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Marketing means selling of goods and services. In
other words, it is the process by which goods are made
available to ultimate consumers from their place of origin.

Marketing consists of those activities which

are concerned with the transfer of ownership of goods from
producers to consumers. Marketing is regarded as
production/sales oriented.
The American Marketing Association (AMA) defines marketing as ‘the
process of planning and executing the conception,pricing,promotion
and distribution of ideas,goods and services to create exchanges that
satisfy individual and organizational goals.”

Marketing deals with products.A product can be a good,service or idea.

A good;A good is a physical entityi.e. it is a tangible product that can
be touched and feel.e.g. a shirt or a bar of chocolate.
A service:A service has no physical form or it is an intangible
product.A service is created when human efforts are clubbed with
mechanical efforts to provide intangible benefits,it gives some value to
the consumer.e.g.laundry,healthcare,transportation,banking etc.
An idea:Ideas provide intellectual or spiritual benefits to
consumers.e.g.politician selling idea like protection of human rights to
political activities.
Evolution of Marketing
1.The Stage of Barter;Before the evolution of industrial
revolution,the agriculturist,whether he produced corn or cotton,meat or
butter,disposed off the surplus in his immediate neighbourhood.These
products were required in the neighbourhood by those people who
were not engaged in the same activity.The agriculturist barterd the
corn,cotton,meat and butter produced by him for leather,hand
tools,utensils and furniture produced by the craftsman.there was no
elaborate distribution system.This represented the stage of barter in the
evolution of marketing.

2.The Stage of Money Economy;No fundamental or far reaching

change took place in this stage of production and distribution of
goods.The change was replacement of barter systemby the money
system,pricing became the mechanism of the exchange process.
3.The Stage of Industrial Revolution;Far reaching changes took
place in this stage.It introduced beginning of new business system.It
introduced new products,new systems of manufacture,new modes of
transportation and methods of communication and brought about
changes in the physical and economic environment.Mass production
lead to variety of low priced goods.It lead to income revolution,giving
a great deal of disposable income to large mass of people.

4.The Stage of Competition;Themass production and mass

distribution brought by Industrial revolution soon led to stage of
competition.The situation demanded the firms to make concious
efforts to make sure their products were preffered overs those by their
5.The Emergence of Marketing;After the Second World War,the
size and characteristics of markets in many countries of the world
changed enormously.There was substantial increase in the
population;the disposable increase per family increased,new
industrial concerns sprang up,a great variety of new products and
services strengthened the rapidly developing consumer market;so
selling of products and services became very difficult and
competitive.Abundant choices were made available to the consumer
and consumer occupied a place of great importance.The indusrial
firms realized that it was not enough to make one time sale and they
ensure that consumers come and buy their products again and
again.They also ensure that product was made availabole at a place
convenient to the consumer.Theyalso ensure best price of the product
and also if any complaint then after sale service to be provided to the
consumer.This lead to emergence of marketing.
Modern Concept of
Modern concept of marketing
According to the modern concept, marketing is concerned with
creation of customers. Creation of customers means identification of
consumer needs and organising business to satisfy these needs.
Marketing in the modern sense involves decisions regarding the
following matters;
1. Products to be produced
2. Prices to be charged from customers
3. Promotional techniques to be adopted to contact and influence
existing and potential customers.
4. Selection of middlemen to be used to distribute goods & services.

This concept of marketing is regarded as consumer oriented as the

emphasis of business is laid on consumer needs and their satisfaction.
Role of marketing
Role of marketing in business
Marketing involves ascertaining the needs and requirements of
customers.This enables the firms to produce goods and services
Demand for goods and services is created through the techniques of
advertising and personal selling.The role of marketing in business
success has become vital because of the following reasons.
1. Technological changes are taking place at fast pace.

2. Competition has become intense in the market.

3. Consumer tastes and preferences are changing very fast.

4. Production is organised on a large scale.

Role of marketing in society

Marketing has also an important role in society.;

1.It makes new and better products available to people.

2.Increasing their standard of living.

3. It helps in creation of new jobs.

4.It bridges the gap between production and sale of goods, making
economic activity possible. It integrates agricultural and industrial

Overall it leads to economic development of the country.

Objectives of marketing
Marketing activities are organised to achieve the following

1. Consumer satisfaction : Marketing activities are organised with

the objective of ensuring that consumers get maximum satisfaction
from the use of the product. Consumer satisfaction ensures steady
and growing demand for firm’s products.
2. Product development : This objective aims at developing new
and better products, which may provide greater satisfaction to
consumers. Product development is necessary for the survival
and growth of the firm.
3. Sustaining Customer loyalty : If customers continue to make
repeated purchases of goods and services, it is possible to sustain
the demand for the products of the firm.
4.Earning profits : Business must earn sufficient profit. Marketing
activities are organised with the objective of earning adequate
profits for the firm.
5. To secure competitive advantage : This objective of marketing
ensures that a firm’s products are preferred over competitor’s
product. Competitive advantage is achieved through cost efficiency
and quality improvements of the products.
6. Growth in Sales : Marketing aims at increasing the sale of
firm’s products. This is necessary to maintain or increase the
market share of the firm. Market share means percentage demand
satisfied by the firm for a particular product. Growth in sales
ensures survival of the firm in the long run.
7. Creation of goodwill : This objective of marketing ensures that
a business firm is regarded as a useful part of society engaged
in satisfying consumer needs. This help business firms to survive
and grow.
Nature of marketing
1.Marketing is essentially a managerial activity; It involves
decisions regarding product, prices, promotion and place with the
objective of providing satisfaction to consumers for the money they pay
and earning profits for the business firms.
2.Marketing starts with the identification of consumer needs;Once
consumer needs are identified, goods and services are designed and
developed to satisfy those needs. Goods are produced by production
department according to market requirements and as determined by the
marketing department. This requires proper co-ordination between the
two departments.
3.Advertising and personal selling are important tools of
marketing; They create an awareness among consumers of their needs
for goods and services. These activities help in creating demand for
products. This demand is met by distribution of goods and services
through various channels. After-sale service is also provided to
Studies have revealed that different organisations have
different perceptions of marketing and it has lead to
the formation of different concepts of marketing such
1.The Exchange concept:
a)Exchange of product between seller and buyer.
b)marketing is much more broader than exchange and exchange is
only a part of it.
c)it does not cover other aspects of marketing like :
1.concern for the customer
2.creative selling
3.generation of value satisfactions
4.integrated action for serving the customer
2.The Production concept:
a)All the focus is on the production.
b)Concentrate on achieving high production efficiency, low cost&
mass distribution.
c)This concept also fail to understand the needs of the customer as
they believe that the steep decline in the unit cost arising from the
maximization of output would bring them all the customers and the
profit they need but this will not give them the customer support as the
customers are motivated by the variety of considerations in their
d)As a result ,the production concept also fails to serve the right
marketing philosophy.

e.g.Inexpensive Toys,electronics
3.The Product concept:
a)This concept is based on product excellence-improved
products,new products and ideally designed and engineered products.
b)It also places the emphasis on quality assurance.
c)They spend considerable time and money on research and
development and bring in new variety of products yet they fail in the
d)They do not bother to study the market and the consumer in depth.
e)they get so engrossed in their product that they forget to find out
what the customer actually need and what they would gladly accept.
f)It leads to marketing myopia.
Marketing Myopia
a)‘marketing myopia’ means crooked perception of marketing and
short sightedness about business.
b)Excessive attention to the production or product or selling aspects at
the cost of customer and his actual needs,creates a myopia.
c)it leads to wrong or inadequate understanding of the market and
hence failure in the market place.
d)It also leads to a wrong understanding or inadequate understanding
of the very nature of the business thereby affecting its future.
e)Since The business keep changing with times but the basic
fundamental characteristics related to human need which business
seek to serve amd satisfy through its products should be maintained.
f)they should define their business according to their fundamentals
and not in the terms of the products and services manufactures at
given point of time.
E.g. movie makers should define their business as entertainment.
4.The Sales concept:
a)The sales concept maintains that a company cannot expects its
product to get picked up automatically by the customers.
b)The company has to consciously push its products.
c)Aggressive advertising,high power personal selling,large scale
promotion,heavy price discounts,strong publicity and public relations
are the normal tools that rely on this concept.
d)In this kind of concept companies believed that selling is
synonymous with marketing but in reality there is a great deal of
difference between selling and marketing.
Marketing Selling
1.Marketing starts with the customer ,present and 1.Selling starts with the seller.It focuses on the need of
potential and focuses constantly on the need of the the need.Seller is the centre of the business
buyer.Buyer is the centre of the business universe.activities starts with sellers existing products.
universe.activities follow the buyer and his needs.
2.Emphasis on identification of a market opportunity 2.Emphasis on saleable surpluses available within the
and fulfilling the needs of the customer. corporation.
3.Seeks to convert customer ‘needs’ into ‘products’. 3.Seeks to convert ‘product’into ‘cash’,concerns itself
with the tricks and techniques of getting the customers to
buy the product available with the salesman in exchange
of cash.
4.View business as ‘customer satisfying process’. 4.View business as a ‘goods producing process’.

5.It is concern with the ‘value satisfaction ‘ customer 5.Overemphasis the ‘exchange’aspectwithout caring for
should get from the exchange. the ‘value satisfaction’ inherent in the exchange.
6.The firm makes a ‘total product offering’that would 6.The firm makes the product first and then figure out
match and satisfy the identified needs of the how to sell it and make profit.
7.Adopting more innovative technology to provide 7.Emphasis on staying with the existing technology and
better value to the customer. reducing the cost of production.
8.If the enterprise has a customer orientation- 8.If the enterprise has internal orientation concerned
concerned more about his needs,and make genuine more about itself and its products and the need to
efforts to satisfy those needs ,then it is practising dispose off its products,then it is practicing ‘Selling’.
Marketing Selling

9.Consumer determines price;price 9.Costs determine price.

determines cost.

10.They are seen as vital services 10.Transportation,storage and

to be provided to the customers other distribution functions are
keeping in mind their convinience. merely a part of production
11.In firms practising function.
11.In firms practising
‘marketing’,marketing is the ‘selling’,production is the central
central function of the business;the function of the business.
entire company is organised
around the marketing the
12.’Marketing’views function.
customer 12.’Selling’ views the customer as
as the very purpose of the the last link in the business.
business;sees business from point
of view of the customer.
Features of Marketing Concept

1.Consumer Orientation;Consumer orientation places consumer at

the beginning as well as at the end of the business cycle.Consumer
becomesthe focal point of the business.Organisations should
strive,adapt and alter products to keep pace with the ever changing
customer preferences and desires.

2.Long term profitability;Customer satisfaction,which is a major

theme of the marketing concept does not preach that a firm must
generate consumer and forget the other goals of the
organisation.Instead it should treat customer as a pathway to the
attainment of all the goals of the organisation.And ,inthis process,the
Organisational goals including profits are automatically realised.The
Market Concept never suggests that profit is unimportant to the firm
but are essential for the survival and growth of any business.
3.Integrated Management action;All Organisational departments
should be well coordinated keeping marketing as the pivot.Lack of
coordination between different departments or function can hamper the
performance of the organisation.Themarketing department should be
well coordinated with other departments like R&D,finance,personnel
and manufacturing.
The organisations that do not practice integrated management,the
departments are preoccupied with the optimisation of their specific
activities thus effecting the overall result.
e.g. the engineering department may create a substandard product to
save cost of production.
Who benefits from the Marketing Concept
1.The Organisation;The organisation keep itself in the pace with the
times and through contineous marketing audit,market research and
consumer testing.It is quick to respond to changes in the buyer
behaviour,rectify its products and give great importance to
planning,research and innovation.

2.The Consumer;As the organisation improve its products,it benefits

its consumers as they get better quality,low price,improved/new
products and ready stocks at convinient places.

3.The Society;Since the Organisations are producing products as per

the consumers so it ensures that the society’s economic resources are
channelised in the right direction.It also creates entrepreneurs and
managers in the given society.It improves the standard of living of the
people and accelerates economic development of the society as a
Marketing Environment
The Performance of the firm depends upon its sales and sales depend
upon the marketing environment that influence its market
activities.The marketing activities focus on satisfying customer
needs.With the market environment becoming increasingly dynamic,it
is necessary for the firm to keep pace with the changing environment.

A variety of internal and external forces have an impact on an

organisation and its marketing environment.
Internal forces are inherent to the firm and can be controlled by the
External forces are dynamic and any change in them bring
uncertainties,threats and opportunities to the marketers.
Business Environment of a Firm
H u m a n R e so u rce s

Pro d u ctio n Fa cility

In te rn a l E n viro n m e n t R &D

C o m p a n y Lo ca tio n

Fin a n cia l C a p a b ility

Firm C o m p a n y Im a g e
D e m o g ra p h ic
S u p p lie rs
Le g a l
M icro E n viro n m e n t
M a rke t In te rm e d ia rie s Po litica l

C u sto m e rs Te ch n o lo g ica l
E xte rn a l E n viro n m e n t
S o cio -cu ltu ra l

E co n o m ic

M a cro E n viro n m e n t N a tu ra l
Macro Environment

Macro environmental forces do not affect the operations of a company

aand its relationship with its customers and suppliers,directly and
immediately.However,they affect the company in the long run.

1.Demographic Environment;Demographics is a branch of sociology that

deals with the study of the characteristics of human population such as
size,growth,density,distribution,gender and marital status.
E.g.demand for smaller houses and household items has increased
significantly due to rise in the smaller families.
Since no of children in a family has reduced and more women are taking up
professions,the average income is on rise and the amont spent on each person
has increased,people are looking for more lifestyle products.
Cosumer Groups;Demographic variables help in distinguishing consumer
groups.Condumer groups that attract the attention of marketers can be
classified as;
Infants:The population of India is growing at an alarming rate and the
average spending per family is increasing,so the demand for toys,baby care
products,clothes and diapers is increasing.

Children(School going-teens):the demand for school

dress,bags,shoes,stationary,confectionaries ,bicycles and other teen-oriented
products like i-pod,laptops,computers are increasing.

Young Adults:Young adults in the age group of 19-30 years with products
like motorbikes,music systems,clothes,fast food joints and sports car,the
demand for these products are increasing.

Adults(35-50):Consumers in this age group are more health concious,so

industries like pharmaceuticals,fitness products,gym equipment,real
estate,cars,home appliances,insurance sector,cars etc.
Senior citizens:This group has increased the demand for healthcare
services,retirement housing,select skin care products.Companies like
Tranquility have come up with products like wipers and mattress
protectors for seniors with bowel and bladder problems.
Apart from Age other demographic factors that influence marketer’s
decisions are:

Women:Women constitute nearly 50% of the population and since

they are taking professional jobs there is greater demand for child
care and convinient products that saves times in cooking,cleaning and
shopping.e.g. companies like MTR,ITC,Knorr have come up with
products like precooked vegetables,noodles,chapatis.

Singles:Nearly one third of the population in India are Single.This

group includes single men and women,and divorcees.Spending habits
of single are different like small houses,less and convinient
furniture,fewer and smaller appliances,smaller packages of
products ,spend heavily on travel,convinient food,restaurants and
Occupation and Literacy:A literate customer is more demanding and
conscious to advertising.The awareness is high.They gather
information and then buy the product.e.g. advertisements in
magazines and newspapers create more demand for personal care
products,clothing and shoes.

Location:Geographical location is another vital element,which

determines the demand for the products.A product may be well
accepted in one region whereas fail in another region.

Cultural diversity:As a result of more liberalization and globalization

people from various part of the world work
together.Hipanics,Asians,Latinos and American Africans constitue a
significant part of US population.People with different cultural
backgroung have different needs,wants,tastes and preferences.
2.Political Environment
Government policies shape the economic conditions and trade
relationships and are influenced by the political
environment.Government policies influence the marketing decisions
and strategies of a firm.Organisations should closely monitor all the
political environment of the countries.Foreign investment is lower in
less stable countries.

Domestic politics:
When Organizations help in electing candidates that support their
industry by funding election campaigns and sometimes run political
ads for them.A company may contribute to one party at a time.

International Politics:MNCs try to influence foreign politicians and

governments through the domestic governments.
3.Economic Environment:
The economic performance of a country is measured by its Gross
Domestic Product(GDP).The gap in GDP between rich and poor
countries has increased primarily due to higher population growth in
poor countries.Purchasing power parity(PPP) is used to compare
incomes across nations.The higher the (PPP) of a country,the more
buying power it enjoys.

Buying Power:The buying power of a person depends upon the

financial resources and the state of the economy.
E.g.Due to inflation the prices of goods and services increases so a
person can buy fewer goods if the income is constant.It means the
purchasing power decreases.So marketers should study fluctuations in
the demand for their products,and develop appropriate strategies.
The major sources Financial Resources of buying power are:
A.Income:The income of an individual refers to the total amount of money
earned by him over a fixed period of time.Sources of income
are;wages,rent,investments,dividends and salary.
a)Disposable income:The income left to consumers after tax is disposable
b)Discretionary income:The income left after purchasing the basic needs is
known as discreationary income.Customers use them for their future savings
or purchasing non-essentials.Change in this income affect sales.So the
marketers should pay closer attention to the changes in the income levels.

B.Credit:Credit is obtained from financial institutions,banks and

Stores.Marketers can lure customers to use credit by offering them attractive
rates and payment plans.

C.Wealth:It refers to accumulated money of individuals,a group of

individuals.Wealth ca n be generated through
savings,inheritence,gambling,gifts and theft.It can be in the form of
Bonds,property,jewellery and antiques.Wealth increases the buyer power of
the person.

Socio-Cultural forces refer to the attitude,beliefs,norms,values and lifestyles

of individuals in a society.
e.g.-As life style changes due to both husband and wife working ,the market
for ready made food and garments have increased and the shopping time is
reduced significantly so this has given boost to shopping malls,supermarkets
where individuals can get everything under one roof.Changes in the lifestyle
of people affect the marketing environment.To a great extend,social forces
determine what customers buy,how they buy,where they buy,when they
buy,and how they use the products.
Today ,technology guides the way we lead our lives.Our eating
habits,sleeping patterns,health care,and work style,are all influenced by
technology.With the advantage of internet we can work from
homes.Advancement in technology has direct impact on the economic
growth and the business which do not keep pace with the technology often
fail to survive in the market.

Therefore it is important for marketers to know the type of technology

used,level of technological development in country.

Business functions that are directly influenced by technology are listed

1.Product: Technology can help improve the product design,reduce the cost
of manufacturing the existing products or come up with the new product.
E.g-technology developed by Microsoft,Windows,has changed the way
world uses personal computing and millions use the software.
E.g-Earlier Automated Teller Machine(ATM) were offered by limited Banks
so they enjoyed competitive advantage,now all the banks are offering this
service it has become standard feature of a saving account.
2.Price:As the Technology is available at cheaper rates,more and
more business are adapting it fast.So the companies are reducing their
cost of products by which the price of the product will reduce
therefore enabling marketing managers to manage supply,forecast
demand and establish prices.

3.Promotion:Technology has revolutionized the way we

communicate with a vast number of people.buyers and distributors
through various media like e-mail,voice mail,cell phones,and fax
machines.Stores and Supermarkets have tied up with phone providers
to promote them.So technology has reduced the time of transmission
of data helping business to obtain competitive advantage.
E.g.-Hutch and Reliance Infocomhave provided discount coupons for
various products in selected stores.
4.Advertising:Technological advancement has brought about a
signifivant change in the way business advertise.Creative ads can be
developed in short time.Ad agencies are gaining business.Apart from
entertainment radio and televisionprovide vast media for
advertising.The jingles of certain ads are etched on the memory of
people soon even though the shelf life of commercials is small.
E.g. Pepsi-’Youngistan can Wow.’
Kelvinator-’It’s the coolest one’
thums up-’Taste the Thunder.’

5.Distribution:Technological advancement in the transportation

industry has helped bringing market closer.A sales person can provide
the valuable information about the product like –the price,order
processing or status of stock by accessing company database.
E.g.- transit companies like FedEx promise to deliver light weight
products within twenty four hours via their overnight carriers.
Technological developments have disturbed ecological balance.
E.g.-Global warming,Ozone layer deplition,increase in harmful gases due to
So many manufacturing companies are developing products that do not
harm the environment.
Like Refrigerators indicate on their packaging that they are Chloro floro
carbon(CFC) free.
A.Resources:Since companies uses raw materials to convert them into
finished product the companies have now realised that natural resources are
limited.Therefore some companies are demarketing their products.
E.g.-Indian Oil Corporation are compaigning-”Save oil-save india”.

B.Weather:In summers demand for water coolers,AC,soft drinks,ice-

cream ,cotton clothes goes up.Whereas demand for Woolen clothes,room
heaters and spicy food goes up in winters.A city like Delhi demand for
seasonal products is significant.
C.Pollution:Industrialization has brought with it hazards of
pollution,air ,water,noise,bio non-degradable wastes and CFC causing
environmental degradation.So the companies are using environmental
friendly products like recycled paper,paper bags instead of polythene

D.Government intervention:The policies of government,regarding

the natural environment varies fron one another.Some countries
restrict the import of goods that cause ecological balance.
The laws and regulations of a country have a major impact on the way
a company conducts its business.Therefore,marketers must be updated
with the important rules,regulations and Acts that have a significant
effect on their businesses.
E.g. Consumer protection Act-It came into force to safeguard the
interest of consumers.It is applicable in the Whole of India.
Consumer can seek legal help when;
A)A trader adopts unfair practices or restrictive trade practices.
B)Goods suffer from one and more defects.
C)A trader charges higher prices for the same goods.
D)Services offer suffer from deficiences.
E)Goods hazardeous to life are being offered to general public for
sale,against provisions of any law.
Types of Competitive Structures
1.Monopoly:It is a structure when one firm completely controls the supply
of a product, which has no closer substitute. Due to the absence of
competition the firm controls the supply and price of the product.
E.g.-Railroad business

2.Oligopoly:It is a structure where few sellers control the major supply of

the product. Companies operating in the oligopoly structure usually sell
branded products. Marketing and Advertising are the key features of such

3.Monopolistic competition: In this structure, many firms compete with

one another. Each firm has a relatively small market share.
E.g.-textile industry and publishing industry,footwear,clothing,children

4.Pure competition: Any body can enter into such markets. It is an ideal
structure in which a large number of sellers compete to offer relatively
similar products.
E.g-Unregulated agriculture market
Marketing Planning


Strategic marketing planning involves answering questions like where
should be company 5 years down the line?
Which are the markets it should serve?
What are the products it should offer?
Should there be any product line or brand extentions,and,if yes then at
what intervals?

Importance of Strategic planning

The strategic planning process not only helps an organization gain a
clear picture of its future, but it also helps in maintaining good
relationships among its various departments.
Strategy planning involves devising the brand strategy, the product
strategy, sales strategy, sales promotion strategy, and the advertising
Scope of Strategic planning
Companies need to formulate effective strategies to deal with
emerging technological change, ever-changing customer needs,
turbulent market situations,unpredictible competitions, and changes
in political,legal,social,economic,and technological environments.
Case Study
Oxemberg’s down –to- Top Strategy
Oxemberg,a Rs.65 crore menswear brand belonging to the Rs 400 crore Siyaram Silk mills
company, was launched in 1992.Since 2002,it adopted a top-down- strategy. The brand
targeted B and C class cities where few people could afford premium brands.These cities
accounted for about 75 percent of the brand sales. The remaining 25 percent sales come
from A class cities. When the brand was launched initially, A class cities were crowded with
major brands like Raymond’s, park Avenue, Madura Garments, Louis Philippe and
Bombay dyeing Vivaldi among others. According to Vijay Laxmi Poddar,E.D.,Siyaram
SilkMills,it was difficult to compete with these established brands in A class cities. Hence
they concentrated to small towns in the western and southern parts of the country, as the
climatic conditions in these two regions were similar.
The company increased its distributors in the south to 40 by the beginning of 2003.Of these,
only two or three focused on A class cities. The sales in the southern region accounted for
about 35 to 40 percent of the entire sales. One reason of Oxemberg success in the B and C
class cities was that the retailers stock fewer brands as compared to the A class cities. The
company price the brand at Rs.300 onwards and offered various incentive schemes to
retailers. Today ,the company has a strong presence in the B and C class cities with about 70
percent exclusive distributers,as compared to the 30 percent exclusive distributors in 1995.
Another reason for the brand’s success in the B and C class cities was that there was no
major player operating in this segment who could offer premium brand menswear at a low
price. But recently, Oxemberg has been facing stiff competition as peter England (Rs 395
onwards),Arvind Mills Excalibur(Rs.450 to Rs.850) and indigo nation(Rs 400 to Rs.800)
start focusing on B and C classes.
Strategic planning is the process of identifying an
organization's long-term goals and objectives and then
determining the best approach for achieving those goals and

Companies that have different business units undertake corporate

planning through a series of meetings. The head quarters provide
guidelines for the business units to formulate strategic plans.

Corporate plan has to be developed in such a way that it adds value

to the organization.

The Corporate vision and mission paves the way for the creation of
long-term and short-term objectives, the planning strategies are
adopted to realize these objectives.
There are five basic activities that companies undertake;

1.Corporate mission

2.Establishment of SBUs(Strategic Business units)

3.Resource Allocation of SBUs

4.Planning new business activities and

5.downsizing existing businesses

1.Corporate mission
The corporate mission of an organization explains the business of the
organization. It also explains- the type of customers the company is serving its
products and services, its business,technological,and functional capabilities.
The corporate mission statement should be developed keeping in mind the core
values of the organization. Mission statements should be framed in such a way
that they are easily understandable by the employees and give a clear picture of
what company is trying to achieve. Mission statement should be authentic and
different from other companies.

2.Establishment of SBUs(Strategic Business Units)

It is a separate and self-sufficient business unit operating in the market with its
own customers and competitors. Each SBU should have its own head who is
responsible for its planning.

3.Resources Allocation to SBUs

Resources allocation to strategic business units is done by differentiating the
company’s businesses according to their potential and identifying whether they
are profitable. For that estimations we use BCG competitive model
BCG Market Growth/Market Share
Question Marks-These business units are characterized by low market share
and high growth rate. These organizations have to make huge investment in
advertising and promotion because potential users are not aware of their
products. With the market growing rapidly, it is easier to gain market share.
Since their growth rate is uncertain that results from changes in technologies,
distribution channel, So only a few question marks move to stars.
Stars-These business units have large market share in fast growing markets or
industries. Firms need to invest in stars as the industry is still emerging and the
market share is growing. But once the industry reaches the stage of maturity,
the stars hardly need any investment and become major resources for the firms.
Cash Cows-These business units have a large market share in a mature and
slow growing industry. These businesses have a strong business position and
negligible investment requirements and so the returns from these business are
often more than their investment requirements.
Dogs-These business units have a low market in an intensely competitive,
mature industry generating low profits. A dog does not need much investment,
but it ties up its capital in the industry to earn better results.
Planning New Businesses
Companies have to deal with situations where there is a gap between
actual and projected sales. The firm then has to devise strategies to
fill this gap or rather increase the sales.

Downsizing Existing Businesses

Companies need to consider the importance of growth, and similarly
the importance of gradually removing old and sick businesses that
are not adding any value to the company. The removal of these
businesses is vital so that resources can be allocated to new and
lucrative business activities.
SWOT Analysis
SWOT Analysis is the process of analyzing the company and the
environment in which it is operating. This analysis helps in
formulating effective strategies for the company and ready for
Strength-The strength can be anything that add value to the
business.Infrastructure,its employees, its marketing team, its latest
product innovation, its international quality standards.
Weakness-Incompetent management, untrained employees, poor
marketing strategies, low quality products or lack of proper financial
capabilities. They are external factors.
Opportunities-They are external factors and are critical for its
effective functioning. Opportunity can be new potential market with
ample scope of growth, opportunities to collaborate through
Threats-New competitor in the market, price reduction in the
competitor’s products or a new product introduced in the market that
will eat the company’s share.
Steps in the Planning Process

A C h a rt S p e cifyin g th e C o n te n ts

E xe cu tive S u m m a ry

O p p o rtu n ity a n d Issu e A n a lysis

M a rke tin g S tra te g y

A ctio n Pro g ra m s

o je cte d Pro fit a n d Lo ss S ta te m e n t


C o n tro l
Segmentation is all about dividing the market to serve them better value
Dividing the market by grouping the customers with similar tastes and
preferences into one segment is called segmentation. If marketers know
which segment of the market they are targeting, they can design their
marketing mix to suit the customer in the segment.


Market segmentation looks at markets consisting of customers who differ
in their wants and needs.


A market consists of different consists consumers possessing innumerable
tastes and preferences. Depending on their marketing approach and the nature
of the products, marketers can adopt different levels of segmentation.
1.Segment marketing
2.Individual Marketing
3.Niche Marketing
4.Local marketing
1.Segment Marketing; Marketers divide the target market into
different segments on the basis of similar needs. The focus on
segmenting the market by providing satisfaction to that segment to
large extend. It is also to identify, capturing and retaining potential
new markets.
For e.g.- Tata entered the jewelry market with the brand name segmented the market on the basis of the level of purity
required by people and targeted people who wanted 24 carat gold
unlike other conventional jewelers.
E.g.Oyzterbay-it segmented the market by selling daily wear jewelers
between the range of Rs.500-Rs.5000.
2.Individual marketing; It is the extreme level of segmentation
where marketers focus on individual customers.
E.g.-Most companies are approaching individuals through e-mails to
promote their product.

3.Niche Marketing; A niche is a small segment of the market that

has some specific unsatisfied needs. For niche marketing to be
successful a company should understand its strengths and
weaknesses, its customers and its competitors. The firm should also
clearly differentiate itself from its competitors.
For e.g.-Saint Gobain,a French glass company, has carved out a
niche’ for itself by entering the fragmented glass market.
4.Local Marketing; Most marketers who have a global presence tend
to offer customized products to suit the local markets. Even if the
product is successful globally, it may fail in the local market because
of unmatched tastes and preferences.
E.g.-Mc Donald's entered Indian market in 1996,initially it had
burgers and other related items on the menu which were foreign to
Indian taste, therefore to suit the Indian taste they introduced
indianized products like Mc Aloo tikki,Paneer salsa etc.
Before segmenting the market a company should evaluate whether
segmenting will be profitable to the company and whether it will help
increasing its sales and market share.
Consumer markets are mostly segmented based on
1.Geographic segmentation
2.Demographic segmentation
3.Psychographic segmentation
1.Geographic segmentation; The market is divided into according to
geographical areas such as localities,regions,cities,states and countries.
in such segmentation, a marketer need to have clear idea about what to
E.g.-T.O.I. publishes local editions to different regions such as delhi

2.Demographic segmentation; The market is divided into groups

based on demographic attributes such as
age,gender,income,occupation,religion,race,nationality,social class,
family size etc.The following are some of the demographic variables
used to segment the market:

1.Age and Life cycle stage; The taste and preferences keep
changing.E.g.-a 12 year boy might like chocolates but might dislike at
the age of 30.So Cadbury's starting focus on youth and old people to
boost up its sales in 14 years and above segment.
2.Gender;Many products like
garments,watches,shoes,jewellery,wristwatches,magazines etc. are
segmented according to gender. There are certain brands which are
positioned exclusively for a specific sex.
E.g.-Raymond is a brand exclusively for men.
Gillette have shaving accessories exclusively for men but now they
have also produced products specially for women. This is the case
where products were manufactured to suit one gender but later
switched to another gender.

3.Income;Marketers tend to segment products and services such as

apparels,automobiles,travel,etc. on the basis of income groups. Now
even the middle income group consumers can have excess to luxuries
such as cars, homes due to loan and installment facilities.
E.g. –Titan have introduced Sonata, targeting the lower end. Regalia,
the upper end and fast track aimed at younger generation.
4.Generation;Generation also plays a major role in segmenting the
E.g.-various activities like Movies,Cars,music etc.affect their product
purchase patterns.

5.Social class; Social class segmentation is influenced by customer

choices of automobiles, interior decorators, clothing preferences. The
tastes and preferences of the social class also change with the times.
E.g.-Allen Solly was men’s formal wear now focusing on Women’s
wear, due to changing social habits.
3.Psychographic segmentation; in psychographic segmentation
,variables to segment the consumer markets are
lifestyle,personality,values ,motivation and beliefs. It helps marketers
to understand buyer behavior better and design products, which will
appeal the consumers. People also buy products that reflect their
e.g.-A rich person will move in mercedes,will wear a Rolex, perfume
will be Valentino and will use pen like Mont Blanc reflects his life

Lifestyle; Since different people lead different life styles they buy
products accordingly to suit their lifestyle.E.g. –Top manager will
usually buy formal wear or Titan introduced fast track to young
Personality; Personality characteristics such as
aggression,masculinity,extroversion etc. also influence the buyer behavior of
individuals. Marketers presume that people who either have a particular
characteristic or aspire to have the particular characteristic, will be
influenced positively to buy that particular brand.

Values; Values affect the customer behavior and marketers believe that if
the values of the customers can be influenced, their impact on the customer
will be for a longer period. Marketers can use values and beliefs to segment
the markets.
4.Behavioral Segmentation; Organizations can divide markets on
the basis of behavior that customers show towards the usage of the
products. This segmentation is most suitable for product driven
organizations. But its usage is restricted when new customers come to
the marketer. Various variables are occassions,benefits,user status,
loyalty ,etc.

Occassions:Markets can also be classified on the basis of various

occasions because people need different products for different
E.g.-Kellogg’s promoted its cereals as a breakfast item.Archies came
out with special cards like mother’s day, father's day, valentine’s

Benefits: In this segmentation market is divided on the basis of the

benefits customers seek from the products.
Usage rate: The usage rate of a particular product/service can be divided
into heavy ,medium or light.
E.g. – Indian Airlines gives the ‘frequent flier status’ to its heavy users.
Customer earn mileage points, which can be exchanged to host of services
ranging from a stay in luxury hotels to free travel to international

Loyalty status: loyalty status of a particular market can be divided into four
1.Hard core loyals;Consumers,who are extremely brand loyal.
e.g.- the beetle Automobile of Volkswagen achieved that status.
2.Split loyals;Split royals are those customers who use more than one
brands.E.g- a customer may use two or three brands of perfumes.
3.Shifting loyals;Customers who shift their loyalty from one brand to
another E.g.-A customer use cinthol soap for some time may shift to Dove
4.Switchers;Switchers are those customers who are not brand specific These
people might buy any brand on impulse or to seek variety.

Total Quality management is essentially the constant striving to produce

what the customer wants, by carefully eliminating defects prior to and
after the products have been delivered to the customers.

The team in charge of maintaining quality in organizations, usually

undertake three steps when something goes wrong in the process.
1.The team members try to identify the problem.
2.rectify it
3.Communicate the process to the entire organization so that care can be
taken to avoid such problems in the future.

The team responsible should also interact with R&D department to

understand the root of the problem and how they can be avoided in the
future. The joint efforts of the R&D and the Quality management team
provide better results for the organization.

PRODUCT PERSONALITY; The following constitute the components of

a product.

A. Core features; A core feature is the basic component of a product. In

designing any product, a company has to first define the core benefits that a
product offers. All the marketing activities can be built upon the core benefits
of the product.
E.g.-Car –its core feature is as a private means of transport.

B.Associated Features; Every product has a set of associated features. For

e.g.- Car its associated features are its shape, its size and capacity, power
stering,suspension system, the auto locking system,color,automatic glass pane
rolling, brand name rolling etc.

Firms selling the similar product compete on the basis of the associated
features cause the core features are the same for all. Marketers try to innovate
around the associated features to make the product distinct from the
competitor’s product.
Brand name;Brand name is the most important associated feature of
the product.The Product is identified by the Brand name.It identifies
the product offered by one seller from another.The brand includes a
name,symbol,design or a combination of these.Companies invest a lot
of time and money in building a brand.
E.g.- A customer no longer asks for a product alone but they ask for a
specific brand like Colgate tooth paste, Gillette shaving cream,Revlon
lipstick,luxor Pen etc.

Packaging ;main purpose of packaging is to protect the product from

damaging and smooth handling at distribution stage.Packaging also
plays a vital role in promoting a product.The size,color,design and
labelling of the package helps in attracting customer’s attention.
E.g.-Calcium Sandoz tablets are packed in the puppy shape bottle thus
attracting children who are ultimate consumers.
labelling; Every product has its unique label. A label contains written
information about the attributes of the product. It helps the buyer in
understanding the features and composition of the product. It also
gives other information like the date of manufacture, date of
expiry,barcodes,batch no. etc.
Nature of the product
1.Generic Product:generic product are unbranded,plainly packed products
and are less expensive than branded products.

2.Expected Products:After developing the basic product,the marketers

adds attributed to transform the product into expected product.Marketers try
to identify attributes and conditions required by the customers and try to
build these into their products.

3.Augmented product:Companies do not limit the attributes of a product

rather they try to put in additional attributes in the product to differentiate it
from the competitor’s product.Augumented products
usually exist in mature markets or where the customers are reasonably

4.Potential product: Potential products are products which include all the
improvements that are possible under given technological,economic and
competitive conditions.Only big companies with huge resources make
significant investments in producing potential products.
Product Hierarchy

It is an organizational chart that depicts the array of products offered in a

given market.
a)Product Class:Product class can be divided into cars,trucks,bikes

b)Product form:The Cars can be divided into Sports car,family car or

trucks can be classified as heavy duty and semi heavy duty trucks.

c)Variation in the form:cars with two doors,with four doors etc.

d) brands: For cars we have Fiat,chevrolet,Skoda etc.

For trucks we have tata,Mahindra etc.
Product Classification
Products have been classified on the basis of characteristics like;

Durability and Tangibility: Based on durability and tangibility, products

can be classified into three groups

1.Non durables:Non durables goods are tangible in nature.They are

consumed over a short period of time..For e.g.—All fast moving consumer
goods(FMCG) like soaps,tooth paste, petrol etc.They are consumed by the
consumers at a fast rate,hence they are purchased frequently by the
2.Durables:Durable goods are tangible in nature.They are consumed over a
relatively longer period of time,usually two or three years or more.
Services: Servicesare intangible and perishable by nature. Services can be
independent like hair cut or free home delivery or after sale service offered
with the main product.

Usage: Based on usage of the products, they are divided into:

a)Consumer products; Since no consumers think alike and depending upon

time, money and risks( social, functional and physical) involved in buying the
product. Hence single product can fit into several categories at the same time.

1.Convinience products
2.Shopping products
3.Speciality products
4.Unsought products
b)Industrial products
1.Production goods
2.Support Goods
1.Convinience products;They are relatively inexpensive and bought
frequently.These products are usually bought with minimum of
thought and efforts.they are not affected by fashion and
fad.Convinience products can be catagorized into staple
goods(milk,bread,newspapers etc.).Marketers sell convinience
products through retail stores stock them in self-service shelves.
For E.g.-Wrigley’s chewing gum,Femina magazine,Gillette Sensor,etc.
are placed at counters and shelves near the check-out points at Food
World outlets,so that a customer is bound to look at them while
waiting for his turn at the check out counter.
Marketers also try to use screen displays at the entrance of the store.
E.g.-Ponds beauty care displaying its products.
2.Shopping Products;Shopping products are products for which a
buyer is willing to spend time and effort in planning and making
purchase decisions.These products are expected to have longer life
and are purchased less frequently.They are more expensive and
available at limited outlets.Buyers evaluate features like price,product
features,warranties,quality,after sales services,etc in a brand.
E.g.-home appliances,cameras,T.V.

3.Speciality Products;Speciality products are products which have

one or more unique features.These products are available at few
selected outlet or single outlet.Customer are person or brand loyal.
E.g.-Mercedes-Benz car,Mont blanc pen etc.

4.Unsought Products;Unsought products are products that a customer

purchases when he is faced with sudden problem.
E.g.-Umbrellas, Insurance policies etc.
Industrial Products;Industrial products are the products that are purchased
to produce other products or facilitate the smooth functioning of an
1.Production Goods;production goods are the goods that are used solely for
the production of a manufacturer’s products;
1.Raw material;they are required in bulk.
E.g.-Fabric,crude oil,chemicals,farm products etc.

2.Component parts;Acomponent is a finished product or a product that

needs little processing before becoming a part of main product.
E.g.-Wheels,seats,glass panes are components of car.

3.Process material;They are used directly in the production of the final

E.g.-Perfumes have alcohol as base for its product.
Preservatives for processed food
Support products;Support products are products that facilitate the
production.They do not become a part of the final product.

1.Capital equipment;it comprises of large tools and machines that are used for
production of goods or for providing services.They are usually expensive.

2.Accessory equipment;Accessories are those products that help in production or

office activities.They are relatively less expensive.They are purchaesdmore
frequently and demand less services.
E.g.-Computers,calculators,furniture etc.

3.Consumable supplies;Consumable supplies are consumed during production and

delivery but are not part of final product.
E.g.-pencil,paper,Envelopes(office stationary),brooms(maintainence items),repair
items(handy tools,replacement parts).

4.Business services;They are intangible in nature.Organizations require them for

smooth functioning of their operations.
E.g.-legal services,finance services,marketing research,temporary workers.
Product mix
The product mix is the set of all the products that an organization offers to its
customers. A company may decide to a single or a variety of products,add
new products, or withdraw certain products. Relevant decisions are made
keeping in view the scope of marketing. Such decisions are called product
line or product mix decisions.
E.g.-HLL offers detergents,shampoos,hair care products,cosmetics beverages.
It has certain characteristic features like ;
1.Width;This is total no of product lines a company carries.HLL has 10 lines.
2.Length;The length of the product mix is the total number of items in that
3.Depth;The depth is the assortment of sizes,colors and variations offered for
each product in the product line.
E.g.-Lifebuoy Active Red comes in three sizes:125gm,100gm and 60gm
4.Consistency;It refers to how close are the product lines as far as production
requirement,distribution,end usage is concerned as they are consumer goods.
E.g.-HLL products are consumer goods so they have same distribution
channels and produced in similar manufacturing facilities.
Confectionarie Colour
Product mix of HLL
Hair care Skin care Oral care Deodrants Soaps and Toilet soaps Beverages
s cosmetics detergent
Max lakme Sunsilk Fair & lovelyPepsodent Axe Surf Liril Lipton
Yellow labe

Aviance Clinic Pond’s Close-up Pond’s Rin Lifebuoy Lipton

Green label

Rexona Wheel Lux Red label

u ct lin e
Denim Ok Breeze Lipton Ice
e p th tea
501 Pears Taj Mahal

Vim Hamam Brooke

Bond Taaza

Sunligh Rexona Bru

Ala Dove
Positioning the Product

Product positioning is the image projected by the product against the

competitor’s product and other products of the same firm.Marketers use various
strategies to position the product in the market.
Some of these strategies are:
a) Positioning the product in relation to the competitors product.
E.g.-Pepsi and Coke-They position themselves directly against each other.

b)Position the product in relation to the target market.

E.g.-Coke targeted its Diet Coke at calorie conscious people.

c)Positioning in relation to product class.Either by associating or

dissassociating it from a common class of products.
E.g.-Tropicana fruit juices,available in 7 flavours,position all its products as
containing no preservatives,no added sugar or colouring.

d)Positioning by price and Quality.Some retail outlets like Croma are known
for their high quality merchandise and high prices,while others like(Big bazaar)
offer same products at a lower price and ‘value for money).
Product Life Cycle

Product life cycle, helps in deciding about the product or

products which should be offered in different markets.
It is a very valuable tool in the hand of a marketer.A typical
product goes through four stages in its life,i.e.
The Four Stages of product Life
1.Introduction Stage; When any product is introduced in
the market, heavy expenditure is incurred on advertising and other
methods of increasing the sale. This is known as introductory
stage.Introductory stage is marked by zero profits and negligible sales.

2.Growth Stage; During the growth period, sale of the product increases fast
and cost of production comes down due to increase in scale of
production.Profits earned increase substantially.

3.Maturity Stage;During the maturity stage, the

growth in sale of the product slows down. Profits also start declining.
After the maturity stage there is a stage of decline, when the product
starts losing its acceptance. There is a pressure for price cut. Firms
generally start withdrawing the product after maturity stage. In this stage the
customers try out new products and substitutes.

4.Decline Stage;During this stage,the sales of the product fall rapidly,forcing

firms to withdraw from the market.The reason for decline in sales could be
1)technological advances 2)increase in competition 3)shift in consumer’s
tasts and preferences.
Marketing Mix
The basic task of marketing is the delivery of product(s) to consumers
so that their needs are fulfilled and organizational objectives are also
achieved. This involves several important decisions, e.g. deciding
about the product or products which should be offered for sale, price
of the product, markets where products may sell and the means of
communication with the consumer for the sale of the product. All
these decisions form part of marketing-mix.
The elements of marketing mix have been classified under four
heads –
2.price, and
4. promotion.

That is why marketing mix is said to be a combination of 4 P’s.

Product refers to a physical product or a service or an idea which a
consumer needs and for which he is ready to pay.
Products is the key element of any marketing mix.

The decisions concerning product may relate to -

a) Product attributes; Product attributes refer to the quality, features
and design of the product.A product should serve the purpose for
which it is made, in terms of utility and quality. In a competitive
market, products are differentiated on the basis of certain features or
b) Branding; Brand is an identification of product. In a competitive
market, many products are sold by brand names. It plays an important
role in creation of demand while branding a product, it should be
ensured that the name is simple, easy to read and pronounce and if
possible, it should have an appeal.
c) Packaging and labelling; Packaging means putting the products in
suitable containers or packets such as tin, plastic jar or card board box,
etc. Packaging should be such that product is protected and easily
Labelling serves the purpose of indicating the contents, weight or
measure, instructions for use, price, name of the producer, date of
manufacture and expiry, etc. The information on the label is essential
for various reasons.
d) Product support service; Service may be by way of installation
service, training in product use, after sale service, credit and financing
service, etc. It should be decided whether services would be provided
free or against separate charge.
e) Product mix; A company may decide to a single or a variety of
products,add new products, or withdraw certain products. Relevant
decisions are made keeping in view the scope of marketing. Such
decisions are called product line or product mix decisions.
2.Price; Price is the amount charged for a product or service. It is the
consideration paid by consumers for the benefit of using any product
or service. Price fixation is an important aspect of marketing. Pricing
decisions of a company are affected by both internal as well as
external factors.
There may be two methods of price-fixation:
 1. Cost-based approach; This is the simplest method of pricing.
Generally companies add a certain percentage of Profit, to the total
cost of the product. The total cost of the product is calculated after
taking all types of costs into consideration.

2. Competition-based approach; The prices are determined on the

basis of conditions in the market. Companies may follow any one of
the following three approaches.
a) Price-in-line
b) Market-plus
c) Market-minus
a.Price-in-line; means prices fixed nearly equal to the prices of close
alternatives. Prices are decided by the market forces of demand
and supply.

b. Market-plus;When companies charge (fix up) a price which is

more than the priceof existing substitutes, it is called market plus
pricing. This approach is adopted when the quality of a product is
better, or it has a popular brand name, or its packaging is attractive
and useful. Consumers will pay more only when they find distinctive
differences in the product and its substitutes.

c) Market-minus;Sometimes business enterprises get ready to supply

products at a price lower than the market price. It may be adopted to
grab a larger market share or to make a newly introduced product
more popular. This approach is called market-minus approach.
Promotion refers to using methods of communication with two
objectives :
(i) informing the existing and potential consumers about a
(2) to persuade consumers to buy the product. It is an
important element of marketing mix.

Various tools of communication form part of promotion mix. The

tools should be combined. These decisions are known as promotion-
mix decisions.
Tools of Promotion-mix


2.personal selling

3.sales promotion and

4. publicity

Advertising is an impersonal form of communication for which the

seller pays in order to promote a physical product or service. It may
Print form;
1. newspapers
2.magazines, or

Audio form;
1. radio and other similiar methods

Audio-visual forms;
1. Television,
2.cinema screen, etc.
Personal selling

Personal selling is a personal communication with one or more

prospective buyers for the purpose of selling a product or service.
These days, personal selling is considered to be the most effective
- it involves personal interaction, hence feed back is received
- it is quite flexible, salesman can adjust communication according
to the level of customer’s under-standing.
- it is more persuasive; buyers can be convinced about the utility
of the product;
- impressive salesman leaves an impression on the prospective
buyer; it may increase sales in the future.
Sales Promotion
Sales promotion means the use of short-term incentives which are
designed to encourage immediate purchase of a product or service by
the buyer. Most of the sales promotion activities come in the form of
incentive for the buyer; hence sales generally increase immediately.
sales promotion tools while introducing a
new product.
It includes ;
1.offer of discounts gifts sample
5.demonstration display, etc.

E.g.-One tooth brush free with one 100gm of Close-up dental cream .

Publicity takes place when a favourable presentation is made through

mass media about a product or service. People believe more on such
news than in advertising. It covers people who do not entertain
personal selling and sales promotion approaches. It is a non-paid form
of communication. Very few products or services are covered by


It is also considered as a powerful sales promotion tool these

days. It immediately attracts the buyer and makes him buy the
This tool has produced good results in case of consumer goods.
Once the goods are manufactured, packaged, priced and promoted,
they must be made available to the consumers. Place is another
important element of marketing mix as it covers Activities related to
placing the products. It ensures various
facilitating services need to be arranged like;
1. transportation
3.inventory control
4.order processing.

Two elements of ‘place’are;

(A) Channels of distribution
(B) Physical distribution
(A) Channels of Distribution :

There can be various levels of channel. It is for the

producer to decide which level would suit the sale of his product.

Number of Channel Levels

Distribution channel starts from the producer and ends with the
Channels of Communication
Channel 1 Manufacturer Consumer

Channel 2 Manufacturer Retailer Consumer

Channel 3 Manufacturer Wholesaler Retailer Consumer

Channel 4 Manufacturer Wholesalers Jobers Retailer Consumer

Channel 1 is called a direct marketing channel. It has no intermediary
level. Producers sell products directly to the consumers.

Channel 2 includes one intermediary which is generally a retailer.

Retailers buy products directly from the manufacturer and sell these to
the consumers.
Generally electronic goods like televisions, computers, are sold
through this channel level.

Channel 3 consists of two levels, typically a wholesaler and a retailer.

This channel is often used by small manufacturers of food items, and
other products.

Channel 4 contains three middlemen levels. Jobbers usually come

between wholesalers and retailers. They buy from wholesaler and sell
to small retailers who generally are not served by wholesalers.
(B) Physical Distribution :
Physical distribution comprises all those activities which deliver
customer satisfaction by supplying right type of products at right place
and at right time regularly.
Components of physical distribution :-

(i) Order Processing:Physical distribution begins with customers’

order. Both the company and customer are benefitted if order
processing is carried out quickly and accurately. These days
computers are used which establish a link between retailers and
(ii) Warehousing;Every company must store goods to maintain a
proper flow.Storage facilities are important because production and
consumption cycles generally do not match.
(iii) Inventory;Inventory level also affects customer satisfaction.
Marketers wouldlike that company having enough stock to ful fill all
customers’ order immediately.
(iv) Transportation;Transportation has infact, facilitated the physical
distribution of goods and services over a larger area. Modes of
transportation may include road, rail, water, air, etc. The choice of
mode of transport affects the pricing and condition of goods.
Marketing research
Marketing research provides information about consumers and
markets,and their reactions to various products,prices,distribution,and
promotion strategies.Marketing research involves collection and
analysis of relevant facts to solve marketing problems.

It is a logical method of solving marketing problems.

Marketing research may consist of any or all of the following :

(1) Research on markets: This is a study of customers and their


(2) Research on Products: This is a study of products, which

involves development and introduction of new products,
improvement of existing products and withdrawal of old productsfrom
the market.

(3) Research on marketing methods and policies: This branch of

marketing research studies issues relating to advertising, personal
selling, pricing and channels of distribution.
The marketing research process has following steps:

1.Formulating the problem;The purpose of conducting marketing research

is to find a suitable solution for a specific and immediate problem faced by a
business manager.

2.Developing objectives of the research;The objectives of the research

should be clear and specific.The objectives should cover all the questions
regarding the purpose of the study,how the study to be conducted.

3.Designing an effective research plan;It is using the tools and techniques

to conduct marketing research.
The research instruments generally used to collect primary data are;
2.Mechanical instruments.
4.Data collecting techniques

1.Questionnaires;Questionnaires are formal set of questions to collect the

required information.This is ome of the most effective techniques used in
the surveys.The contents,phrasing and the sequence of the
questionnaireshould be clear and non-confusing.
2.Mail interviews; The cost is relatively low.The questionnaire is sent on
the mail and the customer can respond at his convinience.
The identity can be kept secret and the customer can express their ideas
3.Telephonic interviews;They are conducted when the information required
is not great and need to be collected quickly.
4.personal interviews;They are conducted when interviewer and
interviewee are physically present at one place.They can be one to one or
one to many.Theinterviewer can ask questions and records the responses
from the respondents.
5.Mechanical instruments;Instruments like galvanometers measure the
responses on various parameters such as emotions,interest etc.
Secondary Data;Secondary data is collected from company’s
external and internal resources.

Company’s internal resources include;

1.annual reports
2.Sales reports

Company’s external resources could be;

1.Independant magazines
2.journals documents
5.Evaluating the data and preparing a research report;Once the
information is collected,it is edited and coded.The coded data is then
tabulated and evaluated and detailed research report is made.This
reprt is submitted to the management to make effective decisions to
attract potential business opportunities.

retailing is a business activity that involves selling products/services

to customers for non-commercial’individual or family
use.Normally,retailing is the last stage of the distribution process.

Over the past few years,industrial gaints like Tata’s westside,Eureka

forbes,Pantaloons,Big Bazaar,Shopper’s stop and lifestyle have made
a foray into the Indian retail market.
Globalization and the increase in the double income households has
given a tremendous boost to the spending power of consumers
thereby opening a plethora of opportunities for retailers.
Since both parents are working and people have less time for
shopping the shopping time has reduced but the disposable income
has increased.Hence,customers are on the lookout for instant products
and services to save time.
Generally retailers are classified into four catagories:

1.Retailing based on ownership

2.Retailing based on the extent of product lines handled

3.Retailing based on the services vs.goods lines handled

4.Non-store based retailing

a)It primarily includes independent retailers,where a retailers own only a
single retail unit.Individual retailing units can be set up with minimum
licensing requirements.However,the market share of the individual retailers
is significantly low as compared to other form of retail ownership.

b)Chain retailership;These retailers own several retail outlets.Purchasing

decisions and activities are carried out centrally from these various outlets.
E.g.-Pantaloons and Food World.

c)leased department;A retailer takes a portion of a major store or outlet on

lease or rent and is responsible for decorating his section of the store.In
return for the leased or rental space,the retailer pays an amount equal to a
percentage of his sales to the store owner.
E.g-Big Bazaar
d)Vertical Market Units;In vertical market unit,all the three
functions of business –manufacturing,wholesaling and retailing- may
be owned by a single person,and comprise a fully integrated
system.When the three functions are owned by two persons,it
comprises a partially integrated system,and when owned by three
different individuals,they are called independent systems.

e)Consumer cooperatives;they are retail outlets that are owned and

operated by a group of consumers.The representatives of these
consumers look after the day-to-day operations of the retail outlet.
E.g.-AMUL(Anand Milk Producers’ Union Limited) are successful
milk cooperatives.
2.The extend of Product Lines handled
It includes speciality stores,departmental stores,discount
stores,supermarkets and hypermarkets.

a)Speciality stores;Speciality stores offer a wide selection of

specially chosen goods pertaining to a single product line.Thexse
stores provide a narrow product line but a wide assortment of choice
within this product line.These stores target small segment of market
for sales.
E.g.-Health and Glow stores by Goenka group and they offer solutions
for better health in the form of Ayurvedic products.

b)Departmental Stores;They offer wide selection of product for

consumers.There is considerably large retail space with separate
sections allocated for toiletories,food stuff,body care products etc.
E.g.-Westside,Shopper’s Stop and Lifestyle.
c)Discount Stores;They offer products at less than the retail price.The
purpose of doing so is to obtain profits on large volume sales.Discount
stores are targeted to middle and lower level class who are price

d)Supermarkets;They are based on the concept of self service.The

customers can pick and choose products on their own from a variety
of brands displayed on the shelf.

e)Hypermarkets;They are very large supermarkets with the shop

floor area ranging between two lakh to three lakh square feet.They
offer wide variety of products ranging from needle to household
3.Service vs.Goods Retail Strategy Mix;
Retailing business can also be classified into goods and services.
A)In goods retailing,physical products are sold such as groceries.
B)In services retailing,the consumer does not get the ownership of a product
such as spa or beauty parlours.
C)There are other retailers who offer a combination of both goods and
services such as video parlours. They sell and rent video CDs.

The Service sector are growing faster than manufacturing and the goods
sector globally.
Service retailing can be divided into;
1.Rented goods services;In this case,the consumer pay the fees for the time
but he does not own it.E.g.-Hertz car rental offer cars on rent.
2.Owned goods service retailing;The service provider does not own the
goods that he services.E.g.-Annual PC maintainence or AC maintainence
3.Non –goods service retailing;Personal services are provided.No physical
goods are involved.E.g.-Tutors,personal trainers,real stoke brokers etc.
4.Non-Store based retailing
It can be in the form of;

1.Direct selling;It is the process of selling the products directly to the

consumers by meeting them personally in their homes,offices or other non
store locations.Products sold using this method include vaccuum
cleaners,water purifiers,milk,news paper and magazines etc.

2.Direct marketing;It is the process of exposing the consumer to the

product or service,through mailers,telephone calls,cable,satellite
television,or radio and ask for direct response from customers.
E.g.-TSN(Tele Shopping Network) promote their products through
television channels and invite direct response from customers.

3.Automatic Vending;It is a type of non store retailing in which vending

machines are used to dispense goods and services to customers without any
sales person.When customer inserts the coin in the vending machine,it
delivers the product or service to the customer,For e.g.-Cold drink vending
booths,telephone booths etc.

Franchising is a contractual and legal binding agreement
between a franchiser and a franchisee.
A franchiser may be the owner of thea trademark or a
tradename,a producer of goods and services
provider.Hegives the right to the franchisee the right to do
the business under his trade mark,trade name,product.or
Strategic Issues in Retailing

A retail strategy has six major elements as described below;

1.Situation analysis;Before venturing into the business the vendor should

conduct a situational analysis to assess the current position of his business
and directiond it must take.This include evaluation of his strengths and
weaknesses. Making decisions whether to start business on a sole
proprietorship,partnership and whether to invest in entire new business,buy
an existing business,or start a franchise.
Taking management decisions whether to manage business of his own or to9
hire a professional and decisions whether to centralize or decentralize his

2.Setting objectives;He should set long or short term targets.It includes an

overall growth in sales,stability in sales and profits and achieving higher
market share.It also includes customer satsfaction,meet the expectation of
stock holders and enhance the image of the store.
3.Identification of Target markets and consumers;In this the
retailer can choose between:
1.Mass marketing;When he has to sell his products and services to a
large number of customers.

2.Concentrated marketing;When the products and services are

targeted at a specific group of customers.

3.Differentiated marketing;When the products are targeted at two or

more distinct groups of customers. when a company attempts to
appeal to two or more clearly defined market segments with a specific
product and unique marketing strategy tailored to each separate
segment. differentiated marketing creates more total sales and it also
increases the costs of doing business.
E.g.-Firms such as Maruti-Suzuki use differentiated marketing to
attract all segments. Others, such as Hyundai, and Microsoft appeal to
two or more segments, but not all segments.
4.Developing an Overall Strategy;This is done by taking into
account two or more variables;
1.Controllable variables;The controllable variables are that can be
controlled by the retailer such as;
1.Working hours
2.investment capital
3.location of the outlet
4.advertising and promotional strategies etc.

2.Non-controllable variables;They are those elements that are cannot

be controlled by the retailer and to which he has to adapt himself.
1.Technological advancement
3.Government regulations
5.Developing specific activities;it involves decisions based on day to
day operations activities like pricing of the products and
communicating with the customers.
1.Location;Location of the store is of significant strategic importance.
A retailer can adapt himself to changing market conditions by
changing his product,price,promotion or distribution strategy but
changing the store location is very difficult and can impact business
in the long-term.Therefore to choose an appropriate location is
releventeven if there are future market changes.Scientific research
has to be conducted.Next,the researchers study the capability of the
store to attract maximum customers from different geographic
locations.Then an analysis is done to estimate the sales that an outlet
can generate.In this way,a location that will generate maximum sales
can be selected.
6.Store Image Decisions;The store image is an important factor
influencing the consumer’s choice of the store.If the retail store is
targeting mass market,then the store’s appeal should be balanced as to
attract as many people as possible.
The younger generation is attracted to a young trendy store
images.They consider aspects like the aesthetics of the store,the
responsiveness of the sales staff and the quality of the merchandise.
The older generation like to associate with those stores that have
evolved with the times along with them.
Case Study
BCPL’s Petrol Pump Retail Revolution
Petrol pumps in India have come a long way from being dusty, poorly lit places manned by
shabbily clothed and indifferent personnel, to the shopping malls of the early 21st century.Bharat
Petroleum Corporation Ltd.(BCPL),a leading player in the Indian petroleum industry, received
wide acclaim for having brought about this change in the Indian fuel retailing business.
In the mid 1990s,the oil industry felt the need to establish strong brand identities. Until then, the
industry seemed to have adopted an indifferent approach towards customer service. With the
deregulation of the oil industry in April 2002,Indian players realized that they needed to become
more customer focused.BPCL’s pioneering efforts in creating brand awareness for its products
were thus a welcoming change.BPCL’s first foray into petrol pump retailing was through Bharat
Shell Ltd.(Shell).The store, offering eatables, soft drinks,stationary,newspapers,magazines,frozen
foods, light bulbs, audio cassettes and CDs,came as a pleasant surprise to Indian consumers.
By July 1999, 35 of BCPL’s retail outlets across the country had the ‘Bazaar, stores running
successfully, in october,2000,BCPL,pioneered another revolutionary concept by launching a
McDonalds’s fast food outlet at a petrol pump near Mathura (UP) on the Delhi –Agra highway.
The 4000 sq.ft,180 seat outlet was set up at a cost of Rs.40 million.Mc.Dold’s paid a fixed rent,
besides a percentage of its sales to BCPL,for using the facility.
In January 2001,BCPL further upgraded the ‘Bazaar’ stores ,and a month later, launched the’In
& Out’stores at around 40 outlets in Bangalore,Mumbai,Delhi,Kolkata and Chennai. To offer
enhanced services to its customers,BCPL tied up with the various companies from a number of
different industries:fast food,photography,music,financial services,ISPs,ecommerce
portals,document centres,ticketing,greeting cards,ATMs,and courier services.
International Marketing
According to The American Marketing Association
(AMA) ,International marketing is the multinational
process of planning and executing the
conception,pricing,promotion and distribution of
ideas,goods and services to create exchanges that satisfy
individual and organizational objectives.
International marketing Vs Domestic
International Domestic Marketing
. In te rn a tio n a l m a rke tin g stu d ie s 1.Domestic marketing studies
th e " h o w " a n d " w h y " a p ro d u ct
su cce e d s o r fa ils a b ro a d a n d h o w
about a product sales in the
a rke tin g e ffomethods th e outside national
rts a ffe ctused market.
2.Domestic marketing is
o u tco m e .
the home marketing are foreign concerned with the marketing
3. International marketing
marketing. 3.Domesticmarketing involves
practices within the marketer’s
involves two or more sets of one
of uncontrollables derived
environmental uncontrollable from the domestic market.
variables originating from various

Trade is the voluntary exchange of goods, services, or both.

Trade is also called commerce or transaction. A mechanism
that allows trade is called a market.
It is the commercial exchange (buying and selling on
domestic or international markets) of goods and services.

General Agreement of Tariff and Trade is an agreement
among more than 120 countries,the purpose of which is to
lower barriers to the free flow of goods and services
between nations.
Instruments of trade Policy

They are called as trade barriers.There are six main instruments of

trade policy;
3.Import Quotas
4.Voluntary export restrictions
5.Local content requirements
6.Administrative policies
A tarriff is a tax levied on imports.A tarriff raises the cost of imported goods
relative to products produced in domestic market. The principle objective of
tarriff is to protect domestic producers and employees against foreign
competition,they also raise revenue for the government.The government
gains because tariffs increases government revenues.The Domestic
producers gain because tarriff makes foreign goods more expensive so
people will buy more domestic products.Customers loose because they have
to pay more for certain imports.

1.Protective tariff;It is to protect home industry,agriculture,and labor

against foreign competitors by trying to keep foreign goods out of the
2.Revenue tariff;It is to generate tax revenues for the government.It is
relatively low as compared to protective tariff.
For e.g.-When Japanese and other foreign cars are exported into States,there
is a 3 % duty.
A subsidy is a government payment to a domestic producer.By lowering
costs,subsidies help domestic producers in two ways;
1.They help them compete against low cost foreign imports.
2.They help domestic producers to gain foreign market.
Subsidies are in the form of;
1.Cash grant
2.Tax breaks
3.low interest loans etc.

3.Import Quotas;
Quotas is a limit on the amount of exports that can come into the country in a
year.It reduces quantity of imports.
4.VER’s-Voluntary-Exports Restrictions;
A trade restriction on the quantity of a good that an
exporting country is allowed to export to another country.
This limit is self-imposed by the exporting country.
E.g.-When the automobile industry in the United States was threatened by
the popularity of cheaper more fuel efficient Japanese cars, a 1981 voluntary
restraint agreement limited the Japanese to exporting 1.68 million cars to the
U.S. annually.

5.Local content requirements;When a foreign company makes products in

a country, the materials, parts etc that have been made in that country rather
than imported. A minimum level of local content is sometimes a requirement
under trade laws when giving foreign companies the right to manufacture in
a particular place.

6.Administrative policies;In order to restrict imports and boost exports the

government use range of informal policies.Administrative trade policies are
bureacratic rules that are designed to make it difficult for imports to enter a
Taxes; A fee charged by a government on a product, income, or activity. If
tax is levied directly on personal or corporate income, then it is a direct tax.
If tax is levied on the price of a good or service, then it is called an indirect
tax. The purpose of taxation is to finance government expenditure. One of
the most important uses of taxes is to finance public goods and services, such
as street lighting and street cleaning.

Taxes are collected at a particular point of distribution or when purchases

and consumption occur.
Indirect taxes are of four kinds;
1.Single-stage sales tax;it is a tax collected only at one point in the
manufacturing and distribution chain.

2.A value-added tax(VAT);it is a national sales tax levied at each stage of the
production and distribution system,though only on the value added at that
stage.In other words,each time a product changes hands,even between
middlemen,a tax must be paid.
3.Cascade tax; They are collected at each point in the manufacturing
and distribution chain and are levied on the total value of a
product,including taxes borne by the product at early stage.

4.An excise tax; it is a one-time charge levied on the sales of

specified products.E.g.-Alcoholic beverages and cigarettes.
The Balance of payments and International Economic
The balance of payments is an accounting statement that summerizes
all the economic transactions between residents of the home country
and residents of all other countries.

The statistics are followed closely by :

business people,economists,bankers,and foreign exchange traders.
Currently inflows are recorded as credits.Credits shows with plus
sign.Export of goods and services are credits.Capital inflows appear
as credits since the nation is selling(exporting to foreigners valuable
assets like land,building,machine,stock,bonds and other financial
claims-and receiving cash in return.

Currently outflows are recorded as debits.Debits show with minus
sign.Capital outflows show up as debits because they represent
purchases(import of valuable foreign assets).
The balance of Payments
The balance of payments statement is based on double entry book
keeping.Every economic transaction recorded as credit brings about equal
and offsetting debit entry,and vice-versa.Because double entry book keeping
ensures that debits equal credits,the sum of all transactions are zero.
For e.g.-If a foreigner sells a painting to an Indian resident,a credit is
recorded to reflect an increase in liabilities(payment to the painting) and
debit is recorded to indicate an increase in purchase made by the indian(the

There are three major balance of payments catagories;

1.Current account;which records flow of goods,services and transfers.

2.Capital account;which shows public and private investment and lending


3.Official’s reserves account;which measures changes in holdings of gold

and foreign currencies-reserve assets-by official monetary institutions.