B.

Com III Year Semester V

Faculty of Commerce
Paper DSE 504
MARKETING MANAGEMENT SYLLABUS

Objective: To understand the product, price, promotion and channel management, and enable them to
design marketing strategy and planning.

UNIT-I: PRODUCT MANAGEMENT: Concept of Product - Classification of Products - Product Mix Decisions -
Product Line Decisions - New Product – New Product Development Stages – Product Life Cycle Stages and its
Strategies – Branding - Packaging & Labeling.

UNIT-II: PRICE MANAGEMENT: Pricing – Objectives of Pricing – Role of Price in Marketing Mix - Factors
Influencing - Price Decisions – Pricing Under Different Competitive Conditions – New Product Pricing - Pricing
Methods – Cost Based and Demand Based Strategies.

UNIT-III: PROMOTION MANAGEMENT: Promotion: Significance, Promotion Mix Elements – Advertising:

Objectives, Types, Effectiveness, Budget - Media & its Selection - Personal Selling: Nature, Steps - Sales
Promotion: Objectives, Tools - Public Relations and Publicity - Direct Marketing & its Forms.

UNIT-IV: CHANNEL MANAGEMENT & RETAILING: Marketing Channels: Nature – Levels - Structure -
Participants – Functions of Marketing Intermediaries - Online Marketing - Retailing: Meaning, Significance.

UNIT-V: MARKETING STRATEGY AND PLANNING: Corporate Strategy - Planning – Vision – Mission –
Objectives - Business Strategic Planning - SWOT Analysis - Goal Formulation - Strategy Formulation - Program
Formulation – Implementation - Feedback and Control - Marketing Process - Nature and Contents of a
Marketing Plan.

SUGGESTED READINGS:
1. Principles of Marketing: Philip Kotler, PHI.
2. Marketing Management: Ramaswamy&Namakumari, Tata McGraw Hill
3. Marketing Planning and Strategy: Jain, Cengage learning.
4. Marketing Management: Gandhi IC, Tata McGraw Hill
5. Basic Marketing: Me Carthy EJ &. Others, Tata McGraw Hill
6. Marketing Channels: Rosenbloom, Cengage learning.
7. The Essence of Marketing: Majare, PHI
8. New Marketing Strategies: Ian Chasten, McGraw Hill
9. Marketing Management: RajanSaxena, Tata McGraw Hill
10. Marketing: Sharma etal.,Cengage Learning
 MARKETING MANAGEMENT SUGGESTED ANSWERS

SUBJECT: MARKETING MANAGEMENT

TIME: 3 HOURS MAX.MARKS: 80

ESSAY QUESTIONS & ANSWERS

UNIT-1

1. Define Product and Explain the classification of products?

Define Product
According to Philip Kotler “A product is anything tangible or intangible that can be offered to a
market for attention, acquisition use or consumption that might satisfy a need or want”.
A product is something that is manufactured for sale in the market. Customer needs are met by the
usage of products. Product is one of the main components of marketing—all marketing activities
revolve around the product. Products can be tangible or intangible. Tangible products are known as
goods while intangible products are called services.

Product is an article/substance/service, produced, manufactured and/or refined for the purpose of

onward sale. It may be any item that is the result of a process or action. It can be intangible or
intangible form. A product has a cost and therefore has a price, means to produce a product you have
to spend money and you get your money back with profit when the product is sold out.

Products can be anything. It can be physical product (e.g. fan, cycle etc.), service (e.g. haircuts,
property deals etc.), place (e.g. Agra, Delhi etc.), person (e.g. Late M.F. Hussain etc.), Organization
(e.g. Helpage India, Rajiv Gandhi foundation etc.) and idea (e.g. Family Planning, safe driving etc.).
A mobile phone handset is a tangible product whereas the software used to run this handset is an
intangible product. Service provided by the mobile operator is also a product and it is also an
intangible one. To further understand, a tennis ball is a tangible product whereas an insurance policy
is also a product but it is intangible.

CLASSIFICATION OF PRODUCTS
The products are classified as follows:
1. Consumer Products
A. Convenience Goods
B. Shopping Goods
C. Specialty Goods
D. Unsought Goods
2. Business Products
A. Materials and Parts
B. Capital Items
C. Supplies and Business Services
CONSUMER GOODS
Consumer goods can be classified on the basis of their shopping habits. They are grouped as
convenience goods, shopping goods, specialty goods and unsought goods. Consumer goods are
targeted for consumption of either individuals or family members.

1. Convenience Goods
These are goods frequently purchased by consumers. They often buy them in frequent consumption
situations and they are purchased immediately and with minimum efforts.Products that users buy as a
routine matter for their daily life usage are convenience products. These are bought by the customer
just habitually without having a thought for an alternative option. In fact, these are mostly low-cost
items; hence there is hardly any difference between different brands. Resultantly customers keep on
buying the same brand over and over without considering any other brand.

Examples include toiletries, soaps, cigarettes and newspapers.

Items of daily usage such as Soap, Coffee, Candy, toothpaste, etc. may be categorized under this
type. Since these products are of low-cost category, most consumers don’t bother about price and just
keep on buying the same brand unless there is a visible increase in price. So the price does not matter
in this category of products; it is only the trust of the consumer on a particular brand.

These goods can be further classified as follows:

 Staple Goods: Consumer purchases on a regular basis. There is a high level of routinised response
behaviour for this kind of products. Toothpaste and soaps fall under this category.

 Impulse Goods: Consumer purchases without any planning or search effort. Purchases of a
magazine or a chocolate candy are examples of situations in which customers buy on impulse.

 Emergency Goods: Consumer purchases on urgent need. There is no previous decision to buy
them but the consumer is forced to buy due to the emerging situation. These include the purchase
of umbrella, antiseptic creams like Burnol or knife to cut down trees during the rainy season.

2. Shopping Goods
Shopping Goods are goods that the customer purchases by undergoing a comparative process of
selection and purchase on such bases as price, psychological fitment, suitability, style and quality.
Just opposite to Convenience Goods, Shopping Goods are the products that carry relatively high
costs, such as house, car and clothing, etc. Customers spend a little time on research and analysis
while buying such products. Not only the price matters here, but at the same time brands and
manufacturers also have to be compared before reaching a final decision.
As such the companies and manufacturers pay a lot of attention to the quality and durability of their
products that can justify the price paid by the buyer. Here the producer has to keep a balance in
quality and pricing. A product with almost the same quality offered at a relatively lower price will
attract the customer. Similarly with the same price range, better quality as compared to the
competitor will also do the trick.
Examples include furniture, electrical appliances, home furnishings and clothing.
Shopping goods can be classified as follows:
A. Homogeneous: Shopping Goods which are the goods that are similar in quantity but
differ in price levels, justifying a pricing comparison by the buyer.
B. Heterogeneous: Shopping Goods which are the goods, which differ in product
features, and services and these differences, are more important than price for a
decision.

3. Specialty Goods
These are goods with unique characteristics or brand identification for which the buyers need to make
a special purchasing effort.
This is a unique group of products. Price and quality don’t matters here; the only thing that matters is
the uniqueness of the product and loyalty of the customers. The iPhone users will always buy an
iPhone and a Ferrari rider will go for it all the time without considering anything else.
What matters here is only the specialty of the product. Since price does not have any impact, the
producer has to focus only on the ever-increasing trust and loyalty of the customer, for which a
consistent improvement in the product is required. Above all, a sense of status consciousness is also
associated with this category of products
Examples include music systems, televisions, cars and men’s clothing. There is hardly any
comparison in speciality goods as each brand is unique and different than others. The buyer is ready
to spend more time and effort while making a purchase decision for this kind of goods.

4.Unsought Goods
These are goods the consumer does not know about or does not normally think of buying. These
goods need advertising and more of personal selling efforts for making a sale.
Products which are so innovative and out of the box that customer never thinks about fall under this
category. Similarly, products which do not fetch any attention of the customers unless they are
compelled to buy one, also fall in this category.
You will never think of buying an insurance policy unless a fear arises in your mind about your life
expectancy. Similarly, most people don’t bother to buy a fire extinguisher unless they are compelled
to buy one due to a mishap.
Examples include life insurance products, coffins and fire alarms.

BUSINESS PRODUCTS

Many of the goods coming out of a firm enter another firm’s production process, so that the final
goods can be made ready for consumption by individual or family consumers.
Many of these products go to the production process as raw materials and spare parts; some of them
also enter as capital items for augmenting the finished goods and the rest as consumables or supplies.
These are ably supported by services targeted towards business class customers.

MATERIAL AND PARTS

These are goods that enter the manufacturer’s product completely. They are of two types namely raw
materials and manufactured materials and component parts.
 Raw materials can be of farm products like rice, maize, cotton, starch or natural products like fish,
petroleum, gas, iron and aluminium ore.
 Farm products are renewable as they involve agricultural production.
 The natural products are very often limited and often available in great bulk and low unit value.
There are a few but large producers and marketers supplying natural products.
 Long-term supply contracts are a common phenomenon in these categories, as the industry needs
an uninterrupted supply of products and services for running their business process.

Manufactured materials can be classified as component materials like iron, steel, zinc and
component parts like motors, printed integrated circuits.
The component materials are further fabricated like from alumina to aluminium, pig iron to steel and
cloth from yarn. Components enter the final product without being changed or modified. In this case
price, quality and service are important factors while making a decision.

CAPITAL PRODUCTS
Capital Products are long-lasting goods that facilitate developing or managing the finished product.
They include two groups: installations and equipment.
 Installation includes buildings, shades, offices and shop floors and heavy equipment like
earthmovers, trucks, drillers, servers and mainframe computers. Installations are
Major purchases for the organisation.
 Equipment includes hand tools and office equipment like personal computers, laptops. These
equipment are not permanent and they need to be replenished at different period of time.
Supplies and Business Services
These are short-term goods and services that facilitate managing or developing the finished product
supplies.
They can be of two kinds namely maintenance and repair items and operating supplies.
Maintenance supplies include painting, nailing and operating supplies include writing papers,
consumables for computer, lubricants and coal.
Business services can be classified as maintenance service like copier repair, window and glass
cleaning and business advisory services include consultancy, advertising and legal services.

2. Explain the Features of Product ?

Features of a product
Tangibility:
Products are tangible in nature, customers can touch, seen or feel a products. For example, car, book,
computer etc.
 Intangible Attributes:
Service products are intangible in nature, services like, consultancy, banking, insurance etc.
The product may be combination of both tangible and intangible attributes like restaurants,
transportation, in case of a computer it is a tangible product, but when we will talk of its free
service provided by dealer, then the product is not only a tangible item but also an intangible
one.
Associated Attributes:
The attributes associated with product may be, brand, packaging, warranty, guarantee, after sales
services etc.
Exchange Value:
Irrespective of the fact that whether the product is tangible or intangible, it should be capable of
being exchanged between buyer and seller for a mutually agreed price.
Customer Satisfaction:
A product satisfies the customer needs and wants of customers, value of products is also determined
by the level of satisfaction given by a product after purchase.
Characteristics of Product
It can be a single commodity or a service; a group of commodities or a group of services; a product
service combination, or even a combination of several products and services.
Its meaning is determined by the needs and desires of the consumer. The purpose of a product is to
satisfy some need of the consumers. The buyers purchase problem-solving and time for creativity
when they purchase a computer system.
3. It may be durable such as those that are expected to deliver a stream of satisfaction over a period of
time,
4. Products may be luxuries which might be needed as a symbol of prestige and status such as car, a
well- furnished bungalow in a posh colony or necessities which are needed to keep the body and soul
together, such as bread, milk, sugar, etc.
5. It may be an agricultural, mineral, forest or semi-manufactured or manufactured product.

3. Explain product mix decisions and Product line decisions

Meaning of Product Mix Decision
Product mix or product assortment refers to the number of product lines that an organization offers
to its customers. A product line is a group of related products manufactured or marketed by a single
company. Such products function in a similar manner, sold to the same customer group, sold through
the same type of outlets, and fall within the same price range.

Product mix consists of various product lines that an organization offers, an organization may have
just one product line in its product mix and it may also have multiple product lines. These product
lines may be fairly similar or totally different, for example - Dishwashing detergent
liquid and Powder are two similar product lines, both are used for cleaning and based on the same
technology; whereas Deodorants and Laundry are totally different product lines.

An organization's product mix has the following four dimensions:-

 1. Width,
2. Length,
3. Depth, and
4. Consistency.

Width
The width of an organization's product mix pertains to the number of product lines that the
organization is offering. For example, Hindustan Uni Lever offers wide width of its home care,
personal care, and beverage products. The width of the HUL product mix includes Personal wash,
Laundry, Skincare, Haircare, Oral care, Deodorants, Tea, and Coffee.

Length
The length of an organization's product mix pertains to the total number of products or items in the
product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products,
hence, the length of the product mix is 23.

Depth
The depth of an organization's product mix pertains to the total number of variants of each product
offered in the line. Variants include size, color, flavors, and other distinguishing characteristics.
For example, the Close-up, brand of HUL is available in three formations and in three sizes. Hence,
the depth of the Close-up brand is 3*3 = 9.

Consistency
The consistency of an organization's product mix refers to how closely related the various product
lines are in use, production, distribution, or in any other manner.

Product Mix Decision

Product mix decision refers to the decisions regarding adding a new or eliminating any existing
product from the product mix, adding a new product line, lengthening an existing line, or bringing
new variants of a brand to expand the business and to increase the profitability.
o Product Line Decision - Product line managers take product line decisions considering the
sales and profit of each item in the line and comparing their product line with the competitors'
product lines in the same markets. Marketing managers have to decide the optimal length of
the product line by adding new items or dropping existing items from the line.
o Line Stretching Decision - Line stretching means lengthening a product line beyond its
current range. An organization can stretch its product line downward, upward, or both ways.
1. Downward Stretching means adding low-end items in the product line, for example in the
Indian car market, watching the success of Maruti-Suzuki in the small car segment, Toyota
and Honda also entered the segment.
2. Upward Stretching means adding high-end items in the product line, for example, Maruti-
Suzuki initially entered the small car segment, but later entered the higher-end segment.
3. Two-way Stretching means stretching the line in both directions if an organization is in the
middle range of the market.
o Line Filling Decision - It means adding more items within the present range of the product
line. Line filling can be done to reach incremental profits or to utilize excess capacity.

4. What is PLC ? and Explain the stages in Product life cycle?

What Is a Product Life Cycle?
The term product life cycle refers to the length of time a product is introduced to consumers into
the market until it's removed from the shelves. The life cycle of a product is broken into four
stages—introduction, growth, maturity, and decline. This concept is used by management and by
marketing professionals as a factor in deciding when it is appropriate to increase advertising,
reduce prices, expand to new markets, or redesign packaging. The process of strategizing ways to
continuously support and maintain a product is called product life cycle management.
 A product life cycle is the amount of time a product goes from being introduced into the
market until it's taken off the shelves.
 There are four stages in a product's life cycle—introduction, growth, maturity, and decline.
 The concept of product life cycle helps inform business decision-making, from pricing and
promotion to expansion or cost-cutting.
 Newer, more successful products push older ones out of the market.

4 Stages of the Product Life Cycle

Generally, there are four stages to the product life cycle, from the product's development to its
decline in value and eventual retirement from the market.

States in Product Life Cycle

Introduction: This phase generally includes a substantial investment in advertising and a marketing
campaign focused on making consumers aware of the product and its benefits. This stage of the cycle
could be the most expensive for a company launching a new product. The size of the market for the
product is small, which means sales are low, although they will be increasing. On the other hand, the
cost of things like research and development, consumer testing, and the marketing needed to launch
the product can be very high, especially if it’s a competitive sector.

Growth: If the product is successful, it then moves to the growth stage. This is characterized by
growing demand, an increase in production, and expansion in its availability. The growth stage is
typically characterized by a strong growth in sales and profits, and because the company can start to
benefit from economies of scale in production, the profit margins, as well as the overall amount of
profit, will increase. This makes it possible for businesses to invest more money in the promotional
activity to maximize the potential of this growth stage.
Maturity: This is the most profitable stage, while the costs of producing and marketing decline.
During the maturity stage, the product is established and the aim for the manufacturer is now to
maintain the market share they have built up. This is probably the most competitive time for most
products and businesses need to invest wisely in any marketing they undertake. They also need to
consider any product modifications or improvements to the production process which might give
them a competitive advantage.

Decline: A product takes on increased competition as other companies emulate its success—
sometimes with enhancements or lower prices. The product may lose market share and begin its
decline. Eventually, the market for a product will start to shrink, and this is what’s known as the
decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers
who will buy the product have already purchased it), or because the consumers are switching to a
different type of product. While this decline may be inevitable, it may still be possible for companies
to make some profit by switching to less-expensive production methods and cheaper markets.

1. Introduction
Once a product has been developed, the first stage is its introduction stage. In this stage, the product
is being released into the market. When a new product is released, it is often a high-stakes time in the
product's life cycle - although it does not necessarily make or break the product's eventual success.
During the introduction stage, marketing and promotion are at a high - and the company often invests
the most in promoting the product and getting it into the hands of consumers.
It is in this stage that the company is first able to get a sense of how consumers respond to the
product, if they like it and how successful it may be. However, it is also often a heavy-spending
period for the company with no guarantee that the product will pay for itself through sales.
Costs are generally very high and there is typically little competition. The principle goals of the
introduction stage are to build demand for the product and get it into the hands of consumers, hoping
to later cash in on its growing popularity.
2. Growth
By the growth stage, consumers are already taking to the product and increasingly buying it. The
product concept is proven and is becoming more popular - and sales are increasing.
Other companies become aware of the product and its space in the market, which is beginning to
draw attention and increasingly pull in revenue.
If competition for the product is especially high, the company may still heavily invest in advertising
and promotion of the product to beat out competitors. As a result of the product growing, the market
itself tends to expand. The product in the growth stage is typically tweaked to improve functions and
features.
As the market expands, more competition often drives prices down to make the specific products
competitive. However, sales are usually increasing in volume and generating revenue. Marketing in
this stage is aimed at increasing the product's market share.
3. Maturity
When a product reaches maturity, its sales tend to slow or even stop - signaling a largely saturated
market. At this point, sales can even start to drop. Pricing at this stage can tend to get competitive,
signaling margin shrinking as prices begin falling due to the weight of outside pressures like
competition or lower demand. Marketing at this point is targeted at fending off competition, and
companies will often develop new or altered products to reach different market segments.
Given the highly saturated market, it is typically in the maturity stage of a product that less successful
competitors are pushed out of competition - often called the "shake-out
point."
In this stage, saturation is reached and sales volume is maxed out. Companies often begin innovating
to maintain or increase their market share, changing or developing their product to meet with new
demographics or developing technologies.
The maturity stage may last a long time or a short time depending on the product. For some brands,
the maturity stage is very drawn out, like Coca-Cola (KO) - Get Coca-Cola Company Report .
4. Decline
Although companies will generally attempt to keep the product alive in the maturity stage as long as
possible, decline for every product is inevitable.
In the decline stage, product sales drop significantly and consumer behavior changes as there is less
demand for the product. The company's product loses more and more market share, and competition
tends to cause sales to deteriorate.

Examples of the Product Life Cycle

The life cycle of any product always carries it from its introduction to an inevitable decline, but what
does this cycle practically look like, and what are some examples?
Typewriter
A classic example of the scope of the product life cycle is the typewriter.
When first introduced in the late 19th century, typewriters grew in popularity as a technology that
improved the ease and efficiency of writing. However, new electronic technology like computers,
laptops and even smartphones have quickly replaced typewriters - causing their revenues and demand
to drop off.
Overtaken by the likes of companies like Microsoft (MSFT) - Get Microsoft Corporation (MSFT)
Report , typewriters could be considered at the very tail end of their decline phase - with minimal (if
existent) sales and drastically decreased demand. Now, the modern world almost exclusively uses
desktop computers, laptops or smartphones to type - which in turn are experiencing a growth or
maturity phase of the product life cycle.
VCR
Many of us probably grew up watching or using VCRs (videocassette recorders for any Gen Z
readers), but you would likely be hard pressed to find one in anyone's home these days.
With the rise of streaming services like Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report and
Amazon (AMZN) - Get Amazon.com, Inc. Report (not to mention the interlude phase of DVDs),
VCRs have been effectively phased out and are deep in their decline stage.
Electric Vehicles
The rise of electric vehicles shows more of a growth stage of the product life cycle. Companies like
Tesla (TSLA) - Get Tesla Inc Report have been capitalizing on the growing product for years,
although recent challenges may signal changes for the particular company.
Still, while the electric car isn't necessarily new, the innovations that companies like Tesla have made
in recent years are consistently adapting to new changes in the electric car market, signaling its
growth phase.
AI Products
While AI (artificial intelligence) has been in development (and application) for years, it is continually
pushing boundaries and developing new products that are in the introduction stage of the PLC.
Amid dozens of new products, even AI-infused sex robots or autonomous vehicles are very much in a
developmental (or introductory) stage in the market, as their products are still being tested and
adopted in the market by consumers.

5. Discuss the different levels of a product in brief & explain about Product
Design

Core Product:
It includes the key feature of a product. It forms the basis for other product offering levels. For
example, the key feature of a car is to travel from one place to another. Therefore, a simple and small
car with no additional features is a core product.
Basic Product:
It includes some added benefits along with the basic feature of a product. For example, a clean and
spacious car is the basic product.
Expected Product:
It refers to a product that is desired by customers. It varies from individual to individual depending
on other factors, such as social class. For example, a customer buying a car may expect an air
conditioner and music system in it.
Augmented Product:
It includes additional attributes of a product as compared to products offered by competitors. The
additional benefits satisfy rational customers more in terms of value. For example, a car may have
special in-built features, such as LCD TV or refrigerator.
Potential Product:
It compares the benefit derived from the product in future with the current product. It creates a value
for customers beyond their expectations. For example, a high technology gadget car with good
ambience and comfort is a potential product.
What is Product Design
Changes in design are largely dictated by whether they would improve the prospects of greater sales,
and this, over the accompanying costs. Changes in design are also subject to cultural pressures. The
more culture-bound the product is, for example food, the more adaptation is necessary. Most products
fall in between the spectrum of “standardization” to “adaptation” extremes.

The application the product is put to also affect the design. In the UK, railway engines were designed
from the outset to be sophisticated because of the degree of competition, but in the US this was not
the case. In order to burn the abundant wood and move the prairie debris, large smoke stacks and
cowcatchers were necessary.

In agricultural implements a mechanised cultivator may be a convenience item in a UK garden, but in

India and Africa it may be essential equipment. “Perceptions” of the product’s benefits may also
dictate the design. A refrigerator in Africa is a very necessary and functional item, kept in the kitchen
or the bar. In Mexico, the same item is a status symbol and, therefore, kept in the living room.

6. Explain with suitable illustrations, strategies used by marketers in different

stages of Product Life Cycle.
Uses of PLC Analysis
Conducting PLC analysis can help companies determine if their products are servicing the market
they target efficiently, and when they might need to shift focus.
By examining their product in relation to the market on the whole, their competitors, sales and
expenses, companies can better decide how to pivot and develop their product for longevity in the
marketplace.
Examining their product's life cycle, specifically paying attention to where their products are in the
cycle, can help companies determine if they need to develop new products to continue generating
sales - especially if the majority of their products are in the maturity or decline stages of the product
life cycle.
PLC Strategies
For companies in an introduction stage with their product, there are several pricing models available
to begin generating sales - either price skimming, which sets the price of the product initially high
 and lowers it to "skim" groups as the market expands, or price penetration, which sets the initial price
low to penetrate the market more quickly and eventually increases it once demand grows.
Companies often run into trouble when they don't understand the introduction stage of their product's
life cycle - especially when customers do not respond well to the initial product (either because of
pricing or the inherent value and usefulness of the product).
t is important to examine product advertising and packaging in addition to pricing.
Is the product meeting the demands and needs of its target market? If sales are stale, many companies
consider shifting their marketing strategy and focus on marketing to new demographics to help
introduce their product to a potential new revenue stream.
Conducting a PLC analysis can help companies learn when they need to reinvent or pivot their
product in a new direction. For example, online streaming service Netflix pivoted their product by
going from a DVD-delivering service to primarily an online streaming service - which was met with
great success.
By examining where their product is in the product life cycle, companies can continue innovating
alongside new technology to diversify their product, keep up with competition and potentially
elongate their product's life in the market.

7. What are the various stages in a new product development?

NEW PRODUCT DEVELOPMENT
Product development is the first stage in the product life cycle, and when you want to develop a
product for selling online, you need to think like Bezos and systematically analyze product, market,
and distribution characteristics in order to build your business plan.
The product development process is composed of the steps that transform a product concept into
marketable merchandise. You start with an idea and end up with technical specifications, product
positioning, pricing strategy, service components, and financial characteristics.
At its outset, this process can be idea-driven or market-driven, but it mostly follows the same steps.
The new product development process is a systematic guide for all budding businesses and
entrepreneurs that will help them come up with a customer-oriented, high-quality product that has the
best chance of doing well in the highly competitive markets. In an attempt to explain new product
development process, many market experts believe that there exist 6 or 7 stages of new product
development process. This number however can vary based on how detailed the process is from one
example to another. To know more about these stages and find out what are the 8 steps of new
product development process, read on.
8 STAGES OF PRODUCT DEVELOPMENT PROCESS
It is important to understand that there is no one generic product development process and that each
rendition of such a process will vary depending on the depth and detail that each explanation covers.
This article explains 8 stages of the product development process and these are listed below.
1. Idea Generation: The first stage in the product development process is idea generation. In this stage,
the company comes up with many different and unique ideas based on both internal and external
sources. Internal idea sources more often than not refer to the in-house research and development
teams of the company and external sources refer to competitor innovations, the customer wants,
 distributors and suppliers, and so on. The company thereby focuses on coming up with as many
feasible ideas as possible.
2. Idea Screening: The next stage involves the screening of this often-large set of ideas. The primary
objective of this stage is to focus on ideas that are in line with the company’s customer value and
financial goals. The stage focuses on the filtering out of ideas that are poor or are not feasible and
retain those that have good potential. This is to ensure that the company does not face losses by
moving ahead with fickle ideas that do not promise adequate returns.
3. Concept Development and Testing: The third of the product development process steps is concept
development and testing. In this stage, the good product ideas must be developed into detailed
product concepts that are conveyed in consumer-oriented terms. The concept must be made in order
to project the product in terms of how it is perceived by consumers and how it will potentially be
received in the market and by which set of potential customers. This concept must then be tested by
presenting it to the target consumers and their response must be taken into account.
4. Development of Marketing Strategy: The new product development process in marketing is
covered in stage four. In this step, the company tries to come up with strategies to introduce a
promising product into the market. The company must therefore come up with the price, potential
revenue figures as well as advertising and distributing channels in this step.
5. Business Analysis: The product concept is put through a vigorous business analysis or test in order
to ascertain projected sales and revenue and also assess risk and whether the production of the
product is financially feasible. The company’s objectives are considered and if these are satisfied, the
product is moved on to the next step.
6. Product Development: This is the step that comes after the management of a company declares a
product concept to be in line with the goals of the company and issues green light for development.
The research and development wing of the company then works on the product concept for many
months and even years in some cases, to come up with a working and functional prototype of the
product concept.
7. Test Marketing: This is the penultimate stage of the new product development process and involves
the testing of the product and its suggested marketing program in realistic market settings. This stage
provides an insight into how the product will be introduced into the market, advertised, produced,
packaged, distributed, and eventually sold to the customers, and therefore any optimizations if
required can be made by the company.
8. Commercialization: The final step of the product development process is that of commercialization.
Based on the information gathered during the test marketing process, the business management may
either decide to go ahead with the launch of the product or put it on the backburner. In case the go-
ahead is given, the product is finally introduced into the market and this process is called
commercialization. This stage often leads to massive costs in terms of initial infrastructural
investments as well as sales promotions and advertisements.
CONCLUSION
The primary focus of the entire product development process is to generate superior customer value
and ensure that the product is well received in the market. More importantly, every company needs to
properly evaluate the kind of commitment that the product production calls for and whether or not
such a commitment can be undertaken by it based on the financial and administrative resources
available at its disposal. This 8-stage product development process is by no means an absolute
structure that makes or breaks a product but it certainly offers an excellent starting point for all
businesses that are looking to launch a product into the market

8. Explain the reasons why new products fail?

Different reasons why new products fail

No product point-of-difference
For a new product to win initial trials and then ongoing repeat business, it needs to bring something
new to the marketplace. Potential customers need an incentive – such as additional benefits or some
form of variety – to be persuaded to try and buy a new product. Without any real point of
difference, , the new product is likely to fail.
Limited retailer support
Most retailers are pretty happy with their existing merchandising mix and also need to be persuaded
that the new product has value for them and their customers. Many new products will fail because
they do not obtain the necessary distribution and market coverage to be viable, due to lack of interest
from most retailers.
Poor product design
Virtually all products that are put to development and launch sound good on paper. However, during
the development phase when final design decisions are made at the product is actually developed and
produced, this may not go exactly to plan. The end result is a poorly designed or poor quality
product, which is unlikely to generate a large number of repeat sales.
Established customer loyalty in the market
The success of new products will rely upon existing consumers being willing to switch from their
current purchases OR entering a market where there are a significant proportion of first-time
customers without any established brand loyalty. In many cases, existing customer inertia – the
unwillingness to switch brands – will limit the potential success of a new product. Clearly this
phenomenon will vary by type of product – for example, many basic supermarket products are
bought by consumers who follow simple habitual loyalty and are less likely to switch as a result.
Weak launch or poorly executed launch
Most new products require a reasonable degree of promotional support to build brand awareness and
to access distribution channels and retailers. With a limited launch budget or a poorly executed
launch, then the success of a new product is less likely.
Adverse media attention
Occasionally a new product may attract adverse media attention, usually related to deficiencies in the
product design, price level, or early use problems experienced by consumers. If this occurs, in
today’s Internet connected world it becomes difficult to achieve new product success.
Aggressive competitor actions
Virtually all new products are designed to take market share away from established competitors.
Therefore, some form of competitor reaction should be expected. In some cases competitors will
increase their level of promotion, reduced prices, leverage retail relationships to discourage their
partners from supporting a new product from a competitor, or even launch a similar product
themselves.
ll of these initiatives are designed to protect their market share and try to have the new product to be
as unsuccessful as possible.
Poor pricing or cost structure
New products may suffer from a poor pricing and cost structure. Sometimes companies will design
products with many features in an attempt to bring something new to the market. As a result, these
products are often more costly to produce, but the firm expects the marketplace to have a willingness
to pay more for a better product. This may or may not be the case and this product strategy may be
quite successful, or be perceived as poor value in the market.
In line with this concern, an expensive development process, along with an expensive launch, may
necessitate the need to charge a higher price – which again may or may not be accepted by the
marketplace.
Weak supporting brand equity
As we know, new products launched under a strong brand have a greater likelihood of success. This
is because the brand has existing customer following and loyalty. These consumers are more likely to
trial the new products produced by a brand that they trust and like. Obviously the reverse will apply –
weak brands do not have the same degree of customer loyalty or brand awareness, and are therefore
less likely to generate strong sales due to their brand support.
Small target market
In today’s marketing world, market segments are fragmenting and a number of companies now
pursue niche markets. While niche markets provide a suitable and possibly attractive market if there
is no or little competition, they have the danger of being relatively small. Clearly a small target
market will generate less sales volume and is less financially viable as a consequence.
No clear market need or perceived product benefits
For new-to-the-world products, , they have the extra concern of whether their benefits/features are
actually meeting a market need. By their very nature, this classification of new products (brand-new
inventions) are something new to the marketplace and provide a different solution to an established
need and sometimes a solution to need it does not yet exist in the minds of the consumer.
Therefore, if the company misreads this situation, then their level of sales is likely to be
disappointing. This is relatively common with backyard inventors who think that their new invention
is the next big thing.
Poor internal marketing
Service companies in particular rely on internal staff – such as retail staff and call center staff and
various other customer contact personnel. Usually they are the sales or fulfillment part of the overall
launch and marketing process of the new product. Surprisingly, without an internal marketing
program to convince the staff members of the benefits of the new product for their customers, many
of them will be reluctant to sell, or help switch customers to, the new product.
Existing product cannibalization
A risk associated with a product line extension is that it may simply cannibalize an existing product.
So in essence, while the new product may be successful, because it could take significant sales away
from an established product the overall new product could be deemed a failure by management. This
is because the company has invested time and money into bringing new product to market, yet no
additional profitability has been delivered to the bottom line.
However, of course, there are companies who believe in the importance of cannibalizing their own
products – primarily as a competitive defensive measure – an example here is 3M..
Weak sales for size of company
When we discuss a product failure, it needs to be considered in conjunction with the overall size of
company. For example, take a large company like Coca-Cola. If they were to bring a new product to
market, some sort of beverage, and that only generated $1 million per year profit (which is good
money for the average company) a company the size of Coca-Cola would deem this new product a
failure and would probably look to discontinue it.
Insufficient time for success
Because new product success relies upon consumers being willing to switch and trial new products
and then become a repeat and loyal purchaser, there are several steps phases involved in the
customer’s journey. This process obviously takes time. Some companies are willing to wait and
invest in a new product, whereas others seek and expect almost instant success in the marketplace.

UNIT-2

1. Define Price & Explain the objectives and the importance of pricing .
Meaning of Pricing
Generally, the amount to be paid for any goods or service is called price. Price is one of the important
factors of marketing mix. This is also the main source of income of any business organization. So,
profit or loss of business organization depends on the price of products. Price also expresses the
quality of products/goods. Generally, high quality goods have high price and low quality goods have
low price. Customers select goods on the basis of the price according to their buying capacity.
Without certain price no exchanges of any goods or services can be done. So, price has important role
in marketing. Generally, price is measured in currency.
Price means the rate paid by customers for any goods or service. For example, if a customer buys
Batika Shampoo for Rs. 140, the price of shampoo is Rs. 140. Here, the utility of the shampoo and its
price should be equal. Otherwise, one side gets loss. So, value/utility and price should remain
in balance.

Price is the strong equipment of marketing. It simplifies exchange function of marketing. There are
many names of such price. For example, interest paid for the use of currency, rent paid for the use
of capital or capital assets, commission paid for use of service, tuition fees paid for the
education, salary paid to employees for using their service, tax paid for earning income, premium
paid for insurance, etc.

According to Prof. Philip Kotler, “Price is the only element in the marketing mix that produces
revenue, the other elements produce cost.”
According to David J. Schwartz, “Price is the exchanged value of the product or service expressed in
terms of money.”

Objective of Pricing

The task of fixing reasonable value of any product or services is called pricing. To fulfill this task all
the costs and profits should be included. Various expenses are included under production cost. They
may be direct and indirect expenses. Before determining price of any product or services, all the
objectives which are directly influenced by the organizational goal should be made clear. If the
organizational goal is clear, it becomes easy to prepare the objectives of pricing. Main objectives of
pricing are as follows:

Objectives of Pricing

1. Profit oriented objective

All the business organizations or companies are conducted with the main objective of earning profit.
Their profit making objective may be for long term or short term. Under such task, companies or
organizations form two types of objectives as follows:
 To achieve a target result: The certain rate of profit intended by an organization or company
to earn during certain period is called target result. Business firms or companies fix prices of their
products with the objective to get certain result from sale or investment, for instance, 8% profit from
sale, 7% profit from investment, etc. Most of the wholesalers and retailers estimate targeted result
with the objective of earning short term profit. The firms or companies who do not need to face
strangling competition take decision to fix such price.
 To maximize profit: There are various types of profit making objectives. Among them profit
maximization is the second important objective. Fixing maximum rate of price of any product or
service to earn maximum profit in very short term adversely affects the customers. So, a strategy
should be adopted to earn maximum profit in long term. Sales volumes should be maximized with the
minimization profit margin for earnings maximum profit. As a result, profit amount increases. This
becomes beneficial to the company/firm and society in the long run.
2. Sales oriented objective

A company may adopt a policy to increase sales volume by fixing lower rate of price of products or
services. In fact, sales oriented objectives aims to increase sales quantity and market share. This
objective can be studied by dividing into two classes as follows:
 To increase sales volume: Increasing sales quantity of any product also may be one of the
objectives of pricing. The emphasizes to increase certain percent of sales quantity can be increased
getting permission from sales department or adopting other pricing strategies. Such strategy
discourages possible competitions. Besides this, profit can increase in the long run due to minimum
production cost.
 To increase market share: Every company or firm wishes to promote sale of its products.
The objective of pricing may be to increase sales quantity. This also increases market share. In this
age of competitive environment of market, it is also necessary to increase market share.
Some companies adopt a policy to expand market share gradually; some others adopt the policy to
expand market share immediately and control it. In order to expand market share, price of products or
services should be low in comparison of competitors. Japanese auto products have become very high
in price in American market due to which Toyota, Nissan, Honda Companies have cut down
production cost fixing low margin profit and adopted a policy to increase share in American markets.
This makes it clear that market share can be increased fixing low profit margin.

3. Status-quo oriented objective

Status-quo objective is formed to maintain the present situation for long time. In this objective, price
of products remains same for long. Firm or company does not take any step to change the price. This
status-quo includes the objectives like continuation of same price, facing competition and
continuation of existence. They can be mentioned as follows:
 Stability in price: Price stability is one of the importance objectives. This remains effortful to
maintain price at the same rate for time. Price leadership companies, frequent demand
changing companies and the companies wishing to maintain reputation try not to let price fluctuate.
All such companies make their objective to maintain price same at the same level. Such organizations
or companies also wish to maintain revenues, price of their products, profits etc. at the same level.
They do not want to take risk. They try to maintain same price by increasing production and supply
in prosperity period and decreasing production and supply in depression period.
 To meet competition: This is the age of market competition. Every business company needs
to face competition for survival/existence. Companies/firms have to fix price of their products or
services as fixed in the markets. So, price is fixed with a view to facing/meeting competition in
market. The price leadership companies should fix/determine price of their products by studying and
considering market prices. Otherwise, the prices of their products cannot face/meet competition in
market; as a result they are compelled to flee away from the market.
 Survival: It becomes very difficult to save the company/firm from high competition in
market. In such situation, the firm should fix prices of their products in a way that only production
cost can be recovered. In such situation, production cost may be equal to revenue. (Production cost =
Revenue). This situation is called breakeven point. In this situation, there is neither profit nor loss. In
this way, company’s existence is saved and it expects improvement in future. Business companies
make such objectives waiting for bright future.

Reasonable pricing plays an important role in achieving business goal. Price remains as crucial
matter for business companies. Its importance is linked with various aspects. The importance of
pricing is related mainly to economy, organization and customers. They can be mentioned as follows:

1. Importance to the economy

In fact, price is the important element of economy. It directly affects demand and saving. It also
controls means of production. To make it clearer, a short description has been made as follows:
 Determinant of demand and supply: As the price of products directly affects demand, price
plays an important role in determining the quantity of demand. So, price has been accepted as basic
element. If the price is increased but the quality of the product is unchanged, and then demands of the
products decreases, and if the price is decreased, demand for the products increases. In other words,
when price decreases, demand increases, and when price increases, demand decreases, hence the law
of demand applies. In this way, the quantity of demand and supply depends on price; price can be
identified as determinant of demand and supplies.
 Effect to the factors of production: Price of products is very important to economy and
industry. It directly affects wages, rent, interest and profits. Capital, labor, land and venture are the
factors/means of venture productions. Wage for labor, rent for land, interest for capital, reasonable
profits for venture should be distributed. The factors/means of production (wages, rent, capital and
venture) affect demand and supply. Rate of wage attracts labor whereas high interest rate attracts
capital. Hence, price strongly affects factors/means of productions.
 Effect to the saving and investment: Determined/fixed price for target market may affect
inflation. This indicates that inflation causes increase in price of products. If the price of products or
service increases, the customers get in difficulties. When the price of products or services increases,
consumers’ saving decreases, due to which investment is discouraged. But, if price decreases and
saving increases, investment also increases. This situation contributes to the development of society
and nation.

2. Importance to organization

Price of product or services is an important element/factor of marketing mix. Price management is

very difficult task for profit making organizations. So, rational decision should be taken for price
management. Success in market competition can be achieved; income and profits can be earned only
through price. The following points are discussed to make the importance of price clearer.
 Revenue and profit: Price plays an important role in determining income and profit of an
organization. Total income can be made out/found out by multiplying per unit price by sold quantity.
When sale quantity remains same, but price is decreased, income also decreases. If price is increased
and sale quantity remains same, income is increased. Profit can be made out/found out also by
subtracting total cost from total revenue. So, profit can be increased or decreased by increasing or
decreasing price of products. But policy of frequent change in prices and profit/revenue is detrimental
to the company.
 Competition: Business organization should face various competitions appeared in market. It
has to face price competition certainly. If market competition increases in the price already fixed, the
organization can attract increased number of customers by decreasing the price. This increases sales
volume and decreases production cost.
 Expansion of the product line: Price directly affects organization to expand target markets
and add product line. Price also helps in taking decision whether to add new product line or expand
new product or not. This can be decided by comparing production cost with the price. If profit seems
sure, decision for expansion should be taken. But, just opposite to it, if there is no possibility of profit
but only loss, then decision should be taken not to expand the products.

3. Importance to the customers

Determination of price should be based on genuine reasons. If price has been determined rationally,
this helps general customers. Following points can be discussed to make clearer the importance for
general customers:
 Importance of the product selection: Most of the customers give priority to price and
analyze it. They try to select products considering their prices. Such customers minimize quality and
utility. They can take decision to buy the products which contain relatively low prices.
 Importance of the quality perception: Price plays an important role to meet customers’
necessity/want. Similarly, it is also equally helpful to assure them of the quality of the products. If
high price products or services make the customers realize high quality and low price product
signifies low quality.
 Importance of customers’ benefits: Price of products affects customers’ benefits. The
customers by low priced products/goods even when the income sources have fallen down. In the
situation when income has increased, demand for products does not decrease even if the price is high.
The customers who are sensitive to price may take decision to buy products when the price has
decreased or discount is provided. Some customers give priority to their social dignity, respect and
satisfaction.

2. Explain the factors influencing pricing decisions?

Factors influencing pricing decisions
Objectives of the Business : There may be various objectives of the firm such as getting a
reasonable rate of return, to capture the market, maintenance of control over sales and profits etc. A
pricing policy thus, should be established only after proper consideration of the objectives of the
firm.
Cost of the Product: Cost and price of a product are closely related. Normally, the price cannot or
shall not fixed below its cost (including the product, administrative and selling costs). Price also
determines the cost.
Market Position. The prices of the products of different producers are different either because of
difference in quality because of the goodwill of the firm. A reputed concern may fix may fix higher
prices for its products on the other hand, a new producer may fix lower prices for its products.
Competition may also affect the pricing decisions.
Competitors Prices: Competitive conditions affect the pricing decisions. The company considers the
prices fixed and quality maintained by the competitors for their products.
Distribution Channels Policy : The nature of distribution channels used, and trade discounts which
have to be allowed to distributors and the distribution expenses also affect the pricing decisions.
Price Elasticity and Demand Elasticity : Price elasticity affects the decisions of price fixation.
Price elasticity means the consequential change of demand for the change for the change in the prices
of the commodity. If demand is elastic, the firm should not fix high prices rather it should fix lower
prices than that of the competitors.
Product’s Stage in the Life Cycle of the Product : Pricing decision is affected by the stage of
product in its life cycle.. In the introductory stage of the product, it the price strategy which
determines the price of the product.
Product Differentiation : The price of the product also depends upon the characteristics of the
product. In order to attract the customers different characteristics are added to the product such as
quantity, size, color, alternative uses, etc.
Buying Patterns of the Consumers : If the purchase frequency of the product is higher, lower prices
should be fixed to have a low profit margin. It will facilitate increasing the sale volume and the total
profits of the firm.
Economic Environment : In recession period, the prices are reduced to a sizable extent to maintain
the level of turnover. On the other hand, the price and increased in boom period to cover the
increasing cost of production and distribution.
Government Policy : Price discretion is also affected by the price control by the government through
enactment of legislation when it is thought proper to arrest the inflationary trend in prices of certain
commodities.

3. Explain the different types of pricing methods?

Definition: Pricing method can be seen as the process of ascertaining the value of a product or
service at which the manufacturer is willing to sell it in the market. The cost, market competition
and demand are the three significant factors which influence a product’s price
Pricing of products or services is a crucial decision-making strategy of the firm. Since it has a long-
lasting impact over the business and its existence. Hence, a suitable pricing method needs to be
adopted for this purpose.
Pricing Methods.
We will further discuss the various models developed over the years for price determination,
based on cost, demand and market determinants:

Cost-Oriented Methods
These are the traditional methods of product pricing. The major factors which influence the product
price are the fixed cost, variable cost other overheads incurred in manufacturing the products.
Different cost-oriented pricing models

Cost Plus Pricing

Cost-plus pricing is one of the simplest ways of price determination. A certain percentage of cost is
added as a profit margin to the value of the product to acquire the selling price.

Mark-up Pricing
It is a form of cost-plus pricing, but here the profit margin is presented as a percentage of expected
return on sales. The formula for mark-up pricing is:
Mark-up Price=Unit Cost (Fixed+Variable)/(1-Percentage of Expected Return on Sales)
Mark-up Price=100/1-25%
Mark-up Price=₹133.33

Marginal Cost Pricing

The primary aim of the company adopting this pricing method is to meet its marginal cost and
overheads. The marginal costing method is suitable for entering the industries which are dominated
by giant players, posing a fierce competition for the organization to sustain in the business.
Target Return Pricing
The pricing objective in target return method is to attain a certain level of ROI (Return on
Investment). The formula for determining the target return price is:

To find out the desired return on investment:

Example: If the total business investment is ₹80000, the desired ROI is 25%; the total cost incurred is
₹30000 and the expected sales are 5000 units, determine the target return price.
Target Return Price=(Total Cost+Desired Return on Investment)/Total Sales in Units
Desired Return on Investment=Desired %ROI×Total Investment Value
Desired return on Investment=25%x80,000
Desired return on Investment=20,000
Target return Price=(30,000=20,000)/5000
Target return Price=10

Break-Even Pricing
This method is similar to break-even analysis, here the company needs to price the products such that
it generates profit after recovering the fixed and variable costs. The selling price should be equal to or
more than the break-even price (the point at which the sales revenue matches the cost of goods sold).
The formula for ascertaining the break-even limit is:

For instance, a company incurs ₹500000 as fixed cost and ₹25 as a variable cost. If the selling price
is Rs.75, find out the break-even limit.
Break-Even Limit=Total Fixed Cost/(Selling Price Per Unit-Variable Cost Per Unit)
Break-Even Limit=500000/(75-25)
Break-Even Limit=10000 Units
Thus, the organization either needs to sell more than 10000 units or price the product higher than
Rs. 75 to earn a profit.
Early Cash Recovery Pricing
When it comes to rapidly growing technological products or the ones with a short life cycle, the cost
needs to recover as early as possible. This method is very similar to target return pricing; the only
difference is that it considers a high value of return on investment owing to a short recovery period.

Market-Oriented Methods
In a highly competitive market, the company cannot survive with cost-oriented pricing. Hence, it
needs to price its products according to the market demand and competitor’s pricing strategy.
To understand the three primary market-oriented models of pricing, read below:

Going Rate Method

‘Follow the crowd’ method is based on market competition, where the company price its product
similar to the competitor’s product price. If the market leader reduces the price of its product, the
organization also needs to decrease its product price, even if the latter’s cost of production is high.

Sealed Bid Pricing Method

When it comes to industrial marketing or government projects, the supplier needs to bid specific
product price, which he/she assumes to be the lowest, in a sealed quotation.
In other words, the organization needs to fill a tender, which indicates its costing and
competitiveness. The pricing should be done smartly by estimating the profit margin at different price
Levels and enclosing the most competitive price.

Customer-Oriented Method
This method is also called perceived value pricing. It is demand-based pricing where the company
determines the product price on value perception in terms of consumer demand for the particular
goods or service. This perceived value is based on the following constituents:
 Acquisition Value: The acquisition value is based on the opportunity cost of a product or
service, which is estimated through the comparison of the perceived benefit and the perceived
sacrifice.
 Transaction Value: The comparison of the customer’s reference price (assumed or quoted
price) with the actual price paid for the product or service is the transaction value.
The other methods to find out the perceived value are as follows:
 Direct Price Rating Method: The customers need to determine the price of products displayed
to them, where each product belong to a different brand.
 Direct Perceived Value Rating: The buyers rate the different brand products on a scale of 0-
100 according to their preference. The highest-rated product has the maximum perceived
value.
 Economic Value to the Customer: To determine the target market segment, the companies
correlate its total product cost to the consumer benefits of the current product.
 Diagnostic Method: The customers evaluate products of multiple brands on various
parameters or attributes. Each attribute has an importance weight, and on multiplying it with
the given ratings, the perceived value of each brand can be determined.
Other Pricing Methods
There are specific other methods for determining the price of a product or service, other than
considering the cost or market competition as the basis. These are explained in detail below:

Market Skimming Pricing

The skimming method is usually implemented in case of speciality, luxury or innovative products.
Here, the company avails the profit opportunity in the initial stage of marketing by selling the
products at a high price in a non-price-sensitive market segment. Later, the prices are dropped down
Gradually to sustain in the market.

Limit Pricing
This is defensive pricing strategy. The company price its products immensely low (and this price is
known as entry forestalling price), to retain the monopoly in the market. It is done to discourage the
entry of competitors by presenting the business as unattractive and non-profitable.
Peak Load Pricing
The peak load method is demand-based pricing, where the companies charge high prices in the peak
seasons or period when the demand for the product is quite high. However, in the off-peak time or
season when the demand falls, the prices are kept low.
It is applied for seasonal product pricing, airline travel pricing, tourism package pricing, etc.

Bundle Pricing
Bundling refers to compiling of two or more products together and selling it as a single product. The
company prices the complete bundle at a single price known as the offer price.
An organization can either opt for pure bundling, where the products in a bunch are strictly not
available individually. Or it may go for a mixed bundling, i.e. the products in a bundle can be sold
Separately but at a higher price.

Psychological Pricing
This pricing method aims to influence the consumers mentally by posing a low product price.
Here, the product is priced slightly less than a round figure, for instance: a product is priced at ₹99
instead of ₹100 or 1.98$ instead of 2$. This makes the consumer assume that the product price lies
With the range of rupees 100 or $2 and therefore it is worth buying

Internet Pricing Models

Internet is a modern communication platform and therefore, provides vast scope for carrying out
marketing activities. The different pricing methods for internet services (as a product) are as follows:
Priority Pricing: The consumer’s priority for service quality determines the price of internet
services; thus, the price increases with the quality of internet service.
Flat-Rate Pricing: The consumer is charged a fixed amount for availing the internet services for a
defined period irrespective of the sage.
Usage-Sensitive Pricing: The utility tariff is divided into two sections, the provider first charges for
the service connection and then for the usage in terms of price per unit (bit).
Transaction-Based Pricing: Here, the price is first charged for service connection and then each
transaction is separately chargeable.
Precedence Model: The pricing here, is based on the security provided to the existing customers by
setting up the priority of different applications. Data packets are formed based on network preference
and are given different precedence numbers. In case of congestion, the packets are sent in the
sequence of their assigned precedence numbers.
Smart Market Mechanism Model: This model is purely dependent on network congestion. It
functions through a dynamic bidding system where the bit price fluctuates with the level of
congestion or traffic in the network. The bidder with the highest bit or unit price wins the deal.
Every business organization has a different objective; not all the companies aim at profit-making.
Some may look forward to capturing the market and others may focus on long term existence.
Thus, these organizational goals determine the pricing methods to some extent. However, the
prevailing market trends or industry type also influence these decisions massively.

4. Explain the strategy followed for new product pricing?

 The different methods of pricing can be grouped under the following categories:-
 Cost based pricing
 Demand based pricing
 Competition-oriented pricing
 Differential pricing
 Going rate or “Follow the crowd”

The different pricing methods are explained in detail as follows:-

1. COST –BASED PRICING
Under this category, only one approach has been taken into consideration i.e. Mark-up pricing / Cost
plus pricing.
Mark-up Pricing refers to the pricing method in which the selling price of the product is fixed by
adding a margin to the cost price. The mark-ups vary depending on the nature of products & markets.
Usually, the higher the value of the product (unit cost of the product) the larger the mark-up & vice-
versa. Again, the faster the turn round of the product, the smaller the mark-up vice-versa.
2. DIFFERENTIAL PRICING
Some firms charge different prices for the same product in different zones / areas of the market.
Sometimes, the differentiation in pricing is made on the basis of customer class rather than marketing
territory. Sometimes, the differentiation is on the basis of volume of purchase. Differentiation on the
basis of volume is more common than differentiation based on customer class in marketing territory.
3. GOING RATE OR “FOLLOW THE CROWD”
In this method, the firm prices its products at the same level as that of the competition. This method
assumes that there will be no price wars within the industry. This is a method commonly used in an
oligopolistic market.. Despite its advantage of preventing price wars, the method suffers from serious
limitations. The first is that, it is not necessarily true that all firms or the leader firm is operating
efficiently. In case, it is not, it will mean that the follower firm will also adopt a price level which
reflects leader’s inefficiency rather than the firm’s efficiency. Besides, it is not always true that a
 decision taken in collective wisdom is the best. It may certainly not be so from the customer’s point
of view.
4. DEMAND/MARKET BASED PRICING
The following methods belong to the category of demand / market based pricing:
 ‘What The Traffic Can Bear’ Pricing
 Skimming Pricing
 Penetration Pricing
The basic feature of all these demand based methods is that profits can be expected independent of
the costs involved, but are dependent on the demand.
As per pricing based on ‘what the traffic can bear’, the seller takes the maximum price which the
customers are willing to pay for the product under the given circumstances. It is not a sophisticated
method. It is used more by retail traders than by manufacturing firms.
Skimming Pricing
Skimming Pricing aims at high price & high profits in the early stage of marketing the product. As
the word skimming indicates, this method literally skims the market in the first instance through high
price & subsequently settles down for a lower price.
Penetration Pricing
Penetration pricing, as the name indicates, seeks to achieve greater market penetration through
relatively low prices. It is the opposite of skimming pricing. This method too is quite useful in pricing
of new products under certain circumstances.
5. COMPETITION ORIENTED PRICING
In several industries, competition oriented pricing methods are followed. The methods under this
category rest on the principle of competitive parity in the matter of pricing. Competition based
pricing, or competitive parity pricing does not, however, mean exactly matching competition.
Three policy alternatives are available to the firm under this pricing method:
 Premium Pricing
 Discount Pricing
 Parity Pricing / Going Rate Pricing
Premium pricing means pricing above the level adopted by competitors;
discount pricing means pricing below such level; and
parity pricing means matching competitors pricing.
Where supply is more than adequate to meet demand & the market remains competitive in a stable
manner & where the channel & consumers are well aware of their choices, parity pricing may be the
answer. Similarly, when a market leader has established a market price with the intention of
stabilizing the price, the smaller firms in the industry may have to go in for parity pricing.

UNIT-3
1. Explain the significance of Promotion?
Meaning of Promotion
“What is Promotion?” Promotion is a marketing tool, used as a strategy to communicate between the
sellers and buyers. Through this, the seller tries to influence and convince the buyers to buy their
products or services. It assists in spreading the word about the product or services or company to the
people. The company uses this process to improve its public image. This technique of marketing
creates an interest in the mind set of the customers and can also retain them as a loyal customer.
Promotion is a fundamental component of the marketing mix, which has 4 Ps.: product, price, place,
and promotion. It is also an essential element promotional plan or mix, which includes advertising,
self and sales promotion, direct marketing publicity, trade shows, events, etc.,
Some methods of this procedure contain an offer, coupon discounts, free sample distribution, trial
offer, buy two items in the price of one, contest, festival discounts, etc. The promotion of a product is
important to help companies improve their sales because customers reaction towards discounts and
offers are impulsive. In other words, promotion is a marketing tool that involves enlightening the
customers about the goods and services offered by an organization.
Types of Promotion:
Advertising-
It helps to outspread a word or awareness, promote any newly launched service, goods or an
organization. The company uses advertising as a promotional tool as it reaches a mass of people in a
few seconds. An advertisement is communicated through many traditional media such as radio,
television, outdoor advertising, newspaper or social media. Other contemporary media that supports
advertisement are social media, blogs, text messages, and websites.
Direct Promotion-
It is that kind of advertising where the company directly communicates with its customers. This
communication is usually done through various new approaches like email marketing, text
messaging, websites, fliers, online adverts, promotional letters, catalog distributors, etc.
Sales Promotion-
This utilizes all sorts of a marketing tool to communicate with the customers and increase sales.
However, it is for a limited time, used to expand customers demand, refresh market demand and
enhance product availability
Self-promotion-
It is a process where the enterprises send their agents directly to the customers to pitch for their
product or service. Here, the response for the feedback of the customer is prompt and therefore, easy
to build trust.
Public Relation-
Popularly know as PR is exercised to broadcast the information or message between a company
(NGO, Government agency, business), an individual or a public. A powerful PR campaign can be
valuable to the company.
Online Promotion-
This includes almost all the elements of the promotion mix. Starting from the online promotion with
Pay per click advertising. Direct marketing by sending newsletters or emails.

 It is a communication tool that incorporates all the elements used to spread awareness and
convince customers to buy good and services
 It is applicable only for short term sales
 It is one of the variables of the marketing mix
 The effect of promotion is short term
 The result or outcome of the promotion is immediate
 It is an economic marketing tool as compared to advertising
  It can be used for all sorts of businesses irrespective of the size, brand of a company

2. Explain the Promotion Mix Elements?

Meaning of promotion mix –
 It refers to the sum of promotional tools that are used by the marketer to inform and persuade
the buyers to buy the product.
 These tools/elements are used in different combinations depending upon the necessity of
information.
Elements of the promotional mix
These tools are in the form of-
(a) Advertisement.
(b)Personal Selling.
(c) Publicity.
(d) Sales Promotion.

In the promotional tool of marketing mix Personal selling involves the oral presentation of message
with one or more prospective customers for the purpose of making sales.
Many times, a salesman meets the customers of a different nature. They make irrelevant questions,
waste a lot of time and buy nothing. Under such circumstances, the salesman should not lose his
temper but should listen to the customers patiently.
Under Personal selling cost per person reached is very high
Personal selling.is used as the communication tool by the marketer to open a relationship so that the
marketers can build a long-term successful enterprise.

3. What is meant by Advertising? Explain the objectives and importance

Advertising?

DEFINITION
'Advertising is a non-personal communication of information usually paid for and usually persua-sive
in nature about products, services or ideas by identified sponsors through the various media."
Advertising is the best way to communicate to the customers. Advertising helps informs the
customers about the brands available in the market and the variety of products useful to them.
Advertising is for everybody including kids, young and old. It is done using various media types,
with different techniques and methods most suited.

Let us take a look on the main objectives and importance of advertising.

Objectives of Advertising

Four main Objectives of advertising are:

i. Trial
ii. Continuity
 iii. Brand switch
iv. Switching back

Let’s take a look on these various types of objectives.

1. Trial: the companies which are in their introduction stage generally work for this objective.
The trial objective is the one which involves convincing the customers to buy the new product
introduced in the market. Here, the advertisers use flashy and attractive ads to make
customers take a look on the products and purchase for trials.
2. Continuity: this objective is concerned about keeping the existing customers to stick on to
the product. The advertisers here generally keep on bringing something new in the product
and the advertisement so that the existing customers keep buying their products.
3. Brand switch: this objective is basically for those companies who want to attract the
customers of the competitors. Here, the advertisers try to convince the customers to switch
from the existing brand they are using to their product.
4. Switching back: this objective is for the companies who want their previous customers back,
who have switched to their competitors. The advertisers use different ways to attract the
customers back like discount sale, new advertise, some reworking done on packaging, etc.

Basically, advertising is a very artistic way of communicating with the customers. The main
characteristics one should have to get on their objectives are great communication skills and very
good convincing power.

Other Objectives
To promote a single product or service.
To make an immediate sale.
To create the branding of the product.
To introduce a price deal.
To inform about new products availability or features.
To build an overall company image.
To effect immediate buying action.
To increase market share.

Importance of Advertising

Advertising plays a very important role in today’s age of competition. Advertising is one thing which
has become a necessity for everybody in today’s day to day life, be it the producer, the traders, or the
customer. Advertising is an important part. Lets have a look on how and where is advertising
important:

1. Advertising is important for the customers

Just imagine television or a newspaper or a radio channel without an advertisement! No, no

one can any day imagine this. Advertising plays a very important role in customers life.
Customers are the people who buy the product only after they are made aware of the products
 available in the market. If the product is not advertised, no customer will come to know what
products are available and will not buy the product even if the product was for their benefit.
One more thing is that advertising helps people find the best products for themselves, their
kids, and their family. When they come to know about the range of products, they are able to
compare the products and buy so that they get what they desire after spending their valuable
money. Thus, advertising is important for the customers.

2. Advertising is important for the seller and companies producing the products

Yes, advertising plays very important role for the producers and the sellers of the products,
because

Advertising helps increasing sales

 Advertising helps producers or the companies to know their competitors and plan
accordingly to meet up the level of competition.
 If any company wants to introduce or launch a new product in the market, advertising
will make a ground for the product. Advertising helps making people aware of the
new product so that the consumers come and try the product.
 Advertising helps creating goodwill for the company and gains customer loyalty after
reaching a mature age.
 The demand for the product keeps on coming with the help of advertising and demand
and supply become a never ending process.
3. Advertising is important for the society

Advertising helps educating people. There are some social issues also which advertising deals
with like child labour, liquor consumption, girl child killing, smoking, family planning
education, etc. thus, advertising plays a very important role in society.

4. What are the Classification Of Advertising

It is classified under nine heads.
1 Product advertising
A normal characteristic of advertising is to create primary demand for a product category rather than
for a specific brand. It is wrongly believed that product advertising must stress on brand name. This
is based on the feeling that a good image often enhances the effectiveness of product advertising.
However, in practice, most companies are successful in building the product image by using the
brand names (e.g., Dettol, Horlicks). In short, when the company tries to sell its product or services
through advertising it is referred to as product advertising.

2 Institutional advertising
These advertisements are not always directed to consumers. Instead, it is aimed at many of the
various types of public (shareholders, creditors, etc.). It is not product oriented but is rather designed
to enhance the image of the company.
3 Primary demand advertising
It is intended to stimulate primary demand for a new product or product category. It is heavily
utilised during the introduction stages of the life cycle of the product.
4 Selective or competitive advertising
When a product enters the growth stage of its life cycle, and when competition begins, advertising
emerges and becomes selective. Here, the goal of advertising is to increase the demand for a specific
product or service. Advertising may begin to stress subtle difference in brands, with heavy emphasis
on 'brand name recall'. Pricing also will be used as a key promotional weapon as products become
very similar.
5 Comparative advertising
This is a highly controversial trend in today's competitive market. Such types of advertising play a
decisive role on comparative features of two or more specific brands in terms of product / service
attributes. This method is adopted in the maturity stage when similar products fast appear in the
market causing stiff competition.
6 Co-operative advertising
When manufactures, wholesalers and retailers jointly sponsor and share the expenditure on
advertising, it takes the form of co-operative advertising. Such advertising carry the names of all the
parties involved. From the customers' point of view this is beneficial, as they can get the articles
directly from the authorised outlets.
7 Commercial advertising
It is also termed as business advertising. As the name suggests such advertising is solely meant for
effective increase in sales.
8 Non-commercial advertising
These are usually published by charitable institutions preferably to solicit general and financial help
(such as collection of donation or sale of tickets).
9 Direct action advertising
Advertising that stresses and persuades immediate buying of the product is known as direct action
advertising. Direct mail advertising is capable of achieving immediate action to a large extent.

4. What are the Different Types of Advertising? Explain the advantags of

advertising? Write about Advertising Budget?

1 Television Advertising - TV
TV advertising is a popular way to mass-market messages to large audiences. Although this me-
dium has the ability to reach a high number of potential buyers, it is also one of the most costly forms
of advertising
2 Radio Advertising
Radio advertising is an effective way for businesses to target a group of people based on location or
similar tastes.
3 Print Advertising
Magazine and newspaper advertisements are another way to spread the word about a product or
service. Print advertising also offers the ability to target specific audience based on geography or
com-mon interests. Print advertising usually includes larger display ads, as well as classified
advertising. The classifieds are typically very affordable, whereas display ads are a bit pricey.
4 Online Advertising
Advertising online is an increasingly popular method for promoting a business. There are many
forms of online advertising. Banners are image advertising displayed on web pages. Google
advertise-ment is another popular form of online advertising that matches an ad to an internet user's
search inquiry.

5 Billboard Advertising
Billboard advertisements are large advertisements displayed on structures in public places. Most
commonly, billboards are located along the highways to target the passing motorists.
6 In-store Advertising
In-store advertising, takes place within a retail store. For example, a company that produces a new
cleaning product might include an end cap display when they ship the product to stores. This gives
the store an attractive display that draws attention to the new product. Other types of in-store
advertis-ing include banners and display cases.
7 Word of Mouth Advertising
While some may argue that word of mouth is not advertising because it is free, this form of promo-
tion is one of the best and the most credible and priceless asset of any business. Even if business
owners cannot buy word of mouth advertising, they can encourage their customers to tell their friends
and family about the great product or service they purchased.
8 Endorsements
Endorsement is similar to word of mouth promotion but typically does involve money. Having a
product or service endorsed by a celebrity can increase sales and product awareness. Not every
company can afford to have major A-list celebrities promoting a product. Smaller companies
consider using local celebrities or well-known individuals within the product's niche market.
ADVANTAGES OF ADVERTISING
1. Broadens the knowledge of the consumers.
2. Helps easy introduction of products into the market.
3. Increases sale volume.
4. Helps to create image of the product and the company.
 5. Enables them to have product information.
6. Creates awareness on product and service.
7. Maintains retail price.
8. Increases the rate of the turnover of stock.
9. Provides an opportunity to the customers to compare the merits and demerits of various
substitute products.
10. Helps to establish direct contact between manufacturers and consumers.
11. Leads to large-scale supply for demand, creating more employment opportunities.
CONCLUSION
The advertising is a highly cost incurring method, its efficiency and effectiveness should be en-
sured. It is for this, purpose that concept of scientific advertising should be carefully planned and
efficiently implemented and promptly monitored and controlled.

5. Explain the features and steps in Personal Selling?

Features of personal selling:
Personal form
An interactive relationship exists between the sellers and the buyer in personal selling.
This happens due to a direct face to face dialogue between them.
Two-way communication
In personal selling, the seller gives information about the product and at the same time, the buyer gets
a chance to clarify his doubts.
Better response
When the seller personally explains the utilities of the product to the customers they do pay some
attention and listen to the information.
Relationship
When the seller and the buyer meet together, it improves the relation between them.
Salesperson normally makes friendly relations with customers.
Better convincing
Personal selling is the most effective form of promotion.
The salesperson can convince the buyer by demonstrating the use of the product.
He can also make changes in the product or the offer according to the needs of the customer.

Personal Selling Process: Steps and Stages

1. Prospecting and Evaluating
2. Approaching the Consumer
3. Preparing for the Sale
4. Making the Presentation
5. Overcoming the Objections
6. Closing the Sale
7. Following Up.
This process involves identifying the prospective buyer, establishing a contact and relationship with
the buyer, presentation of the product to the buyer and demonstrating its uses and benefits,
convincing the customers about the product by efficiently handling objections from the customers,
negotiating the price and terms of payment and finally getting the orders.

A follow up call from the sales personnel, after the sales process is over so that customer satisfaction
can be ensured and it establishes long term relationship between the seller and customer and
improves goodwill.
1. Identifying the Prospective Buyer (Prospecting and Qualifying):
The first stage of personal selling process involves identifying potential customers. All prospects
identified may not turn out to be actual customers. Hence identifying the right prospect is essential as
it determines the future selling process. Marketers tap different sources to identify the prospective
customers. Marketers search for prospects in directories, websites and contact through mail and
telephone.
Marketers establish booth at trade shows and exhibitions, get the names of the prospects from
existing customers, cultivate referral sources such as – dealers, suppliers, sales representatives,
executives, bankers etc. After identifying the prospect the sales person qualifies the prospects on the
basis of their financial ability, needs, taste and preferences.
2. Pre-Approach:
The next step to prospecting and qualifying is pre-approach. At this stage the salesperson needs to
decide as to how to approach the prospective customer. The salesperson may make a personal visit, a
phone call or send a letter, based on the convenience of the prospects.
3. Approach:
At this stage the salesperson should properly approach the prospects. He should properly greet the
buyer and give a good start to the conversation. The salesperson’s attitude, appearance, way of
speaking matters most at this stage.
4. Presentation and Demonstration:
At this stage the salesperson provides detailed information about the product and benefits of the
product. The salesperson narrates the features of the product, explains the benefit and the worth of
the product in terms of money.
5. Overcoming Objections:
After presentation and demonstration, when customers are asked to place order, they are reluctant to
buy and raise objection. Customers give importance to well-established brands, show apathy,
impatience, reluctance to participate in the talk etc. Customer may raise objection with regard to
price, delivery schedule; product or company characteristics, etc. Salesperson handles such
objections skillfully by clarifying their objections and convinces the customer to make purchase.
6. Closing:
After handling objections and convincing customers to buy the product, the salesperson requests the
customer to place order. The salesperson assists the buyer to place order.
7. Follow-Up and Maintenance:
Immediately after closing the sale, the salesperson should take some follow up measures. The sales
person assures about delivery at right time, proper installation, after sales service. This ensures
customer satisfaction and repeat purchase.
In case of newly introduced product and product that requires demonstration and presentation,
personal selling is effective.
The activities involved in the selling process vary from salesman to salesman and also with selling
situations. No one method is used by the two salesmen.

6. Explain the objectives of Sales Promotion?

Meaning of sales promotion- It refers to short term incentives which are offered to the ultimate
customers to encourage them to make immediate purchase of the product or service

The word promotion, originates from the Latin word ‘Promovere.’ The meaning is “to move
forward” or to push forward or to advance an idea. The aim of production is sales. Sales and
promotion are two different words and Sales Promotion is the combination of these two words. Sales
promotion increases the sales.

Sales promotion methods aim to capture the market and increase the sales volume. It is an important
instrument in marketing to lubricate the marketing efforts. Now-a-days sales promotion is a
necessary tool to boost sales. Sales promotion becomes a fashion and luxury.

In the broader sense it is not an expenditure; it is an investment, as it pays rich returns.

It aims in creating demand.
It is right to say that sales promotion moves the product. A manufacturer must make the customers to
know the product and he must influence them to buy that product.
Sales promotion is one among the three pillars of promotional mix.
The other two pillars are personal selling and advertising. Sales promotion is the connecting link
between personal selling and advertising. Sales promotion is an important and specialized function of
marketing.
Promotion is the final element in the marketing mix. After the nature of the product is decided, its
price fixed and the methods of distribution adopted, the producer has to take effective steps in
meeting the consumers in the market. In consumer-oriented markets, the producer must know what is
required by the consumers and to make the consumers know from where, when, how and at what
price, the products would be available. The most widely used methods of promotion are personal
selling and advertising. Sales promotion is designed to supplement and co-ordinate personal selling
and advertisement efforts.
Definition:
According to the American Marketing Association, sales promotion is “those marketing activities
other than personal selling, advertising, and publicity that stimulate consumer purchasing and dealer
effectiveness such as display shows, expositions, demonstrations and various non-recurrent selling
efforts not in the ordinary routine”.
According to George W. Hopkins, “Sales Promotion is an organised effort applied to the selling
job to secure the greatest effectiveness for advertising and for dealer’s help.”
“Sales promotions may be defined as all the marketing and promotion activities, other than
advertising, personal selling and publicity that motivate and encourage the consumer to purchase by
means of such inducements as premiums, advertising specialties, stamps, refunds, rebates, exhibits,
displays and demonstrations.
It is employed as well, to motivate retailers, wholesalers; the manufacturer’s sales forces to sell
through the use of such incentive as awards or prizes (merchandise, cash and travel), direct payments
and allowances, co-operative advertising and trade show. It offers a direct inducement to act by
providing extra worth over and above what is built into the product as its normal price. These
temporary inducements are offered usually at a time and place, the buying decision is made.”
Purpose of Sales Promotion:
Customers are more selective in; their buying choices and a good promotional programme is needed
to reach them. The main purpose of sales promotion is to boost sales of a product by creating
demand, that is, both consumer demand as well as trade demand. It improves the performance of
middlemen and acts as a supplement to advertising and personal selling.
It helps in achieving the following purposes:
The basic purpose of promotion is to disseminate information to the potential customers.
2. Sellers use incentive-type promotions to attract new customers, to reward loyal customers and to
increase the repurchase rates of occasional users.
3. To encourage the customers to try a new product. An interesting example: the Brooke Bond Tea of
India used to distribute free tea to every household during 1930’s, in order to promote tea drinking
habits among the people of Chennai.
4. Sales promotions yield faster responses in sales than advertising.
5. Sales promotion is considered as a special selling effort to accelerate sales.
6. Brand switchers are primarily looking for low price, good value and premiums. Sales promotions
are likely to turn them into loyal brand users.
7. It helps to defeat competitors’ promotional activities.
Importance of Sales Promotion:
In recent years, the importance of sales promotion has increased. The amount spent on sales
promotion now equals the amount spent on advertising. The sales promotion increase is due to the
changes in the marketing environment. The importance of sales promotion increase is due to the
thinking of new ideas for creating a favourable condition of selling, promoting sales and future
expansion of sales.
It is a part of marketing strategy. It is essential for the survival of a manufacturer. For the birth of
new product or new brand, sales promotion is very important. Advertising reaches the customers at
their homes, or at the place of business or in their travels, whereas sales promotional devices inform,
remind or stimulate the buyers at the point of purchase.
Hence it is the only device which is available to the consumers at the point of purchase. A good sales
promotional programme will remove the consumer’s dissatisfaction with respect to retail selling.
Sales promotion increases as a result of the growing use of self-service and other sales methods.
In India lakhs of rupees are now being spent on sales promotional activities. Now-a-days it becomes
a necessity and it is not a luxury. All the marketing devices, by which demand for a product is
stimulated and re-stimulated are known as sales promotion.
Reasons for the Rapid Growth of Sales Promotion:
This is due to several factors which contribute to the rapid growth of sales promotion, particularly in
consumer markets.
I. Internal Factors:
(a) Promotion is accepted by top management as an effective sales tool. Now-a-days top level
managers realize and accept that sales promotion effects sales. It will increase the sales volume.
(b) Product managers are qualified to use sales promotion tools. Product managers realize the
importance of sales promotion. Hence they practise sales promotion tools effectively.
(c) It is the duty of the product managers to increase the sales volume, and this attracts the sales
promotion tools to achieve the aimed objective.
II. External Factors:
ADVERTISEMENTS:
(a) There is widespread use of branding. Promotional activities are essential as they are more
practical than advertising.
(b) Competitors have become promotional-minded. There is cut-throat competition, and the market is
flooded with numerous products. Hence, promotional activities are essential.
(c) During the period of inflation and recession, the consumers are more deal-oriented and the
promotional techniques facilitate sales.
(d) The present stage of trade demands more deals from manufacturers.

Merits of sales promotion:

a. Attention value - Its purpose is to draw the attention of prospective customers to
make them buy the products.
Example: “Buy 1 Get 1 free” offer, draws the attention of the customers.
b. Useful in new product launch - It is used mainly when the new products are
launched in the market so that the attention of the prospects can be drawn towards new
products.
Example: Offers given by Reliance at the time of launch of Jio.
c. Synergy in total promotional efforts - It helps to supplement the efforts made in
personal selling and advertisement.
It adds to overall effectiveness to the promotional efforts.
Example: Sales promotion by domino’s “Buy 1 Get 1 free” helps to make TV
advertisements hit leading to more sales.
Limitations of sales promotion
a. Reflects crisis –
A firm cannot remain too much dependent upon sales promotions.
It may otherwise leave the impression that the company is not doing good business.
b. Spoils product image –
Too much dependence on sales promotion techniques gives the impression in the mind
of customers that perhaps the product falls short of quality and is not saleable.

7. Explain the importance of Public Relations and Publicity?

Public Relations is one of the most effective ways to build on marketing strategies and create a solid
online reputation. Companies that have caught onto that are investing a tremendous amount of time
and effort into staying on top of their PR strategies, and they’re seeing even larger returns with
better ROI.
Public relations is about sending the right messages to the right place and the right people, creating a
stronger brand reputation. PR agencies work alongside their clients to help them achieve this and
promote them within their clients industries. PR is an area that can transform the future and
profitability of a business. Used properly, PR can give a company the ability to overcome almost
any obstacle it may face. This is some of what makes PR so essential.
PUBLIC RELATIONS INCREASES BRAND CREDIBILITY
Whatever the industry, trust plays a monumental role when it comes to determining the success of a
business. Without trust, a business leaves potential sales on the table. To bridge that trust-gap
between a business and its would-be clients or customers, the business can hire someone in public
relations.
The expert works on increasing their credibility within their given industry and increasing their
overall reputation. This is often done through thought leadership pieces, influencer connections and
networking strategies.
Increase Profits, Sales And Leads With Pr
PR isn’t complete without marketing. A company that enhances its reputation through a range of
unique PR practices makes it likely that new potential customers will find their way right to its door.
Customers and clients will have more options to connect with the company through its business
stories and press releases.
PR agencies make that possible by helping organizations to craft the right messages to resonate with
their target customers in impactful ways. In the end, that means bigger profits.
Pr Changes The Way People Think About A Business
The online world allows people to say whatever they want about a business, true or not, with the
business being able to do very little about it. A large number of businesses get a bad reputation
without doing anything to deserve it, while other businesses are not within easy online reach of their
intended markets. Both circumstances are hardly ideal.
The most effective way to fix that is through PR campaigns. PR support and the right campaigns
increase awareness for a brand while maintaining a positive and consumer-resonant image.
Audiences are also more likely to listen to a message coming from an objective source, as opposed
to paid-for advertising. By leveraging their connections with influencers, PR agencies can gain trust
for a company.
Pr Enhances Online Presence
Everyone is digitally connected in today’s world, and PR helps companies to create a strong online
presence that is highly visible to their target audience. PR agencies provide businesses with support
and guidance to help them market themselves online while being constantly ready to step in when a
disaster occurs or something threatens to damage the image the company has been building.
PR experts can identify the best channels and influencers to spread a company’s message to the right
people, and they can use their experience and industry connections to maximize reach.
Press releases, social media and influencer connections with promotional content-publishing sites
are some of the tools that PR companies use to help their clients to strengthen their brand image and
increase their profitability. Plus, they are tools that can also be used to overcome challenges that
may threaten a company’s success.
Increases Awareness: The company and the PR department primarily focuses on spreading
awareness by making people understand the product specifications and brand values.
Creates Brand Image and Reputation:
 The company has a chance to improve its image and build up a reputation among the public through
public relations practice.
Develops Loyalty:
The customers generate a loyalty factor for the brand because of an intense public relations practice.
They tend to buy from the company repeatedly.
Promotes Goodwill:
In the long term, public relations practice paves the way for creating substantial goodwill for the
company.
Builds Trust and Credibility:
The repetitive brand promotion, done in a way to align the company’s objectives to those of the
society and the target audience, develops trust and credibility among the public.
Types of Public Relations
Business Communication leads to building up of strong relationships and healthy business practice.
Thus, the PR department and the PR experts are required to consider the following types of public
Relations for organizational growth.

:
1. Media Relations: The PR department collects information from the press or media sources
while maintaining cordial relations with them. This data is used by the company to plan its
marketing strategies .
2. Investor Relations: Investors are essential to the organization. Hence, the PR department
keeps them informed, manages their events, releases financial reports and manages queries and
complaints.
3. Government Relations: Adherence to various government regulations like corporate social
responsibility, employee welfare, consumer protection, fair trade practices, etc. builds an
organization’s relationship with the government.
4. Community Relations: Society plays a crucial role in deciding the company’s as well as the
product’s future. An organization needs to create a positive image of the brand by supporting
social practices like say no to child labour, child education, equality, environmental protection,
etc.
5. Internal Relations: Communicating with the employees and counselling them on their
responsibilities, duties and actions helps in their better performance and long-term existence in
the organization.
 6. Customer Relations: Interaction with the valued customers and potential consumers is
necessary to know their feedback, suggestions, interest and priorities. This data is required to
prepare further business-related strategies.
7. Marketing Communications: The company uses different marketing strategies like brand
awareness program, product launch, marketing campaigns, product positioning, etc.

FUNCTIONS OF PUBLIC RELATIONS

 Product Publicity: The company organizes brand and product promotion through
sponsorships to gather customer’s attention.
 Press Relations: The company uses the press or the media to provide information about the
product to the customers.
 Lobbying: The PR experts communicate with the government officials and the legal
department to support the favourable regulations and defeat the unfavourable ones.
 In-House Journals: The brands launch their magazines and booklets to promote the products
among the customers. It also publicizes the annual reports, newsletters, websites, brochures
and annual reports to capture the target market.
 Corporate Communication: The PR department is continuously engaged in providing
information about the product and the brand through internal and external communication.
 Special Events: The PR experts organize events such as charity event, promotional events or
contests to capture the attention of the media.
 Public Service Activities: The companies often stand for social causes. They invest their time
and money and ask their employees to support such causes. This indirectly enhances public
relations in the organization.
 Counselling: At the time of product failure or poor performance, the PR department provides
suggestions and advice to the management.

8. Define Direct Marketing. Explain the different forms of Direct Marketing?

A form of advertising in which physical marketing materials are provided to consumers in order to
communicate information about a product or service. Direct marketing does not involve
advertisements placed on the internet, on television or over the radio. Types of direct marketing
materials include catalogs, mailers and fliers.
What Is Direct Marketing?
Direct marketing consists of any marketing that relies on direct communication or distribution to
individual consumers, rather than through a third party such as mass media. Mail, email, social
media, and texting campaigns are among the delivery systems used. It is called direct marketing
because it generally eliminates the middleman, such as advertising media.
 Direct marketing consists of any marketing that relies on direct communication or distribution
to individual consumers, rather than through a third party such as mass media.
 The call to action is a common factor in much of direct marketing.
 The effectiveness of direct marketing is easier to measure than media advertising.
The Advantages and Disadvantages of Direct Marketing
Direct marketing is one of the most popular and effective marketing tools in order to establish a
direct connection with a target audience. Direct marketing has its appeal, particularly to companies
on a shoestring budget who can't afford to pay for television or Internet advertising campaigns.
Especially as the world becomes increasingly connected through digital platforms, social media
becomes an effective way to market to customers.
The main drawback with direct marketing, however, is the profile-raising and image building that
comes with a third party accrediting your brand. For example, although a company may pay for a
sponsored article in The New York Times, this can greatly enhance a brand's image and can help
"seal the deal" with customers who are willing to trust a supposedly unbiased source or external
opinion.
By its nature, the effectiveness of a direct marketing campaign direct marketing campaign is easier to
measure than other types of advertising, since brands can analyze their own analytics, track unique
source codes, and tweak strategies effectively without going through a middleman. The company can
measure its success by how many consumers make the call, return the card, use the coupon, or click
on the link.
Types of direct marketing
Direct mail
Direct mail is posted mail that advertises your business and its products and services. There are
several different types of direct mail (e.g. catalogues, postcards, envelope mailers). Direct mail
campaigns are usually sent to all postal customers in an area or to all customers on a marketing list.
Learn more about direct mail.

Telemarketing
Telemarketing involves contacting potential customers over the phone to sell products or services. It
is capable of generating new customer prospects in large volumes and is also a useful tool for
following up on direct marketing campaigns. However, a successful telemarketing involves planning
and using accurate and well-researched customer data to match customer profiles to product profiles.

Email marketing
Email marketing is a simple, cost-effective and measurable way of reaching your customers. It can
include e-newsletters, promotional emails to generate new leads or offers for existing customers, or
ads that can appear in other businesses' emails.

Text (SMS) marketing

Text messaging allows businesses to reach individual customers and send messages to large groups
of people at a low cost. You could use short message service (SMS) messaging to send customers
sales alerts, links to website updates, appointment or delivery reminders, or personalised messaging.

Leaflet marketing using letterbox drops and handouts

Distributing well-designed leaflets or flyers through letterbox drops and handouts can work well for a
local business whose products or services appeal to a broad audience. It is a simple, inexpensive and
effective way of reaching customers, although it is a less targeted form of direct marketing.

Social media marketing

Social media can be used effectively as a marketing tool for business as it gives you the opportunity
to interact directly with your customers and regularly share relevant product or service information.
Social media platforms also make it very easy for your customers to share your content with their
entire network, increasing your reach exponentially. Consider developing a profile for your business
that allows you to promote your products and services while also encouraging customers to provide
feedback by leaving comments.

Direct selling
Direct selling is an effective way to grow a flexible, low-cost business. Direct selling involves an
independent salesperson selling products or services directly to customers, often at a customer's home
or workplace. Traditional direct selling methods include door-to-door sales, party plans and network
marketing.

UNIT -4
1, Define Marketing Channel. Write about channel levels and various channel
decision in relation to Channel Design.
What is Marketing Channel?
Marketing Channel is simply called as a distribution method of products, in which a company can
transfer their goods from one person to another through different mediums. In Simple
words “building a connection between company to customers”.
It’s a way through which product reaches to consumer and due to this, it is also known as
a Distribution channel.
It is a very useful tool for managing and is essential for developing a productive and strategic
marketing strategy.
Dual Distribution Channel is another type of marketing channel. It’s a less conventional channel that
helps wholesalers to reach consumers using more that one distribution channel.
In this type of channel, he can either reach the consumer directly or simply can sell it to another
company or retailer who will then sell it to the consumer.
Roles of Marketing Channel
The major role of a marketing channel are that it removes the gap between producers and consumers.
It is a connection that connects producers to buyers.
It takes part in sales and adverting and controls firm pricing planning which influences the marketing
strategy.
It affects the product strategy by branding, policies, maintenance, etc.
It is composed of different systems that help the transaction and physical exchange.
These systems have three categories
1. Creator of the product
2. A consumer of the product
3. A Middleman (Wholesaler or Retailer)
The Channel performs three functions-
 Transactional functions
 Logistical Functions
 Facilitating functions or helping functions.So these are the roles of the marketing channel.
Types Of Marketing Channel?
There are many types of marketing channels that are used according to different situations of
companies, but now we have to understand the Main component of Marketing channels.
1. Direct Selling
2. Intermediaries Selling.
 Direct Selling: If You Are dealing directly with customers without any interference of any
mediocre is called direct selling. There are many pros and cons of direct selling we will also
discuss this here.
 Direct Selling Benefits:
 Fewer Expenses
 More Profit
 Can Be Sold On Less Price
Direct Selling Cons:
 Need to Create Brand Awareness
 More Hustle in Marketing
Example of Direct Selling
 Online Selling (eg. Xiaomi)
 Own Brand Outlet (eg. Royal Enfield)
Intermediaries Selling – Intermediaries selling is a channel in which a company can take help from
the Broker or Agents, Wholesaler and Retailers to reach their customers.
It also seems like a Middleman in a Company.

1. Broker – A broker is someone who can charge the fee from the company for selling their
products.
2. Wholesaler – A person who purchases products in large quantity and sell those products to the
retailers.
3. Retailers – A person who can sell the product to the Consumer.
Intermediaries Selling Benefits:
 Easily available to the customers.
 Fast Expansion & Time-saving.
 Less Marketing Efforts.
Intermediaries Selling Cons: Increase in price of products.
Examples of Marketing Channel

o Wholesalers – These are the middle people who handle the goods in bulk quantity.
They usually sell goods to retailers and sometimes to consumers directly.
o Internet direct– Internet created a deep effect on communication, entertainment,
buying and selling and now in the distribution channel.
o Catalog direct – It is a channel in which consumer selects or order products from a
printed or online catalog.
o Sales team – Sales team create awareness for a product among the potential customer
and prepare him for interaction with the sales team.
o Value-added Reseller -It is a type of company or reseller that adds some value and
features to the existing product and resells it.
 Consultant – Consultant is an advisor who works for the company to create and implement
strategies that might be helpful to the company
 Retail sales agent – A retail sales associate’s job to look for all sales activities and sales
associate job duties like greeting customers, answering questions, offering assistance, etc.
 Manufacturer’s representative – Manufacturer’s Representative is a person, sales agency or
company that sells manufacturer’s products to retailers or wholesalers.

1. Explain the structure Marketing Channels? Explain the different Levels of Marketing
Channels?
here are basically four types of marketing channels:
 Direct selling;
 Selling through intermediaries;
 Dual distribution; and
 Reverse channels.
Essentially, a channel might be a retail store, a web site, a mail order catalogue, or direct personal
communications by a letter, email or text message. Here’s a bit of information about each one.
Direct Selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail
location. Peddling is the oldest form of direct selling.
Modern direct selling includes sales made through the party plan, one-on-one demonstrations,
personal contact arrangements as well as internet sales.
A textbook definition is: “The direct personal presentation, demonstration, and sale of products and
services to consumers, usually in their homes or at their jobs. ”
Direct selling is different from direct marketing in that it is about individual sales agents reaching and
dealing directly with clients while direct marketing is about business organizations seeking a
relationship with their customers without going through an agent/consultant or retail outlet.
Direct selling often, but not always, uses multi-level marketing (a salesperson is paid for selling and
for sales made by people they recruit or sponsor) rather than single-level marketing (salesperson is
paid only for the sales they make themselves).
Selling Through Intermediaries
A marketing channel where intermediaries such as wholesalers and retailers are utilized to make a
product available to the customer is called an indirect channel.
The most indirect channel you can use (Producer/manufacturer –> agent –> wholesaler –> retailer –>
consumer) is used when there are many small manufacturers and many small retailers and an agent is
used to help coordinate a large supply of the product.
Dual Distribution
Dual distribution describes a wide variety of marketing arrangements by which the manufacturer or
wholesalers uses more than one channel simultaneously to reach the end user. They may sell directly
to the end users as well as sell to other companies for resale. Using two or more channels to attract
the same target market can sometimes lead to channel conflict.
An example of dual distribution is business format franchising, where the franchisors, license the
operation of some of its units to franchisees while simultaneously owning and operating some units
themselves.
Reverse Channels
If you’ve read about the other three channels, you would have noticed that they have one thing in
common — the flow. Each one flows from producer to intermediary (if there is one) to consumer.
Technology, however, has made another flow possible. This one goes in the reverse direction and
may go — from consumer to intermediary to beneficiary. Think of making money from the resale of
a product or recycling.
There is another distinction between reverse channels and the more traditional ones — the
introduction of a beneficiary. In a reverse flow, you won’t find a producer. You’ll only find a User or
a Beneficiary.
Selecting Marketing Channels
Strategic selection of marketing channels can impact an organization’s brand, profitability, and
overall scale of operations for a given line of products or services.

2. Explain the Function and role of Marketing Intermediaries?

Functions of a Channel
The primary purpose of any channel of distribution is to bridge the gap between the producer of a
product and the user of it, whether the parties are located in the same community or in different
countries thousands of miles apart. The channel of distribution is defined as the most efficient and
effective manner in which to place a product into the hands of the customer. The channel is
composed of different institutions that facilitate the transaction and the physical exchange.
Institutions in channels fall into three categories:
 The producer of the product: a craftsman, manufacturer, farmer, or other extractive industry
producer
 The user of the product:an individual, household, business buyer, institution, or government
 Certain middlemen at the wholesale and/or retail level
A channel performs three important functions. Not all channel members perform the same function.
The functions are:
 Transactional functions: buying, selling, and risk assumption
 Logistical functions: assembly, storage, sorting, and transportation
  Facilitating functions: post-purchase service and maintenance, financing, information
dissemination, and channel coordination or leadership
These functions are necessary for the effective flow of product and title to the customer and payment
back to the producer.
Characteristics of a Channel
Certain characteristics are implied in every channel.
First, although you can eliminate or substitute channel institutions, the functions that these
institutions perform cannot be eliminated. Typically, if a wholesaler or a retailer is removed from the
channel, its function will either shift forward to a retailer or the consumer, or shift backward to a
wholesaler or the manufacturer.
For example, a producer of custom hunting knives might decide to sell through direct mail instead of
retail outlets. The producer absorbs the sorting, storage, and risk functions; the post office absorbs the
transportation function; and the consumer assumes more risk in not being able to touch or try the
product before purchase.
Second, all channel institutional members are part of many channel transactions at any given point in
time. As a result, the complexity of all transactions may be quite overwhelming. Consider how many
different products you purchase in a single year and the vast number of channel mechanisms you use.
Third, the fact that you are able to complete all these transactions to your satisfaction, as well as to
the satisfaction of the other channel members, is due to the routinization benefits provided through
the channel.
Routinization means that the right products are most always found in places where the consumer
expects to find them (such as catalogues or stores), comparisons among products are possible, prices
are marked, and methods of payment are available. Routinization aids the producer as well as the
consumer, because it tells the producer what to make, when to make it, and how many units to make.
Fourth, there are instances when the best channel arrangement is direct, from the producer to the
ultimate user. This is particularly true when available middlemen are incompetent or unavailable, or
the producer feels he or she can perform the tasks better. Similarly, it may be important for the
producer to maintain direct contact with customers so quick and accurate adjustments can be made.
Direct-to-user channels are common in industrial settings, as are door-to-door selling and catalogue
sales. Indirect channels are more typical and result, for the most part, because producers are not able
to perform the tasks provided by middlemen.
Finally, although the notion of a channel of distribution may sound unlikely for a service product
(such as health care or air travel), service marketers also face the problem of delivering their product
in the form and at the place and time demanded by the customer.
Banks have responded by developing bank-by-mail, Automatic Teller Machines (ATMs), and other
distribution systems. The medical community provides emergency medical vehicles, outpatient
clinics, 24-hour clinics, and home-care providers. Even performing arts employ distribution channels.
In all three cases, the industries attempt to meet the special needs of their target markets while
differentiating their product from that of their competition. A channel strategy is evident.

3. Explain the advantages and disadvantages of Online Marketing?

Advantages of Internet Marketing
Low-cost promotion strategy. There’s no doubt that Internet marketing requires no large capital
investment and there is no physical capital to worry about, as everything is online.

Each a global market. Online marketing also lets your business reach customers around the world.
Because your business isn’t limited to a particular geographic location, you can reach a much wider target
audience and have a higher chance of success.

Reach your target market easily. Online marketing can also help you reach your target market
immediately and potential customers will be able to find you with a quick search.

Convenient payment collections. With e-commerce enabled on your website, you’ll also be able to
collect payment easily and conveniently.

24/7 advertising. Your online marketing will be available and visible 24 hours a day, 7 days a week
.
Affiliate marketing. You can earn passive income from affiliate marketing combined with your Internet
marketing.

Disadvantages of Online Marketing

No instant trust. Because online advertising is everywhere, there is no way for potential customers to tell
if the marketing is good or bad. It can take some time for a business marketing online to gain the trust of
users.
Competition. One of the biggest downsides to online marketing is the stiff competition. It can be very
difficult to make your business and information stand out with companies around the world competing.
Skill and knowledge required. Online marketing today also requires a great deal of knowledge and skill
to be successful.
Many businesses find it helpful to consult with or hire an advertising firm or design company to help them
with their marketing strategy.
Because online marketing comes with so much competition, it’s worth a second thought before you jump
in and try to market your own business online.
Internet marketing offers so many benefits when done properly and helps you connect with a broader
customer base.

Advantages of Online Digital Marketing:

The advantages of online digital marketing are given below one by one.
1. Global Reach to Audience:
Online Digital advertising and marketing help organizations and people to reach the audience
globally easily.
As modern technology advances day by day and moved to handy devices,
It is very easy for businesses to reach a global audience in less time, and regardless of geographical
boundaries.
Social media platforms and website allows you to find new markets and trade globally to the world.
2. Increase Engagement:
Using traditional advertising and marketing strategies might not provide the engagement you may get
in online digital advertising and marketing.
It allows you to pay more attention to your buyers and customers.
Contentious engagements help you to stay survive in competitive markets.
Online digital marketing helps you to stay actively participating together with your customer via
different media channels.
3. No Time Barriers:
Times are not any more barriers to marketing with online digital marketing.
Your customers and clients can enter your website or social media profile at any time they want and
can interact with your business.
4. Brand Development:
The main advantage of online digital marketing is the brand development of your business.
It can increase the value of your brand by personalized content and direct campaign from the
perspective of your customers.
A brand is not about its name or products it’s about its voice and the message required to be
established in the market.
A brand receives not only a wider reach but people also look upon the brand’s trusted name.
5. Online Digital Marketing is Cost-Effective:
One of the best advantages of online digital marketing is cost-effectiveness.
Online digital marketing saves a lot of money for the business and companies to reach their targeted
audiences compared to traditional marketing.
online digital marketing can save a lot of money for the business and companies in marketing.
6. Easy to Setup and Manage:
Organizing and setup up the accounts of all social media and online platforms are very easy and free.
It requires an average knowledge to open and organize an account on online platforms.
Anyone can set up and run an online campaign through their mobile phones easily.
7. Online Sale:
Online digital advertising and marketing campaigns can impact the purchases decision of the
customers.
Typically, people share stories and information online with other people, which leads them to
purchase online.
If you have an online website and social media profiles, then your customers are a few clicks from
making an online purchase from you.
Online digital marketing is not like other media people get up and go out to the store for purchasing.
Online digital marketing can be seamless and fast.
8. Online Digital Marketing is Super-Fast:
Another benefit of online digital marketing for businesses to utilize digital marketing is it is super-
fast than traditional marketing.
Instead of traditional marketing online digital marketing is very fast and effective.
With the help of online digital marketing, you can reach your right audience in less time and effort.
In just a few minutes you can create a marketing campaign and publish it and reach your audience.
9. Online Digital Marketing is Measurable:
With the help of digital marketing, you can easily measure how your marketing campaign is going,
and many people have visited your website, and how they are interacting with your business.
You can find it easily from google analytics, and interestingly Google analytics is completely free
and provided by Google.
Therefore, many businesses find it effective and easily measurable to determine their online
advertising budget.
10. Personalized Approaches:
The indispensable benefit of online digital marketing is its ability to find and target the right
audience.
And interact with them and find out what they are looking for.
Figuring out what your audience wants and interacting with them is very important for your brand
reputation and loyalty.
Online digital marketing is more environmentally friendly than traditional marketing.
Whenever your audience visits your website, you can greet them with new offers and their interest.
The more they buy from you, you can refine their profiles and accordingly market to them.
Online digital marketing gives you the platforms to your businesses and companies for individual
marketing, to design their contents and advertising.
That gives feeling to the customers that the brand is addressing their needs.
Social Currency:
Online digital marketing enables you to create engaging content and campaigns utilizing content
marketing ways.
The content materials include photos, videos, and blogs, articles that can help you to achieve social
currency. Being passed from user to user and becoming viral.
12. Online Digital Marketing Accessibility:
Online digital marketing makes the brand accessible to customers from anywhere at any time.
And it increases the chance of the existing customers to leave a review for a good experience and
also place recommendations for everyone as well.
Thus online digital marketing provides a platform for the customers to leave a review and
recommendations for the businesses.
Also, may the customers want to know about the location of the store, and services they offered,
opening and closing hours, availability, brand specialize in, and much other information.
Online digital marketing helps your customers to stay connected to your businesses.
13. Better Customer Relation:
Online Digital Marketing helps you to interact and understand your customer behavior and need and
make a better relationship with them.
An online digital marketer can treat them according to their need and behavior and satisfy them.
It helps a lot of businesses to build better customer relations and promote their brand reputation and
loyalty.
14. Less Risky:
One of the good things about online digital marketing is it doesn’t involve too many risks.
As compared to traditional marketing, Television, Newspaper Advertisements, Billboards, and many
others, online digital marketing and social media marketing are much cheaper.
With online digital marketing, you have to take a lot of risks.
Disadvantages of Online Digital Marketing:
Before you begin working on online digital marketing, it’s very important to about its limitations.
Otherwise, you may regret it afterward,
So, before starting online digital marketing there are some limitations and challenges in online digital
marketing you should aware of.
1. Negative Feedback and Review:
In online digital marketing, any negative feedback, review, or criticism about your brand can be
visible throughout review websites and social media platforms.
If your customer had a bad experience with your business and may decide to give a negative review
about your business, it can create a bad image of your business brand.
Single negative feedback, comment, and review can decimate the reputations of your business brand.
2. Global Competition:
As with the help of online digital marketing you can reach your audience globally, you also come in
against global competition.
It means that you are going against a large number of competitors who are also targeting the same
audience.
In fact, global reaching to the audience comes up with the global competition also.
It can be a big challenge for the business to come up against a large number of competitors and grab
the attention of the customers.
3. Different skills and Training:
For online digital marketing, you need proper skills and training in online digital marketing tools and
strategies.
You have to make sure that your employees and staff have the right knowledge and experience to
carry out online digital marketing with success.
Online digital marketing requires plenty of skills and knowledge about different aspects of digital
marketing to be successful.
Many businesses and companies consult digital marketing companies to help them in their online
marketing strategies.
Because online digital marketing comes up with a lot of different strategies, tools, and competitions.
It’s not an easy task, it requires a lot of computer and social media knowledge and managing skills.
Web Development, SEO (Search engine Optimization), Photography, Video Editing, good writing
skills, and many more are required for effective online digital marketing.
Also, the marketer should handle many social media platforms, such as LinkedIn, Twitter, Facebook,
and Pinterest to properly promote your business products and services.
4. Reliance on technology:
Online digital marketing is completely based on modern technological devices, gadgets, and internet
technology.
Without the usage of technology and the internet, you cannot do online digital marketing.
Internet is not available, website downtime, slow page loading speed, and rough site design can be
the reasons for the ineffectiveness of marketing.
This can lead your customers to switch to other brands,
Therefore, to avoid this, you have to test your website and all the component of online digital
marketing.
5. Time Consuming:
One of the biggest disadvantages of online digital marketing is its time-consuming nature.
Unorganized tactics and improper strategies might consume a lot of time.
This will eventually lead to negative outcomes, therefore before coming to online digital marketing is
to focus on the proper strategies and proper planning.
6. Security and Privacy Issues:
Security and privacy is the main requirement are the main requirements for the brands and businesses
executed by the digital marketer.
Customer data security and privacy are some of the major issues in online digital marketing.
That’s why customers feel hesitant to join new online and social media platforms.
That’s why it is very difficult for businesses and companies to attract customers to their businesses.
7. Online Digital Marketing will not be taken Seriously:
If the online digital marketing campaigns are not done professionally then they will not be taken
seriously by their targeted audience.
Businesses, companies, and digital marketers should focus on bringing the online digital campaign to
the professional levels.
The first impression is the last, whether you are using traditional marketing or online digital
marketing.
If your campaign is not looking professional, then it will be not taken seriously by your targeted
customers.
Many businesses and companies do not focus on the professional level of the marketing campaigns
and they lost their customers.
8. Online Digital Marketing May Not Be Acceptable for Your Products:
Some businesses and companies and services providers have targeted audiences that may not be
reached by the online digital platforms and internet.
Some products and services targeted the wrong audience, only a few are techy and may not know
how to use the technology or access it.
In that case, you will be only wasting your time and assets in digital marketing.
Online digital marketing is completely based on the strategies and planning of the business, you have
first to identify your business types and accordingly make the strategy and planning to be executed
and make digital marketing effective for themselves.
9. Maintenance Cost:
Online digital marketing reduces many costs, but it can increase the cost of buying tools and
maintenance costs.
You have to hire techy professionals and developers to manage your online platforms.
And also you have to buy many inline tools for digital marketing which can cost a lot of money.
When combining all of the costs of the online digital marketing components then it becomes a large
amount of expense you invest for online digital marketing.
10. It Can Take Control Out of Your Hand:
Online digital marketing can be a bad thing when someone leaves negative feedback and reviews
about your business and it goes viral.
There would be no way to stop the backlash, and it can ruin your entire business reputation.
4. Define Retailing and Explain the significance of Retailing?
American Marketing Association – outlined “Retailing consists of activities involved in selling
directly to ultimate consumer for personal or non-business use. It embraces the direct to customers
sales activities of the producer, whether through his own store, by house to house counseling or mail
order business”.
As per the definition any one i.e., manufacturer or middlemen or retailer selling directly to the final
customer through any kind of sales outlet is doing the business of retailing.
Philip Kotler:
The marketing guru has said all activities in selling goods or service directly to final consumer for
personal or non-business use is retailing or retail marketing.

Retail marketing primarily undertakes following activities:

1. Identify the customer and understand his needs
2. Store the needed merchandise or goods.
3. Attractive presentation of goods for easy identification and convenience.
4. Provide necessary comfort in purchase i.e., location, price, service etc.,

Characteristics or Features of Retail Marketing:

1. Sale to Ultimate Customer:

Goods or service in a retail transaction are sold to final customer for consumption. There is no further
re-sale of the product or service. Goods and service sold for consumption, may be for domestic or
household use or industrial use are classified as retail transaction.
Even sale of spare parts, equipment, machineries etc., to industrial house or business is organised 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:
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. Organised Sale:
Retail marketing is organised business of selling to the customer by application of principles and
functions of marketing. Un-organised retail like street vendor a Paanwala may not be typically
classified under retail marketing.
6. Marketing not Just Sale:
Organised 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
Globalisation 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 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 customers wants, it ensures their delight. It provides more
satisfaction than what is expected through its retail network. Retail marketing collects information
regarding type of product decide by them, Communicates such information to manufacturer. Product
is designed to match the changing taste of customer. Retailer stores and presents such product to the
people in size, style, price and other services through his store that increases satisfaction levels of
people.

5. Importance of Retail Marketing?

Products are created for consumption and satisfaction of the people. They should the reach people for
whom they are meant for. It is the retailer who assumes the role of taking the goods to the people and
delivers them to their convenience and comfort, Importance retailer is due to following role he
assumes in the sale of goods.
1. Link and Communication between Manufacturer Marketing and Consumer:
A retailer functions between the final customer and manufacturer. He not only helps in selling and
buying activity, but collects important information about the people, i.e., likes and dislikes of the
product and important information regarding market. This will help manufacturer to design and
deliver a product to the expectation of people. This will increase sale and profits and ensure higher
levels of satisfaction to the consumer.
2. Benefits of a Specialist or Expert in Distribution Network:
Retailer is an expert and experienced person in distribution network. He understands the pulse of
people, there likes and dislikes due to his proximity and contact with the people. He stores those
products and services that people want and delivers them in size and style which the people expect
Dye to his expertise and knowledge about the product and market he helps the customers to make
right choice in their purchase.
3. Creates Utility and Value:
Retailer creates time, place and from utility in the distribution of goods and increases value of goods.
Goods that are manufactured in bulk and large quantity are purchased in large scale by retailer and he
breaks the bulk, delivers them in small packs and quantity that is required by the consumer. In this
process he creates form utility. Goods are manufactured in one corner of country and they care
consumed in different parts of the word.
Retailer buys goods from different producers and makes them available locally to his customer and
there by creates place utility. There is time gap in production and consumption. A retailer buys in
advance from middlemen, stores them and sells through his shelf, whenever it is demanded. Creating
these three utilities he increases value of goods and helps. The role of retailer ensures regular and
continues production and consumption.
4. Comfort and Facility of Shopping:
Modern retail houses like Shopping Malls, Chain Stores and Multiplexes make shopping a pleasant
experience. The environment and ambience in these Super Bazaars provide variety of facilities like
kids play, entertainment, parking, lifts, trolleys to collect the goods, coffee shop etc. Retailing
through internet, mobile, mail order will ensure delivery of goods to the doors of customer.
5. Service to Manufactures and Middlemen:
A retailer provides verities of services to manufacturers and middlemen by sharing customers
information i.e. their likes and dislikes about the product.
6. Provision of Storage and Warehousing:
Buying in advances and storing goods in his premise minimizes problem of warehousing to
manufacturer Retailer undertakes buying in advance and selling out that product. Further display and
promotion of the product will increase demand and sale of product.
7. Service to Customer:
Retailer provides variety of services to customers:
i. Locates retail stores at a place that is convenient to maximum people, near to his locality or in the
heart of city.
ii. Offer’s variety of goods to choose from.
iii. Makes attractive presentation and placement of product for easy identification and selection.
iv. Offers monetary incentives like reasonable price, discount, offers etc.
v. Provides services like home delivery, quality assurance, offer of sale service etc.
vi. Gives knowledge and information about the product to utility and there by helps him selecting
right kind of product.
8. Increase in Productivity:
Retailer ensures productivity and efficiency in distribution of goods. He shares market information
with manufactures and ensures production of those goods that have demand. His policies of
promotion and placement create demand for product and ensure fast turnover through quick sale.
Proper logistics like transportation, warehousing will reduce damage and loss of value to the
commodity. These initiatives will minimise wastage, cut down cost of operation and there by ensure
efficiency and productivity.
9. Increase in Standard of Living:
Standard of living is measured by consumption of comforts and luxury goods. Retailer ensures a
higher standard of living by making available variety of goods and service to the people at reasonable
price. Facility, of credit and shopping within reach of common man will increase standard of living.
10. Increase in Employment Opportunities:
It is estimated that retail industry in India provides around 10% of employment. Over populous
country like India which has a high percentage of Un-employment is benefited by growing number
and size of retail business. Apart from this retail provides and creates job opportunities for women, as
women can take better care of customer.
With growing number of educated women who aspire to be economically independent, retail
provides a better job opportunity. Retail also can provide part time job opportunities for those who
want to work in shifts and also pursue their study or take care of some other home assignment.
11. Increase in GDP:
Organised and developed retail system creates better demand for goods and services. It provides
convenient outlet for sales. Increased sales necessitate more production that in turn increases
employment of more resources in economic activities. These factors result in a higher GDP growth
that is essential for economic development of a nation.
12. Retail as a Separate Branch of Study:
Growing demand for organised retail and revolutionary changes in the retail trade has resulted in
retail management and market as a separate branch of study. Universities are offering courses in
retail business. These further creating new opportunities in retail education and development.

6. What is retailing? Write about the different formats of retail stores.

Mom-and-pop Stores
These are small family-owned businesses, which sell a small collection of goods to the customers.
They are individually run and cater to small sections of the society. These stores are known for
their high standards of customer service.

Department stores

Department stores are general merchandisers. They offer to the customers mid- to high-quality
products. Though they sell general goods, some department stores sell only a select line of
products. Examples in India would include stores like "Westside" and
"Lifestyle"--popular department stores.

Category Killers

Specialty stores are called category killers. Category killers are specialized in their fields and offer
one category of products. Most popular examples of category killers include electronic stores like
Best Buy and sports accessories stores like Sports Authority.

Malls

One of the most popular and most visited retail formats in India is the mall. These are the largest
retail format in India. Malls provide everything that a person wants to buy, all under one roof.
From clothes and accessories to food or cinemas, malls provide all of this, and more. Examples
include Spencers Plaza in Chennai, India, or the Forum Mall in Bangalore.

Discount Stores

Discount stores are those that offer their products at a discount, that is, at a lesser rate than the
maximum retail price. This is mainly done when there is additional stock left over towards the end
of any season. Discount stores sell their goods at a reduced rate with an aim of drawing bargain
shoppers.

Supermarkets

One of the other popular retail formats in India is the supermarkets. A supermarket is a grocery
store that sells food and household goods. They are large, most often self-service and offer a huge
variety of products. People head to supermarkets when they need to stock up on groceries and other
items. They provide products for reasonable prices, and of mid to high quality.

Street vendors

Street vendors, or hawkers who sell goods on the streets, are quite popular in India. Through
shouting out their wares, they draw the attention of customers. Street vendors are found in almost
every city in India, and the business capital of Mumbai has a number of shopping areas comprised
solely of street vendors. These hawkers sell not just clothes and accessories, but also local food.

Hypermarkets

Similar to supermarkets, hypermarkets in India are a combination of supermarket and department

store. These are large retailers that provide all kinds of groceries and general goods. Saravana
Stores in Chennai, Big Bazaar and Reliance Fresh are hypermarkets that draw enormous crowds.
Kiosks

Kiosks are box-like shops, which sell small and inexpensive items like cigarettes, toffees,
newspapers and magazines, water packets and sometimes, tea and coffee. These are most
commonly found on every street in a city, and cater primarily to local residents.

9, Different types of retail stores

Today, consumer can shop for goods and services in a wide variety of stores. The important types of
retail stores are:

1. Speciality store
2. Department store
3. Super market
4. Convenience store
5. Discount store
6. Off-price retailer
7. Superstore
8. Hypermarket; and
9. Catalogue showroom.
1. Speciality store
Speciality stores carry very limited product lines with deep assortment. They offer a wide choice in
terms of models, size, style, colour and other important attributes in the assortment carried.

2. Department store
A department store is a large retail outlet that handles a wide variety of lines of product. It has a wide
assortment in each line and is organized into separate departments for purposes of buying, promotion,
services and control. It is sometimes called mass merchandising departmental store e.g., military
canteens.
3. Super markets
A supermarket is designed to serve the total needs for food, laundry and household maintenance
products. It is relatively large in size. Its operation is low cost, low margin, high volume and self
service in nature.

4. Convenience store
A convenience store is located near residential area. It is relatively small. It is kept open for long
hours. A limited lines of convenience products are offered for sale. The prices charged are slightly
higher.

5. Discount store
A discount store sells standard merchandise at lower prices. Higher volumes of sales compensate
lower margins and increase the overall profitability. Discount retailing has moved into speciality
merchandise stores such as sport goods stores, electronics stores and book shops.

6. Off price retailer

An off-price retailer sells left over goods, over runs, and irregulars obtained at reduced prices from
manufactures or other retailers. Off price retailers may be of three types.

1. Factory outlets
These are owned and operated by manufacturers. They carry the manufacturer’s surplus,
discontinued or irregular goods. e.g., dinner ware, shoes, upscale apparel, etc.
2. Independent off price retailer
Independent off-price retailers are owned and run by entrepreneurs or by divisions of larger retail
corporations.

3. Warehouse clubs
These are otherwise known as wholesale clubs. They sell a limited selection of brand-name grocery
items, appliances, clothing etc.

4. Super store
Super stores meet consumers’ total needs for routinely purchased food and non food items.

5. Hyper Markets
Hyper markets originated in France. Hyper markets combine speciality stores, limited line stores in a
single level store. Product assortment goes beyond routinely purchased goods. It includes furniture,
large and small appliances, clothing items, etc.

Bulk display and minimum handling by store personnel are the other features present in the hyper
markets. Discount is offered to customers who are willing to carry heavy appliances and furniture out
of the store.

9. Catalogue showroom
Customers order goods from a catalogue in the showroom. Then, they pick these goods up at a
merchandise pickup area in the store.

UNIT – 5

1, What is Marketing Strategy and Explain the Business Strategic Planning and
Explain its objectives?
What Is a Marketing Strategy
A marketing strategy refers to a business's overall game plan for reaching prospective consumers and
turning them into customers of their products or services. A marketing strategy contains the
company’s value proposition, key brand messaging, data on target customer demographics, and other
high-level elements. A thorough marketing strategy covers “the four Ps” " of marketing—product,
price, place, and promotion.

Benefits of a Marketing Strategy

The ultimate goal of a marketing strategy is to achieve and communicate a sustainable competitive
advantage over rival companies by understanding the needs and wants of its consumers. Whether it's
a print ad design, mass customization, or a social media campaign, a marketing asset can be judged
based on how effectively it communicates a company's core value proposition.

4 Ps in a marketing strategy
The 4 P's" are product, price, promotion, and place. These are the key factors that are involved in the
marketing of a good or service. The 4 P's can be used when planning a new business venture,
evaluating an existing offer, or trying to optimize sales with a target audience. It can also be used to
test a current marketing strategy on a new audience.
Difference between marketing strategy the same as a marketing plan
The terms marketing plan and marketing strategy are often used interchangeably because a marketing
plan is developed based on an overarching strategic framework. In some cases, the strategy and the
plan may be incorporated into one document, particularly for smaller companies that may only run
one or two major campaigns in a year. The plan outlines marketing activities on a monthly, quarterly,
or annual basis while the marketing strategy outlines the overall value proposition..

“Marketing strategy is the basic approach that the business unit will use to attain its goals and which
comprises of elaborate decisions (strategies) on largest markets, market positioning and mix and
marketing expenditure allocation. Moreover, the marketer should take care of the other two strategic
aspects, viz., expected environment and competitive conditions while determining the marketing
strategy”. — Prof. Philip Kotler

Once deciding over the game plan, the next task of the marketer is to develop or elaborate each
element of the marketing strategy. The marketer’s first task is to choose a potential market and
identify its needs and patterns, after which it formulates strategies for each controllable (product,
place, price and promotion).

And, it is the management which manipulates the controllable in terms of the non-controllable in
such a way which can meet both the target market’s needs and wants and helps to attain the
company’s overall objectives. Now to perform these tasks managements streamlined product market,
distribution, promotion and pricing strategies into an overall marketing strategy.

The marketing department (or, the marketer) while establishing and implementing an overall
marketing strategy mainly take care in identifying opportunities to serve the target markets in such a
way which frustrates other competitors efforts to take the business away on a profitable basis.

Finally, the need and importance of an overall marketing strategy varies, with the competitive setting.
A small change with respect to any controllable or non-controllable calls for the re-evaluation of the
entire marketing strategy.

Once deciding over the game plan, the next task of the marketer is to develop or elaborate each
element of the marketing strategy. The marketer’s first task is to choose a potential market and
identify its needs and patterns, after which it formulates strategies for each controllable (product,
place, price and promotion).

And, it is the management which manipulates the controllable in terms of the non-controllable in
such a way which can meet both the target market’s needs and wants and helps to attain the
company’s overall objectives. Now to perform these tasks managements streamlined product market,
distribution, promotion and pricing strategies into an overall marketing strategy.
The marketing department (or, the marketer) while establishing and implementing an overall
marketing strategy mainly take care in identifying opportunities to serve the target markets in such a
way which frustrates (Thwarts) other competitors efforts to take the business away on a profitable
basis.

Finally, the need and importance of an overall marketing strategy varies, with the competitive setting.
A small change with respect to any controllable or non-controllable calls for the re-evaluation of the
entire marketing strategy.

The company should think of the following strategies for marketing their goods and services in
the growth stage:
i. Company should strive on improving the quality of the product.
ii. Add new attributes to the product and improve the presentation styles.
iii. Company should add new models and flanker products.
iv. Identify new market segments.
v. Identify new marketing channels and enhance distribution coverage.
vi. Company must pursue the product-performance advertising and give away the strategy of product
awareness advertising strategy.
vii. Prices of the goods and services to be kept low to attract the price-sensitive buyers.

These strategies would help the company to strengthen its competitive position. However, the
company may face the trade off between high market share and the high current profit. It would be a
wise business decision to look for the higher market share as the company can make up its current
profit in the stage of maturity. Many companies usually abandon weaker products and look for
diversification of the activities and functions for better profits.
The company should carefully determine the sales volume and fix targets. The sales volume may be
computed multiplying the number of user with usage rate per user. The marketing strategy should
also include promotional schemes for converting the non-users into the user stream and increase the
usage rate of the existing customers. The most challenging strategy that any company should think of
is making the competitors out or winning their customers.

The product differentiation strategy may be built in order to improve the quality of the existing
products by adding new features and attributes to it. The company should also aim at the style
improvement by increasing the aesthetic appeals of the product. The advantage of the style strategy
would reflect in conferring a unique market identity and help in winning a loyal following.

However, a change in style usually requires discounting the old style and company may averse risk in
losing customers who liked the old style. The company needs to develop strategies for all the
variables of marketing-mix in favour of customers and channels. A company faces a number of tasks
and decisions to handle the market at the decline stage. Hence the company must consider the
strategy building as a prime task and consider the following issues that help in effective strategy
formulation.

2, Explain the importance of SWOT Analysis?

SWOT analysis (strengths, weaknesses, opportunities and threats analysis)

SWOT analysis is a framework for identifying and analyzing an organization's strengths, weaknesses,
opportunities and threats -- which is what makes up the SWOT acronym. The primary goal of SWOT
analysis is to aid organizations in increasing awareness of the factors in making a business decision.
SWOT accomplishes this by analyzing the internal and external factors that can impact the viability
of a decision.

SWOT analysis is most commonly used by business entities, but it is also used by nonprofit
organizations and, to a lesser degree, individuals for personal assessment. Additionally, it can be used
to assess initiatives, products or projects. As an example, CIO’s could use SWOT to help create a
strategic planning template.

The framework is credited to Albert Humphrey, who tested the approach in the 1960s and 1970s at
the Stanford Research Institute. Developed for business and based on data from Fortune 500
companies, the SWOT analysis has been adopted by organizations of all types as an aid to making
decisions.

When and why you should do a SWOT analysis

SWOT analysis is often used either at the start of, or as part of, a strategic planning exercise. The
framework is considered a powerful support for decision-making because it enables an organization
to uncover opportunities for success that were previously unarticulated and highlights threats before
they become overly burdensome.

As an example, this exercise can identify a market niche in which a business has a competitive
advantage. It can also help individuals plot career success by pinpointing a path that maximizes their
strengths while alerting them to threats that can thwart achievement.

SWOT ANALYSIS
Elements of a SWOT analysis
As its name states, a SWOT analysis examines four elements:
 Strengths: Internal attributes and resources that support a successful outcome.
 Weaknesses: Internal attributes and resources that work against a successful outcome.
 Opportunities: External factors that the entity can capitalize on or use to its advantage.
 Threats: External factors that could jeopardize the entity's success.
A SWOT matrix is often used to organize the items identified under each of these four elements. A
SWOT matrix is usually a square divided into four quadrants, with each quadrant representing one of
the specific elements. Decision-makers identify and list specific strengths in the first quadrant,
weaknesses in the next, then opportunities and, lastly, threats.
Entities undertaking a SWOT analysis can opt to use various SWOT analysis templates; however,
these templates are generally variations of the standard four-quadrant SWOT matrix.
How to do a SWOT analysis
A SWOT analysis generally requires decision-makers to first specify the objective they hope to
achieve for the business, organization, initiative or individual.
From there, the decision-makers list the strengths and weaknesses as well as opportunities and
threats.
Various tools exist to guide decision-makers through the process, often using a series of questions
under each of the four elements. For example, decision-makers may be guided through questions
such as "What do you do better than anyone else?" and "What advantages do you have?" to identify
strengths; they may be asked "Where do you need improvement?" to identify weaknesses. Similarly,
they'd run through questions such as "What market trends could increase sales?" and "Where do your
competitors have market advantages?" to identify opportunities and threats.
Example of a SWOT analysis
The end result of a SWOT analysis should be a chart or list of a subject's characteristics. The
following is an example of the analysis of an imaginary retail employee:
Strengths: good communication skills, on time for shifts, handles customers well, gets along well
with all departments, physical strength, good availability.
Weaknesses: takes lengthy smoke breaks, low technical skill, very prone to spending time chatting.
Opportunities: storefront worker, greeting customers and assisting them to find products, helping
keep customers satisfied, assisting customers post-purchase with items and ensuring buying
confidence, stocking shelves.
Threats: occasionally missing time during peak business due to breaks, sometimes too much time
spent per customer post-sale, too much time in interdepartmental chat.
Using a SWOT analysis
A SWOT analysis should be used to help an entity, whether it is an organization or an individual, to
gain insight into its current and future position in the marketplace or against a stated goal.
The idea is that because entities can see competitive advantages, positive prospects as well as
existing and potential problems, they can develop plans to capitalize on positives and address
deficiencies.
In other words, once the SWOT factors are identified, decision-makers should be better able to
ascertain if an initiative, project or product is worth pursuing and what is needed to make it
successful. As such, the analysis aims to help an organization match its resources to the competitive
operational environment.
SWOT analysis pros and cons
SWOT analysis can help the decision-making process by creating a visual representation of the
various factors that are most likely to impact whether the business, project, initiative or individual
can successfully achieve an objective.
Although that snapshot is important for understanding the multiple dynamics that impact success, a
SWOT analysis does have limits. The analysis may not include all relevant factors for all four
elements, thereby giving a skewed perspective. In addition, because it only captures factors at a
particular point in time and doesn't allow for how those factors could change over time, the insight
SWOT offers can have a limited shelf life.

3. Explain the advantages and disadvantages of SWOT Analysis?

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.

By definition, Strengths (S) and Weaknesses (W) are considered to be internal factors over which the
companies have some measure of control. Also, by definition, Opportunities (O) and Threats (T)
are considered to be external factors over which you have essentially no control.

SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of
the business and its environment. Its main purrpose is to identify the strategies that will create a firm
specific business model that will best align an organization’s resources and capabilities to the
requirements of the environment in which the firm operates.
In other words, it is the foundation for evaluating the internal potential and limitations and the
probable/likely opportunities and threats from the external environment. It views all positive and
negative factors inside and outside the firm that affect the success. A consistent study of the
environment in which the firm operates helps in forecasting/predicting the changing trends and also
helps in including them in the decision-making process of the organization.

An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) is given below-

1. Strengths - Strengths are the qualities that enable us to accomplish the organization’s mission.
These are the basis on which continued success can be made and continued/sustained.

Strengths can be either tangible or intangible. These are what you are well-versed in or what you
have expertise in, the traits and qualities your employees possess (individually and as a team)
and the distinct features that give your organization its consistency.

Strengths are the beneficial aspects of the organization or the capabilities of an organization,
which includes human competencies, process capabilities, financial resources, products and
services, customer goodwill and brand loyalty. Examples of organizational strengths are huge
financial resources, broad product line, no debt, committed employees, etc.

2. Weaknesses - Weaknesses are the qualities that prevent us from accomplishing our mission and
achieving our full potential. These weaknesses deteriorate influences on the organizational
success and growth. Weaknesses are the factors which do not meet the standards we feel they
should meet.

Weaknesses in an organization may be depreciating machinery, insufficient research and

development facilities, narrow product range, poor decision-making, etc. Weaknesses are
controllable. They must be minimized and eliminated. For instance - to overcome obsolete
machinery, new machinery can be purchased. Other examples of organizational weaknesses are
huge debts, high employee turnover, complex decision making process, narrow product range,
large wastage of raw materials, etc.

3. Opportunities - Opportunities are presented by the environment within which our organization
operates. These arise when an organization can take benefit of conditions in its environment to
plan and execute strategies that enable it to become more profitable. Organizations can gain
competitive advantage by making use of opportunities.

Organization should be careful and recognize the opportunities and grasp them whenever they
arise. Selecting the targets that will best serve the clients while getting desired results is a
difficult task. Opportunities may arise from market, competition, industry/government and
technology. Increasing demand for telecommunications accompanied by deregulation is a great
opportunity for new firms to enter telecom sector and compete with existing firms for revenue.

4. Threats - Threats arise when conditions in external environment jeopardize the reliability and
profitability of the organization’s business. They compound the vulnerability when they relate to
the weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can
be at stake. Examples of threats are - unrest among employees; ever changing technology;
increasing competition leading to excess capacity, price wars and reducing industry profits; etc.

Advantages of SWOT Analysis

SWOT Analysis is instrumental in strategy formulation and selection. It is a strong tool, but it
involves a great subjective element. It is best when used as a guide, and not as a prescription.
Successful businesses build on their strengths, correct their weakness and protect against internal
weaknesses and external threats. They also keep a watch on their overall business environment and
recognize and exploit new opportunities faster than its competitors.

SWOT Analysis helps in strategic planning in following manner-

a. It is a source of information for strategic planning.

b. Builds organization’s strengths.
c. Reverse its weaknesses.
d. Maximize its response to opportunities.
e. Overcome organization’s threats.
f. It helps in identifying core competencies of the firm.
g. It helps in setting of objectives for strategic planning.
h. It helps in knowing past, present and future so that by using past and current data, future plans
can be chalked out.

SWOT Analysis provide information that helps in synchronizing the firm’s resources and capabilities
with the competitive environment in which the firm operates.

SWOT ANALYSIS FRAMEWORK

Limitations of SWOT Analysis

SWOT Analysis has limitations. It may cause organizations to view circumstances as very simple
because of which the organizations might overlook certain key strategic contact which may occur.
Moreover, categorizing aspects as strengths, weaknesses, opportunities and threats might be very
subjective as there is great degree of uncertainty in market. SWOT Analysis does stress upon the
significance of these four aspects, but it does not tell how an organization can identify these aspects
for itself.

There are certain limitations of SWOT Analysis which are not in control of management. These
include-

a. Price increase;
b. Inputs/raw materials;
c. Government legislation;
d. Economic environment;
 e. Searching a new market for the product which is not having overseas market due to import
restrictions; etc.

Internal limitations may include-

a. Insufficient research and development facilities;

b. Faulty products due to poor quality control;
c. Poor industrial relations;
d. Lack of skilled and efficient labour; etc

4, Explain the nature and contents of a marketing Plan? Explain the importance
of marketing Plan
What Is a Marketing Plan?
Marketing is a process of developing and implementing plans to identify and satisfy customer needs
and wants with the objective of customer satisfaction and profits making. The main elements of
marketing planning are - market research to identify and anticipate customer needs and wants; and
planning of appropriate marketing mix to meet market requirements/demands.

Definition of Marketing Planning

"Marketing Planning is the process of developing marketing plan incorporating overall marketing
objectives, strategies, and programs of actions designed to achieve these objectives."

Marketing Planning involves setting objectives and targets, and communicating these targets to
people responsible to achieve them. It also involves careful examination of all strategic issues,
including the business environment, the market itself, the corporate mission statement, competitors,
and organisational capabilities.

"Marketing Plan is a comprehensive blue print which outlines an organisation's overall marketing
efforts."

Marketing Plan is a written document that describes an organisation's advertising and marketing
efforts for a coming period of time. It includes description of target markets, marketing situation,
organisation position, competition, and description of marketing mix the organisation intend to use to
reach their marketing goals.

A marketing plan is an operational document that outlines an advertising strategy that an organization
will implement to generate leads and reach its target market. A marketing plan details the outreach
and PR campaigns to be undertaken over a period, including how the company will measure the
effect of these initiatives. The functions and components of a marketing plan include the following:

 Market research to support pricing decisions and new market entries

 Tailored messaging that targets certain demographics and geographic areas
 Platform selection for product and service promotion: digital, radio, Internet, trade
magazines, and the mix of those platforms for each campaign
  Metrics that measure the results of marketing efforts and their reporting timelines

A marketing plan is based on a company’s overall marketing strategy.

Definition of Marketing Planning:

The American Marketing Association has defined the marketing planning as – “Marketing planning
is the work of setting up objectives for marketing activity and of determining and scheduling the
steps necessary to achieve such objectives”. Thus, under marketing planning first of all marketing
objectives are set-up and then marketing activities like – purchase-sale, product planning and
development, advertisement, sales-promotion and scheduled policies and programme to carry out
these activities are prepared.
Types of Marketing Planning:
(i) Long-Term Marketing Planning:
It refers to that marketing planning which is done for more than one year. It involves development of
basic objectives and strategy to guide future company efforts. These long-run plans provide the
framework within which other short-term plans are prepared and implemented. These plans are
generally done by the top management. It involves the selecting of marketing research programme,
selection of channel of distribution, selection of price policy, selection of media advertising and sales
promotion etc.
(ii) Short-Term Marketing Planning:
Planning made for less than one year for marketing activities refers to short-term marketing planning.
Generally, these are annual or bi-annual plans of the company. In fact, these short-run plans are not
possible in absence of the long run plan. These plans are made to solve problems of recurring nature.
Short-term marketing planning is the responsibility of medium level of management.
Factors Affecting Marketing Planning:
There are number of factors that affect the marketing planning of an organization.
These factors can be grouped under three categories as:
(i) Internal Factors:
Internal factors are those factors which arise in the organization itself. It includes size of the
company, risk bearing capacity of the company; financial resources of the company; organizational
structure; availability of experienced marketing personals and channel of distribution etc.
(ii) Industry Factors:
Every firm is a part of total industry. Any change in factors related to industry also affects the
organization. Various industrial factors are technological changes in industry; severity of competition
in industry and relationship between organization and industry etc.; which affect marketing planning
of an organisation.
(iii) Natural Factors:
Certain natural factors like population and its regional distribution; National income and regional
distribution; regional development in the country; State of national economy; industrial policy in the
country and trade policy of country etc. also effect the marketing planning of an organization.
Difficulties in Marketing Planning:
Marketing planning is concerned with the identification of resources available and allocating these
resources to achieve organizational objectives. This task of identification and allocation of resources
is not the easy task. Some thinkers state that it is waste of time, energy and money. They argue that as
planning is concerned with uncertainty, then how planning can be cent per cent correct. The idea
behind this thinking is perhaps the difficulties which arouse during marketing planning.
Some of main difficulties of marketing planning are:
1. Diversity of Alternatives:
One of the greatest difficulty in marketing planning is the availability of number of alternatives to
solve a problem. Every alternative has its own merits and demerits. Moreover, every alternative gives
different results. It is very hard to select that alternative which is best for the organization. In this
way, diversity of alternatives present difficulties in marketing planning.
2. Rapid Change in Cost:
The cost of producing a product is not fixed; it changes as the time changes. It makes frequent change
in price of product, which has direct effect on the demand for the product. It in turn has influence on
the objective of marketing planning. Therefore, frequent and rapid changes in cost is also a hurdle in
the way of marketing planning.
3. Time Consuming:
Another handle in the way of marketing planning is that, it is time consuming process. Time
managers always complain about lack of time, while preparing scientific plan for the organization
which requires time cum efforts to analyse and evaluate available time.
4. Difficulties of Marketing Research:
Every marketing planning is based on marketing research about consumer behaviour which is very
uncertain especially in India. In fact, in certain cases it is impossible to forecast. In absence of
accurate forecasting, marketing research become difficult and unreliable, this in turn makes
marketing planning a useless effort.
5. Inadequate Management Ability:
Marketing planning involves the great ability and intelligence of marketing manager and staff.
Unfortunately in India, there is lack of trained marketing professionals. Latest study says only 21% of
MBA are useful. Thus, lack of inadequate managerial ability is another hurdle in way of marketing
planning.
6. Expensive:
Another difficulty in marketing planning is that it involves huge expenditure because it involves
extensive marketing research. It needs lot of time, energy and money and thus, increases the cost of
marketing planning. Most of the companies are not in a position to bear these huge expenses and
hence, do not go for marketing planning.
7. Frequent Changes in Government Policy:
Frequent change in the government policies is another difficulty in a way of effective marketing
planning. In India, especially frequent changes are made by government and its policies. Sometimes,
it encourages export at other time restrictions are imposed an export. Rate of taxation changes
frequently which affect the price level, which in turn influence the demand and supply position of an
organization.
Marketing Planning System:
Different companies adopt different organizational structure which suits them. The marketing
planning, thus in different organizational structures are different.
In broad category these structures can be:
a. Product oriented organization.
b. Customer oriented organization.
c. Market oriented organization.
d. Function oriented organization.
a. Product Oriented Organization:
Under product oriented marketing organization, marketing plans for each product is made separately.
In these organizations plan for each product is set separately and then detail programme for achieving
these targets are made. In such planning amount to be spent on advertising, sales promotion, product
development, market research etc. are fixed for each product. In same way decisions are taken
separately for each product regarding its distribution and marketing etc.
b. Customer Oriented Organization:
This type of organization is based on the different characteristics of customers. Separate marketing
plans are prepared for each class of customers. The objectives and goals of the organization are set
keeping in view the characteristics of each class of customers and decisions regarding advertising,
sales promotion, pricing, distribution etc. are made accordingly.
c. Market Oriented Organization:
These are those organizations in which different target for different regions are fixed and
programmes are prepared to achieve these objectives or targets. In this type of organization decision
regarding advertising, sales promotion, distribution channels and pricing etc. are made keeping in
view the nature and intensity of competition in each region.
d. Function Oriented Organization:
Under this type of organization marketing planning is based on the functions. In this organization
whole marketing department is divided into different functions or activities like – marketing research,
product planning and development, advertising and sales promotion; and physical distribution etc.
There is separate head in each department, who makes plan for each department.
5, Goal Formation, Strategy formulation & Program Formulation.

Definition of Goals:

Goals have been defined by organisation theorists like V.H. Vroom in 1960 and A. Etzioni in 1964 as

“desired future state of affairs”. Generally speaking, goals are the objectives, aims or purposes which

are to be achieved by an organisation over varying periods of time. Goals are the result of planning

which is related to future as described by Vroom and Etzioni.

Planning is required both for choosing the goals and attaining the goals.

The words aim, goal, mission, objective or purposes are used interchangeably in general practice.

According to Bertram M. Gross Mission is a general term which denotes the fundamental reason for

the organization’s existence.

It incorporates idealism relating to objectives within its frame. The idealism which forms part of the

mission presents a very difficult or an impossible aim. For example, the labour unions have the

mission of organizing the unorganized or a political party has the mission of providing the

government free from all types of exploitation. Mission, therefore, reflects the long term commitment

of the organisation.

Mission is generally associated with non-business organisation. A government may announce its

mission in terms of eradicating poverty, unemployment, economic and social inequality etc. Purpose

according to Gross is an all inclusive term which refers to commitment of desired future.
An Objective may be defined as a specific category of purpose for which the organisation is

committed. The objective may be production of goods or services, efficiency etc.

A Goal is even more specific and fine than the objective. An increase in production may be the

objective but when its objective is expressed in relation to particular norms or standard such as

increase in production by 10 units per man per week, it becomes a goal. These distinctions become

imperative when the organisation follows the policy of Management by objectives.

Importance of Organisational Goals:

Organisational goals are essential to regulate and control the functioning of individuals and groups

inter se and also individuals and group in relation to organisation.

Importance of these goals has been described under the following heads:
1. Focus Attention of Individuals and Groups to Specific Activities and Efforts of
Organisations:

When organisation’s goals are known to individuals and group, it will help them in channelizing their

activities towards attaining organisation’s goals. In other words the goals prescribe the course of

action to individuals and groups which will be helpful and complementary to the achievement of

organisation’s goals.
2. Provide a Source of Legitimacy to Action by Members:

Once this course of action has been decided for the individuals and the groups within the framework

of organisational goal, it will promote legitimacy and justification to individual’s or group’s actions

and decisions.
3. Serve as a Standard of Performance:

Goals provide a measure of individual’s or group’s performance. They may help the organisation

members to evaluate the level of their performance in the perspective of organisation’s goals.
4. Affect the Structure of Organisation:

Goals and structure are intimately related to each other. The relationship among people in the form of

authority and responsibility or the positions to be created at different levels has to be decided on the

basis of organisational goals. In other words, what the organisation proposes to do will be determined

by the organisational setup it will structure. Similarly, it will be the structure also which will

influence the goals.

5. Provide Clues about the Nature and Character of Organisation:

The nature and character of an organisation may be known by its goals. For instance, the goal of

maintaining the quality of product without much regard to return on investment may help the outsider

to hold the organisation and its members in very high esteem.

Peter Drucker emphasises the point that goals are important in every area of enterprise more specially

when performance and results are directly related to its survival and prosperity.

In these vital areas, goals will enable managers to:

(i) Organize and explain the whole range of business phenomena in a small number of general

statements

(ii) Test these statements in actual experience

(iii) Predict behaviour

(iv) Apprise the soundness of decisions when they are still being made and

(v) Analyze their own experience and as a result improve their own performance.

Drucker suggests eight specific areas in which goals have to be set in terms of performance and

results.

These are:

(1) market standing,

(2) innovation,

(3) productivity,

(4) physical and financial resources,

(5) profitability.

(6) Manager performance and development,

(7) worker performance and

(8) public responsibility.

Goal Formulation:
Who Formulates the Goals?

Goals are formulated by individuals after taking into account the interest of a large number of groups

which have a bearing on organisation.

These groups may be of:

(i) Managers,

(ii) Owners,

(iii) Creditors,

(iv) Consumers,

(v) Employees and

(vi) Government.

Each of these groups has a conflicting goal with one another vis-a-vis organisation. For example,

management and labour as well as producers and consumers have a diagonally opposite interest

which presents constraints in forging a coalition process and goal formulation. Goal formulation is a

bargaining process in which each group has its own interest as paramount to the good of the
organisation but the final outcome depends upon how best each group intersects bargains and

compromises.

Organisational goals are established by the individuals in some collective fashion for the benefit of

the total organisation entity. When the organisation is created originally, the goal formulation

exercise is completed by its founders. Thereafter, it is done by those ‘who have sufficient control of

organisational resources to commit them in certain directions and to with hold from others’.

Though such individuals may be persons holding higher formal positions in the organisation, but

sometimes even persons in the lower rank may fulfill the task as they may “have sufficient control of

organisational resources.” Such persons may be technical persons who, though may not be occupying

higher positions in formal organisation, may yield considerable influence on vital organisational

resources such as technical expertise.

Definition: Strategy Formulation is an analytical process of selection of the best suitable course of
action to meet the organizational objectives and vision. It is one of the steps of the strategic
management process. The strategic plan allows an organization to examine its resources, provides a
financial plan and establishes the most appropriate action plan for increasing profits.

It is examined through SWOT analysis. SWOT is an acronym for strength, weakness, opportunity
and threat. The strategic plan should be informed to all the employees so that they know the
company’s objectives, mission and vision. It provides direction and focus to the employees.

Steps of Strategy Formulation

The steps of strategy formulation include the following:

1. Establishing Organizational Objectives: This involves establishing long-term goals of an
organisation.. Strategic decisions can be taken once the organizational objectives are determined.
2. Analysis of Organizational Environment: This involves SWOT analysis, meaning identifying the
company’s strengths and weaknesses and keeping vigilance over competitors’ actions to understand
opportunities and threats.
Strengths and weaknesses are internal factors which the company has control over. Opportunities and
threats, on the other hand, are external factors over which the company has no control. A successful
organization builds on its strengths, overcomes its weakness, identifies new opportunities and
protects against external threats.

3. Forming quantitative goals: Defining targets so as to meet the company’s short-term and long-term
objectives. Example, 30% increase in revenue this year of a company.
4. Objectives in context with divisional plans: This involves setting up targets for every department
so that they work in coherence with the organization as a whole.
5. Performance Analysis: This is done to estimate the degree of variation between the actual and the
standard performance of an organization.
6. Selection of Strategy: This is the final step of strategy formulation. It involves evaluation of the
alternatives and selection of the best strategy amongst them to be the strategy of the organization.
Strategy formulation process is an integral part of strategic management, as it helps in framing
effective strategies for the organization, to survive and grow in the dynamic business environment..

Levels of strategy formulation

 There are three levels of strategy formulation used in an organization:

 Corporate level strategy: This level outlines what you want to achieve: growth, stability, acquisition
or retrenchment. It focuses on what business you are going to enter the market.
 Business level strategy: This level answers the question of how you are going to compete. It plays a
role in those organization which have smaller units of business and each is considered as the strategic
business unit (SBU).
 Functional level strategy: This level concentrates on how an organization is going to grow. It
defines daily actions including allocation of resources to deliver corporate and business level
strategies.
Hence, all organisations have competitors, and it is the strategy that enables one business to become
more successful and established than the other.

Programme formulation is the process of choosing the who, what, how, when, and where of persuing
programme objectives. Programme plans generally do not contain many details on the activities to be
carried out and the outputs expected by these activities: these are specified at the project specification
level. Program formulation provides a framework where different projects, sharing the same overall
objectives, can be conceived and implemented in a co-ordinated manner.

PROGRAM FORMULATION AND IMPLEMENTATION

Once the business unit has developed its principal strategies, it must work out detailed support
programs. A great marketing strategy can be sabotaged by poor implementation. If the unit has
decided to attain technological leadership, it must plan programs to strengthen its R&D department,
gather technological intelligence, develop leading-edge products, train the technical sales force, and
develop ads to communicate its technological leadership.

Once the marketing programs are formulated, the marketing people must estimate their cost
regarding trade show, sales contest salesperson contribute etc to determine whether it is likely to
produce sufficient results to justify the cost.
In implementing strategy, companies also must not lose sight of their multiple stakeholders and their
needs. Traditionally, most businesses focused on stockholders. Today’s businesses are increasingly
recognizing that unless they nurture other stake holders, customers, employees, suppliers,
distributors. The business may never earn sufficient profits for the stockholders. A company can aim
to deliver satisfaction levels above the minimum for different stakeholders.

For example, it might aim to delight its customers, perform well for its employees, and deliver a
threshold level of satisfaction to its suppliers. In setting these levels, a company must be careful not
to violate the various stakeholders groups sense of fairness about the relative treatment they are
receiving.

. A smart company creates a high level of employee satisfaction, which leads to higher effort, higher-
quality products and services, which create higher customer satisfaction, which leads to more repeat
business, higher growth and profits, high stockholder satisfaction, more investment, and so on. This
is the virtuous circle that spells profits and growth.

Marketing insight: Marketing Contribution to Shareholder value highlights the increasing importance
of the proper bottom-line view to marketing expenditures.

According to McKinsey & Company strategy is only one of seven elements in successful business
practice. The first three elements strategy, structure and system are considered the hardware of
success. The next four style skills, staff, and shared values are the software company employees
share a common way of thinking and behaving. McDonalds employees smile at the customer, and
IBM employees are very professional in their customer dealings. The second, skills, means that the
employees have the skills needed to carry out the company’s strategy. The third, staffing means that
the company has hired able people, trained them well, and assigned them to the right jobs. The
fourth, shared values mean that the employees share the same guiding values. When these elements
are present, companies are usually more successful at strategy implementation.

Another study of management practices found that superior performance over time depended on
flawless execution, a company culture based on aiming high, a structure that is flexible and
responsive, and a strategy that is clear and focused.

Feedback and Control

As it implements its strategy, a firm needs to track the results and monitor new developments. Some
environments are fairly stable from year to year. Other environments evolve slowly in a fairly
predictable way. Still other environments changes rapidly in major and unpredictable ways.
Nonetheless, a company can count on one thing: The marketplace will change; and when it does, the
company will need to review and revise its implementation, programs, strategies, or even objectives.

A company’s strategic fit with the environment will inevitably erode because the market environment
changes faster than the company’s 7 Ss. Thus, a company might remain efficient while it loses
effectiveness. Peter Drucker pointed out that it is more important to the right things? (effectiveness)
than to do things right (efficiency). The most successful companies excel at both.
Once an organization fails to respond to a changed environment, it becomes increasingly hard to
recapture its lost position. Consider what happened to Lotus Development Corporation. It Lotus 1-2-
3 software was once the worlds leading software program, and now its market share in desktop
software has slipped so low that analysts do not even bother to track it.

6, Explain the importance of implementation of marketing strategic Plan and

importance of Feedback & Control.

What is Marketing Strategy ?

Marketing strategy is the comprehensive plan formulated particularly for achieving
the marketing objectives of the organization.

It provides a blueprint for attaining these marketing objectives. It is the building block of a
marketing plan. It is designed after detailed marketing research. A marketing strategy helps
an organization to concentrate it’s scarce resouces on the best possible opportunities so as
to increase the sales.

A marketing strategy is designed by:

Choosing the target market:

By target market we mean to whom the organization wants to sell its products. Not all the
market segments are fruitful to an organization. There are certain market segments which
guarantee quick profits, there are certain segments which may be having great potential but
there may be high barriers to entry. A careful choice has to be made by the organization. An
indepth marketing research has to be done of the traits of the buyers and the particular needs of the
buyers in the target market.

Gathering the marketing mix.

The organization has to gather the four P’s of marketing in appropriate combination. Gathering the
marketing mix is a crucial part of marketing task. Various decisions have to be made such as -

 What is the most appropriate mix of the four P’s in a given situation
 What distribution channels are available and which one should be used
 What developmental strategy should be used in the target market
 How should the price structure be designed

Importance of Marketing Strategy

 Marketing strategy provides an organization an edge over it’s competitors.

 Strategy helps in developing goods and services with best profit making potential.
 Marketing strategy helps in discovering the areas affected by organizational growth
and thereby helps in creating an organizational plan to cater to the customer needs.
 It helps in fixing the right price for organization’s goods and services based on
information collected by market research.
 Strategy ensures effective departmental co-ordination.
 It helps an organization to make optimum utilization of its resources so as to provide
a sales message to it’s target market.
 A marketing strategy helps to fix the advertising budget in advance, and it also
develops a method which determines the scope of the plan, i.e., it determines the
revenue generated by the advertising plan.