Marketing Management Bba Notes

Marketing Management Notes
Unit 1
Definition of marketing:
According to American marketing Association, “Marketing is an organizational function and

a set of processes for creating, communicating and delivering value to customers and foe
managing customer relationships in ways that benefit the organization and its stakeholders.
Nature of Marketing Management:
The nature of marketing is as follows:
I. Specialized Business Function: In early days, the selling function did not call for any
specialized skills as the sales could have been affected on production basis. But now the
business environment has undergone tremendous changes in social, economic, political,
and cultural aspects. Therefore the management of a firm has to develop a specialized
department with a view to absorbing new ideas, new approaches and new market
demands with the occurring and expected changes.
II. Socially desirable function: It requires constant interaction with various strata of
society. It is instrumental in manipulating the factors of production, distribution,
promotion and price.
III. Integrative function: It integrates and combines the other business functions like
production, finance, personnel, R&D etc with a view to accomplishing the organizational
goals.
IV Reflects the business mission: Marketing reflects the business goals and aims of a firm
. before the public and society.
V. Universal Function: It has a universality in the sense that it can be applied to both profit-
motive and non-profit motive organizations. A profit seeking business is essentially
dependent on marketing and institutions like hospital, schools, university also practice
marketing in popularizing the services offered by them
VI. Management Function: The business policies, strategies and programs related to
marketing are mostly of managerial functions. These are needed to be planned, organized,
directed, coordinated and controlled so as to achieve the marketing objectives of the firm.
Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Scope of Marketing
The scope of marketing is as follows:
I. Goods: Physical good constitute the bulk of most countries’ production and marketing
effort. In developing nations, goods particularly food, commodities, clothing and housing
are the mainstay of the economy.
II. Services: Services include the work of airlines, hotel, car rentals, hospitals, schools, as
well as professional working within or for companies, such as accountants, lawyers,
engineers, doctors, software programmers and management consultants.
III. Experiences: By orchestrating several services and goods, one can create and stage
different market experience.
IV. Events: Marketers promote time-based events such as the Olympics, company
anniversaries, major trade shows, and sports events. There is a whole profession of event
planners who work out the details of an occasion and stage it come off perfectly.
V. Persons: Celebrity marketing has become a major business. Today every film star has an
agent, a personal manager and ties to a public relations agency. Cricketers, artists,
musicians, CEOs, Physicians, and other professionals are drawing help from celebrity
marketers.
VI. Places: Places- cities, states, regions, and whole nations- compete actively to attract
tourists, factories, company headquarters and new residents. Place marketers include
economic development specialists, real estate agents, commercial banks, local business
associations, and advertising and public relation agencies.
VII. Properties: Properties are tangible rights of ownership of either real property or financial
property. Properties are bought and sold, and this occasions a marketing effort. Real
estate agents work for property owners or seekers to sell or buy residential or commercial
real estate and arrange rental properties off-shore.
VIII. Organisations: Organisations are actively work to build a strong, favorable image in the
mind of their publics. We see corporate identity ads by companies seeking more public
recognition and acceptance.
IX. Information: Information can be produced and marketed as a product. This is essentially
what schools and universities produce and distribute at a price to parents, students and
communities.
X. Ideas: Every market offering includes a basic idea at its core. Products and services are
platforms for delivering some idea or benefit. Marketers search hard for the core need
they are trying to satisfy.
Importance of Marketing
The importance of marketing management is as discussed below:
Importance of Marketing to society: marketing can play a vital role for well being to society.
The importance of marketing to society may be summarized under following heads:

i. Delivery of standard of living to the society: Chief obligation of marketing is to

produce goods and services for the society according their needs and tastes at reasonable
price. Firms produce the goods and services according to the customers’ needs, create
demand for these goods and services, encourages customers to use them and thus
improves the standard of living of the society.
ii. Decrease in distribution cost: Marketing aims at reducing the cost of distribution as far
as possible so that the commodities might be within the reach of maximum number of
consumers.
iii. Increase in employment opportunities: Employment opportunities are directly affected
by the development of marketing. According to an estimate, about 40% of the labour force
in developed countries like U.S.A., Japan, Canada, Germany, France etc is engaged in
different activities of marketing such as marketing research, transport, communication,
storage, warehousing, publicity, wholesale and retail trade.
iv. Protection against business recession: Business slowdown causes unemployment,
slackness in productivity and great loss to the economy. Marketing helps in protecting
society against all the re-occurring problems.
v. Increase in National Income: Successful operation of marketing activities creates,
maintains and increases the demand for goods and services in the society. It results in the
increased level of production and utilization of services which in turn enhance the scope
of marketing.
Importance of marketing to the firm: Marketing plays an important role for the well being
of a firm. The importance of marketing to a business firm may be summar ized under
following heads:
i. Helpful in business planning and decision making: Marketing is helpful in the

overall business planning and taking various decisions regarding production and other
activities in the business. A firm will produce what it can sell or as much quantity as
it can sell and not what and how much it can produce.
ii. Helpful in increasing profits: Every business is carried on with the profit motive.
Marketing helps in increasing the business profits by reducing the selling cost on the
one hand and by increasing the demand of the product through advertising and sales
promotion activities on the other hand
iii. Helpful in communication between firm and society: Business collects information
regarding consumers’ behavior and changes therein from time to time through
marketing. Marketing also provides information to the firm of the competitors, price
policies, production policies, advertising and sales promotion policies and distribution
policies. It helps the firm in framing its own policies or making necessary adjustments
therein accordingly.

Classification of Market
Markets have been classified on the basis of different approaches, in various ways as are
given below:
(1) On the basis of geographical area: There are four types of markets which are:
i. National Market: For certain types of commodities, a country may be
regarded as a market with the rapid speed of industrialization; it is called a
national market.
ii. International Market: world or international market comes up when buyers
and sellers of goods evolve trans-globally, i.e. involvement of buyers and
sellers beyond the boundaries of a nation
iii. Regional Market: A regional market covers a particular region of a country.
Such regional classification is found in a large country. For example India is
divided into four regions, east, west, north, and south for all practical
purposes.
iv. Local Market: A local market has a very limited area and exists generally for
daily necessary good perishable in nature like fish, vegetable etc.
(2) On the basis of Nature of Transaction: There are two types of markets:
i. Spot Market: In such a market, goods are exchanged and the physical delivery of goods
takes place immediately for all practical purposes.
ii. Future market: In such a market, contracts are made over the price for future delivery. The
dealing and settlement take place on different dates.
(3) Classification according to position of sellers: There are three types of

markets which are:
i. Primary Market: The agricultural or industrial goods are sold by the
producers to some middlemen like wholesalers. This is the primary market.
ii. Secondary market: In the secondary market, the middlemen like the
wholesalers sell the goods to another group of middlemen called the retailers.
iii. Terminal Market: Ultimately the goods are sold in the terminal market to the
actual consumers.
(4) On the basis of commodities/Goods : There are four types of market:
i. Produce Exchange Market: This type of market is found only in developed
industrial centres or cities. One market deals in one commodity only. For
Example: Wheat exchange market of Hapur and Cotton exchange market of
Mumbai.
ii. Manufactured Goods Market: Such type of market deals with manufactured
goods. For example: Leather goods, machinery etc.

iii. Bullion Market: This type of market deals with the purchase or sale of gold,
silver etc. Bullion markets of Mumbai, Kolkata, Kanpur etc are the example
of bullion market.
iv. Stock Market: It deals with the sale and purchase of equity shares,
debentures, bonds, mutual funds etc. This market is regulated through the
stock exchange such as NSE and BSE.
(5) On the basis of competition: There are two types of markets:

i. Perfect Market: A market is perfect market if there are large number of
sellers and buyers, the products of the sellers is identical, each buyer and
seller has perfect knowledge of the market etc.
ii. Imperfect market: When one or more of the above conditions are absent the
market is imperfect. Market can be further classified according to the degree
of imperfection. The worst situation is when there is a monopoly
(6) On the basis of volume of business transacted: There are three types of
markets:
i. Retail Market: In retail market goods are sold in small quantities directly to
the users or consumers in consumer market. The Consumer gets the goods for
consumption and not for profit-making.
ii. Wholesale market: In wholesale market, goods are supplied in bulk quantity
to dealers.
iii. Industrial Market: Here goods are bought in bulk quantity either for
Consuming or for reproducing process.
Marketing Functions
The functional approach of marketing consists of a number of activities called marketing

functions. These functions are:
i. Buying: it is the first step in the process of marketing. A manufacturer has to buy raw
materials for production. Buying involves transfer of ownership of goods from seller to
buyer.
ii. Assembling: Assembling means creation and maintenance of the stock of good,
purchased from different sources. In such a case the goods have to be collected and
assembled at one place.
iii. Selling: The primary objective of marketing is to sell the products at a profit. By selling,
the ownership is transferred to buyer.
iv. Transportation: products must be physically relocated to the locations where consumers
can buy them. This is a very important function. Transportation includes rail road, ship,

airplane, truck, and telecommunications for non-tangible products such as market

information.
v. Storage: products must be stored and protect ed until they are needed. This function is
especially important for perishable products such as fruits and vegetables.
vi. Distribution function: the function of distribution is to ensure that your product is easily
and effectively moved from the point of production to the target market, the kind of
transportation system to employ e.g. Road, rail, water or air, and ensures that the product
can be easily accessed by customers. You as a Marketer should also design the kind of
middlemen to engage in the channel of distribution, their incentives and motivations etc.
vii. Risk-Taking: insurance companies provide coverage to protect producers and marketers
from loss due to fire, theft, or natural disasters.
viii. Pricing function: you perform the function of pricing on your product offerings by
designing effective pricing systems base on your product stage and performance in the
product life cycle. Price is the actual value consumers perceive on your product, so you
as a marketer should ensure that your value of your product is not too high or too low to
that of your costumers.
ix. Market Information: information from around the world about market conditions,
weather, price movements, and political changes, can affect the marketing process. Market
information is provided by all forms of telecommunication, such as television, the internet,
and phone.
x. After sales-service: in a more complex and technical product, you as a marketer should
make provision in order to assist your customers after they have purchased your product.
In terms of machines or heavy equipment product that requires installation or
maintenance, most marketing organization renders such services like installing the
machine or maintaining it for stipulated periods on time for free or by a little service
charge.
Marketing vs. Selling
Basis of Selling Marketing

difference
Emphasis Emphasis on product. Emphasis on consumer needs and wants.
Approach Company manufactures the product first Company first determines customers’ needs
and then decide to sell it and wants and then decides on how to deliver a
product to satisfy these wants.
Orientation Management is sales-volume oriented Management is profit- oriented
planning Planning is shot term oriented, in terms of Planning is long-term oriented, in terms of new
today’s products and markets products, tomorrow’s markets, and future
growth
Need priority Stresses needs of a seller Stresses needs and wants of buyers.
Philosophy Views business as a goods producing Views business as a consumer satisfying

process process
Technology Emphasis on staying with existing Emphasis on innovation in every sphere, on

technology and reducing costs. providing better value to the customers by
adopting a superior technology.
Work Different departments work as highly All departments of a business operate in an

delegation separate watertight compartments. integrated manner, the sole purpose being
generation of consumer satisfaction.
Price Cost determines price. Consumers determine price, price determines

determination cost.
Customers Selling views customers as the last link in Marketing views the customers as the very
business. beginning of a business.
Marketing management
According to Philip Kotler: Marketing management is the process of planning

and executing the conception, pricing and promotion and distribution of goods,
services and ideas to create exchanges with target groups that satisfy customer and
organizational objectives.
Marketing Concepts/Philosophies/Orientations
There are five competing concepts in marketing management which are:
1. Production Concept: Production concept is a concept where goods are produced without
taking into consideration the choices or tastes of the consumers. It is one of the earliest
marketing concepts where goods were just produced on the belief that they will be sold
because consumers need them.
The Salient Features of production concept are:
i. This concept is based on the belief that consumer’s needs can be satisfied with
reasonable quality and reasonably priced product.
ii. There is fair amount of competition and competing products are sold with
complete knowledge of the products available in the market.
iii. The manufacturer should maintain availability of sufficient quantity of products
and consistency in quality.
2. Product Concept: The product concept is management philosophy that consumers
generally prefer those products in the market which offer the best in terms of quality and
price and essentially all organizations in marketing business try to produce and provide
sustainable improved quality products.
The Salient features of product concept are:

i. Consumers generally look and prefer quality of the product.

ii. Consumers compare quality of products to competing product or brand on offer.
iii. Consumers generally buy products to meet their overall needs and not specific
needs.
iv. Consumers are aware of the product quality differences between competing
brands and they choose the quality which comes closest to their preferences and
their affordable price.
3. Selling Concept: Many organisations follow the selling concept, which holds that
consumers will not buy enough of the organization’s products unless it undertakes a large
–scale selling and promotion effort. The concept is typically practiced with unsought
goods- those that buyers do not normally think of buying, such as Encyclopedias or
Insurance.
The Selling concept is based on the following premises:
i. Consumers do not waste money in buying things which are not essential or
buying excess quantities then required.
ii. Consumers prefer to be motivated to buy things by use of selling efforts by
organisations.
4. Consumers appreciate good selling techniques, efforts and good salesmanship.
Aggressive ill behaved salesmanship is not useful.Modern Marketing Concept: Modern
concept of marketing is a customer –oriented concept. This concept is based on the
assumption that a business and industrial enterprises can achieve its object of maximizing
the profits only when it considers the needs and wants of its consumers and make efforts
for the satisfaction of these needs and
wants. Therefore, according to this concept, marketing starts with the discovery of needs
and wants of customers and ends with the satisfaction of these needs and wants. The main
premises on which the modern marketing concept is based are:
i. The customers’ needs and wants are varied and many. These must be understood
and suitable products and services offered to match the requirement.
ii. The market consists of different segments and these segments can be grouped
according to the customers’ characteristics.
iii. The Consumers in any market may not buy a product if they feel that it will not
serve the purpose of solving their needs and wants.
iv. The success of marketing concept lies in proper analysis of market research.
Factors influencing Modern Marketing Concept:

i. Population growth
ii. Increasing Households
iii. Disposal income
iv. Surplus income
v. Technological development

vi. Mass Communication media

vii. Credit Purchases
5. Societal Marketing Concepts: The societal marketing is an enlightened marketing
concept that holds that a company should make good marketing decisions by considering
consumers’ wants, the company’s requirements, and society’s long-term interests. It is
closely linked with the principles of corporate social responsibility and of sustainable
development.
The societal marketing concept holds that the organisation should determine the needs,
wants and interests of target markets.
Marketing Mix
The term “marketing mix” was first coined by the American Marketing expert James
Culliton. The description of the “marketing Mix” as four Ps was given by the well-
known American Professor Jerome McCarthy.
Four P’s of Marketing Mix

1. Product: The product itself is the first element. Products satisfy consumer needs. The
management must decide the products to be produced by knowing the needs of the
consumers. The product mix combines the physical product, product services, brand and
package.
2. Price: The second element to affect the volume of sales is the price. The marked or
announced amount of money asked from a buyer is known as basic price-volume placed
on a product. There may be basic price alterations may be made in the form of discount,
allowances etc. Apart from this, the term of credit, liberal dealings will also boost sales.
3. Place: The third element of the marketing mix is place. Place refers to having the right
product, in the right location, at the right time to be purchased by consumers. This proper
placement of products is done through middle people called the channel of distribution.
4. Promotion: Promotion is the persuasive communication about the products by the
manufacturer to the public. Firms must undertake the promotion work like advertising,
publicity, personal selling etc., which are the major activities. Thus the public may be
informed of the product and be persuaded by the firms.
Factors affecting Marketing Mix
Factors affecting marketing mix can be divided into the category of controllable and
uncontrollable factors as given below:
1. Controllable factors: There are certain factors, which can be controlled by the
marketing management. Some of them are as follows:
a. Product Planning: The product of the company must have the quality of satisfying
the needs of the customers and it should plan and develop its products accordingly.

b. Brand Policy: It includes decisions regarding trademarks and brand name because it
influences the sale volume of the product of the company. He may decide one brand
name for the different products of the company or different brand may be used for
different qualities of the product.
c. Packaging Policy: Packaging also has an important effect on sales. The marketing
manager is to decide whether product should be sold loose or packs. If he decides to
sell the product in packs then size, quality and getup of packing should be considered
very carefully.
d. Personal selling: Personal selling is good to increase the sale and the same time to
know the consumer’s needs and desires.
e. Special sales promotion policy: Apart from personal selling and general
advertisement policy, the business should provide for the special sales promotion
campaigns as a part of its sales promotion policy to increase its sales.
f. Physical distribution: All the above variables create demand but creation of demand
is not sufficient. The marketing manager must plan to supply the product in
accordance with the needs of the public of the different markets.
g. Market Research: Market research is a system by which one can analyze the market
conditions. It helps a marketer in formulating the policies by which the product reaches
in an efficient way in the hands of the consumers.
2. Uncontrollable Factors: Uncontrollable factors are also known as external factors. These
factors can be classified under four heads:
a. Consumer’s Buying Behavior: Consumer’s buying behavior is affected by buying
habits, purchasing power, motivation in buying, living standard, social environment,
technological changes.
b. Competition: marketing manager should also study the competitive conditions in the
market. For this purpose, he should take into account basis of competition, the number
of competitors, the viewpoint towards the consumers, quality and characteristics of
competitors’ product.
c. Pattern of Distribution system: The marketing manager should consider the various
forms of distribution system and the nature and behavior of distributors before
deciding upon the marketing mix of his company.
d. Government Control: The marketing manager should consider the rules and
regulations of the government in respect of products, pricing, competitive practices,
advertising etc.

Unit - 2
Product
Product is anything that can be offered to a market that might satisfy a want or need.
According to Philip Kotler, “A product is a bundle of physical services and symbolic particular
expected to yield satisfactions or benefits to the buyers”.
Characteristics of Product
1. Tangibility: It should be perceptible by the touch. An item to be called a product should

have a tangibility character- touch, seen of feeling.
2. Intangible Attributes: The product may be intangible in the form of services, for
example, banking, insurance services, repairing etc.
3. Associated Attributes: Such attributes may be brand, package, warranty etc. For
example Hindustan Lever’s “Vanaspati Ghee” has a brand name Dalda and with its
package it can be identified by the consumers.
4. Exchange value: Whether the product is tangible or intangible, it should have exchange
value and must be capable of being exchanged between seller and buyer for mutually
agreed prices.
5. Consumer Satisfaction: Products should have the ability to offer value satisfaction to
the consumer. The satisfaction must be both real and psychological.
Types of Product
There are different approaches and parameters to differentiate products which are as follows:
1. Based on the Nature: based on nature, product can be classified into ten types. These
are
a. Goods: These are intangible performances where the consumption and production point
is the same.
b. Ideas: Every market offering includes the basic idea at its core. For example,
Consultancy firm, Ad agency.
c. Experiences: By orchestrating several services and goods, one can create stage and
market experiences. For example: Science City, Aquatica Theme park and water world.
d. Events: Marketers promote time based events such as Olympics or Movie Awards.
e. Persons: Celebrity marketing has become a major business .Different film stars and
sportsperson have their own publicity and endorsement agents.
f. Places: Places can be marketed to attract tourist industries etc. For example: Kerala-
God’s Own Country Campaign.
g. Properties: Properties are intangible rights of ownership of either real property of
financial property such as Maruti or TCS IPO campaign.
h. Organisations: Organisations actively work to build a strong favorable image in the
mind of their customers. For example: Philips uses a tagline “Let’s make things Better”.

i. Information: Information can be produced and marketed as a product. For example,

Dictionaries, Encyclopedias, Schools etc.
2. Based on Consumer’s Intentions: Products can be classified into two broad categories
based on who will use them and how they will be used. These are:
I. Consumer Products: Consumer products are those bought by final consumers
for personal consumption. Marketers usually classify these goods further based on
how consumers go about buying them. Consumer products include convenience
products, shopping products, specialty products and unsought products. Examples:
Newspapers, drugs, grocery products, prescription medicines, a lawyer’s services
etc.
II. Industrial Goods: A product bought for use in the production of other products
or in an Organizational operation is an industrial product. Business products are
intended for resale, for further processing in producing other products, or for use
in conducting business. Industrial goods include raw materials, capital equipment,
Component parts, Supplies and industrial services etc.
Example: Grains, fruits, minerals, products from forests and seas, machineries,
cranes, motors, hand tools, paints, office stationeries, financial, legal, marketing
services.
3. Based on Social Benefits: From the social aspects, we can differentiate the products
depending on long-term and short-term advantages:
i. Pleasing Products: These give high immediate satisfaction, but do harm to
consumers in the long run. For example: Pan Masala, cigarettes, alcohols etc.
ii. Deficient Products: These have neither immediate appeal nor long-term run benefits.
Firms are not interested in such products as there is no chance to make any profit at
all. For example, Typewriter or pager.

iii. Salutary Products: They have long run advantages but have no immediate appeal to
consumers. Hence firms are not primarily interested in such products. For example:
Soyabean chips (diet chips).
iv. Desirable Products: These have a happy combination of high immediate satisfaction
and high long run consumer welfare. Tasty, nutritious, ready- made food products are
the examples of such desirable products.
Product mix
Product Mix is the composite of products offered for sale by a firm or a business unit. A product
mix is the combination of products that a company offers. The greater the number of offerings,
derives the greater the chance of satisfying a customer.
Example: If an enterprise manufactures or deals with different varieties of soap, oil, toothpaste,
toothbrush etc. the group of all these products is called ‘Product Mix’.
Product Mix Decisions
An Organisation with several product lines has a product mix. A product mix consists of all the
product lines and items that a particular seller offers for sale.
A company’s product mix has a certain width, length, depth and consistency which are described
below:
1. Product Mix Length: The length of a product mix refers to the total number of items in
the mix. HUL carries many brands within each line. For example, it sells six laundry
detergents, ten soaps, four shampoos and two toothpastes etc.
2. Product Mix Width: The width of a product mix refers to how many different product
lines the company carries. For example, HUL markets a fairly wide product mix
consisting of many product lines, including paper, food, household cleaning, medicinal,
cosmetics, and personal care products.
3. Product Mix Depth: The depth of a product mix refers to how many variants are offered
of each product in the line. In other words, product mix depth refers to the number of
versions offered of each product in the line. If Close-up comes in 5sizes and three
formulation (red, green, blue), Close-up has depth of 15.
4. Product Mix Consistency: The consistency of the product mix refers to how closely
relate the various product lines are in the end use, production requirements, distribution
channels, or some other way. HUL product lines are consistent in so far as they are
consumer goods that go through the same distribution channels.

New Product Development
A new product is one which is really innovative which is significantly different from existing
and imitative products that are new to the company.
Once a company has carefully segmented the market, chosen its target customers, identified
their needs, and determined its market positioning, it is better able to develop new products.
Factors Contributing to New Product Development
Several factors contribute to new product development, while most are related to external
environmental variables, the most important internal factors in the product development is
the surplus capacity that a firm may have at any given time.
1. Changing Customer Preferences: The driving force in new product development is

changing customer life styles, leading towards a change in the customers’ preferences
and expectations.
2. Technological Changes: Another factor is the technological change in the industry and
the market. For example: If Mrs. Indira Gandhi’s government had not decided to expand
the television network to cover 70% of the Indian population, launched its own satellite
INSAT IB and started color telecast in 1982. It is extremely doubtful if many of today’s
products would have seen the light of the day in the Indian market.
3. Government Policy: Government policy can also encourage or foster new product
development processes. For example, a government policy encouraging competition and
entrepreneurship can motivate firms to launch new products.
4. Product Life Cycle (PLC): In order to maintain growth in sales and profits firms decide
to drop or modify or develop new products when the existing products reach maturity or
decline stages in product life cycles.
New Product Development Process
There are eight steps of NPD Process comprising the key elements of a new product
development. These steps are discussed below:
1. Idea generation: The first step of NPD requires gathering ideas to be evaluated as
potential product options. For many companies idea generation is an ongoing process
with contributions from inside and outside the Organisation. Idea generation includes
customer comments and suggestions via toll free telephone numbers and website forms
etc.
2. Screening of Idea: In step 2 the idea generated in step 1are critically evaluated by
company personnel to isolate the most attractive options. Depending on the number of
ideas, screening may be done in rounds. Only those ideas are selected which are feasible
and workable to develop. Non feasible ideas can clearly be costly for the company.
Acceptable ideas move on the next step.

3. Concept Development and Testing: With a few ideas in hand the marketer now attempts
to obtain initial feedback from customers, distributers and own employees. Ideas are
presented to a group in the form of concept and not in actual working form.
4. Marketing Strategy and Development: How will the product/service idea be
launched within the market? A proposed marketing strategy will be written laying out
the marketing mix strategy of the product, the segmentation, targeting and positioning
strategy sales and profits that are expected. After testing, the new-product manager must
develop a preliminary marketing-strategy plan for introducing the new product into the
market.
5. Business Analysis: At this point in the NPD process the marketer has reduced a
potentially large number of ideas down to one or two options. Now in this step the
process becomes very dependent on market research as efforts are made to analyse the
viability of the product ideas. The key objective at this stage is to obtain useful forecasts
of market size, operational costs and financial projections. Organisation must determine
if the product will fit within the company’s overall mission and strategy.
6. Product and Marketing Mix Development: Finally it is at this stage that a prototype is
finally produced. The prototype will clearly run through all the desired tests, and be
passing through business analysis are given serious consideratio n for development. Once
the prototype is ready the marketer seeks customer input. However, unlike the concept
testing stage where customers were only exposed to the idea, in this step the customer gets
to experience the real product as well as other aspects of the marketing mix.
7. Test marketing: Test marketing means testing the product within a specific area. The
product will be launched within a particular region so the marketing mix strategy can be
monitored and if needed, be modified before national launch.
8. Commercialization- Launching the Product: If the test marketing stage has been
successful and displays promising results then the product will go for national launch.
There are certain factors that need to be taken into consideration before a product is
launched nationally. These are timing, how the product will be launched, where the
product will be launched, will there be a national roll out or will it be region by region?
Benefits of New Product Development
Some of the benefits of the new product introduction include:
1. Product Introduced on Time:

a. Shorten the time from a product’s concept initiation to its release to manufacturing,
b. Plan and manage overall duration of the NPI process and each of its phases,
c. Manage change and lifecycle for various deliverables, and
d. Standardise format and attributes for different deliverables.
2. Higher Productivity:
a. Capture and automate company specific NPI process steps,

b. Incorporate a best-practice project plan, document templates and metrics,

c. Identify and reduce time spent on non-value add activities,
d. Focus effort and increase R&D throughout.
3. Lower Project Cost:
a. Define, plan track, and manage project cost,
b. Increase the number of projects completed on-budget
c. Quickly identify, capture, and resolve action items and risks,
d. Identify and eliminate repeating activities and
e. Speed adoption, and improve consistency of process execution.
4. Greater Revenue from New Products:
a. Provide process visibility to management, accelerating benefit of implementation,
b. Improve quality of metrics, and reduce collection time,
c. Focus on the most critical quality initiative and
d. Achieve timely market introduction of the complete product.
Product Life Cycle
Like a human being, all products have certain length of life during which they pass through
certain identifiable stages. Through the conception of the product, during its development and
upto the market introduction, product remains in pre-initial stage. Its life begins with its market
introduction, then goes through a period during which its market grows rapidly, eventually, it
reaches at maturity and then stands saturated. Afterwards its market declines and finally its life.
Most product life cycle curves are portrayed as bell-shaped. This curve is typically divided into
four stages:

1. Introduction: A period of slow sales growth as the product is introduced in market.

Profits are nonexistent in this stage because of the heavy expenses incurred with product
introduction.
2. Growth: A period of rapid market acceptance and substantial profit improvement.
3. Maturity: A period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits stabilize or decline because of increased
competition.
4. Decline: The period when sales show a downward drift and profits erode.
Characteristics of PLC
The life cycle is nothing but the pattern of demand for a product over time.
1. No every product goes through every stage. Infact, many products never get past the
introduction stage.
2. The length of time a product spends in any one stage may vary.
3. Some products may move through the entire cycle in weeks.
4. Repositioning of a product can lead to a, new life cycle. Repositioning is basically
changing the image or perceived uses of the product.
Product Life Cycle Strategies
Products typically go through four stages during their lifetime. Each stage is different and
requires marketing strategies unique to the stage.
1. Introduction Stage This stage involves introducing a new and previously unknown
product to buyers. Sales are small, the production process is new, and cost reductions
through economies of size or the experience curve have not been realized. The promotion
plan is geared to acquainting buyers with the product. The pricing plan is focused on first-
time buyers and enticing them to try the product.
2. Growth stage: In this stage, sales grow rapidly. Buyers have become
Acquainted with the product and are willing to buy it. So, new buyers enter the market
and previous buyers come back as repeat buyers. Production may need to be ramped up
quickly and may require a large infusion of capital and expertise into the business. Cost
reductions occur as the business moves down the experience curve and economies of size
are realized. Profit margins are often large. Competitors may enter the market but little
rivalry exists because the market is growing rapidly. Promotion and pricing strategies are
revised to take advantage of the growing industry.
3. Maturity Stage: In this stage the market becomes saturated. Production has caught up
with demand and demand growth slows precipitously. There are few first-time buyers.
Most buyers are repeat buyers. Competition becomes intense, leading to aggressive
promotional and pricing programs to capture market share from competitors or just to

maintain market share. Although experience curves and size economies are achieved,
intense pricing programs often lead to smaller profit margins. Although companies try to
differentiate their products, the products actually become more standardized.
4. Decline Stage: In this stage buyers move on to other products and sales drop. Intense
rivalry exists among competitors. Profits dry up because of narrow profit margins and
declining sales. Some businesses leave the industry. The remaining businesses try to revive
interest in the product. If they are successful, sales may begin to grow. If not, sales will
stabilize or continue to decline.
Factors affecting the Life Cycle of a Product
1. Rate of technical change: Life cycle of a product is affected by the rate of technical
change in the country. If the rate of technical change in the country is very high, the life
of the product is limited.
2. Rate of man at acceptance: The rate of customer acceptance also affects the life cycle
of products. If the rate of market acceptance is high, the life cycle of products in that
country is limited.
3. Ease of Competitive Entry: The situation of competition in the market also affects the
life cycle of the products. If the entries of competitors are easy and unchecked, the life of
the products will be shorter as the new and new products will enter the market.
4. Risk bearing capacity: The risk bearing capacity of the enterprise also decides the life
cycle of its products. If the enterprises have risk bearing capacity, they can keep their
product alive in the market for a long period as they can face the challenges of the market
very effectively.
5. Economic and managerial force: Enterprise having strong economic and managerial
forces, can keep their products standing in the market and the life cycle of their product
will be longer that of the life cycle of the products of those enterprises having weal
economic and managerial forces.
6. Protection of patents: The life cycle of the products is fairly long if their patents have
got registered. On the other hand, if the products are not patented, their life is out short.
7. Goodwill of the Enterprise: If the goodwill of the enterprise is good in the market as the
producer of good quality products, its product will last long in the market as compared to
the products of those enterprises whose goodwill is not good or which are not known to
the public.

Unit - 3
Pricing
Meaning of Pricing: pricing is the function of determining the product or service or idea value
in monetary terms by the marketing manager before it is offered to the target consumers for sale.
Objectives of Pricing
A firm may choose its objectives from any of the following are as follows:
1. To maximise the profits: The primary objective of the pricing decision is to maximise
profits for the concern and therefore pricing policy should be determined in such a way
so that the company can earn the maximum profits.
2. Price Stability: As far as possible, the prices should not fluctuate too often. A stable
price policy above can win the confidence of the consumers. For this purpose, the
concern should consider long-run and short run elements.
3. Competitive situation. ONE OF HE OBJECTIVES Of the price decision is to face the
competitive situation in the market. Prices of the commodities should be fixed in the
keeping in the mind the competitive situation.
4. Achieving a Target-Return. This is a common objective of well-established and reputed
firm in the market to fix a certain rate of return on investment. The prices of the product
are so calculated as to earn that rate of return on investment.
5. Capturing the Market. One of the objectives of pricing decision may be capturing the
market. A company especially a big company, at the time of introducing the product in
the market fixes comparatively lower prices for its products, keeping in view the
competitive position with an objective of capturing a big share in the market.
6. Ability to Pay: Price decisions are sometimes taken according to the ability of customers
to pay, i.e. more prices can be charged from persons having capacity to pay.
7. Long-run Welfare of the Firm: The main aim of some concerns is to fix the price of the
product which is in the best interest of the firm in the long run keeping the market
conditions and economic situations in mind.
8. Margin of profit to Middlemen: Pricing of the product should be made keeping in view
that middlemen get a fair return on the sale of company’s product.
9. Resources Mobilisation: Under this objective, the firm fixes the prices of its products in
such a way that it can accumulate sufficient resources for its expansion.
Importance of Pricing
Pricing is one of the important elements of the marketing mix, but lately, it has come to occupy
the centre stage in marketing wars. The reasons for this are as follows:

1. Product Differentiation Getting Blunted: As technologies get standardised,

differentiation among firms on the basis of the product is going to get blunted. More
products and brands will transcend to a commodity situation.
2. Inter-Firm Rivalry: The intensity in inter-firm rivalry increases as the entry and exit
barriers in the industry are lowered. With an increase in rivalry, marketers find that a
firm’s cost of operation also increases, as it now has to spend more money to lure
customers and middlemen.
3. Mature products and markets: When the products enter the maturity stage and the
markets are also mature, the only way to differentiate the various offers is on the basis of
augmented service or price cut.
4. Customers’ value perception: Another factor contributing to the importance of pricing
decisions is the customer’s perception of the product’s current and potential value. To a
customer, price always represents the product’s value.
5. Inflation in the economy: Pricing decisions become important in the inflationary
economy. Inflation affects pricing in two ways:
a. It lowers the purchasing power of the customer and hence a search for low priced
substitutes,
b. It increases a firm’s cost because of the inputs costing more, thus forcing the price of
the product upwards.
6. Firm now finds itself in a Dilemma: If it passes the increase in input costs to the
customer in the form of a price increase, and there are equally attractive alternatives at
lower prices available to him, the firm may lose the customer and if it does not increase
the price, it incurs a loss. This is a challenge for firm to decide.
Factors Influencing Pricing
The pricing decisions are influenced by many factors. There are internal as well as external
factors which are discussed below:
1. Internal Factors: These factors are as follows:

a. Organisational Factors: Pricing decisions occur on two levels in the organisation.
Overall price strategy is dealt with by top executives. The actual mechanics of pricing
are dealt with at lower levels in the firm and focus on individual product strategies.
b. Marketing Mix: Marketing experts view prices as only of the many important
elements of the marketing mix. A shift in any one of the elements has an immediate
effect on the other three i.e. product, promotion and place.
c. Product Differentiation: The price of the product also depends upon the
characteristics of the product. In order to attract the customer, different characteristics
are added to the product such as quality, size, colour etc.

d. Cost of the Product: Cost and price of a product are closely related. The most
important factor is the cost of production. The price of the product fixed after
considering the cost of production of the product.
e. Objectives of the Firm: Objectives of the firm also affects the price of a product.
Firms may pursue a variety of value-oriented objectives, such as maximising sales
revenue, maximising market share, maximising customer volume, maintaining an
image, maintaining stable price.
2. External Factors: These factors are as follows:
a. Demand: The market demand for a product or service has big impact on pricing. If the
demand for a product is high then company can fix a high price for its product and vice
versa.
b. Competition: Competition is a crucial factor in price determination. A firm can fix
the price equal to or lower than that of the competitors, provided that quality of
product, in no case, be lower than that of the competitors.
c. Suppliers: Suppliers of raw materials and other goods can have a significant effect
on the price of a product. If the price of cotton goes up, the increase is passed on by
suppliers to manufacturers. Manufacturers, in turn, pass it on the consumers.
d. Economic Conditions: The inflationary or deflationary tendency effects pricing. In
recession period, the prices are reduced and in inflation prices are increased.
e. Buyers: Buyers’ nature and behaviour for the product of a particular product, brand
or service, etc. affect pricing when their number is large.
f. Government: Price discretion is also affected by the price-control by the government
through element of legislation. The prices cannot be fixed higher, as government keeps
a close watch on pricing in the private sector.
Methods of Pricing
There are various pricing policies which are discussed below:
1. Mark-up pricing or Cost plus Pricing Method: In this method, the marketer estimates the
total cost of producing or manufacturing the product and then adds a fixed percentage of
margin or profit that the firm wants. This is indeed the most elementary pricing method
and many of services and projects are priced accordingly.
2. Full Cost Pricing: The method uses standard costing techniques and works out the
variable cost and fixed cost of manufacturing, selling and administrating the product.
After adding variable and fixed cost, firm arrives at fixed. Selling price is fixed after
adding a fixed margin or profit to total cost.
3. Marginal Cost or Incremental Cost Pricing Method: Here, the company may work on to
recover its marginal cost and getting a contribution towards its overheads. This method
works well in a market already dominated by giant firms.

4. Break Even Point Pricing Method: Break-even point is the point where company neither
makes any profit nor incurs any loss. This method is also known as ‘No Profit No Loss
Method’. In this method company fixes price in such a way that it can reach the Break-
even point.
5. Skimming –the cream Pricing: This refers to the policy of charging high prices in the initial
stages of the life of a product. The initial high prices serve to skim the cream of the inelastic
market and the initial investment is recovered quickly. This pricing policy is useful in the
case of new and speciality products.
6. Penetrating Pricing: This pricing policy involves setting a low initial price to attract as
many buyers as possible. Prices are fixed below the competitive level to maximize the
market share and to make the brand popular quickly. When brand is established, the
marketer increases the price of the product.
7. Competitive Pricing: Competitive pricing implies selling a product at the going market
rate. When the market is highly competitive and the product is not differentiated and the
product is not differentiated significantly from the competitive products, this policy is
quite useful. Every firm tends to follow the current market prices because products are
standardised in perfect competition.
8. Follow the Leader Pricing: In some industries, there are a few firms but one out of them
controls so large a share of the market that a change in its supply will affect the market
price. The leader sets the price of the product and all other firms follow that price.
9. Price Discrimination: Discrimination pricing or charging what the traffic will bear means
charging different prices from different customers according to their ability to pay. The
policy of price discrimination is popular among professionals like doctors and lawyers
who render specialized services.
10. Psychological Pricing: A seller has to decide whether to charge even price e.g. Rs. 100 or
odd prices e.g. Rs. 99. Odd prices have a favourable psychological influence on the buyers.
They give an impression of accurate pricing and provide an illusion of a bargain.
11. Prestige or Premium Pricing: Rich buyers are not price conscious and are willing to pay a
high price provided the product is of premium quality. When the product has unique
features and is of superior quality, premium pricing policy can be adopted.

Unit – 4
Distribution Channels
The path between producers and users that goods & services follow is called Distribution Channel
or Marketing Channel or a trade Channel.
The Distribution Channel is the movement of goods and services between the point of production
and the point of consumption through organisations that performs a variety of marketing activities.
The major participants in the distribution channel are; producers, intermediaries and consumers.
Characteristics of Channel of Distribution
1. Route or Pathways: Channel of distribution is a route or pathway through which goods

and services flow from the manufacturers to consumers.
2. Flow: The flow of goods and services is smooth and sequential and usually
unidirectional.
3. Composition: It is composed of intermediaries such as wholesalers, retailers, agents,
distributors etc.
4. Remuneration: The intermediaries are paid in the form of commission for the services
rendered by them.
5. Time Utility: As they bring goods to the consumers when needed;
6. Convenience value: As they bring goods to the consumers in convenient shape, unit,
size, style, and package.
7. Possession Value: As they make it possible for the consumers to obtain goods with
ownership title.
8. Marketing Tools: As they serve as vehicles for viewing the marketing Organisation
in its external aspects and for bridging the physical and non-physical gaps which
exist in moving goods from the producers to the consumers.
9. Supply-Demand Linkage: As they bridge the gap between the producers and consumers
by resolving geographical distance and relating to time discrepancies in supply and
demand.
Objectives of Distribution Channels
1. To make the product readily available to the market consumers at which it is aimed.
2. To enhance the prospect of sales being made.
3. To achieve cooperation with regard to any relevant distribution factors.
4. To achieve a given level of service.
5. To minimize logistics and total costs.
6. To receive fast and accurate feedback of information.

Functions of Distribution Channel
1. Information Provider: Middlemen have a role in providing information about the

market to the manufacturers. Since middlemen are present in the market place and
close to the customer they can provide information related to customer preferences,
customer demography, media habits and the entry of new competitors at no additional
cost.
2. Matching Buyers and Sellers: The most crucial activity of the marketing channel
members is to match the needs of buyers and sellers.
3. Time and Place Utility: Channels of distribution help the consumers to buy goods at
the time and place they need them. They create time and place utilities to the buyer.
4. Assortment of Products: This activity leads to the customer convenience because
channels of distribution help the consumers to buy goods in convenient units, lots,
packs, and assorted varieties of the products.
5. Price Stability: Maintaining price stability in the market is another function a
middlemen performs. Many a time the middlemen absorb an increase in the price of
the products and continue to charge the customer the same old price.
6. Promotion: Promoting the products in his territory is another function that
middlemen perform. Many of them design their own sales incentive programs, aimed
at building customers traffic at other outlets.
7. Financing: Middlemen finance manufacturers operation by providing the necessary
working capital in the form of advance payments for goods and services.
8. Help in Production Function: The producer can concentrate on the production
function leaving the marketing problem to middlemen who specialise in this
profession. Their services can be best utilised for selling the product.
9. Matching Demand and Supply: The chief function of intermediaries is to assemble
the goods from many producers in such a manner that a customer can affect purchases
with ease.
10. Pricing: In pricing a product, the producer should invite the suggestions from the
middlemen who are very close to the ultimate users and know what they can pay for
the product.
Importance of Distribution Channel
1. Time and Place utility, 6. Promotional Activities
2. Assortment of products. 7. Storage of finished goods
3. Relieve from marketing 8. Break the bulk
problems. 9. Finance the producer
4. Information to the producer 10. Fixing the price
5. Stability in Prices

Types of Distribution Channel
1. Direct Marketing Channel: This is the shortest channel a producer can adopt for
distribution of goods or services. In this system, goods move directly from the producers
to the consumers without any middleman or a merchant.
Under direct channel of distribution, the manufacturer can adopt one of the following
methods of selling:
a. Selling at manufacturer’s Plant: Under this system, goods are sold by the producers
directly to the consumers. Direct selling is generally preferred in case of perishable
products like bread, milk, ice cream, fish, meat, egg, vegetables and agricultural
products etc.
b. Door to Door Sales: Salesmen employed by the manufacturers call at the door of
customers. This system works better when a new product is introduced into market.
c. Sales by Mail Order method: It is a system by which products are sold to
consumers. The post-office plays an important role. For example, Books, drugs,
watches, toys etc.
d. Sales by Opening Own Shops: It is very common and producers of perishables and
non-perishable goods sell their products to customers by opening their own retail
shops.
2. Indirect Marketing Channel: It means distribution of goods through middlemen or
intermediaries. Either, in the channel there is one middleman like a sole selling agent who
distributes the goods through a number of middlemen subsequently or, there may be a
number of middlemen when the producer distributes the products through a number of
agents or wholesalers or even retailers.
a. One-Level Channel: In this type of channel there is only one intermediary between
producer and consumer. This intermediary may be a retailer or a distributor.
If the intermediary is a distributor, this type of channel is used for specialty products
like washing machines, refrigerators or industrial products.
b. Two-Level Channel: This type of channel has two intermediaries, namely,
wholesaler/distributor and retailer.
c. Three-Level Channel: This type of channel has three intermediaries, namely,
distributor, wholesaler and retailer. This pattern is also used for convenience
products.
d. Four-Level Channel: This type of channel has four intermediaries, namely, agent,
distributor, wholesaler and retailer. This channel is similar to the previous two. This
type of channel is used for consumer durable products also.

Factors Affecting Channels of Distribution
There are number of factors which affect the channel of distribution which are:
1. Industrial or Consumer Product: In case of industrial product, direct channel of

distribution is used because of the relatively small number of customers. In case of
consumer products, indirect channel of distribution such as wholesaler, retailer, is most
suitable.
2. Perishability: Perishable goods such vegetables, milk, butter, bakery products, fruits, sea
foods etc. require direct selling as they must reach the consumers as easily as possible after
production.
3. Weight and Technicality: When the products are bulky, large in size and technically
complicated, it is useful to choose direct channel of distribution.
4. Financial Strength: A company which is financially sound may engage itself in direct
selling. On the contrary, a company which is financially weak has to depend on
intermediaries and therefore, has to select indirect channel of distribution.
5. Size of the Company: A large-Sized company handling a wide range of products would
prefer to have a direct channel of distribution. On the contrary, a small-sized company
would prefer indirect selling by appointing wholesalers, retailers etc.
6. Location of the Market: When the consumers are spread over a wide geographical area,
the long channel of distribution is most suitable. On the other hand, if the customers are
concentrated and localised, direct selling would be beneficial.
7. Availability of Middlemen: The Company should make efforts to select aggressively
oriented middlemen. In case they are not available, it is desirable to wait for some time
and then to pick up. In such cases, the company should manage its own channel so long
the right types of middlemen are not available.
8. Cost of Channel: Direct selling generally is costlier and thus distribution arranged
through middlemen is more economical.
9. Competitors’ Channel: This also influences the channel choice decision. Mostly, in
practice, similar types of channels of distribution used by the competitors are preferred.
10. Services provided by Middlemen: If the nature of product requires after-sale services,
repairs etc. such as automobiles, cars, scooters etc, only those middlemen should be
appointed who can provide such services, otherwise the company wil adopt direct selling
channel.

Unit - 5
Promotion
Meaning of Promotion
Promotion is a communication process, by which the producers of the products or services draw
attention of the consumers or prospective consumers towards their products and services.
Consumers are informed and reminded about the products and are requested and persuaded to
purchase their products.
Characteristics of Promotion
Characteristics of promotion are as follows:
1. Constant Activity: Marketing communication is a constant activity. It is a universal and

essential feature of human expression and organisation.
2. Information Transaction: Marketing communication is concerned with sending and
receiving knowledge, ideas, facts, figures, goals, emotions and values.
3. Differentiating Act: Marketing communication try to exclude competing products from
consumers’ decision-making by making promoted products more attractive and a closer
match to their needs.
4. Reminding Act: marketing communication ensures that when options for consumption
are being assessed, promoted product is included. Reminding is simply to trigger the
customer’s memory.
5. Informing Act: Providing data into the consumer’s mindful and appreciation thought
processes to endure that promoted product is considered as an attractive option in
consumption.
6. Persuading Act: Effort to induce desired favourable behaviour from the consumer. At
growth stage the target market should have general product awareness and some
knowledge of how the product is fulfilling wants. Therefore promotional nature switches
from informing consumers about the product category to persuading them to purchase.
7. Human Skill: Marketing communication is also a human skill, so it is concerned with
the state of mind of the communicator, and with the state of mind of the person intended
to receive the communication.
8. Interpersonal Element: Marketing communication is also a central element of the way
in which people relate to and cooperate with each other and attending the interpersonal
event which is the building block of society.
9. Marketing Tool: communication can be viewed as neutral and compassionate, a form of
human interaction which helps society and the organisations within it to work well, and
which can only benefits those who take part in it.

Objectives of Promotion
Promotion constitutes very important role in fulfilling the different marketing objectives of a
firm by concentrating on the following key objectives:
1. Leads to Behaviour Modification: Promotion seeks to modify behaviour and thoughts

(e.g. persuading to drink Coca Cola rather than Pepsi), Reinforces existing behaviour
(e.g. persuading to continue Coca Cola once customer began to take).
2. Objective to inform: All promotional communications are designed to inform the largest
market about the firm’s product or services. Informative promotion is more prevalent in
the early stages of product life cycle of a product or service.
3. Objective to persuade: Persuasion objective is the main objective when the product
reaches to the growth stage of its product life cycle because at that time the consumer
formation objective and consumer retention objective both has to be taken
simultaneously.
4. Objective to Remind: It is used to keep the product brand name in the public’s mind and
is used in the maturity stage of the product life cycle.
5. Specific Objectives: Broadly speaking the goal of promotion is to change the pattern of
demand for a product by behaviour modification, informing, persuading and reminding.
Importance of Promotion
The importance of promotion in the present marketing context is as follows :
1. Consistency of Message Delivery: By approaching the planning process in a holistic

manner, companies can ensure that all components of the communications program
deliver the same message to the target audience.
2. Corporate Cohesion: For the company, promotion can be used as a strategic tool in
communicating its corporate image and product/services benefits. This has important
consequences both on an internal and external level. As consumers increasingly gravitate
towards companies with whom they feel comfortable, it becomes important to ensure that
the overall image projected by the organisation is favourably received.
3. Client Relationship: For the agency, it provides the opportunity to play a significantly
more important role in the development of the communications program and to become a
more effective partner in the relationship.
4. Interaction: Promotion ensures better communication between agencies and creates a
stringer bond between them and the client company. By providing a more open flow of
information it enables the participants in the communication program to concentrate on
the key areas of strategic development, rather than pursue individual and separate
agendas.
5. Motivation: Promotion offers the opportunity to motivate agencies. The combined
thinking of a team is better the sum of the parts.

6. Participation: Everyone owns the final plan, having worked together on the
brainstorming and implementation, avoiding any internal politics. This can overcome the
divisive nature of the individual departments.
7. Measurability: Perhaps the most important benefit is the delivery of better measurability
of response and accountability for the communication program.
Promotional Mix
Promotion mix refers to the combination of various promotional elements vis. Advertising,
personal selling, publicity and sales promotion techniques used by a business firm to create,
maintain and increase demand of the product.
According to Philip Kotler, “A company’s total marketing communication mix also called
promotion mix consists of specific blends of advertising, personal selling, sales promotion,
public relations and direct marketing tools that the company use to pursue its advertising and
marketing objectives”.
Tools of Promotion Mix
1. Advertising: Advertising includes any informative or persuasive message carried by a

non-personal medium and paid for by a sponsor whose product is some way identified in
the message. Traditional mass media, such as Television and magazines are mostly used.
2. Sales Promotion: It includes activities other than advertising, personal selling, publicity
and public relations which are used in promoting sales of the product. Distribution of
samples, premium coupon, off-price selling etc. is the examples of sales promotion.
3. Personal Selling: Personal selling is a person-to-person dialogue between buyer and
seller. Personal selling can be face-to-face or over the phone, to convince the buyer to
purchase a product or service.
4. Publicity: Publicity is a non-personal not paid stimulation of demand of the product or
services or business units by planting commercially significant news or editorial
comment in the print media or by obtaining a favourable presentation of it upon radio,
television or stage.
5. Public Relations: Most firms in today’s environment are not only concerned to
customers, suppliers, and dealers but also concerned about the effect of their actions on
people outside their target markets. It is a planned effort by an organisation to influence
the attitudes and opinions of a specific group by developing a long-term relationship.
6. Direct Marketing: In Direct marketing, organisations communicate directly with target
customers to generate a response and/or a transaction.
7. Word-of-Mouth: Word of mouth is a reference to the passing of information from person-
to-person in oral or written form. An organisation’s image can be projected through
channels other than the formal communication process. Of course, positive word-of-mouth
recommendation is generally dependent on customers having good experiences with the
organisation,

8. Online Marketing: Unlike traditional forms of marketing communications such as

advertising, which are one-way in nature, the new media allow users to perform a variety
of functions such as receive and alter information and images, make inquiries, respond to
questions and, of-course, make purchases. The interactive medium that is having the
greatest impact on marketing is the Internet, especially through the component known as
WWW i.e. World Wide Web.
Factors Affecting Promotional Mix
1. Type of Product: The promotion task depends on the type of product marketed. Low-
priced, frequently purchased consumer goods like toilet soap, toothpaste, soft drinks, etc.
will need frequent repeat messages to influence and remind the existing consumers about
the brand and to persuade new consumers to buy.
2. Nature of market: The intensity of competition in the market, locational characteristics
of the consumers, and the requirement of channel members also influence the
promotional mix decision. If the target audience is large and widely spread-out in
different parts of the country, advertising and sales promotion will be effective and
economical.
3. Stage in the PLC: Product Life Cycle also affects the promotional mix. Based on the
stage at which the product is in the PLC the promotion mix has to change. Each stage of
PLC requires different type of promotional mix.
4. Budget Availability: Using each promotion tool adds to the cost. Hence, the budget
availability with a company has to be considered while deciding the promotion mix.
5. Company Policy: All the considerations given above should fit in with the overall
marketing and promotion policy of the company, while deciding the promotion mix.
6. Type of Product market: Communications-mix allocations vary between consumer and
business markets. Consumer marketers tend to spend comparatively more on sales
promotion and advertising; business marketers tend to spend more on personal selling.
7. Buyer-Readiness Stage: Communication tools vary in cost-effectiveness at different
stages of buyer readiness. Advertising and publicity play the most important role in the
awareness-building stage. Customer comprehension is primarily affected by advertising
and personal selling.
Sales Promotion
Sales Promotion is another important component of the marketing communications mix. It is

essentially a direct and immediate inducement. It is essentially a direct and immediate
inducement. It adds extra value to the product and hence prompts the dealer /consumer to buy
the product.
According to American Marketing Association, “ These marketing activities, other than

personal selling, advertising, and publicity that stimulate consumers purchasing and dealer

effectiveness such as display shows and exhibition, demonstration and various non- recurrent
selling efforts not in the ordinary routine.
Characteristics of Sales Promotion
The major characteristics of sales promotion can be understood by the following points:
1. Irregular / Non-Recurring Activity: Sales promotion is an irregular and non- recurring
activity to increase the sales; and this techniques is used for specific situations only such
as decline in demand, fall in profit, acute competition in market or during the introduction
of new product in the market.
2. Target Action: Sales promotion can be targeted to three distinct audiences. The first is
internal and is usually the marketer’s own salespeople. There may, however, be other
employees targeted such as technical sales support people or marketers.
3. Action Focused: There seems to be no doubt that sales promotion is action focused.
While advertising may be designed to build a brand image and personal selling may be
designed to build long-term relationships.
4. Motivation and Extra Incentives: Sales promotion involves some type of incentives
that offer a reason to buy. This incentive is usually the key element in a promotional
program and is an effort by which consumers, traders, and sales-force are motivated
towards maximum sales.
5. Acceleration Tool: Sales promotion is designed to speed-up the selling process and
maximises sales volume. Sales promotions offer an incentive to buy now.
6. Non-Media Activity: In sales promotion there is no media used like in advertising and
publicity.
7. Means of Marketing Communication: It is an important means of communication by
which views and ideas of consumers about the products and services are exchanged with
the producers regularly.
8. Element of Promotion Mix: Sales promotion is one of the important elements of
promotion-mix, other than advertising, personal selling, and publicity.
9. Universal Activity: It is a universal activity adopted by all the economies of the world in
their sales efforts.
Objectives of Sales Promotion
The various objectives of sales promotion are as follows:
1. To introduce new products: To induce buyers to purchase a new product, free samples
may be distributed or money and merchandise allowance may be offered to business to
stock and sell the product.
2. To attract new customers: New customers may be attracted through issue of free
samples, premiums, contests and similar devices.

3. To induce present customers to buy more : Present customers may be induced to buy
more by knowing about a product, its ingredients, and uses.
4. To help firm remain competitive: Sales promotion may be undertaken to meet
competition from a firm.
5. To increase sales in Off Season: Buyers may be encouraged to use the product in off
seasons by showing them the variety of uses of the product.
6. To Increase the Inventories of Business Buyers: Retailers may be induced to keep in
stock more units of a product so that more sales can be affected.
7. To Educate customers: Educating customers/dealers and salesmen simplifies the efforts
of sales-force and motivate them for larger purchases.
8. To stimulate sales: Sales promotion can promote larger sales in certain specified
segments of market. To stimulate maximum sales on special occasions such as Diwali,
religious festivals, and other such occasions.
9. To facilitate coordination: sales promotion can be easily used to facilitate coordination
and proper link between advertising and personal selling.
Methods/Tools of Sales Promotion
The various sales promotion devices can be broadly classified in two ways:
1. Consumer Promotion: Forms of consumer promotion are:

a. Free distribution of samples: It involves free distribution of samples to ultimate
consumers. The samples may be distributed door to door, or may be offered in a retail
store, or with the purchase of any particular product.
b. Coupons: A coupon is a certificate that entitles the consumer to a specified saving on the
purchase of a specified product.
c. Premiums or bonus offers: An offer of a certain amount of product at no cost of
consumers who buy a stated amount of a product or a special pack thereof is called
premium offer or bonus offer.
d. Money refund offer: This offer is generally stated in media advertising that the
manufacturer will return the price if the product is not to the satisfaction of the consumer
within a stated period.
e. Contests or sweepstakes: At times, contests are arranged with a view to attract new users
to the company’s product. An opportunity under this device is given to consumer to
contest with a chance to win cash prizes, free air trips or goods.
f. Bonus Stamps: Such bonus stamps are issued to the consumers by the retailers or
manufacturer in proportion to their purchases. The consumers go on collecting stamps
until he has sufficient quantity to obtain desired merchandise in exchange of the stamps.
g. Draw: Under this system, every purchaser making a purchase of certain specified amount
is offered a coupon during a certain period. After the expiry of the period a draw is made
and attractive prizes are given to the winners.

h. Cheap Bargain or Self Liquidating Premium: Under this method, the consumers are
offered another product at a cheaper rate along with the purchase of company’s product.
2. Middleman Promotion: there are different types of deals and the most common among
them are described below:
a. Buying Allowance Discount: The buying allowance or discount is offered to the dealer to
induce him to buy the manufacturer’s product.
b. Buy-Back Allowance: Under this method, the manufacturer offers a certain amount of
money for additional new purchases based on the quantity of purchases made on the first
trade deal.
c. Display and Advertising Allowance: The allowance is offered to the dealer to display the
manufacturer’s product. The allowance is given on the basis of space provided to display
the manufacturer’s product in the shop.
d. Dealer-listed Promotion: Under this method dealer name and address is given on the
advertisement and other publicity material as calendars, diaries etc.
e. Push Money: This is an incentive payment in cash or in kinds to the retailer or salesman
to push the sale at a fixed rate for each article sold.
f. Advertising material: The advertising materials such as calendars, New Year diaries,
literature, sign boards, packing bags, posters etc. are supplied by the producer of the
product to the dealer or middlemen for advertisement.
g. Credit Facility: The producers allow credit to their dealers, based on the quantity
purchased by them. This enables them to purchase bulk quantity.
Personal Selling
Personal selling is a highly distinctive word and the only form of direct sales promotion involving
face-to-face relationship between sellers and potential customers. Personal selling is a two-way
communication or mutual communication.
Characteristics of Personal Selling: Characteristics of personal selling are as follows:
1. Personal contacts with customers: Under personal selling there established of personal
contact between buyers and salesman are practised. Both parties face each other.
2. Oral Conversation: There is oral conversation between the sales person and the buyer
regarding the features of the product i.e. price, colour, shape, design, methods of use etc.
3. Quick Solution of Queries: The prospective buyer can make inquiries regarding the
product. Salesman answers these queries quickly and removes any doubts in the mind of
the buyer.
4. More Expensive Approach: Personal selling is more expensive as compared to other
methods.
5. More Flexible: Personal selling is a flexible medium of providing information about
goods and services. While conversing with the customers, the salesman can read the mind
of the customers and acts accordingly.

6. Slow Speed of Sales: Under this, the speed of sales is very slow. Sales persons have to
move from door to door and more than once. This requires a lot of time and consequently
speed of sales slows down.
7. Receipt of Additional Information: Normally, before introducing its product, a
company is aware of the preferences of the probable buyers. Nevertheless, during the
course of personal selling, when the sales person is in direct contact with the buyers he
gathers additional information’s regarding their tastes and likings.
8. Real Sale: Under personal selling, the buyers are not only informed about the product but
the goods are actually sold to them.
9. Maintaining the Sales Records: Sales person maintains proper sales records in respect
of the goods sold and the orders secured. Media in terms of the cost per contact. Also,
it is the quality of the direct mail that determines its ability to reach the target audience.
10. Web/Internet Advertising Media: With the number of Internet users increasing
phenomenally across the globe, the Internet is likely to emerge as a powerful advertising
media in the near future.

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Marketing Management Notes

According to American marketing Association, “Marketing is an organizational function and

Nature of Marketing Management:

The nature of marketing is as follows:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

The importance of marketing management is as discussed below:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

i. Delivery of standard of living to the society: Chief obligation of marketing is to

i. Helpful in business planning and decision making: Marketing is helpful in the

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

(3) Classification according to position of sellers: There are three types of

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

(5) On the basis of competition: There are two types of markets:

The functional approach of marketing consists of a number of activities called marketing

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

airplane, truck, and telecommunications for non-tangible products such as market

Marketing vs. Selling

Basis of Selling Marketing

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Technology Emphasis on staying with existing Emphasis on innovation in every sphere, on

Work Different departments work as highly All departments of a business operate in an

Price Cost determines price. Consumers determine price, price determines

According to Philip Kotler: Marketing management is the process of planning

There are five competing concepts in marketing management which are:

The Salient features of product concept are:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

i. Consumers generally look and prefer quality of the product.

Factors influencing Modern Marketing Concept:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

vi. Mass Communication media

Four P’s of Marketing Mix

Factors affecting Marketing Mix

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

1. Tangibility: It should be perceptible by the touch. An item to be called a product should

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

i. Information: Information can be produced and marketed as a product. For example,

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Product Mix Decisions

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

New Product Development

1. Changing Customer Preferences: The driving force in new product development is

New Product Development Process

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Benefits of New Product Development

Some of the benefits of the new product introduction include:

1. Product Introduced on Time:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

b. Incorporate a best-practice project plan, document templates and metrics,

Product Life Cycle

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

1. Introduction: A period of slow sales growth as the product is introduced in market.

Product Life Cycle Strategies

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Factors affecting the Life Cycle of a Product

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

1. Product Differentiation Getting Blunted: As technologies get standardised,

Factors Influencing Pricing

1. Internal Factors: These factors are as follows:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.

There are various pricing policies which are discussed below:

Dr. S. ABDUL LATHIF, Assistant Professor, Jamal Mohamed College, Trichty-20.