1.

Consumer Products
The products which directly satisfy the wants and needs of a consumer are
known as Consumer Products. For instance, soap, clothes, bread, jam, butter,
etc. Consumer products are used by consumers for their personal needs. These
products can be further classified into two categories: On the Basis of
Durability and On the Basis of Shopping Efforts.
i) Durable Products
The goods that can be used for a long period of time are known as Durable
Products. For example, sewing machines, washing machines, refrigerators, air
conditioners, etc. The durable goods include higher profit margins for the
producer and needs greater personal selling efforts and various after-sales
service by the organisation.
ii) Non-durable Products
The goods that can be consumed for a short period of time (one or few uses
only) are known as Non-durable Products. For example, soap, shampoo,
toothpaste, biscuits, etc. These products need heavy advertising and have less
profit margin.
iii) Services
The activities, satisfaction, or benefits offered by an organisation for sale are
known as Services. For example, services offered by a CA, teacher, doctor, etc.
Services are intangible in nature, which means that we cannot see, touch, or
feel them. They are also inseparable from their source and cannot be stored
because of their perishability. Another feature of services is that they are highly
variable because the quality and experience gained by a consumer vary with
the person providing them.

2. Industrial Products
i) Materials and Parts
The goods which enter the products of a manufacturer completely are known
as Materials and Parts. These goods are of two types; namely, Raw
Material and Manufactured Material and Parts.
  Raw Material: It consists of farm products such as sugarcane, cotton,
etc.
 Manufactured Material and Parts: It consists of component materials
such as iron, glass, etc., and other components parts, such as batteries,
tyres, etc.
ii) Capital Items
The fixed assets which are used by an organisation for the production of
finished goods are known as Capital Items. For example, fax machines, laptops,
etc.
iii) Supplies and Business Services
The goods and services which are used by organisations to facilitate the
development and management of the finished products are known as Supplies
and Business Services. For example, maintenance items such as paint, nails,
etc., and operating supplies, such as writing paper, lubricants, etc.

Stages of Product Life Cycle (PLC)

1. Introduction
The introduction stage signifies the entry of a product into the market. The
initial stage is typically associated with an increase in sales since it involves
introducing the product to consumers. During this phase, businesses incur
expenses for marketing and research and development (R&D) as they strive to
raise awareness and stimulate demand for their product. Companies need to
invest in marketing and create distribution channels to ensure that their
product is easily accessible to customers. The objective is to establish a
presence in the market and generate interest. During this phase, pricing
strategies often revolve around two approaches:
 Penetration pricing, where a lower price is initially offered to gain market
share,
 Skimming pricing, where a higher price is charged at first to recover
development costs.
2. Growth
The growth stage witnesses a surge in sales as consumers become more aware
of the product's existence and its advantages. This growth is fueled by word-of-
mouth favourable reviews and effective marketing campaigns. In this phase,
businesses strive to expand their market share by scaling up production and
distribution. With the increasing demand, competition may intensify as new
players try to capitalise on the opportunity. As the product gains recognition,
pricing strategies might shift towards a competitive approach. Companies may
also introduce variations or extensions of the product aimed at market
segments.
3. Maturity
The maturity stage represents the peak of sales and market penetration for the
product. Competition typically reaches its point during this period, and
attention shifts from attracting customers to retaining existing ones. Price
stability and product differentiation become a feature of this stage. Ongoing
marketing endeavours aimed at maintaining both market share and brand
loyalty. Companies frequently make investments in improving their products,
adding features, and implementing marketing campaigns to ensure their
products remain relevant and competitive. Furthermore, they may explore
opportunities in markets.
4. Decline
In the decline phase, sales of the product start to decrease due to changing
consumer preferences, market saturation, or the emergence of alternatives.
Companies must decide whether to discontinue the product or continue
selling, it with marketing efforts. As existing inventory price reductions or
discounts may be necessary, some companies may choose to reinvent or
rebrand the product or find markets to extend its life cycle. Ultimately, the
decision to withdraw or revive the product depends on its profitability and how
well it aligns with the company's strategy.

Strategy for Product Life Cycle

The product lifecycle (PLC) is a key idea in marketing. It gives the stages
through which a product passes since it is being introduced onto the market till
its eventual decline. To maximize success and profitability of the product it is
essential to understand this cycle and make specific strategies for different
parts of it.
Four Stages of the Product Life Cycle (PLC):
 Introduction: This stage is marked by slow sales growth and high
marketing costs, wherein efforts are to create awareness among
consumers about benefits of a product and develop strong brand image.
 Growth: With the increase in consumer adoption rates, sales volume
experiences a sharp rise leading to higher profits. At this point,
companies should concentrate on expanding their market share as well
as building loyalty among customers for their brands which may allow
them even raise prices slightly if necessary.
 Maturity: When market saturation occurs along with no more sales
growth; competitors become more aggressive thus mandating
differentiation strategies or/and innovation. Usually these involve
reducing costs; extending product lines while exploring alternative
promotional channels among others.
 Decline: Due to changes in customer preferences as well release of new
technologies that make some products obsolete; sales will dwindle
followed by profits. In such cases organizations can opt to rake maximum
possible earnings without pushing them back into further development;
modify their offerings entirely so they best fit current needs and wants
or even quit altogether.
Real life example is petrol vehicle

Module 5

Pricing means deciding the value of the product/service that the manufacturer will get in
return in exchange for a particular product/service.
Objectives of Pricing
The objectives of pricing encompass a range of strategic goals that businesses aim to achieve
through their pricing decisions. These objectives guide how products or services are priced
and contribute to overall business success. Key objectives of pricing include:
1. Revenue Generation: Pricing can be used to maximise total revenue by finding the
optimal balance between price and quantity sold. This objective is particularly relevant when
a business aims to capture a larger market share.
2. Market Ruler: A business would want to rule the market and acquire a significant share in
the market against its rival firms. For this, it will try to increase its revenue and customer
base. In order to do the same, the company will need to agree on an optimal price for its
product/service that the customers can afford.
3. Survival: Pricing decisions focus on generating revenue which helps the firm to survive in
the market. Without revenue and profits, a firm can not survive for a longer period. Pricing
generates revenue and revenue is used in further production in order to produce goods.
4. Profit Maximisation: One of the primary objectives of pricing is to generate maximum
profit for the business. Pricing strategies are designed to ensure that the revenue generated
from sales exceeds the costs incurred in producing and marketing the product or service.
5. Attraction and Retention of Customers: Having a proper and affordable pricing strategy
helps the business in acquiring new customers and retention of previous customers. A more
customer base means more revenue.

Importance of pricing
1. First Impression: Price is the first thing that the customers think of while purchasing any
product/service. Even if the customer makes his/her overall decision on the overall benefit
from the product he/she is going to get, they are still going to compare the prices of other
similar goods. If the prices are too high than what customers can afford, they are going to
lose interest.
2. Right-Level Pricing: Setting up the wrong prices can even shut down the company due to
the non-generation of revenue. A thorough market research is required before setting up the
final prices for the product.
3. Sales Promotion: As the basic idea of more sales includes lowering the prices, a sales
manager may suggest the business to cut down the prices in order to generate more sales.
4. Flexible Element: Price is the most flexible element of marketing in comparison to
product, place, and promotion. Price can be changed rapidly and is affected by many factors
like customer perception of value, inflation, economy, overall costs, etc.
5. Profit Generation: Pricing directly influences a company’s revenue and profit margins.
Setting the right price ensures that the revenue generated from sales exceeds the costs
incurred in production, distribution, and marketing, thereby contributing to profitability.
6. Competitive Edge: Pricing strategies can differentiate a business from its competitors.
Appropriate pricing helps create a competitive advantage by appealing to customers through
factors such as affordability, perceived value, or quality.
7. Demand Management: Effective pricing can regulate demand for products or services.
Price adjustments, discounts, or promotions can stimulate demand during slow periods or
manage peak demand to prevent stockouts.

Pricing Process

Step 1: Selecting the pricing objective

Pricing can make reaching the company’s positioning goals easier. If the company has to work over its
capacity or handle tough competition, the price of the product would need to take into account two
factors. The variable costs and a part of the fixed cost.

Although short-term, this strategy can help boost initial performance for companies who are
introducing revolutionary products or services.

If a company is looking to maximise the profit, it can set a higher price by considering costs and the
competition. On the other hand, if a company is looking to improve and maximise its market share, it
will set a lower price to generate maximum volume.

However lucrative, this strategy can be risky, as it can cause consumer-related or legal issues.

Step 2: Determining demand

According to the law of economics, there’s a definite demand for a product at every price level.
However, this law depends on the nature of the product in question. For instance, demand rises with
the price increase for luxury goods, while the demand for a commodity will fall as the price rises.

What companies must do is plan the demand curve while understanding price sensitivity. It is
possible to estimate the demand curve by analysing historical data or performing price-related tests.
That way, a company can gain a deeper insight into how much the consumers are willing to pay for a
specific product or service.

Step 3: Estimating costs – ensuring profits

In order to continue working successfully, companies need to manage their costs so that they are left
with a good profit margin. Therefore, to achieve this, a company needs to establish a production
level at which it will be able to maintain its fixed and variable costs.

In general, the cost per unit decreases as production level increases. That is simply due to the
learning curve effect that comes with increased experience. So to ensure you profit with this
strategy, you need to allocate the costs and set the price accordingly.

Step 4: Analysing Competitors’ Costs, Prices, and Offers

Every company has to track its competitors carefully. That especially goes for pricing, costs, and
promotional offers. Companies need to know just how much their competitors’ prices can fluctuate
in comparison to their own. They also need to be ready to adjust to those fluctuations with their own
offers.
Step 5: Choosing your pricing method

There are several methods you can go for with regards to the pricing process of your products or
services.

These are the most popular ones:

 The markup method means that you’re setting a price based on your desired profit level.

 Target return means that you’re setting a price based on the company’s desired ROI.

 Perceived value is as simple as setting a price based on how much your consumers believe
your product or service is worth to them in reality.

There are also auction type pricing and group pricing methods, but they are less popular.

Step 6: Determining the final price

The previous steps will help you set a price, but the final word goes to your consumers. Do market
research to make sure that you’re not under or overcharging for your products or services.

Top pricing strategies

1. Value-based pricing

With value-based pricing, you set your prices according to what consumers think your product is
worth. We're big fans of this pricing strategy for SaaS businesses.

2. Competitive pricing

When you use a competitive pricing strategy, you're setting your prices based on what the
competition is charging. This can be a good strategy in the right circumstances, such as a business
just starting out, but it doesn't leave a lot of room for growth.

3. Price skimming

If you set your prices as high as the market will possibly tolerate and then lower them over time,
you'll be using the price skimming strategy. The goal is to skim the top off the market and the lower
prices to reach everyone else. With the right product it can work, but you should be very cautious
using it.

4. Cost-plus pricing

This is one of the simplest pricing strategies. You just take the product production cost and add a
certain percentage to it. While simple, it is less than ideal for anything but physical products.

5. Penetration pricing

In highly competitive markets, it can be hard for new companies to get a foothold. One way some
companies attempt to push new products is by offering prices that are much lower than the
competition. This is penetration pricing. While it may get you customers and decent sales volume,
you'll need a lot of them and you'll need them to be very loyal to stick around when the price
increases in the future.

What are Marketing Channels?

A marketing channel is defined as a path that consists of tools, strategies, medium platforms, and
distribution of products or services from producers to consumers. Marketing channels connect the
producers to their consumers and build a healthy relationship between them. Marketing channels
can be online, offline, paid, or unpaid. These channels act as a vital part of the business process as it
affects the success rate of the product. In short, a marketing channel is a medium that is used by a
company for the advertisement of its products and services.

It is an effective way through which the products are delivered to their customers; therefore,
marketing channels are also known as Distribution Channels. For example, Coca-Cola is one of the
most famous soft drinks in India. But, how does this product reach every part of India? The company
provides the product to every part of India through its Marketing Channel. The company uses two
basic marketing channels; direct channel and indirect channel. Under the first channel, it directly
communicates with the audience. However, by using indirect channels, it distributed the product
through different offline and online media like newspapers, advertisements, events, promotion
campaigns, billboards, social media, etc.

Importance of Marketing Channel

Marketing channels are essential as they help the business to reach customers. Before a product or
service is released to customers, a company ensures its basic and important elements, such as
product, price, place, and promotion. Thus, a marketing channel is important for a business because
of the following reasons:

1. Reach More Customers: Marketing channels help to reach more customers within less time. If a
company uses efficient online platforms where the traffic is more, it can reach more customers
within less time.

2. Builds a Healthy Relationship with Customers: Marketing channels build a healthy relationship
between producers and consumers with the help of interaction related to products and services. This
relationship helps to gain more trust from customers and increase the company’s sales.

3. Product-related Information: Marketing channels provide use, importance, benefits, and

strategies regarding products and services. This helps to encourage the customers for buying the
product.

4. Customer Support: Marketing channels provide customer support for all consumers. This helps
customers to interact through phones, emails, and social media and get their questions and
problems solved as soon as possible.

5. On-time Delivery: Marketing channels help a company make sure that its products are delivered
to the customers at the right time. It is important to provide the customers with their product on
time because otherwise, the company has a high possibility of losing the customer.
6. Enough Stock: Proper marketing channel also helps a company in maintaining enough products in
stock with itself. The company can easily store its products in warehouses and supply them according
to the prevailing market demand.

Number of Channel Levels

The channel level includes Direct Marketing Channels, where sales take place between producer and
consumer, and Indirect Marketing Channels where producers take the help of retailers for the
distribution of the product.

1. Direct Marketing Channel

Direct Marketing Channel is defined as a type of channel where the sales of products take place
directly from producers to consumers. There is no involvement of any third party, such as retailers,
for their distribution. For example, any online shopping website, such as Amazon sells its products
directly from its shopping website to the customers.

2. Indirect Marketing Channel

An indirect Marketing Channel is defined as a type of channel where any third party, such as
wholesalers, distribution agents, and retailers are involved in the distribution of products. The
manufacturer makes contact with such third parties located at different locations and then sells their
products. For example, Amazon also uses indirect marketing channels. Customers can purchase
goods from independent retailers through Amazon, and those companies/retailers will have to fulfil
the deliveries on time.

Indirect Marketing Channel is further classified into three categories:

 One-Level Channel: One level channel is a channel where only one intermediary; i.e.,
the retailer is involved in the sales between the manufacturer and consumers.

 Two-Level Channel: Two level channel is a channel where two

intermediaries; wholesalers and retailers are involved in the sales.

 Three-Level Channel: Three-Level Channel is a channel where three

intermediaries; distribution agents, wholesalers, and retailers are involved in sales.

Types of Marketing Channels

1. Email Marketing:

Email is used by more than 4 billion people today. It is one of the most cost-effective strategies. Email
marketing involves sending emails to customers. Once they sign up, using the same email, the
producers can share new offers, products, lists, and newsletters through email. The required files can
be easily attached to the email. If consumers or receiving users want to stop receiving their messages
and emails, the user can unsubscribe from their channel.

2. Influencer Marketing:

Influencer marketing is a type of marketing where pairing with influencers is done on which the
customer has trust. A maximum number of producers and manufacturers make use of influencer
marketing. The major channels used for influencer marketing are YouTube, Facebook, Instagram,
TikTok, etc. Influencer marketing works well for the business as the targeted audience has trust on
the influencer.
3. Social Media:

Social media platforms are used by most of the youth today. The manufacturer and producers use
social media such as Facebook, Instagram, and WhatsApp for marketing their products. The
producers build a network over social media platforms and share information over the platforms.
Social media marketing channels require less time to reach more customers.

4. SEO:

SEO stands for Search Engine Optimization. SEO is also the most widely used marketing channel. In
order to get in front of the target audience, it makes sure that the product site gets ranked in Google
search. If the site gets to appear in the top ranking, the customers are attracted to the product. With
the help of traffic tools and analytics, it is possible to monitor how effectively the SEO is working.

5. Websites and Blogs:

Having your own website and blog results is an advantage for marketing. Websites and blogs act as
marketing tools for the products and provide required information and customer support for the
customers. Customers can get answers and solutions to their queries upon visiting the websites and
blogs. Therefore, building a simple, efficient, and user-friendly website and blogs is required. The
users can even purchase the products from the official website.

6. Video Marketing:

In video marketing, the producers create videos and use them as content for their marketing. The
videos can consist of features of the product, reviews, feedback from previous customers, videos for
entertainment, steps for using the product, or any achievements. These videos are then shared on
various platforms such as Instagram, Facebook, YouTube, and other social media platforms. With the
help of videos the manufacturers can describe their products more effectively, and it is even
accessible for their customers to understand it.

7. Podcast Marketing:

Podcast Marketing makes use of podcasts for marketing the product. It is a type of marketing
strategy that makes use of audio content for marketing the product. This podcast is made in such a
way that audience takes an interest while listening to it. This podcast can contain encouraging stories
of products, steps, benefits, stories and reviews of customers, achievements, etc. Few episodes are
provided for the customers initially in order to engage them with the product. In order to increase
the traffic paid ads are also being used in between the podcast.