Features of Modern Retail Marketing

RETAIL MARKETING
UNIT-1
Definition of Retail Marketing
Retail marketing includes a set of activities where a retailer buys products from a wholesaler or
manufacturer to sell them to ends users (consumers). In simple words, a retailer is an intermediary which
makes products available to consumers using different channels, for example, brick-and-mortar retail
stores, shopping malls, shopping websites
FEATURES OF MODERN RETAIL MARKETING:
FEATURES OF
FEATURES OFMODERN RETAILMARKETING
MODERN RETAIL MARKETING
Sale to Ultimate Customer
Convenient Form (Quantity
Convenient Place and Location
Last Link in Chain of Distribution
Organized Sale
Marketing not Just Sale
Goods and also Service
Creation of Utility
Customer Delight
1. Sale to Ultimate Customer:

Goods or service in a retail transaction are sold to final customer for consumption. There is no
further re-sale of the product or service. Goods and service sold for consumption, may be for domestic or
household use or industrial uses are classified as retail transaction.
Even sale of spare parts, equipment, machineries etc., to industrial house or business is organized
are classified under retail transaction. Once the goods are sold, there should not be further sale of the
product or service. It is consumed by the customer or the person for whose benefit he has purchased.
2. Convenient Form (Quantity):
The word retail means cut size ‘small piece’ or break the bulk. Retailers buy in large quantity from
middleman or manufactures, he breaks the bulk and sells in small quantities to match the need of
customers. Goods may be repacked or delivered in small packs in convenient form which an individual
can carry to his home.
3. Convenient Place and Location:
SHRI SAKTHIKAILASSH WOMEN’S COLLEGE Page 1

RETAIL MARKETING
Retailers deliver goods from a location that is convenient to the customers. In case of physical
location. It may be a small store, a shop and multiplex. It may also be over the internet,
through mobile or mail order business. Goods/or service are offered to the convenience and comfort of the
consumer.
Online shopping through internet, mobile is becoming popular with the growth of I-T and courier
service. (Ex- the advertisement of pizza, on the TV is shown delivering within half hour of its order)
4. Last Link in Chain of Distribution:
A retailer is the last link in the chain of distribution. He sells goods to final customer. He connects
between middlemen and consumer acting as link between them. He is described as merchandising arm or
neck, in the bottle of distribution. He acts as communicator between manufacturer and consumer.
Benefits both of them by sharing necessary information that gives profit to manufacturer by
manufacturing goods that are liked by the people.
5. Organized Sale:
Retail marketing is organized business of selling to the customer by application of principles and
functions of marketing. Un-organized retail like street vendor a Paanwala may not be typically classified
under retail marketing.
6. Marketing not Just Sale:
Organized retailing or retailing is not an activity of just a sale. It is a marketing activity. Consumer
is offered comfort and convenience and concession in buying goods of his choice. Marketing functions
like transportation banking insurance, ware housing are undertaken to create and deliver goods to
satisfaction of people.
Goods are designed and delivered to match the taste of people and satisfy their desire and thereby
ensuring customer delight. Every marketing effort is undertaken in the sale or delivery of goods.
7. Goods and also Service:
Retail marketing is not only connected with delivery of physical goods or merchandise like
Grocery Vegetable, Electronic goods etc., it is also engaged in providing services.
Now a days marketing of services is becoming an important areas like Insurance, Tourism, Hotel,
Investment etc. With Globalization process, entry of MNC’s, development in the field of I-T sector has
made marketing of services more popular and developing.
8. Creation of Utility:
Retail marketing creates Form, Place and Time, utility. It breaks the large bulk size into small size
and changes the form of product. Place utility is created by bringing goods from place of manufacturer to

RETAIL MARKETING
the place of consumer. Goods are stored in advance and delivered when demanded by the customer. A
retailer creates these utilities and their by increases value and utility of goods.
9. Customer Delight:
Retail marketing not only satisfies customer’s wants, it ensures their delight. It provides more
satisfaction than what is expected through its retail network.
Retail marketing collects information regarding type of product decide by them, Communicates
such information to manufacturer. Product is designed to match the changing the taste of customer.
Retailer stores and presents such product to the people in size, style, price and other services through his
store that increases satisfaction levels of people.
TYPES OF RETAIL MARKETING
There are three main types of retail marketing activities including store based retail marketing, traditional
retail marketing and digital retail marketing. Each channel compliments the other and the most effective
retail marketing strategy will encompass all three.
Store Based Retail Marketing
If you have a physical store location, it's important to fully make the most of all available promotional and
marketing opportunities. Putting time and energy into store based retail marketing can help bring in new
customers, increase customer retention, increase sales and increase the amount each customer spends per
transaction.
 Events: Retail stores are the perfect place to host events and they can be tailored depending on your
audience, store size and brand image. Examples of retail store events include fashion shows,
demonstrations and industry expert talks.
 Instore displays: In-store displays are a great way of showcasing new products or promoting specific
collections. Whether it's a visual merchandising display or a digital board showcasing customer social
media posts, it's a great way to engage with your target audience.
 Sample products: Product samples can be utilised to get shoppers interested in a product that they might
not have considered on their own. This can be especially useful for luxury items such as makeup, skincare
and perfume as it allows customers to try before they buy.
 Interactive displays: Interactive displays are a great way of getting your customers to engage with your
products or brand. They can be used to show relevant information such as in store stock levels, pricing and
product info. Alternatively they can also be used for displaying videos and interactive games and quizzes.

RETAIL MARKETING
 In store promotions: Your physical store is the ideal place to highlight promotions and offers. Whether
it's a big season sale or an everyday promotion such as 2 for 1 on accessories, your store is the perfect
place to let customers know about what you have to offer.
Traditional Retail Marketing
Traditional marketing is any form of marketing that uses offline media to reach an audience. Examples of
traditional marketing include direct mail, posters, TV advertisements, press releases and word of mouth.
 Direct mail: Direct mail marketing means you can reach your customers in their homes. Sending
catalogues and discounts is a cost effective way of getting customers in store or online.

 Posters: Promotional and advertising posters in a prime location such as next to public transport can be
highly effective at raising brand awareness. Though posters in prime locations can be costly, it's a tried
and tested marketing strategy
 TV Advertisements: TV marketing is another great way of reaching your target audience. Local TV ads
can be highly targeted, and video content offers a lot more room for creativity compared to things like
posters and direct mail.
 Press Releases and PR: Press releases are an essential marketing tool for retailers, especially if they are
offering a special promotion or hosting an event. Reaching out to local and online publications can help
raise awareness of your brand as well as drive traffic to your store or website.
 Word of mouth: Word-of-mouth marketing is an incredibly valuable resource for both physical and
digital retailers. Consumers trust the opinion of their friends and family members far more than they trust
marketing and advertisements. By creating referral programs, you can encourage your existing customers
to recommend your brand to others.
Digital Retail Marketing
 Website: Most retailers have a website but even if you don’t sell any products online it's important to
have a professional website that establishes your brand image, whilst giving visitors information about
what you offer. If you do sell products online, then your website is essentially the equivalent of a physical
store and needs to offer excellent user experience, excellent customer service, highlight sale and
promotions and encourage calls to actions.
 Social media: Social media is an incredibly effective tool for promoting your brand online. It gives your
direct access to your target audience, is free to use and gives brands the opportunity to be creative in the
content they produce.

RETAIL MARKETING
 SMS marketing: SMS marketing is the process of sending marketing messages by text message. This is
an opt in scheme and is a marketing method used by retailers or have already had some interaction with a
consumer. It can be a really effective method of increasing brand loyalty and repeat business.
 Email newsletters: Email marketing is a form of direct marketing and digital marketing that uses email to
promote your products or services. It can help make your customers aware of your latest items or offers by
integrating it into your marketing automation efforts. It is an opt in marketing channel meaning a customer
will typically already have some interaction with your brand.
IMPORTANCE OF RETAILING
1. Retailing shapes the lifestyle of people : Retailing is an integral part of the modern society. It
shapes the way of life. In the past, trading of goods was part of a traditional society. But in recent times,
buying and selling of goods have become a brand dominated activity.
2. Retailing contributes to the economy : The importance of retail sector is reflected in its
contribution to the growth of an economy. Its contribution is much more visible in the modern era than it
was in the past. As the retail sector is linked to the significant portion of the economy, its contribution to
GDP is substantial. Retailing is the driving force of the economy. It aims at promoting its sustained
growth.
3. Retailing dominates the supply chain: Goods and service flow from manufacturers or service
providers to consumers. Where consumers are large in number and are widely distributed, the role of
retailers becomes crucial. Retailers serve as a connecting link between the wholesalers and consumers.
Due to its dominant position in the supply chain, the retail structure has steadily developed over the years.
Now-a-days, retailing is characterized by large multiple chains rather than small scale independent
retailers. The formalization and growing importance of retailing has made it powerful in the distribution
channel. Now, retailers are compared with manufacturers which indicate the growing dominance of
retailers within the supply chain. Besides, the annual turnovers achieved by the retailers can be compared
with the largest companies in other service industries.
4. Retailing is interdisciplinary: The pace of growth within retailing is accelerating. Retailing has
emerged from a number of interrelated disciplines such as geography, economics, management and
marketing.
5. Retailing is acknowledged as a subject area in its own right: Potter has described the academic
study of retailing as the “Cinderella of the social sciences”. Retailing is an accepted area of academic area
of academic debate, such as marketing and management, developed fully as an area of study. University

RETAIL MARKETING
research centers focus on retailing and profession appointments is retailing has been made. Academic
journals focusing on retailing are being published worldwide.
6. Retailers enjoy status as major employers: In today’s society, retailers are the major employers.
It is estimated in developed countries that retail industry employs one in nine of the workforce. More than
two thirds of the retail industry employs one in nine of the workforce. Retailers employ a significant
proportion of the overall workforce. More than two thirds of the retail force is women. Also, more than
half of retailing employees are employed on a part-time basis. This highly flexible workforce is capable of
adapting to the differing labour demands. In the past, retailing employees got lower pay and had longer
working hours. But now, the retail sector is becoming more organized with better pay scale.
7. Retailers are gate keepers within the channel of distribution : Retailers are becoming
increasingly important in their role as gate keepers within the channel of distribution. In the past, suppliers
were dominant. Retailers supplied the merchandise that was on offer and consumers selected from them.
As retailers have become significantly powerful, they are able to influence suppliers and stock only the
brands they wish to sell. So, consumers are able to by only what is stocked and offered to them by the
retailers. Retailers are thus considered as shaping consumer demand.
8. Retailing has scope for expanding internationally: Retail internationalization is defined as
follows: “The management of retail operations in markets which are different from one another in their
regulation, scope, social conditions, cultural environment and retail structure.” Retailing offers scope for
shifting retail operations outside the home market. Retailers who focus on luxury goods markets are
expanding their business internationally. Retailers are moving into more geographically and culturally
distant markets.
RETAIL MARKETING MIX
The marketing mix is often called the four Ps and it represents four discreet areas of business
planning and marketing decision-making. The four Ps are: Product, Price, Place and Promotion.
1. The product is the totality of the offer which will normally include the services, store layout,
merchandise. It will also include the company, and product brand name.
2. The price is what the customer has to be willing to pay in exchange for the benefits of the product
and channel service. The price is related to a perception of value based upon the way the whole of the
marketing mix creates an image of the transaction experience.
3. The promotion is the means by which the retail offer is communicated to the target groups in order
to inform and persuade different segments of the benefits of utilizing a specific retailer’s outlet or to make
a purchase.

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4. The place is based on the retailer’s activities in supplying a channel service. This includes the
logistics of inventory management systems.
Product Price Promotion Place
 Service  Value  Advertising  Supply channel
 Quality  List reductions  Sales promotion  Location
 Merchandise  Cost  Relationship  Convenience
 Range  Backward marketing  Channel
 Brand name penetration  Personal selling relationships
 Features/Benefits  Variable  Direct marketing  Logistics
 Store layout  Leader  Sponsorship  Transport
 Guarantees  Everyday low  Printed in-store  Warehousing
 Skimming communication
 Markdown
 Credit terms
PRODUCT
 The product decision involves deciding what goods or services should be offered for sale to a
particular group of customers. An important aspect of this element of the mix is new product
development. As technology and tastes change, products become out of date and inferior to those of the
competition, so companies must update products with features that customer’s value or completely replace
the product.
(For example, the Sony Walkman was the market leader in portable music players. Following its launch,
the Apple iPod soon outsold the Walkman as it offered the advantages of being able to download music
and hold thousands of songs on a much smaller device. From the first iPod, Apple has developed a
product range to cater for diverse customer needs.)
 Product decisions also involve choices regarding brand names, guarantees, packaging and the
services that should accompany the product offering. Guarantees can be an important component of the
product offering. From a retail marketing perspective, the product element of the mix is very important.
Retailers provide stores full of products to suit every consumer’s needs. Some retailer’s fill their shelves

RETAIL MARKETING
with extensive product ranges the range of products a retailer sells is called the assortment and this defines
the nature of the business and its position in the marketplace.
PRICE
 Price is a key element of the marketing mix because it represents, on a unit basis, what the
company receives for the product or service that is being marketed. It is the only element of the marketing
mix that creates revenue, while all of the other elements represent costs.
 For example, expenditure on product design (product), advertising and salespeople (promotion)
and transportation and distribution (place) all cost money. Marketers therefore need to be very clear about
pricing objectives, methods and the factors that influence price setting. They must also take into account
the necessity of discounting and giving allowances in some transactions. These requirements can influence
the level of list price chosen, perhaps with an element of negotiation margin built in. Payment periods and
credit terms also affect the real price received in any transaction. These kinds of decisions can affect the
perceived value of a product.
 Because price affects the value that customers perceive they get from buying a product, it can be
an important element in their purchase decision. Some companies attempt to position themselves as
offering lower prices than their rivals. Another strategy is to launch a low-price version of an existing
product targeted at price-sensitive consumers.
PLACE
 Place considerations involve decisions concerning the distribution channels to be used and their
management, the locations of outlets, methods of transportation and inventory levels to be held. The
objective is to ensure that products and services are available in the proper quantities, at the right time and
place.
 Distribution channels consist of organizations such as retailers or wholesalers through which goods
pass on their way to customers. Producers need to manage their relationships with these organizations well
because they may provide the only cost-effective access to the marketplace. They also need to be aware of
new methods of distribution that can create a competitive advantage. (For example, Dell revolutionized
the distribution of computers by selling direct to customers rather than using traditional computer outlets.)
 Increasingly, music is distributed by downloading from the internet rather than being bought at
music shops. Consequently, place is another important part of the mix that influences retail management
decision making.

RETAIL MARKETING
PROMOTION
 Retailers constantly communicate with their customers using a variety of methods and approaches.
Retail promotions involve the management of elements of the promotional mix, which include advertising,
sales promotions, digital and direct marketing, personal selling, sponsorship and public relations.
 By these means the target audience is made aware of the existence of a product or service and the
benefits (both economic and psychological) it confers on customers. Each element of the promotional mix
has its own set of strengths and weaknesses. Advertising, for example, has the property of being able to
reach wide audiences very quickly.
 Digital marketing via the internet is increasingly important as a promotional tool. A great
advantage of the internet is its global reach – companies can now easily extend the reach of their
communications to consumers worldwide by creating a website. The internet has also proven to be a
powerful communication tool, sometimes replacing traditional media.
 Many retailers now sell through the internet, either exclusively or in conjunction with a network of
stores and/or paper-based catalogues. The internet brings opportunities for retailers to sell to and
communicate with their customers through one highly interactive and flexible channel. In the final part of
this course, you will learn about how retailers use marketing communications to engage the interest of
their target customers.
QUESTION BANK
5&10 MARKS
1. Explain about concept of retailing.

2. Explain about evolution of retailing.
3. Write notes on features of retailing.
4. Give detailed notes on marketing mix of retailing.
5. Explain about importance of retailing.

RETAIL MARKETING
UNIT-II
1.BUYING
DEFINITION OF BUYING
According to Pyle, “Buying comprises all those activities involved in finding a suitable source of
supply, selecting the desired quantity, quality, grade, style and size and coming to agreement with
reference to the price, deliver date and their conditions”.
FACTORS TO BE CONSIDERED IN BUYING:
1) Source of supply
This is an important function to be considered. The price of course, is a delicate and complex factor in
marketing a decision to buy. Equally or more important aspect is the considering of various sources of
supply and deciding a particular source from where to buy.
2) Time
To decide when to buy. In the case of seasonal products timing of purchase is a critical factor.
3) Estimating the demand
Before buying, one should determine the kind, quality and quantity of goods to be bought. Records
maintained in the business and research conducted in the market for products help estimate the demand.
The manufacturers determines the rate of production and the middlemen decides the quantum of stocks to
lift. They scan their stock records while buying their requirements. Therefore, estimating demand is the
most important step in buying.
4) Market news
The buying functions involves taking several decisions such as a)the kind of goods that are needed, (b) the
quantity to be bought, c) when they are to be bought, d) from whom to be bought. For this purpose a list
of specific requirements is prepared and suppliers are contacted. So, it is essential for the buyer to gather
complete market information about the goods meant for purchase. He should be aware the conditions of
the market. Data regarding, suppliers, prices, terms of sale, mode of delivery, changing style, new goods
etc., should be collected. These data are vital for taking purchase decisions.
5) Quality
Decision regarding quality of material to be bought is of great importance. Because, a manufacturer needs
quality materials for maintaining the quality of his final product .
The following figure will clearly explain how much important is buying for an enterprise. IT also
show the relationship of the function of buying with other function of an organization.

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TYPES OF BUYING
The purchases made by manufacturers, wholesalers, retailers, dealers, institutions an Individuals
considerably vary for various reasons.
1.Speculative buying :
It is also known as “forward buying”. This is usually practiced by the retailers, when the prices
move up. They try to accumulate inventories to gain from the price increase. In this sense, this kind of
buying is opposite to the Hanot – to – month – buying.
But the danger are more. For instance, if the price have reached the peak point, the tendency the
after will be to reverse the trend. Therefore, the price position should be examined carefully before
buying decisions is made. This kind of buying is usually adopted in commodity exchange.
2.Concentrated buying :
It refers to a situation where goods need to be purchased from a particular source only. It happens
because the source only. It happens because the source of supply is confined to a particular region.
3.Diversified buying
Under the system of scattered buying, purchases are made from a large number of sources. The
buying plan is therefore, flexible. The following are the merits of scattered buying.
4.Reciprocal Buying
When two business units agree mutually to buy from each other it is known as reciprocal buying.
For example there may be an understanding between a paper mill and a stationary shop by which the
former (papermill) will supply the paper required by the latter (stationery) and the stationer will provide
the stationery items needed by the papermill.
5.Conservative buying
As the name suggests, it is a kind of buying in small quantities. This is also known as hand to
mouth buying or current need buying.
6.Buying by samples
A sample is representation of the goods offered for sale. The seller guaratees that goods meant for
scale correspond with the sample shown in all respects. For example, in sale of agriculture produce such
as cotton, grain etc., samples are shown to the buyers. If the samples are found satisfactory, orders are
placed.
7.Buying by inspection

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It is the simplest method of buying. Before, the buying decision is taken the buyer examines the
whole lot of goods to be purchased. This method is adopted when goods are purchases locally. If good
which are not of uniform quality, the buyer will have to insist on prior inspection.
However, when the place to which the buyer belongs and the place of buying are far away, this
method is unsuitable. Incidentally, it is in such cases that assembling offers the maximum offers the
maximum benefit to the buyers.
8.Contract Buying
Manufacturers who require regular supply of raw materials often enter into long-term contracts with the
suppliers. The suppliers provide certain quantity of such materials at a certain price for a fairly longer
period of time.
9. Buying by description
Manufacturers of furniture items usually make available catalogues showing different models to
enable their customers to choose. They also make furniture as per the description and specification given
by their clients.
Purchase by description has widened the scope of market. It facilities distribution of goods even in
foreign market. When goods are bought on the basis of description, fair dealing is essential on the part of
the seller.
10.Scheduled buying
This is another variety of contract buying. Here, the buyer will not enter into a long term
agreement buy indicates the estimated quantity that would be needed over a period. This agreement is
done between two business units where the output of one is the input of another. Therefore, it enables the
former unit to plan its production will greater confidence. Eg., arrangement between a manufacturer of
paper and manufacturer of note books.
11.Period buying
When buying is made at regular and fixed intervals it is known as period buying. Usually mouth
to mouth requirements are bought is a lot. This method is adopted by retailers.
12.Buying by requirements
Certain goods are demanded mainly during a particular season IT is called seasonal goods. For
example, during Diwali crackers will be demanded. Even, more clothes will be demanded during this
season. To meet this extra demand the manufacturer has to increase production which require additional
buying of raw materials.
ASSEMBLING

RETAIL MARKETING
MEANING:
Assembling means bringing together goods of the same type from various sources of supply to a
particular place.
Assembling and buying do not mean one and the same. Assembling indicates concentration of
goods of the same type scattered in small lots. But buying involves a variety of products. Further, buying
involves transfer of ownership of the goods while assembling involves creating and maintaining of stock
of goods.
NEEDS OF ASSEMBLING
Assembling assumes importance in marketing. The need for assembling arises out of the
following factors :
1. Supply of goods is seasonal.
2. Goods are non-standardized in nature and they vary greatly in quality.
3. Assembling of different goods offers customers a wide choice of goods.
4. Collection in large quantities makes further processing and handling of goods economical.
5. Goods are produced by numerous small manufacturers scattered over a wide area.
ADVANTAGES
1. Market for goods assembled is widened.
2. Assembling results in saving in transportation costs and handling charges are considerable
reduced.
3. Assembling helps in getting a variety of goods in the market at reasonable prices.
4. When goods are collected in bulk, standardization and grading of goods become economical.
5. Assembling ensures a steady supply of goods of customers.
DISADVANTAGES
Assembling of goods suffers from the following problems :
1. Where the products are seasonal or irregular, holding or stock is difficult.
2. The process of assembling is not simple as it may appear. It requires a specialized knowledge
about the sources of supply scattered over a wide area.
SELLING
MEANING:
Selling is the crown of all marketing activities. The object of selling is to dispose of goods at
satisfactory prices. Selling involves transfer of ownership of goods to the buyer. Selling is the act of

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transferring possession and ownership of goods by sale. It is also the process of persuading the
prospective buyers to buy the product.
DEFINITION:
According to Pyle, “selling comprises all personal and impersonal activities, finding, securing and
developing demand for a given product or service and in consummating the sale of it”.
METHODS OF SELLING:
Selling may be performed in any one of the following ways :
1.Sale by Sample :
A sample is a specimen of the goods stocked. Where the whole lot of goods offered for sale
cannot be presented before the buyer, a small portion representing the bulk of goods is shown. For
instance, in the sale of grain, it is not possible for the prospective buyer to see personally every unit
offered for sale. Several handfuls taken from grains stocked are shown as sample.
2.Sale by inspection :
This is the oldest system of sales. The undertone of this method is “let the buyer beware”
(Principle cavest emptor). But this method is not applicable to the goods of following nature:
a) Goods lack standardization.
b) Goods are highly perishable.
In such instances, this system is replaced by sample and description method of selling.
3.Sale by description :
This method is adopted in the case of manufactured goods where standardization is perfect. Such
products can be easily described in a catalogue. There products cannot be sent for inspection nor a sample
could be given eg, are consumer durables, machinery items etc.
4.Sale by advertisement:
Sales through advertisement is an impersonal method of selling. Advertisement create demand for
the products or services through written, printed or spoken words, pictures, diagrams and symbols. It
generates sales immediately or at sometimes in the future Advertisement are called printed salesmanship.
Advertising through radio and television may be called mass salesmanship.
TRANSPORTATION
MEANING
Transportation is quite vital to marketing. It is through physical means that goods are moved from
the point of production to the points of consumption. It helps assembling and dispersion of goods. It

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creates place utility by carrying commodities from where their utility is relatively low to places where it is
lighter. It also creates time utility by speedy dispatch through various modes of transportation.
FUNCTIONS
1. It increase the demand for goods. Newer customers in newer places can be easily contracted and
products supplied. This widens the market.
2. It ensures even flow of commodities into the hands of the consumers.
3. It helps in the growth of industries whose products require quick marketing.
4. It helps stabilize prices of several commodities.
5. It intensities competition which, in turn, reduces prices.
6. It enables the consumers to enjoy the benefits of money goods not produced locally.
CLASSIFICATION OF TRANSPORT
Basically, the modes of transport have been classified into three categories, namely land transport,
water transport and air transport
1. LAND TRANSPORT
2. It is further divided into road transport and rail transport.
A) Road Transport
It is the ancient form of transport. Even now, it remains the commonest form of transport.
Merits :
1. It is the cheapest form of transport compared to the other forms on account of less maintenance
expenses of the ‘way’.
2. The state has the responsibility of laying and maintenance of roads. This relieves transport owners
form incurring high cost of operation compared to the railways.
3. It is safe. Damage to goods is generally much less in road transport because handling is minimum.
4. It is flexible. This advantage could be claimed only be road transport. It can reach the place of
loading and unloading. Door-to-door service is one of the most attractive features of road transport.
5. The roadways are used by different kinds of vehicles and for varies purposes.
Demerits :
1. Accidents occurs often in highways. This makes road transport highly safe.
2. The rates are not standardized.
3. Limited load carrying capacity is one of the drawbacks of road transport.
4. Most of the transporting systems operating on roads are not coordinated.

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5. Speed is an essential element in marketing. In the present day competitive market the rule of ‘first
come first succeed’ applies the slow seed of the road transport is one of its drawbacks.
B)Rail transport
Railways play a crucial role in the promotion of trade and industry in India. They carry
consignments of different nature to different parts of the country.
Merits :
1. It is must suitable for carrying heavy and bulky commodities.
2. It is suited for long distance travel and transportation.
3. Railways are often referred to as the common man’s transport. This is mainly because of its cheap
rates.
Demerits :
1. Railways are totally unfit to provide rural transport services.
2. They cannot offer door-to-door delivery services.
3. Short distance travel cannot be imagined on railways as they are profitable only for long distance
journeys.
4. Maintenance of railways involves huge expenditure.
2.WATER TRANSPORT
In the past this was the only means of transport available for moving bulky goods of cheap value.
Now a days, world trade and industry was developed through the medium of waterways. Ships carry
consignments to different parts of the country and to different parts of the world.
Merits :
1. It is the cheapest medium of transport. Its operating cost is very low compared to all other forms
of transport.
2. Water transport carriers are the heaviest carriers of goods. In case of ships the capacity is still
greater.
3. It helped international trade to be within the reach of all nations.
4. Water transport is best studied in areas where other kinds of transport cannot be operated.
Demerits:
1. Water transport cannot create time utilities because its moving speed is considerably low. So
perishable articles cannot be transported.
2. It is vey much affected by weather and climatic conditions.

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3. Storms and high tides are the usual enemies of the ocean-going ships. Therefore, during rainy
season, this kind of transport is too risky.
4. It has very low flexibility. It can move only where there is a route.
3.AIR TRANSPORT
Now-a-days distance is measured not in miles but in hours, with the even of airways. The
contribution of air transport in commercial field is highly significant. It has created ‘time utility’ even in
international markets.
Merits :
1. The speed is the most important feature fair transport. No other transport can compete in the
respect with the airways.
2. There are no barriers to air transport.
3. Perishable commodities like fruits, flowers etc. can be easily transported to other countries.
Demerits :
1. The air freight rates are very high. Therefore, it can be used only for valuable commodities which
could pay high rates.
2. The carrying capacity of plane is much less when compared with ships.
3. It is very much affected by bad weather conditions.
4. In spite of the modern requirements, the frequency and intensity of accidents is quite high. This
restricts its use and operation.
QUESTION BANK
5&10MARKS
1. Explain about features of retailing.

2. Explain about functions of retailing.
3. Explain about types of buying.
4. Explain about Assembling.
5. Explain about transportation with its merits and demerits.

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UNIT – III
STORAGE AND WARE HOUSING
Storage
Storage is an important function of marketing, storage means holding and protecting goods in
store. It is the process of holding and preserving goods from the time they are produced until they are
needed for consumption or use. Storage protects commodities from deterioration. Moreover surplus is
carrier over for future consumption during the period of scarcity. When goods produced are seasonal and
are to be consumed in future, storage is quite essential to keep them safely.
Need for storage
1. Storage fills the gap between the time of production and the time of consumption. Production of
agricultural goods is seasonal but they are consumed throughout the year.
2. Some goods are manufactured throughout the year but their demand is only seasonal. E.g. fans, raincoats,
umbrella etc.
3. The quality of certain products increases by storing, e.g. wine, whisky, etc.
4. To meet the demand created by purposeful activities of the producer, goods must be stored until the
demand starts flowing.
5. If goods are stored in ample quantities, it will avoid violent fluctuations in prices. It is particularly so with
seasonal goods because they are produced only in a particular season only. They are stored in anticipation
of future demand. Ultimately, prices are kept at a stable level.
6. Storage is not a post-production function above. It is essential for preproduction activities too.
7. The existence of storage facilities enables the producers and distributors to hold stocks at points
convenient for regional distribution.
WAREHOUSING
The place where the goods are stored is known as a warehouse. The term ‘ware’ means ‘article’
and warehouse is a building or room for storing goods. The function of storage is performed through
housing or storing the products properly. Therefore storage is one of the physical distribution function of
marketing and warehouse is the tool with which this function is performed.
Functions of warehousing
The functions of warehouse is generally required in the following cases :
Warehousing function
1.Price Stabilisation

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Goods manufactured as finished products are stored until they are demanded. Production of some
goods is seasonal, but they are consumed through out the year. Warehousing by offering storage facilities
maintains a balance between demand and supply of goods. As a result, prices are stable throughout the
year. in the absence of warehousing facilities, prices of commodities would fluctuate widely.
2.Storage
It is the basic function of a warehouse. Storage of goods helps to create time utility and place
utility. Commodities are protected from deterioration. Thus, warehousing offers facilities for the proper
storage of commodities.
3.Financing
Warehouse receipts is issued for goods stored in licensed warehouse. The warehouse receipt is an
important instrument for trading to commodities. The warehouse keeper may advance money to the
owner on the security of goods kept in the warehouse. Banks and other financial agencies also lend
against the warehouse receipt to the owner of the merchandise.
4.Risk bearing
Warehouse safeguards the goods against deterioration. Once the goods are handed over to the
warehouse keweper, the owner of merchandise is relieved from the botheration of safeguarding of goods.
The risk of loss or damage for goods in storage is borne by the warehouse keeper.
Kinds of warehouses
The warehouses can be divided into three groups on the basis of place of necessity, ownership and
special provisions. The various kinds of such warehouses are discussed below.
1.On the basis of ownership
a)Public warehouse
Public warehouse are public utilities. Public warehouses are licensed by the government which
regulated their operation. Products can be stock piled in appropriate physical condition and in strategic
locations until the seller wishes to distribute them to customers. (In India, the warehouses are controlled
by the warehousing corporation Act, 1962. A central warehousing corporation – CWC – was established
on March 2, 1957, to look into warehousing problems).
b) Cooperative warehouse
The ownership of these houses is vested in the hands of a primary cooperative society. But this
method is not popular so far, but if properly organized it will be a boon to agriculturists in villagers.
C)Private warehouse

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A manufacturer who operates a warehouse exclusively for his own purpose is called a private
warehouse Bonded warehouse and in-plant warehouse are private warehouses.
II.On the basis of place of Necessity
a)Bonded warehouse
Bonded warehouses are located near ports. They enable the unloading of commodities from a ship
safely into place until the owner of the goods takes delivery of them. The importer normally has to take
over the goods after paying customs and other duties due to the shipping and port authorities. The
importer release the goods from warehouses by paying these dues in installments. It is actually these
function which made this warehouses to be known as bonded warehouse. The goods deposited with them
are said to be ‘in bond’.
b)In plant warehouse
Most of the manufacturers have their own warehouses through the size may be small. In any cases
it is impossible for the manufacturers to ‘slug-load’ all the production. The entire production is not
immediately sent to the market. The manufactured products have to wait for some time. A large number
of manufacturers find it convenient to distribute the products from plants directly to retailers or to
customers. This reduces handling cost and improves the services. Therefore, this method is required in-
plant warehousing.
III.Speciality warehouses
a)Refrigerated warehouses
It is the latest contribution of technology which made the storing function really capable of giving
time utility to any product. Form products are really benefited by this.
b)Special commodity warehouses
These warehouses are specially constructed to house certain commodities, which require special
treatment. E.g., cotton, explosives etc. require special facilities such as maintenance of fixed temperature,
non-exposure to light etc.
RISK BEARING
Risk means an element of uncertainty or possibility of loss. Marketing risk is defined as the
possibility of loss from unforeseeable circumstances in future. Goods are subject to man risks such as tire,
destruction, loss in storage and transportation, price fluctuation etc., Thus, a marketing organization has to
bear innumerable risks in the process of marketing goods.
Factors responsible for causing risks :
1. Risks due to political causes.

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2. Risk due to accidents while goods are in transit.

3. Loss due to competition.
4. Government interference (imposition of customs and similar duties)
5. Risks due to new inventions.
6. Risks of deterioration in quality
7. Loss due to supply and demand and changes in prices.
8. Variations in purchasing power of the consumer.
9. Unexpected loss due to fire, floods, or storm.
Classification of risks
Marketing risks may be classified as market risk, political risk and physical risk.
a)Market risk
These are caused by changing market condition. These risks include time risk, place risk, and
competition risk.
i)Time risks
From the time the goods are manufactured to the time they are sold, they are subject to many risks.
Most risks arises due to the passage of time. Traders and middlemen purchase goods, with a view to sell
them at a later date at a remunerative price. Over a period of time, the prices of goods may fluctuate. So
manufacturers, middlemen undertake time risk in the process of marketing goods.
ii)Place risk
Place risk arise from the fact that prices for a product are different in different markets at the same
time. Same price line for a product does not prevail at different points of sale. When traders buy articles
from one. Place they hope to sell them elsewhere at a higher price. This hope could be made fruitful only
if there exists a demand at the intended place of sales. This is he fundamental reason for place risk.
iii)Competition risk
The demand for a particular product is affected by the strategy followed by competitors. The
competing firms may effect an improvement in the quality of the product or in their selling methods.
Price cutting is one of the methods that are generally adopted to establish a product in the market;
providing special guarantees to durable products is another method. To complete and become successful,
manufacturer may need financial strength supported by the capacity to anticipate things.
b)Political risk

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Political risk are losses arising out of intervention by governments. Imposition of tariffs or
restrictions on imports are examples.
c)Physical risk
Physical risk lead to the total destruction of the product. Ultimately such a loss ends in two ways.
Product loss and loss of profit. Examples are : loss in transit, loss due to improper handling etc.
Dealing with risks
Risks can be dealt by 1.Minimising risk, 2.Preventiaing risk and 3. Shifting of risks.
1.Minimising risks
Through effective management, the effect of the risk could be minimized. For example, even
when there is a fashion change, the goods that are already produced could be sold at managerial discounts.
Market reach and forecasting will also help in minimizing the risks arising out of market changes.
2.Preventing risks
The following measures may be adopted to eliminate risks.
i. Risks arising from bad debts can be avoided by extending credit only to credit worthy.
ii. Loss due to price fluctuations may be eliminated by the marketers by entering into long-term contracts
with customers.
iii. Risk of fire may be avoided by construction of fire proof walls.
iv. Theft and burglary may be avoided by providing watch and ward, safety vaults etc.
3.Shifting of risks
Some of the risks can be shifted to others. The risks arising out of changes in the market
conditions are however not insurable because losses cannot be anticipated accurately. Insurance
companies usually assume many of the risks for a payment called premium. These are specialized
insurance agencies for the assumption for the assumption of each kind of risk. Another institution that
helps in shifting risks due to price changes is ‘commodity exchange’ a properly organized commodity
exchange can shoulder such risks.
STANDARDISATION AND GRADING
Standardization determines the condition of a manufactured product such as size, quality, performance,
etc. The common explanation of standardization is the knack to use standard marketing worldwide. In
other words, it’s the aptitude for a company or business to use the same marketing policy from one
country to the next, and across diverse cultures. Goods that cannot be produced of a single size, weight or
color such as fruits, grains, eggs or cotton are graded into classes on the basis of quality.

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 Standardization refers to producing goods of predetermined specifications, which helps in achieving

uniformity and consistency in the output.
 Standardization ensures the buyers that goods conform to the predetermined standards of quality, price,
and packaging and reduces the need for inspection, testing, and evaluation of the products.
Grading is the procedure of categorization of products into dissimilar groups, on the source of some of its
significant characteristics such as quality, size, etc. Products of diverse qualities should be divided into
groups or lots and related quality products are put into a grade.
 Grading is mainly needed for products which are not produced according to predetermined specifications,
such as in the case of farming products, say wheat, oranges, etc.
 Grading ensures that goods belong to an exacting feature and helps in realizing higher prices for high-
quality output.
Differences between Standardization and Grading –
Standardization
 Standardization means that goods are of a specified and uniform quality.
 It is a set of requirements as to the desired qualities in a product.
 It is a measurement of physical characteristics and specified quality of a product.
 Standards are set by both small as well as big business concerns.
 It refers to the procedure of setting up basic measures or standard to which the products must conform and
taking steps to ensure that the goods essentially produced adhere to these standards.
Grading
 Grading is the process of sorting individual units of a product into well-defined classes or grades of
quality.
 It is the division of products into different categories on the basis of units possessing similar features.
 It helps in fixing different prices for different categories of the product.
 Grading is done on the basis of certain characteristics such as quality, size, etc. Particularly, in the case of
agricultural products which are not produced according to predetermined specifications.
 Grading is the sorting of the produce into dissimilar lots each with the similar characteristics of market
quality.
Advantages of Standardization and Grading: Standardization and Grading are useful marketing
functions as they offer the following advantages:
1. Standardization and Grading facilitate buying and selling of goods by sample or description. Customers
can buy standardized goods effortlessly. The customers need to examine all the goods which are not

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standardized or graded. When goods are of standardized quality, customers do not insist on detailed
assessment.
2. Standardization and Grading facilitate the manufacturer to direct the goods of dissimilar qualities towards
the market best suited to them. The task of middlemen becomes simple because they can converse well the
characteristics of standardized products to customers.
3. Standardized goods benefit from a wider market. The customers become capable to take appropriate
buying decisions as they can get information about prices, relative advantages, durability, etc. of
standardized goods.
4. Standardization and Grading facilitate the trading of goods on the product exchange. Hedging, future
trading and price comparisons become easy. This function can be accomplished by grading and
standardization.
5. Standardization and Grading help in raising finance because consistent products enjoy a ready market and
they are eagerly received as a collateral safety for granting loans.
FUNCTIONS OF RETAILING MARKETING
1. Assembly and Sorting of Merchandise:
Retailer has to meet every need of merchandise(Goods) of common man. He has to keep wide variety of
goods and service that may be demanded by the customer. Retailer collects and assembles the goods from
different manufacturers or middleman. He undertakes sorting or classifying of the goods to meet the
specific need of each customer.
Following figure may illustrate the activity of sorting:
6.
Retailer has wide variety of customers who have

different requirements. Retailer collects and
assembles these merchandise from different
sources, assorts them and keep in his shelf ready
for easy identification for himself and customers.
He displays product to visiting customers and ensure sales.
2. Breaking the Bulk:
Retailer buys in large quantity “RETAILS’ or cuts into small bulk or pack to match the need of each
individual customer. The large bundle or bag or bulk is broken into small units of packs that is convenient
for a retailer to buy and carry.

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3. Holding Stocks:
Merchandise of adequate quantity is always kept in stores so that it is delivered whenever demanded. By
holding ready stock, He creates Time Utility, and increases value of goods. This is an important service
that a retailer is offering both to manufacturer and also to customer.
Manufacturers are relieved of creating storage and warehouse facility for the goods he has manufactured,
as manufactured product is taken by the retailer. This will minimize the cost of warehousing, damage that
may occur in storage period. Similarly every customer is benefited as any commodity he desires is readily
available with retailer, Customer need not bother of buying the product in bulk and keeping the stock in
his home. \
4. Collect Market Information:
Customers come into direct and personal contact with the retailer. They share their opinion and ideas
regarding the utility and value of goods and what they further expect from the goods. The retailer will
share this information with the manufactures so that manufacturer can design, price and deliver the
product to match the expectation of people, Common man may not be having the idea of variety of goods
available.
Retailer knows the likes and dislikes of each individual customer; he can guide the consumer to buy the
product that matches his taste and budget. Retailer’s knowledge about the market, i.e., types of product
available, expectations of people about the product will help retailer sell those product that matches taste
of customer. It helps a manufacturer to produce the product that the customer likes.
5. Marketing Functions:
Retailer will perform marketing functions like transportation, warehousing, promotion and in some cases
also grading, packing and labeling etc. In absence of retailer these activities have to be carried out by
manufacture themselves. Retailer undertakes the task of transporting goods that are manufactured, keeps
them in his warehouse until they are demanded.
During this period he may also undertake grading, packing and labeling if they are not already done. He
undertakes sales promotion campaign through various forms of Publicity and advertising to create demand
for products and sells them.
6. Promotion of Product:
Promotion is an important activity in selling the product. Retailer undertakes promotion of products by
giving publicity and advertisement in the local media. Placement, showcasing and window dressing of the
product in his shop and showroom will make the product visible to people and it may attract them to buy
it.

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Since retailer has personal contact with his customers he can influence their buying behavior by
suggesting the product that matches their taste. Retailer will help for demand creation for the product by
offering services like free home delivery, after sale service. Discount and other offers which are important
sales promotion strategies.
7. Offers Variety of Services to his Customers:
Regular retailer offers variety of services along with the sale. These may include free home delivery, after
sale service, credit Retailer is a man of confidence to a regular customer. Long and regular association-
ship between retailer and his customer will make them to share their personal and family related issues.
Retailer may act as Friend Philosopher and Guide of his trusted customer in his routine life.
8. Risk Bearing:
A retailer by holding large stock of variety of products assumes the following kinds of risks:
i. Selling risk of all the variety that he has stocked.
ii. At some point of time some quantity will remain unsold. He has to design strategy like discount sales,
offer etc. to undertake stock clearance, or else he has to suffer the loss.
iii. Damage to goods- when the goods are in his warehouse goods may get damaged due to accidents, fire,
earth quake, burglary or goods may lose value due evaporation or any other cause. Every paisa of damage
cannot be insured. Retailer undertakes the risk of sharing the burden of such loss.
9.Stocking varieties of goods:
Retailers buy varieties of goods from various manufacturers or wholesalers. Thus, a retailer provides wide
range of choice enabling the consumers to select the products of their choice.
10.Estimating the demand and arranging the purchase of the product:
Retailers create demand for products by communicating with their customers. This demand creation is
quite helpful for manufacturers and wholesalers.
11.Acting as consumer’s agent:
The retailers anticipate the wants of the consumers and then supply them the right kind of goods at a
reasonable price. Their job is to make the consumer’s buying as easy and convenient as possible.
QUESTION BANK
5&10MARK
1. Explain about need for storage.
2. Explain about different kinds of warehouses.
3. Explain about standardization and grading.

RETAIL MARKETING
4. Explain about classifications of risk.
UNIT-4
BUYER BEHAVIOUR

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Buyer behavior refers to the decision and acts people undertake to buy products or services for individual
or group use
CONSUMER AND INDUSTRIAL GOODS
1. CONSUMER PRODUCTS: Consumer products are products and services bought by final consumers for
personal consumption. These are the products which are used without further commercial processing. In
other words, consumer goods are meant for personal and non-business use. Consumer products include
convenience products, shopping products, and specially products.
2. INDUSTRIAL PRODUCTS: Industrial products are primarily purchased for further processing or for
use in producing other goods. Examples include capital goods, raw materials, components, tools and etc.
They are non-portable goods involving a high degree of consumer design making, are very expensive, last
many years and do not change form.
S.NO CONSUMER GOODS INDUSTRIAL GOODS
1. The demand for consumer goods is a The demand for industrial goods is a ‘derived
‘direct demand’. demand’. it is derived from the demand for
consumer goods.
2. The number of buyers is large. Industrial goods have only limited number of
buyers.
3. The demand for consumer goods in Industrial goods have relatively inelastic
elastic. demand.
4. The buyers are found scattered in The buyers are found to be concentrating in
different parts of the country/world. certain regions only.
5. Each purchase will generally be of Each purchase involves a very high amount.
small value.
6. These goods are not technically Industrial goods are technically complicated.
complicated.
7. Buying is much influenced by emotions. Buying cannot be influenced by emotions.
8. Any individual can undertake buying. Here, buying is always a group process.
9. After sale service is important in the After sale is of paramount importance in the
case of consumer durables. case of all industrial goods.

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10. There are number of middlemen in the The manufacturers of industrial goods supply
market. directly to their customers.
BUYER BEHAVIOR MODEL

Buying behavior is a process. The potential customers are subjected to various stimuli (inputs).
Customers secretely mnaupulate the things and one ccannot see what is going on in his mind. He respond
to the stimuli or inputs and may purchase some products or service of his interest. Under the system view
of buyer behavior, we have:
1.Inputs, 2. Processing, 3. Outputs, $. Feedback loop.
FEEDBACK FEEDBACK
External influences: Consumer Decision Making: Consumer Decision and

Action:
Marketing Inputs Buyer characterstics
1.Product choice.
1.product. 1.Psychological. 2. Brand choice.
3. Dealer choice.
2. price. 2. Personal.
4. Purchase timing.
3. promotion. 3. Cultural. 5. Purchase amount.
4. channel of distribution. Buyer Decisions:
Others: 1.Process.
1.Economical
2. Technological.
3. Political.
4. Social
The marketing stimuli are received by the potential customers. These stimuli may be social,
economic, cultural, technological and political in nature. Inputs also includes buying power and marketing
mix. Buying power is the ability to participate in the exchange activity. Marketing mix is the marketing
effort in product, price, place and promotion appeal.
At the point of receiving marketing stimuli, the consumer already has a certain emotional and
psychological frame of mind which is due to his culture, social and family elaborate process of decision
making according to his own framework of mind. The time takne to make the decision may vary. The
outpur in the form of buying a product is the prime objective of the marketer.
FACTORS INFLUENCING BUYER BEHAVIOUR

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I.GEOGRAPHIC FACTOR :
a. PHYSICAL CONDITIONS
Every place has its own physical conditions which determine the buying behavior of the people.
For eg : Bullock carts are used as a mode of transport by the peoples in villages due to lack of proper
roads. In cities such carts are used mainly for transporting goods.
b. CLIMATIC CONDITIONS :
People living hill station always experiences a cold climate. Such a climate condition forces them
to use sweaters, caps etc.
II.DEMOGRAPHIC FACTOR :
AGE :
The age of the buyer determines his buyer behavior. Children desired to have toys chocolates etc.
Adults like cosmetic item saving cream etc. old age like spectacles walking stick etc.
a. SEX :
Certain product is desired by men and certain other by woman. For eg : Men-shoes, belts etc.
Women – Bangles, lipstick etc
III.CULTURAL FACTOR :
a. CUSTOMS :
The buying behavior of the people will be very much influenced by their customs and practice.
Eg : People in the north side eat chapattis where as in the south side rice is the major food items.
b. HABIT :
Customs and practice are inherited habits for acquired and not inherited. E.g. : Noodles and pizza
are not our type of foods. But we have acquired a taste for such items as a result, there are being sold in
every nooks and cones of our cities and towns.
IV.SOCIAL FACTORS :
a. FAMILY INFLUENCE :
A person buying behavior is very much influenced by his family. The father or the mother may
decide what they should buy for their children. Likewise if there are two sisters, probably the elder sister
will suggest to her younger sister what is good for her.
b. MEDIA INFLUENCE :
The influence of media, cinema in particular on a person’s buying behavior cannot be ignored.
Most of the youngsters emulate their favorite film hero’s in hair styles, dress and so on.
V.SOCIAL ECONOMIC FACTOR:

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a. INCOME:
Needless to say an increase in a person’s income may motivate him to go in for new items. He may
buy something for himself or for his wife or children.
b. DESIRE FOR SAVINGS:
Sometimes when there is an increase in an individual income, he may desire to save a portion of
fit. The amount so saved may be invested. He may invest in gold, shares, land and so on.
MARKET SEGMENTATION
(DIFFERENTIATED MARKETING)
INTRODUCTION:
Market segmentation is the most popular technique used to reach the market with service,
Packages. Markets generally are heterogeneous in nature with varied culture, lifestyle and economic
backgrounds.
Market segmentation is the dividing of heterogeneous markets into segments. It should be ensured
while segmentation that each segment is homogeneous in all significant characteristic.
DEFINITION :
 According to R.S.Davar defines “Grouping of buyers or segmenting the market is described as market
segmentation”.
 William J. Stanton “marketing segmentation” consists of taking the total, heterogeneous for a product and
dividing into several sub markets and segments each of which tends to be homogenous in all significant
aspects.
 Davar “grouping of buyers or segmenting the market is described as the market segmentation”
NATURE OF MARKETING SEGMENTATION:
 Grouping of customers on the basis of their homogenous characteristics, such as nature, tastes, habits,
income, behaviour, qualities and needs.
 To locate of identify the tastes and preferences and buying motives and needs, priorities and preferences
of the customers.
 To determine the marketing strategies and targets, goals of the firm.
 To make the activities of the firm as customer oriented.
 To identify the areas or sectors where the customers may be created and the sphere of the market is
expanded.
BENEFITS OF MARKET SEGMENTATION?
 Easy identification of the target audience.

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 Can make in-depth study in the market.

 To understand exact requirement of the audience.
 To know about exact competitors
 Can make the marketing programmes reliable and predictable
BASES FOR MARKET SEGMENTATION (OR) TYPES OF MARKET SEGMENTATION
The following are the bases for market segmentation.
I. GEOGRAPHIC SEGMENTATION
It is the simplest way of segmenting the market. Under this approach, the markets will be divided
into various geographical units. Companies generally use the market division such as nations, states,
regions, cities and towns.
Geographic segmentation reflects in the identification of cultural groups, climate difference,
resource combination, demand – supply gaps, religion and race.
II. DEMOGRAPHIC SEGMENTATION
AGE
Consumer wants and capacity to buy differ with age. The manufacturer should see to which age
group, his product would be most suitable because only on the basis of age of his customers.
SEX
Another basis upon which market can be segmented is expectations. Many products, have been
traditionally purchased by one sex or the other.
In India, females generally purchase cosmetics, Jewellery, Bangles Lipsticks, etc.,
On the other hand, shaving blades, razor etc., are purchased only by males.
INCOME
Market segmentation on the basis of income is considered to be logical because it is the main
source of purchasing power. People must have money to spend, then they can make a market.
EDUCATION
On the basis of level of education, consumers can be classified into different types, i.e., uneducated
, educated etc.,
FAMILY SIZE
Size of family is another criterion, based on which market can be segmented for certain products
like almirah, dining table sets, pressure cooker etc.,
III. PSYCHOGRAPHIC VARIABLES

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It includes social of people like lower class, middle class, upper class etc., lifestyle of people such
as straights, swingers, etc., personality factors such as gregarious, authoritarian compulsive etc.,
IV.BEHAVIOURAL SEGMENTATION
Many marketers are of the opinion that behavioural variables are the best starting point for
constructing market segment.
In behavioural segmentation, consumers can be divided into groups on the basis of their attitude,
use, knowledge, expectation from the product.
IV. TECHNO GRAPHIC SEGMENTATION
The market for technology related services has been on a tremendous rise darting the customer
groups that have the willingness as well as the ability to use the latest technology.
STAGES OF MARKET SEGMENTATION

There are at least three stages in the process of market segmentation. They are:
 SEARCH
 SELECTION
 STRATEGY
SEARCH
The first step in market segmentation is to conduct a survey by using exploratory interviews and
focus groups in order to have greater in sight into the motivation, attitude and behaviouer of consumer.
We consumer opinion on the attribute of the service package the ratings of importance, boand
awareness and ratings are collected for a sound base for segmentation.
SELECTION
Based on the search information and analysis segments are identified segments have to be given a
name, based on their dominant characteristics.
Each segment is full details relating to attitude behaviour, demographics, physiographic and media
patterns are studied.
STRATEGY
The formulation of a right strategy is essential for achieving success through market segmentation.
While formulating the strategy, three are given special focus:
 Value maximization
 Capacity utilization and
 Customer participation
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VARIOUS FACTORS DETERMINING MARKET SEGMENTATION

The following are the factors
 RESOURCES AVAILABLE
Market segmentation involves heavy financial commitment unless the business has adequate
financial resources at its disposal, it will not be able to undertake such a task.
 NATURE OF THE PRODUCTS
The market should be of a diverse nature. That is, the tastes and preferences of the buyers must
vary. If all the buyers react in the same manner to the marketing strategies, there will not be any scope of
segmentation.
 COMPETITORS STRATEGY
If the competitors have segmented their market, it becomes essential fall in line with them. It is not
possible for a business to survive with a strategy of undifferentiated market.
 CONSIDERATION OF THE PRODUCT LIFE CYCLE
If the product is only in its introduction stages, the marketer may not think of segmenting its
market. This question of segmentation does not does not arise when the product is in its decline stage.
NEEDS AND WANTS
Needs and Wants Marketing Concept
To begin with, needs, wants and demands are tied. We, humans, have infinite wants and demands.
Needs
 The easiest explanation of the concept “needs” is the basic human requirements like shelter, clothe, food,
water, etc.
 These are essential for human beings to survive.
 If we take the topic further, other needs are education, healthcare, insurance, pension, etc.
 Basically, things that we can associate with “needs” don’t require a boost because these are the products
and services people always buy.
 Though, don’t feel relieved if you’re planning to promote a product or a service that falls under the
“needs” category.
 In the 21st century, thousands of brands are promoting the same products and services from the needs
category.
 In other words, there are thousands of competitors trying to sell the same things you are.

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 In addition, needs aren’t only physical. Needs can be a social thing, for example, social class, belonging to
a certain society and need of self-expression.
Wants
 This is quite different from needs.
 Wants aren’t permanent and it regularly changes.
 As time passes, people and location change, wants change accordingly.
 Wants aren’t essential for humans to survive, but it’s associated with needs.
 For example, if we always manage to satisfy our wants, it transforms into a need.
TARGETING
Target Marketing refers to a concept in marketing which helps the marketers to divide the
market into small units comprising of like minded people. Such segmentation helps the marketers to
design specific strategies and techniques to promote a product amongst its target market. A target market
refers to a group of individuals who are inclined towards similar products and respond to similar
marketing techniques and promotional schemes.
What is a 'Target Market'?
A target market is the market a company wants to sell its products and services to, and it
includes a targeted set of customers for whom it directs its marketing efforts. Identifying the target market
is an essential step in the development of a marketing plan. A target market can be separated from the
market as a whole by geography, buying power, demographics and psychographics.
Targeting is a follow on process from segmentation, and is the process of actually determining the
select markets and planning the advertising media used to make the segment appealing. Targeting is a
changing environment. Traditional targeting practices of advertising through print and other media
sources, has made way for a social media presence, leading a much more ‘web-connected’ focus.
Behavioral targeting is a product of this change, and focuses on the optimization of online
advertising and data collection to send a message to potential segments. This process is based around the
collection of ‘cookies’, small pieces of information collected by a consumer’s browser and sold to
businesses to identify potential segments to appeal to.
For example, someone consistently accessing photography based searches is likely to have advertisements
for camera sales appear, due to the cookie information they deliver showing an interest in this area. Whilst
targeting a market, there are three different market coverage choices to consider - undifferentiated,
differentiated and niche marketing. Choosing which targeting choice to pursue depends on the product or

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service being offered. Undifferentiated marketing is the best option to focus on the market as a whole and
to promote products that have a wide target segment, whilst differentiated and niche marketing are more
specialized and focus on smaller, more selective segments.
POSITIONING
It is the process of establishing and maintaining a distinctive place in the market for an organization and/or
its individual product offerings.
PRINCIPLES OF POSITIONING
1. A company must establish a position in the minds of its targeted customers.
2. The position should be singular, providing one simple and consistent message.
3. The position must set a company apart from its competitors.
4. A company cannot be all things to all people – it must focus its efforts.
ROLE & IMPORTANCE OF POSITIONING.
 Positioning links market analysis & competitive analysis to internal corporate analysis.
 It enables the service organization to answer questions like – what is our product, what do we want it to
become and what actions must we take to get there.
 Positioning analysis is used as a diagnostic tool.
 Provides inputs to decisions relating to product development, service delivery, and pricing &
communication strategy.
 The company is able to assess its position vis a vis competitors.
 The company is able to know the customer perception about itself.
 The company is able to project a clear image about itself to the customer.
 The company makes it possible for the customer to differentiate the service of one company from the
other.
 The customer gets a clear image about the services of the firm.
 The company can also develop a clear strategy if it knows how it is positioning itself.
 With the help of a positioning map, the company can identify the gap existing in the market. It can either
reposition itself ( if necessary ) or introduce a new service to utilize that gap.
TYPES OF POSITIONING
REPOSITIONING
It means making a significant change in an existing position. It may include revising service
characteristics or redefining target market segment.
COPY POSITIONING

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When marketers associate positioning with communication elements of the marketing mix, like
advertising, promotion & publicity to create images & associations for broadly similar branded products
so as to give them a special distinction in the customer’s mind, it is known as copy positioning.
EVOLUTIONARY POSITIONING
Positions are not constant. They need to evolve over time in response to changing market structures,
technology, competitive activity & the evolution of the market itself.
METHODS OF POSITIONING.
Services can be positioned in six different ways:
a. Service attributes: It means positioning the service in terms of what it does best.
b. Use or application: E.g. fitness center – to reduce weight, to maintain fitness, for weight lifting etc. Each
position targets a different market segment and requires a unique combination of equipment & physical
facility design.
c. Price – quality relationship: It depends on the thinking of the firms. Some firms believe people are ready
to compromise on some quality level if the service is charged less & some firms believe that customers are
ready to pay extra for high quality service.
d. Service class: E.g. Dine in restaurants, fast food restaurants.
e. Service user: The services can be for business units or individuals. Depending on that the strategies will
differ.
F. Competitor: Service providers can also position themselves relative to a competitor. E.g. Pepsi & Coke.
The official & non official.
NARRATE THE STEPS IN DETERMINING A CONSUMER POSITION.
a. First step – identify the competitors: It is important to look at competition from a consumer’s viewpoint.
In making a purchase decision, what vendors do consumers consider? The lists of vendors generated are
the competing firms.
b. Second step – assess the consumer’s perception: Consumers perception are crucial in positioning. The
position a firm believes they occupy or the position they would like to occupy is irrelevant at this point.
c. Third step – determine the position of each firm: Using a positioning map is an excellent method of
determining the position of each firm within the industry. The map will allow to see where they are
relative to their competition.
d. Fourth step – analyze consumer preference: This is done to determine the correct consumer position. The
information is difficult to obtain but is important in making a positioning decision. Analyzing consumer
preference is the process of determining why consumers prefer one firm over another.

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e. Fifth step – making a consumer position decision: the decision may be to remain positioned where it is. If
a firm is unhappy over the position it occupies in consumer’s mind, it may want to reposition itself.
Changing the position of a firm in consumer’s mind is very difficult, since positions become very deeply
entrenched. Consumers have to be convinced that what they believe about a firm in reference to its
competition is wrong or that must be modified.
f. Final step – develop a strategy: The final step is to develop a strategy to implement the new position or to
reinforce the current position.
QUESTION BANK
5/10 MARKS
1. Explain the variable for market segmentation.

2. Explain briefly about Market Segmentation.
3. Explain importance of customer’s service expectation.
4. Discuss the selection Procedure for target Segmentation .
5. Explain the role & importance of Positioning.
UNIT-5
RETAIL SALES FORECASTING
Forecasting in retail involves utilizing existing data to predict future events and, more
specifically, consumer behavior. Existing data and market research varies by the types of products a

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retailer sells, but the basic means of forecasting in retail follows similar patterns, even across different
product lines.
1. Survey of buyers’ intentions
Under this method of sales forecasting, first, a list of all potential or prospective buyers is drawn up. Then,
a face to face interview with a selected group of potential buyers is conducted. On the basis of the
interview, the buyers’ intentions are ascertained and an estimate of the sales of the products of the firm is
made. This method is a practical method of sales forecasting. This method or approach is, generally,
adopted by industrial marketers, i.e., marketers of industrial goods.
2. Opinion poll of sales force
Under this method of sales forecasting, an opinion poll of the sales force is conducted. On the basis of the
opinion poll, an estimate of the sales of the firm is made. This method is a very good method of sales
forecasting, because the salesmen have a good idea of market conditions. Further, it is less expensive. This
method is, generally, used when it is not possible to make use of the first method (i.e., the survey of
buyers’ intentions).
3. Expert opinion
Under this method, the opinions of the experts are sought, and on that basis sales forecasts are made. The
experts may be outside experts or top executives of the firm itself, such as the production executive,
marketing executive, finance executive, etc.
4. Market test method
A company may conduct a direct market test, and on the basis of its outcome, sales forecast is made. This
method may be used either independently or as a supplement to other methods. It is used more frequently
by consumer goods marketers. It may also be used by industrial goods marketers. When this method is
used by industrial goods marketers, it is called a market probe.
5. Projection of past sales
Under this approach of sales forecasting, the past year sales of the firm are studied, and by making certain
changes in the last year’s sales (i.e., by adding or deducting a certain percentage to or from last year’s
sales), sales forecasts are made. This approach is simple and easy to adopt. It is also the most widely used
approach. It is also a safe method for companies engaged in more or less stable industries. However, in
many cases, this method is not reliable. Again, this method cannot be adopted in the case of new products
or by new companies.

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6. Products in use analysis

Under this method, a firm undertakes a census of a number of products or closely related brands already in
use in the market, and on the basis of such a census, makes the sales forecast for its products. This method
is based on two assumptions. First, it assumes that the future market for a product will vary in direct
proportion to the quantity already in use. Secondly, it assumes that the present users of the product of a
concern will continue to patronize the same in future.
7. Industry forecast and share of the sales of the industry
Under this method, a company estimates its sales by applying a certain percentage (based on past sales or
expected sales) to the sales forecast of the whole industry. The sales forecast for the whole industry can be
obtained from the Government or trade associations or other outside agencies. This method is very simple.
Besides it is quick and less expensive.
8. Statistical demand analysis
Under this method, the important factors which are likely to cause variations in the sales, such as the
population, disposable income in the hands of the people, the prices of the products, advertising
programmes, etc., are analyzed, and on the basis of such an analysis, sales forecast is made by a firm for it
products. This method has become quite popular with the introduction of computers.
9. Time series analysis
Under this approach of sales forecasting, long-term trends, cyclical changes, seasonal variations and
irregular fluctuations in the sales of a concern are isolated (ignored), and the sales forecast is made on the
basis of normal trends. This approach is inexpensive. So, it is widely used.
PRODUCT
Introduction
Good products are key to market success. The product represents a bundle of expectations of the
consumers. The product satisfies the needs of society. A successful product ensures its own promotion if
satisfies the needs of consumers, that is the product is right to the market.
Product and market are two essentials of successful marketing. If marketing can bring together
products and markets in such a way that product and consumer demands are perfectly correlated, there is
no reason why marketing cannot be successful. Both are equally important.
A product or service is essentially offered to satisfy a need or want. Therefore, want-satisfying is
the basic characteristic of a product. A firm’s marketing plant must begin with the determination of its
offerings – products or services – to the target market. For example a woman does not buy a simple
chemical compound for a lipstick. What she buys are aspirations and hopes in the form of a lipstick.

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Product
A product is one which satisfies the needs of customers. According to Philip Kotler, “A product
is anything that can be offered to a market for attentions, acquisition, use of consumption that might
satisfy a want or need. It include physical objects, services, persons, places, organization and ideas”.
Alderson defines, “A product s a bundle of utilities consisting of various product features and
accompanying services. “Stanton defines, “A product is a set of tangible and intangible attributes,
including packaging, colour, price, manufacturer’s prestige, retailer’s prestige, and manufacturer’s and
retailer’s services, which the buyer may accept as offering satisfaction or wants or needs”.
Important features of a product :
1. Tangibility : It should be perceptible by the touch. An item to be called a product, should have a
tangibility character touch, seen or feeling. For instance, car, shirt, book etc.
2. Intangible Attributes : The product may be intangible, in the form of services, for instances,
banking insurance services, repairing etc. It is an associated feature for instance, scooter is a tangible
product, and when free servicing is offered by the seller, then the product is not only a tangible item but
also an intangible one.
3. Associated Attributes : Such attributes may be, brand, package, warranty etc. For instance,
Hindustan Leaver’s Vanaspati ghee has a brand name DALDA and with its package it can be identified by
the consumers. It has developed an image that all kinds of vanaspati ghee sold are being referred to as
DALDA ghee.
4. Exchange Value : Whether the product is tangible or intangible, it should have exchange value
and must be capable of being exchanged between seller and buyer for mutually agreed price.
5. Consumer satisfaction : Products should have the ability to offer value satisfaction to the
consumer. The satisfaction may be both real or / and psychological. For instance, when we, buy SNOW
we also buy beauty – a product with a bundle of utilities.
CLASSIFICATION OF PRODUCTS OR GOODS
In marketing the term goods is used in synonm for products. The products may be classified into
the following categories :
1. Industrial Goods : are those which are used for further production of goods or services, and
include capital goods, raw materials, component parts etc. These are used as input in producing other
products. For instance, iron ore, machine tools etc.
2. Consumer Goods : are meant the final consumption by consumers and not for sale. They are of
three types :

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a. Convenience Goods : Items, the consumer buyers frequently, immediately and with minimum shopping
effort are convenience goods. For instance, food items, newspapers, drugs, soap, toothpaste, biscuit etc.
b. Shopping Goods : There are goods purchased by the consumers, only after a careful comparison-
suitability, quality, price, style etc. for example, clothes, furniture, household appliances, fans etc.
c. Speciality Goods : There are goods with unique characteristics or brand identification and purchasers
make a special purchasing effort, for instance, fancy goods, special eating items etc.
According to durability or tangibility, products can be classified into three :
1. Non-durable goods, such as soap, salt etc.
2. Durable goods, such as clothing, tools, refrigerators etc.
3. Service, such as repair, haircut etc.
Product Levels (The customer value hierarchy)
In planning its market offerings, the marketer needs to analyse the product at different levels. A
product has different layers (levels), like an onion and each of the layers contributes to make the product.
The identified levels are :
1. Core Benefit or Product
2. Basic or Generic Product
3. Expected Product
4. Augmented Product
5. Potential Product
1.Core Benefit or Product
This is the most fundamental level. The core product explains the reasons for which the customer
is making the purchase. For instance, a hotel customer is actually buying the concept of “rest and sleep”.
2.Basic or Generic Product
The marketer at this level has to turn the core benefit to basic Product. The basic Product for hotel
may include bed, toiler, towels etc.
3.Expected Product
At this level, the marketer prepares an expected product by incorporating a set of attributes and
conditions, which buyers normally expected when they purchase this Product. For example hotel
customer expect clean bed, fresh towel, a degree of quietness etc.
4. Augmented Product
At the fourth level, the marketer prepares an augmented product that exceeds customers
expectations. In developed countries, brand positioning and competition take place at this level. For

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example, today’s hotel customers expect cable or satellite television with a remote control and high-speed
internet access etc.
5.Potential Product
This levels takes into care of all the possible augmentations and transformations the Product might
undergo in the future. This level prompts the companies to search for new ways to satisfy the customers
and distinguish their offer. Successful companies add benefits to their offering that not only satisfy
customers, but also surprise and delight them. Delighting is a matter of exceeding expectations. For
example, ever-faster internet.
PRODUCT LINE
“A product line is a group of products that are closely related, either because they function in a similar
manner, or are sold to the same customer groups, or are marketed through the same types of outlets, or fall
within given price ranges”. According to Stanton, “A broad group of products, intended for essentially
similar uses and possessing reasonably similar physical characteristics, constitute a product line.” In other
words, a broad group of products, which are meant for essentially similar uses and possess reasonably
similar physical characteristics, constitute a product line. For instance, a range of toilet soaps is product
line.The product item is a specific version of a product that has a separate designation in the seller’s list.
That is, a product item is a specific product. For instance, Hindustan Motor’s Ambassador Mark IV is a
product item.
Product Line Decision Strategies
Taking of decisions or changing the compositon of the product line, by either adding or subtracting
products, depends upon a number of factors :
1. Consumer’s preference
2. The tactics of competitors
3. The firm’s cost structure
4. Changes in market demand
5. Bying habits
6. Marketing influences
7. Product influences
8. Company objectives
9. Product specialization
10. Elimination of obsolete products
PRODUCT MIX

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“A product mix (also called product assortment) is the set of all product lines and items that a
particular seller offers for sale to buyers”. An organization with several product lines has a product mix.
Product mix need not consist of related products. In other words, product mix is the composite of
products offered for sale by a firm”. “It is a collection of products manufactured or distributed by a firm.
It is the full list of all products offered by a firm, For instance, a firm manufacturers watches, machinery
items, electric lamp etc. It has four main characteristics : (1) Length, (2) Width (3) Depth (4)Consistency.
Length of product mix refers to the total number of items in its product mix. Width or breadth of
the product mix refers to the number of different product lines offered by the company. Depth of the
product mix refers to the average number of items offered by the company in each product line.
Consistency of the product mix refers to how closely the various product lines are related in production
requirements, distribution, channels etc. for instance, products manufactured by an electric company have
an overall consistency, as most products involve electricity power.
Product Line and Product Mix
Most companies generally market several products rather than just one or two. It is necessary for
them to understand the relationship among tall their products to coordinate their marketing of total group
of products. Product item, product line and product mix concepts help us to understand the relationship
among a company’s different products.
A product item refers to a particular version of product that is distinct, such as Surf Excel is a
(premium) product item offered by the Hindustan Lever Limited. A product line is a closely related group
of products for essentially similar use, and technical and marketing considerations. Etc. product mix is the
total number of products that a company markets. Product mix consistency means how closely related
different product lines are in end-use, production requirements, distribution etc. A company may have
many product lines in its product mix. The product mix width refers to the number of product lines
accompany has. Product line length means the number of product variants available in a company’s
product line.
Factors Influencing change in product mix
Generally it is very difficult for and concern to take a decision about the number of products it
should produce at a given time because the number of products or product mix is affected by several
factors. Changes in the product mix, that is, adding or eliminating products may be due to the following
factors :
1. Change in demand of product due to population changes,
2. Change in purchasing power or behaviour of the customers,

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3. Change in company desire,

4. Development of by-products by using residuals, at low cost,
5. The competitor’s actions and reactions,
6. To utilize the available marketing capacity fully,
7. Financial influences of the firm,
8. Advertising and distribution factors
9. Goodwill of the firm,
10. Possibility of adding new product to its product line at less cost.
PRODUCT LIFE CYCLE
The product life cycle is generally termed as product market life cycle, because it is related to a
particular market, have a new life in a remote village. The product life cycle may be short for some
products and long for some other products. The period may differ from product to product. But the
product passes through the stages, collectively known as product life cycle. The chart below gives the life
cycle of a product.
Every product moves through a life cycle, having five phases and they are :
1. Introduction
2. Growth
3. Maturity
4. Saturation
5. Decline
1.Introduction :
This is the first stage in the life of a product. This is an infant stage. The product is a new one.
The new product means “a product that opens up an entirely new market, replaces an exiting product, or
signigicantly broadens the market for an existing product”. The initial stage needs greater amount for
investment. In this stage, the product is introduced into the market and made available to the customers
with a slow rise in sales. The profit may be low, because of heavy advertising and sales promotion in
order to stimulate the demand.
2.Growth :
The product satisfies the market. In this stage, a product gains acceptance from the part of
consumers and business men. Sales of the product increase. Profit also increases. This is the stage where
competitors appear along with substitute products in large numbers. Previous buyers continue in their

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purchase and new buyers appear. Firms may find it difficult to meet the demand. The success of firms
depends upon the efficient manufacturing and distributing systems of the product.
3.Maturity :
At this stage, keen competition increases. Sales continue to increase for a while, but at a decreasing
rate. Competitors go for mark-down price by increasing advertising deals. Market expenses increase,
even after mark-down prices, which enable to face competition. Thus, profit is thinned. Additional
expenses are involved in product modification and improvement in the marketing mix or / and product
mix or style changes, to attract the customers and retain the market. Overall marketing effectiveness
becomes the key factor in this stage.
4.Saturation :
In the saturation stage, the sales are at the peak an further increase is not possible. The demand for
the products is stable. The rise and fall of sale depend upon supply and demand. At this stage, a
replacement of product is needed, because the sale of the existing product cannot be increased.
5.Decline :
When sales start declining, buyers go for newer and better products. This is because of many
reasons – technological advances, consumer shifts in taste, increased competition etc. at this stage, the
product cannot stand in the market ; many firms withdraw from the market, when sales and profits
decrease. Price becomes the competitive weapon. Under such a situation, firms shift their attention to
other products. The product becomes out of date and fashion. Then the firm will drop the product from
the product line.
Advantages of PLC :
1. When the product life pattern is known, the management must be cautious in taking advance steps, before
the decline stage, by adopting product modification, pricing strategies, style, quality change etc.
2. The firm can prepare an effective product plan, by knowing the PLC of a product.
3. The PLC will greatly help the management in drawing future plans of the firm.
A management may be able to adopt some measures to control the PLC. They include :
1. Extension of the life at maturity and saturation stage by adopting new packaging, re-pricing of product
modification etc.
2. Creation of new uses by expansion of the market.
3. Creation of more varieties of the product among current users. For instance, Amul Milk Powder, through
advertisement emphasizes many uses, in preparing milk, tea, curd etc. “It is like having a dairy in your
home.”

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4. Adoption of the latest technological changes, fashion changes, market acceptance etc.
DEVELOPMENT OF NEW PRODUCTS
The term “new product” has many connotation. So, what should we call a ‘new’ product? Most
definition of new- product have a common feature that new products offer innovative benefits. The
development and introduction of new products have traditionally been seen to be a costly and risky
activity.
We can identify six categories of new products:
1.New –to-the-world- products : New products that create an entirely new market.
2.New product lines : New products that allow a company to enter an established market for the first time.
3.Additional to existing product line : New products that a supplement established product line (package
size, flavours etc.)
4.Improvments and revisions of existing product : New products that provide improved performance or
greater perceived value and replace existing products.
5.Repositioning : Existing products that are targeted to new markets or market segments.
6.Cost Productions : New products that provide similar performance at lower cost.
NEW PRODUCT PLANNING PROCESS
The new product planning is the function of top management personnel and specialists drawn from
sales and marketing, research and development, manufacturing and finance. This group considers and
plans new and improved products different phases, as given bellows :
1. Ideal generation (Idea Formulation)
2. Screening of ideas (Evaluation)
3. Concept Testing
4. Business Analysis
5. Product development
6. Test marketing
7. Commercialisatio (market introduction)
1. Ideal generation :
The focus in the first stage is one searching for new product ideas Few ideas generated at this
stage are good enough to be commercially successful. New product ideas come from a variety of sources
An important source of new product ideas is customers. Fundamentally, customer needs and wants seem
to be the most fertile and logical place to start looking for new product ideas. This is equally important for
both personal consumers and industrial customers.

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Sources of New Product Ideas (External)

1. Consumers
2. Competitors
3. Free-lance inventors
4. Trade literature
5. Consulting organisations
6. Trade Fairs
7. Advertising Agencies
8. Government Agencies
9. Intermediaries (Distributor etc)
10. Wholesalers and Retailers.
2.Screening the Ideas (Evaluation)

It means critical evaluation of product ideas generated. After collecting the product ideas, the next
stage is screening of these ideas. The main object of screening is to abandon further consideration of
those ideas which are inconsistent with the product policy of the firm. The product ideas are expected to
be favourable and will give room for consumer satisfaction, profitability, a good market share, firm’s
image etc.
Answers are sought to questions like :
 Does the product meet a genuine need?
 Is it an improvement over the existing product?
 Is it close to our current line of business?
 Does it a totally new line of business?
 Will it offer customers a superior value?
 Will the new product bring in expected ROI?
 Does the market accept the new product? Etc.
3.Concept Testing
After the new product idea passes the screening stage, it is subjected to ‘Concept testing’. Concept
testing is different from test marketing, which takes place at a later stage. What is tested at this stage is
the ‘product concept’ itself – whether the prospective consumers understand the product idea, whether
they are receptive towards the idea, whether they actually need such a product and whether they will try
out such a product if it is made available to them.
4.Business Analysis (Market analysis)
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This stage is of special importance in the new product development process, because several vital
decisions regarding the project are taken based on the analysis done at this stage. Estimates of sales, costs
and profits are important components of business analysis and forecasts of market penetration and market
potential are essential.
5.Product Development
The idea on paper is converted into product. The product is shaped corresponding to the needs and
desire of the buyers. Product development is the introduction of new products in the present markets.
New or improved products are offered by the firm to the market so as to give better satisfaction to the
present customers. Laboratory tests, technical evaluations etc. are made strictly.
6.Test Marketing
By test marketing, we mean, what is likely to happen, by trial and error method when a product is
introduced commercially into the market. These tests are planned and conducted in selected geographical
areas, by marketing the new products. The reactions of consumers are watched. It facilitates to uncover
the product fault, if any, which might have escaped the attention in the development stage. By this, future
difficulties and problems are removed. This type of pretesting is essential for a product before it is mass
produced and marketed. Sometimes, at this stage, management may take decision to accept or reject the
idea of marketing products.
7.Commercialisation (Market introduction)
This is the final stage of product planning. At this stage, production starts, marketing programme
begins to operate and products flow to the market for sale. It has to complete with the existing products to
secure maximum share in the market –sales and profits. When a product is born, it enters into the
markets; and like human beings, has a life span-product life cycle.
MAIN CAUSES FOR FAILURE OF NEW PRODUCT
The following are the causes for failure of new product.
(i) Inadequate market analysis
(ii) Product defect
(iii) Higher costs
(iv) Poor timing
(v) Distribution problem
(vi) Promotion problems
(vii) Pricing problems
(i) Inadequate market analysis:

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where the product is introduced in the market with out proper market analysis or with biased and
incomplete data, the products fails in achieving its objectives it is because the enterprise fails in,
Understanding the consumers needs and wants properly.
Making correct estimates of sales.
Meeting the standard of utility.
(ii) Product defect:
This arises out of technical flaws in the process of production low quality of the product, poor
design or packing may lead to product failures.
(iii) Higher costs:
Higher costs then anticipated at the time of product failure. It might be partly due to the wrong
pricing policies adopted by the firm. The cost estimates also often go wrong when the products are finally
introduced into the market.
(iv) Poor timing:
The fundamental principle to be followed in product planning is to find out the exact time at which
the product is to be introduced in the market. Usually when and how are the two questions, manufacturer
is often finding difficult to answer.
(v) Distribution problem:
This includes channels of distribution failure to train marketing personnel for new marketer, failure
to co-operate with middleman, poor physical distribution of goods.
(vi) Promotion problems:
Inadequate ad, use of wrong appeals, failure to co-operate with distribution system etc.,
(vii) Pricing problems:
This includes higher costs then anticipated. This led to higher prices, which in term led to lower
sales volume then anticipated.
QUESTION BANK
1.Explain about Important features of a product.
2. Explain about Classification of Products or Goods.
3.What are the Factors influencing marketing of accessory equipment?

Features of Modern Retail Marketing

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RETAIL MARKETING

1. Sale to Ultimate Customer:

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1. Explain about concept of retailing.

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1. Explain about features of retailing.

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2. Risk due to accidents while goods are in transit.

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 Standardization refers to producing goods of predetermined specifications, which helps in achieving

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Retailer has wide variety of customers who have

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4. Explain about classifications of risk.

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BUYER BEHAVIOR MODEL

External influences: Consumer Decision Making: Consumer Decision and

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 Can make in-depth study in the market.

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STAGES OF MARKET SEGMENTATION

VARIOUS FACTORS DETERMINING MARKET SEGMENTATION

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1. Explain the variable for market segmentation.

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6. Products in use analysis

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