MARKETING MANAGEMENT

Introduction of Marketing Management

Marketing Analysis

Segmentation

Targeting

Positioning

Marketing Research

Consumer Buying Behavior

Marketing Channels and Supply Chain Management

Direct Marketing

Retail, Direct Marketing and Wholesaling

Integrated Marketing Communications

Business Markets and Buying Behavior

Business Markets, Business Buyer Behavior Meaning, Types & Factors

Pricing Concepts

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MARKETING MANAGEMENT facilitates the activities and functions which are involved in
the distribution of goods and services.

According to Philip Kotler, Marketing management is the analysis, planning, implementation

and control of programmers designed to bring about desired exchanges with target markets for
the purpose of achieving organizational objectives.

It relies heavily on designing the organizations offering in terms of the target markets needs and
desires and using effective pricing, communication and distribution to inform, motivate and
service the market. Marketing management is concerned with the chalking out of a definite
programmed, after careful analysis and forecasting of the market situations and the ultimate
execution of these plans to achieve the objectives of the organization.

Further, their sales plans to a greater extent rest upon the requirements and motives of the
consumers in the market. To achieve this objective, the organization has to pay heed to the right
pricing, effective advertising and sales promotion, distribution and stimulating the consumers
through the best services.

To sum up, marketing management may be defined as the process of management of marketing
programmers for accomplishing organizational goals and objectives. It involves planning,
implementation and control of marketing programmers or campaigns.

IMPORTANCE OF MARKETING MANAGEMENT:

Marketing management has gained importance to meet increasing competition and the need for
improved methods of distribution to reduce cost and to increase profits. Marketing management
today is the most important function in a commercial and business enterprise.

The following are the other factors showing importance of the marketing management:

(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Export market.

(v) Development in the means of communication and modes of transportation within and outside
the country.

(vi) Rise in per capita income and demand for more goods by the consumers.

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IMPORTANCE OF MARKETING CAN BE STUDIED AS FOLLOWS:

(1) Marketing Helps in Transfer, Exchange and Movement of Goods:

Marketing is very helpful in transfer, exchange and movement of goods. Goods and services are
made available to customers through various intermediaries viz., wholesalers and retailers etc.
Marketing is helpful to both producers and consumers.

To the former, it tells about the specific needs and preferences of consumers and to the latter
about the products that manufacturers can offer. According to Prof. Haney Hansen Marketing
involves the design of the products acceptable to the consumers and the conduct of those
activities which facilitate the transfer of ownership between seller and buyer.

(2) Marketing Is Helpful In Raising And Maintaining The Standard Of Living Of The
Community:

Marketing is above all the giving of a standard of living to the community. Paul Mazur states,
Marketing is the delivery of standard of living. Professor Malcolm McNair has further added
that Marketing is the creation and delivery of standard of living to the society.

By making available the uninterrupted supply of goods and services to consumers at a reasonable
price, marketing has played an important role in raising and maintaining living standards of the
community. Community comprises of three classes of people i.e., rich, middle and poor.
Everything which is used by these different classes of people is supplied by marketing.

In the modern times, with the emergence of latest marketing techniques even the poorer sections
of society have attained a reasonable level of living standard. This is basically due to large scale
production and lesser prices of commodities and services. Marketing has in fact, revolutionized
and modernized the living standard of people in modern times.

(3) Marketing Creates Employment:

Marketing is complex mechanism involving many people in one form or the other. The major
marketing functions are buying, selling, financing, transport, warehousing, risk bearing and
standardization, etc. In each such function different activities are performed by a large number of
individuals and bodies.

Thus, marketing gives employment to many people. It is estimated that about 40% of total
population is directly or indirectly dependent upon marketing. In the modern era of large scale
production and industrialization, role of marketing has widened.

This enlarged role of marketing has created many employment opportunities for people.
Converse, Huegy and Mitchell have rightly pointed out that In order to have continuous
production, there must be continuous marketing, only then employment can be sustained and
high level of business activity can be continued.
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(4) Marketing as a Source of Income and Revenue:

The performance of marketing function is all important, because it is the only way through which
the concern could generate revenue or income and bring in profits. Buskirk has pointed out that,
Any activity connected with obtaining income is a marketing action. It is all too easy for the
accountant, engineer, etc., to operate under the broad assumption that the Company will realize
many dollars in total sales volume.

However, someone must actually go into the market place and obtain dollars from society in
order to sustain the activities of the company, because without these funds the organization will
perish.

Marketing does provide many opportunities to earn profits in the process of buying and selling
the goods, by creating time, place and possession utilities. This income and profit are reinvested
in the concern, thereby earning more profits in future. Marketing should be given the greatest
importance, since the very survival of the firm depends on the effectiveness of the marketing
function.

(5) Marketing Acts as a Basis for Making Decisions:

A businessman is confronted with many problems in the form of what, how, when, how much
and for whom to produce? In the past problems was less on account of local markets. There was
a direct link between producer and consumer.

In modern times marketing has become a very complex and tedious task. Marketing has emerged
as new specialized activity along with production.

As a result, producers are depending largely on the mechanism of marketing, to decide what to
produce and sell. With the help of marketing techniques a producer can regulate his production
accordingly.

(6) Marketing Acts as a Source of New Ideas:

The concept of marketing is a dynamic concept. It has changed altogether with the passage of
time. Such changes have far reaching effects on production and distribution. With the rapid
change in tastes and preference of people, marketing has to come up with the same.

Marketing as an instrument of measurement, gives scope for understanding this new demand
pattern and thereby produce and make available the goods accordingly.

(7) Marketing Is Helpful In Development Of An Economy:

Adam Smith has remarked that nothing happens in our country until somebody sells
something. Marketing is the kingpin that sets the economy revolving. The marketing

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organization, more scientifically organized, makes the economy strong and stable, the lesser the
stress on the marketing function, the weaker will be the economy.

THE MARKETING STRATEGY: SEGMENTATION, TARGETING, POSITIONING &

DIFFERENTIATION

Written by Maximilian Claessens 9th February 2015

Marketings goal is to create value for customers and build profitable customer relationships in
order to capture value back afterwards. But how does the company create this customer value?
The marketing strategy addresses exactly that. It is the marketing logic by which the firm wants
to create this customer value and achieve these profitable customer relationships. But consumers
are in the center of marketing. Therefore, we should not just establish a marketing strategy it
should be a customer-driven marketing strategy. How to create customer value and how to
achieve profitable relationships?

First of all, the company has to know which customers it will serve. It must segment the market
based on certain criteria that are relevant to the company. Then, it has to select one or several
market segments to serve. We call these two steps segmentation and targeting. Finally, the
company decides how it is going to serve the selected customers. This involves differentiating
itself from other offerings in the market (differentiation) and aiming at a position in the market
and in customers minds (positioning).

In order to do so, the company must identify the total market, and then divide it into smaller
segments. Next, select the most promising ones and then focus on how to serve and satisfy the
customers in the selected segments. The company should never neglect the crucial importance of
centering the marketing strategy around the customers needs by delivering superior value. Only
then, it can survive in todays competitive marketplace. But before we can satisfy customers, we
first have to understand their needs and wants. Therefore, the process of establishing a marketing
strategy requires thorough and careful customer analysis.

SEGMENTATION, TARGETING, POSITIONING AND DIFFERENTIATION

NECESSARY FOR AN INTEGRATED MARKETING STRATEGY.

Segmentation Step 1 of the Marketing Strategy

Any company should know that it cannot serve all consumers in the total market at least not
profitably and in the same way. The variety of different kinds of consumers and their needs is
simply too large. There are too many differing types of customers, characteristics, needs, wants,
and behaviors. Also, most companies can serve some segments better than others, because there
is a greater fit between the companys strengths and the segments opportunities. Thus, every
company should not try to focus on the complete market. Instead, it should divide it up into small
segments. This is the first step of setting up a marketing strategy.

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The market can be seen as a huge pie. But the company has only one mouth. So, it should choose
the part of the pie which appears most delicious for the company. In other words, the marketer
must determine which of all the segments offer the best opportunities. We can define market
segmentation as the process of dividing a market into distinct groups of customers who have
different characteristics, needs and behaviors and therefore require different products or
marketing programmers. Consequently, we can look at a market segment as a group of
consumers responding in a similar way to a set of marketing efforts.

Therefore, we have to group consumers, based on various variables which are relevant to the
company. These variables can be based on geographic, demographic, psychographic and
behavioral factors. But not every variable is equally useful for each company. For instance, a car
manufacturer would gain little by distinguishing between vegetarians and non-vegetarians.
However, for a meat company, this may be the most important variable in the marketing strategy.

An example for segmentation can easily be recognized in nearly every market. Lets take a look
at the automotive industry. You will find small, economical cars for those who care mainly about
price and operating economy. But on the other side there are big, sportive cars with large engines
for those who want the best performing cars regardless of price. It would not be wise for the car
manufacturer to try to create one offering for both segments. The resulting marketing strategy
would never result in satisfying results. Instead, the company should focus on meeting the
distinct needs of each individual market segment it wants to serve.

Targeting Step 2 of the Marketing Strategy

After having distinguished between the separate segments in a market, the company can select
one or more of these segments to enter. Before doing this blindly, each segment should be
assessed. Therefore, targeting is concerned with evaluating each segments attractiveness for the
company and selecting one or more segments to enter. The evaluation of segments is based on
the question which segment the company can serve best. In other words, we should concentrate
on and enter those segments in which we can generate the greatest customer value over time.

Whether a company decides to enter one or more segments may also depend on its resources. If
these are limited, it may be better served to focus on one or a few smaller segments, which we
call market niches. In the best case, the company should look for segments competitors overlook
or ignore. Alternatively, a company can decide to enter several segments. This may be based on
a strong relation between the segment in terms of resembling needs, or on the companys
widespread resources. For instance, clothing companies often target more than only one segment:
males, females, children and so on. A large company such as a major car manufacturer might
even decide to serve all market segments by offering a complete range of products.

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However, the usual case is that a company first enters a new market by serving one single
segment. Later, if that proves successful, it may add more segments to serve.

Market Targeting,

Differentiation and Positioning Steps 3 + 4 of the Marketing Strategy

Now that we know which segments there are in the market and having chosen one or more to
serve, we have to decide on the how. How will the company differentiate its offerings for each
targeted segment and what position does it aim at in those segments? That are the last steps in
setting up the marketing strategy.

Differentiation and Positioning are strongly related and depend on each other. Positioning, which
is the process of arranging for a product to occupy a clear, distinctive and desirable place relative
to competing products in the minds of target customers, depends on the differentiation. Because
through the differentiation which is the process of actually differentiating the product to create
superior customer value, we can achieve the desired position in customers minds.

Firstly, we need a plan on what position we want to achieve with our product in the minds of our
target customers. The position is the first thing a customer would think of hearing the name of
the product or the brand. This position should be chosen so that it is distinguished from
competing products to the greatest extent possible and lead to the greatest advantage in the target
market. Therefore, the company should first identify possible customer value differences which
provide competitive advantages on that the position can be built on. Should the customer think of
our product as the cheapest one, or the best one, or the nicest one? Or should the customer think
it is the most sustainable and environmentally beneficial one? This must be determined before
establishing the marketing strategy.

But only promising those values is not sufficient. If the company promises greater customer
value to achieve a certain position in customers minds, it needs to deliver that value. The
marketing strategy means nothing without the means to carry it out. Therefore, positioning
depends on differentiation, by which we actually differ our product from competing ones so that
it gives consumers more value. After the company has chosen a desired position, it can take the
steps necessary to deliver and communicate that position to target customers by differentiation. If
the desired position is to be seen as the cheapest product in the market, the product should be
differentiated by an exceptionally low price. If the desired position is to be thought of as the
highest quality product in the market, the product should be differentiated by actually delivering
that exceptional quality competing products do not offer.

Who is a Consumer?

Any individual who purchases goods and services from the market for his/her end-use is called a
consumer. In simpler words a consumer is one who consumes goods and services available in the
market.
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What is Consumer Interest?

Every customer shows inclination towards particular products and services. Consumer interest is
nothing but willingness of consumers to purchase products and services as per their taste, need
and of course pocket.

Meaning of Behavior a response of an individual or group to an action, environment, person,

or stimulus. It is a mirror in which everyone shows his or her image. Behavior is the process of
responding to a thing or event.

DEFINITIONS:

In the words of Kotler, Consumer Behavior is the study of people of how people buy, what they
buy, when they buy, and why they buy, ".

Consumer behavior can be defined as the activities and the actions of people and organization
that purchase and use economic goods and services, including the influence on these activities
and actions. JF Engel

Consumer buying behavior refers to the buying behavior of final consumers individuals and
households who buy goods and services for personal consumption. Kotler and Armstrong

Consumer behavior consists of the acts of individuals in obtaining, using and disposing of
economic goods and services, including the decision processes that precede and determine these
acts. Kurtz

Consumer behavior may be defined as the behavior that consumers display in searching for,
purchasing, using, evaluating and disposing of produces, services and ideas which they expect
will satisfy their needs. Schiffman and Kanuk

Thus, the study of consumer behavior is the study of how individuals make decisions to spend
their available resources-money, time and effort-on consumption-related items.

Consumer behavior focuses on how individuals make decisions to spend their available resources
(time, money, effort) on consumption-related items that includes what they buy, why they buy,
when they buy it, where they buy it, how often they buy it, how often they use it, how they
evaluate it after the purchase and the impact of such evaluations on future purchases, and how
they dispose of it.

MARKETING CHANNEL & SUPPLY CHAIN MANAGEMENT

Supply Chains and the Value Delivery Network

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Producing a product or service and making it available to buyers, requires building relationships
not just with customers, but also with key suppliers and resellers in the companies supply chain.
SUPPLY CHAIN:

A supply chain consists of upstream and downstream partners

Upstream: from the company is the set of firms that supply the raw materials, components,
parts, information, and expertise needed to create a product or services.

Downstream: Marketing channels or Distribution channels. Such as wholesalers and Retailers.

Supply Chain vs. Demand chain

Marketers have traditionally focused on the downstream side Supply chain make-and-sell
view Demand chain sense-and-respond-view

Supply chain: The term supply chain is too limited: like make and sell view.

Its mean that marketing planning starts from the raw material, product input.

Demand chain: It suggest a sense and response: like marketing planning starts with the needs of
target customer.

Value Delivery Network: The network made up of the company, suppliers, distributors, and
ultimately customers who partner with each other to improve the performance of the entire
system.

THE NATURE AND IMPORTANCE OF MARKETING CHANNELS

Few producers sell their goods directly to the final users. Most use intermediaries to bring their
product to market. Most producers do not sell their goods directly to the final users; between
them stands a set of intermediaries performing a variety of functions. These intermediaries
constitute a marketing channel (also called distribution channel) Distribution channels: A set of
interdependent organizations that help make a product or service available for use or
consumption by the consumer or business users.

The nature and importance of marketing channels - How channel members add value.
Producers use intermediaries because they create greater efficiency in making goods available to
target market. Through their contacts, experience, specialization and scale of operation,
intermediaries usually offer the firm more than it can achieve on its own. In making products and
services available to consumers, channel members add value by bridging the major time, place
and possession (ownership) gaps that separate goods and services from those who would use
them.

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The nature and importance of marketing channels, Members of the marketing channel perform
many key functions. Such as: Information, Gathering key information about potential and
current customers, and competitors. Promotion Developing and spreading communications about
offers. Contact Finding and communicating with prospective (potential) buyers.

The nature and importance of marketing channels Negotiation Reaching agreement on price and
other terms of the offer. Physical distribution Transporting and storing goods Risk taking
Assuming some commercial risks by operating the channel (e.g. holding stock) All of the above
functions need to be undertaken in any market. The question is - who performs them and how
many levels there need to be in the distribution channel in order to make it cost effective.

Number of Channel level Companies can design their distribution channels to make products
and services available to customers in different ways. Each layer of marketing intermediaries that
performs some work in bringing the product and its ownership closer to the final buyer is a
channel level. Direct Marketing: A marketing channel that has no intermediary level. That is
direct from manufacturer to end users. For example Dell.

1-Level: Indirect Marketing Channel: Producer-Retailer-Consumer.

2-Level: Indirect Marketing Channel: Producer-Wholesaler-Retailer- Consumer.

3-Level: Indirect Marketing Channel: Producer-Wholesaler-Jobber- Retailer-Consumer.

Channel behavior each channel member depends on the others.

For example: Ford Dealer depends on Ford to design cars that meet consumer needs. Ford
depends on their dealers to attract consumers, convince them to buy Ford cars.

Samsung role to produce consumer electronic products that consumer will like and to create
demand through advertising and then distribute these Samsung products in convenient location.

Channel Behavior

Channel Conflict: Disagreement among marketing channel members on goals and roles.
Horizontal conflict: occurs among firms at the same level of the channel. For example some
Ford dealer in Chicago might complain the other dealers in the city steal sales from them by
pricing to low or by advertising outside their assigned territories.

Vertical Conflict: A conflict occurs between different levels of same channel.

For example: A retail distributor may refuse to carry a manufacturer's product because of low
sales, further decreasing the manufacturer's total sales.

Channel Dynamics

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 Vertical marketing System: consists of producers, wholesalers and retailers acting as a unified
system. One channel members owns the others, has contracts them, or wield (hold) so much
power that they must all cooperate.

Corporate VMS: A vertical Marketing System that combines successive stages of production
and distribution under single ownership. For example ZARAs success secret is its control over
almost every aspect of the supply chain.

Contractual VMS: A VMS in which independent firms at different levels of production and
distribution join together through contracts to increase sales than they could achieve alone. For
example Franchise.

Channel Dynamics

Horizontal Marketing System: A channel arrangement in which two or more companies at one
level join together to follow a new marketing opportunity. For example: McDonalds now places
express version of its restaurants in Wal-Mart stores.

Multichannel Distribution System: In cases where a marketer utilizes more than one
distribution design the marketer is following a multi- channel distribution system. Starbucks
follows this approach as their distribution design includes using a direct retail system by selling
in company-owned stores, a direct marketing system by selling via direct mail, and a single-party
selling system by selling through grocery stores (they also use other distribution systems).

Channel design decision

Push Strategy: With a push-based supply chain, products are pushed through the channel, from
the production side up to the retailer. It takes longer for a push-based supply chain to respond to
changes in demand, which can result in overstocking

Pull Strategy: In a pull-based supply chain, procurement, production and distribution are
demand-driven so that they are coordinated with actual customer orders, rather than forecast
demand.

Designing a channel system calls for analyzing consumer needs, setting channel objectives, and
identifying major channel alternatives, and evaluating them.

Analyzing Consumer Needs:

Do customers want to buy from nearby location or them willing to travel to more centralized
distant location?

Would they rather buy in person, over the phone, through the email, or online?

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 Do consumers want many add-on services (delivery, credit, repairs, installation), or will they
obtain these elsewhere?

Channel design decision

Setting channel Objectives:

Companies should state their marketing objectives in terms of targeted levels of customer
service.

A company can identify several segments wanting different levels of service.

The company should decide which segment to serve and the best channel to use in each case.

For example: for convenience product they will require widespread distribution and for
shopping they may require few outlets.

Identifying Major Alternatives: When company has defined its channel objectives, it should next
identify its major channel alternatives in terms of:

Types of Intermediaries

Number of marketing Intermediaries.

Responsibilities of Channel Members.

Channel design decision

Types of Intermediaries.

Number of marketing Intermediaries.

Responsibilities of Channel Members.

Types of Intermediaries: Company Sales force: Expand the companys direct sales force.

Manufacturers agency: Hire manufacturers agent.

Industrial distribution: Find distributors in the different regions.

Channel design decision

Evaluating the Major Alternatives

Suppose a company has identified several marketing channel alternatives and wants to select
the one that will best satisfy its long-run objectives. Alternative should be evaluated against the
following:

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 Economic criteria: Sales, costs and Profitability. What will be the investment required by each
channel alternative, and what returns will result?

Control criteria: Intermediaries require some control over the marketing of the product, but
some intermediaries take more control. Company prefers to keep as much control as possible.

Adoptive Criteria: The Company wants to keep the channel flexible so that it can adopt to
environmental changes.

Channel Management Decision

In managing its channels, a company must convince distributors that they can succeeds better by
working together.

Procter & Gamble and Wal-Mart work together to create superior value for final customers.

General Electric Appliances has created Customer Net to coordinate, support and motivate its
dealer.

Gives dealers instant online access to GE Appliances, distribution and order-processing system,
24 hours a day, 7 days a week. They can check the product availability, price and place orders
and review order status.

McDonalds provides franchisees with promotional support, a record keeping system, training at
Hamburger University, and general management assistance.

Channel Management Decision Evaluating Channel Members

The producer must regularly check channel member performance against standards such as sales
quotas, average inventory levels customer delivery time, treatment of damaged goods,
cooperation in company promotion and training programs and services to the customer.

FUNCTIONS OF A CHANNEL

The primary purpose of any channel of distribution is to bridge the gap between the producer of
a product and the user of it, whether the parties are located in the same community or in different
countries thousands of miles apart. The channel of distribution is defined as the most efficient
and effective manner in which to place a product into the hands of the customer. The channel is
composed of different institutions that facilitate the transaction and the physical exchange.

Institutions in channels fall into three categories:

The producer of the product: a craftsman, manufacturer, farmer, or other extractive

industry producer

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 The user of the product: an individual, household, business buyer, institution, or
government
Certain middlemen at the wholesale and/or retail level

A channel performs three important functions. Not all channel members perform the same
function. The functions are:

Transactional functions: buying, selling, and risk assumption

Logistical functions: assembly, storage, sorting, and transportation
Facilitating
functions: post-purchase service and maintenance, financing, information
dissemination, and channel coordination or leadership

These functions are necessary for the effective flow of product and title to the customer and
payment back to the producer.

Characteristics of a Channel

Certain characteristics are implied in every channel.

First, although you can eliminate or substitute channel institutions, the functions that these
institutions perform cannot be eliminated. Typically, if a wholesaler or a retailer is removed from
the channel, its function will either shift forward to a retailer or the consumer, or shift backward
to a wholesaler or the manufacturer.

For example, a producer of custom hunting knives might decide to sell through direct mail
instead of retail outlets. The producer absorbs the sorting, storage, and risk functions; the post
office absorbs the transportation function; and the consumer assumes more risk in not being able
to touch or try the product before purchase.

Second, all channel institutional members are part of many channel transactions at any given
point in time. As a result, the complexity of all transactions may be quite overwhelming.
Consider how many different products you purchase in a single year and the vast number of
channel mechanisms you use.

Third, the fact that you are able to complete all these transactions to your satisfaction, as well as
to the satisfaction of the other channel members, is due to the routinization benefits provided
through the channel.

Routinization means that the right products are most always found in places where the consumer
expects to find them (such as catalogues or stores), comparisons among products are possible,
prices are marked, and methods of payment are available. Routinization aids the producer as well
as the consumer, because it tells the producer what to make, when to make it, and how many
units to make.

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Fourth, there are instances when the best channel arrangement is direct, from the producer to the
ultimate user. This is particularly true when available middlemen are incompetent or unavailable,
or the producer feels he or she can perform the tasks better. Similarly, it may be important for the
producer to maintain direct contact with customers so quick and accurate adjustments can be
made.

Direct-to-user channels are common in industrial settings, as are door-to-door selling and
catalogue sales. Indirect channels are more typical and result, for the most part, because
producers are not able to perform the tasks provided by middlemen.

Finally, although the notion of a channel of distribution may sound unlikely for a service product
(such as health care or air travel), service marketers also face the problem of delivering their
product in the form and at the place and time demanded by the customer.

Banks have responded by developing bank-by-mail, Automatic Teller Machines (ATMs), and
other distribution systems. The medical community provides emergency medical vehicles,
outpatient clinics, 24-hour clinics, and home-care providers. Even performing arts employ
distribution channels. In all three cases, the industries attempt to meet the special needs of their
target markets while differentiating their product from that of their competition. A channel
strategy is evident.

WHAT IS DIRECT MARKETING?

Direct marketing is a channel free approach to distribution and/or marketing communications. So

a company may have a strategy of dealing with its customers directly, for example banks (such
as City Bank) or computer manufacturers (such as Dell). There are no channel intermediaries i.e.
distributors, retailers or wholesalers. Therefore direct in the sense that the deal is done
directly between the manufacturer and the customer.

The Internet and New Media (e.g. mobile phones or PDAs) are perfect for direct marketing.
Consumers have never had so many sources of supply, and suppliers have never had access to so
many markets. There is even room for niche marketers for example Scottish salmon could
ordered online, packed and chilled, and sent to customers in any part of the world by courier.

Many companies use direct marketing, and a current example of its use, as part of a business
model, is the way in which it is used by low-cost airlines. There is no intermediary or agent,
customers book tickets directly with the airlines over The Internet. Airlines capture data that can
be used for marketing research or a loyalty scheme. Information can be processed quickly, and
then categorized into complex relational databases.

Then, for example, special offers or new flights destinations can be communicated directly to
customers using e-mail campaigns. Data is not only collected on markets and segments, but also
on individuals and their individual buyer behavior. Companies such as Amazon are wholesalers
of books (i.e. they do not write or publish them) so they use Customer Relationship

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Management and marketing communications targeted directly at individual customers which is
another, slightly different example of direct marketing.

As mentioned above, direct also in the sense that marketing communications are targeted at
consumers by the manufacturers. For example, a brand that uses channels of distribution would
target marketing communications at wholesalers/distributors, retailers, and consumers, or a blend
of all three. On the other hand, a direct marketing company could focus upon communicating
directly with its customers. Direct marketing and direct mail are often confused although direct
mail is a direct marketing tool.

THE IMPORTANCE OF INTEGRATED MARKETING COMMUNICATIONS

Integrated marketing communications is an approach to planning communications that gives

your small business the potential to get better results from your campaigns and reduce marketing
costs. By integrating tools such as advertising, direct mail, social media, telemarketing and sales
promotion, you provide clarity, consistency and maximum communications impact, according to
the American Association of Advertising Agencies definition.

In the traditional approach to marketing communications, businesses and their agencies plan
separate campaigns for advertising, press relations, direct marketing and sales promotions.
Integrated campaigns use the same communication tools to reinforce each other and improve
marketing effectiveness. In an integrated campaign, you can use advertising to raise awareness of
a product and generate leads for the sales force. By communicating the same information in press
releases and feature articles, you reinforce the messages in the advertising. You can then use
direct mail or email to follow up inquiries from the advertising or press campaigns and provide
prospects with more information. To help convert those prospects to customers, you can use
telemarketing to sell directly or make appointments for the sales team.

Creative Consistency

In an integrated campaign, the different tools feature the same creative treatment. By repeating
the headlines, key phrases and images in each communication, you ensure that prospects and
customers receive consistent messages each time they see one of the elements of the campaign.
Creative consistency helps reinforce the basic campaign themes by increasing the number of
times prospects see or hear the same message.

Cost Savings

Creative consistency in your integrated campaigns can also save you money. By using the same
images and adapting the same copy for different media, you reduce copy-writing, design and
photography costs. If you work with external communications suppliers, you may be able to

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reduce agency fees by working with a single firm that offers integrated communications services,
rather than separate specialist agencies.
Customer Preference

An integrated campaign helps you provide customers with information in the format they prefer.
Consumers and business customers can specify if they want to receive product information via
email, direct mail, text message or telephone. Integration ensures they receive the same
information in all communications. You can also meet the needs of customers who search the
Internet for product information by integrating your website design and content with other
communications.
Specifics of Business Markets
1. A number of businesses in a particular territory
2. Smaller number of consumers
3. Higher value cash transactions
4. Shorter and simpler distribution channels

Business market is the area of exchange between the provider of business arrangements and
commercial petitioner-both sides realize some business, which is not the case in the market of
individual consumers. It consists of all the organizations that buy goods and services for the
production of further products and services for sale and for-profit and non-profit organizations
and institutions that buy for their own use or to provide services to others. The value of cash
transactions is high (50% above the value of transactions in the market of personal
consumption).

TYPE OF BUSINESS MARKETS

Given the objective of buying, market business spending is divided into three types:

1. Market producers
2. Market intermediaries
3. Government and institutional market

1. Market of producers
It is the most important segment of the business market. This is the market that requires a large,
pre- planned purchase of the product, semi-products and raw materials etc. For example,
manufacturers in the United States only for raw materials annually spend 1,500 Billion (nearly
400,000 manufacturing companies).

2. Market of intermediaries
The main function is buying intermediaries from producers or other suppliers with a view to
resale in the same form. Wholesalers, retailers, manufacturers and different government agencies

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perform the functions of intermediaries. Retailers-buy products continue to sell them to end
users.

3. Government and institutional markets

Government Market is the largest single market. Government and institutional markets offers
products or services by sealed bids (tender) on a contract basis as a result of negotiations
(Negotiated contract). Government institutions like hospitals, schools, foundations, houses
usually buy by the principles of state.

PRICING CONCEPTS

Price is the value exchanged for products in marketing transactions. Price is not always money
paid; barter, the trading of products, is the oldest form of exchange. Price is a key element in the
marketing mix because it relates directly to generation of total revenue.
The profit factor can be determined mathematically by multiplying price by quantity sold to get
total revenue and then subtracting total costs. Price is the only variable in the marketing mix that
can be adjusted quickly and easily to respond to changes in the external environment.

A product offering can compete on either a price or a nonprime basis. Price competition
emphasizes price as the product differential. Prices fluctuate frequently, and price competition
among sellers is aggressive.
Nonprime competition emphasizes product differentiation through distinctive features, service,
product quality, or other factors. Establishing brand loyalty by using nonprice competition works
best when the product can be physically differentiated and the customer can recognize these
differences.

An organization must determine the demand for its product. The classic demand curve is a graph
of the quantity of products expected to be sold at various prices if other factors hold constant. It
illustrates that as price falls, the quantity demanded usually increases. However, for prestige
products, there is a direct positive relationship between price and quantity demanded: demand
increases as price increases. Next, price elasticity of demand, the percentage change in quantity
demanded relative to a given percentage change in price, must be determined.
If demand is elastic, a change in price causes an opposite change in total revenue. Inelastic
demand results in a parallel change in total revenue when a product's price is changed.

Analysis of demand, cost, and profit relationships can be accomplished through marginal
analysis or break-even analysis. Marginal analysis examines what happens to a firm's costs and
revenues when production (or sales volume) is changed by one unit. Marginal analysis combines
the demand curve with the firm's costs to develop a price that yields maximum profit. Fixed costs
do not vary with changes in the number of units produced or sold; average fixed cost is the fixed
cost per unit produced. Variable costs vary directly with changes in the number of units produced
or sold. Average variable cost is the variable cost per unit produced.

Total cost is the sum of average fixed cost and average variable cost times the quantity produced.
The optimal price is the point at which marginal cost (the cost associated with producing one
more unit of the product) equals marginal revenue (the change in total revenue that occurs when

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one additional unit of the product is sold). Marginal analysis is only a model; it offers little help
in pricing new products before costs and revenues are established.

Break-even analysis, determining the number of units that must be sold to break even, is
important in setting price. The point at which the costs of production equal the revenue from
selling the product is the break-even point. To use break-even analysis effectively, a marketer
should determine the break-even point for each of several alternative prices.

This makes it possible to compare the effects on total revenue, total costs, and the break-even
point for each price under consideration. However, this approach assumes the quantity demanded
is basically fixed and the major task is to set prices to recover costs.

Eight factors enter into price decision making: organizational and marketing objectives, pricing
objectives, costs, other marketing mix variables, channel member expectations, customer
interpretation and response, competition, and legal and regulatory issues. When setting prices,
marketers should make decisions consistent with the organization's goals and mission. Pricing
objectives heavily influence price-setting decisions. Most marketers view a product's cost as the
floor below which a product cannot be priced. Because of the interrelationship among the
marketing mix variables, price can affect product, promotion, and distribution decisions. The
revenue channel members expect for their functions must also be considered when making price
decisions.

Buyers' perceptions of price vary. Some consumer segments are sensitive to price, but others
may not be. Thus, before determining price, a marketer needs to be aware of its importance to the
target market. Knowledge of the prices charged for competing brands is essential to allow the
firm to adjust its prices relative to competitors'. Government regulations and legislation also
influence pricing decisions. Several laws aim to enhance competition in the marketplace by
outlawing price fixing and deceptive pricing. Legislation also restricts price differentials that can
injure competition. Moreover, the government can invoke price controls to curb inflation.

Unlike consumers, business buyers purchase products for resale, for use in their own operations,
or for producing other products. When adjusting prices, business sellers consider the size of the
purchase, geographic factors, and transportation requirements. Producers commonly provide
discounts off list prices to intermediaries. The categories of discounts include trade, quantity,
cash, seasonal, and allowance.

A trade discount is a price reduction for performing such functions as storing, transporting, final
processing, or providing credit services. If an intermediary purchases in large enough quantities,
the producer gives a quantity discount, which can be either cumulative or noncumulative. A cash
discount is a price reduction for prompt payment or payment in cash. Buyers who purchase
goods or services out of season may be granted a seasonal discount. An allowance, such as a
trade-in allowance, is a concession in price to achieve a desired goal.

Geographic pricing involves reductions for transportation costs or other costs associated with the
physical distance between buyer and seller. With an F.O.B. factory price, the buyer pays for
shipping from the factory. An F.O.B. destination price means the producer pays for shipping; this

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is the easiest way to price products, but it is difficult to administer. When the seller charges a
fixed average cost for transportation, it is using uniform geographic pricing. Zone prices are
uniform within major geographic zones; they increase by zone as transportation costs increase.
With base-point pricing, prices are adjusted for shipping expenses incurred by the seller from the
base point nearest the buyer. Freight absorption pricing occurs when a seller absorbs all or part
of the freight costs.

Reference:

http://www.businessdictionary.com/definition/consumer-buying-behavior.html

https://www.slideshare.net/gibsondaniel83/market-segmentation-targeting-and-positioning

https://marketing-insider.eu/marketing-strategy/

https://www.slideshare.net/dennimardomingo/marketing-channel-supply-chain-management-
principles-of-marketing

http://www.marketingteacher.com/direct-marketing/

https://courses.lumenlearning.com/boundless-marketing/chapter/marketing-channels-in-the-
supply-chain/

http://smallbusiness.chron.com/importance-integrated-marketing-communications-73248.html

http://www.studylecturenotes.com/mba-marketing/business-markets-business-buyer-behavior-
meaning-types-factors

http://college.cengage.com/business/pride/marketing/14e/assets/students/chsummary/summary21
.html

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