5 Mod MCV

Module 1: Introduction to marketing
Chapter 1.1 Concept, nature, scope and importance of marketing
Marketing informs your customers about the products or services you're

offering them. Thro’ marketing, the customers get to know about the value
of the products, their usage and additional info’ that might be helpful to the
customers. It creates brand awareness and makes the business stand out.
The term "marketing" covers a lot of different activities – all associated

with selling your company's products and services. Advertising is the most
obvious marketing activity, but so is consumer research, which better
matches your product to consumer wants and needs. Product design, also, is
a form of marketing, as it helps match your company's products and services
to known customer needs.
Marketing is a strategy that businesses do to advertise their businesses.

Every business entity needs to understand such a strategy and how to
employ it. Business sectors have been using marketing strategies. They even
hire people knowledgeable in marketing to help them sell their products. On
that note, how important marketing in business?
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Nature of Marketing: The Nature of Marketing (or Modern marketing)

may be studied under the following points:
 Human activity: Originally, the term marketing is a human activity

under which human needs are satisfied by human efforts. It’s a human
action for human satisfaction.
 Consumer-oriented: A business exist to satisfy human needs, hence
business must find out what the desire of customer (or consumer) and
thereby produce goods & services as per the needs of the customer. Thus,
only those goods should be produce that satisfy consumer needs and at a
reasonable profit to the manufacturer (or producer).
 Art as well as science: In the technological arena, marketing is the art
and science of choosing target markets and satisfying customers through
creating, delivering, and communicating superior customer value. It is a
technique of making the goods available at right time, right place, into
right hands, right quality, in the right form and at right price.
 Exchange process: All marketing activities revolve around
commercial exchange process. The exchange process implies transactions
between buyer and seller. It also involves exchange of technology,
exchange of information and exchange of ideas.
 Starts and ends with customers: Marketing is consumer oriented and
it is crucial to know what the actual demand of consumer is. This is
possible only when required information related to the goods and services
is collected from the customer. Thus, it is the starting of marketing and
the marketing end as soon as those goods and services reach into the safe
hands of the customer.
 Creation of utilities: Marketing creates four components of utilities
viz. time, place, possession and form. The form utility refers to the
product or service a company offers to their customers. The place utility
refers to the availability of a product or service in a location i.e. easier for
customers. By time utility, a company can ensure that products and
services are available when customers need them. The possession utility
gives customers ownership of a product or service and enables them to
derive benefits in their own business.
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Scope/Functions of marketing:
The term scope of marketing can be understood in terms of the functions of

the marketing manager. The major purpose of marketing manager is to
generate revenue for the business by selling goods and services to the
consumers. It lies in insuring the customer needs and converting them into
product or services and moving the product and services to the final user or
customer, to satisfy the wants and needs of specific segment of customers
with emphasis on profitability and ensuring the optimum use of resources
available with the organization.
The mktg manager has to perform research functions/exchange functions:
 Functions of Research: The modern marketing activities start with

consumer research. It is referred with the analysis of consumer attitudes,
tastes, habits, reactions and preferences to the company’s product so that
the products may be produced according to the needs of the consumers.
The major functions of research are as follows:
 Marketing Research: The marketing research is helpful in analyzing

the customer’s behavior, popularity of product, effectiveness of
advertising, pricing policy, etc. In other words, it is the systematic
gathering, recording and analyzing of data about problems relating to the
marketing of goods and services. For making correct and timely
decisions, the marketing manager analyses all the available opportunities,
threats, strengths and weaknesses of the organization and determine the
best opportunity to be pursue for it.
 Product planning and development: Under modern marketing

activities, product planning is determined before the start of actual
production. It is the process in which shape, size, color, weight, design,
packing, etc. of the product is determined on the basis of information
gathered with the help of market research. Product development involves
decisions regarding shape, size, color, weight, design, quality, brand,
label, etc. as per the needs of the consumer, which will give maximum
satisfaction to the consumer and reasonable profit to the manufacturer.
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MARKETING AND ITS IMPORTANCE TO BUSINESS:
There are many important things marketing can do for different business
sectors. That is why many business establishments adopt many marketing
strategies. Give yourself time to know the importance of marketing to your
business.
MARKETING HELPS TO BOOST THE SALES:
Marketing is one way to give information to consumers. This way,

consumers will have a basic idea of what is your product all about. They will
also know the benefits of buying your products. Marketing educates many
people about a certain product. When people are well-informed about your
product, your sales will increase.
MARKETING CREATES REVENUE OPTIONS:
Marketing is a great help for many business establishments to create revenue

options. It is when business sectors use different marketing strategies to
increase business profits. One way to increase the profit is to reduce the
product costs. This way many customers will buy the product.
Reducing the product costs will increase the number of potential buyers,
thus getting more sales. It is better to gain smaller profits but consistent
sales. Another way to increase the revenue is to run media advertisements
and promotions. It is the easiest way to make people know about your
products.
SET BETTER GOALS FOR YOUR BUSINESS:
The success of a business depends on its goals and objectives. Marketing

can help a business set its goals. By practicing some marketing strategies, it
will lead to the popularity of their brand. By this, it will motivate the
company to maintain its reputation. They will now set clear goals and
objectives for their employees to know their targets. These goals will also
reach their consumers.
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BUILD A REPUTATION FOR YOUR BRAND:
Another benefit of implementing marketing strategies is to build a reputation

for your brand. But it is essential to ensure you are giving outstanding
quality and useful products to your target market. This way, you won’t only
build an excellent reputation for your product, but also your brand.
IMPROVES DECISION-MAKING:
When a company hires a marketing specialist, they will do everything to

boost the sales of your products by making appropriate marketing actions.
The first thing to consider in doing these activities is to know your audience.
When the company has known fully their audience, this will help them
decide what lines and details they will create in convincing people to buy
their products. The company will gather different tag lines to choose from.
Marketing will help them decide what fits and what works for the people.
TYPES OF MARKETING:
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B2B MARKETING: B2B Marketing is the term used for Business-to-

Business transactions. They use this type of marketing strategy when a
company sells goods or any other services to an organization.
B2C MARKETING: B2C Marketing is another term for Business-to-

Consumer marketing. This is done when an organization sells its products to
people. B2C marketing promotes the business through advertisements.
C2B MARKETING: We also know C2B Marketing as Consumer-to-

Business Marketing. It is the opposite of B2C Marketing. It is a marketing
strategy when consumers give goods or services to a company.
C2C MARKETING: C2C Marketing or Consumer-to-Consumer marketing

is a strategy in which the consumers can have an interaction with their co-
consumers. It happens when they share a common product or service. This
business model enables a customer to transact business with another
customer. Exs of C2C, also known as Network-marketing, are Uber, Ola etc
9 REASONS WHY YOU REALLY DO NEED IT:
Do you know what your customers want? Do you think your customers trust
your products? When was the last time you saw a customer tweeting about
your product or service? Was it a complaint or compliment?
The answers to all these questions lie in marketing.
How you market your business determines if the enterprise will be

successful or not. Marketing is a tool used to create and maintain demand,
relevance, reputation, competition and more. Without it, your business is
likely to close down due to lack of sales.
So why is marketing important? Check out these 9 reasons why you really
do need it.
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1. MKTG IS AN EFFECTIVE WAY OF ENGAGING CUSTOMERS:
It’s important for business to engage its customers. Marketing is a tool to

keep the conversation going. Engaging customers is different from pushing
your offers. Engaging involves furnishing your customers with relevant
information about your products and your business as well. It’s all about
creating fresh content.
Tell your customers what they don’t know. Let it be interesting and worth
their time. Social media is one of the best platforms where you can engage
your customers. Some organizations use short videos and other humor-laden
tricks to engage their customer base. By engaging your customers,
marketing gives them a sense of belonging.
2. MKTG HELPS BUILD/MAINTAIN COMPANY’S REPUTATION:
The growth and life span of your business is positively correlated to your
business’s reputation. Hence, it’s fair to say your reputation determines your
brand equity. A majority of marketing activities are geared towards building
the brand-equity of the company.
Your business’s reputation is built when it effectively meets the expectations

of its customers. Such a business is considered a responsible member of the
community. The customers become proud to be associated with your
products. Marketers use effective communication, branding, PR and CSR
strategies to ensure that a business’s reputation is maintained.
3. MKTG HELPS BUILD RELATIONSHIP WITH CUSTOMERS:
Businesses need to build a relationship of trust and understanding with their

customers. How does marketing establish this relationship? Marketing
research segments should be based on demographics, psychographics, and
consumer behavior. Segmentation helps the business meet the needs of its
customers, thus gaining their trust. The product team ensures the business
delivers what’s promised at the right time. This makes the customers brand
loyal. Loyal customers will have the confidence to buy more products from
you.
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4. MKTG IS COMM CHANNEL USED TO INFORM CUSTOMERS:
Marketing informs your customers about the products or services you’re

offering them. Thro’ marketing, the customers get to know about the value
of the products, their usage and additional info’ that might be helpful to
them. It creates brand-awareness and makes the business stand out.
There’s stiff competition in the market and you need to be a constant voice
to convince the customers. Inform your customers of discounts and other
competitive tricks you intend to use. Through communication, marketing
helps your business become a market leader.
5. MARKETING HELPS BOOST SALES:
Marketing utilizes different ways to promote your products or services. Once

a product has been advertised, it’s already on the radar and this increases
your chances of selling it. Customers may want to try your products or
services and this will trigger a purchase decision.
When customers are happy about your products or services, they become
your brand ambassadors without your knowledge. They will spread the word
and your sales will start to increase. Ensure you offer high-quality products
and services to complement your marketing efforts.
6. MKTG AIDS IN PROVIDING INSIGHTS ON YOUR BUSINESS:
Every marketer understands the need for targeting the right audience.
However, you must have the right content to share with such an audience.
Your marketing strategies can help you establish what business messaging
will convince the target audience. At this point, you have to test different
messages and see what works. Once you have tested different sets of
messaging on the target audience, you will find a viable baseline for your
marketing efforts.
It acts as a metric and provides the insight needed to make you avoid
guesswork.
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7. MKTG HELPS YOUR BUSINESS TO MAINTAIN RELEVANCE:
Every marketer understands the need for disrupting a potential consumer’s

opinion about other products. But don’t make a mistake of taking this
chance for granted. Most businesses assume that they will always remain the
client’s favorite brand, bec’ up to now, the client has never complained. This
is the wrong mindset. You need to find ways to remain at the top of the
client’s mind.
Every relationship needs to be maintained. Marketing helps your business to

maintain a good relationship with customers by making you remain relevant.
Don’t focus on gaining new customers before addressing the need to retain
the present ones.
8. MARKETING CREATES REVENUE OPTIONS:
During the startup phase, your options are sparse, since you’re mostly cash-
strapped. This limits your options. As your marketing strategies generate
more customers and revenue opportunities, you’ll begin having options.
Having options will give you the courage you need to penetrate new
markets. You will have the freedom to start letting go of customers who are
too demanding to your sanity and well-being. Without marketing, you will
be forced to continue working with clients who you have outgrown and are
paying you peanuts.
9. MKTG HELPS MGMT TO MAKE INFORMED DECISIONS:
Every business is confronted with problems such as to what, when, for

whom and how much to produce. A complex and tedious process determine
your business’s survival. As a result, businesses heavily rely on marketing
mechanisms to make these decisions.
Why should you rely on marketing mechanisms? These mechanisms serve

as a reliable link between your business and society. They cultivate people’s
mind, educate the public and convince them to buy.
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WHY IS MKTG IMP IN BEATING YOUR BUSINESS RIVALS?
Your competitor too is actively marketing their products. Doesn’t this tell
you why is marketing important? The only way to gain a competitive
advantage over your competition is aggressive marketing.
However, you don’t have to be sleazy or negative while marketing against

your competitor. Simply conduct research on what your target market is
expecting and then find ways to deliver better products or services. If you’re
offering a product or service that is new to the market, you need to be more
aggressive and strategic.
HOW MARKETING STRATEGIES LEAD TO SUCCESS?
Every successful business has a story of its marketing strategies. It is the

marketing strategies that boost the success of the business. Marketing
strategies may include promotions and advertising. It also deals with media
relations. Marketing can promote a certain brand, product, and people.
Even though you provide quality goods and services, it can be useless when
people do not know about it. When people are fully aware of your product, it
will help in increasing sales. Thus, it means success to the business.
When the company has maintained its reputation and pleasant image to the
public, consumers’ trust will increase. This can lead to some companies or
individuals investing in them.
BOTTOM LINE:
Marketing helps businesses reach success. With the right marketing

strategies, your business will continue to grow and develop. Finding the best
marketing strategy for your business is challenging at first. Research will
guide you to determine which marketing strategy will best fit your business
and help you succeed. There is no single marketing strategy that will make
you succeed overnight. Thus, it is best to do research and try some strategies
for your marketing venture.
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Chapter 2.1: Marketing concepts, evolution
Evolution of marketing:
Following Robert Bartels, we may distinguish six different periods in the

history of marketing since its discovery between 1900 and 1910. Prior to
1900, market behavior and trade practice were explained mainly from
macro-point in economic theory.
The period of discovery is a period in which the early teachers of the

subject sought facts about the distributive trades. In the process of this
search, theory was borrowed mainly from economics; particularly in the
fields of distribution, world trade and commodity markets and the term
marketing was selected to describe this particular activity.
The years between 1910 and 1920 are characterized as a period of

conceptualization and in this era basic concepts on which the structure of
marketing thought was built for the next 40 or 50 years emerged and were
crystallized. It was during this period that many marketing concepts were
initially developed and classified and terms defined.
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It was also during this time that three lines of approach to the analysis of
marketing were identified — the institutional, the functional and the
commodity approaches.
The next decade (1920-30) is characterized as a period of integration. The

years between 1920 and 1930 mark the coming of age of the discipline of
marketing. During that decade not only did all the branches of the subject
attain a general or integrated statement but two additional areas of
specialization appeared — wholesaling and marketing research.
However, during the 1930s, changes in social and economic conditions had a
marked effect, molding the direction of thinking and practice in marketing
with the result that the 1930s and 1940s are described as a period of
development. This phase is characterized as one during which specialized
areas of marketing continued to be developed, hypothetical assumptions
were verified and quantified and some new approaches to the explanation of
marketing were undertaken.
The developments of the 30s laid the basis for the next decade —typified as
a period of reappraisal. By 1950 marketing thinking encompassed an
impressive array of content and techniques that was short of concepts and
lacked any general theory of marketing.
It was with these latter issues that we have been concerned in the second half
of the 20th century commencing with period of conceptualization (1950-60),
the period during which traditional approaches to the study of marketing
were supplemented by increasing emphasis upon managerial decision-
making, the societal aspects of marketing and quantitative marketing
analysis.
Many new concepts borrowed from the field of management were

introduced into marketing.
Marketing is a management process. Marketing creates value for

customers. For this reason, the marketers need to find, anticipate and
satisfy customer requirements at a profit.
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MARKETING CONCEPT
The marketing concept holds the key to achieving organizational goals, that
consists of determining the needs and wants of target markets and delivering
the desired satisfaction more effectively and efficiently than competitors.
Under marketing concept, the emphasis is on selling satisfaction and not
merely selling a product. The consumer is the pivotal point and all
marketing activities operate around this central point. It is, therefore,
essential that the entrepreneurs identify the customers, establish a rapport
with them, identify their needs and deliver the goods and services that would
meet their requirements.
5 core customer and marketplace concepts are: (1) Needs, wants, and
demands, (2) Market offerings such as products, services, and experiences,
(3) Value, satisfaction, and quality (4) Exchange, transactions and
relationships, and (5) Markets.
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Different customers within a market have different needs which they seek to
satisfy. To be fully marketing oriented, a company would have to adapt its
offering to meet the needs of each individual. In fact, very few firms can
justify aiming to meet the needs of each specific individual; instead, they
target their product at a clearly defined group in society and position their
product so that it meets the needs of that group. These subgroups are often
referred to as segments.
Needs, wants and demands:
1. Needs:
Needs are the basic requirements which human beings require for existence.
These mainly consist of air, water, food, clothing and shelter. Along with
these needs, some other needs which are required to be satisfied are
education, medical care, entertainment, and recreation. It is a difficult task
for a marketer to identify the needs of the customers since customers may
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not be conscious of their needs and even if they are, they might be unable to
put forth their needs clearly.
The needs can be further classified into 5 types as:
(i) Stated needs: These are the clearly-defined needs of the customer; i.e.
the customer clearly tells his needs to the company. These are the parameters
that the customer defines to the marketer of the product. They are the easiest
to deal with since through the stated needs the marketer actually knows what
the customer wants from them. For example, a customer may ask for an
inexpensive fridge.
(ii) Real needs: These are the actual needs of the customers which he may
not be able to pinpoint to the salesperson. In this case, salesperson has to ask
questions to the customers to find out the exact nature of the stated need by
the customer. From the above example – if a customer says that he wants an
inexpensive fridge, he might be saying that he needs to buy a fridge which
consumes less electricity and thus save the electricity cost.
(iii) Unstated needs: These are the benefits which are not asked by the
consumers but they expect them naturally with the products/services offered.
E.g. Customer expects good service from the showroom dealer from where
he is going to purchase the fridge.
(iv) Delight needs: When a customer gets more than what he needs and if
that makes him happy, then it is called as delight need. These needs help the
marketer to cross the expectation level of the customer. E.g. If the dealer
provides the customer with free movable fridge trolley and free fridge cover
on purchase of fridge then the customer will be delighted.
(v) Secret needs: These are the needs which customer does not want to
disclose but still gives indication to have it from the seller. Ex. The customer
wants his friends to see him as a savvy customer and gain a social status for
himself after buying the fridge.
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Wants:
The wants are a step ahead of needs and are largely dependent on the human
needs. A need becomes a want when a need is directed to a specified object.
Wants are designed according to the taste and preferences of the society.
Needs already exist in the market; however, wants may be created by the
marketers. It can also be said that need and want are relative terms, because,
a product may be considered to be a need by someone but it may also be
perceived as a want by others. Ex: To have food is a basic need of human
beings but to have pizza for food is a want created by the marketers.
Demand:
A demand is generated when a customer is willing to buy a particular

product and has an ability to pay for it. A company should study not only
how many people want their product but also how many would actually
afford to buy the product. Ex: Many people would be desirous to buy Ferrari
car; however, there is only a small segment which can afford to buy it, that
reflects the demand for Ferrari car in the market.
Demand = Willingness to pay + Ability to pay
2. Product/Service:
People satisfy their needs and wants with products. A product is anything
that can be offered to satisfy a need or want. The concept of product is
not limited to physical objects. Anything capable of satisfying a need can be
called a product. More broadly defined, products include experiences,
persons, places, organizations, information, and ideas.
Thus, the term product includes much more than just physical goods or
services. Consumers decide which events to experience, which tourist
destinations to visit, which hotels to stay in and which restaurants to
patronize. To the consumer these are all products. One of the most
interesting areas of marketing is product planning and development.
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3. Value, satisfaction and quality:
Value reflects the sum of the perceived tangible and intangible benefits
and costs to customers. Here the costs include both economic and non-
economic costs whereas benefits include both tangible as well as intangible
ones. A product or services is successful when it delivers value and
satisfaction to the buyers. Value is usually a combination of quality,
service, and price.
Value increases with quality and service and decreases with price. A value is
a relative term as perceived benefit for one person may not be a benefit
for others. Value changes based depending on time, place and people in
relation to changing environmental factors. It is a creative energy exchange
between people and organizations in our marketplace.
Companies try to figure out the list of add-on benefits that they can provide
based on the taste and preferences of the customers. A high value product
not only helps the company to generate new customers but also helps to
retain the older ones. Ex. Online parcel tracking facility provided by the
courier companies without any additional cost can be one of the best
examples of customer value. The same goes for free delivery of products
purchased through online shopping portals.
4. Exchange:
It is act of obtaining an object which one needs from another by offering

some other thing in return. Marketing occurs when individuals decide to
satisfy needs and wants through exchange. Marketing helps to create a
business environment where exchange of value can take place.
For an exchange to happen:
(i) There should be at least two parties involved for any kind of exchange.
(ii) Each party must have something or other that interests the other party.
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(iii) Each party must be willing to have an exchange with other party and
must have a desirable or at least acceptable opinion about the other party.
(iv) Each party must be totally free from any obligation regarding accepting
or denying the offer.
(v) Each party must be able to communicate and deliver the product as per
the requirement of the other.
Ex: A man visiting a fast food chain might have enough money to buy a
burger while the fast food chain should have a burger. If the customer in the
fast food chain shop cannot make himself understood, or if he decides he
does not want a burger, or if he does not have enough money to buy the
burger, then there will be no exchange. If all of the needed conditions are
met then, there will be an exchange of money for burger.
5. Marketing V/s Market:
Marketing is the process of trying to get a group of people interested in

buying company’s products or services. It is an organizational function and a
set of processes that work in tandem to serve the market effectively,
efficiently and profitably. It is 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 is all those activities that facilitate trade. These include activities
that identify consumers’ needs such as market research and those activities
that satisfy consumers’ needs e.g., packaging and distribution. Marketing
activities therefore support the marketing of goods and services.
Market is a collection of buyers and sellers. A market, colloquially, is a

group of people who are willing to buy something. It is a public gathering
held for buying and selling merchandise. It is a place where goods are
offered for sale. It is a set of individuals or institutions that have similar
needs and that can be met by a particular product.
Therefore, a market is the set of all actual and potential buyers of a market
offer. A market is any space within which trade takes place between buyers
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and sellers for a well-defined product. This space can be a producer market,
a shop, internationally between countries, or over the internet.
As the market has changed, so has the way the company deals with the
marketplace. The company orientation towards marketplace deals with
the concepts which a company may apply while targeting a market.
There are basically five different orientations which a company takes

towards the marketplace.
1. Production concept:
In this concept, the company mainly tries to increase production

irrespective of demands of the customer. The production concept is almost
extinct now with companies paying more and more attention to the
customer.
The concept is mainly based on the principle that, “as the productivity levels
increase, cost of production decreases, and as a result, customer will be able
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to purchase a product at a cheaper rate, which in turn accelerates the sales of
the company.”

2. Selling concept:
The selling concept came into practice following the Great Depression
era when goods were not in great supply. Once the depression ended,
companies with an abundance of products needed to move their inventories
and the selling concept followed shortly thereafter.
Today's selling concept has evolved to assume the customer will buy the
product without regret or, if they do, their feelings won't linger and the
customer will buy the product again at a future date.
Unlike the marketing concept, which seeks to understand consumer needs,

the selling concept seeks prospects and sells the product's benefits. While
marketing concepts might focus on developing new products, the selling
concept assumes the product won't sell without a significant sales effort.
To fully understand the sales concept, consider a company that sells

chocolate candies. The product has few health benefits, so advertising
focuses on the taste and texture of chocolate and the indulgence of the
special treat. This influences the customer to purchase the candy even when
it isn't a necessity.
Sales concepts work for companies that have an inventory overstock, or

when selling products the customer doesn't typically purchase, known as
unsought goods, such as:
Nonprofits
Fundraisers
College admissions
Political campaigns
Timeshares
Insurance plans
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Blood donations
Funeral plots
3. Product Concept:
Product concept is a basic idea of the product. When you’re new to a

company, it’s hard to know what the product concept is and how it fits into
the bigger picture of your business.
The product concept is a mandatory term in order to give customers the best
possible products. They want an optimal balance of quality, performance
and features along with other factors such as marketing or distribution that
can make your business successful.
A lot of companies don’t even have a product concept or they don’t make
sure that all their employees understand it. This can lead to confusion and
miscommunication about whether something is supposed to be sold as a
feature or an outcome.
Having a clear idea of what your product does for customers and why they
would want that, will help you write better marketing copy and create more
effective sales presentations.
The product concept is on the assumption that the customers would

choose the product if it has better quality, features, and performance.
The reason product concept is important is, bec’ it makes it necessary for
you to meet the demands and wishes of customers by delivering the best
product. Sales, marketing, and distribution are also important factors in
the product concept.
Under the product concept, a company can not only give identity to the
product but also adds functional values and usability so that a customer can
buy it in the market to take maximum benefits. The product concept falls
under the category of marketing and orientation strategy that many
businesses and companies follow.
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A quality product attracts a great market share and builds a strong brand
image. For a product to be successful under this concept, it should stand
apart from the rest of the crowd.
4. Marketing Concept:
This is a business philosophy that challenges the above three business

orientations. Its central tenets crystallized in the 1950s. It holds that the key
to achieving its organizational goals consists of the company being more
effective than competitors in creating, delivering, and communicating
customer value to its selected target customers.
The marketing concept rests on four pillars: target market, customer needs,

integrated marketing and profitability.
Just like selling is a necessity, similarly branding and marketing are a

necessity in some products. The marketing concept proposes that the success
of a firm depends on the marketing efforts of the company in delivering
a value proposition.
For a company to achieve its sales target, a great marketing strategy coupled

with proper branding are absolutely important. Marketing concept thus
indicates that for products to be successful, it needs to approach the
customers with a value proposition and to deliver the same without fail.
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The Marketing Concept represents the major change in today’s company
orientation providing the foundation to achieve competitive advantage. This
philosophy is the foundation of consultative selling.
Societal Marketing Concept:
The societal marketing concept leads to a company orientation which

believes in giving back to the society what it had received from the
society. This concept believes that the company is profiting because of
society and hence it should also take measures to make sure the society also
benefits from the company.
If a company has benefited from the society, it should reciprocate the same
by striving towards benefiting the society. This is one of the fastest
growing marketing concepts which is quite capable of creating an
indelible impression in the minds of customers and along the way, help
itself create an unparalleled brand image.
The company orientation towards the market place thus depends on the
application of the above 5 concepts. Some of these concepts are not
applicable in today’s market whereas others are applicable sector by sector.
The social marketing concept proposed marketers to introduce social and

ethical values into their marketing practices.
Example – Microsoft
Microsoft invests a generous amount of money every year in the welfare of

the community and the needy. Microsoft donated over $1.4 Billion in
(software and services) to NGOs around the globe that is involved in
addressing significant societal challenges.
The firm provided basic computer science education to more than 12 million
students in 54 countries to prepare them for the jobs of tomorrow. The
Technology-Education and literacy in Schools program (TEALS) by
Microsoft aims to fill the gap in computer science education.
23
With the help of this program, 1,000+ technology volunteers partnered with
teachers for providing computer science education to more than 13,000
students in 344 U.S. high schools.
Chapter 3.1: Marketing mix
What Is a Marketing Mix?
A marketing mix includes multiple areas of focus as part of a

comprehensive marketing plan. The term often refers to a common
classification that began as the four Ps: product, price, placement, and
promotion.
Effective marketing touches on a broad range of areas as opposed to fixating

on one message. Doing so helps reach a wider audience, and by keeping the
four Ps in mind, marketing professionals are better able to maintain focus on
the things that really matter.
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Focusing on a marketing mix helps organizations make strategic
decisions when launching new products or revising existing products.

Understanding Marketing Mix:
The four Ps’ classification for developing an effective marketing strategy

was first introduced in 1960 by marketing professor and author E. Jerome
McCarthy.
Depending on the industry and the target of the marketing plan, marketing
managers may take various approaches to each of the four Ps. Each element
can be examined independently, but in practice, they often are dependent on
one another.
Additionally, for services, another 3 Ps were introduced, viz., people,

process and physical evidence.
Product:
This represents an item or service designed to satisfy customer needs and

wants. To effectively market a product or service, it's important to identify
what differentiates it from competing products or services. It's also
important to determine if other products or services can be marketed in
conjunction with it.
Price:
The sale price of the product reflects what consumers are willing to pay for
it. Marketing professionals need to consider costs related to research and
development, manufacturing, marketing, and distribution—otherwise known
as cost-based pricing. Pricing based primarily on consumers' perceived
quality or value is known as value-based pricing.
Placement:
The type of product sold is important to consider when determining areas of

distribution. Basic consumer products, such as paper goods, often are readily
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available in many stores. Premium consumer products, however, typically
are available only in select stores. Another consideration is whether to place
a product in a physical store, online, or both.
Promotion:
Joint marketing campaigns also are called a promotional mix. Activities

might include advertising, sales promotion, personal selling, and public
relations. A key consideration should be for the budget assigned to the
marketing mix. Marketing professionals carefully construct a message that
often incorporates details from the other three Ps when trying to reach
their target audience. Determination of the best mediums to communicate
the message and decisions about the frequency of the communication also
are important.

Value-based pricing plays a key role in products that are considered to be
status symbols.
Three additional Ps tied to this type of marketing mix might include people,

process, and physical evidence. People refer to employees who represent a
company as they interact with clients or customers. Process represents the
method or flow of providing service to the clients and often incorporates
monitoring service performance for customer satisfaction. Physical evidence
relates to an area or space where company representatives and
customers interact. Considerations include furniture, signage, and layout.
People:
This refers to the people who work for a company in customer-facing roles.
These people can affect a customer's level of satisfaction as much as the
service they provide because customers associate services with the people
who deliver them. Effective customer service can motivate customers to
return to the business for additional services as repeat buyers and also refer
their peers to the business. Businesses apply several methods to strengthen
the customer service of their staff, including:
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 Training staff on how to greet customers, answer questions about the
services they provide and resolve customer challenges
 Creating a service script so that staff can create a unified, consistent
customer experience
 Establishing a protocol for upselling so customers feel comfortable

when a staff member suggests purchasing additional products and
services
 Instructing staff to remember important details about repeat
customers, such as their career path and interests.
Process:
Businesses train their staff members to perform a service using a set process.
These processes ensure that the employee delivers a service efficiently and
that customers can expect a consistent standard of quality. Many companies
use process mapping to teach their staff what actions to perform when
delivering a service. Process mapping usually consists of the following:
 Symbols that visualize each step of the process, which can make it
easier for employees to follow
 Details about when and where the action happens
 Flowcharts showing how each step transitions into another
 A regular revision process to strengthen existing steps and add new
ones
Physical evidence:
Customers often use the physical aspects of a business to help them judge
the quality of the services the company provides. Physical evidence includes
the space in which the service takes place and the tangible items that
customers take with them as proof of a purchase.
Though the service is intangible, giving customers a receipt or brochure

allows them to associate their service experience with a physical symbol.
Some ways that customers perceive physical evidence include:
 The comfort of waiting areas
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 The color scheme and decorations within the service provider's
facility
 The cleanliness of a business
 The clothing staff members wear
 The branding of any products they buy after a service

Special considerations:
Not all marketing is product-focused. Customer service

businesses are fundamentally different than those based primarily on
physical products, so they often will take a consumer-centric approach that
incorporates additional elements to address their unique needs.
Additionally, marketers often study consumers who frequently will influence

strategies related to service or products. This also requires a strategy for
communicating with consumers in terms of obtaining feedback and defining
the type of feedback being sought.
Traditionally, marketing commences with identifying consumers' needs and

ceases with the delivery and promotion of a final product or
service. Consumer-centric marketing is more cyclical. Reassessing the
customers' needs, communicating frequently, and developing strategies to
build customer loyalty are the goals.
Why are the 7 Ps important?
The seven Ps are important because they can help you plan and lead
discussions about a business' marketing practices, whether the company sells
products, services or both. This means if you're marketing a service or
product, you can consider the seven Ps to help you sell it effectively. This
set of best practices is easy to remember and each step focuses on a different
factor that contributes to increased sales, reviewing each of the seven Ps can
help a company develop an effective marketing plan that may increase sales.
Key Takeaways:
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 A marketing mix often refers to E. Jerome McCarthy's four Ps:
product, price, placement, and promotion.
 The different elements of a marketing mix work in conjunction with
one another.
 Consumer-centric marketing mixes incorporate a focus on customers
into their approaches.
Chapter 4.1: Strategic marketing planning – an overview
What is a Marketing Plan?
A marketing plan is a document that lays out the marketing efforts of a

business in an upcoming period, which is usually a year. It outlines the
marketing strategy, promotional, and advertising activities planned for the
period.

The goal of every business is to get its products into the hands of its
customers. However, that’s easier said than done. Businesses need to first
find their target market, tell them about their products and convince
them that the products are superior to their competition. A useful
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business tool that can help companies to encourage customers to purchase
their products is a strategic marketing plan.
A strategic marketing plan helps businesses to identify their marketing

goals and develop tactical strategies to achieve them.

Strategic marketing plan definition:
A strategic marketing plan reviews both long-term and short-term

objectives that the company wants to meet. The strategic marketing plan
also takes into consideration the current financial position of the company as
well as trends in the marketplace.
The strategic marketing plan is a living document, which means it is

never final. In order to remain successful, the company must regularly
update its strategic marketing plan with new strategies and ideas. Since
the position of the company, industry trends and consumer behavior and
sentiment are always changing; the company must pivot its marketing
strategies in order to achieve its goals.
Conduct a SWOT analysis:
A strategic marketing plan needs to identify the company’s place in the

current market. A SWOT analysis that reviews strengths, weaknesses,
opportunities and threats ensures the business has a clear vision for where it
stands in the present and where it needs to go in the future in order to remain
successful.
A SWOT analysis of the company should review:
 Internal strengths, such as resources, talent and experience

 Internal weaknesses, such as budget or time constraints
 Competitive organizations
 Changes in business processes and business technology
 Cultural shifts within the industry
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Market trends:
The importance of strategic marketing planning is that it enables

businesses to get a comprehensive view of the possibilities that lie ahead,
taking into account both internal and external factors. This is a strong
foundation upon which to build a strategic marketing plan.
Outline your organization’s goals and marketing objectives:
In the strategic marketing plan, it’s critical to specify the goals that the
company wants to achieve. This may include doubling revenue, entering a
new market or maintaining growth at 25% each year. These goals are what
should drive the marketing strategies and tactical plans.
It’s imperative that marketing objectives align with larger company

goals. Otherwise, the marketing activities have little impact on the success
of the business. If the company’s goal is to enter a new market, for example,
a corresponding marketing objective would be to increase brand recognition
The company cannot sell to new prospects who are not familiar with the
brand or the product. As a result, the marketing effort works hand in hand
with the company’s overarching goals.
Research market opportunities:
In order to create a useful strategic marketing plan, the organization needs to

research the trends in the current marketplace. This insight informs all four
elements of the marketing mix: product, price, place and promotion.
Marketing opportunities may show that a certain area of the market is

heavily saturated with products. This may tell the company that it is difficult
to enter.
On the other hand, the company may then become aware of a different
market segment where there is little competition and room for growth.
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It’s important to analyze both long-term and short-term breaks in the market.
For example, there may be an opportunity to increase revenue in the short
term by holding a promotion for a particular item geared toward low-value
prospects.
In the long term, the company may work on building customer loyalty and
increasing revenue through repeat purchases from high-value customers.

Identify your target market:
The strategic marketing plan needs to answer the “who” question in

detail. Who are you serving with your products and services? Conduct
research to ascertain your target market’s age, gender, income and
occupation. You’ll also need to go beyond the demographic details into the
behavioral details.
It’s important to establish:
 What problems are your prospects trying to solve with which you can
help?
 What do they fear will happen if they cannot solve that problem?
 What will happen if they are able to solve that problem with your
help?
Regardless of what your business sells or does, the key value proposition is
that you are helping your target market solve an issue they are experiencing.
It’s vital to extrapolate on that problem to fully understand how you can help
them. For example, if you sell hand-painted scarves, the problem you solve
is that you help your prospects find unique luxury accessories at an
affordable price that they cannot get anywhere else.
Establish your marketing mix:
The marketing mix serves as the basis for any marketing strategy. Outline
the following elements in your plan:
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 Product: What you’re selling and how you will package it to capture
your prospect’s attention.
 Price: How much the consumer is willing to pay for this product
while still enabling you to make your desired profit.
 Place: Where you will make the sale, such as a store, online or at a
temporary location like a farmers' market.
 Promotion: How you will communicate the benefits of your product
to your prospects, including advertising, direct marketing, sales
promotion, personal selling or public relations

Focus on your brand messaging:
In the strategic marketing plan, outline how you will share the value of your
product or service. It’s vital to develop a unique value proposition that
specifies what your company helps your prospects to do that no one else
does. For example, if you run a mobile tire-changing shop, you ensure your
customers can get new tires without having to drive to a mechanic. You save
them time by coming to them.
Be sure to list three to five unique elements about your business that help
you stand out to your prospects. Go back to your target market description
and connect your value to what your prospects want to see. For example, if
your target market is pressed for time, helping them save time will be of
value to them. Frame this in a way that helps set you apart from competitors.
Outline the marketing tactics:
Establish the different marketing activities you plan to implement during the

next fiscal year, complete with schedules, budgets and resources. It’s
important to ensure your activities align with the goals you initially set out
in the strategic marketing planning process. Everything must relate to what
the company is hoping to achieve, so be sure to establish that connection.
For example, if the overall goal of the company is to enter a new market, one
of the marketing goals may be to increase brand awareness in that market.
Your tactical plans need to specify how you will do that. Will you use print
or social media advertising? Will you issue press releases or hold a
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community-wide event? How long will it take, and how much will it cost?
Who will execute the plan?
Create benchmarks to measure success:
In order to ascertain whether your strategic marketing plan was successful,

it’s important to establish some benchmark metrics. Quantify how you can
measure your marketing activities. Remember to relate your metrics back to
your company’s initial goals. This will enable you to tell whether you have
achieved your objectives. Be sure to establish timelines for your metrics.

Elements of a marketing plan:
A marketing plan will typically include the following elements:
 Marketing objectives of the business: The objectives should be

attainable and measurable – two goals associated with SMART, which
stands for Specific, Measurable, Attainable, Relevant, and Time-bound.
 Current business marketing positioning: An analysis of the current
state of the organization concerning its marketing positioning.
 Market research: Detailed research about current market trends,
customer needs, industry sales volumes, and expected direction.
 Outline of the business target market: Business target market
demographics.
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 Marketing activities: A list of any actions concerning marketing goals
that are scheduled for the period and the indicated timelines.
 Key performance indicators (KPIs) to be tracked
 Marketing mix: A combination of factors that may influence
customers to purchase products. It should be appropriate for the
organization and will largely be centered on the 4Ps of marketing – i.e.,
product, price, promotion, and place.
 Competition: Identify the organization’s competitors and their
strategies, along with ways to counter competition and gain market share.
 Marketing strategies: Strategies will include promotional strategies,
advertising, and other marketing tools at the disposal of the organization.
Chapter 5.1: Market analysis and selection
A market analysis can help you identify how to better position your
business to be competitive and serve your customers.
 A market analysis is a thorough assessment of a market within a

specific industry.
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 There are many benefits of conducting a market analysis, such as
reducing risk for your business and better informing your business
decisions.
There are seven steps in conducting a market analysis:
Understanding your customer base is one of the first key steps to success
in business. Without knowing who your customers are, what they want
and how they want to get it from you, your business could struggle to
come up with an effective marketing strategy. This is where a market
analysis comes in. A market analysis can be a time-intensive process, but it
is straightforward and easy to do on your own in seven steps.
What is a market analysis?
A market analysis is a thorough assessment of a market within a specific

industry. With this analysis, you will study the dynamics of your market,
such as volume and value, potential customer segments, buying patterns,
competition, and other important factors.
A thorough marketing analysis should answer the following questions:
 Who are my potential customers?

 What are my customers' buying habits?
 How large is my target market?
 How much are customers willing to pay for my product?
 Who are my main competitors?
 What are my competitors' strengths and weaknesses?
What are the benefits of running a marketing analysis?
A marketing analysis can reduce risk, identify emerging trends, and

help project revenue. You can use a marketing analysis at several stages of
your business, and it can even be beneficial to conduct one every year to
keep up to date with any major changes in the market.
36
A detailed market analysis will usually be part of your business plan, since it
gives you a greater understanding of your audience and competitions,
helping you build a more targeted marketing strategy.
These are some other major benefits of conducting a market analysis:
 Risk reduction: Knowing your market can reduce risks in your

business, since you'll have an understanding of major market trends, the
main players in your industry, and what it takes to be successful, all of
which will inform your business decisions. To help you further protect
your business, you can also conduct a SWOT analysis, which identifies
the strengths, weaknesses, opportunities and threats for a business.

 Targeted products or services: You are in a much better position to

serve your customers when you have a firm grasp on what they are
looking for from you. When you know who your customers are, you can
use that information to tailor your business's offerings to your customers'
needs.
 Emerging trends: Staying ahead in business is often about being the

first to spot a new opportunity or trend, and using a marketing analysis to
stay on top of industry trends is a great way to position yourself to take
advantage of this information.
 Revenue projections: A market forecast is a key component of most

marketing analyses, as it projects the future numbers, characteristics and
trends in your target market. This gives you an idea of the profits you can
expect, allowing you to adjust your business plan and budget
accordingly.
 Evaluation benchmarks: It can be difficult to gauge your business's

success outside of pure numbers. A market analysis provides benchmarks
against which you can judge your company and how well you are doing
compared to others in your industry.
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 Context for past mistakes: Marketing analytics can explain your
business's past mistakes or industry anomalies. For example, in-depth
analytics can explain what impacted the sale of a specific product, or why
a certain metric performed the way it did. This can help you avoid
making those mistakes again or experiencing similar anomalies, because
you'll be able to analyze and describe what went wrong and why.
 Marketing optimization: This is where an annual marketing analysis

comes in handy – regular analysis can inform your ongoing marketing
efforts and show you which aspects of your marketing need work, and
which are performing well in comparison to competition in your industry.
A market analysis can benefit your business in many ways, especially if you
conduct regular analyses to make sure you have current information for your
marketing efforts.
How to conduct a market analysis:
While conducting a marketing analysis is not a complicated process, it does

take a lot of dedicated research, so be prepared to devote significant time to
the process. These are the seven steps of conducting a market analysis:
1. Determine your purpose: There are many reasons you may be conducting
a market analysis, such as to gauge your competition or understand a new
market. Whatever your reason, it's important to determine it right away to
keep you on track throughout the process. Start by deciding whether your
purpose is internal – like improving your cash flow or business operations –
or external, like seeking a business loan. Your purpose will dictate the type
and amount of research you will do.
2. Research the state of the industry: It's vital to include a detailed outline
of the current state of your industry. Include where the industry seems to be
heading, using metrics such as size, trends and projected growth, with plenty
of data to support your findings. You can also conduct a comparative market
analysis to find your competitive advantage within your specific market.
3. Identify your target customer: Not everyone in the world will be your
customer, and it would be a waste of your time trying to get everyone
38
interested in your product. Instead, decide who is most likely to want your
product using a target market analysis and focus your efforts there. You
want to understand your market size, who your customers are, where they
come from, and what might influence their buying decisions, looking at
factors like these:
 Age/gender
 Education
 Occupation
 Location
 Needs, Interests
During your research, you might consider creating a customer profile or

persona that reflects your ideal customer to serve as a model for your
marketing efforts.
4. Understand your competition: To be successful, you need a good

understanding of your competitors, including their market saturation, what
they do differently from you, and their strengths, weaknesses and advantages
in the market. Start by listing all your main competitors, then go through that
list and conduct a SWOT analysis of each competitor. What does that
business have that you don't? What would lead a customer to choose that
business over yours? Put yourself in the customer's shoes. Then, rank your
list of competitors from most to least threatening, and decide on a timeline to
conduct regular SWOT analyses on your most threatening competitors.
5. Gather additional data: With marketing analyses, information is your

friend – you can never have too much data. It is important that the data you
use is credible and factual, so be cautious of where you get your numbers.
These are some reputable business data resources:
 Bureau of Labor Statistics

 Census Bureau
 State and local commerce sites
 Trade journals
 Your own SWOT analyses
39
 Market surveys or questionnaires
6. Analyze your data: After you collect all the information you can and
verify that it is accurate, you need to analyze the data to make it useful to
you. Organize your research into sections that make sense to you, but try to
include ones for your purpose, target market and competition.
These are the main elements your research should include:
 An overview of your industry's size and growth rate

 Your business's projected market share percentage
 An industry outlook
 Customer buying trends
 Your forecasted growth
 How much customers are willing to pay for your product or service
7. Put your analysis to work: Once you've done the work to create a market
analysis, it's time to actually make it work for you. Internally, look for where
you can use your research and findings to improve your business. Have you
seen other businesses doing things that you'd like to implement in your own
organization? Any ways to make your marketing strategies more effective?
If you conducted your analysis for external purposes, organize your research
and data into an easily readable and digestible document to make it easier to
share with lenders. Be sure to retain all of your information and research for
your next analysis, and consider making a calendar reminder each year so
that you stay on top of your market.
Why conduct market analysis and when to do it:
So what’s the point of all of this tough research? After all, it can be tough to
decide which factors to include, and — even then — it can be difficult
and/or costly to find the data.
Market analysis is conducted for two main reasons:
40
 To assess viability of a new market: Market analysis is most often
used to assess whether a business should enter a new market. Entering a
new market or industry can be an extremely costly and time-consuming
process, so it’s important to know (with as much certainty as possible)
that your new venture will succeed.
 To thrive in an existing market: Market analysis can also be used to
assess a market in which you already operate. In this case, market
analysis can allow a business to better perform in its market, especially
by uncovering previously unnoticed factors. Also, market analysis can be
a good indicator of whether a business needs to invest more or less
resources in a given market, as it can help predict the future of that
market.
Final thoughts: Market analysis is nothing too difficult! It’s simply a tool
for finding out the different characteristics of a chosen market or industry,
however dictionaries choose to define it.
Chapter 6.1: Marketing environment – macro and micro components
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The marketing environment refers to all internal and external factors,
which directly or indirectly influence the organization's decisions
related to marketing activities. Internal factors are within the control of an
organization; whereas, external factors do not fall within its control.
Various environmental factors affect the way a business is operated. These

environmental factors can be divided into two broad categories, such as the
internal environment and the external environment. A business is required
to adapt to these marketing environments to stay profitable and ahead
in the competition.
The marketing environment can be defined as a combination of both internal

environmental factors and external environmental factors. These marketing
environments surround a business and influence the operations of the
business.
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The internal marketing environment consists of factors like material,
machines, workers, money, etc. All of these components are necessary to
run a business successfully. For example, if the raw material is not available
on time and in sufficient quantity, then the work of production will become
slow and the company will not be able to fulfill the demand of the product in
the market.
On the other hand, the external marketing environment can be divided

into two categories, such as macro external marketing environment and
micro external marketing environment.
The microenvironment is closely related to the business and constitutes

all external business activities such as distribution and promotion
of products of the company.
The macro-environmental components affect all the companies serving

in a single industry similarly. For example, changes in the laws and rules
related to production or doing business will apply to all companies likely. In
the next section, you will learn about all the internal as well as external
components of an organization.
Components of the marketing environment – Internal:
The internal environment is formed of all the internal factors and forces of
an organization. The internal environment of an organization is within the
control of the marketer and he can change or modify the environment as per
the demand in the market and requirement of the business.
The following are the five factors that form the internal environment of
an organization. These factors are also referred to as five Ms of a business.
 Money
 Men
 Markets
 Materials
 Machinery
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All the components of the internal environment are as important as that of
the components of an external environment. However, the internal
environment factors are changed according to the change in the
external marketing components. For example, an organization is required
to upgrade its technology if new technology in the market is introduced.
The internal environment of an organization also includes the marketing

department, the sales department, the human resource department, and
the manufacturing department.
Components of the marketing environment – External:
The external marketing environment consists of all the external marketing

factors that exist outside the organization, and the marketer has little or
no control over the external marketing environment factors.
The external marketing environment can be divided into two categories,

such as microenvironment and the macro environment.
A. Micro-environment:
The microenvironment of a business consists of all the factors and forces

that are directly associated with the company. The micro components of
the external environment are also known as task environments.
The following are the various components of the micro environment:
1. Suppliers: Suppliers are an essential part of every organization. Suppliers

supply materials and all other types of resources required for the production
of products. A company can run its business successfully only if its
suppliers supply materials of good quality and on time.
2. Market intermediaries: Market intermediaries are the intermediary

parties that help a business to distribute its products in the market. The
market intermediaries can be wholesalers, retailers and distributors. All of
these market intermediaries represent the products of the company in the
market.
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3. Partners: Business partners are the business entities that conduct business
with organization. For example, ad agencies, banking/insurance cos, MR
organizations, brokers/transportation companies etc. A company is required
to partner with several other companies to run a successful business.
4. Customers: Customers are the most crucial component of the business.

Customers are the target audience of the product and the preference of
customers influences all the marketing and business efforts of a company.
5. Public: The public is people other than the target audience of the

organization. The public plays a vital role in the success of the business as it
can build or destroy the image of a company in the market. The public has
the power to influence the purchasing decision of the target audience.
6. Competitors: The last but not least component of the microenvironment

is the competitors of a business. The competitors are the other businesses
that sell similar products as your products or are part of the same strategic
group in the industry.
B. Macro-environment: PEST/PESTEL analysis:
Macro components of a marketing environment consist of all external

forces and factors that impact the whole industry rather than just
changing an organization directly. Therefore, the macro marketing
environment is also referred to as a large environment.
The following are the six components of the macro environment. Let us
learn about them one by one.
1. Technological environment: Technology is one of the elements that have

great potential to influence the business of an organization. It is dynamic, as
it changes rapidly. Technology provides several threats and opportunities to
the business environment. The technological environment consists of R&D
in technology, innovation, inducement of technology and technical
alternatives, etc.

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2. Demographic environment: The demographic environment component
of the macro marketing environment consists of people that form a
market. The population of the demographic environment can be
characterized based on various factors such as age, gender, density, size,
location, race and occupation, etc. The demographic environment is a
crucial component for business as the company design and builds its
products based on the characteristics of the demographic environment.
3. Social-cultural environment: The social-cultural component of a macro

environment is formed using values, lifestyle, culture, beliefs and
prejudices of the target audience of a business. The social-cultural
environment varies from one region to another region. People living in one
area might prefer a different type of product than the preference of the
product of the people of any other region. Businesses are required to have
in-depth knowledge of the social-cultural environment to design a product or
service that is preferred by most people.
4. Economic environment: The economic environment component is a type

of component that influences all industries. The economic environment
affects the purchasing power and spending patterns of the buyers. The
following are the different factors that form an economic environment.
 Interest Rates, Gross Domestic Products (GDP)
 Gross National Product (GNP), Inflation
 Subsidies, Income distribution
 Government funding, Other significant economic variables.
5. Political-legal environment: The political-legal environment consists of

laws and policies of a country. In addition to rules and procedures, the
political-legal environment also includes agencies and pressure groups. All
of these political entities impact the working capacity of the industry in
society.
6. Physical environment: The last component of the macro environment is

the physical environment in which an organization exists. The following are
the components of the physical environment:
Climate/Pollution, Environmental change, Availability of the raw material.

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Examples of the marketing environment - Internal:
The best example of an internal marketing environment is the office

culture of the organization. Your office culture consists of the values,
beliefs and attitudes of your employees. All of these factors determine how
the employees of your organization will behave. For example, in an
organization where employees are encouraged to perform in a team and
support the members of the group are more likely to perform better
than the organization where employees compete with one another.
Moreover, employees are likely to perform better in a positive internal

marketing environment rather than an environment where employees are
nagged continuously and pressured to perform well. Google is one of the
best companies that provide a positive and very healthy internal
environment to its employees. Because of this, Google is now one of the
leading companies in the industry.
Examples of the marketing environment - External:
A macro marketing environment does not affect an organization directly

but affects the whole industry. An organization is required to perform its
business operations according to the macro-environment factors. The
examples of the macro-environment are demographic environment, social-
cultural environment, economic environment, political-legal environment,
physical environment, and technological environment, etc.
The business operations of an organization are controlled by the laws

and policies decided by the government. In addition to this, the
technological environment influences the business environment more
than any other macro-environment factor. A business is required to
upgrade the technology that it uses for business operations from time to time
in order to stay ahead in the competition.
The technological environment has both advantages and disadvantages for

an organization as an organization is always required to think of innovation
to compete with its competitors. On the other hand, it is also costly for an
organization to update its technology regularly.
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Importance of marketing environment:
The marketing environment holds great importance when it comes to

conducting business successfully. Businesses of all size, whether small or
large, or required to do their business within the marketing environment.
The existence of the company, its profits and its losses largely depends on
the internal as well as the external environment around it. Therefore, it
becomes essential for a marketer to understand and study the marketing
environment thoroughly to generate profits and stay in business for a
more extended period.
Let us understand why the understanding and knowledge of the marketing

environment is necessary to run a successful business.
 To learn about your competitors: A business needs to learn about its

competitors to stay ahead in the competition. Different companies fight
for a single opportunity in a niche market using different strategies.
 To learn about your customers: Customers are an essential part of a
business. All the business activities of a company are focused on serving
its customers better. Therefore, a company gives great importance to
learn about their customers and their changing preferences to serve them
better and to have a long relationship with them. The marketing
environment helps marketer understand customers and their preferences.
 Necessary for future planning: A business is required to plan to
meet the demand of the market and produce as per the latest trends in the
market. It is essential to learn about the internal and external
environments to plan efficiently.
 To make most out of the latest trends: Trends change rapidly, and
the change is rapid in fashion and other similar industries. Companies
that are part of such industries are required to keep a check on the
changing trends. To do this, they learn about every aspect of the
marketing environment so that they can prepare a foolproof plan for the
future.
 To learn about all the threats and opportunities related to
business: The marketer can take advantage of being a first-mover if he
knows the opportunities/threats related to the business to stay
safe/profitable.
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Chapter 7.1: Concept & Bases for market segmentation
Definition:
A market consists of all such people who have the willingness to buy and the
capacity to buy a product or service. The market for a product or service
is generally heterogeneous father than the homogeneous mass of
customers.
Each potential buyer has individual needs and desires, and specific
circumstances that influence his/her purchasing and consumption behavior.
If the firm attempts to cater to the local market, its limited resources might
be frittered away. At the same time, it would be highly inefficient to tailor
the marketing program to each specific customer. The firm can develop a
marketing program for each relatively homogeneous and meaningful
segment of the total market.
Some firms attempt to appeal to the total market. This practice is known as
“Undifferentiated Marketing” or the “Total Market Approach”. For
example, producers of petrol usually attempt to serve the total market. This
approach offers economics of scale due to product standardization and large
sales volume.
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When one product can serve most or all of the market, this approach is
appropriate. When one homogeneous product will not satisfy the total
market, segmentation is appropriate. Developing a different offering for each
segment of the total market is called “Differentiated Marketing”. An initial
policy decision in mktg is whether or not to practice market segmentation.
Concept:
The process of dividing the total heterogeneous market for a product or

service into sub-markets or segments, each of them being homogeneous
in all significant aspects, is known as market segmentation.
According to William Station, market segmentation is, “the process of

taking the total heterogeneous market for a product or service and
dividing it into several markets or segments, each of which tends to be
homogeneous in all significant respects.” For example, the total market
for ready-made garments may be divided into segments like kids, teenagers,
ladies and gents.
Market segmentation is based on the fact that a market is composed of

different buyers who respond differently to the same marketing
program. Therefore, all the potential customers are grouped into sub-groups
so that each sub-group is different from others but all customers in a
particular sub-group have by and large similar characteristics.
Market segmentation is customer-oriented philosophy. It is a technique of

recognizing effectively the differences among customers. It is well-tested
system for guiding marketing strategy. It enables a bank (or any other
organization) to offer specialized services and need-based (user- oriented)
schemes for optimum deployment of funds.
The basic aim of market segmentation is to identify the varying and

specific needs of different types of customers so that appropriate mix of
products/services may be designed and offered to satisfy different types
of customers. In this age of intense competition for the mass market,
individual sellers can prosper by serving specific market segments in a
creative manner.
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The process of market segmentation involves the following steps:
 Identify the total market (those who buy or may be induced to buy the
product or service under consideration).
 Divide the total market into its major sub-markets or segments.
 Estimate the sales potential and profit potential for each sub-market.
 Determine the unique characteristics and requirements of each sub-
market.
 Select one or more segments on which the firm will focus on serving.
Bases for market segmentation
Segmentation bases are the characteristics marketer uses to separate an

audience into groups, or segments, that can be targeted with specific
marketing efforts.
These bases help the marketer better understand how consumers are
similar yet different from one another, which helps inform a
segmentation strategy and analysis.
Understanding segmentation bases in marketing is the first step in

creating a segmentation strategy that creates beneficial results for your
business and customers.
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Segmentation bases in marketing:
A segmentation base is a specific way of categorizing or grouping people

that has been proven to lead to greater responsiveness to marketing efforts.
It's an extremely useful but often overlooked aspect of an effective global
marketing strategy. Many companies ignore segmentation and risk losing
huge returns on their marketing campaigns.
Understanding segmentation bases helps your company develop

campaigns that connect to customers and generate results. You become
better positioned to create campaigns that outperform your competitors.
To achieve this, you need a solid understanding of the different types of

market segmentation and why each is useful for improving your marketing
results.
Benefits of segmentation in marketing:
The main benefit of segmenting as a marketing effort is it allows you to

apply different strategies to specific audience groups depending on what
they're looking for, the issues they face, or what they love doing.
This means better engagement with your target demographic. When

applied effectively, segmentation allows you to be more relevant to your
audience and helps you create more value.
This is because segmenting your market forces you to look at how your
product or service fits into your customers' lives. You can then communicate
that by appealing to their needs to influence their behavior without feeling
like you're imposing on them.
An added benefit of marketing segmentation is that it creates brand

advocacy and loyalty, eg. word-of-mouth support. Marketing
segmentation also allows you to appeal to a broader audience by giving
your product more versatility and personality. It also helps you reduce
costs by focusing on reaching fewer people overall but making sure each
one of them is engaged with your brand.
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Chapter 8.1: Types of market segmentation
Why use market segmentation?
The goal of market segmentation is to develop detailed profiles of each

market segment. Once these segments are clearly defined, marketers
choose the segments with the highest potential of buying their products
and services.
To achieve that goal, marketers go through a three-step process that

clarifies who people are and why they buy products.
 Segmentation: Marketers divide the market into categories based on

shared traits.
 Targeting: They choose the market or target, who are most likely to
buy their products.
 Positioning: Marketers research what product, price, promotion, and
place combinations will attract customers to buy their products.
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Sounds easy? Large companies spend huge amounts researching markets to

find the right target market that will increase a successful product's chances.
Each market will likely have other companies who sell similar products, so
research on competitors and their products is essential.
Once marketers isolate their target audience, they must define what is
different about their product? Is it better, faster, cheaper, or more advanced
than competitive products? To answer that question, marketers should
understand their target audience's problems and how they can creatively
solve those problems.
Companies create a competitive advantage for themselves through product

differentiation, helping their products and services stand out as solutions for
buyers’ issues.
5 types of market segmentation:
There are many ways to segment markets to find the right target audience.
Basically, there are five ways to segment markets that include
demographic, psychographic, behavioral, geographic, and firmographic
segmentation.
 Demographic segmentation:
Demographic segmentation assumes that people with common

characteristics will have similar lifestyle patterns, tastes, and interests
that will influence their purchasing habits. Demographics are often
combined with other segmentation approaches to develop target markets
with the greatest likelihood of buying their products.
Demographics include factors like age, gender, occupation, income, and

education. Surveys are one way to collect demographic information and
may consist of these questions:
 What is your age?

 What is your household income?
 What is your highest level of education?
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 How many members are in your household?

 What gender do you identify as?
 Do you own or rent your home?
 In what zip code is your primary residence?
 Are you married/divorced/single?
 What is your nationality/race?
 How many children do you have?
The advantage of demographic segmentation is that it is easy to collect.

Government sources, including the Bureau of Labor Standards, provide
household, income, education, and health data for marketing strategy and
business goals. Companies have also developed apps that track more
granular demographic data for contact tracing and travel patterns. Surveys
also reveal the specific demographics of a target market instead of available
research data sources and uncover actionable insights.
After using demographics for market segmentation, marketers can use this
same information for customer segmentation. Using demographics and
behaviors, they can identify:
 How big the market opportunity is for their product.

 How their brand compares to the competition.
 Which demographics are most likely to buy our product or service.
 Which advertising campaigns will resonate best with their target
market.
When combined with behavior traits and other variables, demographic

segmentation provides valuable insights to understand which specific
customers within their target market will buy products and better understand
how to reach them with the right marketing messages.
 Psychographic segmentation:
Psychographic segmentation divides people into groups based on their

personality, lifestyle, social status, activities, interests, opinions, and
attitudes. Psychographics is an excellent complement to demographics
because they identify the motivations behind why people make particular
choices.
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Companies use psychographics for market segmentation to understand:
 How consumers perceive their products and services

 What consumers really want—and why
 Gaps or pain points with their current products or services
 Opportunities for future engagement
 How to better communicate with their target audience
Marketers collect psychographic info’ using 3 types of survey questions:
 Open-ended questions that use a qualitative approach include a

question like, “What is your biggest challenge with…” will provide a
deeper understanding of the respondent's problems.
 Likert scale questions show how much the respondent agrees or
disagrees with a statement, like “strongly agree” to “strongly disagree,”
letting marketers know how important the topic is to them.
 Semantic differential scale questions ask people to rate a product,
brand, company, or other attributes, helping marketers understand their
attitude.
 Behavioral segmentation:
Behavioral market segmentation describes specific steps in their ideal

customer’s buying process, including what their ideal customers want,
why they want it, the benefits sought, and how they go about getting
their needs met.
Behavioral segmentation is used to study B2C and B2B market segments.

When companies understand why people buy, they can better target their
marketing messaging. Behaviors can include:
 Purchasing reason: Are buyers searching for the best price, excellent

ratings, safety considerations, or other criteria? What problem are they
trying to solve?
 Occasion or event: Are consumers buying for a holiday or
anniversary? Are B2B buyers trying to use up their budget before year-
end?
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 Product benefits: Is the buyer looking to purchase the latest
technology, safest product, or be the first to buy the newest product?
 Buyer’s journey stage: Does the buyer want information for a future

purchase? Or are they looking to try out the brand for the first time?
 Engagement level: Is the buyer a die-hard fan looking for the latest
product?
These are a few of the behaviors that buyers exhibit when they are
purchasing products. When marketers know why consumers or businesses
are buying their products, they can make it part of their marketing strategy to
address those behaviors.
 Geographic segmentation:
Geographic segmentation allows marketers to group people based on

where they live, work, or travel. The location has a significant influence on
buying habits that marketers can use to develop their marketing messages.
Marketers use various geographic segmentation variables that include

the country, region, state, province, town, climate zone, or zip code.
Culture and population density (urban or rural) are also crucial variables to
include in their market research. These location variables will influence
what problems people have in that region & how marketers can solve it.
 Firmographic segmentation:
Firmographic segmentation is to B2B marketers what demographics is for

B2C marketers. Firmographics explain their business target market
characteristics and include their industry, number of employees, legal status,
company size, financial standing, and other business-related variables.
A B2C market may have thousands of customers, but a B2B target market
may have only a few large commercial companies in their target
market. Firmographics provide information for marketers who want to
understand companies' strengths and viability within their target
market. They focus on their financial performance and growth trends to see
if the market segment is growing or experiencing a decline.
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Firmographic data is available through online sources like federal and state
government websites, trade journals, and other industry sources. Marketers
also use surveys to collect specific data about their B2B target market.
Firmographic data examples include:
 Industry classification: Industry Classification System code.

 Ownership/Legal Status: Ownership status, including
proprietorships, limited liability corporations (LLCs), limited liability
partnerships, private corporations, and public shareholder-owned
corporations.
 Years in business: Years in business can be an indicator of financial
strength and industry experience.
 Number of employees: The number of employees shows how large
the company is.
 Location: Locations may include offices, mfg plants, or stores.
 Customers and products: What products the company makes or sells
and who their target audience is.
 Market size: How large is their market, and who are their
competitors.
Why use segmentation:
Why should companies use the market segmentation process and focus on
how to solve customer problems? According to research, over 30,000 new
products are launched each year, and 95% of them fail. By identifying a
target market, isolating their problems, and creating a product that solves
those problems, marketers have a higher probability of success over their
competitors.
Market segmentation examples:
Companies use different approaches to segment their markets. Here are

three examples:
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 No segmentation: Companies use mass marketing to sell their
products to everyone, using an undifferentiated strategy. For example,
commodities like salt or generic items with many substitutes may not
spend much effort segmenting their market.
 Few segments: Firms may use one or more narrowly defined target
markets to create a highly focused niche market for specialized products.
Example: exclusive high fashion apparel/handmade art/machinery parts.
 Thousands of segments: Known as hyper-segmentation, marketers
can customize a one-to-one marketing approach for each customer to
develop a long-term relationship. For example, personalized services like
hair salons and online retailers like Amazon offer personalized
recommendations based on purchase history.
Other types of segmentation:
 Volume segmentation: Consumers are classified light, medium and

heavy users of a product. In some cases, 80 per cent of the product may
be sold to only 20 per cent of the group. Marketers can decide product
features and advertising strategies by finding common characteristics
among heavy users. For example, airlines having ‘Frequent Flyer’ are
using user rate as the basis of market segmentation.
 Product-space segmentation: Here the buyers are asked to

compare the existing brands according to their perceived similarity
and in relation to their ideal brands. First, the analyst infers the latent
attributes that consumers are using to perceive the brand. Then buyers are
classified into groups each having a distinct ideal brand in mind. The
distinctive characteristics of each group are ascertained.
 Benefit segmentation: Consumer behavior depends more on the

benefit sought in product/service than on demographic factors. Each
market segment is identified by the major benefits it is seeking. Most
buyers seek as many benefits as possible. However, the relative
importance attached to individual benefits differs from one group to
another. For example, some consumers of toothpaste give greater
importance to freshness while others prefer taste or brightness of teeth.
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Market segmentation is the first step for successful product marketing.
Whether companies are marketing to consumers or businesses, market
segments help companies better understand their customers’ problems and
solve them.
Chapter 9.1: Effective segmentation criteria
Market segmentation is the act of dividing a broad consumer or business

market, normally consisting of existing and potential customers, into sub-
groups of consumers based on some type of shared characteristics. It is the
process of dividing the market of potential customers into groups, or
segments, based on different characteristics. The segments created are
composed of consumers who will respond similarly to marketing strategies
and who share traits such as similar interests, needs, or locations.
There are a few criteria for an effective segmentation:
 Measurable and obtainable:
The size, profile and other relevant characteristics of the segment must be
measurable and obtainable in terms of data. It has to be possible to
determine the values of the variables used for segmentation with
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justifiable efforts. This is important especially for demographic and
geographic variables. For an organization with direct sales (without
intermediaries), the own customer database could deliver valuable
information on buying behavior (frequency, volume, product groups, mode
of payment etc).
 Relevant:
The size and profit potential of a market segment have to be large enough
to economically justify separate marketing activities for this segment. If
a segment is small in size then the cost of mktg activities cannot be justified.
 Accessible:
The segment has to be accessible and servable for the organization. That
means, the customer segments may be decided considering that they can
be accessed through various target-group specific advertising media
such as magazines or websites the target audience likes to use.
 Substantial:
The segments should be substantial to generate required returns.

Activities with small segments will give a biased result or negative results.
 Valid:
This means the extent to which the base is directly associated with the
differences in needs and wants between the different segments. Given that
the segmentation is essentially concerned with identifying groups with
different needs and wants, it is vital that the segmentation base is
meaningful and that different preferences or needs show clear
variations in market response to individually designed marketing mixes.
 Unique or Distinguishable or Differentiable:
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The market segments have to be that diverse that they show different
reactions to different marketing mixes. If not then there would have been
no use to break them up in segments.
 Appropriate:
The segments must be appropriate to the firm’s objectives and resources.

 Stable:
The segments must be stable so that its behavior in the future can be
predicted with a sufficient degree of confidence.
 Congruous:
The needs and characteristics of each segment must be similar otherwise the
main objective of segmentation will not be served. If within a segment the
behavior of consumers are different and that they react differently, then
a unique marketing strategy cannot be implemented for everyone. This
will call for a further segmentation.
 Actionable or Feasible:
It has to be possible to approach each segment with a particular marketing

program and to draw advantages from that. The segments that a company
wishes to pursue must be actionable in the sense that there should be
sufficient finance, personnel and capability to take them all. Hence,
depending upon the reach of the company, the segments must be selected.
 Homogeneous:
The consumers allocated to each segment should be similar in some

relevant way. This is the basis of market segmentation that the consumers
in each segment are similar in terms of needs and characteristics.
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 Heterogeneous:
Each segment of consumers should be relatively unique, as compared to

the other segments that have been constructed. This demonstrates that the
consumers in the overall market have been effectively divided into sets of
differing needs.

Some general considerations:
Apart from the above-mentioned characteristics, the segment must have

some other features:
 Growth potential
 Profitable
 Less risk prone
 Less competition intensive
Combining multiple bases for segmentation:
Marketers may find it most useful to combine different bases for

segmentation in order to create a richer picture of their target market.
For example, a “geo-cluster” approach combines demographic data with

geographic data to create a more accurate profile of a specific
consumer.
Geographic data combined with behavioral data can point companies

toward locations where customers are clustered who demonstrate
behaviors that make them a good target for a company’s product.
Overlaying demographic data onto lifestyle or behavioral segments

helps marketers understand more about their target customers and how
to reach them effectively with the marketing mix.
Any of these approaches may be the “right” approach for a given company
and product set.
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It is also important for marketers to continually evaluate what’s
happening in their target market and to adjust their segmentation
approach as customer attitudes, behaviors, and other market dynamics
evolve.

Chapter 10.1: Concept of target market
What is a Target Market?
A target market is a group of people with some shared characteristics

that a company has identified as potential customers for its products.
Identifying the target market informs the decision-making process as a
company designs, packages, and markets its product.
A target market may be broadly categorized by age range, location,

income, and lifestyle. Many other demographics may be considered. Their
stage of life, their hobbies, interests, and careers, all may be considered.
Understanding Target Markets:
Few products today are designed to appeal to absolutely everyone. Part

of the success of selling a good or service is knowing to whom it will
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appeal and who will ultimately buy it. Its user base can grow over time
through additional marketing, advertising, and word of mouth.
That's why businesses spend a lot of time and money to define their
initial target markets, and why they follow through with special offers,
social media campaigns, and special advertising.
In simple words, not all products can be consumed by all customers and
each product has a different set of consumers who want to purchase the
product. In order to attract a particular segment of the market, the
company at times, modifies the product accordingly.
Creating the target market involves conceptualizing the product,

understanding the need of the product in a market, studying its target
audience etc. Target marketing would revolve around deploying
marketing techniques for a particular segment of markets which could
be the key to attract new customers, expand business opportunities across
geographies and expand distribution network to widen the reach.
There are various steps involved in defining the target market:
 The first is to understand the problem of a customer whom you

are addressing. Once it is done, the customers can be identified who are
interested in that product. For example, you make water purifiers – so
you address the problem of contaminated water quality. We know that
farm houses do not have a regular water connection and the water they
get from underground is hard. So, there is a wide opportunity for water-
purifier makers to enter into this segment and tap the market.
 The next step is to understand your customer according to the

region, income level, etc. Always think about the market, know your
competition and the pricing of the product. It will help you in creating a
benchmark.
Segmenting the market:
Dividing a target market into various segments is as simple as dividing the

population into groups that can be measured by key characteristics. These
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include gender, age, income level, race, education, religion, marital status,
and geographic location.
Consumers with the same demographics tend to value the same products and
services, which is why narrowing down the segments is one of the most
important factors to determine target markets.
For example, people who fall into a higher income bracket may be more
likely to buy specialty coffee from Starbucks instead of Café coffee Day.
The parent companies of both of these brands need to know that in
order to decide where to locate their stores and where to stock their
products.

A business may have more than one target market—a primary target
market, which is the main focus, and a secondary target market, which is
not as large but still has growth potential. Toy commercials are targeted
directly to children. Their parents are the secondary market.
Target Market and Product Sales:
Identifying the target market is an essential part of a product

development plan, along with manufacturing, distribution, price, and
promotion planning.
The target market determines significant factors about the product

itself. A company may tweak certain aspects of a product, such as the
amount of sugar in a soft drink, so that it appeals more to consumers in its
target group.
As a company’s product sales grow, it may expand its target market to

other regions/globally. The international expansion allows a company to
reach a broader subset of its target market in other regions of the world.
In addition to international expansion, a company may find its domestic

target market expands as its products gain more traction in the
marketplace. Expanding a product's target market is a revenue opportunity
worth pursuing.
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How detailed should a Target Market be?
It depends. Broadly speaking, a product may be designed for a mass

market or a niche market, and a niche market can be a very small group
indeed, especially in its early introductory phase.

Most carbonated beverages may aim for a practically universal market:
 Coca-Cola branched out to 200 markets abroad to grow its customer

base
 Gatorade is owned by Pepsi-Cola, but this brand is positioned as a
drink for athletes.
 The soda brand Poppi, which is branded as a "Healthy, Sparkling, Pre-
biotic Soda with Real Fruit Juice, Gut Health, and Immunity Benefits," is
clearly aimed at a younger, healthier, and more trend-conscious target
market.
What is an example of a Target Market?
Consider a casual apparel company that is working to build its distribution

channels abroad. In order to determine where its apparel will be most
successful, it conducts some research to identify its primary target market. It
discovers that the people most likely to buy their products are women
between the ages of 35 and 55 who live in Switzerland.
It's only logical for the company to focus its advertising efforts on
Switzerland-based websites that appeal to women.
But first, the company may consider how its apparel can be most attractive
to that target market. It may revise its styles and colors and tweak its
advertising strategy to optimize its appeal to this new prospective market.
What is the purpose of a Target Market?
A target market defines a product as well as vice versa.
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Once a target market is identified, it can affect a product's design,
packaging, price, promotion, and distribution.
A product aimed at men won't be packaged in pink plastic. A luxury

cosmetic won't be sold at a pharmacy. An expensive pair of shoes comes
with a branded cloth drawstring bag as well as a shoebox. All of those
factors are signals to the target audience that they have found the right
product.
Chapter 11.1: Evaluating & selecting target markets
How are target markets evaluated?
The selection of target markets involves the examination of various aspects

and measures of a market segment in comparison to the firm’s goals and
resources.
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Typically the firm assesses whether this particular target market
logically fits with the firm’s strategic direction, whether it is the best use
of its resources (opportunity cost), and to what degree with a firm be able
to successfully compete in the segment.
Target market selection is a very important decision for an organization as

it is an integral part of their marketing strategy. As consequence, firms will
typically adopt a fairly analytical approach to target market selection
and will usually use to set criteria to evaluate and assess each market.
The target market selection process: As can be seen in the STP process, the
selection of target markets occurs after a number of important steps:
 Firstly, the organization defines the product/market that they are

interested in, they then group consumers into different market segments
using a variety of segmentation bases/variables.
 After the segments have been validated, segment profiles are
developed.
 Then, using the information in the segment profile, the target potential
target markets are evaluated and selected, most likely by using an
established model or other set of minimum requirements.
Evaluating and selecting market segments:
In evaluating market segments, the firm must look at two factors:
 The segment’s overall attractiveness and the company’s objectives

and resources. How well does a potential segment score on the five
criteria? Does it have characteristics that make it generally attractive,
such as size, growth, profitability, scale economies, and low risk?
 Does investing in it make sense given the firm’s objectives,
competencies, and resources? Some attractive segments may not mesh
with the company’s long-run objectives, or the company may lack one or
more competencies necessary to offer superior value.
Marketers have a range or continuum of possible levels of segmentation that

can guide their target market decisions. At one extreme is a mass market of
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essentially one segment; at the other extreme are individuals or segments of
one person each. In between are multiple segments and single segments.
Full market coverage:
Here a firm attempts to serve all customer groups with all the products they
might need. Only very large firms such as Microsoft (software market) and
Coca-Cola (nonalcoholic beverage market) can undertake a full market
coverage strategy, through either differentiated or undifferentiated
marketing.
In undifferentiated or mass marketing, the firm ignores segment

differences and goes after the whole market with one offer. It designs a
marketing program for a product with a superior image that can be sold to
the broadest number of buyers via mass distribution and mass
communications.
Undifferentiated marketing is appropriate when all consumers have

roughly the same preferences and the market shows no natural
segments. The narrow product line keeps down the costs of research and
development, production, inventory, transportation, marketing
communication, and product management. However, many critics point to
the increasing splintering of the market and the proliferation of marketing
channels and communication, which make it difficult and increasingly
expensive to reach a mass audience.
In differentiated marketing, the firm sells different products to all the

different segments of the market. Differentiated marketing typically
creates more total sales than undifferentiated marketing. However, it
also increases the costs of doing business. Because differentiated marketing
leads to both higher sales and higher costs, no generalizations about its
profitability are valid.
Multiple-segment specialization:
With selective specialization, a firm selects a subset of all the possible

segments, each objectively attractive and appropriate. There may be little
or no synergy among segments, but each promises to be a moneymaker.
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The multi-segment strategy also has the advantage of diversifying the
firm’s risk. Keeping synergies in mind, companies can try to operate in
super-segments rather than in isolated segments. A super-segment is a set
of segments sharing some exploitable similarity. A firm can also attempt
to achieve some synergy with product or market specialization.
 With product specialization, the firm sells a certain product to

several different market segments. A microscope manufacturer, for
instance, sells to university, government, and commercial laboratories,
making
different instruments for each and building a strong reputation in the

specific product area. The risk is that the product may be supplanted by
an entirely new technology.
 With market specialization, the firm concentrates on serving many

needs of a particular customer group, such as by selling an assortment
of products only to university laboratories.
The firm gains a strong reputation among this customer group and
becomes a channel for additional products its members can use. The risk
is that the customer group may suffer budget cuts or shrink in size.
Single-segment concentration:
With single-segment concentration, the firm markets to only one

particular segment. Through concentrated marketing, the firm gains
deep knowledge of the segment’s needs and achieves a strong market
presence.
It also enjoys operating economies by specializing its production,

distribution, and promotion. If it captures segment leadership, the firm can
earn a high return on its investment.
A niche is a more narrowly defined customer group seeking a distinctive

mix of benefits within a segment. Marketers usually identify niches by
dividing a segment into sub-segments.
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What does an attractive niche look like?
Niche customers have a distinct set of needs; they will pay a premium to
the firm that best satisfies them; the niche is fairly small but has size, profit,
and growth potential and is unlikely to attract many competitors; and it gains
certain economies through specialization.
As marketing efficiency increases, niches that seemed too small may

become more profitable.

Chapter 12.1: Concept of positioning
Definition:
Positioning defines where your product (item or service) stands in

relation to others offering similar products and services in the
marketplace as well as the mind of the consumer.
Description:
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Positioning is a marketing concept that outlines what a business should
do to market its product or service to its customers. In positioning, the
marketing department creates an image for the product based on its
intended audience. This is created through the use of promotion, price,
place and product.
The more intense a positioning strategy, typically the more effective the
marketing strategy is for a company.
A good positioning strategy elevates the marketing efforts and helps a buyer
move from knowledge of a product or service to its purchase.
A good positioning makes a product unique and makes the users

consider using it as a distinct benefit to them. A good position gives the
product a USP (Unique selling proposition). In a market place cluttered
with lots of products and brands offering similar benefits, a good
positioning makes a brand or product stand out from the rest, confers it
the ability to charge a higher price and stave off competition from the
others.
A good position in the market also allows a product and its company to ride
out bad times more easily. A good position is also one which allows
flexibility to brand or product in extensions, changes, distribution and advtg.
What is market position?
In marketing and business strategy, market position refers to the

consumer’s perception of a brand or product in relation to
competing brands or products. Market positioning refers to the process
of establishing the image or identity of a brand or product so that
consumers perceive it in a certain way.
For example:
 A car maker may position itself as a luxury status symbol.

 A battery maker may position its batteries as most reliable & long-
lasting
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 A fast-food restaurant chain may position itself as a provider of cheap
and quick standardized meals.
 A coffee company may position itself as a source of premium upscale
coffee beverages.
 A retailer might position itself as a place to buy household necessities
at low prices.
 A computer company may position itself as offering hip, innovative,
and use-friendly technology products.
The positioning of a brand or product is a strategic process that

involves marketing the brand or product in a certain way to create and
establish an image or identity within the minds of the consumers in the
target market.
Market positioning of a brand or product must be maintained over the life of

the brand or product. Doing this requires ongoing marketing initiatives
intended to reinforce the target market’s perceptions of the product or brand.
Repositioning:
Repositioning a brand or product means altering its place in the minds of

the consumer, or essentially changing the brand’s or product’s image or
identity. When you are repositioning, or trying to change the consumers’
perception of a brand or product, after it has already been solidified, may
confuse or alienate consumers in the target market.
For example, if a premium luxury car maker suddenly slashed the prices of

its vehicles and began selling them at the same prices as cheaper brand-name
vehicles, consumers would no longer perceive the vehicles from luxury car
maker as prestigious status symbols, though features may remain
unchanged.
Target market analysis:
The best start for any positioning analysis is gaining a thorough

knowledge of a product or service's target market. This is the group of
people or businesses that will best benefit from the use of the product or
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service. With a good idea of the wants, needs and interests of a product or
service's target market, the marketing team develops a positioning statement.
Positioning in advertisements:
Advertisements are usually the first places businesses position themselves. A

cosmetics marketing department, for example, must determine who they are
targeting and what consumer need is being met. If the intended target is
African American teenagers, what type of need should the cosmetics fill? If
the cosmetics line is trying to help teenage girls overcome acne issues, the
person in the ad might be one of a younger African American physician who
teaches girls how to battle acne with the use of these cosmetics. To note the
importance of positioning, this same type of advertisement might not work if
the intended audience of the cosmetics line was older Caucasian women
trying to look younger.
Positioning in sales locations:
Reaching the customer is not simply a matter of advertising; it is also a

matter of choosing the right channels for distribution. If a majority of your
target market lives in an urban area with only public transportation available
to them, having your product in rural areas where a private automobile is
needed for transport would not equal sales success. Place or position your
product or service as close to the target market as possible. Create similar
advertisements in store as the ones seen out of store to create an overall
identity for your brand.
Positioning through price:
It should be noted that there is a large amount of research on the psychology

of pricing in marketing. Simply put, the price of an item tells the buyer more
about the item than most realize. Many associate a higher price with higher
quality and the opposite with a lower price. Additionally, if a product is
positioned as a good alternative to high-priced brands, the marketing
department must price it in the middle of the market to avoid a comparison
to the cheapest end of the spectrum.
The main points that you should remember are:
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 Positioning is the final part of the STP process.
 Positioning is undoubtedly one of the simplest and most useful tools
to marketers.
 Positioning is all about ‘perception’. As perception differs from
person to person, so do the results of the positioning map e.g. what one
perceives as quality, value for money in terms of worth, etc, will be
different to any other person’s perception. But there will be similarities in
certain cases.
 After segmenting a market and then targeting a consumer, next step
will be to position a product within that market. It refers to a place that
the product offering occupies in consumers’ minds on important
attributes, relative to competing offerings. How new and current items in
the product mix are perceived, in the minds of the consumer, therefore re-
emphasizing the importance of perception!!
 New product needs to communicate benefits.
Chapter 13.1: Positioning and differentiation strategies
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Before we move on to the different types of differentiation strategies, let’s
recap:
 Positioning is the place you hold in the mind’s eye of your target
audience.
 Differentiation is how your firm is different or stands out from your
competitors on a non-price basis.
From a marketing perspective, this is important, particularly for professional

service businesses whose average client might not know specifically what
the provider does.
Your ability to connect with an audience rests on positioning and

differentiation. If the way you present yourself and your services relates to
people on a one-to-one basis, the more likely it is they’ll feel emotionally
connected with your firm and do business with it.
Types of Differentiation Strategies:
A differentiation strategy is multi-pronged but can generally be

condensed into three steps:
 Identifying differentiating competitive advantages.

 Choosing the competitive advantages that will build the best position.
 Selecting a global positioning strategy.
Once completed, you must then effectively communicate your chosen

position to the market.
The right positioning strategy improves your brand’s visibility both online
and in the minds of your target audience. There are several approaches you
can take and rarely if ever is lowering your price one of them.
Here’s what is recommended instead:
 What features can be highlighted differentiating from your

competitors?
 What do you want to be known for?
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 What benefits does your service offer that the competition does not?
 What unique problems do your target audiences have only you can
solve?
 How do your services financially benefit clients if they act today?
 Are there additional services or features you can offer such as access
to complementary service firms?
Whatever it takes to make your firm stand out—and as long as it offers real
value—is what defines a good differentiation strategy.
How to choose a Differentiation Strategy:
It often happens you’ll need to choose between two similarly positioned

options. That’s where differentiation helps in the decision-making process.
For instance, on the surface the odds are good that two accounting firms can
meet similar needs of a targeted market segment. The differentiation
questions set out above help you drill down to discover why your firm is the
one they should choose.
What is Differentiation?
Differentiation is a marketing strategy companies use to make their

product unique to stand out from competitors. According to Michael
Porter, industry is less attractive when there are multiple substitutes. Thus,
companies continuously attempt to differentiate themselves from the
competitors. In order to practice differentiation, the company should
have a competitive advantage over similar competitors.
Differentiation strategy in marketing: A product or brand can be

differentiated based on a number of attributes such as:
 Features – Volvo
 Performance – Apple
 Timing – Domino’s
 Distribution – Coca Cola
 Experience – Starbucks
 Price – Ferrari
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Companies should be rich with resources that are unique and

imperfectly imitable (difficult to copy) in order to be successful in
differentiation. These resources are often a combination of strong brand
name, processes and human capital. Further, it takes a significant time for
a company to be successful in terms of differentiation due to the
commitment it requires.
What is the difference between Positioning and Differentiation?
Positioning vs Differentiation
Positioning is referred to Differentiation is a marketing
acquiring a space in the strategy companies use to make their
mind of the customer. product unique to stand out from
competitors.
Use
Positioning is a technique Differentiation strategy is adopted by some
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used by all companies companies.
based on specific criteria.
Success
Success of positioning Success in differentiation depends on
strategy depends on the company’s competitive advantage based on
nature of the market internal resources.
conditions.
Types of Differentiation Strategy:
There are two types of differentiation strategy. They are;
 Broad Differentiation Strategy

 Focused Differentiation Strategy.

A “broad differentiation strategy” is adopted by a company to be ‘unique

to a wide range of customers’. In this case, ‘a large number of customers’ is
the focus, and those customers consider the differentiation valuable to them.
For example, a cement company is offering its product to a broad market
with the brand name.
On the other hand, a differentiation strategy is called a focused

differentiation study when the company divides its market into several
small segments (niche) and then offers a product design for each market
second segment.
For example, cola companies follow of focused differentiation strategy in

that it offers normally bolted cola, canned cola, and diet-cola for
differentiation of different segments.
Popular differentiation strategies:
 Innovation/Invention: Ex: Apple & Google

 Product-level differentiation strategy: Ex: Tourism companies
 Price differentiation strategy: Ex: Big Bazaar, Micromax appliances
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 Branding: Ex: Coca Cola, BMW
 Packaging: Ex: Tropicana juice in tetrapack, Goodlife milk
 Service - pre sale and post sale: Ex: Ikea
 Point of customer interaction: Ex: Wal-Mart
 User convenience: ATMs of banks
 Offer variety of products: Ex: P&G, Unilever
Summary – Positioning vs. Differentiation:
The difference between positioning and differentiation mainly depends on

whether the company focuses on managing and promoting the company’s
products and brand with the intention of acquiring a space in the mind of the
customer (positioning) or offering a unique product that has very limited
substitutes (differentiation). In the process of this, the company should
ensure that the intended positioning and differentiation strategies are
communicated to the customers effectively in order to obtain intended
results.
Module 2: Product decisions
Chapter 14.1: Concept and classifications of products
Concept of products
A product is what a seller has to sell and what a buyer has to buy and it
satisfies the needs of customers. Customers purchase products because they
are capable of realizing some benefits to them. A marketer can satisfy the
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needs and wants of his customers by ‘offering something’ in exchange for
money. And this ‘offering’ is basically a product. The product is one of the
important elements of the 4Ps of the marketing mix. It consists of a bundle
of tangible and intangible attributes that satisfies consumers.
Product is an important component in marketing-mix. Other elements of

marketing-mix i.e. price, promotion and place are complementary to it.
A product is central to the marketing operations in an organization. Most of
the time product fails not because of poor quality but because they fail
to meet the expectations of the customers.
It is not just a bundle of physical attributes, but a bundle of perceived

benefits which satisfy consumer’s needs. Hence, utmost care should be
taken to handle product decisions. A bad product not only generates bad
name for the firm but also affects negatively the price set for the product,
dissuades the channel members and reduces the believability of the
promotional measures.
From the above definitions, it is clear that product has the want satisfying
attributes which drive a customer to purchase the product. It is nothing but a
package of problem solving devices and is something more than a physical
product. This is because a product encompasses a number of social and
psychological attributes and other intangible factors which provide
satisfaction to the consumer.
Products can be anything. It can be physical product (e.g. fan, cycle etc.),
service (e.g. haircuts, property deals etc.), place (e.g. Agra, Delhi etc.),
person (e.g. Late M.F. Hussain etc.), Organization (e.g. Helpage India) and
idea (e.g. Family Planning, safe driving etc.).
Product refers to a good or service that satisfies the needs and wants of
customers. It is offered in the market by an organization to earn revenue
by meeting the requirements of customers. Product is an asset of an
organization and referred as the backbone of marketing mix.
Features of a product:
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 Tangibility: Products are tangible in nature, customers can touch, seen
or feel a products. For example, car, book, computer etc.
 Intangible attributes: Service products are intangible in nature,
services like, consultancy, banking, insurance etc. The product may be
combination of both tangible and intangible attributes like restaurants,
transportation, in case of a computer it is a tangible product, but when we
will talk of its free service provided by dealer, then the product is not
only a tangible item but also an intangible one.
 Associated attributes: The attributes associated with product may be,
brand, packaging, warranty, guarantee, after sales services etc.
 Exchange value: Irrespective of the fact that whether the product is
tangible or intangible, it should be capable of being exchanged between
buyer and seller for a mutually agreed price.
 Customer satisfaction: A product satisfies the customer needs and
wants of customers, value of products is also determined by the level of
satisfaction given by a product after purchase.
Characteristics of products
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It is critical for businesses to make sure that they have good services and
products to market. Obviously only then, they will be able to make their
target audience purchase from them and eventually earn profits.
In order to develop products that provide value to consumers, it is

important to understand the key consumer product characteristics.
Product Characteristics are features, attributes, or properties of a part,

component, or assembly. Examples include color, weight, dimensions,
surface finish, hardness, appearance, material composition, etc.
Key Consumer Product Characteristics:
Understanding the most important consumer product characteristics is the

key to providing superior consumer value.
These characteristics include the following points:
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1. Physical look: What does the product look like? One needs to be able to
describe the product in terms of its physical criteria, including color,
shape and size, in as much detail as possible. Obviously, this criterion must
be altered depending on the product and may only partly be applicable
to services.
2. Purpose: What is the purpose of the product and what will it do? This
should be as specific as possible because a potential consumer will need
to know how the product adds value. In what way does this particular
product make the life of the consumer easier, more fun, …?
3. Craftsmanship: The product needs to be made well. It should be

durable so that it will last. It should come with directions for use and
warranty information, if applicable. A consumer will need this
information to determine the total quality of the product.
4. Price: The price of a product is very important. A consumer wants to get

the very most for their money. A business needs to make sure that the
price is fair if they want to get their share of the market. Once they
figure out a decent price, they can work with sales, promotions and
discounts in order to entice customers to buy from them.
5. Comparing criteria: A business should be able to tell their potential

customers why their product is the best. It should try to find out as
much as possible about competitors and be able to state clearly why the
particular product is better than competitors’ offerings. This step is of
crucial importance in order to shape the USP and communicate the
superior value to consumers.
What are special product characteristics?
Special Pdt Characteristics are unique product-related characteristics

that can affect safety, regulatory compliance, appearance, function,
performance or subsequent product manufacturing.

They are the direct output of a given manufacturing operation. Some

companies call them Key Product Characteristics.
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Special Product Characteristics are a subset of the product
characteristics, and are designated by the company for highlighted
attention. They require follow up in the Process Control Plan and usually
have their own approval process.
Hiring help for shaping Consumer Product Characteristics:
Sometimes, a business may need assistance in knowing how to describe and

market the product. There are companies that specialize in helping
businesses determine their consumer pdt characteristics. Clearly defining
consumer product characteristics for every single product is a key to
success in the marketplace. A business must know its own product in as
much detail as possible from different angles. Likewise, it should know as
much as possible about competing products in the marketplace. With good
positioning and marketing, the business can communicate superior
consumer value and reach more consumers.
Classifications of products

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Understanding product classification is a key to uncovering the reasons
behind your consumers' general buying behaviors and how you can
better market your products as a result.
There are four types of product classification. Let's dive into each type, so
you can determine where your product falls.
What is product classification?
Product classification organizes products into four categories based

mostly on consumer buying behavior, similarity to competing brands,
and price range. Classifying products helps marketers develop strategies
that target consumers' specific needs.
Product classification in Marketing:
Knowing the classification of a product is vital when devising a

marketing strategy. Why? Well, it lets you know the mindset most
consumers have/behavior they exhibit when interacting with your pdt.
This knowledge arms you to devise an effective marketing strategy that will
meet your consumers where they are.
For instance, say your products fall under the "unsought goods"
classification, this means that you’ll likely need to take a more aggressive
marketing approach to reach consumers that may not have considered
your product or brand.
Think of charity organizations, life insurance companies, and funeral

homes. These are usually not top of mind for consumers. As such, these
brands must work a little harder to be visible to consumers and
highlight the benefits of their goods or services.
Shopping goods, on the other hand, are highly visible and very competitive.
Consumers typically spend time comparing quality, cost and value
before making a purchase. That’s why building brand loyalty is vital for
this product classification.
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As you can see, there are factors to consider for every classification of
product. The more familiar you are with consumer habits and beliefs for
that category, the more equipped you will be to market your product.
What are the four classifications of products?
 Convenience goods
 Shopping goods
 Specialty goods
 Unsought goods
There are four types of products and each is classified based on consumer
habits, price and product characteristics: convenience goods, shopping
goods, specialty products, and unsought goods.
1. Convenience Goods: Like the Colgate toothpaste example, convenience

goods are products that consumers purchase repeatedly and without
much thought. Once consumers choose their brand of choice, they
typically stick to it unless they see a reason to switch, such as an
interesting advertisement that compels them to try it or convenient
placement at the checkout aisle.
These products include chewing gum, toilet paper, soap, toothpaste,

shampoo, milk and other necessities that people buy regularly.
To market convenience goods, you want to consider that most people will
impulse buy these products. Placing your products near the checkout line at
a store could be a good idea for these products — which is why you'll often
find candy and gum at the front of a store.
Since most convenience products are priced low, cost and discounting isn't a
major deciding factor when considering a purchase. I won't switch my toilet
paper brand just to save a few cents.
For convenience goods, brand recognition is the key. With this in mind,
you'll want to implement widespread campaigns to spread awareness of your
company if possible.
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2. Shopping Goods: Shopping goods are commodities consumers
typically spend more time researching and comparing before purchase.
They can range from affordable items, like clothes and home decor, to
higher-end goods. These are more purchases with a higher economic
impact.
To market a shopping good, invest in content that persuades your buyer

of your product’s value. It's important your marketing materials
demonstrate how your product differs from the competition, and the
unique value it provides consumers.
Price also plays a role in this product type, so the promotion of discounts
and sales can attract consumers toward your brand.
3. Specialty Goods: A specialty good is the only product of its kind on the

market, which means consumers typically don't feel the need to
compare and deliberate as much as they would with shopping products.
A good example of this? iPhones.
When marketing a specialty good, you don't necessarily need to spend too
much time convincing consumers that your product is different from
competitors. They already know already. Instead, focus on how your
products are constantly innovating and improving. This will ensure your
customers will remain loyal to your brand.
4. Unsought Goods: Finally, unsought products — goods that people

aren't typically excited to buy. Good examples of unsought goods include
fire extinguishers, batteries and life insurance.
People will typically buy an unsought good out of a sense of fear or danger.
For instance, you wouldn't go on the market looking for the "new and best"
fire extinguisher. You'd only purchase one due to the fear of a potential fire.
Alternatively, some unsought goods, like batteries, are bought simply
because the old ones expired or ran out. When marketing an unsought
good, focus on reminding consumers of the existence of your product
and convincing consumers that purchasing your product will leave them
with a better sense of security.
Chapter 15.1: Major product decisions
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Product decision in marketing refers to the company’s strategic decisions,
major or minor regarding their products. It ranks first among the 4Ps of
marketing- Product, Price, Place and Promotion. The organizations take
these decisions to attain their objectives and also, to become profitable in the
long run.
Product decisions are vital marketing decisions to be made at various levels.

These decisions broadly cover:
 New product development

 Modification or elimination of existing ones
 Variants and visual elements
 Product mix and line
Factors affecting product decisions are:
 Growth
 Market-share
 Cash flow
 Profitability
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What is a product?
Anything of value that fulfils the requirement of the end-user is known

as a product. It can be goods or services, tangible or intangible, physical or
psychological. The customers and competitors largely depend upon the
products offered by the company.
Layers or levels of products:
 Core or generic product: It’s the raw product that satisfies the

customers’ primary needs. The core product is at its raw form, not
bearing any brand name and remains undifferentiated. Ex: Rice, Wheat.
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 Basic product: The core products differentiated from the rest become

the basic products. It adds some necessary features to the products like
brand name, packaging and label, etc. Ex: Fortune Chakki Fresh Atta.
 Expected product: These products include the key features that

customers look forward to. It also contains standard features that a
product should have. Ex: Chapattis prepared from wheat flour.
 Augmented product: To differentiate products from competitors,

companies add distinctive features to them. These additions depend on
the market survey conducted for the product. They try to create USPs for
their products. Ex: Brown Bread and Cookies.
 Potential product: It refers to all the possible features that a product

can have in the future. These features depend on the market conditions
and economic changes. Ex: Digitally marketed products
Major product decisions:
The major product decisions are discussed briefly below:

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 New product decision:
A new product incorporates the elements of newness and varies from the
existing ones. It may include new features, qualities or be introduced
differently. Adding new products can result in growth, profitability,
increased market share and more.
To remain profitable and maintain sales, organizations need to launch new

products. The products may fail, so the marketers must take new product
decisions wisely.
 Product decisions may include:
 Original product
 Improved product
 Modified product
 Development of product
 Launching product etc.
 Product mix:
It refers to the aggregate range of products that a company owns. In other

words, the total number of products that a company offers for sale is the
product mix of the company.
Product mix decisions depend upon the following four characteristics:
 Length
 Width
 Depth
 Consistency
There are various decisions the marketers have to take regarding products
mix. It may include:
 Expansion
 Contraction
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 Product Differentiation
 Deepening and Alteration, etc.
 Product line:
This refers to a range of closely-related products belonging to the same

class. They are sold to the same customers, having identical attributes
marketed by the same distribution channel but for different segments.
The product decisions relating to a product line are:
 Line stretching
 Line filling
 Design
It indicates the appearance or personality of the product. The marketers have

to decide whether to go for the standard design or the creative design.
Changing the product’s design may be effective but can be risky too.
The customer may or may not like the design and face problems while using
the product.
 Branding:
Branding is one of the vital decisions taken under product decisions. It

involves the visual and symbolic elements of the product.
Branding helps in monitoring the brand image, loyalty and acceptance.
The marketers distinguish the product using:
 Band name
 Trade marks
 Logo
 Brand marks, etc.
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 Packaging:
Packaging is the outermost covering of the product. It enables product

protection, conveys information and creates sale appeal. And is not restricted
to just the safety of the product. Packaging has evolved as the medium of
mktg. Marketers use packaging to reposition/renovate their products.
 Packaging decisions include:
 Size
 Design
 Innovation
 Aesthetics
 Convenience
 Material
 Environmental factors
 Labeling:
The label is a part of the packaging. It contains all the essential

details about the product in written form. Also, it conveys information
regarding performance, features, quality and price, etc. The marketers must
perform an in-depth analysis at the time of labeling. It is a medium of
communicating with customers. Vital decisions based on labeling are:
 Brand label
 Descriptive label
 Grade label
 Informative labels
 Positioning:
Positioning builds a unique image of the product in the target

audience’s mind. It differentiates products from others using benefits and
attributes in the customer’s mental space. The product decisions concerning
positioning are: Segmentation, Differentiation and Aggregation.
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 Support:
Support or Customer Support is the company’s added benefit for the

customers. It may be offered to the end-user by after-sale services,
grievances management, and so on. It assists in creating loyal customers and
recurring sales. Different customer support services possess varied cost
structures. The marketers must make decisions to reduce costs and improve
customer experience.
Product marketing ethics:
Product marketing ethics is a minor term than marketing ethics. The

marketers must pay attention to following ethical issues while marketing:
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 Deceitful practices:
The marketers often put faulty or low-quality products for sale without
informing customers. They also ask for additional charges in the name of
customer services.
The customers acknowledge it while consuming and are left with no other
option than to pay for it.
 Eco-friendly products:
The companies must carry out production considering the statutory

guidelines for pollution control. The product must not harm the environment
at any stage, from production to post-consumption.
The marketers should convey instructions on the packaging about the

product disposal.
 Quality products:
The companies should produce quality products and disclose complete

details. They should contain important information like ingredients, uses and
precautions.
Also, the packaging must mention all the areas of concern related to the
product.
Conclusion:
While market planning, product-related decisions are vital decisions the

marketer makes. It includes all the critical decisions for existing and new
products, from development to launch.
The marketers must decide the compelling product mix, packaging,

branding, labeling and positioning. It enables organizations to remain
competitive and thrive in the long run.
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Module 3: Distribution channels
Chapter 25.1: Distribution Channels and Physical distribution decisions
Producers produce goods and finally make them ready for the market. The
methods and routes to be adopted to bring the products to the market to the
ultimate consumers and industrial users must be determined.
This process involves establishing distribution strategies, including channel

of distribution and providing for physical handling and distribution.
Distribution system has two components:
1. Channels of Distribution
2. Physical Distribution
Channels of Distribution mean the intermediaries or the process

through which the products are transferred from the producers to
ultimate users. They are distributors, retailers, agents, bankers etc.
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Physical Distribution is concerned with the flow of goods to the ultimate
consumers which includes transportation, warehousing and inventory
management.

A channel of distribution or marketing channel is the structure of intra-

company organization units and extra company agents and dealers,
wholesaler/retailer through which a commodity, product is marketed.
Marketing channel may be defined as “Pathways composed of

intermediaries, also called middlemen, who perform such functions as
needed to ensure smooth floor of goods and services from the
manufacturing ends to the consuming ends in order to achieve
marketing of the produce of a company.”
The distribution channel is the movement of goods and services between

the point of production and point of consumption through organization,
which perform a variety of marketing activities. Thus, distribution is the
application of motion to materials as they move from the times, places,
forms and conditions where they have no value, to the times, places,
forms and conditions where they have value.
Drucker has described distribution as “Industry’s Dark Continent”

implying thereby that the distribution system seldom receives the
attention it deserves & there are lots of things to be explored in this area
 Functions of Distribution: These broadly cover the following:
 Transport services for a timely and safe physical movement

of goods. Major transportation modes are: Rail/Road/Water/Air.
 Warehousing facilities that irons out the market
fluctuations and make the goods available to the customer’s
when/where needed.
 Sorting/grading facilitating customers’ in selection of goods.
 Different Channels of Distribution:
The different types of distribution channels currently in India are:
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 Direct Selling/ Direct marketing: Manufacturer to ultimate customer
e.g. manufacturer of machinery may directly contact the user firms; a
detergent manufacturer employs sales girls to sell on door-to-door
basis. Also gaining popularity is Telemarketing.
 Selling through Intermediaries (Middlemen):
 For B2C:: Manufacturer to consumer thro’ Wholesaler, retailer,

stockiest, distributor
 For B2B: Manufacturer to firms thro’ broker, industrial

distributor
 Channel-Mix: An organization using a number of

channels of distribution and not just one channel adopts a channel-
mix. The decision of channel-mix formula is generally guided by the
following broad functions:
 Promptness and regularity in making the products

available to the ultimate users.
 Cost of alternative modes of distribution.
 Extent of possible market segmentation and

product differentiation
 Changes needed in the organization e.g. setting up

another branch/sales depot. The choice out of a few alternative
distribution channels will involve a proper comparative assessment
of different levels of capital investment, advertising, and sales
promotional expenses, working capital for inventory and forecast
of sales.
In channel selection the overriding consideration should be maximum

contribution to the profit performance and easy availability of company’s
profit to ultimate users.
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The decision to open an own depot in a zone depends on the turnover in that
zone is at least equal to break-even sales values to justify the setting up of a
depot.
The setting up of a depot would eliminate the distributor but would involve
additional variable cost on sales due to additional transport charges, interest
on working capital and inventory carrying cost.
Physical distribution of goods and its function:
1. Physical distribution of goods:
Physical distribution involves management of physical flows of raw

materials, finished products from the points of origin to the points of
consumption to meet the customer needs at a profit. It covers all
activities in the flow of goods between producer and consumer.
The components of Physical distribution are as follows:
1. Distribution planning and accounting

2. In-bound transport
3. Receiving
4. Inventory management
5. In-plant warehousing
6. Order Processing
7. Packaging/Repackaging, as necessary
8. Dispatch of goods
9. Outbound transport
10. Field warehousing
11. Customer service
12. Communication.
Even though, above components are dissimilar, they all relate to a common
bond of an efficient flow of goods. The major physical distribution
components are only three i.e., Transportation, Warehousing and
Inventory management.
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Planned and integrated management of physical distribution has assumed
unique importance in marketing management since a customer gives top
preference to reliable and punctual delivery of goods and expects
minimum time interval between the date of placing an order and the
date of receipt of goods.
A large consumer goods company having all-India marketing network

spends following percentages of market price of goods on:
(1) Transport 1.5-2.0,

(2) Warehousing and handling 2-2.5,
(3) Inventory carrying 3-3.5 and
(4) Order processing 4—4.5.
Marketers now feel that physical distribution should be the new major
frontier for cost minimization without of course, adversely affecting
customer satisfaction. The elements constituting customer service are now
given greater emphasis.
A slight improvement in customer service can produce accelerated sales.

The physical distribution policy assumes unique importance in offering
desired level of customer service at a reasonable cost. The distribution
policy attempts to optimize time and place utility (through storage, transport
and physical handling of products) for marketable products, while
minimizing the total cost of physical distribution.
The management of physical distribution activities emphasizes the system

approach designed to achieve a trade-off between optimum customer service
and operating costs in physical distribution. Under the system approach,
marketers have to recognise the integrated and interrelated character of all
components of physical distribution. The costs of transport, warehousing
inventories, packaging, order processing etc. are closely interdependent and
integrated. The total cost approach is desirable in practice.
2. Function of Physical Distribution and Logistics:
Marketing represents two different but closely interrelated distribution

functions:
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 Demand Oriented Functions: These are concerned with the search
for and stimulation of consumer demand. The channels of distribution
i.e., wholesaler, retailers and all types of mercantile agents, perform these
demand-oriented functions.
 Supply-Oriented Functions: These are concerned with physical
product flow. These activities “revolve around the notion of movement
and they represent physical distribution as a planned movement (physical
flow).
Supply-oriented marketing activities (relating to physical distribution) are

not quite visible to average consumers.
A marketer must recognize the importance of physical distribution in adding

time, place and possession utilities to the products and delivering higher
level of customer satisfaction at relatively lower cost.
Two types of distribution functions are shown in the diagram below:
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The demand-oriented functions represent the primary operations of
marketing channels. The supply-oriented functions represent the area of
physical distribution in charge of all channel members.
Customer service means several things i.e., the speed of order execution and
delivery of goods, safe delivery, quick replacement of damaged goods,
prompt after-sale service etc..
Chapter 26.1: Nature, functions and types of distribution channels
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Product’s availability, ease of access, and the way it reaches the customer,
influence its demand at many levels. Distribution channels are a key
element in all the marketing strategies that revolve around the product.
They help businesses reach their customer in a way to maximise their
revenue and brand awareness.
What is a Distribution Channel?
A distribution channel (also called a marketing channel) is the path or

route decided by the company to deliver its good or service to the
customers. The route can be as short as a direct interaction between the
company and the customer or can include several interconnected
intermediaries like wholesalers, distributors, retailers, etc.
Hence, a distribution channel can also be referred to as a set of

interdependent intermediaries that help make a product available to the end
customer.
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Functions of Distribution Channels:
In order to understand the importance of distribution channels, businesses

need to understand that it doesn’t just bridge the gap between the producer
of a product and its user.
Distribution channels do provide time, place, and ownership utility. They

make the product available when, where, and in which quantities the
customer wants. But other than these transactional functions, marketing
channels are also responsible to carry out the following functions:
 Logistics and physical distribution: Marketing channels are

responsible for assembly, storage, sorting, and transportation of goods
from manufacturers to customers.
 Facilitation: Channels of distribution even provide pre-sale and post-

purchase services like financing, maintenance, information dissemination
and channel coordination.
 Creating efficiencies: This is done in two ways: bulk

breaking and creating assortments. Wholesalers and retailers purchase
large quantities of goods from manufacturers but break the bulk by
selling few at a time to many other channels or customers. They also
offer different types of products at a single place which is a huge benefit
to customers as they don’t have to visit diff retailers for different pdts.
 Sharing risks: Since most of the channels buy the products

beforehand, they also share the risk with the manufacturers and do
everything possible to sell it.
 Marketing: Distribution channels are also called marketing channels

because they are among the core touch points where many marketing
strategies are executed. They are in direct contact with the end customers
and help the manufacturers in propagating the brand message and product
benefits and other benefits to the customers.
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Types of distribution channels:
Channels of distribution can be divided into direct/indirect channels.
Indirect channels can further be divided into one-level, two-level, and

three-level channels based on the number of intermediaries between
manufacturers and customers.
 Direct channel or Zero-level channel (Manufacturer to Customer):
Direct selling is one of the oldest forms of selling products. It doesn’t

involve the inclusion of an intermediary and the manufacturer gets in direct
contact with the customer at the point of sale. Some examples of direct
channels are brand retail stores, taking orders on the company’s website, etc.
Direct channels are usually used by manufacturers selling perishable
goods, expensive goods, and whose target audience is geographically
concentrated. For example, bakers, jewelers, etc.
 Indirect channels (selling through intermediaries):
When a manufacturer involves a middleman/intermediary to sell its product

to the end customer, it is said to be using an indirect channel.
Indirect channels can be classified into three types:
 One-level channel (Manufacturer to Retailer to Customer): Retailers

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

simultaneously to reach the end user, he is said to be using the dual
distribution strategy. They may open their own showrooms to sell the
product directly while at the same time use internet marketplaces and other
retailers to attract more customers.
A perfect example of goods sold through dual distribution is smart phones.
 Distribution channels for services:
Unlike tangible goods, services can’t be stored. But this doesn’t mean that
all the services are always delivered using the direct channels.
With the advent of the internet, online marketplaces, the aggregator

business model, and the on-demand business model, even services now use
intermediaries to reach to the final customers.

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Internet as a distribution channel:
The internet has revolutionized the way manufacturers deliver goods. Other
than the traditional direct and indirect channels, manufacturers now
use marketplaces like Amazon (Amazon also provide warehouse services for
manufacturers’ products) and other intermediaries like aggregators
(Uber, Instacart) to deliver the goods and services. The internet has also
resulted in the removal of unnecessary middlemen for products like software
which are distributed directly over the internet.
Factors determining the choice of distribution channels:
Selection of the perfect marketing channel is tough. It is among those few

strategic decisions which either make or break a company.
Even though direct selling eliminates the intermediary expenses and gives
more control in the hands of the manufacturer, it adds up to the internal
workload and raises the fulfillment costs. Hence these four factors should be
considered before deciding whether to opt for direct/indirect channel.
Market characteristics:
This includes the number of customers, their geographical location, buying

habits, tastes and capacity and frequency of purchase, etc.
Direct channels suit businesses whose target audience lives in a

geographically confined area, who require direct contact with the
manufacturer and are not that frequent in repeating purchases. In cases of
customers being geographically dispersed or residing in a different country,
manufacturers are suggested to use indirect channels.
The buying patterns of the customers also affect the choice of distribution
channels. If customers expect to buy all their necessaries in one place,
selling through retailers who use product assortment is preferred. If delivery
time is not an issue, if the demand isn’t that high, the size of orders is large
or if there’s a concern of piracy among the customers, direct channels are
suited.
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If the customer belongs to the consumer market, longer channels may be
used whereas shorter channels are used if he belongs to the industrial
market.
Understanding consumer behavior is essential for deciding the most

effective marketing channel for the business.
Short Channels Long Channels

The offering is targeted to
The offering is targeted to business
consumers and non-business
users.
users.
The customers are geographically The customers are geographically
concentrated. dispersed.
Customers require extensive technical Customers don’t require extensive
knowledge. technical knowledge.
Regular servicing is required for the Regular servicing is not required
offering to operate. for the offering to operate.
The order quantity is large. The order quantity is small.
Product characteristics: Product cost, technicality, perishability and

whether they are standardized or custom-made play a major role in selecting
the channel of distribution for them.
Competition characteristics: The choice of the marketing channel is also

affected by the channel selected by the competitors in the market. Usually,
the firms tend to use a similar channel as used by the competitors. But some
firms, to stand out and appeal to the consumer, use a different distribution
channel than the competitors. For example, when all the smart phones were
selling in the retail market, some companies partnered with Amazon and
used the scarcity principle to launch their smart phone as Amazon exclusive.

Chapter 27.1: Distribution channel intermediaries
110
Distribution channels determine the path goods will take from the
manufacturer to the final consumer. Thus, they have direct impact over
sales.
There are many types, formats, and levels of distribution channels. The first
step is to understand each of them.
What are Distribution Channels?
Distribution channels are the path products take from their initial
manufacturing stage to selling them to consumers. The main goal of these
channels is to make goods available to final consumers in sales outlets as
soon as possible.
Distribution channels directly impact a company’s sales, so you want to

make them as efficient as possible.
Three types of Distribution Channels:
There are three ways to make sure a product gets to the final consumer.

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1. Direct Channels: With direct channels, the company is fully
responsible for delivering products to consumers. Goods do not go
through intermediaries before reaching their final destination. This model
gives manufacturers total control over the distribution channel.
Since the manufacturer alone is responsible for delivering products, this

channel generally makes it impossible to have a high number of customers.
At the same time, it’s possible to offer lower prices, since the company does
not have to pay commission to intermediaries.
2. Indirect Channels: With indirect channels products are delivered by

intermediaries, not by the sellers.
Who are these intermediaries? They could be wholesalers, retailers,

distributors, or brokers, for example.
In this case, manufacturers do not have total control over distribution

channels. The benefit is that this makes it possible to sell larger volumes
and sell to a range of customers. However, products have higher prices due
to the commissions paid to intermediaries.
3. Hybrid Channels: Hybrid channels are a mix of direct and indirect

channels. In this model, the manufacturer has a partnership with
intermediaries, but it still takes control when it comes to contact with
customers.
One example is brands that promote products online but don’t deliver them
directly to customers. Instead, they nominate authorized distributors.
Three methods for Distribution Channels:
There are three different delivery methods for distribution. Basically,

they concern who will be allowed to sell your products.
1. Exclusive Distribution: With exclusive distribution, intermediaries take

the company’s products to specific sales outlets. This is usually done by a
sales representative.
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This means that only exclusive retail outlets will be able to sell the items
to consumers. Depending on the quality of the product, this is a great
strategy not only for manufacturers but also for retail outlets/chain stores.
2. Selective Distribution: With selective distribution, the company allows

sales to a specific group of intermediaries who are responsible for
selling items to final customers.
An important factor in how successful this strategy will be is the

reputation of the intermediaries since they have a direct impact over the
company’s performance. In this case, the intermediary becomes the real
consultant for consumers, answering questions and recommending
appropriate products for their needs.
3. Intensive Distribution: In intensive distribution, the manufacturer tries

to place their product in as many sales outlets as possible. The
manufacturers themselves, sales teams, and commercial representatives
are all involved in this method. They are responsible for distributing
products to sales outlets.
This distribution method is generally used by manufacturers of low-cost

products with a high frequency of consumption.
Distribution channel levels:
Besides the types and methods of distribution channels, they may also
operate on different levels. Their levels represent the distance between the
manufacturer and the final consumer.
 Level 0 distribution channel: In this level, there is a close and direct

relationship between the manufacturer and the client. For the
company, the costs of the relationship with the consumer are higher.
 Level 1 distribution channel: In level 1, the manufacturer sells the
products to the distributor, who might sell it to consumers via
retailers or wholesalers. The distributor keeps some of the rights to the
product, but not all. The distributor is also responsible for the costs of
sales and transportation to sales outlets.
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 Level 2 distribution channels: Level 2 is similar to level 1. The
difference is that in this case, the distributor delivers products only to
retailers, who sell them to consumers.
 Level 3 distribution channels: Level 3 channels are a traditional
distribution model. The product’s journey from the manufacturer
involves distributor, retailer, and customer. The costs relative to sales
and marketing are divided between the parties. The advantage of this
model is that it’s possible to reach a larger number of consumers. On
the other hand, products have a higher price because of
the operational costs of all the parties involved.
Nine main intermediaries in distribution channels:
Let’s now discuss the main intermediaries who take products to consumers:
1. Retailers: Retailers are intermediaries used frequently by companies.

Examples include supermarkets, pharmacies, restaurants, and bars. Each of
these types of businesses has full sales rights. Generally, product prices are
higher in retailers.
2. Wholesalers: Wholesalers are intermediaries that buy and resell products

to retailers. Wholesalers sell to those who are going to put products in their
own stores. These intermediaries generally don’t sell small quantities to final
consumers, though there are exceptions, like supermarkets that sell in the
wholesale model. Prices are lower because sales involve large quantities.
3. Distributors: Distributors sell, store, and offer technical support to

retailers and wholesalers. Their operations are focused on specific regions.
4. Agents: Agents are legal entities hired to sell a company’s goods to final

consumers and are paid a commission for their sales. In this case, the
relationships between intermediaries and companies are for the long term.
5. Brokers: Brokers are also hired to sell and receive a commission. The
difference between agents and brokers is that brokers have short term
relationships with the company. That’s the case with real estate agents and
insurance brokers, for example.

114
6. The Internet: To those who sell tech and software, the internet itself
works as the intermediary of the distribution channel. The consumer only
has to download the material to have access to it. E-commerce
companies also use the internet as a distribution intermediary.
7. Sales teams: A company can also have its own sales team who are
responsible for selling goods or services. There is also the possibility of
creating more than one team to sell to various segments and audiences if the
company has a wide range of products.
8. Resellers: Resellers are companies or people who buy from manufacturers

or retailers to later sell to consumers in retail.
9. Catalogues: Catalog sales, as the name indicates, is when a salesperson is

connected to a company and sells its products using a magazine. Salespeople
in this model also usually earn a commission for their sales. This type of
sales is common in the beauty segment, with brands like Avon and the
Brazilian Natura.
Reverse Distribution Channel:
Now you know the types and methods available for products to reach
customers.
But what happens when consumers need to return items to manufacturers?
Consumers need to rely on reverse distribution if they receive defective

products or need to return clothes or shoes they bought online that don’t fit.
In this case, the consumer is responsible for returning the items and needs to
find information from the manufacturer about how to do this.
Usually, consumers find information about returns on the site for the
product.

Chapter 28.1: Design/Channel management decisions
115
Decisions on design of channels
Channel design is presented as a decision faced by the marketer, and it

includes either setting up channels from scratch or modifying existing
channels. This is sometimes referred to as re-engineering the channel
and in practice, is more common than setting up channels from scratch.
The term design implies that the marketer is consciously and actively
allocating the distribution tasks to develop an efficient channel. Finally,
channel design has a strategic implication, as it will be used as a
strategic tool for gaining a differential advantage.
Who engages in Channel Design?
Producers and manufacturers, wholesalers, and retailers all face channel

design decisions. Producers and manufacturers “look down” the channel.
Retailers “look up” the channel while wholesaler intermediaries face
channel design from both perspectives.
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A Paradigm of the Channel Design Decision:
The channel design decision can be broken down into seven phases or
steps. These are:
1. Recognizing the need for a channel design decision

2. Setting and coordinating distribution objectives
3. Specifying the distribution tasks
4. Developing possible alternative channel structures
5. Evaluating the variable affecting channel structure
6. Choosing the “best” channel structure
7. Selecting the channel members

Phase 1: Recognizing the need for a Channel Design decision: Many
situations can indicate the need for a channel design decision. Among them
are: Developing a new product or product line, aiming an existing
product to a new target market, making a major change in some other
component of the marketing mix, establishing a new firm, opening up
new geographic marketing areas, facing the occurrence of major
environmental changes and meeting the challenge of conflict or other
behavioral problems.
Phase 2: Setting and Coordinating Distribution Objectives: In order to set

distribution objectives that are well coordinated with other marketing and
firm objectives and strategies, the channel manager needs to perform
three tasks: Become familiar with the objectives and strategies in the
other marketing mix areas and any other relevant objectives and
strategies of the firm. Set distribution objectives and state them explicitly.
Check to see if the distribution objectives set are consistent with marketing
and the other general objectives and strategies of the firm.
Phase 3: Specifying the Distribution Tasks: The job of the channel manager
in outlining distribution functions or tasks is a much more specific and
situationally dependent one. The kinds of tasks required to meet specific
distribution objectives must be precisely stated. In specifying distribution
tasks, it is especially important not to underestimate what is involved in
making products and services conveniently available to final consumers.
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Phase 4: Developing possible alternative Channel Structures: The channel
manager should consider alternative ways of allocating distribution
objectives to achieve their distribution tasks. Often, the channel manager
will choose more than one channel structure in order to reach the target
markets effectively and efficiently. Whether single or multiple channel
structures are chosen, the allocation alternatives (possible channel structures)
should be evaluated in terms of the following three dimensions: Number of
levels in the channel, Intensity at the various levels: refers to the number
of intermediaries at each level of the marketing channel and Type of
intermediaries at each level.
Phase 5: Evaluating the variables affecting Channel Structure: The

channel manager should evaluate a number of variables to determine how
they are likely to influence various channel structures.
These five basic categories are most important:
 Market variables: geography, size, density & behavior

 Product variables: weight, perishability, unit value, technical,
newness
 Company variables: size, financial capacity, managerial expertise
 Intermediary variables: availability, costs, service offered
 Environmental variables: Economic, socio-cultural, competition
Phase 6: Choosing the “Best” Channel Structure: In theory, the channel

manager should choose an optimal structure that would offer the
desired level of effectiveness in performing the distribution tasks at the
lowest possible cost. In reality, choosing an optimal structure is not easy.
Phase 7: Select channel members: A channel member is one business in a

network of businesses that help a producer channel their products to
consumers. Channel members, sometimes called intermediaries or
middlemen, work together to complete the various tasks it takes to get a
product from production through to sale. Important factors in selection
are: market knowledge, reselling experience, partnership mentality,
technical capability, skills & experience, fit & purpose, market focus,
target market experience, financials and stability.
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Management of channels
Definition of channel management:
Channel management can be defined as a process used by companies to

direct and manage various marketing techniques and the parties
involved in the channel of distribution. The channel management
process is used to reach a broad range of customers through different
marketing and sales channels.
The job of a manufacturer does not end with the production of goods.
Once goods are ready, the next step is to find the most efficient channel
partners to sell the products in the market. The channel partners are
vital as they establish communication between a firm and its customers.
Channel management is a technique of choosing the best and most

efficient channel partners and different routes to make your products
available in the market and to put various efforts to obtain maximum
results from these channels. Separate channels for distribution should be
selected based on your customers. It would be best if you considered the
buying pattern of your customers and their requirements.
For example, if you are selling a product for adults, then you might consider
both online as well as offline channels that can sell your products in the
market on your behalf. But if you are in the grocery of sale products, then
selling your products in a well-established store might get you more
sales as compared to online channels.
Therefore, analyze and determine which channel will be suitable for the
sales of your products what output do you expect out of
each distribution channel.
In addition to this, it also determines the segment of the population,

which is connected with each distribution channel. Once you have all
this information, then you can invest in the right channel and can enjoy
maximum sales and profits.

119
Process of channel management:
The success of a business largely depends on the intermediaries who

represent the product of the manufacturer in the market.
A channel manager is required to establish a healthy relationship with

these intermediaries. To do this, he is required to give both financial as
well as non-financial benefits so that they actively promote the products
of the manufacturer.
There are a total of six steps in the process of channel management:
 Identification of sources
 Preparing a selection criterion
 Selection of intermediaries
 Providing required training to intermediaries to sell
 Motivating intermediaries whenever required
 Assessment of intermediaries
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Six steps in the process of channel management:
1. Identification of sources: The first step of the channel management

process is the identification of references. When you are new in the market,
then you are required to do research to identify sources through different
methods. For example, you can enquire in the market to learn about the
reputation of distributors and their customers. Make sure that you do a
proper background check of the distributors before signing a contract
with them. The things that a manufacturer must verify are views of custs
about distributor, their sales force & their enthusiasm to sell products.
2. Preparing a selection criterion: The next step of the process of channel

management is the preparation of selection criteria. A selection criterion is
essential for effective channel management with factors like knowledge of
the market, knowledge of the product, understanding of customers,
competitiveness, market coverage, the reputation of intermediaries in
the market, and managerial competence, etc. Different intermediaries
have different qualities.
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3. Selection of intermediaries: The right choice of channel intermediaries is
essential for the success of the business. There are several intermediaries
of different sizes available in the market. Small-scaled and new
intermediaries can sell your products with enthusiasm and might have
better selling skills and resources. You might need to give proper
incentives to convince large-scaled and well-established intermediaries
to distribute your products in the market. You need to identify the right
intermediaries for your business based on the requirements of business.
4. Providing required training to intermediaries to sell: Once you have

selected your channel management partners, the next step that you are
required to follow is to provide necessary training to them so that they
can sell your products effectively and efficiently. Make sure that you
cover essential areas such as financial management, marketing, sales,
personnel management, and stock control, etc. Smaller distributors will
appreciate training in these areas as they might not have well-established
processes to manage these areas.
5. Motivating intermediaries whenever required: The next step in the

process of channel management is to drive your channel partners.
Motivation could be in financial form, or it could be in non-financial form.
For example, some distributors will get motivation when you provide
them an increased margin on the sales of the products, whereas, some
distributors might like to have territorial rights for some areas. You can
also motivate your channel partners with verbal appreciation and recognition
for their efforts, by providing those up-to-date products, providing solutions
to their problems, and keeping regular personal contact with them.
6. Assessment of intermediaries: The last step of the channel management

process is the assessment of intermediaries. It is essential to assess the
performance of all intermediaries. The output of the evaluation process
will help you in deciding which channel partner to retain and whom to
drop. There are various criteria of assessment of a channel partner such
as sales skills, competencies, customers’ response, quality of service
provided to customers, the quantity of stock purchased, the position of
display in-store, etc.
Chapter 29.1: Retailing and wholesaling
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Many businesses wonder what really sets wholesale business and retail
companies apart from one another, so the pros and cons of each business are
discussed in detail.
Retailing and wholesaling consist of all the activities which include the

selling of goods and services directly to the end consumers for their personal
use or for non-professional use.
A retail market is an enterprise where all the goods are available under

one room serving for the purpose of convenience to the customers and
whose large sales volume comes from the process of retailing.
Any organization who is serving for the purpose of providing goods to the
customer is doing retailing. There are different types of retail stores that are
made available for the customers, these are:
 Specialty stores: these stores offer a narrow product line.

 Departmental stores: these types of stores offer various product lines.
 Discount stores: these are low price and high volume standard stores.
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 Supermarkets: these are low cost, high volume self service stores,
specially designed to meet all the household needs of the customers.
 Convenience stores: these are the small stores in the residential areas
which offer high range of convenience products and are opened all day
long.
 Off-price retailer stores: these are for the left over goods which are
not available anywhere and are sold at low rate, like factory outlets and
are independent off retailers.
 Superstores: these stores have a huge space for selling goods; they
include all the food and household items and also offer services to the
customers.
Wholesaling:
It includes of all the activities in selling the goods or services to those who
buy it for the purpose of resale or for the use in business operations, these
exclude retailers. There are many services provided by wholesalers like:
 Selling and promotion of goods

 Bulk-breaking
 Warehousing
 Transportation
Many of you wonder what the critical differences between wholesaling and
retailing are. In the entire supply chain sector, wholesale and retail play a
significant role in the distribution process.
When a company manufactures an item, it sells the item in bulk to the

wholesaler, who then further sells it to the retailer. The retailer further
sells it to the end customers.
In simpler terms, a wholesaler always buys goods in bulk from the

manufacturer, sells them to the retailer, who then delivers them to
ultimate buyers. Wholesaling and retailing are the primary mediators of
the supply chain. If any of these are missing, the entire supply chain may
get disrupted.
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Wholesaling is the process of selling goods to consumers such as retailers,
industries, or any other entity in bulk quantities and at lower prices.
A wholesaler buys products from the manufacturer in huge lots, split them
into smaller lots, repacks them further, and sold them to the next party.
One key aspect of wholesaling is that it does not focus on the quality of
goods; instead, it emphasizes quantity. This kind of business does not
require any publicity, marketing, or advertisement.
However, there is a considerable capital investment required as the size

of the company is large. Their business is entirely dependent on the
clients they have.
Customers of a wholesale business are spread in various cities, towns, or

even in different states. Most goods are sold on credit to the customers of the
wholesale business.
The price of purchase on wholesale is lower as it consists of fewer profit

margins.
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What is retailing?
For retailers it is very difficult to differentiate themselves from the other

retailers, therefore they often differentiate themselves with the type of
services they provide to the customers.
Usually there are four levels of services that can be offered by retailers like:
 Self-service: In this the customers are ready to carry out and locate
and select the goods in order to save money.
 Self-selection: Customers search for the goods by themselves and can
also ask for assistance.
 Limited-service: These retailers offer many verities of shopping
goods & the customers demand more information than in self selection
service.
 Full service: Here the staff assists and help the customers in every
phase of the purchase, and this often results in high retailing cost to
serve.
Retailing is the process of selling goods in smaller lots, without any

purpose of further resale, to the end customers. Retailers can typically be
called the middleman between wholesalers and end-users, as they
purchase goods in bulk from wholesalers and sell them further to
buyers at higher prices.
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The prices are comparatively higher in retailing because there are many
additional costs in this kind of business. Expenses such as marketing costs,
shipping and logistics costs, salary to employees, electricity expenses, and
warehousing costs are all included in the retail price of a product.
To become a successful retailer, there are several factors that eCommerce

business owners have to consider. Location of the shop (if you have a brick-
and-mortar store), the look and feel of the store, product displays, quality of
products, customer support, and delivery speed are a few of the factors that
have to be given much importance in a retail business, as they leave a
profound impact on the customers’ minds.
Wholesaling vs. Retailing: This table will give you a clear picture of the
differences between the two types of business models:
Wholesaling Retailing
Retailing is when
Wholesaling is the the retailer
process where the purchases products
Meaning wholesaler purchases from the wholesaler
products in bulk from the and sells it further
manufacturer. in small quantities
to the end customer.
Price Lower Higher
Business Size Large Small
Competitiveness Low High
Product Range Limited products Variety of products
Marketing and
Not required Required
Promotions
Capital Investment Large Small
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Choosing the right channel for your business:
When choosing the most appropriate avenue to market, you must consider
which model fits best with:
 Your strengths and personality as a business
 The brand identity of your business and its product or products
 How best to reach your target market
Remember to evaluate the strengths of your product and your employees and
assess the avenues open to you.
Also take into account how much control of the product you want to retain,
and how much face-to-face contact with the consumer you need or want to
have.
Module 4: Promotion decisions

Chapter 30.1: Communication process
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Communication is fundamental to the health and operation of an
organisation. A clear communication process creates a space and
platform for people to share ideas, information, facts and feelings. It
improves the reliability and coordination of information. As a result, key
stakeholders can make informed decisions quickly and efficiently.
Hereunder, we define the communication process, identify its major

components and explain how a communication process works with an
example for you to follow.
What is the communication process?
The communication process is a dynamic framework that describes how a

message travels between a sender and receiver using various
communication channels. Its goal is to ensure the receiver decodes the
message correctly and can provide feedback with ease and speed. This is
especially important for larger organizations that need to notify people in
different areas and time zones about an event, problem or change.
Technology in the workplace has made the communication process more

effective. A message is no longer communicated just through voice or
writing; it is also shared through audio, video, email and social media. A
communication process streamlines the flow of information and takes
advantage of multiple channels in the best way possible.
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Communication processes need good management to sustain them in the
long-run. Leaders in the workplace establish the style, tone and function of
communication. If you are in a position of authority, it is especially
important that you model good communication.
Key components of the communication process:
Here are seven essential components that make up the communication

process:
1. Sender: The person who conceptualized the idea and wants it

delivered to the recipient.
2. Encoding: The way the information is described or translated into a
message.
3. Message: The idea, fact or opinion that the sender wants to
communicate.
4. Communication channel: The method of delivering the message.
5. Receiver: The target audience of the message.
6. Decoding: The interpretation of the message.
7. Feedback: The response or action a receiver takes after decoding a
message.
How does the communication process work?
The communication process works through a series of seven steps, they

include:
1. The sender develops an idea to be sent:
Communication begins with an idea. For you to construct a clear and

actionable message, you need to organize your thoughts. To understand
the purpose of your message, answer these three essential questions:
 Who do you want your message to reach?

 What information does the receiver need to know?
 What do you want the receiver to do with this information?
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2. The sender encodes the message:
Once the sender develops an idea, he needs to present the message in a

coherent structure. Ask yourself the following questions to understand the
receiver's communication style better:
 Is the receiver knowledgeable about the topic?

 Does the receiver prefer a general overview or detailed
information?
 Do you need to provide any additional resources to aid their
judgment?
 Can you think of any distractions, such as preconceived ideas,
that could influence their interpretation of the message?
3. The sender selects the channel of communication that will be used:
Think about how you need to send your message. The communication
channel you use should organize your information in a way that
enhances your point.
Consider the four main types of communication channels when making

your decision:
 Verbal: Face-to-face, telephone, video conferences, presentations and

visual media
 Non-verbal: Eye-contact, facial expressions, body language and dress
code
 Written: Emails, newsletters, press releases, text messages, social
media posts, records, proposals and other business documents
 Visual: Graphs, charts and drawings
4. The message travels over the channel of communication:
The sender should select an appropriate medium for the message. This
will depend on your relationship with the receiver, the purpose of your
writing and the urgency of the message.
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Technology has made it faster than ever to share important information.

However, in the business environment, formal written communication, such
as contracts and legal documents, continues to exist to safeguard the
interests of an organisation and its employees.
5. The receiver receives the message:
Next, the recipient receives the message. The receiver will process the
message according to the communication channel the sender uses. For
example, the sender could deliver the message by speaking to the receiver
face-to-face. For more formal messages, the sender may present the message
during a board meeting instead.
6. The receiver decodes the message:
The receiver then decodes the sender's message. In this stage, the receiver
processes the information, understands its context and analyses its
implications. This is one of the most crucial stages in the communication
process. If the receiver can successfully decode the message, this implies
the effectiveness of the communication process. As a result, businesses
can continue their operations with little disruption.
7. The receiver provides feedback:
Feedback is the most important step in the communication process. Ask

yourself the following questions to analyze and improve your future
communication:
 Have you arranged a process for collecting feedback?

 Have you given the receiver an opportunity to ask questions?
 Can you pick up on non-verbal cues to understand how the
message has been received?
 Could you have done anything differently to achieve a better
result?
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Types of noise during the communication process:
Reducing 'noise' or ‘distraction’ can significantly increase your chances

of successfully communicating your point. It ensures your message does
not get misinterpreted or ignored, & the receiver takes it seriously instead.
To effectively eliminate noise, senders should consider the receiver's

personal beliefs and their physical environment. Here are the four types
of noise you need to eliminate for smooth communication:
1. Psychological noise: This type of noise interferes with communication

between the sender and receiver because of personal barriers. Managing
psychological noise is a sign of respect. It helps build trust and
encourages people to speak up. Some examples of psychological noise are:
 Preconceived beliefs
 Biases and prejudice
 Stereotypes
 Sarcasm
2. Physical noise: Physical noise describes external distractions in your

workplace. Noise from colleagues speaking loudly or listening to music
exemplifies how our surroundings can hamper us from understanding or
decoding a message.
3. Environmental noise: Environmental noise makes it difficult to hear or

concentrate on a message, for example, noise from a construction site or
passing traffic. Noise can affect our emotions and, therefore, the way we
perceive a message. That is why it is important to keep distractions to a
minimum.
4. Semantic noise: Semantic noise is interference on the sender's end. This

could be because of technical issues or poor communication skills. To
communicate a message clearly, it is important to avoid jargon, abstract
ideas and ambiguous language when writing. Similarly, speaking clearly in a
relaxed and confident tone can communicate your point more effectively.
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Summary:
The process of communication refers to the transmission or passage of

information or message from the sender through a selected channel to the
receiver overcoming barriers that affect its pace.
The different elements in the process of communication:
Sender, Message, Encoding, Channel, Receiver, Decoding & Feedback
Four types of feedback. The types are as follows:
 Negative Feedback or corrective comments about past behavior

 Positive Feedback or affirming comments about future behavior
 Negative feed-forward or corrective comments about future behavior
 Positive feed-forward or affirming comments about future behavior
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Chapter 31.1: Promotion mix
To promote services or products to a target audience, the marketing

communication mix refers to a set of tools used to promote them. What
makes communication unique is the list of principles and factors that go into
marketing those products and services, as well as how they are implemented.
When companies want to achieve their marketing goals, they use a

marketing communication mix consisting of advertising, personal selling,
publicity, public relations, etc. Using a variety of communication
channels, it is directly responsible for delivering your promotional
message. Now let's take a closer look at what a marketing communication
mix is!!
1. Advertising: In a paid, indirect way, customers are informed about

products and services via television and radio. We are all aware of the
influence of advertising on our purchasing decisions. Broadcast
advertising, or ATL, is the most common type of advertising, while direct
response advertising, or BTL, uses print and digital media (OOH).
Advertising is more likely to be used by companies with deep pockets or a
large # of competitors in the mkt. Advertising messages that are unique
and compelling have a stronger connection with their target audience
than those that are not.
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2. Sales promotion: Several short-term incentives are included in the
sales promotion in order to persuade customers to initiate the purchase
of goods and services. Sales promotion tools include rebates, discounts,
paybacks, Buy-one-get-one-free schemes, coupons, and more. According
to the industry, there are many different ways to run sales promotions and
many different tips and tactics. For consumer durables, free services and
value addition (free installation) outperform trade discounts.

Sales promotion also involves giving the consumer a reason to buy the
product, in the form of a discount. Also included may be the provision of
incentives for dealers and distributors to help move the product. Sales
promotion has lower costs and requires less capital because it gets the
product moving.
Increasingly, sales promotions are used as a marketing tool, especially

with the rise of E-commerce and online sales. As if on cue, you'll see lots
of 'Online Sale' everyday, where customers can buy impulsively. On-line
retailers can move huge quantities of products across the country or region
they are selling in because of a temporary discount.
3. Personal selling: When salesmen approach prospective customers

directly to explain the products and services they offer, this is the
traditional method of marketing communication. You can communicate
directly either verbally (face to face) or in writing (via emails and text
messages) and it is considered one of the most reliable modes of
communication.

When it comes to converting a lead into a prospect, and ultimately a
paying customer, personal selling is the second most popular method of
doing so. Today, many large firms are focusing on personal selling.

An employee of the company's marketing department will often be present
in a branded retail outlet when you enter it. Having their own brand
promoter on staff ensures that the customer will receive more attention
from the company. Because the company's salesman has been hired
specifically, he'll also have a better understanding of its product and its
competitors' products.
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4. Public relation: People talk about your products or services when you use
public relations, because it creates a buzz and encourages others to do the
same. In the days leading up to the release of a movie or the launch of an
upcoming product, news about the movie or product is published in the
newspapers.

The same is true for public relations. Since its inception, social media has
grown to become one of the most important platforms for public
relations campaigns. You'll see a lot of news about what's trending.

The same goes for press conferences, face-to-face interactions with
consumers, newspaper advertorials, and community involvement. In
spite of this, digital marketing is used by large and small businesses alike
because it helps the brand reach its target audience.

PR turns brand messages into stories that appeal to the media and
target audiences by turning them into compelling stories. News,
strategies, and campaigns are amplified through partnerships with
newspapers, journalists, and other relevant organizations to create a positive
view of the company.
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5. Direct Marketing: Emails, faxes, and mobile phones are used by the
companies to communicate directly with prospective customers without
involving a third party in the process, thanks to the technology. In the last
few years, digital marketing has been putting a lot of pressure on TV
and newspaper ads. To date, digital marketing has nearly surpassed
television advertising in terms of spending, and is the most popular form
of advertising among all media.

Because digital advertising is accessible to even small businesses and less
expensive than traditional television advertising means that even
smaller businesses can participate. As a result, digital advertising
generates much more revenue than television or radio or newspaper. In
spite of this, digital marketing is used by large and small businesses alike
because it helps the brand reach its target audience.

The personal connection that the brand makes with the consumer is the
key attraction of digital marketing. Social marketing allows brands to
enter your private space, such as your email box, your Facebook wall, or
your Twitter feed. Brands that execute successful campaigns can actually
walk away with a large # of digital followers as a result of their efforts.

Other practices in communication mix:

When it comes to marketing, these are the spokes of the wheel.

1. Social media: Although relatively new, social media has changed the way
we communicate by offering 'the next big thing' As part of the direct
marketing section of the communications mix, it can be used to advertise,
retain and gain customers, gather feedback about products or services, and as
a customer service tool.

2. Identity & Image of a Brand: Your Company’s visual appeal is referred
to as your brand identity or corporate image. It's all there, from the company
logo to the colors used in it. Consistent branding across all marketing
collateral tends to be viewed more positively. Businesses with a consistent
image are perceived as more serious and well-organized by customers than
their counterparts, who tend to use a variety of marketing collateral.
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3. Sponsorship: The possibilities are endless when it comes to
sponsoring. With major brands and especially in sports, sponsorship is a
common occurrence. As a result, it is frequently used to attract new
communities and align with them. An effective marketing and
communications tool, sponsorship requires a thorough understanding of your
target audience, as well as the setting of clear goals.

4. Product packaging: In terms of marketing and communications,
packaging can be considered a component of both. As the company's last
point of sale, packaging can make or break a brand's reputation. In
addition to visual design and product writing, packaging can also
communicate effectively through its size and shape, as well as the materials
it is made from. A customer's decision could be influenced by these factors.

5. New variables/innovations: Today's communication tools are vastly
superior to what was available ten years ago or even five years ago for that
matter. You should always keep an eye out for new developments and
releases that could revolutionize the way you communicate with your
target audience.

6. Events and Experiences: In order to reinforce their brand in the minds
of customers and create a long-term association with them, several
companies sponsor sports, entertainment, nonprofit, or community
events. There are signs of the event's sponsor on the playground, player's
jerseys, trophies and awards in the entertainment shows as well as stage
banners and hoardings.

7. Interactive Marketing: Consumers can now interact with companies
online and have their questions answered. Interactive marketing has
recently gained in popularity as a marketing communication tool. Among
most successful interactive marketing campaigns is that of “Amazon”.

8. Word-of- Mouth Marketing: In addition to being one of the most widely
used communication tools, a brand's image is determined by the customer's
perception of the brand and by what he tells others about the brand. Because
it's free, word-of-mouth marketing may be the least expensive form of
advertising a business can engage in.
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Let’s sum up:

We've covered a lot of ground when it comes to marketing. When it comes
to marketing a product to a large audience, it's even more difficult. When
developing a marketing strategy, it's important to keep in mind what
customers like and dislike about products and services.
Who is your target audience and what is the best way to promote?

As a marketing student, you must understand the importance of
scheduling, pricing, distribution channels, and a good promotion plan
when it comes to marketing strategy.

However, you must also have a thorough understanding of the market,
taking into account the services offered by your competitors, and acting
accordingly to that understanding.
The secret of success of your marketing lies in the perfect communication

mix.
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Chapter 32.1: Determining advertising budget
What is advertising budget?
An advertising budget is an estimate of a company's promotional

expenditures over a certain time period. More importantly, it is the
money a company is willing to set aside to accomplish its marketing
objectives.
An advertising budget is the amount of money set aside for purposes of

marketing and advertisements. The cost of advertising amount must be
weighed against the potential recognized revenues that those amounts will
generate.
Demographic research and customer segmentation can create profiles to help

optimize the returns to advertising spending.
Understanding advertising budget:
An advertising budget is part of a company's overall sales or marketing

budget that can be viewed as an investment in a company's growth. The best
advertising budgets—and campaigns—focus on customers' needs and
problems and on providing solutions to these issues, not company problems
such as an overstock reduction.
141
When creating an advertising budget, a company must weigh the value

of spending an advertising dollar against the value of that dollar as
recognized revenue. Before deciding on a specific amount, companies
should make certain determinations to ensure that the advertising budget is
in line with their promotional and marketing goals:
 The target consumer: Knowing the consumer and having

their demographic profile can help guide advertising spend.
 Best media type for the target consumer: Mobile or internet
advertising, via social media, may be the answer, although traditional
media, such as print, television, and radio may be best for a given
product, market, or target consumer.
 Right approach for the target consumer: Depending on the product
or service, consider if appealing to the consumer's emotions or
intelligence is a suitable strategy.
 Expected profit from each dollar of advertising spending: This may
be the most important question to answer, as well as the most difficult.
The following points highlight the top six methods of determining an

advertising budget listed:
 The percentage of sales approach

 The all-you-can afford approach
 The return on investment approach
 The objective and task approach
 The Competitive Parity approach.
1. The percentage of sales approach:
In this method, the sales value of the preceding year is first taken and then
the expected sales during the year in question are arrived at. Thereafter,
some percentage of the expected sales is considered and this is known as
the percentage of sales approach. This method was dominant in the past
and even now it is widely used. It may be a fixed percentage or a percentage
that varies with conditions of sales. The method is simple in calculation. In
this method, a clear relationship exists between sales and advertising
expenses. By adopting this method advertisement war can be avoided.
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In spite of these advantages, this method has little to justify it. This method
does not provide a logical basis for choosing the specific percentage except
what has been done in the past or what competitors are doing. It discourages
experimenting with countercyclical promotion or aggressive spending.
The aim of advertising is to increase the demand for the product and
therefore it should be viewed as the cause, not the result of sales. But this
approach views advertising on the results of sales. It leads to a budget
set by the availability of funds rather than by market opportunities.
2. The all-you-can afford approach:
Under this approach, a company spends as much on advertising as it can

afford. It can spend for advertising as much as the funds permit. From the
name itself, it is clear that the affordable amount set aside for advertising
is known as affordable method. This approach appears to be more realistic,
for all companies generally spend that much amount on advertisements
which they can afford, even though they may not say so.
As advertising outlays are growing out of all proportions in the modern

business, this method seems to provide a basis for many firms with
regard to advertising outlet. Generally, a firm has to take into account
the financial constraints while resorting to advertisement schemes.
As Joel Dean rightly says, “The limit of what a company can afford ought
to involve ultimately the availability of outside funds. In this sense firm’s
resources set a real limit on advertising outlay. However, this limit may be
above the limit set being marginal-return criterion.”
This approach to spending on advertising sometimes proves uneconomical.

The point up to which a firm can afford to spend is a limiting point. If
the increase in sales does not match the expenditure on advertising, it is
evident that this is not a wise or economical way of determining the budget.
This approach is helpful in the following ways in determining the

advertising budget:
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 It produces a fairly defensible cyclical timing of that part of

advertising outlay that has cumulative long-run efforts.
 This method is more suitable to the marginal firms.
 This method sets a reasonable limit to the expenditure to be
incurred on advertising.
However, the method has got some inherent weaknesses and they are the
following:
 It is difficult to plan long-term marketing development.

 The opportunities of advertising may be overlooked.
3. The ROI approach:
This approach treats advertisement as a capital investment rather than

as a more current expenditure.
Advertising has a two-fold effect:
 It increases current sales.

 It builds up future goodwill.
An increase in current sales involves such decisions as the selection of the

optimum rate of output in order to maximize short run profits. The building
up of goodwill for the future calls for a selection of the pattern of investment
which is expected to produce the best scale of production, leading to the
maximum long run profits.
This method emphasizes the relation between advertisement and sales. Sales
are measured with advertising and without advertising. The rate of return
provides a basis for advertising budgeting, as the available funds will
have to be distributed among various kinds of internal investment on
the basis of prospective rate of return.
The limitation to the return on investment approach is that one cannot

accurately judge the rate of return as advertising investment.
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It involves the following problems and they are:
 Problem of measuring the effect of advertisement accumulation

as long run sales volume.
 Problem of estimating the evaporation of the cumulative effects
of advertising, and
 Problem of distinguishing of investment advertising from outlays
for immediate effect.
4. The objective and task approach:
This method is also known as the research objective method. This method
became prominent during the war time. This method calls upon marketers
to develop their promotion budgets by defining their specific objectives,
determining the tasks that must be performed to achieve these
objectives and estimating the cost of performing these tasks. The sum of
these costs define the proposed budget.
This approach is an improvement over the percentage of sales approach. But

the fundamental relationship between the objectives and the advertising
media again depends upon the past experience of the firm. In reality, tasks to
be determined should be related to the objectives of the firm and to the past
records of the firm.
This method has the following advantages:
 It requires management to spell out its assumption about the

relationship between amount spent, exposure level, trial rates and
regular usage.
 This method can be extended to highly promising experimental
and marginal approaches.
 With the help of this method a clear ad program can be drawn.
There are inherent defects in this approach. The important problem of the
method is to measure the value of such objectives and to determine whether
they are worth the cost of attaining them. This method is also highly
irrational.
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5. The competitive parity approach:
This approach is nothing but a variant of the percentage of sales approach. A

firm sets its budget solely depending upon the basis of competitors’
expenditure. The advertising cost is decided on the basis of spending for
advertising by the competitors in the same industry.
Two arguments are advanced for this method. One is that the competitors’
expenditures represent the collective wisdom of the industry. The other is
that it maintains a competitive parity which helps to prevent promotion wars.
Joel Dean claims that this method is widely used. The defensive logic of
large proportion of advertising outlay aims at checking the inroads that
might be made by competitors. The money which an individual firm spends
does not reveal how much it can afford to spend in order to equate its
marginal benefits with marginal costs. He finds that no correlation appears
to exist between the outlay and the size of the firm.
Further, Dean defends this approach on the ground that the advertising
percentages of competitors represent the combined wisdom of the
industry. Another advantage of this method is that it safeguards against
advertising wars.
The main advantages of the method are simplicity and security of its use.
For this a firm has to collect relevant data about competitors. If it is quite
easy for the firm then it is quite easy for it to follow its competitors. The
major problem in this method is that the firm has to identify itself with
others in the industry. Another problem is that it breeds complacency.
6. Expert opinion method:
Many marketing firms follow this method. Both internal and external
experts are asked to estimate the amount to be spent for advertisement
for a given period. Experts, on the basis of the rich experience on the area,
can determine objectively the amount for advertising. Experts supply their
estimate individually or jointly. Advertising budget recommended by
external experts is more neutral.
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Chapter 33.1: Copy designing and testing
Copywriting turns words into action.
But which words? And which action?
Often, copywriters take a strategy for granted. They don’t take the time to
think about what this sentence or that paragraph might be for. They hesitate
to describe the foundations of their method, and instead resort to time-tested
tricks and phrases.
A word for the strategies involved in creating a product or service that fills a
niche and solves a problem. That’s what designers do. The pretty part comes
next (and it’s confusingly called design as well, when it should probably be
called craft.)
Design leads to leaps and breakthroughs. Craft ensures that great design
accomplishes its mission.
Designing effective copy begins with the presumption that you can then
craft the sentences that support that strategy.
But beginning with design ensures that good craft won’t go to waste.
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Freelance designers who produce marketing materials will know that design
and copy should be developed together to work well. But sometimes there
aren’t enough budgets for teaming with a copywriter. Or the client needs a
project in a hurry. That's when being able to produce concept and copy in
addition to design can be a powerful business advantage.
It goes without saying that an ability to write is fundamental. But you

don't have to be a copywriter to produce strong concepts and write copy for
many smaller projects.
Think of the concept as a hook, a lead-in that will grab readers' attention and
persuade them to read on. Think of the copy as a fulfillment of the concept's
premise, the fleshing out of the product story.
Avoid trying to do too much, bombarding readers with multiple copy and
visual messages. For any piece to be persuasive and memorable, its
design, headlines, visuals, and copy must work together to communicate
one single and strong message.
As idea starters, below are thirteen simple concept/copy approaches. Each

has been proven to help deliver sales results.
 Focus on a particularly persuasive benefit: This is a fail-safe

approach to communicating the product message in advertising.
Brainstorm a list of product benefits and focus on the benefit your
reader will find most appealing.
 Create a need and then show how the product fulfils it: A proven
way to position a product is to show how it solves a need or a
problem.
 Focus on the product's Unique Selling Point: The product you're
selling doesn't need to fill an obvious gap in the market to have a
USP. A USP can be a fact about the product (such as sales history,
brand reputation, or product origination)
 Associate the product with a connected idea, feeling, or emotion:
Metaphor is commonly used in consumer advertising, corporate-
identity, and brand-building. It can be particularly effective in
activating an archetype that connects an emotion with the brand.
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 Prove how popular the product is: People trust popular products
because they are seen as reliable and imply good quality. Popularity
messages also respond to deep emotional needs to feel part of a
community.
 Use a case study: Case studies prove validity by showing how
people have already benefited from the product in the past. They are
particularly useful for highlighting success stories, before-and-after,
or for demonstrating the versatility and universality of the product.
 Endorse the product: People trust respected figures in society.

Your lead copy could be a published testimonial or have the client pay
a respected figure to put his/her name to the product.
 Tell the product's story: A product with an interesting background
has real news value, and news makes for an attention-grabbing
message, appealing to the reader's sense of curiosity. Product stories
can also initiate desire for the product by developing the reader's
emotional attachment to the brand.
 Put the product to the test: You can ‘test' the product to highlight its
key features such as convenience, strength, versatility or to show how
the product compares with the competition.
 Announce something new: The word ‘New' is one of the most
powerful words in advertising copy. Sometimes the most effective
message is simply to announce the product's newness.
 Guarantee the product: A guarantee quickly dissolves any

skepticism your reader has about the reliability of the product.
Guarantees can be based around results, quality, durability, strength,
customer satisfaction, a commitment on behalf of the company, fixed
price promises, and lowest price claims.
 Announce how much and where to buy: If the product is
particularly good value for money, you can't go wrong with "the three
Ps": show the Product, show the Price, and show where to Purchase.
 State the offer: People are always looking for a bargain, which is
why the word ‘Free' is another powerful word in the advertiser's
lexicon. If you have a good offer to tell readers about, lead with it.
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Advertising and marketing professionals may use a series of tests and

analytics to create effective advertisements. One of the most commonly
used methods, copy testing, is a great way for these professionals to predict
and measure the success of their ad campaigns among their target audience.
Understanding copy testing and how to apply it to your existing efforts

may contribute to the completion of your promotional goals.
What is copy testing?
Copy testing is an effective form of marketing research that uses consumer

feedback to determine the probable success of an advertisement. Copy
testing often involves a series of tests and measured responses from viewers
of an advertisement before it's launched or aired. Marketing and
advertising professionals then assess the test results using qualitative
and quantitative data to determine the likelihood of the advertisement's
success. These tests may continue after launching the advertisement in order
to monitor its success, allowing brands to make adjustments as necessary.
Why is copy testing important?
There are several reasons copy testing is an important part of successful

marketing and advertising campaigns, including:
 Helps to ensure success: Copy testing is a great way to ensure the

success of your campaigns. By using research and testing based on
statistics, you may be able to more accurately predict the
effectiveness of your advertisement through copy testing. This type of
analysis is often very dependable and may provide you with an accurate
understanding of your advertisement's success, allowing you to make
adjustments and launch the most optimal version of your ad.
 Saves resources: Bec’ success of ads that have gone through copy
testing is of greater probability; there may be less likelihood of wasted
time and money on ineffective campaigns. Copy testing is a great way
to ensure your advertisement will perform as desired and may save
valuable resources.
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 Increases customer outreach: Copy testing is an effective way to

learn about your target audience and engage with them in a way that is
most impact. The data and insight learned through copy testing may
help you create advertisements that strongly connect with your
customer base, which could drive sales, increase revenue, promote
customer loyalty and contribute to the overall success of your advertising
efforts.
 Promotes continued improvement: Copy testing may provide brands

and businesses with an opportunity for continued learning. Each copy
test may provide new and valuable information about the
effectiveness of your advertisements. You may apply this information
to future campaigns to produce effective ads that meet your promotional
expectations.
7 methods of copy testing:
There are several commonly used methods of copy testing that may help to
ensure the success of your advertisements, including:
1. Automated: Automated copy testing uses software to send variations of

advertisements to a target audience of registered consumers who have
agreed to provide feedback. The software compiles analytics based on
consumer feedback and you may use this information to eliminate less-
successful versions or increase the number of versions that were highly
successful. Automated copy testing can provide brands and businesses with
a highly accurate depiction of their advertisement's success while saving
time and efforts often involved in traditional, non-automated methods.
2. Focus group: Focus group copy testing is one of the most traditional
methods. This method often involves outsourcing copy testing to a market
research firm. The research firms then form focus groups that represent the
demographics of your target audience and begin testing versions of your
advertisement among them. When collecting feedback, market research
firms may focus on:
 Measurements of how the focus group perceives your brand

before seeing the advertisement
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 How the focus group receives of the presentation of your

advertisement in differing contexts
 Measurements of how the focus group perceives your brand after
seeing the advertisement
 Data about focus group's buying habits, interested and consumer
behaviors
3. Consumer jury: The consumer jury method of copy testing works

similarly to focus group testing, though you may be able to conduct
consumer jury tests without outsourcing to a market research firm. You can
use the consumer jury method to distribute versions of your advertisement to
selected members of your target audience and ask them to compare, rank and
evaluate your advertisements. Often, brands and businesses offer a benefit in
exchange for participation in consumer jury testing, such as a free product or
discounted service. Consumer juries are a cost-effective way to gauge the
effectiveness of your advertisements among potential buyers.
4. Rating scale: The rating scale method involves specific, pre-defined

standards for effective advertising. You can use these standards to compare
different versions of your advertisement and determine which most
successfully meets your requirements. The requirements used to measure
your advertisement's success may vary depending on your objectives but
may be helpful in standardizing your efforts, promoting consistency across
your campaigns and ensuring high-quality promotional material.
5. Portfolio: Portfolio copy testing involves providing a portfolio of versions

of an advertisement to chosen representatives of your target audience. Often,
one of the versions is the most likely choice for final circulation- you may
place this version in the portfolio among alternative options. Your consumer
representatives then provide feedback about which versions were most
memorable or attractive. You may use this method in the final stages of
advertisement creation to ensure the final version of your ad is effective for
your target audience. If your consumer representatives select a version that
differs from your final version, you may consider making improvements to
your advertisement to enhance its perception among your customer base.
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6. Psychological: Psychological copy testing is a great way to study the

psychological impact of your advertisements. This method often involves
the expertise of skilled interviews and psychologists, but its results are often
very dependable and may provide valuable insight into effective
advertisement techniques and aspects like:
 Word association
 Sentence completion
 Depth
 Storytelling
 Emotional response
 Readability
 Believability
During psychological copy testing, you can ask members of your target
audience to view versions of your advertisements and discuss their responses
with a skilled interviewer. Then, using the collective results, you can make
changes to your advertisement to ensure optimal psychological impact.
7. Sales copy: Sales copy testing is an accurate way to measure the success
of your advertisements based on the amount of revenue brought in by your
target audience after launching the ad. You can associate the effectiveness of
your advertisement with the number of sales generated after its circulation.
You may also categorize your target audience into smaller subcategories and
use their revenue to determine which is the most profitable to focus your
advertising efforts. Sales copy testing is an effective way to test your
advertisements within your actual target audience and adjust your efforts as
necessary to maximize the success of your campaigns.
Tips for copy testing:
Below are some additional tips that may help you successfully use copy
testing in your marketing and advertising efforts:
 Learn from ineffective ads: Even if your target audience doesn't

respond successfully to early versions of your ad, this is a great
opportunity for learning and improving your future advertisements.
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Try to remember that ineffective advertisements offer a large amount

of information that when applied to future campaigns, may help to
ensure the success of your efforts.
Do your best to note areas of improvement and proactively respond

when they arise.
 Use large test groups: Often, the larger the test group, the more
accurate the results of your copy testing.
Whenever possible, do your best to include a large audience of

consumers to review your advertisements and provide feedback.
To attract consumers to your copy testing efforts, consider offering a

benefit in exchange for their participation, partnering with similar
brands to access new audiences and using social media or newsletters
to directly connect with your audience and inform them of the
opportunity to take part in your testing.
 Include multivariate testing: Multivariate testing means testing

multiple versions of your advertisement that contain interchangeable
elements or multiple variables.
For example, a color scheme that is ineffective on its own may

increase in effectiveness when paired with a particular style of font.
You can determine information like this by including different

combinations of stylistic elements throughout the versions of your
advertisement.
This may help you determine which combinations are most effective.
and could help you curate an advertisement that most successfully
fulfills your promotional requirements.
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Chapter 35.1: Advertising effectiveness
What is advertising effectiveness and how to measure it?
Assessing advertising effectiveness is crucial for all kinds of online as well

as offline businesses.
While running ad campaigns for your business, it is fundamental that you

inspect the behavioral inclinations and insights of your customers. It not
only makes your advertisements more result-driven but also ensures
better returns on your ad spend.
By checking the effectiveness of your advertising efforts, you also

safeguard yourself from wasting your efforts and money on
the strategies which are just not working. Advertising is useful in
enabling brands to optimize their reaches and lead generations.
Checking the effectiveness of advertisements assists a brand in deciding

whether their advertisements are moving ahead on the right path where
relevant audiences are being targeted, and conversion potential is optimized.
This will empower you to gauge the qualities, shortcomings, and ROI of

your advertisements so that you can tweak them in a more personalized
and result-oriented manner.
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At the time, when more and more purchasers prefer to take control of their
ads and like to block those ads that they would prefer not to see, it has
become inevitable for the brands to make their ads customized as per
the preferences of target audiences.
An analysis will take you deep into some of the critical metrics and
techniques that should be used for gauging the effectiveness of advertising
campaigns.
So, let us get started straight away.
Advertising effectiveness:
Advertisements are the backbone of any business, and undoubtedly, brands

should focus on the relevant ad campaigns to optimize their reach, lead
generations, and sales.
But the question that might arise here is:
 How do you know if your advertising techniques are working or

not?
That’s where the measurement of advertising effectiveness comes into

play. You need to measure if your advertisements are capable of meeting the
expectations and offering you good returns on investments.
Now, this measurement technique may not be the same for all the brands,
and there is no rulebook here. You can’t define a single method to solve
your query on the advertising effectiveness.
Let’s look at a few of the professional approaches to measure the

effectiveness of the advertisement.
Best ways of measuring advertising effectiveness:
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Measuring a few key factors of successful advertising campaigns is essential
for gauging the effectiveness of any ad campaigns. Below given factors will
help you in checking the advertising effectiveness of your brand ads:
1. Cost per new customer:
What’s the sole purpose of your ad? To generate sales! So why not start
from measuring cost per new customer to define ad’s effectiveness. You can
measure it by dividing the total cost of the advertisement by new customers
that were brought through the ad. Next, the cost per new customer and
revenue per new customer is calculated.
If this revenue is more than the cost, then your ad is doing well. You can
keep that ad until revenue minus cost is positive.
2. Custom conversions:
To measure ROI – custom conversions are indeed the best way. Platforms
like Facebook allow you to set filters of purchases through ads. Custom
conversions enable marketers in tracking and optimizing
advertisements for the conversions in the most alleviated manner, as
there would less manual code adding to your site for tracking effectiveness.
3. Impact of the campaign:
You want your ad to be seen by your audience, but it’s not that simple. Your
ad sits at a full website or a source where there’s already tons of ads. If your
ad is not able to break through it, then it’s not performing. Now, just by
creating catchy headlines, you can get the attention, but what if the ad is not
able to make a lasting brand impact? Hence a successful ad campaign not
only drives the attention of people but also creates a lasting brand
impact.
4. Reality v/s expectations:
You don’t always get what you expect, and that’s natural, but if you are not
even close to your expectations, then there’s a need to worry. All of us
expect something from our ad campaigns. At first, it is essential to set
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realistic expectations. Then it would help if you find out what your ad is
delivering you—shorter the gap between reality and expectations, better
the performance of your advertisement.
5. Check certain metrics:
You need to check specific metrics to check the advertising effectiveness of

your ad campaigns.
Let us have a look at those advertisement metrics here and now:
 Click-through rate (CTR): If your audience is viewing your ad and

not clicking on it, then the purpose of your ad is still not fulfilled. You
need to compare the number of people who viewed your ad and the
number of people who clicked on it. If this difference is high, then your
ad is not performing well.
 Cost per Click (CPC): You need to compare the amount that you are
spending on an ad and the number of people who clicked on your ad.
Again, if the difference is too high, then your ad is not performing well.
 Cost per Acquisition (CPA): This is simple: You need to find out how
much you are spending to get a sale. If your expenses are higher than the
revenue, then your ad is underperforming.
 Cost per lead (CPL): Here, you need to find out how much lead you
are generating through your expenses on an ad. By this, you can also
figure out how much you need to spend on the lead generation.
Through these metrics, you can find out the effectiveness of your
advertisement.
6. Measure different objectives to get better results on ROI:
Not all the ads have the same purpose; we do agree that the end goal is to
generate revenue, but objectives are often divided. There may be several
checkpoints to get a bigger goal. You may be expecting brand
awareness, customer retention, engagement, and so on through your new
ad campaign. Hence you need to measure all this to get a better idea of
ROI. The type of ad also defines which of the above objectives are fulfilled.
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Hence, just by looking at the revenue, you can’t always predict the
effectiveness of your advertisement. To get a broader picture, you need to
look at other factors as well.

Undoubtedly, the methods to measure ad effectiveness are increasing day

by day, and it depends on your business and ad type that which method
suits you.
Let’s look at some key points to follow while measuring the ad’s
effectiveness:
 Have clear goals and realistic expectations: You can’t measure

something without having an objective. More important is having valid
expectations; you can’t expect something unachievable. Be practical
with your objectives.
 It might be possible that your ad is not placed on the right channel:
Calling your ad in-effective is not always the right idea; you might
consider changing the channel as well.
 Always give your ads the right amount of time to air: Your results
from the measurement are only valid if you gave enough time to your
campaign. You can’t expect a month’s result in just a week.
 You need to find out if your audience is getting the message: Your
ad won’t do anything if it’s not reaching the target audience. Keep track
of its progress as well.
So, it’s not always the fault with your ad, but there are several other
factors that you should look before changing your advertisement.
Measuring an ad’s effectiveness is never easy as it requires proper expertise,
and the strategies mentioned above will assist you in the process quite
adeptly.
Final thoughts:
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Ads perform the best if they are tracked correctly. Nothing is perfect; hence,
there are chances that your ad may have certain flaws. You need to find and
fix them at earliest. If you are tracking your ad well, then only you can
detect those flaws. Consider factors you consider the most useful in tracking
the effectiveness of your ad campaigns.
Chapter 36.1: Sales promotion – tools and techniques
Concept and nature of sales promotion:
Sales promotion is an important tool of promotion which supplements

personal selling and advertising efforts. According to American
Marketing Association, “Sales promotion includes those marketing
activities, other than personal selling, advertising, and publicity, that
stimulate consumer purchasing and dealer effectiveness, such as displays,
shows and expositions, demonstration, and various non-recurrent selling
efforts not in the ordinary routine.”
Sales promotion includes techniques like free samples, premium on sale,

sales and dealer incentives, contests, fairs and exhibitions, public
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relations activities, etc. Sales promotions are those activities, other than
advertising and personal selling that stimulate market demand for
products. The basic purpose is to stimulate on the spot buying by
prospective customers through short-term incentives. These incentives
are essentially temporary and non-recurring in nature.
Sales promotion is different from personal selling which is persuasion of

customers by the sales persons to buy certain products. It is also different
from advertising. Except for advertising through direct mail, advertising
deals with media owned and controlled by the firm itself.
Usually, sales promotion deals with non-recurring and non-routine

methods in contrast to personal selling or advertising. As a matter of fact,
sales promotion activities aim at supplementing and co-coordinating
personal selling and advertising.
Sales promotion includes activities of non-routine nature to promote

sales, e.g., distribution of samples, discount coupons, contests, display of
goods, fairs and exhibitions, etc. But it does not include advertisement,
publicity and personal selling.
Objectives of sales promotion:
The basic purpose of sales promotion is to increase the sales of a product

by creating demand. Sales promotion has a capability to complement
and supplement the advertising functions of the marketing. It helps
marketers to realize a variety of objectives. These objectives are for both
marketers and traders.
Following are the objectives of sales promotion:
 It improves the performance of middlemen and acts as a supplement

to advertising and personal selling.
 It motivates sales force to give desire emphasis on new accounts,
latent accounts, new products and new territories.
 It increases sales and makes sales of slow moving products faster and
stabilize fluctuating sales pattern.
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 It attracts channel members to participate in manufacturer promotion
effort.
 Motivating the dealers to buy high volumes of products and push
more of the brands that are on promotion.

 Supporting and supplementing advertising and personal selling

efforts.
 Making consumers to switch brands in favour of firm.
 To overcome the seasonal fluctuation of products.
 Inducing retailers to promote the brand by local advertising and POP
display.
 Sales promotions motivate the salesmen to sell more and to sell the
full line of products.
 To reduce the perception of risk associated with the purchase of a
product.
Sales promotion tools and programs:
Sales promotion techniques are known as promotion tools and the mode of
their application is known as sales program.
These tools and programs are divided under two heads:
 Tools and programs for consumer sales promotion.

 Tools and programs for dealer/distributor sales promotion
1. Tools and programs for Consumer Sales Promotion:
 Sample: Also known as consumer sample or free samples and given

to consumers to introduce a new product or to expand the market. The
consumers are expected to be convinced to use the product.
 Demonstrations or instructions: These are instructions given to aware
the consumers about using the product. This method may be used in
products like washing machine.
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 Coupon: It is a certificate that reduces the price. When a buyer gives a
coupon to the dealer or retailer he gets the product at lower price. It
gives expected result.
 Money-refund orders: The technique indicates refund of full purchase
price if the buyer so wants. It is helpful in the introduction of a new
product. Refund offer creates additional interest and increases sales
considerably. It is a good device for creating new user and to
strengthen the brand loyalty.
 Premium (Gift) offers: These are temporary price reductions, which

appeal to bargain instinct. Towels, dinner ware, hair-brushes, key-
chains, artificial flowers, ball pens, toilet soaps, bathing soaps, blades,
are given as in-pack premiums. BUY ONE GET ONE, BUY TWO
GET ONE FREE are usual offers made to customers to appeal them.
 Price-off: The price off label is printed on the package that is a certain
amount is reduced from the actual price to woo the customers. It gives
a temporary discount to the consumers.
 Contests or quizzes: These are held to stimulate consumer’s interest in
the product. In these contests, participants compete for prizes on the
basis of their skill or creative ideas. In this type of sales promotion,
prizes are offered in kinds (especially the products of the company).
 Trading stamps: Trading or Bonus stamps are issued by retailers to
customers who buy goods from there. The number of stamp given to a
buyer depends upon the amount of purchases made by him. Stamps
are issued at predetermined percent rate of the purchase amount.
These stamps are given free of charge and the customers can redeem
them to obtain products out of the specified list.
 Fairs and exhibitions: Trade shows, fashion shows or parades, fairs
and exhibitions are important technique/tools of sales promotion.
They provide a forum for the exhibitions or demonstration of
products. Free literature can be distributed to introduce the firm and
its products to the public. Fairs and exhibitions are organized usually
by big firms or trade associations. At these fairs and exhibitions,
business firms are allotted stalls wherein they display their products
and attract the customers through gifts, special concessions and free
demonstrations of technical and specialty products.
 PR activities: These include greetings or thanks in newspapers,
donating space for noble causes, offer of Privileged Citizen Card, etc.
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Their purpose is not to create immediate demand or to increase sales.
They are designed to create a good image of the firm in the society.
 Exchange scheme: This technique offers to exchange the old product
with new one in payment of a fixed amount which is less than the
original price. For example, exchange of old Black & White
Television for Color Television by paying rupees 8000 only (original
price is rupees 10000) was offered by a particular producer of color
TV sets.
2. Tools and Programs for Dealers/Distributors Sales Promotion:
 Free display: There is provision of free display of material either at

the point of purchase (POP) or at the point of sale (POS), depending
on one’s view point. Display reaches consumers when they are buying
and actually spending their money.
 Retail demonstrations: These are arranged by manufactures for
preparing and distributing the products as a retail sample, for example,
Nescafe Instant Coffee was served to consumers for trying the sample
on the spot of demonstration regarding the method of using the
product.
 Trade deals: These are offered to encourage retailers to give
additional selling support to the product, e.g., tooth paste sold with
30% to 40% margin.
 Buying allowance: Sellers give buying allowance of a certain amount
of money for a product bought.
 Buy-back allowance: It is offered to encourage repurchase of a
product immediately after another trade deal. A buy back is a resale
opportunity.
 Advertising and display allowance: These are also offered to retailers
to popularize the product and brand name of the manufacturer.
 Contests: Sales contests are held for salesmen. These are usually
aimed at increasing the performance of the sales persons.
 Dealer loader: A gift for an order is a premium given to the retailer
for buying certain quantities of goods or for special display done by
the retailer.
 Training for salesmen: Periodical training programs are conducted by
dealers and distributors for salesmen to give them a better knowledge
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of a product and its usage. Dealer sales promotion provides the selling
devices. Sales promotion devices at the point of purchase inform,
remind, and stimulate buyers to purchase products. People who see
these devices are in a buying mood and thus they can be easily
persuaded to buy those products. Tell tags are informative labels
affixed on the product, describing in detail the features of the product
and its unique selling points. Counter, top racks, posters, mechanized
signs are other point-of purchase displays.

Benefits of sales promotion:
 Creates differentiation: When you launch a new product or ask

customers to engage with your business in a new way, this sets you
apart from your competition. Promotion planning compels you to
identify something new or different that offers value to your
customers.
 Creates new content and communication opportunities: One of the

easiest ways to create new content for your customers is to create
news by using sales promotion.
 Creates upsell and cross sell opportunities: When you package or

bundle products around a theme or solution, you can often generate
sales of multiple items rather than a single item.
 Drives customer decision making: Limited availability offers can
create a sense of scarcity in your customers that get them to act. If you
can add sampling of your promotional item to the mix, you can create
compelling reasons to buy.
 Creates word-of-mouth opportunities: Promotions can often get your

regular customers a new reason to be surprised and delighted by your
business which gets them to talk about your product to their friends.
 Creates training opportunities for staff: Promotions give a chance to
train, prepare and re-engage the sales staff in what’s new in the
business.
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 Creates testing opportunities: Promotion gives a limited time window
to test new ideas and new products and to measure them. This will
help to figure out whether they warrant additional investment of time
and money to make them permanent products or services.
 Grows revenue: Sales promotions are a great way to build year-over-

year and month-over-month revenue growth.

Limitations of sales promotion:
Sales promotion activities are often criticized on the following grounds:
 No real incentives: The incentives offered through sales promotion

schemes are fictional, and not real. It is said that the manufacturer will
realize the cost of these incentives by raising the price of goods.
 Shoddy products are passed-off: Only products which are lacking in

quality, or are not likely to be favored by consumers, require sales
promotion efforts.
 Short-term perspective: The sales promotion schemes are carried out

during particular seasons and not on a permanent basis; the results
achieved through them are generally short-lived. As soon as the
incentives offered under such schemes are withdrawn, the benefit in
terms of increased sales may also vanish.
 Switching of demand: Sales promotion shifts demand from one brand

to another. It does not create new demand.
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 Reflection of crisis: Frequent use of sales promotion activities may
lead consumers to think that the product is of inferior quality. They
may not, therefore, prefer to buy such products.
Module 5: Marketing research

Chapter 37.1: Meaning and scope of marketing research
Meaning of marketing research:
Marketing research is a process of analyzing and conducting research

about the market to understand market trends. It involves proper
collection, analysis and interpretation of information regarding market
conditions.
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Marketing research is mainly conducted to identify changes in
preferences and behavior of customers arising from the change in
market mix elements viz. promotion, place, price and product.
It may be defined as the mechanism which helps in linking the

customers, producers and several other end users to the marketer and
help in finding and communicating of all required information.

Scope of Marketing Research:
 Determines consumer behavior:
Market research helps the organization in understanding the behavior of

customers. It performs research and acquires data like age, gender,
income, likes, dislikes etc. related to customers. All this data provided to
an organization helps them in developing the right product as to satisfy
their wants. Marketing research helps organizations in understanding
the needs and wants of customers and thereby accordingly formulates
their production policies.
 Provides valuable data:
Effective decision making of any organization depends entirely on the

quality of information available with it. Marketing research supplies all
important information about the market to the management team. MR keeps
organization aware of market factors like demand, supply, competition,
technological changes, consumer behavior etc. All this information is vital
for strategic decision making. Managers frame all their organization policies
in accordance with data supplied by marketing research.
 Helps in sales forecasting:
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Marketing research supports business activities by forecasting sales using
different techniques. Producing and maintaining an optimum level of
inventory in the organization is a challenging task in front of every product
manager. Producing goods in accordance with the demand helps in reducing
risk and raising profit. Over-producing and under-producing of goods
adversely affects the business. Marketing research helps in forecasting
sales using sales-force method, jury-method etc. and supplies data to the
organization. This helps in framing production policies accordingly.
 Lowers business risk:
Marketing research plays an important role in reducing business risk

and raising the revenue of the business organization. It helps businesses
in carrying on their operations in accordance with market
requirements. The business acquires all current data and generalized
information about market trends. All decisions are taken in order to focus
on the customer’s current demands and thereby producing the right
product. This results in avoiding resources of organization and lowering
risk.
 Evaluates market performance:
Market performance has an effective role in developing a good image of the

business in the market. Marketing research helps the business in
evaluating its performance in the market and taking action accordingly
to improve it. It checks the effects of product, price, brand name, packaging
etc. on sales volume. Marketing research studies the customer response
towards company products in the market and provides all data. It
evaluates and helps in choosing best pricing policies, distribution
channel and advertising techniques which help in improving the market
performance.
 Facilitates introduction of new products:
169
Marketing research enables the business to examine and introduce their
new products in the market. It enables to conduct testing of new products
in small or local markets initially and studies consumer reaction
towards it. This helps the business in understanding the deficiencies and
problem in their product. They can accordingly overcome these issues and
develops an efficient marketing mix for their products. All these help in
minimizing the risk involved in the launching of a new product.

 Choose best promotion techniques:
Selection of proper promotional techniques is a must for increasing the sales

of a business. Marketing research helps business in deciding suitable
promotional and marketing programs for their products. It helps the
business in understanding the customers’ needs and behavior. Accordingly,
promotional techniques are designed and implemented which display
the keys wants of customers as the product features. It has an influencing
and long-lasting effect on customers and helps in attracting more of them.
Marketing research increases the sales of a business by choosing the
best promotional measures.
Objectives of Marketing Research:
 Identify customer needs and expectations:
Marketing research helps business in understanding the needs and wants of

customers. Proper knowledge of what customers want is necessary to deliver
the products as per their expectations. Marketing research involves
reaching out to customers and interacting with them to understand
their demands. It helps in developing the right product as per customer
requirements.
 Minimize marketing costs:
Marketing research process monitors and controls all marketing

programs. It performs a proper analysis and research of the market
before formulating various marketing policies. It helps in choosing the
170
efficient means of advertising and distributing the goods to reduce the
marketing expenses. Marketing strategies used by competitors are also
analyzed through this process to design better plans for marketing.
 Setting up proper pricing policy:
Deciding a proper price is a crucial decision for every business organization.

Pricing policy should be such that it should neither adversely affects the
customers nor the organization itself.
Market research conducts research about price policies adopted by several

other competitors in the market. It collects a considerable amount of
information regarding what competitors are charging and also what
customers are willing to pay. This all helps in deciding optimum prices for
different products.
 Finds target market and new opportunities:
Identifying potential customers and new opportunities are important for

grabbing the market. Marketing research explores the wide and large
markets and finds out the opportunities for new products by recognizing the
unfulfilled needs of customers.
It finds and gathers collection about new areas where its products can
be sold. Different information about people of that area like their taste
and preferences, purchasing power, culture and tradition is collected
and analyzed to target that area.
 Recognizes deficiencies in products:
Marketing research helps companies in identifying the deficiencies in their

products. Timely identification and removal of faults from company
products is essential to retain its image in the market. Marketing
research process involves interacting with customers and takes their
valuable feedback and suggestions.
171
These suggestions and feedback from customers help the companies in
improving their product quality. Marketing research also informs of any
technological changes in market, so that timely changes can be made.
 Product positioning in market:
Positioning of products among targeted customers is an important task. It is

the means through which customers are attracted and the market for the
product is developed. Marketing research process collects all relevant
information about the targeted audience.

This information helps in designing a company offer an image that may

attract customers and have a long-lasting effect on their mind. Positioning
strategy is designed differently for each product that may attract large
customers. These strategies should clearly denote the main features of
products.
Conclusion:
5 factors you should consider when doing market research:
 Is the target market worth anything for my business?

 Is the target market manageable enough?
 Who will I be fighting to attract the target market?
 What do I want out of my market research in the first place?
 Do I need help doing my market research?
Marketing research plays an important role in studying consumer

behavior. It is very efficient tool for the marketers to understand the trends
of the market that mainly consists of information relating to new product
launch in the market, trends in consumer demand, pricing strategy of the
competitor and available close substitutes of the product.
Marketing research companies easily identify what their customers want

which helps in developing products of their use so that competitive
advantage over other competitors can be maintained in the market. It helps
172
in finding out the target market and interacts directly with potential
customers to get valuable feedback and suggestions. These all
information acquired through this process enables in the smooth functioning
of the marketing process.
Marketing research includes the complete analysis of the market.

Information regarding the nature, size, organization profitability of different
markets, changes in markets and various factors, economic, social and
political-affecting those changes are studied vigorously.
Chapter 38.1: Marketing research process
Marketing research is a useful and necessary tool for helping marketers

and an organization’s executive leadership makes wise decisions. Carrying
out marketing research can involve highly specialized skills that go deeper
than the information. However, it is important for any marketer to be
173
familiar with the basic procedures and techniques of marketing
research.
It is very likely that at some point a marketing professional will need to

supervise an internal marketing research activity or to work with an outside
marketing research firm to conduct a research project. Managers who
understand the research function can do a better job of framing the
problem and critically appraising the proposals made by research
specialists. They are also in a better position to evaluate their findings
and recommendations.
The Marketing Research is the systematic collection, analysis and

interpretation of data pertaining to the marketing conditions.
The basic reason for carrying out the marketing research is to find out
the change in the consumer behavior due to the change in the elements
of the marketing mix (product, price, place, promotion).
The marketers need to know about the changing trends in the market viz.
changes in the customer’s tastes and preferences, the new products launched
in the market, prices of the competitor’s product, the close substitutes of the
product, etc.
Periodically marketers themselves need to find solutions to marketing

problems without the assistance of marketing research specialists inside or
outside the company. If you are familiar with the basic procedures of
marketing research, you can supervise and even conduct a reasonably
satisfactory search for the information needed.
The marketing research process involves six steps:
 Problem definition
 Development of an approach to the problem
 Research design formulation
 Data collection
 Data preparation and analysis, and
 Report preparation and presentation
174
 1. Define the problem:
The first step in any marketing research study is to define the problem,
while taking into account the purpose of the study, the relevant
background information, what information is needed, and how it will be
used in decision making.

The foremost decision that every firm has to undertake is to find out the
problem for which the research is to be conducted. The problem must be
defined adequately because if it is too vague, then it may result in the
wastage of scarce resources and if it is too narrow, then the exact
conclusion cannot be drawn. In order to define the problem
appropriately, each firm must have a clear answer to the questions viz.
 What is to be researched (content and the scope)?

 Why the research is to be done (decisions that are to be made)?
This stage involves discussion with the decision makers, interviews with
industry experts, analysis of secondary data, and, perhaps, some
qualitative research, such as focus groups.
There are three types of objectives that can be deployed in marketing

research:
 Exploratory research
 Descriptive research
 Causal research
 2. Develop the research plan:
This step involves gathering the information relevant to the research

objective. It includes:
175
 Data sources: The researcher can collect the data pertaining to the
research problem from either the primary source or the
secondary source or both the sources of information. The primary
source is the first-hand data that does not exist in any books or
research reports whereas the secondary data is the second-hand data
which is available in the books, journals, reports, etc.
 Research approaches: The secondary data are readily available in

books, journals, magazines, reports, online, etc. But the primary
data have to be collected and to do so, the following research can be
conducted:
 Observational Research: The researcher can collect the

information by just observing the happenings in the market and
sometimes having a friendly conversation with the customers to know
about their purchase experiences.
 Ethnographic research: It is one of the forms of an observation
research where the researcher studies an individual in the real life
situation and not under any market setup or a lab. The purpose of this
research is to know the way people live (their lifestyles), what they do
to earn their livelihood, how they consume goods and services, what
they need in their personal and professional lives etc.
 Focus group research: It is a form of group discussion wherein
six to ten people gather and discuss the common topic given by the
moderator. A moderator is a person who conducts the group
discussion and is skilled in group dynamics. He also keeps the
discussion focused on the topic so that relevant information can be
obtained from the group members.
 Survey research: These are the descriptive research generally
conducted to know the about the customer’s knowledge about the
product, their preferences, and satisfaction level. The best way to
conduct surveys is through the Questionnaires.
 Behavioral data: The customer’s actual purchases at the store
reflect its behavior and the choice of products. Thus observing what
customers are buying gives more accurate information about the
customer rather than the planned answers given by them in the
surveys.
176
 Experimental research: This is done to find out the cause and
effect relationships. This research is undertaken to study the effects of
change in the customer’s behavior due to the change in the product’s
attributes.
 Sampling plan: Once the research approach is decided, the
researcher has to design a sampling plan and have to decide on the
following:
o The sampling unit i.e. whom, shall we survey?

o The sample size, i.e., how many units in the population shall
be surveyed?

o The sampling procedure, i.e. how the respondents shall be

chosen?
 Contact methods: The researcher has to choose the

medium through which the respondents can be contacted. The
respondents can be reached via emails, telephone, in person or
online.
 3. Collect the information:
This is one of the most expensive methods of marketing research. At this

stage, the researcher has to adopt the methods to collect the information; he
may find it difficult to gather the correct information because of the
respondent’s biasedness, unwillingness to give answers or not at home.
 4. Analyze the information:
Once the information is collected the next step is to organize it in such a way
that some analysis can be obtained. The researchers apply several statistical
techniques to perform the analysis, such as they compute averages and
measures of dispersion. Also, some advanced decision models are used to
analyze the data.
 5. Present the findings:
177
Finally, all the findings and the research are shown to the top management
level viz. Managing director, CEO, or board of directors to make the
marketing decisions in line with the research.
 6. Make the decision:
This is the last step of the marketing research, once the findings are
presented to the top level management it is up to them either to rely on the
findings and take decisions or discard the findings as unsuitable.
Thus, marketing research is done to gather all the relevant information about
the market and design the marketing strategies accordingly.
Chapter 39.1: Marketing organization
The Marketing organization is the vehicle for making decisions on all

marketing areas viz. products, marketing channels, prices, physical
distributions and promotions.
178
It establishes the authority relationships among marketing personals and
specialists who are responsible for making marketing decisions and planning
that are essential for the success of any business firm.
Hence, we can say that marketing organization is an organizational

structure which implements the policies of the enterprise, helps in
taking decisions regarding production, packing, price, advertisement,
sales promotion, branding, trade mark and channels of distribution etc.
It helps in making marketing activities of the enterprise suitable to the

needs and specifications of the marketing and helps in implementing the
decisions, so that predetermined objectives of the enterprise may be
achieved.

Need for Marketing Organization:
In the technological arena, modern marketing activities are consumer

oriented. Thus, to sustain in the competitive market, the business
enterprise requires a marketing organization that can take decision on
the marketing factors viz. product, price, promotions, etc. to satisfy the
needs and desires of customers and maximize profit of the enterprise.
Therefore, a sound marketing organization is the pillar for success for

any business enterprise and provides a framework to establish an
authority among the sub-ordinates, locate responsibility, establish sales
routines, enforces proper supervision of sales force, avoid repetitive
duties and enable the top executives to devote more time for planning
policy matters.
Principles of Organization:
Following are the important principles of organization:
 Unity of Objectivity: The attainment of objectives is the main purpose

of the organizing. An organization and every part of it should be
directed towards the accomplishment of objectives. Every member of
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the organization should be familiar with the common objectives or goals.
Thus, the organizational goals, departmental goals and individual goals
must be clearly defined.
 Efficiency: An organization is efficient if it is able to accomplish

pre-determined objectives at minimum possible cost. An organization
must also provide maximum possible satisfaction to its employees and
should also contribute to the welfare of the community.
 Division of work: For the sound and effective organization, the total
task should be divided in such a manner that the work of every
individual in the organization is limited and the work should be assigned
to the right person according to his physical, mental and psychological
capacities.

 Span of control: Due to limitation of time and ability, no executive

can effectively supervise more than a particular number of subordinates.
Therefore, every executive should be asked to supervise a reasonable
number of executives depending upon his ability, his job, the
complexities of duties of his sub-ordinates, the nature and importance of
work to be supervised, etc.
 Scalar Principle: It is sometimes also known as the chain command.

According to the principle, the authority and responsibility should be
in a clear line from the top to the bottom of the organization. The
clearer the line of authority in an enterprise, the more effective will be
communication and responsible decision making.
 Delegation: The authority delegated to an individual manager

should be adequate to enable him to accomplish results expected of him.
 Functional Definition: The duties, responsibilities, authorities and

organizational relationships of an individual working on a particular
position should be clearly defined so that there is no confusion. The
180
clearly defined duties and authorities of an individual will contribute
towards the accomplishment of objectives more effectively.
 Authority and responsibility: It is the tool by which a manager is able

to create an environment for individual performance. Thus, the authority
and responsibility of each manager and supervisor should be clearly
defined. Every manager should be held responsible for the acts of his
subordinates as well as his own acts.
 Unity of command: The subordinates should receive orders from only

one supervisor and no one should be accountable to more than one boss
at a time. This will avoid confusion, disorder and indiscipline. Thus, this
principle creates the feeling of personal responsibility and avoids the
problems of conflicts.
 Unity of direction: For the sound and effective organization, there

must be one head and one plan for group of activities directed towards
the same objectives.
 Co-ordination: There must be an orderly arrangement of group

effort and unity of action and co-ordination of activities at various levels.
 Flexibility: The organization structure should be flexible so that it

can be easily adjusted to changing conditions. The organization structure
should permit expansions, mergers and replacements, etc. without
disturbing the basic design.
 Continuity: The organization should be so structured as to have

continuity of operations.
 Communication: For the sound and effective organization, the

effective communication is necessary. It is the process of
transformation of information from one person to another of different
levels. It involves the systematic and continuous process of telling,
listening and understanding opinions ideas, feelings, information, views,
etc. of employees of the organization.
181
 Simplicity: For the better communication and co-ordinations, the
levels of the organization should be kept as minimum as possible. This
principle focuses on the simplicity of an organizational structure.
Importance of Organization:
The sound organization can contribute to the success of an enterprise in the

following ways:
 Facilitates administration: Organization provides the framework

within which the functions of co-ordination and control can be performed
effectively. It increases managerial efficiency, avoid delay and
duplication of work, motivates employees, etc. It provides a system of
authority and a network for effective communication.
 Optimum use of resources and new technology: In the business

enterprise, an optimum use of technological improvements can be made
through a sound structure. In addition, a sound organization permits
optimum use of human resources and ensures that every individual is
placed on the job for which it is best suited.
 Helps in the growth of enterprise: The sound organization enables

an enterprise to grow. The systematic division of work and delegation
of authority facilitate to take up new activities and meet public demands
of the market.
 Facilitates co-ordination: The sound organization assigns right job

to right person, improves job satisfaction and interpersonal relations.
The well-defined job and clear line of authority and responsibility helps
to establish cordial relations between the different departments or
divisions of an enterprise. The division of labor, better utilization of
technology and human talent, etc. helps to improve the efficiency and
quality of work.
 Stimulates creativity and innovation: A well-designed organization

stimulates creative thinking and initiative on the part of employees. It
182
provides for effective management of change and responds favorably to
changes in the environment.
7 types of marketing organization structures:
Here are seven of the most common types of marketing organization

structures you can use or adapt depending on your business needs:
1. Functional structure: Functional structures organize employees into

groups based on their job positions and skill sets. A specialized team or
function group is an assortment of employees with similar job aspects. Team
leaders may manage function groups and report to senior executives when
necessary. Specialized functional groups can promote consistent work and
speed up work performance since they don't involve employees outside of
their function. This structure is easier to manage on a larger scale because it
can easily adjust to changes in the business as it grows.
2. Product-based structure: A product-based structure is mostly ideal for

a business selling multiple products or services. This structure separates
employees into groups or divisions that focus on each individual product
line. Each division can have employees from every specialized function,
whereas a functional structure has employees divided into separate groups
that focus on one specialized function. A product-based structure can give
each division independence from one another, which allows employees to
focus on their own division-related tasks since they do not have to
communicate with outside groups or departments.
3. Matrix structure: A matrix structure is a combination of a product-

based structure and a functional structure. This is best for arranging
employee departments or teams based on their job roles and the products
they are working with because each department handles one specific
product. A marketing organization structure like this can provide more
information at a faster rate since multiple specialty teams oversee one
project. Having a variety of specialty teams responsible for one project can
help employees openly communicate and provide more resources for other
employees to use while working toward their goals.
183
4. Geographical structure: International companies usually are on a much
larger scale since they work in multiple countries and languages. Using a
geographical marketing structure can be helpful for these companies
because it divides employees into teams based on geographical regions
or districts. Having teams dedicated to certain geographical regions can
assist employees in designing local marketing strategies based on their target
audience. This structure also could allow employees in each division to
become familiar with their regions, giving them the ability to connect with
their audience on a deeper level.
5. Market-based structure: Some businesses focus on certain industries,

markets or types of consumers while creating a marketing organization
structure. Industries, markets and consumer types are division segments
that outline an organizational structure. Focusing on individual segments
gives employees the opportunity to create marketing strategies that appeal to
different consumers. These structures are best for a business that aims to
provide services to particular parts of a market or industry.
6. Network structure: A business that intends to work with another, separate

business to share resources may use a network structure, which is helpful for
organizations that want to maintain control and expedite their internal
operations. A business that provides one or two specified goods or
services might want to outsource tasks that are not performed
internally, since the business is most familiar with its internal tasks. For
example, a restaurant might want to sell custom merchandise, but
outsourcing the job to a graphic designer could allow the restaurant to focus
on its core operations while expanding its network with new partnerships.
7. Linear structure: This type of structure refers to the chain of

command hierarchy as its organizational structure. The top employee in
the chain of command oversees the entire business, and the other employees
in the chain of command only oversee one part of the business and refer
directly to the employee above them in the hierarchy. This structure can be
best for small businesses with few job positions.
184
Chapter 40.1: Controlling marketing operations
185
Marketing control refers to the measurement of the company’s
marketing performance in terms of the sales revenue generated, market
share captured, and profit earned. Here, the actual result is compared
with the standard set, to find out the deviation and make rectifications
accordingly.
Marketing is one of the crucial functions of any organization. Therefore, the

management must exercise proper control over the marketing
operations to ensure error-free results, optimum utilization of the
resources and achievement of the planned objectives.
Types of Marketing Control:
When we say control, it is not about overpowering the personnel, but it

means enhancement of efficiency, by reducing the chances of errors and
meeting the standards set by the management.
186
Let us now discuss the four major types of control, implemented in an
organization:
1. Annual Plan Control:
As the name suggests, the plans which are determined for one year for
the control of operational activities through successful implementation
of management by objectives is termed as annual plan control.
Such programs are usually framed and controlled by the top management
of the organization.
Following are the five vital tools used under the annual plan control
mechanism:

187
 Sales analysis: In sales analysis, the manager determines whether the
sales target of the organization has been achieved or not. For this
purpose, the actual sales are compared with the desired sales and
deviation is computed. This method is also used for finding out the
efficiency of sales personnel by comparing the individual sales with the
target set for each salesperson.
 Market share analysis: To evaluate competitiveness, management
needs to find out the market share acquired by the firm. However, it
is quite challenging to determine the market share of other organizations
which constitute of unorganized firms, due to lack of sufficient data.
 Marketing expense to sales analysis: Sometimes the firms spend
much on the marketing of products, which diminishes their profit
margin or increases the product price. Therefore, a marketing expense
to sales ratio is calculated to know the percentage of sales value paid off
as a marketing expense.
 Financial analysis: The management needs to handle its finances
well. It should examine the reasons and factors which influence the
rate of return and financial leverage and return on assets in the
organization through financial analysis tools. It also helps to enhance
the financial leverage position of the company.
 Customer Attitude Tracking: Consumer satisfaction has been
considered as an essential parameter to analyze the organization’s
performance. It is a qualitative analysis tool which can be of the
following three types:
 Customer surveys: The companies get the questionnaires filled

or make calls to the past customers for finding out the level of
consumer satisfaction. It provides a direction to the sales team and
the management.
 Customer panels: The organizations form consumer panels
where the customers are hired to review the products, advertisements
and other marketing activities. It helps the management to know
about the consumer’s perception and attitude.
 Feedback & suggestion systems: Market performance of the
products can be analyzed with the help of genuine feedback from the
customers, and the same can be improved through their
suggestions and input.
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2. Profitability Control:
Maximizing the profit margin has become a difficult task in today’s highly
competitive market. This has enforced pressure on the marketing team of the
organizations too. They now need to frame strategies for profit
assessment/control on different product lines, trade channels/territories.
Following is the process of profitability control in an organization:
 The first step is to understand the functional expenses, i.e., selling,

distribution, administrative and advertising expenses incurred while
carrying out the marketing function of a territory or marketing channel.
 The second step is to segregate the non-marketing expenses from
the marketing overheads and then to associate these pure marketing
expenses to the marketing entities (like apportioning the building rent
into marketing function).
 Lastly, to compile everything systematically and to ascertain the profit
or loss incurred on carrying out the particular marketing activity, an
individual profit and loss account is prepared for each operation.
3. Efficiency Control:
The management and the marketers are regularly involved in finding out
ways to improve the task performance in the organization. These
improvements bring in efficiency and perfection in marketing operations.
189
The three essential mechanisms used under efficiency control are:
 Sales-force efficiency indicators: The competence of the sales team

can be determined by evaluating the various factors. It includes
acquisition of new customers, customer turnover, average cost incurred
on each sales call, return on time invested on the prospective customers,
market share lost to the competitors, average sales made by each person
per day, etc.
 Advertising efficiency indicators: To know the effectiveness of the
advertising activities, the marketers analyze the various advertising
functions on different grounds. For this purpose, it finds out the brand
awareness, cost incurred on each enquiry, media cost to reach per
thousand customers, advertising campaign reach, etc.
 Distribution efficiency indicators: The performance of the
distribution channels in comparison to the cost incurred on channel
partners and distribution of products can be analyzed through the
distribution efficiency control. It includes the measurement of the
channel member’s market reach, cost incurred on operating a particular
channel and the contribution of each channel member in selling the
brand’s products.
190
4. Strategic Control:
The external environment creates a significant impact on the

organization’s marketing strategies. To understand and align the plans with
the prevailing external environment, the organization can adopt any of the
following control functions:
 Customer Relationship Barometer: To determine the customer’s

loyalty towards the brand and its products, the organization uses the
relationship barometer. Here, the company studies the customer’s
perception based on the criteria like organization’s core values, system,
policies, structure, customer orientation strategy, technology, personnel
attitude, knowledge, skills and behavior.
 Marketing Audit: Like accounting audits, marketers carry out

marketing audit to get a clear picture of the company’s performance
while executing the various marketing operations. It is a systematic
record which periodically examines the problem areas and provides for
the means of rectification, to overcome the weakness by utilizing the
organizational strength and grab the current opportunities.
191
Marketing Control Process:
Marketing control is a systematic and integrated process. A marketer

follows the following steps while exercising control over the marketing
operation in an organization:
 Determining Marketing Objectives: The initial step in marketing

control is the setting up of the marketing goals, which are in alignment
with the organizational objectives.
 Establishing Performance Standards: To streamline the marketing
process, benchmarking is essential. Therefore, performance standards are
set for carrying out marketing operations.
 Comparing Results with Standard Performance: The actual
marketing performance is compared and matched with the set standards
and variation is measured.
 Analyzing the Deviations: This difference is then examined to find
out the areas which require correction, and if the deviation exceeds the
decided range, it should be informed to the top management.
 Rectification and Improvement: After studying the problem area
responsible for low performance, necessary steps should be taken to fill
in the gap between the actual and expected returns.
Thus, marketing can be seen as a complete function, which needs to be

performed successfully through proper control over the related
activities, to ascertain the achievement of the set goals and objectives.
192
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Module 1: Introduction to marketing

Chapter 1.1 Concept, nature, scope and importance of marketing

Marketing informs your customers about the products or services you're

The term "marketing" covers a lot of different activities – all associated

Marketing is a strategy that businesses do to advertise their businesses.

Nature of Marketing: The Nature of Marketing (or Modern marketing)

 Human activity: Originally, the term marketing is a human activity

The term scope of marketing can be understood in terms of the functions of

The mktg manager has to perform research functions/exchange functions:

 Functions of Research: The modern marketing activities start with

The major functions of research are as follows:

 Marketing Research: The marketing research is helpful in analyzing

 Product planning and development: Under modern marketing

MARKETING AND ITS IMPORTANCE TO BUSINESS:

MARKETING HELPS TO BOOST THE SALES:

Marketing is one way to give information to consumers. This way,

MARKETING CREATES REVENUE OPTIONS:

Marketing is a great help for many business establishments to create revenue

SET BETTER GOALS FOR YOUR BUSINESS:

The success of a business depends on its goals and objectives. Marketing

BUILD A REPUTATION FOR YOUR BRAND:

Another benefit of implementing marketing strategies is to build a reputation

When a company hires a marketing specialist, they will do everything to

B2B MARKETING: B2B Marketing is the term used for Business-to-

B2C MARKETING: B2C Marketing is another term for Business-to-

C2B MARKETING: We also know C2B Marketing as Consumer-to-

C2C MARKETING: C2C Marketing or Consumer-to-Consumer marketing

9 REASONS WHY YOU REALLY DO NEED IT:

The answers to all these questions lie in marketing.

How you market your business determines if the enterprise will be

1. MKTG IS AN EFFECTIVE WAY OF ENGAGING CUSTOMERS:

It’s important for business to engage its customers. Marketing is a tool to

2. MKTG HELPS BUILD/MAINTAIN COMPANY’S REPUTATION:

Your business’s reputation is built when it effectively meets the expectations

3. MKTG HELPS BUILD RELATIONSHIP WITH CUSTOMERS:

Businesses need to build a relationship of trust and understanding with their

4. MKTG IS COMM CHANNEL USED TO INFORM CUSTOMERS:

Marketing informs your customers about the products or services you’re

5. MARKETING HELPS BOOST SALES:

Marketing utilizes different ways to promote your products or services. Once

6. MKTG AIDS IN PROVIDING INSIGHTS ON YOUR BUSINESS:

7. MKTG HELPS YOUR BUSINESS TO MAINTAIN RELEVANCE:

Every marketer understands the need for disrupting a potential consumer’s

Every relationship needs to be maintained. Marketing helps your business to

8. MARKETING CREATES REVENUE OPTIONS:

9. MKTG HELPS MGMT TO MAKE INFORMED DECISIONS:

Every business is confronted with problems such as to what, when, for

Why should you rely on marketing mechanisms? These mechanisms serve

WHY IS MKTG IMP IN BEATING YOUR BUSINESS RIVALS?

However, you don’t have to be sleazy or negative while marketing against

HOW MARKETING STRATEGIES LEAD TO SUCCESS?

Every successful business has a story of its marketing strategies. It is the

Marketing helps businesses reach success. With the right marketing

Following Robert Bartels, we may distinguish six different periods in the

The period of discovery is a period in which the early teachers of the

The years between 1910 and 1920 are characterized as a period of

The next decade (1920-30) is characterized as a period of integration. The

Many new concepts borrowed from the field of management were

Marketing is a management process. Marketing creates value for

Needs, wants and demands:

The needs can be further classified into 5 types as:

A demand is generated when a customer is willing to buy a particular