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Contents:
Notes on Introduction to Marketing
Notes on Market Segmentation
Notes on Multi-Level Marketing
Notes on Organization Structure
Notes on the Channels of Distribution
Notes on Direct Marketing
Notes on Marketing Orientations
Notes on Marketing Environment
Notes on Societal Marketing
Notes on Marketing Mix
Notes on Product
Notes on Retail Audit
Notes on Marketing Ethics
Notes on International Marketing Channels
Notes on Virtual Marketing
Notes on Marketing Information System
Notes on Market Research
Notes on Advertising Research
Notes on Integrated Marketing Communication (IMC)
Notes on Rural Marketing
Notes on Advertising
Notes on Service Marketing Mix
Notes on Retailing
Notes on Strategic Marketing
Notes on Demand Forecasting
Notes on Business Markets
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Notes on Rural Marketing Mix
Notes on Brand Positioning
Notes on Online Retailing
Notes on Personal Selling
Notes on Introduction to Marketing # 1. Introduction to Marketing:
Till 1950, marketing was usually sales-oriented and the selling concept stressed the need of high
pressure salesmanship and advertising to secure maximum sales volume. Since 1950, we have
customer-oriented marketing plans and programmes and this customer-orientation is called the
marketing concept.
The essence of marketing concept is that customer and not the product shall be the centre or the
heart of the entire business system. It emphasizes customer-oriented marketing process. All
business operations revolve around customer satisfaction and service. Marketing plans, policies
and programmes are formulated to serve efficiently customer demand.
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Marketing research and marketing information service is expected to provide adequate, accurate
and latest information regarding target markets and current consumer wants as well as dealer
wants to the marketing managers and on the basis of such realistic information, they will take
sound decision on any marketing problem. The entire marketing mix will be formulated on the
basis of marketing research.
Two radical changes were brought about when the marketing concept was
introduced after 1950 in the process of marketing:
1. We have a steady shift from the product-oriented or sales-oriented business enterprise to the
customer-oriented business enterprise. Marketing and innovation are now the distinguishing
features of a business organization from those of other types of social institution
2. We have also a gradual shift from caveat emptor (buyer beware) to caveat vendor (seller
beware). This has clearly emphasized the social responsibility of business towards consumer and
the need for consumer protection in the market place.
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According to American Marketing Association, “Marketing is the process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods and services to
create exchanges that satisfy individual and organizational goals”.
According to the Marketing Guru, ‘Philip Kotler’, “Marketing is typically seen as the task of
creating, promoting, and delivering goods and services to consumers and businesses; it is defined
as a societal process by which individuals and groups obtain what they need and want through
mating, offering, and freely exchanging products and services of value with others.”
Sometimes, marketers confuse marketing with selling, since they consider marketing as an art of
selling products. However, marketing is different from selling in many ways.
Short Notes on Marketing # 2. Market Segmentation:
The total market for many of the products is not homogeneous but too much heterogeneous
because people have different needs and wants and therefore, marketer cannot derive maximum
benefit from an analysis of marketing as a whole. For example, there may be total market for
textiles, electrical appliances, refrigerators, etc., but within the total for each of these products,
there might actually exist many sub-markets which differ virtually from each other.
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Under textile markets, in one section of the population, there might be huge demand for cotton
textile, in another for synthetic fibre textiles and yet in another for pure silk garments. This
diversity may be due to differences in income of the people, taste, fashion buying habits or
motives, etc. Further no two customers are identical in their demand.
Therefore, to take advantage of this situation, the marketers may divide the total market into
smaller groups of consumers on the basis of significant difference in buyer characteristics or
buyer responses to marketing programs.
By tailoring product designs, pricing policies, promotion and distribution channels to meet the
needs of these small groups’ marketers often gain a competitive advantage. This kind of
marketing strategy is also consistent with the marketing concept, which requires the
identification of the consumer wants and needs and development of marketing programs to
satisfy them.
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According to Stanton, “Market segmentation consists of taking the total heterogeneous market for
a product and dividing it into several sub-markets or segments each of which tends to be
homogeneous in all significant aspects.”
Market segmentation is the process of dividing a potential market into distinct sub-markets of
consumers with common needs and characteristics. Market segmentation is the starting step in
applying the marketing strategy. Once segmentation takes place, the marketer targets the
identified customer groups with proper marketing-mix so as to position the
product/band/company as perceived by the target segments.
From the perspective of the marketing manager, market segmentation involves two closely related
areas. First, the total market for any product can be sub-divided or segmented into groups of
potential customers who are homogeneous with respect to certain wants or desires. Second, it
might be advantageous to the organisation to serve one or more of these market segments.
Market segments are large identifiable groups like customers interested in personal computer,
laptop, tablet, etc. It is possible that a market creates a niche. Niche is a narrowly defined group of
customers that have a distinct and complex set of needs.
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Thus, in Cycle Industry, there might be segments like cycle for regular users, sports, adventure,
racing, kids, girls, etc. Niche is created when cycle is required for health clubs, physically
handicapped with left and right hand working, etc. In the niches, there are few or no competitors
and the product might command a premium price.
Complete Notes on Marketing # 3. Multi-Level Marketing:
Multi-level marketing (MLM) is a mode of direct marketing followed by a producer or marketer.
Multi-level marketing, pioneered by Amway, consists of recruiting independent business persons
who act as distributors of company’s product. Each distributor can further engage other sub
distributors and so on. The distributor’s compensation includes a percentage of sales of those
engaged by the distributor as well as earnings (margins) on direct sales to the customers.
Under multi-level or network marketing, the product reaches the customers from the
manufacturer via distributors, sub-distributors, sub-sub distributors and sub-sub-sub
distributors. The distributors are organised in the form of hierarchy, i.e., level I, level II, level III
and so on. Each of the distributors is also a customer. The products are always sold directly to the
customers. The conventional retail route is completely by-passed.
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In multi-level marketing (MLM), individuals become associated with the parent company in an
independent contractual relationship. They are compensated based on their sales of company’s
products or services, as well as the sales of those they bring into the business. Multi-level
marketing has a recognised image problem because of difficulties in making a clear distinction
between legitimate network marketing and illegal “pyramid schemes” or Ponzi schemes.
Due to this image problem, many new MLM network marketing firms do not use the words
“multi-level marketing” or “network marketing” and instead use terms like “affiliate marketing”,
“home-based business franchising” etc. Under this arrangement, commissions are only earned on
the sale of products or services to the end consumer who, in many cases, is also a distributor. No
money is earned on a “sign-up fee” or for recruiting distributors alone.
The companies which are using MLM include Amway Corporation (household goods, personal
care and nutritional products); Avon Products (cosmetics, jewellery, home furnishing, and baby
care products); Brite Music Enterprises (children’s song books, CDs, DVDs, etc.), and Discovery
Toys (educational toys, books, and games).
Limitations of Network Marketing:
The limitations of multi-level or network marketing are as follows:
(i) Sales forecasting is difficult. This might result in under or over stocking of various items.
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(ii) Customer relationships are at the mercy of the distributors or subdistributors.
(iii) Brand-building is very difficult without sales promotion and advertising.
(iv) Distributors may become large customers and hence take over control of the company.
(v) The company cannot control its sales team’s actions because of its excessive dependence on
the network of distributors and subdistributors.
Lecture Notes on Marketing # 4. Organization Structure:
Inside any company, a large number of activities are carried out by big groups of individuals,
spread across multiple departments (e.g. Production, Sales, Marketing, Purchase, Human
Resources, Administration, Inventory (Stock), IT Systems, Accounts etc.).
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The activities within these departments must be properly coordinated such that every employee
understands his responsibilities. Also, the employees need to understand the protocol for their
communication and coordination within the department and also across various departments.
Ideally, each department must be supervised by one single person, and the team within that
department must report to her. That person remains responsible for the day-to-day decisions and
performance of that department. This ensures a single line of command. Without a single
command line, employee coordination is very difficult.
If everybody takes decisions about everything, a lot of confusion and communication gaps may
arise. In such cases, nobody will be responsible when things go wrong. This is usually observed in
organizations which have grown without putting proper systems and processes in place.
Of course, if the organization is very small where only one business leader takes care of all the
activities, only he is the single command, but division of activities within the team is essential and
applicable in such cases also.
The tool to graphically represent the relationships and responsibilities within a company is called
an Organization Structure.
It is a tree-like graphical representation of the organization, starting from the head of the
organization at the top and the hierarchy below him shown downwards.
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As the name suggests, it is used to properly communicate the work and reporting relationships
within the company in an organized and structured manner.
Everybody on the roll of the company must be represented in the organization structure.
In an organization structure, the person shown above is responsible for guiding and supervising
the person(s) below her.
The persons below are responsible to fulfill the work given to them and report the status to the
person above.
The reporting relationships must be determined very carefully. People’s seniority, experience etc.
must be considered while deciding these relationships. If proper care is not taken in deciding the
reporting structure, it may give rise to a lot of conflicts within the team.
Ideally, every employee in the company must have one position in the organization structure. This
means that there should be only one boss for every employee. Nobody in the company should
have more than one reporting boss. If it is so, it creates a lot of confusion.
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If functionally a person performs multiple duties which fall under two or more departments, she
may have functional reporting to more than one bosses, but her administrative boss must be only
one. This administrative boss should be the one who may grant her various permissions like
leaves, reimbursement of expenses etc.
The senior positions must be given to the persons with leadership and people skills along with the
requisite technical skills and relevant experience. If the persons at higher positions lack
leadership and people skills, they will eventually be ineffective in those supervisory roles. If these
skills are not possessed, we must try to develop the same in them through proper training and
coaching.
The organization structure must be revised as and when the manpower changes occur within the
company.
Notes on Marketing # 5. Channels of Distribution:
A channel of distribution refers to a path or route that a good or service takes in order to reach the
hands of the ultimate consumer. In other words, it is a chain of businesses or intermediaries
through which a good or service passes until it reaches the end consumer. Distribution channels
in marketing are a key element in the entire marketing strategy. It helps the business in
expanding its reach and grows its revenue.
Some important definitions of channels of distribution:
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A channel of distribution or marketing channels are the distribution networks through which
producers’ products flow to the market. — Cundiff, Still and Govoni
This is a route taken by the title to the goods as they move from producer to the ultimate
consumers or industrial users. —William J. Stanton
There are various functions of distribution channels:
(i) Transfer of title of the goods involved.
(ii) Physical movement from the point of production to the point of consumption.
(iii) Storage function.
(iv) Communication of information concerning the availability, characteristics and price of the
goods in transit, inventory and on purchase.
(v) Most of the utilities of products are created by performing the function of physical distribution
promptly and efficiently.
(vi) Transactional function like buying from the manufacturer and selling to the consumer.
(vii)Storing the goods and sorting them into quantities desired by customers.
(viii) Channels of distribution also conduct marketing research and gather data on market
conditions, expected sales, consumer’s trends, competition etc. Thus giving valuable information
to the manufacturer.
(ix) Distribution channels help in maintaining the price too. By stocking the goods, a constant
flow of goods to the market is assured. This equalizes the demand and supply factors which
stabilize prices.
Channels of distribution are very important for any firm because of the following:
(i) Distribution channel is an important element of marketing mix of a firm and other elements
are closely related with interdependence on the distribution channel. Other marketing decisions
like pricing, promotion and physical distribution are highly affected by this.
(ii) A sound distribution channel enables the firm to cut down cost and maximize its sales volume.
(iii) The cost involved in the use of distribution channels adds up into the price of the product that
the ultimate customer has to pay. Thus it is important to choose the distribution channel wisely.
(iv) A product or service is really useful to the consumer only when it is available at the right time
and at the right price. Distribution channels ensure this.
(v) Due to right distribution channels fluctuations in the production can be reduced which
ensures steady employment and proper budgetary control.
Notes on Marketing # 6. Direct Marketing:
Direct marketing refers to an element of marketing communication that facilitates organizations
to reach their customers directly without any intermediary. This element of marketing
communication involves sending direct mails through the Internet and providing catalogs and
coupons to customers.
It also includes telemarketing that requires calling customers through telephones. This type of
marketing does not necessarily involve face-to-face interaction with customers. Direct marketing
proves to be an extremely effective element of marketing communication process that practices a
targeted marketing approach to lure customers. It helps in creating valuable and lasting
relationships with customers in the long run.
Oriflame Cosmetics is one of the best examples of an organization practicing direct marketing.
The organization sells cosmetic products all over the world (62 countries). The customers of
Oriflame themselves act as consultants by taking its membership to sell products to other
customers with the help of a catalog.
Direct marketing is generally an unsolicited practice and can be seen as a nuisance by people as
they do not like to be disturbed by sales representatives. The practices of direct marketing, such
as telemarketing, e-mailing, and junk mailing are generally not entertained by customers. These
practices distract the routine of customers. Thus, the tools of direct marketing need to be used
with caution.
Significance of Direct Marketing:
Direct marketing facilitates an organization to target a specific segment of customers. It assists
the customers in making purchase decisions by showing them product demonstrations. An
organization can design a number of suitable ways to serve its customers as per their unique
needs and make more efficient and effective marketing efforts. Direct marketing is a relatively
cheaper way to reach out to a huge number of customers at a personal level. Thus, it helps an
organization to build a relationship with customers.
Advantages and Disadvantages of Direct Marketing:
Following are the advantages of direct marketing:
a. Involves high conversion and success rate as customers can be approached directly
b. Serves as a basis for testing the chances of success of new products in the market
c. Facilitates rapid delivery of products.
Following are the disadvantages of direct marketing:
a. Evokes the resistance of customers when extra persuasion is used to sell the products
b. Having less sales orientation and more customer-relationship orientation
c. Pestering customers by sending bulk mails and making telemarketing calls.
Notes on Marketing # 7. Marketing Orientations:
An orientation, in the marketing context, relates to a perception or attitude a firm holds towards
its product or service, essentially concerning consumers and end-users. The marketing
orientation evolved from earlier orientations namely the production orientation, the product
orientation and the selling orientation.
Product Orientation:
The industrial revolution of the 17th century brought about the production era, which continued
till the late 1920’s. Up to 1950s firm focused on a production orientation specializes in producing
as much as possible of a given product or service. Thus, this signifies a firm exploiting economies
of scale, until the minimum efficient scale is reached.
A production orientation may be deployed when a high demand for a product or service exists,
coupled with a good certainty that consumer tastes do not rapidly alter. Companies focused on
manufacturing processes and they looked for ways and means to produce the goods faster, more
efficiently and at low prices. Product features were not given any importance because it was felt
that customers were concerned only about the availability of the product, and not about its
features.
Sales Orientation:
The sales era began in early 1960s. A firm employing a product orientation is primarily concerned
with the quality of its own product. A firm would also assume that as long as its product was of a
high standard, people would buy and consume the product. Manufacturers believed that the
success of their business depended on outselling the competition. Companies realized the need
for product promotion and distribution. In this era, marketers focused their efforts only on selling
their products to the customers.
Companies realized that they could increase their demand by promotional methods like
advertising, product promotion etc.
Marketing Orientation:
1970’s to present day, the marketing orientation is perhaps the most common orientation used in
today’s marketing. It involves supplying products and services according to consumer tastes.
Marketers wants to know their customers in better way, by the R&D they develop a product
attuned to the revealed information, and then utilize promotion techniques to ensure persons
know the product exists. During the sales era, companies ignored consumer wants and needs.
They focused simply on selling their products. Critics of sales era believed that products in sales
era were sold without looking at consumer needs and wants.
At this stage, companies focused on marketing, rather than on selling; they also embraced the
concept of coordinated marketing management, which was directed toward the twin goals of
customer orientation and profitability. Companies are now shifting their focus towards customer
relationship, and began attempting to fulfill customers’ needs according to their preferences.
Notes on Marketing # 8. Marketing Environment:
A company’s ability to develop and maintain successful transactions with its target customers is
affected by company’s marketing environment. Marketing environment consists of the forces
close to the company that affect its ability to serve and satisfy its customers in the context of their
needs and requirements.
All firms must identify, analyse and monitor external forces and assess their potential impact on
their goods and services. Although external forces are outside the marketing manager’s control,
they must be considered together with the variables of the marketing mix (i.e., product, price and
promotion) in developing marketing plans and strategies. An attempt has been made to study the
impact of various kinds of external environmental variables on the decisions to be taken by
marketing managers.
The term ‘marketing environment’ denotes all the external factors and forces that affect a firm’s
ability to develop and maintain successful transactions and relationships with the target
customers. Thus, marketing environment includes all forces that affect marketing policies,
decisions and operations of a firm.
The external forces which constitute uncontrollable environment include (a) micro factors such as
suppliers, customers, intermediaries, competitors and general public; and (b) macro factors such
as demographic, economic, natural/physical, technological politico-legal and socio-cultural
factors.
The internal environment of a firm which is controllable includes product design, packaging,
pricing, promotion, and distribution policies of the firm. As a matter of fact, these forces
constitute the marketing mix of a firm.
What Is Marketing Environment?
“A company’s marketing environment consists of the actors and forces outside marketing that
affect management’s ability to build and maintain successful relationships with target customers.”
—Philip Kolter
A few examples of external forces having influence on a business are as follows:
(i) Rapid technological changes as in computer industry—introduction of new models.
(ii) Changes in government economic policies, e.g., licensing policy, import-export policy,
taxation policy, etc.
(iii) Political uncertainty, e.g., unstable government, change of finance minister or industry
minister of the nation, etc.
(iv) Social changes, e.g., demand for reservation in jobs for minorities and women.
(v) Changes in fashion and tastes of consumers, e.g., preference for Khadi garments in place of
synthetic garments, dislike of oils containing unsaturated fats.
(vi) Labour unrest leading to industrial conflicts—demand for higher wages and bonus, better
working conditions, etc.
(vii) Increased competition in the market with the entry of multinational corporations (MNCs).
Notes on Marketing # 9. Societal Marketing:
The philosophy of marketing has been continuously changing with the emerging new social values
and trends. Marketing is a societal activity to meet consumption needs for human welfare and
existence. The societal marketing concept is a management orientation that holds that the key
task of the organisation is to determine the needs, wants, and interests of target markets and to
adopt the organisation for delivering the desired satisfactions more effectively and efficiently than
its competitors in a way that preserves or enhances the consumer’s and society’s wellbeing.
Societal marketing management considers four basic elements while taking decisions viz.,
consumer needs, consumer interests, company interests and society interests. The wave of
consumerism; pioneered by Ralph Nader in the late 1960s, which aims at protecting the
consumers’ interests because they are the king; has a strong impact over societal marketing
concept.
In the social responsibility era, the businessman should bear the social cost of its antisocial
conduct as quid pro quo. The business is compelled to be socially responsible for its own survival
and growth. A query arises why should business markets bother at all about society? This enigma
can be judged by two arguments, viz. argument of survival and argument of social cost.
The true marketing believes, consumer is pivotal and does not ask, ‘what do we want to sell?’ but
asks ‘what does the consumer what to buy?’ The modern concept supports to provide high
customer welfare and satisfaction. This includes satisfying the personal consumer needs and
considering social good and environment.
The product is not only an item of purchase and sell but also affects the whole society. If we
consider the same example of Pillsbury Company U.S.A., it has changed its goal. Now Pillsbury is
emphasising the national value of its product. Social marketing is new sense of social
responsibility for everyday business activity.
Notes on Marketing # 10. Marketing Mix:
Marketing mix is the combination to various elements which are available at the disposal of a
marketer, it consist of essential variable factors which influence success of marketing. Marketing
variables are changing with the expectation, need and desire of customers, increasing competition
in market and consumer awareness also impact on marketing mix strategies.
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in
the target market. Marketing mix decisions must be made to influence the trade channels as well
as the final consumers. Marketing mix elements remain in control of a business firm, marketers
can make changes according to change in business environment and marketing policy of a firm.
According to American marketing association “A marketing mix is nothing but a judicious
blending of the various ingredients available at the disposal of a marketer”.
In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of
company performance actions that can influence the consumer decision to purchase goods or
services. Borden suggested that all those actions of the company represented a “Marketing Mix”.
Professor E. Jerome McCarthy, at the Michigan State University in the early 1960s, suggested that
the Marketing mix contained 4 elements—product, price, place and promotion.
Product:
The product aspects of marketing deal with the specifications of the actual goods or services and
how it relates to the end-user’s needs and wants. The scope of a product generally includes
supporting elements such as warranties, guarantees, and support.
Pricing:
This refers to the process of setting a price for a product, including discounts. The price need not
be monetary; it can simply be what is exchanged for the product or services, e.g. time, energy or
attention. Methods of setting prices optimally are in the domain of pricing science.
Place (or Distribution):
This refers to how the product gets to the customer; for example, point-of-sale placement or
retailing. This third P has also sometimes been called Place, referring to the channel by which a
product or service is sold (e.g. online vs. retail), which geographic region or industry, to which
segment (young adults, families, business people), etc. also referring to how the environment in
which the product is sold in can affect sales.
Promotion:
This includes advertising, sales promotion, promotional education, publicity, and personal
selling. Branding refers to the various methods of promoting the product, brand, or company.
These four elements are often referred to as the marketing mix, which a marketer can use to craft
a marketing plan – The four Ps model is most useful when marketing low value consumer
products. Industrial products, services, high value consumer products require adjustments to this
model.
Price:
(i) List price
(ii) Discounts
(iii) Allowances
(iv) Payment period
(v) Credit terms
Promotion:
(i) Sales promotion
(ii) Advertising
(iii) Sales force
(iv) Public relations
(v) Direct marketing
Place:
(i) Channels
(ii) Coverage
(iii) Assortments
(iv) Locations
(v) Inventory
(vi) Transport
Product:
(i) Product variety
(ii) Quality
(iii) Design
(iv) Features
(v) Brand name
(vi) Packaging
(vii) Sizes
(viii) Services
(ix) Warranties
(x) Returns
In order to recognize the different aspects of selling services, as opposed to
Products, a further three Ps were added to make a range of Seven Ps for service
industries:
i. Process—the way, in which orders are handled, customers are satisfied and the service is
delivered.
ii. Physical Evidence—is tangible evidence of the service customers will receive (for example, a
holiday brochure).
iii. People—the people meeting and dealing with the customers.
Notes on Marketing # 11. Product:
The product is the most tangible and important single component of the marketing programme.
Product is the vehicle by which a company provides consumer satisfaction. It is the engine that
pulls the rest of the marketing programme. The product may be goods, a service, a goods plus
service, or just an idea. A product is all things offered to a market.
Those things include physical objects, design, brand, package, label, price, services, supportive
literature, amenities, and satisfaction, not only from physical product and services offered but
also from ideas, personalities and organisations. In short, a product is the sum total of physical,
economic, social and psychological benefits.
Marketers must define their market in terms of product functions — what the customer expects
from the product. Buyers are not interested in the composition of a product. They are concerned
only with what the product does, what the product means to them and to what extent it satisfies
their social and psychological needs. The needs will vary between one customer category and
another. The needs and expectations are also changing.
A product is any tangible offering that might satisfy the need or aspiration of a consumer. A
product is a set of attributes assembled in an identifiable form. There are three attributes for a
product- (a) Any product should have a physical form, (b) it should offer some utility to serve the
purpose, and (c) it should give satisfaction to the customer. Example- Ball-point pen, shape of the
pen serves as a physical form, ink inside the pen serves as a utility, and smooth writing leads to
consumer satisfaction.
A manufacturer of cosmetics said- “In the factory we make mascara and skin cleaner, but in the
store we sell hope and beauty.” Toothpaste may be a product to the producer. To the consumer it
means whiter and cleaner teeth, pleasant taste, fewer cavities, stronger gums and sweet-smelling
breath.
The consumer buys these hopes and expectations, and not the toothpaste. These expectations of
benefits are called market offerings and they act as the selling points of a product. If the
performance of the product is on par with expectations, the customer will be satisfied and the
seller’s mission is fulfilled.
What marketers are selling in a product is the capacity and competence of the product to offer
expected use, performance and satisfaction. The concept of product as a bundle of utilities,
satisfaction, and benefits cannot be overstressed.
Notes on Marketing # 12. Retail Audit:
Audit means verification or checking. Retail audit means verification or checking performance of
a retail organisation.
Retail Audit can be defined as systematic examination and evaluation of firms retailing efforts it is
investigation of retailer’s objectives, strategy implementation and organisation.
Such audit may be undertaken by a company audit specialist or be a company department
manager or outside auditor.
Retail audit reviews basically a firm’s strategy and its operations to identify its areas of strength
and neatness.
There are basically two types of audit:
(a) Horizontal.
(b) Vertical.
A Horizontal retail audit undertakes evaluation of overall performance that is organisations,
goals, customer satisfaction, retail marketing mix and its implementation.
A Vertical audit analyses firms performance in one specific area e.g. Customer service,
Merchandise assortment interior display etc.
Whereas Vertical audit concentrates in one area Horizontal audit undertakes evaluation of
functioning performance of entire retail operation. The purpose of such audit is to find out
limitations in functioning of retail operations and suggests necessary remedies for its improved
performance.
Retail audit provides gather information on a brands sales volume, sales trends, stock level
effectiveness of in-store display and promotion efforts and other associated aspects.
Retail audit also called store audit. The measurement of products sales in a store for a time. It
verifies movement of a product. What factors influence movement of a product, like price,
advertisement, the salesman, visual display etc. Retail Audit helps to evaluate existing marketing
programme. If the present marketing tactics are not yielding results, it guides new strategies.
Notes on Marketing # 13. Marketing Ethics:
Marketing ethics goes beyond legal issues though the distinction between ethical and legal issues
often gets ignored in decision making. Ethics are standards of moral conduct. To act in an ethical
fashion is to conform to an accepted standard of moral behaviour.
It is easy to be ethical when no hardship is involved—when a person is winning and life is going
well. The test comes when things are not going well —when pressures build. These pressures arise
in all walks of life, and marketing is no exception.
Marketing executives face the challenge of balancing their own best interests in the form of
recognition, pay and promotion, with the best interests of consumers, their organisations, and
society into a workable guide for their daily activities. In any situation they must be able to
distinguish what is ethical from what is unethical and act accordingly, regardless of the possible
consequences.
An ethical issue in marketing arises whenever consumers feel manipulated or cheated.
Main ethical issues in marketing are given below:
(i) Product issues – Failure to disclose risks associated with the product, use of inferior materials
or components to reduce costs.
(ii) Price issues – Price fixing, predatory pricing failure to disclose the full price associated with a
product.
(iii) Promotion issues – False and misleading advertising, deceptive or manipulative sales
promotion, use of bribery in personal selling.
(iv) Distribution issues – Manipulating suppliers to distributors, coercing middle men.
Methods to Create Ethical Relationships in Marketing:
(i) Listen and learn – Recognize the problems that confront your company, team or unit. Do not
argue, criticize or defend yourselves, keep listening and reviewing until you are sure that you
understand others.
(ii) Identify the ethical issues – Examine how the co-workers and consumers are affected by the
situation or decision at hand. Examine how you feel about the situation and understand the view
point of those who are involved in the decision or the consequences of the decision.
(iii) Create and analyze options – Try to put aside strong feelings.
Marketing is Highly Influential in Nature:
If used unwisely, it can have harmful implications like:
(i) Marketers can take undue advantage of vulnerable groups such as children. They can take
advantage of impulsive or less sophisticated buyers specially the elderly by hiding the information
or by making false promises.
(ii) They can sell outdated or useless products to inner-city rural people due to lack of knowledge.
(iii) They can promote potentially harmful products, e.g., Baby food products are generally
accused of adding sugar in the powder since they know that generally mothers are used to tasting
the food although it is not necessary for the baby.
(iv) Invasion of privacy-Almost every time a consumer orders a product by mail or telephone, his
name, address and telephone number is added to the company’s database. This information is
generally used for further sale and can also be sold to other companies.
(v) Irritation-Direct marketing or tele-marketing generally irritates people who are not interested
in the product.
Thus a marketer must take care of all of the above problems arising out of his deeds and should
act ethically.
Notes on Marketing # 14. International Marketing Channels:
International marketing channels, also called world market penetration policies, could be defined
as those different company structures that perform or facilitate, totally or partially, the
undertakings implied by the internationalization of a company.
A company internationalization implies a gradual and constant assumption of commitments of
different kinds (financial, human, productive, among others), which allows a progressive
connection with external markets, and which promotes the generation of commercial agreements
in the medium and long term. The concept of internationalization can be thought of from the
exporting as well as from the importing operation point of view.
Selection of International Marketing Channels:
A small and medium-sized organization entrepreneur who wants to have access to international
markets with his or her product has to know that there is not only one standardized way to gain
access. There are different factors that should be assessed in order to enter a product in the global
markets, which will directly affect the selection of the access channel.
Among the most important there are:
i. Kind of product commercialized in the internal market (differentiated or undifferentiated
product, industrial or for ultimate consumers, etc.).
ii. Market knowledge degree the company that wants to have access to the world market possesses
(in some cases, it is even unknown which the most convenient market for a product is).
iii. Level of knowledge of the different aspects of international marketing- export operations,
management of international commercial documents and means of payment, insurance and
carriage hiring, and detection of business opportunities.
iv. Competitive environment features of the destination market. That is, how concentrated
competition is, what the number of competitors is, and what their distribution participation in the
market is.
v. The existence of strong tariff (taxation on imports) or paratariff barriers (quota for imports;
bureaucratic, customs, packing, commercial documentation and quality regulations), that hinder
access to the market through exportation.
vi. Market size and its features- Market size, as well as its cultural, political and economic features
that make it different from the market of origin, will have to be analyzed.
vii. The degree of risk (closely related to the levels of income yield capacity that each operation
may render) the company is willing to accept in internationalization. There are channels like
direct investment or product manufacturing in the destination market, which carry a higher risk
for the operator that enters international markets. However, other channels such as trading
companies that buy the product directly to the manufacturer in order to export it later at their
own risk, represent less risk for entrepreneurs.
viii. Number of resources (financial, human, productive, etc.) that the company devotes to
international activity.
ix. Degree of control that the organization wants to keep over the international marketing process.
x. Internationalization stage of the company.
Notes on Marketing # 15. Virtual Marketing:
The World-Net and Electronic Marketing:
The development of new digital or virtual channels gives rise to new business models called
“virtual businesses”. One of main qualities of the Internet is the hypertext. It allows to move from
one datum to another in non-synchronic jumps, simultaneously and multimedially, generating a
great variety of text, image, and sound links in a server-client relationship.
Virtual marketing is based on the structure developed by Internet an information highway.
Internet is part of the www (World Wide Web), which expands as a world-net, linking every sector
of the planet through information highways.
Electronic trade, in the strict sense, can be assimilated to the business and information exchange
developed through the net, but, in a wider sense, it includes other ways of electronic marketing
(automatic teller machines, electronic machines, etc.) so, it originated before Internet trade.
The European Union includes those transactions and businesses in which information or
communication technologies are used in electronic trade. The following words, related to the
Internet commercial channels, are going to be considered as synonyms in order to simplify
criteria for the development of this topic- electronic trade, e-commerce, virtual marketing, and
digital marketing.
Main Features of Electronic Marketing:
Electronic trade is based on the development of websites and webpages that can be visited by any
potential consumer of the global market, and on the management of electronic trade or e-mail (in
the last case, a more limited electronic trade).
Electronic trade implies, among other issues:
i. The existence of adequate hardware (PC, modems, etc.), that is, the physical infrastructure to
develop the virtual platform.
ii. Advanced Controllable Variables of the Commercial Mix 277
iii. Software adequate to develop the different virtual processes efficiently (treatment of graphs,
data filing, etc.).
iv. Virtual space where the page will be located. This means hiring the services of an Internet
provider (ISP or Internet Service Provider). Those services may be varied and include- page
design, surfing service, technical support and maintenance, site content updating. This may vary
according to the space granted to the page, number of mail boxes in use, maximum amount of
monthly data to update the site, hours of surfing, speed connection, among other variables.
v. Virtual commercial approach complementation with real complementing service such as
distribution and personal handing of the acquired products.
Notes on Marketing # 16. Marketing Information System:
Marketing information system usually abbreviated as MkIS, is the major tool used by marketing
management for problems solving and decision-making. The concept of marketing information
system can be understood easily by earlier examination of three separate words: marketing,
information and system. Marketing information includes all the facts, estimates and opinions etc.
That affect the quality of decisions for firm’s survival and growth. Marketing information system
is an interacting, continuing, future-oriented structure of people, equipment and procedures
designed to generate and process an information flow to aid managerial decision-making in a
company’s marketing programme.
According to Philip Kotler, “A marketing information system is a continuing and interacting
structure of people, equipment and procedures designed to gather, sort, analyse, evaluate and
distribute pertinent, timely and accurate information for use by marketing decision makers to
improve their marketing planning, execution and control”.
Marketing information system is a systematised method for providing information flow on a
regular basis – the right information, for the people, at the right time. MkIS is a very broad term.
Even it includes such diverse elements such as weather reports and forecasts which may affect the
agricultural commodity prices.
After the problem definition, the marketing information are collected through internal or external
sources. The collected data are carefully interpreted and used. Finding the conclusive truth from
data analysis highly depends on the dynamic thinking capacity and creative, logical mind of the
marketer.
After data interpretation, the marketing information must be communicated and disseminated to
the ready parties. Effective management not only makes systematic analysis but also
dissemination of that at different organisational levels should also be cared. The decision making
authority must communicate his opinion to the man of action’, so that ‘doing and thinking man’
can be combined.
A MkIS, to some extent, resembles a military or diplomatic intelligence operation. It gathers,
processes and stores potentially useful information that currently, exists in inside or outside the
company. However, in MkIS we could not suggest the industrial espionage or hiring the
competitors’ personnel to say their secrets.
Frequently they are valueless or counter-productive. Moreover, the information a company needs
is usually available by socially acceptable means, if the firm will just establish a reasonably simple
marketing information system.
Notes on Marketing # 17. Market Research:
The term market research encompasses a number of activities that are designed to connect
marketers to consumers through information gathering and evaluation. Market research provides
businesses with information about their customers, their competitors, and their overall industry.
It is commonly used to identify marketing problems and opportunities, as well as to develop and
evaluate the effectiveness of marketing strategies. Small business owners, because of their usually
limited financial resources, have a particular need for adequate, accurate, and current
information to aid them in making decisions.
Market research can help entrepreneurs evaluate the feasibility of a start-up venture before
investing a great deal of time and capital, For example- as well as assist them in effectively
marketing their goods and services.
Employing such marketing strategies as market segmentation and product differentiation would
be nearly impossible without first conducting market research. Market research is often needed to
ensure that we produce what customers really want and not what we think they want.
Market research refers to organized use of sample surveys, polls, focus groups, and other
techniques to study market characteristics (e.g., ages and incomes of consumers; consumer
attitudes) and improve the efficiency of sales and distribution.
Development of new products, opening of new markets, measurement of advertising
effectiveness, and knowledge of business competitors are among its basic aims. Developed in the
United States in the early 20th cent., the field expanded rapidly after World War II, spreading to
Europe and Japan.
Market Research is the collection and analysis of information about consumers, competitors and
the effectiveness of marketing programs. Small business owners use market research to
determine the feasibility of a new business, test interest in new products or services, improve
aspects of their businesses, such as customer service or distribution channels, and develop
competitive strategies.
In other words, market research allows businesses to make decisions that make them more
responsive to customers’ needs and increase profits. While market research is crucial for business
startup, it’s also essential for established businesses. It’s accurate information about customers
and competitors that allows the development of a successful marketing plan.
While it’s common for businesses to hire market research companies to conduct market research
for them, it is possible for small business owners to do their own. For an explanation of the basics
of market research and tips on designing your own market research surveys and questionnaires.
Scientific discovery methods applied to marketing decision making is known as market research.
Market Research is a systematic, objective collection and analysis of data about a particular target
market, competition, and/or environment. It always incorporates some form of data collection
whether it be secondary research (often referred to as desk research) or primary research which is
collected direct from a respondent.
The purpose of any market research project is to achieve an increased understanding of the
subject matter. With markets throughout the world becoming increasingly more competitive,
market research is now on the agenda of many organisations, whether they be large or small.
Market Research is broader in scope and examines all aspects of a business environment. It asks
questions about competitors, market structure, government regulations, economic trends,
technological advances, and numerous other factors that make up the business environment.
Sometimes the term refers more particularly to the financial analysis of companies, industries, or
sectors. In this case, financial analysts usually carry out the research and provide the results to
investment advisors and potential investors.
Study of the requirements of specific markets, the acceptability of products, and methods of
developing and exploiting new markets. Various strategies are used for market research- past
sales may be projected forward; surveys may be made of consumer attitudes and product
preferences; and new or altered products may be introduced experimentally into designated testmarket areas.
Formal market research dates back to the 1920s in Germany and the 1930s in Sweden and
France. After World War II, U.S. firms led in the use and refinement of market-research
techniques, which spread throughout much of Western Europe and Japan.
Gathering, analyzing, and interpreting data concerning market conditions are known as Market
Research.
Example- Market research typically includes a detailed data collection phase, whereas market
analysis focuses principally on interpreting data that have already been collected.
Although market research can be costly, it is often even more costly to make erroneous decisions
based upon bad or inadequate information. In fact, an average business spends between 25 and
50 percent of its annual marketing budget on research activities. Conducting large-scale market
research in-house is not possible for many small businesses, since it requires a comprehensive
understanding of the problem to be addressed, the market, and the application of research
procedures.
But there is a great deal of helpful information available to entrepreneurs who know where to
look, and there are many consultants, advertising firms, and market research specialists who offer
their services to small businesses for a fee.
The information gathered through market research can be divided into two main categories- The
first category- primary information- generally does not exist in a coherent form before the
marketer gathers it in response to a particular question or problem. The most common methods
of gathering primary market research information are through direct mail, telemarketing, and
personal interviews.
The other category-secondary information-has already been compiled and organized by a source
other than the marketer. Rather than looking at a specific marketing problem faced by an
individual company, secondary information generally tracks trends within a market, an industry,
a demographic group, or a geographic region.
A great deal of valuable secondary information is available to small business owners at little or no
cost. Some possible sources of secondary market research information include government
reports, trade association records, newspaper and magazine surveys, university-sponsored
research, local chamber of commerce records, on-line services, and competitors’ annual reports.
Market research can provide small business owners with the information they need to answer a
wide range of questions, including: Who are my customers? Where are they located? How much
and how often will they buy? And what product attributes.do they prefer? Given the importance of
market research – and its potential cost- experts recommend that businesses follow a step-bystep approach in order to gain the most benefits from their research activities.
The first step in the market research process is to define the marketing problem to be addressed.
Next, a marketer should determine what information is needed to solve the problem, as well as
what sources should be used to acquire the information.
Many businesses make a preliminary investigation at this early stage in order to give their
definition of the problem more focus and to develop tentative answers that can be tested during
the next stage of the process. The third step involves planning the research.
This step includes selecting the techniques to be used for gathering data and deciding on an
appropriate group, or sample, to be included in the research. Fourth, a marketer actually gathers
the necessary data.
The fifth step involves analyzing and interpreting the information that has been gathered. Finally,
the marketer reaches a conclusion about the marketing problem and translates the findings into
changes in the firm’s overall marketing strategy.
There are three general types of market research suppliers that can assist small businesses with
one or more steps in the above process. Some firms specialize in conducting overall market
research that they release to a variety of clients for a fee.
This type of firm includes syndicated services such as A.C. Nielsen and Company, which provides
viewership ratings for national television programs. There are also custom market research firms
that handle all aspects of the process, from defining the marketing problem and designing
research techniques to evaluating results and formulating new marketing strategies.
In contrast, smaller, specialty line suppliers usually concentrate on one aspect of the process.
Marketers who wish to secure the services of a market research firm usually obtain bids from a
number of suppliers. The following sections provide more information about the various types of
market research that such suppliers perform.
The purpose of market research is to gather facts about markets and the forces operating therein.
The areas of market research broadly include:
i. Study of the market size/potential
ii. Study of the market profile
iii. Market share analysis
iv. Study of market segments
v. Market trends
vi. Sales forecasting
vii. Study of seasonal trends.
Notes on Marketing # 18. Advertising Research:
Advertising research is a prerequisite for developing advertisement as well as assessment of
effectiveness of the advertisement. It is necessary to understand thoroughly the product profile in
terms of its physical properties and composition to enable to develop a meaningful and factual
copy.
The organizational profile needs to be understood clearly for linking the product with the
organization and its brand. It is a must to conduct buyer behavior survey to know the perceptions
of the viewers and the potential response. The advertisement pre-testing results also need to be
analyzed and used for modifying the copy and presentation style.
The media effectiveness may be studied for any advertisement by conducting the viewership
survey, media vehicle response, and advertisement scheduling results, frequency and reach
assessment and the impact of the previous advertisement. The effectiveness of any advertisement
can be measured at two different levels – pre-insertion and post-insertion of the advertisement in
the media.
The concept of the advertisement can be measured in a pre-testing campaign, by viewing or
presenting to sample viewers and getting free association of the consumers and merchants while
developing the same. The specific and non-specific themes may be tested with specially identified
viewers. The reach and status of the media is to be assessed before insertion of the advertisement.
The copy research can be assessed using the following approaches:
i. Consumer jury.
ii. Matched samples.
iii. Portfolio test or message recall efficiency.
iv. Storyboard test or image retention through video clipping.
v. Other mechanical devices.
The assessment of the effectiveness of the advertisement in the post-insertion stage needs to be
done on the basis of audience exposure, attitude and change in attitude and turnover effect in
terms of sales volume. The controlled field experiments may also be conducted to assess the
attention on the advertisement, comprehensiveness of the message, technical execution of the
advertisement and the overall impact.
Effectiveness in Advertising:
Print advertising typically tends to work more slowly than television or radio. Therefore, an
especially long period of time (or an especially heavy media schedule) is required to fully evaluate
the total effects of print advertising. Advertising for new products is more effective than
advertising for established products. It’s easier to create effective advertising for new products, in
other words, than it is for established products.
The inherent ‘news value’ of new products is the principal reason new product advertising is more
effective. Given the greater effectiveness of new product advertising, one of the most common
marketing mistakes is failure to take advantage of this inherent advantage (i.e., to underspend on
introductory advertising for new products).
The persistently high advertising failure rate results primarily from lack of an accurate feedback
mechanism, a lack of testing and evaluation. If an agency doesn’t know when its advertising is bad
or why it is bad, how can the agency possibly improve its advertising? Marketing research can
provide this feedback, but it is too expensive for the typical advertisement or commercial.
The degree of sales effectiveness can vary greatly from one commercial to the next. One
commercial might be several times more effective than another. This indicates that the quality of
advertising tends to be more important than the quantity of advertising. Nevertheless, the
quantity of advertising (i.e., the media weight) must achieve a threshold level for the advertising
to have any positive effects.
Limited telephone tracking research (and this can be done with small budgets) can monitor the
cumulative effects of advertising upon awareness, brand image, and consumer attitudes, and is
one of the simplest and most effective ways to make sure that your advertising is doing its job.
Message recall is a positive factor, but its importance should not be overstated.
Brand registration, however, is always important (as opposed to message/element recall). If
consumers don’t remember the brand name, the effectiveness of the advertising is
correspondingly reduced. Failure to register the brand name is one of the most common
weaknesses of the commercials. When next you review your advertising, just make sure that the
brand name is clearly stated and clearly shown in the commercial.
Advertising effectiveness cannot be determined by any one measure, such as persuasion or recall.
Recall is a good measure for some commercials, but not for others. Persuasion scores don’t work
very well for brands with high market shares, and cannot be relied upon for brands in poorly
defined product categories. Purchase intent works reasonably well for new products, but poorly
for established products.
A large number of important variables must be examined to judge the potential effectiveness of
advertising. The commercials on AM/FM radio can be as effective, or more effective, than
television commercials on the basis of sales return per dollar of media. Typically, production
budgets of commercials for radio are much less than television and radio commercials are rarely
submitted to the rigors of marketing research evaluation.
Notes on Marketing # 19. Integrated Marketing Communication (IMC):
As per American Association of Advertising Agencies, Integrated Marketing Communication
(IMC), is a concept of marketing communication planning that recognises the added value of &
comprehensive plan that evaluates the strategic roles of a variety of communication disciplines
(advertising, sales promotion, public relation, personal selling and publicity etc.) and combines
the disciplines to produce clarity, consistency and maximum communication impact.
The purpose of IMC is to unify the company’s brand images and messages and communicate a
common theme and positioning. AMC helps the company to build a strong brand identity in the
market-place.
All kinds of promotion play the role of communication channels between the marketer (the source
and the sender of message) and the consumer (the receiver of the message). Promotion as an
element of marketing-mix has three broad objectives- (a) information, (b) persuasion, and (c)
reminding. The overall objective of promotion is, of course, influencing the buyer behaviour and
his pre-dispositions (needs, attitudes, goals, beliefs, values, and preferences).
The promotion-mix elements have a definite role in all stages of the selling process. Publicity is
more effective in the awareness stage. Advertising gradually becomes less and less effective over a
time-span. Hence, reminder advertisement it necessary.
Personal selling becomes more and more effective as interpersonal interaction assumes
increasing importance. Closing of sales needs not only personal selling but also sales promotion
tools at the point of purchase, in order to provide additional incentives for buyer’s action.
All these tools have one common objective i.e., communicating a message to the customer. For
communication to be effective, the receiver has to understand the contents of the message. The
message is based on unique features of the product, features that are appealing to the consumers,
comparison of brands, competition, and the position of the product in the minds of the customer.
Very often, companies make use of different promotion media and methods to pass on the
message about products and services to consumers. Lack of clarity and consistency in the message
from different sources may lead to confusion in the mind of the target audience. To avoid such a
problem, companies are now following the concept of IMC. IMC involves coordination and
integration of all marketing communication tools and resources within a company that minimises
the impact on target consumers.
The participants in IMC process include the company (the advertiser), Advertising agency, Media
organisations and communication specialist. Example- Companies such as Xerox, IBM, and
Motorola have initiated IMC by bringing together people from advertising, personal selling,
public relations and publicity to ensure consistency and uniformity in the messages about product
and services.
IMC is based on master marketing plan. The marketing plan makes effective use of marketingmix including promotion efforts. Promotion is a form of communication with an additional
element of persuasion. Marketing communication may be distorted particularly when a message
passes through a number of channels and may lead to confusion in the mind of the consumers.
Therefore, there is a need for co-ordination and integration of all communication tools and
resources to maximise the impact on consumers in a cost effective manner.
Notes on Marketing # 20. Rural Marketing:
Rural markets in India are fascinating and challenging. They offer a large scope on account of
their sheer size and demand base. However, they pose many complex problems like poor
communication and distribution facilities, low literacy level, thinly populated and scattered
markets, poor standard of living and socio-economic and cultural backwardness.
Rural marketing problems arise out of peculiar dynamics of the rural markets in India.
Uniqueness of the rural consumer, uniqueness of the structure of the rural markets and the
peculiarities of the distributional infrastructure in rural areas are some of the pertinent issues to
be dealt with.
Practically, in every aspect of marketing, rural markets pose certain special
problems, but the following points are found to be important from the Marketing
Management point of view:
i. Distribution logistics, storage, transport and handling;
ii. Location and degree of concentration of demands;
iii. Dealers’ attitude and motivation;
iv. Consumer motivation and buying habits;
v. Mass communication media, their reach and influence; and
vi. Organisational alternatives.
For any marketer to cover the 5.76 lakh villages is a formidable as well as a mysterious task. There
are many villages which are not connected by rail or road. Rural markets bristle with many variety
of problems and for a successful footing, a marketer has to grasp these problems and provide
innovative solutions to them.
“The Rural Society is urbanising gradually with the increase in literacy rates and exposure to
global trends”.
The given statement is in line with the current marketing scenario because of the
following various reasons:
(i) Marketers are realising the importance of rural marketing. They consider rural areas as
untapped and new markets with lots of opportunities. Thus they themselves advertise their
products in the villages making people aware about the global trends.
(ii) Due to land acquisition policies of development authorities, villagers are getting richer day by
day. Thus villagers are also now looking for comfort and luxury.
(iii) Because of infrastructure development, government reforms in education sector and
availability of funds, more and more children of rural areas are coming to the Metros for getting
an education.
When these children get exposed to global trends and technological advancements, they educate
their parents, neighbourhoods and other people in rural areas thereby making them aware of the
urban lifestyle.
Notes on Marketing # 21. Advertising:
As the marketing environment, advertising also works in an environment that may be understood
by studying the conditions under which it functions.
The environmental factors affecting advertising are given below:
i. Social and cultural factors,
ii. Market competition related factors,
iii. Legal factor, and
iv. Economic factors related to business and consumer.
These factors nurture advertising and as well as other related functions like marketing. The
environment helps planners to asses the extent of the investment needed and to accordingly
decide the advertising strategies. Environmental conditions provide a base for formulating the
advertising policy and to provide magnitude and direction. The contemporary advertising system
is an example of a “free enterprise” environment.
The socio-cultural environment comprises of shared beliefs, social values, customs, life styles,
ethics and community behavior. These components play a major role in shaping the behavior of
consumer. Thus advertising should keep to the social cultural standards and if failing to do so, the
consumer should resolve not to buy the advertised product.
A competitive environment provides more options to influence the consumer. Hence, to plan
strategies for effective advertising, there is a need to look into the product policies, distribution
approaches, pricing mechanism and promotional strategies with reference to competitive
products and their sustainability in the market. The legal environment consists of enforced
regulation under which advertising has to be developed and exposed.
Business fluctuations, the broad economic framework for establishing business at the embryonic
stage, prospects and political stability form the economic environment for developing advertising
plans. Thus, it is difficult for any advertiser to ignore these factors while planning advertising
within the given economy of the country or region.
There are many other factors which have stake in the advertising environment and play a
significant role in determining policies for effective advertising as a communication and
marketing tool.
These factors are:
i. Technology development,
ii. Growth in per capita income,
iii. Increase in disposable income,
iv. Higher purchasing power of consumer,
v. Growth of popular consumer clusters,
vi. Development of infrastructure,
vii. Increase in education standards of consumer,
viii. Specialization in advertising techniques,
ix. Use of research and development results,
x. Growth of brands and variety of trade,
xi. Growth of service sector, and
xii. Growth in marketing finance.
The scope of the advertising is very wide and leads to an integrated impact on the planning
process.
The Advertising Process:
Advertising is closely associated with marketing variables. Hence, the process of advertising
depends largely on the market environment. The marketing plans enables the advertiser to set
objectives, the advertising budget and the time plan for scheduling the advertisement. In an
advertising process the important determinants are communication strategy and media strategy.
The strategy for communication includes the type of message to be released, its length, contents,
audience interest, product characteristics and frequency of message dissemination. The message
tactics also need to be developed in accordance with the media and media watchers. An
appropriate media strategy is selected by analyzing media responses carefully. On selection of
appropriate media, an operational plan putting the advertisements through needs to be
developed.
The whole advertising process results in the exposure of the advertising product as an output that
needs to be evaluated for its effectiveness in a given marketing situation. The media consultants,
media representatives, and advertising agencies form the organizational structure and within its
frame the process of advertising is made functional. The response analysis of advertisement
shows mixed impacts.
Sometimes the advertisements receive a very positive response from consumer, augmenting the
market for the product, while at the same time negative responses also distort the product
market. Such cases need to be subjected to research on the improved communication styles and
the media vehicle in order to recharge the advertising planning process with new inputs.
Advertising Categories:
Advertising is a creative task and varies according to the need and taste of the target group. It can
be categorized into audiences, types of advertiser, mass media and functions. There are three sets
of audience in advertising-business, professionals and consumers. The business-to-business
advertising is directed towards processors, wholesalers and professionals.
An advertisement carrying a message for raw materials, business machines or services to the
manufacturing units are categorically of a business-to-business nature and can be termed as
industrial advertising. Similarly when an advertisement is directed towards a group of
professional like engineers, doctors, it is called professional advertising.
The advertising audience may also be categorized as a mass or a class. An example of advertising
for biscuits may be planned for the mass audience while a rich processed and canned food may be
directed towards high-class audience.
The volume of the business of a company and the geographical coverage of the product would be
another consideration for classifying advertising strategies. The countrywide coverage of a
product such as automobiles, television sets, refrigerators and the like is called general
advertising.
Advertising for a product limited to regional markets for local consumption is defined as local
advertising. Advertising can be also classified with reference to the medium used to deliver the
message like national TV network, cable TV network, radio, newspaper and magazines of national
and regional status.
The functional classification of advertising is of an illustrative and symbolic nature.
The advertising classification according to functions is given under:
i. Product advertising,
ii. Non-product or institutional advertising,
iii. Primary advertising,
iv. Selective advertising,
v. Direct action advertising, and
vi. Indirect action advertising.
Product advertising emphasizes the characteristics of the product and other related issues while
the institutional image is build up by non-product advertising. The brand of the company, its
public relation aspects and regulations is based on the theme of the advertising in this category.
For example, we have the Tata Steel Company which prefers institutional advertising,
highlighting the biographical excerpts of the founder veteran or emphasizing the development
nurtured by the company in rural housing, education, health and sports. Such advertising
mentions the product of company as a secondary message.
Primary advertising attempts to promote a market for indigenous products which are largely
unbranded while selective advertising is done for the products that are branded or that fall in line
with related brands. Selective advertisement is used by individual companies to stimulate a
market for their products after the demand has been established.
Direct action advertising generates instant demand for the product and is found to be an effective
stimuli for short-run sale campaigns. The art of abstract communication is called indirect
advertising which does not seek immediate attention of the mass audience. However, this type of
advertising is appreciated by the class audience to some extent.
Notes on Marketing # 22. Service Marketing Mix:
The services marketing-mix consists of eight elements which are essential in the functioning of
services. These elements are product, price, place, promotion, people, pace, process and physical
evidence. In the mix each element is governed by various attributes. The product in reference to
services may be defined as the package of services offered to the users.
The length and width of services define the product line and the life cycle of services. The price
component of the services marketing-mix includes various pricing approaches and the extent of
customization. The services are delivered in retail and on centralized basis directly to the
customers either directly by the agency or by the franchisees.
The promotion of the services include communication and advertising approaches, direct
marketing, public relations and personalized approaches. The participants for the services are
internal and external customers, vendors of the services and animators. The services need to be
evaluated periodically and improved accordingly.
The competitive strategies, brand positioning approaches, technological intervention, etc., will
drive the company to sustain in the market and pace through competition in the services market.
The services are delivered after the core and supporting processes and the documentation. The
service providing companies may also work out the risk chart in delivery of services to meet the
inadvertent situations to provide the clear status of delivery and intactness of the services to the
customers.
It is important to understand the Service Life Cycle (SLC) as it provides insights on the
competitive dynamics of the service being marketed. The SLC also exhibits the distinct stages in
the sales history of a service. The SLC comprises four stages known as introduction, growth,
maturity and decline. In the stage of introduction of the service in the segmented market the
profit remains almost non-existent and service sales also remain slow.
However, the expenditure in pushing the service into the market is found heavy for the marketing
firm. The service passes into the next stage of SLC – growth, with improved sales and profit
conditions, observing the rapid acceptance of the service in the market. The service remains in the
growth stage till the competition increases and pulls back the sales of the existing service.
At this juncture the service moves into the stage of maturity where it faces setback on the volume
of sales but succeeds in sustaining the profit level. While passing into the stage of decline the
service faces downward trend in both the volume of sales and profit.
Hypothetically, all the services in the market moves through these stages of life cycle but there
could be some exceptions always. Some of the services get out of the market in the stage of
introduction itself while few are thrown out of competition at the growth stage. At the stage of
maturity the strategy for service diversification begins and some services fall out of the main
stream of the service categories in the market.
Thus, the marketer should develop sustainable marketing strategies to survive his services at each
stage of the SLC. The service requires high promotion at the time of introduction but the price of
the service should be kept low as compared to its competing brands. Such strategy is known as
high penetration strategy.
Once the brand becomes popular in the market, the expenditure on the promotion may be
reduced and the service can be pulled to high price-low promotion bracket following the low
skimming strategy.
A marketer has to make more crucial decisions at the growth stage of the service.
The major strategies to be drawn at this stage to provide adequate support to the
service in the market are as under:
i. Rationalizing the service line and width.
ii. Innovative promotional approaches.
iii. Identifying new market segments.
iv. Evolving comprehensive distribution policy.
v. Changing the strategy of service awareness advertising to the service preference advertising and
launching advertising campaigns accordingly.
It is essential at this stage of SLC to rationalize the service portfolio in the company and develop
strategies to promote only such categories of service, which had gained considerable response
from the consumers. Such service categories need to be promoted through innovative promotion
approaches and giving more emphasis on the service preference based advertisements and
advertising campaigns. However, the possibilities of exploring new market segments and
comprehensive coverage of distribution need also to be worked out in the same stage of SLC.
The stage of maturity is the sustainable stage in the SLC. As there will not be encouraging growth
in the profit through the service marketing, there exists enormous scope for developing the
business relationships and renovating the service attributes. At the last stage of SLC, i.e., stage of
decline, the strategies are built to re-launch the service in the same or new market segments. The
more important need at this stage of SLC is to sustain the brand image and to the extent possible
rebuild the same through service and institutional advertising.
Notes on Marketing # 23. Retailing:
The word retailing has its origins in the French verb retaillier, which means to cut a piece or to
break a bulk. This refers to one of the fundamental retailing activities- to buy in larger quantities
and sell in smaller quantities. For example, a convenience store would buy dozens of boxes of
soaps but would sell in single units. However, a retailer is not the only type of business entity to
“break bulk.” Wholesalers also buy in larger quantities and sell to their customers in smaller
quantities.
Hence, it is basically the type of customer that actually distinguishes a retailer from other
distributive traders and not the activity. The distinction here is that a retailer sells to final
consumers, unlike a wholesaler who sells to a retailer or other business organizations. Thus, the
definition of a retailer is “any establishment that is engaged in selling merchandise for personal or
household consumption and rendering services incidental to the sale of such goods.”
The retailing business we see today is not the same as it was in the past. It has gone through the
several stages of evolution in the way retailing is done. Retail business is still undergoing a rapid
transformation in its marketing practices. Until a few years ago, we bought most items of daily
use from small shops in our neighborhood (mom-and-pop store) or a market close by.
These shops such as Kirana stores or general stores or clothing and apparel shops are owned by
individuals, who usually run the shop themselves and sell their goods with the help of a few
assistants. Gradually, the department stores came into being due to the growing sophistication of
this sector. This was the beginning of the organized sector. In the last few years, however, the
concept of large departmental stores and shopping malls changed the face of retailing.
Today, the traditional formats like grocers, hawkers, and other mom- and-pop stores coexist with
modern formats like departmental stores, supermarkets, hypermarkets, shopping malls, and nonstore retailing units such as teleshopping and multilevel marketing.
On the other hand, with the advancement of information technology (IT) and communication,
electronic retailing, which is also called as e-retailing or e-tailing, is a burgeoning phenomenon
and has drastically changed the way the business of retailing is done. The growth of e-commerce
has radically changed the way world does business in every conceivable aspect.
Today, the consumers can buy the products online from their electronic devices such as
computers and laptops from the virtual marketplace from anywhere and at any time. The
products are displayed on the shopping portal of the e-retailer and payments can be made
through online payment systems like e-banking or by payment in cash on delivery (COD) of the
merchandise at the place where the delivery is required.
In addition, there exist many businesses that carry out retailing activity and are not in themselves
classified as retailers. For example, a factory may engage in retailing activity by selling its
products in their own shop located in their manufacturing premises. The term “retailing” applies
not only to the selling of tangible products, such as apparel, electronic goods, or pairs of shoes,
but also to the selling of services.
The consumption of the service offered coincides with the retailing activity itself. Companies that
provide food items, traveling services and aromatherapy sessions are all essentially retailers, as
they sell to the final consumer, and yet customers do not receive goods from these retailers in a
shopping bag.
Thus, this article will mainly focus on introduction to the business of retailing, its significance,
and the emergence of various formats in retailing. Hence, this article mainly deals with the
understanding of the concept of retail business and functions performed by a retailer.
It will also cover the analysis of retail sector industry in India and implications of the recent
foreign direct investment (FDI) policy in retail sector of India. We will also try to understand the
legal framework and provisions, regulatory environment, and strengths, weaknesses,
opportunities, and threats (SWOT) in the context of changing dynamics of Indian retail
landscape.
Notes on Marketing # 24. Strategic Marketing:
The strategic marketing delineates 3Rs emphasizing the right products for right growth markets
at right time. These issues are also highlighted in the marketing management but from a different
perspective. The resources of the firm are identified as uncontrollable variables of the marketing
mix in the process of marketing management while the strategic marketing systematically defines
all the variables and examines its necessary inputs to maximize the corporate performance.
Strategic marketing is a plan of all aspects of the strategy of an organization in the market place
unlike a simple marketing plan that deals with so-called marketing mix. Strategic marketing
differs from marketing management in many areas like orientation, core philosophy, approach,
and relationship of business organization with various environmental variables. One of the
prominent differences between the strategic marketing and marketing management is the
temporal framework.
The strategic marketing deals with long range planning and the decisions thereof would have
long-term implications. The inductive and intuitive attributes dominate the strategic marketing
process while marketing management is largely oriented towards analytical examination of the
associated marketing factors and its implementation.
The strategic marketing advocates the democratic decision-making process which is defined as
bottom-up approach while in the marketing management the flow of directions are from topdown to make decisions. In the strategic management process environment is considered as ever
changing and dynamic.
On the contrary the marketing management assumes that the environment is constant for
effective implementation. However, occasional changes are noted in the marketing management.
The continuous search of opportunities is one of the major focuses of strategic marketing and is
aimed to explore the opportunities for optimizing its business goals in the long run.
However, an ad-hoc search is conducted in the marketing management process to find new
opportunities. The marketing management has a narrow profit center approach while the
strategic marketing pursues broad objectives of achieving synergy between different components
of organization, both horizontally and vertically.
The strategic marketing activity requires high degree of creativity and originality in the approach.
The implementation, control and monitoring skills are preferred in the marketing management
activity unlike the strategic marketing. Strategic marketing needs a proactive perspective and the
marketing management requires the reactive perspectives for effective leadership.
A division of Cargill Corp. developed its strategic direction that would take it from a
commodity type business of egg production to a value-added, broader definition:
We will be a leading marketer of quality, value-added egg based food products serving primarily
the food service industry. We will be a least-cost producer and a leader in developing and
implementing innovative products and processes to meet the needs of an evolving marketplace.
The statement reflects a clear and pragmatic vision that moved the division away from its
orientation of just dealing with fresh egg production to one of going to the next step by preparing
and packaging ready-to-use egg-based products for all types of institutions. These statements are
no more word play.
Rather they have a practical application in creating a workable mental set whereby managers can
envision how a product line or business might expand over the next three to five years. In turn,
the statements help shape objectives, strategies, and a portfolio of products and markets.
If you view the basic product as railroad cars traveling on parallel tracks down a path, the result is
a shortsighted business condition that, in turn, confines products, services, and market
development on a narrow dimensions.
Redefined as a transportation company, however, the strategic vision includes transportation of
all types – air, water, space, and diverse forms of transportation still unknown. Since Railroads
Company owns land on either side of the tracks, a transportation viewpoint can conceivably
include laying underground pipe to transport food, fluids, chemicals, and power lines.
This type of expansive strategic thinking is not limited to the private sector of profit-making
corporations. It applies equally well to the public sector. Consider the March of Dimes Defect
Foundation, an organization that was originally dedicated to the cure of Polio. Fortunately, polio
is no longer a serious threat.
Does that situation mean that March of Dimes is out of business and can serve no useful
functions? Not at all. By redefining its mission or strategic direction as birth defects, the
organization is alive and well, using its skills and resources in a broader mandate to serve
societies needs.
Even companies with strong positions in the market place and with profitable businesses are
redefining mission statements to embrace the inevitable movement towards new technologies.
For example, consider GTE Directories Corp., the producer of the familiar telephone directories
known as Yellow Pages. Its basic business consists of selling advertising space, the volumes, and
distributing the directories.
At one point GTE defined its business purpose and developed the following mission:
A worldwide integrated and marketing corporation of directional hard copy and electronic
advertising media and informational services.
Does the mission specifically state that the company is the producer of the Yellow Pages? Not at
all. Does the statement include that product? Yes, by using the phrase “directional hard copy”, it
includes the product line of Yellow Pages.
Yet the clear implication is that the manager can think expansively of new products that may take
different forms. Now consider the phrase “electronic advertising media”. Taking into account the
evolving use of the Internet and the yet-to-be developed technology, GTE can link up to new
media that can augment its Yellow Pages or, in time, even displace it.
This portion of the mission permits managers at all levels of the company to open their minds to
new possibilities, while still remaining consistent with GTE’s basic business. Finally, the phrase
“information services” opens the window into expansion areas as developed countries move
increasingly towards service economies and information transfer, thus building “a worldwide
integrated publishing and marketing corporation”.
Yet, how far should thinking go towards a market-driven orientation? It is the best to initially
think as far toward that orientation as possible, and then come back to a more comfortable
position somewhere between the two extremes of a product-driven and a market-driven
orientation.
That position is usually based on the following factors:
i. The culture of the organization, with the broad range of behaviors exhibited as conservative to
aggressive.
ii. The availability of human, material, and financial resources for maintaining existing business
functions and for investing in future growth.
iii. The amount of risk that the management is willing to assume in going into debt.
iv. The degree of environmental change that is anticipated in market behavior.
v. The threat of competitive activities and their impact on survival and growth.
Even surrounded by these factors, think as expansively as possible. On the other hand, staying
rooted to a product-driven orientation ultimately bogs you down in mature and then declining
business. If you hold responsibility for company, business unit, or product line, then
responsibility for conceptualizing a mission or strategic direction begins with you-regardless of
level in the organization.
As such, you are no longer a victim of a narrow focus that ends up with mature products, price
wars, and other competitive conflicts. The broader market-driven viewpoint permits you to think
more expansively about business, market, and customer needs-not just products.
Notes on Marketing # 25. Demand Forecasting:
Marketing information system including marketing research, gives an insight into available
market opportunities. It is very essential for a company to understand the quantum of demand in
the market. The assessment of demand leads to plan the finances, manufacturing, purchases and
human resources.
Demand forecasting is a quantitative estimation of the demand of a product or service by
customers during some defined future period. The demand forecasting can be done either for the
industry or for a company or its individual products.
For example – Demand forecasting can be done for Soaps on the whole and then it can be done
for say, Hindustan Unilever Limited (HUL) and then it can be done for an individual brand say,
Lux.
Demand forecasting for a multinational corporation like Tata Group companies say Tata Motors
can also be done at global, country, region, state and district level. Again the forecasting will be
different for various products / services and its different brands and its variants.
Right from Jaguar, Land Rover (JLR) to Tata Motors’ commercial vehicles to passenger vehicles
will all form the complete picture. Thus, right from Tata Nanos to Tata Arias to Tata Trucks and
Buses to Jaguars and Land Rovers will complete the picture of Tata Motors.
Demand forecasting can be done either for short term, say a quarter or three to six months or it
can be done for medium term between one to three years or it can be done for a long period say
five to ten years. The duration also varies depending upon the nature of the business. Generally
core infrastructural sector’s time frame will be much longer than say a FMCG company.
Although the long term demand forecasting is very important from the business planning,
financial planning and manpower planning purposes, yet with the dynamic business environment
today, a company needs to keenly watch and plan for short term as well as medium term
requirements.
With volatility in the business environment today, coupled with technological and other changes;
a company needs to look out for short as well as medium term forecasting. In the short term, a
company may gain form planning for the right manufacturing schedule, right purchasing
schedule, right financial schedule and realistic sales targets.
Notes on Marketing # 26. Business Markets:
In Business market, the buying and selling takes place among businesses. According to Dwyer and
Tanner, ‘It include companies that consume products or services, government agencies (Local,
State and National), institutions (Schools, Hospitals, Nursing Homes, Churches, Charities) and
resellers.’
It is also known as industrial marketing or business to business (B2B) marketing or
Organisational Marketing.
Webster and Wind has defined organisational buying as the decision making process by which
formal organisations establish the need for purchased products and services and identify,
evaluate and choose among alternative brands and suppliers.
As far as size of the business market is concerned, ‘Business marketers serve the largest market of
all; the dollar volume of transactions in the industrial or business market significantly exceeds
that of the ultimate consumer market.’ For example, companies such as GE, DuPont and IBM
spend more than $60 million a day on purchases to support their operations.
Dwyer and Tanner has also stated that the purchases made by companies, government agencies
and institutions ‘account for more than half of the economic activity in industrialized countries
such as the United States, Canada and France.’
Although the business market is bigger than the consumer market, yet only consumer market is
seen and heard by you. It is because consumer market rely more on advertising and promotions
to reach to its millions of consumers. While, in business markets, the number of buyers and
sellers are quite small with respect to consumer market. For example – If you take into account
the tyre suppliers to an automobile company like Maruti Suzuki in India.
Then Maruti Suzuki will source five tyres (four for the car and one for the reserve stepney) for
every car, it manufactures. The sourcing of tyres can be done from any one of the six leading
manufacturers of tyres (Apollo, Bridgestone, Goodyear, JK, Ceat and MRF). On the whole, there
are just 16 leading car manufacturing companies (Hindustan Motors, Maruti Suzuki, Hyundai,
Chevrolet, Tata Motors, Ford, Skoda, Mahindra & Mahindra, Renault, Fiat, Volkswagen, Nissan,
Honda, Toyota, Mercedes and BMW) in India. The business market equation is 16 automobile
companies sourcing tyres from 6 tyre manufacturers.
In this respect, the market becomes quite small to be targeted easily on a company to company
basis. In turn, it also nullifies the need for advertising and promotions. That’s why business
market is not seen and heard, yet it generates more business than the consumer market. In the
same tyre market, all the tyre companies need to advertise and promote their product heavily for
the replacement market of the tyres, which is also called aftermarket.
Notes on Marketing # 27. Rural Marketing Mix:
a. Products:
The product’s attributes should match with the need and requirements of rural people. Some of
the products can be offered in the same way as to urban consumers, but smaller pack size, can
make the unit price affordable to common customers. Products for the rural markets will have to
simple and easy to use and maintenance. Product packaging need to be functional and capable of
dispensing smaller units of the products, for example, sachet packaging of Shampoo, coffee, tooth
paste etc. Brand identity may be created through the visual logos and pictures. Products should be
customized to suit the socio cultural and rural economic environment.
For example, Philips has come out with smokeless chulhas for rural market. There are
possibilities of solar powered electronic products due to frequent power cuts in rural areas.
Companies should sell high value brands not cheap brands. The urban buyers may look for low
price but they are brand conscious.
There are problems in transportation and warehousing in rural marketing due to poor
transportation network. These constraints can affect the maintenance and after sales services of a
company. The physical distribution costs in rural areas are higher as compared to urban areas. By
facilitating product delivery, companies can make direct contact with rural consumers. The
weekly rural market Haat is an effective distribution point firms can link with different villages
through its van.
b. Price:
The prices of products and services should be affordable by rural peoples as the average income
level is low as compare to urban people. Rural consumer is price sensitive. They can offer smaller
units or packs at a lower price. It does help to design specific products at specific price points for
the rural market. Firms may benefit by offering distinctive payment in terms for the rural market.
Some buyers need credit which can be extended till harvest time. Companies may go for common
pricing strategy for rural and urban market. There is a good scope for occasional pricing especially
at the time of marriage, festivals and harvest seasons.
c. Promotion:
The characteristics of rural segment are different as compare to urban segment, the literacy rate is
low, and the marketing communication should be in local idiom. The target audiences in rural
areas are fragmented location wise and media habits. Therefore media mix should the carefully
designed. Visual copy has a much greater appeal than just audio and print media, wall paintings,
posters and advertising at point of purchase like stickers and shelf display are effective tools of
promotion.
The radio is a well-established medium of communication in rural area. Audio Visual van is an
effective tool in rural promotion. It can easily cover the scattered rural population. There is need
for specialization in developing and delivering the message, the copy, language and the delivery
must be according to the rural context. The large scale communication programme in which team
of communicators meet rural audience in interactive sessions and also carry out demonstration
would be an effective technique.
Unique Selling Propositions should be adopted by the marketers which involve presenting a
theme with the product to attract the client to buy that particular product. For examples, some of
famous Indian Farm equipment manufacturers have coined catchy themes, which they display
along with the products, to attract the target client that is the farmers.
d. Sales Force Management:
Rural marketing involves more intensive personal selling efforts. Salesmen must be able to guide
dealers and consumers in the choice of products. They must be well-acquainted with the rural
cultural aspects it is better employ those people who feel happy in working in the village
environment. Scattered location of retail outlets is a constraint in rural marketing. Sale force
management in the rural context is indeed a difficult task it require high motivation and positive
attitude.
Notes on Marketing # 28. Brand Positioning:
Brand positioning is a marketing strategy which aims to make a brand occupy a distinct position,
relative to competing brand, in the mind of the customer. Once a brand is positioned, it is very
difficult to reposition it without destroying its credibility.
Brand positioning simply means target consumers’ reason to buy a particular brand in preference
to others. It is an activity of creating a brand in such a manner that it occupies a distinctive place
and value in the target customer’s mind.
It involves identifying and determining points of similarity and difference to ascertain the right
brand identity and to create a proper brand image. Kotler defines brand positioning as the act of
designing the company’s offering and image to occupy a distinctive place in the mind of the target
market.
In other words, brand positioning describes how a brand is different from its competitors and
where or how it sits in the minds of the customers. Hence a good brand positioning strategy
involves creating brand associations in customers’ minds to make them perceive the brand in a
specific way.
Brand Positioning ensures that all brand activity has a common aim, is guided, directed and
delivered by the brand’s benefits/reasons to buy.
BP must be able to answer the questions:
i. Is it unique/distinctive w.r.t., Competitors?
ii. Is it significant and encouraging to the niche market?
iii. Is it appropriate for the targeted geographic markets and businesses?
iv. Is it helpful to the organisation in achieving its financial goals?
v. Is it able to support and boost-up the organization in terms of sales?
vi. Is it sustainable? etc.
BP involves identifying and delivering points of similarity and difference to ^ ascertain the right
brand identity and to create a proper brand image.
Notes on Marketing # 29. Online Retailing:
Online retailing is going through a negative phase since the crash of most of the dot-com
companies in recent years. However, it is not the end of online retailing in India, simply because
net access and PC use is growing by leaps and bounds.
The e-commerce scenario has not been too bad in India. In retail banking, Indian banks have
been pretty successful in adapting the technology to provide customers with facilities like realtime account status, transfer of funds, bill payment and so on.
The future does look bright for online retailing in India and the areas expected to-grow include
financial services, travel, entertainment and groceries. For those considering opening a virtual
storefront, the forthcoming technology and agreements on standards will not only make setting
up web-sites easier, they will also safeguard them against payment fraud.
On the downside, some experts feel that it will be increasingly difficult for smaller sites and the
online version of mom and pop shops to attract customers. On the other hand, big stores and
larger organizations with established brand names and deep pockets may do well.
Retailing has been defined as business activity in selling goods and services to consumers for their
personal, family or household use. Although retailing has been around for millennia, the
twentieth century has witnessed a lot of change in the retail sector, especially in the developed
countries.
Indian retailing is undergoing a process of evolution and is poised to undergo dramatic
transformation. Today, more prospects are generated in e-business because of lower costs and
increase in revenue. The enhancement in productivity and a response to new customer and
competitive demands is also one of the reasons for e-commerce. E-business involves careful
planning, preparations, development, execution and refinement. E-business should complement
your traditional business strategy.
The success of the online retailing or e-tailing remains of five different rules that
are:
1. The product or service must be ideally suited to the existing market and to what people want,
need and are willing to pay for.
2. There must be a company-wide focus on marketing, sales and revenue generation.
3. Efficient internal system of book-keeping, accounting, inventory management and cost control
must exist.
4. There must be a clear sense of direction and a high level of synergy and teamwork among
managers and staff in organization.
5. The company should never stop learning, growing, innovating and improving.
The future does look bright for online retailing in India and the areas expected to grow include
financial services, travel, entertainment and groceries. For those considering opening a virtual
storefront, the forthcoming technology and agreement on standards will not only make setting up
web-sites easier, they will also safeguard them against payment fraud.
The recent development of sending e-greetings has helped customers get into the habit of using
the Internet. Another area of development is bill presentment and e-ticketing. Retail banking and
related services through the Internet are also being promoted and a good deal of transaction takes
place through the Net. Shopping robots on the Net help instant price comparisons to enable
customers make purchase decisions.
The key success factor for online retailing is efficient logistics to ensure that the right product is
delivered to the right customer at the right time. The supply chain network is triggered in an
automatic fashion, meeting promised delivery dates. There is good scope for promoting on-site
products merchandised and sold online.
The site itself can host links of products/services offered by other companies for a fee. There is a
lot of opportunity to create customer stickiness by constantly communicating with them through
e-mail. Personalized offerings can be made to individual customers based on individual’s
shopping characteristics.
The major pitfalls of e-tailing are as follows:
No Theatrical Ambience – The online retailing site does not have a theatrical ambience that can
be felt by the customer.
Intangible Merchandise – The customer cannot hold, smell, feel or try the product.
No emotional experience – There is no emotional shopping experience that the customer can get
in e-tailing as he would in a brick and mortar environment.
Security Issues – Customers online are relevant to part with their credit card details on the net,
fearing they may be misused.
Impersonal customer service – Indian customers are used to tangible personalized customer
service which online retailing cannot provide.
As in brick and mortar retailing, online retailing too has its thin challenges.
(i) Getting clicks which is equivalent to footfalls in physical store retailing.
(ii) Conversions into buying from among the clicks, which is equivalent to conversion from
footfalls.
The advantages of online retailing are as follows:
i. An opportunity to move from physical space to cyberspace.
ii. No location boundaries.
iii. Wider spectrum of customers.
iv. Non-geocentric buying habits of customers.
Online Store Front — Creating a Look and Feel – Every e-tailing site has a storefront with an
identifying, image and positioning. The online storefront has its signature identified with features
that trigger off browsing and persuade customers to buy its product offerings.
Visual Density – Online retailers use visual density very effectively to promote offerings and sell
merchandise.
Online Merchandising – One of the major advantages of online merchandising is that the site can
have an unlimited number of SKUs on display.
Expenses being low, there is potential for high margins in e-tailing. Online Pricing – Prices of
merchandise online are competitive compared to brick and mortar stores. This is because
operating expenses saved by working through the Internet are generally passed on to the
consumer.
The online retail segment is buzzing again with the entry of sound business with estimated
business 300 $ billion in this year and + 427 $ billion by 2010.
Today, the buzzword across the world in retailing is diversifying. Currently, it is estimated to be
contributing 23% to the B2C market and is expected to account for nearly 60% of the B2C market
in the near future. With Indian Railways and domestic airlines conducting the online sale of
tickets, this segment is expected to grow at a phenomenal rate of 140%.
Recent Trends of E-Tailing in India:
The recent development of sending e-greetings and e-ticketing has helped customers get into the
habit of using the Internet. The railways and airways are providing tickets through the Net which
is very convenient to the customer. Another area of development is bill presentation.
Retail banking and related services through the Internet is also being promoted and a good deal of
transactions takes place through the Net. Shopping robots on the Net help instant price
comparisons to enable customers make purchase decisions. Storing merchandise in satellite
warehouses enables timely delivery in operations that are spread over a wide area.
There is good scope for promoting on-site products merchandised and sold online. The site itself
can host links of products/services offered by other companies for a fee. Banners, crawlers,
browser buttons, URL Links etc. can be put on other non-competing sites.
There is a lot of opportunity to create customer stickiness by constantly communicating with
them through e-mail. Personalized offerings can be made to individual customers based on
individual’s shopping characteristics.
Some instances of Indian companies doing business on the Net:
i. Rediff(dot)com does a good deal of merchandising on its site with innovative product offerings
and prices.
ii. Indiatimes(dot)com is a popular internet selling site with multifaceted merchandise offerings.
iii. Bazee(dot)com is a site very widely known in India for its ‘bidding sale’.
iv. Fabmart(dot)com does food relating.
v. Playwin is an online lottery that is catching on with the masses.
The e-commerce scenario has not been too bad in India. In retail banking, Indian banks have
been pretty successful in adopting the technology to provide customers with facilities like realtime account status, transfer of funds, bill payment and so as.
The future does look bright for online retailing in India and the areas expected to grow include
financial services, travel, entertainment and food groceries. For those considering opening a
virtual storefront, the forthcoming technology and agreements on standards will not only make
setting up web-sites easier, they will also safeguard them against payment fraud.
Notes on Marketing # 30. Personal Selling:
Personal selling involves face-to-face contact between the seller and the prospective customer
with an intention of selling some product. Salesmanship is the art of presenting an offering that
the prospect appreciates the need for it’s and ultimately buys the product. The purpose of
personal selling is winning a regular customer.
Personal selling is the process of assisting and persuading a prospective buyer to buy a product in
a face-to-face situation. It involves direct and personal contact between the seller or his
representative with the prospective buyer. It is one of the most effective methods of selling the
products. Personal selling is by far the major promotional method used to increase profitable
sales by offering want-satisfying products to the customers.
According to Pederson and Wright, “Salesmanship is the process whereby the seller ascertains
and activates the needs or wants of the buyer and satisfies the needs or wants to mutual
continuous advantage of both the buyer and the sellers.” Salesmanship or personal selling
involves face-to-face contact between the seller and the prospective customer with an intention of
selling some products. Salesmanship is the art of so representing an offer that the prospect
appreciates the need for it and that a mutually satisfactory sale follows.
What is Personal Selling?
i. “Salesmanship is the process whereby the seller ascertains and activates the needs or wants of
the buyer and satisfies the needs or wants to mutual continuous advantage of both the buyer and
the seller.” —Pederson and Wright
ii. “Personal selling consists of winning the buyer’s confidence for seller’s house and goods
thereby winning a regular and permanent customer” —G. Blake
Personal selling is pervasive in nature. It results in many benefits to the seller and also the buyer.
Aggressive salesmanship or selling by pressurising the customers can pay only in the short-run.
Aggressive selling is ethically not good. A good salesman should assist the prospect or customer in
satisfying his needs by the purchase of products or services according to his capacity. Thus,
modern salesmanship is creative in approach. The salesman should use problem-solving
approach to ensure customer satisfaction.