelter, clothing, esteem, belonging, and likewise. Note that needs are
not created. They are pre-existed in human being. Needs create physiological tension that can be
released by consuming/using products.
2. Wants:
Wants are the options to satisfy a specific need. They are desire for specific satisfiers to meet specific
need. For example, food is a need that can be satisfied by variety of ways, such as sweet, bread, rice,
chapati, puff, etc. These options are known as wants. In fact, every need can be satisfied by using
different options. Maximum satisfaction of consumer need depends upon availability of better
options. Needs are limited, but wants are many; for every need, there are many wants. Marketer can
influence wants, not needs. He concentrates on creating and satisfying wants.
3. Demand:
Demand is the want for specific products that are backed by the ability and willingness (may be
readiness) to buy them. It is always expressed in relation to time. All wants are not transmitted in
demand. Such wants which are supported by ability and willingness to buy can turn as demand.
Marketer tries to influence demand by making the product attractive, affordable, and easily available.
Marketing management concerns with managing quantum and timing of demand. Marketing
management is called as demand management.
4. Product:
Product can also be referred as a bundle of satisfaction, physical and psychological both. Product
includes core product (basic contents or utility), product-related features (colour, branding, packaging,
labeling, varieties, etc.), and product-related services (after-sales services, guarantee and warrantee,
free home delivery, free repairing, and so on). So, tangible product is a package of services or
benefits. Marketer should consider product benefits and services, instead of product itself. Marketer
can satisfy needs and wants of the target consumers by product. It can be broadly defined as anything
that can be offered to someone to satisfy a need or want. Product includes both good and service.
Normally, product is taken as tangible object, for example, pen, television set, bread, book, etc.
However, importance lies in service rendered by the product. People are not interested just owning or
possessing products, but the services rendered by them. For examples, we do not buy a pen, but
writing service. Similarly, we do not buy a car, but transportation service. Just owning product is not
enough, the product must serve our needs and wants. Thus, physical product is just a vehicle or
medium that offers services to us. As per the definition, anything which can satisfy need and want can
be a product. Thus, product may be in forms of physical object, person, idea, activity, or organisation
that can provide any kind of services that satisfy some needs or wants.
7. Markets:
A market consists of all potential customers sharing particular need/ want who may be willing and
able to engage in exchange to satisfy need/ want. Market Size = fn (Number of people who have need/
want; have resources that interest others, willing or able to offer these resources in exchange for what
they want).
In Marketing terms: Sellers – called as “INDUSTRY”. Buyers – referred to in a group as
“MARKET”.
Types of Markets:
Resource Market,
Manufacturing Market,
Intermediary Market,
Consumer Market,
Government market.
There are five distinctive marketing concept types or approaches to achieving effective marketing.
Notably, not all these marketing concept types work for all industries, because they differ in function.
Every marketing concept was created depending on the need of the market. As markets changed, so
did the concepts.
The marketing concept came about after the Second World War. There were more product variety and
the selling concept could not be depended upon to generate sales. With raised discretionary income,
consumers were also able to be selective. They could buy products that met their needs precisely but
those needs were not patently obvious. As companies started to use the marketing concept actively,
they usually put up individual marketing departments in their organizations. Their goals were to
satisfy the needs of their customers. Oftentimes, the departments were sales departments with
extended responsibilities. Although these extended sales departments are still found in the companies
of today, many companies have structured themselves to marketing organizations with more wide-
ranging focus on the company.
The Societal Marketing Concept
The societal marketing concept is a relatively new marketing concept. While the societal marketing
concept highlights the needs and wants of a target market and the delivery of better value than its
competitors, it also underscores the importance of the well-being of customers and society as a whole
(consumer welfare or societal welfare). The societal marketing concept goes one step further than the
marketing concept. Case in point, if a company creates a car that uses less fuel but has more pollution,
this would merely increase customer satisfaction, but not societal welfare. Companies who believe in
the societal marketing philosophy direct their marketing towards giving customer satisfaction and
social welfare. With this last concept of marketing, companies receive long-term profit, not only from
the viewpoint of the consumer, but also of society.
2. Marketing Planning:
In order to achieve the objectives of an organisation with regard to its marketing, the marketeer chalks
out his marketing plan. For example, a company has a 25% market share of a particular product. The
company wants to raise it to 40%. In order to achieve this objective the marketer has to prepare a plan
in respect of the level of production and promotion efforts. It will also be decided as to who will do
what, when and how. To do this is known as marketing planning.
7. Branding:
Every producer/seller wants that his product should have special identity in the market. In order to
realise his wish he has to give a name to his product which has to be distinct from other competitors.
Giving of distinct name to one’s product is called branding. Thus, the objective of branding is to show
that the products of a given company are different from that of the competitors, so that it has its own
identity. For instance, if a company wants to popularise its commodity – X under the name of “777”
(triple seven) then its brand will be called “777”. It is possible that another company is selling a
similar commodity under AAA (Triple ‘A’) brand name. Under these circumstances, both the
companies will succeed in establishing a distinct identity of their products in the market. When a
brand is not registered under the trade Mark Act, 1999, it becomes a Trade Mark.
MARKETING ENVIRONMENT
The marketing environment refers to all internal and external factors, which directly or indirectly
influence the organization’s decisions related to marketing activities. Internal factors are within the
control of an organization; whereas, external factors do not fall within its control. The external factors
include government, technological, economical, social, and competitive forces; whereas,
organization’s strengths, weaknesses, and competencies form the part of internal factors. Marketers
try to predict the changes, which might take place in future, by monitoring the marketing
environment. These changes may create threats and opportunities for the business. With these
changes, marketers continue to modify their strategies and plans.
Men
Money
Machinery
Materials
Markets
The internal environment is under the control of the marketer and can be changed with the changing
external environment. Nevertheless, the internal marketing environment is as important for the
business as the external marketing environment. This environment includes the sales department,
marketing department, the manufacturing unit, the human resource department, etc.
2. Micro Environment
The micro-component of the external environment is also known as the task environment. It
comprises of external forces and factors that are directly related to the business. These include
suppliers, market intermediaries, customers, partners, competitors and the public
Suppliers include all the parties which provide resources needed by the organisation.
Market intermediaries include parties involved in distributing the product or service of the
organisation.
Partners are all the separate entities like advertising agencies, market research organisations,
banking and insurance companies, transportation companies, brokers, etc. which conduct
business with the organisation.
Customers comprise of the target group of the organisation.
Competitors are the players in the same market who targets similar customers as that of the
organisation.
Public is made up of any other group that has an actual or potential interest or affects the
company’s ability to serve its customers.
3. Macro Environment
The macro component of the marketing environment is also known as the broad environment. It
constitutes the external factors and forces which affect the industry as a whole but don’t have a direct
effect on the business. The macro-environment can be divided into 6 parts.
ENVIRONMENTAL SCANNING
Environmental scanning is the process of gathering information about events and their relationships
within an organization's internal and external environments. The basic purpose of environmental
scanning is to help management determine the future direction of the organization. Environmental
scanning is a process where deep analysis of an environment is done in order to learn about the new
opportunities and threats on the basis of which new strategies can be prepared. Popular method of
environmental scanning are SWOT Analysis, Porter's Five Forces Analysis etc.
CONSUMER BEHAVIOUR
Consumer Behaviour is the study of individuals, or organizations and the processes consumers use to
search, select, use and dispose of products, services, experience, or ideas to satisfy needs and study of
its impact on the consumer and society.
Consumers are complex in needs and expectations, but if you segment them accordingly and
understand their behaviour, you will know how to treat your customers and increase the number of
loyal ones. How many times throughout the day do you make decisions? What should I wear today?
What perfume should I put on? What am I going to have for lunch? If you think about it, we take
many buying decisions every day without giving them much thought. And these decisions, however
insignificant they may seem, keep marketers up at night. Because decoding the processes behind them
means that we can use that info to boost revenue.
Studying consumer behaviour is important because this way marketers can understand what
influences consumers’ buying decisions. By understanding how consumers decide on a product they
can fill in the gap in the market and identify the products that are needed and the products that are
obsolete. Studying consumer behaviour also helps marketers decide how to present their products in a
way that generates maximum impact on consumers. Understanding consumer buying behaviour is the
key secret to reaching and engaging your clients and convert them to purchase from you.
A consumer behaviour analysis should reveal:
What consumers think and how they feel about various alternatives (brands, products,
etc.);
What influences consumers to choose between various options;
Consumers’ behaviour while researching and shopping;
How consumers’ environment (friends, family, media, etc.) influences their
behaviour.
Consumer behaviour is often influenced by different factors. Marketers should study consumer
purchase patterns and figure out buyer trends. In most cases, brands influence consumer behaviour
only with the things they can control; like how Supermarkets like Big Bazaar, Pantaloons etc seems to
compel you to spend more than what you intended to every time you walk into the store.
TYPES OF CONSUMER
In business terms, there are different types of consumers of goods and services that are offered for
sale by companies and manufacturers. So, why is it important to understand different types of
consumers and how to reach them? A product manufacturing company needs to understand the type
of consumers it is targeting with its goods because it is essential to be confident a market exists for the
products they intend to introduce into the market.
Knowing the types of consumers for goods enables a company to appropriately present the product to
the potential purchaser, hence increasing sales and profitability. Understanding the type of consumers
who purchases your products can help you make a diverse range of decisions including: product
design (including cost), product placement, promotions (type and timing) and production schedules.
There are different types, classes or categories of consumers of goods and services and in this article
each of them will be discussed to help you understand the difference.
1. Seasonal Consumers
Many consumers purchase and consume products on a seasonal basis. They shop at certain times
when the need for them arises. Cash flow for a business selling seasonal products can be very
difficult. Long periods of the year may be without sales, so it is vital to quickly and effectively target
seasonal consumers.
Examples of products that rely on seasonal consumers:
2. Personal Consumers
These types of consumers are individual consumers who purchase goods for the sole purpose of
personal, family or household use.
Examples:
Going to the supermarket and shopping for goods which are to be used in the house
Purchasing a car that you intend to use personally
Purchasing clothes for personal use from a clothing mall
Purchasing a mobile phone for personal communication.
Have you ever wondered why cameras and internet connections were added to cell phones? It is
hard to imagine any individual who would not be eager to take photos and share them with their
personal contacts and friends. Manufacturers selling products to personal consumers are
constantly looking for ideas for upgrades and add-ons to enhance the appeal of their goods to
individuals.
3. Organizational Consumer
Organizational consumers purchase products for organizations, governments or businesses, They
often buy in bulk and may place long-term recurring orders. For this reason, an organizational
consumer is generally highly prized and sought after. Products and services sold to organizational
consumers are often required to meet very strict standards. They may need to be adapted to meet
the specific requirements of the buyer, and specific prices are negotiated.
Manufacturers and service providers who target organizational consumers are expected to be
flexible in their approach to negotiating a sale, but rigid in maintaining quality. Goods may be
offered for resale at a profit to the organizational purchaser. Or an organization may buy raw
materials that are aimed at producing other goods which will later be offered for sale to other
consumers.
4. Impulse Buyers
Impulse buyers are consumers who make unplanned buying decisions. Impulse buyers make swift
buying decisions and immediately purchase when they 'connect' with the product and its features.
There is often some kind of emotional appeal. Products impulse consumers purchase are not
initially in their plans, so product placement is very important. Manufacturers who target impulse
buyers need their goods to be featured prominently in a store.
For example:
7. Habitual Consumer
Habitual consumers are those who feel compelled to use certain brands or types of goods. Marketers
work hard to create brand loyalty among this type of consumer. It may be as simple as always
choosing the same brand of deodorant, the same brand of soda, or shopping in the same store for
groceries or clothes. Cigarettes and alcohol are classic examples of products that target habitual
consumers. A beer drinker can be expected to always buy the same type of beer, and smokers have
been known to leave a store and go to a different sales outlet if their brand of cigarette is not available.
Advertising often encourages a persona associated with a specific product to appeal to habitual
consumers.
Product: The uniqueness of the product, the physical appearance and packaging can
influence buying decision of a consumer.
Pricing: Pricing strategy does affect buying behaviour of consumers. Marketers must
consider the price sensitivity of the target customers while fixing prices.
Promotion: The various elements of promotion such as advertising, publicity, public
relations, personal selling, and sales promotion affect buying behaviour of consumers.
Marketers select the promotion mix after considering the nature of customers.
Place: The channels of distribution, and the place of distribution affects buying behaviour
of consumers. Marketers tries to select the right channel and distribute the products at the
right place.
2. Personal Factors
The personal factors of a consumer may affect the buying decisions. The personal factors include:
Age Factor: The age factor greatly influences the buying behaviour. For instance, teenagers
may prefer trendy clothes, whereas, office- executives may prefer formal clothing.
Gender: The consumer behaviour varies across gender.
Education: Highly educated persons may spend on books, personal care products, and so on.
But a person with low or no education may spend less on personal grooming products,
general reading books, and so on.
Income Level: Normally, higher the income level, higher is the level of spending and vice-
versa. But this may not be always the case in developing countries, especially in the rural
areas.
Status’ in the Society: Persons enjoying higher status in the society do spend a good amount
of money on luxury items such as luxury cars, luxury watches, premium brands of clothing,
jewellers, etc.
Other Personal Factors: The other personal factors such as personality, lifestyle, family size,
etc., influence consumer behaviour.
3. Psychological Factors
A person’s buying behaviour is influenced by psychological factors such as:
Learning: It refers to changes in individual behaviour that are caused by information and
experience. For example, when a customer buys a new brand and is satisfied by its use, then
he/she is more likely to buy the same brand the next time. Through learning, people acquire
beliefs and attitudes, which in turn influence the buying behaviour.
Motives: A motive is the inner drive that motivates a person to act or behave in a certain
manner. The marketer must identify the buying motives of the target customers and influence
them to act positively towards the marketed products.
Perception: It is the impression, which one forms about a certain situation or object. A
motivated person is ready to act. But the way or the manner in which he acts is influenced by
his/her perception of the situation.
Beliefs: A belief is a descriptive thought, which a person holds about certain things. It may be
based on knowledge, opinion, faith, trust and confidence. People may hold certain beliefs of
certain brands/products. Beliefs develop brand images, which in turn can affect buying
behaviour.
4. Situational Factors
Major situational influences include the physical surroundings, social surroundings, time, the nature
of the task, and monetary moods and conditions.
Physical Surroundings: The physical surroundings at the place of purchase affects buying
behaviour. For instance, when a customer is shopping in a store, the features that affects
buying behaviour would include the location of the store, the decor, the layout of the store, the
noise level, the way merchandise is displayed, and so on.
Social Surroundings: The social surroundings of a situation involve the other people with the
customer that can influence buying decision at the point of purchase. For instance, a bargain
hunter shopping with an impatient friend may do quick purchases, and may not bargain over
the price, to please the impatient customer.
Time Factor: Customers may make different decisions based on when they purchase – the
hour of the day, the day of the week, or the season of the year. For instance, a consumer who
has received a pay cheque on a day may shop more items, than at the end of the month when
he is short of funds.
Momentary Conditions: The moods and conditions of the customer at the time of purchase
may also affect the buying decision. A customer who is very happy would make a different
buying decision, as compared to when he is not happy.
5. Social Factors
The social factors such as reference groups, family, and social and status affect the buying behaviour:
Reference Groups: A reference group is a small group of people such as colleagues at work
place, club members, friends circle, neighbours, family members, and so on. Reference
groups influence its members as follows:
- They influence members’ values and attitudes.
- They expose members to new behaviours and lifestyles.
- They create pressure to choose certain products or brands.
Family: The family is the main reference group that may influence the consumer behaviour.
Nowadays, children are well informed about goods and services through media or friend
circles, and other sources.
Roles and Status: A person performs certain roles in a particular group such as family, club,
organisation, and so on. For instance, a person may perform the role of a senior executive in a
firm and another person may perform the role of a junior executive. The senior executive may
enjoy higher status in the organisation, as compared to junior executive.
People may purchase the products that conform to their roles and status, especially in the case
of branded clothes, luxury watches, luxury cars, and so on.
6. Cultural Factors
Culture includes race and religion, tradition, caste, moral values, etc. Culture also include sub-cultures
such sub-caste, religious Sects, language, etc.
Culture: It influences consumer behaviour to a great extent. Cultural values and elements are
passed from one generation to another through family, educational institutions, religious
bodies, social environment, etc. Cultural diversity influences food habits, clothing, customs
and traditions, etc. For instance, consuming alcohol and meat in certain religious communities
is not restricted, but in certain communities, consumption of alcohol and meat is prohibited.
Sub-Culture: Each culture consists of smaller sub-cultures that provide specific identity to its
members. Subcultures include sub-caste, religious sects geographic regions as South Indians,
North Indians, and based on languages etc. The behaviour of people belong to various sub-
cultures is different. Therefore, marketers may adopt multicultural marketing approach, i.e.,
designing and marketing goods and services that cater to the tastes and preferences of
consumers belonging to different sub-cultures.
NATURE OF MARKETING
1. Human Activity: Originally, the term marketing is a human activity under which human needs
are satisfied by human efforts. It’s a human action for human satisfaction.
2. Consumer Oriented: A business exist to satisfy human needs, hence business must find out
what the desire of customer (or consumer) and thereby produce goods & services as per the
needs of the customer. Thus, only those goods should be produce that satisfy consumer needs
and at a reasonable profit to the manufacturer (or producer).
3. Art as well as Science: In the technological arena, marketing is the art and science of
choosing target markets and satisfying customers through creating, delivering, and
communicating superior customer value. It is a technique of making the goods available at
right time, right place, into right hands, right quality, in the right form and at right price.
4. Exchange Process: All marketing activities revolve around commercial exchange process.
The exchange process implies transactions between buyer and seller. It also involves
exchange of technology, exchange of information and exchange of ideas.
5. Starts and Ends with Customers: Marketing is consumer oriented and it is crucial to know
what the actual demand of consumer is. This is possible only when required information
related to the goods and services is collected from the customer. Thus, it is the starting of
marketing and the marketing end as soon as those goods and services reach into the safe
hands of the customer.
6. Creation of Utilities: Marketing creates four components of utilities viz. time, place,
possession and form. The form utility refers to the product or service a company offers to
their customers. The place utility refers to the availability of a product or service in a location
i.e. Easier for customers. By time utility, a company can ensure that products and services are
available when customers need them. The possession utility gives customers ownership of a
product or service and enables them to derive benefits in their own business.
7. Goal Oriented: Marketing seeks to achieve benefits for both buyers and sellers by satisfying
human needs. The goal of marketing is to generate profits through the satisfaction of the
customer.
8. Guiding Element of Business: Modern Marketing is the heart of industrial activity that tells
what, when, how to produce. It is capable of guiding and controlling business.
9. System of Interacting Business Activities: Marketing is the system through which a business
enterprise, institution or organization interacts with the customers with the objective to earn
profit, satisfy customers and manage relationship. It is the performance of business activities
that direct the flow of goods and services from producer to consumer or user.
1. Study of Consumer Wants and Needs - Goods are produced to satisfy consumer wants.
Therefore study is done to identify consumer needs and wants. These needs and wants
motivates consumer to purchase.
3. Production planning and development - Product planning and development starts with the
generation of product idea and ends with the product development and commercialisation.
Product planning includes everything from branding and packaging to product line expansion
and contraction.
4. Pricing Policies - Marketer must determine pricing policies for their products. Pricing policies
differs from product to product. It depends on the level of competition, product life cycle,
marketing goals and objectives, etc.
6. Promotion - Promotion includes personal selling, sales promotion, and advertising. Right
promotion mix is crucial in accomplishment of marketing goals.
7. Consumer Satisfaction - The product or service offered must satisfy consumer. Consumer
satisfaction is the major objective of marketing.
PROMOTIONAL STRATEGIES
Promotions refer to the entire set of activities, which communicate the product, brand or service to the
user. The idea is to make people aware, attract and induce to buy the product, in preference over
others. There are several types of promotions. Above the line (ATL) promotions include advertising,
press releases, consumer promotions (schemes, discounts, contests); Below the line (BTL) include
trade discounts, freebies, incentive trips, awards and so on while Through the line promotions digital
marketing as well as combining ATL and BTL.
A promotion strategy is defined by the plan and tactics you implement in your marketing plan, in
order to increase the demand for your product or service. Promotion strategies play a vital role in the
mix of marketing (product, price, placement & promotion), and they revolve around:
Target audience – who are you selling for and what are their interests
Budget – how much are you willing to invest
Plan of action – what strategy are you adopting in order to reach your purpose and make a
profit.
Advertising
Advertising refers to impersonal paid promotions which use mass media to deliver a message. These
include things like newspaper or magazine space ads, TV spots, Internet banners, and outdoor
billboards or posters. The upside of advertising is it's an excellent way to reach a large number of
people. Though it's not targeted, it can be an excellent way to do a branding campaign or boost
awareness. Unfortunately, because advertising is not very targeted the return on investment tends to
be lower. In industries where everyone advertises, the ads may also get "lost in the noise."
Personal Selling
Personal selling is the oldest form of promotion. It takes place generally face to face or over the
telephone, when a company representative speaks with someone in charge of purchasing decisions
(such as a manger, consumer, or company buyer) and persuades them to place an order. The
advantage of personal selling is that the message is always custom-tailored to the prospective
customer. If the consumer doesn't understand or respond to one message, the sales rep can take a
different approach in order to address the customer's needs better. Unfortunately, the in-person nature
of personal selling can also be a major drawback. Personal selling is labour intensive, and many sales
reps have a personality that does not quite resonate with the client. Many people have experienced
salespeople who were overly aggressive, annoying, or repetitive in their pitch, and this can turn off
customers.
Direct Marketing
Sales Promotion
Sales promotions use short-term offers or giveaways such as promotional pens to incentivise a
purchase. The idea is that customers will feel compelled to "act now" to take advantage of the limited
time offer or will be more likely to prefer a brand they've received something useful. However, too
many short-term sales promotions can increase customer price sensitivity or eliminate the response.
Public Relations
Public relations is the art of using non-paid media (such as news) to draw attention to the company.
Sending out press releases announcing news is the best-known form of public relations, but there are
many other methods also. The major benefit of public relations is the effect of a single "success" is
much greater than nearly any other form of promotion. Third party sources like newspapers are seen
as much more authoritative and trustworthy, and far more people read the articles in a newspaper than
look at the ads. However, traditional news is no longer as widely read by the public as it once was, so
traditional PR efforts are also less effective.
Digital promotion
Digital promotion uses social media, phones, and other electronic devices to advertise or sponsor a
product or service. This includes those fancy electronic billboards that are alongside highways and
heavily trafficked areas. All the different platforms and types of devices like desktops, mobile phones,
tablets, etc should be taken into consideration. Digital advertising is any visual ad, written or video,
that you see on the internet. This includes pop ups that appear before you can log onto your daily
crossword puzzle or information about a new drug that comes in your social media feed.
Integrated marketing communication refers to integrating all the promotion strategies to promote a
product or service among target customers. In integrated marketing communication, all aspects of
marketing communication work together for increased sales and maximum cost effectiveness.
Integrated marketing communications is an approach used by organizations to brand and coordinate
their marketing efforts across multiple communication channels. As marketing efforts have shifted
from mass advertising to niche marketing, companies have increasingly used IMC to develop more
cost-effective campaigns that still deliver consumer value. Typically, communication tools for IMC
encompass both traditional and digital media, such as blogs, webinars, search engine optimization,
radio, television, billboards, and magazines.
As products move through the four stages of the product lifecycle different promotional strategies
should be employed at these stages to ensure the healthy success and life of the product.
Introduction - When a product is new the organizations objective will be to inform the target
audience of its entry. Television, radio, magazine, coupons etc may be used to push the
product through the introduction stage of the lifecycle. Push and Pull Strategies will be used
at this crucial stage.
Growth - As the product becomes accepted by the target market the organization at this stage
of the lifecycle the organization works on the strategy of further increasing brand awareness
to encourage loyalty. Organization take persuasive tactics to encourage the consumers to
purchase their product over their rivals
Maturity - At this stage with increased competition the organization take retention tactics to
encourage the consumers to keep purchasing their products /services. Any differential
advantage will be clearly communicated to the target audience to inform of their benefit over
their competitors.
Decline - As the product reaches the decline stage the organization will use the strategy of
reminding people of the product to slow the inevitable.
New products typically merit large advertising budgets to build awareness and to gain consumer trial.
Existing products usually are supported with lower advertising budgets, measured as a ratio to sales.
ADVERTISING STRUCTURE
Whether you are advertising an event, new product or a service, creating an ad can help you inform,
persuade and even remind current and potential customers about your brand. Advertising ads are
placed in newspapers, magazines and on websites. Regardless of where you place you advertisement,
successful ads contain five major parts.
1. Headline - The headline is a major aspect of an advertising ad. It often appears at the top of an
advertisement or in the middle so that it immediately attracts attention from potential
customers. Headlines contain a few words of text and they should be direct and to the point so
as not to overwhelm readers. Your headline should make a promise to the reader, stating what
they’ll discover if they continue to read the rest of the advertisement. The headline and its
promise should address a concern, problem or interest your consumers have.
2. Sub-headline - A sub-headline appears directly under the headline. The text is typically
smaller and it gives more insight into the product you are selling, while further outlining why
the customer should care enough to keep reading. The sub-headline can be the length of a
sentence.
3. Benefits - Your potential customers want to know how their lives may improve if they use the
product or service you are promoting. For this reason, it is important to turn your product or
service features into benefits. If you are selling a microwave, one feature is fast-cooking
times, so a benefit might be that parents spend less time in the kitchen and families get to eat
faster. You can list your benefits in bullet points, as individual words or even in paragraph
form.
4. Image - While not all ads contain images, many companies use images of their products, or
people using their products, to grab consumer interest. Ensure that the image you use fits the
scale of the advertisement and is clear. If you do not use an image of your product, you can
include an image of your logo.
5. Call-to-action - Get your potential customers to act on your offer by including a call-to-action
in your. The call-to-action typically appears at the end of an advertisement and is used to add
a sense of urgency. It should instruct customers what steps they should take to purchase your
item or sign up with a service through your company. You can ask customers to visit your
website, call to book an appointment or drop by your location.
ADVERTISING BUDGET
A budget is an expression in monetary terms of the forward plan and the proposed activity.
Advertising plan includes, sales targets, product facts, marketing information, competitive situation,
creative platform, copy treatment etc. The advertising budget is the translation of an advertising plan
into monetary form. It states the amount of proposed advertising expenses and informs the
management of the organisation the expected cost of executing the advertising plan.
The advertising budget is a statement of the advertising plan in financial terms. It is the allocation of
available funds to various advertising functions after determining the total funds available for
advertising purposes during a specified period.
Preparation:
The total expenditure on advertising is estimated on the basis of the information of markets,
product, pricing, image, message and media. The determination of the total funds is the first
step in budgeting, which is known as budget appropriation. The determination of advertising
appropriation depends on the existing sales, the unit of sales, and the expenditure on
advertising and affordable capacity.
After determining the appropriation, the next step is to specify the expenditure to be incurred
on each function of advertising. The allocation of appropriation to different advertising
activities in made on the basis of the contribution to advertising and the attitude of the
management.
Thus, the total budget is cut into small budgets for each advertising function. Advertising
budgets are prepared for each market segment, time and geographic area.
Presentation:
The budget prepared by the advertising manager is presented to the marketing manager who
decides the rationale and the contribution of the budget components. The budget is modified
on the basis of the prevailing marketing conditions and management requirements.
The top executive may also fix the budget and budget components. The financial manager is
consulted before this decision is taken. The budget is modified in the light of sales forecast,
sales opportunities and the role of advertising in capturing the market share. The advertising
plan is then formulated for the final budget.
Budget Execution:
The execution of the budget is done through routine activities. The cost of advertising,
production, purchase of advertising time and space and other functions are considered.
Constant surveillance and periodic checks determine whether the advertising norms are
implemented and budgets properly utilised.
The budgets are prepared in the light of the normal marketing conditions. If the conditions
change, the budgets are changed accordingly. Contingency funds are provided in the
beginning, which are used during times of need.
Control of Budget:
The advertising budget should not be less than the advertising expenditure. The expenditure is
compared with the provision in the advertising plan. No larger amount should be spent unless
the advertiser is constrained to do so in the light of existing conditions. The planned
expenditure and the actual expenditure should be on parallel lines.
The budgeted expenditure on advertising should be used only for advertising purposes and not
for other purposes. Since sales promotions include several functions other than the advertising
function, the advertising budget should be used only for the advertising purposes and not for
other sales promotion strategies – that is, on personal selling, merchandising, packaging,
public relations, etc.
There should be a separate budget for each sales promotion strategy. When the budget is
exhausted by other functions, the phenomenon is known as budget attrition, which should be
avoided. There are some combined expenditures on sales promotion which may be drawn
from the advertising budget.