Unit 1 Introduction

Meaning of Marketing

 Marketing is the buying and selling goods from one person to another person.

 Marketing is the action or business of promoting and selling products or services, including
market research and advertising.

 Marketing includes advertising, selling, and delivering products to consumers or other

businesses.

 Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchange that satisfy individual and
organizational objectives.

Features of Marketing

 It is a customer oriented.

 It is the result of the integration of several activities.

 It begins from customers and also ends with customers.

 It provides after sales services.

 It is related to marketing mix.

 It is one of the most powerful or managerial functions.

 It is a process of transferring goods and services from producer to consumer.

 It is the performance of business activities that direct the flow of goods and services from
producers to consumers or users.

 It is a social and managerial process by which individual or companies create value for
customers and build strong customers relationships in order to capture value from
customers in return.

 It is all the business activities which are related to product, price, place and promotion
activities. It starts and ends to customers. The major function of marketing is customer
satisfaction.

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Importance of Marketing

 Information

 Want satisfaction

 New product

 Product distribution

 Development of economy

 Provide employment

 Utilization of resources

 Rise in living standard

 Selection facility

 Reduction in costs

Evolution of the Marketing Philosophies

 Production Concept

 Product Concept

 Selling Concept

 Modern Marketing Concept

 Societal Marketing Concept

 Holistic Marketing Concept

1. Production Concept

 This concept is oldest concept of marketing.

 It is emerged after the breakdown of industrial revolution in Europe (1820-1940 A.D.).

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 This concept believes that consumers will favor those products which are widely available in
low cost.

 This concept is a management orientation, which assumes that consumers will favor those
products, which are available and affordable.

 This concept assumes that demand exceeds supply, so consumers have little product choice.

 Consumers buy those products, which are available in the market because demand for a
product exceeds supply. Consumers buy those products, which are affordable i.e. they
prefer to buy low-priced products.

Basic Principles of the Production Concept

1. Starting Point – Factory

2. Main Focus – Mass Production

3. Means – Low price, Mass distribution

4. Target – Profit through production efficiency

Features of the Production Concept

 Mass productions of products using advanced technology.

 Low priced products through economies of scale.

 Mass distribution of products to facilitate customers.

 It assumes selling what we can produce.

 Cost saving efforts were made with various techniques

 Profit is made through production efficiency

2. The Product Concept

 This concept assumes that customers favour those products which are good quality, high
performance and innovative features.

 It assumes that consumers will favor those products that offer the most quality for the price.

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 Product concept is an idea that consumers will favor products that offer the most in quantity,
performance and features and that the organization should therefore devote its energy to make
continuous product improvements.

 This concept pays more attention to produce quality and long lasting products with warranty
facilities, this increases brand loyal consumers.

Basic Principles of the Product Concept

 Starting Point – Factory

 Main Focus – Product quality

 Means – High quality, Innovation, Performance

 Target – Profit through high performance products.

Features of the Product Concept

 Quality orientation and improve quality continuously.

 Production of durable product with super performance.

 This concept trusts to their production engineers.

 Reasonable price with quality, performance and features.

 It does not care needs of customers.

3. The Selling Concept

 This concept is developed after the failure of production and product concept.

 According to this concept, customers should be persuaded for buying products through
aggressive selling and promotion efforts.

 It assumes that sales can be increased through attractive, exciting and interesting promotional
tools.

 This concept does not focus the desire of customers.

 It is also based on “we sell what we make.”

 It assumes that consumers will either buy or not buy enough of the firm’s products unless the
firm makes a substantial effort to stimulate their interests in its products.

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Basic Principles of the Selling Concept

 Starting Point – Factory

 Main Focus – Production

 Means – Aggressive selling, Heavy promotion

 Target – Profit through high sale volume

Features of the Selling Concept

 Mass selling using aggressive promotions.

 Profit is made through high sales volume.

 Mostly used in unsought products, political sectors and tourism sectors.

 Do not care customer’s needs and satisfaction.

 Customers are persuaded into buying existing products.

4. The Modern Marketing Concept

 Under this concept, customers focused at beginning and end also.

 It assumes that unless and until the goods and services are designed on the basis of customer’s
needs and wants no marketing objective can be achieved by the organization.

 It is a customer oriented, integrated, goal-oriented philosophy for a firm, institution or person.

 This concept believe that the key to achieve organizational objectives lies being more than that
of competitors in integrating marketing activities toward determining and satisfying wants,
desire, needs and demand of customers.

Basic Principles of the Modern Marketing Concept

 Starting Point – Market

 Main Focus – Customer needs

 Means – Integrated marketing

 Target – Profit through customer satisfaction

Features of the Modern Marketing Concept

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 This concept is customer oriented concept.

 It focuses to determine target market and market segmentation.

 It offers after sales service such as warranty, free repairs etc.

 It suggests providing goods and services that is more effectively than the competitors.

 Profit is made through customer’s satisfaction.

5. The Societal Marketing Concept

 It fulfills the weakness of modern marketing concept.

 This concept believes that the task of marketing is to determine the needs, want and interest of
target market and to deliver the designed satisfaction effectively and efficiently them
competition in way that protect and pressure consumers and social well-being.

 This concept assumes that along with the consumers‟ wants and interests, social interests too
should be considered so that long-run social welfare could be maintained.

 Consumers will increasingly favor organization, which show a concern with meeting their wants,
long-run interests and society’s long run interests.

 This concept should maintain the balance between conflicting criteria of company profit,
consumer want satisfaction and public interest and welfare.

Basic Principles of the Societal Marketing Concept

 Starting Point – Target Market

 Main Focus – Consumer and social needs

 Means – Integrated marketing, Social responsibility

 Target – Profit through customer and social welfare

Features of the Societal Marketing Concept

 This concept focuses on social responsibility with customer satisfaction.

 It integrates company profit, consumer satisfaction and public interest, welfare.

 Marketing practices to bring harmony in society.

 This concept gets the profit through the satisfaction of customers.

 Products are produced maintaining corporate, social and consumer harmony.

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6. Holistic Marketing Concept

 This concept defines marketing as a complex activity.

 It is based on the development, design and implementation of marketing programs, process and
activities that recognizes the breath and interdependences.

 It assumes that consumer satisfaction and social responsibilities only are not the part of
marketing. Besides this, marketing is broad term and the several factors should be integrated.
Relationship marketing is mostly focused and used to develop lifelong relation with customers
and other parties also.

 This concept is established as a combined form of modern marketing concept and societal
marketing concept.

Basic Principles of the Holistic Marketing Concept

1. Starting Point – Target Market/Society

2. Main Focus – All aspects of customers as well as social needs and wants

3. Means – Internal Marketing, Integrated marketing, Relationship Marketing, Performance

Marketing

4. Target – Goal achievement by developing the corporate culture in marketing.

Features of the Holistic Marketing Concept

 It integrates marketing concept and societal concept.

 It is based on four broad themes such as Internal Marketing, Integrated marketing, Relationship
Marketing, Societal Marketing.

 It brings harmony relationship in society, organizational management and customer relationship.

 Profit is earned through applying all the marketing practices.

 It is ultimate developed concept.

Meaning of Marketing Management

 Marketing management is planning, organizing, controlling and implementing of marketing

programs, policies, strategies and tactics designed to create and satisfy the demand for the
firms‟ product offerings or services as a means of generating an acceptable profit.

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 Marketing Management performs all managerial functions in the field of marketing.

 Marketing Management identifies market opportunities and comes out with appropriate
strategies for exploring those opportunities profitably.

 Marketing management is the process of planning, implementing and controlling marketing

activities or practices to achieve the desired organizational goal.

 Marketing management is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational goals.

Tasks of Marketing Management

1. Marketing Planning

It refers to a strategic planning of a marketing organization formulated for achieving the desired
goal in the long run.

2. Implementing the Marketing Plans and Programs

It means executing or putting the plans and programs into action in a coordinated manner.

3. Marketing Control

It is a process of establishing standards, measuring actual performance, identifying deviations or

mistakes and taking corrective action.

Marketing Challenges of 21st Century and Firm’s Responses to the Challenges

Marketing Challenges of 21st Century

 Customers are being more savvy or informative than the marketers.

 Customers are increasingly demanding better quality and reliability in the products and services
they buy.

 Customer wants, needs and expectations are changing more rapidly.

 We operate in a market where all customers want essentially the same thing.

 New products and services are coming to market more quickly than in the past.

 Competitors have introduced multiple brands for their products and competition for sales in
intense.

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 Medias are being more fragment and expensive for advertising the products.

 Competition is now global rather than just domestic.

 Competition is well established and entrenched.

 The Internet and e-commerce is having a significant impact on business practice.

 Accountability of the marketers has been rapidly increased towards their customers.

 Increased bargaining power of the buyers.

Challenges for a Marketer

 Budget Allocation

 Differentiation

 Brand Recall

 Brand Positioning

Firms’ Responses to Marketing Challenges

 Developing marketing plans that are designed to build long-term profitability.

 Developing cogent arguments to protect, or increase, the investment in marketing when

economic times were tough.

 The need for a framework that created a good balance within marketing strategy between the
needs of the customer and those of the organization.

 Developing effective strategies that engaged those outside of marketing that were crucial to
delivering the promise to consumers.

 Developing the right metrics to monitor progress and provide accountability.

 Motivating others to be passionate about data quality, as fit for purpose‟ data is vital in direct,
digital and CRM based marketing, and for monitoring performance against achieving the goals
laid down in the marketing plan.

Concept of Relationship Marketing

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 It is the practice of building long-term satisfying relations with key parties-customers, suppliers
and distributors- in order to retain their long-term preference and business.

 The ultimate outcome of relationship marketing is the building of a unique company asset called
a marketing network.

 It provides greater customer satisfaction and hence, retains the existing customers.

 The operating principle of relationship marketing is building a good network of relationships

with key stakeholders and profits will follow.

Contributions of Relationship Marketing

 It helps building harmonious relationship not only with the customers, but also with the
distributors, stakeholders and other segments of the society.

 It encourages understanding the complaints and dissatisfactions of the customers and makes all
the salespeople accountable to satisfy the customers.

 It can help understanding the actual need and desire of the customers.

 It can help developing committed customers for the marketer.

Concept, Relevance & Practices of Green Marketing

Concept of Green Marketing

 The term “Green Marketing‟ is also called as ecological marketing and environmental marketing.

 It is a term used to identify concern with the environmental consequences of a variety of

marketing activities.

 It refers to the process of selling products and services on their environmental benefits.

 It incorporates a broad range of activities, including product modification, changes in the

production process, packaging changes, as well as modifying advertising.

 It consists of all activities designed to generate and facilitate any exchanges intended to satisfy
human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal
harmful impact on the natural environment.

Components of Green Marketing

 Product or Green products

 Price or green price

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 Place or Eco-Labeling

 Promotion or Green Promotion

Reasons for Adopting Green Marketing

 To enjoy opportunities or competitive advantage

 To fulfill corporate social responsibilities

 To follow government pressure

 To avoid and minimize competitive pressure

 To maintain cost or profit

Green Marketing Problems

 Lack of standards

 Lack of Transparency

 Lack of knowledge about Target customers

 Misleading Environmental Statements

Rules of Green Marketing or Requirements of Green Marketing

 Know the right customers or audience

 Empower and communicate consumers

 Be transparent

 Consider pricing

 Be genuine

Concept, Relevance & Practices of E-Marketing/Internet Marketing

 E-marketing or Internet marketing is concerned with e-commerce.

 Electronic commerce is one of the newest and rapidly evolving areas of international trade.

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 The terms Electronic Commerce or E-commerce are used interchangeably and they all mean the
same thing- the paperless exchange of routine business information using Electronic Data
Interchange, email, electronic bulletin boards, fax transmissions and Electronic Funds transfer.

 Ecommerce refers to buying or selling something electronically. It refers to Internet shopping

because Internet is used for this purpose.

 The Internet is a global network connecting people and organizations with each other through
computer networks.

Important Features of the Internet Services

 Direct Communication

 Central Repository of data

 Advertisement Billboard

 E-commerce

 Distance Learning

 Downloading of Free Software Programs

 Distance Conversation

Components of Marketing Mix for Product and Services Marketing-Mix & its Components
Major Components (4Ps)

 Product Mix

 Price Mix

 Place or Distribution Mix

 Promotion Mix

Supportive Components (3Ps)

 Process Mix

 People Mix

 Physical evidence mix

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Features of Marketing Mix

 It is a combination of four marketing variable or tools

 It is useful for achieving marketing targets

 It is flexible and dynamic concept

 Marketing acts as a mixture of ingredients

 Customer is the focus point

Important Implications of Marketing Mix

 It is the main source of marketing plan and program

 It is the core marketing tool for achieving the desired result

 It is a customer focused activity and it is a strategic marketing tool that helps long-run survival
and success in the market.

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 Unit 2
Marketing Environment

Meaning of Marketing Environment

 Marketing environment as the forces, which are external to the marketing management
function, largely uncontrollable, potentially relevant to marketing decision making and changing
or constraining in nature.

 It is the aggregate of all conditions, events and influences that surround and affect it.

 It is the sum of forces or institutions that affects firm’s ability to build and maintain successful
business.

 It consists of the actors and forces outside marketing that affect marketing management’s ability
to build and maintain successful relationship with targets customers.

Scope of Marketing Environment

1. Internal Environment

2. External Environment

1. Internal Environment

Internal environment forces can be controlled or manipulated by the management whenever

required. Internal environment forces are as follows:

 Production & Marketing facilities, Financial resources Human resources, Company location, R &
D capability and company Image

2. External Environment
This environment is uncontrollable in nature and has considerable effect on any organizational
system. External environment forces are as follows:

Micro Environment

 The Firm’s Market

 Producers and Suppliers
 Marketing Intermediaries

Macro Environment

 Economic Environment
 Demographic Environment
 Socio-Cultural Environment

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 Technological Environment
 Political and Legal Environment
 Natural Environment
 Competitive Environment

Micro Environment Variables

 A Firm’s Market

 Producer-Suppliers

 Marketing Intermediaries

Macro Environment Variables

 Economic Environment

 Demographic Environment

 Socio-Cultural Environment

 Technological Environment

 Political and Legal Environment

 Natural Environment

 Competitive Environment

Economic Environment

The term economic environment refers to all the external economic factors that influence
buying habits of consumers and businesses and therefore affect the performance of a company.
These factors are often beyond a company's control, and may be either large-scale (macro) or small-
scale (micro).

Economic factors are as follows:

1. Level of Income

2. Economic Policy of the Government

3. Level of Employment

4. Rate of Inflation

Demographic Environment

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 Demographic environment is a term used by marketers to describe the characteristics of a
population that can be used to influence the success of a business or commercial venture. The most
important demographic factors for businesses include age, sex, income, education level, and
occupation.

 Demography represents the statistical study of human population and its distribution
characteristic.

Socio-Cultural Environment

 The sociocultural environment refers to trends and developments in changes in attitudes,

behavior, and values in society.

 It is closely related to population, lifestyle, culture, tastes, customs, and traditions.

 These factors are created by the community and often are passed down from one generation to
another.

Technological Environment

 Technological environment refers to the changes in the output, production methods, use of
equipment and quality of the product.

 It includes force related to scientific innovations and improvements in products as well as

production technology.

 It improves competency of the company and leads to a quick growth of the company as well.

 It leads to better-finished products.

Political and Legal Environment

 The political-legal environment is a combination of a lot of factors such as the current political
party in power, the degree of politicization of trade and industry, the efficiency of the current
government, government policies, current legal framework, the public attitude towards the
economy, etc.

 It consists of an interacting set of laws, government agencies and pressure groups that influence
and constrain the conduct of various organizations and individuals in the society.

 While formulating a marketing plan and program, a marketer must be able to analyze all these
political and legal factors:

1. Type of government and Permanency of Government

2. Government Laws, Rules and Regulations

3. Power and Influence of Government Agencies

4. Increasing Pressure Groups

5. Political Climate

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Natural Environment

 Natural environment consists of natural resources, which are needed as raw materials to
manufacture products by the organization.

 This environment is more concerned with ecology of the nation including weather and climatic
situation of the country.

 Changes in weather and climatic conditions can impact on availability and non-availability of
particular natural resources in particular place or location, global climatic change, growth of
tourism, farming and other form of industries in the country.

While analyzing natural environment, the following environmental factors may be analyzed:

 Availability of Natural Resources

 Unstable cost of energy

 Increased levels of Environment Pollution

 Increased Global Warming

 Government Intervention in Natural Resource Management

Competitive Environment

 A competitive environment is a system where different businesses compete with each other by
using various marketing channels, promotional strategies, pricing methods, etc. This system has
regulations within it that companies should follow.

 Success in the market place is dependent not only upon identifying and responding to
customer’s needs, but also upon the company’s ability to ensure that its response is judged by
customers to be superior that of the competitors.

 The development of marketing strategy must be based around both customer satisfaction and
competitive differentiation.

 The components of Competition are 3C’s, they are:

1. Customer

2. Competition

3. Company

Reactive Marketing

 A reactive marketing/company responds after the event has taken place and has little
preparation or anticipation of such changes.

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Features:

 No written marketing strategy and plan

 Referrals occur whenever the customer decides to call.

 Marketing is inconsistent and weak.

 It depends on bottom-of-the-barrel approaches, such as Group on.

 When marketing is done, it is usually a, “Let’s try this latest fad.”

 The attitude towards marketing is exasperation, rolled eyes and resentment

Proactive Marketing

A proactive company marketing is the one who foresees these changes and has the action plans
ready to face them.

Features:

 Creating a written marketing plan, based on homework, analysis and research.

 It is viewed and treated as a manageable business process.

 Is not done based on fads or desperation, but only with time-honored methods.

 Referrals are regularly generated through incentive programs, social media and other means.

 “Spray and pray” blasts of bulk mail, coupons and emails are never used.

 Profits are increasing. Moreover, the owners are happy and in control of their lives.

Marketing Environment in Nepal

1. Economic environment

2. Demographic Environment

3. Political-Legal Environment

4. Technological Environment

5. Natural Environment

6. Competitive Environment

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 Unit 3
Marketing Information System & Buyer Behavior

Concept and Relevance of Information in Marketing Decision

 Information is the main source of decision making.

 Planning and decision making in any organization is hampered by the lack of required
information.
 Information in general, is defined as those cues, which have the potential to affect managerial
decisions.
 Information is like a mirror, which demonstrates the realities of the organization, makes aware
of the threats and helps identifying the right track or road to move.

Information vs. Data

 Data refers to an accumulation of facts or values, which describe, define or limit.

 Information refers to the knowledge derived through the analysis of data.
 The two concepts are related to each other, as data are selected and recorded in the form of
inputs to data processing systems, emphasis is placed on generating specific types of
information output.
 The processing may take the form of classifying, sorting, calculating or summarizing the data
resource inputs.
 Information is the most usable form of data since it relates specifically to a need of a manager.

Sources of Marketing Information

 Marketing Mix
 Marketing Research
 Marketing Information System

1. Marketing Mix

Product Mix, Price Mix, Place Mix, Promotion Mix, Process Mix, People Mix etc.

2. Marketing Research

Marketing research is the systematic gathering, recording, and analysis

of qualitative and quantitative data about issues relating to marketing products and services. The
goal is to identify and assess how changing elements of the marketing mix impacts customer
behavior.

3. Marketing Information System

A marketing information system is a platform for collecting, storing, analyzing, and distributing
important marketing data received from internal and external resources.

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 Meaning of Marketing Information System (MIS)

 It is a carefully developed master plan for information flow.

 A MIS consists of people, equipment and procedures to gather, sort, analyze, evaluate marketing
decision makers.
 It is the structured interacting complex of persons, machines and procedures designed to
generate an orderly flow of pertinent information collected from both inter and extra firm
sources, for use as the bases for decision making in specified responsible areas of marketing
management.
 There must be coordination among many departments and individuals, including top
management, marketing research, personnel, finance, system analysts, programmers and
computer experts.
 The Marketing Information System refers to the systematic collection, analysis, interpretation,
storage and dissemination of the market information, from both the internal and external
sources, to the marketers on a regular, continuous basis.
 The marketing information system distributes the relevant information to the marketers who
can make the efficient decisions related to the marketing operations viz. pricing, packaging, new
product development, distribution, media, promotion, etc.

Need for Marketing Information System

 To simplify the complex phenomenon

 To cope with the changed competitive situation and consumer needs and wants
 To rightly identify the customer’s expectations from the company.
 Innovation of information technology has enforced the firms to store and timely use of
information in day-to-day purpose, which reduces uncertainty in business.
 In MIS is only one dependable source of regular flow of adequate and reliable information within
the firm.

Benefits of Marketing Information System

 Makes marketers more capable in projecting potential threats and opportunities by monitoring
the dynamic nature of marketing environment.
 Helps marketers in identifying the appropriate needs and wants of the customers to implement
the marketing concepts more effectively.
 It helps in making better market segmentation.
 It helps in assessing demand for goods and services in the market place.
 It helps in evaluating marketing tools.
 It helps marketer in maintaining up to date information within the firm which helps in making
right decision in right time.
 It helps upgrading the management performance of the firm which lays foundation for future
growth.

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Components of Marketing Information System

 Internal records system: It collects result-oriented information about the organization which are
maintained the files and documents in the concern departments.
 Marketing intelligence system: It collects happening information about the marketing
environment. The main source of such information may be newspapers, books, journals,
magazines, research papers, research articles, observations etc.
 Information processing: It helps in gathering, retrieving, classifying and necessary information
and supplies them for analysis purpose.
 Analytical systems: It is a set of statistical or mathematical tools and decision models that help
the marketing managers in analyzing and decision making.
 Marketing research: It is a systematic and objective such for and analysis of information relevant
to the identification and solution of marketing problems. Its main features are systematic,
objectivity, informative, problem-based, decisive etc

Process of Marketing Research

 Defining the Problem and Establishing the Objective

 Developing the Research Plan
 Collecting the Information
 Analyzing the Information
 Presenting of the Findings and Submission of the Report

1. Defining the Problem and Establishing the Objective

In Marketing research may be numerous problems faced by the company, among them the
researcher must be able to select the most burning problem that can represents the overall
problems of the company.

2. Developing the Research Plan

While designing the most efficient research plan the researcher has to perform a lot of jobs.
They are sources of data, research approaches, research instruments, sampling plan, contact
method etc.

3. Collecting the Information

It is entirely based on the research design. While collecting the information, the researchers
should follow certain process.

4. Analyzing the Information

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 Information collected from the target population is in the raw form. Before using this
information in the research, they must be tabulated and analyzed systematically. The researchers
should follow the certain procedures to analyze the information.

5. Presenting of the Findings and Submission of the Report

After the analysis of data, it is the responsibility of the researcher to evaluate the research study
to see whether the tools used are appropriate or the results obtained from the tools are correct.

Areas of Market & Marketing Research

1. Advertising Research

 Motivation Research
 Copy Research
 Media Research
 Studies of Advertising Effectiveness

2. Business Economics and Corporate Research

 Short-range Forecasting
 Long-range Forecasting
 Studies of Business Trend
 Pricing Studies
 Plant and Warehouse Location Studies

3. Corporate Responsibility Research

 Consumer’s Right-to-know Studies

 Ecological impact Studies

 Study of Legal Constraints

 Social Values and Policies Study

4. Product Research

 Mew Product Acceptance and Potential Studies

 Competitive Product Studies

 Testing of Existing Products

 Packing Research – Design or Physical Characteristics

5. Sales and Market Research

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 Measurement of Market Potentials

 Market Share Analysis

 Determination of Market Characteristics

 Sales analysis

 Establishment of Sales Quota, Territories

 Distribution Channels studies

 Test Markets, Store Audits

 Consumer Panel Operations

 Sales Compensation Studies

 Promotional Studies of Premiums, Coupons, Sampling and so on.

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 Unit 4
Buyer Behavior

Concept of buyer behavior

 Buyer consists of those individuals & organizations who are potentially interested to buy firm’s
product.

 Buyer behavior refers to the decision and acts people undertake to buy products or services for
individual or group use.

 Buyer behavior is the driving force behind any marketing process.

 It is concerned with the activities and actions of people that purchase and use economic goods
and services, including , the influences on these activities and actions.

 The act of activities show by the concerned buyers refers as the buyer behavior.

Need for understanding consumer behavior

 Different persons and communities have different needs because they live in different
environment.

 Different persons may demand different goods and services at the same time.

 Enables marketer to rightly assess the actual need of the consumer.

 Helps marketer to establish the firm’s marketing objective.

 Makes marketer capable of defining, analyzing and understanding market requirements.

 Helps marketer to reduce the uncertainty in the market.

 Helps a firm to measure the effects of its strategy.

 Helps marketer to know about the use of product information by the consumers.

Organizational buyer behavior

 It is also called as institutional buying behavior or industrial buying behavior or business buying
behavior.

 It refers to the buying behavior organizations that may buy products for resale, further
production or for conducting organization’s operation such as government organizations,
Universities, Private organizations etc.

 Organizations may be the government, industries or resellers.

 Government organizations may include Ministries, Departments, public enterprises etc.

 Industries may purchase products for reproduction or further production.

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 Resellers such as wholesalers, retailers, agents may purchase products for resale purpose.

 Organizational markets may include numerous business sectors such as: agricultural market,
reseller market, service market, international market etc.

Distinctive characteristics of organizational buying decision

 It is a regulatory purchase i.e., organizations buy goods according to the government and
organization’s laws, rules and regulations.

 Buyers are well informed about what they are buying than are ultimate consumers.

 Organizational buying aims normally a long- term relation with seller or suppliers. Organizations
generally do not frequently change their sellers or suppliers.

 It involves infrequent purchase i.e., organizations do not tend to buy goods frequently as an
individual buyer does.

 Demand is derived from the demand for the consumer production in which that business
product is used.

 Demand for business products is inelastic i. e., there is a very little changes in its demand in
response to its price.

 Demand is widely fluctuating i.e., business users take more inventories or less inventories when
they expect drastic changes that may take place in prices of the products or in national
economy. However, it normally involves lot-size purchases.

Organizational buying process

 Recognizing the need or requirement of the organization, such as stationeries, furniture, flooring
and furnishing, raw materials, component parts computers software programs etc.

 Determining the product and buying specifications such as quality, quantity price, method of
payment, mode of payment, delivery date and place, design of the product etc.

 Identifying the potential suppliers that can supply goods and services according to the accepted
product specifications and mutually-agreed terms and conditions.

 Evaluating and selecting the most reliable and capable supplier, who can supply products to the
organization according to its requirements. While evaluating the suppliers, several to the criteria
may be adopted such as the past performance of the supplier, regularity, punctuality, product
quality, price of the products, terms of delivery of goods, firm’s relation with the supplier,
reliability etc.

 Evaluating the supplier’s sales performance i.e., post-purchase behavior of the supplier.
Evaluation may be done on the basis of the quality of his service, business efficiency, punctuality
etc. If the organization or the purchasing department is satisfied with the past purchase
behavior, decision may be done to make repurchase from the same supplier or the similar
product from any supplier.

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Influencing factors of organizational buying behavior

 Environmental factors such as government regulations change in demand pattern, technological

innovations, competition, the cost of funds, availability of reliable suppliers, availability of
resources etc.

 Organizational factors such as goals and objectives, purchase policies, buying procedure,
organizational structure and production system.

 Interpersonal factors such as interest or users and buyers within organization, authority to buy,
and status of the buying center (buyers & users).

 Individual factors such as age of the buyer, income education status, job position, personality,
risk attitude culture.

Consumer Behavior

 Consumer behavior is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions.

 Consumer behavior is the decision process and physical activity, which individuals engage in
when evaluating, acquiring, using or disposing of goods and services’.

 It deals primarily with the behavior of individuals in the market place-the manner in which they
purchase and use products and services.

 It is multi-disciplinary. Its understanding is enhanced by contributions from such areas as

psychology, social psychology, sociology, cultural etc.

 It is concerned with the process by which buyers arrive at buying decisions and how that process
differs across individuals and products.

 It includes post purchase phenomena satisfaction with the outcome of a purchase and usage
behavior surrounding a product.

Consumer buying process

1. Need Recognition

First of all, a consumer identifies his real need without which he may be dissatisfied.

2. Information Search

After the recognition of real need, he will search for reliable information regarding the
product. There may be several products which may satisfy his needs.

3. Evaluation of alternatives

After the collection of reliable information regarding the product, he will evaluate all the
alternative products to select the best one by using several evaluation criteria.

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4. Purchase Decision

After the evaluation of alternatives, he will select the best one which may satisfy his
need and make buying purchase. This will bring to an end the first-time purchase.

5. Post purchase evaluation

If the consumer is not satisfied with his past purchase decision, he may make a new
purchase decision. In this type of decision, a consumer has to go through the whole buying
processes. A dis-satisfied consumer not only cancels a new purchase decision, he can damage
the goodwill of the firm and distract several other potential customers of the firm.

Influencing factors of consumer behavior

1. Economic Determinants

Buying decision primarily depends upon the purchasing power and willingness of the
consumer. Purchasing capacity and willingness of the consumer largely depends upon several
factors i.e. level of personal income, income of other members of the family, expectation of
income in future, availability of liquid assets, availability of credit to consumer, past-expenditure
habits.

2. Socio-Cultural Determinants

A successful marketer is one who can make detailed study and analysis of, at least,
major social factors including family, reference group, social class, opinion leaders and culture.

3. Psychological Determinants

Psychology of a person consists of several factors, which must be carefully analyzed by

the marketer. These factors include motivation, perception, learning, beliefs, attitude and
personality.

4. Demographic Determinants

Consumer behavior is affected and determined by demographic factors also.

Demographic factors are individual characteristics such as age, sex, race, culture, income, family
size, occupation, education, marital status etc. These demographic factors can influence the
individuals who are involved in family decision-making.

5. Psycho-Analytic Determinants of Consumer behavior

It is also called socio-psychology. Personality is made up of three main systems of

interdependent psychological forces i.e. id, the superego and the ego. Human behavior is a
function of the interaction of these three systems. The ‘id’ represents instinctive needs.

Global consumer movement and consumer protection

Global Consumer Movement

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 The first ever international conference of leaders from consumer organizations took place in The
Hague on March 1960. The global consumer movement was born after the five of the 17
organizations present signed papers to create the International Organization of Consumers
Unions (IOCU).

 The increasing number of consumer goods on offer was accompanied by rising wages across
Europe and North America.

 Meanwhile at the biennial conferences that IOCU organized, leaders spoke of a wider consumer
agenda and particularly the need to address poverty, access to basic goods and services and the
challenges faced by consumers in developing countries.

 In the early 1970s, a regional office was created in Asia. Its advisory committee came from India,
Singapore, Malaysia, Fiji and the Philippines, a very different stakeholder group from the
founders of IOCU itself.

The need for the global consumer voice

1. For capacity building

2. Focus on International Trade Negotiations Particularly those of newly formed WTO

3. IOCU becomes Consumers International

4. Development of New consumer issues

United nation guidelines for global consumer protection

1. The earliest known statement of consumer rights at a political level was given on 15 March 1962,
when President John F Kennedy of the United States delivered a speech to Congress in which he
outlined four consumer rights: the right to safety, the right to be informed, the right to choose
and the right to be heard.

2. The Guidelines originally covered seven areas: physical safety, promotion and protection of
consumers’ economic interests, standards for the safety and quality of consumer goods and
services, distribution facilities for essential consumer goods and services etc.

3. The United Nations Conference on Trade and Development (UNCTAD), which is the subsidiary
body of the UN General Assembly that holds responsibility for consumer protection and
competition policy, states that the Guidelines “take into account the interests and needs of
consumers, particularly those in developing countries.”

4. In 2011, Consumers International, which was involved in preparatory work for the original
guidelines and the sustainable consumption amendments, developed a suggested set of further
amendments to the Guidelines covering the topic of access to knowledge.

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Consumer protection in Nepal

Identification of Consumer Rights

According to the Consumer Protection Act, 1988, for the purpose of protecting the rights and
interests of consumers every consumer shall have the following rights:

1. Right to be protected from the sale and supply of consumer goods and services, which may harm
life, body, health and property?

2. Right to be informed about the prices, attributes, quantity, purity, quality etc. of consumer’s
goods and services so as to be safe from unfair trading practices.

3. Right to be assured of an opportunity to select consumer goods and services at competitive

prices as far as possible.

4. Right to be assured that an appropriate agency will hear matters concerning the protection of
the rights and interests of consumers.

5. Right to be heard and compensated against exploitation and hardships resulting from unfair
trading practices.

6. Right to consumer education.

Appointment of inspection officers

 Government can appoint Inspection Officers or designate any officer-employees to work in that
capacity in the prescribed manner in order to monitor the supply of quality consumer goods or
services to consumers in a simple manner and at fair prices by making the market and supply
systems effective. The Inspection Officers have power to inspect, investigate or search the goods
or services sold or supplied in the market by the business communities.

 The Inspection Officers can collect samples of consumer goods from the market and sent to the
specified testing Centre for laboratory test within the prescribed time period. If the goods found
sub-standard, unsafe or violation of act or rules, the Inspection Officers can take action against
the businessman under the law.

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 Unit 5
Market Segmentation, Targeting & Positioning Strategies

Concept of Market Segmentation

 Market segmentation is the process of dividing a broad consumer or business market, normally
consisting of existing and potential customers, into sub-groups of consumers (known
as segments) based on some type of shared characteristics.

 It is the process of dividing large, heterogeneous (dissimilar) markets into smaller, homogeneous
(similar) sub-markets.

 It is the process by which an organization attempts to match a total marketing program to the
unique manner or needs in which one or more customer groups behave in the marketplace.

 Market segmentation consists of sectioning the target market into smaller groups that share
similar characteristics, such as age, income, personality traits, behavior, interests, needs or
location.

Objectives of Market Segmentation

 To match the product with the specific market needs.

 To minimize the effect of market competition or to win the market competition.

 To assure the sale of product and survive for the longer period in the market place.

 To maximize the gains from business.

 To assure regular satisfaction to both customers and the marketer.

Benefits of Market Segmentation

1. Efficient and Effective Way of serving Target market

2. Better analysis of competition

3. Advantage of quick response to the changing market needs

4. Enables efficient resource allocation

5. Enables to formulate effective strategic planning

Process of Market Segmentation

1. Identify market segments

The marketer must follow several approaches of market identification such as, consumers’ taste,
needs, preferences, sex-group, age-group, consumer size, product characteristics etc.

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2. Develop profiles of each segment

After identifying alternative potential market segments, the marketer should properly analyze
each segment to determine their similarities and dissimilarities. Then prepare separate profile for
each segment identified.

3. Evaluate market segments

After the segments have been formed and separate profile has been developed, the marketer
should evaluate the profit contribution expected from each segment. For this purpose, the marketer
has to perform several tasks, such as: Predict demand for each component of a product market,
predict segment size and profit size, analyze and assess the potential corporate goals and objectives
in the market segment.

4. Select target market

After the segments are properly evaluated the marketer should select the best segment that will
be the target market for the company. A best segment is one, which offers the greatest
opportunities for the company.

5. Develop a Positioning Strategy

Once the company selects a market segment, it must identify the attributes and images of each
competitor’s product and select a position for its own product for making target market more
accessible.

6. Establish a Marketing plan and program

After positioning the company’s offerings, the company should develop an overall marketing
plan and program.

Requirements for an Effective Segmentation

An effective segmentation is one which can achieve the desired goal and objective of market
segmentation. For an effective segmentation the following condition must be fulfilled.

 There should be differences in customer response in each segment

 Customer differences should be measurable or identifiable

 Segments should be accessible or reachable

 Segments should be Large enough

 It should be sufficiently stable

Levels of Market Segmentation

1. Mass Marketing

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 In simple words seller offer same product for all the buyers with different needs and seller
engages in the mass production, mass distribution and mass promotion of one product for all
buyers. In this case, the size of market will be larger and the promotion and advertising expenses
becomes generic in nature to attract the entire customers.

2. Segment Marketing

In this level of market segmentation, a marketer or a seller divides a total market into several
segment depending upon the needs, problems, requirements, buying behavior, purchasing capacity,
social class and other demographic variables and then select some of the segments to sell his/her
entire range of products.

3. Niche Marketing

A niche is a more closely defined group, it is dividing the segment in to sub segment and it can
be divided by identifying the distinct trait of consumer which might need special combination of
benefits this sub segments are made for those consumers whose needs and wants are not satisfied.

4. Local Marketing

Its focus on brands and promotion to the needs and wants of local consumer and design
marketing program according to the need of local consumer groups cities, neighborhoods and even
specific stores. Locally manufactured foods and products may be marketed rather than importing
from other regions.

5. Individual Marketing

It focuses on satisfying the needs and wants of individual prospective customer. It is the
segmentation level where seller offer customized product to the consumer, in other words, a
product according to the needs and preference of consumer.

Bases for Segmenting a Consumer Market

1. Geographic Segmentation or Variables

Marketers often identify buyer groups by neighborhood, city, state, region and state because
some behavior clearly are peculiar, while some firms choose to serve only one or a few territories or
regions depending upon the size of population or market.

2. Demographic Segmentation or variable

Variables under demographic segmentation of market on the basis of sex-group, age group,
cultural group, education status, income distribution, family-life-cycle, level of employment etc.

3. Psychographics Segmentation or Variable

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 It is based on three variables i.e. social class, life-style and personality. While segmenting market
on the basic of social class people are classified into various socio-economic groups such as upper-
class people, middle-class people and lower-class people.

4. Behavioral Segmentation

Some marketers usually segment their markets on the basis of a consumer behavioral pattern
related to the product. In this segmentation, basically three behavioral characteristics are
considered, they are: product-usage rate benefits sought from the product and brand loyalty.

Bases for Segmenting Organizational Markets

1. Use of Product

One of the most important bases for segmenting industrial markets is the purpose of using
products or how the customer will use the product. On the basis of the type of customer or the use-
purpose of product, industrial markets are segmented. For example: Car, Laptop, Television,
Refrigerator etc.

2. Buying Characteristics

An industrial market or business market can be segmented on the basis of buying characteristics
of the customers. It include price sensitivity, importance of services, type of purchase, requirement
of home delivery, buying procedures etc. In this marketers need to segment market into small
segments.

3. Size of Market or Size of Purchase

The next important basis for segmenting an industrial market is to identify how much the
customers buy at a time i.e. what will be lot-size purchase. This type of market segment is suitable
for a firm the viewpoint of economies of scale in production, sales, profitability, goodwill and long-
term survival in the market.

4. Geographical Areas

Geographical areas where organizations are being operated. It is also important basis because,
demand for most of the industrial products is urban-oriented or location oriented.

Segment Evaluation, Analysis & Selection

Before selecting a target market, marketers have to critically evaluate and decide how many or
which one segment to serve in order to acquire more opportunities from the desired market
segment. Normally, three tools are available for evaluating market segments.

1. Size & Growth of Segments

A market segment must have a right size. Large companies usually prefer large segments, while
small companies prefer small segments. Growth means continuous increase in sales and profit sizes.

2. Structural Attractiveness of Segment

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 It indicates long-term profit i.e., profitability. A market segment might have desirable size and
growth characteristics and still not be attractive from the viewpoint of profitability.

3. Company Objectives and resources

A market segment has positive size and growth characteristics and is structurally attractive, it may
not mesh with the company’s long-run objective. A market segment must be able to achieve
company’s desired goal.

Selection of Target Market

After the market segments are properly evaluated, a marketer needs to select the best target
market. For a marketer, there may be three types of target markets or strategies as follows:

1. Single Coverage Market

In this case, a marketer selects only one segment among the identified market segments. This
type of market is also known as niche market.

2. Limited Coverage Market

In this case, a marketer may select more than one but less than all market segments for
marketing purpose. Here, a marketer has three alternative strategies i.e. product specialization,
market specialization, selective specialization and localization of market.

3. Full Coverage Market

In this case, a marketer does not want to avoid any segment for fear of losing market for his
product. He selects all available market segment, considers the specific needs and problems of each
market segment and raise to fulfill their needs and wants through as single basket. For example:
Coca-Cola, General Motors, IBM all these large companies have adopted this strategy. Coca-Cola
targets all children, youths and old people.

Concept of Product Positioning/Decision

 Its mean the act of building the company’s image and value in the market.

 It also reveals the act of designing the product’s image in the target market.

 It is the place a product occupies in consumer’s minds relative to competitors’ offering.

 Many positions are available to a company such as low-price position, high-price position, high-
service position, advanced-technology position.

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 Some customers may prefer low-price products, some prefer high-quality products

 The objective of a positioning strategy is to have the brand favorably perceived by the people in
the target market.

Types of Product Positioning /Decision

1. Positioning on specific product features

Companies usually offer products to the customers by describing specific feature of their
products.

2. Positioning on Benefits, Problem Solution or Needs

Companies may mention some of the important benefits that can be obtained by the customers
while using their products.

3. Positioning on Specific Usage Occasions

Manufacturer of certain products, usually medicines, use certain information such as, use two or
three times daily, for external use only, store in a cool place, use before meal etc.

4. Positioning for User Category

Some of the manufacturers and sellers may be dealing in certain specialized products, which are
used by specific market segments only. In such a circumstances, they try to communicate to the
specific user category only. Example inviting only children customers and products.

5. Positioning against another product

Some manufacturers may communicate to their customers that their products are more
qualitative or better than those of customers.

6. Positioning on Product Class Dissociation

In order to attract more customers, sometimes manufacturers may offer certain irrelevant but
beneficial or separate but useful communication for the same product or service.

Process of Product Positioning

1. Identify the actual competitors

2. Determine how the competitors are perceived and evaluated

3. Determine the competitors position in the market

4. Analyze the customers’ objective, preferences, tastes, problems, needs etc.

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 Unit 6
Product Decisions

Concept of Product

 A product is the item offered for sale. A product can be a service or an item.

 It is a need satisfying item because consumers buy product to satisfy their needs.

 A product may consist of tangible and intangible attributes.

 Tangible attributes are visible while intangible attributes are invisible in nature.

 A product is any item or service you sell to serve a customer’s need or want.

 A product is anything an organization or individual offers for exchange that may satisfy
customers or customers’ needs or the marketer’s own needs.

A product can be defined in four ways:

1. As a Tangible Product

Tangible goods mean products that are of a physical nature, such as clothing or household items.
Tangible goods are physical products defined by the ability to be touched. Product is the basic
physical entity, which has precise specifications and is offered under a given description or model
number. Name, color style, taste, size, weight, durability, quality and efficiency in use are some of
the features of tangible products.

2. As an Extended Product

Actually, a product is more than a physical entity. A product includes not only the physical
attributes, but also the accompanying cluster of image and service features. For example:
computer.

3. As a Service Product

It is an intangible item. Sellers and buyers cannot see and touch it, they can just feel it. For
example: insurance service, banking service, transportation service, tourism service etc. A service
product may be supported by documents.

4. As a Total Product

It is a consumer-oriented product. It focuses on what a product means to the customer, not the
sellers. It is a modern concept of the product, which should be accepted by all the marketing
organization. It refers to the broad spectrum of tangible and intangible benefits that a buyer might
gain from a product.

Levels of a Product

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1. The Core Product

It is the fundamental level of product what the buyer is really buying, which is included into the
package or basket to protect from the external shock or damages. From the core product the buyer
wants some benefits, uses or taste. For example: a woman buys lipstick for solving her problem, she
is not buying any chemical or physical attributes of the product such as package, brand name, style
etc. She is buying just ‘hope’ that she will look beautiful or attractive by using lipstick.

2. The Formal Product

It is the outer part of the core product including physical and chemical attributes such as
package, brand name, quality, style etc. through which the product is formally recognized as a
tangible item. For example: a lipstick may have physical and chemical attributes such as brand
name, beautiful package, style, quality etc. These are called as formal product.

3. The Augmented Product

It is the totality of benefits or a hope that a person receives or experiences and prestige in
obtaining the formal product. It is a totality of core and formal product. For example: a woman buys
lipstick and along with it she gets package, quality, style etc. Similarly, a person buys a computer
and with it he gets physical item, brand name, package, style, installation, free delivery service etc.
i.e., he is buying IBM compute along with its accompanying services such as instruction, software
programs, warranty, guarantee, package etc.

Product Classifications & Marketing Considerations

Classification of Products on the basis of Product characteristics

1. Durable goods

They are tangible items that can be used for a long time, such as furniture, washing machines,
cars etc.

2. Non-durable Goods

They are tangible items, which can be used for relatively a short period of time, such as soap,
food, shampoo, fruits, tooth paste etc.

3. Services

They are activities, benefits or satisfactions that are offered to satisfy consumer’ needs.
Services are intangible in nature, such as haircuts, automobile repair, banking services etc.

Product Classification on the basis of type of Buyers & the Product Use

1. Consumer Products

i. Convenience Goods

ii. Shopping Goods

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 iii. Speciality Goods

iv. Unsought Goods

2. Industrial Products

i. Foundation Goods

ii. Entering Goods

iii. Facilitating Goods

Product Life Cycle Stages & Strategies

Concept of a Product Life Cycle

 It is an attempt to recognize distinct stages in the sales and profit history of the product.

 It is a concept that attempts to describe a product’s sales profits, customers, competitors and
marketing emphasis from its beginning until it is removed from the market.

 It enables a marketer to anticipate change in consumer taste, competition and channel support
and adjust the marketing plan accordingly.

 Products require different marketing, financial, manufacturing, purchasing and personnel

strategies at different stages of their life cycle.

Stages of Product Life Cycle

1. Market Introduction Stage

In this stage, a new idea is being introduced to a market. The main purpose of the marketer is to
attract customers and opinion leaders to new product. Marketer cannot enter into the market with
a broad rage of products, he will enter with only one or two products because high risk may be
involved in the broad range of products.

2. Market Growth Stage

As such marketer will be able to earn adequate profits in this stage, because with an increase
sales volume profits also increase rapidly. As such competitors will enter into the market. But due
to the continuously increase in sales, competition may not have adverse effect in this stage.

3. Market Maturity Stage

In this stage, market maintain differential advantage as long as possible. Company sales is stable,
competition rapidly increasing and market. Number of customers is high in this step.

4. Saturation Stage

It is a stage at which point the company’s growth ends and its sales become horizontal for
certain period. In this stage, marketers must not try to increase profits but must work for consumer

38
satisfaction. In this stage, improving product quality, standardizing products, attractive designs of
the products, improving markets etc.

5. Declining Stage

In this stage, the number of customers goes on decreasing, many firms quit the market and the
product offerings become narrow. In this stage, no additional efforts can improve company’s sales
and profits.

Marketing Strategies at Different Stages of Product Life Cycle

1. Product Strategy

2. Price Strategy

3. Place Strategy

4. Promotion Strategy

5. Market Segmentation Strategy

6. Competition Strategy

There are two basics product life cycle strategies:

1. Product modification strategy

This strategy includes functional changes, quality changes, style changes and socio- ecological
changes in the product.

2. Product abandonment Strategy

This Strategy refers removing the existing product and starting the new one.

The New Product Development

For the marketer, a new product may be either innovative product, imitating product or
modified product.

New Product Development Process

1. Generation of new-product ideas

2. Screening and evaluation of product ideas

3. Business analysis

4. Product development

5. Test marketing

6. Commercialization and launching of new product

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1. Generation of new-product ideas

Idea generation reveals the creation of new ideas about the product to be produced in
future. For this purpose, marketers have to collect new ideas about the product from various
sources.

2. Screening and evaluation of product ideas

The purpose of idea screening is to reduce the number of ideas collected to an attractive
practicable few. This is possible through the evaluation of the collected ideas.

3. Business analysis

Once the product is filtered through the initial screening stage, a through study of the
various marketing opportunities must take place and data quantified with a view to preparing
projections.

4. Product development

After the analysis of business opportunities and risk is over, the actual product
development activity takes place. In this stage, the main tasks of the marketer should be to
translate product idea into a technically and commercially feasible physical product.

5. Test marketing

After a technically and commercially feasible product is developed. But before it is

commercialized, the marketer should test the product to find out whether the consumers accept
the new product or whether the product is market-friendly and whether the products is viable
for sales purpose in the long run.

6. Commercialization and launching of new product

Once the purpose of test marketing is over, the company is ready to produce products in
mass scale for commercial purpose. Commercialization refers to the introducing or launching of
the new product in the market for commercial purpose.

Branding Decisions
Meaning of Branding;

 A brand is the part of a product.

 A ‘brand’ is a name, term, symbol or special design, or some combination of these elements,
that is intended to identify the goods or services of one seller or a group of sellers.

 It differentiates one seller’s products or services from those competitors.

 It suggests something about the product’s characteristics such as its benefits, quality, use or
combination of all. Such as IBM, Sony, Burger King suggests specific name of quality.

40
 It refers the prestige of the manufacturers, sellers and also give prestige to the consumers when
they use popular brands.

 It assures regular satisfaction to the customers.

 To maintain constant quality of the products and thus win the confidence of the target market,
because brand may be a symbol of quality.

Objectives of Branding

1. To differentiate a firm’s products from those of competitors.

2. To make convenience in shopping.

3. Brands refer the prestige of the manufacturers, sellers and also give prestige to the consumers
when they use popular brands.

4. To legally protect the company.

5. To identify the exact market for their products.

6. To assure regular satisfaction to the customers.

7. To maintain constant quality of the products and thus win the confidence of the target market,
because brand may be a symbol of quality.

8. To reduce price comparisons because it is hard to compare prices on two items with different
brands.

Branding Strategies/Types of Branding

1. Manufacturer vs. Distributor Brand

When the products are given the name of the manufacturer, such brands are called as
manufacturer’s brand. Most of the manufacturers try to give the name of the products after their
names because of several reasons as mentioned in the previous section. For example: Hulas, Bata,
Tata, Samsung etc.

When the products are distributed in the name of dealers or distributors such as wholesalers
and retailers then such brands are called as distributor’s brand or dealer’s brand. For example: A &
P, K mart, Karmacharya, Nebico etc.

2. Individual vs. Family Brand

When separate brand names are used to each product of the manufacturer’s product-line, such
brands are called as individual brands. Individual brands are generally used when the product quality
or feature differ widely from one product to another in the product-line or when the manufacturer
wants to differentiate his products from each other. For example: Janakpur Cigarette Factory has
adopted individual branding policy. It has several products such as: Laliguras, Yak, Gainda.

41
 When, instead of using separate name to each product in the product line or product group,
family name is used for each product group or particular product line, this type of brand is known as
family brand. For example: one company produces Star Beer, Star Lemon. Here, in each product
family name ‘Star’ is used, therefore this is family brand.

Concept of Brand Equity

 Brand equity indicates to those attributes and association, which make the brands difference
from one another, or which make branded products superior to others.

 It consists of differential attributes underpinning a brand which gives increased value to the
firm’s product or service.

 Brand equity is a set of brand assets and liabilities linked to a brand, its name and symbol add to
or subtract from the value provided by a product or services to a firm or to firm’s customers.

Concept of Packaging

 Packaging is an act of designing or producing the package for a product.

 It includes all activities required for designing and producing the container or wrapper for a
product.

 It is the science, art and technology of enclosing or protecting products for distribution, storage,
sale and use.

 It can be described as a coordinated system of preparing goods for transport, warehousing,

logistics, sale and end use.

 We see that some products are enclosed in a paper box, some are enclosed in a tube, some are
enclosed into a plastic bag, wood box, metal container etc.

Functions of Packaging

 To protect goods from external damages due to mishandling, external shocks or adverse climatic
conditions.

 To disseminate adequate information to the customers and other concerned parties.

 To differentiate firm’s products from those of competitors, trademarks, brand name, packaging
design, distinct color combination and other information are printed outside the package.

 To facilitate storage of goods. Packaged goods can be stored for a long time compared to non-
packaged products.

 To facilitate self-service due to convenient in handling.

 To meet consumer affluence because they are willing to pay a little more for their convenience,
attractive looking, dependability and prestige of better packaging.

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 To build up company’s image and reputation, because attractive, protective and informative
packaging may build up company’s image and reputation.

Levels of Package

1. Primary Package

It is the product’s immediate package. It is used immediately after the product is produced.

2. Secondary Package

It is the additional layer that protects the primary package and is removed when the product arrives
at home or is ready to use.

3. Shipping Package

It is the external layer necessary for storage, identification, bulky handling and transportation
because for distant distribution and long-time storage, secondary package cannot protect products
from external shocks.

Essentials of a Good Package

 Economical

 Functional

 Communicative

 Attractive

 Eco-friendly

Product-Mix and Line Strategy

1) Product-Mix Strategies
2) Product Mix Dimensions
3) Breath, Length, Depth and Consistency

Product-Mix Decision

 Product-mix Expansion Strategy

 Product-mix Contraction

 Alteration of Existing products

 Trading up and Trading Down Strategy

Product-line Decision

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 Product-line Analysis

 Product-line Length

 Line Modernization Decision

 Line Featuring Decision

 Line Pruning Decision

Service Product Strategies

Service Marketing Concept

 A service may be defined as any task performed by the company to another as the provision of
any facility or as a product.
 Service sector has been creating and expanding sufficient job opportunities in the countries.
 Development of services marketing has minimized the business complexities.
 Service Marketing helps in creating trained or skilled manpower in the country.
 Services may or may not be attached with the physical product.

Characteristics of Services

1. Services are intangible or intangibility

2. Services are perishable and cannot be stored or perishability

3. Services vary widely in quality or variability

4. Services are not separable from their provider or non-severability

5. Non-measurability

Marketing Strategies for Service Products

1. The Service-profit chain

It stresses the importance of people – both employees and customers and how linking they can
leverage corporate performance.

2. Managing Service Differentiation

How do you differentiate your services from that of the competition?

3. Managing Service quality

Service quality involves a comparison of expectations with performance.

4. Managing Service Productivity

The productivity of a process is related to how effectively input resources are transformed into
value for customers.

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Management of People, Physical Evidences & Processes

People

 Service personnel- A marketer should always make his/her service personnel customer-oriented
and loyal to the customers.

 Customers- A marketer should always try to establish good relationship with the customers,
he/she should treat them as the good friends and should try to develop good relationship from
strategic point-of-view.

 A marketer should try to attract new customers by offering quality services.

 A marketer should try to develop and maintain customer-customer relationship.

Physical Evidence

Physical Evidence or atmosphere consists of:

 Maintaining good office-room conditions

 Better office furnishings

 Attractive office layouts

 Provision of customer complaint box

 Lighting and ventilation system in the rooms

 Appropriate office sizes

 Adequate physical facilities in the office rooms such as heater, fans, stationeries etc.

 Provision of waiting rooms for customers associated with entertainment such as television in the
waiting room.

 And association of many other services that the customers demand in the course of time.

Processes

These are the two major aspects of the ‘process’ element of the marketing mix, which have a
strategic dimension, they are as follows:

1. Degree of customer contact

Marketers should try to contact customers time-to-time or regularly even after the products are
sold to them.

2. Quality control standards

Most customers prefer to buy products or services from those companies, which are capable to
maintain upgrade standards the product or services.

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 Unit 7
Pricing Decisions

Concept of Price & Pricing

 Price is one of the major elements that the marketing manager must consider while preparing a
marketing program.

 It is the prime factor in generating the return on capital invested in a business enterprise.

 Pricing means the determination of appropriate value to a particular good or a service.

 Pricing is an act of determining a right price for the right product.

 Pricing facilitates not only the exchange goods and services between the seller and buyer but
also has facilitates the whole market system.

 It is equally important to the customers, to the nations and the marketing firms for several
reasons.

Importance of Price to the economy

 The major purpose of price within the free market economy is to help allocate goods and
services to various members of society. Price is allocation of resources.

 The price of a product influences the price paid for the factor of production i.e., a product’s price
influences wage, rent, interest and profits. High wages attract labor; high interest rates attract
capital and so on. Hence, price is a regulator of the economic system.

Importance of Price to the Firm

 A product’s price is a major determinant of the market demand for the item. High prices usually
reduce the demand for the products while low prices raise demand.

 Price affects a firm’s competitive position and its market share. Therefore, most of the
marketing executives use price as a competitive tool to achieve the desired goal.

 A right price may help sales increase, as such it generates adequate revenue and profits to the
company.

 Price is only the means through which money comes into an organization.

 Price may be an indicator of a product’s quality; as such it helps in market segmentation on the
basis of purchasing capacity of the people.

Factors Affecting Price Determination

1. Internal Factors

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 i. Pricing objective

ii. Level of organizational involvement

iii. Marketing mix

iv. Product differentiation

v. Costs

2. External Factors

i. Demand for the product or service

ii. Competitive situation

iii. Suppliers’ characteristics

iv. Distribution system

v. Economic condition

vi. Government control

Pricing Approaches

1. Cost-based Pricing

2. Demand-based Pricing

3. Competition-based Pricing

1. Cost-based Pricing

Pricing is generally based on the costs. Most of the companies set their prices on the basis of
costs. Since the companies do not popularly use all the methods, we shall discuss first three
methods only. They are Markup pricing, Target Return Pricing, Break-Even Method Pricing.

2. Demand-based Pricing

Under this method price is determined on the basis of the consumer’s perceptions and demand
intensity rather than on costs. Under this method price is determined by three methods. They are
Perceived-Value Pricing, Value Pricing, Demand-Differential Pricing.

3. Competition-based Pricing

Under this method, a company sets its price chiefly on the basis of what is competitors are
changing. Price may be determined below the market price depending upon the nature of
competition, nature of product, market expectations etc. There are generally two methods of
pricing i.e. Going-Rate Pricing, Sealed-Bid Pricing.

New Product Pricing Decisions

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 It is a pricing strategy that a marketer follows while entering to the market for the first time. It
consists of two strategies.

1. Market-skimming price

It involves setting high price for a new product in the initial stage assuming that the customers
will pay high price for the new product. This strategy may be suitable in the following situations.

 If the company is going to launch a new product for the market.

 If the new product has distinct feature strongly desired by the customers.

 Of the demand for the product is fairly inelastic.

 If the new product is protected by patent right or other rights or the market is more protective
for the product.

2. Market Penetration Strategy

It involves setting low price for the new product in the initial period with a view to penetrate the
mass market immediately and thus obtain a large sales volume and larger market share. This
strategy may be suitable in the following situations.

 When a mass or large market exists for the product.

 When the demand for the product is highly elastic.

 When economies of scale are possible.

 When fierce competition already exists in the market for the product.

Price Lining & Price Adjustment Decisions

Price lining refers to selecting a limited number of prices at which a business will sell related
products. It helps customers in simplifying buying decisions, while for the retailers, price lining helps
planning purchases of required goods.

Strategies for Price Adjustment Decisions

 Geographical Policy

 Price Discounts and allowances

 Promotional Pricing

 Discriminatory Pricing

 Product-mix Pricing

 Psychological or Odd Pricing Strategy

 Resale Price Maintenance

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Initiating & Responding to Price Changes

1. Initiating Price cuts

2. Initiating Price increases

3. Responding to Competitors’ Price changes

Responding to Price Changes by the Firm

1. Maintaining the price

2. Price Maintaining with Non-price Counter-attack

3. Price reduction

4. Price increase with product Counter- attack

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 Unit 8
Distribution Decisions

Concept of Distribution

 Distribution is concern activities involve in transferring goods from producers buyers and users.

 The general concept is that a right product must be distributed to the right place.

 Distribution is the process of where by goods and services are delivered from producers to
consumers and to organizational buyers where and when the products are needed.

 It is the marketing function that provides time, place and possession utilities.

 Distribution includes not only channels of distribution or marketing intermediaries such as

wholesalers, retailers and agents but also include physical distribution such as order processing,
transporting, storing, materials handling etc.

Objectives of Distribution Decision

 To the right place

 At right time

 Through right channel

 With minimum chances of loss and damage

 Transferring ownership from seller to buyer or at different distribution chains

Importance of Distribution Decision

 Fulfillment of consumer’s needs and wants

 Brings cost-effectiveness

 Minimizes or eliminates market competitions

 Promotes relationship with channel members

 Improves company’s sales and profit positions

 Makes transfer of ownership effective

 Strengthens promotion of goods

Channel Functions & Flows

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 Wholesaling
 Retailing

Meaning of Wholesaling & Wholesaler

 Wholesaling is selling of goods and services to parties for resale, use in producing other goods
and services, or operating an organization.

 Wholesaling includes all sales transactions and incidental activity where the buyer is to resell
the goods or use them in the conduct of his business rather than in ultimate consumption.

 Wholesalers are intermediaries who sell to other intermediaries, who buy for resale or for
industrial use.

 A wholesaler is a middleman that produces nor consumes the finished product but, instead,
sells to retailers and other institutions that use the product for ultimate resale.

Types of Wholesalers

1. Merchant Wholesalers

i. Full-service Wholesalers

ii. Limited- Service Wholesalers

2. Agent Wholesalers

i. Brokers

ii. Selling Agents

iii. Manufacturers’ Agents

iv. Commission Merchants

2. Manufacturer-Wholesaler or Manufacturers’ sales Branches

Role & Functions of Wholesalers in the Distribution System

 Transportation

 Warehousing

 Financing

 Risk Bearing

 Market information

 Servicing Products and Management Advice

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Meaning of Retailing & Retailers

 It is the final stage in a channel of distribution through which the needs and wants of the
ultimate consumers are fulfilled.

 It consists of all activities involved with the sale of products to ultimate consumers.

 It encompasses those business activities, which are involved with the sale of goods and services
to the final consumer for personal, family or household use.

 Manufactures, importers and wholesalers act as retailers when they sell products directly
to the final consumer.

 In retail trade a typical sale transaction involves a small quantity of goods, while in wholesaling
it involves a big quantity of goods.

Types of Retailers

1. Traditional retailers

Specialty store, Department Stores, Variety Stores, Supermarkets, Convenience Stores

2. Mass Merchandisers

Discount Houses or Stores, Off-Price Retailers, Superstore, Warehouse Showrooms, Catalog

Showrooms

3. Non-store retailers

Direct Marketing, Vending Machines, Personal Sales at home, and Retailing Services

Role & Functions of Retailers in the Distribution System

 They purchase goods in small lots and sell in small quantities according to the consumer’s
requirement.

 They hold stock of goods at convenient centers.

 They display goods in their stores attractively to attract consumers and help in promotion
activities.

 They make a thorough study of consumers’ tastes and habits and then endeavor to satisfy
them.

 They help to meet the daily demands for necessaries.

 They usually purchase goods from the wholesalers or producers to suit individual requirements.

 They supply local needs of the particular area and the special needs of different classes and
individuals of society.

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 They often grant credit facilities to the consumers, they provide personal services to the
consumers.

Role of Retailer to Wholesalers & Manufacturers

 Relieves them from distributing goods to final consumer

 Provides reliable information about consumer taste and preferences

 Helps to maximize their production and sales

 Speedy distribution of Perishable goods

 Promotes their goodwill in the market

 Advertises and promotes their products and services

Role of Retailer to Consumers

 Provides shopping convenience

 Offers variety of goods

 Provides personal services

 Understanding personal problems of consumers and solves them

 Provide adequate information about produces and wholesalers

 Provide credit facilities

Marketing Channels & Channel Designs for Consumer & Industrial Products

Meaning of Channels of Distribution

 Channel of distribution mean middlemen or intermediaries who distribute goods and services
from a manufacturer to the final consumers or users.

 The marketing channel consists of all institutions or intermediaries used to move a product
from the producer to the consumer or user.

 A Distribution channel consists of the set of people and firms involved in the flow of title to a
product as it moves from producer to ultimate consumer or business user.

Channel Design for Consumer Goods

 Manufacturer-Consumer Channel

 Manufacturer-Retailer-Consumer Channel

 Manufacturer-Wholesaler-Retailer-Consumer Channel

 Manufacturer-Agent-Retailer-Consumer Channel

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 Manufacturer-Agent-Wholesaler-Retailer-Consumer Channel

Channel Design for Industrial or Business Products

 Manufacturer – Industrial Users

 Manufacturer –Industrial Distributor - Industrial Users

 Manufacturer –Agent- Industrial Users

 Manufacturer –Agent -Industrial Distributor - Industrial Users

Channel Selection Factors

Selection of a channel of distribution is affected by a number of factors like :

 Consumer or market Considerations

 Company Considerations

 Product Considerations

 Middlemen Considerations

 Competitive environment

1. Consumer or market Considerations

Type of Consumer or Market, Number of customers, Geographic Concentration of Market, Order

size

2. Company Considerations

Desire for Control, Managerial Ability and experience, Financial Resources, Services required

3. Product Considerations

Nature of product, Unit value of the product, Technical Products, Order size and Weight of the
product

4. Middlemen Considerations

Services provided by Middlemen, Availability of Desired Middlemen, Sales Volume Possibilities,

Attitude of Middlemen Towards the Manufacturer’s Policies

5. Competitive environment

A competitive environment is one in which companies compete with each other. The more
businesses that provide a similar product or service, the more competitive the environment.

Channel Conflicts & their Resolution

Channel Conflict

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 It refers to a situation in which the desires of channel members are not sufficiently integrated.

 It exists when one channel member perceives another channel member to be acting in a way
that prevents the first member from achieving its distribution objectives.

There are three types of channel conflicts. They are :

 Horizontal Conflict

 Vertical Conflict

 Multi-Channel or Inter-type Conflict.

Causes of Channel Conflict

1. Price

2. Purchase terms

3. Shelf space

4. Exclusivity

5. Delivery

6. Advertising support

7. Profitability

8. Continuity

9. Order size

10. Assortment

11. Risk

12. Branding

13. Channel access

14. Importance of account

15. Consumer loyalty

16. Channel control

Resolution or Settlement of Channel Conflict

 Resolution through Mitigation

 Resolution through Conciliation

 Resolution through Arbitration

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 Resolution through Regulation

Marketing Logistics/ Physical Distribution

Concept, Nature & Objectives of Marketing Logistics

 Marketing logistics is concerned with the management of physical flow of goods from the points
of purchasers.

 It is the process of strategically managing the movement and storage of materials, parts and
finished inventory from suppliers, between enterprise facilities and to customers.

 It is the activities concerned with the movement of the right amount of the right products to the
right place at the right time.

 The main objective of physical distribution is getting the right products safely to the right places
at the right time at the least possible cost.

Objectives of Marketing Logistics

 To provide customer service

 To distribute goods more safety at right time

 To minimize the total cost

 To supply goods to the right target market

Major Marketing Logistics Functions

 Transportation Arrangement

 Warehousing Management

 Inventory Management and control

 Order Processing

 Materials handling and Customer Services Decision

 Logistics Information Management

Models of Transportation

 Railway Transport

 Road Transport

 Water Transport

 Pipe-line Transport

 Air Transport

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Types of Warehouse

 Private warehouse

 Public warehouse

 Bonded warehouse

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 Unit 9
Promotion Decisions
Concept & Objectives of Promotion

 Promotion refers to marketing communication that aims to deliver a complete package of

information to the final customers.

 It is that a marketer must be able to communicate to the customers about several aspects of his
goods and services through appropriate media.

 It is any form of communication used to inform, persuade or remind people about an

organization’s or individual’s goods, services, image ideas community involvement or impact on
society.

 It is an applied communication used by marketers to exchange persuasive message and

information between buyers and seller.

Objectives of Promotion

 Informing the customers about the new products.

 Persuading or appealing the customers to buy the product.

 Reminding the customers to make them alert at all time.

 Entertaining the customers to influence an attract them towards the product.

 Re-enforcing that is to make impulse purchases by the customers.

Marketing Communication Process & System

 Marketing communication is a process of transmitting thoughts, ideas, instructions or

information and then receives its response from the target audience or market.

 In a communication system there must be two parties – communicator and the receiver.

 Communicator is a source or sender who converts information into message and conveys to the
audience or target group and receiver or audience is a person or a target group who receives
message from the communicator and then makes response to the message.

 In a marketing communication system, marketers usually become the communicator and the
customers or target market becomes the receiver.

Process of Marketing Communication System

 Source of information

 Encoding

 Selection of channels of information

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 Decoding

 Receipt of message of information / Receiver

 Response to the message / Feedback

Promotion Mix & Its Components

 Promotion mix is the particular combination of promotion tools used by a company to

communicate with its audiences.

Components of Promotion

 Advertising

 Personal Selling

 Sales promotion

 Public relations

 Publicity

Promotion Mix Determination Factors

 Nature of the Market

 Nature of the product

 Stage of the product’s life cycle

 Availability of funds for promotion

Nature & Objectives of Advertising

 Advertising is a paid form of personal communication by the identified sponsor targeted at mass
community through a single effort.

 Advertising fulfills all objectives undertaken by promotion, it can substitute for personal selling
and it can complement personal selling.

 Advertising is used for several reasons, e.g. for the promotion of product and institution itself, to
win the competition, to create demand for product, to introduce a new product in the market
etc.

The features of advertising are:

 It is a mass communication.

 It is informative in action

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 It is a Persuasive act

 It is a competitive act

 It is a paid form of communication

 It has an identified sponsor

 It is Non-personal presentation

Types of Advertisement

 Product or brand advertisement

 Service advertising

 Local or retail advertising

 Political advertising

 Directory advertising

 Institutional advertising

 Direct-response advertising

 Business-to-business advertising

 Interactive advertising

 Global advertising

 Web advertising

 Transit advertising

 Social advertising

Nature & Objectives of Personal Selling

 Personal selling consist of direct or face-to-face communication between the seller and the
buyer.

 It is being used as a most effective method of promoting goods and services because it is a
process of direct or two-way communication between the seller and the buyer.

The main objectives of personal selling are:

 Informing customer by fully explaining about goods and services

 Persuading customers by clearly distinguishing goods and service attributes from one another

 Reminding customers about the products

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 Building company image

 Developing relationship with customers and promoting relationship marketing

There are two processes or methods of personal selling. They are indoor sale and outdoor sale.

Process of Indoor Sale:

 Drawing attention of the customers

 Reception

 Inquiry

 Demonstration of goods

 Handling objections

 Selection of goods

 Closing the sales

Process of Outdoor sale

 Prospecting

 The pre-approach

 The approach

 Product presentation

 Meeting objections

 Closing the sales

 The follow-up

Importance of Personal Selling

 Flexibility

 Two-way communication

 Persuasion

 Represents the Whole company

 Reliable source of Information

 Minimizes Wasted efforts

 It results in the Actual Sale

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Nature & Objectives of Sales Promotion

 It involves marketing activities, other than advertising, publicity or personal selling, that
stimulate consumer purchases and dealer effectiveness.

 The forms of sales promotion include trade shows, demonstrations, coupons, rebates, contests
and many additional activities that bridge personal selling and advertising.

The natures of Sales Promotion are as follows:

 It is short-term nature

 It provides incentives

 It aims at quick response

 It is primarily directed at target audience

Objectives of Sales Promotion

 To attract new tries or new customers who have not use company’s products before.

 To reward loyal customers for their loyalty and thus maintain market.

 To increase perceptions of brand differentiation in markets where products are basically similar.

 To encourage impulse purchases

 To create excitement among the consumers towards the products.

 To promote off-season products.

Sales Promotion Tools & Techniques

1. Consumer Promotion Tools

Price-off Promotion, Rebate, Coupon, Samples, Premiums, Prizes, Point-of-purchase displays and
demonstrations, Product warranties, Trade shows and exhibitions.

2. Trade Promotion Tools

Sales contest, Credit facilities, Push money, Cooperative advertising, Price –off, free samples.

3. Sales Force Promotion Tools

Sales Contest, Bonus and Commission, Promotional Kits, Gift Items, Trade Shows and
Conventions.

Concept & Features of Publicity

 Publicity is an effort to produce favorable climate for the organization and its products among
the potential customers or the publics.

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 It is also considered as a part of public relations.

 The forms of publicity include news stories, articles, pamphlet, personal communication through
various media of advertisement etc.

Public Relation

 It is an effort to establish good relationship with the publics.

 The basic philosophy of public relation is that if the image of the company is poor in society, no
other marketing efforts including quality product and service can satisfy the customers.

Features of Public Relation

 It is based on a social philosophy of management.

 It is a social philosophy expressed in policy decisions.

 It is action resulting from sound policies.

 It is communication.

Objectives of Public Relation

 Build consumer awareness

 Build credibility of the company and its product

 Stimulates sales force and dealer

 Hold down promotion cost

Concept, Relevance & Methods of Direct Marketing

 Direct Marketing comprises all types of non-store retailing other than direct selling,
telemarketing and automatic venting. Direct marketer contact consumers through one or more
of the following media, TV, newspapers, magazines, catalogs and mailings/direct mail.
Consumers order by telephone or mail.

Reasons for the Growth of Direct Marketing

 Stiff Competition in the Market, Low Operating Expenses, Scarce Time with Customers, Provides
adequate information and quality services, Possibility of Increased Sale and Expansion of Market

Important Methods of Direct Marketing

 Direct Mail, Direct Selling, Catalog Marketing, Telemarketing, Televised Shopping, E-marketing
and Kiosk Marketing

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