MARKETING PLAN

Products Convenience Shopping

Sold to consumer
(satisfaction/benefit)
Input
Consumer
Goods
(manufacturing)
Medicine
Bus Industrial
Currency
Output
(end product)

Services
(nonmanufacturing) Non-tangible
Treatment Reduced waiting
Courteous calls
Market Transport
Banking
 Goods vs Services
Products (Goods)
It is tangible
It is patented
Standardization is possible eg.
Motorcycle: all models are standard
Production and consumption are not
simultaneous eg. AC
Inventory possible
If not used, keep it & use tomorrow
Homogeneous
Ownership e.g. registration of a vehicle
Separable e.g. Motorcycle
Car, Cold drinks, Antibiotics
Products (Services)
It is non-tangible
It is not patented
Standardization not possible eg, Every
hotel have different types of services
Simultaneous eg teaching
Not possible eg teaching
Not possible, journey of yesterday will
not come back
Heterogeneous
No ownership e.g. purchase
Not separable e.g. singer
Electricity, banking, transport
 The Elements of the Marketing Mix for Good
Product Activities
A product, service or idea, may be defined as something which is given
to consumers in exchange for a price. Activities related to a product,
service or idea include the following:
quality
features
style
brand name
packaging
sizes
services
warranties
returns
Pricing Activities: The amount of money that consumers must pay in
exchange for the product, service or idea. Generally, marketers
consider the following factors in setting prices:
•Target customers: how much they will buy at various prices, in other
words, price elasticity of demand.
•Cost: how much it costs to produce and market the product, i.e., both
production and distribution costs.
•Competition: severe competition may indicate a lower price than when
there is monopoly or little competition.

•The law: government authorities place numerous restrictions on pricing

activities

•Social responsibility: pricing affects many parties, including employees,

shareholders and the public at large. These should be considered in
pricing.
 Pricing Activities:
There are other factors as well, besides the ones listed
above which a marketer has to consider. For example, a
television set manufacturer may have to determine prices
for the distributor, the dealer, and the ultimate consumer.
Different varieties of the product may have varying
prices, e.g., a `deluxe' model may be priced higher than a
very basic model. Similarly, there are other factors
which a marketer has to consider like the granting of
discounts and allowances or location of the customer in
determining prices. These are significant questions, and
how they are dealt with can make a real difference in the
sales volume of the organisation.
Promotional Activities
Promotional activities consist of various means of communicating
persuasively with the target audience. The important promotional
methods are:
• Advertising - where an identified sponsor pays media (such as
Doordarshan's National Network) to transmit messages to target
consumers.
• Personal selling - where sales representatives employed by the firm
engage in interpersonal communications with individual consumers
and prospective customers.
• Sales promotion - where the marketer utilises displays,
demonstrations, premiums, contests or similar devices to supplement
advertising and personal selling.
• Publicity and public relations - where both publicity and public
relations are used to stimulate supportive news items about the firm
and its products that have greater credibility with the public than
advertising.
 Promotional Activities
• The general role of publicity is similar to advertising, but
public relations (PR) usually addresses itself to a wider public
than the firm's customers. In PR there is recognition that all
actions taken by the firm communicate something to
someone.
• The press release, news conference and the offer of some
exclusive feature are typical ways of seeking publicity. The
weakness of both PR and publicity is that the firm does not
pay the piper and so does not call the tune
 Promotional Activities
Of particular importance is the composition of the promotion
mix. The promotion mix is the particular combination of
advertising, personal selling and sales promotion that is
used in communicating with consumers. Generally,
advertising is employed to reach large groups of consumers
at a low price per contact. It-is widely used by firms selling
consumer durables as well as by selling consumption items
like toiletries to serve a mass market. Personal selling has a
higher cost per contact, but is an intense form of
communication - consumers usually find it more difficult to
ignore or refute the arguments of a sales person than the
persuasive appeals of an advertisement.
 Promotional Activities
Firms selling items like computers, home products, etc. utilize
personal selling extensively. For example, Eureka Forbes
utilizes its salesmen for door to door selling of its home-
products, viz., Euroclean (the all-purpose cleaning system)
and Aquaguard (on-line electronic water-purifier). Finally,
sales promotion aids advertising and personal selling in
achieving the communications mission, it tends to
accomplish tasks the other two are not capable of attaining,
but is generally supplementary to them. Sales persons
demonstrating the use of particular items in stores can
considerably enhance the effect of advertising upon
consumers.
 Promotional Activities
Like other elements of the marketing mix, promotion should
be aimed at the target audience rather than at consumers at
large. If target consumers are in upper-income groups,
promotional messages for, say, colour television sets might
highlight motives such as status and prestige associated
with owing a colour television, whereas if they are in lower-
income groups, the price of a model might be emphasised.
If target consumers tend to be highly educated, promotion
messages should be more sophisticated than when target
consumers have low levels of education. Failure to consider
the unique characteristics of the target consumer can result
in ineffective promotional efforts.
 Place or Distribution related Activities
• Basically, place or distribution activities are used to transfer ownership to
consumers and to place products, services and ideas at the right time and place.
• Distribution is made up of two components: (1) Physical distribution, and (2)
Channels of distribution.

• Physical distribution consists of the activities involved in moving products or

services from producer to consumer. Examples include:
• 1. Transportation
• 2. Warehousing and Storage
• 3. Order Processing
• 4. Inventory Control
• 5. Locations
 Place or Distribution related Activities
• Often, the objective of physical distribution is to move goods to consumers at
minimum cost. This can frequently be accomplished through cost trade-offs, as
and when an organisation shifts from railways to air transportation, thereby
increasing transportation costs but possibly decreasing total costs because of
substantial decline in the cost of inventory. Sometimes, management
considers the cost of lost sales in its cost trade-off analysis. The cost of lost
sales is that cost which results when goods are not available at the time, place,
and in the condition desired by consumers. Thus, if air freight moves goods to
consumers faster than trucks, the cost of lost sales can be reduced.
• The physical distribution network should be oriented towards the needs and
desires of target consumers. Thus, the target consumers for cut flowers may
require very rapid, fresh and damage-free transportation, thereby
necessitating air freighting. (e.g., sending roses from Bangalore or Nasik to
Bombay by air). On the other hand, target consumers of an item like steel or
cement may look for reliability in delivery schedules but relatively'
unconcerned with speed of delivery suggesting the use of rail transportation.
 Place or Distribution related Activities
• In establishing channels of distribution, the marketer decides
which marketing functions are needed in order to satisfy target
consumers, then determines which institutions (such as
wholesalers and retailers or the manufacturer himself) can best
perform these functions. Some manufacturers such as Kinetic
Honda may find that independent dealers are better equipped
to serve target consumers, and as a result decide to distribute
their product (scooter) through dealers. Another producer such
as the Hindustan, Lever may decide to move its products
through a suitable permutation of clearing and forwarding
agents, stockists and wholesalers depending upon the region,
accessibility, time of the year, and so on. The overall objectives
of such decisions is to maximise service to the consumer at a
profit to the marketer.
 What is Service ?
• service is any activity or benefit that one party
can offer to another that is essentially
intangible and does not result in the ownership
of anything. Its production may or may not be
tied to a physical product

15
 CHARACTERISTICS OF SERVICES

Services have a number of unique characteristics that make them so

different from products. Some of the most commonly accepted
characteristics are:

a) intangibility
b) Inseparability
c) heterogeneity
d) perishability
e) ownership.

16
 CHARACTERISTICS OF SERVICES

Intangible features are:

 a service cannot be touched
 precise standardisation is not possible
 there is no ownership transfer
 a service cannot be patented
 production and consumption are inseparable
 there are no inventories of the service

17
 CHARACTERISTICS OF SERVICES

a) Example of Intangibility: when you pay fees for a term in college,

you are paying for the benefit of deriving knowledge and education
which is delivered to you by teachers. In contrast to the soap where
you can immediately check its benefits, there is no way you, can do
so in case of the teachers who are providing you the benefits.
Teaching is an intangible service. When you travel by aeroplane,
the benefit which you are deriving is a service (transportation) but it
has some tangible aspects such as the particular plane in which
you fly (Boeing, Avro, Concorde, and the food and drink which is
served). In this case the service has both a tangible and intangible
aspect as compared to teaching which has no tangible aspect at all.
18
 CHARACTERISTICS OF SERVICES

b) Inseparability : In most cases service cannot be separated

from the person or firm providing it. Service is provided by a
person who possesses a particular skill (singer). A plumber
has to be physically present to provide the service, the
beautician has to be available to perform the massage. This is
in direct contrast to products which can be produced in the
factory today, stocked for the next two, three or more months
and sold when an order is procured.

19
 CHARACTERISTICS OF SERVICES

c) Heterogeneity : The human element is very much involved

in providing and rendering services and this makes
standardisation a very difficult task to achieve. The doctor who
gave you his complete attention in your last visit may behave
a little differently the next time.

20
 CHARACTERISTICS OF SERVICES

d) Perishability : Services cannot be stored and are perishable.

A car mechanic who has no cars to repair today, or spare
berths on a train, unsold seats in a cinema hall represent
service capacity which is lost forever. Apart from the fact that
a service not fully utilised represents a totalloss, the other
dimension of this perishability aspect is that most services
may face a fluctuating demand. There is a peak demand time
for buses in morning and evening (office hours), certain train
routes are always more heavily booked than others. This
fluctuating demand pattern aggravates the perishability
21
 CHARACTERISTICS OF SERVICES

e) Ownership : When you buy a product you become its

owner-be it a pencil, book, shirt, refrigerator or car. In the case
of service, you may pay for its use but you never own it. By
buying a ticket you can see the evening film show in the local
cinema theatre; by paying wages you can hire the services of
a chauffer who will drive your car; by paying the required
charges you can have a marketing research firm survey into
the reasons for your products' poor sales performance, etc. In
case of service, the payment is not for purchase, but only for
the use or access to or for hire of items or facilities.
22
 ELEMENTS OF MARKETING MIX IN SERVICE
MARKETING

i) product
ii) price
iii) Physical distribution
iv) promotion
v) People
vi) physical evidence
vii) process

23
 ELEMENTS OF MARKETING MIX IN SERVICE
MARKETING
Product: The most important issue in the service product is
understanding what benefits and satisfaction the consumer is
seeking from the service. From the view-point of a
restaurant's manager, the restaurant simply provides food.
But the customers coming to the restaurant may be seeking
an `outing', an atmosphere different from home, relaxation,
entertainment or even status. The marketing of services can
be a success only if there is a match between the service
product from the consumer's view-point and the supplier's
view-point. To find this match, marketing manager has to
analyse his/her service at the following levels:
a)the customer benefit concept;
b) the service concept;
c) the service offer;
d) the service delivery system. 24
 ELEMENTS OF MARKETING MIX IN SERVICE MARKETING
a)the customer benefit concept:
The service product which you offer in the market place must have
its origin in the benefits which the customers are seeking. But the
problem is that customers themselves may not have a clear idea
of what they are seeking or they may find it difficult to express or it
may be a combination of several benefits and not a single one.
Over a period of time, the benefits sought may also change. This
change in customers may come about by a satisfactory or
unhappy experience in utilising the service, through increased
sophistication in service use and consumption, and changing
expectations. All these make the issue of marketing a service
product very complex. A centre for the performing arts may offer
entertainment and recreation. But within this broad framework,
there can be specific choice paths for satisfying the entertainment
objective, such as, drama, musical concerts, mime, poetry
recitation, dance etc. 25
 ELEMENTS OF MARKETING MIX IN SERVICE
MARKETING
b)the service concept:
Using the customer benefits as the starting point, the
service concept defines the specific benefits which the
service offers. At the generic level the service concept
refers to the basic service which is being offered. To refer
to the example of centre for the performing arts, the
service concept is to provide entertainment. The service
offer is concerned with the specific elements that will be
used to provide entertainment: drama, music, mime,
poetry recitation, dance. In the category of musical
concerts the choice may be vocal or instrumental, within.
vocal whether light or classical, Hindustani, Carnatic or
Western.
26
 ELEMENTS OF MARKETING MIX IN SERVICE
MARKETING
c) Service Forms:
In what form should the services be made available to
the customers is another area of decision-making. Should
all the shows of the centre be available in a package deal
against a yearly membership fee or a seasonal ticket?
Should there be daily tickets with the consumer having
freedom to watch any one or more performances being
staged on that particular day? Or should each
performance have a separate entrance ticket, with a
higher priced ticket for a well-known performer. Service
form refers to the various options relating to each service
element. The manner in which they are combined gives
shape to the service form
27
 ELEMENTS OF MARKETING MIX IN SERVICE
MARKETING
d) Service Delivery System:
When you go to your bank to withdraw money from your
account, you either use a cheque or a withdrawal slip in
which you fill all the particulars and hand it over to the
clerk, who, after verifying the details, gives you money.
The cheque or withdrawal slip and the clerk constitute the
delivery system. In a restaurant, the waiters are the
elements of the delivery system. The two main elements
in a delivery system are the people and the physical
evidence. The physical evidence components have also
been called `facilitating goods' and `support goods'.
These are the tangible elements of the service and they
exert an important influence on the quality of the service
as perceived by the consumers. 28
 PRICING
In the case of products, the term `price' is used for all
kinds of goods, fruits, clothes, computers, building etc.
but in the case of services, different terms are used for
different services.
Tuition Education

Fare Transport

Fees Legal Services

Interest Use of Money

Rent Property use

Salary Employee Service

Tariff Utilities
29
 How determining the prices of services

1. Perishability of the product: In determining the prices of

services, the one characteristic which has great impact is
their perishability and the fact that fluctuations in demand
cannot be met through inventory. Hotels and airlines offering
lower rates in off-season .

2. Intangibility: a) Higher the intangibility: Another

characteristic of services that creates problem in price
determination is the high content of the intangible component.
The higher the intangibility the more difficult it is to calculate
cost and greater the tendency towards non-uniform services,
such as fees of doctors, management consultants, lawyers.
In such cases, the price may sometimes be settled through
negotiation between the buyer and seller 30
 How determining the prices of services

b) Lower the intangibility: On the other hand, in

services such as dry cleaning the tangible component is
higher, and the service provided is homogeneous. It is
easier to calculate cost on a unit basis and have a
uniform pricing policy. In general, the more unique a
service the greater the freedom to fix the price at any
level. Often the price may be fixed according to the
customer's ability to pay. In such cases price may be
used as an indicator of quality.

31
 How determining the prices of services

3) Regulation of Government: The third characteristic to

be kept in mind while determining prices is that in many
services, the prices are subject to regulations, either by
the government or by trade associations. Bank charges,
electricity and water rates, fare for rail and air transport in
India are controlled by the government. In many other
cases, the trade or industry association may regulate
prices in order to avoid undercutting and maintain quality
standards. International air fares are regulated by
international agreement of airlines, sea freight fares may
be regulated by shipping conferences. In all such cases,
the producer has no freedom to determine his own price.

32
 How determining the prices of services

3) Regulation of Government: The two methods which a service

organisation may use to determine prices are
1. cost based pricing
2. market-oriented pricing.
cost based pricing : the price may be regulated by the
government or industry association on the basis of the cost
incurred by the most efficient unit. Such a pricing strategy is
effective in restricting entry and aiming at minimum profit
target.
The market-oriented pricing may either be competition or
customer-oriented. In case of competition-oriented pricing, the
price may be fixed at the level which the competitor is
charging, or fixed lower to increase market share. Customer-
oriented pricing is varied according to customers' ability to pay.
33
 PROMOTION

The four methods used for promoting services, viz.,.

advertising,
personal selling,
publicity and
sales promotion

34
 PROMOTION
Advertising: Certain services such as entertainment (cinema,
theatre), passenger and freight transport (roadways, airlines,
trains), hotel, tourism and travel, insurance have been advertising
heavily in newspapers magazines, radio, TV to promote greater
usage and attract more customers. However, certain service
professionals such as doctors and lawyers, have rarely used
advertising as a means of increasing their clientele. These groups
have traditionally relied on word-of mouth for attracting new
customers. But this situation is changing and you can occasionally
see an advertisement in the daily newspaper giving information
about the location and timings that a particular doctor is available
for consultation. These advertisements may also carry the
message `Honorary doctor to the President of India' or ex-director
of a prestigious medical college or institution. Such messages
help create positive image and credibility.
35
 Advertising
The guidelines which can be kept in mind while promoting
services are as follows:
 use-simple, clear messages;
emphasise the benefits of service;
 promise only that which can be delivered and do not
exaggerate claims;
built on the word-of-mouth communication by using
testimony of actual consumers in advertisements;
 provide tangible clues to services by using well-known
personalities or objects to help customers identify the
service. This is being done by Indian Railways in their
advertising on TV wherein they are using well-known sports
personalities to talk about the importance of railways to the
nations' economic development and protection of railway
property 36
 Personal Selling

personal selling implies using an actual

professional rather than a salesman to sell the
service. A firm of management consultants may
send one of its consultants (junior or senior
depending on the kind of customer being
attended to) for soliciting new business. This kind
of personal selling is certainly effective but also
very expensive.

37
 Publicity
Publicity: Publicity is unpaid for exposure which is
derived by getting coverage as a news or editorial item.
It is possible to-get publicity when the service which you
are offering is unique and, therefore, newsworthy, by
holding a press conference in which you can associate
your service with some issues of greater social
relevance or by involving the interest of the newspaper
or its staff in covering your service. The important point
about publicity is that your choice of the newspaper,
magazine and journal should be correct. The vehicle
which you choose must be credible and enjoy a
reputation of being trustworthy. Wrong choice of media
vehicle will result in adverse publicity
38
 Sales Promotion:
Sales Promotion: In the case of services, the sales promotion
techniques which are used are varied and various in number. A
doctor may charge lesser amount of fee on subsequent visits to
encourage the patient's loyalty, paediatrician may send reminder
cards to parents about their children's pending inoculations, a car
mechanic may offer a guarantee for repairs undertaken up to
three months, a chartered accountant may offer his services free
for the first two visits to allow the customer to evaluate his work. In
services, sales promotion techniques are used to offset their
perishability characteristic (family discounts offered by hotels in
off-season in which two children under twelve are allowed free of
charge) and to overcome the problem faced by customers in
evaluating and judging the quality before making the purchase.
Sales promotion techniques reduce the risk associated with the
purchase.
39
 Physical distribution
The most important decision element in the distribution
strategy relates to the issue of location of the service so as to
attract the maximum number of consumers. The
inseparability characteristic of services such as those of
doctors, teachers, consultants, mechanics etc. poses a
distribution constraint since they are able to serve only a
limited, localised market. The other characteristic of services
which affects the distribution strategy is the fixed location of
services such as universities, restaurants, hospitals which
necessitates the customer to go to the service location rather
than vice-versa. In case of services which are inseparable
from the performer, direct sale is the only possible way of
reaching the consumer. In case of other services such as
hotels, airlines, property, life insurance, they may operate
through middlemen.
40
 People
People constitute an important dimension in the management of
services in their role both as performers of service and as
customers.
People as performers of service are important because, "A
customer sees a company through its employees. The employees
represent the first line of contact with the customer. They must,
therefore, be well informed and provide the kind of service that
wins customer approval. Marketing manager’s primary concern is
the visible service personnel and to improve the quality and
performance of service personnel.
This can be done through:
 careful selection and training of personnel;
 laying down norms, rules and procedures to ensure consistent
behaviour;
ensuring consistent appearance;
reducing the importance of personal contact by introducing
automation and computerisation wherever possible. 41
 People
As customers: Customers are important because they are a
source of influencing other customers. In the case of doctors,
lawyers, consultants one satisfied customer will lead to a chain
reaction bringing in his wake a number of other customers. Thus
as a marketing manager, your first task should be to ensure
complete satisfaction of the existing customers.
The kind of customers that you attract exerts an important
influence on prospective customers. The prospective customer
may feel attractive towards the organisation (it may be a
restaurant, club, school, college) because it has his `type' of
customers or it has the customer clientele towards which he
himself is aspiring. On the other hand, the customer may turn
away if he perceives the existing customers to be the kind with
whom he would not like to be associated. You have to decide
about the class of customers you would like to have and work
towards providing your service organisation an image which will
fetch you your future customers. 42
 PHYSICAL EVIDENCE
Cleanliness in doctor's clinic, exterior appearance and
interior decor of restaurant, the comfort of the seating
arrangement in a cinema hall, adequate facility for personal
needs at the airport all contribute towards the image of the
service (organisation) as perceived by the customer. The
common element in these is that they are all physical,
tangible and controllable aspects of a service
organisation. They constitute the physical evidence of the
service.
There may be two kinds of physical evidence:

i) peripheral evidence;
ii) Essential evidence,

43
 PHYSICAL EVIDENCE
Peripheral evidence is actually possessed as a part of
the purchase of service but by itself is of no value.
Airline ticket, cheque book, receipt for a confirmed
reservation in a hotel are examples of peripheral
evidence. A cheque book is of value only if you have
money in the bank-without that it is of no significance.
Peripheral evidence adds on' to the - value of essential
evidence. In a hotel you may find matchbox, writing
pad, pen, complimentary flowers and drinks, which you
may take away. These are representations of peripheral
evidence. Such evidence must be designed keeping in
mind the overall image which the organisation wishes to
project and the reminder value of the evidence in its
ability to remind the customer about the organisation
44
 PHYSICAL EVIDENCE
Whereas peripheral evidence is possessed and
taken away by the customer the essential evidence
cannot be possessed by the customer; the building,
its size and design, interior Layout and decor, logo
and mnemonic device of the organisations are
constituents of the essential evidence. The
essential evidence is a very critical input in
determining the atmosphere and environment of the
service organisation.

45
 PROCESS
Services can be described on the basis of type of process used in
the delivery of the service. It is the process of adding `value' or
`utility' to system inputs to create outputs which are useful for the
customers.

The three kinds of delivery processes that are applicable in case

of service products are
line operations: Eg. Departmental Store
job shop operations : . In a hospital, some patients need only
consultation in the Out Patient Department, some others may
need consultation at well as medication or X-ray, some patients
require hospitalisation for surgery, medication or investigations. All
these, categories of consumers require a different combination of
the hospital's services. In a restaurant consumers order their own
combination of dishes. A college may offer courses for full-time
students, as well as for working people through correspondence.
 intermittent operations: Tax consultant 46
MARKETING PLANNING
 MARKETING PLANNING
An important point that you should remember
here is that marketing planning, like any other
planning process, is an iterative process and has
to be done on a continuing basis. In other words,
what is needed is constant monitoring,
redefinition, adaptation, and re-evaluation of
objectives and strategy, its implementation and
control in an effort to obtain maximum payoff
from ever-changing market situation.
 THE PLACE OF THE MARKETING MIX IN MARKETING PLANNING

All these elements of marketing mix are arrived upon and

implemented in the broad framework of a marketing plan.
Therefore, to appreciate the relationship between the marketing
planning process and the elements of the marketing mix, let us
briefly describe the various components of a marketing plan.
A typical marketing plan has the following components:
 description of the current marketing situation, i.e., where we are or
situation analysis,
 identification of problems and opportunities in the situation,
 definition of objectives of the marketing plan, i.e., `where we want to
be',
 designing the marketing strategy,
 developing the marketing programme, and
 estimating the necessary appropriations, i.e., budgeting, forecasting
sales and estimating cost and profit contribution
 MARKETING PLANNING
• Current Marketing Situation
• What sort of data will form part of this section of the marketing
plan? The data will basically relate to the market, product,
competition, distribution and macro-environment. Each one of
these is analysed below to give you a more detailed
understanding of the type of data that will be generated.

• Market Situation: data on the target market served like the size
and growth of the market for the past several years, and
customer needs, perceptions and buying behavior trends.
• Product Situation: data on sales, prices, contribution margins and
net profits for each major product for the past several years.
 Current Marketing Situation

• Competitive Situation: data on major competitors in respect of

their size, goals, market share, product quality, marketing
strategies and other relevant characteristics that are likely to help
in understanding and predicting their behavior.

• Distribution Situation: data on the number and value of the units

sold in each distribution channel together with the changes that
are taking place in the power and importance of each channel
and also the changes in the trade relations mix like prices trade
terms, etc. required to motivate channel members.

• Macro-environment Situation: data on changing trends in

respect of political/legal, technological, demographic, economic
and sociocultural factors having a bearing on company's products.
 Identification of Problems and Opportunities

Here the marketer has to identify the strengths and

weaknesses as well as the opportunities and
threats which exist in the environment in relation
to the company's products. The data required to
be collected in respect of the current marketing
situation should help him in identifying major
strengths, weaknesses, opportunities and
threats.
 Defining Objectives
• The resulting data generated above should help the
marketer in defining the main issues that will need to be
addressed to in the plan.
• The identification of these issues will in turn help in
arriving at the decisions about the objectives. These
objectives will guide the subsequent search for strategies
and action programmes.
• These objectives may be in terms of (a) financial
objectives (long-run rate of return on investment; profits
and cash-flow during the current year) and (b) Marketing
objectives (sales revenue, sales volume, market share,
average realised price; consumer awareness, distribution
coverage, etc.) to achieve the financial objectives.
 Designing the Marketing Strategy
• Marketing strategy means the `game plan' that the
marketer will use in attaining the objectives of the
business. In other words, it represents the broad
marketing thrusts that will be used.
• Kotler defines marketing strategy as follows:
Marketing strategy is the basic approach that the business
unit will use to achieve its objectives and it consists of
broad decisions on target markets, market positioning and
mix, and marketing expenditure levels. Of course, he will
have to keep in mind the expected environment and
competitive conditions in determining the marketing
strategy.
 Designing Marketing Strategy
Typical Marketing Strategy has following Steps.
it consists of broad decisions on
1. Target markets & market positioning (Segmentation)
2. Competitive Condition
3. Marketing mix ( 4Ps)
4. Marketing expenditure levels.
 Designing the Marketing Strategy
• A marketer has a number of options available to him when he is
developing a suitable marketing strategy. To illustrate, supposing the
objective is to increase the sales revenue by a certain percentage
during the next 12 months. Now try to think of the many different
ways the marketer can achieve this objective: Some of the possible
ways in which he could do so are:
• by increasing the average price of all units
• by increasing the overall sales volume
• by selling more of the higher price units.
• Again each of the three objectives in turn could be achieved in a
number of ways.
• Take for instance the second objective, viz., the overall sales volume.
This objective can be achieved by:
• increase in market growth
• increase in market share.
 Designing the Marketing Strategy
Going a step further, increased market growth can in turn be brought
about in a number of ways, like
 by convincing people to consume more of the company's product
 by convincing people to replace the old models by company's new
model.

By going down the path of each objective, the marketer can identify the
major strategy options facing the company's product. And the
formulation of marketing strategy calls for making basic choices
among these strategy options.
The Marketing STRATEGY with an example

Need Product: Perfume

Market segmentation:

Women Urban High

Area Income
Group
 Market segmentation:

Need Product: Perfume

3
1
2 High
Women
Income
4
Group
5 6

Urban
7
Area
 Product Planning

 Identify product attributes from segmentation

process and company’s own decision
 Introduction of new product
 Packaging
 Compare with Competitor Product

 Competitor’s product situation

 Compare
 Develop competitor strategy
 Promotion
 Advertising
 Pricing
The right price
 Physical Distribution
Big branded shop or mall
 marketing expenditure levels
A marketing expenditure is simply a payment
made for a marketing-related investment or
expense. Market research, product
development, promotions, sales and service
are all areas in which companies make
marketing investments. Companies often
allocate certain amounts toward marketing
expenditures through a set budget amount.
 Developing the Marketing Programme

• After designing the `game plan' or the broad marketing results, the
marketer will try to develop or elaborate each element of the
marketing strategy. The questions like the following will need to be
answered in developing each element.
• What will be done?
• When will it be done?
• Who will do it?
• How much will it cost?
 THE RELATIONSHIP BETWEEN
MARKETING MIX AND MARKETING STRATEGY
Marketing mix is one of the broad decision areas of the marketing
strategy. Its other decision areas relate to target markets, market
positioning and marketing expenditure levels.
marketing strategy is a broad concept of how resources are to be
deployed to achieve market success. If you examine the content of a
marketing strategy you will find that it shows how the proposed key
features of the firm's offering (product, price, promotion and
distribution) are intended to achieve the firm's objectives.
Marketing strategy is composed of a set of sub-strategies concerned
with competition, segmentation (market positioning or market niche
and target markets), pricing, promotion and distribution. How these
sub-strategies are related defines the structure of the strategy and
determines whether or not they form an effective plan of action.
 THE RELATIONSHIP BETWEEN
MARKETING MIX AND MARKETING STRATEGY
Marketing mix is one of the broad decision areas of the marketing
strategy. Its other decision areas relate to target markets, market
positioning and marketing expenditure levels.
marketing strategy is a broad concept of how resources are to be
deployed to achieve market success. If you examine the content of a
marketing strategy you will find that it shows how the proposed key
features of the firm's offering (product, price, promotion and
distribution) are intended to achieve the firm's objectives.
Marketing strategy is composed of a set of sub-strategies concerned
with competition, segmentation (market positioning or market niche
and target markets), pricing, promotion and distribution. How these
sub-strategies are related defines the structure of the strategy and
determines whether or not they form an effective plan of action.
 An essential characteristic of an effective marketing
mix is that it be closely co-ordinated.' Do you agree?
Explain.
All the elements of marketing mix should work together in serving
target consumers in the manner suggested by the firm's marketing
strategy. Thus, if newspaper advertisements are promoting a new
brand of toilet soap, the physical distribution and channel of
distribution components should operate so that goods are actually
available for consumer purchase as and when they are desired. If an
electronic firm's sales representatives tell customers that the various
calculators produced by the firm are of high quality, then product
planners should take steps to ensure that this is indeed the case.
Overall, the desired objective is a marketing mix made up of activities
that will work together to achieve a common goal-attainment of the
marketing strategy of the organization
 Key Element in the Marketing Mix

Every market has its own logic. Its understanding in terms of the
emphasis that need be placed on a particular element of the
marketing mix is often a necessary condition for success. That means
the key element in a particular marketing situation has to be
identified.
• A number of factors would determine the key element and these are:
• the product,
• the type of market (for example, whether industrial or consumer),
• stage in evolution (emerging, transition and decline stages), and
• competitive conditions.

Key elements might be advertising (promotion) in the case of analgesics,

distribution in the case of petrol, pricing in the case of basic
commodities and product performance in the case of machine tools.
 THE CONCEPT OF OPTIMUM MARKETING MIX
The concept of optimum marketing mix relates to the issue of dividing
the marketing budget optimally over the elements of the marketing
mix.
But in so doing you should remember that the components of the mix
are partially substitutable for each other.

How a company that is seeking increased sales can achieve them by

substituting one element of the marketing mix for the other?

By lowering the price or by increasing the sales promotion/advertising

budget or by increasing the sales force or by improving the availability
of the product
 THE CONCEPT OF OPTIMUM MARKETING MIX
The challenge, however, that a marketer faces is to find the
optimal marketing mix.

Assume that a marketer has identified sales promotion and

advertising as the two major components of the marketing mix on
which marketing budget is to be allocated. In principle, the
marketing budget can be divided in a number of ways on these
two elements. Associated, with every possible marketing mix
would be a resulting sales level. In theory, for a given marketing
budget, the money should be divided among the various
marketing tools in a way that gives the same marginal profit on the
marginal rupee spent on each tool. This would result in an
optimum allocation of a given marketing budget over different
elements of the marketing. Such an allocation would prove to be a
sales-maximising or profit-maximising marketing mix.
 MARKETING MIX - SOME SPECIFIC SITUATIONS
New Product Development and Marketing Mix
• The product is one component of the marketing mix and is usually
the core part. Product passes through a specific sequence of
stages corresponding to the life phases of infancy, growth,
maturity and decline. The focus in the case of products is on the
shape of the sales curve. The assumption is that sales are low
during the introductory stage, rapidly rising during the growth
stage, reach the peak during the maturity stage and start
declining during the final stage. Different products will take
different spans of time to pass through the cycle of introduction,
growth, maturity and decline. Many classes of product like light
bulbs and aspirin, seem to remain indefinitely at the maturity
stage, while some products quickly come and go. Further, just as
countries can be at different stages in economic growth, a
product can also be at the introductory stage in one country, and
in maturity stage in another.
 MARKETING MIX - SOME SPECIFIC SITUATIONS
New Product Development and Marketing Mix
Stage in Life Product Price Promotion Distribution
Cycle
Introduction Product deficiencies Highest Create awareness Selective
about product distribution
potential, stimulate
primary demand

Growth Product quality, High Heavy advertising to Extended

variation of product create image coverage
introduced,
Maturity Product adjustment for Moderate Build and Seek close
further broad maintained image dealer
differentiation relationship
Decline Simplify product line Low Primary again may Selective
Seek new product uses, be cultivated cultivated
Introduced changes
 Role of Advertising in the Marketing Mix
• Generally speaking, there are only a few firms which directly
compete with each other in the same target market. Economists
call such a situation as oligopolistic situation. In this type of
structure or situation, many firms prefer to increase their share by
increasing demand through advertising rather than by reducing
prices. The question that arises is why firms prefer such a strategy.
The reason is that building up an image through advertising can be
more difficult to match than a price 'cut. The assumption behind
this preferred approach, of course, is that the firm can achieve a
competitive edge in advertising and that it does not possess such
a large cost advantage over competition so as to make price
cutting an attractive pre-empting strategy.
 Role of Price in the Marketing Mix
• Price can be the major element in the marketing mix. Generally
however, pricing decisions have to be carefully coordinated with
decisions on product, promotion and distribution. The framework
for such coordination is the target market strategy, since the
chosen target market gives overall direction in determining the
marketing mix.
• To illustrate: The luxury segments of consumer markets suggest a
quality, branded product, extra touches, high-class outlets,
appeals and media that capture the luxury image and a high
price to match.
 SUMMARY
• The objective of a marketer is to combine the various elements of
the marketing mix viz., Product, Promotion and Distribution in
such a way that he will achieve the necessary volume of sales at a
cost that will permit him to make a desired profit. The way these
elements are to be combined will basically depend on the target
market to be served. Which means that the needs and wants of
the target consumers have to be studied and interpreted and then
a unique blend of various elements of the marketing mix has to be
designed to reach a specific group of consumers. The planning of
the marketing mix, however, is a part of the overall marketing
planning. The elements of a marketing plan are current marketing
situation analysis, problems and opportunities analysis, objectives,
marketing, strategy and programme, marketing budgets and sales
volume, cost/profit estimate. The marketing mix decisions form
the basis of the overall marketing strategy.
 SUMMARY
• The other decision areas of marketing strategy relate to target
markets, market positioning , and marketing expenditure levels.
The interdependence of these decision areas defines the structure
of the marketing strategy and determines whether or not they
form an effective plan of action.
• In combining different components, it is important to identify the
key element in the marketing mix. A number of factors affect the
key element and these are the product, the type of market, stage
in evolution and competitive conditions. These factors are not
static factors but keep on changing. Further, components of the
marketing mix are partially substitutable for each other. This
further complicates the situation.
 SUMMARY
• Notwithstanding all this each firm must try to find the best
combination or optimum marketing mix for its particular situation
at a particular time. The decisions, however, are not easily made.
In many instances it is difficult to obtain information upon which
to base a decision. There are so many alternative mixes available
that it is difficult to run elaborate experiments that will measure
the results of various combinations. Furthermore, costs change,
competition changes, and consumer tastes change, which make it
necessary to vary the mix from time to time.
• Nevertheless, decisions are made with respect to the marketing
mix. For instance, new products are developed and modifications
are made in existing products. Packages are redesigned from time
to time. Price and channel policies are established. Decisions are
made with respect to the allocation of marketing budget over
different elements of the promotional mix, viz., advertising,
personal selling and sales promotion. Remember these are largely
 SUMMARY
• decisions made by the individual firm for its own situation. They
do not necessarily have general applicability, although we do
know for example, that industrial goods manufacturers tend to
spend proportionately less for advertising than do consumer
goods manufacturers. But these relationships should not be
accepted without further inquiry as marketing mix variables
interact not only with each other but also with non-marketing
variables in the firm.