MM1 - PPTs Merged

MARKETING MANAGEMENT
Dr. MUKESH MISHRA

MARKETING MANAGEMENT:
DEFINITIONS
➢ 1. “Marketing is the creation and delivery

of a standard of living”.
➢ 2. “Marketing is a managerial and societal
process by which individuals and groups
obtain what they need and want through
creating, offering, and exchanging
products and services of value with
others”.
DEFINITIONS
3.Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value to
customers and for managing customer
relationships in ways that benefit the
organization and its stakeholders.
DEFINITIONS
⚫ Marketing management is the

⚫ art and science
⚫ of choosing target markets
⚫ and getting, keeping, and growing
⚫ customers through
⚫ creating, delivering, and communicating
⚫ superior customer value.
WHAT IS MARKETED?
Marketers are
involved with 5. Persons
marketing ten
6. Places
types of entities:
1. Physical Goods 7. Properties
2. Services 8. Organizations
3. Experiences 9. Information
4. Events 10. Ideas
Good Marketing is No Accident
The roaring success of

four-wheeler Tata Ace,
in a market earlier
dominated by three-
wheeler load carriers,
was due to a deep
understanding of the
market needs and
customer requirements
Big on technology.
Small in size
➢ Tata Ace, a mini truck with the engine capacity of

less than one ton launched by Tata motors in 2005.
➢ The resounding success of Tata ace was due to deep
understanding of the market needs and the customer
requirement.
➢ The company realized that, as the Indian economy
was growing, there would be for smaller vehicles
that can navigate through the narrow roads and by
lanes of city, small towns and village
➢ In order to compete effectively with three wheeler

majors who dominated the market of small payload
vehicles, the company needed to offer better
solution to the customer.
➢ The solution lay down in the market, and that is
where the engineers went- to talk the transporters,
the small traders and the farmers- to learn what they
wanted.
➢ Discussion with potential customer and detailed
marker research indicated that potential customer
needed vehicles for last mile distribution for
carrying less than one ton load over short distances.
➢ Customer were willing to pay a marginally high

price for such product. But what come out more
strongly was the social status associated with four
wheeler.
➢ Based on customer insight, the company decided to
introduce a vehicle positioned as a Tata truck in
mini size with competitive price tag while
maintaining higher quality standards.
➢ Within 22 month of launch of vehicle, the company
rolled out the 1,00,000th ace , surpassing the
company optimistic target
Who Markets?
Marketers and prospects
➢ A marketer is someone who seeks a
response-attention, a purchase from other
parties called prospect.
➢ If two parties are seeking to sell something
to each other, we call them both marketers
Who Markets?
Market
➢ It is collection of buyers and sellers who
transact over a particular product or product
class
A Simple Marketing System
1-
Types of Demand
1. Negative demand- customer dislike the
product and may even pay price to avoid it.
2. Non existence demand- consumers may be
unaware of or uninterested in the product.
3. Latent demand- consumer may share a strong
need that cannot be satisfied by existing
product.
4. Declining demand- consumer begin to buy
the product less frequently or not at all.
Types of Demand
5. Irregular demand- Consumer purchases vary
on a seasonal, monthly, weekly, daily, or even
hourly basis.
6.Full demand- consumers are adequately buying
all the products put into market place.
7. Overfull demand- More consumer would like
to buy the product that can be satisfied.
8.Unwholesome Demand- Consumers may be
attracted to products that have undesirable
social consequences.
Structure of Flows in a Modern Exchange
Economy
Key Customer Markets
Consumer Markets Global Markets
Business Markets Nonprofit/ Government Markets

www.marutitruevalue.com
Functions of CMOs
⚫ Strengthening the brands

⚫ Measuring marketing effectiveness
⚫ Driving new product development based on
customer needs
⚫ Gathering meaningful customer insights
⚫ Utilizing new marketing technology
Improving CMO Success
⚫ Make the mission and responsibilities clear

⚫ Fit the role to the marketing culture and structure
⚫ Ensure the CMO is compatible with the CEO
⚫ Remember that show people don’t succeed
⚫ Match the personality with the CMO type
⚫ Make line managers marketing heroes
⚫ Infiltrate the line organization
⚫ Require right-brain and left-brain skills
Core Marketing concepts
Needs, Wants and Demand
➢ Needs are basic human requirement
➢ Wants are needs directed to a product
➢ Demand is a want accompanied by buyers
ability to pay.
Today the challenge for the
marketer is that of converting needs to
wants to demands
➢ Marketers don't create needs: Needs preexist
markets. Marketers along with other societal factors,
influence wants.
Five type of needs
1.Stated need(the customer wants an inexpensive car)
2.Real needs(the customer wants a car whose
operating cost is low)
3.Unstated needs(the customer expects good service
from dealer)
4.Delight needs
5.Secret need (the customer wants friends to see him
as a savvy consumer)
Target Markets, Positioning and Segmentation
➢ A marketers can rarely satisfy everyone in
the markets.
➢ Marketers start by dividing the market into
segments.
➢ They identify and profile distinct groups of
buyers who might prefer or require varying
product mix by examining demographic,
psychographic, and behavioral differences
among buyer
➢ After identifying market segments, the
marketer then decides which present the
great opportunity-which are its target
market.
➢ For each, the firm develops a market
offerings ie positions in the minds of the
target buyers as delivering some central
benefits
➢ E.g. Scorpio (SUV) launched by M&M is
designed for people who prefer sturdy
vehicle that offers luxury and comfort
Positioning
Press ads of the

Scorpio focused on the
functional features of
the vehicle and the
television ads focused
on emotional benefits.
Offerings and Brands
➢ Company address needs by putting forth a
value proposition(functional, emotional and
self expressive benefits)
➢ A brand is an offering from a known source.
the brand name carries many associations
in peoples mind that make up the brand
image
Value and Satisfaction
➢ The offering will be successful if it delivers
value and satisfaction to the target buyer.
➢ The buyer choose between different
offerings based on she perceive to deliver
the most value
➢ Value reflects the sum of the perceived
tangible and intangible benefits and costs to
the customer
➢ Value is a composition of quality service
and price (QSP) called the customer value
triad
➢ Value increases with quality and service
and decreases with price although other
factors can also play an important role in
our perception of value
➢ Marketing can be considered as
identification , creation , communication
delivery and monitoring of customer value.
➢ Satisfaction reflects person judgments of a
product perceived performance in
relationship with expectations.
➢ If performance falls short of expectation he
customer is dissatisfied and disappointed.
➢ If it matches expectations, the customer is
satisfied, if it exceeds them, the customer is
delighted.
Marketing channels
➢ To reach a target market, the marketers uses
3 kinds of marketing channels
➢ Communication channels deliver and
receive message from target buyers and
include newspaper, magazines, radio, tv,
billboard and internet.
➢ Distribution channels is used to display,
sell, or deliver the physical product or
services to the buyer or user.
➢ It include distributors,wholesalers,retailers and
agents.
➢ Service channels is used to carry out
transactions with potential buyers.
➢ It include warehouses, transportation
companies, banks, and insurance companies
that facilitate transactions.
Marketer face a design challenge in

choosing the best mix of communication,
distribution, and service channels for their
offering.
Supply Chain
➢ The supply chain is a longer channel stretching
from raw materials to components to final
products that are carried to final buyers
➢ Each company captures only a certain
percentage of the total value generated by
supply chains value delivery system.
➢ When a company acquires competitors or

expands upstream or downstream, it aim to
capture a higher percentage of supply chain
value.
Competition
➢ Competition includes all the actual and
potential rival and substitute a buyer might
consider
Marketing Environment
➢ It consists of the task environment and
broad environment
➢ The task environment includes the actor
engaged in producing, distributing, and
promoting the offering
➢ These are company suppliers, distributor
dealers, and the target customers.
➢ In the supplier group are material suppliers and
service suppliers, such as marketing research
agencies, ad agencies, banking and insurance
companies and transportation companies.
➢ The broad environment consists of six
components: demographic environment,
political-legal environment and socio cultural
,technical, natural and economic
The marketplace isn’t what it used to be…
Information technology
Globalization
Deregulation
Privatization
Competition
Convergence
Consumer resistance
Retail transformation
New Consumer Capabilities
⚫ A substantial increase in buying power
⚫ A greater variety of available goods and services
⚫ A great amount of information about practically
anything
⚫ Greater ease in interacting and placing and
receiving orders
⚫ An ability to compare notes on products and
services
⚫ An amplified voice to influence public opinion
Company Orientation toward
the marketplace
The Production Concept
➢ It holds that consumers will prefer product
that are widely available and inexpensive.
➢ Manager of production oriented business
concentrate on achieving high production
efficiency, low costs and mass distribution
➢ This orientation make sense in developing
country
the marketplace
The Product Concept
➢ It proposes that consumers favor products that
offer the most quality, performance, or
innovative features.
➢ Manager in these organization focus on
making superior product and improving them
over time.
➢ But a new or improved product will not
necessarily be successful unless its priced,
distributed, and sold properly.
the marketplace
The selling concept
➢ This concept holds that a organization must
undertake an aggressive selling and promotion
effort.
➢ The selling concept is practiced most aggressively
with unsought goods, goods that buyer normally
don’t think of buying.
➢ Most firm also practice the selling concept when
they have over capacity. Their aim is to sell what
they make, rather than what the market wants.
the marketplace
The Marketing Concept
➢ The marketing concept holds that the key to
achieving organizational goals is being
more effective than competitors in creating,
delivering, and communicating superior
customer value to your chosen target
market.
Holistic Marketing Dimensions
the marketplace
➢ The holistic marketing concept is based on
development, design ,and implementation
of marketing programs, processes, and
activities that recognizes their breadth and
interdependencies.
➢ It is an approach that attempts to recognize
and reconcile the scope and complexities of
marketing activities
the marketplace
Relationship Marketing
➢ A key goal of marketing is to develop deep,
enduring relationships with people and
organization that directly or indirectly affect
the success of the firm`s marketing activities.
➢ Relationship Marketing aims to build mutually
satisfying long-term relationship with key
constituent in order to earn and retain business
the marketplace
➢ Four key constituents for relationship
marketing are customer, employees, marketing
partner (channels, suppliers, distributor,
agencies) and member of financial community
(shareholders, investors, analysts)
➢ To develop strong relationship with them
requires understanding their capabilities and
resources, needs, goals, and desires
the marketplace
➢ The ultimate outcome of relationship marketing is a
unique company assets called a marketing networks.
➢ A marketing networks consists of the company and
its supporting stakeholders-with whom it has build
mutually profitable business relationships
➢ The operation principle is simple:build an effective
network of relationships with key stakeholders, and
profits will follow.
➢ Attracting a new customer may cost five time as
much as doing a good enough job to retain an
existing one.
the marketplace
Integrated Marketing
➢ The marketers task is to devise marketing activities
and assemble fully integrated marketing programs to
create, communicate, and deliver value for customer.
➢ marketers should design and implement any one

marketing activity with all other activities in mind
➢ McCarthy classified these activities as marketing-mix

tools of four broad kinds, which he called 4ps of
marketing: product, price, place, and promotion.
The Marketing Mix
the marketplace
➢ The firm can change its price, sales force size, and
ad expenditures in the short run.it can develop new
product and modify its distribution channels only in
long run.
➢ The four ps represents the sellers view of marketing
tools available for influencing buyers
➢ From buyers point of view, each marketing tool is
designed to deliver a customer benefits.
➢ A complimentary breakdown of marketing
activities has been proposed that centers of customer
four dimensions are (SIVA) solution, Information,
Value and access
The New Four Ps
People
Processes
Programs
Performance
The New Four Ps
1.People-
➢ It reflects , in part, internal marketing and
the fact that employees are critical to
marketing success.
➢ It also reflect the fact that marketers must
view consumers as people to understand
their life more broadly, and not just as they
shop for and consume products and
services.
The New Four Ps
2. Processes
➢ It reflects all the creativity, discipline, and
structure brought to marketing management.
➢ Only by instituting the right set of processes
to guide activities and program can a firm
engage in mutually beneficial ling term
relationship.
The New Four Ps
3.Programs
➢ It reflect to firm consumer-directed activities
➢ It encompasses the old four Ps as well as range
of other marketing activities that might not fit
as nearly into old view of marketing
➢ These activity must be integrated such that
their whole is greater than the sum of their
parts and they accomplish multiple objectives
for frim.
The New Four Ps
4. Performance
➢ To capture range of possible outcome
measures that have financial and non
financial implications(profitability as well
as brand and customer equity) and
implications beyond the company
itself(social responsibility, legal, ethical and
community related)
the marketplace
Internal Marketing
➢ It ensure that everyone in organization embraces
appropriate marketing principles, especially senior
management.
➢ It is the task of hiring , training, and motivating able
employees who want to serve customer well.
➢ Smart marketers recognize that marketing activities
within the company can be more important than
marketing activites directed outside the comapany
➢ It make no sense to promise excellent service befor
the companies staff is ready to provide it.
the marketplace
Performance Marketing
➢ It is understanding the returns to the business
from marketing activities and programs as well
as addressing broader concerns and their legal,
ethical, social, and environmental effects
➢ Top management is going beyond sales
revenue to examine the marketing score card
and intreprete what is happening to market
share, customer loss rate, customer
satisfaction, product quality, and other
measures
the marketplace
Financial Accountability
➢ Marketers are being increasingly asked to
justify their investments to sinior
management in financial and profitability
terms, as well in terms of building brand
and growing customer base.
➢ They are applying broader variety of
financial measures to assess the direct and
indirect value their marketing efforts create.
the marketplace
Social Responsibility Marketing
➢ The effect of marketing clearly extend beyond the
company and the customer to society as a whole.
➢ Marketers must carefully consider their role in
broader terms, and the ethical, environmental, legal,
and social context of their activities
➢ The societal marketing concept holds that the
organizations task is to determine the needs , wants,
and interest of the target market and to deliver the
desired satisfaction more efficiently and effectively
than competitors in away to preserve or enhances
the consumers and society long term well being.
Marketing Management Tasks
⚫ Develop market strategies and plans
⚫ Assess market opportunities and customer
value
⚫ Choose value
⚫ Design value
⚫ Deliver value
⚫ Communicate value
⚫ Sustain growth and value
Marketing Environment
Objectives
➢ Understanding the behavior of key

environmental forces that have an implications
on marketing decisions.
➢ Grasp the technique available for environmental
scanning.
➢ Some important macro economic development.
Introduction
➢ It is very important for the marketer to

monitor the environmental forces and take
necessary steps to negate/take advantage of
them before competition
➢ In India many industries lost their competitive
advantage to relatively new entrant in 1980
and thereafter
➢ HM and premier automobiles lost their pre
eminent position in the Indian market to
Maruti 800
Introduction
➢ Titan watches herald a new era of watches and

shock the giant HMT.
➢ Today south Korean brand LG and Samsung are the
principal players leaving behind the Indian
Companies like Videocon.
➢ Analysis of the external environment consists of
identification of opportunities and threats and
tracking it to particular sources.
➢ E.g. A small family with a one child means the
emergence of a child market where all parental
attention is focused on this child
Needs and Trends
1.Fad
➢ A fad is unpredictable, short-lived, and
without social, economic and political
significance.
➢ A company can cash in on a fad, but getting
it right is more a matter of luck and good
timing than anything else.
Needs and Trends
2.Trend
➢ A trend is a direction or sequence of events
that has some momentum and durability
➢ Trends are more predictable and durable
than fads. A trend reveals the shape of
future and provide many opportunities. E.g.
physical fitness.
Needs and Trends
3.Megatrends
➢ It is a large social, economic, political, and
technological changes that are slow to form, and
once in place, they influence us for some time 5-10
years.
➢ E.g. young employees
companies and their suppliers, marketing
intermediaries, customers, competitors, and public
all operate in a macro environment of forces and
trends, increasingly global that shape opportunities
and poses threats
Environmental Forces
Demographic
Political-Legal Economic
Technological Socio-Cultural
Natural
Demographic Environment
➢ The main demographic force that marketers

monitor is population, because people make up
the markets.
➢ Marketers are keenly interested in the size and
growth rate of population in cities, region, and
nations; age distribution and ethnic mix;
educational level; household patterns; and
regional characteristics and movements
a)Age composition
➢ a marketer needs to understand the age
composition in a country. This will help them
to decide their optimal marketing mix and
also take strategic decisions regarding
entering a particular market segment.
➢ E.g. about 72% of Indian market is a young
market consisting of people in the age group
of 5-44 years
b) Sex structure of population and role of women

➢ Besides the age , it is necessary to break up
population according to sex and study the role of
women in Indian society.
➢ E.g. more and more women have taken to working
and to professional careers and hence one observes
an increase in the no. of working couples
➢ To help her and the family, many time-saving
appliances like cooking range , washing machine,
vacuum cleaner, as well ready to eat foods are
available in the market.
c) Role of Man
➢ Today man is perceived as more caring, concerned
and sensitive.
➢ He is continuously searching for new avenues of
growth for himself and other family member
➢ His relation with his family, peer group, and
opposite sex, has changed.
➢ He perceives entertainment as very important for
the family, so long as it does not lead to
extravaganza.
d)The new urban child

➢ This child is more responsible, disciplined, career-
minded, and conscious for family values.
➢ He or she has a role in the purchase and consumption
of all products and services.
➢ A highly ambitious, confident, and aware child, dreams
for becoming rich and famous like D Ambani, s
tendulakar or Bill gates, therefore role models are
parents, the rich, and celebrities.
➢ Fashion plays an important part. But for him, adopting
fashion product is dependent on the peer groups
influence.
e) Occupation and Literacy profile

➢ A major determinants of market structure in counties like india
is the literacy rate of the population,
➢ this is so because it affects the demand for information and
also the quality of demand for other products and services.
➢ As in 2001, about 65.4% of Indian were literate.75%of Indian
males were literate as opposed to 54% of women. the Indian
market has been on ascent so far as literacy is concerned.
➢ The occupational profile of the population also affects the
media choice and product demand,
➢ E.g. a shirt or suiting exclusively for the professional
executive sells best when advertised in business magazines
Economic Environment
➢ The available purchasing power in an economy

depends on current income, prices, savings,
debt and credit availability
➢ Marketer must pay attention to ternds affecting
purchasing power because they can have
strong impact on business, especially for
companies whose product are geared to high-
income and price sensitive consumers
• Wage inflation – annual wage increases in a particular
sector will depend on the supply of labour in that sector.
Where there is scarcity of supply, wages usually increase
(e.g. doctors).
• Price inflation – how much consumers pay for goods and
services is dependent on the rate of supply of those goods
and services.
• Gross domestic product per capita – combined output of
goods and services in a particular nation determines
relative wealth between countries when comparisons are
calculated per member of the population.
• Income, sales and corporation taxes – typically operating in all

countries around the world usually at different levels, substantially
affecting how we market goods and services.
• Exchange rates – the relative value of a currency vis-à-vis

another currency impacts on businesses operating in foreign
markets or holding financial reserves in other currencies.
• Export quota controls and duties – there are often restrictions

placed on the amounts (quotas) of goods (and services) that any
particular firm or industry can import into a country, depending on
to which trading bloc or country a company or firm is exporting.
➢ The economic environment affects the demand

structure of any industry or product. in order to
assess the impact of these forces.
➢ It is necessary that a marketer examines the
following factors in great detail.
⚫ Gross National Product
⚫ Per capita income
⚫ Balance of Payments Position
⚫ Trends the prices of goods and services
Income Distribution
➢ A marketer needs to understand the distribution of
income to reach more meaningful conclusions about
taking specific decisions.
➢ 77.7% of urban households in India have a monthly
income of up to Rs 3000.Urban households with a
monthly income between Rs3001 and 6000 are
estimated to about 16.2% and another 4% with a
monthly household income of Rs 60001- 10,000.
Only about 2.15 of urban household have monthly
income of over Rs 10000.
The NCAER has classified Indian consumers into 5 categories

according to annual house hold income
⚫ Destitute :Below Rs 16,000(Not active Participant in market
exchange for a wide range of goods)
⚫ Aspirants: Between Rs 16001 and 22,000(New entrant in
consumption system due to increase in their real income)
⚫ Climbers :Between Rs 22001 and 45000(Have desire and
willingness to buy, but have limited cash at hand)
⚫ Consuming Class: Between Rs 45000 and 215000 (household
that form the majority of consumers; have money and willing to
spend)
⚫ Very rich : Over Rs.2,15,000(those who have money and own a
wide range of products)
➢ The no. of households classified as the rich is estimated to

grow by 95% from the year 95-96 to 2006-2007, the
consuming class by 132%, and the climber class by 51%.
➢ The percentage of aspirants is expected to decline by 54%
and the destitute by about 50%
➢ The rich class in urban areas is estimated to increase by
400%, where as rural India indicate a growth of 200%
➢ The climber are estimated to grow by 145% in urban areas
and by 119% in rural areas.
➢ It is expected that the urban areas are likely to register a
sharper reduction in households belonging to the aspirants
and destitute category than the rural areas.
Cultural Environment
➢ Cultural forces are the most difficult uncontrollable variable to
predict. It is important for marketer to understand and
appreciate the cultural values of the environment in which they
operate.
➢ The element that build up the cultural environment are
Language, aesthetic(art, drama, music, folk), Religion and
education.
➢ Changes in cultural environment affect consumer behavior,
which affects sales of products.
➢ Culture has a large impact on the consumption habit of people.
since culture is homogeneous within a group. so there is
similarities in choice which need to be paid attention by
marketing manager
➢ E.g. Mc D, KFC, Kelloggs
Natural Environment
➢ The deterioration of the natural
environment is a major global problem.
➢ There is a great concern about Green House
Gases in the atmosphere due to burning of
fossil fuels.
➢ About the depletion of the ozone layer due
to certain chemical and global warming and
about the growing water shortage.
Natural Environment
➢ The campaign against Coca-cola by the local
community in Kerla, alleging the environmental
deterioration and shortage of drinking water in the
vicinity of the plant, is an example of the increasing
environmental consciousness.
➢ Steel companies and public utilities have had to
invest billions of dollars in pollution-control
equipment and more environmentally friendly fuels.
➢ The soap industries increased its product
biodegradability.
Technological Environment
➢ Every new technology is a force for `creative
destruction` transistor hurt vacuum tube industry,
Xerography hurt the carbon paper business.
➢ Marketer should monitor the following four trends
in technology:
A) accelerating pace of change
➢ Many of today's common products were not
available 40 years ago.
➢ Electronic researchers are building smarter chip to
make our cars, homes and office connected and
more responsive to changing conditions
Technological Environment
b) Some of the most exciting work today is taking
place in biotechnology, computers,
microelectronics, telecommunication and designer
materials
c)Varying R&D Budgets
➢ Increasing opportunities emerging as a result of
globalization are forcing many companies in South
Asia to increase their R&D efforts.
d)Increased regulation of technological change
➢ Gov. has expanded its agencies power to investigate
and ban potentially unsafe product
Political-Legal Environment
➢ It consists of laws, government agencies,
and pressure group that influence and limit
various organization and individuals.
➢ These laws sometimes also create new
opportunities for business.e.g. Recycling
➢ Major trend in political –legal environment
are
a) Increase in business legislation
➢ Its main purpose are to protect companies
from
⚫ To protect consumers from unfair business
practices
⚫ To protect the interests of society for
unbridled business
b)Growth of special interest group
➢ in order to protect interest of consumer Gov. passed
legislation consumer protection act 1986. under this act
following 6 rights of consumer were recognized
⚫ safety
⚫ Information
⚫ Choice
⚫ Representation
⚫ Redressal
⚫ Consumer education
The Political Environment: Business-
Government Relations
Several ways marketers conduct business
➢ government relations in various countries include:
➢ Lobbyist firms, with key industry knowledge, are

engaged either permanently or as needed.
➢ Using public relations consultancies, e.g. Public
Relations Consultants Association of India, can be
commissioned for their political services.
➢ A politician can be paid a fee to give political advice on
matters of importance to an organization, where this is
legal within that particular jurisdiction, and that
politician is not serving directly within the government
in question on the same portfolio as that on which they
are advising.
The Political Environment: Business-
Government Relations
➢An in-house public relations manager might
handle government relations directly.
➢An industry association can be contacted to
lobby on behalf of members (e.g. the
International Marine Contractors Association
(IMCA) is the international trade association
representing offshore, marine, and underwater
engineering companies).
➢A politician may be invited directly to join the
board of directors, board of trustees, or board
of advisers of an organization.
Environmental Scanning
• According to Aguilar (1967), environmental
scanning is the process of gathering information
about a company’s external events and
relationships, in order to assist top management in
its decision-making, and so develop its future
course of action.
• It can be regarded as the internal communication of
external information about issues that may
potentially influence an organisation’s decision-
making process, focusing on the identification of
emerging issues, situations and potential threats in
the external environment (Albright, 2004).
Information Requirements for
Environmental Scanning
• Customer and competitor information –
➢ including competitors’ prices, competitors’ new product introductions,
competitors’ advertising/promotional programmes, competitors’ entry into new
markets and new product technologies, customers’ buying habits, customers’
product preferences, customers’ demands and desires.
• Company resources and capabilities

➢ including company’s R & D capabilities and resources, company’s advertising
and promotions resources, company’s sales capabilities/resources, company’s
financial capabilities/resources, company’s management capabilities/resources.
• Suppliers of labour and funds

➢ including availability of external financing, availability of labour and new
manufacturing technologies (Beal, 2000
Environmental Scanning Process
Understanding Task/Performance Environment
The performance environment consists of those organizations that

either directly or indirectly influence an organization’s operational
performance. There are three main types:
1.Those companies that compete against the organization in the
pursuit of its objectives.
2.Those companies that supply raw materials, goods, and services and
those that add value as distributors, dealers, and retailers, further
down the marketing channel.
3.Those companies that have the potential to indirectly influence the
performance of the organization in the pursuit of its objectives. These
organizations often supply services such as consultancy, financial
services, or marketing research or communication agencies.
Industry Analysis: Porter’s Five Forces
1. Threat that new competitors will enter the

market
2. Threat posed by substitute products
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Intensity of rivalry between the current
competitors
Industry Analysis: Porter’s Five Forces
Analyzing Consumer Markets
Analyzing Consumer Markets
⚫ How do consumer characteristics influence
buying behavior?
⚫ What major psychological processes influence
consumer responses to the marketing program?
⚫ How do consumers make purchasing
decisions?
⚫ How do marketers analyze consumer decision
making?
Hariyali Kisaan Bazaar:
Connecting with Customers
Hariyali Kisaan Bazaar:
Connecting with Customers
➢ Successful marketing requires that companies
fully connect with their customers.
➢ Adopting a holistic marketing orientation means
understanding customers—gaining a 360-degree
view of both their daily lives and the changes that
occur during their lifetimes so the right products
are always marketed to the right customers in the
right way.
➢ DSCL’s Hariyali Kisaan Bazaar provides a wide
range of products and services relevant to the
target segment—Indian farmers—based on deep
customer insight.
What Influences
Consumer Behavior?
Cultural Factors
Social Factors
Personal Factors
Cultural Factors
➢ Consumer behavior is the study of how
individuals, groups, and organizations select,
buy, use, and dispose of goods, services,
ideas, or experiences to satisfy their needs and
wants.
➢ Marketers must fully understand about the
theory and reality of consumer behavior.
➢ Culture subculture and social class are
particularly important influences on consumer
buying behavior.
Cultural Factors
➢ Culture is the fundamental determinant of persons
wants and behavior. The growing child acquires a
set of values, perceptions, preferences, and
behaviors through his family and other key
institutions
➢ A child growing up in a traditional middle-class
family in India is exposed to following values:
respect and care for elders, honesty and integrity,
hard work, achievement and success,
humanitarianism, and sacrifice.
➢ A child growing up in the US is exposed to the
following values: achievement and success,
,efficiency and practicality, progress, material
comfort, individualism, freedom.
Subcultures
Nationalities
Religions
Racial groups
Geographic regions
Cultural Factors
➢ Each culture consists of smaller subcultures
that provide more specific identification and
socialization for their members.
➢ Subculture includes nationalities, religions,
racial groups, and geographic regions.
➢ When subculture grow large and affluent
enough, companies often design specialized
marketing programs to serve them.
Cultural Factors
➢ Multicultural marketing grew out of careful
marketing research, which revealed that different
ethnic and demographic niches did not always
respond favorably to mass marketing advertising.
Social Class
➢ All human societies exhibit social stratification.
Stratification sometimes takes the form of a caste
system, more frequently it takes the form of social
classes, relatively homogeneous and enduring
divisions in a society, which are hierarchically
ordered , whose member share similar value,
interests and behavior. Social class in US are as
below
Social Classes
Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers
Social Classes
A1
A2
B1
B2
C
D
E1
E2
Social classes
➢ Virtually all human societies exhibit social stratification,
most often in the form of social classes, relatively
homogeneous and enduring divisions in a society,
hierarchically ordered and with members who share
similar values, interests, and behavior.
➢ Indian marketers use a term called Socio-Economic

Classification (SEC), which uses a combination of the
education and occupation of the chief wage earner of the
household to classify buyers in urban areas.
Social classes
➢ This classifies all the urban households into eight
broad categories, namely, A1, A2, B1, B2, C, D,
E1, and E2; with A1 signifying the highest purchase
potential and E2 signifying the lowest.
➢ For the rural areas, the system uses the occupation

of the chief wage earner of the household and the
type of house to classify households into four broad
categories from R1 to R4 in the descending order
of purchase potential.
Social Classes
Characteristic of social Classes
➢ Those within each class tend to behave more
alike than person from different social classes
➢ Social class differ in dresses, speech patterns,
recreational preferences, and many other
characteristics.
➢ Social classes show distinct product and brand
preferences in many areas, including clothing,
home furnishing, leisure activities.
➢ Social classes differ in media preferences.
Social factor
Social factor which affect our buying behavior
are
1.Reference Group
2.Family
3.Role and Status
Reference Groups
Membership groups
Primary groups
Secondary groups
Aspirational groups
Dissociative groups
Social factor
➢ A person reference groups are all the groups that have
direct( face to face ) or indirect influence on their
attitudes or behavior.
➢ Groups having a direct influence are called membership
group. Some of these group are primary groups with
whom the person interacts fairly continuously and
informally, such as family, friends, neighbors, and
coworkers.
➢ People also belong to secondary group such as
religious, professional, and trade union groups, which
tend to be more formal and require less continuous
interaction
Social factor
➢ Reference group influences members in many
ways. they expose an individuals to new
behavior and life style, they influence
attitudes and self –concept, and they create
pressures for conformity that may affect
product and brand choices
➢ People are also influence by the groups to
which they don’t belong. Aspirational group
are those a person hope to join, dissociative
groups are those value or behavior an
individuals rejects
Social factor
➢ Where reference group influence is strong,
marketers must determine how to reach and
influence the groups opinion leader.
➢ An opinion leader is a person who offers informal
advice or information about a specific product or
product category such as which of the several
brands is best or how a particular product may be
used.
➢ Opinion leaders are highly confident, socially
active, and involved with the category.
➢ Marketer try to reach opinion leaders by identifying
their demographic and psychographic
characteristics, identifying the media they read, and
directing message to them
Provogue uses teenage icons as brand ambassadors and a
youth targeted website to connect to its customers
Radio Shack Targets Women with
Female Store Managers
Social factor
2. Family
➢ The family is the most important consumer buying
organization in the society, and family members
constitute the most influential primary reference
group. There are two family in the buyer life
a) The family of Orientation
➢ It consists of parents and siblings. from parents a
person acquire an orientation towards religion,
politics, a sense of personal ambition, self worth,
and love.
b) The family of Procreation
➢ It consist of one`s spouse and children. In a
countries where parent live with grown children,
their influence can be substantial.
Social factor
3. Role and Status
➢ A person participates in many groups- family, clubs,
organizations. Group often are an important source
of information and help to define norms of behavior.
➢ We can define a person`s position in each group to
which he belongs in terms of role and status.
➢ A role consists of the activities a person is expected
to perform. Each role carries a status.
➢ A VP marketing has more status than sales manager,
sales manager has more status than an office clerk .
People chose a product that reflect and
communicate their role and actual or desired status
in society. Marketers must be aware of the status
symbol potential of products and brands
Personal Factors
Age
Self- Life cycle
concept stage
Lifestyle Occupation
Values Wealth
Personality
Personal Factors
1.Age and Stage in The Life Cycle
➢ People buy different goods and services over a
life-time . Taste in food , clothes and furniture, and
recreation is often age related.
➢ Consumption is shaped by the family life cycle.
Trends like delayed marriage, children migrating
to distant cities or abroad for work leaving parents
behind, tendency of professionals/ working couple
to acquire assets such as house or automobile in
the early stages of career has resulted in different
opportunities for marketers at different stages in
the consumer life cycle.
➢ Marketer should also consider critical life events
or transitions- marriage, childbirth, illness ,
relocation, divorce, career change, as giving rise to
new need.
Age and Stage of Lifecycle
The Family Life Cycle
Personal Factors
b) Occupation and Economic circumstances

➢ Occupation also influences consumption
patterns. Marketers try to identify the
occupational groups that have above average
interest in their product and service.
➢ Product choice is greatly affected by economic
circumstances: spendable income, saving and
assets and attitude toward spending and saving.
Personal Factors
c) Personality and Self concept

➢ Each person has personality characteristics that
influence his behavior.
➢ By personality we mean a set of distinguishing human
psychological traits that lead to relatively consistent and
enduring response to environmental stimuli.
➢ Such traits are self –confidence, dominance, autonomy,
deference, sociability, defensiveness and adaptability.
➢ Personality can be a useful variable in analysing
consumer brand choice. Consumer are likely to choose
those brands whose personalities match their own.
Brand Personality
Sincerity
Excitement
Competence
Sophistication
Ruggedness
Personal Factors
➢ Consumers often choose and use brands

that have a brand personality consistent
with their own actual self concept(how we
view ourselves), although the match may
instead be based on the consumer`s ideal
self concept(how we would like to view
ourselves) or even on the other self
concept(how we think other see us).
Lifestyle Influences
Multi-tasking
Time-starved
Money-constrained
Personal Factors
d) Lifestyle and values

➢ People from the same subculture, social class, and
occupation may lead quite different lifestyles.
➢ A lifestyle is a person`s pattern of living in the
world as expressed in activities, interest, and
opinions.
➢ Marketers search for relationship between their
products and lifestyle groups. E.g a computer
manufacturer might find that most of the computer
buyer are achievement oriented and than aim the
brand more clearly at achiever lifestyle.
Lifestyle and Values
Personal Factors
➢ Lifestyles are shaped partly by whether consumers

are money constrained or time constrained
➢ Consumer who experience time famine are prone to
multitasking, doing two or more things at the same
time. They will also perform tasks because time is
more important than money. Companies aiming to
serve them will create convenient products and
services for this group.
➢ Consumer decisions are also influenced by core
value, the belief systems that underlie attitudes and
behaviors. who target consumers in the basis of their
values belief that with appeal to people inner selves,
it is possible to influence their ourselves- their
purchase behavior.
Faysal Bank of
Pakistan has
extended
banking hours
for time-
pressed
executives.
Stimulus Response Model
(Understanding Consumer Behavior)
➢ Marketing and environmental stimuli enter the
consumer consciousness, and a set of
psychological process combine with certain
consumer characteristics to result in decisions
processes and purchase decisions.
➢ Marketer task is to understand what happens in
the consumers consciousness between the
arrival of the outside marketing stimuli and the
ultimate purchase decisions
Model of Consumer Behavior
Key Psychological Processes
Motivation Perception
Learning Memory
Motivation
➢ Some need are biogenic; they arise from

physiological states of tension such as hunger,
thirst ,and discomfort.
➢ Other needs are psychogenic; they arise from
psychological states of tension such as need for
recognition, esteem , or belonging.
➢ A need becomes a motive when it is aroused to
a sufficient level of intensity to drive us to act.
Motivation
Maslow’s Herzberg’s
Freud’s Hierarchy Two-Factor
Theory of Needs Theory
Behavior Behavior Behavior is

is guided by is driven by guided by
subconscious the lowest, motivating
motivations unmet need and hygiene
factors
Maslow’s Hierarchy of Needs
Herzberg’s Two-Factor
Theory
Freud's Theory
➢ It assumed that the psychological forces shaping
people`s behavior are largely unconscious, and that
person can not fully understand his or her own
motivations.
➢ When a person examines specific brands, he will react to
not only to their stated capabilities, but also to other,
less conscious cues such as shape size, weight, material,
color and brand name.
➢ A technique called laddering lets us trace a persons
motivation from the stated instrumental ones to more
terminal ones. Then the marketer can decide at what
level to develop the message and appeal.
Maslow`s Theory
➢ This theory explains why people are driven
by particular needs at particulate times
➢ Human heeds are arranged in a hierarchy
from most to least pressing-physiological
needs, safety needs, socials needs, esteem
needs, and self actualization needs.
Herzberg`s Theory
➢ Herzberg developed a two factor theory that distinguishes
dissatisfied(factor that cause dissatisfaction) from satisfiers(
factors that cause satisfaction).
➢ The absence of dissatisfies is not enough to motivate a
purchase; satisfier must be present
➢ E.g. A computer that does not come with a warranty would be
a dissatisfied. Yet the presence of a product warranty would
not act as a satisfier or motivator of a purchase, because it is
not a source of intrinsic satisfaction.
➢ Marketer should do their best to avoid dissaisfiers.although
these things will not sell a product, they might easily unsell it.
➢ Marketer should identify the major satisfiers or motivators of
purchase in the market and then supply them.
Perception
Selective Attention
Selective Retention
Selective Distortion
Subliminal Perception
Perception
➢ A motivated person is ready to act. How he act is influenced by his
view of the situation.
➢ Perception are more important than reality, because it is the perception
that affect consumers actual behavior
➢ Perception is the process by which we select, organize, and interpret
information inputs to create a meaningful pictures of the world.
➢ Perception is not only depends on the physical stimuli but also on the
stimuli's relationship to the surrounding field and on conditions with
each of us.
➢ E.g. Talkative salesperson
➢ People can emerge with different perceptions of the same object
because of three perceptual process, selective attention, selective
distortion and selective retention.
Perception
1.Selective Attention
➢ Attention is allocation of processing capacity
to some stimulus.
➢ The average person may be exposed to over
1500 adds or brand communication a day.
Since we can not possibly attend to all these,
we screen most stimuli out of out- a process
called selective attention.
➢ The real challenge is to explain which stimuli
people with notice
Perception
2. Selective Distortion
➢ Selective distortion is the tendency to
interpret information in a way that fits our
preconceptions. Consumer will often distort
information to be consistent with prior brand
and product belief and information.
➢ Selective distortion can work to the advantage
of marketers with strong brands when
consumers distort neutral or ambiguous brand
information to make it more positive
Perception
3. Selective retention
➢ Most of us donts remember much of the
information to which we are exposed, but we
do reatin information that supports our
attitude and beliefs.
➢ Because of selective retention we are likely
to remember good point about a product and
forgot good point about competiting product
Perception
4.Subliminal Perception
➢ Marketers embeds covers, subliminal
message in ads or packaging. Consumers
are not consciously aware of them, yet they
affect behaviour
Learning
➢ When we act , we learn. Learning induces changes in our

behavior . Most human behavior is learned, although much
learning is incidental
➢ Learning theorists believe that learning is produced through
interplay of drives, stimuli, cues, responses, and reinforcement
➢ A drive is a strong internal stimulus impelling action. cues are
minor stimuli that determine when, where, and how a person
responds. E.g. Brand and subrand.
➢ We generalize our response to similar stimuli. A counter
tendency of generalization is discrimination. It means we have
learned to recognize differences in sets of similar stimuli and
can adjust our responses accordingly
Learning
➢ Learning theory teaches marketers that they can build

demand for a product by associating it with strong
drives, using motivation cues, and providing positive
reinforcement.
➢ A new company can enter the market by appealing to
the same drives that competitors use ,and by providing
similar cues, because buyers are more likely to transfer
loyalty to similar brands(generalization); or company
might design its brand to appeal to it a different set of
drives and offer strong cue inducements to
switch(discrimination)
Memory
➢ All the information and experiences we encounter as we
go through life can end up in our long term memory.
➢ Associative network memory model views LTM as a set
of Nodes and Links. Nodes are stored information
connected by links that varies in strength.
➢ We can think a consumer brand knowledge as a node in
memory with variety on linked association. The strength
and organization of these associations will be important
determinant of the information we can recall about the
brand.
➢ Brand association consist of brand related thoughts,
feelings, perception image, experiences beliefs, attitudes,
and so on that become linked to the brand node.
Analyzing Business Market
Chapter objective
⚫ What is the business market, and how does

it differ from the consumer market?
⚫ What buying situations do organizational
buyers face?
⚫ Who participates in the business-to-
business buying process?
Chapter Objective
⚫ How do business buyers make their

decisions?
⚫ How can companies build strong
relationships with business customers?
⚫ How do institutional buyers and
government agencies do their buying?
What is Organizational
Buying?
Organizational buying refers
to the decision-making process by which
formal organizations establish the need
for purchased products and services, and
identify, evaluate, and choose among
alternative brands and suppliers.
The Business Market versus
Consumer Market
➢ The business market consists of all the
organizations that acquire goods and
services used in production of other product
or service.
➢ The major industry making up business
market are agriculture, forestry, fisheries;
mining; manufacturing ;construction
;transportation; communication etc
Characteristics of Business Markets
⚫ Fewer, larger ⚫ Multiple sales calls

buyers ⚫ Derived demand
⚫ Close supplier- ⚫ Inelastic demand
customer ⚫ Fluctuating demand
relationships
⚫ Geographically
⚫ Professional
concentrated
purchasing buyers
⚫ Many buying
⚫ Direct purchasing
influences
a) Fewer , larger buyer

➢ The business market deals with far fewer,
much larger buyer then the consumer market
does.
➢ The fate of tyre company and other auto
motive part depend upon major automobile
manufacturing companies to get as the
original equipmnt manufacturer
(OEM)supplier of tyre
b)Close supplier-customer relationship

➢ Because of smaller customer base and the
importance and power of larger cutomer, supplier
are frequently expected to customize their
offerings to individual business customer needs.
C)Professional Purchasing
➢ Business goods are often purchased by trained
purchase agent. Many of buying instruments
requires quotations, proposals, and purchase
contracts are not found in consumer buying.
D) Multiple Buying influences

➢ More people typically influence busines buying
decision. Buying committee consists of technical
expert and even senior management.
➢ Business marketers need to send well trained sales
representative and sale team to deal with well trained
buyer.
E) Multiple sales call
➢ In the case of capital equipment sale for a large project
it may take many attempts to fund a project and the
sales cycle- between quoting a job and delivering the
product
F) Inelastic demand
➢ The total demand of many business goods and services
is inelastic- that is not much affected by price change,
some manufacture are not going to buy much more
leather if the price of leather falls, nor will by less
leather if the price rise unless they can find satisfactory
substitutes.
G)Fluctuating demand
➢ The demand for business goods and services tends to
be more volatile than the demand of consumer goods
and service. A given percentage increase in consumer
demand can lead to a much higher percentage in
demand for plant and equipment needed for additional
production
G) Geographically concentrated buyers
➢ Different type of industry in India tend to get
concentrated in specific regions of different states
e.g. automobile and auto ancillary in Nasik and
pune. Pharma in near by Ahmadabad.
Geographical concentration of producers helps to
reduce the selling cost. Business market need to
monitor regional shifts of certain industries.
H) Direct Purchasing
➢ Business buyers often buy directly from
manufactures rather than through intermediaries,
especially items that are technically complex.
Buying Situation
Straight rebuy
Modified rebuy
New task
Buying Situation
A) Straight Rebuy
➢ In a straight rebuy,the purchasing department reorders supplies
on a routine basis and chooses from suppliers on an approved
list. Their goal is to get a small order and then enlarge their
purchase share over time.
B) Modified Rebuy
➢ The buyer wants to modify product specifications, prices,
delivery requirement to the other terms.
C) New Task
➢ A Purchaser buys a product or service for the first time such as
an office building. The greater the cost or risk, the lrger the no.
of participants and greater their information gathering.
➢ It is the marketer greatest opportunity and challenge. The
process passes through several stages: awareness, interest,
evaluation, trial and adoption.
Systems Buying and Selling
Turnkey solution System

desired; subcomponents
bids solicited assembled
Prime Second-tier
contractors contractors
The Buying Center
Initiators
Users
Influencers
Deciders
Approvers
Buyers
Gatekeepers
The Buying Center
a) Initiators
➢ Users or other in organization who request that something be
purchase
b) Users
➢ Those who use the product or services. In many cases, the
users initiate the buying proposal and help and help define the
product requirement.
c)Influencers
➢ People who influence the buying decision, often by helping
define specifications and providing information for evaluating
alternatives
d) Deciders
➢ People who decide on product requirements or on suppliers
The Buying Center
e)Approvers
➢ People who authorize the proposed actions of
deciders or buyers
f)Buyers
➢ People who have formal authority to select the
suppliers and arrange the purchase term
G) Gatekeepers
➢ People who have the power to prevent sellers or
information from reaching members of the buying
center
Of Concern to Business
Marketers
⚫ Who are the major decision participants?
⚫ What decisions do they influence?
⚫ What is their level of influence?
⚫ What evaluation criteria do they use?
Sales Strategies
Key Buying
Small Sellers Influencers
Multilevel
Large Sellers In-depth
Selling
Stages in the Buying Process:
⚫ Problem recognition
⚫ General need description
⚫ Product specification
⚫ Supplier search
⚫ Proposal solicitation
⚫ Supplier selection
⚫ Order-routine specification
⚫ Performance review
a) Problem Recognition
➢ The buying process begins when some one in the
company recognizes a problem or need that can met
acquiring a good or service. The recognition can be
triggered by by internal or external stimuli.
➢ Internal stimuli might be that company decides to
develop a new product or and needs new equipment and
material.
➢ Externally the buyer may get new ideas at a trade show,
see an ad, or receive a call from a sales representative
who offer a better product or a lower price
➢ Business markets can stimulate problem recognition by
direct mail, telemarketing and calling prospects
b) General Need Description and Product

Specification
➢ The buyer determines the needed items general

characteristics and required quantity.
➢ For complex item buyers will work with
others-engineers,users-to define characteristics
sch as reliability, durability, or price.
➢ Business marketer can help by describing how
their products meet or even exceed the buyers
need
c)Supplier search
➢ The buyer next tries to identify the most appropriate suppliers
through trade directories, contact with other companies, trade
ad, trade shows, and the internet.
d)Proposal Solicitation
➢ The buyer next invites qualified suppliers to submit proposals. If
the item is complex or expensive, the buyer will require a
detailed written proposal from each qualified suppliers. After
evaluating the proposals, the buyer will invite few suppliers to
make formal presentations.
➢ Business marketer must be skilled in researching, writing, and
presenting proposals, written proposal should be marketing
documents that describe value and benefits in customer terms
e) Supplier selection
➢ Before selecting a supplier, the buying
center will specify desired supplier
attributes and indicate their relative
importance.
➢ To rate and identify the most attractive
supplieres,buying centers often use supplier
evaluation model
Table 7.3 Vendor Analysis
Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 7-329

➢ Order-Routine Specification
➢ Performance review
Institutional and Govt.Markets
⚫ The insti. Market consist of school college
and univ. hospital etc.
Identifying Market Segments
and Targeting
Chapter Objective
⚫ What are the different levels of market

segmentation?
⚫ How can a company divide a market into
segments?
⚫ How should a company choose the most
attractive target markets?
⚫ What are the requirements for effective
segmentation?
Effective Targeting
Requires…
⚫ Identify and profile distinct groups of
buyers who differ in their needs and
preferences
⚫ Select one or more market segments to
enter
⚫ Establish and communicate the distinctive
benefits of the market offering
Introduction
➢ Companies can not connect with all customer in

large, broad, or diverse market. But they can divide
such markets into groups of consumers or segments
with distinct needs and wants.
➢ A company then need to identify which market
segments it can serve effectively.
➢ This decision requires a keen understanding of
consumer behavior and careful strategic thinking..
➢ To develop the best market plans, managers need to
understand what makes each segment unique and
different
Levels of Market
Segmentation
Mass Marketing
➢ In mass marketing , the seller engages in the
mass production, mass distribution, and mass
promotion of one product to all buyer
Now a days most company are turning to

micromarketing at one of four level- segments
, niches, local areas, and individuals
Levels of Market
Segmentation
a) Segment Marketing
➢ A market segment consists of group
customers who share a similar set of needs
and wants.
➢ Segment marketing offers key benefits over
mass marketing. The company can offer
better design , price and can also fine tune the
marketing program and activities to better
reflects competitors marketing
Flexible Marketing Offerings
⚫ Naked solution: ⚫ Discretionary

Product and service options: Some
elements that all segment members
segment members value options but
value not all
Preference Segments
⚫ Homogeneous preferences exist when

consumers want the same things
⚫ Diffused preferences exist when
consumers want very different things
⚫ Clustered preferences reveal natural
segments from groups with shared
preferences
Levels of Market
Segmentation
b) Niche Marketing
➢ A niche is a more narrowly defined customer
group seeking a distinctive mix of benefits.
E.g. Ezee, Crack, Astha, QTV
➢ As the customer have distinct set of needs ,
they will pay premium to the firm that best
satisfies them: the niche is fairly small but has
size, profit, and growth potential and is
unlikely to attract other competitors; nicher
gain certain economies through specialization
The Himalaya
Drug Company
serves a growing
niche market by
focusing on
ayurvedic
medicines and
health
supplements
Levels of Market
Segmentation
C) Local Marketing
Target marketing is leading to marketing
programs tailored to the needs and wants of
local customer group in trading areas. E.g.
NRI Branches., local courier company,
Spiderman3 in Bhojpuri. Bharti Matrimony.
Levels of Market
Segmentation
d) Individual Marketing
➢ We can call it as customized marketing or
one to one Marketing. E.g. Asian Paints
and other paints company. Ruff n Tuff
(Arvind Mills) ready to Stitch jeans.
Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behavioral
Geographic Segmentation
➢ It calls for division of the market into different

geographical units such as nations, states, regions,
country city.
➢ In India one of the major geographical segmentation
variable is the division of Markets into rural and Urban
areas.
➢ Rural and urban markets differ on the no. of important
parameter such as literacy levels, income, spending
power
➢ Geographical markets also vary in their product
requirement. Inverter coolers and AC. Coffee and tea.
Demographic Segmentation
Age and Life Cycle

Life Stage
Gender
Income
Generation
Social Class
➢ In demographic segmentation, we divide the

market into groups on the basis of variables
such as age, family size,m family life cycle,
gender, income , occupation, education,
religion generation, nationality and social
class.
➢ Demographic variable are important because is
often associated with consumer needs and
wants and they are easily measurable.
a) Age and Life-cycle Stage

➢ Consumers wants and abilities change with
age. Therefore, age and life-cycle stages
are important variables to define segments.
➢ E.g. J&J baby Soap, Peers Pink Soap,
cartoon Network. MTV and VTV for
youngsters
b)Life Stage
➢ Persons in the same part of life cycle may
differ in their life stage
➢ Life stage define a persons major concern,
such as getting married, deciding to buy a
home , sending child to school, taking care of
older family members.
➢ Insurance c companies offer schemes for
people who are planning their retirement life.
C) Gender
➢ Gender differentiation has long been applied
to product categories such as clothing,
hairstyle, cosmetics and magazines.
➢ Some products have been positioned as more
masculine arnd more feminine..
➢ Park avenue, positioned as a masculine brand,
where as a range of women's apparel under
the brand Be.
Dove Targets Women
d)Income
➢ Income segmentation is a long- standing
practice in a variety of products and
services.
➢ Nirma washing Powder was launched as
lowest price detergent in India.
➢ C K Prahlad BOP
e) Generation
F) Social Class
Psychographic Segmentation
➢ Psychographic is the science of using

psychology and demographic to better
understand consumers.
➢ In psychographic segmentation, buyers are
divided into different groups on the basis of
personality traits, lifestyle and value. People
within the same demographic group can
exhibit very different psychographic profiles.
➢ E.g. Mc D Jhtka and Halal process.
➢ Titan watches have a wide range sub brand

within their Titan range such as , Edge, regalia,
Nebula, and Raga to appeal different lifestyle
segment.
➢ One of the most popular commercially
available classification system based of
psychographic measurement is sri consulting
Business intelligence VALS framework
The VALS Segmentation System
➢ The main dimension of VALS segmentation framework

are consumer Motivation (horizontal Dimension) and
consumer resource(Vertical dimension)
➢ Consumer are inspired by three primary motivation-
ideals, achievement and self expression
➢ Those motivated by ideals are guided by knowledge and
principles.
➢ Those motivated by achievement look for product and
services that demonstrate success to their peers
➢ Those motivated by self expression desire social and
physical activity, variety, and risk
➢ Personality traits such as energy, self

confidence, intellectualism, novelty seeking,
innovativeness, impulsiveness, leadership and
vanity-in conjunction with key demographic-
determines an individual resources
➢ Different level of resources enhance or
constrain a persons expression of his or her
primary motivation.
The four group with higher resources are

1. Innovators- successful, sophisticated,
active “take-charge” people with high self
esteem. Purchaser often reflect relatively
upscale,niche oriented products and
services.
2. Thinker- Mature, satisfied, and reflective

people motivated by ideals and who value
order, knowledge and responsibility.
They seek durability, functionality, and value
in products.
3. Achiever- successful, goal-oriented people who

focus on career and family.
They favor premium producs that demonstrate
success to their peers.
4.Experiencers-young, enthusastics, impulsive
people who seeks variety and excitement.
They spend a comparatively high proportion of
income on fashion, entertainment and socializing.
The four groups with lower resources are

1.Believers-Consrvative,conventional, and
traditional people with concrete beliefs
2.Strivers-Tendy and fun-loving people who are
resource-constrained.
They favor stylish products that emulates the
purchases of those with greater material wealth.
3. Makers- Practical, down to earth, self

sufficient people who likes to works with their
hands.
4.Survivors-Elderly,passive people concerned
about change and loyal to their favorite brands.
Behavioral Segmentation
Decision Roles Behavioral Variables
⚫ Initiator ⚫ Occasions
⚫ Influencer ⚫ Benefits
⚫ Decider ⚫ User Status
⚫ Buyer ⚫ Usage Rate
⚫ User ⚫ Buyer-Readiness
⚫ Loyalty Status
⚫ Attitude
Decision Roles
➢ People play five roles in a buying decision:
influencer, decider, buyer, and user.
➢ Recognition of the different buying roles and
specification of the people who play these
roles for specific product or services are vital
for marketers.
➢ This is specially used for designing the
communication strategy.
Behavioral Variables
a) Occasions- Arches, gift pack, Kurkure. Marketer
should know at what occasion consumer are using
their products and make strategy accordingly.
b) Benefits
➢ Buyers are classified according to the benefits that
seek. Many product categories offer different
product targeted at people who seek different set of
benefits such as basic cleaning , conditioner,
dandruff free shampoo.
c)User Status
➢ Every product has its nonusers, exusers,
potential users, first time users, and regular
users,
➢ The key to attracting potential user, or
nonuser, is understanding the reasons they are
not using. Do they have deeply held attitude,
beliefs, or behaviors or just lack of
knowledge of the product oe brand benefits
and usage?
d) Usage Rate
➢ Markets can be segmented into light,
medium and heavy product users. Heavy
users are often a small percentage of
market but account for a high percentage
of total consumption
The Brand Funnel Illustrates Variations in
the
Buyer-Readiness Stage
⚫ Aware
⚫ Ever tried
⚫ Recent trial
⚫ Occasional user
⚫ Regular user
⚫ Most often used
Loyalty Status
Hard-core
Split loyals
Shifting loyals
Switchers
Behavioral
Segmentation Breakdown
The Conversion Model
Convertible Shallow Average Entrenched
Users Nonusers
Strongly Weakly
Ambivalent Available
unavailable unavailable
Segmenting for Business Markets
Demographic
Operating Variable
Purchasing Approaches
Situational Factors
Personal
Characteristics
Patterns of
Target Market Selection
Market Targeting
Patterns of
Marketing Targeting
➢ Once the firm has identified its market
opportunities, it must decide how many and
which ones to target.
➢ Marketer are increasingly combining
several variables in an effort to identify
smaller better defined target groups
Competitive Forces
Competitive Forces
➢ Michale Porter has identified five forces
that determine the intrinsic long run
attractiveness of a market or market
segment.
➢ These forces are industry competitors,
potential entrants, substitutes, buyers, and
suppliers.
➢ The treat these forces pose are as follows
Competitive Forces
1.Threat of intense segment rivalry
➢ A segment is unattractive if it already contains
numerous, strong, or aggressive competitors.
➢ Its even more unattractive if its stable or declining, if
plant capacity must be added in large increments, if
fixed cost or exit barriers are high, or if competitors
have high stakes in staying in the segment.
➢ These condition will lead to frequent price wars,
advertising battles, and new product introduction and
will make it expensive to compete. The cellular phone
market has seen fierce competition due to segment
rivalry.
Mobile service
providers
compete with
each other
through
innovative
marketing
ideas
Competitive Forces
2.Threat of new entrants
➢ The most attractive segment is one in which entry barriers are
high and exit barriers are low. few new firm can enter the
industry, and poorly performing firm can easily exit.
➢ When both entry and exit barriers are high, profit potential is
high, but firm face more risk because poorer-performing firms
stay in and fight it out.
➢ When both entry and exit barriers are low, firms easily enter
and leave the industry, and the return are stable and low
➢ The worst case is when entry barriers are low and exit barriers
are high: here the firm enter during good times but find it hard
to leave during bad time . e.g. airlines industry.
Competitive Forces
3.Threat of substitute product
➢ A segment is unattractive when there are actual or
potential substitutes for the product. Substitute place
a limit on prices and on profits.
➢ If technology advances or competition increase in
these substitute industries, price and profit are likely
to fall.
4.Threat of buyers growing bargaining power
➢ A segment is unattractive if buyer possess strong or
growing bargaining power.
Competitive Forces
➢ Buyers bargaining power grows when they become
more concentrated or organized, when the product
represent a significant fraction of the buyers cost,
when the product is undifferentiated, when buyers
switching cost are low.
5.Threat of suppliers growing bargaining power
➢ A segment is unattractive if the companys suppliers
are able to raise prices or reduces quantity supply .
e.g. Oil company
Identifying Competitors
➢ We can examine competition from both an industry
and market point of view.
➢ An industry is a group of firm that offer a product or
class of product that are close substitute of one
another.
➢ Marketer classify industries according to the number
of sellers, degree of product differentiation; presence
or absence of entry, mobility, and exit barriers; cost
structure; degree of vertical integration; and degree
of globalization.
Identifying Competitors
➢ Using the market approach, we define competitors
as companies that satisfy the same customer need.
➢ Coca-Cola , focused on its soft drink business,
missed seeing the market of coffee bars and fresh
fruit juice bars that eventually impinged on its soft
drink business.
➢ The market set of competition reveals a broader set
of actual and potential competitors than competition
defined in just product category term.
Effective Segmentation
Criteria
➢ Not all segment scheme are useful. Similarly,
not all types of segmentation are useful.
➢ It is important to recognize that a marketer
needs to use relevant variables to segment a
market. Eg segmenting a market based on on
age is not possible for salt , but segmentation
should be based of health.
➢ To be useful, market segments must rate
favorably on five key criteria
Criteria
a) Measurable
➢ The size , Purchasing power, and
characteristics of the segments can be
measured.
b)Substantial
➢ The segments are large and profitable enough
to serve. A segment should be largest
possible homogeneous group worth going
after with a tailored marketing program.
Criteria
C)Accessible- the segment can be effectively
reached and served
D)Differentiable
➢ The segments are conceptually
distinguishable and respond differently to
different marketing mix element and
programs
e) Actionable
➢ Effective programs can be formulated for
attracting and serving the segment.
Evaluating and selecting the
Market segments
a) Single segment Concentration
➢ Company is concentrating on single segment
b) Selective Specialization
➢ A firm selects a no. of segments, each
objectively attractive and appropriate. There
may be little or no synergy among the
segments, but each promise to be money
maker
➢ The multisegment strategy has the advantage
of diversifying the firm`s risk
Evaluating and selecting the
Market segments
c) Product Specialization
➢ The firm makes a certain product that it
sells to several different market segment.
➢ E.g. microscope
d)Full Market coverage
➢ The firm attempt to serve all customer
groups with all the product that might need
Patterns of
Figure 8.5 Segment-by-Segment Invasion
Plan
Positioning
➢ Positioning is the act of designing the company`s

offering and image to occupy a distinctive place in
the minds of the target market.
➢ The goal is to locate the brand in the minds of
consumers to maximize the potential benefits to the
firm
➢ A good brand positioning helps giude marketing
strategy by clarifying the brands essence, what goals
it helps the consumer achieve and how it does so in
a unique way.
The Buying decision Process
Consumer Buying Process
Problem Recognition
Information Search
Evaluation
Purchase Decision
Postpurchase
Behavior
Problem Recognition
➢ The buying process starts when the buyer recognizes a
problem or need triggered by internal or external
stimuli. With an internal stimulus, one of the person`s
normal needs rise to a threshold level and becomes a
drive. a need can be aroused by an external by an
external stimulus.
➢ Marketers need to identify the circumstances that trigger
a particular need by gathering information from a
number of consumers.
➢ Marketer may need to to increase consumer motivation
so a potential purchase gets serious consideration.
Information Search
a) Information Search
a)Personal- Family, friends, neighbors
b)Commercial- adv, websites, salespersons,
dealer, packaging, displays.
c)Public- Mass media, consumer-rating
organization
d)Experimental- Handling, examining, using
the product
Successive Sets Involved in Consumer
Decision Making
Information Search
b)Search Dynamics
➢ Through gathering information, the consumer learns
about competing brands and their features.
➢ Out of total set individual consumer will come to
know only a subset of these brand known as
awareness set.
➢ Some brands, the consideration set, will meet initial
buying criteria, as the consumer gather more
information, only a few the choice set, will remain
strong contenders. The consumer makes a final
choice from this set.
Information Search
➢ Marketers need to identify the hierarchy if
attributes that guide consumer decision
making in order to understand different
competitive forces and how these various
set get formed.
➢ Company must strategize to get it brand into
the prospect awareness, consideration and
choice set
Evaluation of Alternatives
➢ How does the consumer process competitive brand
information and make a final value judgment?
➢ There are several processes, and the most current
models see the consumer forming judgments largely
on a conscious and rational basis.
➢ First the consumer is trying to satisfy the need.
second, the consumer is looking for certain benefits
from the product solutions. third, the consumer sees
each product as a bundle of attributes with varying
ability for delivering the benefits sought to satisfy
this need
➢ Consumers will pay the most attention to
attributes that deliver the sought-after benefits.
We can segment the market for a product
according to attributes important to different
consumer group.
a)Belief and Attitude
➢ Through experience and learning, people
acquire beliefs and attitudes. This in turn
influence buying behaviour
B) Expectancy-Value model
➢ A consumer arrive at attitudes towards various
brands through an atribute evaluation
procedure.we develop a set of beliefs about
where each brand stands on each attribute,
➢ This model of attitude formation posits that
consumer evaluate products and services by
combining their brand beliefs- the positives
and negatives –according to importace
Expectancy-Value model
Evaluation Of Alternatives
➢ Suppose a consumer assigned 40% of the
importance to memory capacity, 305 to graphic
capability, 20% to weight and size and 10% to
price
➢ Then perceived value of each computer
computer A= .4(8)+.3(9)+.2(6)+.1(9)= 8
Computer b =7
Computer C =6
Computer D =5
Purchase Decision
Non Compensatory models of consumer Choice
➢ Consumer often take mental shortcut using simplified
choice heuristics. Heuristics are rules of thumb or
mental shortcuts in the decision process
a) Conjunctive heuristic-
➢ The consumer sets a minimum acceptable cutoff level
for each attribute and choose the first alternative that
meets the minimum standard for all attributes
b) Lexicographic heuristic
➢ The consumer choose the best brand on the basis of its
perceived most important attribute.
Stages between Evaluation of
Alternatives and Purchase
Post Purchase Behaviour
⚫ Post purchase satisfaction
⚫ Post purchase Action
⚫ Post purchase use and Disposal
How Customers Use and Dispose of
Products
DIFFUSION OF INNOVATIONS
Setting Product strategy
What is a Product?
A product is anything that can be offered

to a market to satisfy a want or need,
including physical goods, services,
experiences, events, persons, places,
properties, organizations, information, and
ideas.
Components of the
Market Offering
Value-based prices
Attractiveness
of the market
offering
Product Services
features mix and
and quality quality
Five Product Levels
Five Product Levels
1. Core benefits
➢ the service or benefit the customer is really buying.
E.g. hotel guest is buying `rest and sleep`
2.Basic Product
➢ Marketer must turn the core benefit into a basic
benefits. Hotel room include a bed, bathroom, towels,
desk, and dresser.
3. Expected Product
➢ A set of attributes and conditions buyers normally
expect when they purchase product. Hotel guest expect
a clean bed, fresh towels, working lamp
Five Product Levels
4. Augmented product- that exceed customer
expectation
5.Potential product
➢ It encompasses all the possible
augmentation and transformations the
product or offering might undergo in the
future
Product Classification
Schemes
Durability
Tangibility
Use
Durability and Tangibility
Nondurable
goods
Durable
Services
goods
Consumer Goods
Classification
Convenience Shopping
Specialty Unsought
Industrial Goods
Classification
Materials and parts
Supplies/
Capital items
business services
Product Differentiation
⚫ Product form
⚫ Features
⚫ Customization
⚫ Performance
⚫ Conformance
⚫ Durability
⚫ Reliability
⚫ Repairability
⚫ Style
Design
➢ As competition intensifies, design offers a potent way to differentiate and position a

company’s products and services.
➢ Design is the totality of features that affect how a product looks, feels, and functions to
a consumer.
➢ Design offers functional and aesthetic benefits and appeals to both our rational and
emotional sides.
➢ Well-designed features can help differentiate a product from others in the market.
Hawkins is a brand that is known for its functional and innovative designs.
Service Differentiation
⚫ Ordering ease
⚫ Delivery
⚫ Installation
⚫ Customer training
⚫ Customer consulting
⚫ Maintenance and repair
⚫ Returns
Developing products for rural
markets
⚫ Products should be designed keeping in mind the
rural conditions
⚫ Packaging is one of the key drivers of success in
rural areas
Issue of transfer and storage: Rugged packing
The issue of affordability: small-unit packs
⚫ Brand elements should be decided keeping in
mind rural consumers
The Product Hierarchy
Item
Product type
Product line
Product class
Product family
Need family
Product and Brand
Relationship
The Product Hierarchy
1. Need family
➢ The core need that underlies the existence
of a product family. E.g. security
2.Product Family
➢ All the product classes that can satisfy a
core need with reasonable effectiveness.e.g
savings and income
Product and Brand
Relationship
3.Product Class
➢ A group of product within the product family
recognized as having a certain functional
coherence. Also called product category. E.g.
Financial Instruments.
4. Product Line
➢ A group of product between product class that are
closely related because they perform similar
function, are sold to the same customer group, are
marketed through a same outlet or channel.
Product and Brand
Relationship
5. Product Type
➢ A group of items within a product line that
share one of several possible forms of the
product. E.g. term life insurance
6.Item(stock keeping Unit or product variant)
➢ A distinct unit within a brand or product line
distinguishable by size, price, appearance. Eg.
Renewable term life insurance
Product Mix
A product mix is the set of all products and
items a particular seller offers for sale
Product width
➢ The width of a product mix refers to how
many different product lines the company
carries. HUL is having 11 lines
Product Length
➢ The length of the product mix refers to the
total no of item in the mix (42 items in
HUL). Average product length over 3
Product Mix
Product Depth
➢ The depth of the product mix refers to how
many variants are offered of each product in
line. Lux comes in 4 variant(strawberry &
Cream, Peach& Cream, Purple Lotus &
Cream, and Lux International) and 2 sizes, so
Lux has a depth of 8.
Consistency
➢ It describes how closely related the various
product line are in end use, production
requirements, distribution channels, or some
other way.
Product Systems and Mixes
Product Portfolio Management
Assigning Resources to each SBU
➢ The purpose of identifying the companies strategic
business units is to develop separate strategies and
assign appropriate funding
➢ Senior manager knows that its portfolio of business
usually includes the number of `yesterday has
beens` as well as tomorrow breadwinners`
➢ Yet it cannot rely just on impressions; it needs
analytical tools for classifying its business by profit
potential
➢ Two of the best known business portfolio evaluation
models are the BCG Model and GE model
ASSIGNING RESOURCES TO SBUs
(THE BCG GROWTH-SHARE MATRIX)
➢ The Boston Consulting Group (BCG), a leading management consulting firm,
popularized the growth-share matrix.
➢ The eight circles represent the current sizes and positions of eight business unit in
hypothetical company
➢ The dollar volume size of each business is proportional to circle area
➢ Location of each business unit indicates its market growth rate and relative market
share
➢ The market-growth rate on the vertical axis indicates the annual growth rate of the
market in which the business operates. The relative market share, measured on the
horizontal axis, refers to the SBUs market share relative to that of the largest
competitor in the segment.
➢
A relative market share of 0.1 means that the company`s sales volume is only 10%
of leader sales volume; a relative share of 10 means that the company's SBU is the
leader and has 10 times sales of the next-strongest competitors in market
THE BCG GROWTH-SHARE MATRIX
RELATIVE MKT SHARE
20%
STARS QUESTION MARKS
MKT 4
3 1
GROWTH
5
10% 2
6 7 DOGS 8
0% CASH COWS
10x 1x 0.1x
THE BCG MARIX (CONTD)
The growth- share matrix is divided into four cells, each
indicating a different type of business
1.Question marks
➢ Question marks are business that operate in high
growth markets but have low relative market shares
➢ Most business start off as question marks as the
company tries to enter a high growth market in which
there is already a market leader
➢ A question mark require a lot of cash because the
company has to spend money on to keep up with fast
growing market, and because it wants to overtake the
leader
2.Star:
➢ If the question mark business is successful, it becomes a
star. A star is the market leader in a high-growth market.
➢ A star doesn't necessarily produce a positive cash flow for
the company. the company must spend substantial funds to
keep up with the high market growth and fight off
competitors attack.
3. Cash Cows:
➢ When a market annual growth rate falls less than 10% the
star becomes a cash cow if it still has the largest relative
market share.
➢ A cash cow produces a lot of cash for the company.the
company doesn’t have to finance capacity expansion
because the market growth rate has slowed down
➢ Since the business is the market leader, it enjoys
economies of scale and higher profit margins. The
company uses its cash-cow businesses to pay its bills
and support its other businesses
➢ If the cash cow starts losing relative market share, the
company will have to pump money back into it to
maintain market leadership. if it does not, the cash
cow may devolve into dog.
➢ 4.Dogs:
➢ Dogs are the businesses that have weak market shares
in low growth markets. They typically generate low
profit or loss.
➢ The company should consider whether it is holding on
to these business for good reason such a expected
turnaround or for sentimental purpose.
➢ After plotting its various businesses in the growth
share matrix, a company must determine whether
its portfolio is healthy
➢ An unbalanced portfolio would have too many
dogs or question marks and/or too few stars and
cash cows
The next task is to determine what objective,

strategy, and budget to assign each SBU, four
strategies can be pursued
1. Build- here the objective is to increase market
share, even forgoing short term earning to
achieve this objective if necessary, building is
appropriate for question mark whose market
share must grow if they are to become star.
2.Hold- here the objective is to preserve market
share. This strategy is appropriate for strong cash
cows if they are to continue yielding a large
positive cash flow.
3.Harvest-here the objective is to increase short term
cash flow regardless of long term effect.
Harvesting involves a decision to withdraw from a
business by implementing a program of
continuous cost retrenchment
4. Divest-here the objective is to sell or liquidate the
business because resources can be better used
elsewhere.
Product Portfolio Management
Existing New Category

Category
Existing brand 1.Line 2. Brand

Name Extension Extension
New 3.Multiple 4. New Offering
Brand Branding
Product-Item Contributions to
a Product Line’s Total Sales
and Profits
Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
Line stretching
➢ Every company`s product line covers a
certain part of total possible range. E.g
Mercedes automobiles are located in the
upper price range of the automobile market.
➢ Line stretching occurs when a company
lengthens its product line beyond its current
range. The company can stretch its line
down-market, up-market or both.
Line stretching
1. Down- Market Stretch
➢ A company may want to introduce a lower priced
line for any of the three reason
a) The company may notice strong growth
opportunities as mass retailers attract a growing no.
of shoppers who want value price goods.
b) The company may wish to tie up lower-en
competitors who might otherwise try to move up
market. If the company has been attacked by a
low-end competitor, it often decide to counter
attack by entering the low end of the market.
Line stretching
c. The company may find that middle market is
stagnating or declining.
2. Up market stretch
➢ company may wish to enter high end of market to
achieve more growth, to realize higher margins, or
simply to position themselves as full-line
manufacturer
3. Two way approach
➢ company serving in middle class market might
decide to stretch their line in both direction . E.g.
Titan edge, Nebula, Xylus, Sonata. ITC soaps.
Line Filling
Pruning
Pruning weak brands

can strengthen the
remaining brands in
the line
Co-Branding
➢ Marketers often combine their products from others companies
in various ways
➢ In co-branding also called dual branding or brand bundling- two
or more well known brands are combined into a joint product or
marketed together in same fashion.
a. Same company co-branding- Gillette Match3 shaving system
and shaving Gel
b. Joint venture co-branding--- Indian Oil and Citibank credit card
c. Multiple-sponsor co-branding
d.Ingredient Branding
➢ It is a special case of co- branding. It creates brand equity for
materials, components, or parts that are necessarily contained
within other branded product
Factors Contributing to the
Emphasis on Packaging
Self-service
Consumer affluence
Company/brand image
Innovation opportunity
Innovations in Packaging
.
Packaging Objectives
⚫ Identify the brand

⚫ Convey descriptive and persuasive
information
⚫ Facilitate product transportation and
protection
⚫ Assist at-home storage
⚫ Aid product consumption
Functions of Labels
Identifies
Grades
Describes
Promotes
Introducing New Market
Offerings
New-product Options
1) Make or Buy
➢ a company can add new product through
acquisition or development.
➢ The acquisition rout can take three forms. The
company can buy other companies or it can
buy licsence or francise from other company
➢ E.g. coca-cola Thums Up Fritolay –Uncle
Chips
New-product Options
2 Types of New-to-the-world
New Product
New product lines
Additions
Improvements
Repositionings
Cost reductions
Factors That Limit
New Product Development
⚫ Shortage of ideas
⚫ Fragmented markets
⚫ Social and governmental constraints
⚫ Cost of development
⚫ Capital shortages
⚫ Faster required development time
⚫ Shorter product life cycles
Challenges in new product
Development
1.New- product Success
➢ Most established company focus on
incremental innovation. It allow companies to
enter new markets by tweaking products for
new customers, use variations on core product
to stay one step ahead of the market
2.New- Product Failure
➢ New product development can be quite risky.
New product continue to fail at disturbing rate.
Challenges in new product
Development
New product can fail for many reasons
⚫ ignored or misinterpreted market research
⚫ Over estimate of market size
⚫ High development cost
⚫ Poor design
⚫ Incorrect positioning
⚫ Inefficient advertising
⚫ Inefficient distribution support
⚫ Competitors who fight back hard
Finding One Successful
Product
What is a Venture Team?
➢A venture team is a cross-functional group
charged with developing a specific product
or business.
➢ Many companies have assigned new-
product development to venture teams.
Venture teams are cross-functional groups
charged with developing a specific product
or business.
What is a Venture Team?
➢ These “intrapreneurs” are relieved of other
duties and given a budget, time frame, and
“skunkworks” setting.
➢ Skunkworks are informal workplaces
where intrapreneurial teams attempt to
develop new products.
➢ Cross-functional teams can collaborate and
use concurrent new-product development to
push new products to market.
The New Product Development Decision
Process
Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 20-52

New Product development
1. Idea Generation
➢ Marketing experts believe that greatest opportunities
and highest leverage with new product are found by
uncovering the best possible set of unmet customer
needs or technological innovation
➢ Encouraged by open innovation movement, many
firms are increasingly going outside the company to
tap external resources.e.g. P&G connect-and-
development approach to innovation.
Ways to Find Great New
Ideas
⚫ Run informal sessions with customers
⚫ Allow time off for technical people to putter
on pet projects
⚫ Make customer brainstorming a part of plant
tours
⚫ Survey your customers
⚫ Undertake “fly on the wall” research to
customers
More Ways to Find Great
Ideas
⚫ Use iterative rounds with customers
⚫ Set up a keyword search to scan trade
publications
⚫ Treat trade shows as intelligence missions
⚫ Have employees visit supplier labs
⚫ Set up an idea vault
Drawing Ideas from
Customers
⚫ Observe customers using product
⚫ Ask customers about problems with products
⚫ Ask customers about their dream products
⚫ Use a customer advisory board or a brand
community of enthusiasts to discuss product
Demand-First Innovation and
Growth (DIG) Framework
Demand Landscape
Opportunity Space
Strategic Blueprint
➢ The demand-first innovation and growth (DIG)
framework is designed to provide companies with
an unbiased view and an outside-in perspective of
demand opportunities. It has three parts: the
demand landscape, the opportunity space, and the
strategic blueprint.
➢ The demand landscape is based on the consumer

needs and wants gleaned from observational,
anthropological, and ethnographic methods.
➢ The opportunity space uses a conceptual lens
and structured innovative thinking tools to
achieve market perspective.
➢ The strategic blueprint sketches out where the
new product will fit in the lives of consumers.
Idea Generation:
Creativity Techniques
⚫ Attribute listing
⚫ Forced relationships
⚫ Morphological analysis
⚫ Reverse assumption analysis
⚫ New contexts
⚫ Mind mapping
2.Idea screening
➢ In screening idea company must avoid two types
of errors
➢ A DROP-error occurs when the company
dismisses a good idea, it is extremely easy to find
fault with other peoples ideas.
➢ A Go-error occurs when the company permits a
poor idea to move into development and
commercialization
Forces fighting new ideas
➢ The executive committee then reviews each idea
against a set of criteria
⚫ Does the product meet a need?
⚫ Would it offer superior value?
⚫ Can it be distinctively advertised?
⚫ Does the company have the necessary know how
and capital?
⚫ Will the new product deliver the expected sales
volume, sales growth and profit?
3. Concept development and testing
➢ Suppose a large food processing company gets the idea of
producing a powder to add to milk to increase its
nutritional value and taste
➢ A product idea can be developed into several concepts.
⚫ concept 1- An instant breakfast drink for adults who
want a quick nutritious breakfast without preparation.
⚫ Concept 2-a tasty snack for children to drink as a midday
refreshment
⚫ Concept 3- a health supplement for older adults to drink
in the late evening before they go to bed.
➢ Each concept represents a category concepts that
defines the product competition. An instant
breakfast drink would compete against hot milk,
cornflakes with cold milk, and other home made
items.
➢ A tasty snack drink would compete against soft
drinks, fruit juices, sports drinks, and other thirst
quenchers.
Product and
Brand Positioning
3. Concept Testing
➢ It means presenting the product concept,
symbolically or physically, to target consumers and
getting their reactions.
➢ The more the tested concepts resembles the final
product or experience, the more dependable concept
testing is.
➢ Concept testing of prototypes can help to avoid
costly mistakes, but it may be especially challenging
with radically different, new- to-the- world products
➢ Concept testing presents consumer with an
elaborated version of concept
` Our product is powdered mixture added to milk
to make an instant breakfast that gives the person
all the days needed nutrition along with good
taste and high convenience. The product comes
in three flavors( chocolate, vanilla, and
strawberry) and would come in individual packs,
ten to a box, at Rs 110 a box.`
After receiving this information, researchers measure product
dimensions by having consumers respond to following type of
questions:
1. Communicability and believability- Are the benefits clear to you
and believable? If the score are low, the concept must be
refined or revised.
2.Need level- Do u see this product solving a problem or filling a
need for you?
3Gap level-Do the products currently meet this need and satisfy u?
the greater the gap, the higher the expected consumer interest.
Marketers can multiply the need level by the gap level to
produce a need –gap score. high score means the consumer
sees the product as filling a strong need not satisfied by
available alternatives
4.Perceived Value-Is the price reasonable in
relationship to the value? The higher the
perceived value, the higher is expected consumer
interest.
5.Purchase Intention-Would you(definitely,
probably, probably not, definitely not)buy the
products? Consumers who answered the first
three question positively should answer
`definitely` here.
6.User targets, purchase occasions, purchasing
frequency-
who would use this product, when, and
how often?
➢ Respondents answers indicate whether the
concepts has a broad and strong consumer
appeal, what product it compete against, and
which consumer are the best targets
Conjoint Analysis
Conjoint Analysis
➢ Consumer preferences for alternative product
concepts can be measured with conjoint
analysis, a method for deriving the utility
values that consumers attach to varying levels
of a product’s attributes.
➢ Conjoint analysis has become one of the most
popular concept-development and testing tools.
With conjoint analysis, respondents see
different hypothetical offers formed by
combining varying levels of the attributes, then
rank the various offers.
Conjoint Analysis
Management can identify the most appealing
offer and its estimated market share and
profit. In a classic illustration, academic
research pioneers Green and Wind used this
approach in connection with developing a new
spot removing, carpet-cleaning agent for
home use.
Conjoint Analysis
Suppose the new-product marketer is considering
five design elements:
Three package designs (A, B, C – as shown
in the slide)
Three brand names (K2R, Glory, Bissell)
➢ Three prices ($1.19, $1.39, $1.59)
➢ A possible Good Housekeeping seal (yes, no)
➢ A possible money-back guarantee (yes, no)
Utility Functions Based on
Conjoint Analysis
Conjoint Analysis
➢ Although the researcher can form 108 possible
product concepts, it would be too much to ask
consumers to rank them all from most to least
preferred.
➢ A sample of, say, 18 contrasting product
concepts is feasible. The marketer now uses a
statistical program to derive the consumer’s
utility functions for each of the five attributes .
Conjoint Analysis
➢ Utility ranges between zero and one; the higher
the utility, the stronger the consumer’s
preference for that level of the attribute.
➢ Looking at packaging, package B is the most
favored, followed by C and then A (A hardly
has any utility). The preferred names are
Bissell, K2R, and Glory, in that order. The
consumer’s utility varies inversely with price.
Conjoint Analysis
➢A Good Housekeeping seal is preferred, but
it does not add that much utility and may
not be worth the effort to obtain it. A
money-back guarantee is strongly preferred.
➢ The consumer’s most desired offer is
package design B, brand name Bissell,
priced at $1.19, with a Good Housekeeping
seal and a money-back guarantee.
Conjoint Analysis
➢ We can also determine the relative importance
of each attribute to this consumer—the
difference between the highest and lowest
utility level for that attribute.
➢ The greater the difference, the more important
the attribute. Clearly, this consumer sees price
and package design as the most important
attributes, followed by money-back guarantee,
brand name, and a Good Housekeeping seal.
4.Marketing Strategy Development
➢ Following a successful concept test, a new
product manager will develop a preliminary three
part strategy plan for introducing the new
product into the market
➢ The first part describe the target market size,
structure, and behavior: the planed product
positioning; and sales , market share, and profit
goals sought in first few years
5.Business Analysis
➢ After management develops the product concept and
marketing strategy, it can evaluate the proposal business
attractiveness.
➢ Management need to prepare sales, cost and profit
projection to determine whether they satisfy company
objectives. If they do, the concept can move to the
development stage.
➢ Total estimated sales are sum of estimated first time
sales, replacement sales, and repeat sales. Sales
estimation methods depend on whether the product is
purchased once, infrequently or often
Product Life-Cycle Sales for
Three Types of Products
➢ Total estimated sales are the sum of estimated
first-time sales, replacement sales, and repeat
sales.
➢ Sales-estimation methods depend on whether
the product is purchased once (such as an
engagement ring or retirement home),
infrequently, or often.
➢ For onetime products, sales rise at the
beginning, peak, and approach zero as the
number of potential buyers is exhausted (as
shown in Figure 19.6a).
➢ If new buyers keep entering the market, the
curve will not go down to zero.
➢ Infrequently purchased products—such as
automobiles, toasters, and industrial equipment
- exhibit replacement cycles dictated by
physical wear or obsolescence associated with
changing styles, features, and performance.
➢ Sales forecasting for this product category
calls for estimating first-time sales and
replacement sales separately (as shown in
Figure 19.6b).
➢ Frequently purchased products, such as
consumer and industrial nondurables, have
product life-cycle sales resembling Figure
19.6c.
➢ The number of first-time buyers initially
increases and then decreases as fewer buyers
are left (assuming a fixed population).
➢ Repeat purchases occur soon, providing the
product satisfies some buyers. The sales curve
eventually falls to a plateau representing a
level of steady repeat-purchase volume; by this
time, the product is no longer a new product.
Projected Five-Year Cash
Flow Statement (in Rupees
Million)
Million)
➢ Costs are estimated by the R&D,
manufacturing, marketing, and finance
departments. Table 19.3 illustrates a five-year
projection of sales, costs, and profits for the
instant breakfast drink.
➢ Row 1 shows projected sales revenue over the
five-year period. The company expects to sell
Rs. 500 million (approximately 500,000 cases
at Rs. 1,000 per case) in the first year.
Million)
➢ Row 2 shows the cost of goods sold, which
hovers around 33 percent of sales revenue. We
find this cost by estimating the average cost of
labor, ingredients, and packaging per case.
➢ Row 3 shows the expected gross margin, the
difference between sales revenue and cost of
goods sold.
➢ Row 4 shows anticipated development costs,
including product-development cost,
marketing research costs, and manufacturing
development costs.
Million)
➢ Row 5 shows the estimated marketing costs
over the five-year period.
➢ Row 6 shows the allocated overhead to this
new product to cover its share of the cost of
executive salaries, heat, light, and so on.
➢ Row 7, the gross contribution, is gross margin
minus the preceding three costs.
➢ Row 8, supplementary contribution, lists any
change in income to other company products
caused by the new product introduction.
Million)
➢ Row 9 shows net contribution, which in this
case is the same as gross contribution. Row 10
shows discounted contribution.
➢ Row 11 shows the cumulative discounted cash
flow, the accumulation of the annual
contributions in row 10.
➢ Two points are of central interest. First is the
maximum investment exposure, the highest
loss the project can create.
Million)
➢ The company will be in a maximum loss
position of Rs. 192.50 million in year 1. The
second is the payback period, the time when
the company recovers all its investment,
including the built-in return of 15 percent.
➢ The payback period here is about three and
a half years.
6.Product Development
➢ The job of translating target customer
requirement into a working prototype is helped
by a set of method known as Quality function
deployment(QFD).
➢ The methodology takes the list of desired
customer attributes(CAs) generated by market
research and turns them into a list of engineering
attributes(E As) that engineers can use.
➢ The R&D department will develop one or more
physical versions of the product concept. it goals is
to find a prototype that embodies the key attributes
described in the product-concept statement, that
performs safely under normal use and conditions,
and that the firm can produce within budgeted
manufacturing cost.
➢ When prototype are ready, they must be put through
rigorous functional tests and customer tests befor
they enter the market place.
➢ Alpha testing is testing the product within the firm to
see how it performs in different applications.
➢ After refining the prototype further, the company
move to beta testing with customers
➢ Consumer testing can take several forms, from
bringing customers into a laboratory to giving
them samples to use in their homes.
➢ P&G has on site labs such as diaper testing centre
where dozens of mothers bring their babies to be
studied
7.Market Testing
➢ After management is satisfied with functional
and psychological performance, the product is
ready to be dressed up with a brand name and
packaging and put into market test.
➢ In a authentic setting marketers can learn how
large the market is and how consumers and
dealers react handling, using , and repurchasing
the product.
Method of consumer goods market testing
a) Simulated Test marketing
➢ It calls for finding 30 qualified shoppers and questioning them
about brand familiarity and preferences in a specific product
category
➢ These consumers attend a brief screening of both well -known
and new TV aids. once ad advertises the new product but is not
singled out for attention.
➢ Consumer receive a small amount of money an are invited into
a store where they may buy any item. the company notes how
many consumers buy the new brand and competing brands.
This provides a measure of ads relative effectiveness against
competition ads in stimulating trial.
b) Controlled Test Marketing
➢ In this a research firm manages panel of stores that
will carry new products for a fee. The company with
the new product specifies the number of stores and
geographic locations it want to test.
➢ The research firm delivers the product to the
participating stores and control shelf position;
number of facings, displays, and POP and pricing.
➢ Electronic scanners measure sales at checkout.the
company can also evaluate the impact of local
advertising and promotions
c) Test Markets
➢ The ultimate way to test consumer product is to put it into
full blown test markets. The company choose a few
representative cities, and the sales f forece tries to sell the
trade on carrying the product and giving it good self
exposure.
➢ The company puts on a full advertising and promotion
campaign similar to the one it would use in national
marketing
➢ Test marketing also measures the impact of alternative
marketing plans by varying the marketing program in
different cities.
8) Commercialization
➢ In this process company will face its largest cost
to date.it will need to conract for manufacture or
build or rent a full scale manufacturing facility.
a) When(Timing)
1.First Entry
2.Parallel Entry
3.Late Entry
b) Where(Geographic Strategy)
➢ The company must decide whether to launch the new
product in a single locality, a region, several regions,
the national market, or the international market. Most
will develop a planned market rollout overtime
company size is also an important factor.
c) Whom(Target market Prospects)
➢ Within the rollout markets, the company must target
initial distribution and promotion to best prospect
groups
d) How(introductory market strategy)
➢ A company must develop an action plan for
introducing new product into rollout markets,
because new-product launches often take longer
and cost more money than expected, many
potentially successful offerings suffer from
underfunding.
➢ It is important to allocate sufficient time and
resources-but also not overspend- as the new
product gain traction in the market place
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Adopter Categorization on
the Basis of Relative time of
Adoption
Adopter Categorization on the
Basis of Relative time of
Adoption
➢ A person’s level of innovativeness as “the degree to
which an individual is relatively earlier in adopting
new ideas than the other members of his social
system.” Some people are the first to adopt new
clothing fashions or new appliances; some doctors
are the first to prescribe new medicines.
➢ The adopter categories are shown in Figure,After a
slow start, an increasing number of people adopt the
innovation, the number reaches a peak, and then it
diminishes as fewer non adopters remain.
Adoption
➢ Innovators are technology enthusiasts; they
are venturesome and enjoy tinkering with
new products and mastering their
intricacies.
➢ Early adopters are opinion leaders who
carefully search for new technologies that
might give them a dramatic competitive
advantage.
Adoption
➢ Early majority are deliberate pragmatists who
adopt the new technology when its benefits are
proven and a lot of adoption has already taken
place.
➢ Late majority are skeptical conservatives who
are risk averse, technology shy, and price
sensitive.
➢ Laggards are tradition-bound and resist the
innovation until the status quo is no longer
defensible.
Characteristics of an
Innovation
⚫ Relative advantage
⚫ Compatibility
⚫ Complexity
⚫ Divisibility
⚫ Communicability
Innovation
➢ relative
advantage—the degree to which the
innovation appears superior to existing
products.
➢ compatibility—the degree to which the
innovation matches the values and
experiences of the individuals..
Innovation
Third is complexity—the degree to which the
innovation is difficult to understand or use.
Fourth is divisibility—the degree to which the
innovation can be tried on a limited basis.
Fifth is communicability—the degree to which
the benefits of use are observable or
describable to others.
Innovation
Other characteristics that influence the rate of
adoption are cost, risk and uncertainty,
scientific credibility, and social approval. The
new-product marketer must research all these
factors and give the key ones maximum
attention in designing the product and
marketing program
Product life-cycle Marketing
Strategies
PLC Marketing Strategies
➢ A company`s positioning and differentiation
strategy must change as the product, market and
competitors change over the period the PLC
➢ PLC asserts four things
1. Product have a limited life.
2. Product sales pass through distinct stages, each
posing different challenges, opportunities, and
problem to the seller.
3. Profit rise and fall at different stage of PLC.
4. Products require different marketing, financial,
manufacturing purchasing, and human resource
strategies in each life cycle stage
Product life Cycles
Product life Cycles
1. Introduction
➢ A period of slow sales growth as the product is introduced in
the market, profit are non existence because of heavy expenses
of product introduction.
2.Growth
➢ A period of rapid market acceptance and substantial profit
improvement
3. Maturity
➢ A slow down in sales growth because the product has achieved
acceptance by most buyers
➢ Profits stabilize or decline because of increased competitions
4.Decline
➢ Sales shows a downward drift and profit erode
Marketing strategies at
different stages of PLC
1.Introduction Stage
➢ Since it takes time to roll out a new product, work
out the technical problems, fill dealer pipelines,
and gain consumer acceptance, sales growth tends
to be slow in the introduction stage.
➢ Profits are negative or low, and promotional
expenditures are at their highest ratio to the sale
because the need to inform potential customers,
induce product trial, and secure distribution in
retail outlets.
➢ Firms focus on those buyers who are most
ready to buy, usually in higher- income
groups. Price tends to high because cost are
high.
➢ Companies that plan to introduce a new
product must decide when to enter the
market.
➢ To be the first can be rewarding, but risky and
expensive. To come in later makes sense if
the firm can bring superior technology,
quality, or brand strength.
2. Growth stage
➢ The growth stage is marked by a rapid climb in sales.
Early adopters like the product, and additional
consumer start buying it.
➢ New competitors enter, attracted by the opportunities.
They introduce new product features and expand
distribution.
➢ Prices remain where they are or fall slightly, depending
on how fast demand increases.
➢ Companies maintain their promotional expenditures at
the same or at the slightly increased level to meet
competition and to continue to educate the market.
➢ Sales rise much faster than promotional
expenditures, causing a welcome decline in the
promotional –sales ratio.
➢ Profit increased during this stage as the promotion
costs are spread over a larger volume and unit
manufacturing costs falls faster than price decline.
➢ Firms must watch for a change from an
accelerating to a decelerating rate of growth in
order to prepare new strategies.
➢ E.g. Men Cosmetic market in India .
During the growth stage, the firm uses
several strategies to sustain rapid market
growth
➢ It improves product quality and adds new
product features and improve styling.
➢ It adds new model and flanker products(i.e
product of different sizes, flavor, and so
forth to protect the main product)
➢ It enters into new market segments
➢ It increases its distribution coverage and
enters new distribution channels.
➢ It shifts from product awareness advertising
to product preference advertising.
➢ It lowers price to attracts the next layer of
price-sensitive buyers
3. Maturity stage
➢ At some point, the rate of sales growth will
slow, and the product will enter a stage of
relative maturity.
➢ This stage normally lasts longer than the
previous stages and posses a big challenges
to marketing. Most product are in the
maturity stage of the life cycle.
➢ The maturity stage divides into three phases:
growth, stable and decaying maturity.
➢ In the first phase the sales growth rate start to
decline. There are no new distribution
channel to fill.
➢ In the second phase , sales flatten on a per
capita basis because of market saturation.
most potential customers have tried the
product and the future sales are goverened by
population growth and replacement demand.
➢ In the third phase, decaying maturity, the
absolute level of sales start to decline, and
customer begin switching to other products.
➢ This phase poses the most challenges, the sales
slowdown create over capacity in industry,
which leads to intensified competition.
Competitors scramble to find niches
➢ They engage in frequent markdown, they
increase ad and trade and consumer promotion
➢ They increase R&D budgets to develop product
improvements and line extensions.
➢ A shakeout begins, and weaker competitors
withdraw.
➢ The industry eventually consists of well-
entrenched competitors whose basic drive is to
gain or maintain market share.
➢ Dominating the industry are a few giant firm-
perhaps a market leader, a service leader, and a
cost leader- that serve the whole market and
make their profit mainly through high volume
and lower costs
➢ Surrounding these dominant firm is a
multitude of market nichers, including
market specialists, product specialists, and
customizing firms.
➢ The issue facing a firm in a mature market is
whether to struggle to become on of the big
three and achieve profit through high volume
and low cost, or to pursue a niching strategy
and achieve profit through low volume and
high margin
➢ Sometimes market will become polarized
between low- and high end segments, and the
firm in middle see their market share steadily
erode. E.g. Electrolux.
Strategies
➢ Three potentially useful ways to change the
course for a brand are market, product and
marketing program modification
1. Market Modification
➢ A company might try to expand the market
for its mature brand by working with the two
factors that make up sales volume
Volume = no. of brand users x usage rate
A No. of brand user
a) Convert non user- small sachet shampoo
market in India
b) Enter new market segment
➢ J&J successfully promoting its baby
shampoo to adult user.
➢ Pears soap has introduced a pink soap
specially targeted at children
c) Attract competitors customer
B. Increase the Usage Rates Among Users
a) Use the product on more occasion
➢ e.g. milkmaid(Nestle) for making variety of
dessert preparations at home.
b) Use more of the product on each occasion
➢ E.g. drink a large glass of orange juice.
C ) Use the product in new ways
➢ Use aspirin daily as a medicine for reducing
chances of a stroke.
2. Product Modification
➢ Managers also try to stimulate sales by
modifying the product characteristics through
quality improvement, feature improvement,
or style improvement.
a) Quality Improvement
➢ Pillsbury Chakki fresh atta, good for family
heart, rich in fiber, more hygienic.
b) Feature improvement
➢ Adding new feature such as size, weight, materials,
additives, and accessories..
c) Style improvement
➢ It aims at increasing product esthetic appeal. A style
strategy might give the product a unique market
identity. yet style competition has problem.
➢ It isdificult to predict whether people and which
people will like a new style.
➢ A style change usually reuires discontinuing of old
style and the company risks losing customer. E.g.
New Coke.
3. Marketing Program Modification
a) Price
➢ Would a price cut attract new buyers? If so,
should we lower the prices through prices
through price specials, volume or early
purchase discounts, freight cost absorption or
easiest credit terms? Or would it be better to
raise the price, to signal higher quality?
b) Distribution
➢ Can the company obtain more product support
and display in existing outlet? Can it penetrate
more outlets? Can the company introduce the
product into new distribution channels?
c) Advertising
➢ Should we increase advertising expenditure?
Change the message or ad copy? The media
mix? What about the timing, frequency, or size
of ads?
d) Sales promotion
➢ Should the company step- up sale promotion-trade
deals, price-off coupons, rebates, warranties, gifts and
contests?
e) Personal selling
➢ Should we increase the no. or quality of salesperson?
Should we change the basis for sales force
specialization? Revise sales territories of sales force
incentive? Can we improve sale call planning?
f) Service
➢ Can the company speed up delivery/ can we extend
more technical assistance to customers? More credit?
4. Decline Stage
➢ Sales decline for a no. of reason, including technical
advances, shifts in consumer tastes and increased
domestic and foreign competition..
➢ All can lead to over capacity, increased price cutting
and profit errosion,
➢ As sales and profit decline, some firm withdraw from
market. Those remaining may reduce the no. of
products they offer
➢ They may withdraw from small market segments and
weaker trade channels, and they may cut their
promotional budgets and reduce prices further.
Common
Product Life-Cycle Patterns
Common
a) Growth –slump- maturity pattern
➢ It is characteristics of kitchen appliances.
Sales grow rapidly when the product is
first introduced.then fall to certain level
that is suatained by late adopter buying the
rodct for first time and early adopter
replacing it.
Common
b) The cycle –recycle pattern
➢ It describe the sales of new drugs. The pharma
company aggressively promotes its new drug, and
this produces the first cycle. later the sales starts
declining and compny gives the drug another
promotion push, which produces the second cycle.
c) Scalloped PLC
Sales pass through succession of life cycles based on
the discovery of the new product characteristics
uses and users . E.g. nylon.
Style, Fashion, and Fad Life
Cycles
Cycles
1. Style
➢ T is a basic mode of expression appearing
in a field of human endeavor.
➢ Style appears in homes, clothing(formal
casual, funky); and art(realistic,
surrealistic, abstract)
➢ A style can last for generations ang go in
out of vouge.
Cycles
2. Fashion
➢ It is a currently accepted or popular style in a
given field.
➢ Fashions passes through four stages:
distinctiveness, emulation, mass fashion and
decline.
➢ The length of fashion cycle is hard to predict.
Fashion end because they represent a purchase
compromise, and consumer start looking for
missing attributes.
➢ E.g. As automobiles become smaller they become
less comfortable, and then a growing no. of buyers
start wanting larger cars
Cycles
3. Fads
➢ Fads are a fashions that come quickly into public
view, are adopted with great zeal, peak early and
decline very fast.
➢ Their acceptance cycle is very short and they tend
to attract only a limited following who are
searching for excitement or want to distinguish
themselves from others.
➢ Fad fail to survive because they don’t normally
satisfy a strong need.
➢ The marketing winner are those who recognize
fads early and leverage them into products with
staying power.
Pricing
Common Pricing Mistakes
⚫ Determine costs and take traditional industry
margins
⚫ Failure to revise price to capitalize on market
changes
⚫ Setting price independently of the rest of the
marketing mix
⚫ Failure to vary price by product item, market
segment, distribution channels, and purchase
occasion
Consumer Psychology
and Pricing
Reference Prices
Price-quality inferences
Price endings
Price cues
Consumer Psychology
and Pricing
1.Reference prices
➢ Consumers compare an observed price to an
internal reference price they remember or an
external frame of reference such as a posted
“regular retail price.”
2.Price-quality inferences
➢ Consumers use price as an indicator of
quality. Image pricing is especially effective
with ego-sensitive products such as perfumes,
expensive cars, and designer clothing.
Consumer Psychology
and Pricing
3.Price endings
➢ Many sellers believe prices should end in an
odd number. Customers see an item priced at
Rs. 299 as being in the Rs. 200 rather than the
Rs. 300 range; they tend to process prices
“left-to-right” rather than by rounding.
➢ Another explanation for the popularity of “9”
endings is that they suggest a discount or
bargain. Prices that end with 0 and 5 are also
popular and are thought to be easier for
consumers to process and retrieve from
memory.
Possible Consumer Reference Prices
⚫ “Fair price” ⚫ Lower-bound price

⚫ Typical price ⚫ Competitor prices
⚫ Last price paid ⚫ Expected future price
⚫ Upper-bound price ⚫ Usual discounted
price
Price Cues
⚫ “Left to right” pricing ($299 vs. $300)
⚫ Odd number discount perceptions
⚫ Even number value perceptions
⚫ Ending prices with 0 or 5
⚫ “Sale” written next to price
When to Use Price Cues
⚫ Customers purchase
item infrequently
⚫ Customers are new
⚫ Product designs vary
over time
⚫ Prices vary seasonally
⚫ Quality or sizes vary
across stores
Steps in Setting Price
Select the price objective
Determine demand
Estimate costs
Analyze competitor price mix
Select pricing method
Select final price

Step 1: Selecting the Pricing Objective
⚫ Survival
⚫ Maximum current
profit
⚫ Maximum market
share
⚫ Maximum market
skimming
⚫ Product-quality
leadership
Step 2: Determining Demand
Price Sensitivity
Estimating
Demand Curves
Price Elasticity
of Demand
Inelastic and
Elastic Demand
Factors Leading to Less Price Sensitivity
⚫ The product is more distinctive
⚫ Buyers are less aware of substitutes
⚫ Buyers cannot easily compare the quality of substitutes
⚫ The expenditure is a smaller part of buyer’s total income
⚫ The expenditure is small compared to the total cost of the end
product
⚫ Part of the cost is paid by another party
⚫ The product is used with previously purchased assets
⚫ The product is assumed to have high quality and prestige
⚫ Buyers cannot store the product
Step 3: Estimating Costs
Types of Costs
Accumulated
Production
Activity-Based
Cost Accounting
Target Costing
Cost Terms and Production
⚫ Fixed costs
⚫ Variable costs
⚫ Total costs
⚫ Average cost
⚫ Cost at different
levels of production
Cost Per Unit at Different
Levels of Production
Break-Even Chart for
Determining Target-Return
Price and Break-Even Volume
Step 5: Selecting a Pricing
Method
⚫ Markup pricing
⚫ Target-return pricing
⚫ Perceived-value pricing
⚫ Value pricing
⚫ Going-rate pricing
⚫ Auction-type pricing
Method
1. Cost –based Pricing
a) Mark-up pricing( Cost plus pricing)
b) Absorption cost pricing (Full cost
pricing)
c) Target rate of return pricing
d) Marginal cost pricing
Method
2. Demand Based Pricing
a) “What the traffic can bear” pricing
b) Skimming pricing
c) Penetration pricing
3. Competition-oriented Pricing
a) Premium pricing
b) Discount Pricing
c) Parity pricing/ Going rate pricing
Method
4. Product Line Pricing
5. Tender Pricing
6. Affordability-based Pricing
Method
1.Cost –based pricing
a)Mark-up pricing
➢ In mark-up pricing the selling price of the product
is fixed by adding a particular margin or mark up
to its cost.
➢ Usually, distributive trade and marketing firms,
who don’t have manufacturing of their own, prefer
this pricing method.
➢ The mark-up may vary depending on the product,
the market and the company`s policy.
Method
Unit cost= variable Cost +( Fixed Cost/Unit sales)
Markup price= Unit Cost/(1-desired return on sale)

Method
b) Absorption cost pricing or full cost pricing
➢ It rests on the estimated unit cost of the
product at normal level of production and
sales
➢ A profit margin is added to this unit cost. The
method uses standard costing techniques and
workout the variable and fixed cost involved
in manufacturing, selling and administering
the product.
➢ By adding these costs the total cost is arrived
at. The selling price of the product is arrived
at by adding the required margin towards
profit to such costs
Method
c) Target Rate of return Pricing
➢ It is similar to absorption cost pricing. In
absorption cost pricing mark up is decided
on arbitrary basis.
➢ Rate of return pricing uses rational
approach to arrive at the mark-up. It is
arrived in such a way that the return on
investment (ROI) expectation of the firm is
met in the process.
Target-Return Pricing
Break-Even Chart for
Determining Target-Return
Price and Break-Even Volume
Method
d) Marginal cost pricing
➢ It aims as maximizing contribution
towards fixed cost. Marginal costs include
all the direct variable costs of the product.
➢ In this method these cost are fully realized.
In addition a portion of fixed cost is also
realized.
➢ This method gives the flexibility not to
recover a portion of fixed costs depending
on the market situation.
Method
2. Demand based pricing
a) ‘What the traffic can bear’
➢ In this seller sets the maximum price that
the customers are willing to pay for the
product under the given circumstances.
➢ In effect its variant of skimming pricing.
➢ This method bring high profits in the short
term, but the chance of error in judgments
is very high in the method.
Method
b) Skimming pricing
➢ This method literally skims the market in
the first instance through high price and
subsequently settle down for a lower price.
➢ It aims at high price and high profits in the
introduction stage of the product.
c) Penetration pricing
➢ This method seeks to achieve greater
market penetration through relatively low
price
Method
➢ When the new product is capable of
bringing in large volume of sales, but is
not a luxury item and there is no price
insensitive segment backing it,
➢ the firm can choose penetration pricing
and make large-size sales at reasonable
price before competitors enter the market
with a similar products.
Method
3. Competition oriented pricing
a) Premium pricing- pricing above the level
adopted by competitors
b) Discount pricing- pricing below such level
c) Parity pricing/ Going rate pricing- rpice
matching with the competitors
Method
4. Product Line Pricing
➢ When a firm markets a variety of products
grouped
Perceived-Value Pricing
Customer’s perceived-value
▪ Performance
▪ Warranty
▪ Customer support
▪ Reputation
Auction-Type Pricing
English auctions
Dutch auctions
Sealed-bid auctions
➢ English auctions (ascending bids) have one
seller and many buyers. On sites such as eBay
and Amazon.com, the seller puts up an item
and bidders raise the offer price until the top
price is reached.
➢ The highest bidder gets the item. English
auctions are used today for selling antiques,
cattle, real estate, and used equipment and
vehicles.
➢ Dutch auctions (descending bids) feature one
seller and many buyers, or one buyer and many
sellers.
➢ In the first kind, an auctioneer announces a
high price for a product and then slowly
decreases the price until a bidder accepts.
➢ In the other, the buyer announces something he
or she wants to buy, and potential sellers
compete to offer the lowest price.
➢ Sealed-bid auctions let would-be suppliers
submit only one bid; they cannot know the
other bids. Government departments and
large public and private enterprises use this
method to procure supplies.
Step 6: Selecting the Final Price
⚫ Impact of other marketing activities

⚫ Company pricing policies
⚫ Gain-and-risk sharing pricing
⚫ Impact of price on other parties
Price-Adaptation Strategies
Geographical Pricing
Discounts/Allowances
Promotional Pricing
Differentiated Pricing
Countertrade forms:
⚫ Barter
⚫ Compensation deal
⚫ Buyback arrangement
⚫ Offset
➢ In geographical pricing, the company decides
how to price its products to different customers
in different locations and countries.
➢ Should the company charge higher prices to
distant customers to cover the higher shipping
costs, or a lower price to win additional
business?
➢ How should it account for exchange rates and
the strength of different currencies? Another
question is how to get paid.
➢ This issue is critical when buyers lack
sufficient hard currency to pay for their
purchases.
➢ Many buyers want to offer other items in
payment, a practice known as countertrade.
U.S. companies are often forced to engage in
countertrade if they want the business.
➢ Countertrade may account for 15 percent to 20
percent of world trade and takes several forms.
➢ Barter means the buyer and seller directly
exchange goods, with no money and no
third party involved.
➢ A compensation deal involves the seller
receives some percentage of the payment in
cash and the rest in products. A British
aircraft manufacturer sold planes to Brazil
for 70 percent cash and the rest in coffee.
➢ A buyback arrangement means that the seller
sells a plant, equipment, or technology to
another country and agrees to accept as partial
payment products manufactured with the
supplied equipment.
➢ Offset means the seller receives full payment
in cash but agrees to spend a substantial
amount of the money in that country within a
stated time period.
Price Discounts and
Allowances
⚫ Discount
⚫ Quantity discount
⚫ Functional discount
⚫ Seasonal discount
⚫ Allowance
Price Discounts and
Allowances
➢ A discount is a price reduction to buyers
➢ A quantity discount is a price reduction to

those who buy large volumes.
➢ A functional or trade discount is offered by a

manufacturer to trade channel members if they
will perform certain functions, such as selling,
storing, and record keeping. Manufacturers
must offer the same functional discounts
within each channel.
Price Discounts and
Allowances
➢ A seasonal discount is a price reduction to
those who buy merchandise or services out of
season.
➢ An allowance is an extra payment designed to
gain reseller participation in special programs.
Trade-in allowances are granted for turning in
an old item when buying a new one.
Promotional allowances reward dealers for
participating in advertising and sales support
programs.
Promotional Pricing Tactics
⚫ Loss-leader pricing
⚫ Special-event pricing
⚫ Cash rebates
⚫ Low-interest financing
⚫ Longer payment terms
⚫ Warranties and service
contracts
⚫ Psychological discounting
1.Loss leadership
➢ Supermarkets and department store often drop
the price on well known brands to stimulate
additional store traffic.
➢ This pay if the revenue on the additional sales
compensates for the lower margins on loss
leader item.
➢ Manufacturer of loss leader brands typically
object because this practice can dilute brand
image and bring complaints from retailers
who charge the list price.
2. Special event pricing
➢ Sellers will establish special prices in certain
seasons to draw in more customer. Every
august , there are back to school sale.
3. Low interest financing
➢ Instead of cutting its price, the company can
offer customers low-interest financing,
automakers have used no –interest financing
to try to attract more customers.
4.Longer payment system
➢ Seller specially mortgage banks and auto
companies, stretch loans over longer
periods and thus lower EMI.
5. Psychological discounting
➢ This strategy involves setting an
artificially high price and then offering the
product at substantial savings
⚫ Customer-segment
pricing
⚫ Product-form pricing
⚫ Image pricing
⚫ Channel pricing
⚫ Location pricing
⚫ Time pricing
1. Price discrimination
➢ Occurs when a company sells a product or
service at two or more prices that do not
reflect a promotional difference in costs
➢ In first degree price discrimination, the
seller charges a separate price to each
customer depending on the intensity of his
demand
➢ In second degree price discrimination, the
seller charges different amounts to different
classes of buyers
➢ In third degree price discrimination, the seller
chargers different amounts to different class
of buyers
A. Customer-segment pricing-different customer
group pay different pricing. E.g different
interest for senior citizen.
B. Product form pricing – big bazaar sells men's shirt
in many style fabric and levels of quality
C .Image pricing- Some companies price the same
product at two different levels based on image
difference. This is common in the cosmetics and
garments industries.
D. Channel pricing- Coca- Cola carries a different
price depending on whether the consumer
purchases it in a fine restaurant, a fast food
restaurant, or a vending machine
E. Time pricing- airline
Pricing for rural markets
⚫ A large proportion have a low and seasonal income
⚫ Several approaches adopted by retailers and companies to
address this
⚫ Rural retailers often extend credit
⚫ Retailers also “break the bulk” and sell in loose form, in
small quantities
⚫ Companies use a similar strategy by introducing “low-unit
packing” or LUP
⚫ Companies also develop low-priced products with a target
price for rural markets
⚫ Companies might offer refill packs or recyclable and
reusable packs
Initiating and Responding to Price Changes
Traps in Price Cutting Strategies
⚫ Low-quality trap
⚫ Fragile-market-share trap
⚫ Shallow-pockets trap
⚫ Price-war trap
Initiating and Responding to Price Changes
Traps in Price Cutting Strategies

➢ Low-quality trap. Consumers assume quality is low.
➢ Fragile-market-share trap. A low price buys market

share but not market loyalty. The same customers will
shift to any lower-priced firm that comes along.
➢ Shallow-pockets trap. Higher-priced competitors match

the lower prices but have longer staying power because of
deeper cash reserves.
➢ Price-war trap. Competitors respond by lowering their

prices even more, triggering a price war.
Increasing Prices
Delayed quotation pricing
Escalator clauses
Unbundling
Reduction of discounts
Increasing Prices
1. Delayed quotation pricing- the company does
not set a final price until the product is
finished or delivered. This pricing is prevalent
in industries with long production lead times,
such a s industrial construction.
2. Escalator clauses- the company requires the
customer to pay today`s price and all or part
of inflation increase takes place before
delivery.
Increasing Prices
3. Unbundling- the company maintains its
price but remove or price separately one or
more elements that were part of former
offer.
4. Reduction of discounts- the company
instructs its sales force not to offer its
normal cash and quantity discount
Brand Leader Responses to Competitive
Price Cuts
⚫ Maintain price
⚫ Maintain price and add value
⚫ Reduce price
⚫ Increase price and improve quality
⚫ Launch a low-price fighter line
Delivering Value
Designing and managing
integrated Marketing
Channels
What is a Marketing Channel?
A marketing channel system is the

particular set of interdependent
organizations involved in the process of
making a product or service available for
use or consumption.
Intermediaries
Intermediaries
➢ Some intermediaries—such as wholesalers
and retailers—buy, take title to, and resell
the merchandise; they are called merchants.
➢ brokers,manufacturers’representatives, sales
agents—search for customers and may
negotiate on the producer’s behalf but do
not take title to the goods; they are called
agents.
Intermediaries
➢ transportation companies, independent
warehouses, banks, advertising agencies—
assist in the distribution process but neither
take title to goods nor negotiate purchases
or sales; they are called facilitators.
➢ Landmark, a Tata enterprise, is India’s
largest books and music retailer.
Channels and
Marketing Decisions
➢ A push strategy uses the manufacturer’s sales
force, trade promotion money, and other means
to induce intermediaries to carry, promote, and
sell the product to end users.
➢ A pull strategy uses advertising, promotion, and

other forms of communication to persuade
consumers to demand the product from
intermediaries.
Channel Development
➢ Deciding on the best channel might not be a
problem; the problem is often to convince the
available intermediaries to handle the firm`s line.
➢ If the firm is successful, it might branch into new
markets and use different channel in different
market.
➢ In smaller market firm might sell directly to retailer;
in larger markets, it might sell through distributor.
In rural areas, it might work with general good
merchant.
Hybrid Channels
➢ Today`s successful companies are also multiplying the

no. of channels in any one market area.
➢ E.g. Dell, HP has used its sales force to sell to the large
accounts, outbound telemarketing to sell to sell to
medium size accounts, direct mail with an inbound no.
to sell to small accounts, retailers to sell to still smaller
accounts, and internet to sell specialty items.
➢ Companies that manage hybrid channels must make sure

these channels work well together and match each target
customers preferred way of doing business.
Buyer Expectations for
Channel Integration
⚫ Ability to order a product

online and pick it up at a
convenient retail location
⚫ Ability to return an online-
ordered product to a nearby
store
⚫ Right to receive discounts
based on total online and
offline purchases
Rural Distribution
Innovative Distribution Traditional Channels
Channels for Rural for Reaching Out to
Markets Rural Customers
• Hub and Spoke • Haats
• Model • Mandis
• Mobile shops and offices • Melas
• Linkage with community
based organizations
(SHGs, NGOs, and
cooperatives
Channel Member Functions
⚫ Gather information
⚫ Develop and disseminate persuasive
communications
⚫ Reach agreements on price and terms
⚫ Acquire funds to finance inventories
⚫ Assume risks
⚫ Provide for storage
⚫ Provide for buyers’ payment of their bills
⚫ Oversee actual transfer of ownership
F Marketing Flows
in the Marketing Channel
Marketing Channel Levels
▪ Zero-level channel (direct marketing channel)

▪ One-level channel
▪ Two-level channel
▪ Three-level channel
Consumer Markets
Industrial Markets
Reverse-Flow Channels
Reverse-flow channels are important to:
(1)reuse products or containers (such as refillable
chemical-carrying drums);
(2)refurbish products for resale (such as circuit boards
or computers)
(3)recycle products (such as paper)
(4)dispose of products and packaging
Designing a
Marketing Channel System
Analyze customer needs
Establish channel objectives
Identify major channel alternatives
Evaluate major channel alternatives

Understanding Customer
Needs
➢ Consumers may choose the channels they
prefer based on number of factors; the price,
product assortment, and convenience of a
channel option, as well as their own
particular goals(economic social, or
experiential)
➢ In many market buyers fall into one of four
categories
Understanding Customer
Needs
a) Habitual Shoppers- purchase from the same places in the same manner overtime
b) High- value deal seeker- know their needs an go for channel surfing, purchase
from the channel who give best deal at lowest possible price.
c) Variety –loving shoppers- gather information in all channel, take advantage of high
touch services, and then buy in their favorite channel, regardless of price.
d) High-involvement shoppers- gather information in all channels, make their

purchase in low cost channel, but take advantage of customer support from a
high touch channel
Service Outputs of Channels
Lot size
Waiting and delivery time
Spatial convenience
Product variety
Service backup
Value Network
➢ It is a system of parternership and alliances that a firm create
to source, augment, and deliver its offering.
➢ The company should first think of the target market and than
design supply chain backward from that point. This view is
called demand chain Planning
➢ Demand chain planning yields several insights. First, the
company can estimate whether more money is made upstream
or downstream., in case it might want to integrate backward or
forward.
➢ Second, the company is more aware of disturbances anywhere
in the supply chain that might cause costs, prices, or supplies
to change suddenly.
➢ Third, company can go online with their business partner to
carry on faster and more accurate communications,
transactions, and payments to reduce costs, speed up
information, and increase accuracy.
Channel Member Functions
⚫ Gather information
⚫ Develop and disseminate persuasive
communications
⚫ Reach agreements on price and terms
⚫ Acquire funds to finance inventories
⚫ Assume risks
⚫ Provide for storage
⚫ Provide for buyers’ payment of their bills
⚫ Oversee actual transfer of ownership
Type of Intermediaries
➢ A firm needs to identify the types of intermediaries
available to carry on its channel work.
➢ Company should search for innovative marketing
channels.HUL`s operation shakti, involves self-help
groups(SHGs) of women to distribute its products in
rural areas;ITC choupal also fall in this category.
➢ Sometimes a company chooses a new or
unconventional channel because of difficulty, cost,
or ineffectiveness of working with dominant
channel.e.g Eureka Forbes
Number of intermediaries
➢ Companies must decide on the number of intermediaries to use
at each channel level.
➢ Three strategies are available: exclusive, selective and intensive
distribution
a) Exclusive distribution
➢ It means severely limiting the number of intermediaries. Its
appropriate when the producer wants to maintain control over
the service level and output offered by the reseller.
b) Selective Distribution
➢ It relies on more than a few but less than all of the
intermediaries willing to carry a particular product. It make
sense for establish companies and for new companies seeking
distributors
Number of intermediaries
➢ The company does not need to worry about too
many outlets; it can gain adequate market
coverage with more control and less cost than
intensive distribution.
c) Intensive distribution
➢ In this manufacturers places the goods or
services in as many outlet as possible. This
strategy is generally used by items such as
snack foods, soft drinks.
Terms and responsibilities of
channel members
➢ Each channel member must be treated
respectfully and given the opportunity to be
profitable.
➢ The main element in trade relation mix are
price policies, conditions of sales, territorial
right and specific services to be performed
by each party.
Terms and responsibilities of
channel members
a) Price policy- it calls for the producer to
establish a price list and schedule of
discounts and allowances intermediaries
see as equitable and sufficient.
b) Conditions of sale- refers to payment terms
and producer guarantees
c) Distributors territorial rights
d) Mutual services and responsibility
Evaluating the major alternatives
The Value-Adds vs. Costs of Different
Channels
Break-Even Chart for the Choice
Between a Company Sales Force and
Manufacturer’s Sales Agency
Channel management
decision
a)Selecting a channel
➢ to facilitate channel member selection, produce
should determine what characteristics distinguish
the better intermediaries.
➢ They should evaluate the no. of year of business,
other line carried, growth and profit record,
financial strength, cooperativeness, and service
reputation
➢ If intermediaries are sales agents, producer should
evaluate the no. and character of other lines carried
and the size and quality of the sales force.
Training and Motivating
channel Members
➢ A company needs to view its intermediaries in the
same way it views its end users
➢ It needs to determine intermediaries needs and
construct a channel positioning such that its
channel offering is tailored to provide superior
value to these intermediaries
➢ The company should plan and implement careful
training programs, market research programs and
other capability building programs to improve
intermediaries performance.
channel Members
➢ Producer varies greatly in the skill in managing
distributors
➢ Channel power is the ability to alter channel member
behavior so that they take actions they would not have
taken otherwise.
a) Coercive Power
➢ a manufacturer threatens to withdraw a resource or
terminate a relationship if intermediaries fails to
cooperate.
➢ This power can be effective but its exercise producers
resentment and can generate conflict and lead the
intermediaries to organize countervailing power.
channel Members
b) Reward power
➢ The manufacturer offers intermediaries an
extra benefit for performing specific act or
functions
➢ Reward power typically produces better
results than coercive power, but it can be
overrarted.The intermediaries may come to
expect a reward every time the manufacturer
want a certain behavior to occur
channel Members
c)Legitimate power
➢ The manufacturer requests a behavior that is warranted under
the contract. As long as the intermediaries view the
manufacture as a legitimate leader, legitimate power works.
d) Expert power
➢ The manufacturer has special knowledge the intermediaries
value. Once the intermediaries acquire this expertise, the expert
power weaken.
➢ The manufacturer must continue to develop new expertise so
that the intermediaries will want to continue cooperating.
e) Referent Power
➢ The manufacturer is so highly respected that intermediaries are
proud to be associated with it,
Evaluating channel Members
➢ Producer must periodically evaluate intermarries
performance against such standards as sales-quota
attainment, average inventory level, customer
delivery time, treatment of damaged and lost goods,
and cooperation in promotional and training
program.
➢ producer should set up functional discounts in
which they pay specific amounts for the trade
channel performance of each agreed-upon service.
➢ Underperformers need to be counseled, retained,
motivated or terminated.
Evaluating channel Member
➢ Producer must periodically evaluate intermediaries
performance against such standards as sales-quota
attainment, average inventory levels, customer delivery
time, treatment of damaged and lost goods, and
cooperation in promotional and training programs.
➢ Producer should set up functional discounts in which
they pay specified amounts for the trade channel`s
performance of each agreed-upon service.
➢ Under performance need to be counseled, retrained

motivated, or terminated.
Modifying Channel Design
and Arrangements
➢ A producer must periodically review and
modify its channel design and arrangements
➢ He needs to modify them when the distribution
channel is not working as planned, consumer
buying pattern change, the market expands,
new competition arises, innovative distribution
channel emerge, and the product moves into
later stages in the product life cycle.
Channel Integration and Systems
❖ Vertical marketing
systems
⚫ Corporate VMS
⚫ Administered VMS
⚫ Contractual VMS
❖ Horizontal
marketing systems
❖ Multichannel
systems
1. Vertical Marketing System

➢ It comprises the producer, wholesaler and retailer
acting as a unified system. One channel member, the
channel caption, owns the others or franchises them or
has so much power that they all cooperate.
a) Corporate VMS
➢ It combines successive stages of production and
distribution under single ownership. Eg. Future group.
b) Administered VMS
➢ It coordinates successive stages of production and
distribution through the size and power of one of the
members manf. dominant brand are able to secure
strong trade cooperation and support from reseller.e,g,
Gillete.
c)Contractual VMS
➢ It consists of independent firms at different levels
of production and distribution, integrating their
programs on a contractual basis to obtain more
economies or sales impact than they could achieve
alone.e.g wholesaler sponsored voluntary chain.
2.Horizontal Marketing Systems
➢ In this system two or more unrelated companies
put together resources or programs to exploit an
emerging marketing opportunity.
➢ e.g. HUL entering strategic tie up with PepsiCo
India for bottling and distribution of Lipton
RTD.
Channel Conflict
⚫ Channel conflict occurs when one

member’s actions prevent another channel
from achieving its goal.
⚫ Types of channel conflict
– Vertical
– Horizontal
– Multichannel
Channel Conflict
a) Vertical channel conflict

➢ It means a conflict between different levels within
the same channel. E.g. HUL came into conflict
with its distributors in Kerala.
b) Horizontal Channel conflict
➢ It involves a conflict between members at same
level within the channel.
➢ Dealers frequently get into conflict with each other
for the transgression of the domain of operation
and under cutting.
c) Multichannel Conflict
➢ It exists when the manufacturer has established
two or more channel that sell to the same market.
Causes of Channel Conflict
Goal incompatibility
Unclear roles and rights
Differences in perception
Intermediaries’ dependence
on the manufacturer
Causes of Channel Conflict
a) Goal incompatibility
➢ The manufacturer may want to achieve rapid market
penetration through a low-price policy. Dealers, in contrast,
may prefer to work with high margins and pursue short-run
profitability.
b)Unclear roles and right
➢ Territory boundaries and credit for sales often produce conflict
c) Differences in perception
➢ The manufacturer may be optimistic about short –term
economic outlook and want dealers high inventory. Dealer
may be pessimistic.
d)Intermediaries dependence on the manufacturers
➢ The fortunes of exclusive dealers, such as auto dealer, are
profoundly affected by manufacturers product and pricing
decisions.
Managing channel conflict
➢ As companies add channels to grow sales, they run
risk of creating channel conflict.
➢ Some channel conflict can be constructive and lead
a better adaptation to a changing environment, but
too much conflict is dysfunctional. So ways of
effective conflict management are
a) Adoption of super ordinate goal
➢ Channel members come to an agreement on the
fundamental goal they are jointly seeking, whether
it is survival, market share, high quality or
customer satisfaction.
➢ They usually do this when the channel faces an
outside threats, such as more efficient competitions
Managing channel conflict
b)Exchange of person
c)Joint membership in trade association
d) Cooptation
➢ It is an effort by one organization to win the support of the
leaders of other organization by including them in advisory
councils, boards of director and likes.
e)Diplomacy mediation , or arbitration
➢ Diplomacy takes place when each sides sends a person or group
to meet with its counterpart to resolve the conflict.
➢ Mediation means resorting to a neutral third party skilled in
conciliating the two party interests
➢ Arbitration occurs when two parties agree to present their
arguments to one or more arbitrators and accept arbitration
decision
Managing retailing,
Wholesaling, and logistics
What is Retailing?
Retailing includes all the activities

involved in selling goods or services
directly to final consumers for personal,
nonbusiness use.
Major Store Retailer Types
⚫ Specialty store ⚫ Discount store

⚫ Department store ⚫ Off-price retailer
⚫ Supermarket ⚫ Superstore
⚫ Convenience store ⚫ Catalog showroom
➢ Specialty stores carry a narrow product line.

E.g Tanishq
➢ Department stores carry several product
lines. E.g. Shoppers Stops
➢ Supermarkets are large, low-cost, low-
margin, high-volume, self-service store
designed to meet total needs for food and
household products. E.g. Hypercity
➢ Convenience stores are small stores in

residential area, often open 24/7, limited
line of high-turnover convenience products
plus takeout.
➢ Drug stores carry prescription and
pharmacies, health and beauty aids, other
personal care, small durable, miscellaneous
items.
➢ Discount stores are standard or specialty

merchandise; low-price, low-margin, high-
volume stores. Walmart
➢ Extreme value or hard-discount store carry a
more restricted merchandise mix than discount
stores but at even lower prices. e.g Big Bazaar
➢ Off-price retailers carry leftover goods,
overruns, irregular merchandise sold at less
than retail.
➢ Superstores are huge selling spaces, routinely

purchased food and household items, plus
services. Category killers carry a deep
assortment in one category. Hypermarkets are
huge stores that combine supermarket,
discount, and warehouse retailing.
➢ Catalog showrooms include a broad selection
of high-markup, fast-moving, brand-name
goods sold by catalog at a discount.
Non Store Retailing
1. Direct Selling
2. Direct marketing- telemarketing, TV direct
response marketing and e shopping
3. Automatic vending
4. Buying service- is a store less retailer serving
a specific clientele-usually employee of large
organizations who are entitled to buy from a
list of retailer that have agreed to give
discount in return of membership
Levels of Retail Service
Self-service
Self-selection
Limited service
Full service
1
Levels of Retail Service
1. Self services- many customer are willing to

carry out their own locate- compare- select
process to save money.
2. Self selection- customer find their own goods,
although they can ask for assistance
3.Limited services-. Limited service means these
retailers carry more shopping goods and
services such as credit and merchandise-return
privileges.
4 full service- sales people are ready to assist in
every phase of the locate- compare-select
process.
Major Types of Corporate
Retail Organizations
⚫ Corporate chain store
⚫ Voluntary chain
⚫ Retailer cooperative
⚫ Consumer cooperative
⚫ Franchise organization
⚫ Merchandising conglomerate
➢ Corporate chain store refers to two or more
outlets owned and controlled, employing
central buying and merchandising, and selling
similar lines of merchandise.
➢ A voluntary chain is a wholesaler-sponsored
group of independent retailers engaged in bulk
buying and common merchandising.
Independent Grocers Alliance (IGA
➢A retailer cooperative is an independent
retailers using a central buying organization
and joint promotion efforts.
➢ Consumer cooperative is a retail firm
owned by its customers. Members
contribute money to open their own store,
vote on its policies, elect a group to manage
it, and receive dividends.
➢A franchise organization is a contractual
association between a franchisor and
franchisees, popular in a number of product
and service areas.
➢A merchandising conglomerate is a
corporation that combines several diversified
retailing lines and forms under central
ownership, with some integration of
distribution and management.
Franchising System
⚫ The franchisor owns a trade or service mark
and licenses it to franchisees in return for
royalty payments
⚫ The franchisee pays for the right to be part of
the system
⚫ The franchisor provides its franchisees with
a system for doing business
Retailers’ Marketing
Decisions
Target market
Product assortment
Procurement
Prices
Services
Retailers’ Marketing
Decisions (cont.)
Store atmosphere
Store activities
Communications
Locations
Marketing Decisions
a) Target Market
➢ Until it defines and profiles the target market, the
retailer cannot make consistent decisions about product
assortment, store décor, advertising message and
media, price, and service level.
b) Product assortment
➢ Retailer decide on product assortment keeping in the
mind of the requirement of their target customers.
➢ The retailer has to decide on the product assortment
breadth(no of categories ) and depth varient of each
category
➢ The next challenge for a store is to develop a product
differentiation strategy
Marketing Decisions
c) Procurement
➢ Retailers are rapidly improving their skills in
demand forecasting, merchandise selection,
stock control, space location and control.
➢ Stores are using direct product
profitability(DPP) to measure products
handling cost( receiving, moving to storage,
paperwork, selecting checking, loading and
space cost) from the time it reaches the
warehouse until a customer buy it in the retail
store.
Marketing Decisions
d) Prices
➢ It is key positioning factor and must be decided in
relation to the target market, the product and
service assortment mix, and the competition
➢ Most retailer fall into high-markup, lower volume
group(fine specialty product) or lower markup,
higher volume group(mass merchandising and
discount stores)
➢ Retailers must also pay attention to pricing tactics.
Most retailers will put low prices on some items to
serve as traffic builder or loss leaders or to signal
their pricing policies.
Marketing Decisions
e)Services
➢ The service mix is a key tool for differentiating
one store to another. Retailer must decide on the
services mix to offer customer
a) Pre purchase services include accepting telephone
and mails orders, advertising.
b) Post purchase service include shipping and delivery,
gift wrapping, alternation and tailoring.
c) Ancillary service include general information, check
cashing, parking, restaurants, and baby attendant
service
Marketing Decisions
f) Store Atmosphere
➢ Every store has a look, and a physical layout that
makes it hard or easy to move around. some retailers
of experiential products are creating in-store
entertainment to attract customers who want fun and
excitement.
➢ Retailers must consider all the senses in shaping the
customer’s experience. Varying the tempo of music
affects average time and dollars spent in the
supermarket. Sony Style stores are seasoned with a
subtle vanilla and mandarin orange fragrance, and
every surface, from countertops to paneling, is
designed to be touchable.
Helping Stores to Sell
⚫ Keep shoppers in the store
⚫ Honor the transition zone
⚫ Don’t make them hunt
⚫ Make merchandise available to the reach and
touch
⚫ Note that men do not ask questions
⚫ Remember women need space
⚫ Make checkout easy
Marketing Decisions
f) Communications
➢ Retailer use a wide range of communication
tools to generate traffic and purchase.
➢ They place ads , run special sales, issue
money saving coupon and run frequent
shopper reward programs, in –store food
sampling, and coupon on shelves or checkout
points.
➢ They will also work with manufacturer to
design point- of- sale material that reflect the
retailer`s image as well as that of the
manufacturer `s brand
Marketing Decisions
f) Location Decision
➢ In view of the relationship between high
traffic and high rents, retailers must decide
on the most advantageous locations for
their outlets, using traffic counts, surveys
of consumer shopping habits, and analysis
of competitive locations
Location Decision
⚫ Central business districts
⚫ Regional shopping centers
⚫ Community shopping
centers
⚫ Shopping strips
⚫ Location within a larger
store
Location Decision
➢ Central business districts. The oldest and most

heavily trafficked city areas, often known as
“downtown”
➢ Regional shopping centers. Large suburban
malls containing 40 to 60 stores, with few well
known chains like McDonald’s, Westside,
Fabindia and a number of clothing, footwear,
linen, and consumer electronics stores.
Location Decision
Community shopping centers. Smaller malls

with one anchor store and 20 to 40 smaller
stores.
Shopping strips. A cluster of stores, usually in
one long building, serving a neighborhood’s
needs for groceries, hardware, laundry, shoe
repair, and dry cleaning
Location Decision
A location within a larger store. Certain well-known

retailers—McDonald’s, Starbucks, Dunkin’ Donuts—
locate new, smaller units as concession space within
larger stores or operations, such as airports, schools, or
department stores.
Stand-alone stores. Some retailers such as Reliance
Mart and Spencer’s are avoiding malls and shopping
centers to locate new stores in free-standing sites on
streets, so they are not connected directly to other
retail stores.
Indicators of Sales Effectiveness
Number of people passing by
% who enter store
% of those who buy
Average amount
spent per sale
Organized rural retailing
⚫ Rural retail has a large potential
⚫ Traditionally rural retail was done by local
traders
⚫ Some companies have entered organized rural
retail
⚫ Hariyali Kissan Bazaar, is a pioneer in new
format rural retailing
⚫ Chaupal Sagar by ITC acts as a collection
centre as well as retail outlet
Wholesaling
➢ Wholesaling includes all the activities in

selling goods or services to those who buy
for resale or business use.
➢ Why do manufacturer not sell directly to
retailers or final consumers? Why are
wholesalers used at all?
➢ Wholesalers are more efficient in
performing one or more of the following
function
Wholesaling Functions
⚫ Selling and ⚫ Transportation

promoting ⚫ Financing
⚫ Buying and
⚫ Risk bearing
assortment building
⚫ Market information
⚫ Bulk breaking
⚫ Management
⚫ Warehousing
services and
counseling
Market Logistics Planning
⚫ Deciding on the company’s value

proposition to its customers
⚫ Deciding on the best channel design and
network strategy
⚫ Developing operational excellence
⚫ Implementing the solution
Market Logistics
⚫ Sales forecasting ⚫ In-plant

⚫ Distribution warehousing
scheduling ⚫ Shipping-room
⚫ Production plans processing
⚫ Finished-goods ⚫ Outbound
inventory decisions transportation
⚫ Packaging ⚫ Field warehousing
⚫ Customer delivery
and servicing
What are
Integrated Logistics Systems?
An integrated logistics system (ILS) includes

materials management, material flow systems,
and physical distribution, aided by information
technology.
Market Logistics Decisions
⚫ How should orders be

handled?
⚫ Where should stock be
located?
⚫ How much stock
should be held?
⚫ How should goods be
shipped?
Market Logistics Decision
Order processing
Warehousing
Inventory
Transportation
Order Processing
➢ It is the elapsed timing between an order
receipt, delivery, and payment.
➢ This cycle has many steps, including order
transmission by the salesperson, order entry
and customer credit check, inventory and
production scheduling, order and invoice
shipment, and receipt of payment.
➢ Longer this cycle takes, lower the customer
satisfaction and the lower the company profile
Inventory
➢ Inventory cost increases at an accelerating
rate as the customer-service level
approaches 100 %.
➢ Management needs to know how much
sales & profit would increase as a result of
carrying larger inventories and promising
faster order fulfillment times, and then
make a decision
Inventory
➢ As inventory draws down, management must
know at what level to place new order. This
stock level is called the order(or reorder Point).
➢ The order point should balance the risks of
stock out against the cost of overstock
➢ The larger the quantity ordered, the less
frequently an order needs to be placed
➢ The company need to balance order processing
cost and inventory carrying cost
Inventory
➢ Order processing costs for a manufacturer
consist of setup costs and running costs i.e.
operating cost when production is running for
the item.
➢ If setup cost are low, the manufacturer can
produce the item often, and the average cost
per item is stable and equal to the running
costs
➢ If setup costs are high, however, the
manufacturer can reduce the average cost per
unit by producing a long run and carrying more
inventory.
Inventory
➢ Order-processing costs must be compared
with inventory-carrying costs.
➢ The larger the average stock carried, the

higher the inventory-carrying costs.
➢ These carrying costs include storage

charges, cost of capital, taxes and insurance,
and depreciation and obsolescence.
Inventory
➢ Carrying costs might run as high as 30 percent
of inventory value.
➢ This means that marketing managers who want
their companies to carry larger inventories
need to show that the larger inventories would
produce incremental gross profits to exceed
incremental carrying costs.
➢ We can determine the optimal order quantity
by observing how order-processing costs and
inventory- carrying costs sum up at different
order levels.
Determining Optimal Order
Quantity
Inventory
➢ Figure shows that the order-processing cost
per unit decreases with the number of units
ordered because the order costs are spread over
more units.
➢ Inventory-carrying charges per unit increase
with the number of units ordered, because each
unit remains longer in inventory.
➢ We sum the two cost curves vertically into a
total-cost curve and project the lowest point of
the total-cost curve on the horizontal axis to
find the optimal order quantity Q*.
Transportation Factors
⚫ Speed
⚫ Frequency
⚫ Dependability
⚫ Capability
⚫ Availability
⚫ Traceability
⚫ Cost
➢ Transportation choices affect product pricing, on-

time delivery performance, and the condition of the
goods when they arrive, all of which affect customer
satisfaction.
➢ In shipping goods to its warehouses, dealers, and
customers, the company can choose rail, air, truck,
waterway, or pipeline. Shippers consider such
criteria as speed, frequency, dependability,
capability, availability, traceability, and cost.
➢ For speed, air, rail, and truck are the prime
contenders. If the goal is low cost, then the choice is
water or pipeline.
➢ Shippers are increasingly combining two or more

transportation modes, thanks to containerization.
➢ Containerization consists of putting the goods in
boxes or trailers that are easy to transfer between
two transportation modes.
➢ Piggyback describes the use of rail and trucks;
fishyback, water and trucks; trainship, water and
rail; and airtruck, air and trucks.
➢ Each coordinated mode offers specific advantages.
For example, piggyback is cheaper than trucking
alone yet provides flexibility and convenience.
➢ Shippers can choose private, contract, or

common carriers.
➢ If the shipper owns its own truck or air fleet, it
becomes a private carrier.
➢ A contract carrier is an independent
organization selling transportation services to
others on a contract basis.
➢ A common carrier provides services between
predetermined points on a scheduled basis and
is available to all shippers at standard rates.
Communicating Value
Designing and managing
integrated marketing
communications
What are
Marketing Communications?
Marketing communications are the means
by which firms attempt to inform, persuade,
and remind consumers, directly or
indirectly, about the products and brands
they sell.
Marketing Communications Mix
⚫ Advertising ⚫ Direct marketing

⚫ Sales promotion ⚫ Interactive
⚫ Events and marketing
experiences ⚫ Word-of-mouth
⚫ Public relations and marketing
publicity ⚫ Personal selling
a) Advertising
➢ Any paid form of nonpersonal presentation and promotion of
ideas, goods, or services by an identified sponsor.
b) Sales permotion
➢ A variety of short term incentive to encourage trial or purcahse
of product or services.
c)Events and experience
➢ Company sponsored activities and programs designed to create
daily or special brand related interaction
d)Public relation and publicity
➢ A variety of program designed to promote or protect a
company image or its individual product
e) Direct Marketing
➢ Use of mail, telephone, fax, e-mail or internet to communicate
directly with specific customers and prospects.
f) Interactive Marketing
➢ Online activity and program designed to engage customers or
prospect and directly or indirectly raise awareness, improve image.
g) word-of-mouth marketing
➢ People to people oral, written, or electronic communication that
relate to merits or experiences of purchasing or using products or
services
h) Personal Selling
➢ Face to face interaction with one or more prospective purchasers for
the purpose of making presentation, answering questions and
procuring orders
Communication Platforms
Advertising Sales Promotion
⚫ Print and broadcast ads ⚫ Contests, games,
⚫ Packaging inserts sweepstakes
⚫ Motion pictures ⚫ Premiums
⚫ Brochures and booklets ⚫ Sampling
⚫ Posters ⚫ Trade shows, exhibits
⚫ Billboards ⚫ Coupons
⚫ POP displays ⚫ Rebates
⚫ Logos ⚫ Entertainment
⚫ Videotapes ⚫ Continuity programs

IMC Builds Brands
Events/ Experiences Public Relations

⚫ Sports ⚫ Press kits
⚫ Speeches
⚫ Entertainment ⚫ Seminars
⚫ Festivals ⚫ Annual reports
⚫ Arts ⚫ Charitable donations

⚫ Publications
⚫ Causes ⚫ Community relations
⚫ Factory tours ⚫ Lobbying
⚫ Company museums ⚫ Identity media

⚫ Company magazine
⚫ Street activities
Personal Selling Direct Marketing

⚫ Sales presentations ⚫ Catalogs
⚫ Mailings
⚫ Sales meetings
⚫ Telemarketing
⚫ Incentive programs
⚫ Electronic shopping
⚫ Samples
⚫ TV shopping
⚫ Fairs and trade shows
⚫ Fax mail
⚫ E-mail
⚫ Voice mail
⚫ Blogs
⚫ Websites
Word-of-Mouth Marketing
⚫ Person-to-person
⚫ Chat rooms
⚫ Blogs
Elements in the Communications Process
Response Hierarchy Models
➢ All these model assume that buyer passes through
cognitive, affective and behavioral stage.
➢ `learn-feel-do` sequence is appropriate when the
audience has high involvement with a product category
perceived to have a high differentiation such as
automobile house.
➢ Do –feel-learn is relevant when the audience has high
involvement but perceive little or no differentiation with
product category.e.g Airline ticket or PC.
➢ Learn-do-feel is relevant when the audience has low
involvement and perceives little differentiation within
the product category. E.g. FMCG
Hierarchy- of –effect model in context of marketing communication campaign
a) Awareness
➢ if most of the target audience is unware of the object, the communicator's task is to
build awareness.
b) Knowledge
➢ The target audience might have brand awareness but not know much more. The
company may want its target audience to know the value proposition of the brand.
c) Liking
➢ If the target market know the brand, how do they feel about it? If the audience
does not view the value proposition of the brand favorably, then the communicator
needs to find out the reasons.
➢ If unfavorable view is based on real problems with the product efficacy, then the
same has to be fixed and its renewed quality need to be communicated
➢ If unfavorable view is based on perceptions created by the problems with message
execution, then it needs to be addressed through a revamp communication strategy
d)Preference
➢ The target audience might like the product but not prefer it to others. In
this case communicators must try to build consumer preference by
comparing quality, value, performance, and other features to likely
competitors.
e) Conviction
➢ a target audience might prefer a particular product but not develop
conviction about buying it. The communicator`s job is to build the
conviction among interested consumer by why me positioning strategies.
f)Purchase
➢ Some members of target audience might have conviction but not quite get
around to making a purchase
➢ The communicator must lead these consumers to take a final step, perhaps
by offering the product at the low price, offering a premium, or leting
consumer try it out
An Ideal Ad Campaign
⚫ The right consumer is exposed to the message at
the right time and place
⚫ The ad causes consumer to pay attention
⚫ The ad reflects consumer’s level of understanding
and behaviors with product
⚫ The ad correctly positions brand in terms of
points-of-difference and points-of-parity
⚫ The ad motivates consumers to consider purchase
of the brand
⚫ The ad creates strong brand associations
Steps in Developing Effective
Communications
Identify target audience

Determine objectives
Design communications
Select channels
Establish budget
Decide on media mix
Measure results/ manage IMC
Identify the Target audience
➢ The process must start with a clear target
audience in mind; potential buyers of the
company`s product , current users, deciders,
influencer; individuals, groups, particular
public or general public.
➢ The target audience is a critical inlfuence on
the communicators decisions about what to
say, how, when, where and whom.
Communications Objectives
Category Need Brand Awareness
Brand Attitude Purchase Intention

➢ We may try to establish a category need which

means establishing a product or service
category as necessary to remove or satisfy a
perceived discrepancy between a current
motivational state and a desired emotional
state.
➢ We may try to build brand awareness such that
the consumer’s ability to recognize or recall
the brand within the category, in sufficient
detail to make a purchase.
➢ We may focus on brand attitude to help

consumers evaluate the brand’s perceived
ability to meet a currently relevant need.
➢ We may focus on brand purchase intention
to move consumers to decide to purchase
the brand or take purchase-related action.
Designing the Communications
⚫ Message strategy
⚫ Creative strategy
⚫ Message source
⚫ Global adaptation
➢ Formulating the communications to achieve

the desired response requires solving three
problems: what to say (message strategy), how
to say it (creative strategy), and who should
say it (message source).
➢ To be effective, modalities and media for
communication should be tailormade to suit
the audience and their media habits. E.g Dabur
Chyawanprash,
a) Message Strategy
➢ In determining message strategy, management searches
for appeals, themes, or ideas that will tie into brand
positioning and help to establish point of parity or
points of difference.
➢ Some of these may be related directly to product or
services performance, whereas others may relate to
more extrinsic consideration( the brand as being
contemporary, popular, or traditional.)
➢ Buyers expecting one of the four type of rewards from
a product: rational,sensory, social or ego satisfaction
➢ Buyers might visualize three rewards from result-of-
use experience, product-in-use- experience, or
incidental-in-use -experience
➢ Crossing the 4 types of reward with 3 types of
experience generate 12 types of message
b) Creative strategy
➢ Communication effectiveness depend on how a
message is being expressed, as well as content of
message itself.
➢ If the communication is ineffective, it may mean the
wrong message was used or the right one just poorly
expressed.
➢ Creative strategies are the way marketer translate
their message into a specific communication.
➢ It can be broadly classified as informational or
transformational appeal.
1. Informational Appeal
➢ it elaborates on product or service attributes
or benefits e.g problem solution ads, product
demonstration ads, product comparison ads,
and testimonial from unknown or celebrity
endorser.
2.Transformational appeal
➢ It elaborate on a non product-related benefits
or image. It might depict what kind of person
uses a brand.
➢ Transformational appeals often attempt to stir

up emotions that will motivate purchase.
➢ Communicator use negative appeals such as
fear, guilt, and shame to get people do
things(brush their teeth) or stop doing
things(smoking, alcohol).
➢ Fear appeals work best when source credibility
is high, and when communication promises to
relieve, in a believable and efficient way, the
fear it arouses.
➢ Communicators also use positive emotional

appeals such as humor, love, pride, and joy.
➢ Humor is often used to highlight a particular
benefit of brand by exaggerating it.
➢ the magic of advertising is to bring concepts
on a piece of paper to life in minds of
consumer target.
➢ In a print ad, the communicator must decide on
headline, copy, illustration and color
➢ For radio message communicator must choose
words, voice quality and vocalization.
c)Message Source
➢ Message delivered by attractive or popular
sources can achieve higher attention and
recall, which is why advertisers often use
celebrities as spokespeople . E.g. DCP
TajMahal tea.
➢ The important factor is spokesperson's
credibility. Three most important source
credibility factor are expertise,
trustworthiness, and likability
Message Source
Celebrity Characteristics
– Expertise
– Trustworthiness
– Likeability
1
➢ If a person has positive attitude toward a source and

message, or a negative attitude toward both, a state
of congruity is said to be exist.
➢ What happens if the person holds one attitude
towards the source and opposite one towards the
message?
➢ Attitude change will take place in the direction of
increasing the amount of congruity between the two
evaluations.
➢ The principle of congruity implies that
communicators can use their good image to reduce
some negative feeling towards a brand
d) Global Adaptation
1. Product
➢ Many products are restricted or forbidden in certain
part of world. E.g. Beer, wine, and spirits cannot be
advertised or sold in many Muslim countries
2. Market segment
➢ In many countries no TV aid may be directed under
12. to play it safe McD advertises itself as a family
restaurant in Sweden. In India , tobacco products and
alcoholic beverage can not be advertise in mass media.
To overcome this restriction, alcoholic beverage
companies advertise their brand as other innocuous
products such as soda.
3.Style
➢ Comparative ads, although acceptable and
even common in US and Canada
unacceptable in Japan. PepsiCo had
comparative taste test ad in Japan that was
refused by many TV stations
4.Global or Local
Issues Facing Global
Adaptations
⚫ Is the product restricted in some countries?
⚫ Are there restrictions on advertising the
product to a specific target market?
⚫ Can comparative ads be used?
⚫ Can the same advertising be used in all
country markets?
Selecting the communication
channel
➢ Selecting efficient means to carry the message
become more difficult as the channels of
communication become more fragmented and
cluttered.
➢ Communication channels may be personal and
nonpersonal,
1 .Personal
➢ It means two or more person communicate
face to face, person- to- audience, over the
telephone, or through e-mail
channel
a) Advocate
➢ It consist of company sales people contacting
buyer in the target market
b) Expert
➢ It consist of independent expert making
statement to the target buyer
c) Social channel
➢ It consist of neighbors, friends, family
members and associate talking to the target
buyer
Stimulating
Personal Influence Channels
⚫ Identify influential individuals and devote extra
attention to them
⚫ Create opinion leaders
⚫ Use community influential's in testimonial
advertising
⚫ Develop advertising with high “conversation
value”
1
channel
2. Nonpersonal communication channel
a) Media
➢ it consist of print media; broadcast media and display
media(billboard)
b) Sales promotion
➢ It consist of consumer promotion(such as sample,
coupons and premium); trade promotion(such as
advertising and display allowances); and business and
sales force promotions( contests for sales person)
c) Event and experience- includes sorts, arts entertainment
.
d) Public Relation- include communications directed
internally to employees of the company or externally to
consumers, other firms, the government, and media.
Establish the Budget
Affordable
Percentage-of-Sales
Competitive Parity
Objective-and-Task
Objective-and-Task Method
⚫ Establish the market share goal
⚫ Determine the percentage that should be reached
⚫ Determine the percentage of aware prospects that
should be persuaded to try the brand
⚫ Determine the number of advertising impressions per
1% trial rate
⚫ Determine the number of gross rating points that would
have to be purchased
⚫ Determine the necessary advertising budget on the
basis of the average cost of buying a GRP
Deciding on the marketing
communication mix
➢ Company must allocate the marketing
communications budget over the eight major mode
of communication-
➢ advertising, sales promotion, public relation and
publicity, event and experience, direct marketing ,
interactive marketing, word –of-mouth marketing,
and sales force
➢ Within the same industry, companies can differ
considerably in their media and channel choices.
➢ Amway concentrates on personal selling through
network marketing whereas L`Oreal spend heavily
on ad Eureka Forbes focuses on door-to-door
selling with 5000 field sales force
Characteristics of Marketing
communication Mix
1 Advertising
➢ It reaches geographically dispersed buyers.
➢ It can build up a long term image of product
➢ Just presence of adverising might have effect on sales
2.Sales Promotion
➢ Companies use sales promotion tools- coupons, contests,
premiums and the like- to draw stronger and quicker
buyer response.
➢ They gain attention and may lead the consumer to the
product
➢ They incorporate some concession, inducement, or
contribution that gives value to the customer
communication Mix
3.Public Relations and Publicity
➢ News stories and features are more
authentic and credible to readers than ads
➢ Public relation can reach prospects who
prefer to avoid salespeople and
advertisement.
➢ Public relations has the potential for
dramatizing company or product.
communication Mix
4. Events and Experiences
➢ It can be used as brand building as well for selling
the product. E.g. Kurkure Express
➢ A well chosen event or experience can be seen as
highly relevant because the consumer get personally
involved.
5. Direct and Interactive Marketing
➢ Direct and interactive marketing take many forms-
over the phone, online, or in person
➢ The message can be prepared to appeal to the
addressed individual
➢ The message can be changed depending on the
persons response
communication Mix
6. word-of-Mouth marketing
➢ Since people trust others they know and
respect word of mouth can be highly
influential.
➢ It can be very intimate dialogue that reflects
personal facts, opinion and experiences.
7. Personal selling
➢ It is most effective tool at later stages of
buying process, particularly in building up
buyer preference and action
Factors in Setting
Communications Mix
⚫ Type of product market
⚫ Buyer readiness stage
⚫ Product life cycle stage
Factors in Setting
Communications Mix
1.Type of Product Market
➢ Communication –mix allocations vary
between consumer and business market
➢ Consumer marketers tend to spend
comparatively more on sales promotion and
advertising
➢ Business marketer tend to spend
comparatively more on personal selling
➢ Insurance companies have been utilizing
personal selling to sell insurance produxt.
Cost Effectiveness by Buyer Readiness
Stage
communication Mix
3. Product life- cycle Stage
➢ Communication tools also vary in cost- effectiveness at
different stages of product life cycle.
➢ In the introduction stage, advertising, events and experiences
and publicity have highest cost-effectiveness, followed by
personal selling to gain the distribution coverage and sales
promotion and direct marketing to induce trial.
➢ In growth stage demand has its own momentum through word
of mouth.
➢ In maturity stage, advertising events and experiences, and
personal selling all become more important.
➢ In the decline stage, sales promotion continue strong, other
communication tools are reduced, and sales people give the
product only minimal attention
Measuring Communication
Result
⚫ Managers want to know the outcomes and revenues
resulting from their communication investments.
⚫ After implementing communications director must
measure its impact on the target audience.
⚫ Member of target audience are asked whether they
recognize or recall the message, how many time
they saw it, what point they recall, how they felt
about the message, and their previous and current
attitude towards the product and company
⚫ The communicator should also collect behavioral
measure of audience response, such as how many
people bought the product, liked it, and talked to
others about it.
Current Consumer States for Two
Brands
What is Advertising?
Advertising is any paid form of
nonpersonal presentation and promotion of
ideas, goods, or services by an identified
sponsor.
The Five M’s of Advertising
Advertising Objectives
Informative Persuasive
advertising advertising
Reminder Reinforcement
advertising advertising
Factors to Consider in Setting an
Advertising Budget
Stage in the product life cycle
Market share and consumer base
Competition and clutter
Advertising frequency
Product substitutability
Developing the
Advertising Campaign
⚫ Message generation
and evaluation
⚫ Creative development
and execution
⚫ Legal and social
issues
Television
Advantages Disadvantages
⚫ Reaches broad spectrum ⚫ Brief
of consumers ⚫ Clutter
⚫ Low cost per exposure ⚫ High cost of production
⚫ Ability to demonstrate ⚫ High cost of placement
product use ⚫ Lack of attention by
⚫ Ability to portray image viewers
and brand personality
Print Ads
Advantages Disadvantages
⚫ Detailed product ⚫ Passive medium
information ⚫ Clutter
⚫ Ability to ⚫ Unable to demonstrate
communicate user product use
imagery
⚫ Flexibility
⚫ Ability to segment
Print Ad Components
Picture
Headline
Signature
Print Ad Evaluation Criteria
⚫ Is the message clear at a glance?
⚫ Is the benefit in the headline?
⚫ Does the illustration support the headline?
⚫ Does the first line of the copy support or explain
the headline and illustration?
⚫ Is the ad easy to read and follow?
⚫ Is the product easily identified?
⚫ Is the brand or sponsor clearly identified?
Communicating to the Rural
Audience
⚫ Large variations in language and culture
⚫ Campaigns have to be tailor made for product and
region
⚫ Product demonstrations in haats, mandis, and
melas (fairs) are useful
⚫ TV and print media do not reach all villages and
all customers
⚫ Wall paintings and signboards very popular
⚫ Folk theatre, magic shows and puppet shows are
also used as a media vehicle
Media Selection
• Reach
• Frequency
• Impact
• Exposure
Media Selection
a) Reach- The no. of different persons or
households exposed to a particular media
schedule at least during a specified time
period.
b) Frequency (F) – The no. of times within
the specified time period that an average
person or household is exposed to the
message
Media Selection
c. Impact- The qualitative value of an exposure
through a given medium( for a food ad khana
khjana would have higher impact than
Business world)
Total No. of exposure E = Rx F also called Gross
Rating Point(GRP)
➢ If a given media schedule reaches 80% of
homes with an average frequency of 3 than
GRP=(80x3) = 240.
Relationship Among Trial, Awareness,
and the Exposure Function
Choosing Among Major Media Types
⚫ Target audience and media habits

⚫ Product characteristics
⚫ Message characteristics
⚫ Cost
Major Media Types
⚫ Newspapers ⚫ Outdoor
⚫ Television ⚫ Yellow Pages
⚫ Direct mail ⚫ Newsletters
⚫ Radio ⚫ Brochures
⚫ Magazines ⚫ Telephone
⚫ Internet
Advertising Research
Techniques
⚫ For Print Ads
⚫ For Broadcast Ads
⚫ In-house tests
⚫ Trailer tests
⚫ Theater tests
⚫ On-air tests
Place Advertising
⚫ Billboards
⚫ Public spaces
⚫ Product placement
⚫ Point-of-purchase
Measures of Audience Size
⚫ Circulation
⚫ Audience
⚫ Effective audience
⚫ Effective ad-exposed audience
Classification of Advertising Timing
Patterns
Factors Affecting Timing Patterns
⚫ Buyer turnover
⚫ Purchase frequency
⚫ Forgetting rate
Media Schedule Patterns
⚫ Continuity
⚫ Concentration
⚫ Flighting
⚫ Pulsing
a) Continuity- Means exposure appear
throughout a given period. Generally
advertiser use continuous advertising in
expanding market situations, with frequently
purchased item.
b) Concentration- calls for spending all the
advertising budget in a single period. This
make sense for products with one selling
season or related holiday.
c. Flighting- Calls for a period, followed by a
period of no advertising, followed by
second period of advertising activity. It is
useful when funding is limited ,the
purchase cycle is relatively infrequent
d) Pulsing- Continuous advertising at low-
weight levels reinforced periodically by
waves fo heavier activity.
Evaluating Advertising
Effectiveness
⚫ Communication-Effect Research
– Consumer feedback method
– Portfolio tests
– Laboratory tests
⚫ Sales-Effect Research
Formula for Measuring Sales Impact of
Advertising
Sales Promotion
What is Sales Promotion?
Sales promotions consist of a collection of
incentive tools, mostly short term, designed
to stimulate quicker or greater purchase of
particular products or services by
consumers or the trade
Sales Promotion
➢ Advertising offers a reason to buy, sales
promotion offer incentive to buy.
1. Sales promotion includes tools for
consumer promotion(samples , coupons ,
cash refund offer, price off, premiums,
prizes, patronage rewards, free trials, and
free goods)
Sales Promotion
2. Business and sales force promotion
➢ It includes trade shows and conventions,
contests for sales representative, and
specialty advertising)
Sales Promotion Tactics
Consumer-directed Trade-directed
⚫ Samples ⚫ Price offs
⚫ Coupons ⚫ Allowances
⚫ Cash refund offers ⚫ Free goods
⚫ Price offs ⚫ Sales contests
⚫ Premiums ⚫ Spiffs
⚫ Prizes ⚫ Trade shows
⚫ Patronage rewards ⚫ Specialty advertising
⚫ Free trials
⚫ Tie-in promotions
1. Sample – offer of free amount of a product or
service delivered door-to-door.
2. Coupons-- certificates entitling the bearer t a
stated saving on the purchase of specific
product.
3.Cash refund offer(rebates)– provide a price
reduction after purchase
4. Price Packs- offers to the consumer of saving
off the regular price of product
5. Premiums(gifts)— buyer offered at a
relatively low cost or free as an incentive
to purchase a particular product.
6. Frequency programs- programm providing
rewards related to the consumer`s
frequency and intensity in purchasing the
company product or service.
Consumer Promotion Tools
7. Prizes(contests, sweepstakes, game)
➢ A contest calls for consumers t submit an
entry to be examined by a panel of judges
who will select the best entries.
➢ A sweepstakes asks consumers to submit their
names in a drawing.
➢ A game presents consumers with something
every time they buy. Eg. Number missing
letter
Consumer Promotion Tools
8.Patronage Awards– values in cash or in other
forms that are promotional to patronage of
certain vendor.
9. Free Trials—Inviting prospective purchasers
to try the product without cost in the hope that
they will buy.
10. Tie-in promotion– Two or more bands or
companies team up on coupon to increase
pulling power
11. Cross promotions- using one brand to
advertise another noncompeting brand
12. POP display.
Trade Promotion Tools
1. Price-off(off-invoice or off-list)- a straight
discount off the list price on each case
purchase during a stated time period
2. Allowance– Display allowance, rack
discount.
3. Free goods--- 12+1, 24+3.
Business and Sales-Force
Promotion Tools
1. Trade show ad conventions--- Participating
vendors expect several benefits, including
generating new sales, maintaining customer
contacts, introducing new products ,meeting
new customers, selling more to present
customer, and educating customer.
2. Sales Contests– A sales contest aims at
inducting the sales force or dealers to increaes
their sales results over a stated period, with
prizes( money, trips, gifts, or points) going to
those who succeed.
Business and Sales-Force
Promotion Tools
3. Specialty Advertising---
➢ it consists of useful, low-cost items bearing
the company`s name and address, and
sometimes an add message that
salespeople give to prospects and
customers.
➢ Common items are ballpoint pens,
calendars, key chains, bags, and memo
pad.
Using Sales Promotions
Establish objectives
Select tools
Develop program
Pretest
Implement and control
Evaluate results
1. Objectives
➢ Sales promotion tools vary in their specific
objectives. A free sample stimulates
consumer trial, whereas a free management
advisory service aims at cementing a long-
term relationship with a retailer
➢ Sellers use incentive-type promotions to
attract new triers, to reward loyal customers,
and to increase the repurchase rates of
occasional users,
➢ Sales promotion often attract brand switchers, who
are primarily looking for low price, good value, or
premiums.
➢ If some of them would not have otherwise tried the
brand, promotion can yield long terms increases in
market share.
➢ Sales promotions in markets of high brand
similarity can produce a high sales response in
short run but little permanent gain in brand
preferences. In market of high dissililarity, they
may be able to alter market share permanently
➢ In addition to brand switching, consumers
may engage in stockpilining– purchasing
earlier than usual, or purchasing extra
quantities. So sales may then hit a post
promotion dip.
➢ For retailers objective include persuading
retailers to carry new items and higher level
of inventory, encouraging of season buying,
encouraging stocking of related item,
offsetting competitive promotion, building
brand loyalty, and gaining entry into retail
outlet.
2. Selecting promotion Tools
a) Consumer promotion tools
b) Trade promotion Tools--Marketer award money to
the trade
I. To persuade the retailer or wholesaler to carry the
brand.
II. To persuade the retailer or w/s to carry more unit
than normal amount
III. To induce retailers to promote the brand by feature
display and price reduction.
IV. To stimulate retailers and their sales clerks to push
the product.
c) Business and sales force promotion tools
➢ In deciding to use a particular incentive
marketer must
I. Determine the size of incentive.A certain
minimum is necessary if promotion is to
succeed.
II. Marketing manager must establish conditions
for participation.
III. Duration of promotion
IV. Distribution vehicle
V. Timing of promotion
VI. Total sales promotion budget
3. Pretesting
➢ Although most sales promotion programs
are designed on the basis of experience,
pretest can determine whether the tools are
appropriate, the incentive size optimal, and
presentation method efficient.
➢ Consumers can be asked to rate or rank
different possible deals, or trial tests can
be run in limited geographic area.
4. Implementing
➢ Marketing manager must prepare
implementation nd control plans that cover
lead time and sell in time for each
individual promotion.
➢ Lead time is the time necessary to prepare
the program prior to launching it
➢ Sell in time begins with the promotional
launch and end when approximately 95%
of the deal merchandise is in the hands of
consumer.
5.Evaluating the program
➢ Marketers can evaluate the program usung
sales data, consumer surveys, and
experiment.
➢ Sales data helps analyze the type of people
who took advantage of promotion, what
they bought before the promotion, and
how they behaved later toward the brand
and other brand.
➢ Consumer surveys can uncover how many recall
the promotion, what they thought of it, how many
took advantage of it,and how the promotion
affected subsequent brand choice behavior.
➢ Additional cost beyond the cost of specific
promotion include
I. The risk that promotion might decrease long-run
brand loyalty
II. Costs of special production runs, extra sales force
effort, and handling requirement.
III. Certain promotion irritate retailers, who may
demand extra trade allowance or refuse to
cooperate.
Why Sponsor Events?
⚫ To identify with a particular target market or life
style
⚫ To increase brand awareness
⚫ To create or reinforce consumer perceptions of
key brand image associations
⚫ To enhance corporate image
⚫ To create experiences and evoke feelings
⚫ To express commitment to community
⚫ To entertain key clients or reward employees
⚫ To permit merchandising or promotional
opportunities
Using Sponsored Events
Choose events
Design programs
Measure effectiveness
Ideal Events
Audience closely matches target market
Event generates media attention
Event is unique with few sponsors
Event lends itself to ancillary activities
Event enhances brand image of sponsor

Customer Experience Management:
Experience Providers
⚫ Communications ⚫ Environments
⚫ Identity ⚫ Internet
⚫ Product presence ⚫ Electronic media
⚫ Co-branding ⚫ People
Steps in the CEM Framework
Analyze the customer’s experiential world
Build the experiential platform
Design the brand experience
Structure the customer interface
Engage in continuous innovation

Public Relation
Public Relation
➢ Public relation includes a variety of programs
to promote or protect a company`s image or
individual product.
➢ The company takes concrete steps to manage
successful relations with its key public.
➢ Most companies have a PR department that
monitors the attitude of the organization`s
publics and distributes information and
communications to build goodwill.
Tasks Aided by Public
Relations
⚫ Launching new products
⚫ Repositioning a mature product
⚫ Building interest in a product category
⚫ Influencing specific target groups
⚫ Defending products that have encountered
public problems
⚫ Building the corporate image in a way that
reflects favorable on products
Public Relations Functions
⚫ Press relations
⚫ Product publicity
⚫ Corporate communications
⚫ Lobbying
⚫ Counseling
1.Press release– presenting news and
information about the organization in the
most positive light.
2. Product publicity– sposorship efforts to
publicize specific products
3. Corporate communications– Promoting
understanding of the organization through
intrnal and external communication
4. Lobbying– Dealing with legislators and
govt. officials to promote or defeat
legislation and regulation.
5. Counseling---Advising management about
public issues, and company positions and
image during good times and bad.
Marketing Public
Relations(Publicity)
➢ Many companies are turning to MPR to
support corporate or product promotion and
image making.
➢ The task of MPR is of securing editorial
space ---as opposed to paid space--- in print
and broadcast media to promote or hype a
product, service, idea, place, person , or
organization
Marketing Public
MRP Plays an important role in the following task
I. Launching new products
II. Repositioning a mature products
III. Building interest in a product category
IV. Influencing specific target groups
V. defending products that have encountered public
problems
VI. Building the corporate image in a way that reflects
favorably on its product
Marketing Public
➢ As the power of mass advertising weakens,
marketing managers are turning to MRP to
build awareness and brand knowledge both
for new and established product.
➢ MRP is also effective at reaching specific
groups and can be more cost effective than
advertising.
Major Tools in Marketing PR
⚫ Publications
⚫ Events
⚫ Sponsorships
⚫ News
⚫ Speeches
⚫ Public Service Activities
⚫ Identity Media
1. Publication- company rely extensive on
published materials to reach and influence
their target market. These include annual
reports, brochures,articles,company newsletter
and magazines, and audiovisual material.
2. Events-company can draw attention to new
products or other company activities by
arranging special events, such a news
conferences, seminars, trade shows and
exhibits.
3.Sposorships- companies can promote their
brands and corporate name by sponsoring
sports and cultural events and highly
regarded cause.
4.News- one of the major tasks of PR
professionals is to find or create favorable
news about the company, its products, and
its people and to get media to accept press
releases and attend press conferences
5. Speeches- Give talks at trade associations or
sales meeting, these appearances can build the
company`s image.
6. Public Service Activities- company can build
goodwill by contributing money and time for
good cause.
7.Identity Media- Companies need a visual
identity that the public intermediately
recognizes.The visual identity is carried by
company logos, stationary, brouchers, signs,
busness forms, business card. Etc.
Decisions in Marketing PR
Choose messages
Choose vehicles
Implement
Evaluate results
Decisions in Marketing PR
1. Establishing Objectives
➢ MPR can build awareness by placing stories
in the media to bring attention to a product,
service, person, organization, or idea.
➢ It can build credibility by communicating the
message in an editorial context.
➢ It can help boost sales force and dealer
enthusiasm with stories about a new product
before it is launched.
➢ It can hold down promotion cost because
MRP cost less than direct-mail and media ad.
Propaganda
➢ It is an idea or statement that are intended as
publicity for a particular cause, esp,a political
one are often exaggerated or false.
➢ Propaganda is the means of gaining support for
a given cause , belief, opinion or attitude.it is
essentially bias towards a particular view
point.
➢ It signifies an organized effort to spread a
peculiar doctrine. It is not frank, open and
only look for achievement by any means
Propaganda/Advertising
➢ Propaganda sends message which is not
commercial in nature while advertising is
commercial
➢ Propaganda achieves its objectives by
poisoning the minds of public while
advertising is not sinister in this approach.
➢ The identity of propagandist is not known but
in case of advertising it is known.
➢ The claim of propagandists can not be easily
tested while those of advertiser can be tested.
Personal Selling
It entails personal communication
between a seller and a buyer for the purpose
of determining and satisfying the buyers
current and latent needs.
Personal selling
➢ It involves an individual salesperson or a sales
team to establish and build a profitable and
symbiotic relationship with customer over a
time for multiple transaction cycle.
➢ In the process of building relationship, a
salesperson must determine a buyer`s needs
and influence or persuade the buyer to
purchase his product with the assurance that
the product or service will satisfy the buyer
more than the competitors products.
Types of personal selling
• Industrial selling
• Retail selling
• Services selling
1. Industrial Selling
➢ It is basically termed as BtoB selling but
in a traditional business model, it is
characterized as the manufacturing sector
selling.
➢ These are grouped into four categories on
the basis of their consumer base
a)Selling to resellers
➢ A reseller is a wholesaler or a retailer or an
intermediary who buys finished goods and
resell them to the end –users..
b) Selling to business users
➢ This means the output of one producer enters
into production process of another producer
to manufacture a final goods for the
consumption of end users
c) Institutional selling
➢ These institutional customers use the products in
their daily operation.
➢ Companies such as Xerox in photocopiers, J&J in
surgical equipments, and Reynolds in office
stationeries sell directly to institutions for
institutional consumption.
d) Selling to governments
➢ company is also selling their goods in govt.
organization. such as railway canteen,defence
canteen etc.
2.Retail Selling
➢ Retailing is defined as the all the activities
directly related to the sales of goods and
services to ultimate customers for personal or
non business use or consumption
3.service selling
➢ Services such as insurance, airline, and travel
are intangible in nature. unlike products
services cannot be separated from their source
and hence cannot be stored for future use.
Selling skills
Effective
Problem
communication
solving skills
skills
Selling Skills
Listening Skills
Negotiation
and bargaining
skills
Conflict management and

resolution skills
The Selling Process
Process
➢ The selling process is defined as a process by which
a salesperson identifies and locates the prospects,
separate the prospects from suspects, approaches
them and makes a sales presentation, handle the
objections, and close a sale
➢ The selling process can help a salesperson to
identify the customers needs, arouse their interest in
product or brand, and motivate them to make a
purchase decision
The Selling Process
➢ It is assumed to be a chain process that a
salesperson ha s to follow step by step to have
a synergistic effort.
➢ Each of these step can be called a sales
proposition,
➢ it is a n orderly process in which a salesperson
can respond to the decision making process of
the customers and close a sale to the end of the
process
Stages in the selling process
Pre-
Pre-sale approach Approach to
Prospecting before the
preparation the customer
interview
Handling
Follow up Closing the Customer Sales
action Sale Objections Presentation

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MARKETING MANAGEMENT

Dr. MUKESH MISHRA

➢ 1. “Marketing is the creation and delivery

3.Marketing is an organizational function

⚫ Marketing management is the

The roaring success of

➢ Tata Ace, a mini truck with the engine capacity of

➢ In order to compete effectively with three wheeler

➢ Customer were willing to pay a marginally high

Business Markets Nonprofit/ Government Markets

⚫ Strengthening the brands

⚫ Make the mission and responsibilities clear

Press ads of the

Marketer face a design challenge in

➢ When a company acquires competitors or

➢ marketers should design and implement any one

➢ McCarthy classified these activities as marketing-mix

➢ Understanding the behavior of key

➢ It is very important for the marketer to

➢ Titan watches herald a new era of watches and

➢ The main demographic force that marketers

b) Sex structure of population and role of women

d)The new urban child

e) Occupation and Literacy profile

➢ The available purchasing power in an economy

• Income, sales and corporation taxes – typically operating in all

• Exchange rates – the relative value of a currency vis-à-vis

• Export quota controls and duties – there are often restrictions

➢ The economic environment affects the demand

The NCAER has classified Indian consumers into 5 categories

➢ The no. of households classified as the rich is estimated to

➢ Lobbyist firms, with key industry knowledge, are

• Company resources and capabilities

• Suppliers of labour and funds

The performance environment consists of those organizations that

1. Threat that new competitors will enter the

➢ Indian marketers use a term called Socio-Economic

➢ For the rural areas, the system uses the occupation

b) Occupation and Economic circumstances

c) Personality and Self concept

➢ Consumers often choose and use brands

d) Lifestyle and values

➢ Lifestyles are shaped partly by whether consumers

➢ Some need are biogenic; they arise from

Behavior Behavior Behavior is

➢ When we act , we learn. Learning induces changes in our

➢ Learning theory teaches marketers that they can build

⚫ What is the business market, and how does

⚫ How do business buyers make their

⚫ Fewer, larger ⚫ Multiple sales calls

a) Fewer , larger buyer

b)Close supplier-customer relationship

D) Multiple Buying influences

Turnkey solution System

b) General Need Description and Product

➢ The buyer determines the needed items general

Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 7-329

⚫ What are the different levels of market

➢ Companies can not connect with all customer in

Now a days most company are turning to