MARKETING
INTRODUCTION
Marketing as a subject of study is now attracting
attention from business firms, companies, institutions
and even from countries. In history, its origin dates back
to the days when the people realized that he should
specialize only in the activity to which he was best suited
and he found it to be his advantage to utilize the
services of others when they could do things better than
him. This specialization created the necessity of
exchange and thus the foundation of business was
started. After Industrial Revolution, there were changes
in the techniques, methods and volume of production.
Large scale production introduced the new methods of
marketing to create demand for products and services.
Marketing includes various activities which are involved
in the generation of markets and the satisfaction of
consumer needs. Marketing is not a single activity nor is
it the sum of several activities. It is the result of a
balanced interaction of several activities. In this unit we
will explain the basic concept of marketing, its nature,
scope, importance and the evolution of marketing
concepts.
The traditional view of marketing states that marketing is
mainly concerned with the physical and ownership
transfer of goods and services from the producer to the
ultimate consumers. But the modern concept of
marketing states that marketing involves the production
of the product acceptable to the customers and the
activity which helps physical transfer and ownership
from the producer to the ultimate consumers. The
modern view assumes that marketing means identifying,
anticipating and satisfying consumer’s needs and
desires. Thus, marketing creates place utility, time utility
and possession utility.
Marketing is a human activity directed at satisfying
needs and wants through exchange processes.
A need is a state of felt deprivation. Marketers create
wants on the basis of needs. For example, food is an
essential to satisfy the hunger needs. Marketers produce
various types of food such as Pulao, Sweets, Tea, and
Coffee etc. to create wants. Creating wants means
creating demand for a product by providing an
opportunity for choice or selection. Here, the buyers
have an opportunity to select out of the four alternatives
–Pulao, Sweets, Tea or Coffee to satisfy their hunger
needs. The exchange process means the transfer or
transaction of goods which cannot be made free of cost
i.e. it should be on payment basis.
The process of marketing starts with the identification of
needs and wants through market survey and converting
them into products or services and distributing the same
to ultimate consumers through buyer oriented channel
with suitable sales promotion technique at logical price
to make a reasonable profit.
DEFINITION OF MARKETING
The term “marketing” has been defined by a number of
scholars in a variety of ways. In fact, there are as many
definitions as there are popular scholars in marketing.
The reason is obvious. The subject is even changing
and at every stage of evolution new potentialities are
recognized which result in a new definition. We shall
describe a few definitions here to realize how dynamic
the
subject
marketing
is–
1. “Marketing is the performance of business activities
that direct the flow of goods and services from producer
to
consumer
or
user”.
–Committee of the American Marketing Association.
This definition merely emphasizes one particular aspect
i.e. movement of goods and services from producer to
consumer. It makes marketing production oriented rather
than
consumer
oriented.
2. “Marketing is that part of economics which deals with
the creation of time, place and possession utilities”
–American
Marketing
Association
Place utility is created by marketing the goods and
services available to the consumer at the place where
such
goods
are
needed.
Time utility is created by making the goods available at
the
time
when
they
are
needed.
Possession utility is created by transferring the goods to
those
who
need
them.
This definition expresses the traditional views of
marketing and it covers only few aspects of marketing.
3. “Marketing is a total system of interacting business
activities designed to plan, promote and distribute want
satisfying products and services to present and potential
consumers”
–W.
J.
Stanton
The above definition given by Stanton appears to be
more suitable as it covers almost all the modern views
such
as–
(a) It views marketing as a total concept.
(b) It describes marketing as dynamic process.
(c) It covers all the activities ranging from product
planning
to
distribution.
(d) It indicates that marketing is the result of interaction
of
several
activities.
(e) It pays importance for satisfying consumer’s needs
and wants.
4. “Marketing is the process of discovering and
translating consumer wants into product and service
specifications and then in turn helping to make it
possible for more and more consumers to enjoy more
and more of these products and services”.
–Harry L. Harsen
5. “Marketing is the business function that identifies
customers’ needs and wants, determines which target
markets the organisation can serve best, and designs
appropriate products, services, and programmes to
serve
these
markets”
–(Kotler and Armstrong, 1996).
This definition has also covered all the activities of
marketing starting from identification of needs and wants
of consumers, converting than into product and service
and making things available to consumers in a manner
that they can enjoy more and more.
BASIC MARKETING CONCEPT
A few decades ago, companies face a number of tough
decisions for marketing their products. They had to
determine product features, and quality, establish
accompanying services, set the price, determine the
distribution channels, decide how mush to spend on
marketing, and decide how to divide their resources
among advertising, sales force, and other promotion
tools. Modern marketing has become very complex and
dynamic.
Chronologically, the concepts are classified in five. They
are
mentioned
below:
(i)
Production
concept,
(ii)
Product
concept,
(iii)
Selling
concept,
(iv)
Marketing
concept,
and
(v) Societal Marketing concept.
(i) Production Concept: This concept assumes that
customers will favour products that are available and
highly affordable and that management should therefore;
focus on increasing production and distribution. Most of
producers believe that the customers prefer only low
priced products and so they concentrates on large scale
production to reduce the cost. A firm may apply this
concept
in
two
types
of
situations:
(a) When the demand for the product or service is higher
than
the
supply
of
the
same.
(b) When the cost of the product is high and increase in
production is going to reduce the cost due to economics
of large scale production. This concept can work only in
a sellers market. In buyer’s market it fails to market
under keen competition. American luxury car market
was captured by Japanese and European car because
of this concept.
(ii) Product Concept: This concept assumes that buyers
favour those products that offer the most quality,
performance and features. The producers are of the
opinion that it is the quality of product that attracts the
customers, the quality of the product alone will yield
satisfactory sales and profits. Though this concepts
appears to be initially very sound, it failed in actual
operation. Leading companies have produced quality
products but have not been able to push up the sales,
unless they take positive steps to design, pack and price
attractively, to place them in proper distribution
channels, bring them to the notice of persons concerned
and convince them that the product is of superior quality.
No wise marketer can follow this philosophy of
marketing in this competitive world. This concept may
lead to “marketing myopia” or short-sighted marketing
because of undue concentration on the product rather
than the needs and desires of consumers for whom the
products
or
services
produced.
(iii) Selling concept: The selling concept assumes that
the consumer’s response will not increase without
promotional efforts. Even the best products cannot have
assured sales without the help of sales promotion and
aggressive salesman-ship. It implies, the consumer’s
satisfaction is considered secondary; selling the product
is the primary consideration. The seller in the long run is
likely to lose his customers, who would not be satisfied
with the product. Dissatisfied customers do act on their
dissatisfaction. As a result, the dissatisfied consumers
do not purchase further and do not recommend your
product to any of their friends and relatives or they do
complain to consume. Since there are many potential
customers, the producer is not very particular about the
reparative sales in monopoly or less competitive markets
but in highly competitive market, the producers are
under compulsion to play attention or reparative
purchases. The selling concept starts with the factory
and it focuses on the existing products and promotion
and calls for heavy selling and promotion to obtain
profitable sales volume. This concept may be explained
with the help of the following diagram.
(iv) Marketing Concept: This is a new idea in the field of
exchanging of goods. Under this concept the
organization trice its best to determine the needs, wants
and values of the buyer’s market and takes all possible
steps to deliver the desired satisfaction more effectively
and efficiently than its competitions do. Every attempt is
made to satisfy the wants of customers and to achieve
this objective; a special programme of Market Research
is undertaken. The organization fully understands that it
can win the loyalty of its customers and their
appreciation only by providing them satisfactory services
in respect of their needs and wants. Winning the
confidence of customers is as good as fulfilling the goals
of the organization. It fully believes in theory known as
customer sovereignty and ensure the maximum welfare
of consumers, thereby ensuring a good amount of
profits. This concept assumes that organizations
produce what customer want and thereby yield
consumers’ satisfaction and make profits. This concept
may be explained with the help of the following diagram.
(v) Societal Marketing Concept : This concept is
management orientation that holds that the key task of
the organization is to determine the needs and wants of
target market and to adapt the organization to deliver the
desired satisfaction more effectively and efficiently than
its competitor in a way that preserves or enhances the
customers’
and
society’s
well
being.
marketing is to bring circulation of products so that the
customers get the product in time and in right manner.
But the experts of marketing concept assumed that
customers’ satisfaction is an important element of
marketing. The marketers can not survive for long period
Environmental trends like public welfare concerns for if they do not consider consumers’ satisfaction is an
better living quality of life etc. indicate that organization essential
element.
would have to adopt socially responsible marketing
policies and plans in order to assume social welfare in (ii) Profit Generation: The selling concept experts
addition to consumer welfare. The socially responsible
worked with an objective of generating profit.
marketing concept is based on the assumption:
(a) The mission of an organization is to create satisfied
and healthy customers and contribute to the quality of Whereas, the market concept experts are of the view
that the generation of profit would not be possible
life.
(b) The organization will not offer a product to customer unless, the marketers concentrate on consumers’
if it is not in the best interest of customers. satisfaction.
(c) Marketing plans and programmes shall duly consider
consumers wants, interest, desires, social welfare and
(iii) Consumer Orientation: The selling concept experts
corporate
needs
e.g.
profits.
(d) The organization will offer long run customer and felt that marketing should be product oriented. Where
public
welfare. the experts of marketing concept advocates that
marketing should be consumer oriented. This concept
The last two concepts of current market philosophy have pays emphasis on customer’s needs and wants. The
been extensively adopted and widely accepted in the marketers first determines the needs and wants of the
interest of the organization, the consumer and society.
customer and then delivers the product to satisfy those
The first three concepts remained successful till
competitors did not emerge in a large number and needs and wants. But in selling concept they make the
supply was less than demand. As the numerous product and then decide how to sell it.
competitors came into market it became flooded with
goods and services of same quality and price. That led (iv) Planning: In selling concept, planning is short run
producers to give importance on selling efforts like oriented where as in marketing concept, planning is long
personal selling and advertisement. But the selling term
oriented.
efforts of the producers did not last long. As almost all
producers applied the same sort of selling efforts.
Ultimately, the producers started price-war to increase (v) Process: In selling concept, first production, then
their market share but all of them were adversely selling takes place at a profit without knowing customer’s
affected in price-war. Thus during those periods needs. In marketing concept, first consumer’s need is
marketing managers were in big crisis. Some known and then production takes place, then the product
enlightened marketing managers thought changing of is
sold
at
a
profit.
their basic attitude and philosophy to solve the crisis.
They started to take into con-sideration of needs, wants,
(vi) Price: In selling concept, cost of production
tastes and preferences of consumers for marketing their
products. This idea saved them from un-necessary determines price where as in marketing concept, buyer
selling efforts including false propaganda and protected determines the price and price determines the cost.
them from going out of market with the adoption of this
concept. The first three concept are known as traditional (vii) Welfare: In selling concept, the experts did not
concept and the last two concepts are known as Modern assign any place to the welfare channelisation. In
marketing concept.
marketing concept, the experts talk about the payment
SELLING CONCEPT –VS- MARKETING CONCEPT
of taxes to the government and the social welfare
The differences between the two concepts are explained
programmes taken up by the business houses.
on
the
basis
following
points:
(viii) Research and Development: In selling concept, the
(i) Satisfaction: The experts of selling concepts did not
marketing survey and research did not receive the due
pay due priority to the elements consumers’ satisfaction.
place but in marketing concept these activities are
They were of the view that the ultimate objective of
considered very essential for growth of marketing. consumers. It includes channels and outlets through
which products move to the buyer and arranging their
In conclusion, it may be mentioned that the selling physical movement to different market segments. It
depends upon the middlemen, products and services,
concept unnecessarily limited the preview of marketing.
channels of distribution etc. It maintains the flow of
This selling concept cannot get results in the age of products and services from the producers to the buyers.
globalization.
The combination of all the ingredients of marketing mix
is shown in the following figure:
MARKETING MIX
Marketing mix is the mixture of the essential elements of
marketing in order to enhance consumer satisfaction.
Marketing mix is the mixture of 4Ps’ – Product, Pricing,
Promotion and Place (Physical distribution and channel
of distribution). To attain success in marketing effort, the
various components should be well coordinated.
Marketing mix offers an optimum combination of all
marketing elements so that we can achieve company
goals such as profit, return on investment, sales volume,
and market shares and so on. The market mix will
naturally be changing according to changing marketing
conditions and also with changing environmental factors
such as technical, social, economic, and political and
competition.
Elements
of
Marketing
Mix:
The elements of marketing mix are described below:
(i) Product: Product means anything which can satisfy
consumers needs and wants through exchange process.
It provides economic utility and socio-psychological
advantages. The marketer may offer a single product or
several products. The marketer should also revise the
product design, make improvements in the products
frequently so as to suit the changing tastes, habits and
preferences of the consumers. Packaging and branding
decisions are also included in product decision.
(ii) Price: Price is the value which is paid by the buyer to
the manufacturer in exchange of the products and
services. The marketer has to take into consideration the
cost factors, profit margin, the possibility of sales at
different price level and the competitors pricing policy as
well
as
number
of
competitors.
(iii) Promotion: The marketers should provide
information to the customers about its products and
services and motivate customers to buy. Advertising,
personal selling, publicity and other sales promotional
programs are the various promotional activities. All these
activities increase the volume of sales by expending as
well as retaining the market share for the products.
Basically, promotion deals with no price competition in
the market. Promotion is done for three purposes – (a)
informing, (b) persuading and (c) influencing consumers.
(iv) Physical Distribution: Distribution is the delivery of
the product and transfer of ownership to the buyers and
Service can be defined as “a service is an act or
performance offered by one party to another. Although
the process may be tied to a physical product, the
performance is transitory, often intangible in nature and
doesn’t normally result in ownership of any of the factors
of production”.
Phillip Kotler defined services as “Service is any act or
performance that one party can offer to another that is
essentially intangible and does not result in any
ownership”.
A service is an act or performance offered by one party
to another. This performance is transitory and intangible
in nature. This does not necessarily result in ownership
of any of the factors of production. The process of
offering performance may be tied to a physical product.
A service is an economic activity that creates value and
provides benefits for customers of specific times and
places by bringing about a desired change in, or on
behalf of, the recipient of service.
In the case of ‘goods’, the benefits come from ownership
of physical objects, whereas in ‘services’ the benefits are
created by actions or performances. The growing
complexities in the service environment demand a
higher emphasis on the marketing aspects of services. It
is very important to run efficient operations, but that
alone is no longer enough for success. Employers must
be customer service oriented in addition to being
concerned about efficiency in operations. The service
product must meet customers’ requirements. The
service product should be priced realistically and
judiciously distributed through effective channels
convenient for the customers and should be actively
promoted so that customers become aware and
interested in the service product.
As a service is a deed or performances, it is ephemeral
– transitory and perishable – and so cannot be stocked
as inventory after being produced. The service is
produced and consumed simultaneously.
SERVICE MARKETING MIX
Generally for goods market we use four P’s of marketing
strategy. But the major difference in the education of
services marketing versus regular marketing is that
instead of the traditional “4 P’s,” Product, Price, Place,
Promotion, there are three additional “3 P’s” consisting
of People, Physical evidence, and Process. Thus, 7p’s
of
service
marketing
are
as
follows:
· Product: A product is anything that can be offered to a
market for consumption that might satisfy a want or
need. Generally when we talk about a product we
consider physical objects. But a service product is
different from a physical product. A service product
refers to an activity that a marketer offers to perform,
which result in satisfaction of a need or want of pre
determined customers. Managers must select the core
service and its supplementary service to create value for
customers.
Promotion: Promotion means promoting a product to the
potential customers. Marketers employ various
promotional tools like advertising, sales promotion,
public relation and personal selling. As services are
intangible in nature, promotion plays a vital role in this
field. In service marketing much promotion is
educational in nature, specially for new customers.
Companies may need to teach this customers about the
benefits of the service, where and when to obtain it, and
how to participate in service processes. Communication
can be delivered through advertising or face to face
interaction with sales people. For example, insurance
agent explains us about the benefit of their service.
· Price: Price is one of the important marketing tools that
a marketer controls and manages. In service marketing
price is often used by the buyers in making pre purchase
quality assessments. Therefore low priced services are
often considered to be low quality and high price
services are considered to be high quality. Service
marketing is not limited to the traditional pricing task of
determining the selling price to customers. While setting
price, service marketer should include monetary costs,
such as travel expenses, time, mental and physical effort
etc.
interact. The appearance of buildings, equipments,
vehicle, interior furnishing, staff member, brochures,
other printed material etc. provides tangible evidence of
a
firm’s
service
quality.
Process: The actual procedure through which service is
delivered is known as process. Creating and delivering
product elements require the design and implementation
of effective process. A badly designed process generally
leads to slow and ineffective process and customer
dissatisfaction.
People: Here people mean all the human being who
takes part in the service delivery process. Many services
depend on direct interaction between customers and a
firm’s employees. These interactions strongly influence
the customer’s perception of service quality. For
example getting a hair cut strongly influences customer’s
expectation from the barber.
Place: Delivering product or service to the customers
involves decision on the place and time of delivery, as
well as the methods and channels used. Firms may
deliver service directly to the customers or through
intermediaries. Service marketers also have to handle
distribution of their services. But, services can not be
produced in some centralized location and transported SCOPE OF MARKETING
later to different market for sale and consumption. Marketing has a very wide scope it covers all the
Rather services must move near the place of demand. activities from conception of ideas to realization of
profits. Some of them as discussed as below :
- Study of Consumer wants and needs : Goods
Physical Evidence: It is the environment in which service
are produced to satisfy consumer wants.
is delivered and where the firm and the customer
Therefore study is done to identify consumer
-
-
-
-
-
-
needs and wants. These needs and wants
finding customer needs, persuading customer to
motivates consumer to purchase
buy products, customer service etc
Study of Consumer Behaviour : Marketers
- Promotion: Promotion includes personal selling,
performs study of consumer behavior. Analysis
sales promotion and advertising, right promotion
of buyer behavior helps marketer in market
mix is crucial in accomplishment of marketing
segmentation and targeting.
goals
Product planning and development : It
- Finance : Marketing is also concerned about the
includes the activities of product research,
finance, as for every marketing activity be it
marketing research, market segmentation,
packaging, advertising, sales force budget is
product development, determination of the
fixed and all the activities have to be completed
attributes, quantity and quality of the products
with in the limit of that budget
Branding : Branding of products is adopted by
- After sales service : Marketing covers after
many reputed enterprises to make their products
sales services given to customers, maintaining
popular among their customer and for many
good relationships with customers, attending
other benefits. Marketing manager has to take
their queries and solving their problems.
decision regarding the branding policy, NATURE OF MARKETING
procedures and implementation programs
- Exchange is the essence of marketing
Packaging : Prackaging is to provide a container
- Marketing is cusomet/ consumer oriented
or wrapper to the product for safety, attraction
- Marketing starts and ends with customers
and ease of use and transportation of the product
- Modern marketing precedes and succeeds
Channels of Distribution : Decision regarding
production
selection of most appropriate channel of
- Marketing is goal oriented and the goal being
distribution like wholesaling, distribution and
profit maximization through satisfaction of human
retailing is taken by the Marketing Manager and
needs
Sales Manager.
- Marketing is a science as well as an art
Pricing Policies : Marketer has to determine
- Marketing is the guiding element of business ( it
pricing policies for their products. Pricing policies
tells what, when how to produce, marketing is
differs from product to product. It depends on the
capable of guiding and controlling business
level of competition, product life cycle, marketing
- Marketing is a system – input-process and output
goals and objectives etc
- Marketing is a process i.e series of interrelated
Sales Management : Selling is a part oc
functions
marketing. Marketing is concerned about all the
selling activies like customer identification,
RURAL MARKETING
Rural Marketing:
Rural marketing is now a two-way marketing
process. There is inflow of products into rural
markets for production or consumption and there
is also outflow of products to urban areas. The
urban to rural flow consists of agricultural inputs,
fast-moving consumer goods (FMCG) such as
soaps, detergents, cosmetics, textiles, and so on.
The rural to urban flow consists of agricultural
produce such as rice, wheat, sugar, and cotton.
There is also a movement of rural products within
rural areas for consumption.
Features of Rural Marketing:
The main reason why the companies are
focusing on rural market and developing
effective strategies is to tap the market
potential, that can be identified as follows:
1. Large and scattered population:
According to the 2001 census, 740 million Indians
forming 70 per cent of India’s population live in
rural areas. The rate of increase in rural population
is also greater than that of urban population. The
rural population is scattered in over 6 lakhs
villages. The rural population is highly scattered,
but holds a big promise for the marketers.
2. Higher purchasing capacity:
Purchasing power of the rural people is on rise.
Marketers have realized the potential of rural
markets, and thus are expanding their operations
in rural India. In recent years, rural markets have
acquired significance in countries like China and
India, as the overall growth of the economy has
resulted into substantial increase in purchasing
power of rural communities.
3. Market growth:
The rural market is growing steadily over the
years. Demand for traditional products such as
bicycles, mopeds and agricultural inputs; branded
products such as toothpaste, tea, soaps and other
FMCGs; and consumer durables such as
refrigerators, TV and washing machines has also
grown over the years.
4. Development of infrastructure:
There is development of infrastructure facilities
such as construction of roads and transportation,
communication network, rural electrification and
7
public service projects in rural India, which has
increased the scope of rural marketing.
5. Low standard of living:
The standard of living of rural areas is low and
rural consumers have diverse socio-economic
backwardness. This is different in different parts of
the country. A consumer in a village area has a
low standard of living because of low literacy, low
per capita income, social backwardness and low
savings.
6. Traditional outlook:
The rural consumer values old customs and
traditions. They do not prefer changes. Gradually,
the rural population is changing its demand
pattern, and there is demand for branded products
in villages.
7. Marketing mix:
The urban products cannot be dumped on rural
population; separate sets of products are designed
for rural consumers to suit the rural demands. The
marketing mix elements are to be adjusted
according to the requirements of the rural
consumers.
The Product Life Cycle
A product's life cycle (PLC) can be divided into
several stages characterized by the revenue
generated by the product. If a curve is drawn
showing product revenue over time, it may take
one of many different shapes, an example of
which is shown below:
Product Life Cycle Curve
The life cycle concept may apply to a brand or to a
category of product. Its duration may be as short
as a few months for a fad item or a century or
more for product categories such as the gasolinepowered automobile.
Product development is the incubation stage of the
product life cycle. There are no sales and the firm
prepares to introduce the product. As the product
progresses through its life cycle, changes in
the marketing mix usually are required in order to
adjust to the evolving
challenges and
opportunities.
Introduction Stage
When the product is introduced, sales will be low
until customers become aware of the product and
its benefits. Some firms may announce their
product before it is introduced, but such
announcements also alert competitors and remove
the element of surprise. Advertising costs typically
are high during this stage in order to rapidly
increase customer awareness of the product and
to target the early adopters. During the
introductory stage the firm is likely to incur
additional costs associated with the initial
distribution of the product. These higher costs
coupled with a low sales volume usually make the
introduction stage a period of negative profits.
During the introduction stage, the primary goal is
to establish a market and build primary demand
for the product class. The following are some of
the marketing mix implications of the introduction
stage:
 Product - one or few products, relatively
undifferentiated
 Price - Generally high, assuming a skim
pricing strategy for a high profit margin as
the early adopters buy the product and the
firm seeks to recoup development costs
quickly. In some cases a penetration
pricing strategy is used and introductory
prices are set low to gain market share
rapidly.
 Distribution - Distribution is selective and
scattered as the firm commences
implementation of the distribution plan.
 Promotion - Promotion is aimed at building
brand awareness. Samples or trial
incentives may be directed toward early
adopters. The introductory promotion also
is intended to convince potential resellers
to carry the product.
Growth Stage
The growth stage is a period of rapid revenue
growth. Sales increase as more customers
become aware of the product and its benefits and
additional market segments are targeted. Once
the product has been proven a success and
customers begin asking for it, sales will increase
further as more retailers become interested in
carrying it. The marketing team may expand the
distribution at this point. When competitors enter
8
the market, often during the later part of the
growth stage, there may be price competition
and/or increased promotional costs in order to
convince consumers that the firm's product is
better than that of the competition.
During the growth stage, the goal is to gain
consumer preference and increase sales. The
marketing mix may be modified as follows:
 Product - New product features and
packaging options; improvement of product
quality.
 Price - Maintained at a high level if demand
is high, or reduced to capture additional
customers.
 Distribution - Distribution becomes more
intensive. Trade discounts are minimal if
resellers show a strong interest in the
product.
 Promotion - Increased advertising to build
brand preference.
Maturity Stage
The maturity stage is the most profitable. While
sales continue to increase into this stage, they do
so at a slower pace. Because brand awareness is
strong, advertising expenditures will be reduced.
Competition may result in decreased market share
and/or prices. The competing products may be
very similar at this point, increasing the difficulty of
differentiating the product. The firm places effort
into encouraging competitors' customers to switch,
increasing usage per customer, and converting
non-users into customers. Sales promotions may
be offered to encourage retailers to give the
product more shelf space over competing
products.
During the maturity stage, the primary goal is to
maintain market share and extend the product life
cycle. Marketing mix decisions may include:
 Product - Modifications are made and
features are added in order to differentiate
the product from competing products that
may have been introduced.
 Price - Possible price reductions in
response to competition while avoiding a
price war.
 Distribution - New distribution channels
and incentives to resellers in order to avoid
losing shelf space.
 Promotion - Emphasis on differentiation
and building of brand loyalty. Incentives to
get competitors' customers to switch.
Decline Stage
Eventually sales begin to decline as the market
becomes saturated, the product becomes
technologically obsolete, or customer tastes
change. If the product has developed brand
loyalty, the profitability may be maintained longer.
Unit costs may increase with the declining
production volumes and eventually no more profit
can be made.
During the decline phase, the firm generally has
three options:
 Maintain the product in hopes that
competitors will exit. Reduce costs and find
new uses for the product.
 Harvest it, reducing marketing support and
coasting along until no more profit can be
made.
 Discontinue the product when no more
profit can be made or there is a successor
product.
The marketing mix may be modified as follows:
 Product - The number of products in the
product line may be reduced. Rejuvenate
surviving products to make them look new
again.
 Price - Prices may be lowered to liquidate
inventory of discontinued products. Prices
may be maintained for continued products
serving a niche market.
 Distribution - Distribution becomes more
selective. Channels that no longer are
profitable are phased out.
 Promotion - Expenditures are lower and
aimed at reinforcing the brand image for
continued products.
Introduction
Pricing is one of the most important elements of
the marketing mix, as it is the only mix, which
generates a turnover for the organisation. The
remaining 3p’s are the variable cost for the
organisation. It costs to produce and design a
product, it costs to distribute a product and costs
to promote it. Price must support these elements
of the mix. Pricing is difficult and must
reflect supply and demand relationship. Pricing a
product too high or too low could mean a loss of
sales for the organisation.
Pricing Factors
Pricing should take into account the following
factors into account:
1. Fixed and variable costs.
2. Competition
3. Company objectives
4. Proposed positioning strategies.
5. Target group and willingness to pay
An organisation can adopt a number of pricing
strategies, the pricing strategy will usually be
based on corporate objectives.
9
Types of Pricing Strategy
Pricing
Definition
Strategy
Example
Penetration
Pricing
Here the organisation sets a low price to
A television satellite company sets a low
increase sales and market share. Once
price to get subscribers then increases the
market share has been captured the firm may
price as their customer base increases.
well then increase their price.
Skimming
Pricing
The organisation sets an initial high price and
then slowly lowers the price to make the
product available to a wider market. The
objective is to skim profits of the market layer
by layer.
Competition
Pricing
Setting a price in comparison with
competitors. Really a firm has three options Some firms offer a price matching service to
and these are to price lower, price the same match what their competitors are offering.
or price higher
A games console company reduces the
price of their console over 5 years, charging
a premium at launch and lowest price near
the end of its life cycle.
An example would be a DVD manufacturer
offering different DVD recorders with
different features at different prices eg A HD
Product Line Pricing different products within the same and non HD version.. The greater the
Pricing
product range at different price points.
features and the benefit obtained the
greater the consumer will pay. This form of
price discrimination assists the company in
maximising turnover and profits.
Bundle
Pricing
The organisation bundles a group of products This strategy
at a reduced price. Common methods are supermarkets
buy one and get one free promotions
is
very
popular
with
The seller will therefore charge 99p instead
£1 or $199 instead of $200. The reason
The seller here will consider the psychology why this methods work, is because buyers
Psychological
of price and the positioning of price within the will still say they purchased their product
Pricing
market place
under £200 pounds or dollars, even thought
it was a pound or dollar away. My favourite
pricing strategy.
reflect
the
An example of products using this strategy
would be Harrods, first class airline
services, Porsche etc.
Premium
Pricing
The price set is high to
exclusiveness of the product.
Optional
Pricing
This strategy is used commonly within the
The organisation sells optional extras along
car industry as i found out when purchasing
with the product to maximise its turnover. T
my car.
If a firm operates in a very volatile industry,
The firms takes into account the cost of
where costs are changing regularly no set
Cost Based production and distribution, they then decide
price can be set, therefore the firm will
Pricing
on a mark up which they would like for profit
decide on their mark up to confirm their
to come to their final pricing decision.
pricing decision.
Cost
Pricing
For example it may cost £100 to produce a
Here the firm add a percentage to costs as
Plus
widget and the firm add 20% as a profit
profit margin to come to their final pricing
margin so the selling price would be
decisions.
£120.00
10
SETTING PRICING POLICY
1.
2.
3.
4.
5.
6.
7.
Selecting the pricing objective
Determining demand
Estimating costs

Analyzing competitors’costs, prices, and
offers
Selecting a pricing method
Selecting final price

Pricing Strategies
PRICING OBJECTIVES
 Survival
 Maximum current profit
 Maximum market share
 Maximum market skimming
 Product-quality leadership
different marketing mix strategy, with each offering
alternate growth and profit opportunities.
Some different ways you can segment your
market include the following;
Demographics
which
focuses
on
the
characteristics of the customer. For example
age, gender, income bracket, education, job and
cultural background.
Psychographics which refers to the customer
group's lifestyle. For example, their social class,
lifestyle, personality, opinions, and attitudes.

Behaviour which is based on customer
behaviour. For example, online shoppers,
shopping centre customers, brand preference
and prior purchases.

Geographical location such as continent,
country, state, province, city or rural that the
customer group resides.
MARKET SKIMMING PRICING
 Setting a high price for a new product to
skim maximum revenues layer by layer
from the segments willing to pay the high
price: the company makes fewer but more
profitable sales.
Requirement of Market Segments


THE CONDITION
1. A sufficient number of buyers have a high
current demand;
2. The unit costs of producing a small volume
are not so high that they cancel the
advantage of charging what the traffic will
bear;
3. The high initial price does not attract more
competitors to market;
4. The high price communicates the image of
a superior product.
MARKET PENETRATION
 Setting a low price for a new product in
order to attract a large number of buyers
and a large market share.
THE CONDITION
1. The market is highly price sensitive,and a
low price stimulates market growth;
2. Production and distribution costs fall with
accumulated production experience;
3. A low price discourages actual and 
potential competition.
MARKET SEGMENTATION
Market segmentation involves grouping your
various customers into segments that have
common needs or will respond similarly to a
marketing action. Each segment will respond to a



Identifiable – the differentiating attributes
of the segments must be measurable so
that they can be identified
Accessible – the segments must be
reachable through communication and
distribution channels
Substantial- the segments should be
sufficiently large to justify the resources
required to target them
Unique needs : To justify separate
offerings, the segments must respond
differently to the different marketing
mixes
Durable – the segments should be
relatively stable to minimize the cost of
frequent changes
TARGETING
After segmenting the market based on the
different groups and classes, you will need to
choose your targets. No one strategy will suit all
consumer groups, so being able to develop
specific strategies for your target markets is very
important.
There are three general strategies for selecting
your target markets:
Undifferentiated Targeting: This approach views
the market as one group with no individual
segments, therefore using a single marketing
strategy. This strategy may be useful for a
business or product with little competition where
you may not need to tailor strategies for different
preferences.
11

Concentrated Targeting: This approach focuses
on selecting a particular market niche on which
marketing efforts are targeted. Your firm is
focusing on a single segment so you can
concentrate on understanding the needs and
wants of that particular market intimately. Small
firms often benefit from this strategy as focusing
on one segment enables them to compete
effectively against larger firms.

Multi-Segment Targeting: This approach is used
if you need to focus on two or more well defined
market segments and want to develop different
strategies for them. Multi segment targeting
offers many benefits but can be costly as it
involves greater input from management,
increased market research and increased
promotional strategies.
Prior to selecting a particular targeting strategy,
you should perform a cost benefit analysis
between all available strategies and determine
which will suit your situation best.
POSITIONING
Positioning is developing a product and brand
image in the minds of consumers. It can also
include improving a customer's perception about
the experience they will have if they choose to
purchase your product or service. The business
can positively influence the perceptions of its
chosen customer base through strategic
promotional activities and by carefully defining
your business' marketing mix.
Effective
positioning
involves
a
good
understanding of competing products and the
benefits that are sought by your target market. It
also requires you to identify a differential
advantage with which it will deliver the required
benefits to the market effectively against the
competition. Business should aim to define
themselves in the eyes of their customers in
regards to their competition.
Market Research
Marketing Research has two words, viz.,
marketing and research.
1. Marketing means buying and selling
activities.
2. Research means a systematic and
complete study of a problem. It is done by
experts. It uses scientific methods.
Thus, we can say, “Marketing Research is a
systematic method of collecting, recording and
analyzing of data, which is used to solve
marketing problems.”
A company faces many marketing problems. It
faces problems about consumers, product, market
competition, sales promotion, etc. Marketing
research helps to solve these problems.
Definition of Market Research:
There are many definitions of marketing research.
Some important ones are:
1. According to American Marketing Association
(AMA),
“Marketing Research is the systematic gathering,
recording and analysing of data about problems
relating to the marketing of goods and services.”
2. According to Philip Kotler,
“Marketing research is a systematic problem
analysis, model building and fact finding for the
purpose of improved decision-making and control
in the marketing of goods and services.”
3. According to David Luck, Donald Taylor and
Hugh Wales,
“Marketing Research is the application of scientific
methods in the solution of marketing problems.”
Features of Market Research:
Systematic process:
Marketing research is a systematic process. It first
collects data (information) about the marketing
problem. Secondly, it records this data. Then it
analysis (studies) this data and draws conclusions
about it. After that, it gives suggestions (advice) for
solving the marketing-problem. So, marketing
research helps to solve the marketing problems
quickly, correctly and systematically.
Connected with MIS - Marketing research is a
component of Marketing Information System
(MIS). Marketing research and MIS are
interrelated. Both are used to solve marketing
problems and to take marketing decisions.
Collection of Information:
Marketing research collects full information about
consumers. It finds out the needs and
expectations of the consumers. So the company
produces the goods according to the needs and
expectations of the consumers.
Tool for decision-making –
The marketing manager has to take many
decisions. For this, he requires a lot of data.
Marketing research provides correct and up-todate data to the marketing manager. This helps
him to take quick and correct decisions. Therefore,
marketing research is an important tool for
decision-making. Marketing research helps the
company to make its production and marketing
policies. It helps the company to introduce new
12
products in the market. It helps to identify newmarkets.
Competitive analysis:
Marketing research also collects full information
about the competitors. The company uses this
information to fight competition. It also helps the
marketing manager to take decisions.
Continuous Process:
Marketing research is a continuous process. It has
a few limitations. However, a company cannot
survive and succeed without it. Marketing research
is a special branch and soul of 'Marketing
Management'. It is of recent origin and widely used
by manufacturers, exporters, distributors and
service organisations. Marketing research is very
systematic, scientific, objective and organised. It
has a wide scope. It includes product research,
consumer research, packaging research, pricing
research, etc.
Uses different methods –
Marketing research uses three methods for
collecting data, viz., Survey Method, Experiment
Method and Observation Method. All three
methods are scientific. The researcher has to use
a suitable method for collecting a reliable data.
Objectives of Marketing Research
The main objective of Marketing Research (MR) is
to provide information to the marketing manager.
The marketing manager uses this information to
make marketing decision and to solve marketing
problems.
The purposes or objectives of marketing research
are listed below.
1. Identify the consumer response to the
company’s product.
2. Know the consumers’ needs and
expectations.
3. Seek maximum information about the
consumer, i.e. the know consumers’
income range, their location, buying
behavior, etc.
4. Know the nature and extent of competition
and also the strength and weaknesses of
the competitors.
5. Check the reaction of the dealers to the
company policies.
6. Evaluate the reputation of the company in
the market.
7. Identify and solve the marketing problems
of the company.
8. Search for new marketing opportunities.
9. Find out alternative uses of the existing
products.
10. Estimate the cost of marketing of goods
and service.
Functions of Marketing Research:
The five main functions of marketing research
(MR) are:
1. Description,
2. Evaluation,
3. Explanation,
4. Prediction, and
5. Aid in decision making.
Now let's discuss these prominent functions of
marketing research.
1. Description: Marketing research gives full
description about the consumers. It describes
their age, sex, education, income, etc. It also
gives a description about the competitors and
the market situation. This description is used to
take marketing decisions and solve marketing
problems.
2. Evaluation: Marketing research helps to
evaluate the company's performance. It helps
to evaluate the company's production and
marketing policies. It finds out the customer
reaction to the quality of the product, price,
packaging, advertising, sales, promotions'
techniques, etc. If the consumer reactions are
bad, then the company must change its
policies. It also compares the company's
policies with the competitors' policies.
3. Explanation:
Marketing research gives
explanations (answers) for all the marketing
problems. For example, it answers in detail,
why are the sales falling, why are the retailers
giving negative reaction, etc. It gives all the
causes or reasons for the problem. It also tells
how to solve the problem.
4. Prediction: Marketing research also gives
predictions. Predictions mean to forecast or
guess about the future. It gives a prediction
about the future sales, future market
opportunities, future risks, future marketing
environment, future consumer behavior, etc.
All the prediction may not be correct. However,
these predictions help the company to make
future plans and policies. It helps to take
advantage of future opportunities. It also helps
to avoid future risks.
5. Aid in decision making: Marketing research
helps the marketing manager to take
decisions. It provides all the concerned data,
which is necessary to take decisions. Decision
making means to select a course of action
from two or more alternatives. Decision making
requires up-to-date and correct data. MR helps
the marketing manager to take decisions. It
provides all the data, which is necessary to
13
take decisions. It also provides alternative
course of action. It gives the merits and
demerits of each course of action. It also helps
the marketing manager to choose the best
course of action.
Scope of Market Research:
1. Product Research:
Product means the goods and services which are
sold to the consumers. It includes consumer
products and industrial products. Product research
studies the individual product. It studies the
making and marketing of the product. It studies the
colour, size, shape, quality, packaging, brand
name and price of the product. It also deals with
product modification, product innovation, product
life cycle, etc. The product is modified (changed)
as per the needs and wants of the consumers.
Therefore, the product will not fail in the market.
2. Consumer Research:
Consumer is the person who purchases the goods
and services. The consumer is the king in the
market. Consumer research studies consumer
behaviour. It studies the consumers needs, wants,
likes, dislikes, attitude, age, sex, income, location;
buying motives, etc. This data is used to take
decisions about the product, its price, place and
promotion.
3. Packaging Research:
Packaging research is a part of product research.
It studies the package of the product. It improves
the quality of the package. It makes the package
more attractive. It makes the package more
convenient for the consumers. It reduces the cost
of packaging. It selects a suitable method for
packaging. It also selects suitable packaging
material.
4. Pricing Research
Pricing Research studies the pricing of the
product. It selects a suitable method of pricing. It
fixes the price for the product. It compares the
companies price with the competitor's price. It also
fixes the discount and commission which are given
to middlemen. It studies the market price trends. It
also studies the future price trends.
5. Advertising Research
Advertising research studies the advertising of the
product. It fixes the advertising objectives. It also
fixes the advertising budget. It decides about the
advertising message, layout, copy, slogan,
headline, etc. It selects a suitable media for
advertising. It also evaluates the effectiveness of
advertising and other sales promotion techniques.
6. Sales Research
Sales research studies the selling activities of the
company. It studies the sales outlets, sales
territories, sales forecasting, sales trends, sales
methods, effectiveness of the sales force, etc.
7. Distribution Research
Distribution research studies the channels of
distribution. It selects a suitable channel for the
product. It fixes the channel objectives. It identifies
the channel functions like storage, grading, etc. It
evaluates the competitor's channel.
8. Policy Research:
Policy research studies the company's policies. It
evaluates the effectiveness of the marketing
policies, sales policies, distribution policies, pricing
policies, inventory policies, etc. Necessary
changes, if any, are made in these policies.
9. International Marketing Research
International marketing research studies the
foreign market. It collects data about consumers
from foreign countries. It collects data about the
economic and political situation of different
countries. It also collects data about the foreign
competitors. This data is very useful for the
exporters.
10. Motivation Research:
Motivation research studies consumers' buying
motives. It studies those factors that motivate
consumers to buy a product. It mainly finds
out, why the consumers buy the product? It also
finds out the causes of consumer behaviour in the
market.
11. Market Research:
Market research studies the markets, market
competition, market trends, etc. It also does sales
forecasting. It estimates the demand for new
products. It fixes the sales territories and sales
quotas.
12. Media Research:
Media research studies various advertising media.
The different advertising media are television (TV),
radio, newspapers, magazines, the internet, etc.
Media research studies the merits and demerits of
each media. It selects a suitable media for
advertising. It does media planning. It also studies
media cost. It helps in sales promotion and to
avoid wastage in advertising.
Market Research Process
14
The market research process is a systematic
methodology for informing business decisions.
The figure below breaks the process down into six
steps:
Step 1. Define the Objective & Your “Problem”
Perhaps the most important step in the market
research process is defining the goals of the
project. At the core of this understands the root
question that needs to be informed by market
research. There is typically a key business
problem (or opportunity) that needs to be acted
upon, but there is a lack of information to make
that decision comfortably; the job of a market
researcher is to inform that decision with solid
data. Examples of “business problems” might be
“How should we price this new widget?” or “Which
features should we prioritize?”
By understanding the business problem clearly,
you’ll be able to keep your research focused and
effective. At this point in the process, well before
any research has been conducted, I like to
imagine what a “perfect” final research report
would look like to help answer the business
question(s). You might even go as far as to mock
up a fake report, with hypothetical data, and ask
your audience: “If I produce a report that looks
something like this, will you have the information
you need to make an informed choice?” If the
answer is yes, now you just need to get the real
data. If the answer is no, keep working with your
client/audience until the objective is clear, and be
happy about the disappointment you’ve prevented
and the time you’ve saved.
Step 2. Determine Your “Research Design”
Now that you know your research objects, it is
time to plan out the type of research that will best
obtain the necessary data. Think of the “research
design” as your detailed plan of attack. In this
step you will first determine your market research
method (will it be a survey, focus group, etc.?).
You will also think through specifics about how
you will identify and choose your sample (who are
we going after? where will we find them? how will
we incentivize them?, etc.). This is also the time
to plan where you will conduct your research
(telephone, in-person, mail, internet, etc.). Once
again, remember to keep the end goal in mind–
what will your final report look like? Based on that,
you’ll be able to identify the types of data analysis
you’ll be conducting (simple summaries, advanced
regression analysis, etc.), which dictates the
structure of questions you’ll be asking.
Your choice of research instrument will be based
on the nature of the data you are trying to collect.
There are three classifications to consider:
Exploratory Research – This form of research is
used when the topic is not well defined or
understood, your hypothesis is not well defined,
and your knowledge of a topic is vague.
Exploratory research will help you gain broad
insights, narrow your focus, and learn the basics
necessary to go deeper. Common exploratory
market research techniques include secondary
research,
focus
groups
and
interviews.
Exploratory research is a qualitative form of
research.
Descriptive Research – If your research objective
calls for more detailed data on a specific topic,
you’ll be conducting quantitative descriptive
research. The goal of this form of market research
is to measure specific topics of interest, usually in
a quantitative way. Surveys are the most common
research instrument for descriptive research.
Causal Research – The most specific type of
research is causal research, which usually comes
in the form of a field test or experiment. In this
case, you are trying to determine a causal
relationship between variables. For example,
does the music I play in my restaurant increase
dessert sales (i.e. is there a causal relationship
between music and sales?).
Step 3. Design & Prepare Your “Research
Instrument”
In this step of the market research process, it’s
time to design your research tool. If a survey is
the most appropriate tool (as determined in step
2), you’ll begin by writing your questions and
designing your questionnaire. If a focus group is
your instrument of choice, you’ll start preparing
questions and materials for the moderator. You
get the idea. This is the part of the process where
you start executing your plan.
By the way, step 3.5 should be to test your survey
instrument with a small group prior to broad
deployment. Take your sample data and get it into
a spreadsheet; are there any issues with the data
structure? This will allow you to catch potential
problems early, and there are always problems.
Step 4. Collect Your Data
This is the meat and potatoes of your project; the
time when you are administering your survey,
running your focus groups, conducting your
interviews, implementing your field test, etc. The
15
answers, choices, and observations are all being
collected and recorded, usually in spreadsheet
form. Each nugget of information is precious and
will be part of the masterful conclusions you will
soon draw.
Step 5. Analyze Your Data
Step 4 (data collection) has drawn to a close and
you have heaps of raw data sitting in your lap. If
it’s on scraps of paper, you’ll probably need to get
it in spreadsheet form for further analysis. If it’s
already in spreadsheet form, it’s time to make sure
you’ve got it structured properly. Once that’s all
done, the fun begins. Run summaries with the
tools provided in your software package (typically
Excel, SPSS, Minitab, etc.), build tables and
graphs, segment your results by groups that make
sense (i.e. age, gender, etc.), and look for the
major trends in your data. Start to formulate the
story you will tell.
Step 6. Visualize Your Data and Communicate
Results
You’ve spent hours pouring through your raw data,
building useful summary tables, charts and
graphs. Now is the time to compile the most
meaningful take-away into a digestible report or
presentation. A great way to present the data is to
start with the research objectives and business
problem that were identified in step 1. Restate
those business questions, and then present your
recommendations based on the data, to address
those issues.
SALES PROMOTION, PRICING, CHANNELS OF
DISTRIBUTION
MARKETING - SALES PROMOTION
Sales promotion is the process of persuading a
potential customer to buy the product. Sales
promotion is designed to be used as a short-term
tactic to boost sales – it is not really designed to
build long-term customer loyalty.
Some sales promotions are aimed at consumers.
Others are targeted at intermediaries (such as
agents and wholesalers) or at the firm’s sales
force.
TOOLS OF SALES PROMOTION
To increase the sales of a product, the producers
or manufacturers use various measures like free
samples, bonus, etc. These measures are called
the tools or techniques of sales promotion.
1.
Free samples: These are distributed to
attract consumers to try out a new product and
thereby
create
new
customers.
Some
businessmen distribute samples among selected
persons in order to popularize the product.
Common examples - shampoo, washing powder,
coffee powder, etc.
2.
Premium or Bonus offer: This is a reward
given to the existing customers. This tool will help
increase the sales of the product among the
existing customers itself.
3.
A milk shaker along with Nescafe, mug
with Bourn vita, toothbrush with 500 grams of
toothpaste might be some examples of this tool.
4.
Exchange schemes: It refers to offering
exchange of old product for a new product at a
price less than the original price of the product.
This is useful for drawing attention to product
improvement. Most common example for this tool
is - 'Bring your old mixer-cum-juicer and exchange
it for a new one just by paying Rs.500'
5.
Price-off offer: Under this offer, products
are sold at a price lower than the original price.
This type of scheme is designed to boost up sales
in off-season and sometimes while introducing a
new
product
in
the
market.
'Rs. 2 off on purchase of lifeboy soap, Rs. 15 off
on a pack of 250 grams of Taj Mahal tea, Rs. 1000
off on cooler' etc., are some of the common
schemes.
6.
Coupons: Sometimes, coupons are issued
by manufacturers either in the packet of a product
or through an advertisement printed in the
newspaper or magazine or through mail. These
coupons can be presented to the retailer while
buying the product. The holder of the coupon gets
the product at a discount. Best example for this is
coupons distributed by the pizza restaurants like
dominos, pizza hut, etc.
7.
Fairs and Exhibitions: Fairs and
exhibitions may be organized at local, regional,
national or international level to introduce new
products, demonstrate the products and to explain
special features and usefulness of the products.
Apart from this small stalls are also placed in
popular locations where the products are sold in
smaller quantity to attract more customers.
8.
Bonus points: certain retail shops will
have a scheme which will require the customer to
be a member of the shop and to acquire
membership card for the same. And every time the
customer makes a purchase bonus points are
added to the card and at the end of the year gifts
are given for the points earned. Example – coffee
day bonus points card
9.
Money Back offer: Under this scheme
customers are given assurance that full value of
the product will be returned to them if they are not
16
satisfied after using the product. This creates
confidence among the customers with regard to
the quality of the product. This technique is
particularly useful while introducing new products
in the market.
10.
Scratch and win offer: To induce the
customer to buy a particular product 'scratch and
win' scheme is also offered. Under this scheme a
customer scratch a specific marked area on the
package of the product and gets the benefit
according to the message written there.
Marketing Management - Definition & scope, Selling &
Modern Concepts of Marketing, Market Research, Rural
Marketing, Marketing Environment, Customer Behaviors,
Product Launching, Sales Promotion, Pricing, Channels of
Distribution, Advertising, Market Segmentation, Marketing
Mix, Positioning, Targeting
Marketing Environment Definition Factors & Examples
Definition
There are several factors which affect a firm. All the
things which affect the operations of a firm are known
asmarketing environment. Few of these factors can
be controlled by the firm but not all. In order to deal
with these factors firm must understand their market
environment so that positive and negative factors
would be managed accordingly.
In other words a firm is surrounded by internal and
external force which have a great effect on firm’s ability
to maintain lasting relation with target customers.
Macro
Micro
Internal
Environment
Environment Environment
Population Change
Employees
Employees
Media
Media
Machinery
Health and Safety
Banks
Materials
Legislation
Customers
Capital Assets
Green Technology
Distributors
Company Policies
Carbon Neutral
Suppliers
Company
Inflation
Trade Unions Procedures
Recession
Internal Environment factors
The internal marketing environment of a firm comprise
of all those factors which are inside firm, including the
firms employees, firms policies, firms capital assets,
firms organizational structure and its products. Firm can
control these factors.
Micro environment and Macro Environment form the
external environment of a firm. The factors of this
environment are not controlled by firm, but they greatly
influence the decision of marketers during marketing
strategy planning.
Micro Environment Factors
The Supplier: Business success depends on the
suppliers when they enjoy an authority. The supplier of
a company holds the power when they are the only one
in market or when they are the largest supplier of the
goods. The buyer is not essential to the suppliers
business, as the supplier’s good is core ingredient of
the finished product of buyer.
The Resellers: The success of companies marketing
strategy also depends on resellers if the finished goods
of a company is taken to market by market
intermediaries or any other third party. These forces
include wholesaler, retailers etc. For example If the
retail seller holds a reputable name in the market then
their reputation can impact the marketing of company’s
product.
The Customers: The success of marketing strategy
also depends on the customers of company’s product.
The nature of customer such as b2c, b2b, international
or local and the reason for buying the product will play a
role in establishing the marketing strategy of company
and how they approach the customers and serve them.
The Competition: Market competition exists when two
or more firms sell same or similar products and
services. The companies must take into account the
way they approach the customers and sell their
products to the customer, what price and product
differentiation they have for their customer. These
factors can be taken into account to get edge over their
competitors.
The General Public: The satisfaction of general public
is a duty of organization. Company must take decisions
while taking the perspective of general public into
consideration and how they will get affected by their
decision. The customers hold the power to make a winwin situation for a company by helping it reach the
goals.
Macro Environment Factors
Demographic Factors: Demographic forces do impact
the different market segments, which includes region,
country, age, educational level, ethnicity, lifestyle,
cultural norms and values.
Economic Factors: The organizations production and
decision making process of customer also affected by
the economic environment
Natural/physical Factors: The Company must take
into account the renewal of the natural resources of the
earth such as agricultural product, forest, marine
resources etc. The organizations production can also
be affected by the non renewable resources which
includes coal, oil mineral.
Technological
factors: The
organization
must
consider the technological factors as the knowledge
and skills used in production of goods. The technology
and materials used in production of goods and services
helps in smoothing the process of business.
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Political and Legal Factors: The organization should
take into consideration the political and legal
development relating to market and organization during
decision making process.
Social and Cultural Forces: The impact of your
organization’s services and products on the society
must be taken into consideration. If there is any
element used in production process or product that is
harmful to society should be avoided as it is a social
responsibility of an organization. A most recent
example is the environment and the organizations and
sectors who have reviewed their services and products
to be considered environmentally friendly.
Example of Marketing Environment
The study of decisions that people and businesses
make for resource allocation and prices for services
and goods is known as Microeconomics. The
governmental regulations and tax policies are also
taken into consideration. Microeconomics solely
focuses on the forces that determine the level of price,
supply and demand in an economy. For
e.g. microeconomics factors see how a company
would do to maximize the production and capacity in
order to lower the prices of its products and to compete
in the industry in better and efficient way.
Macroeconomics, on the other hand, is the study of
whole economy which includes the study of complete
industry and economies, not just of a specified
company. This involves the phenomenon’s which are
economy wide, such as Gross National Product (GDP)
and how changes in the economical factors such as
national income, unemployment, growth rate and level
of price affects it. For instance, the impact of netexports on nation’s capital account or effect of
unemployment rate on GDP.
The macro and micro economics is considered as the
study of two diverse divisions of economy. Whereas
there are several issues in both fields that make them
inter-reliant to each other. For instance, the price of end
product would increase with the increase of inflation
rate, as with the increase of inflation rate, the price of
raw material will increase that will end up with increase
in price of finished goods.
The microeconomics adopts the bottoms-up approach
whereas macroeconomics has a top-down tactic to
analyze the economical situation.
Studying Macroeconomics
factors and microeconomics
factors concurrently
plays a vital role in establishing a successful business
as it provides elementary means for professionals to
operate the business in an efficient and effective way to
generate sound revenue.
Conclusion
Strategic marketers must take into consideration
the micro-economic
factors and macro-economic
factors during decision making process as these forces
have a major effect on the marketing campaigns
success. Thus marketing environment forces can play
a vital role in success of a business, its marketing
strategies, marketing campaigns and its branding.
Consumer Behaviour: Meaning/Definition and
Nature of Consumer Behaviour
Article shared by Smriti Chand
Consumer Behaviour: Meaning/Definition and Nature of
Consumer Behaviour!
Meaning and Definition:
Consumer behaviour is the study of how individual
customers, groups or organizations select, buy, use,
and dispose ideas, goods, and services to satisfy their
needs and wants. It refers to the actions of the
consumers in the marketplace and the underlying
motives for those actions.
Marketers expect that by understanding what causes
the consumers to buy particular goods and services,
they will be able to determine—which products are
needed in the marketplace, which are obsolete, and
how best to present the goods to the consumers.
The study of consumer behaviour assumes that the
consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play
various roles in the marketplace. Starting from the
information provider, from the user to the payer and to
the disposer, consumers play these roles in the
decision process.
The roles also vary in different consumption situations;
for example, a mother plays the role of an influencer in
a child’s purchase process, whereas she plays the role
of a disposer for the products consumed by the family.
Some selected definitions of consumer behaviour
are as follows:
1. According to Engel, Blackwell, and Mansard,
‘consumer behaviour is the actions and decision
processes of people who purchase goods and services
for personal consumption’.
2. According to Louden and Bitta, ‘consumer behaviour
is the decision process and physical activity, which
individuals engage in when evaluating, acquiring, using
or disposing of goods and services’.
Nature of Consumer Behaviour:
1. Influenced by various factors:
The various factors that influence the consumer
behaviour are as follows:
a. Marketing factors such as product design, price,
promotion, packaging, positioning and distribution.
b. Personal factors such as age, gender, education and
income level.
c. Psychological factors such as buying motives,
perception of the product and attitudes towards the
product.
d. Situational factors such as physical surroundings at
the time of purchase, social surroundings and time
factor.
e. Social factors such as social status, reference groups
and family.
f. Cultural factors, such as religion, social class—caste
and sub-castes.
ADVERTISEMENTS:
2. Undergoes a constant change:
Consumer behaviour is not static. It undergoes a
change over a period of time depending on the nature
of products. For example, kids prefer colourful and
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fancy footwear, but as they grow up as teenagers and
young adults, they prefer trendy footwear, and as
middle-aged and senior citizens they prefer more sober
footwear. The change in buying behaviour may take
place due to several other factors such as increase in
income level, education level and marketing factors.
3. Varies from consumer to consumer:
All consumers do not behave in the same manner.
Different consumers behave differently. The differences
in consumer behaviour are due to individual factors
such as the nature of the consumers, lifestyle and
culture. For example, some consumers are
technoholics. They go on a shopping and spend
beyond their means.
They borrow money from friends, relatives, banks, and
at times even adopt unethical means to spend on
shopping of advance technologies. But there are other
consumers who, despite having surplus money, do not
go even for the regular purchases and avoid use and
purchase of advance technologies.
4. Varies from region to region and country to
county:
The consumer behaviour varies across states, regions
and countries. For example, the behaviour of the urban
consumers is different from that of the rural consumers.
A good number of rural consumers are conservative in
their buying behaviours.
The rich rural consumers may think twice to spend on
luxuries despite having sufficient funds, whereas the
urban consumers may even take bank loans to buy
luxury items such as cars and household appliances.
The consumer behaviour may also varies across the
states, regions and countries. It may differ depending
on the upbringing, lifestyles and level of development.
5. Information on consumer behaviour is important
to the marketers:
Marketers need to have a good knowledge of the
consumer behaviour. They need to study the various
factors that influence the consumer behaviour of their
target customers.
The knowledge of consumer behaviour enables
them to take appropriate marketing decisions in
respect of the following factors:
a. Product design/model
b. Pricing of the product
c. Promotion of the product
d. Packaging
e. Positioning
f. Place of distribution
6. Leads to purchase decision:
A positive consumer behaviour leads to a purchase
decision. A consumer may take the decision of buying a
product on the basis of different buying motives. The
purchase decision leads to higher demand, and the
sales of the marketers increase. Therefore, marketers
need to influence consumer behaviour to increase their
purchases.
7. Varies from product to product:
Consumer behaviour is different for different products.
There are some consumers who may buy more quantity
of certain items and very low or no quantity of other
items. For example, teenagers may spend heavily on
products such as cell phones and branded wears for
snob appeal, but may not spend on general and
academic reading. A middle- aged person may spend
less on clothing, but may invest money in savings,
insurance schemes, pension schemes, and so on.
8. Improves standard of living:
The buying behaviour of the consumers may lead to
higher standard of living. The more a person buys the
goods and services, the higher is the standard of living.
But if a person spends less on goods and services,
despite having a good income, they deprives
themselves of higher standard of living.
9. Reflects status:
The consumer behaviour is not only influenced by the
status of a consumer, but it also reflects it. The
consumers who own luxury cars, watches and other
items are considered belonging to a higher status. The
luxury items also give a sense of pride to the owners.
Meaning of Advertising - Advertising is an activity of
attracting public attention to a product or business, as
by paid announcements in the print, broadcast, or
electronic media.
Advertising is a paid form of a non-personal message
communicated through the various media by industry,
business firms, nonprofit organisations, or individuals.
Advertising is persuasive and informational and is
designed to influence the purchasing behaviour and/or
thought patterns of the audience. Advertising is a
marketing tool and may be used in combination with
other marketing tools, such as sales promotions,
personal selling tactics, or publicity.
Definition of Advertising - Advertising is defined
differently by different people, some of the definitions
are as follows:
According to Richard Buskirk, "Advertising is a paid
form of non-personal presentation of ideas, goods or
services by an identified sponsor."
According to Wheeler, "Advertising is any form of paid
non-personal presentation of ideas, goods or services
for the purpose of inducting people to buy."
According to William J. Stanton, "Advertising consists
of all the activities involves in presenting to a group, a
non-personal, oral or visual, openly sponsored
message regarding disseminated through one or more
media and is paid for by an identified sponsor."
Objectives of Advertising - The real objective of
advertising is effective communication between
producers and consumers with the purpose to sell a
product, service, or idea. The main objectives of
advertising are as follows:
Informative
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Objective of advertising is to inform its targeted
audience/customers about introduction of new product,
update or changes in existing products or product
related changes, information regarding new offers and
schemes. Informative advertising seeks to develop
initial demand for a product. The promotion of any new
market entry tends to pursue this objective because
marketing success at this stage often depends simply
on announcing product availability. Thus, informative
advertising is common in the introductory stage of the
product life cycle.
Persuasive
Objective of advertising is to increase demand for
existing product by persuading new customer for first
time purchase and existing customers for repurchases.
Persuasive advertising attempts to increase demand for
an existing product. Persuasive advertising is a
competitive type of promotion suited to the growth
stage and the early part of the maturity stage of the
product life cycle.
Reminder
The objective of advertising is to remind customers
about existence of product, and ongoing promotional
activities. Reminder advertising strives to reinforce
previous promotional activity by keeping the name of a
product before the public. It is common in the latter part
of the maturity stage and throughout the decline stage
of
the
product
life
cycle.
Mathews, Buzzell, Levitt and Frank have listed some
specific objectives of advertising.
 To make an immediate sale.
 To build primary demand.
 To introduce a price deal.
 To build brand recognition or brand insistence.
 To help salesman by building an awareness of a
product among retailers.
 To create a reputation for service, reliability or
research strength.
 To increase market share.
Functions of Advertising - Following are the basic
functions of advertising:
1.
To
distinguish
product
from
competitors' products
There are so many products of same category in the
market and they competes with each other, advertising
performs the function of distinguishing advertiser's
product from competitors.
2. To communicate product information
Product
related
information
required
to
communicated to the targeted customers,
advertisement performs this function.
be
and
3. To urge product use
Effective advertisement can create the urge within
audience for a product.
4. To expand product distribution
When the market demand of a particular product
increases, the number of retailer and distributor
involved in sale of that product also increases, hence
product distribution get expanded.
5. To increase brand preference
There are various products of different bands
are available, the brand which is effectively and
frequently advertised is preferred most.
6. To reduce overall sale cost
Advertising increases the primary demand in the
market. When demand is there and the product is
available, automatically the overall cost will decrease,
simultaneously the cost of sales like distribution cost,
promotional cost also get decreased.
Classification of Advertising - Advertising can be
classified on the basis of Function, Region, Target
Market,
Company
demand,
Desired
response, and Media.
A) Classification on the basis of function
 Advertisement informs the customers about a
product
 Advertisement persuades the consumers to buy a
products
 Advertisement reminds existing customers about
the presence of the product in the market
Let us discuss some important types of advertising
based on the functional aspect of advertising.
Informative advertising: This type of advertising
informs the customers about the products, services, or
ideas of the firm or organization.
Persuasive advertising: This type of advertising
persuades or motivates the prospective buyers to take
quick actions to buy the products or services of the firm.
Example: “Buy one, get one free”.
Reminder advertising: This genre of advertising
reminds the existing customers to become medium or
heavy users of the products or services of the firm that
have been purchased by them at least once. This type
of advertising exercise helps in keeping the brand name
and uses of the products in the minds of the existing
customers.
B) Classification on the basis of region
Advertisements can also be classified on the basis of
the region, say:
Global advertising: It is executed by a firm in its global
market niches. Reputed global magazines like Time,
Far Eastern Economic Review, Span, Fortune, Futurist,
Popular Science. Cable TV channels are also used to
advertise the products through out world. Supermodels
and cinema stars are used to promote high-end
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products Examples: Sony, Philips, Pepsi, Coca Cola,
etc.
National advertising: It is executed by a firm at the
national level. It is done to increase the demand of its
products and services throughout the country.
Examples: BPL (Believe in the best). Whirlpool
Refrigerator (Fast Forward Ice Simple) etc.
Regional advertising: If the manufacturer confines his
advertising to a single region of the country, its
promotional exercise is called Regional Advertising.
This can be done by the manufacturer, wholesaler, or
retailer of the firm. Examples: Advertisements of
regional newspapers covering those states or districts
where these newspapers are circulated. Eg. The
Assam Tribune (only for the NE region) etc.
Local advertising: When advertising is done only for
one area or city, it is called Local Advertising. Some
professionals also call it Retail Advertising. It is
sometime done by the retailer to persuade the
customer to come to his store regularly and not for any
particular brand. Examples: Advertisements of Ooo la
la, Gupshup (Local FM channels) etc.
C) Classification on the basis of target market
Depending upon the types of people who would receive
the messages of advertisements, we can classify
advertising into four subcategories:
Consumer product advertising: This is done to
impress the ultimate consumer. An ultimate consumer
is a person who buys the product or service for his
personal use. This type of advertising is done by the
manufacturer or dealer of the product or service.
Examples: Advertisements of Intel, Kuttons (shirt),
Lakme (cosmetics) etc.
Industrial product advertising: This is also called
Business-to-Business Advertising. This is done by the
industrial manufacturer or his distributor and is so
designed that it increases the demand of industrial
product or services manufactured by the manufacturer.
It is directed towards the industrial customer.
Trade advertising: This is done by the manufacturer to
persuade wholesalers and retailers to sell his goods.
Different media are chosen by each manufacturer
according to his product type, nature of distribution
channel, and resources at his command. Hence, it is
designed for those wholesalers and retailers who can
promote and sell the product.
Professional advertising: This is executed by
manufacturers and distributors to influence the
professionals of a particular trade or business stream.
These professionals recommend or prescribe the
products of these manufacturers to the ultimate buyer.
Manufacturers of these products try to reach these
professionals under well-prepared programmes.
Doctors, engineers, teachers, purchase professionals,
civil contractors architects are the prime targets of such
manufacturers.
Financial advertising: Banks, financial institutions,
and corporate firms issue advertisements to collect
funds from markets. They publish prospectuses and
application forms and place them at those points where
the prospective investors can easily spot them.
D) Classification on the basis of desired responses
An ad can either elicit an immediate response from the
target customer, or create a favourable image in the
mind of that customer. The objectives, in both cases,
are different. Thus, we have two types of advertising
under this classification.
Direct action advertising: This is done to get
immediate responses from customers. Examples:
Season's sale, purchase coupons in a magazine.
Indirect action advertising: This type of advertising
exercise is carried out to make a positive effect on the
mind of the reader or viewer. After getting the
advertisement he does not rush to buy the product but
he develops a favourable image of the brand in his
mind.
Surrogate advertising: This is a new category of
advertising. In this type of promotional effort, the
marketer promotes a different product. For example:
the promotion of Bagpiper soda. The firm is promoting
Bagpiper Whisky, but intentionally shows soda. They
know that the audience is quite well aware about the
product and they know this fact when the actor states,
"Khoob Jamega Rang Jab Mil Baithenge Teen Yaar ...
Aap ... Main, Aur Bagpiper").
E) Classification on the basis of the media used in
advertisement
The broad classification based on media is as follows:
Audio advertising: It is done through radio, P A
systems, auto-rickshaw promotions, and four-wheeler
promotions etc.
Visual advertising: It is done through PoP displays,
without text catalogues, leaflets, cloth banners,
brochures, electronic hoardings, simple hoardings,
running hoardings etc.
Audio-visual: It is done through cinema slides, movies,
video
clips,
TV
advertisements,
cable
TV
advertisements etc.
Written advertising: It is done through letters, fax
messages, leaflets with text, brochures, articles and
documents, space marketing features in newspapers
etc.
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Internet advertising: The world wide web is used
extensively to promote products and services of all
genres.
For
example
Bharat
Matrimony,
www.teleshop.com, www.asianskyshop.com etc.
Verbal advertising: Verbal tools are used to advertise
thoughts, products, and services during conferences,
seminars, and group discussion sessions. Kinesics also
plays an important role in this context.