CH 11

Chapter 11
MARKETING
WHAT IS MARKETING?
 Phillip Kolter (the father of marketing) has defined marketing as, “a social process by which
individual groups obtain what they need and want through creating offerings and freely exchanging
products and services of value with others”.
 Marketing is a social process where in people interact with others, in order to persuade them to act
in a particular way, say to purchase a product or a service, rather than forcing them to do so.
FEATURES of marketing
1. Needs and Wants:
 A need is a state of felt deprivation or feeling of being deprived of something.
 If unsatisfied, it leaves a person unhappy and uncomfortable.
 E.g., we become uncomfortable on getting hungry and start looking for objects capable of satisfying
our hunger.
 Wants are culturally defined objects that are potential satisfiers of needs.
 In other words, human needs shaped by such factors as culture, personality and religion are called
wants.
 E.g. A basic need for food may take various forms such as want for dosa and rice for a South Indian
and chapatti and vegetables for a North Indian person.
 A marketer’s job is to identify needs of the target customers and develop products and services that
satisfy such needs.
2. Creating a Market Offering:

 Market offering refers to a complete offer for a product or service with features like size, quality,
taste, etc; at a certain price; available at a given outlet or location and so on.
 E.g. A cell phone, available in four different versions, on the basis of size of memory, television
viewing, internet, camera, etc., for a given price, say between Rs. 5,000 and Rs. 20,000 (depending
on the model selected), available for sale at firm’s exclusive shops in and around all metropolitan
cities in the country.
 A good ‘market offer’ is the one which is developed after analysing the needs and preferences of the
potential buyers.
3. Customer Value:
 The buyers make buying decisions on their perceptions of the value of the product or service in
satisfying their need, in relation to its cost.
 A product will be purchased only if it is perceived to be giving greatest benefit or value for the
money.
 The job of a marketer, therefore, is to add to the value of the product so that the customers
prefer it in relation to the competing products and decide to purchase it.
Marketing Page 1 of 26
B.St. Notes - XII Marketing
4. Exchange Mechanism:
 The process of marketing involves exchange of products and services for money or something
considered valuable by the people.
 Goods are produced at different places and are distributed over a wide geographical area
through middlemen, involving exchanges at different levels of distribution.
 For any exchange the following conditions are satisfied:
(i) involvement of at least two parties viz., the buyer and the seller.
(ii) each party should be capable of offering something of value to the other. For example, the seller
offers a product and the buyer, money.
(iii) each party should have the ability to communicate and deliver the product or service. No
exchange can take place if the buyers and sellers are not able to communicate with each other
or if they cannot deliver something of value to the other.
(iv) each party should have freedom to accept or reject other party’s offer.
(v) the parties should be willing to enter into transaction with each other. Thus, the acceptance or
rejection of the offer takes place on voluntary basis rather than on the bases of any compulsion.
MARKETING MANAGEMENT PHILOSOPHIES

The Production Concept:
 During the earlier days of industrial revolution, the demand for industrial goods started picking up
but the number of producers were limited.
 As a result, the demand exceeded the supply.
 Selling was no problem.
 Anybody who could produce the goods was able to sell.
 The focus of business activities was on production of goods.
 It was believed that profits could be maximised by reducing the average cost of production by
producing at large scale.
 Availability and affordability of the product were considered to be the key to the success of a firm.
 Greater emphasis was placed on improving the production and distribution efficiency of the firms.
The Product Concept:

 With the increase in the supply of the products, customers started looking for superior quality
products, their performance and features.
 The emphasis of the firms shifted from quantity of production to quality of products.
 The focus of business activity changed to bringing continuous improvement in the quality,
incorporating new features etc.
 Thus, product improvement became the key to profit maximisation of a firm, under the concept of
product orientation.
The Selling Concept:

 The increase in the scale of business further improved the position with respect to supply of goods,
resulting in increased competition among sellers.
 The product quality and availability did not ensure the survival and growth of firms because of the
large number of sellers selling quality products.
 This led to greater importance to attracting and persuading customers to buy the product.
 The business philosophy changed.
 It was assumed that the customers would not buy, or not buy enough, unless they are adequately
convinced and motivated to do so.
 Firms must undertake aggressive selling and promotional efforts to make customers buy their
products.
 The use of promotional techniques such as advertising, personal selling and sales promotion were
considered essential for selling of products.
 Thus, the focus of business firms shifted to pushing the sale of products through aggressive selling
techniques with a view to persuade/lure/coax the buyers to buy the products.
 Making sale through any means became important.
 It was assumed that buyers can be manipulated but what was forgotten was that in the long run
what matters most is the customer satisfaction, rather than anything else.
The Marketing Concept:

 Marketing orientation implies that focus on satisfaction of customer’s needs.
 In the long run profits can be maximized by identifying and satisfying the needs of its present and
prospective buyers in an effective way.
 Customer’s satisfaction become the focal point of all decision making in the organisation.
 E.g. the customers want features like double door in a refrigerator or a separate provision for water
cooler in it, the organisation would produce a refrigerator with these features, would price it at a
level which the customers are willing to pay.
 If all marketing decisions are taken with this prospective, selling will not be any problem.
 The basic role of a firm then is to ‘identify a need and fill it’.
 The concept implies that products and services are bought not merely because of their quality,
packing or brand name, but because they satisfy a specific need of a customer.
 A pre-requisite for the success of any organisation, is to understand and respond to customer
needs.
To sum up, the marketing concept is based on the following pillars:
(i) Identification of market or customer who are chosen as the target of marketing effort.
(ii) Understanding needs and wants of customers in the target market.
(iii) Development of products or services for satisfying needs of the target market.
(iv) Satisfying needs of target market better than the competitors.
(v) Doing all this at a profit.
Thus, the focus of the marketing concept is on customer needs and the customer satisfaction becomes the
means to achieving the firms’ objective of maximising profit. The purpose of marketing is to generate
customer value at a profit.
The Societal Marketing Concept

 The marketing concept cannot be considered as adequate if we look at the challenges posed by
social problems like environmental pollution, deforestation, shortage of resources, population
explosion and inflation.
 It is so because any activity which satisfies human needs but is detrimental to the interests of the
society at large cannot be justified.
 The business orientation should, therefore, not be short-sighted to serve only consumers’ needs.
 It should also consider large issues of long-term social welfare, as illustrated above.
 The societal marketing concept holds that the task of any organisation is to identify the needs and
wants of the target market and deliver the desired satisfaction in an effective and efficient manner
so that the long-term well-being of the consumers and the society is taken care of.
 Thus, the societal marketing concept is the extension of the marketing concept as supplemented by
the concern for the long-term welfare of the society.
 Apart from the customer satisfaction, it pays attention to the social, ethical and ecological aspects of
marketing.
Differences in the Marketing Management Philosophies
Philosophies Production Marketing
Product Concept Selling Concept Societal Concept
Bases Concept Concept
Starting Point Factory Factory Factory Market Market, Society
Quantity of Quality, performance, Customer Customer needs and
Main Focus Existing product
product features of product needs society’s well being
Availability and
Selling and Integrated
Means affordability of Product improvements Integrated marketing
promoting marketing
product
Profit through Profit through Profit through
Profit through product Profit through
Ends volume of customer customer satisfaction
quality sales volume
production satisfaction and social welfare
FUNCTIONS OF MARKETING
1. Gathering and Analysing Market Information:

 This is important for making an analysis of the available opportunities and threats as well as
strengths and weaknesses of the organisation and help in identifying best opportunities.
 For example, rapid growth is predicted in the use of the Internet, market for cell phones etc.
 Which of these areas a particular organisation should enter, or expand, requires a careful
scanning of the strengths and weaknesses of the organisation, which is done with the help of
careful market analysis.
 E.g. One of the popular TV News Channel (in Hindi) seeks viewers choice (through SMS) on
which of the given four or five main news stories of the day would be broadcasted as detailed
story at the prime time, to ensure that the viewers get to listen to the story of their own choice.
2. Marketing Planning:
 Another important activity or area of work of a marketer is to develop appropriate marketing
plans so that the marketing objectives of the organisation can be achieved.
 For example a marketer of colour TV, having 10 per cent of the current market share in the
country, aims at enhancing his market share to 20 per cent, in the next three years.
 He will have to develop a complete marketing plan including the plan for increasing the level of
production, promotion of the products, etc.
3. Product Designing and Development:

 Another important marketing activity or decision area relates to product designing and
development.
 The design of the product contributes to making the product attractive to the target customers.
 A good design can improve performance of a product and also give it a competitive advantage
in the market.
 For example, when we plan to buy any product say a motorbike, we not only see its features like
cost, mileage, etc. but also the design aspects like its shape, style, etc.
4. Standardisation and Grading:

 Standardisation refers to producing goods of predetermined specifications, which helps in
achieving uniformity and consistency in the output.
 Standardisation ensures the buyers that goods conform to the predetermined standards of
quality, price and packaging and reduces the need for inspection, testing and evaluation of the
products.
 Grading is the process of classification of products into different groups, on the basis of some of
its important characteristics such as quality, size, etc.
 Grading is necessary for products not produced according to predetermined specifications, e.g.
agricultural products, say wheat, oranges, etc.
 Grading ensures helps in realising higher prices for high quality output.
5. Packaging and Labelling:

 Packaging refers to designing and developing the package for the products.
 Labelling refers to designing and developing the label to be put on the package.
 The label may vary from a simple tag to complex graphics.
 Packaging and labelling have become so important in modern day marketing that these are
considered as the pillars of marketing.
 Packaging is important not only for protection of the products but also serves as a promotional
tool. Sometimes, the quality of the product is assessed by the buyers form packaging.
 Packaging has played an important role in the success of Lays or Uncle Chips potato wafers,
Clinic Plus shampoos, and Colgate Toothpaste, etc.
6. Branding:
 A very important decision area for marketing is whether to sell the product in its generic name
(Fan, Pen, etc.) or to sell them in a brand name (Pollar Fan or Rottomac Pen).
 Brand name creates product differentiation with that of the competitor, which helps in building
customer’s loyalty and in promoting its sale.
 The important decision area is deciding branding strategy, say whether each product will be
given a separate brand name or the same brand name will be extended to all products of the
company, say Phillips bulbs, tubes and television.
 Selection of the brand name plays an important role in the success of a product.
7. Customer Support Services:

 A very important function of the marketing management relates to developing customer support
services such as
 after sales services,
 handling customer complaints and adjustments,
 procuring credit services,
 maintenance services,
 technical services and consumer information.
 All these services aim at providing maximum satisfaction to the customers, which is the key to
marketing success in modern days.
 Customer support services are very effective in bringing repeat sales from the customers and
developing brand loyalty for a product.
8. Pricing of Product:
 Price of product refers to the amount of money customers have to pay to obtain a product.
 Price is an important factor affecting the success or failure of a product in the market.
 The demand for a product or service is related to its price.
 Generally lower the price, higher would be the demand for the product and vice-versa.
 The marketers have to properly analyse the factors determining the price of a product, set the
pricing objectives, determine the pricing strategies, determine the price and change the prices.
9. Promotion:
 Promotion of products and services involves informing the customers about the firm’s product,
its features, etc. and persuading them to purchase.
 The four important methods of promotion include advertising, Personal Selling, Public Relation
and Sales Promotion.
 A marketer has decide the promotion budget, the promotion mix, etc.
10. Physical Distribution:

 Managing physical distribution is another very important function in the marketing of goods and
services.
 The two major decision areas under this function include:

(a) decision regarding channels of distribution or the marketing intermediaries (like whole salers,
retailers).
(b) physical movement of the product from the place of production to place of consumption.
 The important decision areas under physical distribution include:
 managing inventory,
 storage and warehousing,
 transportation of goods from one place to the other.
11. Transportation:
 Transportation involves physical movement of goods from one place to the other.
 Generally the users of products (consumer products) are wide spread and geographically
separated from the place of production, so it is necessary to move the products to the place of
consumption or use.
 For example, tea produced in Assam has to be transported not only within the state but to other
far off places like Tamil Nadu, Punjab, Jammu and Kashmir and Haryana, Rajasthan, where it is
consumed.
 A marketing firm has to analyse its transportation needs and modes of transportation after
considering nature of the product, cost and location of target market etc.
12. Storage or Warehousing:

 Usually there is a time gap between the production or procurement of goods and their sale or
use. It can be due to:
 irregular demand for the products, e.g. woolen garments or Raincoats.
 irregular supply because of seasonal production, e.g. agricultural products (sugarcane, rice,
wheat, cotton, etc.).
 There is a need for storage of adequate stock of goods to:
 maintain smooth flow of products in the market.
 protect against unavoidable delays in delivery.
 The function of storage is performed by different agencies such as manufacturers, wholesalers
and retailers.
MARKETING MIX
 The combination of variables chosen by a firm to prepare its market
offering is called marketing mix.
 Marketing mix is described as the set of marketing tools that a firm
uses to pursue its marketing objectives in a target market.
ELEMENTS OF MARKETING MIX
The marketing mix consists of various elements classified into four
categories, popularly known as four Ps of marketing –
(i) Product, (ii) Price, (iii) Place, and (iv) Promotion.
These are briefly discussed as follows:
1. Product:
 Product means goods or services or ‘anything of value’, which is offered to the market for sale.
 For example, Hindustan lever offers number of consumer products like toiletries (Close-Up
toothpaste, Lifebuoy soap, etc.),detergent powder (Surf, Wheel), food products (Refined Vegetable
Oil); Tata offers Tata Steel, Trucks, Salt and a large number of other products;
LG Electronics offers televisions, refrigerators, colour monitors for computers, etc.;
Amul offers a number of food products (Amul milk, ghee, butter, cheese, chocolates, etc.).
 The concept of product relates to not only the physical product but also the benefits offered by it
from customer’s view point (for example toothpaste is bought for whitening teeth, strengthening
gums, etc.).
 The concept of product also include the extended product or what is offered to the customers by
way of after sales services, handling complaints, availability of spare parts etc. These aspects are
very important, particularly in the marketing of consumer durable products (like Automobiles,
Refrigerators, etc.).
 The important product decisions include deciding about the features, quality, packaging, labelling
and branding of the products.
2. Price:
 Price is the amount of money customers have to pay to obtain the product.
 In case of most of the products, level of price affects the level of their demand.
 The marketers have not only to decide about the objectives of price setting but to analyse the
factors determining the price and fix a price for the firm’s products.
 Decisions have also to be taken in respect of discounts to customers, traders and credit terms, etc.
so that customers perceive the price to be in line with the value of the product.
3. Place:
 Place or Physical Distribution include activities that make firm’s products available to the target
customers.
 Important decision areas - selection of dealers or intermediaries to reach the customers, providing
support to the intermediaries (by way of discounts, promotional campaigns, etc.).
 The intermediaries keep inventory of the firm’s products, demonstrate them to potential buyers,
negotiate price with buyers, close sales and also service the products after the sale.
 The other decision areas relate to managing inventory, storage and warehousing and transportation
of goods from the place of production to the place consumption.
4. Promotion:
 Promotion of products and services include activities that communicate availability, features, merits,
etc. of the products to the target customers and persuade them to buy it.
 Most marketing organisations use number of tools such as advertising, personal selling and sales
promotion techniques (like price discounts, free samples, etc.).
 In the respect of advertising it is important to decide about the message, the media to be used
(newspaper, magazines etc.) and the objections of customers etc.
 The success of a market offer will depend on how well these ingredients are mixed to create
superior value for the customers and simultaneously achieve their sale and profit objectives.
 The issue before a firm then is to decide what would be the most effective combination of elements
to achieve the given objectives.
PRODUCT
 In common parlance, the word ‘product’, is used to refer only to the physical or tangible attributes of
a product. For example a car or a pen or a Cell phone or a tractor.
 Our decision to buy a product is not only affected by its physical qualities, but also by certain non-
tangible and psychological factors, e.g., brand name, reputation, guaranty, packaging etc.
 In marketing, product is a mixture of tangible and intangible attributes, which are capable of being
exchanged for a value, with ability to satisfy customer needs. Besides physical objects, we also
include services, ideas, persons, and places in the concept of product.
 Thus, product may be defined as anything that can be offered to a market to satisfy a want or need.
It is offered for attention, acquisition, use or consumption.
 From the customer’s point of view, a product is a bundle of utilities, which is purchased because of
its capability to provide satisfaction of certain need.
 There can be three types of benefits a customer may seek to satisfy from the purchase of a product,
viz., (i) functional benefits, (ii) psychological benefits, and (iii) social benefits.
 For example, the purchase of a motorcycle provides functional utility of transportation, but at the
same time satisfies the need for prestige and esteem and provides social benefit by the way of
acceptance from a group, by riding a motorbike.
BRANDING
 One of the most important decisions that a marketer has to take in the area of ‘product’ is in respect
of branding.
 For example, a book, a wristwatch, tyre, camera, toilet soap, etc.
 We know that a camera is a lens surrounded by plastic or steel from all sides and having certain
other features such as a flash gun and so on.
 Similarly book is a bunch of papers, which are in a bound form, on which some useful information
about a subject is printed.
 Thus, all products having these characteristics would be called by the generic name such as
camera or book.
 If products were sold by generic names, it would be very difficult for the marketers to distinguish
their products from that of their competitors.
 Thus, most marketers give a name to their product, which helps in identifying and distinguishing
their products from the competitors’ products.
 This process of giving a name or a sign or a symbol etc., to a product is called branding.
 The various terms relating to branding are as follows:
1. Brand:
 A brand is a name, term, sign, symbol, design or some combination of them, used to identify the
products—goods or services of one seller or group of sellers and to differentiate them from those of
the competitors.
 For example, some of the common brands are Bata, Lifebuoy, Dunlop, Hot Shot, and Parker.
 Brand is a comprehensive term, which has two components—brand name and brand mark.
 For example, Asian Paints has the symbol of Gattu on its pack, which is its brand mark.
2. Brand Name:
 That part of a brand, which can be spoken, is called a brand name.
 In other words, brand name is the verbal component of a brand.
 For example, Asian Paints, Safola, Lifebuoy, Dunlop, and Uncle Chips are the brand names.
3. Brand Mark:
 That part of a brand which can be recognised but which is not utter able is called brand mark.
 It appears in the form of a symbol, design, distinct colour scheme or lettering.
 For example, the Gattu of Asian Paints or Devil of Onida or symbol of Yogkshma of LIC, or four
fingers and a palm of Anacin are all brand marks.
4. Trade Mark:
 A brand or part of a brand that is given legal protection against its use by other firms is called
trademark.
 Thus the firm, which got its brand registered, gets the exclusive right for its use. In that case, no
other firm can use such name or mark in the country.
 Though branding adds to the cost e.g., to the cost of packaging, labelling, legal protection, and
promotion, it provides several advantages to the sellers as well as the consumers.
Advantages to the Marketers
(i) Enables Marking Product Differentiation: Branding helps a firm in distinguishing its product from
that of its competitors. This enables the firm to secure and control the market for its products.
(ii) Helps in Advertising and Display Programmes: A brand aids a firm in its advertising and display
programmes. Without a brand name, the advertiser can only create awareness for the generic
product and can never be sure of the sale for his product.
(iii) Differential Pricing: Branding enables a firm to charge different price for its products than that
charged by its competitors. This is possible because if customers like a brand and become habitual
of it, they do not mind paying a little higher for it.
(iv) Ease in Introduction of New Product: If a new product is introduced under a known brand, it
enjoys the reflected glory of the brand and is likely to get off to an excellent start. Thus, many
companies with established brand names decide to introduce new products in the same name.
For example, Food Specialties Ltd. had a successful brand Maggie (Noodles), it extended this name
to many of its new products introduced such as Tomato Ketchup, Soups, etc. Similarly Samsung
extended the brand name of its Television, Washing Machines and Microwave oven etc.
Advantages to Customers
(i) Helps in Product Identification: Branding helps the customers in identifying the products. For
example, if person is satisfied with a particular brand of a product, say tea leaves or detergent soap,
he need not make a close inspection every time, he has to buy that product. Thus, branding greatly
facilitates repeat purchase of the products.
(ii) Ensures Quality: Branding ensures a particular level of quality of the product. Thus, whenever
there is any deviation in the quality, the customers can have recourse to the manufacturer or the
marketer. This builds up confidence of the customers and helps in increasing his level of
satisfaction.
(iii) Status Symbol: Some brands become status symbols because of their quality. The consumers of
those brands of products feel proud of using them and adds to the level of satisfaction of the
customers.
Characteristics of Good Brand Name
Following are some of the considerations, which should be kept in mind while choosing a brand name.
(i) The brand name should be short, easy to pronounce, spell, recognise and remember e.g., Ponds,
VIP, Rin, Vim, etc.
(ii) A brand should suggest the product’s benefits and qualities. It should be appropriate to the
product’s function. e.g., Rasika, Genteel, Promise, My Fair Lady and Boost.
(iii) A brand name should be distinctive e.g., Liril, Sprit, Safari, Zodiac.
(iv) The brand name should be adaptable to packing or labeling requirements, to different advertising
media and to different languages.
(v) The brand name should be sufficiently versatile to accommodate new products, which are added to
the product line e.g., Colgate.
(vi) It should be capable of being registered and protected legally.
PACKAGING
Packaging refers to the act of designing and producing the container or wrapper of a product. Packaging
plays a very important role in the marketing success or failure of many products, particularly the consumer
non-durable products. In fact if one makes an analysis of the reasons for the success of some of the
successful products in the recent past, it can be noted that packaging has played its due role.
For example, it was one of the important factors in the success of products like Maggie’s Noodles, Uncle
Chips or Crax wafers.
Levels of Packaging
There can be three different levels of packaging. These are as below:
1. Primary Package:
It refers to the product’s immediate container. In some cases, the primary package is kept till the
consumer is ready to use the product (e.g., plastic packet for socks); whereas in other cases, it is
kept throughout the entire life of the product (e.g., a toothpaste tube, a match box, etc.).
2. Secondary Packaging:
It refers to additional layers of protection that are kept till the product is ready for use, e.g., a tube of
shaving cream usually comes in a card board box. When consumers start using the shaving cream,
they will dispose off the box but retain the primary tube.
3. Transportation Packaging:
It refers to further packaging components necessary for storage, identification or transportation. For
example a toothpaste manufacturer may send the goods to retailers in corrugated boxes containing
10, 20, or 100 units.
Importance of Packaging
Packaging has acquired great significance in the marketing of goods and services, because of following
reasons:
(i) Rising Standards of Health and Sanitation:
Because of the increasing standards of living in the country, more and more people have started
purchasing packed goods as the chances of adulteration in such goods are minimised.
(ii) Self Service Outlets:
 The self-service retail outlets are becoming very popular, particularly in major cities and towns.
 Because of this, some of the traditional role assigned to personal selling in respect of promotion
as gone to packaging.
(iii) Innovational Opportunity:
 Some of the recent developments in the area of packaging have completely changed the
marketing scene in the country.
 For example, milk can now be stored for 4-5 days without refrigeration in the recently developed
packing materials.
 Lots of new innovations have come in respect of packaging of pharmaceuticals, soft drinks, etc.
 As a result, the scope for the marketing of such products has increased.
(iv) Product Differentiation:
 Packaging is one of the very important means of creating product differentiation.
 The colour, size, material etc., of package makes real difference in the perception of customers
about the quality of the product.
 For example, by looking at the package of a product say Paint or Hair Oil, one can make some
guess about quality of the product contained in it.
Functions of Packaging
Packaging performs a number of functions in the marketing of goods, which are as follows:
(i) Product Identification:
 Packaging greatly helps in identification of the products.
 For example, Colgate in red colour, or Ponds cream jar can be easily identified by its package.
(ii) Product Protection:
 Packaging protects the contents of a product from spoilage, breakage, leakage, pilferage,
damage, climatic effect, etc.
 This kind of protection is required during storing, distribution and transportation of the product.
(iii) Facilitating Use of the Product:
 The size and shape of the package should be such that it should be convenient to open, handle
and use for the consumers.
 E.g. Cosmetics, medicines and tubes of toothpastes.
(iv) Product Promotion:
 Packaging is also used for promotion purposes.
 A startling colour scheme, photograph or typeface may be used to attract attention of the people
at the point of purchase.
 Sometimes it may work even better than advertising.
 In self-service stores, this role of packaging becomes all the more important.
Labelling
 The label may vary from a simple tag attached to the product (unbranded products like sugar,
wheat, pulses, etc.) indicating some information about the quality or price, to complex graphics that
are part of the package (branded products say the graphic of Boat and Patwar on the package of a
popular brand of After Shave Lotion).
 Labels are useful in providing detailed information about the product, its contents, method of use,
etc.
Functions performed by a label are as follows:
1. Describe the Product and Specify its Contents:
 The label on the package of a popular brand of Prickly Heat Powder, describes how the product
provides relief from prickly heat and controls bacterial growth and infection, giving caution forbidding
its application on cuts and wounds.
 Package of fast food products like ready to eat Dosa, Idli or Noodles, describe the procedure of
cooking these products;
 The Package of a toothpaste brand lists the ‘Ten Teeth and Gum Problems’, which the product
claims to fight with its ‘Complete Germicheck Formula’;
 The Package of a brand of Coconut Oil describes the product as pure coconut oil with Heena, Amla,
Lemon and specifies how these are good for Hair.
 Thus, one of the most important functions of labels is to describe the product, its usage, cautions in
use, etc. and specify its contents.
2. Identification of the Product or Brand:
 The other important function performed by labels is to help in identifying the product or brand.
 For example, the brand name of any product, say Biscuits or Potato Chips imprinted on its package
helps us to identify, from number of packages, which one is our favourite brand.
 Other information provided by the labels include name and address of the manufacturer, net weight
when packed, manufacturing date, maximum retail price and Batch number.
3. Grading of Products:
 Another important function performed by labels is to help grading the products into different
categories.
 Sometimes marketers assign different grades to indicate different features or quality of the product.
 For example, different type of tea is sold by some brands under Yellow, Red and Green Label
categories.
4. Helps in Promotion of Products:
 A carefully designed label can attract attention and give reason to purchase.
 E.g. the pack of a popular Amla Hair Oil states, ‘Baalon mein Dum, Life mein Fun’.
 The label on the package of a brand of Detergent Powder says, ‘Keep cloth look good and your
machine in top condition’.
 Labels play important role in sales promotional schemes launched by companies.
 For example the label on the package of a Shaving Cream mentions, ‘40% Extra Free’ or package
of a toothpaste mentioning, ‘Free Toothbrush Inside’, or ‘Save Rs15’.
5. Providing Information Required by Law:
 Another important function of labeling is to provide information required by law.
 For example, the statutory warning on the package of Cigarette or Pan Masala, ‘Smoking is
Injurious to Health’ or ‘Chewing Tobacco is Injurious to Health’.
 Such information is required on processed foods, drugs and tobacco products.
 In case of hazardous or poisonous material, appropriate safety-warning need to be put on the label.
PRICING
 Price may be defined as the amount of money paid by a buyer in consideration of the purchase of a
product or a service.
 No product can be launched without a price tag or at least some guidelines for pricing.
 Pricing is often used as a regulator of the demand of a product. Generally, if the price of a product is
increased, its demand comes down, and vice-versa.
 In the conditions of perfect competition, most of the firms compete with each other on the basis of
his factor.
 It is also the single most important factor affecting the revenue and profits of a firm.
 Thus, most marketing firms give high importance to the fixation of price for their products and
services.
Factors Affecting Price Determination

There are number of factors which affect the fixation of the price of a product. Some of the important factors
in this regard are discussed as below:
1. Product Cost:
 This includes the cost of producing, distributing and selling the product.
 The cost sets the minimum level or the floor price (lower limit of price) at which the product may be
sold.
 Generally all marketing firms strive to cover all their costs, at least in the long run.
 They aim at earning a margin of profit over and above the costs.
 There are broadly three types of costs: viz., Fixed Costs, Variable Costs and Semi Variable Costs.
 Fixed costs are those costs, which do not vary with the level of activity of a firm say with the volume
of production or sale.
For example, rent of a building or salary of a sales manager remains the same whether 1000 units
or 10 units are produced in a week.
 Variable costs are those costs which vary in direct proportion with the level of activity.
For example, the costs of raw material, labour and power are directly related with the quantity of
goods produced. Let us say, if the cost of wood for manufacturing one chair comes to Rs.100 the
cost of wood for 10 chairs would be Rs. 1000.
 Semi variable costs are those costs which vary with the level of activity but not in direct proportion
with it.
For example, compensation of a sales person may include a fixed salary of say Rs. 10,000 plus a
commission of 5 per cent on sales. With an increase in the volume of sales, the total compensation
will increase but not in direct proportion with the change in the volume of sale.
 Total Costs are the sum total of the fixed, variable and semi-variable costs for the specific level of
activity, say volume of sales or quantity produced.
2. The Utility and Demand:
 The intensity of demand of the buyer sets the upper limit of price, which a buyer would be prepared
to pay.
 In fact the price must reflect the interest of both the parties to the transaction—the buyer and the
seller.
 The buyer may pay where the utility from the product is at least equal to the sacrifice made in terms
of the price paid.
 The seller would try to at least cover the costs.
 According to the law of demand, consumers usually purchase more units at a low price than at a
high price.
 The price of a product is affected by the elasticity of demand of the product.
 The demand is said to be elastic if a relatively small change in price results in large change in the
quantity demanded.
 Here numerically, the price elasticity is greater than one.
 In the case of inelastic demand, the total revenue increases when the price is increased and goes
down when the price is reduced.
 If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
3. Extent of Competition in the Market:
 Between the lower limit and the upper limit where would the price settle down?
 This is affected by the nature and the degree of competition.
 Lesser degree of competition - The price will reach the upper limit.
Free competition - the price will be set at the lowest level.
 Competitors’ prices and their anticipated reactions, features of the competitive products must be
considered before fixing the price of a product.
4. Government and Legal Regulations:
 Government can intervene and regulate the price of commodities to protect the interest of public
against unfair practices in the field of price fixing.
 Government can declare a product as essential product and regulate its price.
 For example, the cost of a drug manufactured by a company having monopoly in the production of
the same come to Rs 20 per strip of ten and the buyer is prepared to pay any amount for it, say Rs
200. Usually in such a case, the Government does not allow the firms to charge such a high price
and intervene to regulate the price of the drug.
5. Pricing Objectives:
 Generally the objective is to maximise the profits.
 If the firm decides to maximise profits in the short run, it would tend to charge maximum price for its
products.
 To maximize total profit in the long run, it would opt for a lower per unit price so that it can capture
larger share of the market and earn greater profits through increased sales.
 Apart from profit maximisation, the pricing objectives of a firm may include:
a) Obtaining Market Share Leadership - it will keep the price of its products at lower levels so that
greater number of people are attracted to purchase the products;
b) Surviving in a Competitive Market - it may resort to discounting its products or running a promotion
campaign to liquidate its stock; and
c) Attaining Product Quality Leadership - normally higher prices are charged to cover high quality and
high cost of Research and Development.
6. Marketing Methods Used:
 Price fixation process is also affected by distribution system, quality of salesmen employed, quality
and amount of advertising, sales promotion efforts, the type of packaging, product differentiation,
credit facility and customer services provided etc.
 For example, if a company provides free home delivery, it has some of flexibility in fixing prices.
PHYSICAL DISTRIBUTION
The fourth important element of marketing mix is the physical distribution of products and services. It is
concerned with making the goods and services available at the right place, so that people can purchase the
same. There are two important decisions relating to this aspect:
1. regarding physical movement of goods from producers to consumers or users and
2. regarding the channels or using intermediaries in the distribution process.
 The physical handling and movement of goods from place of production to the place of distribution is
referred to as physical distribution, which is a very important element of marketing mix.
 Physical distribution covers all the activities required to physically move goods from manufacturers to
the customers.
 Important activities involved in the physical distribution include transportation, warehousing, material
handling, and inventory control.
Channels of Distribution
Types of Channels
I. Direct Channel (Zero Level)
 The most simple and the shortest mode of distribution is direct distribution, where in the goods are
made directly available by the manufacturers to customers, without involving any intermediary.
 This is also called zero level channel.
 A direct relationship is established between the manufacturer and the customer.
 E.g. when a manufacturer sells his goods through his own retail outlets (e.g., Mc Donald, Bata).
Similarly, mail order selling, internet selling and selling through own sales force, (e.g., Eureka
Forbes) are example of zero level channel.
II. Indirect Channels
When a manufacturer employs one or more intermediary to move goods from the point of
production to the point of consumption, the distribution network is called indirect.
This may take any of the following forms:
1. Manufacturer-Retailer Consumer (One Level Channel):
 In this form of arrangement one intermediary i.e., retailers is used between the manufacturers
and the customers.
 Goods pass from the manufacturer to the retailers who sell them to the final users.
 For example, Maruti Udyog sells its cars and vans through company approved retailers.
 Wide area of market is covered while retaining control over the Channels.
2. Manufacturer-Wholesaler-Retailer- Consumer (Two Level Channel):
 This is the most commonly adopted distribution network for most consumer goods like soaps,
oils, clothes, rice, sugar and pulses.
 Wholesaler and retailer are the links between the manufacturer and consumer.
 This enables the manufacturer to cover a larger market area with two middlemen.
3. Manufacturer-Agent-Wholesaler- Retailer-Consumer (Three Level Channel):

 In this case, manufactures use their own selling agents or brokers who connect them with
wholesalers and retailers.
 It is done particularly when the manufacturer carries a limited product line and has to cover a
wide market.
 An agent in each major area is appointed, who contacts the wholesalers.
Types of Channels
(i) Direct Channel (zero level)
Manufacturer ----- Customer
Indirect Channel
(ii) One level Channel
Manufacturer ----- Retailer ----- Customer
(iii) Two level Channel
Manufacturer ----- Wholesaler ------ Retailer ------ Customer
(iv) Three level Channel
Manufacturer ----- Agent ----- Wholesaler ----- Retailer ----- Customer
Components of Physical Distribution

The main components of physical distribution are explained as follows:
1. Order Processing:
 In a typical buyer-seller relationship order placement is the first step.
 Products flow from manufacturers to customers via channel members.
 While orders flow from customers to the manufacturers.
 A good physical distribution system should provide for an accurate and speedy processing of orders
otherwise goods would reach the customers late or in wrong quantity or specifications.
 This would result in customer dissatisfaction, with the danger of loss of business and goodwill.
2. Transportation:
 Transportation is the means of carrying goods and raw materials from the point of production to the
point of sale.
 It is one of the major elements in the physical distribution of goods.
 The sale cannot be completed unless the goods are physically made available.
3. Warehousing:
 Warehousing refers to the act of storing and assorting products in order to create time utility in them.
 The need for warehousing arises because there may be difference between the time of production
and the time consumption.
 Larger the number of warehouses lesser would be the time taken in serving customers at different
locations but greater would be the cost of warehousing and vice-versa.
 Thus the firm has to strike a balance between the cost of warehousing and the level of customer
service.
 For products requiring long-term storage (such as agricultural products) the warehouses are located
near production sites. This helps in minimising the charges on transportation of the goods.
 The products which are bulky and hard to ship (machinery, automobiles) as well as perishable
products (bakery, meat, vegetables) are kept at different locations near the market.
4. Inventory Control:
 Inventory decisions are linked to warehousing decisions which hold key to success especially where
the per unit cost is high.
 A very important decision is deciding about the level of inventory.
 Higher the level of inventory, higher will be the level of service to customers but the cost of carrying
the inventory will also be high because lot of capital would be tied up in the stock.
 Thus, a balance is to be maintained in respect of the cost and customer satisfaction.
 With advancements in computers and information technology the need for keeping higher inventory
is reducing and the new concept of Just-in-Time-Inventory decision is becoming popular in an
increasing number of companies.
 The decision regarding level of inventory involves prediction about the demand for the product.
 A correct estimate of the demand helps to hold inventory and cost level down to a minimum.
 This not only helps the firm in terms of the cash flows but also in terms of its ability to maintain
production at a consistent level.
 The major factors determining inventory levels include:
(a) firm’s policy regarding the level of customer service to be offered. Higher the level of service greater
will be the need to keep more inventories;
(b) degree of accuracy of the sales forecasts. In case more accurate estimates are available, the need
for keeping very high level of inventory can be minimised;
(c) responsiveness of the distribution system - In case the time required to respond to the additional
demand for the products is high there is a need to maintain higher inventory. But if the additional
demand can be met in less time, the need for inventory will also be low; and
(d) cost of inventory, which includes holding cost such as cost of warehousing, tied up capital, etc and
the manufacturing cost.
PROMOTION
Promotion refers to the use of communication with the twin objective of informing potential customers about
a product and persuading them to buy it.
Promotion is an important element of marketing mix by which marketers makes use of various tools of
communication to encourage exchange of goods and services in the market.
PROMOTION MIX
 Promotion mix refers to combination of promotional tools used by an organisation to achieve its
communication objectives.
 Various tools of communication are used by the marketers to inform and persuade customers about
their firm’s products. These include: (i) Advertising, (ii) Personal Selling, (iii) Sales Promotion, and
(iv) Publicity (v) Public Relation.
 These tools are also called elements of promotion mix and can be used in different combinations, to
achieve the goals of promotion.
 E.g. consumer goods firms may use more of advertising through mass media while the industrial
goods firms may be using more of personal selling.
 What combination of these elements is used by a firm will depend upon various factors such as
nature of market, nature of product, the promotion budget, objectives of promotion, etc.
ADVERTISING
Concept of Advertising
Advertising is perhaps the most commonly used tool of promotion. It is an impersonal form of
communication, which is paid for by the marketers (sponsors) to promote some goods or service. The most
common modes of advertising are ‘newspapers’, ‘magazines’, ‘television’, and ‘radio’.
Quotes -
“If you’re trying to persuade people to do something, or buy something, it seems to me you should use their
language, the language in which they think.” —David Ogilvy
“We find that advertising works the way the grass grows. You can never see it, but every week you have to
mow the lawn.” —Andy Travis
The important distinguishing features of advertising are as follows:

(i) Paid Form: Advertising is a paid form of communication. The sponsor has to bear the cost of
communicating with the prospects.
(ii) Impersonality: There is no direct face-to-face contact between the prospect and the advertiser.
Therefore It is referred to as impersonal method of promotion. Advertising creates a monologue and
not a dialogue.
(iii) Identified Sponsor: Advertising is undertaken by some identified individual or company, who
makes the advertising efforts and also bears the cost of it.
Merits/Role of Advertising
Advertising, as a medium of communication, has the following merits:
(i) Mass Reach:
Advertising is a medium through which a large number of people can be reached over a vast
geographical area. For example, an advertisement message placed in a national daily reaches
lakhs of its subscribers.
(ii) Enhancing Customer Satisfaction and Confidence:
Advertising creates confidence amongst prospective buyers as they feel more comfortable and
assured about the product quality and hence feel more satisfied.
(iii) Expressiveness:
Advertising has developed into one of the most forceful medium of communication with the
developments in art, computer designs, and graphics. Even simple products and messages can
look very attractive with the special effects.
(iv) Economy:
Advertising is a very economical mode of communication if large number of people are to be
reached. Because of its wide reach, the overall cost of advertising gets spread over numerous
communication links established. As a result the per-unit cost of reach comes low.
Limitations of Advertising (Read Carefully only)

The following are the major limitations of advertising as a tool of promotion:
(i) Less Forceful: Advertising is an impersonal form of communication. It is less forceful than the
personal selling as there is no compulsion on the prospects to pay attention to the message.
(ii) Lack of Feedback: The evaluation of the effectiveness of advertising message is very difficult as
there is no immediate and accurate feedback mechanism of the message that is delivered.
(iii) Inflexibility: Advertising is less flexible as the message is standardised and is not tailor made to the
requirements of the different customer groups.
(iv) Low Effectiveness: As the volume of advertising is getting more and more expanded it is becoming
difficult to make advertising messages heard by the target prospects. This is affecting the
effectiveness of advertising.
SALES PROMOTION
 Sales promotion refers to short-term incentives, which are designed to encourage the buyers to
make immediate purchase of a product or service.
 E.g. cash discounts, sales contests, free gift offers, and free sample distribution.
 These include all promotional efforts other than advertising, personal selling and publicity, used by a
company to boost its sales.
 Sales promotion is usually undertaken to supplement other promotional efforts such as advertising
and personal selling.
 Companies use sales promotion tools specifically designed to promote:
 to customers (e.g., free samples, discounts, and contests),
 to tradesmen or middlemen (e.g., cooperative advertising, dealer discounts and dealer
incentives and contests),
 to sales person (e.g., bonus, salesmen contests, special offers).
 Sales promotions include only those activities that are used to provide short term incentives to boost
the sales of a firm.
Merits of Sales Promotion

(i) Attention Value: Sales promotion activities attract attention of the people because of the use of
incentives.
(ii) Useful in New Product Launch: Sales promotion tools can be very effective at the time of
introduction of a new product in the market. It induces people to break away from their regular
buying behaviour and try the new product.
(iii) Synergy in Total Promotional Efforts: Sales promotion activities are designed to supplement the
personal selling and advertising efforts used by a firm and add to the overall effectiveness of the
promotional efforts of a firm.
Limitation of Sales Promotion
(i) Reflects Crisis: If a firm frequently rely on sales promotion, it may give the impression that it is
unable to manage its sales or that there are no takers of its product.
(ii) Spoils Product Image: Use of sales promotion tools may affect the image of a product. The buyers
may start feeling that the product is not of good quality or is not appropriately priced.
Commonly used Sales Promotion Activities

1. Rebate:
 Offering products at special prices, to clear off excess inventory.
 Example, a car manufacturer’s offer to sell a particular brand of car at a discount of Rs 10,000, for a
limited period.
2. Discount:
 Offering products at less than list price.
 Example, a shoe company’s offer of ‘Discount Up to 50%’ or a shirt marketer’s offer of ‘50+40%
Discount’.
3. Refunds:
 Refunding a part of price paid by customer on some proof of purchase, say on return of empty foils
or wrapper.
 This is commonly used by food product companies, to boost their sales.

4. Product Combinations:
 Offering another product as gift along with the purchase of a product.

 e.g. offer of a pack of ½ kg of rice with the purchase of a bag of Aatta (wheat flour), or
‘Get 128 KB Memory Card Free with a Digicam’ or
‘Buy a TV of 25+ and Get a Vacuum Cleaner Free’ or
‘100 Gm Bottle of Sauce Free With 1 kg Detergent.’
5. Quantity Gift:
 Offering extra quantity of the product commonly used by marketer of toiletry products.
 For example, a shaving cream’s offer of ‘40% Extra’ or A Hotel’s offer of “Take a 2 Night 3 Days
Package At the Hotel and Get an Extra Night Stay At Just Rs 500” or
‘Buy 2 Get 1 Free’ offer of a marketer of shirts.
6. Instant Draws and Assigned Gift:
 For example, ‘Scratch a Card’ or ‘Burst a Cracker’ and instantly win a Refrigerator, Car, T-shirt,
Computer, with the purchase of a TV.
7. Lucky Draw:
 For example, the offer of a bathing soap to win a gold coin on lucky draw coupon for free petrol on
purchase of certain quantity of petrol from given petrol pump or
lucky draw coupon on purchase of easy undergarment and win a car offer.
8. Usable Benefit:
 ‘Purchase goods worth Rs 3000 and get a holiday package worth Rs 3000 free’ or ‘Get a Discount
Voucher for Accessories on Apparel Purchase of Rs 1000 and above.’
9. Full finance @ 0%:
 Many marketers of consumer durables such as Electronic goods, automobiles etc. offer easy
financing schemes such as ‘24 easy instalments, Eight Up Front and 16 To Be Paid as Post Dated
Cheques’.
 However, one should be careful about the file charges, which sometimes is nothing but interest
recovered in advance.
10. Sampling:
 Offer of free sample of a product, say a detergent powder or tooth paste to potential customers at
the time of launch of a new brand.
11. Contests:
 Competitive events involving application of skills or luck, say salving a quiz or answering some
questions.
PUBLIC RELATIONS
 Managing public opinion of an organisation is an important task which can be performed by the
marketing department.
 Public may be interested in the company and its product and have an impact on the business.
 Public relations involve a variety of programmes designed to promote or protect a company’s image
in the eyes of the public.
 Consumer activist groups need to be satisfied because they can impose restriction on the sales of
the firm’s products directly by urging customers to refrain from buying them or through the
imposition of laws.
 Most organisations have a separate department to manage public relations.
 They may also utilize the services of any outside public relations agency.
 Their main task is to disseminate information and build goodwill about the business.
 Concrete steps are to be taken to monitor the attitude of the general public and generate positive
publicity.
 They are especially useful when there is negative publicity about the company or its products.
Role of Public Relations

The public relations department performs five functions:
1. Press relations:
 Information about the organisation needs to be presented in a positive manner in the press.
 Generating news requires skill in developing and researching a story.
 Getting the media to accept press releases is a difficult task.
 The public relations department is in contact with the media to present true facts and a correct
picture about the company.
 Otherwise news can get distorted if taken from other sources.
2. Product publicity:
 New products require special effort to publicise them and the company has to sponsor such
programmes.
 The public relations department manages the sponsoring of such events.
 The company can draw attention to new products by arranging sports and cultural events like news
conferences, seminars and exhibitions.
3. Corporate Communication:
 The image of the organisation needs to be promoted through communication with the public and the
employees within the organisation.
 This is usually done with the help of newsletter, annual reports, brochures, articles and audio-visual
materials.
 Speeches by the company’s executives at a meeting of trade associations or trade fairs can really
boost the company’s image.
 Even interviews with TV channels and responding to queries from the media help in promoting
public relations.
4. Lobbying:
 The organisation has to deal with government officials and different ministers in charge of corporate
affairs, industry, finance with respect to policies relating to business and the economy.
 The government also seeks to maintain a healthy relationship with associations of commerce and
industry and solicits the opinion of major stakeholders while formulating industrial, telecom, taxation
policies, etc.
 The public relations department then has to be really proactive in promoting or defeating
regulations that affect them.
5. Counselling:
 The public relations department advises the management on general issues which affect the public;
and the position the company on a particular issue.
 The company can build goodwill by contributing money and time to certain causes like environment,
wildlife, children’s rights, education, etc.
 Such cause-related activities help in promoting public relations and building goodwill.
6. In addition, maintaining good public relations also helps in achieving the following marketing
objectives:
(a) Building awareness:
Public relations department can place stories and dramatise the product in the media. This will build
marketplace excitement before the product reaches the market or media advertising takes place.
This usually creates a favourable impression on the target customer.
(b) Building credibility:
If news about a product comes in the media whether print or electronic it always lends credibility
and people believe in the product since it is in the news.
(c) Stimulates sales force:
It becomes easier for the sales force to deal with the retailers and convince dealers if they have
already heard about the product in the news before it is launched. Retailers and dealers also feel it
is easier to sell the product to the ultimate consumer.
(d) Lowers promotion costs:
Maintaining good public relations costs much less than advertising and direct mail. However, it
requires a lot of communication and interpersonal skills to convince the media to give space or time
for the organisation and its product.
TEST YOURSELF ASSIGNMENT

1. Impact Ltd. is a large multinational company and operates in many countries of the world. The company is in
the business of organising fashion show, trade fair, music concert, film festival, etc. around the globe.
What is being marketed by the company?
2. Identify the marketing management philosophy highlighted in the following cases:
i. This concept is based on the belief that consumers favour those products which are widely available
at lower prices.
ii. This concept stresses on quality of production rather than quantity of production.
iii. The motive of companies practicing this concept is to sell what they make instead of make what the
market wants.
iv. Maximise the profits by satisfying the customer needs better than the competitors.
v. This concept is an extension of the marketing concept.
vi. Under this concept, product improvement is considered the key to success.
vii. This concept pays attention to social, ecological and ethical aspects of marketing.
viii. Consumer can be convicted and manipulated to purchase the products.
ix. Produce product according to customer needs.
x. It aims at availability and affordability of the product.
3. Mansi, a shoe manufacturing for school students, decided to maximise her profit by producing and distributing
at large-scale and thereby reducing the average cost of production.
a) Identify the marketing management philosophy adopted by Mansi, and
b) Explain this philosophy on the basis of:
i. Main focus and
ii. Means and ends.
4. Ayesha is manufacturing lunch-boxes for school-going children. To maximise profit she decided to improve
the quality and added a warmer for the lunch-boxes. Due to this improvement in product, the sale is
increasing day-by-day. Identify and explain the marketing philosophy involved.
5. Ginika, Tanish and Rohit were friends from college days and now they are doing different kinds of business.
They regularly meet and discuss their business ideas and exchange notes on customer satisfaction,
marketing efforts, product designing, selling techniques, social concerns, etc.
In one such meetings, Ginika drew the attention of Tanish and Rohit towards the exploitation of consumers.
She told that most of the sellers were exploiting the consumers in various ways and were not paying attention
towards the social, ethical and ecological aspects of marketing, whereas she was not doing so.
Tanish told they were under pressure to satisfy the consumers, but stated that the consumers would not buy
or not buy enough unless they were adequately convinced and motivated for the same.
Rohit stressed that a company cannot achieve its objectives without understanding the needs of the
customers. It was the duty of the businessmen to keep consumer satisfaction in mind because business is run
by the resources made available to them by the society. He further stated that the himself was taking into
consideration he needs of the customers.
Identify the various types of thinking that guided Ginika, Tanish and Rohit in the marketing efforts of their
business.
6. Payal Ltd. is a garment manufacturing has decided to identify the needs of the customers to start successful
marketing of the garments produced by it and for this company is doing SWOT analysis (Strength, Weakness,
Opportunity and Threat Analysis). The company is pursuing its objectives with full efforts. It has decided to
make a blueprint for the level of production it will do the efforts behind promotion it will put and all other major
actions it will undertake to achieve its objectives. However, the company has one weak area which it would
like to improve. The physical movement of its prepared garments was not proper last year and the company
wants to ensure it is done properly this year. For this, it has created a separate department.
Identify and explain the three functions of marketing highlighted above by quoting the lines.
7. Shenoy Ltd. is a well established brand name has launched a new product in the same name. The new
product is doing amazingly well and has caught attention of the newspapers. Since, the product is enjoying a
lot of fame the company has decided to charge high prices for it in comparison to the same product launch by
competitor. The top management of the company has decided to make an advertisement campaign for the
success of the product. The company need not worry about the success of the advertising campaign as the
effect of the brand is enough to make the audience recall it. The company can expect good revenue from the
product in future.
Identify and explain three advantages of branding to marketer by quoting the lines.
8. Lakshay went to purchase toothpaste for himself. After entering the mall he went to the place where all Fast
Moving Consumer Goods (FMCG) items were placed. By looking at the packaging of toothpaste he
immediately came to know that it was red gel toothpaste which he preferred. Definitely other items had
different type of packaging like soaps, packaged eatables, etc. As he was walking, it started to rain. He had no
umbrella so he got wet and along with him his toothpaste also get drenched in water. When he reached home
he realised that had the toothpaste packaging not appropriate it might have got spoilt. Days passed and he
daily used to brush his teeth with the same toothpaste. In the morning he often used to realise that though he
had less time but the shape of the tube containing toothpaste was such that he could squeeze the toothpaste
out easily. One month passed and his toothpaste was about to finish. He realised a lot of information was
given about the toothpaste like its quantity, its flavour, its contents, extra promotional quantity of 5gm, brand
name, etc. and all this information helped him repurchase another tube of the same toothpaste.
Identify and explain the four functions of packaging which has been reflected in the above case by quoting
the lines.
9. In a departmental store a product was contained inside boxes of dark colour. The outside surface of boxes
were covered by labels which gave information about the product inside the box and by reading the labels it
could also be identified what were the contents of the material. Gurpreet was one customer who purchased
this item. It was an insecticide. There was a picture of a dead insect and a signal pf warning which showed
that the product was poisonous and had the required killing impact on the insect thus attracting attention of
Gurpreet and helping him purchase it. As he carried product to his house his neighbourer inquisitively asked
about the product in his hand. He told him it was insecticide. On hearing the neighbourer reacted negatively
and said that it could be dangerous for children. He told him that there is required information printed on the
box based on the directives given by the government which makes it mandatory for the company to put
warning.
a) Identify and state the important product-related decision highlighted above.
b) Explain its three functions highlighted above by quoting the lines.
10. Identify whether a firm would set a high or low prices for their product in the given situations:
i. In case of inelastic demand.
ii. If firm wants to attain product quality leadership.
iii. If there is lesser degree of competition.
iv. If firm decides to maximum profits in the short run.
v. If the firm is providing marketing facilities like free home delivery market.
vi. If a firm objective is to obtain larger share of the
vii. If government has declared a product a product as essential product.
viii. If the firm decides to maximise profits in the long run.
11. Sagar is a small entrepreneur involved in the manufacturing of shaving cream. He finds that cost of production
of 100 gm of shaving cream is Rs 225. He has decided to keep a margin of 10% as profit. Moreover, he has
assessed that there is a free competition in this product segment.
a) Identify the functions of marketing being performed by Sagar.
b) State the two factors that he is taking into consideration while performing the function as identified in
(a) above.
12. Identify whether a firm would prefer short or long channel of distribution in the following situations:
i. If the size of order is small.
ii. If the unit value of a product is low.
iii. If the number of buyers is large.
iv. In case of complex products requiring technical details.
v. Perishable products like fruits, vegetables and dairy products.
vi. If buyers are concentrated in a limited area.
vii. If economy is depressed.
viii. If the firm has plenty of funds.
ix. If the management want to have greater control over distribution.
x. In case of industrial products.
13. Identify the method of sales promotion in the following cases:
i. A company offers a pack of ½ kg of sugar with the purchase of a 5Kg bag of wheat flour.
ii. A mobile company offers a discount of Rs 500 to clear off excess inventory.
iii. A customer gets Rs 5 off on return of a empty wrapper while making a new purchase of the same
product.
iv. A company offers 40% of extra shaving cream in a pack of 500 gms.
v. Scratch a card and get a gold coin with the purchase of a cold drink.
vi. Purchase goods worth Rs 50,000 and get a holiday package worth Rs 10,000 free.
vii. Nokia announced Rs 2500 off on MRP.
viii. Samsung offered a free i-pod with every LED TV.
ix. A sachet of new brand of shampoo attached to a magazine for use by its readers.
x. A comb free with a bottle of hair oil.
14. Radha found a worm crawling out of newly opened tetra pack of a juice manufactured by a reputed tetra pack
of a juice manufactured by a reputed company, Zest, Ltd. She went back to the shopkeeper from whom the
pack was purchased who directed her to call up the customer care centre. When all her efforts failed, she
went to a consumer activist group to seek help. The group decided to help Radha and take measures to
impose restrictions on the sale of the firm's products of the particular batch and urge customers to refrain from
buying the products of the company. Zest Ltd. lost its image in the market. The CEO gives the responsibility of
bringing back the lost image of the company to a manager.
a) Identify the concept of Marketing Management which will help the manager getting the firm out of the
above crises.
b) Also explain the role of above identified concept by stating any two points.

CH 11

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Chapter 11

2. Creating a Market Offering:

MARKETING MANAGEMENT PHILOSOPHIES

The Product Concept:

The Selling Concept:

The Marketing Concept:

The Societal Marketing Concept

1. Gathering and Analysing Market Information:

3. Product Designing and Development:

4. Standardisation and Grading:

5. Packaging and Labelling:

7. Customer Support Services:

10. Physical Distribution:

 The two major decision areas under this function include:

12. Storage or Warehousing:

Advantages to the Marketers

Characteristics of Good Brand Name

Factors Affecting Price Determination

3. Manufacturer-Agent-Wholesaler- Retailer-Consumer (Three Level Channel):

Components of Physical Distribution

The important distinguishing features of advertising are as follows:

Limitations of Advertising (Read Carefully only)

Merits of Sales Promotion

Commonly used Sales Promotion Activities

 Offering products at special prices, to clear off excess inventory.

 Offering products at less than list price.

 This is commonly used by food product companies, to boost their sales.

 Offering another product as gift along with the purchase of a product.

Role of Public Relations

TEST YOURSELF ASSIGNMENT

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