MARKETING MANAGEMENT

MODULE II

BBA III Sem

RITESH SHARMA
SYLLABUS/ CONTENTS
MODULE II
 Managing the 4 Ps:
◦ Product: Meaning, Product classifications; Concept of
product mix; Branding, packaging and labeling;
Product life-cycle
◦ Pricing: Significance. Factors affecting price of a
product. Pricing policies and strategies.
◦ Distribution: Channels of distribution: meaning,
importance & functions; Types of distribution
channels; Factors affecting choice of distribution
channel.
◦ Promotion: Significance; elements of promotion mix,
factors affecting promotion mix decisions
 WHAT IS A PRODUCT?

In marketing, the term ‘‘product’’ is often used

as a catch-all word to identify solutions a
marketer provides to its target market.

In other words,
 A product is any tangible, intangible offering
that might satisfy the needs or aspirations of
a consumer.
 According to Phillip Kotler, ‘‘A product is a
bundle of physical service and symbolic
particulars expected to yield satisfactions or
benefits to the buyer.’’
PRODUCT CATEGORIES
 Goods: Something is considered a good if
it is a tangible item. That is, it is something
that is felt, tasted, heard, smelled or seen.
For example, bicycles, cell phones, and
donuts

 Services: It is an offering a customer

obtains through the work or labor of
someone else. Unlike goods, services are
not stored, they are only available at the
time of use

 Ideas : Something falls into the category

of an idea if the marketer attempts to
WHY IS PRODUCT IMPORTANT ?
 Product is the first P of the marketing mix
for any company

 A company has two aims to achieve:

- consumer satisfaction
- profit maximization

 The dual objectives can be attained only

keeping Product as medium
 THE PRODUCT CONCEPT
Delivery Credit
Related Product
Guarantee Services
Installation
Package

Quality
Core Product or
Brand Services
CORE
Style
Spare
Parts Related Product
Operating Safety
Guidance Features
Repair &
Follow Up Service
THE PRODUCT CONCEPT
 It talks about how one goes about
describing product as an entity and what
makes the overall identity of the product.
It comprises of three concepts

 CORE PRODUCT
 It signifies certain immediately identifiable
characteristics and functions that distinguish it
from other products/services. e.g., toothpaste
is different detergent cake
THE PRODUCT CONCEPT
 RELATED PRODUCT FEATURES
include
 brand name (colgate, frooti),
 the type of packaging (squeezy pack, tetra pak,
zip lock pack for extra fresh bhujia- haldiram’s),
 quality (iPhone or nothing),
 style(nissan teana-welcome to hotel teana)
 safety components (anchor switches-shock
proof), etc.
THE PRODUCT CONCEPT
 RELATED PRODUCT SERVICES
 include delivery (whirlpool-free home
delivery),
 installation (dish tv),
 maintenance (Chevrolet-3 years or 100000
km),
 repairs (free service),
 guarantee (2-year replacement, money back),
 credit facility (0% EMI),
 follow Up (How’s Your AC working, sir?),
 manual (How to start your Sony Handy cam.)
 spare parts (use genuine nokia charger) etc.
TYPES OF PRODUCT
 Consumer Product
Convenience Product
 Inexpensive products that require little
shopping efforts. e.g., soft drink, bread, etc.

Shopping Product
 More expensive. Found in fewer stores. Bought
after comparisons. Also called durable goods.
e.g., clothing, furniture, housing, etc.
Specialty Product
 Strong brand preference. Very picky customers.
e.g., Rolex watches, BMW & Rolls Royce cars

Emergency Products
 These are products a customer seeks due to
sudden events and for which pre-purchase
planning is not considered. e.g Medicines

Unsought Product
 Unknown and new products. Needed but not
liked. e.g., insurance.
TYPES OF PRODUCT
 Business Product

 Maindifference (consumer product v/s

business product) is their intended use.

 Consumer products are used to satisfy

customer’s personal wants whereas
business products are further used to
manufacture other goods or services
TYPES OF PRODUCT
 Business Product
 Raw Products: These are obtained through
mining, harvesting, fishing, etc, that are key
ingredients in the products of higher-order
products.
 Equipment Products: These are products
used to help with production or operations
activities. Examples any machinery etc.
 Fabricated Products: They use basic
components to produce products that offer a
significant function needed within a larger
product. e.g., motherboard
 Operational products: These goods are
used for running the day to day operations
of the company. e.g., coal, oil
 PRODUCT DIFFERENTIATION

 It is the act of designing a set of meaningful

differences to distinguish and gain competitive
advantage from the competition

 Successful differentiation moves the product

from competing based primarily on price to
competing on non-price factors. e.g., Eureka
Forbes, Amway have unique distribution.

 It is the process of describing the differences, to

demonstrate the unique aspects of the product
(USP) and create a sense of value.
 The major sources of product
differentiation are:

Difference in quality which is usually

accompanied by difference in price thus
highlighting the significance of value-for-
money

Difference in functional features or

design i.e., how the product performs
differently from its competitors.
Sales promotion activities of sellers,
and in particular, advertising. The more
different the firm’s product vis-à-vis
advertising, the better the chances of it to
be remembered. e.g., Homemaker of
Whirlpool, Zoozoos of Vodafone, etc.

Differences in availability (e.g., timing

and location like Maruti service centers
advertized as being present in such remote
locations like Laddakh.) 
 PRODUCT MIX

 Product mix is the composite of

products offered for sale by a firm or
a business unit.

e.g., if a firm manufactures or deals

with different varieties of soap, oil,
toothpaste, toothbrush, etc., the
group of all these products is called
‘PRODUCT MIX’
The set of all product lines and items
that a particular seller offers for sale to
buyers

Width – how many different product lines?

Length – Total number of items in the
product line.
Depth – The no. of variants offered in a
product line
Consistency – how closely the product lines
are related in usage
PRODUCT ITEM
- a specific product of certain specifications
distinguishable from other brands / products.
e.g., Colgate, HMT, McDonalds

PRODUCT LINE
- group of different product items, closely related
with each other. They are sold to same customer groups, at
same price, through same channels, etc. e.g., Toothpaste,
Watch, Scooter

 Allthe product lines manufactured or distributed by an

enterprise are collectively known as ‘PRODUCT MIX’.
 Product Mix of Hindustan
Unilever Limited

Home & Personal Food & Beverages

Care

Personal Hair
Laundry Skin Care Oral Care Deodorants Tea Coffee
Wash Care

Lux Brooke
Surf excel Fair & Pepsodent Axe Bru
Lovely Sunsilk Bond
Lifebuoy
Rin Ponds Close-up Rexona Lipton
Clinic +
Liril
Wheel Knorr
Vaseline Taj Mahal
Hamam
K-Walls
Annapurna
Breeze Kissan

Dove

Pears

Rexona
PRODUCT LIFE CYCLE

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 The product life-cycle is an attempt
to recognize distinct stages in the
sales history of the product.

 From its birth to death, a product

exists in different stages and in
different competitive environments
which is reflected in the profits.

 Its adjustments to these

environments determines to great
extent how successful its life will be
 INTRODUCTION
 Introduction marks the launch of the
product

 Operational costs are high

 Penetrating/Skimming the market

 Must have sufficient resources to

withstand the initial losses and heavy
promotion costs
 GROWTH
 Improves quality and adds features

 Adds new models and variants

 Enters new market segments

 Increases distribution coverage and adds new

channels

 Shifts communication from awareness to

preference building

 Scale economies enable it to lower prices to

attract the next level of price conscious buyers
 MATURITY
 Most products are in this stage

 Price wars are inevitable.

 Scramble for market share

 The fittest survive

 Market modification, product modification,

marketing mix modification can help extend the
maturity stage

 Convert non-users into users

DECLINE
 Withdrawal

 Rationalization/Revitalization of
products

 Harvesting whatever is possible

 Divesting the product

 Streamlining the Product Assortment

 UTILITY OF PLC
 As a Forecasting Tool
 (like sales forecasting)

 As a Planning Tool
 (helpful
in preparing the marketing plan keeping the
competitors in mind)

 As a Control Tool
 (monitoring the availability of the product based on
demand)

 Development of New Products

 (helps in development of new products and improve
existing products)
FACTORS AFFECTING THE LIFE
CYCLE OF A PRODUCT
 Rate of Technical Change
 (higher rate depicts limited life)

 Rate of Customer Acceptance

 (if acceptance rate high, life is limited)

 Ease of Competitive Entry

 (if entry is easy, life would be short)

 Risk Bearing Capacity

 (if it is high, life also would be long)

 Goodwill of the Enterprise

 (life will be more if goodwill is there)
 BRANDING
It is the seller’s promise to deliver the same
bundle of benefits/services consistently to
buyers
Branding conveys the following
 Attributes
 Benefits
 Values
 Culture
 Personality
 User
 TYPES OF BRAND
 Three major types:
Manufacturer’s Brands
Private Brands / Reseller’s Brands
Generic Brands

 Manufacturer’s Brands are branded directly by the manufacturer who has

invested heavily in them. e.g., Lux, Surf, Colgate, Cadbury’s, Coke, etc.

 Reseller’s Brands are developed and owned by the resellers.

e.g., Big Bazaar, Shopper’s Stop, Vishal Mega Mart, Lifestyle, etc.

 Generic Brands are not specifically advertised and are sold by grocery
stores at a lower price than branded products.
e.g., rice, sugar, wheat, doormats, broomsticks, etc.
 DIFFERENT CATEGORIES OF BRAND
 Premium Brand: A "premium brand" typically costs
more than other products in the same category.

 Economy Brands: An "economy brand" is a brand

targeted to a high price elasticity market segment.

 Fighting Brand: A "fighting brand" is a brand created

specifically to counter a competitive threat.
FACTORS INFLUENCING BRANDING STRATEGIES
 Market Size

 Competitive Situation

 Company Resources

 Product Newness

 Innovativeness and Technology

 OBJECTIVES OF BRANDING

Provide greater value proposition to the

customer to enhance repeat buy

Provoke a positive action in customers by

facilitating the decision-making process.

Create such situations in which the consumer

can identify the brand.
 ADVANTAGES/IMPORTANCE OF BRANDING
 Easy to identify the Products

 Easy for the seller to track down problems and process orders

 Provide legal protection of unique product features

 Branding gives an opportunity to attract loyal and profitable set

of customers

 It becomes easy to expand the Product Mix if the brand enjoys a

loyal following

 It helps build corporate image

 PACKAGING
 Packaging includes all activities that focus on the
development of a container and a graphic design
for a product.
 A package may have three levels;
the primary package is the container of the product
such as a bottle, jar, or tube,
the secondary package is the box of cardboard or some
other material containing the primary package; and
the last is shipping package that contains more units of
secondary package.
 FUNCTIONS OF PACKAGING

Packaging fulfills several functions,

including:
Promoting and selling the product
Defining product identity
Providing information
Expressing benefits and features
Ensuring safe use
Protecting the product
 FACTORS TO BE CONSIDERED WHILE
OPTING FOR A PARTICULAR
PACKAGING
 Protection

 Visibility

 Added Value
 Distributor Acceptance

 Cost

 Long Term Decision

 Environmental or Legal Issues

 LABELING
 A label may be a part of package or it may be a
tag attached to the product.

 Its main function is to inform customers about the

product’s contents and give directions for its use.

 The labels perform a descriptive function related

to
a product’s source,
 its contents,
 important features and benefits,
 use instructions,
 cautions or warnings,
 storage instructions, batch number, date of
manufacture, and date of expiry.
 TYPES OF LABELS
There are three kinds of labels:
 Brand
 The brand label X gives the brand name, trademark, or logo. It
does not supply sufficient product information.
 Descriptive
A descriptive label X gives information about the product’s use,
construction, care, performance, and other features.
 A descriptive label includes date and storage information for
food items. Instructions for proper use and product care are
provided on nonfood items.
 Grade
 A grade label X states the quality of the product.
 PROMOTION
 Promotion encompasses all the tools in the marketing mix
whose major role is persuasive communication.

 Promotion includes every activity which inspires people

to buy the goods and services of the company.

 Promotion means ‘to push forward’ whereas advertising

means ‘to turn towards’.
 PROMOTIONAL MIX
 Promotion mix refers to the combination of various
promotional elements viz. advertising, personal
selling, publicity and sales promotion techniques used
by a business firm to create, maintain and increase
demand of the product.

 It involves an integration of all the above elements of

promotion.
 ELEMENTS OF PROMOTIONAL MIX

 Advertising
- Advertising includes any informative or persuasive
message carried by a non-personal medium and paid
for by a sponsor whose product is in some way
identified in message

 It is a form of communication intended to promote

the sale of the product or service to influence public
opinion, to gain political support or to advance a
particular cause.”
 Personal Selling
- Personal selling is a person-to-person dialogue
between buyer and seller. The stages of personal
selling are:
 Prospecting

 Making the sales call

 Objection handling

 Closing the sale and follow-up

 Public Relations
- firms take up a planned effort under the name
public relations to influence the attitudes and
opinions of a specific group by developing a long
term relationship
 Publicity
- Publicity is a non-personal, not-paid stimulation of
demand of the products or services or business units.
It can be positive as well as negative depending on
the situation.

 Direct Marketing
- Here the firm opts for selling its products directly to
the customers sans (without) any distributors or
intermediaries
 Sales Promotion
- It includes activities other than advertising,
personal selling, publicity and public relations which
are used in promoting sales of the product or in
persuading the customer to purchase the product
such as coupons, rebates, free samples, frequent-
user incentives, exchange, etc.
 FACTORS INFLUENCING PROMOTION
MIX DECISIONS
• Nature of Product
• Nature of Market
• Availability of funds
• Nature of the technique
• Promotional Strategy: Promotional mix depends to a
great extent on whether a company chooses push or pull
strategy to create sales.
 DISTRIBUTION CHANNELS
 A channel facilitates the transfer of ownership and
the physical exchange of products and services.

 Business managers need to plan carefully before

actually setting up a suitable channel for their
products.

 Once established, these channels should be

adjusted often according to the needs of the
customers.
 CHARACTERISTICS OF
CHANNELS OF DISTRIBUTION

 Place Utility -help in moving the goods from one place to

another
 Time Utility-bring goods to the consumers when needed
 Convenience Value-bring goods to the consumers in
convenient shape, size, unit, style and package
 Possession Value- make it possible for the consumers to
obtain goods with ownership title
 Marketing Tools- serve as vehicles for viewing the marketing
organization in its external aspects
 Supply-Demand Linkage-bridge the gap between the
producers and consumers
 FUNCTIONS OF
CHANNELS OF DISTRIBUTION

The main function of a distribution channel is to provide a

link between production & consumption. In addition to
this-
 Information- Gathering and distributing market research and
intelligence - important for marketing planning
 Promotion-Developing and spreading communications about
offers
 Matching-Adjusting the offer to fit a buyer's needs, including
grading, assembling and packaging
 Contact- Finding and communicating with prospective buyers
 Negotiation-Reaching agreement on price and other terms of the
offer
 Physical distribution-Transporting and storing goods
 Financing-Acquiring and using funds.
 Risk taking-Assuming some commercial risks by
operating the channel (e.g. holding stock)
 DISTRIBUTION CHANNEL LEVELS/DEGREES
 Each layer of marketing intermediaries that
performs some work in bringing the product to its
final buyer is a "channel level".
 In the figure, Channel 1 is called a "direct-
marketing" channel, since it has no intermediary levels.
In this case the manufacturer sells directly to customers.

 An example of a direct marketing channel would be a

factory outlet store.

 The remaining channels are "indirect-marketing

channels".
 Channel 2 contains one intermediary. In consumer
markets, this is typically a retailer.

 The consumer electrical goods market is typical of this

arrangement whereby producers such as Sony, Panasonic,
Canon etc. sell their goods directly to large retailers
which then sell the goods to the final consumers.
 Channel 3 contains two intermediary levels - a
wholesaler and a retailer.

 A wholesaler typically buys and stores large quantities of

several producers goods and then breaks into the bulk
deliveries to supply retailers with smaller quantities.

 This arrangement tends to work best where the retail

channel is fragmented. A good example of this channel
arrangement is the distribution of drugs.
FACTORS INFLUENCING CHOICE OF
CHANNEL OF DISTRIBUTION
 1) The Nature of the Product:
 Perishability
 Size and weight of product

 2) The Nature of the market

 Consumer of industrial market
 Size of the order
 Buying habits of customers

 3) The Nature of Middlemen

 Services provided by middlemen
 Reputation and financial soundness
 4) The nature and size of the manufacturing
unit
 Manufacturer Reputation and Financial Stability

 5) Government Regulations and Policies

 The Government may impose certain restrictions on the
wholesale trade of a particular product and takeover the
distribution of certain products.

 6) Competition
 Different
manufacturers producing similar products may
employ the same channels of distribution.
 PRICING
 Theprice of a product or service is the number
of monetary units that a person pays to obtain
one unit of the product or service.

 To attract consumers, producers adopt

different kind of pricing strategies.

A manager should possess a certain level of

creativeness, sufficient skills and sometimes
has to use sixth sense for assigning price of a
product.
 IMPORTANCE OF PRICING
 Price is a powerful force in attracting
attention of buyers and increasing sales.

 The product’s acceptance by the customer

depends on a good price-decision.

 Every marketing plan involves a pricing-decision.

 Itis only the price which guarantees profits to

the company.

 Betterprice fetches more revenue for the

company.
 OBJECTIVES
 Profit Margin Maximization- The Company seeks
to maximize the per-unit profit margin of a product.
 Profit Maximization- The Company seeks to
acquire the greatest amount in profits
 Revenue Maximization- The Company seeks to
maximize revenue from the sale of products.
 Quality Leadership- It is used to signal product
quality to the consumer.
 Quantity Maximization- The Company seeks to
maximize the number of items sold.
 FACTORS INFLUENCING PRICING
Internal Factors
 Organizational Factors-Pricing decisions occur at
two levels in the organization
 Marketing Mix- shift in any one of the elements
has an immediate effect on the other three Ps
 Cost of the Product-The most important factor is
the cost of production.
 Product Differentiation-The customer is able to
tell the difference between the company’s
product and that of its competitor.
 Objectives of the firm-firms may pursue a
variety of objectives, such as maximizing sales
revenue, maximizing market share, maintaining
stable price, etc.
External Factors
 Elasticity of Demand-If the demand increases, the price of
the product also increases.
 Competition-No manufacturer is free to fix his price
without considering competition unless its a monopoly.
 Suppliers-Suppliers of raw materials & other goods can
have a major effect on the price of a product.
 Economic Conditions: In recession period, the prices are
reduced to a large extent to maintain the level of turnover.
 Buying Patterns of the Consumers: low purchase
frequency products are sold at high margin profit and,
therefore, at high prices, such as, Refrigerator, A.Cs. Cars,
etc.
 Government Policy: Government's inference in the
form of taxes and fixation of price is a part of this.
 Distribution Channels: Each of the channels has to be
compensated, which is included in the final pricing of
the item.
 Market Position of the Company-The market
position of the company or the image of the company
in the minds of the consumers.
 Miscellaneous Factors- Product differentiation,
Social and Ethical Consideration, Product’s Stage in
the Life Cycle, etc.
 BASIC METHODS OF PRICING
 Mark-up Pricing- Firms fix a selling price on
the products, which normally exceeds the
costs incurred in producing them. In this
type of pricing, a marketer adds a mark-up on
its cost of the product. e.g., if a retailer incurs
a cost of Rs. 85 to buy a product, he might
add a mark-up of Rs.15 & fix the selling price
Rs. 100.
 Differentiated Pricing- marketers adopt
different prices for the same product at
different locations or for different types of
customers.
 Value Pricing- It is a method in which marketers offer low
prices for higher quality products or services
 Psychological Pricing- The prices of commodities are so
fixed as to appeal to the customers psychologically and
they are motivated to buy them.
 Monopoly Pricing- It is adopted when the manufacturer or
the producer acquire monopoly of a particular product.
adopted mainly in new products
 PRICING STRATEGIES
Companies normally adopt a pricing strategy on the basis of
several aspects like geographical factors, demand patterns
of the customers, service levels that have to be delivered,
pricing to improve short term sales, customer perceived
value pricing, and so on.
 Geographical Pricing- marketers adopt different
pricing for different regions using a pricing method that
adequately covers their delivery expenses.
 Promotional Pricing- A general perception among
marketers is that a price reduction or any other
promotional deal will attract customers to try the product
or service
 Premium pricing- Employed when the product being sold is
unique and is of very high quality, but sells only a small amount.
Buyers of such products typically view them as luxuries and
have little or no price sensitivity.
 Skimming Pricing Strategy- it refers to the firm’s desire to skim
the market, by selling at a premium price. This is particularly
applicable to new products
 Loss Leader Pricing- This strategy involves dropping price on a
well-known brand to generate demand or traffic at the retail
outlet.
 Discounts & Allowances- These are pricing strategies that
marketers adopt to increase the stock movement and thus
increase the sales volume.
 Penetration Pricing Strategy- As opposed to the skimming
strategy, the objective of penetration price strategy is to gain a
foothold in a highly competitive market
 Captive Pricing - Under this strategy, a special price deal is
offered to loyal customers or those who are regularly buying the
products of the firm.
 Good, better, best pricing - Charging more for products that
have received more attention as compared to similar placed
products (for example, in packaging or sorting).
 Multiple pricing- Seeks to get customers to purchase a product
in greater quantities by offering a slight discount on the greater
quantity