UNIT – 3

Marketing Mix
The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or
product in the market. The 4Ps make up a typical marketing mix – Price, Product, Promotion and Place.
However, nowadays, the marketing mix increasingly includes several other Ps like Packaging, Positioning,
People and even Politics as vital mix elements.

Marketing mix refers to the combination of elements used to promote products or services. These elements
vary, based upon the analysis of the four main factors that influence marketing, which are referred to as the
“four P’s” of marketing: product, price, place, and promotion. The intersection of these four factors
influence the choice of specific marketing tactics that form the marketing mix. 
Marketing mix is considered an essential marketing theory that all business people should know in order to
be conversant in the field of marketing.

How Marketing Mix Works

No two products are promoted in the exact same way. Therefore, marketing managers develop product
marketing plans based upon their analysis and interpretation of many factors:

 The product’s attributes: Features, benefits, proof points (such as studies, testimonials)
 The target audience: Who will buy this product What problems will this product solve? What media
does this target audience prefer? Where can we find them online, in print, on the airwaves? What do
they like to do in their free time?
 The price: Is it an inexpensive product? A luxury product? Something in between?
 Brand: What is the company’s overall brand? What is the brand promise? How does this product fit
into the brand?

Once these questions are answered, marketing managers develop a strategy and the tactical plan necessary to
achieve said strategy. The marketing mix becomes part of the tactical plan, describing the elements that will
achieve the product’s sales goals.

The Elements of the Marketing Mix

The elements of a marketing mix aren’t fixed but change over time. Often, marketing managers test various
elements of the marketing mix to determine which tactics achieve the highest return on investment (ROI). 
The elements of the marketing mix (also called the tactics) can include one or all of the following:

 A website or landing page for the product

 Search engine marketing
 Social media marketing
 Paid search ads
 Paid social media ads
 Product reviews
 Sales and marketing brochures
 Print advertising in magazines, newspapers, and journals
 Packaging to appeal to the target audience
 Billboards
 Sponsorships 
 Online videos
 Trade show events
 Radio ads
  Television Ads
 Store demonstrations

There’s really no limit to the creativity that marketers use to develop their marketing mix elements. Similar
products may use different marketing mixes in the hope of reaching a slightly different target market (or
covering part of the market not reached by competitors).

4P’s of marketing Mix

(i) Price

It refers to the value that is put for a product. It depends on costs of production, segment targeted, ability of
the market to pay, supply – demand and a host of other direct and indirect factors. There can be several types
of pricing strategies, each tied in with an overall business plan. Pricing can also be used a demarcation, to
differentiate and enhance the image of a product.

(ii) Product

It refers to the item actually being sold. The product must deliver a minimum level of performance;
otherwise even the best work on the other elements of the marketing mix won’t do any good.

(iii) Place

It refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for her to
buy it is the main aim of a good distribution or ‘place’ strategy. Retailers pay a premium for the right
location. In fact, the mantra of a successful retail business is ‘location, location, location’.
(iv) Promotion

It refers to all the activities undertaken to make the product or service known to the user and trade. This can
include advertising, word of mouth, press reports, incentives, commissions and awards to the trade. It can
also include consumer schemes, direct marketing, contests and prizes.

Importance

All the elements of the marketing mix influence each other. They make up the business plan for a company
and handled right, can give it great success. But handled wrong and the business could take years to recover.
The marketing mix needs a lot of understanding, market research and consultation with several people, from
users to trade to manufacturing and several others.

Marketing mix of Amul

Amul is definitely an “Amoolya” brand. Amoolya in Sanskrit means something which is invaluable or
priceless. With a presence in almost every product which can be made by milk, Amul has won over hearts
along with market share to become a highly valued brand with an Indian origin. Amul was formed because
of a revolt of dairy farmers. And today, Amul is a brand against which companies want to compete and
come on top but the same is not being allowed by the smart minds in Amul. The reason Amul is such a
strong brand is because of the marketing mix of Amul. Here is an in depth analysis of the Marketing mix of
Amul.

Product in the marketing mix of Amul

Amul has a very very strong product portfolio. Amul product portfolio is comprised mainly of Dairy
products. Amul butter, Amul cheese and Amul ice cream are cash cows for Amul as they have the major
market share in their product category. Amul ice cream is amongst the top 10 ice cream brands of India.

Amul milk, Amul Paneer and Amul Dahi consumption is on the rise. In fact Amul milk has 26% of market
share in the packaged milk segment. The only disappointing performance is seen in Amul Chocolates which
are a burden for Amul and lot of push is required for the sales of the same. This is because the chocolate
market has established players like Parle, Dairy milk and others.

Price in the marketing mix of Amul

Amul has a strategy of low cost pricing. Some may call it penetrative pricing. But penetrative pricing
strategy is used when the market has a high level of competition and a player wants to establish itself in the
market by giving low prices. However, in the case of Amul, when Amul started, there were no national
players and the dairy market was unorganized. During the introduction stage itself, Amul had a vision to
provide their products to end customers at the best affordable rates. And the same vision is in place even
today.

Today also, you will find that Amul butter, milk and cheese are available at affordable prices keeping in
mind the end customers. You may call these products costly, but the cost has nothing to do with Amul’s
strategy. Remember that transportation costs as well as storage and distribution costs are very high in
FMCG. Thus, as the cost of transportation, storage and distribution has increased over the years, so has the
cost of Amul products gone up. But considering their value for the average India consumer, these products
are still priced at an affordable rate.

Place in the marketing mix of Amul 

Amul has a massive distribution network because its ice creams, milk, butter and cheese is found practically
everywhere. As it is a FMCG product, Amul follows the methodology of breaking the bulk. The initial
factory output is in bulk. Later on this bulk becomes smaller and smaller and finally one individual slab of
butter or scoop of ice cream is sold at the retail place.

There are two different channels through which Distribution happens in Amul. One is the procurement
channel which is responsible for collection of Milk through dairy co operatives. The other is the distribution
channel which is responsible for distributing the finalized product to the end customers.

In the procurement channel, the milk is individually delivered from farmers to the co operatives. The co
operatives then collect all this milk and send the bulk to the manufacturing facility. At the manufacturing
facility, the milk is used to manufacture the finalised products.

In the distribution channel, there are carrying and forwarding agents, distributors, dealers and retailers
involved. There are also Amul shoppe’s which sell all products in the Amul product portfolio. The
distribution is as follows.

Amul >> Carrying and forwarding agent >> Distributor >> Dealer / Retailer / Amul Shoppe >> Customer

Amul >> Modern retail

Thus there is a lot of transportation involved for all of Amul’s products. However, the distribution channel
of Amul ensures that the products reach every nook and corner of India.

Promotions in the marketing mix of Amul

Amul is responsible for one of the most unique and longest running outdoor campaign as well as one of the
most known outdoor advertising characters –  The Amul girl. Amul hoardings mainly feature the current
news and are used to take a tongue in cheek viewpoint at current happenings. However, each advertisement
hits the nail on the head.

The promotions of Amul are mainly for butter but for all the other products there is hardly any promotions.
During the launch of products, Amul is known to go ATL and advertise milk, butter etc. The Smita Patil ad
wherein Smita patil is shown as a village milk collector is one of the most famous ads for Amul. But overall,
the main advertisement is BTL through outdoor, trade promotions, discount schemes and sales promotions.

Product Mix
The complete range of products present within a company is known as the product mix. In any multi brand
organizations, there are numerous products present. None of the organizations wants to take the risk of being
present in the market with a single product.

If a company has only a single product, than it is understood that the demand of the product is very high or
the company does not have the resources to expand the number of products it has. Generally, most
companies nowadays realize the importance of product diversification.
Product mix

As explained, product mix is a combination of total product lines within a company. A company
like HUL has numerous product lines like Shampoos, detergents, Soaps etc. The combination of all these
product lines is the product mix.

Product line

The product line is a subset of the product mix. The product line generally refers to a type of product within
an organization. As the organization can have a number of different types of products, it will have similar
number of product lines. Thus, in Nestle, there are milk based products like milkmaid, Food products like
Maggi, chocolate products like Kitkat and other such product lines. Thus, Nestle’s product mix will be a
combination of the all the product lines within the company.

Product line length

If a company has 4 product lines, and 10 products within the product line, than the length of the product mix
is 40. Thus, the total number of products against the total number of product lines forms the length of the
product mix. This equation is also known as product line length.

Product line width

The width of the product mix is equal to the number of product lines within a company. Thus, taking the
above example, if there are 4 product lines within the company, and 10 products within each product line,
than the product line width is 4 only. Thus, product line width is a depiction of the number of product lines
which a company has.

Product line depth

It is fairly easy to understand what depth of the product mix will mean. Where length and width were a
function of the number of product lines, the depth of the product mix is the total number of products within a
product line. Thus if a company has 4 product lines and 10 products in each product line, than the product
mix depth is 10. It can have any variations within the product for form the product line depth.

Product line consistency

The lesser the variations between the products, the more is the product line consistency. For example, Amul
has various product lines which are all dairy related. So that product mix consistency is high. But Samsung
as a company has many product lines which are completely independent of each other. Like Air
conditioners, televisions, smart phones, home appliances, so on and so forth. Thus the product mix
consistency is low in Samsung.

Illustration of a Product Mix

In the illustration above, the product mix shows a:

 Width of 3
 Length of 5
 Product Line 1 Depth of 2
 Product Line 2 Depth of 1
 Product Line 3 Depth of 2

Example of a Product Mix

Let us take a look at a simple product mix example of Coca-Cola. For simplicity, assume that Coca-Cola
oversees two product lines: soft drinks and juice (Minute Maid). Products classified as soft drinks are Coca-
Cola, Fanta, Sprite, Diet Coke, Coke Zero, and products classified as Minute Maid juice are Guava, Orange,
Mango, and Mixed Fruit.

The product (mix) consistency of Coca-Cola would be high, as all products within the product line fall under
beverage. In addition, production and distribution channels remain similar for each product. The product
mix of Coca-Cola in the simplified example would be illustrated as follows:
Importance of a Product Mix

The product mix of a firm is crucial to understand as it exerts a profound impact on a firm’s brand image.
Maintaining high product width and depth diversifies a firm’s product risk and reduces dependence on one
product or product line. With that being said, unnecessary or non-value adding product width diversification
can hurt a brand’s image. For example, if Apple were to expand its product line to include refrigerators, it
would likely have a negative impact on their brand image with consumers.

In regard to a firm expanding its product mix:

 Expanding the width can provide a company with the ability to satisfy the needs or demands of different
consumers and diversify risk.
 Expanding the depth can provide the ability to readdress and better fulfill current consumers.

New Product Development

New product development is a task taken by the company to introduce newer products in the market.
Regularly there will arise a need in the business for new product development.

Your existing products may be technologically outdated, you have different segments to target or you want
to cannibalize an existing product. In such cases, New product development is the answer for the company.

New product development (NPD) is the process of bringing a new product to the marketplace. Your
business may need to engage in this process due to changes in consumer preferences, increasing competition
and advances in technology or to capitalise on a new opportunity. Innovative businesses thrive by
understanding what their market wants, making smart product improvements, and developing new products
that meet and exceed their customers’ expectations.

‘New products’ can be:

 Products that your business has never made or sold before but have been taken to market by others
 Product innovations created and brought to the market for the first time. They may be completely
original products, or existing products that you have modified and improved.

There are 7 stages of new product development and they are as follows:-

1. Idea Generation

In this you are basically involved in the systematic search for new product Ideas. A company has to generate
many ideas in order to find one that is worth pursuing. The Major sources of new product ideas include
internal sources, customers, competitors, distributors and suppliers.

Almost 55% of all new product ideas come from internal sources according to one study. Companies like
3M and Toyota have put in special incentive programs or their employees to come up with workable ideas.

Almost 28% of new product ideas come from watching and listening to customers. Customers: even create
new products on their own, and companies can benefit by finding these products and putting them on the
market.

Example – Pillsbury gets promising new products from its annual Bake-off. One of Pillsbury’s four cake
mix lines and several variations of another came directly from Bake-Off winners’ recipes.

2. Idea Screening

The second step in New product development is Idea screening. The purpose of idea generation is to create a
large pool of ideas. The purpose of this stage is to pare these down to those that are genuinely worth
pursuing. Companies have different methods for doing this from product review committees to formal
market research.

It, is helpful at this stage to have a checklist that can be used to rate each idea based on the factors required
for successfully launching the product in the marketplace and their relative importance.

Against these, management can assess how well the idea fits with the company’s marketing skills and
experience and other capabilities. Finally, the management can obtain an overall rating of the company’s
ability to launch the product successfully.

3. Concept Development and Testing

The third step in New product development is Concept Development and Testing. An attractive idea has to
be developed into a Product concept. As opposed to a product idea that is an idea for a product that the
company can see itself marketing to customers, a product concept is a detailed version of the idea stated in
meaningful consumer terms. The product concept is a synthesis or a description of a product idea that
reflects the core element of the proposed product

This is different again from a product image, which is the consumers’ perception of an actual or potential
product. Once the concepts are developed, these need to be tested with consumers either symbolically or
physically. For some concept tests, a word or a picture may be sufficient, however, a physical presentation
will increase the reliability of the concept test.
After being exposed to the concept, consumers are asked to respond to it by answering a set of questions
designed to help the company decide which concept has the strongest appeal. The company can then project
these findings to the full market to estimate sales volume.

4. Marketing Strategy Development

This is the next step in new product development. The strategy statement consists of three parts: the first part
describes the target market, the planned product positioning and the sales, market share and profit goals for
the first few years.

The second part outlines the product’s planned price, distribution, and marketing budget for the first year.
The third part of the marketing strategy statement describes the planned long-run sales, profit goals, and the
marketing mix strategy.

Business Analysis – Once the management has decided on the marketing strategy, it can evaluate the
attractiveness of the business proposal.

Business analysis involves the review of projected sales, costs and profits to find out whether they satisfy a
company’s objectives. If they do, the product can move to the product development stage.

5. Product Development

Here, R&D or engineering develops the product concept into a physical product. This step calls for a large
investment. It will show whether the product idea can be developed into a full- fledged workable product.

First, R&D will develop prototypes that will satisfy and excite customers and that can be produced quickly
and at budgeted costs. When the prototypes are ready, they must be tested. Functional tests are then
conducted under laboratory and field conditions to ascertain whether the product performs safely and
effectively.

6. Test Marketing

If the product passes the functional tests, the next step is test marketing: the stage at which the product and
the marketing program are introduced to a more realistic market settings. Test marketing gives the marketer
an opportunity to tweak the marketing mix before the going into the expense of a product launch.

The amount of test marketing varies with the type of product. Costs of test marketing can be enormous and it
can also allow competitors to launch a “me-too” product or even sabotage the testing so that the marketer
gets skewed results. Hence, at times, management may decide to do away with this stage and proceed
straight to the next one:

7. Commercialization

The final step in new product development is Commercialization. Introducing the product to the market – it
will face high costs for manufacturing and advertising and promotion. The company will have to decide on
the timing of the launch (seasonality) and the location (whether regional, national or international). This
depends a lot on the ability of the company to bear risk and the reach of its distribution network.

Today, in order to increase speed to market, many companies are dropping this sequential approach to
development and are adopting the faster, more flexible, simultaneous development approach. Under this
approach, many company departments work closely together, overlapping the steps in the product
development process to save time and increase effectiveness.
Product Levels
 Need: a lack of a basic requirement.
 Want: a specific requirement of products to satisfy a need.
 Demand: a set of wants plus the desire and ability to pay for the product.

Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the
actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only
if the actual value is the same or exceeds the perceived value. Kotler attributed five levels to products:

The five product levels are:

Core benefit:

The fundamental need or want that consumers satisfy by consuming the product or service. For example, the
need to process digital images.

Generic product:

A version of the product containing only those attributes or characteristics absolutely necessary for it to
function. For example, the need to process digital images could be satisfied by a generic, low-end, personal
computer using free image processing software or a processing laboratory.

Expected product:

The set of attributes or characteristics that buyers normally expect and agree to when they purchase a
product. For example, the computer is specified to deliver fast image processing and has a high-resolution,
accurate colour screen.
Augmented product:

The inclusion of additional features, benefits, attributes or related services that serve to differentiate the
product from its competitors. For example, the computer comes pre-loaded with a high-end image
processing software for no extra cost or at a deeply discounted, incremental cost.

Potential product:

This includes all the augmentations and transformations a product might undergo in the future. To ensure
future customer loyalty, a business must aim to surprise and delight customers in the future by continuing to
augment products. For example, the customer receives ongoing image processing software upgrades with
new and useful features.

What benefits does the model provide?

Kotler’s Five Product Level model provides businesses with a proven method for structuring their product
portfolio to target various customer segments. This enables them to analyse product and customer
profitability (sales and costs) in a structured way. By organising products according to this model, a
business’ sales processes can be aligned to its customer needs and help focus other operational processes
around its customers – such as design and engineering, procurement, production planning, costing and
pricing, logistics, and sales and marketing.Grouping products into product families that align with customer
segments helps modelling and planning sales, as well as production and new product planning.

Types of Product
4 Types of Consumer Products

Firstly, what specifically is a consumer product? A consumer product is a product bought by final
consumers for personal consumption. But not every consumer product is the same. There are four different
types of consumer products. Marketers usually classify consumer products into these 4 types of consumer
products:

 Convenience products
 Shopping products
 Speciality products
 Unsought products.

These 4 types of consumer products all have different characteristics and involve a different consumer
purchasing behaviour. Thus, the types of consumer products differ in the way consumers buy them and, for
that reason, in the way they should be marketed.

1. Convenience Products

Among the four types of consumer products, the convenience product is bought most frequently. A
convenience product is a consumer product or service that customers normally buy frequently, immediately
and without great comparison or buying effort. Examples include articles such as laundry detergents, fast
food, sugar and magazines. As you can see, convenience products are those types of consumer products that
are usually low-priced and placed in many locations to make them readily available when consumers need or
want them.

2. Shopping Products

The second one of the 4 types of consumer products is the shopping product. Shopping products are a
consumer product that the customer usually compares on attributes such as quality, price and style in the
process of selecting and purchasing. Thus, a difference between the two types of consumer products
presented so far is that the shopping product is usually less frequently purchased and more carefully
compared. Therefore, consumers spend much more time and effort in gathering information and comparing
alternatives. Types of consumer products that fall within the category of shopping products are: furniture,
clothing, used cars, airline services etc. As a matter of fact marketers usually distribute these types of
consumer products through fewer outlets, but provide deeper sales support in order to help customers in the
comparison effort.

3. Speciality Products

Number three of the types of consumer products is the speciality product. Speciality products are consumer
products and services with unique characteristics or brand identification for which a significant group of
consumers is willing to make a special purchase effort. As you can see, the types of consumer products
involve different levels of effort in the purchasing process: the speciality product requires a special purchase
effort, but applies only to certain consumers.

Examples include specific cars, professional and high-prices photographic equipment, designer clothes etc.
A perfect example for these types of consumer products is a Lamborghini. In order to buy one, a certain
group of buyers would make a special effort, for instance by travelling great distances to buy one. However,
speciality products are usually less compared against each other. Rather, the effort must be understood in
terms of other factors: Buyers invest for example the time needed to reach dealers that carry the wanted
products. To illustrate this, look at the Lamborghini example: the one who wants one is immediately
convinced of the choice for a Lamborghini and would not compare it that much against 10 other brands.

4. Unsought products

The 4 types of consumer products also include unsought products. Unsought products are those consumer
products that a consumer either does not know about or knows about but does not consider buying under
normal conditions. Thus, these types of consumer products consumers do not think about normally, at least
not until they need them. Most new innovations are unsought until consumers become aware of them. Other
examples of these types of consumer products are life insurance, pre-planned funeral services etc. As a
consequence of their nature, unsought products require much more advertising, selling and marketing efforts
than other types of consumer products.
Product Life Cycle (PLC)
The Product Life Cycle contains mainly four distinct stages. For the four stages introduction, growth,
maturity and decline, we can identify specific product life cycle strategies. These are based on the
characteristics of each PLC stage. Which product life cycle strategies should be applied in each stage is
crucial to know in order to manage the PLC properly.
Product-Life-Cycle-Stages
1. Introduction stage 

The introduction stage is the stage in which a new product is first distributed and made available for
purchase, after having been developed in the product development stage. Therefore, the introduction stage
starts when the product is first launched. But introduction can take a lot of time, and sales growth tends to be
rather slow. Nowadays successful products such as frozen foods and HDTVs lingered for many years before
entering a stage of more rapid growth.

Furthermore, profits in the introduction stage are negative or low due to the low sales on the one hand and
high-distribution and promotion expenses on the other hand. Obviously, much money is needed to attract
distributors and build their stocks. Also, promotion spending is quite high to inform consumers of the new
product and get them to try it.

In the introduction stage, the focus is on selling to those buyers who are the most ready to buy (innovators).

Concerning the product life cycle strategies we can identify the proper launch strategy: the company must
choose a launch strategy that is consistent with the intended product positioning. Without doubt, this initial
strategy can be considered to be the first step in a grander marketing plan for the product’s entire life cycle.

The main objective should be to create product awareness and trial.

To be more precise, since the market is normally not ready for product improvements or refinements at this
stage, the company produces basic versions of the product. Cost-plus pricing should be used to recover the
costs incurred. Selective distribution in the beginning helps to focus efforts on the most important
distributors. Advertising should aim at building product awareness among innovators and early adopters. To
entice trial, heavy sales promotion is necessary. Following these product life cycle strategies for the first
PLC stage, the company and the new product are ready for the next stages.

2. Growth stage 

The growth stage is the stage in which the product’s sales start climbing quickly. The reason is that early
adopters will continue to buy, and later buyers will start following their lead, in particular if they hear
favourable word of mouth. This rise in sales also attracts more competitors that enter the market. Since these
will introduce new product features, competition is fierce and the market will expand. As a consequence of
the increase in competitors, there is an increase in the number of distribution outlets and sales are augmented
due to the fact that resellers build inventories. Since promotion costs are now spread over a larger volume
and because of the decrease in unit manufacturing costs, profits increase during the growth stage.

The main objective in the growth stage is to maximize the market share.

Several product life cycle strategies for the growth stage can be used to sustain rapid market growth as long
as possible. Product quality should be improved and new product features and models added. The firm can
also enter new market segments and new distribution channels with the product. Prices remain where they
are or decrease to penetrate the market. The company should keep the promotion spending at the same or an
even higher level. Now, there is more than one main goal: educating the market is still important, but
meeting the competition is likewise important. At the same time, some advertising must be shifted from
building product awareness to building product conviction and purchase.

The growth stage is a good example to demonstrate how product life cycle strategies are interrelated. In the
growth stage, the firm must choose between a high market share and high current profits. By spending a lot
of money on product improvements promotion and distribution, the firm can reach a dominant position.
However, for that it needs to give up maximum current profits, hoping to make them up in the next stage.
3. Maturity stage 

The maturity stage is the stage in which the product’s sales growth slows down or levels off after reaching a
peak. This will happen at some point, since the market becomes saturated. Generally, the maturity stage lasts
longer than the two preceding stages. Consequently, it poses strong challenges to marketing management
and needs a careful selection of product life cycle strategies. Most products on the market are, indeed, in the
maturity stage.

The slowdown in sales growth is due to many producers with many products to sell. Likewise, this
overcapacity results in greater competition. Since competitors start to mark down prices, increase their
advertising and sales promotions and increase their product development budgets to find better versions of
the product, a drop in profit occurs. Also, some of the weaker competitors drop out, eventually leaving only
well-established competitors in the industry.

The company’s main objective should be to maximize profit while defending the market share.

To reach this objective, several product life cycle strategies are available. Although many products in the
maturity stage seem to remain unchanged for long periods, most successful ones are actually adapted
constantly to meet changing consumer needs. The reason is that the company cannot just ride along with or
defend the mature product – a good offence is the best defense. Therefore, the firm should consider to
modify the market, product and marketing mix. Modifying the market means trying to increase consumption
by finding new users and new market segments for the product. Also, usage among present customers can be
increased. Modifying the product refers to changing characteristics such as quality, features, style or
packaging to attract new users and inspire more usage. And finally, modifying the marketing mix involves
improving sales by changing one or more marketing mix elements. For instance, prices could be cut to
attract new users or competitors’ customers. The firm could also launch a better advertising campaigns or
rely on aggressive sales promotion.

4. Decline stage

Finally, product life cycle strategies for the decline stage must be chosen. The decline stage is the stage in
which the product’s sales decline. This happens to most product forms and brands at a certain moment. The
decline can either be slow, such as in the case of postage stamps, or rapid, as has been the case with VHS
tapes. Sales may plummet to zero, or they may drop to a low level where they continue for many years.

Reasons for the decline in sales can be of various natures. For instance, technological advances, shifts in
consumer tastes and increased competition can play a key role. As sales and profits decline, some
competitors will withdraw from the market.

Also for the decline stage, careful selection of product life cycle strategies is required. The reason is that
carrying a weak product can be very costly to the firm, not just in profit terms. There are also many hidden
costs. For instance, a weak product may take up too much of management’s time. It requires advertising and
sales-force efforts that could better be used for other, more profitable products in other stages. Most
important may be the fact that carrying a weak product delays the search for replacements and creates a
lopsided product mix. It also hurts current profits and weakens the company’s foothold on the future.

Therefore, proper product life cycle strategies are critical. The company needs to pay more attention to its
aging products to identify products in the decline stage early. Then, the firm must take a decision: maintain,
harvest or drop the declining product.

The main objective in the decline stage should be to reduce expenditure. General strategies for the
decline stage include cutting prices, choosing a selective distribution by phasing out unprofitable outlets and
reduce advertising as well as sales promotion to the level needed to retain only the most loyal customers.
If management decides to maintain the product or brand, repositioning or reinvigorating it may be an option.
The purpose behind these options is to move the product back into the growth stage of the PLC. If
management decides to harvest the product, costs need to be reduced and only the last sales need to be
harvested. However, this can only increase the company’s profits in the short-term. Dropping the product
from the product line may involve selling it to another firm or simply liquidate it at salvage value.

In the following, all characteristics of the four product life cycle stages discussed are listed. For each,
product life cycle strategies with regard to product, price, and distribution, advertising and sales promotion
are identified. Choosing the right product life cycle strategies is crucial for the company’s success in the
long-term.

Product Life Cycle Examples

Introduction Stage Examples
1. Flying Cars – We have been hearing about this for at least a decade now. But, flying cars are yet to
“take off”. Pun intended.
2. Smart Glasses – These were a craze when they were launched by Google and Snap, but people didn’t
really take to these. Maybe we are all waiting for Apple to launch something.
3. Online Healthcare and Online Education – People preferred actually going to a hospital or to a
school. However, with the current pandemic, the online options are bound to take off.
4. Virtual Reality (VR) Headsets – These have been around for a years now, but they have not really
taken off. These are used in very niche segments like gaming and research
Growth Stage Examples

1. Electric Cars – Electric cars are at a stage where if a person can afford them and the required
infrastructure is available, then people strongly consider electric cars.
2. IoT (Internet of Things) – Any device that is internet enabled vs those that are not. You can think of
your microwave, fridge and even your light bulb.
3. AirPods – Wireless earphones have been around for a few years. But, it took Apple AirPods to really
sound the death knell for wired earphones or headphones.
4. Organic Foods – A slightly different example, but it is still relevant. Organic foods have really
entrenched themselves into the minds of the millenials in some high income countries. But, it will
take time for organic to really become mainstream in all markets, especially the developing ones.

Maturity Stage Examples

1. TV Cable Connection – If you have recently moved to a different city and rented a place, chances are
that you would not have signed up for cable connection. Netflix, Amazon Prime, etc. would more
than meet your needs.
2. Fuel guzzling cars that run on diesel/petrol/gasoline – These have reached maturity in most
developed markets. But, they are still the go to option in under-developed or developing markets.
3. Kitchen appliances that are not internet enabled – Again, same as above, these are the first choice for
newly middle income families in under-developed and developing markets.
4. Personal Computers – These are almost at the edge of the decline stage. Except in specific cases like
financial companies, researchers, gaming communities, etc., these are on their way out.

Decline Stage Examples

1. CD/DVD Players – It was the floppy disc before this. And now we use USB drives, but these too
shall go away.
2. Landline Phones – Mobile phones made these obsolete.
3. Keypad Mobile Phones or Feature Phones – Smartphones made these obsolete.

Branding and Packaging

Branding
The American Marketing Association defines a brand as “a name, term, sign, symbol, or design, or a
combination of them, intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.” A brand is thus a product or service whose dimensions
differentiate it in some way from other products or services designed to satisfy the same need.

Branding is endowing products and services with the power of a brand. It’s all about creating differences
between products.
Branding is defined as a continuous process, through which the marketer attempts to establish a long-term
relationship with the customer, by identifying their changing needs and wants and supplying such products
which satisfy them. Moreover, with the help of branding a product is easily identifiable.

Branding can be used as a marketing tool, which creates awareness about the product in the mind of the
target customers, about the authenticity of the product and the satisfaction received by them through it.

For an active branding, the marketer should create brand value to the customers, i.e. the consumers must be
convinced that there are substantial differences between products offered by different brands, only then they
are going to buy it. A brand conscious customer usually goes for a brand he/she trusts and hardly makes any
effort to switch to another brand.

Why Is Branding Important?

Branding is absolutely critical to a business because of the overall impact it makes on your company.
Branding can change how people perceive your brand, it can drive new business and increase brand
awareness.

Branding Gets Recognition

The most important reason branding is important to a business is because it is how a company gets
recognition and becomes known to the consumers. The logo is the most important element of branding,
especially where this factor is concerned, as it is essentially the face of the company.

Branding Increases Business Value

Branding is important when trying to generate future business, and a strongly established brand can increase
a business’ value by giving the company more leverage in the industry. This makes it a more appealing
investment opportunity because of its firmly established place in the marketplace.

Branding Generates New Customers

A good brand will have no trouble drumming up referral business. Strong branding generally means there is
a positive impression of the company amongst consumers, and they are likely to do business with you
because of the familiarity and assumed dependability of using a name they can trust. Once a brand has been
well-established, word of mouth will be the company’s best and most effective advertising technique.

Improves Employee Pride And Satisfaction

When an employee works for a strongly branded company and truly stands behind the brand, they will be
more satisfied with their job and have a higher degree of pride in the work that they do. Working for a brand
that is reputable and help in high regard amongst the public makes working for that company more
enjoyable and fulfilling. Having a branded office, which can often help employees feel more satisfied and
have a sense of belonging to the company, can be achieved through using promotional merchandise for your
desktop.

Creates Trust Within The Marketplace

A professional appearance and well-strategised branding will help the company build trust with consumers,
potential clients and customers. People are more likely to do business with a company that has a polished
and professional portrayal.
Packaging

Packaging, as the name suggests, is the process of designing and producing an attractive packet, wrapper, or
cover, in which the product is going to be sold to the customer. It includes all the activities involved in
creating a container, for containing, handling and protecting the product.

A good packaging not only draws the attention of the consumers but also makes the product ready for
transport and sale, and also prevents any damage or pilferage. It is the first thing that a customer encounters.
The main object of packaging is:

 Brand identification
 Communicate information, both descriptive and persuasive.
 Ensure safe transportation
 Act as five-second commercial, at the point of purchase.

Packaging is made up of three layers:

1. Primary packaging: Immediate packing of a product, for instance: glass bottle of cough syrup.
2. Secondary packaging: Extra packaging given to ensure the protection of the product. For instance:
cardboard box to keep the glass bottle of cough syrup.
3. Transportation packaging: It is also called final packaging that is given for proper storage and transportation,
for instance: cardboard cartons in which the cough syrup is transported.

Key Differences between Branding and Packaging

The points presented below are substantial so far as the difference between branding and packaging is
concerned:

1. Branding is the marketing strategy, in which the marketer uses a name, mark or symbol of a product, to
make it easily identifiable by the customer, from the products offered by other competitors in the market.
On the other hand, packaging refers to all the activities involved in designing and creating a cover or wrapper
for the product to make it ready for sale and transport.
2. Branding focuses on identification and thus differentiates the product from other products in the market.
Conversely, packaging aims at promoting the product at the point of purchase and also ensuring protection,
during transit.
3. Branding is all about the colour, symbol, slogan and visual imagery of the product. As against, packaging
integrates components such as the colour, design, description, fonts, logo and so forth.
4. Branding is helpful in retaining and increasing consumer loyalty, as well as introducing a new product under
the similar brand. In contrast, the packaging is helpful in drawing customer’s attention, with its design.

To promote the brands, all the companies often develop a different ‘look and feel’ of the product packaging
which draws the attention of the customer and makes comfortable with the presentation itself, to pick their
product above other products in the market.

Distribution: Concept and Importance

Distribution means to spread the product throughout the marketplace such that a large number of people
can buy it.

Distribution can make or break a company. A good distribution system quite simply means the company has
greater chance of selling its products more than its competitors. The company that spreads its products wider
and faster into the market place at lower costs than its competitors will make greater margins absorb raw
material price rise better and last longer in tough market conditions. Distribution is critical for any type of
industry or service. The best price product, promotion and people come to nothing if the product is not
available for sale at the points at which consumers can buy.

In the FMCG industry in India, specially, companies distribute their low-value, high volume products to
over 1 million retail outlets, or points of sale. The most successful FMCG companies have the biggest
networks, made of factories, stock points, distributors or C&F (Carrying and forwarding agents),
wholesalers, retailers and consumers. Nowadays, even direct marketing is considered a feasible distribution
channel.

Distribution involves doing the following things:

1. A good transport system to take the goods into different geographical areas.
2. A good tracking system so that the right goods reach at the right time in the right quantity.
3. A good packaging, which takes the wear and tear of transport.
4. Tracking the places where the product can be placed such that there is a maximum opportunity to buy it.
5. It also involves a system to take back goods from the trade.

Importance of Distribution

Distribution is one of the important mix among marketing mixes. Delivery of satisfaction, standard of living,
value addition, communication, employment, efficiency and finance are the major role and importance of
distribution.

The role and importance of distribution in marketing and in the whole economy can be discussed as
follows:-

1. Delivery of satisfaction

Marketing concept emphasizes on earning profit through satisfaction of the customers. Besides market
research for the development and sales of goods according to need and wants of consumers, the participants
of distribution channel also help producers in production of new goods.

2. Standard of living

Distribution function helps to improve living standard of the consumers in the society. Proper distribution of
necessary goods and services to the consumers easily at right time does not only satisfy them but also brings
change in their living standard. Distribution brings improvement in living standard of consumers through
generation of employment, increase in income and transfer of ownership. Hence, it brings positive effect in
the society.

3. Value addition

The functions of distribution such as transportation, warehousing, inventory management etc. increase the
importance of products by creating place utility, time utility and quantity utility. Distribution mix plays an
important role to increase the value of the products through delivery of goods in right quantity, at right place
and right time.

4. Communication

Distribution serves as link between producers and consumers. Producers can make flow of information and
messages to consumers about their products, price, promotion etc. through channel members. Similarly, they
receive information about customers, competitors and environmental changes from channel members.

5. Employment
The function of distribution creates employment opportunities in society. Market intermediaries work as
direct and indirect sources of employment. Different producers need to supply their innumerable products to
consumers. Thousands of distributors, agents, wholesalers, retailers, brokers etc. involve in supplying the
products to the consumers. Similarly, many persons of the society can get job in the transport and
warehouses sectors, etc.

6. Efficiency

Producers produce limited types of goods in mass quantity. but the consumers demand different types of
goods in small quantity. When goods are produced in a mass quantity, they can be obtained at lower price.
Distribution helps to satisfy the needs of consumers by supplying assortment of different products of
different producers. From this, efficiency can be achieved in both production and distribution.

7. Financing

Intermediaries themselves make arrangement to keep reserve and stock of goods. The producers need not
make arrangement and management of distribution centers and warehouse. The producers need not do
anything except remaining busy in production, the timely payment by intermediaries and financial helps
become more important for smooth operation of production. Similarly, the role of finance is also decisive in
mobilizing other means of production.

Different Types of Distribution Channels

A distribution channel is a chain of businesses or intermediaries through which a good or service
passes until it reaches the final buyer or the end consumer. Distribution channels can include
wholesalers, retailers, distributors, and even the Internet.

Distribution channels are part of the downstream process, answering the question “How do we get our
product to the consumer?” This is in contrast to the upstream process, also known as the supply chain, which
answers the question “Who are our suppliers?”

A distribution channel is the path by which all goods and services must travel to arrive at the intended
consumer. Conversely, it also describes the pathway payments make from the end consumer to the original
vendor. Distribution channels can be short or long, and depend on the amount of intermediaries required to
deliver a product or service.

Goods and services sometimes make their way to consumers through multiple channels—a combination of
short and long. Increasing the number of ways a consumer is able to find a good can increase sales. But it
can also create a complex system that sometimes makes distribution management difficult. Longer
distribution channels can also mean less profit each intermediary charges a manufacturer for its service.

Channels are broken into two different forms—direct and indirect. A direct channel allows the consumer to
make purchases from the manufacturer while an indirect channel allows the consumer to buy the good from
a wholesaler or retailer. Indirect channels are typical for goods that are sold in traditional brick-and-mortar
stores.

Generally, if there are more intermediaries involved in the distribution channel, the price for a good may
increase. Conversely, a direct or short channel may mean lower costs for consumers because they are buying
directly from the manufacturer.
Different types of channel of distribution are as follows:

Manufacturers and consumers are two major components of the market. Intermediaries perform the duty of
eliminating the distance between the two. There is no standardised level which proves that the distance
between the two is eliminated.

Based on necessity the help of one or more intermediaries could be taken and even this is possible that there
happens to be no intermediary. Their description is as follows:

(A) Direct Channel or Zero Level Channels

When the manufacturer instead of selling the goods to the intermediary sells it directly to the consumer then
this is known as Zero Level Channel. Retail outlets, mail order selling, internet selling and selling

(B) Indirect Channels

When a manufacturer gets the help of one or more middlemen to move goods from the production place to
the place of consumption, the distribution channel is called indirect channel. Following are the main types of
it:

1. One Level Channel

In this method an intermediary is used. Here a manufacturer sells the goods directly to the retailer instead of
selling it to agents or wholesalers. This method is used for expensive watches and other like products. This
method is also useful for selling FMCG (Fast Moving Consumer Goods).

2. Two Level Channel

In this method a manufacturer sells the material to a wholesaler, the wholesaler to the retailer and then the
retailer to the consumer. Here, the wholesaler after purchasing the material in large quantity from the
manufacturer sells it in small quantity to the retailer.

Then the retailers make the products available to the consumers. This medium is mainly used to sell soap,
tea, salt, cigarette, sugar, ghee etc.

3. Three Level Channel

Under this one more level is added to Two Level Channel in the form of agent. An agent facilitates to reduce
the distance between the manufacturer and the wholesaler. Some big companies who cannot directly contact
the wholesaler, they take the help of agents. Such companies appoint their agents in every region and sell the
material to them.

Then the agents sell the material to the wholesalers, the wholesaler to the retailer and in the end the retailer
sells the material to the consumers.
Functions of Distribution channel
1. Sorting: The middlemen collect goods from various sources. These goods are different in quality,
size, nature, colour etc. The intermediaries sort these goods into homogeneous groups on the basis of
the size, quality, nature etc.
2. Accumulation: This function involves accumulation of goods into larger homogeneous stocks,
which maintain continuous flow of supply.
3. Allocation: Allocation involves breaking homogeneous stock into smaller marketable lots.
4. Assorting: Middlemen procure variety of goods from different sources and deliver them in
combinations desired by the customers. A retailer collects a variety of consumer goods and delivers
them to households.
5. Product promotion: The middlemen advertise the product kept with them. They also do certain
sales promotion activities like demonstrations; special displays etc. to increase the sale of products.
6. Negotiation: They negotiate and try to reach agreement on price and other terms of sale.
7. Risk taking: They bears the risk of changes in demand, damage in transit, theft, spoilage,
destruction etc.

Factors determining Choice of Channels

It is essential to make right choice of channel of distribution. The choice of the appropriate channel depends
on various factors

1. Product related factors

2. Market related Factors
3. Company Related factors
4. Competitive factors
5. Environmental Factors
1. Product Related Factors

a) Nature of Product:
The Industrial products are usually technical, and expensive products purchased by few customers. It
requires shortest channel (Direct Channel). Consumer product are standardized products which can
be easily sold through intermediaries.
b) Unit value
When unit value of a product is high direct channel is effective. Eg: Gold, jewelry, Car etc.. On the
other hand less costly product like cosmetics, detergents, soaps are sold through longer channels.

2. Market Related Factors

a) Nature of Market: In a consumer market longer channels are used whereas in industrial market
shorter channels are preferred.
b) Size of the market: In case the number of buyers is small , shorter channels are used. But indirect
channels are required when the market consists of large number of customers.
c) Geographical situation: If the buyers are concentrated in a limited area, direct selling can be used.
But widely scattered customers require the use of middlemen.
d) Size of order: If the size of order is small, as in the case of most consumers products, large number
of intermediaries may be used. But if size of order is large, direct channels may be used.

3. Company Related Factors

a) Financial strength: A company having large amount of funds can create its own channel of
distribution. But financially weak companies will have to depend upon middlemen.
b) Desire for control: Companies which want a tight control over distribution prefer direct channels.
Otherwise indirect channels may be used.
c) Management: If the management of a firm has sufficient knowledge and experience of distribution,
it may prefer direct selling. On the other hand, firms whose management has not sufficient
knowledge of distribution have to depend on middlemen.

4. Competitive factors
The choice of channel is also affected bythe channel selected by competitors in the same industry. If
the competitors have selected a particular channel, the other firm may also like to select the similar
channel. Sometimes, we may avoid the channels used by the competitors

5. Environment factors
Environmental factors include factorssuch as economic condition and legal constraints.eg: In a
depressed economy, marketers use shorter channels to distribute their goods.