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Unit -1

Introduction: Nature and scope of marketing, Evolution,

Various marketing orientations, Core concepts of
marketing, customer value and the value delivery process.
Marketing challenges in the globalized economic
scenario. Understanding
Consumer Behavior: Buying motives, factors
influencing buying behavior, buying habits, stages in
consumer buying decision process, types of consumer
buying decisions, Business buying and Business buying
process.
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According to the American Marketing Association (AMA)
Board of Directors, Marketing is the activity, set of institutions,
and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients,
partners, and society at large.

Dr. Philip Kotler defines marketing as “the science and art of

exploring, creating, and delivering value to satisfy the needs of a
target market at a profit. Marketing identifies unfulfilled needs
and desires. It defines, measures and quantifies the size of the
identified market and the profit potential. It pinpoints which
segments the company is capable of serving best and it designs
and promotes the appropriate products and services.”

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• Exchange is the essence of marketing.
• Marketing is customer/ consumer oriented.
• Marketing starts and ends with customers/ consumers.
• Modern marketing precedes and succeeds production.
• Marketing is goal oriented and the goal being profit maximization through
satisfaction of human needs.
• Marketing is a science as well as an art.
• Marketing is the guiding element of business (It tells what, when, how to
produce; Marketing is capable of guiding and controlling business.
• Marketing is a system Input Process Output
• Marketing is a process, i.e., series of interrelated functions.

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 SCOPE OF MARKETING
Marketing has a very wide scope it covers all the activities from conception
of ideas to realization of profits. Some of them as discussed as below:

• Study of Consumer Wants and Needs: Goods are produced to satisfy

consumer wants. Therefore study is done to identify consumer needs and
wants. These needs and wants motivates consumer to purchase.
• Study of Consumer behaviour: Marketers performs study of consumer
behaviour. Analysis of buyer behaviour helps marketer in market
segmentation and targeting.
• Product Planning and development : It includes the activities of product
research, marketing research, market segmentation, product development,
determination of the attributes, quantity and quality of the products.
• Branding: Branding of products is adopted by many reputed enterprises to
make their products popular among their customer and for many other
benefits. Marketing manager has to take decision regarding the branding
policy, procedures and implementation programs.
• Packaging: Packaging is to provide a container or wrapper to the product
for safety, attraction and ease of use and transportation of the product.
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• Channels of Distribution: Decision regarding selection of most
appropriate channel of distribution like wholesaling, distribution
and retailing is taken by the marketing manager and sales manager.
• Pricing Policies: Marketer has to determine pricing policies for their
products. Pricing policies differs form product to product. It depends
on the level of competition, product life cycle, marketing goals and
objectives, etc.
• Sales Management: Selling is a part of marketing. Marketing is
concerned about all the selling activities like customer identification,
finding customer needs, persuading customer to buy products,
customer service, etc.
• Promotion: Promotion includes personal selling, sales promotion, and
advertising. Right promotion mix is crucial in accomplishment of
marketing goals.
• Finance: Marketing is also concerned about the finance, as for every
marketing activity be it packaging, advertising, sales force budget is
fixed and all the activities have to be completed with in the limit of that
budget.
• After Sales services: Marketing covers after sales services given to
customers, maintaining good relationships with customers,
attending their queries and solving their problems.
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 FUNCTIONS OF MARKETING
• Gathering and Analyzing Market Information
• Marketing Planning

• Product Designing and Development

• Standardization and Grading

• Packaging and Labeling

• Branding

• Customer Support Service

• Pricing of Products

• Promotion

• Physical Distribution
• Transportation

• Storage or Warehousing
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 • Any quantity demand by a single individual at a given price is called individual
demand.
• Market demand is the combination of demand by all individuals.
• Many products which require other products for performance like car and
petrol, bread and butter, ink and fountain pen.
• People may demand wheat for producing bread, biofuels or feeding livestock. It
is an example composite demand.

• Milk is an example of direct and indirect/derived demand. As it can be

directly consumed or can be used for making other products.

• Coca-cola and Pepsi, tea and coffee. it is to note, that price of commodity ‘a’
and the quantity of commodity ’B’ are positively related to each other. It is an
example cross demand.

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Good marketers are practicing holistic marketing. Holistic marketing is the
development, design, and implementation of marketing programs, processes,
and activities that recognize the breadth and interdependencies of today’s
marketing environment.

Four key dimensions of holistic marketing are:

1. Internal marketing—ensuring everyone in the organization embraces
appropriate marketing principles, especially senior management.

2. Integrated marketing—ensuring that multiple means of creating, delivering, and

communicating value are employed and combined in the best way.

3. Relationship marketing—having rich, multifaceted relationships with

customers, channel members, and other marketing partners.

4. Performance marketing —understanding returns to the business from marketing

activities and programs, as well as addressing broader concerns and their legal, ethical,
social, and environmental effects.
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The Production Concept

Consumers will prefer products that are widely available &

Inexpensive
Concentrate on achieving high production efficiency, low
costs and mass distribution
Eg: - Lenovo and Haier in Chin

The Product Concept

Consumers favor products that offer most quality, performance and inno
Make superior products and improve them over time.

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 The Selling Concept

• Consumers, if left alone, wont buy enough of the

organization’s products.
• Must undertake an aggressive selling and promotion effort.
• Practiced most aggressively with unsought goods.
• Eg:- Insurance & Encyclopedias.
• Aim is to sell what they make rather than make what the
market wants.

The Marketing Concept

• Customer Centered instead of Product Centered.

• Not to find right customers for your products, but to
find right products for your customers.
• Eg:- Dell
• Proactive Market Orientation - Understanding and meeting
customers’ latent needs
• Reactive Market Orientation – Understanding and
meeting customers’ expressed needs
• Total Market Orientation
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A marketing mix includes multiple areas of focus as part of a
comprehensive marketing plan. The term often refers to a
common classification that began as the four Ps: product, price,
placement, and promotion. Effective marketing touches on a
broad range of areas as opposed to fixating on one message.

The term "marketing mix" is a foundation model for

businesses, historically centered around product, price, place,
and promotion (also known as the "4 Ps"). The marketing mix
has been defined as the "set of marketing tools that the firm
uses to pursue its marketing objectives in the target market".

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The marketing mix refers to the tactics (or marketing activities)
that we have to satisfy customer needs and position our offering
clearly in the mind of the customer. It involves the 7Ps; Product,
Price, Place and Promotion (McCarthy, 1960) and an additional
three elements that help us meet the challenges of marketing
services, People, Process and Physical Evidence (Booms &
Bitner, 1982).

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What is Marketing Myopia

Initially, the term ‘‘market myopia’’ was floated by the Theodor Levitt in the
marketing paper. It was published in the ‘‘Harvard Business Review’’ in 1960,
where he said that business can do better than just selling their products. His
main contention was that the marketer should also focus on customer’s needs
& satisfaction, not sales and stuffing customers with their products.

Marketing myopia is the failure & narrow-minded approach of marketing

management of a company; which only focuses on certain attributes of the
product or service while completely ignoring the long terms goals such
as product quality, customers need, demand and satisfaction.

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Consumer Behavior can be defined as those acts of
‘individuals’ which are directly involved in making decisions
to spend their available resources in obtaining and using goods
and services.
GENERAL CHARACTERISTICS OF CONSUMER
BEHAVIOR
1. The consumer is the King
2. The consumer behavior can be known
3. The consumers’ behavior can be influenced.

The factors that influence consumer behavior are:

• Cultural Factors
• Social Factors
• Personal Factors
• Psychological Factors

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Two Buying Motives of consumer
When the buyer’s need is raised to a particular level they
become the motives which mean “ I want to achieve this”
which ultimately affect the consumer buying behavior. This
means that the consumers have the desire which motivate them
to buy a particular product. The buying motives of the
consumer are divided into two categories:

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Product Buying Motive

• Product buying motives are those influences and

reasons which prompt a buyer to chose a particular
product in preference to others.

• The preferences may be design, shape, dimension,

size, color, package etc.

• Product Buying Motives are classified into two:

1. Emotional Product Buying Motives

2. Rational Product Buying Motives
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Emotional Product Buying Motive

• When a buyer decides to purchase a product without thinking

over the matter logically and carefully.
• The buyer takes the decisions on the basis of emotions.
• Following are the list of factors that influence the
emotional product buying motives:

Emotional Product Buying Motive

Pride
Imitation
Affection
Comfort
Habit 27
Rational Product Buying Motive

• When buyer examines pros and cons of purchasing a

product and takes decisions then the behavior is called as
rational product buying motives.

• Buyers will be looking for any of the following factors:

 Safety or security
 Value of money
 Suitability and utility
 Durability
 Convenience

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Patronage Buying Motives

• These are those considerations or reasons that make a

buyer patronage a particular shop in preference to other
shops while buying a product.

• Patronage buying motives can be classified as:

1. Emotional Patronage Buying Motives

2. 2. Rational Patronage Buying Motives

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1. Emotional Patronage Buying Motives
• Patronizing a particular shop without logical thinking
or reasoning. • This involves the following decisions:

1. Appearance of the shop

2. Visual merchandizing
3. Reference group purchase
4. Prestige issue 5. Imitation

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2. Rational Patronage Buying Motives

• When the buyer analyzes a shop carefully and buys the

product, it is called as rational patronage buying
motives.

• This includes the following factors:

1. Convenience
2. Value for money
3. Financial schemes and facilities
4. Availability of wide range of products
5. Reputation of the shop
6. Sales force efficiency
7. Service provided by the sales executives.

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Buying Decision Behavior can be classified in to four
different categories.
•Complex Buying Behavior. (Like Car or Computer)
•Dissonance Reducing Buying Behavior.
•Habitual Buying Behavior. (lighter or match box)
•Variety Seeking Buying Behavior.

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1. Complex Buying Behavior
In complex buying behavior consumer shows high level of involvement while
purchase and observe considerable differences among brands. Complex
consumer buying behavior is noticeable when the product price is high,
risky, low quality after sale service and so on. Its good example is buying a
mobile or laptop. Both the products are expensive and variety of brands.
Consumers feel uncomfortable to decide for a specific brand.

2. Dissonance Reducing Buying Behavior

In dissonance reducing buying behavior consumer involvement is very high due
to high price and infrequent purchase with less significance differences among
brands. In this case buyer purchases the product which is easily available. After
the product purchase, consumers may face dissonance post purchase behavior.

3. Habitual Buying Behavior

In Habitual buying behavior consumer involvement is low as well as low is no
significance among brands names. The good example is a lighter or match box.
They just go for it and purchase it, there is no brand loyalty. Consumers do not
need information regarding brand purchase, characteristics. For such brands tv
commercials, news papers and magazines build positive attitude of consumers
towards. 34
4. Variety Seeking Buying Behavior

In variety seeking buying behavior situation consumer involvement is very low but
there are significance differences among brands. In this situation consumers
perceive brand switching. A good example is purchase a chips. In such case
consumer purchase chips and make results are consumption. Next time they
purchase another brand just to change the taste.

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Business Markets
Business buyer behavior refers to the buying behavior of the
organizations that buy goods and services for use in
production of other products and services that are sold,
rented, or supplied to others.

Business buying process is the process where business

buyers determine which products and services are needed
to purchase, and then find, evaluate, and choose among
alternative brands

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Business Buyer Behavior
The Model of Business Buyer Behavior
Business Buyer Behavior
Major Types of Buying Situations

Straight rebuy is a routine purchase decision such as

reorder without any modification

Modified rebuy is a purchase decision that requires

some research where the buyer wants to modify
the product specification, price, terms, or
suppliers

New task is a purchase decision that

requires thorough research such as a new
product
Business Buyer Behavior
Participants in the Business Buying Process

Buying center is all of the individuals and units that

participate in the business decision-making process
• Users
• Influencers
• Buyers
• Deciders
• Gatekeepers
Business Buyer Behavior
Participants in the Business Buying Process

Users are those that will use the product or service

Influencers help define specifications and provide

information for evaluating alternatives

Buyers have formal authority to select the supplier and

arrange terms of purchase

Deciders have formal or informal power to select and

approve final suppliers

Gatekeepers control the flow of information

 Business Buyer Behavior
Major Influences on Business Buyers

Economic Personal
Factors Factors

Price
Emotion
Service
Business Buyer Behavior
Major Influences on Business Buyers Organizational
Factors

Objectives
Policies
Procedures
Structure
Systems
Business Buyer Behavior
The Buying Process
Business Buyer Behavior
The Buying Process

Supplier search involves compiling a list of qualified

suppliers

Proposal solicitation is the process of

requesting proposals from qualified suppliers
 Business Buyer Behavior
The Buying Process

Supplier selection is the process when the buying

center creates a list of desired supplier attributes and
negotiates with preferred suppliers for favorable
terms and conditions

Order-routine specifications is the final order with

the chosen supplier and lists all of the specifications
and terms of the purchase
Business Buyer Behavior
The Buying Process

Performance review involves a analysis of supplier

performance to the purchase terms
 Unit-2

Market segmentation, Targeting and Positioning:

Meaning, Factors influencing segmentation, Market
Aggregation, Basis for segmentation, Segmentation of
Consumer. Targeting: Meaning, Basis for identifying
target customers, Target Market Strategies.
Positioning: Meaning, product differentiation
strategies, tasks involved in positioning. Branding:
Concept of Branding, Brand Types, Brand equity,
Branding Positioning.
What Is Market Segmentation?

Market segmentation is the process of dividing a target

market into smaller, more defined categories. It segments
customers and audiences into groups that share similar
characteristics such as demographics, interests, needs, or
location.

The term market segment refers to people who are

grouped together for marketing purposes. Market
segments are part of a larger market, often lumping
individuals together based on one or more similar
characteristics.
Benefits of Market Segmentation
1. Create stronger marketing messages

2. Identify the most effective marketing tactics

3. Design hyper-targeted ads

4. Attract (and convert) quality leads

5. Differentiate your brand from competitors

6. Build deeper customer empathy

7. Identify niche market opportunities

8. Stay focused
How to Create a Market Segmentation Strategy
1. Analyze your existing customers
•Interview your customers.

•Interview your sales team.

•Refer to your business data.

•Use your website analytics.

•Research audience geography.

2. Identify market segment opportunities.
Once you have a buyer persona that describes your ideal customer, start looking for
market segment opportunities.
A market segment opportunity is a trend that can drive new marketing tactics
or offerings. To find them, first ask questions about your brand.

•What problems does your brand solve?

•What problems can you solve better than your competitors?
•What do you know a lot about or excel at?
•Who do you and your team like to serve?

Then, refer back to your audience analysis and buyer persona and ask questions that
uncover opportunities.

•What large segments stick out?

•What customer characteristics or qualities are most common?
•What segments are currently not being served?
•What segments is your brand uniquely qualified to serve?

Identify a few potential market segment opportunities, and then research to confirm
that they are viable.
 Market Aggregation
The term ‘market aggregation’ is used to refer to that marketing
process in which a particular product or service is marketed to a
large set of audiences or consumers, having the similar kind
of needs and demands thus, giving a heavy brand exposure.
Market aggregation is also known as ‘mass marketing’ or
‘undifferentiated marketing.

“Market aggregation” is defined as the marketing of

standardized goods and services to a large population of
people that have similar needs, according to Inc. Another
name for market aggregation is “mass marketing,” a strategy that
treats all customers as a single group that is handled
homogeneously.
Niche Market
A niche market is a segment of a larger market that can be
defined by its own unique needs, preferences, or identity that
makes it different from the market at large.

Niche marketing is an advertising strategy that focuses on a

unique target market. Instead of marketing to everyone who
could benefit from a product or service, this strategy focuses
exclusively on one group—a niche market—or demographic of
potential customers who would most benefit from the offerings.
1. Competition Identification:

The first step in the positioning process is understanding the

competition and its products. Every company, brand, product or
service has its unique position in the market. For creating a
unique positioning, it is critical to understand the competition
prevalent in the market in that particular sector. Perceptual
mapping or brand mapping is often used for competitor
positioning process.

2. Product Characteristics Identification:

The second step in the positioning process is to evaluate all the

qualitative characteristics, traits and uses of a product or service.
The various characteristics of a product can be in terms of its
usage, sturdiness, benefit, problem-solving, emotional connect
etc.
3. Analyzing Customers:
The third step in the positioning process is to understand the
needs, psychology, personality etc of the customer. Unless a
company understands a customer, it not create a proper
positioning statement. Customer surveys, feedback forms etc can
help understand the customer better.
4. Comparative Qualitative Analysis:
The fourth step in the positioning process is to compare &
analyses the data of competitors, qualitative customer inputs,
external factors etc. On comparison, the gaps in the market
can be understood.

5. Identify Unique Positioning:

The fifth step in the positioning process is to identify a unique
problem area or a gap which the product or service is fulfilling.
This enables a company to have a strong and unique
positioning vis-à-vis its competition.
6. Execute Marketing Plan:

The sixth step in the positioning process is to create a strong

marketing plan which would help in communicating the value
proposition offered by the brand.

7. Measure & Evaluate:

The last step in the positioning process is to measure, evaluate

and constantly monitor the performance of the positioning of the
brand in the mind of the customer. This is very important as a
customer perception might completely differ from the message
which the company is trying to portray. Sometimes, to rebrand or
innovate or improve, companies do a repositioning of its products
and services.
Target market is the end consumer to which the
company wants to sell its end products too. Target
marketing involves breaking down the entire market
into various segments and planning marketing
strategies accordingly for each segment to increase the
market share.
Positioning defines where your product (item or service) stands in
relation to others offering similar products and services in the
marketplace as well as the mind of the consumer.

Market Positioning refers to the ability to influence consumer

perception regarding a brand or product relative to
competitors. The objective of market positioning is to establish
the image or identity of a brand or product so that consumers
perceive it in a certain way.

For example:
•A handbag maker may position itself as a luxury status symbol
•A TV maker may position its TV as the most innovative
and cutting-edge
•A fast-food restaurant chain may position itself as the provider
of cheap meals
Types of Positioning Strategies

There are several types of positioning strategies. A few

examples are positioning by:

•Product attributes and benefits: Associating your

brand/product with certain characteristics or with
certain beneficial value
•Product price: Associating your brand/product with
competitive pricing
•Product quality: Associating your brand/product with
high quality
•Product use and application: Associating your
brand/product with a specific use
•Competitors: Making consumers think that your
brand/product is better than that of your competitors
What Is a Brand?

The term brand refers to a business and marketing concept that

helps people identify a particular company, product, or
individual. Brands are intangible, which means you can't
actually touch or see them. As such, they help shape people's
perceptions of companies, their products, or individuals. Brands
commonly use identifying markers to help create brand
identities within the marketplace.
Branding is an important part of building a successful business.
It helps businesses differentiate themselves from competitors
and establish an identity that connects with their customers. To
develop a brand identity for your business, it is important to
know the different kinds of branding strategies.
Types of Brands
The type of brand used depends on the particular entity using it. The following
are some of the most common forms of brands:

•Corporate Brands: Corporate branding is a way for companies to market

themselves in order to give themselves an edge against their competition. They
make a series of important decisions in order to accomplish this, such as pricing,
mission, target market, and values.

•Personal Brands: As mentioned above, branding isn't just for companies

anymore. People use tools like social media to build their own personas, thereby
boosting their brands. This includes regular social media posts, sharing images
and videos, and conducting meet-and-greets.

•Product Brands: This type of branding, which is also known as merchandise

branding, involves marketing one particular product. Branding a product
requires market research and choosing the proper target market.

•Service Brands: This kind of branding applies to services, which often

requires some creativity, as you can't actually show services in a physical way.
Elements & Components of Brand Equity
Brand equity is a function of several other qualitative parameters which
a customer can associate with a brand.
Some of the main components or elements of brand equity are as follows:
1. Brand Image
The image which is formed in customer's mind. Brand image is the
most important parameter when it comes to creating brand equity.
2. Brand Identity
The image what the company is trying to form. Brand identity is created
by the company to try to form positive brand image but it depends on
how customers perceive.
3. Brand Awareness
Awareness is what is the level of awareness about a brand on products
and services. Awareness should be high for good brand equity.
4. Brand Loyalty
How loyal is customer to the brand and will buy the products again
even if options are there.
5. Brand Association
Does the customer associate brand to a positive attributes or not?
Sometimes association something existing like event or celebrity
can contribute to brand equity.

6. Customer Perception
What is the overall perception and experience of the customer related
to the brand?
Since brand equity gives a qualitative outlook, it is quite complicated to
define it through numbers or a value.
Brand positioning is the way you differentiate yourself from
your competitors and how consumers identify and connect with
your brand. It’s comprised of the key qualities and values that
are synonymous with your company.
Brand positioning can be conveyed through a variety of means
including tone and voice, visual design and the way your
company represents itself in person and on social media.

The positioning of your brand helps inform consumers why

they should choose you over your competitors and is one of the
few things you can completely own about your company.
Competitors can have similar features and aspects to your
product or service — for example, at New Breed, we don’t own
inbound marketing. But we do own New Breed and how people
connect with us. Our competitors might be able to offer similar
services to us, but they can’t replicate our brand.
Example of Brand Positioning:

Apple builds beautiful, innovative computers that are different

than anything else you’ve experienced and markets them to
resonate with their consumers.

Apple’s message highlights the same qualities in their consumers

that they do in their products: if you are an Apple person, you are
also innovative, imaginative and creative.

Like Tesla, Apple leaves price out of their branding and instead
focuses on the value their products offer and the connection
formed with their consumers.
 Unit 3

Product Decisions: Concept, product hierarchy, new product

development, diffusion process, Product Life cycle, Product mix
strategies. Packaging / Labeling: Packaging as a marketing tool,
requirement of good packaging, Role of labeling in packaging.
Pricing Decisions: Pricing concepts for establishing value,
Pricing Strategies-Value based, Cost based, Market based,
Competitor based, New product pricing – Price Skimming &
Penetration pricing
A product can be defined as a collection of physical, service and symbolic attributes
which yield satisfaction or benefits to a user or buyer. A product is a combination of
physical attributes say, size and shape; and subjective attributes say image or
"quality".
In making product decisions for a marketing plan, what must we make
decisions about?
Decisions include those about:

• Product features, Brand name, Packaging

• Related services (delivery, installation, financing, training and support, etc.),
Warranty,
• Fit within the firm’s overall product line and marketing strategy

What should be the goal of these decisions?

Differentiate the product from competitors and substitutes, by delivering to the

target market the benefits promised in the product's positioning
What about branding decisions?

Two key questions to ask:

 Should the brand name...

 Clearly describe the product (e.g., Burger King, Pizza Hut, Healthy
Choice cookies)?
Or

 Provide a neutral image (e.g., McDonald’s, Domino’s, Keebler)?

 Should we use family branding or individual brands for the various products
in our product line?
A descriptive or neutral brand name: what are the pros and cons for each?

Descriptive brand name

Arguments for:
• Easier and less costly to build market awareness, brand image, and gain customer trial
at the outset
• Brand name clearly positions the product
Drawbacks:
Limits the flexibility to adapt to changing market conditions

Neutral brand name

Arguments for:
• Allows adaptation to a changing market
• May accommodate a more diverse product offering
Drawbacks:
• If generic and boring, may make it harder to build an image for and differentiate
one’s brand
• More costly to build market awareness and brand image
What about packaging decisions:
What’s the role of packaging
Product Hierarchy

A product hierarchy is a modeling of the hierarchical relationships between products in a

tree structure. A product hierarchy enables the grouping of products and defines the
relationship between products and groups at different hierarchy levels (for example, food –
frozen food – pizza).
Product hierarchy levels
Product hierarchy is divided into several levels which are best understood using
examples. These product hierarchy levels include:

•Product need – the product need is the primary reason for the existence of a
product. For example, motor vehicles exist because people have to and want to
travel. This is the core product need, for example, Toyota vehicles.
•Product family – in product family, the core need satisfied by a product is the
focus. This means that the attention should not be on the individual market but rather
the entire business market. For example, if travelling is the core need, then it can be
satisfied by planes, trains or ships. In this particular case, the product family is travel
and for Toyota, the product family is vehicles.
•Product class – product class occurs when categories are drawn from the same
company. It is similar to product family only that product class doesn’t go outside the
company, unlike product family. Personal computers constitute an instance of
product class.
•Product line – a product line consists of the entire group of products included in a class of
products and these products are related because they perform a comparable function, are
purchased by the same group of customers or fall within a certain price range. An example
of a product line is a laptop, which is a portable and wireless type of personal computer.

•Product type – this refers to the various products within a product line. For example,
under Hyundai I20 product line, we have product types such as I20Astana, I20 sportz and
I20 Magna.

•Product unit – this is also referred to as the stock keeping unit (SKU) and it is a discrete
item within a product type of brand that can distinguish itself by size, price or any other
feature. A product becomes an individual product unit if it is independent and no other
product type is dependent on it.
 New Product Development:
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 capitalize on a new
opportunity.
1. Idea generation – The New Product Development Process

The new product development process starts with idea generation. Idea generation
refers to the systematic search for new-product ideas. Typically, a company generates
hundreds of ideas, maybe even thousands, to find a handful of good ones in the end.
Two sources of new ideas can be identified:

• Internal idea sources: the company finds new ideas internally. That means R&D,
but also contributions from employees.

• External idea sources: the company finds new ideas externally. This refers to all
kinds of external sources, e.g. distributors and suppliers, but also competitors. The
most important external source are customers, because the new product
development process should focus on creating customer value.
2. Idea screening – The New Product Development Process

The next step in the new product development process is idea screening. Idea
screening means nothing else than filtering the ideas to pick out good ones. In other
words, all ideas generated are screened to spot good ones and drop poor ones as
soon as possible. While the purpose of idea generation was to create a large number
of ideas, the purpose of the succeeding stages is to reduce that number. The reason is
that product development costs rise greatly in later stages. Therefore, the company
would like to go ahead only with those product ideas that will turn into profitable
products.
3. Concept development and Testing – The New Product
Development Process

To go on in the new product development process, attractive ideas must

be developed into a product concept. A product concept is a detailed
version of the new-product idea stated in meaningful consumer terms.
You should distinguish

•A product idea an idea for a possible product

•A product concept a detailed version of the idea stated in
meaningful consumer terms
•A product image, the way consumers perceive an actual or
potential product.
Concept Development

Imagine a car manufacturer that has developed an all-electric car. The idea
has passed the idea screening and must now be developed into a concept.
The marketer’s task is to develop this new product into alternative product
concepts. Then, the company can find out how attractive each concept is to
customers and choose the best one. Possible product concepts for this
electric car could be:
•Concept 1: an affordably priced mid-size car designed as a second family
car to be used around town for visiting friends and doing shopping.
•Concept 2: a mid-priced sporty compact car appealing to young singles
and couples.
•Concept 3: a high-end midsize utility vehicle appealing to those who like
the space SUVs provide but also want an economical car.
4. Marketing strategy development – The New Product
Development Process
The next step in the new product development process is the marketing
strategy development. When a promising concept has been developed and
tested, it is time to design an initial marketing strategy for the new product
based on the product concept for introducing this new product to the
market.
The marketing strategy statement consists of three parts and should be
formulated carefully:
•A description of the target market, the planned value proposition, and the
sales, market share and profit goals for the first few years
•An outline of the product’s planned price, distribution and marketing
budget for the first year
•The planned long-term sales, profit goals and the marketing mix strategy.
5. Business analysis – The New Product Development Process
Once decided upon a product concept and marketing strategy, management
can evaluate the business attractiveness of the proposed new product. The
fifth step in the new product development process involves a review of the
sales, costs and profit projections for the new product to find out whether
these factors satisfy the company’s objectives. If they do, the product can be
moved on to the product development stage.
In order to estimate sales, the company could look at the sales history of
similar products and conduct market surveys. Then, it should be able to
estimate minimum and maximum sales to assess the range of risk. When the
sales forecast is prepared, the firm can estimate the expected costs and
profits for a product, including marketing, R&D, operations etc. All the sales
and costs figures together can eventually be used to analyse the new
product’s financial attractiveness.
6. Product development – The New Product Development Process
The new product development process goes on with the actual product
development. Up to this point, for many new product concepts, there may
exist only a word description, a drawing or perhaps a rough prototype. But if
the product concept passes the business test, it must be developed into a
physical product to ensure that the product idea can be turned into a
workable market offering. The problem is, though, that at this stage, R&D
and engineering costs cause a huge jump in investment.
The R&D department will develop and test one or more physical versions of
the product concept. Developing a successful prototype, however, can take
days, weeks, months or even years, depending on the product and prototype
methods.
Also, products often undergo tests to make sure they perform safely and
effectively. This can be done by the firm itself or outsourced.
In many cases, marketers involve actual customers in product testing.
Consumers can evaluate prototypes and work with pre-release products.
Their experiences may be very useful in the product development stage.
7. Test marketing – The New Product Development Process
The last stage before commercialisation in the new product development
process is test marketing. In this stage of the new product development
process, the product and its proposed marketing programme are tested in
realistic market settings. Therefore, test marketing gives the marketer
experience with marketing the product before going to the great expense
of full introduction. In fact, it allows the company to test the product and
its entire marketing programme, including targeting and positioning
strategy, advertising, distributions, packaging etc. before the full
investment is made.
The amount of test marketing necessary varies with each new product.
Especially when introducing a new product requiring a large investment,
when the risks are high, or when the firm is not sure of the product or its
marketing programme, a lot of test marketing may be carried out.
8. Commercialisation
Test marketing has given management the information needed to make the final decision:
launch or do not launch the new product. The final stage in the new product development
process is commercialisation. Commercialisation means nothing else than introducing a
new product into the market. At this point, the highest costs are incurred: the company
may need to build or rent a manufacturing facility. Large amounts may be spent on
advertising, sales promotion and other marketing efforts in the first year.
Some factors should be considered before the product is commercialized:
•Introduction timing. For instance, if the economy is down, it might be wise to wait
until the following year to launch the product. However, if competitors are ready to
introduce their own products, the company should push to introduce the new product
sooner.
•Introduction place. Where to launch the new product? Should it be launched in a single
location, a region, the national market, or the international market? Normally, companies
don’t have the confidence, capital and capacity to launch new products into full national
or international distribution from the start. Instead, they usually develop a planned market
rollout over time.
What is Diffusion of Innovation?
Diffusion of Innovation (DOI) is a theory popularized by American communication
theorist and sociologist, Everett Rogers, in 1962 that aims to explain how, why, and the
rate at which a product, service, or process spreads through a population or social system.
In other words, the diffusion of innovation explains the rate at which new ideas and
technology spread. The diffusion of innovation theory is used extensively by marketers to
understand the rate at which consumers are likely to adopt a new product or service.
In the diffusion of innovation theory, there are five adopter categories:

1. Innovators: Characterized by those who want to be the first to try the innovation.
( For example, individuals who stay overnight outside a movie theatre to be the first to purchase the first
showing to a movie are considered innovators.)

2. Early Adopters: Characterized by those who are comfortable with change and
adopting new ideas.
(For example, Individuals who wait a couple of days and spend some time reading reviews before going to
see a movie are regarded as early adopters.)

3. Early Majority: Characterized by those who adopt new innovations before the
average person. However, evidence is needed that the innovation works before
this category will adopt the innovation.
(For example, Individuals who go to a movie after it’s been out several weeks and gotten good reviews and
made profits at the box office are early majorities.)
4. Late Majority: Characterized by those who are doubtful of change and will only
adopt an innovation after it’s been generally accepted and adopted by the majority of the
population.
(For example, People who wait for a movie to become available online or on Netflix are regarded as late
majorities.)

5. Laggards: Characterized by those who are very traditional and conservative – they are
the last to make the changeover to new technologies. This category is the hardest to
appeal to.
(For example, Laggards perhaps finally catch a hit movie when it’s shown on network TV.)
Product life-cycle
The product life-cycle refers to a likely pathway a product may take. It has implications
for the marketing strategy of a firm as it seeks to introduce, grow and maintain market
share.
In this case, the product has four stages:

1. Introduction – when the product is introduced and struggles to gain

brand recognition.

2. Growth – advertising and word of mouth helps the product to increase

sales. As sales growth, more firms are willing to stock the product which
helps the product to grow even further.

3. Maturity – When the product reaches peak market penetration.

4. Decline – the product gets eclipsed by new products For example,

products like typewriters, telegrams, and muskets are deep in their
decline stages (and in fact are almost or completely retired from the
market).
Introduction phase
•Raising product awareness through advertising / word of mouth.
•Offering the product at discount – penetration pricing to tempt customers to
try the product.
•Target early adopters and influential market leaders. For example, firms may
offer free product reviews to influential bloggers in the market.
•Firms need to find willing suppliers who are willing to stock.
•This phase will not be profitable because costs are high, but revenue relatively
low.

Growth
•Firms need to capitalise on growth to extend product sales from small retailers
to big supermarkets.
•Firms can change marketing from niche areas to a more mass market.
•The firm can adapt to consumer feedback and offer new features/better
consumer support.
Maturity
•With peak market penetration, the firm may seek to increase prices to increase
profitability. However, if the market is very competitive the firm may feel the need to
keep prices low to defend market share.
•The firm may concentrate on seeking to improve the product to gain market
differentiation and extend the period of maturity.

Decline
•In the decline phase, the firm may feel it is best to let the product go – e.g. diesel cars
cannot solve issues of pollution and damage to its brand reputation. However, with an
iPhone, Apple let old models go, to be replaced by the next model. Decline and
discontinuing the product can be a way to force customers to buy an upgrade – next time
their contract expires.
• CD/DVD Players – It was the floppy disc before this. And now we use USB drives, but
these too shall go away.
• Landline Phones – Mobile phones made these obsolete.
• Keypad Mobile Phones or Feature Phones – Smartphones made these obsolete.
Product Mix Strategies
Packaging is what shows off your product in the best light, displays the
price and value of the product, communicates the product's benefits to
consumers, and it what physically appears in your various distribution points.
Common uses of packaging include:
• Physical protection: The objects enclosed in the package may require protection from, among other things, mechanical
shock, vibration, electrostatic discharge, compression, temperature, etc.

• Information transmission: Packages and labels communicate how to use, transport, recycle, or dispose of the package or
product. With pharmaceuticals, food, medical, and chemical products, some types of information are required by
governments. Some packages and labels also are used for track and trace purposes.

• Marketing: The packaging and labels can be used by marketers to encourage potential buyers to purchase the product.
Package graphic design and physical design have been important and constantly evolving phenomenon for several decades.
Marketing communications and graphic design are applied to the surface of the package and (in many cases) the point of
sale display.

• Convenience: Packages can have features that add convenience in distribution, handling, stacking, display, sale,
opening, re-closing, use, dispensing, reuse, recycling, and ease of disposal.

• Barrier protection: A barrier from oxygen, water vapor, dust, etc., is often required. Permeation is a critical factor in
design. Some packages contain desiccants or oxygen absorbency to help extend shelf life. Modified atmospheres or
controlled atmospheres are also maintained in some food packages. Keeping the contents clean, fresh, sterile and safe for the
intended shelf life is a primary function.
• Security: Packaging can play an important role in reducing the security risks of shipment. Packages can be made with
improved tamper resistance to deter tampering and also can have tamper-evident features to help indicate tampering.
Packages can be engineered to help reduce the risks of package pilferage.
Labels serve to capture the attention of shoppers. The use of catchy words may cause
strolling customers to stop and evaluate the product. The label is likely to be the first thing
new customers see and thus offer their first impression of the product.

Labels are Descriptive

A label is a carrier of information about the product. The attached label provides customers
with information to aid their purchase decision or help improve the experience of using the
product. Labels can include:
•Care and use of the product
•Recipes or suggestions
•Ingredients or nutritional information
•Product guarantees
•Manufacturer name and address
•Weight statements
•Sell by date and expiration dates
•Warnings
 The new “P” of marketing tools — packaging

Effective packaging can actually help a company attract consumers to their product. It
can be the tool that sets apart their product in a vast sea of options that the consumer has
at their disposal. A good packaging can actually add to the perceived value of a product.
There are some effective techniques one can use to ensure that your product package is a
great marketing tool for your product. Let us take a look at some elements that you can
incorporate into a package to make it more effective.
Pricing Decision
Pricing is a process to determine what manufactures receive in exchange of the
product. Pricing depends on various factors like manufacturing cost, raw material
cost, profit margin etc.
Objectives of Pricing
The main objectives of pricing can be learnt from the following points −
• Maximization of profit in short run
• Optimization of profit in the long run
• Maximum return on investment
• Decreasing sales turnover
• Fulfill sales target value
• Obtain target market share
• Penetration in market
• Introduction in new markets
• Obtain profit in whole product line irrespective of individual product profit targets
• Tackle competition
• Recover investments faster
• Stable product price
• Affordable pricing to target larger consumer group
Factors Influencing Pricing

Pricing of a product is influenced by various factors as price involves many

variables. Factors can be categorized into two, depending on the variables
influencing the price.

Internal Factors
The following are the factors that influence the increase and decrease in the price of
a product internally −
• Marketing objectives of company
• Consumer’s expectation from company by past pricing
• Product features
• Position of product in product cycle
• Rate of product using pattern of demand
• Production and advertisement cost
• Uniqueness of the product
• Production line composition of the company
• Price elasticity as per sales of product
External Factors

The following are the external factors that have an impact on the increase and
decrease in the price of a product −

• Open or closed market

• Consumer behavior for given product
• Major customer negotiation
• Variation in the price of supplies
• Market opponent product pricing
• Consideration of social condition
• Price restricted as per any governing authority
Pricing Strategies
Let us now understand the various pricing strategies −
 Skimming Pricing
In this method, a new product is introduced in the market with high price, concentrating
on upper segment of the market who are not price sensitive, and the result is skimmed.
 Penetration Pricing
In penetration pricing, a product is introduced in the market with a low initial price. The
price is kept low to increase target consumer. Using this strategy, more consumers can be
penetrated or reached.
 Discounts and Allowances
Discounts are provided in order to increase the demand of product in the market. The main
points to be considered to offer discounts are as follows −
•Discount in quantity
•Discount in trade
•Discount in cash
•Other discounts like seasonal, promotional, etc.
 Unit 4 (8 hours)
Place Decision: Meaning, Purpose, Channel alternatives, Factors
affecting channel choice, Channel design and Channel management
decisions, Channel conflict, Retailing & Types of Retailers.
Advertising: Advertising Objectives, Advertising Budget,
Advertising Copy, AIDA model, Public Relation: Meaning,
Objectives, Types, and Functions of Public Relations. Sales
Promotion: Sales Promotion Mix, Kinds of promotion, Tools and
Techniques of sales promotion, Push-pull strategies of promotion,
Personal Selling: Concept, Features, Functions, Steps/process
involved in Personal Selling, Direct Marketing: Meaning, Features,
Functions, Growth and benefits of direct marketing, different forms.
Place in the marketing sense refers to the distribution of the product. Place
considerations involve decisions that affect how you will get the product
where it belongs, how you will manage inventory, how warehouse operations
will be carried out and if distribution centers will be established. When you
consider place, you also must consider where you perceive the product will
sell best. For some products this means in the store, while for other products
this means online. The availability of product to the customers is referred to
as distribution.

Following are some of the examples of distribution decisions.

• Market coverage (Exclusive, inclusive or selective distribution)

• Distribution channels
• Inventory management
• Specific channel members
• Order processing
• Warehousing
• Distribution centers
• Reverse logistics
• Transportation
What is Distribution Channel Management?
Distribution channel management is process of managing transfer of
products from producer to end customer. Distribution channel is the
medium or channel which companies use to carry products. It is a critical
element in business as this process is used to distribute products to
retailers & customers across various locations.
There are three main types of channels of distribution, discussed
here under:
Direct Channel
Prior to reaching the hands of the consumers, goods and services pass through
various hands. However, there are certain instances when the producer sells
goods directly to their customer, then such a channel is known as a direct
channel.
Hence, no middlemen exist in the case of the direct channels. And to do so, the
company can supply the product to the customer via their own online or retail
store, or salesman at the customer’s doorstep and arranging their own delivery
system. It is also called a Zero Level Channel.

Example: Consultancy firms, Passenger and freight transport services, banks,

etc.
Indirect Channel

When the producer produces goods on a large scale, it is difficult to make direct
selling of the goods to the customers. In this way, middlemen come into the
picture to ensure the availability of the goods to its customers. It may include
wholesalers and retailers. So, we can say that when there are a host of
intermediaries involved in the distribution process, it amounts to the indirect
channel of distribution.

•One Level Channel: Where only one middleman (either wholesaler or retailer)
is involved.
Two Level Channel: Where two middlemen (both wholesaler and retailer) are
involved.

Three Level Channel: Where along with wholesalers and retailers, the mercantile
agent is also involved. Hence, the producer deals with a mercantile agent, then the
wholesaler buys goods from that agent, and sells them to retailers, who further sell
them to its ultimate consumer.
Hybrid Channels
The combination of the direct channel and indirect channel is called the
hybrid channel of distribution. When the manufacturer uses more than one
channel to reach the final consumer, it is said to be using the hybrid channel.
This attracts more consumers and facilitates more sales.
Suppose a manufacturer owning their own retail outlet and simultaneously,
offering goods to customers via e-commerce platforms or other retailers.
Factors Affecting the Choice of Distribution Channels

1. Industrial/Consumer Product
When the product being manufactured and sold is Industrial in nature, direct channel
of distribution is useful because of the relatively small number of customers need for
personal attention, salesman technical qualifications, and after-sale services, etc.

However, in the case of consumer product, the indirect channel of distribution, such
as wholesalers, retailers are the most suitable.

2. Perishability
Perishable goods, such as vegetables, butter, Bakery products, fruits, and seafood,
etc. require direct selling as they must reach the consumers as easily as possible after
production because of the dangers associated with delays and repeated handling.

3. Number of buyers – If the market of commodity is small, the manufacturer

himself can sell his commodities. However, if there are a large number of
buyers but middlemen are very few, the commodities shall be sold through
wholesaler and retail salesmen.
Geographical Concentration of the Market – If the buyers of product are spread
out in a large geographical area, the manufacturers will have to obtain assistance
from middlemen. However, if the buyers of a commodity are confined to a
particular area, the manufacturer either can sell himself or appoint any agent for
this purpose.
Size of Order – If the manufacturer materializes bulk sale to a few stores, they
can materialize the sale directly. If on the contrary, supply is being made to small
stores in lesser quantum, they may ask for assistance from the wholesalers.

Habits of Buyers – The distribution channels also have a major impact on habits of
buyers. For example, if the buyers pay cash price for the commodity, the producer
himself can materialize the sale but service of middlemen is necessary if tendency of
credit purchase is found among consumers.

Selling Price per Product – If selling price per product is low, a number of
middlemen will be required for the sale. However, if the selling price per product is
high, direct sale or least assistance from middlemen will be required. The
commodities whose selling price per product is lower generally are cigarette, match
box etc. While the commodities whose selling price product is high are fridge,
television, Contessa car, diamond and gems etc.
What is Channel Design?
Channel design is presented as a decision faced by the marketer, and it includes
either setting up channels from scratch or modifying existing channels. This is
sometimes referred to as re-engineering the channel and in practice is more
common than setting up channels from scratch.

A Paradigm of the Channel Design Decision

The channel design decision can be broken down into seven phases or steps. These
are:

1. Recognizing the need for a channel design decision

2. Setting and coordinating distribution objectives
3. Specifying the distribution tasks
4. Developing possible alternative channel structures
5. Evaluating the variable affecting channel structure
6. Choosing the “best” channel structure
Phase 1: Recognizing the Need for a Channel Design Decision

Many situations can indicate the need for a channel design decision. Among them
are: Developing a new product or product line, Aiming an existing product to a new
target market, Making a major change in some other component of the marketing
mix, Establishing a new firm, Opening up new geographic marketing areas, Facing
the occurrence of major environmental changes and Meeting the challenge of
conflict or other behavioral problems

Phase 2: Setting and Coordinating Distribution Objectives

In order to set distribution objectives that are well coordinated with other marketing
and firm objectives and strategies, the channel manager needs to perform three
tasks: Become familiar with the objectives and strategies in the other marketing mix
areas and any other relevant objectives and strategies of the firm. Set distribution
objectives and state them explicitly. Check to see if the distribution objectives set
are consistent with marketing and the other general objectives and strategies of the
firm.
Phase 3: Specifying the Distribution Tasks

The job of the channel manager in outlining distribution functions or tasks is a much
more specific and situational y dependent one. The kinds of tasks required to meet
specific distribution objectives must be precisely stated. In specifying distribution
tasks, it is especially important not to underestimate what is involved in making
products and services conveniently available to final consumers.

Phase 4: Developing Possible Alternative Channel Structures

The channel manager should consider alternative ways of allocating distribution

objectives to achieve their distribution tasks. Often, the channel manager will choose
more than one channel structure in order to reach the target markets effectively and
efficiently. Whether single or multiple channel structures are chosen, the allocation
alternatives (possible channel structures) should be evaluated in terms of the
following three dimensions: Number of levels in the channel, Intensity at the various
levels: refers to the number of intermediaries at each level of the marketing channel
and Type of intermediaries at each level.
Phase 5: Evaluating the Variables Affecting Channel Structure
The channel manager should evaluate a number of variables to determine how they are
likely to influence various channel structures.
These Five basic categories are most important: Market variables, Product variables,
Company variables and Intermediary variables
1) Market Variables •Market variables are the most fundamental variables to consider
when designing a marketing channel. Including: market geography, market size, market
density, and market behavior.
A) Market Geography: Market geography refers to the geographical size of the
markets and their physical location and distance from the producer and manufacturer.
B) Market Size :The number of customers making up a market (consumer or
industrial) determines the market size. From a channel design standpoint, the larger the
number of individual customers, the larger the market size.
C) Market Density :The number of buying units per unit of land area determines the
density of the market. In general, the less dense the market, the more difficult and
expensive is distribution.
D) Market Behavior: Market behavior refers to the following four types of buying
behaviors: Like How customers buy, When customers buy , Where customers buy and
Who does the buying? Each of these patterns of buying behavior may have a significant
effect on channel structure.
.
Phase 6: Choosing the “Best” Channel Structure

In theory, the channel manager should choose an optimal structure that would offer the
desired level of effectiveness in performing the distribution tasks at the lowest possible
cost. In reality, choosing an optimal structure is not possible. Why? First, as we pointed
out in the section on Phase 4, management is not capable of knowing all of the possible
alternatives available to them. Second, even it were possible to specify all possible
channel structures, precise methods do not exist for calculating the exact payoffs
associated with each alternative. Some pioneering attempts at developing methods that
are more exacting do appear in literature and we will discuss these in brief.
Advertising is the concept of communicating a message about products and services
to a customer so that the customer can understand the offering along with its features,
uniqueness, price, offer, benefits and value to get convinced about making a purchase.
Advertising is done using various media like TV, print, radio, online, digital, social
media, outdoor and more where advertisements are showcased showing the value to
the customer. It is one of the most critical components of marketing.
Advertising is a business practice where a company pays to place its messaging or
branding in a particular location. Businesses leverage advertising to promote their
products and services for sale as well as establish corporate culture and branding. When
employed properly and strategically, advertising can drive customer acquisition and
boost sales.

There are countless Objective and benefits to a successful advertising campaign. In

common practice, businesses can leverage advertising to:
•Educate customers on the nature of products or services
•Convince customers that products or services are superior
•Improve customer perception of brand or culture
•Generate customer need or want for products or services
•Exhibit new applications for products or services
•Publicize new products or services to potential customers
•Attract new customers to purchase products or services
•Retain the existing customer base
Within the realm of common advertising techniques, many businesses prioritize any
or all of the following methods:
•Traditional Advertising — This term refers to ad placement in traditional print and
broadcast media. Common examples of traditional advertising include newspaper ads, TV
commercials and radio infomercials.
•Retail Advertising — This terms refers to ad and placement within retail stores to
maximize sales. Common examples of retail advertising include product placement within
stores, ads on shopping carts and featured product displays.
•Online Advertising — This term refers to ad placement on the internet in media and
other websites. Common examples of online advertising include contextual ads in search
engines, banners on websites, promotional videos and sponsored content.
•Mobile Advertising — This term refers to ad placement on mobile phones and
smartphones. Common examples of mobile advertising include automated dialers, banners
to download apps and click-to-call ads.
•Outdoor Advertising — This term refers to ad placement on outside structures,
generally in heavily trafficked areas to attract the most attention. Common examples of
outdoor advertising include billboards, banners on the outside of buildings and branded
vehicles.
•Pay Per Click (PPC) Advertising — This term refers to online ad placement designed
to drive traffic to a company’s website. Companies derive extensive customer data from
these ads, only paying when users click on the link.
Basis of Advertising Budget

The various factors that have to be studied before setting the advertising budget
are –

•Market size and Potential

•Product life cycle stage

•Market share

•Intensity of competition

•Advertising frequency

•Product differentiation strategies

Methods of Advertising Budget

(i) The affordable method – All you can afford –

•It is a simple method
•Whatever is left out of the financial budget is allocated to advertising
•After making all business expenditures the amount left is allocated to advertising
•No consideration is given to advertising objectives or goals
•Chances of over or under spending are high
•A common method in small firms or firms with primary focus on new product
development

(ii) Arbitrary Allocation Method –

•There is no theoretical basis of creating a budget
•Budget is allocated on the basis of what is felt necessary by decision makers
•It lacks systematic thinking
•There is no relationship with advertising objectives
•Managers believe that some amount must be spent on advertising and pick up a figure
(iii) Percentage of sales method –
•It is a commonly used method by large and medium sized companies
•Budget allocated depends upon the total sales figure i.e. high sales = high
budget, low sales = low budget
•The basis of budget allocation is the total sale of brand or product. It may be:
•A fixed percentage of last year’s sales figure is allocated as the budget.
•A fixed percentage of projected sales figures of the next year
•A fixed amount of the unit product cost is taken as advertising expense
and multiplied by the number of projected sales unit.
Advantages
•It is simple, straight forward, easy to implement
•Expenditures are directly related to funds available.
Disadvantages
•It ignores that less advertising may decline sales or potential of advertising in
rising sales
•It can lead to over or under spending
•It is difficult to predict sales for new products
•Decrease in sales leads to decrease in advertising budget which may be needed
(iv) Competitive parity method –

•Budget is based on competitors expenditure, advertisers decide budget

matching competition’s % of sales allocation
•Information of competitor`s budget is available in trade journal and
business magazine
•The basis is that collective wisdom of many firms may generate an
advertising budget optimum or close to optimum
•It leads to competitive stability
•It minimizes chances of promotional wars

Disadvantages
•Each firm allocates budget according to its own specific goals
•It ignores the contribution of media and creative executions
•Information is gathered when money is spent
(v) Objective and Task method
In this method the selling objectives and budget decision are linked and
considered simultaneously. It involves –
•Defining the advertising communication objectives to be accomplished
•Deciding specific strategies and tasks necessary to achieve them
•Estimating the costs involved in putting these activities in operation
•The total of these costs is taken as the base to determine the advertising
budget.
Advantages
•The method develops budget from ground up which is a proper managerial
approach
•It does not rely on past sales or future sale forecasts
•It considers all factors under advertiser’s control
Disadvantages
•It is difficult to implement
•It requires managerial involvement and high skills
•It attempts to introduce variables such as awareness, knowledge, attitude
formation etc.
•It is difficult to estimate all costs and determine all tasks necessary to
achieve the set objectives
(vi) Pay out planning
•It is useful when introducing a new product
•The aim is to spend heavily to achieve increased awareness and product
acceptance
•It estimates the investment value of advertising by linking it to other budgeting
methods
•The idea is to predict the amount of revenue the product will generate and the
costs it will incur over a period of time
•The advertising budget is determined on the basis of rate of return desired
•Preparing a payout plan depends upon accuracy of sales forecast, factors
affecting market, estimated costs
•Initially the advertising expenditures will be high and eventually will reach a
break-even point and then will show decline and increase in sales following the
S shaped Function
Advantages
•It is useful and logical planning tool
Disadvantages
•It cannot account for uncontrolled factors e.g. – competition, changes in
government policies, new technology
AIDA Model
The AIDA Model Hierarchy
The steps involved in an AIDA model are:
•Attention: The first step in marketing or advertising is to consider
how to attract the attention of consumers.
•Interest: Once the consumer is aware that the product or service
exists, the business must work on increasing the potential customer’s
interest level.
For example, Disney boosts interest in upcoming tours by announcing
stars who will be performing on the tours.
•Desire: After the consumer is interested in the product or service,
then the goal is to make consumers desire it, moving their mindset
from “I like it” to “I want it.”
For example, if the Disney stars for the upcoming tour communicate to
the target audience about how great the show is going to be, the
audience is more likely to want to go.
•Action: The ultimate goal is to drive the receiver of the marketing
campaign to initiate action and purchase the product or service.
Public Relations, or PR, is the practice of managing and
guiding perceptions of your business to attract new customers
and strengthen the loyalty of existing customers. Customers'
perceptions can be shaped by direct experiences, the actions
and observations of others, and the statements you make in the
media and marketplace.

Public Relations can be called as non-paid publicity earned by

the company through its goodwill, word of mouth, etc. The
tactics used in public relations are publicity, social media,
press releases, press conferences, interviews, crisis
management, featured stories, speeches, news releases.
Public Relations Defined

A management function

which

and identifies the policies and procedures

of

and executes a program of action (and communication)

to
Public Relations Management Process

Determination and evaluation of public

P attitudes
Identification of policies and procedures

Development and execution of

the program
Traditional PR Perspective

Customers

Community Investors

Public Relations
Department

Suppliers Government

Employees
Determining Public Relations Audiences

Internal or Associated External or Independent

Customers
Stockholders Governments
Educators
andand

Vendors
Community Civic The
and Media
and
Members
Employees BusinessGroups
Financial
Communicating With Target Audiences

Internal or Associated External or Independent

Bulletin boards
Newsletters Press
Public relations ads
releases

Annual reports Research reports

Direct mail Conferences
Benefits of MPR

Advantages
A cost-effective way to
reach the market Circumvents resistance to
sales efforts
Highly targeted way to
conduct public relations
Improved media
Endorsements by involvement w/customers
independent third parties
Creates influence among
Achievement of credibility opinion leaders

Makes advertising Improved ROI

messages more credible
Benefits of MPR

Disadvantages

Lack of control over media

Difficult to tie in slogans or

other advertising devices

Media time and space

aren’t guaranteed

No standards for effective

measurement
 ASIS FOR COMPARISON ADVERTISING

eaning A technique of drawing public Public Relations is a practice of

attention to products or services, strategic communication that
mainly through paid aims at building mutually
announcements, is called beneficial relationship between
Advertising. the company

edia Purchased Earned

ommunication One way Two
ocuses on Promotion of product or Maintaining a positive image of
services, with an aim to induce the
the intended audience to buy.

ontrol The company has full control The company can pitch the
over the ad. story, but has no control over,
how media uses or does not uses
Promotion belongs to the 4Ps of marketing. It’s all about strategies and
techniques that help communicate a product to the audience. The goal of
promotions is to present your product, increase demand, and differentiate it. So,
promotion is the basic element of marketing.
Importance of Marketing Promotion

The marketing promotion plays a very important role in business. Without

effective promotion, the product awareness may remain low in the market and
lead to lower than expected revenue. But on the other hand, marketing promotion
also would require dedicated budget but it helps in creating the awareness in the
market enabling the organization to drive additional revenue.

The main aim of marketing promotion is:

1. To introduce a new product

2. To educate customers about the product usage
3. To increase awareness of the product
4. To differentiate from competitors
5. To achieve increase in product recall
6. To build brand value and image
7. To encourage people to buy in bulk especially in off season to level the
demand
Types of Promotional Marketing
Personal selling. This one-to-one communication with potential customers is the most
expensive type of promotion, but also the most effective when done correctly.

Advertising. Ads play a crucial role in making brands recognizable. Good advertising
with an accurate, targeted message will reach both existing and potential customers.

Direct marketing. Performed through social media, email, and SMS marketing, unlike
advertising, direct marketing intends to build relationships with people who have had
your brand or product on their radars before.

Sales promotions. Promos stimulate purchasing and sales by giving discounts,

cashback, free shipping, gifts, and more.

Public relations. This promotion style is a chance to build a positive and attractive
brand image. With PR promotions, marketers analyze the way people respond to their
brand, find out the positive and negative associations with their company, and work on
the reconstructing of the brand's image.
Promotional Marketing Strategies
1. Email marketing.
2. Social media marketing.
3. Content marketing. It should be a part of your online marketing strategy. People adore
high-quality content which helps them make a choice, answer their questions, offers expert
tips. Do not miss this chance to nurture leads with valuable content. Start your brand blog
if you still haven’t done this. Find out popular search terms and users’ pain points and do
your best to cover them in your articles. Provide how-to guides, interviews with top
specialists in your industry, and outstanding case studies.
4. Influencer marketing. People don’t look for brands — they look for emotions they can
provide. For this reason, they trust other people more than the brand itself. You should
look for thought leaders — influencers — whose opinion DOES matter for your clients.
Using Instagram tags, you can find bloggers who enjoy using your product, or if you’re a
start-up, offer an influencer to try your product and if they like it, let them be your brand
ambassador.
5. Referral marketing.
How to do Promotional Marketing

1. Understand the needs of your target audience. Think about the people
that you want to receive your promotions. If your promotion efforts are to the
point, it will be easier to get your point across to your audience.

2. Decide which marketing channels to use. Define the most suitable

channels to accomplish your goals. For example, SMS marketing is right for
promotional purposes on a local scale. For more international outreach,
companies should use email campaigns, which are not only promotional but
nurturing and trust-building. Besides, SendPulse offers free web push
notifications to reach customers who did not interact with your emails and
SMS.
3. Determine the objectives. Think about the results you want to achieve with
promotional marketing. Set realistic targets; don’t try to satisfy the full list of
your business's goals at once.

4. Develop a proper promotion mix. A promotion mix is a model for creating

a promotional plan based on the 5p’s: people, price, place, product, and
promotion. Before you attempt to conquer new markets, think about the most
critical aspect of promotion marketing — the people, and come up with a
suitable pro
5. Come up with your promotional message. Create a message
that sounds familiar and understandable for your target audience. Be
humorous and trendy when you talk to younger recipients. Be
formal and reliable when communicating with professionals.

6. Set your budget. Set your expectations for your promotion

marketing budget according to your resources and find out the cost
for each channel you are going to use during the promotion.

7. Monitor the results. Use all available tools and data to

understand if your promotion is a success.
Push and Pull Promotion Strategies

1. PUSH STRATEGY

A push promotional strategy involves taking the product directly to the customer via
whatever means, ensuring the customer is aware of your brand at the point of purchase.

"Taking the product to the customer"

EXAMPLES OF PUSH TACTICS

• Trade show promotions to encourage retailer demand

• Direct selling to customers in showrooms or face to face
• Negotiation with retailers to stock your product
• Efficient supply chain allowing retailers an efficient supply
• Packaging design to encourage purchase
• Point of sale displays
2. PULL STRATEGY

A pull strategy involves motivating customers to seek out your brand in an

active process.

"Getting the customer to come to you"

EXAMPLES OF PULL TACTICS

• Advertising and mass media promotion

• Word of mouth referrals
• Customer relationship management
• Sales promotions and discounts
Definition: Personal selling is also known as face-to-face selling in
which one person who is the salesman tries to convince the
customer in buying a product. It is a promotional method by which
the salesperson uses his or her skills and abilities in an attempt to
make a sale.
Features of Personal Selling:

The main features of personal selling are:

i. It is a face to face communication between buyer and seller.

ii. It is a two way communication.

iii. It is an oral communication.

iv. It persuades the customers instead of pressurizing him.

v. It provides immediate feedback.

vi. It develops a deep personal relationship apart from the selling

relationship with the buyers and customers.

Requisites of Effective Personal Selling:
1. Personal Qualities:
An effective salesman must possess certain physical, mental, social and vocational
qualities.

2. Training and Motivation:

In order to achieve effective personal selling, it is essential to train and motivate the
sales persons. The training programme for the sales persons should be designed
keeping in view the requirements of the business. The training programme should
also aim at imparting knowledge of various selling programme should also aim at
imparting knowledge of various selling techniques among the trainees.
For instance, a salesman must be trained how to understand the nature of a
customer, how to arouse his interest in the product, and how to close the sales. It is
also essential that the person selected for selling has aptitude for this vocation. He
has the inner motivation of developing himself into a good salesman. The employer
can also motivate him by providing financial and non-financial incentives.

3. Wide Knowledge:

About self, employer, product, competitors and customers

The personal selling process is a 7 step approach: prospecting, pre-
approach, approach, presentation, meeting objections, closing the sale,
and follow-up. Each step of the process has sales-related issues, skills, and
training needs, as well as marketing solutions to improve each discrete
step.
Direct marketing is a form of communicating an offer, where organizations
communicate directly to a pre-selected customer and supply a method for a
direct response. Among practitioners, it is also known as direct response
marketing. By contrast, advertising is of a mass-message nature
4 key components of successful direct marketing
1. Contact database
2. Unique offer
3. Creative
4. Communication method

Why is direct marketing important?

•It helps marketers reach customers fast
•It is an efficient promotion strategy
•Direct marketing can be customized
•Direct marketing allows measuring its efficiency
Direct Marketing Tools
1. Email marketing
2. SMS marketing
3. Web push marketing
4. Messenger marketing

Direct Marketing Strategies

• Issuing loyalty cards
• Guerilla marketing
• Branding of clothes
• Issuing coupons
• Promotional gadgets
What is the difference between Personal Selling and Direct
Marketing?
• Personal selling is more for products and services that are
complex in nature and cannot sell off the shelves on their
own such as financial products.
• Direct marketing is a selling technique that involves making
direct contact with the intended customer through phone
calls, emails, offers through newspapers and magazines etc.
• Direct marketing is more aggressive than personal selling
that appears like an attempt to arm the client with important
information at first.
• There is an emphasis on building up a relationship with the
customer in personal selling whereas direct marketing seeks
to impress upon the benefits of the offer.
• Personal selling is the oldest form of selling while direct
marketing is being used increasingly by small and big
companies to increase their sales.
 Unit 5 (6 hours)

CRM: Meaning, Relationship Marketing Vs. Relationship Management, Types

of Relationship Management, Significance of Customer Relationship
Management. Global Marketing: current scenario, Global Marketing
environment, Entry strategies, Global P’s of Marketing., Recent trends and
Innovation in Marketing- Green Marketing, Agile Marketing
What is CRM?

Customer relationship management (CRM) is a technology for managing all your

company’s relationships and interactions with customers and potential customers. The
goal is simple: Improve business relationships to grow your business. A CRM system
helps companies stay connected to customers, streamline processes, and improve
profitability.
When people talk about CRM, they are usually referring to a CRM system, a tool that
helps with contact management, sales management, agent productivity, and more.
CRM tools can now be used to manage customer relationships across the entire
customer lifecycle, spanning marketing, sales, digital commerce, and customer
service interactions.
 Customer Relationship Management
A Customer Relationship Management (CRM) system is a combination of
people, process and technology that seeks to provide understanding of a
company’s customer and to support a business strategy to build long-term,
profitable relationship with customer.

CRM is defined as an effective tool to achieve the objectives such as satisfied

and loyal customers and increased market share.

Customer Satisfaction Customer Retention Customer Commitment

Customer Loyalty Customer Advocacy

Customer Satisfaction Cycle

167
Global/ International Marketing is trading of goods and services among different
countries. The procedure of planning and executing the rates, promotion and
distribution of products and services is the same worldwide.

International marketing is the application of marketing principles by industries in

one or more than one country. It is possible for companies to conduct business in
almost any country around the world
A Market Entry Strategy is the intended process of delivering goods or services to
a intention market and distributing them there. There are multiplicities of ways in
which a business or organization can come into a foreign market. No one market
entry strategy moving parts for all international markets. Direct exporting may be
the majority suitable plan in one market while in another you may require setting up
a joint venture and in another you may well license your manufacturing.
Licensing
Licensing is a comparatively complicated agreement where a firm transfers the privileges to the
use of a product or service to another firm. It is a principally helpful approach if the buyer of the
license has a moderately big market share in the market you want to enter. Licenses can be for
marketing or production.

Franchising
Franchising works well for firms that have a repeatable business model (eg. food outlets) that can
be simply transferred into other markets. The first is that your business model should either be
very unique or have strong brand recognition that can be utilized internationally and secondly
you may be creating your potential competition in your franchisee.

Direct Exporting
Direct exporting is selling openly into the market you have selected using in the first occurrence
you own resources. Many companies, once they have established a sales program turn to agents
and/or distributors to represent them further in that market. Agents and distributors work closely
with you in representing your interests.
Partnering
Partnering is nearly an obligation when entering foreign markets and in some parts of the world (e.g.
Asia) it may be required. Partnering can take a diversity of forms from an easy co-marketing
arrangement to a sophisticated strategic alliance for manufacturing. Partnering is a above all helpful
policy in those markets where the culture, both business and social, is substantively different than
your own as local partners bring restricted market knowledge, contacts and if selected cleverly
consumers.
Joint Ventures
Joint ventures are a exacting form of partnership that involves the formation of a third independently
managed company. It is the 1+1=3 process. Two companies agree to work together in a particular
market, either geographic or product, and create a third company to undertake this. Risks and profits
are usually shared equally. The best example of a joint venture is Sony/Ericsson Cell Phone.
Buying a Company
In some markets buying an existing local company may be the majority suitable entry strategy. This
may be because the company has considerable market share, are a direct competitor to you or due to
government regulations this is the only option for your firm to enter the market. It is certainly the
most costly and determining the true value of a firm in a foreign market will require substantial due
diligence.
Turnkey Projects
Turnkey projects are exacting to companies that offer services such as environmental
consulting, architecture, construction and engineering. This is a exceptionally fine way to enter
foreign markets as the client is usually a government and often the project is being financed by
an international financial agency such as the World Bank so the risk of not being paid is
eliminated.

Greenfield Investments
Greenfield investments necessitate the greatest involvement in international business. A
greenfield investment is where you buy the land, build the facility and operate the business on
an ongoing basis in a foreign market. It is positively the most costly and holds the highest risk
but some markets may require you to undertake the cost and risk due to government
regulations, transportation costs, and the aptitude to admittance knowledge or expert labor.
The 4 P’s of Global Content Marketing
Plan: Strategy before execution
Collaborate with relevant stakeholders on regional and country teams to create a global
content marketing strategy that aligns target audiences, key success metrics, priority
countries, and strategic editorial topics with your business objectives. Alignment of
objectives and strategy is vital because it dictates content creation, promotion and
measurement.

Produce: Create content that matters

Develop relevant stories that meet identified countries’ needs with different formats
based on strategic editorial topics that address the target audience’s pain points,
desires, and challenges.
Promote: Distribute content in the digital era
Establish a market-driven content distribution process with paid and social media.
Publish the appropriate formats of content with the optimal frequency in targeted
channels. Use tools and data to optimize the media buy and social media content
distribution.

Perfect: Measure and optimize to drive the maximum impact.

Continuously optimize and measure the impact of content marketing as part of an
ongoing feedback loop. Define goals and use tools and processes to maximize the
effectiveness of content production and content syndication. This step’s goal is to
improve the previous 3 P’s: Plan, Produce and Promote.
Green Marketing is the marketing of products that are presumed to be
environmentally safe. It incorporates a broad range of activities, including product
modification, changes to the production process, sustainable packaging, as well as
modifying advertising.

Green Marketing is a relatively new concept, which involves the promotion of

products and services which are safe for the environment. It involves development,
manufacturing, promotion, distribution, consumption, and disposal of the products
and services in a sustainable fashion so that least damage is caused to nature.
Objectives of Green Marketing
The objectives of green marketing are boiled down in the points given
below:-
• To adhere to corporate social responsibility.
• To reduce expenses.
• To showcase how environment-friendly the company’s offerings are.
• To communicate the brand message
• To implement sustainable and socially accountable business practices.

Example
1. Whole Foods: An American supermarket chain, owned by Amazon, known for
selling organic products, which does not contain hydrogenated fats, flavours,
preservatives, sweeteners, flavours and artificial colours.
2. Starbucks: Starbucks is the largest coffeehouse chain in the world with a presence
in more than 70 countries. It promotes sustainable practices to grow coffee.
3. The Body Shop: A British cosmetic and skincare giant, which offers products which
are cruelty-free, and use natural ingredients.
• Consumer-Oriented Marketing: The notion says that the firm should perceive the marketing
activities from the consumer’s viewpoint, so as to develop a lasting and profitable relationship with
them.
• Customer Value Marketing: As per this notion, the company should allot its resources that add
value to the product or service they offer, rather than simply changing the product packaging or
making a huge investment on the advertisement. this is because, when the value is added to the
product, they will be valued by the customers also.
• Innovative Marketing: To strive for real product and marketing improvements, says the third
principle, i.e. innovative marketing. We all know that the world is ever-changing and so does the
tastes and preferences of the customers. therefore, the company should always look for new and
improved methods, to not lose customers easily.
• Mission Marketing: The company’s mission should be broadly defined, in social terms and not in
the product. This is due to the fact that if a company states the mission that has some social welfare
hidden in it, the employees feel proud to work for a good cause and work in the right direction.
• Societal Marketing: As per this principle, the marketing decisions made by the company must
take into account the wants and interest of the consumers, company’s requirements and the social
welfare.
Definition of Agile Marketing
In simple words, it is a tactical approach where teams identify and fully focus their
collective efforts on high-value projects. These teams go a step further to complete
those projects cooperatively, measure their impact and then continuously and
incrementally improve the results over time.
Teams use sprints to finish those projects cooperatively. And after each sprint, they
measure the impact of the projects and then continuously and incrementally improve
the results over time.

A good example of agile marketing is in the field of advertising and content

creation. For example, a marketing project can be segmented into a landing page, Ad
campaign, content creation, and so on. Next, these tasks are carried out and
eventually, the team reviews and make adjustments based on the lessons learned.
Real Examples:

An example is where the company has daily stand-up meetings to check in with the team,
during which it identifies any blocking issues that are preventing them from meeting their
sprint goals.
The daily stand-up meeting has helped iron most obstacles, such as emails going out late
because someone is sick. This approach makes sure each team member is up-to-date on
projects and progress so that everyone is on the same page.
Agile Marketing Features
Let’s have a look at key features that every team must consider in agile marketing implementation.
• Sprint: This is the length of time given to a team to complete its current projects. Often, this ranges
from two to six weeks.
• Stand up meetings: Every day, a team needs to meet and have a brief meeting. It is during this meeting
each team member goes over what they did the previous day, what they plan to do that day, and the
challenges they may have encountered. Challenges are addressed before the session ends.
• Teamwork: In the agile framework, every member of the team has to contribute even when one of the
members own the project.
• Board to track project progress: There has to be a centralized way to track your sprint that everyone
has access to. It can be a software, whiteboard or anything that will help you track progress.
Benefits of Agile Marketing
Compared to traditional marketing, agile marketing has many advantages to leverage. Here are the top
benefits:
• Consistent growth: As mentioned above, agile marketing is driven by real-time data and analytics.
This makes it possible to develop reliable marketing strategies. In other words, strategies backed by
real-time data. If looking to improve conversion through SEO content, then from the data collected, it
is possible to see areas to improve your content to boost conversion.
• Clear focus: No time to beat around the bush as it is in traditional marketing. Once you decide you
want to accomplish something, all your efforts are focused on that which you want to achieve.
Different strategies are tested over time to see which one works best.
• Getting the most out of your team: Agile marketing allows teams to respond to changes on time.
The ability of a team to adjust to new changes after testing iterations allow companies to get the most
out of their teams. In other words, you will feel the real impact of agile marketing if everything is done
in the right way.
• Seeing results: Looking to increase your revenue? According to research by McKinsey & Company
companies that have shifted to an Agile marketing methodology see their revenue increase 20% to
40%. This is because of the fast sprints and frequent interactions nature of agile marketing which
allows teams to gauge their performance. Why then still cling to approaches that don’t get you real
results? By building performance indicators into their strategy, agile marketing teams can measure
progress.