Marketing Management (UGC NET Commerce & Management

KD COMMERCE CLASSES
2019
Marketing Management
Umakant Annand(UGC NET Commerce, MCom, MBA)
UGC NET Commerce & Management
D A D D Y C O O L , H A R D O I R O A D B A L A G A N J L U C K N O W

2 | Page Prepared by Umakant Annand(UGC NET Commerce, MCom, MBA)
Topic – 1 Concept of marketing
Marketing is the study and management of exchange relationships. Marketing is the business process of creating
relationships with and satisfying customers. With its focus on the customer, marketing is one of the premier
components of business management
Philip Kotler defines marketing as Satisfying needs and wants through an exchange process.
The marketing concept is the strategy that firms implement to satisfy customers needs, increase sales, maximize
profit and beat the competition. There are five marketing concepts that organizations adopt and execute.
The Five Concepts under Marketing
1) The Production Concept.
This concept is the oldest of the concepts in business. It holds that consumers will prefer products that
are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high
production efficiency, low costs, and mass distribution. They assume that consumers are primarily
interested in product availability and low prices. This orientation makes sense in developing countries,
where consumers are more interested in obtaining the product than in its features.
2) The Product Concept.
This orientation holds that consumers will favour those products that offer the most quality, performance,
or innovative features. Managers focusing on this concept concentrate on making superior products and
improving them over time. They assume that buyers admire well-made products and can appraise quality
and performance. However, these managers are sometimes caught up in a love affair with their product
and do not realize what the market needs. Management might commit the “better-mousetrap” fallacy,
believing that a better mousetrap will lead people to beat a path to its door.
3) The Selling Concept.
This is another common business orientation. It holds that consumers and businesses, if left alone, will
ordinarily not buy enough of the selling company’s products. The organization must, therefore,
undertake an aggressive selling and promotion effort. This concept assumes that consumers typically
sho9w buyi8ng inertia or resistance and must be coaxed into buying. It also assumes that the company
has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms
practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than
make what the market wants.
4) The Marketing Concept. This is a business philosophy that challenges the above three business
orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational
goals (goals of the selling company) consists of the company being more effective than competitors in
creating, delivering, and communicating customer value to its selected target customers. The marketing
concept rests on four pillars: target market, customer needs, integrated marketing and profitability.
5) The Societal Marketing Concept.
This concept holds that the organization’s task is to determine the needs, wants, and interests of target
markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is
the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves
or enhances the consumer’s and the society’s well-being.
Comparison Chart
BASIS FOR
COMPARISON
SELLING CONCEPT MARKETING CONCEPT
Meaning Selling concept is a business notion, which
states that if consumers and businesses
remain unattended, then there will not be
ample sale of organization's product.
Marketing concept is a business orientation
which talks about accomplishing
organizational goals by becoming better than
others in providing customer satisfaction.

BASIS FOR
COMPARISON
SELLING CONCEPT MARKETING CONCEPT
Associated with Compelling consumer's mind towards
goods and services.
Directing goods and services towards
consumer's mind.
Starting point Factory Target Market
Focuses on Product Customer needs
Perspective Inside-out Outside-in
Essence Transfer of title and possession Satisfaction of consumers
Business Planning Short term Long term
Orientation Volume oriented Profit oriented
Means Heavy selling and promotion Integrated marketing
Price Cost of Production Market determined
Approaches to Marketing
1) Product approach in studying marketing
The focus here is the product. Everything about a product is studied in this approach. A detailed study
will be made on the nature of the product, the source of supply, the pricing pattern, the kind
of promotional tool used, packing, brand selection, the middlemen in the market and so on.
2) Functional Approach in studying marketing
In this approach the functions of marketing become the target of study. Each of the functions of
marketing, namely, buying, assembling, selling, transport, standardization, grading, storage and
warehousing, financing, risk-taking and market information will be analyzed in detail.
3) Institutional Approach in studying marketing
The institutions engaged in the field of marketing become the focal point of such an approach. There are a
number of institutions that are involved in marketing activity. These include manufacturers, wholesalers,
retailers, transport organizations, warehouses and so on.
4) Decision-making Approach in studying marketing
Decisions help to find solutions to problems. Problems faced by marketers are caused by both
controllable and uncontrollable factors.
5) Legal Approach in studying marketing
This approach considers only the legal aspects of marketing. A number of laws have been enacted in
India to safeguard the interests of both the buyers and sellers.
The Sale of Goods Act, The Consumer Protection Act, The Essential Commodities Act, Prevention of
Food Adulteration Act, The Monopolies and Restrictive Trade Practices Act (MRTP) are some of the
laws concerned with marketing.
6) Economic Approach in studying marketing
The economic aspects affecting marketing get priority in such an approach. There are a number of
economic concepts like cost, revenue, competition, demand and supply that affect marketing. There can
be a study, for example, on the impact of competition on price.
7) Systems approach in studying marketing
A system is an organized body of identifiable independent parts. These parts are called the sub-systems.
For example, the human body as a whole is a system and the various parts of the body, i.e., heart, brain,

eyes, ears and nose are the sub-systems. If business as a whole is a system, production, finance and
marketing are the sub-systems.
Topic – 2 Marketing Channels
Marketing Channels can be defined as the set of people, activities, and the intermediary organizations that play a
crucial role in transferring the ownership of the goods from the point of production or manufacturing to the point
of consumption. Basically, they are the various channels or platforms through which the products reach to the
consumers or the end-users. They are also known as the distribution channels.
4 types of Marketing Channels
1) Manufacturer to Consumer
This is one of the most simple and effortless types of the Marketing Channels as the goods produced
reach to the consumers directly from the house of manufacturer. It works as cost-effective and profitable
for both the parties involved as there is no further involvement of the middlemen such as retailer,
wholesalers, and agents that charge their commission increasing the overall price of the products.
Example of this marketing channel : There are many bakeries and handmade chocolatier brands that
directly sell their confections to their customers through their shop, eating joint, or home delivery through
the orders placed on the website or social media handles of the bakery owners or chocolatiers.
2) Manufacturer to Retailer to Consumer
This type of Marketing Channels is one of the highly adopted and preferred channels in the industry. The
manufacturers who specialize in the manufacturing of the shopping goods such as shoes, furniture, and
fashion apparels amongst others opt for this Marketing Channel.
3) Manufacturer to Wholesaler to Consumer
This category of Marketing Channel is usually adopted by the consumers who are looking out for bulk
purchases of the specific items and procuring the same from the wholesaler works out quite easy and cost
effective for them owing to the economies of scale factor plus no involvement of other intermediaries.
The wholesaler reduces the cost to the consumer such as service cost or sales force cost making the items
available to the consumer at cheaper rates.
Example of this marketing channel : Shopping from the factory outlets of the brand or warehouse clubs
where the consumer has to sign for the membership with the wholesaler in order to buy the products at
cheaper rates.
4) Manufacturer to Agent to Wholesaler to Retailer to Consumer
This type of Marketing Channel involves more than one middlemen or intermediary making the goods
reach to the consumers. The agents or the middlemen helps and assists with the sale of the goods and
charge their commission from the manufacturer. They are quite helpful when the goods need to reach the
consumers in a short span of time.
Marketing channel decisions are the most important decisions by management. One additional level if added to
the distribution channel, can increase costs like anything. Because you have to give margins to the distribution
channel so that they work for you.
Importance of Marketing Channels :

1) Information provider
The first and foremost aspect in the list of the importance of the Marketing Channels is that the
middlemen such as agents provide the vital and crucial market information to the manufacturer that helps
him to plan his production and other related business strategies accordingly. Developments in the market
such as the change in the preferences in the taste of the consumer, entry of new manufactures in the
market, shift in the government policies, and the various pricing points of the other manufacturers are
given to the manufacturer without any additional cost owing to their relationship and working association
with the manufacturer.
2) Stability of the price
Yet another important function that is performed by the middlemen is that they maintain the stability of
price by absorbing the increment along with keeping the overheads cost low and charge the consumers
with the old price of the products. Their main motive behind this strategy is to have a strong foothold in
the market due to the completion from the other middlemen in the market.
3) Promotion
Another aspect in the importance of Marketing Channels is that the middlemen perform the function of
promoting the goods of the manufacturer by planning and designing their own sales incentive and
customer loyalty programs to attain their sales targets and increased market share objectives. This
ultimately works for the benefit of the manufacturer and all the parties involved in the process.
4) Pricing strategy
As the middlemen and the agents are at the sales field on a daily basis and have a thorough knowledge
about the marketing dynamics and the customer preferences, many manufacturers ask for their suggestion
whilst deciding on the pricing of the various products. The pricing and the features of the products are
also customized for the different set of target markets and consumers along with the channel of
distribution.
5) Matching the demand and supply of the products
The main and significant function of the middlemen and commission agents in the Marketing Channels is
to match the demand and supply of the products in the target market. They should provide the
manufacturers with the crucial information on how to assemble the goods to match the taste and
preferences of the targeted consumers that result in the ease of sales and attainment of the sales objectives
of the manufacturer.
Important functions of a good marketing channel are as follows
1) Information Provider:
Middlemen have a role in providing information about the market to the manufacturer. Developments like
changes in customer demography, psychography, media habits and the entry of a new competitor or a
new brand and changes in customer preferences are some of the information that all manufacturers want.
Since these middlemen are present in the market place and close to the customer they can provide this
information at no additional cost.
2) Price Stability:
Maintaining price stability in the market is another function a middleman performs. Many a time the
middlemen absorb an increase in the price of the products and continue to charge the customer the same
old price. This is because of the intra-middlemen competition. The middleman also maintains price
stability by keeping his overheads low.
3) Promotion:
Promoting the product/s in his territory is another function that middlemen perform. Many of them design
their own sales incentive programmes, aimed at building customers traffic at the other outlets.
4) Financing:
Middlemen finance manufacturers’ operation by providing the necessary working capital in the form of
advance payments for goods and services. The payment is in advance even though the manufacturer may
extend credit, because it has to be made even before the products are bought, consumed and paid for by
the ultimate consumer.
5) Title:
Most middlemen take the title to the goods, services and trade in their own name. This helps in diffusing
the risks between the manufacturer and middlemen. This also enables middlemen to be in physical
possession of the goods, which in turn enables them to meet customer demand at very moment it arises.
6) Help in Production Function:

The producer can concentrate on the production function leaving the marketing problem to middlemen
who specialize in the profession. Their services can best utilized for selling the product. The finance,
required for organising marketing can profitably be used in production where the rate of return would be
greater.
7) Matching Demand and Supply:
The chief function of intermediaries is to assemble the goods from many producers in such a manner that
a customer can affect purchases with ease. The goal of marketing is the matching of segments of supply
and demand.
Topic – 3 Marketing mix
The marketing mix (also known as the 4 Ps) is a foundation model . The marketing mix has been defined as the
"set of marketing tools that the firm uses to pursue its marketing objectives in the target". Thus the marketing mix
refers to four broad levels of marketing decision, namely: product, price, promotion, and place. Marketing
practice has been occurring for millennia, but marketing theory emerged in the early twentieth century. The
contemporary marketing mix, or the 4 Ps, which has become the dominant framework for marketing management
decisions, was first published in 1960. In services marketing, an extended marketing mix is used, typically
comprising 7 Ps, made up of the original 4 Ps extended by process, people, and physical evidence. Occasionally
service marketers will refer to 8 Ps, comprising these 7 Ps plus performance
McCarthy's 4 Ps
The original marketing mix, or 4 Ps, as originally proposed by marketer and academic E. Jerome McCarthy,
provides a framework for marketing decision-making. McCarthy's marketing mix has since become one of the
most enduring and widely accepted frameworks in marketing.
Brief Outline of 4 Ps
Category Definition/ Explanation Typical Marketing Decisions
Product
A product refers to an item that satisfies the
consumer's needs or wants.
Products may be tangible (goods) or
intangible (services, ideas or experiences).
o Product design – features, quality
o Product assortment – product range, product
mix, product lines
o Branding
o Packaging and labelling
o Services (complementary service, after-sales
service, service level)
o Guarantees and warranties
o Returns
o Managing products through the life-cycle
Price
Price refers to the amount a customer pays
for a product.
Price may also refer to the sacrifice
consumers are prepared to make to acquire
a product.
(e.g. time or effort)
Price is the only variable that has
implications for revenue.
Price also includes considerations
of customer perceived value.
o Price strategy
o Price tactics
o Price-setting
o Allowances – e.g. rebates for distributors
o Discounts – for customers
o Payment terms – credit, payment methods
Place
Refers to providing customer access
Considers providing convenience for
consumer.
o Strategies such as intensive distribution,
selective distribution, exclusive distribution
o Franchising;
o Market coverage
o Channel member selection and channel
member relationships
o Assortment
o Location decisions

o Inventory
o Transport, warehousing and logistics
Promotion
Promotion refers to marketing
communications
May comprise elements such
as: advertising, PR, direct marketing
and sales promotion.
o Promotional mix - appropriate balance of
advertising, PR, direct marketing and sales
promotion
o Message strategy - what is to be
communicated
o Channel/ media strategy - how to reach the
target audience
o Message Frequency - how often to
communicate
o Product refers to what the business offers for sale and may include products or services. Product decisions
include the "quality, features, benefits, style, design, branding, packaging, services, warranties, guarantees,
life cycles, investments and returns".
o Price refers to decisions surrounding "list pricing, discount pricing, special offer pricing, credit payment or
credit terms". Price refers to the total cost to customer to acquire the product, and may involve both monetary
and psychological costs such as the time and effort spended in acquisition.
o Place is defined as the "direct or indirect channels to market, geographical distribution, territorial coverage,
retail outlet, market location, catalogues, inventory, logistics and order fulfilment". Place refers either to the
physical location where a business carries out business or the distribution channels used to reach markets.
Place may refer to a retail outlet, but increasingly refers to virtual stores such as "a mail order catalogue, a
telephone call centre or a website".
o Promotion refers to "the marketing communication used to make the offer known to potential customers and
persuade them to investigate it further". Promotion elements include "advertising, public relations, direct
selling and sales promotions.
Modified and expanded marketing mix: 7 Ps
By the 1980s, a number of theorists were calling for an expanded and modified framework that would be more
useful to service marketers. The prospect of expanding or modifying the marketing mix for services was a core
discussion topic at the inaugural AMA Conference dedicated to Services Marketing in the early 1980s, and built
on earlier theoretical works pointing to many important problems and limitations of the 4 Ps model. Taken
collectively, the papers presented at that conference indicate that service marketers were thinking about a revision
to the general marketing mix based on an understanding that services were fundamentally different to products,
and therefore required different tools and strategies. In 1981, Booms and Bitner proposed a model of 7 Ps,
comprising the original 4 Ps plus process, people and physical evidence, as being more applicable for services
marketing.
Outline of the Modified and Expanded Marketing Mix
Category Definition/ Explanation Typical Marketing Decisions
Physical
evidence
The environment in which service occurs.
The space where customers and service
personnel interact.
Tangible commodities (e.g. equipment,
furniture) that facilitate service performance.
Artifacts that remind customers of a service
performance.
o Facilities (e.g. furniture, equipment,
access)
o Spatial layout (e.g. functionality,
efficiency)
o Signage (e.g. directional signage,
symbols, other signage)
o Interior design (e.g. furniture, color
schemes)
o Ambient conditions (e.g. noise, air,
temperature)
o Design of livery (e.g. stationery,
brochures, menus, etc.)
o Artifacts: (e.g. souvenirs, mementos, etc.)

People
Human actors who participate in service
delivery.
Service personnel who represent the
company's values to customers.
Interactions between customers.
Interactions between employees and
customers.
o Staff recruitment and training
o Uniforms
o Scripting
o Queuing systems, managing waits
o Handling complaints, service failures
o Managing social interactions
Process
The procedures, mechanisms and flow of
activities by which service is delivered.
o Process design
o Blueprinting (i.e. flowcharting) service
processes
o Standardization vs customization
decisions
o Diagnosing fail-points, critical incidents
and system failures
o Monitoring and tracking service
performance
o Analysis of resource requirements and
allocation
o Creation and measurement of key
performance indicators (KPIs)
o Alignment with Best Practices
o Preparation of operations manuals
o People are essential in the marketing of any product or service. Personnel stand for the service. In the
professional, financial or hospitality service industry, people are not producers, but rather the products
themselves. When people are the product, they impact public perception of an organization as much as any
tangible consumer goods. From a marketing management perspective, it is important to ensure that employees
represent the company in alignment with broader messaging strategies. This is easier to ensure when people
feel as though they have been treated fairly and earn wages sufficient to support their daily lives.
o Process refers to a "set of activities that results in delivery of the product benefits". A process could be a
sequential order of tasks that an employee undertakes as a part of their job. It can represent sequential steps
taken by a number of various employees while attempting to complete a task. Some people are responsible for
managing multiple processes at once. For example, a restaurant manager should monitor the performance of
employees, ensuring that processes are followed. They are also expected to supervise while customers are
promptly greeted, seated, fed, and led out so that the next customer can begin this process.
o Physical evidence refers to the non-human elements of the service encounter, including equipment, furniture
and facilities. It may also refer to the more abstract components of the environment in which the service
encounter occurs including interior design, colour schemes and layout. Some aspects of physical evidence
provide lasting proof that the service has occurred, such as souvenirs, mementos, invoices and other livery of
artifacts.[
According to Booms and Bitner's framework, the physical evidence is "the service delivered and any
tangible goods that facilitate the performance and communication of the service".Physical evidence is
important to customers because the tangible goods are evidence that the seller has (or has not) provided what
the customer was expecting.
Lauterborn's 4 Cs (1990)
Robert F. Lauterborn proposed a 4 Cs classification in 1990.His classification is a more consumer-orientated
version of the 4 Ps that attempts to better fit the movement from mass marketing to niche marketing:
4 Ps 4 Cs Definition
Product
Consumerwants
and needs
A company will only sell what the consumer specifically wants to buy. So,
marketers should study consumer wants and needs in order to attract them one by
one with something he/she wants to purchase.
Price Cost
Price is only a part of the total cost to satisfy a want or a need. The total cost will
consider for example the cost of time in acquiring a good or a service, a cost of
conscience by consuming that or even a cost of guilt "for not treating the kids". It

reflects the total cost of ownership. Many factors affect cost, including but not
limited to the customer's cost to change or implement the new product or service
and the customer's cost for not selecting a competitor's product or service.
Promotion Communication
While promotion is "manipulative" and from the seller, communication is
"cooperative" and from the buyer with the aim to create a dialogue with the
potential customers based on their needs and lifestyles. It represents a broader
focus. Communications can include advertising, public relations, personal
selling, viral advertising, and any form of communication between the
organization and the consumer
Place Convenience
In the era of Internet,catalogues, credit cards and phones, consumers neither need
to go anywhere to satisfy a want or a need nor are they limited to a few places to
satisfy them. Marketers should know how the target market prefers to buy, how to
be there and be ubiquitous, in order to guarantee convenience to buy. With the rise
of Internet and hybrid models of purchasing, Place is becoming less relevant.
Convenience takes into account the ease of buying the product, finding the
product, finding information about the product, and several other factors.
Shimizu's 4 Cs: in the 7Cs Compass Model
After Koichi Shimizu proposed a 4 Cs classification in 1973, it was expanded to the 7Cs Compass Model to
provide a more complete picture of the nature of marketing in 1979. The 7Cs Compass Model is a framework
of co-marketing (commensal marketing or Symbiotic marketing). Also the Co-creative marketing of a company
and consumers are contained in the co-marketing. Co-marketing (collaborate marketing) is a marketing practice
where two companies cooperate with separate distribution channels, sometimes including profit sharing. It is
frequently confused with co-promotion. Also commensal (symbiotic) marketing is a marketing on which both
corporation and a corporation, a corporation and a consumer, country and a country, human and nature can live.
The 7Cs Compass Model comprises:
(C1) Corporation – The core of 4 Cs is corporation (company and non profit organization). C-O-S
(competitor, organization, stakeholder) within the corporation. The company has to think
of compliance and accountability as important. The competition in the areas in which the company competes with
other firms in its industry.
The 4 elements in the 7Cs Compass Model are:
"P"
category
(narrow)
"C" category (broad) "C" definition
Product (C2) Commodity
(Latin derivation: commodus=convenience, happiness) : Co-creation.
The goods and services for consumers or citizens.
Price (C3) Cost
(Latin derivation: constare= It makes sacrifices) : There is not only
producing cost and selling cost but purchasing cost and social cost.
Promotion (C4) Communication
(Latin derivation: communis=sharing of meaning) : marketing
communication : Not only promotion but communication is important.
Communications can include advertising, sales promotion, public
relations, publicity, personal selling, corporate identity, internal
communication, SNS, MIS.
Place (C5) Channel (Latin derivation: canal) : marketing channels. Flow of goods.
The compass of consumers and circumstances (environment) are:
(C6) Consumer – (Needle of compass to consumer)
The factors related to consumers can be explained by the first character of four directions marked on
the compass model. These can be remembered by the cardinal directions, hence the name compass model:
o N = Needs
o S = Security
o E = Education: (consumer education)
o W = Wants
(C7) Circumstances – (Needle of compass to circumstances )

In addition to the consumer, there are various uncontrollable external environmental factors encircling the
companies. Here it can also be explained by the first character of the four directions marked on
the compass model:
o N = National and International (Political, legal and ethical) environment
o S = Social and cultural
o E = Economic
o W = Weather
Topic – 4 Market segmentation
Market segmentation is the activity of dividing a broad consumer or business market, normally consisting of
existing and potential customers, into sub-groups of consumers (known as segments) based on some type of
shared characteristics. In dividing or segmenting markets, researchers typically look for common characteristics
such as shared needs, common interests, similar lifestyles or even similar demographic profiles. The overall aim
of segmentation is to identify high yield segments – that is, those segments that are likely to be the most profitable
or that have growth potential – so that these can be selected for special attention (i.e. become target markets)
Definition and brief explanation
Market segmentation is the process of dividing up mass markets into groups with similar needs and wants. The
rationale for market segmentation is that in order to achieve competitive advantage and superior performance,
firms should: "(1) identify segments of industry demand, (2) target specific segments of demand, and (3) develop
specific 'marketing mixes' for each targeted market segment. " From an economic perspective, segmentation is
built on the assumption that heterogeneity in demand allows for demand to be disaggregated into segments with
distinct demand functions.[
History
➢ Fragmentation (pre-1880s): The economy was characterised by small regional suppliers who sold
goods on a local or regional basis
➢ Unification or mass marketing (1880s–1920s): As transportation systems improved, the economy
became unified. Standardised, branded goods were distributed at a national level. Manufacturers tended
to insist on strict standardisation in order to achieve scale economies with a view to penetrating markets
in the early stages of a product's lifecycle. e.g. the Model T Ford
➢ Segmentation (1920s–1980s): As market size increased, manufacturers were able to produce different
models pitched at different quality points to meet the needs of various demographic
and psychographic market segments. This is the era of market differentiation based on demographic,
socio-economic and lifestyle factors.
➢ Hyper-segmentation (post-1980s): a shift towards the definition of ever more narrow market segments.
Technological advancements, especially in the area of digital communications, allow marketers to
communicate with individual consumers or very small groups. This is sometimes known as one-to-
one marketing.
Market segmentation strategy
Main Strategic Approaches to Segmentation
Number of
segments
Segmentation strategy Comments
Zero
Undifferentiated
strategy
Mass marketing: no segmentation
One Focus strategy
Niche marketing: focus efforts on a small, tightly defined target
market
Two or more Differentiated strategy
Multiple niches: focus efforts on 2 or more, tightly defined
targets
Thousands Hypersegmentation
One-to-one marketing: customise the offer for each individual
customer

Bases for segmenting consumer markets
Segmentation base Brief explanation of base (and example) Typical segments
Demographic
Quantifiable population characteristics. (e.g.
age, gender, income, education, socio-
economic status, family size or situation).
e.g. Young, Upwardly-mobile, Prosperous,
Professionals (YUPPY); Double Income No
Kids (DINKS); Greying, Leisured And
Moneyed (GLAMS); Empty- nester, Full-
nester
Geographic
Physical location or region (e.g. country,
state, region, city, suburb, postcode).
e.g. New Yorkers; Remote, outback
Australians; Urbanites, Inner-city dwellers
Geo-
demographic or
geoclusters
Combination of geographic & demographic
variables.
e.g. Rural farmers, Urban professionals,
'sea-changers', 'tree-changers'
Psychographics
Lifestyle, social or personality
characteristics. (typically includes basic
demographic descriptors)
e.g. Socially Aware; Traditionalists,
Conservatives, Active 'club-going' young
professionals
Behavioural
Purchasing, consumption or usage
behaviour. (e.g. Needs-based, benefit-
sought, usage occasion, purchase frequency,
customer loyalty, buyer readiness).
e.g. Tech-savvy (aka tech-heads); Heavy
users, Enthusiasts; Early adopters, Opinion
Leaders, Luxury-seekers, Price-conscious,
Quality-conscious, Time-poor
Contextual and
situational
The same consumer changes in their
attractiveness to marketers based on context
and situation. This is particularly used in
digital targeting via programmatic bidding
approaches
e.g. Actively shopping, just entering into a
life change event, being physically in a
certain location or at a particular retailer
which is known from GPS data via
smartphones.
Geographic segmentation
Geographic segmentation divides markets according to geographic criteria. In practice, markets can be segmented
as broadly as continents and as narrowly as neighborhoods or postal codes. Typical geographic variables include:
➢ Country e.g. Brazil, Canada, China, France, Germany, India, Italy, Japan, UK, US
➢ Region e.g. North, North-west, Mid-west, South, Central
➢ Population density: e.g. central business district (CBD), urban, suburban, rural, regional
➢ City or town size: e.g. under 1,000; 1,000–5,000; 5,000–10,000 ... 1,000,000–3,000,000 and over
3,000,000
➢ Climatic zone: e.g. Mediterranean, Temperate, Sub-Tropical, Tropical, Polar
Demographic segmentation
Segmentation according to demography is based on consumer- demographic variables such as age, income,
family size, socio-economic status, etc. Demographic segmentation assumes that consumers with similar
demographic profiles will exhibit similar purchasing patterns, motivations, interests and lifestyles and that these
characteristics will translate into similar product/brand preferences.In practice, demographic segmentation can
potentially employ any variable that is used by the nation's census collectors. Typical demographic variables and
their descriptors are as follows:
➢ Age: e.g. Under 5, 5–8 years, 9–12 years, 13–17 years, 18–24, 25–29, 30–39, 40–49, 50–59, 60+
➢ Gender: Male, Female
➢ Occupation: Professional, self-employed, semi-professional, clerical/ admin, sales, trades, mining,
primary producer, student, home duties, unemployed, retired
➢ Socio-economic: A, B, C, D, E, or I, II, III, IV or V (normally divided into quintiles)
➢ Marital Status: Single, married, divorced, widowed
➢ Family Life-stage: Young single; Young married with no children; Young family with children under 5
years; Older married with children; Older married with no children living at home, Older living alone
➢ Family size/ number of dependants: 0, 1–2, 3–4, 5+
➢ Income: Under $10,000; 10,000–20,000; 20,001–30,000; 30,001–40,000, 40,001–50,000 etc.
➢ Educational attainment: Primary school; Some secondary, Completed secondary, Some university,
Degree; Post graduate or higher degree
➢ Home ownership: Renting, Own home with mortgage, Home owned outright

➢ Ethnicity: Asian, African, Aboriginal, Polynesian, Melanesian, Latin-American, African-American,
American Indian etc.
➢ Religion: Catholic, Protestant, Muslim, Jewish, Buddhist, Hindu, Other
Psychographic segmentation
Psychographic segmentation, which is sometimes called psychometric or lifestyle segmentation, is measured by
studying the activities, interests, and opinions (AIOs) of customers. It considers how people spend their leisure,
and which external influences they are most responsive to and influenced by. Psychographics is a very widely
used basis for segmentation, because it enables marketers to identify tightly defined market segments and better
understand consumer motivations for product or brand choice.
While many of these proprietary psychographic segmentation analyses are well-known, the majority of studies
based on psychographics are custom designed. That is, the segments are developed for individual products at a
specific time. One common thread among psychographic segmentation studies is that they use quirky names to
describe the segments.[
Behavioural segmentation
Behavioural segmentation divides consumers into groups according to their observed behaviours. Many marketers
believe that behavioural variables are superior to demographics and geographic for building market segments and
some analysts have suggested that behavioural segmentation is killing off demographics. Typical behavioural
variables and their descriptors include:
➢ Purchase/Usage Occasion: e.g. regular occasion, special occasion, festive occasion, gift-giving
➢ Benefit-Sought: e.g. economy, quality, service level, convenience, access
➢ User Status: e.g. First-time user, Regular user, Non-user
➢ Usage Rate/Purchase Frequency: e.g. Light user, heavy user, moderate user
➢ Loyalty Status: e.g. Loyal, switcher, non-loyal, lapsed
➢ Buyer Readiness: e.g. Unaware, aware, intention to buy
➢ Attitude to Product or Service: e.g. Enthusiast, Indifferent, Hostile; Price Conscious, Quality Conscious
➢ Adopter Status: e.g. Early adopter, late adopter, laggard
Topic – 5 Market targeting
Market targeting is a process of selecting the target market from the entire market. Target market consists of
group/groups of buyers to whom the company wants to satisfy or for whom product is manufactured, price is set,
promotion efforts are made, and distribution network is prepared
Definitions:
Market is segmented using certain bases, like income, place, education, age, and life cycle, and so on. Out of
them, a few segments are selected to serve them. Thus, evaluating and selecting some market segments can be
said as market targeting. The quoted definitions are not available.
We can define the term as:
➢ Market targeting is a process of selecting the target market from the entire market. Target market consists
of group/groups of buyers to whom the company wants to satisfy or for whom product is manufactured,
price is set, promotion efforts are made, and distribution network is prepared.
➢ It involves basically two actions – evaluation of segments and selection of the appropriate market
segments. In this relation, market targeting can be defined as: Market targeting is an act of evaluating and
selecting market segments.
➢ Finally, we define market targeting as: Market targeting consists of dividing the total market into
segments, evaluating these segments, and selecting the appropriate segments as the target market.
Procedure of Market Targeting:
Market targeting procedure consists of two steps:
1. Evaluating Market Segments:
Evaluation of market segments calls for measuring suitability of segments. The segments are evaluated with
certain relevant criteria to determine their feasibility.

To determine overall attractiveness/suitability of the segment, two factors are used:
i. Attractiveness of Segment:
In order to determine attractiveness of the segment, the company must think on characteristics/conditions which
reflect its attractiveness, such as size, profitability, measurability, accessibility, actionable, potential for growth,
scale of economy, differentiability, etc. These characteristics help decide whether the segment is attractive.
ii. Objectives and Resources of Company:
The firm must consider whether the segment suit the marketing objectives. Similarly, the firm must consider its
resource capacity. The material, technological, and human resources are taken into account. The segment must be
within resource capacity of the firm.
2. Selecting Market Segments:
When the evaluation of segments is over, the company has to decide in which market segments to enter. That is,
the company decides on which and how many segments to enter. This task is related with selecting the target
market. Target market consists of various groups of buyers to whom company wants to sell the product; each
tends to be similar in needs or characteristics.
Philip Kotler describes five alternative patterns to select the target market. Selection of a suitable option depends
on situations prevailing inside and outside the company.
Topic – 6 Positioning
Positioning: refers to an overall strategy that "aims to make a brand occupy a distinct position, relative to
competing brands, in the mind of the customer"
Positioning is closely related to the concept of perceived value. In marketing, value is defined as the difference
between a prospective customer's evaluation of the benefits and costs of one product when compared with others.
Value can be expressed in numerous forms including product benefits, features, style, value for money.
Differentiation vs positioning
Differentiation is closely related to the concept of positioning. Differentiation is how a company's product is
unique, by being the first, least expensive, or some other distinguishing factor. A product or brand may have
many points of difference, but they may not all be meaningful or relevant to the target market. Positioning is
something (a perception) that happens in the minds of the target market whereas differentiation is something that
marketers do, whether through product design, pricing or promotional activity.[
Strategies
Approaches Example
Pre-emptive positioning
(Being the first to claim a benefit or feature)
Smith's Chips - the original and still the best
Superlative positioning
(Being the best or exhibiting some type of
superiority)
The burgers are better at Hungry Jack's
Exclusive positioning
(Being a member of an exclusive club or group)
XYZ Ltd - a Fortune 500 company
Positioning within a category
(Strong registration of both category and brand)
Within the prestige car category, Volvo is the safe alternative
Positioning by competitor strategy
(Use competitor's strategy as a reference point)
Avis - we're number two, so we try harder
Positioning according to product benefit(s)
(Emphasise a problem, need or benefit where the
firm
can offer superior satisfaction)
Toothpaste with whitening, tartar control or enamel protection
(or mutltiple benefits)
Positioning according to product attribute Dove is one-quarter moisturiser
Positioning for usage occasion
(Can be associated with seasonal products)
Cadbury Roses Chocolates—for gift giving or saying, 'Thank-
you'
Positioning along price lines A premium brand or an economy brand

Positioning for a user or user group
Johnson & Johnson range of baby products (e.g., No Tears
Shampoo)
Positioning by cultural symbols
Australia's Easter Bilby (as a culturally appropriate alternative
to
the Easter Bunny) used as the shape of Easter chocolates
Topic – 7 Product concept
Product concept is the understanding of the dynamics of the product in order to showcase the best qualities and
maximum features of the product. Marketers spend a lot of time and research in order to target their attended
audience. Marketers will look into a product concept before marketing a product towards their customers.
While the "product concept" is based upon the idea that customers prefer products that have the most quality,
performance, and features, some customers prefer a product that is simpler and easier to use.
A product line is a group of products that a company creates under a single brand. The products are similar and
focus on the same market sector. Maybe their function or channel distribution are the same or similar. Perhaps
their physical attributes, prices, quality, or type of customers are the same. We call the activity product lining.
For instance: Amul offers a series of closely related products such as milk, butter, ghee, dahi, yoghurt, ice
cream, srikhand, Gulab jamun, flavoured milk, chocolate, etc.
“A product line is a group of related products produced by one manufacturer. For example, products that are
intended to be used for similar purposes or to be sold in similar types of shops.”
Some examples of companies with multiple product lines are Proctor & Gamble (P&G), Indian Tobacco
Company (ITC), Hindustan Unilever Limited (HUL), etc.
Product Line Extension
When a new product is introduced by the company which is a quite different from the company’s current range of
products is called Product line extension. It expands the choice of the customers under a single brand. The
merits of product line extension are:
1) Risk: The risk of new product development reduces when the new variant is launched to the existing product
line. The present customers are familiar with the existing product line and if a new product offers the same
quality and fulfils the needs of the customers, that it claims, then it results in the reduction of risk
2) Customer Loyalty: When a company extends its product line by introducing a varied product, the customers
will choose the company’s product over its competitors which will help in maintaining customer loyalty.
3) Market expansion: It is obvious that the extension in the product line will widen the choice of customers and
thus increase market share. The company can also offer higher and low price version to cater different
customer segments, which meets customer requirements.
4) Branding: Customers are likely to buy the product offered by an existing and familiar brand. Nevertheless,
branding becomes difficult when the company offers low-priced line products, as it may harm the parent
brand if less quality is offered. In such a case it is better to offer a low-priced product with different brand
name.
5) Product versions: Introducing a number of versions of a single product, is considered as low-risk strategy,
wherein each version may have some additional or reduced features, as compared to the basic one. This may
help in attracting more and more customers.
Product Mix
Definition: The Product Mix also called as Product Assortment, refers to the complete range of products that is
offered for sale by the company. In other words, the number of product lines that a company has for its
customers is called as product mix.
The product mix has four dimensions: Breadth, Length, Depth, and Consistency. The Breadth of a product
mix shows the different kinds of product lines that firm carries. Simply, it shows the number of items in the
product line. This dimension of the product mix represents the extent to which the activities of the firm are
diversified. In the example below, there are 4 product lines that show the width of the ITC.

The Length of a Product mix refers to the number of items in the product mix. In the example below the length
is 11. As in the foods line, the number of items is 3, in cigarettes is 3 and so on.. On adding all the items, we get
the length of a product.
The Depth of a product mix refers to the variants of each product in the product line. For example, in the
example below, curry, pastes, biryanis, conserves, etc. shows the depth of the foods product line.

The Consistency of a product mix shows the extent to which the product lines are closely related to each other
in terms of their end-use, distribution requirements, production requirements, price ranges, advertising media, etc.
In the above example, it is clear that ITC’s product lines are less consistent as these perform different functions
for the buyers.
Topic – 7 Product life-cycle
The concept of product life cycle (PLC) concerns the life of a product in the market with respect to
business/commercial costs and sales measures. The product life cycle proceeds through multiple phases, involves
many professional disciplines, and requires many skills, tools and processes. PLC management makes the
following three assumptions:
o Products have a limited life and thus every product has a life cycle.
o Product sales pass through distinct stages, each posing different challenges, opportunities, and problems
to the seller.
o Products require different marketing, financing, manufacturing, purchasing, and human resource
strategies in each life cycle stage.
Once the product is designed and put into the market, the offering should be managed efficiently for the buyers to
get value from it. Before entering into any market complete analysis is carried out by the industry for both
external and internal factors including the laws and regulations, environment, economics, cultural values and
market needs. From the business perspective, as a good business, the product needs to be sold before it finishes its
life. In terms of profitability, expiry may jolt the overall profitability of the business therefore there are few
strategies, which are practiced to ensure that the product is sold within the defined period of maturity.
Extending the product life cycle
Extending the product life cycle by improving sales, this can be done through
1) Advertising: Its purpose is to get additional audience and potential customers.
2) Exploring and expanding to new markets: By conducting market research and offering the product (or
some adapted form of it) to new markets, it is possible to get more customers.
3) Price reduction: Many customers are attracted by price cuts and discount tags.
4) Adding new features: Adding value to the product catches the attention of many buyers.
5) Packaging: New, attractive, useful or eco-friendly packaging influence the target customers.
6) Changing customer consumption habits: Promoting new trends of consumption can increase the
number of customers.
7) Special promotions: Raising interest by offering Jackpot and other offers.
8) Heightening interest: Many of the following things attract many customers who match certain profiles:
Eco-friendly production processes, good work conditions, funding the efforts of non-profit organizations
(cancer cure, anti-war efforts, refugees, GLTBI, environment and animal protection, etc.) and the like.
Characteristics of PLC stages
There are the following major product life cycle stages:
Stage Characteristics
1. Market
introduction
stage
o This is the stage in which the product has been introduced first time in the market and
the sales of the product starts to grow slowly and gradually and the profit received
from the product is nominal and non-attained. The market for the product is not
competitive initially and also the company spends initially on the advertisement and
uses various other tools for promotion in order to motivate and produce awareness
among the consumers, therefore generating discerning demands for particular brand.
The products start to gain distribution as the product is initially new in the market and
in this stage the quality of the product is not assured and the price of the product will
also be determined as low or high.[2]
o costs are very high
o slow sales volumes to start
o little or no competition
o demand has to be created

o customers have to be prompted to try the product
o makes little money at this stage
2. Growth stage
o In the growth stage, the product is visibly present in the market, the product has
habitual consumers, and there is quick growth in product sales. More new customers
are becoming aware of the product and trying it. The customers are becoming
satisfied with the product and are buying it again and again. The ratio of the product
repetition for the trial procurement has risen. Competitors have started to overflow
the market with more appealing and attractive inventions. This helps in creating
increased competition in the market and also results in decreasing the product price.
o costs reduced due to economies of scale
o sales volume increases significantly
o profitability begins to rise
o public awareness increases
o competition begins to increase with a few new players in establishing market
o increased competition leads to price decreases
3. Maturity
stage
o In maturity stage, the cost of the product has been decreased because of the increased
volume of the product and the product started to experience the curve effects. Also,
more and more competitors have seen to be leaving the market. In this way very few
buyers have been left for the product and this results in less sales of the product. The
decline of the product and cost of attaining new buyers in this level is more as
compare to the resulted profit. The brand or the product differentiation via rebating
and discounts in price supports in recalling the outlet distribution. Also, there is a
decline in the entire cost of marketing through enhancing the distribution and
promotional efficiency with switching brand and segmentation.
o costs are decreased as a result of production volumes increasing and experience curve
effects
o sales volume peaks and market saturation is reached
o increase in competitors entering the market
o prices tend to drop due to the proliferation of competing products
o brand differentiation and feature diversification is emphasized to maintain or increase
market share
o industrial profits go down
4. Saturation
and decline
stage
o In this stage, the profit as well as the sales of the product has started to decline
because of the deletion of the product from the market. The market for the product in
this stage, started to show negative rate of growth and corroding cash flows. The
product at this stage may be kept but there should be fewer adverts.
o costs become counter-optimal
o sales volume decline
o prices, profitability diminish
o profit becomes more a challenge of production/distribution efficiency than increased
sales
o Note: Product termination is usually not the end of the business cycle, only the end of
a single entrant within the larger scope of an ongoing business program.
Identifying PLC stages
Identifying the stage of a product is an art more than a science, but it's possible to find patterns in some of the
general product features at each stage. Identifying product stages when the product is in transition is very
difficult. More recently, it has been shown that user-generated contents (UGC) (e.g., in the form of online product
reviews) has the potential to reveal buyer personality characteristics that can in turn be used to identify product
life cycle stage.
Identifying
features
Stages
Introduction Growth Maturity Decline
Sales Low High High Low

Investment cost Very high High (lower than intro stage) Low Low
Competition Low or no competition High Very high Very High
Profit Low High High Low
Topic – 8 New product development
In business and engineering, new product development (NPD) covers the complete process of bringing a
new product to market. A central aspect of NPD is product design, along with various business considerations.
New product development is described broadly as the transformation of a market opportunity into a product
available for sale. The product can be tangible (something physical which one can touch) or intangible (like
a service, experience, or belief), though sometimes services and other processes are distinguished from
"products." NPD requires an understanding of customer needs and wants, the competitive environment, and the
nature of the market. Cost, time and quality are the main variables that drive customer needs. Aiming at these
three variables, innovative companies develop continuous practices and strategies to better satisfy customer
requirements and to increase their own market share by a regular development of new products. There are many
uncertainties and challenges which companies must face throughout the process. The use of best practices and the
elimination of barriers to communication are the main concerns for the management of the NPD
The product development process is articulated and broken down in many different ways, many of which often
include the following phases/stages:
1) Fuzzy front-end (FFE) is the set of activities employed before the more formal and well
defined requirements specification is completed. Requirements speak to what the product should do or have,
at varying degrees of specificity, in order to meet the perceived market or business need.
2) Product design is the development of both the high-level and detailed-level design of the product: which
turns the what of the requirements into a specific how this particular product will meet those requirements.
This typically has the most overlap with the engineering design process, but can also include industrial
design and even purely aesthetic aspects of design. On the marketing and planning side, this phase ends at
pre-commercialization analysis stage.
3) Product implementation often refers to later stages of detailed engineering design (e.g. refining mechanical
or electrical hardware, or software, or goods or other product forms), as well as test process that may be used
to validate that the prototype actually meets all design specifications that were established.
4) Fuzzy back-end or commercialization phase represent the action steps where the production and market
launch occur
NPD Process
1) New Product Strategy – Innovators have clearly defined their goals and objectives for the new product.
2) Idea Generation – Collective brainstorming through internal and external sources.
3) Screening – Condense the number of brainstormed ideas.
4) Concept Testing – Structure an idea into a detailed concept.
5) Business Analysis – Understand the cost and profits of the new product and determining if they meet
company objectives.
6) Product Development – Developing the product.
7) Market Testing – Marketing mix is tested through a trial run of the product.
8) Commercialization – Introducing the product to the public.
Topic – 9 Pricing Decision
Pricing is a process to determine what manufactures receive in exchange of the product. Pricing depends on
various factors like manufacturing cost, raw material cost, profit margin etc.
Objectives of Pricing
The main objectives of pricing can be learnt from the following points −
a) Maximization of profit in short run
b) Optimization of profit in the long run
c) Maximum return on investment

d) Decreasing sales turnover
e) Fulfil sales target value
f) Obtain target market share
g) Penetration in market
h) Introduction in new markets
i) Obtain profit in whole product line irrespective of individual product profit targets
j) Tackle competition
k) Recover investments faster
l) Stable product price
m) Affordable pricing to target larger consumer group
n) Pricing product or services that simulate economic development
Factors Influencing Pricing
Pricing of a product is influenced by various factors as price involves many variables. Factors can be categorized
into two, depending on the variables influencing the price.
A. Internal Factors
The following are the factors that influence the increase and decrease in the price of a product internally −
➢ Marketing objectives of company
➢ Consumer’s expectation from company by past pricing
➢ Product features
➢ Position of product in product cycle
➢ Rate of product using pattern of demand
➢ Production and advertisement cost
➢ Uniqueness of the product
➢ Production line composition of the company
➢ Price elasticity as per sales of product
Internal factors that influence pricing depend on the cost of manufacturing of the product, which includes fixed
cost like labor charges, rent price, etc., and variable costs like overhead, electric charges, etc.
B. External Factors
The following are the external factors that have an impact on the increase and decrease in the price of a product −
➢ Open or closed market
➢ Consumer behavior for given product
➢ Major customer negotiation
➢ Variation in the price of supplies
➢ Market opponent product pricing
➢ Consideration of social condition
➢ Price restricted as per any governing authority
External factors that influence price depend on elements like competition in market, consumer flexibility to
purchase, government rules and regulation, etc.
Pricing Methods
Let us now discuss the various pricing methods −
A. Cost plus Pricing
Cost plus pricing can be defined as the cost of production per unit of product plus profit margin decided by the
management.
Step 1 − (Calculation of average variable cost)
Step 2 − (Calculation of average fixed cost), i.e.,
AFC=TotalFixedCostUnitsOfOutputProductsAFC=TotalFixedCostUnitsOfOutputProducts
or,
AFC=TotalFixedCostExpectedUnitSalesAFC=TotalFixedCostExpectedUnitSales
Step 3 − (Determination of the desired profit margin)
Selling Price = Unit total cost + Desired unit profit
i.e., Selling Price = AVC + AFC + Mark up

i.e.,
Selling Price=Unit Total Cos1−(Desired Profit Margin Selling Price=Unit Total Cos1− (Desired Profit Margin
These are the steps one needs to follow to calculate cost plus pricing.
➢ Break Even Analysis
It is a point when the investment and revenue of an enterprise is equal; after this point an enterprise gains
profit.
➢ Prices Based on Marginal analysis
In this method, additional cost of that activity is compared to additional profit and the price is calculated
according to margin cost. Thus, the cost and price is evaluated and as per the result, the price is decided
so as to maximize the profit.
Pricing Policies and Strategies
It is essential to establish policies for pricing of its products or services or ideas just as it is for all the aspects of
business decision-making. Without definite price policies, each price decision is a time-consuming, tedious and a
pell-mell affair.
A policy frame-work should lead to pricing that is consistent with the company objectives, costs, competition and
demand for the product. A set of price policies and strategies will not only make price setting easier but also make
possible as series of prices at various levels of distribution that are rational and justifiable.
A. Price Variation Policies:
Price variation policies are those where in the firm attempts to vary the prices of its products with a view to match
them with the differing market needs. There can be three variations of such price variation policies.
These options open to the firm are:
1) Variable price policy.
2) Non-variable price policy and
3) Single price policy.
1) Variable Price Policy:
It is that policy in which the company charges different prices for sale of its like goods at a given time to
similar buyers purchasing in comparable quantities under similar conditions of sale. This is, prices
charged differ from buyer to buyer.
2) Non-Variable Price Policy:
It is also called as ‘one price’ policy because, the company charges similar price for sale of like goods at a
given time to a class of buyers purchasing in comparable quantities under similar conditions of sale. Here,
the price charged varies from class to class say, wholesalers, sub-wholesalers, retailers and distributors.
3) Single Price Policy:
It is that price policy wherein all the buyers irrespective of their class, size, or the conditions of purchases
are charged similar purchase price under similar conditions of sale. This is the price policy that has no
touch of discrimination and it is constructive in the sense that it helps in building goodwill.
B. Geographic Price Policies:
Geographical price policies are fully reflective of the practical problems of consumers and producers or the sellers
locating geographically and the emergent transportation costs of linking them. Take our own country where
production centres are highly concentrated while the consumption centres are widely dispersed.
Thus, the cities like Mumbai, Chennai, Calcutta, Delhi, Ahmadabad, Bangalore, Hyderabad where we have
industrial conglomeration while the demand for the products produced in these comes from far off places. Taking
transport costs as major thrust, pricing policies are designed.
The major geographical pricing policies are:
1) Point of origin price policy.
2) Freight absorption price policy.
1) Point of Origin Price Policy:
It is that type of geographic pricing policy in which a firm quotes ex- factory price and makes no
allowance for the transportation costs necessary to move the goods to the point of destination. There can
be two variations in this policy namely, ‘ex-factory’ and ‘free on rail’ (F.O.R).
2) Freight Absorption Price Policy:

Freight absorption price policy is one that absorbs the transportation costs fully or partly. That is, the
price quoted is inclusive of transportation costs. In other words, the buyers do not bear directly freight
and other transportation charges though the price includes such charges.
There can be three variations of this freight absorption price policy namely:
a) Uniform delivered price policy.
‘Uniform Delivered Price Policy’ is popularly known as ‘postage stamp’ price or ‘F.O.R. Destination’
price. It is one in which the firm absorbs full transportation costs and delivers the goods to all the buyers
at their ends at a uniform price irrespective of location and distance.
b) Zonal price policy
‘Zonal Price Policy’ is one under which the firm divides its markets into zones and quotes uniform prices
to all the buyers located in the identified zone. That is, the prices quoted will differ from zone to zone
rather than a single price all over the country. The price arrived at is the addition of average transportation
costs to the basic price.
c) Base point price policy.
‘Base Point Price Policy’ like zonal pricing policy it implies partial absorption of the transport costs by
the firm. However, the price is quoted by adding transport costs computed up to the buyers’ location by
reference to one geographic location, not necessarily the factory and that location is called as ‘base-
point’.
C. Price Differential Price Policies:
The price policies that involve price differentials are those the pricing firm accepts the gap between the price
‘quoted to the consumers or dealers and the actual price charged. Thus, price differential represents the
differences between the price quoted and the price charged to the buyer.
Such price differentials have been accepted as part of pricing strategies to encourage buyers, to meet competitive
pressure, to attain financial objective and finally to compensate the buyers for the loss of value satisfaction.
By ‘price differential’ we mean that the final price will be less than the quoted price. It is not always true because,
it may mean price hike too. Thus, discounts and rebates reduce the basic price quoted while warranty charges
might increase it that is they are the subtractions and additions to the price quoted. Therefore, the forms of price
differentials are discount rebates and premiums.
Discounts:
Discount is the price differential that reduces the quoted price so that the buyer pays much less than the quoted
price. Discount is an allowance made to the buyers in consideration on marketing services rendered. Discount can
be of three types namely, trade quantity and cash.
The merits of granting trade discount to the company are:
1.An attractive discount lures the intermediaries to operate in the channel.
2.Price can be differentiated without varying it so as to match it with customer demand elasticity.
3.Large discounts help in increasing the sales as the benefit of discount may be passed on to them also. The
only difficult aspect is how to assess the functions and the performance of intermediaries for fixing a
standard rate of discount.
D. Leader Price Policy:
Leader pricing is one where the firm in the industry initiates the price changes and these price changes are so
effective that other firms follow suit. It is the one of price approximation by followers to that of initiator in the
industry.
In marketing jargon the former is called as “price follower” and the latter as “price leader”. This pricing policy
works on the principle that there is some truth and wisdom in following the established and giant units.
E. Psychological Pricing:

Psychological pricing is to do with creating a typical consumer perception so that the consumer is made to buy the
product. That is, the prices fixed influence the psyche of customer and spur him to action. It is mostly the price
policy followed by consumer durables.
Thus, shoes companies in India have played with the consumer psychology by pricing say, Mocasin pair at Rs.
399.95 instead of pricing at Rs. 400.00 straight. It means two things; for the customer one that things are cheaper
and that the manufacturers are not exploiting the consumers because, they are true to the last paisa. It is an
advantage to the seller as it multiplies the sales.
F. New Product Pricing Policies:
Basically, price determination process involved in case of new products need not be very much different from
those of existing products. However, there are distinct price objectives involved in case of new products. Larger
latitude of pricing objectives is possible in case of new products; pricing flexibility is also greater.
There is growing competition and limited accepted prices when the new product is in the growth, maturity and
decline stage. Further, as product is yet to see light of the day, much depends on external factors.
In case of new products, there can be two possible price policies namely:
1.Skimming price policy and
2.Penetration price policy.
1. Skimming Price Policy:
Skimming price policy sets high initial price to first profit from price inelastic customers, and then successively
lowering the prices, often under increasing competitive conditions, to the levels that more price sensitive
customers are willing to pay. It sets introductory prices at high levels relative to costs to “skim the cream” off the
market.
This skimming pricing policy is going to be very successful under the following conditions:
1) Where the demand is relatively inelastic because, the customers know little about the product and close
rivals are few.
2) Where the market can be broken down into segments with different price elasticities of demand.
3) Where little is known about the cost or price elasticity of the product.
4) Where it is essential to minimise the risk as one can move down then move up in the prices. The
companies with high price tags ride the storms of depression easier than the cut-price merchants as their high
margins support them.
5) Where the firm is efforting to ‘up-market’ its product so as to improve further on quality, service and
expenditure on marketing costs and so capitalise on its efforts.
2. Penetration Price Policy:
As opposed to the concept of skimming price strategy, it is an attempt to set new product prices low relative to the
costs. It involves setting low initial price to establish market share, pre-empt the competitors and/or to capitalise
production economies. By setting low initial prices, the competitors are kept away and this makes possible for the
firm to enlarge its share by generating larger sales volume.
The conditions which favour penetration pricing policy are:
1) Where there is high price elasticity of demand. That is, the firm is depending on low prices to attract more
customers to new product.
2) Where large scale economies are possible, it is because, large sales volume means lower unit cost.
3) Where there is a strong threat of competition; here only a low price can ward off potential entrants to the
market.
4) Where there is unutilised capacity; it is because, the price policy that increases the demand has no
meaning unless the firm is in a position to meet the demand created.
5) Where market segments are not there so that high price may be accepted.
G. Promotional Pricing:
The intention of promotional pricing is to stimulate early purchase on the part of consumers.
Companies follow good many strategies to achieve this goal.
These are:
1. Loss Leader Pricing:

Most of the supermarkets and departmental stores reduce the prices of products on well known brands to attract
more and more customers to increase sales. This pays if the additional revenue.
Sales compensates for the lower margins on the loss-leader-items. Manufacturers of loss-leader brands generally
object to this practice because it can dilute the brand image and bring more complaints from retailers who charge
the list-price.
2. Special Event Pricing:
Sellers fix special prices in certain seasons and events to draw more customers. Mostly seasonal products make it
possible to make good margin. The event of reopening of schools and colleges in June, there good demand for
student’s needs. Even in case of eventful festivals, sellers make good margin and money by charging uniquely
higher and bargain prices. In India marriage season attracts people to buy gold and jewelleries and clothes
between Octobers to May.
3. Cash Rebates:
In case of consumer durable goods-especially white goods like two- wheelers, autos, cars, fans, fridges, washing
machines and home appliances including electronic goods, cash rebate is given.
4. Low or Zero Interest Financing:
Instead of cutting the product’s prices; the companies can offer goods at zero or low rate of interest the finance.
This is a credit transaction but there is a guarantee of recovery and hard sell goods are pushed off. This is very
much common in case of consumer durables. This helps the consumers too. Further, the investment inventories
are cut on the part of the manufacturers and distributors.
5. Longer Period Payments:
Consumers hesitate to buy products like cars, two wheelers, ready flats, and travelling. In such cases, they do not
mind paying comparatively higher rates of interest, but the period of payment is extended to make monthly
instalment quite handy. This is good proposal for both dealers and customers.
6. Warranties and Service Contracts:
We see that companies have been tempted to extend warranty period which never heard earlier. Thus, LG
Washing Machine has 7 year warranty. Asian paints have 8 year warranty. Similarly in case of TV sets and other
electronic goods warranty period is extended because of which consumers come forward to buy these products
without any hesitation. Added to this, they extend service contracts at reasonable costs.
7. Psychological Discounting:
One is aware of discounts from normal prices are legitimate form of promotional pricing. Now more and more
companies are adopting what is known as psychological discounting. It means that the price is originally at a high
level much more than that of normal. Later, high rate of discount is given, where the seller is at gain always.
Topic – 10 Promotion Mix
Definition: The Promotion Mix refers to the blend of several promotional tools used by the business to create,
maintain and increase the demand for goods and services.
he fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on creating the awareness and
persuading the customers to initiate the purchase. The several tools that facilitate the promotion objective of a
firm are collectively known as the Promotion Mix.
The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion, Public Relations and
Direct Marketing. The marketers need to view the following questions in order to have a balanced blend of these
promotional tools.
➢ What is the most effective way to inform the customers?
➢ Which marketing methods to be used?
➢ To whom the promotion efforts be directed?
➢ What is the marketing budget? How is it to be allocated to the promotional tools?

Elements of Promotion Mix
1) Advertising is the paid presentation and promotion of ideas, goods, or services by an identified sponsor in a
mass medium. Examples include print ads, radio, television, billboard, direct mail, brochures and catalogs,
signs, in-store displays, posters, mobile apps, motion pictures, web pages, banner ads, emails.
2) Personal selling is the process of helping and persuading one or more prospects to purchase a good or service
or to act on any idea through the use of an oral presentation, often in a face-to-face manner or by telephone.
Examples include sales presentations, sales meetings, sales training and incentive programs for intermediary
salespeople, samples, and telemarketing.
3) Sales Promotion is media and non-media marketing communication used for a pre-determined limited time
to increase consumer demand, stimulate market demand or improve product availability. Examples include
coupons, sweepstakes, contests, product samples, rebates, tie-ins, self-liquidating premiums, trade shows,
trade-ins, and exhibitions.
4) Public relations or publicity is information about a firm's products and services carried by a third party in an
indirect way. This includes free publicity as well as paid efforts to stimulate discussion and interest. It can be
accomplished by planting a significant news story indirectly in the media, or presenting it favorably
through press releases or corporate anniversary parties. Examples include newspaper and magazine articles,
TVs and radio presentations, charitable contributions, speeches, issue advertising, seminars.
5) Direct Marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to
communicate directly to the customer, with methods such as mobile messaging, email, interactive consumer
websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising.
6) Corporate image campaigns have been considered as part of the promotional mix.
7) Sponsorship of an event or contest or race is a way to generate further positive publicity.
8) Guerrilla marketing tactics are unconventional ways to bring attention to an idea or product or service, such
as by using graffiti, sticker bombing, posting flyers, using flash mobs, doing viral marketing campaigns, or
other methods using the Internet in unexpected ways.
9) Product placement is paying a movie studio or television show to include a product or service prominently
in the show.
10) Digital marketing is the marketing of products or services using digital technologies, mainly on the Internet,
but also including mobile phones, display advertising, and any other digital medium.

The Role Of Promotion Within The Marketing
1) Increase Brand Awareness
Promotions such as television, radio and magazine advertising increase brand awareness. More people
tend to learn about a particular company or its brands if they frequently see or hear about them. New
companies particularly have to advertise to apprise consumers who they are and what they offer. This is
true with local or even national companies, as brand awareness can be measured by market, regionally or
nationally. It can take many months or even years for companies to build brand awareness levels that
match established competitors.
2) Provide Information
Small companies also use promotions to provide information, notes KnowThis, a popular online business
reference site. Marketers may run press releases to apprise consumers that their products can help certain
ailments. A small consumer products manufacturer may use displays and pamphlets to describe the
benefits of a new health food. High-tech manufacturers often use in-store videos and demonstrations to
show people how to use their products. Promotions can inform people during all stages of the buying
process, including their initial search. Small business owners also use promotions to inform consumers
about price, product features and outlets that sell their products.
3) Increase Customer Traffic
Grocery stores, beauty salons and movie theaters use promotions such as frequency programs to increase
customer traffic. A frequency program promotion is designed to reward people the more they visit and
spend with a retailer. Most retailers start their frequency programs by having customers fill out an
application. They then issue cards for customers to use each time they make a purchase; the cards contain
magnetic strips that track purchases through registers and computers. Frequency card promotions are
designed primarily to attract traffic among current customers. New customers also may be attracted to the
promotion if they hear about it.
4) Build Sales and Profits
The primary objective in using promotions such as advertising, sales promotions and public relations is to
build sales. Promotions are designed to get people to try products and services. Promoting high-quality
products or services aims to get customers to return and spend more money. Ultimately, companies use
promotions to build a loyal customer base, which leads to greater sales and profits
Topic – 11 Advertising
Advertising is the action of calling public attention to an idea, good, or service through paid announcements by an
identified sponsor.
According to Kotler –
Advertising is any paid form of non-personal presentation & promotion of ideas, goods, or services by an
identified sponsor.
According to Advertising Association of the UK –
Advertising is any communication, usually paid-for, specifically intended to inform and/or influence one or
more people.
Characteristics Of Advertising
➢ Paid Form: Advertising requires the advertiser (also called sponsor) to pay to create an advertising
message, to buy advertising media slot, and to monitor advertising efforts.
➢ Tool For Promotion: Advertising is an element of promotion mix of an organization.
➢ One Way Communication: Advertising is a one way communication where a brands communicate to
the customers through different mediums.
➢ Personal Or Non-Personal: Advertising can be non-personal as in the case of TV, radio, or newspaper
advertisements, or highly personal as in the case of social media and other cookie based advertisements.
➢
Types Of Advertising
Advertising activities can be categorized into above the line, below the line, and through the line advertising
according to their level of penetration.
➢ Above the line advertising include activities that are largely non-targeted and have a wide reach. Examples
of above the line advertising are TV, radio, & newspaper advertisements.

➢ Below the line advertising include conversion focused activities which are directed towards a specific
target group. Examples of below the line advertising are billboards, sponsorships, in-store advertising, etc.
➢ Through the line advertising include activities which involve the use of both ATL & BTL strategies
simultaneously. These are directed towards brand building and conversions and make use of targeted
(personalized) advertisement strategies. Examples of through the line advertising are cookie based
advertising, digital marketing strategies, etc.
Advertising activities can also be categorized into 5 types based on the advertisement medium used. These types
of advertisements are:
o Print Advertising: Newspaper, magazines, & brochure advertisements, etc.
o Broadcast Advertising: Television and radio advertisements.
o Outdoor Advertising: Hoardings, banners, flags, wraps, etc.
o Digital Advertising: Advertisements displayed over the internet and digital devices.
o Product/Brand Integration: Product placements in entertainment media like TV show, YouTube video,
etc.
Objectives Of Advertising
There are 3 main objectives of advertising. These are:
1) To Inform
Advertisements are used to increase the brand awareness and brand exposure in the target market.
Informing the potential customers about the brand and its products is the first step towards attaining
business goals.
2) To Persuade
Persuading customers to perform a particular task is a prominent objective of advertising. The tasks may
involve buying or trying the products and services offered, to from a brand image, develop a favourable
attitude towards the brand etc.
3) To Remind
Another objective of advertising is to reinforce the brand message and to reassure the existing and
potential customers about the brand vision. Advertising helps the brand to maintain top of mind
awareness and to avoid competitors stealing the customers. This also helps in the word of mouth
marketing.
Other objectives of advertising are subsets of these three objectives. These subsets are:
➢ Brand Building
➢ Increasing Sales
➢ Creating Demand
➢ Engagement
➢ Expanding Customer Base
➢ Changing Customers’ attitudes, etc.
Importance Of Advertising
1) To The Customers
o Convenience: Targeted informative advertisements make the customer’s decision making process easier
as they get to know what suits their requirements and budget.
o Awareness: Advertising educates the customers about different products available in the market and their
features. This knowledge helps the customers compare different products and choose the best product for
them.
o Better Quality: Only brands advertise themselves and their products. There are no advertisements of
unbranded products. This ensures better quality to the customers as no brand wants to waste money on
false advertising.
2) To The Business
o Awareness: Advertising increases the brand and product awareness among the people belonging to the
target market.
o Brand Image: Clever advertising helps the business to form the desired brand image and brand
personality in the minds of the customers.

o Product Differentiation: Advertising helps the business to differentiate its product from those of
competitors’ and communicate its features and advantages to the target audience.
o Increases Goodwill: Advertising reiterates brand vision and increases the goodwill of the brand among
its customers.
3) Value For Money: Advertising delivers the message to a wide audience and tends to be value for money
when compared to other elements of promotion mix.
Advantages Of Advertising
1) Reduces Per Unit Cost: The wide appeal of advertisements increases the demand of the product which
benefits the organization as it capitalizes on the economies of scale.
2) Helps In Brand Building: Advertisements work effectively in brand building. Brands who advertise are
preferred over those which doesn’t.
3) Helps In Launching New Product: Launching a new product is easy when it is backed by an
advertisement.
4) Boosts Up Existing Customers’ Confidence In The Brand: Advertisements boosts up existing
customers’ confidence in the brand as they get a feeling of pride when they see an advertisement of the
product or the brand they use.
5) Helps In Reducing Customer Turnover: Strategic advertisements of new offers and better service helps
reduce customer turnover.
6) Attracts New Customers: Attractive advertisements helps the brand in gaining new customers and
expanding business.
7) Educates The Customers: Advertisements inform the customers about different products existing in the
market and also educates them in what they should look for in an apt product.
Disadvantages Of Advertising
1) Increases The Costs: Advertising is an expense to the business and is added to the cost of the product.
This cost is eventually borne by the end consumer.
2) Confuses The Buyer: Too many advertisements with similar claims often confuses the buyer in what to
buy and should he buy the product or not.
3) Is Sometimes Misleading: Some advertisements use smart strategies to mislead the customers.
4) Only For Big Businesses: Advertising is a costly affair and only big businesses can afford it. This makes
small businesses out of competition with big businesses who gets to enjoy a monopoly in the market.
5) Encourages The Sale Of Inferior Products: Effective advertisements even lead to the sale of inferior
products which aren’t good for the consumers.
Topic -12 Personal selling
Personal selling occurs when a sales representative meets with a potential client for the purpose of transacting
a sale. Many sales representatives rely on a sequential sales process that typically includes nine steps. Some sales
representatives develop scripts for all or part of the sales process. The sales process can be used in face-to-face
encounters and in telemarketing.
Different types of sales roles can be identified:
➢ Order takers refers to selling that occurs primarily at the wholesale or retail levels. Order processing
involves determining the customer needs, pointing to inventory that meets the customer needs and
completing the order.
➢ Order getters refers to the in-field sales activity where a sales representative travels to the client's home
or work place to makes a sales presentation in order to win new business or to maintain relations with
existing clients.
➢ Missionary selling is often seen as a sales support role. The missionary sales person distributes
information about products or services, describes product attributes and leaves materials but does not
normally close the sale. The missionary sales person often prepares the way for a field sales person. For

example, a pharmaceutical sales representative may call on doctors and leave samples, manufacturer
information such as results of clinical trials, copies of relevant journal articles etc. in an effort to persuade
doctors to prescribe a medication or course of treatment.
➢ Cold calling refers to a situation when a sales representative telephones or visits a customer without a
prior appointment. Cold calling is often considered to be the most challenging of the sales activities. In a
cold calling situation, the sales representative is likely to be more conscious of the client's time, and may
seek to condense the sales process by combining the approach and the sales presentation into a single
step.
➢ Relationship selling (also known as consultative selling) refers to a sales practice that involves building
and maintaining interactions with customers in order to enhance long term relationships. Relationship
selling often involves a problem solving approach where the sales representative acts in a consultative
role and becomes a partner in the client's problem-solving exercise. Relationship selling is often found in
high-tech selling environments. See also: Solution selling
Advantages of Personal Selling
1) It is a two-way communication. So the selling agent can get instant feedback from the prospective buyer.
If it is not according to plan he can even adjust his approach accordingly.
2) Since it is an interactive form of selling, it helps build trust with the customer. When you are selling
high-value products like cars, it is important that the customer trusts not only the product but the seller
also. This is possible in personal selling.
3) It also is a more persuasive form of marketing. Since the customer is face to face with the salesperson it
is not easy to dismiss them. The customer at least makes an effort to listen.
4) Finally, direct selling helps reach the audience that we cannot reach in any other form. There are
sometimes customers that cannot be reached by any other method.
Disadvantages of Personal Selling
1) It is a relatively expensive method of selling. High capital costs are required.
2) Also, it is an extremely labour intensive method. A large sales force is required to carry out personal
selling successfully.
3) The training of the salesperson is also a very time consuming and costly.
4) And the method can only reach a limited number of people. Unlike TV or Radio ads it does not cover s
huge demographic.
Topic -13 Publicity
Publicity is also a way of mass communication. It is not a paid form of mass communication that involves getting
favourable response of buyers by placing commercially significant news in mass media. Publicity is not paid for
by the organisation. Publicity comes from reporters, columnists, and journalists. It can be considered as a part of
public relations.
William J. Stanton:
“Publicity is any promotional communication regarding an organisation and/or its products where the message is
not paid for by the organisation benefiting from it.”
Characteristics of Publicity:
Key characteristics of publicity have been briefly described in following part:
1) Meaning:
Publicity is not a paid form of mass communication that involves getting favourable response of
buyers by placing commercially significant news in mass media. It involves obtaining favourable
presentation upon radio, newspapers, television, or stage that is not paid for by the sponsor.
2) Non-paid Form:
Publicity is not a paid form of communication. It is not directly paid by producer. However, it
involves various indirect costs. For example, a firm needs some amount for arranging function,
calling press conference, inviting outstanding personalities, decorating of stage, other related
costs, etc.

3) Various Media:
Mostly, publicity can be carried via newspapers, magazines, radio, or television. For example, in case a
product is launched by popular personality in a grand function, the mass media like newspapers,
television, radio, magazines, etc., will definitely publicize the event.
4) Objectives:
Sales promotion is undertaken for a wide variety of purposes. They may include promotion of new
product, pollution control, special achievements of employees, publicizing new policies, or increase in
sales. It is primarily concerns with publishing or highlighting company’s activities and products. It is
targeted to build company’s image. In a long run, it can contribute to increase sales.
5) Control of Producer:
Company has no control over publicity in terms of message, time, frequency, information, and medium. It
comes through mass media like radio, newspapers, television, etc. It is given independently by the third
party. It is presented as a news rather than propaganda.
6) Credibility/Social Significance:
Publicity has high degree of credibility or reliability as it comes from mass media independently. It is
given as news for social interest. It has more social significance compared to other means of market
promotion.
7) Part of Public Relations:
Publicity is a part of broad public relations efforts and activities. Public relations includes improving,
establishing, and maintaining direct relations with all publics. Publicity can help improve public relations.
8) Costs:
Publicity can be done at much lower cost than advertising. Company needs to spend a little amount to get
the event or function publicized.
9) Effect:
Publicity message is more likely to be read, viewed, heard, and reacted by audience. It has a high degree
of believability as it is given by the third party.
10) Repetition:
Frequency or repetition of publicity in mass media depends upon its social significance or the values for
news. Mostly, it appears only once.
Importance of publicity can be made clear from the below stated points:
1) Publicity is an effective medium to disseminate message to the mass with more credibility. People have
more trust on news given by publicity.
2) The credibility level of publicity is much higher than advertising and other means of market promotion.
People express more trust on what the third party independently says. It appears directly through
newspapers, magazines, television, or radio by the third party. It is free from bias.
3) It provides more information as the valuable information is free from space and time constraints.
Similarly, publicity takes place immediately. No need to wait for time or space in mass media. It enjoys
priority.
4) The firm is not required to pay for publicity. The indirect costs related to publicity are much lower than
other means of promotion.
5) It is a part of public relations. It is free from exaggeration; it carries more factual information about
company. It is more trustable. It helps establish public relations.
6) Generally, publicity covers the varied information. It normally involves name of company, its goods
and services, history, outstanding achievements, and other similar issues. The knowledge is more
complete compared to advertisement.
7) Publicity directly helps middlemen and sale persons. Their tasks become easy. Publicity speaks a lot
about products on behalf of middlemen and salesmen. Sellers are not required to provide more
information to convince the buyers.
8) It is suitable to those companies which cannot effort the expensive ways to promote the product.

Marketing Management (UGC NET Commerce & Management

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