All Units of MM

Emerald’s MARKETING MANAGEMENT
Degree College
UNIT-I
BASIC CONCEPTS OF MARKETING
Marketing is everywhere and it affects our day- to-day life in every possible
manner. Formally or informally people and organizations engage in a vast
number of activities that could be called as marketing. Good marketing is no
accident, but a result of careful planning and execution. It is both an art and
science. Let’s discuss various basic concepts in marketing.
Need:
it is psychological deficiency in human mind. It is a state of felt deprivation.
Physiological Needs-Food, water, shelter, sleep, etc.
Safety needs-A sense of security of the self, job security, health security, safe
environment, etc.
Social needs-belonging and Love Need Strong bonds, love relationships.
Self-Esteem-Self-confidence, respect, good reputation, etc.
Self-Actualization-Acceptance of facts, Lack of prejudice, Ability to solve
problems, Sense of morality, Creativity, Spontaneity
Want: It is the desire of an individual for products or services.
Ex: Lamborghini venin
Products: Product is anything which can satisfy customer need or want.
Products-physical objects
Services- intangible objects
Demand: Consumers desire to purchase goods and services and willingness
to pay a price for a specific good or service.
Desire+ willingness = demand
Ex: Restaurants-pizza
Consumer and customer: The person or individual who purchase the
product is called Customer. The person or any individual who use the
product is called as consumer
For example: when parents purchase a product for their children, the parent is
the customer, and the children are the consumer.
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Value: Customers expectations about products and services.
It is the ration between what the customers get and what the customers gives
V=B/C
Exchange: It is the act of obtaining a desired product by offering something
return.
For example, if you buy food, you have to pay money.
Satisfaction: It is a feeling of a customer about a product or service
performance.
When customer expectation=Performance=Satisfied
Expectation> Performance=dis satisfied
Expectation<Performance= highly satisfied
Ex: Honda active 6G
Market: Traditional View:
it is a place where potential buyers and sellers meet together to exchange goods.
Modern view:
A market is defined as” the sum total of all the buyers and seller in the
area or region under consideration. The area may be the earth, or countries,
regions, states or cities Ex: OLX, stock market
Marketing:
 it is the process of identifying, creating, offering and exchanging products
and services to customers by companies is called as marketing.
 It is a social process by which customers obtain what they need and want
through creating, offering and exchanging products value with others.
 It is an economic process by which products and services are exchanged
between the producer and the customer and their value determined in
terms of prices.
Marketing Definition
In short Marketing is “Meeting needs profitably”. Marketing has been
defined by different authors in different ways which can be broadly classified
into three Product oriented customer oriented value oriented.

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The American marketing association defines (Product oriented):
“Marketing is the process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services to create
exchanges that satisfy individual and organizational goals.”
In the words of Philip Kotler (customer oriented)
“Marketing is the human activity directed at satisfying needs and wants
through an exchange process.”
In 2004 the American Marketing Association defined (Value Oriented)
“Marketing is an organizational function and a set of processes for
creating, communicating and delivering value to customers and for managing
customer relationships in ways that benefit the organization and its
stakeholders.”
Marketing management:
It is a process of creating, offering and exchanging goods and services to
customers by companies through planning and executing is called as Marketing
management.
Concepts of Marketing:
Marketing concept has undergone a drastic change over years. Earlier it
was production or later selling which was key to marketing idea but moving
ahead now these have given way to customer satisfaction rather delight
developing a modern marketing concept. Let’s review the evolution of earlier
marketing ideas;

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The production concept:
It is one of the oldest concepts in business. It holds that consumers will
prefer products that are widely available and inexpensive. Managers of
production- oriented business concentrate on achieving high production
efficiency, low costs, and mass distribution.
Production Concept example: -
You see, in Amazon or retail stores, the market is flooded with cheap
products from china. Everything from the cheap plastic product from China is
on your cart now.
The best example of the production concept is Vivo, the Chinese smartphone
brand. Their phones are available in almost every corner of the Asian market.
You can walk into any phone shop in Asia and can walk out with the latest and
greatest smartphone from Vivo.
The product concept:
It proposes that consumers favor products that offer the most quality,
performance, or innovative features. Managers in these organizations focus on
making superior products and improving them overtime.
EX: When you think of high-quality products, Apple will be one of the top ones.
Their products are so good that they set industry trends and standards.
The selling concept:
This concept, the aim is to sell what the company makes rather than
making what the market wants. Such an aggressive selling program carries very
high risks.

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The marketing concept:
 marketing concept believes that the success of a business depends on the
marketing efforts that deliver a better value proposition than its
competitors.
 This concept focuses on the needs and wants of target marketing as well
as delivering value better than its competition. Through marketing, it’s
your goal to be the preferred option compared to your competitors.
Competitive advantage is key!
The societal marketing concept:
The societal marketing concept is the most progressive and modern-day
applicable marketing mindset to have. It is a marketing concept that
believes in giving back to society by producing better products that help
the world be a better place.
Customer value: Customer Value is the incremental benefit which a customer

derives from consuming a product after paying in return.
It is the difference between the benefits (sum of tangible and intangible benefits)
and the cost. Customer value is dependent on the three factors – Quality, Service
and Price.
Classification of customer value: There are set of values classified as
functional, social, emotional, epistemic, and conditional values. These values are
often found in the purchase of categories (food, grocery, computer peripherals,
sporting events and games).

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Functional value:
The functional value of a consumer choice is the perceived functional,
utilitarian or physical performance utility received from the choice products
attributes. It is associated with economic utility theory, popularly expressed in
term of rational economic reason.
For example: when somebody purchases a bar of soap, he is buying it for the
purpose of washing.
Social value: The social value of a choice is the perceived utility acquired
because of the suggestions of one or more specific social groups and consumer
choice. A consumer’s choice gains social value by being linked with positively or
negatively. Choices involving highly visible products like bicycles and food and
services to be socially shared like gifts, products used in entertainment are often
driven by social values.
For example: when someone is buying a gift they are influenced by social value
as it is presentable or not.
Emotional value: The emotional value of a choice is the perceived utility
acquired from its capacity to stimulate the consumer’s emotions or feelings. A
choice acquires emotional value when associated with specific feelings or when it
triggers or sustains those feelings. Products and services are frequently
associated with emotional responses.
For example, a consumer buying “Dettol” or “lifebuoy soap” in view of
safeguarding the health of his children is an emotional value of the product.
Epistemic value:
The epistemic value of a choice is the perceived utility that comes from the
choices ability to foster curiosity, provide novelty and satisfy a desire for
knowledge. New purchase and consumption experiences, especially offer
epistemic value.
For example, companies such as Amul keeps on adding new milk products to it
are to its portfolio for customer offerings. It keeps brand young and fulfils
epistemic value.
Conditional value:

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Conditional value of a choice is the perceived utility acquired by a choice
as an outcome of some particular situation facing the customer. Products
associated with a particular time or event like coffee at breakfast. The
conditional value is associated with climate or location benefit, once in lifetime
(purchase of first car/bike), emergency situations etc. it is served best when we
associate the brand with usage situations.
For example, A Christmas card is a product with conditional value, since it is
only of value in the Christmas season.
Performance value: Performance value is the quality of physical outcome of
using the product or service. It refers to how well the product fits into its desired
physical function consistently. It comes from the physical composition of the
product or from the design of services. For example, when purchasing a bike,
we desire to have better performance at all circumstances.
Financing value: Financing value consists of offering the terms of purchase that
make the payment more affordable by distributing the liability over an extended
period of time. It allows customised payment schedules, designed to suit
individual payer’s convenience.
Personal value: Personal values expected by the buyer are convenience and
personalisation. Acquiring a product or service requires time and effort. The
effort includes the distance travelled between residence and shop, time spent in
selecting the product and completing the transaction.
Factors that influence the customer value:
 Product function
 Points of differentiation
 Quality
 Service
 Marketing
 Branding
 Price
 Existing relationships or experience
 Personal bias from experience and upbringing

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These are factors that impact a customer’s perception of value. Some you
can control, some you cannot. For any individual customer they will rank
differently in importance. Some people love brands. Some people only buy cheap.
Some favor short form content. Some people treasure personal relationships.
MARKETING ENVIRONMENT
The Surroundings or Conditions in which a person, lives are called as
Environment. The surroundings or conditions in which a business is operating is
called as business or marketing environment.
Definition:
The Marketing Environment includes the Internal factors (employees,
customers, shareholders, retailers & distributors, etc.) and the External factors
(political, legal, social, technological, economic) that surround the business and
influence its marketing operations
Classification of environment:
CONTROLLABLE FACTORS
The controllable factors are well within the grip of the firm and easy to
adjust them to suit the changes. These consist of Marketing policies and
Marketing strategies. Framing of marketing policies is the responsibility of top
management and marketing strategies are developed by middle level
management. The selection of target marketing, Marketing objectives and
Marketing control are the other controllable factors which also helps in framing
Marketing strategies.
UNCONROLLABLE FACTORS
Controllable variables will have to be filtered through various
uncontrollable environmental factors before they reach to the customers. The
uncontrollable environmental consist of two levels i.e., micro environment and
macro environment.
MICRO - ENVIRONMENT VARIABLES
It consists of elements or forces that influence marketing directly. It
includes Supplier, Marketing Intermediaries, Costumers, Competitors and the
General Public.

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Supplier
One who supply the resources to a company. Any shortage of Supply
affects the Marketing function and thus, should avoid dependence on any single
supplier.
Marketing intermediates
They are the middlemen who create place Utility, Time utility and Quantity
utility. These includes Physical Distribution Firms, Transport Companies,
Marketing Consulting Firms, Marketing Services Agencies and Assist the
company in promoting the right products to the right markets.
Customers
It refers to consumer markets, industrial markets, reseller markets,
international markets and govt. markets having its own characteristics.
Public
The marketing decisions considerably influenced by public relations, govt.
policies, the press, the legislatures and the general public.
MACRO- ENVIRONMENT VARIABLES
Macro-environment consists of forces affecting the entire society or
economy at large. Macro environment influences entire industry as a whole. The
various variables of Macro-environment are
Demographic environment
It includes factors such as population growth, change in age-group,
marriages, family sizes, movement of people from big cities to rural or sub urban
areas, literacy etc. It is essential for the market to understand the demographic
forces in a country which helps him frame optimal marketing-mix.
Socio-cultural environment
Sociological Factors Consumers being social animal and their life style is
deeply influenced by the social set up. It is found to have deep influence on
consumer taste, temperament, life and living. The needs, desires, hopes and
aspirations of the consumers are necessary to be understood.
Psychological The study about the behaviour, attitude, temperament, mentality
and personality is must and how there wants and needs can be best satisfied?

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Anthropological these factors are vital in noting the national and regional
characters, cultures and sub cultures and the pattern of living.
Economic environment It comprises of economic system of the country, affects
the demand structure of any industry/ product. Changes in economic conditions
provides marketers with new challenges and threats. Various economic factors
which directly affect the Marketing strategies are discussed below.
Role of Govt: Marketing in greatly influenced by the role of govt. through fiscal
policies, industrial regulations, economic controls, import-export policies etc.
Monetary and Non-Monetary policies of the Govt. also determine the tempo of
economic development.
Consumers: Consumer welfare and interest should be taken into consideration
while preparing marketing programme. The marketer is to make available quality
products at reasonable prices, in sufficient qualities, at required time interval.
Competition: Healthy competition is always in the interest of customers
whereas unhealthy competition is harmful and leads toward increasing cost and
waste.
Price: It is determinant of the fate of any business. If the Price is too high,
reduces the consumer and consumption and if too low, the producers and
marketers are left in the lurch.
Ethical environment: In the race of earning more and more profits, business
people disintegrate the ethical values from the business. This leads to
adulteration, limitation etc. resulting in socio-economic pollution of minds and
relations.
Political/ legal environment: The legal environment for marketing decision is
characterized by various laws passed by Central or State Govt. and even by local
administration. Govt. agencies, political parties, pressure groups and laws create
tremendous pressure and constraints for marketer. Marketing managers
required full knowledge and understanding of political philosophy and ideologies
of major political groups and legal environment for framing marketing strategies
and growth of business.

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Physical environment: It refers to the physical distribution of goods and
services. It needs the in depth study of cost and convenience involved in the
process of physical distribution of products from producer to consumer end.
Technological environment: It helps to shape changes in living style of the
consumers. It has the responsibility of relating changing lifestyle patterns,
values and changing technology to market opportunities for profitable sales to
particular market segment.
MARKETING STRATEGY: Marketing strategy of a firm is the complete and
unbeatable plan or instrument designed specifically for attaining the
marketing objectives of the firm.
Marketing strategy is the comprehensive plan formulated particularly
for achieving the marketing objectives of the organization.
Strategy build areas:
Product mix strategies:
 Expansion: A company increases the number of product lines or depth
(i.e., product variations) within lines.
 Contraction: A company narrows its product mix to eliminate lower-
performing products or lines or to simplify remaining products or lines.
 Change an Existing Product: A company improves a current product
rather than creating a completely new product.
 Product Differentiation: Without modifying the product in any way, a
company positions it as a superior choice to a competitive product.
Pricing strategies

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Distribution Strategies
 Direct Distribution
 Indirect Distribution
 Intensive Distribution-ex gum
 Exclusive Distribution
 Selective Distribution
Promotional strategies
 Personal (face-to-face) selling
 Traditional advertising
 Direct marketing
 Sales promotion
 Public relations
 B2B promotions
 Word-of-mouth marketing
 Customer loyalty program
Importance of having a Marketing Strategy
Choosing a suitable marketing strategies for the company will bring great
advantages such as:
 Increased sales
 Creating sustainable growth for the company
 Understanding what your customers want
 You will meet the needs and exceed the expectations of the customers
 You will strengthen the relationship with the target market
 You will build the brand in the consumer’s mind
MARKETING MIX
 The marketing mix refers to the set of actions, or tactics, that a company
uses to promote its brand or product in the market. The 4Ps make up a
typical marketing mix - Price, Product, Promotion and Place.

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UNIT-II
CONSUMERISM
Meaning:
• Consumerism is a wide range of activities of government, business and
Independent organizations designed to protect rights of consumers.
• Consumerism is a process through which consumers seek Redress,
Restitution and remedy for their dissatisfaction and frustrations with the
help of their all organized and unorganized efforts and activities.
Definition:
According to Prof. Philip Kotler
“Consumerism is a social movement seeking to augment the rights and
powers of the buyers in relation to sellers”.
Consumer exploitation:
Some of the ways in which consumers are being exploited are as follows:
a) Selling at a higher price:
The price charged by the seller for a product or service is not proportionate
to the quality but more than the fair price. Even in times of surplus stock,
distributors create artificial scarcity in the market to push up the prices. The
consumers suffer due to higher prices and non-availability of goods in the open
market.
b) Product risk:
Harmful and banned drugs, electrical appliances with inadequate safety
provisions are sold in the market. Such products are harmful and injure the
consumers in the long run. Example: Electrical gadgets with inadequate
insulation leading to electric shocks.
c) Adulteration:
Adulteration is quite common. In food articles, it is a crime which cannot be
pardoned. It spoils the health of the consumers.
Example:
1) 300 grams of Vanaspati is found in a 500 grams’ tin of ghee, but labelled as
“Pure Ghee”.
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2) One kilogram of sugar packet weighs only 970 grams, whereas labelled as “NET
WEIGHT ONE KILOGRAM”.
3) 500 grams of chilly power packet consists of 150 grams of red brick powder or
coloured saw dust, whereas labelled as “PURE”.
4) Chemicals are added to make the milk dense and white.
d) Duplication:
Duplicates of popular brands of products are produced and sold. Duplicates
are available in the market for every original & pure parts of components etc., a
consumer is not in a position to distinguish duplicate from the original. Thus he
is exploited. Example: watches, auto spares, cosmetics, jewellery etc.
e) Substandard:
On opening a packed and sealed container one finds the contents with poor
quality. Example: Packets of milk powder, ice cream, ghee and butter, toothpaste
etc.
f) Artificial scarcity:
In milk booths and cinema houses we find “No stock” and “House ful”
boards. But milk and cinema tickets are available at a higher price in the black
market.
g) False claims:
Producers make false claims and bogus presentations about their products
in the media (T.V) of Advertising with a view to mislead the consumers.
Example: A ‘Pinch of Rin’ Advertisement
h) Service:
During guarantee period in the case of consumer durable goods like
televisions washing machines, refrigerators, cars, scooters etc. free service is
guaranteed for a few years from the date of purchase. But in reality free service is
denied on flimsy grounds. The consumer service is rendered only during the
warranty period and thus exploited.
i) Fitness:
Items unsuitable for human consumption are sold in the market. Some
items marked as “unbreakable” but breaks while using them. For example, soft
drinks.
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Origin and growth of consumerism:
Consumerism or consumer movement is an outcome of sufferings, and
exploitations of consumers. Consumerism is to secure protection from commercial
terrorism and exploitative practices. The aim is to safeguard their interests by
establishing their rights and powers in relation to products and sellers.
Mr. Ralph Nader pioneered the fight against monopoly and unethical trade
practices of large companies in the United States. He is considered as the father
of the consumer movement. He initially fought against automobile industry for
violating safety standards and pollution control laws. But today, in almost all
countries the consumer movement is well developed. In countries like Britain,
Sweden, Netherlands, Denmark and even Kenya have stringent laws in their
respective countries. The United Nations General Assembly has adopted a set of
general guidelines for consumer protection.
Consumer movement in India:
Consumerism as a movement is just slowly growing in our country. This is
due to sellers’ market and the Government monopolises most of the services, such
as Insurance, Banking, Transport, Telephone etc., Consumer awareness is lacking
due to apathy and illiteracy of the mass. Consumers do not know their rights and
responsibilities. Mahatma Gandhi The father of our nation, emphasized consumer
protection, referring to the consumers as the poor consumers”. His famous
statement is worth remembering.
“A customer is the most important visitor on our premises. He is not
dependent on us. We are dependent on him. He is not an outsider to our business.
He is part of it. We are not doing him a favor by serving him. He is doing us a favor
by giving us an opportunity to do so”
Rights of consumers:
1) Right to be informed about the product quality, quantity, purity, standard
and price of goods.
2) Right of protection against marketing of goods which are hazardous to life
and property.
3) Right of access to variety of goods at competitive prices.

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4) Right of consumer education regarding usage, handling etc., of the
products.
5) Right to have protection from unfair and deceptive trade practices.
6) Right to be heard and to be assured that the consumer’s interest will receive
due consideration.
7) Right to seek reprisal against unfair trade practices or unscrupulous
exploitation of consumers.
Responsibilities of consumer:
1) The consumer must pay the price of the goods according to the terms of the
contract.
2) The consumer has got a duty to apply to the seller for the delivery of the
goods. He has to take delivery of the goods in time.
3) The consumer has to bear any loss, which may arise to the seller as a result
of the consumer refusing to take delivery or for not taking delivery of the
goods in time as per the contract.
4) The consumer is bound to pay any interest and special damages to the seller
in case he had delayed the payment to the seller.
5) The consumer must ask for and collect the invoice, money receipt, delivery
note and guarantee card.
6) The consumer has to follow and observe the instructions and precautions
while using the products.
Consumer oriented legislation in India
Prior to the year 1986, the Central and State Governments in India enacted
a number of legislation’s affecting sale of goods, drugs, proper weights and
measures, adulteration, sale of essential commodities, monopolistic and
restrictive trade practices, etc.
These Acts are:
a. Sale of Goods Act, 1930
b. Dangerous Drug Act, 1930
c. Agricultural Produce (Grading and Marketing) Act 1927
d. Drugs and Cosmetics Act, 1940
e. The Drugs Control Act, 1950.
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f. Indian Standards Institution (Certification marks) Act,1952. (Now ISI is
known as Bureau of Indian Standards)
g. The Prevention of Food Adulteration Act, 1954.
h. The Essential Commodities Act, 1955.
i. Standards of Weights and Measures Act, 1958.
j. Monopolies and Restrictive Trade Practices Act, 1969.
k. Hire Purchase Act, 1972
l. Packaged Commodities Order, 1975.
Nowadays, the consumers’ grievances and dissatisfaction grew. Consumers
themselves did not have any effective mechanism or institutional arrangement for
the speedy redressal of their grievances. Lack of effective popular movement
isolated the consumer and so his plight is increased. Sensing the pressure
mounting from various consumer protection groups and consumers themselves,
the Central Government enacted a comprehensive law called the Consumer
Protection Act in 1986. This Act came into force with effect from 15.04.1987. This
Act was further amended in 1993. The Act is referred in short as ‘COPRA’.
Consumer Protection Councils and Forums
Under the provisions of the Consumer Protection Act 1986, there shall be
consumer councils and a three tier quasi-Judicial Machinery called redressal
forums at National, State and District levels.
1. District forum
District forum are set up in each district by the state concerned. The important
features are:
i.It consists of a President and two members, one of whom should be a woman,
duly appointed by State Govt.
ii.It can receive consumer complaints of not more than Rs. 20 lakhs value.
iii.On receiving the complaint, the district forum shall refer the complaint to the
opposite party concerned and send the sample of goods for testing in a
laboratory.
iv.The district forum after being satisfied that goods are defective or there is
some unfair trade practice can issue an order to opposite party directing him
to either replace or return the price or pay compensation. In case the
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aggrieved party is not satisfied with the order of district forum. He can appeal
before state forum within 30 days of passing an order.
2. State commission
It is set up in each state by the govt. concerned. The salient features are:
a) Each commission consists of a president and it least 2 members appointed
by state Govt.
b) Complaints of at least Rs. 20 lakhs but not more than 1 crore can be filed
with state commission.
c) On receiving the complaint, the state commission can also refer the
complaint to opposite party and send the goods for testing in laboratory.
d) The state commission after being satisfied can order to opposite party to
either replace or repay or pay compensation. In case the aggrieved party is
not satisfied, they can appeal before national commission within 30 days of
passing an order.
3. National commission
It is setup by Central Govt. The provisions of act are:
(a) It consists of a President and at least 4 members appointed by Central Govt.
(b) All complaints are pertaining to goods and services of value more than Rs. 1
crore can be filed with national commission.
(c) On receiving the complaint, the national commission can also refer it to
opposite party and send goods for testing.
(d) The National Commission has the power to issue orders for replace mentor
removal and to pay the compensation for loss.
Importance of consumerism:
• Stop unfair trade practices
• Provide and complete information
• Discourage anti-social activities
• Implementation of consumer Protection laws
• Protect against exploitation

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CONSUMER BEHAVIOUR
Meaning:
• consumer behavior is actions of consumers in the market place and the
underlying motives for those actions.
• The study of consumer behavior is the study of how individuals make
decisions to spend their available resources (time, money, effort) on
consumption related items.
Definition:
• In the words of Walter and Paul
• “consumer behavior is the process where by individuals decide what, when,
where and from whom to purchase goods and services “
Factors influencing consumer behavior

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Psychological factors:
• Consumer Needs and Motivation: All buying decisions start with need
recognition. People always seek to satisfy their needs. When need is not
satisfied it drives people to satisfy that need. Then the need becomes a
motive. Thus motive arises from needs and wants. The force that converts
needs into motives is called motivation.
• Perception: It is the process of selecting, organizing and interpreting
information in order to give meaning to the world or environment we live in.
the way the consumers display selective attention, distortion or retention
motivates marketers to design the product, package, promotional themes
etc. The marketers should understand the consumer perception and convert
perception into a buying response
• Learning: Learning is the process of acquiring knowledge. Generally,
learning results in four Ways-Listening, Reading, Observing and
experiencing. The importance of learning theory for marketers is that they
can create demand for a product by associating it with strong drives, using
motivating cues and providing positive reinforcement.
• Belief and Attitude: A belief is a descriptive thought that a person holds
about something. Such thoughts are based on learning, opinion or faith. For
example, a consumer believes that Maruti cars are less costly and fuel
efficient. Attitude means a person’s feelings towards a particular object or
situation.
• Role and Status: A person takes up many roles in different situations in
his /her life. He can be son, father, husband, employee etc. Each role has a
status. A person’s role and status influence his general as well as buying
behavior.
• Family: Family is one of the important factors influencing buying behavior.
• Reference Group: consumer behavior is influenced by various groups
within society known as reference groups. We have several reference groups
with whom an individual associate such as friends, relatives, classmates,
club memberships etc. In each groups there is an opinion leader whose style

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is adopted by others. Marketers often identify such opinion leaders and
develop advertisement featuring them as endorsers.
Cultural factors:
Culture: Culture simply refers to values and beliefs in which one is born and
brought up. It is a set of Ideas, Customs, Values, Art and Belief that are produced
or shaped by a society and passed on from generation to generation. Culture
influence what we eat and wear, how we relax and where we live etc.
• Sub-Culture: It is based on religion, language, geographic region,
nationality, age etc. It is a segment within a large culture that shares a set
of beliefs, values or activities that differ in certain respects from those of the
main or overall culture. The food habits are different in different parts of
India.
• Social Class: A social class is a group of people with similar values, interest
and behavior within a society. Consumers buying behavior is determined by
the social class to which they belong rather than by their income alone. The
social class is based on income, education, occupation, family history,
wealth, lifestyle, area of residence etc.
Personal factors:
• Age: Need and wants are determined by age. So buying changes with age,
Taste for food, clothing and recreation etc. changes with age.
• Stages in the Life Cycle: People buy different goods during different life
cycle stages. Life cycle of an individual refers to the different phases of his
or her life.
• Occupation and Economic Status: Occupation influences product choice,
brands beliefs etc. It determines income, buying power and status.
• Life Style: It indicates how people live, how they spend their time, how and
what they choose and where they shop. It is the way people eat, drink, spend
leisure time, work and so on.
• Personality: Personality refers to the unique psychological characteristics
of an individual. Personality of consumers influences brand preference and
choice of products.

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• Self-Image: Self-image implies what one thinks of himself/herself. It is the
way one sees himself/herself or wishes to see himself/herself or wants to be
seen by others. Self-concept is an important factor to marketers in planning
advertising campaign
Economic factors:
• Personal Income: Gross income of a person is composed of disposable and
discretionary income. When disposable income rises, the expenditure on
various items will increase and vice versa.
• Family Income: It is the aggregate income of all members of a family. The
family income remaining after the expenditure on the basic needs of the
family is made available for buying goods, durables and luxuries
• Income Expectations: If a person expects any increase in his income he
will buy durables on hire purchase etc, if his future income is likely to
decline he will restrict his expenditure to bare necessities.
• Savings: When a person decides to save more, he will spend less on comfort
and luxuries.
• Liquidity Position: If an individual has more liquid assets, he goes in for
buying comfort and luxuries.
• Consumer Credit: If Consumer Credit is available on liberal terms,
expenditure on comfort and luxuries will increase.
Buying process:
Buying behavior is the decision processes and acts of people involved in
buying and using products. Consumer buying behavior refers to the buying
behavior of ultimate consumers those who purchase products for personal use
and not for business purposes. Understanding buying behavior requires
knowledge of the consumption process and consumers ‘perceptions of product
utility.
Consumer Buying Decision Process:
The consumer buying decision process is a five-stage purchase decision
process which includes problem recognition, information search, evaluation of
alternatives, purchase, and post-purchase evaluation.

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A. Problem Recognition:
This stage occurs when a buyer becomes aware of a difference between a
desired state and an actual condition. Recognition speed can be slow or fast.
Individual may never become aware of the problem or need. Marketers may
use sales personnel, advertising, and packaging to trigger recognition of needs or
problems.
B. Information Search:
After the consumer becomes aware of the problem or need, he or she
searches for information about products that will help resolve the problem or
satisfy the need.
There are two aspects to an information search:
a) In the internal search, buyers first search their memories for information
about products that might solve the problem.
b) In the external search, buyers seek information from outside sources from
friends, relatives, public sources, government reports or publications, or
marketer-dominated sources of information, salespeople, advertising,
websites, package labelling, and in-store demonstrations and displays. The
Internet has become a major information source.
C. Evaluation of Alternatives:
A successful information search within a product category yields a consideration
set, which is a group of brands that the buyer views as possible alternatives.
a) The consumer establishes a set of evaluative criteria, which are objective
and subjective characteristics that are important to him or her.
b) The consumer uses these criteria to rates and ranks brands in the
consideration set.
Marketers can influence consumers ‘evaluations by framing the alternatives that
is, by the manner in which they describe the alternatives and attributes.
D. Purchase:
1. Purchase selection is based on the outcome of the evaluation stage and other
dimensions.
2. Product availability, seller choice, and terms of sale may influence the final
product selection.
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3. The buyer may choose to terminate the buying decision process, in which case
no purchase will be made.
E. Post-purchase Evaluation:
After purchase, the buyer begins to evaluate the product to ascertain if the
actual performance meets expected levels. Evaluation is based on many of the
same criteria used when evaluating alternatives.
Cognitive dissonance is a buyer‘s doubts that arise shortly after a purchase
about whether it was the right decision.
CUSTOMER RELATIONSHIP MANAGEMENT:
Meaning:
• CRM are the concepts used by the organizations to manage their
relationship with customers.
• Ex: Conventional CRM uses telephone, fax, and retail store for contacting
customers.
ECRM is motivated by the ease of internet access from various computing
devices such as desktops, laptops, tablets, and smartphones
From the viewpoint of management:
• CRM can be defined as an organized approach of developing, managing, and
maintaining a profitable relationship with customers.
Technology perspective:
• By equating the term with technology, the IT organizations define CRM as a
software that assists marketing, merchandising, selling, and smooth service
operations of a business.
• As per Franics Buttle, World’s first professor of CRM, it is the core business
strategy that integrates internal processes and functions, and external
networks, to create and deliver value to a target customer at profit. It is
grounded on high quality customer data and information technology.
Objectives:
Primary:
• To increase customer loyalty and
• To improve business profitability.

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Secondary:
• Improve Customer Satisfaction − CRM helps in customer satisfaction as
the satisfied customers remain loyal to the business and spread good word-
of-mouth. This can be accomplished by fostering customer engagement via
social networking sites, surveys, interactive blogs, and various mobile
platforms.
• Expand the Customer Base − CRM not only manages the existing
customers but also creates knowledge for prospective customers who are
yet to convert. It helps creating and managing a huge customer base that
fosters profits continuity, even for a seasonal business.
• Enhance Business Sales − CRM methods can be used to close more deals,
increase sales, improve forecast accuracy, and suggestion selling. CRM
helps to create new sales opportunities and thus helps in increasing
business revenue.
• Improve Workforce Productivity − A CRM system can create organized
manners of working for sales and sales management staff of a business. The
sales staff can view customer’s contact information, follow up via email or
social media, manage tasks, and track the salesperson’s performance. The
salespersons can address the customer inquiries speedily and resolve their
problems.
Features of CRM:
• Analytics − Analytics is the process of studying, handling, and representing
data in various graphical formats such as charts, tables, trends, etc., in
order to observe market trends.
• Business Reporting − Business Reporting includes accurate reports of
sales, customer care, and marketing.
• Customer Service − Customer Service involves collecting and sending the
following customer-related information to the concerned department −
• Personal information such as name, address, age
• Previous purchase patterns.
• Requirements and preferences.
• Complaints and suggestions.
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• Human Resource Management − Human Resource Management involves
employing and placing the most eligible human resource at a required place
in the business.
• Lead Management − Lead Management involves keeping a track of the
sales leads and distribution, managing the campaigns, designing
customized forms, finalizing the mailing lists, and studying the purchase
patterns of the customers.
• Marketing − Marketing involves forming and implementing sales strategies
by studying existing and potential customers in order to sell the product.
• Sales Force Automation − Sales Force Automation includes forecasting,
recording sales, processing, and keeping a track of the potential
interactions.
• Workflow Automation − Workflow Automation involves streamlining and
scheduling various processes that run in parallel. It reduces costs and time,
and prevents assigning the same task to multiple employees.
Types of CRM:
CRM systems are divided based on their prominent characteristics. There are four
basic types of CRM systems−
• Strategic CRM
• Operational CRM
• Analytical CRM
• Collaborative CRM

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CRM process cycle:

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UNIT-III
MARKET SEGMENTATION
Segmentation refers to a process of bifurcating or dividing a large unit into
various small units which have more or less similar or related characteristics.
EX: income, age, education, sex, geographic location etc.
Market segmentation is the strategy that subdivides the target market into sub-
groups of consumers with distinct and homogenous characteristics with a view to
develop and follow a distinct and differentiated marketing programs for each sub-
group in order to enhance satisfaction to consumers and profit to the marketer.
Definition:
According to Philip Kotler, “Market segmentation is the sub-dividing of a
market into homogenous sub-sects of consumers where any sub-sects may
conceivably be selected as a market target to be reached, With a distinct marketing
mix.”
Need of market segmentation:
1. Facilitates Proper Choice of Target Market
In the first place, segmentation helps the marketer to distinguish one
customer group from another within a given market and thereby enables him to
decide which segment should form his target market.
2. Facilitates Tapping of the Market, Adapting the Offer to the Target
Segmentation also enables the marketer to crystallise the needs of the target
buyers. It also helps him to generate an accurate prediction of the likely responses
from each segment of the target buyers. Moreover, when buyers are handled after
careful segmentation, the responses from each segment will be homogeneous.
This, in turn, will help the marketer develop marketing offers/programmes that
are most suited to each group. He can achieve the specialisation that is required
in product, distribution, promotion and pricing for matching the particular
customer group, and develop marketing offers and appeals that match the
requirements of that particular group.

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3. Helps Divide the Markets and Conquer Them.
Through segmentation, the marketer can look at the differences among the
customer groups and decide on appropriate strategic offers for each group. This is
precisely why some marketing experts have described segmentation as a strategy
of “dividing the markets for conquering them”.
4. Make the Marketing Effort More Efficient and Economic
Segmentation also makes the marketing effort more efficient and economic.
It ensures that the marketing effort is concentrated on well-defined and carefully
chosen segments. After all, the resources of any firm are limited and no firm can
normally afford to attack and tap the entire market without any delimitation
whatsoever. It would benefit the firm if the efforts were concentrated on segments
that are the most productive and profitable ones.
5. Helps Identify Less Satisfied Segments and Concentrate on Them
Segmentation also helps the marketer assess as to what extent existing
offers from competitors match the needs of different customer segments. The
marketer can thus identify the relatively less satisfied segments and succeed by
satisfying such segments.
6. Benefits the Customer as well
Segmentation brings benefits not only to the marketer, but to the customer
as well. When segmentation attains higher levels of sophistication and perfection,
customers and companies can conveniently settle down with each other, as at
such a stage, they can safely rely on each other’s discrimination. The firm can
anticipate the wants of the customers and the customers can anticipate the
capabilities of the firm.
DEMOGRAPHIC SEGMENTATION:
Demos means people and graphein means to measure or to study. In
Demography means study of people or population. In Demographic segmentation,
the market is segmented on the basis of demographic variables such as age, sex,
family size, family life cycle, income, occupation, education etc. Demographic
variables or characteristics are the most popular bases for segmenting the market.
• Age: Age is an important factor for segmenting the market. This is because
demand and brand choice of people change with age. On the basis of age, a
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market can be divided into four- Children, Teenagers, Adults and Grown-
ups. For consumers of different age groups, different types of products are
produced. Johnson and Johnson cater to the needs of children below 6
years by presenting baby powders, baby soaps, oils etc.
• Sex: Sex based segmentation means grouping customers into males and
females. The wants, tastes, preferences, interests, choices etc., of men are
different from that of women. For instance, women are more fond of
cosmetics and other fancy articles. Marketers use gender differences for
marketing garments, personal care products, bikes, cosmetics and
magazines.
• Religion: Religious differences have important effect on marketing. The
male folk among the muslims have a demand for striped lungis and the
woman folk for pardhas.
• Income: Income segmentation is used for automobiles, clothing, cosmetics,
travel, financial services etc. For example, BMW (car manufacturer
concentrates on high income segment)
• Occupation: Market segmentation is done also on the basis of occupation
of consumers. For instance, doctors may demand Surgical equipment,
lawyers may demand coat etc.
• Family Size: A marketer launches different sizes of products in the market
according to size of the family. For example, shampoos and oil are available
in 100 ml. 200ml. 500ml etc.
• Education: On the basis of education, market for books may be divided as
high school, plus two, graduate and post graduate.
GEOGRAPHIC SEGMENTATION:
The marketer divides the market into different geographical units. Generally
international companies segment markets geographically. The theory behind
this strategy is that people who live in same area have some similar need and
wants and that need and wants differ from those of people living in other areas.
• Area: This type of segmentation divides the market into different
geographical units such as country, state, region, district, area etc. Some

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manufacturers split up their sales territories either state-wise or district-
wise. Markets may also be divided into urban and rural markets.
• Climate: Different types of climate prevail in different places. On the basis
of climate, areas can be classified as hot, cold, humid and rainy region.
Climate determines the demand for certain goods.
• Population Density: The size and density of population affects the demand
for consumer goods. In those areas where size and density of population is
high, there will be good demand for consumer goods.
BEHAVIOURAL SEGMENTATION:
• Behavioral segmentation is based on buyer behavior i.e. the way people
behave during and after purchase.
• Attitude: Customers can be segmented on the basis of attitude such as
enthusiastic, positive, indifferent, negative, hostile etc. Fashionable and
latest products are used by enthusiastic consumers. Liquor, cigarette etc.
are used by negative consumers.
• Product Segmentation: The market segmentation is done on the basis of
product characteristics that are capable of satisfying certain special needs
of customers.
• Prestige products, e.g., Automobiles, clothing, Home furnishing.
• Maturity products, e.g., Cigarettes, Blades etc.
• Status products, e.g., Most luxuries.
• Anxiety products, e.g., Medicines, soaps etc.
• Functional products, e.g., Fruits, vegetables etc.
• Occasion Segmentation: According to the occasions, buyers develop a
need, purchase a product or use a product. There can be two types of
situations- regular and special. For example, for regular use, women
purchase cotton or polyester sarees or churidars. For attending marriage or
reception (special occasion) they buy silk sarees
• Benefit Segmentation:
Benefit segmentation implies satisfying one benefit group. The benefit may be
classified into Generic or Primary and Secondary or Evolved

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Product Generic or primary Secondary or Evolved
Utilities Utilities
Tooth
paste Cleaning Breath freshing, brightness.
• Volume Segmentation: The market is segmented on the basis of volume or
quality of purchase. The buyers are grouped into categories like bulk
buyers, moderate buyers, and small buyers. Heavy buyers are often small
percentage of the market but account for a high percentage of total
consumption. Marketers prefer to attract one heavy buyer rather than
several small buyers.
• Loyalty Segmentation: Consumers have varying degree of locality to
specific brands. On the basis of brand locality, buyers can be divided into
the following five groups. (1) Hard-core loyals (2) Soft-core loyals (3) Shifting
loyals (4) Switchers (5) Consumer innovators.
PSYCHOGRAPHIC SEGMENTATION:
• It refers to grouping of people into homogeneous segments on the basis of
psychological makeup namely personality and life style.
(a)Life Style: A person’s life style is the pattern of living as expressed in the
person’s activities, interests and opinions. They express their life styles
through the products they use. For example, the life style of a college
student is different from that of an ordinary worker. Car, clothing,
cosmetics, furniture, liquor, cigarettes etc. are segmented by using life style
(b)Personality: Personality reflects a person’s traits, attitude and habits. It
is in this background that a person is classified as active or passive, rational
or impulsive, creative or conventional, introvert or extrovert. For example,
Raymond’s advertisement says “Raymonds. The Complete Man”
• Social Class: On the basis of Social class, consumers may be grouped into
lower class, middle class and upper class. Social class is determined by
income, occupation and education

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STEPS IN MARKET SEGMENTATION:
• Identify the target market
The first and foremost step is to identify the target market. The
marketers must be very clear about who all should be included in a common
segment. Make sure the individuals have something in common. A male and
a female can’t be included in one segment as they have different needs and
expectations.
Burberry stocks separate merchandise for both men and women. The
management is very clear on the target market and has separate strategies
for product promotion amongst both the segments.
A Garnier men’s deodorant would obviously not sell if the company
uses a female model to create awareness.
Segmentation helps the organizations decide on the marketing strategies
and promotional schemes.
Maruti Suzuki has adopted a focused approach and wisely created
segments within a large market to promote their cars.
Lower Income Group - Maruti 800, Alto
Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz
High Income Group - Maruti Suzuki Kizashi, Suzuki Grand VitaraSuzuki
Grand Vitara would obviously have no takers amongst the lower income
group.
The target market for Rado, Omega or Tag Heuer is the premium
segment as compared to Maxima or a Sonata watch.
• Identify expectations of Target Audience
Once the target market is decided, it is essential to find out the needs
of the target audience. The product must meet the expectations of the
individuals. The marketer must interact with the target audience to know
more about their interests and demands.
Kellogg’s K special was launched specifically for the individuals who
wanted to cut down on their calorie intake.
Marketing professionals or individuals exposed to sun rays for a long
duration need something which would protect their skin from the harmful
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effects of sun rays. Keeping this in mind, many organizations came with the
concept of sunscreen lotions and creams with a sun protection factor
especially for men.
• Create Subgroups
The organizations should ensure their target market is well defined.
Create subgroups within groups for effective results.
Cosmetics for females now come in various categories.
Creams and Lotions for girls between 20-25 years would focus more
on fairness.
Creams and lotions for girls between 25 to 35 years promise to reduce
the signs of ageing.
• Review the needs of the target audience
It is essential for the marketer to review the needs and preferences of
individuals belonging to each segment and sub-segment. The consumers of
a particular segment must respond to similar fluctuations in the market
and similar marketing strategies.
NAME YOUR MARKET SEGMENT
• Marketing Strategies
Devise relevant strategies to promote brands amongst each segment.
Remember you can’t afford to have same strategies for all the segments.
Make sure there is a connect between the product and the target audience.
Advertisements promoting female toiletries can’t afford to have a male
model, else the purpose gets nullified.
A model promoting a sunscreen lotion has to be shown roaming or
working in sun for the desired impact
• Review the behavior
Review the behavior of the target audience frequently. It is not
necessary individuals would have the same requirement (demand) all
through the year. Demands vary, perceptions change and interests differ. A
detailed study of the target audience is essential.

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• Size of the Target Market
It is essential to know the target market size. Collect necessary data for the
same. It helps in sales planning and forecasting.
TARGET MARKETING
• Target marketing is the process of assessing the relative worth of different
market segments and selecting one or more segments in which to compete.
These become the target segments. Titan is using the target marketing
strategy very effectively. German car manufacturer Mercedes target high
status consumers with experience and prestigious motor cars.
Target marketing strategies:
Total market approach:
A company develops a single marketing mix and directs it at the entire
market for a particular product. This approach is used when an organization
defines the total market for a particular product as its target market.
Concentration approach:
An organization directs its marketing efforts toward a single market
segment through a single marketing mix. The total market may consist of
several segments, but the organization selects only one of the segments as
its target market.
Multi-segment approach:
An organization directs its marketing efforts at two or more segments
by developing a marketing mix for each segment.
Steps in target marketing:
• Market segmentation: Markets are segmented on the basis of certain
characteristic such as sex, education, income, age etc.
• Market targeting: It refers to evaluating each market segments
attractiveness and selecting one or more of the segments to enter. Thus
target marketing and market targeting are not one and the same. Market
targeting is only a step in target marketing.
• Designing the marketing mix: After selecting the segment, the next step is
to design a suitable product and other marketing mix elements for each
segment selected.
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• Product Positioning: Market segmentation strategy and market positioning
strategy are like two sides of a coin. Target marketing begins with
segmentation and ends with positioning.
PRODUCT MANAGEMENT
Product management is an organizational lifecycle function within a
company dealing with the planning or forecasting or marketing of a product or
products at all stages of the product lifecycle. Product management and product
marketing are different yet complementary efforts with the objective of maximizing
sales revenues, market share, and profit margins. The role of product management
spans many activities from strategic to tactical and varies based on the
organizational structure of the company.
According to the Product Development and Management Association
(PDMA), superior and differentiated new products that deliver unique benefits and
superior value to the customer is the number one driver of success and product
profitability.
Product management may be defined as the entrepreneurial management
of a piece of business (product, product line, service, brand, segment etc.) as a
‘virtual’ company, with a goal of ling-term customer satisfaction and competitive
advantage.
OBJECTIVES OF PRODUCT MANAGEMENT:
Products are the basis of any organization. Sales are realized through sales
of the products. Thus the overall success of the organization depends upon the
planning and development of products.
Product Management is the holistic job of product managers, including
planning, forecasting and marketing products or services. Product management
is an organizational function within a company dealing with the planning
marketing of a product or products at all stages of the product lifecycle. Product
Management is also a collective term used to describe the broad sum of diverse
activities performed in the interest of delivering a particular product to market.
1. To design product strategies with respect to customer, industry and
competition analysis.
2. To spot marketing opportunities, and to see whether they are exploitable.
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3. To seek growth through new product development.
4. To plan strategies for each stage of product life cycle.
5. To generate new product ideas, and develop them further.
6. To consolidate existing product profile and to do portfolio analysis.
7. To improve and modify existing products and to introduce brand extensions
and line extensions.
8. To identify the brand identity, build a brand image, position a brand, build
a brand, to develop brand equity and measure it.
Product:
A product can be defined as a collection of physical, service and symbolic
attributes which yield satisfaction or benefits to a user or buyer. A product is a
combination of physical attributes say, size and shape; and subjective attributes
say image or "quality". A customer purchases on both dimensions
According to Jobber, “A product is anything that has the ability to satisfy a
consumer need.”
Classification of products
A product's physical properties are characterized the same the world over.
They can be convenience or shopping goods or durables and nondurables;
however, one can also classify products according to their degree of potential for
global marketing:
i) Local Products - seen as only suitable in one single market.
ii) International Products - seen as having extension potential into other
markets.
iii) Multinational Products - products adapted to the perceived unique
characteristics of national markets.
iv) Global Products - products designed to meet global segments. Products and
services fall into two broad classes based on the types of consumers use them
(1) Consumer Product
(2) Industrial Product
1. Consumer product: - “Product bought by final consumer for personal
consumption”. Consumer products divided into four classes.

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i) Convenience Product: -
Consumer product that the customer usually buys frequently, immediately,
and with a minimum of comparison and buying effort consumer products can be
divided further into staples, impulse products, and emergency products.
Staples Products are those product that consumers buy on a regular basis,
such as ketchup, tooth path etc. Impulse products are thoseproduct that
purchased with little planning or search effort, such as Candy bar, and magazine;
Emergency product is those when consumer need is urgent, e.g. umbrellas during
a rainstorm etc.
ii) Shopping Product: -
Consumer good that the consumer, in the process of selection and
purchase, characteristically compares as such bases as suitability, quality, price,
and style. Example: Furniture, clothing, used cars, major appliances and hotel
and motel services.
iii) Specialty Products: -
Consumer product with unique characteristics or brand identification for
which a significant group of buyers is willing to make a special purchase effort.
e.g. Specific brands and types of cars, high-priced photographic equipment,
designer clothes etc.
iv) Unsought Products: -
Unsought products are consumer products that the consumer either does
not knows about or knows about but does not normally think of buying. Most
major new inventions are unsought until the consumer become aware of them
through advertising. E.g. Life Insurance and blood donations to the Red Cross.
2. Industrial goods
It is meant for use in the production of other goods or for some business or
institutional purposes. Industrial goods are classified into four- production
facilities and equipment’s, production materials, production supplies and
management materials.
Product Line
Product lining is the marketing strategy of offering for sale several related
products. Unlike product bundling, where several products are combined into one,
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lining involves offering several related products individually. A line can comprise
related products of various sizes, types, colours, qualities, or prices. Line depth
refers to the number of product variants in a line. Line consistency refers to how
closely relate the products that make up the line are. Line vulnerability refers to
the percentage of sales or profits that are derived from only a few products in the
line. If a line of products is sold with the same brand name, this is referred to as
family branding.
Product line modification:
When you add a new product to a line, it is referred to as a line extension.
When you add a line extension that is of better quality than the other products in
the line, this is referred to as trading up or brand leveraging. When you add a line
extension that is of lower quality than the other products of the line, this is referred
to as trading down. When you trade down, you will likely reduce your brand equity.
You are gaining short-term sales at the expense of long term sales.
Product Line Contraction
Product Line Expansion
Changing Models or Styles of the Existing Products
Product simplification:
Product Simplification means limiting the number of products a dealer
deals. Sometimes it becomes necessary for a company to stop the production of
unprofitable products.
Product diversification
Product diversification means adding a new product or products to the
existing product. It is a strategy for growth and survival in the highly complex
marketing environment.
Product differentiation:
Product differentiation involves developing and promoting an awareness in
the minds of customers that the company’s products differ from the products of
competitors. This is made by using trade mark, brand name, packaging, labelling
etc.

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Product Mix
The number of different product lines sold by a company is referred to as
width of product mix.
The total number of products sold in all lines is referred to as length of product
mix.
Factors influencing product mix
 Change in demand.
 Marketing influences.
 Production efficiencies.
 Financial influence.
 Use of waste.
 Competitor’s strategy.
 Profitability.
NEW PRODUCT DEVELOPMENT
Idea generation:
• The new product development process starts with idea generation. Idea
generation refers to the systematic search for new-product ideas. Typically,
a company generates hundreds of ideas, maybe even thousands, to find a
handful of good ones in the end. Two sources of new ideas can be identified
• Internal idea sources: the company finds new ideas internally. That means
R&D, but also contributions from employees.
• External idea sources: the company finds new ideas externally. This refers
to all kinds of external sources, e.g. distributors and suppliers, but also
competitors. The most important external source are customers, because
the new product development process should focus on creating customer
value.
Idea screening: The next step in the new product development process is idea
screening. Idea screening means nothing else than filtering the ideas to pick out
good ones.
• In other words, all ideas generated are screened to spot good ones and drop
poor ones as soon as possible. While the purpose of idea generation was to
create a large number of ideas, the purpose of the succeeding stages is to
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reduce that number. The reason is that product development costs rise
greatly in later stages. Therefore, the company would like to go ahead only
with those product ideas that will turn into profitable products. Dropping
the poor ideas as soon as possible is, consequently, of crucial importance.
Concept development: Imagine a car manufacturer that has developed an all-
electric car. The idea has passed the idea screening and must now be developed
into a concept. The marketer’s task is to develop this new product into
alternative product concepts. Then, the company can find out how attractive
each concept is to customers and choose the best one.
• Concept testing: New product concepts, such as those given above, need
to be tested with groups of target consumers. The concepts can be
presented to consumers either symbolically or physically. The question
is always: does the particular concept have strong consumer appeal? For
some concept tests, a word or picture description might be sufficient.
However, to increase the reliability of the test, a more concrete and
physical presentation of the product concept may be needed. After
exposing the concept to the group of target consumers, they will be asked
to answer questions in order to find out the consumer appeal and
customer value of each concept.
Marketing strategy development:
• The marketing strategy statement consists of three parts and should be
formulated carefully:
• A description of the target market, the planned value proposition, and the
sales, market share and profit goals for the first few years
• An outline of the product’s planned price, distribution and marketing
budget for the first year
• The planned long-term sales, profit goals and the marketing mix strategy.
Business analysis:
• Once decided upon a product concept and marketing strategy, management
can evaluate the business attractiveness of the proposed new product. The
fifth step in the new product development process involves a review of the
sales, costs and profit projections for the new product to find out whether
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these factors satisfy the company’s objectives. If they do, the product can be
moved on to the product development stage.
Product development:
• The new product development process goes on with the actual product
development. Up to this point, for many new product concepts, there may
exist only a word description, a drawing or perhaps a rough prototype. But
if the product concept passes the business test, it must be developed into a
physical product to ensure that the product idea can be turned into a
workable market offering. The problem is, though, that at this stage, R&D
and engineering costs cause a huge jump in investment.
Test marketing:
• The last stage before commercialization in the new product development
process is test marketing. In this stage of the new product development
process, the product and its proposed marketing programme are tested in
realistic market settings. Therefore, test marketing gives the marketer
experience with marketing the product before going to the great expense of
full introduction. In fact, it allows the company to test the product and its
entire marketing programme, including targeting and positioning strategy,
advertising, distributions, packaging etc. before the full investment is made.
Commercialization:
• Test marketing has given management the information needed to make the
final decision: launch or do not launch the new product. The final stage in
the new product development process is commercialization.
Commercialization means nothing else than introducing a new product into
the market. At this point, the highest costs are incurred: the company may
need to build or rent a manufacturing facility. Large amounts may be spent
on advertising, sales promotion and other marketing efforts in the first year.
Some factors should be considered before the product is commercialized:
• Introduction timing. For instance, if the economy is down, it might be wise
to wait until the following year to launch the product. However, if
competitors are ready to introduce their own products, the company should
push to introduce the new product sooner.
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• Introduction place. Where to launch the new product? Should it be
launched in a single location, a region, the national market, or the
international market? Normally, companies don’t have the confidence,
capital and capacity to launch new products into full national or
international distribution from the start. Instead, they usually develop a
planned market rollout over time.
• Concept 1: an affordably priced mid-size car designed as a second family
car to be used around town for visiting friends and doing shopping.
• Concept 2: a mid-priced sporty compact car appealing to young singles and
couples.
• Concept 3: a high-end midsize utility vehicle appealing to those who like the
space SUVs provide but also want an economical car.
• As you can see, these concepts need to be quite precise in order to be
meaningful. In the next sub-stage, each concept is tested.
PRODUCT LIFE CYCLE
Meaning:
All products have certain length of life during which they pass through
certain identifiable stages. The PLC is a conceptual representation of
product ageing process. Like your life is divided into stages same as life of a
product is also divided. Product start with introduction in the market for
the purpose of sale. The demand of that product is gradually increased in
the market & it reach to its maximum, from where it starts decline. It is
effective lifespan of a product.
Definitions:
• According to Philip Kotler: “The Plc is an attempt to recognize the distinct
stages in the sales history of the product.”
• According to William J. Stanton: “The Product life cycle concept is the
explanation of the product from its birth to death as a product exists in
different stages & in different competitive environments”.

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Stages of product life cycle:
Product Introduction/ Development Stage

This is the first stage in product life cycle. Before a new product is
introduced in the market place, it should be created first. The processes involve
in this stage include generation of idea, designing of the new product, engineering
of its details, and the whole manufacturing process. This is also the phase where
the product is named and given a complete brand identity that will differentiate it
from the others, particularly the competitors. Once all the tasks necessary to
develop the product is complete, market promotion will follow and the product will
be introduced to the consumers. Product development is a continuous process
that is essential in maintaining the product’s quality and value to consumers. This
means that companies need to continuously develop or innovate their products to
outride new and existing competitors.
Product Growth Stage
This is a period where rapid sales and revenue growth is realised. However,
growth can only be achieved when more and more consumers will recognize the
value and benefits of a certain product. In most cases, growth takes several years
to happen, and in some instances, the product just eventually died without
achieving any rise in demand at all. Hence, it is important that while the product
is still in the development and introduction stages, a sound marketing plan should
be put in place and a market and primary demand should be established.

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Product Maturity and Saturation Stage
In the maturity stage, the product reaches its full market potential and
business becomes more profitable. During the early part of this stage, one of the
most likely market scenarios that every business should prepare for is fierce
competition. As business move to snatch competitor’s customers, marketing
pressures will become relatively high. This will be characterised by extensive
promotions and competitive advertising, which are aimed at persuading customer
to switch and encouraging distributors to continue sell the product.
In the middle and late phases of the maturity stage, the rate of growth will
start to slow down and new competitors will attempt to take control of the market.
In most cases, many businesses fall and lose money in these stages as they focus
more on increasing advertising spending in hope of maintaining their grip of the
market.
Product Decline Stage
The decline stage is the final course of the product life cycle. This unwanted
phase will take place if companies have failed to revitalize and extend the life cycle
of their products during the maturity stage’s early part. Once already in this
phase, it is very likely that the product may never again recover or experience any
growth, eventually dying down and be forgotten.
Strategies in product life cycle:
Marketing Strategies during PLC Every marketer tries that his product
should stay in the market for the longest period, thus he has to take up various
strategies at the different stages of product life cycle.
• Introduction stage
 Make proper advertising before the product is launched in the
market. – Shorten the period of introduction as far as possible.
 Heavy advertising & promotional expenses (attractive gifts).
 Selective distribution & attractive discount to dealers.
 If product is technical then adopt skimming pricing policy & if
product is simple, then adopt penetration pricing policy.

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• Growth stage
 Improve the product quality.
 Add new product features & improve the product style.
 Enter into new market areas
 Reduce the price to attract more number of buyers. Increase in
promotional activities.
 New version/models, in different sizes & price range are introduced
to cater the requirements of different types of buyers.
 Strengthen the distribution channels by increasing the number of
retailers.
 Create brand image of the product through promotional activities.
 Emphasis on customer satisfaction.
• Maturity stage
 Improve the quality of the product & introduce some new models.
 Give proper attention to increase the usage among the current
customers & also pursue some new uses of the product.
 Try to convert non-users into users of the product.
 Introduce new packaging & wrapper change policy.
 Lowering the price to attract more consumer.
 Middlemen’s margin is increased, to create the interest.
 Give proper emphasis on advertising & promotional programmes.
 Change in the style & design of the product.
 A firm can improve his sales by changing one or more elements of
marketing mix.
 It can reduce the price to attract new users & competitor’s
• Declining stage
 Improve the product in a functional sense.
 Review the marketing & production programs.
 Emphasis on cost control techniques to generate profits means cut
all costs to minimum level.
 Economy packs or models may be introduced to revive the market.
 Adopt selective promotion of the product to reduce distribution costs.
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 Packaging may be made more attractive & reusable packages.
 R&D efforts are increased to innovate the new product
 Sales incentive schemes are introduced to get dealer’s support.
Extension of product life cycle:
Product modification.
 Entry in the new market.
 Promoting frequent use.
 Developing different usage.
 Finding new uses.
 Use of modern advertising & sales promotion techniques.
Importance of product life cycle:
 Helpful in sales forecasting.
 Helpful as a predictive tool.
 Helpful as a planning tool.
 Helpful as a control tool.
 Helpful in framing marketing programme.
 Helpful in price determination.
 Development of new product.
 Comparison of different products.

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UNIT-IV
MARKETING CHANNEL
Meaning:
It is a system which ensures the distribution of the merchandise from the
producer to the consumers by passing it through multiple levels known as
middlemen. It is also known as channels of distribution. Every product is different
from one another and so are their channels of distribution.
Definition:
According to American Marketing Association, “A channel of
distribution, or marketing channel, is the structure of intra-company organization
units and extra company agents and dealers, wholesale and retail through which
a commodity, product or service is marketed.”
According to Philip Kotler, “Every producer seeks to links together the set of
Marketing intermediaries that best fulfill the firm’s objectives. This set of
marketing intermediaries is called the Marketing Channels.
Objectives of marketing channel:
 To ensure the availability of products at the point of sale.
 To build the channel members loyalty.
 To stimulate channel members to put greater selling efforts.
 To develop managerial efficiency in the channel organization.
 To identify your organization at buyer level.
 To have an effective and efficient distribution system, to make your
product and services available.
Functions of marketing channel:
• Sorting: The middlemen purchase goods from multiple manufacturers and
segregate the products which are similar in quality, features, size, etc.
• Accumulation: Marketing channels ensure regular supply and circulation
of goods in the market since the middlemen involved in the process are
responsible for maintaining the required stock in ample quantity.
• Allocation: The goods are manufactured in bulk quantities whereas the
customers prefer to buy very less quantity. Here comes the role of the
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middlemen who breaks the volume into small packages according to the
customers’ requirement.
• Assorting: The customers can avail a large variety of products since the
middlemen buy goods from the manufacturers or suppliers located in
different regions and make them available to the customers at one single
place.
• Product Promotion: The middlemen involved in the channel of distribution
sometimes directly or indirectly promotes the sale of a particular product
through a special display, loyalty programs, additional discounts,
organizing sale, etc.
• Negotiation: The middlemen is the person who bargains with the
manufacturer as well as the consumer for the product’s price, proportion,
quality, after-sale service, guarantee, etc.
• Risk-Taking: The middlemen, i.e. the wholesalers and the retailers have to
bear the risk related to products like expiry, breakage, spoilage, damage,
etc. These risks are even born at the time of transportation and
warehousing.
Types of marketing channel:

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Factors determining the marketing channels:
Product related factors:
The product’s features, specifications, nature, usage, value and durability plays a
vital role in the selection of marketing channels. Let us go through the related
factors give below:
• Nature of Product: If the product is a general product which is widely used
like cosmetics, it requires a more extended channel. Whereas, the product
which is customized or has limited customers like industrial machinery
needs a shorter channel.
• Perishability: The goods which are perishable require to be sold through
the shorter channel. However, the products which are non-perishable can
be distributed through a longer channel.
• Unit Value of the Product: If the product is of low value it can be easily
distributed through the longer channel, but for the products which are
expensive and valuable the manufacturers prefer a shorter channel.
• Product Complexity: If the product is complicated to use and has technical
specifications, it will require a shorter channel. The products which are
user-friendly and easy to handle can be sold through longer channels.
Company related factors:
The company’s financial condition, objectives, privacy policies and level of control
influences the selection of a particular marketing channel:
• Finance Available: If a company is financially sound it can go for a shorter
channel of distribution by opening its retail outlets otherwise it can opt for
a longer marketing channel.
• Core Competency: If the manufacturing company focus on its core ability
which is the production of goods it will be least interested in retailing. Thus
it can opt for a longer marketing channel.
• The degree of Control: If the company wants to regulate its sale and the
market segment it caters, it will prefer a shorter channel. The companies
which do not exercise much control over its products go for a longer
distribution channel.

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Competitive factors:
The competitors affect the company’s decisions related to the selection of
marketing channels in the following ways:
• Competitor’s Channel of Distribution: Sometimes the companies follow
their competitors and use the same channel as adopted by them.
• Distribution Policy: Some companies have a different distribution policy,
and they adhere to it. Multi-level marketing (MLM) companies usually stick
to their chain marketing policy.
Market-Related Factors:
The market is the place where the customers are served. Thus, it has a crucial
role in determining the type of channel for any product. Let us see these factors
in detail:
• Market Size: When the company needs to reach a large number of
customers, it has to go for the longer channel. If the company has to cater
a few customers, it can opt for a shorter channel of distribution.
• Geographical Concentration: If the potential customers are located in a
vast geographic area, the company can reach them through a longer
channel. The shorter channel will be preferred for the buyers located in the
limited area.
• Quantity Purchased: If the product is purchased in bulk quantity by the
limited customers, a shorter channel is suitable whereas the products which
are bought in small quantities by multiple customers, a longer channel will
work.
Environmental factors:
Every business operates within an environment where it has to deal with some
legal obligations as well as economic conditions. These factors include the
following:
• Legal Environment: The government imposes certain legal restrictions over
trading activities which also affects the selection of a distribution channel.
Like selling of weapons cannot take place through a longer channel.

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• Economic Conditions: At the time of recession or depression in a country,
the manufacturers prefer to reduce their distribution cost by going for a
shorter marketing channel.
RETAILING
Definitions:
• Retailing is buying and selling both goods and consumer services.
• Retailing can be defined as the buying and selling of goods and services.
• It can also be defined as the timely delivery of goods and services demanded
by consumers at prices that are competitive and affordable.
Philip Kotler: The marketing guru has said all activities in selling goods or service
directly to final consumer for personal or non-business use is retailing or retail
marketing.
Features of retail marketing:
1. Sale to Ultimate Customer:
Goods or service in a retail transaction are sold to final customer for
consumption. There is no further re-sale of the product or service. Goods and
service sold for consumption, may be for domestic or household use or industrial
use are classified as retail transaction.
2. Convenient Form (Quantity):
The word retail means cut size ‘small piece’ or break the bulk. Retailers buy
in large quantity from middleman or manufactures, he breaks the bulk and sells
in small quantities to match the need of customers. Goods may be repacked or
delivered in small packs in convenient form which an individual can carry to his
home.
3. Convenient Place and Location:
Retailers deliver goods from a location that is convenient to the customers.
In case of physical location. It may be a small store, a shop and multiplex. It may
also be over the internet, through mobile or mail order business. Goods/or service
are offered to the convenience and comfort of the consumer.
Online shopping through internet, mobile is becoming popular with the
growth of I-T and courier service. (Ex- the advertisement of pizza, on the TV is
shown delivering within half hour of its order).
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4. Last Link in Chain of Distribution:
A retailer is the last link in the chain of distribution. He sells goods to final
customer. He connects between middlemen and consumer acting as link between
them. He is described as merchandising arm or neck, in the bottle of distribution.
He acts as communicator between manufacturer and consumer. Benefits both of
them by sharing necessary information that gives profit to manufacturer by
manufacturing goods that are liked by the people.
5. Organized Sale
Retail marketing is organized business of selling to the customer by
application of principles and functions of marketing. Un-organized retail like street
vendor a Paanwala may not be typically classified under retail marketing.
• Marketing not Just Sale: Organized retailing or retailing is not an activity
of just a sale. It is a marketing activity. Consumer is offered comfort and
convenience and concession in buying goods of his choice. Marketing
functions like transportation banking insurance, ware housing are
undertaken to create and deliver goods to satisfaction of people. Goods are
designed and delivered to match the taste of people and satisfy their desire
and thereby ensuring customer delight. Every marketing effort is
undertaken in the sale or delivery of goods.
• Goods and also Service: Retail marketing is not only connected with
delivery of physical goods or merchandise like Grocery Vegetable, Electronic
goods etc., it is also engaged in providing services. Now a days marketing of
services is becoming an important area like Insurance, Tourism, Hotel,
Investment etc. With Globalization process, entry of MNC’s, development in
the field of I-T sector has made marketing of services more popular and
developing.
• Creation of Utility: Retail marketing creates Form, Place and Time, utility.
It breaks the large bulk size into small size and changes the form of product.
Place utility is created by bringing goods from place of manufacturer to the
place of consumer. Goods are stored in advance and delivered when
demanded by the customer. A retailer creates these utilities and them by
increases value and utility of goods.
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• Customer Delight: Retail marketing not only satisfies customers wants, it
ensures their delight. It provides more satisfaction than what is expected
through its retail network. Retail marketing collects information regarding
type of product decide by them, Communicates such information to
manufacturer. Product is designed to match the changing taste of customer.
Retailer stores and presents such product to the people in size, style, price
and other services through his store that increases satisfaction levels of
people.
Service to customer:
 Locates retail stores at a place that is convenient to maximum people,
near to his locality or in the heart of city.
 Offer’s variety of goods to choose from.
 Makes attractive presentation and placement of product for easy
identification and selection.
 Offers monetary incentives like reasonable price, discount, offers etc.
 Provides services like home delivery, quality assurance, offer of sale
service etc.
 Gives knowledge and information about the product to utility and
there by helps him selecting right kind of product.
 Increase in Productivity
 Increase in Standard of Living
 Increase in Employment Opportunities
 Increase in GDP
 Retail as a Separate Branch of Study
Importance:
1. Link and Communication between Manufacturer Marketing and Consumer
2. Benefits of a Specialist or Expert in Distribution Network
3. Creates Utility and Value
4. Comfort and Facility of Shopping
5. Service to Manufactures and Middlemen
6. Provision of Storage and Warehousing:

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Functions of Retail Marketing:
• Assembly and Sorting of Merchandise
• Breaking the Bulk
• Holding Stocks:
• Collect Market Information
• Marketing Functions
• Promotion of Product
• Offers Variety of Services to his Customers
• Risk Bearing
Types of Retail Marketing:
• Department store
• Specialty store
• Discount/Mass Merchandisers
• Warehouse/Wholesale clubs
• Factory outlet
Logistics Management
Meaning:
Logistics is the management of the flow of goods, information and other
resources, including energy and people, between the point of origin and the point
of consumption in order to meet the requirements of consumers.
Logistics involve the integration of information, transportation, inventory,
warehousing, material handling and packaging.

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Objectives of Logistics Management:
(i)Cost Reduction and Profit Maximization
1. Improved material handling
2. Safe, speedy and economical transportation
3. Optimum number and convenient location of warehouses etc.
(ii) Efficient Flow of Manufacturing Operations:
Inbound logistics helps in the efficient flow of manufacturing operations, due to
on-time delivery of materials, proper utilization of materials and semi-finished
goods in the production process and so on.
iii) Competitive Edge:
Logistics provide, maintain and sharpen the competitive edge of an enterprise by:
1. Increasing sales through providing better customer service
2. Arranging for rapid and reliable delivery
3. Avoiding errors in order processing; and so on.
(iv) Effective Communication System:
An efficient information system is a must for sound logistics management. As
such, logistics management helps in developing effective communication system
for continuous interface with suppliers and rapid response to customer enquiries.
v) Sound Inventory Management:
Sound inventory management is a by-product of logistics management. A major
headache of production management, financial management etc. is how to ensure
sound inventory management; which headache is cured by logistics management.
Classification of Logistical Activities:

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• I. Inbound logistics; which is concerned with the smooth and cost effective
inflow of materials and other inputs (that are needed in the manufacturing
process) from suppliers to the plant. For proper management of inbound
logistics, the management has to maintain a continuous interface with
suppliers (vendors).
• II. Outbound logistics (also called physical distribution management or
supply chain management); is concerned with the flow of finished goods and
other related information from the firm to the customer. For proper
management of outbound logistics, the management has to maintain a
continuous interface with transport operators and channels of distribution.
Key Activities in Logistics Management
Logistics management centres on the daily execution of several business activities.
The goal is to pursue the highest customer service at the lowest possible cost.
These functions are separated into the following operations areas:
• Order management: This activity is concerned with the navigation of the
customer order through the inventory allocation, picking, packing,
shipping, and backorder cycles. The fundamental performance target is
ensuring product shipment based on quoted lead times, order quantities,
and quality specifications.
• Production and procurement: Providing information to production and
purchasing concerning the status of channel inventories is essential to high-
performance logistics. Logistics is also responsible for the inbound flow of
materials into production and the outbound flow of finished goods into the
distribution channel.
• Freight cost and service management: These activities consist of
managing inbound/ outbound freight, third-party carrier management,
total cost control, operations outsourcing decisions, and execution of
administrative services. Superior logistics performance is achieved by
optimizing inbound materials and outbound product movement,
warehousing, and administrative services that utilize the most cost effective
yet efficient transportation methods and transportation service partners.
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• Warehouse management: The effective management of inventory in the
supply chain requires efficient and well-managed warehousing techniques.
Key activities are inventory storage, material handling, equipment and
labour utilization, receiving, put away, and returns.
• Transportation routing and scheduling: The movement of product to its
destination is a primary function of logistics. Activities performed are
optimization of shipping capacity utilization, decreasing less-than-truckload
shipments, and applying postponement strategies. Another important
function is selection of third-party transportation providers. An often
overlooked area is shipment documentation and compliance. Accurate
documentation is necessary to effectively manage country quotas, tariffs,
import/export regulations, product classification, and letters of credit.
• Fleet management: It is the responsibility of logistics to ensure the
utilization of company-owned transportation fleets. The goal is to determine
the optimum use of transportation assets, whether internal or through a
third party supplier, without compromising service levels.
• Load planning: Utilizing transportation assets to achieve maximum
fulfilment optimization requires detailed load planning. Critical activities are
packaging and labelling, load building and consolidation, and possible third
party transfer point or cross-docking functions.
• Special functions: Often logistics must manage a range of miscellaneous
functions. Managing service parts inventories and working with return
goods are examples. A function growing in importance is reverse logistics.
This process involves managing customer returns and the reclamation of
packaging materials and other wastes and backhaul to a central collection
point for recycling. The object is the coordination of both the forward and
reverse processes necessary to fully utilize products and materials during
the different stages of their life cycles.
While the effective management of each of these areas is essential to
logistics success, their benefits dramatically increase when the entire
logistics channel network is integrated in the pursuit of supply chain
optimization and development of robust, flexible sourcing, warehousing,
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transportation, and delivery capabilities that unify total logistics
capabilities.
Supply chain management
Supply Chain Management can be defined as the management of flow of
products and services, which begins from the origin of products and ends at the
product’s consumption. It also comprises movement and storage of raw materials
that are involved in work in progress, inventory and fully furnished goods.
Supply chain management is the practice of coordinating the various activities
necessary to produce and deliver goods and services to a business’s customers.
Depending on the business in question, this could involve activities such as
• Monitoring the manufacturing of a product,
• Shipping the product by air, sea, or land;
• Ensuring that it meets quality standards, and
• Delivering the product to customers.
The main objective of supply chain management is to monitor and relate
production, distribution, and shipment of products and services. This can be done
by companies with a very good and tight hold over internal inventories,
production, distribution, internal productions and sales.

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Supply Chain Management – Goals:
• Supply chain partners work collaboratively at different levels to maximize
resource productivity, construct standardized processes, remove duplicate
efforts and minimize inventory levels.
• Minimization of supply chain expenses is very essential, especially when
there are economic uncertainties in companies regarding their wish to
conserve capital.
• Cost efficient and cheap products are necessary, but supply chain managers
need to concentrate on value creation for their customers.
• Exceeding the customers’ expectations on a regular basis is the best way to
satisfy them.
• Increased expectations of clients for higher product variety, customized
goods, off-season availability of inventory and rapid fulfillment at a cost
comparable to in-store offerings should be matched.
• To meet consumer expectations, merchants need to leverage inventory as a
shared resource and utilize the distributed order management technology
to complete orders from the optimal node in the supply chain.
The key benefits of supply chain management:
• Develops better customer relationship and service.
• Creates better delivery mechanisms for products and services in demand
with minimum delay.
• Improvises productivity and business functions.
• Minimizes warehouse and transportation costs.
• Minimizes direct and indirect costs.
• Assists in achieving shipping of right products to the right place at the right
time.
• Enhances inventory management, supporting the successful execution of
just-in-time stock models.
• Assists companies in adapting to the challenges of globalization, economic
upheaval, expanding consumer expectations, and related differences.
• Assists companies in minimizing waste, driving out costs, and achieving
efficiencies throughout the supply chain process.
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Supply chain management Process:
Plan:
• The initial stage of the supply chain process is the planning stage. We need
to develop a plan or strategy in order to address how the products and
services will satisfy the demands and necessities of the customers. In this
stage, the planning should mainly focus on designing a strategy that yields
maximum profit.
• For managing all the resources required for designing products and
providing services, a strategy has to be designed by the companies. Supply
chain management mainly focuses on planning and developing a set of
metrics.
Develop (Source):
• After planning, the next step involves developing or sourcing. In this stage,
we mainly concentrate on building a strong relationship with suppliers of
the raw materials required for production. This involves not only identifying
dependable suppliers but also determining different planning methods for
shipping, delivery, and payment of the product.
• Companies need to select suppliers to deliver the items and services they
require to develop their product. So in this stage, the supply chain managers
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need to construct a set of pricing, delivery and payment processes with
suppliers and also create the metrics for controlling and improving the
relationships.
• Finally, the supply chain managers can combine all these processes for
handling their goods and services inventory. This handling comprises
receiving and examining shipments, transferring them to the manufacturing
facilities and authorizing supplier payments.
Make:
• The third step in the supply chain management process is the
manufacturing or making of products that were demanded by the customer.
In this stage, the products are designed, produced, tested, packaged, and
synchronized for delivery.
• Here, the task of the supply chain manager is to schedule all the activities
required for manufacturing, testing, packaging and preparation for delivery.
This stage is considered as the most metric-intensive unit of the supply
chain, where firms can gauge the quality levels, production output and
worker productivity.
Deliver:
• The fourth stage is the delivery stage. Here the products are delivered to the
customer at the destined location by the supplier. This stage is basically the
logistics phase, where customer orders are accepted and delivery of the
goods is planned. The delivery stage is often referred as logistics, where
firms collaborate for the receipt of orders from customers, establish a
network of warehouses, pick carriers to deliver products to customers and
set up an invoicing system to receive payments.
Return:
• The last and final stage of supply chain management is referred as the
return. In the stage, defective or damaged goods are returned to the supplier
by the customer. Here, the companies need to deal with customer queries
and respond to their complaints etc.
• This stage often tends to be a problematic section of the supply chain for
many companies. The planners of supply chain need to discover a
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responsive and flexible network for accepting damaged, defective and extra
products back from their customers and facilitating the return process for
customers who have issues with delivered products.
Direct and online marketing

• Direct marketing consists of any marketing that relies on direct
communication or distribution to individual consumers, rather than
through a third party such as mass media. Mail, email, social media, and
texting campaigns are among the delivery systems used. It is called direct
marketing because it generally eliminates the middleman, such as
advertising media.

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Benefits of direct marketing:
• Targeting: You can send specific messages to particular groups of
customers and potential customers based on demographics and buying
behavior. The more targeted your campaigns, the more successful they are
likely to be.
• Personalization: Reach your audience with a personal touch. Direct mail
or email can be addressed to a specific person, and even include details like
past orders. A phone call can engage a customer in conversation to start
building a relationship with your business.
• Affordable: Tactics like email marketing or leafleting can be very cost
effective. Most direct marketing will be more cost effective for SMEs than
mass media advertising campaigns.
• Measurable: If your marketing messages ask the recipient to take a
particular action or use a specific voucher code, you can easily track the
success of campaigns. This can help you plan future campaigns.
• Informative: You can deliver detailed information on your products,
services and prices unlike other forms of advertising.
Challenges of direct marketing:
• Intrusive: Many people find direct marketing annoying and intrusive. This
is especially true of telemarketing and door-to-door sales. Some people
dislike marketing mail and consider it to be 'junk mail'. If consumers find
your marketing tactics annoying it can create a negative brand association
and make them less likely to buy. This is more likely with less targeted
campaigns.
• Environment: Using leafleting or paper-heavy direct mail campaigns can
be bad for the environment. To avoid this, and any negative impact on your
brand image, use recycled materials or try email campaigns.
• Low response rates: direct marketing response rates tend to be around 1-
3%. When you reach a consumer who isn't interested in your products of
services, it wastes money and they are likely to find it irritating. Use more
targeted lists as opposed to sending out mass messages to minimize this.

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• Competition: It can be hard to make your messages stand out when the
recipient receives high number of marketing emails or direct mail.
• Cost: Tactics like telemarketing and direct mail may have high financial and
resource costs.
• Legal issues: There are laws relating to privacy and data protection in direct
marketing. You must ensure that your mailing list only contains individuals
who have consented to receive marketing messages from you.
Online Marketing: Online marketing is advertising and marketing the products
or services of a business over Internet.
Online marketing relies upon websites or emails to reach to the users and it is
combined with e-commerce to facilitate the business transactions. In online
marketing, you can promote the products and services via websites, blogs, email,
social media, forums, and mobile Apps.
Difference between Traditional and Online Marketing:
Types of online Marketing:

Search Engine Optimization (SEO)
• It is the activity of optimizing web pages or complete website in order to
make them search engine friendly, thus getting higher position in the search
results. It contributes to overall rankings of the keywords through

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influencing factors such as appropriate titles, meta descriptions, website
speed, links, etc.
Social Media Marketing
• It includes creating profiles of your brand on social media platforms such
as Google Plus, LinkedIn, Pinterest, Twitter, Facebook, etc. It assures that
you remain connected to the existing or potential customers, build
awareness about the products and services, create interest in and desire to
buy your product, and interact with the customers on their own terms and
convenience.
Email Marketing
• You can interact with the customers to answer their queries using automatic
responders and enhance the customer experience with your website.
• You can offer the options such as signing-in to subscribe to your newsletter.
You can make the emails catchy and crisp, so that they don’t make
recipients annoyed. Also, you can use selected best words in the subject line
to boost the open rate.
Web Analytics
• The ultimate goal of analytics is to identify actionable insights on monthly
basis which can help to make favorable changes to the website gradually.
This in turn ultimately leads to strong profits in long term.
Content Marketing
• It includes creation and sharing of media and publishing the content in
order to acquire and retain customers.
Blogs
• Blogs are web pages created by an individual or a group of individuals. They
are updated on a regular basis. You can write blogs for business promotion.
Banners
• Banners are long strips of cloth with a slogan or design. They are carried for
demonstration, procession, or hung in a public place. There are internet
banners in parallel to tangible banners for advertising.

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Internet Forums
• They are nothing but message boards of online discussion websites, where
people posts messages and engage into conversation.
Advantages:
• Global reach. Internet marketing provides businesses with a wide base of
customers for their services or products. ...
• 24/7 marketing. ...
• Low cost. ...
• Social media. ...
• Builds lasting relationships. ...
• Ease of personalization. ...
• Blogging provides quality content.
Dis-advantages:
• No instant trust. Because online advertising is everywhere, there is no way
for potential customers to tell if the marketing is good or bad. It can take
some time for a business marketing online to gain the trust of users.
• Competition. One of the biggest downsides to online marketing is the stiff
competition. It can be very difficult to make your business and information
stand out with companies around the world competing.
• Skill and knowledge required. Online marketing today also requires a great
deal of knowledge and skill to be successful.

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UNIT - V
PRICING
Meaning:
 Value of a product in terms of money is called Price
 Pricing is the method of determining the value a producer will get in the
exchange of goods and services. Simply, pricing method is used to set the
price of producer’s offerings relevant to both the producer and the customer.
Pricing methods:
Market pricing / cost pricing: - The most elementary pricing method is to add
standard mark up to the cost of the product. Construction companies omit job
bids by estimating the total project cost and adding a standard mark up for profit.
Lawyers, accountants and other professions typically price by adding a standard
mark up to their costs.
Target return pricing: - Another cost oriented pricing approach is target return
pricing. The firm tries to determine the price that is at would yield the target rate
of return on investment. This pricing method is also used by public utilities that
are constrained to make a fair return on their investment.
Perceived value pricing: - It fits in well with modern product positioning thinking.
The key to perceive value pricing is to accuracy determine the market’s perception

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of the offer is value. Market research is needed to establish the market perception
of value as a guide to effective pricing. They use the non-price variables in the
marketing mix to build up perceived value in the buyers’ minds.
Going rate pricing: - In going rate pricing, the firm bases its rice largely on
competitor’s prices, with less attention aid to its own cost or demand. The firm
might change the same, more or less than its major competitors. Going rate pricing
is quite popular. Where costs are difficult to measure or competitive response is
uncertain firms feel that the going price represents a good solution.
Sealed- bid pricing: - Competitive oriented pricing also dominates where firms
bid for jobs. The firm bases its price on expectations of who competitors will rice
rather than on a rigid relation to the firm a costs or demand. The firm wants to
win the contract and this requires pricing lower than the other firms. The higher
its sets its rice above the costs the lower its chance of getting the contract.
Promotion
Promotion is a term taken from Latin word “promovere”, it means ‘move
towards’. In marketing, promotion means all those tools that a marketer uses to
take his product from the factory to the customer and hence it involves
advertising, sales promotion, personal selling, and public relation. It is necessary
to flow the information about the product from the producer to the consumer
either along with the product or well in advance of the introduction of the product.
This role is played by promotion.
In the words of Masson and Ruth, “Promotion consists of those activities
that are designed to bring a company’s goods or services to the favorable attention
of customers”.
Promotion mix
Firms select a mix of promotional tools to effectively communicate with their
target customer group.
The different elements of this group are:
1. Advertising
2. Personal selling
3. Sales Promotion
4. Public relations and
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5. Direct Marketing
Advertising:
It is a paid form of mass communication and can be traced to an identified
sponsor. Now a day s advertising plays a significant role in awareness creation
and attitude formation. In a macro concept, it stands for the managerial function
of an organization intending to send information to the other members of the
society.
American Marketing Association defined it as, “Any paid form of non –
personal presentation of ideas, goods, or services by an identified sponsor.”
In the words of Albert Lasker,” Advertising is salesmanship in print, driven by a
reason why?”
Marketing information system:
Marketing Information System (MIS). MIS assesses the information needs of
different managers and develops the required information from supplied data in
time regarding competition, prices, advertising, sales, distribution and market
intelligence etc. Most of today’s information systems are computer applications in
a sophisticated data-driven age. These enable marketers to be better informed
about their customers, potential customers and competitors. New applications are
being developed at a faster pace.
Characteristics
1. It is a planned system developed to facilitate smooth and continuous flow of
information.
2. It provides pertinent information, collected from sources both internal and
external to the company, for use as the basis of marketing decision making.
3. It provides right information at the right time to the right person.
4. Ongoing Process
5. Future Oriented
6. Co-ordinates Internal & External Environment

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Components of a Marketing Information System

A Marketing Information System (MIS) is intended to bring together
disparate items of data into a coherent body of information. An MIS is, as will
shortly be seen, more than raw data or information suitable for the purposes of
decision making. An MIS also provides methods for interpreting the information,
the MIS provides. Moreover, as Kotler’s definition says, an MIS is more than a
system of data collection or a set of information technologies:
“A marketing information system is a continuing and interacting structure
of people, equipment and procedures to gather, sort, analyse, evaluate, and
distribute pertinent, timely and accurate information for use by marketing
decision makers to improve their marketing planning, implementation, and
control”.
The below figure illustrates the major components of an MIS, the
environmental factors monitored by the system and the types of marketing
decision which the MIS seeks to underpin.

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The explanation of this model of an MIS begins with a description of each of

its four main constituent parts: the internal reporting systems, marketing
research system, marketing intelligence system and marketing models. It is
suggested that whilst the MIS varies in its degree of sophistication – with many in
the industrialised countries being computerised and few in the developing
countries being so – a fully-fledged MIS should have these components, the
methods (and technologies) of collection, storing, retrieving and processing data
notwithstanding.
Internal reporting systems: All enterprises which have been in operation for any
period of time have a wealth of information. However, this information often
remains under-utilised because it is compartmentalised, either in the form of an
individual entrepreneur or in the functional departments of larger businesses.
That is, information is usually categorised according to its nature so that there
are, for example, financial, production, manpower, marketing, stockholding and
logistical data. Often the entrepreneur, or various personnel working in the
functional departments holding these pieces of data, do not see how it could help
decision makers in other functional areas. Similarly, decision makers can fail to
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appreciate how information from other functional areas might help them and
therefore do not request it. The internal records that are of immediate value to
marketing decisions are: orders received, stockholdings and sales invoices. These
are but a few of the internal records that can be used by marketing managers, but
even this small set of records is capable of generating a great deal of information.
Below, is a list of some of the information that can be derived from sales invoices.
1. Product type, size and pack type by territory
2. Product type, size and pack type by type of account
3. Product type, size and pack type by industry
4. Product type, size and pack type by customer
5. Average value and/or volume of sale by territory
6. Average value and/or volume of sale by type of account
7. Average value and/or volume of sale by industry
8. Average value and/or volume of sale by sales person
By comparing orders received with invoices an enterprise can establish the
extent to which it is providing an acceptable level of customer service. In the same
way, comparing stockholding records with orders received helps an enterprise
ascertain whether its stocks are in line with current demand patterns.
Marketing research systems: The general topic of marketing research has been
the prime subject of the textbook and only a little more needs to be added here.
Marketing research is a proactive search for information. That is, the enterprise
which commissions these studies does so to solve a perceived marketing problem.
In many cases, data is collected in a purposeful way to address a well-defined
problem (or a problem which can be defined and solved within the course of the
study). The other form of marketing research centres not around a specific
marketing problem but is an attempt to continuously monitor the marketing
environment. These monitoring or tracking exercises are continuous marketing
research studies, often involving panels of farmers, consumers or distributors
from which the same data is collected at regular intervals. Whilst the ad hoc study
and continuous marketing research differs in the orientation, yet they are both
proactive.

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Marketing intelligence systems: Whereas marketing research is focused, market
intelligence is not. A marketing intelligence system is a set of procedures and data
sources used by marketing managers to sift information from the environment
that they can use in their decision making.
This scanning of the economic and business environment can be undertaken in a
variety of ways, which are follows:
1. Unfocused scanning: The manager, by virtue of what he/she reads, hears and
watches exposes him/herself to information that may prove useful. Whilst the
behaviour is unfocused and the manager has no specific purpose in mind, it is not
unintentional.
2. Semi-focused scanning: Again, the manager is not in search of particular
pieces of information that he/she is actively searching but does narrow the range
of media that is scanned. For instance, the manager may focus more on economic
and business publications, broadcasts etc. and pay less attention to political,
scientific or technological media.
3. Informal search: This describes the situation where a fairly limited and
unstructured attempt is made to obtain information for a specific purpose. For
example, the marketing manager of a firm considering entering the business of
importing frozen fish from a neighbouring country may make informal inquiries
as to prices and demand levels of frozen and fresh fish. There would be little
structure to this search with the manager making inquiries with traders he/she
happens to encounter as well as with other ad hoc contacts in ministries,
international aid agencies, with trade associations, importers/ exporters etc.
4. Formal search: This is a purposeful search after information in some
systematic way. The information will be required to address a specific issue. Whilst
this sort of activity may seem to share the characteristics of marketing research it
is carried out by the manager him/herself rather than a professional researcher.
Moreover, the scope of the search is likely to be narrow in scope and far less
intensive than marketing research.
Marketing intelligence is the province of entrepreneurs and senior managers
within an agribusiness. It involves them in scanning newspaper trade magazines,
business journals and reports, economic forecasts and other media. In addition,
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it involves management in talking to producers, suppliers and customers, as well
as to competitors. Nonetheless, it is a largely informal process of observing and
conversing.
Some enterprises will approach marketing intelligence gathering in a more
deliberate fashion and will train its sales force, after-sales personnel and
district/area managers to take cognisance of competitors’ actions, customer
complaints and requests and distributor problems. Enterprises with vision will
also encourage intermediaries, such as collectors, retailers, traders and other
middlemen to be proactive in conveying market intelligence back to them.
Marketing research
"Marketing research is the systematic and objective search for, and analysis
of, information relevant to the identification and solution of any problem in the
field of marketing. “
Marketing research is the function that links the consumer, customer, and
public to the marketer through information - information used to identify and
define marketing opportunities and problems; generate, refine, and evaluate
marketing actions; monitor marketing performance; and improve understanding
of marketing as a process. (AMA)
Areas of Market Research
MARKETING RESEARCH
1 CUSTOMER RESEARCH
2 ADVERTISING RESEARCH
3 PRODUCT RESEARCH
4 DISTRIBUTION RESERCH
5 SALE RESEARCH
6 ENVIRONMENT RESEARCH

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Marketing Research process
Step 1: Identifying and defining your problem:
This step is always the start of the marketing research process. At this point,
the problem will have been recognized by at least one level of management, and
internal discussions will have taken place. The most common tools are internal
and external secondary research. Secondary research intelligence consists of
information that was collected for another purpose, but can be useful for other
purposes. Examples of internal secondary research are sales revenues, sales
forecasts, customer demographics, purchase patterns, and other information that
has been collected about the customer.
Most external secondary information is produced via research conducted for
other purposes, financial performance data, expert opinions and analysis,
corporate executive interviews, legal proceedings, competitive intelligence firms,
etc.
Step 2: Developing your approach:
Once your problem is better defined, you can move onto developing your
approach, which will generally be around a defined set of objectives. Clear
objectives developed in Step 1 will lend themselves to better approach
development. Developing your approach should consist of honestly assessing you
and your team's market research skills, establishing a budget, understanding
your environment and its influencing factors, developing an analysis model, and
formulating hypotheses.
Step 3: Establishing research design and strategy:
Based upon a well-defined approach from Step 2, a framework for the
designing your marketing research program should be apparent. This step is the
most encompassing of all steps in the research process, requiring the greatest
amount of thought, time and expertise - and is the point at which those less
experienced with market research will obtain assistance from an internal market
research expert or perhaps partner with an external marketing research provider.
Research design includes secondary information analysis, qualitative research,
methodology selection, question measurement & scale selection, questionnaire
design, sample design & size and determining data analysis to be used.
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Step 4: Collecting the data:
Often called data collection or survey fielding, this is the point at which the
finalized questionnaire (survey instrument) is used in gathering information
among the chosen sample segments. There are a variety of data collection
methodologies to consider such mail survey, internet panel, mail panel, in-home
panel etc.
Step 5: Performing data analysis:
Any questionnaire data analysis will depend on how the questionnaire was
constructed. Less complex questionnaire data analysis can be handled with any
of a number of office suite tools, while more complex questionnaire data analysis
u-quires dedicated market research analysis programs. Types of statistical data
analysis that might be performed are simple frequency distributions, cross tab
analysis, multiple regressions (driver analysis), cluster analysis, factor analysis,
perceptual mapping (multidimensional ruling), structural equation modelling and
data mining.
Step 6: Reporting and presentation:
Market research reporting mid presentation is easily the second most
important step, if not the first any business critical information and knowledge
that comes from your market research investment will be limited by how it is
presented to decision makers.
Applications of marketing research
 Demand Forecasting
 Sales Analysis
 Advertising Research
 Positioning Research
 Market Segmentation
 Product Research
 Pricing Research
 Distribution Research
 Customer satisfaction Research

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Emerald’s MARKETING MANAGEMENT

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Customer value: Customer Value is the incremental benefit which a customer

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CRM process cycle:

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Product Generic or primary Secondary or Evolved

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Product Introduction/ Development Stage

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Direct and online marketing

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Types of online Marketing:

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Components of a Marketing Information System

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The explanation of this model of an MIS begins with a description of each of

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