NORTH CIRCLE ACADEMY, INC.

Tubon, Pigcawayan, North Cotabato

MODULE in
MKTG 1
(Marketing Management)

FLORESA M. TAHUM, LPT

COMPILER
 SELF-LEARNING MODULE

Course Title: Marketing Management

Course Outcome: It is the course that examines the role and importance of marketing in the firm and
other organizations. We will cover topics such as marketing plans/strategies, marketing research,
market segmentation, retailing, advertising, pricing, Internet marketing, etc. You will find the course
interesting and informative. Keep on top of the work. All the best.

Course Objectives:

 To enhance your knowledge about marketing theories, principles, strategies and concepts and
how they are applied;
 To provide you with opportunities to analyze marketing activities within the firm;
 To allow you to apply marketing concepts and theories to realistic marketing situations.

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 CONTENTS
1.0 Objectives

1.1 Introduction to Marketing Management

-Importance of Marketing

1.2 Core Concept of Marketing.

-Needs, Wants and Demands

1.3 Marketing Offers

1.4 Marketing relevant terms

1.5 Marketing and Selling

1.6 Process in Marketing

1.7 Marketing Tasks

1.8 Scope of Marketing

2.0 Market Segmentation, Target market and Positioning

2.1 Marketing Channels

Communication, Distribution and Service Channels

Supply Chain

2.2 Competitions
Brand, Industry, Form, and Generic Competitions
2.3 Marketing Mix and Marketing Program
McCarthy 4P’s, SIVA
Extended 3P’s
2.4 Marketing Management Philosophies
Production Concept
Product Concept
Selling Concept
Marketing Concept
Societal Marketing Concept
Holistic Concept
2.5 Marketing Environment
Internal Marketing Environment or Controllable Factors
External Marketing Environment or Uncontrollable Factors

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 MARKETING MANAGEMENT

MARKETING- is a planned and conceptual implementation of procedures including a product, price,

promotion, and distribution of products and services to create an exchange that satisfies individuals
and achieves the aims of an organization (Kotler, 2003).

MANAGEMENT - is the process of planning, organizing, leading, and controlling the duties and
responsibilities of an organization's members, as well as the use of all available resources to achieve
the goals that have been established.

MARKETING MANAGEMENT - is a process of controlling the marketing aspects, setting the goals of
a company, organizing the plans-step by step, and taking decisions for the company.

IMPORTANCE OF MARKETING

Marketing is the process of understanding your customers, and building and maintaining relationships
with them. It is a process in which a product or service is launched or promoted.

HERE ARE SOME FUNCTIONS THAT SHOW THE SIGNIFICANCE OF MARKETING

IN ANY BUSINESS.

CUSTOMER

The success of any marketing activity could influence the number of customers who would willingly
spend their money buying the companies’ products and services

FINANCE

A business becomes more financially stable and successful when products or services are effectively
marketed.

HUMAN RESOURCE

No business could survive without human resource to work for them.

PRODUCTION

More products being manufactured by a company means there would be more quantity of goods to
trade and more earning opportunity a well

COMPETITION

Competition always starts when certain goods and services grow to be more well-liked and then other
companies begin selling the same.

DECISION

In the local markets before, selling is simply a direct link between manufacturer and end consumers.

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These modern times it is exceedingly difficult and hard job to market products.

IDEA

The idea of marketing is so dynamic and has altered a lot through times. Companies are able to
adjust their production and distribution with the new demands.

ECONOMY

The economy is made strong and stable by the marketing organization, if the marketing function
would not be pressured, the economy would become weak.

Marketing creates value for the customer.

Therefore a marketer must have a clear
concept of customer needs, wants and market
conditions. A core concept is one which has an
extremely precise, specific, commonly
acceptable, applicable, and comfortable to
understand the very process of marketing that
directs the flow of goods and services from
producers to consumers.

HERE ARE THE CORE CONCEPTS OF MARKETING:

 NEEDS
 WANTS
 DEMANDS

NEEDS

• Human needs are states of deprivation. The prerequisite to embarking on marketing activities isthe
existence of unmet needs.

• The satisfaction of customers’ needs is what marketing attempts to do.

• Needs are of various types such as physical needs, social needs, and personal needs.

• Needs are not formed, they are pre-existed in a human being.

3 TYPES OF NEEDS:

1. Existing need
 Any need of a customers which is short-term and is readily obtainable is known as existing
need.
 There are many businesses which gratify the existing needs of customers.
 A startup businesses usually tries to accommodate the existing need of the customer.
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  Demographic and geographic segmentation is generally used to furnish the existing needs of
customers.

2. Latent need
 A need of customer which is there but has not manifested itself because such a product has
not been launched. Companies which tap the latent needs of customers need a lot of
innovation and might go wrong at times. Although there are the companies which have
fantastic profitability because they cater to the needs of the customers which even the
customer does not know he has.

3. Incipient need
 It is a type of need which people want but there is no product to satisfy that need. The incipient
need could turn into a window of opportunity.

WANTS

Wants are a form of human needs influenced by culture and individual personality. Wants are the
choices to gratify a particular need. In fact, every need can be satisfied by using different options.

DEMANDS

• Demand is the want for particular products that are supported by the ability and willingness or
readiness to buy them. • It is at all times conveyed in relation to time.

• In marketing, the quantum and timing of demand is called as demand management.

Demand should have three conditions:

1. The desire of getting the product or service;

2. Ability to pay for the product or service; and
3. Intention to pay for the product or service.

Demand could be in these natures:

Negative demand

 Major market dislikes the product, hence seeks to stay away from it. The product may be
helpful but the customer does not like it.

No demand

 Some products face the challenge of no demand. Possibly customers are unaware and
uninterested in the product.

Latent demand

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  Latent demand is a demand which the customer realizes later. Thus, while buying the product,
he might not want some features. Except, later on, he may reflect on those features and
purchase the product.

Declining demand

 Demand decreases over a period of time. Although there is still a demand for the product, the
demand is a declining one.

Irregular demand

 Irregular demand is a demand which is not steady.

Full demand

 In a perfect environment, a company must constantly have filled demand. Full demands that
the demand is satisfying the supply potential of the company.

Overfull demand

 Overfull demands occur when the companies manufacturing capacity. Hence, brand switching
in cement industry is high. Numerous companies use de-marketing techniques to offset
overfull demands.

Unwholesome demand

 Unwholesome demand is the face of negative demand.

MARKETING OFFERS:

Product

- Everything that can be offered to a market for attention, acquisition, use or consumption that
may satisfy a want or need. It can also be referred to as bundle of satisfaction, physical and
psychological.

Service

- Any activity or benefit that one party can present to another that is basically intangible and
does not result in the ownership of anything.

Experiences

- Knowledge or skill which is gained from doing, seeing or feeling things.

FEW RELEVANT TERMS ON MARKETING

Market:

Normally people understand the term market as a place where goods are bought and sold. But, in the
context of Marketing, it refers to a group of buyers for a particular product or service.

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Place Concept:

A market is a convenient meeting place of buyers and sellers to gather together in order to conduct
buying and selling activities.

Marketer:

It refers to the person who organises the various marketing activities such as market research,
product planning, pricing, distribution etc.

Seller:

It refers to a person or organization, who is directly involved in the process of exchange of goods and
services for money. This includes the wholesaler, retailer, etc.

Buyer:

A buyer is one who is directly involved in the process of purchase of goods and services. He/she is
one who selects the goods, makes payment and takes the delivery.

Consumer:

One who actually uses the product or service. For example, you bought a shirt and gifted it to your
friend who uses it. Here your friend is the consumer and you are a buyer. However, a consumer can
also be the buyer.

Customer:

A customer usually refers to the person who takes the buying decision. For example, in a family,
father decides on the brand of the toothpaste to be used by his children. Here, the children are the
consumers and the father is the customer. A customer can also be the consumer. Similarly, the buyer
may be different from the customer or one can be the customer as well as the buyer.

Virtual Market:

With advancement of technology, the buyer and sellers can, now-a-days, interact with each other by
using Internet. This is called virtual market.

DIFFERENCE BETWEEN SELLING AND MARKETING

• The old sense of making a sale is telling and selling, but in new sense it is satisfying customer
needs.

• Selling occurs only after a product is produced. By contrast, marketing starts long before a company
has a product.

• Marketing is the homework that managers undertake to assess needs, measure their extent and
intensity, and determine whether a profitable opportunity exists.

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PROCESS OF MARKETING:
The marketing process involves five steps:

The first four steps create value for customers and build strong customer relationships in order to
capture value from customers in return.

MARKETING TASKS
According to market experts John Evans & Berry Bergmen- there areb nine functions of marketing.
These are:

 Customer analysis
 Buying supplies
 Selling products and services
 Product and service planning
 Pricing

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  Distribution
 Marketing research
 Opportunity analysis
 Social responsibility.

SCOPE OF MARKETING
Goods:

Physical goods constitute the bulk of most countries’ production and marketing effort. Most of the
country produces and markets various types of physical goods, from eggs to steel to hair dryers. In
developing nations, goods— particularly food, commodities, clothing, and housing— are the mainstay
of the economy.

Services:

As economies advance, a growing proportion of their activities are focused on the production of
services. The Indian economy today consists of a 70–30 services-to-goods mix. Services include
airlines, hotels, and maintenance and repair people, as well as professionals such as accountants,
lawyers, engineers, and doctors. Many market offerings consist of a variable mix of goods and
services.

Experiences:

By orchestrate several services and goods, one can create, stage, and market experiences. Walt
Disney World’s Magic Kingdom is an experience.

Event:

Marketers promote time-based events, such as the Olympics, trade shows, sports events, and artistic
performances.

Persons:

Celebrity marketing has become a major business. Artists, musicians, CEOs, physicians, high profile
lawyers and financiers, and other professionals draw help from celebrity marketers.

Place:

Cities, states, regions, and nations compete to attract tourists, factories, company headquarters, and
new residents. Place marketers include economic development specialists, real estate agents,
commercial banks, local business associations, and advertising and public relations agencies.

Properties:

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Properties are intangible rights of ownership of either real property (real estate) or financial property
(stocks and bonds). Properties are bought and sold, and this occasions a marketing effort by real
estate agents (for real estate) and investment companies and banks (for securities).

Organizations:

Organizations actively work to build a strong, favorable image in the mind of their publics. Philips, the
Dutch electronics company, advertises with the tag line, “Let’s Make Things Better.” The Body Shop
and Ben & Jerry’s also gain attention by promoting social causes. Universities, museums, and
performing arts organizations boost their public images to compete more successfully for audiences
and funds.

Information:

The production, packaging, and distribution of information is one of society’s major industries. Among
the marketers of information are schools and universities; publishers of encyclopedias, nonfiction
books, and specialized magazines; makers of CDs; and Internet Web sites.

Ideas:

Every market offering has a basic idea at its core. In essence, products and services are platforms for
delivering some idea or benefit to satisfy a core need.

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 Market segmentations and Marketing Strategies
Now marketers view the sellers as the industry and the buyers as the market. The sellers send goods
and services and communications (ads, direct mail, email messages) to the market; in return they
receive money and information (attitudes, sales data). The inner loop in the diagram in Figure 1-1
shows an exchange of money for goods and services; the outer loop shows an exchange of
information.

Figure 2: Marketing Communication System

Marketing Channels: Marketing channels means the parties that help the company to promote, sell
and distribute its goods to final buyers. To reach a target market, the marketer uses three kinds of
marketing channels:

 Communication channels: deliver and receive messages form target buyers and
include newspapers, magazines, radio, television, mail, telephone and the internet.

 Distribution channels: The marketers use this channel to display, sell or deliver the
physical products or services to the buyer or user. They include distributors,
wholesalers, retailers and agents.

 Service channels: The marketer also uses service channels to carry out transaction
with potential buyers. Service channels include warehouses, transportation companies,
banks and insurance companies that facilitate transaction.

Segmentation, Target market and Positioning: Market Segmentation means dividing a market into
smaller groups of buyers on the basis of different needs, characteristics or behavior. Market
segments can be identified by examining geographic, demographic, psychographic and behavioral
differences. The marketer then decides which segments present the greatest opportunity which is its
target market. For each chosen target market, the firm develops a market offering. The offering is
positioned in the minds of the target buyers as delivering some central benefits. Thus, product
positioning is the way a product occupies a place in the minds of the customers relative to competing
products. Like, Volvo, positions its car as the safest a customer can buy, where Ford positioned on
economy and Mercedes and Cadillac positioned on Luxury.

Supply Chain: It is the channel stretching from raw materials to components to final products that are
carried to final buyers. The supply chain of women’s’ purse starts with hides and moves through

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tanning, cutting, manufacturing, and the marketing channels to bring to bring products to final
customers. This supply chain represents a value delivery system. Each company captures only a
certain percentage of the total value generated by the supply chain. When a company acquires
competitors or moves upstream or downstream, its aim is to capture a higher percentage of supply
chain value.

Competition: Competition includes all the actual and potential rival offerings and substitutes a buyer
might consider. There are several possible level of competition:

 Brand competition: A company sees its competitors as other companies that offer
similar products and services to the same customers at similar prices. Volkswagen
might see its major competitor as Toyota, Honda and other manufacturers of medium
period automobiles. It would not see itself to compete with Mercedes or Hyundai.

 Industry competition: A company sees its competitors as all companies that make the
same product or class of products. Volkswagen would see itself competing against all
other automobile manufacturers.

 Form competition: A company sees its competitors as all companies that manufacture
products that supply the same service. Volkswagen might see itself as competing
against not only other auto mobile but also against manufacturers of motor cycle,
bicycles and trucks.

 Generic competition: A company sees its competitors as all companies that compete
for the same consumer dollars. Volkswagen might see itself competing with companies
that sell major consumer durables, foreign vacations and new homes as substitutes of
spending on a Volkswagen.

The marketing program and marketing mix: A marketing program consists of numerous
decisions on the mix of marketing tools to use for their target market.

The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in
the target market. McCarthy classified these tools into four broad groups that he called the four P’s
of marketing: product, price, place and promotion.

 Product: Product means the combination of goods and services that the company
offers to the target market.

 Price: Price is the amount of money customers have to pay to obtain the product.

 Place: Place includes company activities that make the product available to target
consumers.

 Promotion: Promotion means the activities that communicate the merits of the product
and persuade target customers to buy it.

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The latest way to view four P’s from buyers’ perspective is SIVA which stands for

 Solution: How can I get a solution of my problem? (Represents the product)

 Information: Where can I learn more about it? (Represents promotion)

 Value: What is m total sacrifice to get this solution? (Represents Price)

 Access: Where can I find it? (Represents place).

Extended Marketing Mix (3 Ps): Now a day’s three more Ps have been added to the marketing mix
namely People, Process and Physical Evidence.

This marketing mix is known as extended marketing mix.

People - All people involved with consumption of a service are important. For example workers,
management, consumers etc

Process - Procedure, mechanism and flow of activities by which services are used. Physical

Evidence - The environment in which the service or product is delivered, tangible are the one which
helps to communicate and intangible is the knowledge of the people around us.

MARKETING MANAGEMENT PHILOSOPHIES:

Marketing management is the carrying out the task to achieve desired exchanges with target markets.
Marketing activities should be carried out under a well thought out philosophy of efficiency,
effectiveness and social responsibility. The philosophies are the guidance for marketing efforts. It
emphasizes on the weight that should be given to the interests of the organizations, customers and
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society. There are some concepts under which organizations conduct their marketing activities.
These are:

 Production Concept

 Product Concept

 Selling Concept

 Marketing Concept

 Societal Marketing Concept

 Holistic Concept

Production Concept: It holds that consumers will favor products that are available and highly
affordable. Therefore, management should focus on improving production and distribution efficiency
that means high production efficiency, low costs and mass distribution. This concept is still useful in
two types of situations, when the demand exceeds the supply and when the product’s cost is too high
and improved productivity is needed to bring it down. It is used when a company wants to expand the
market. Managers assume that consumers are primarily interested in product availability and low
cost.

Product Concept: It holds the idea that consumers will favor products that offer the most quality,
performance, and features and that the organization should therefore devote its energy to making
continuous product improvements.

 Focuses on making superior product and improving them.

 Buyers admire well-made products and can evaluate quality and performance.

 Product concept can lead to marketing myopia (that means lack of foresight or long-term view
regarding the product decision).

Selling Concept: It holds the idea that consumers will not buy enough of the organization’s products
unless the organization undertakes a large-scale selling and promotion effort. This concept is typically
practiced with unsought goods, those that buyers do not normally think of buying, such as
encyclopedias or insurance. Most firms practice the selling concept when they have over capacity.
This concept takes an inside-out perspective. It starts with the factory, focuses on the company’s
existing products and calls for heavy selling and promotion to obtain profitable sales.

 Consumer typically show buying inertia/resistance & must be coaxed into buying.

 To sell what they make rather than make what market wants.

Marketing Concept: It holds the idea that achieving organizational goals depend on determining the
needs and wants of target markets and delivering the desired satisfactions more effectively and
efficiently than competitors do. The main task for marketers not to find the right customers for the
product, but the right products for the customers.

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It can be expressed in many ways:

 Marketer balance creating more value for customers against making more profits.

 Marketing concept rest on four pillars: a) Target market b) Customer needs c) Integrated
marketing d) Profitability.

 Love the customer not the product

 Putting people first.

It holds the idea that the organization should determine the needs, wants and interests of target
markets and deliver the desired satisfactions more effectively and efficiently than do competitors in a
way that maintains or improves the consumer’s and society’s well-being. This concept calls on
marketers to balance three considerations in setting their marketing policies: company profits,
consumer wants and society’s interests. It emphasizes on both the short run wants and long run
welfare of consumers.
Holistic Concept: this is the most recent concept of marketing which is based on the development,
design and implementation of marketing programs processes and activities from a broad integrated
perspective. It is the integration of internal marketing, integrated marketing, relationship marketing
and performance marketing concept.

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(a) Internal Marketing Concept: This concept holds the idea to satisfy the internal people or
employees within the organization, so that they work for the satisfaction of the customers. The first
step to satisfy the customers is to satisfy the internal people first or to motivate them first.

(b) Integrated Marketing Concept: It refers to an approach where all the departments of the
organization work in a coordinated manner to support and serve the customers. Any single section
cannot serve the customers without the help of other sections. The customer’s satisfaction is
achieved when all the departments have the common goals and intention to serve the customers.

(c) Relationship Marketing Concept: It refers the long-term relationship with the customers. It
emphasizes on creating, maintaining and developing a long term value laden or value based
relationship with the target customers benefits and costs.

(d) Performance marketing: Holistic marketing incorporates performance marketing and

understanding the returns to the business from marketing activities and programs as well as their
legal, ethical, social, and environmental effects. Performance marketing thus includes: Financial
accountability and socially responsible marketing.

MARKETING ENVIRONMENT:

Competition represents only one force in the environment in which all marketers operate. The overall
marketing environment consists of the task environment and the broad environment.

The task environment includes the immediate actors involved in producing, distributing, and
promoting the offering, including the company, suppliers, distributors, dealers, and the target
customers. Material suppliers and service suppliers such as marketing research agencies, advertising
agencies, Web site designers, banking and insurance companies, and transportation and
telecommunications companies are included in the supplier group. Agents, brokers, manufacturer
representatives, and others who facilitate finding and selling to customers are included with
distributors and dealers. The broad environment consists of six components: demographic
environment, economic environment, natural environment, technological environment, political-legal
environment, and social-cultural environment. These environments contain forces that can have a
major impact on the actors in the task environment, which is why smart marketers track
environmental trends and changes closely.

According to Philip Kotler, “A company’s marketing environment consists of the internal factors &
forces, which affect the company’s ability to develop & maintain successful transactions &
relationships with the company’s target customers”.

Marketing Environment involves forces that directly or indirectly influence an organisation’s capability
to market its product successfully.

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Internal Marketing Environment or Controllable Factors

Internal Environment is generally audited by applying 5 Ms i.e.

 Men

 Money

 Machinery

 Markets

 Materials

The internal marketing environment consists of all factors that are internal to the organisation like:

 Company`s mission, vision and business objectives

 Company Culture

 Company image and Goodwill

 Marketing Strategy

 Technical Capacity

 Managerial Skills and Abilities

 Structure and Processes

 Finance and Sales force

 Production and Research

 Internal Processes and Procedures

 Allocation of responsibilities

 Resource availability

 Attitude of stakeholders
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  Organisation culture

 Human Resources – HR department, Operations department, Accounting and Finance

departments, Research and Design

The External Environmental Factors may be classified as:

 Internal Factor

 External Factor

External Factors may be further classified into:

External Micro Factors & External Macro Factors

Company’s Internal Environmental Factors:

A Company’s marketing system is influenced by its capabilities regarding production, financial & other
factors. Hence, the marketing management/manager must take into consideration these departments
before finalizing marketing decisions. The Research & Development Department, the

Personnel Department, the Accounting Department also have an impact on the Marketing
Department. It is the responsibility of a manager to company ordinate all department by setting up
unified objectives.

EXTERNAL MICRO FACTORS:

 Suppliers: They are the people who provide necessary resources needed to produce goods &
services. Policies of the suppliers have a significant influence over the marketing manager’s decisions
because, it is laborers, etc. A company must build cordial & long-term relationship with suppliers.

 Marketing Intermediaries: They are the people who assist the flow of products from the producers
to the consumers; they include wholesalers, retailers, agents, etc. These people create place & time
utility. A company must select an effective chain of middlemen, so as to make the goods reach the
market in time. The middlemen give necessary information to the manufacturers about the market. If
a company does not satisfy the middlemen, they neglect its products & may push the competitor’s
product.

 Consumers: The main aim of production is to meet the demands of the consumers. Hence, the
consumers are the center point of all marketing activities. If they are not taken into consideration,
before taking the decisions, the company is bound to fail in achieving its objectives. A company’s
marketing strategy is influenced by its target consumer. Eg: If a manufacturer wants to sell to the
wholesaler, he may directly sell to them, if he wants to sell to another manufacturer, he may sell
through his agent or if he wants to sell to ultimate consumer he may sell through wholesalers or
retailers. Hence each type of consumer has a unique feature, which influences a company’s
marketing decision.

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 Competitors: A prudent marketing manager has to be in constant touch regarding the information
relating to the competitor’s strategies. He has to identify his competitor’s strategies, build his plans to
overtake them in the market to attract competitor’s consumers towards his products.

Types of Competition

Pure Competition: Numerous competitors offer undifferentiated products. No buyer or seller can
exercise market power.

Monopolistic Competition: Numerous competitors offer products that are similar, prompting the
competitors to strive to differentiate their product offering from others.

Oligopoly: A small number of competitors offer similar, but somewhat differentiated, products. There
are significant barriers to new competitors entering the market.

Monopoly: There is only one supplier and there are substantial, potentially insurmountable, barriers
to new entrants.

Monopsony: The market situation where there is only one buyer.

Company faces three types of competition:

a) Brand Competition: It is a competition between various companies producing similar products.

Eg: The competition between BPL & Videcon companies.

b) The Product Form Competition: It is a competition between companies manufacturing products,

which are substitutes to each other Eg: Competition between coffee & Tea.

c) The Desire Competition: It is the competition with all other companies to attract consumers
towards the company. Eg: The competition between the manufacturers of TV sets & all other
companies manufacturing various products like automobiles, washing machines, etc.

Hence, to understand the competitive situation, a company must understand the nature of market &
the nature of customers.

ACTIVITIES:

No. 1: Create a Video Presentation on Marketing Management Philosophies and Marketing

Environment.

No. 2: Compose a Marketing Program integrating the Marketing Mix of McCarthy’s 4Ps.

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 UNIT-III PRODUCT PRICING STRATEGY

Structure
3.1 Product
- Product Classification.
- Product Strategies.
- New Product Development.
- Product Life Cycle and Marketing Mix.
3.2 Branding Strategy
3.3 Labeling Strategy
3.4 Packaging Strategy
3.5 Pricing Methods and Strategy

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PRODUCT PRICING STRATEGY
PRODUCT
A product may be defined in a narrow as well as broad sense. In a narrow sense, it is a set of tangible
physical and chemical attributes in an identifiable and especially recognizable form.
Essential Attributes of a Product
Based on the above definitions, we can list out the essential characteristics of a product as follows:
1) Tangible or Intangible: It may be capable of being touched, seen and felt. For example, products
like a refrigerator and motor cycle are tangible. At the same time, a product need not necessarily be
tangible. It can be intangible but capable of providing a service. For instant repairing, hair-dressing
and insurance, etc. are intangible but provide satisfaction to the customers.
2) Associated Attributes: A product consists or various product features and accompanying
services. Thus, a product is comprised of attributes including colour, package, brand name,
accessories, installation, instruction to use, manufacturing prestige, retailer's prestige, after sale
service, etc. These attributes differentiate the products from each other.
3) Exchange Value: A product must be capable of being exchanged between a buyer and seller at a
mutually acceptance cost.
4) Satisfaction: It should be capable of providing, satisfaction to the buyers both real and
psychological. As far as the seller is concerned, it should provide the much-needed business benefit.
A product, therefore, can be considered as comprising of three distinct levels.
First level is the core product is., the core benefit which the consumers seek to buy.
The second level of the product can be described as the actual product. This includes the
packaging, brand name, features of the product, design, the shape, utility etc. The third level is the
augmented product. In addition to the actual product, the provider may give additional customer
services such as after sales service, warranty, delivery, installation etc.
The product concept has three dimensions:
i. Managerial Dimension:
It covers the core specifications or physical attributes, related service, brand, package, product life-
cycle, and product planning and development. As a basis to planning, product is second only to
market and marketing research.
The product offering must balance with consumer-citizen needs and desires. Product planning and
development can assure normal rate of return on investment and continuous growth of the enterprise.
ii. Consumer Dimension:
To the consumer a product is actually a group of symbols or meanings. People buy things not only for
what they can do, but also for what they mean. Each symbol communicates a certain information. A
product conveys a message indicating a bundle of expectations to a buyer.
Consumer’s perception of a product is critical to its success or failure. A relevant product is one that is
perceived by the consumer as per intentions of the marketer. Once a product is bought by a
consumer and his evaluation, i.e., post-purchase experience is favourable, marketers can have
repeat orders.
iii. Social Dimension:
To the society salutary products and desirable products are always welcome as they fulfill the
expectations of social welfare and social interests. Salutary products yield long-run advantages but
may not have immediate appeal.
Desirable products offer both benefits, immediate satisfaction and long-run consumer welfare. Society
dislikes the production of merely pleasing products which only give immediate satisfaction but which
sacrifice social interests in the long-run.

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Marketers have to fulfill the following social responsibilities while offering the products to
consumer:
i. Conservation and best use of resources,
ii. Safety to users,
iii. Long-run satisfaction of consumers,
iv. Quality of life, concern for better environment,
v. Fulfilment of government regulations relating to composition, packaging and pricing of many
products.
Levels of Product:
Products have five levels, which are known as “customer value hierarchy”, with each level adding
more customer value.
I. The most basic is the core product or core benefit. This is what the customer is actually buying
II. At the second level, the core benefit is turned into a basic product. This will have features, design,
a quality level, a brand name
and packaging.
III. At the third level, it becomes an expected product, a set of attributes and conditions normally
expected by consumers when they
buy the product.
IV. At the fourth level, it becomes an augmented product by offering additional consumer services
and benefits.
V. Finally, it becomes a potential product containing all possible augmentations and transformations
that it might undergo in the
future. Consumers normally see products as complex bundles of benefits that satisfy their needs.

PRODUCT CLASSIFICATION:

1. CONSUMER GOODS:
Consumer goods of different classes are discussed below:
a) Convenience Goods:
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Convenience Goods, usually of semi-durable nature, refer to those comparatively high value items
which the customers buy after paying consideration as to quality, price, design, etc. The buying
motives of the customers exhibit a high degree of differentiation in the purchase of these items.
Examples are; shoes, ready-made garments, cosmetics, etc.
b) Speciality Goods:
Speciality Goods refer to those items which possess unique characteristics and/or brand identification
and for which a significant group of buyers are habitually willing to make a special purchasing effort.
These are usually of durable nature and high unit value, and the customers’ brand preferences
dictate their buying motives. Examples are; T.V., radio, refrigerators, steel furniture, etc.
c) Industrial Goods:
Industrial Goods refer to those goods which are destined to be sold primarily for use in producing
other goods or rendering services as contrasted with the goods destined to be sold primarily to the
ultimate consumers.
2. INDUSTRIAL GOODS:
Industrial goods of different classes are discussed below:
a) Raw Materials:
Raw materials may be agricultural items (e.g. cotton) or items of semi-finished nature (e.g. steel) or
parts for the finished product to be assembled (e.g. parts of a motor vehicle).
b) Equipment’s:
Equipment’s may be basic installations (e.g. boiler, turbines) or accessory products (e.g. calculator,
time clocks). These items move directly from the producers to the industrial users.
c) Fabricated Items:
Fabricated items consist of those parts that are used in the assembly of finished goods like
automobiles, etc.
d) Operating Supplies:
Operating supplies such as fuel, coal, etc. neither form a part of nor enter into the product but are
necessary for the running of industries.

PRODUCT STRATEGY:
Product strategy is defined as the road map of a product. This road map outlines the end-to-end
vision of the product, particulars on achieving the product strategy and the big picture context in terms
of what the product will become.
Whenever a new product launches in the market, it is difficult for the company or brand to forecast
where the product will reach or how it will shape up. At such times, brands design the Product
strategy.
The product strategy determines all the steps which a brand will have to take to make the product a
success. Alternatively, because this is how a strategy works, the brand also has to decide what to do
if the product is a failure of it is not gaining attraction in the market.
Product strategy helps in deciding the basic elements of a product such as its marketing mix and its
design. At the same time, it also helps in targeting the product to the right segment, product line
stretching etc. All this will be discussed in the steps to develop a product strategy.
A common terminology used in product strategy is the product roadmap which means the sequential
step of events which need to take place to ensure maximum penetration of the product and maximum
product adoption in the market. Product strategy helps the formation of the product roadmap.
IMPORTANCE OF PRODUCT STRATEGY:
i. It helps decide the exact steps to be taken in any event to make the product a success.
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ii. It prepares the company for response by competitors or towards changing market conditions.
iii. It helps the company decide the target market and in market penetration.
iv. A product vision is formed thereby setting the product on an independent path with a time to time
intervention allowing the company to focus on multiple products in a short time.
Product Strategy Process:
A lot of product analysis is needed to develop a strategy. Besides product, you need to analyze your
competitors, the market and various segments so that you can come up with the right product
strategy. Here are the steps of Product Strategy.
a) Marketing mix
The product is the most important element of the marketing mix. If you have decided on a market
segment to target, then product design plays a crucial role. This is because a change in the product
brings a change in all the other elements of the marketing mix.
Be it a service or a product, the marketing mix majorly depends on the product for other aspects like
promotions, place and price.
b) Levels of a product
A product has various levels. One of the articles on this site discusses the three levels of a product
which includes the core product, the actual product, and the augmented product.
A marketer needs to assume the various levels of a product while deciding the product strategy.
Example – An automobile manufacturer or an equipment manufacturer needs to give service along
with the product to the end customer.
c) Type of products
The product that you are designing will be of which type? There are various types of products.
 Durable products / Nondurable products
 Shopping goods / Specialty goods / Convenience goods
 Industrial goods/consumer goods
 Service products
d) Differentiation
There are various possibilities to differentiate a product or to differentiate services. We have detailed
articles on each which you can find by clicking the links above. However, to make it simpler, here are
the features which you can use to differentiate a product or a service.
 Product Form and Product features
 Product performance levels
 Reliability / Repairability / Durability
 Style and Design
 Ordering ease / Ease of installation
 Customer service / Warranties and Guarantee
As can be seen above, these are critical decision-making elements for any consumer and by creating
differentiation at the product level, the product strategy becomes a sound strategy to compete on
even grounds with the competitor.
e) Brand elements
Brand identity and Brand image are important considerations for the success of any company.
Naturally, when deciding on the product strategy, you need to decide the brand elements for the
product. There can be numerous branding elements involved thereby giving more recognition for the
product and accumulating more respect in the market.

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f) Product Design
Quite simply, a computer is a generic product name whereas desktops & laptops are all variants of a
computer. The only difference between laptops and desktops is the product design. Both of them
have CPU and both have monitors.
g) Product Mix
Sometimes a single product might not make the cut but its product variant might be an instant hit.
Take shampoos for example. Most in demand shampoo are the Anti-dandruff shampoo. However,
besides this, most of the top shampoo brands have a variety of products on offer with minor
differences in ingredients. These are nothing but a combination of the product mix.
New Product Development.
Product development process is expensive, risky and time consuming. Though world-shaping
innovations have emerged from the ‘garages’ and will continue to do so, companies cannot depend
solely on flashes of brilliance and inspiration to provide their next bread earner or even their next
blockbuster.
An eight-step new product development process consists of new product strategy, idea generation,
screening, concept testing, business analysis, product development, market testing and
commercialization. New products pass through each stage at varying speeds.

a) New product strategy:

By outlining their objectives, for instance, market share, profitability, or technological leadership for
new products, the senior management can provide indicators for screening criteria that should be
used to evaluate these ideas.
A development team is likely to achieve better results if it concentrates its resources on a few projects
instead of taking shots at anything that might work. Since the outcome of new product development
process is unpredictable, a company might believe that it is taking a risk by working on only a few
new ideas. However unpredictable the new product development process may be, chances of
success will definitely improve if the team knows precisely what it wants to achieve from the process,
puts its best people in the project, and has enough resources to commit to the project.
b) Idea generation:
Developing an innovative culture that kindles imagination is a prerequisite. In such an environment
every employee is alert to new opportunities. Great ideas come in a period of quiet contemplation,
uninterrupted by bustle of everyday life and work.

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A company can follow the following practices:

i. A company can look outside markets that are currently being served. It may not be manufacturing
the precise product which the new market requires, but it may realize that it has the competence and
the technology to serve the needs of the new market.

When a company scrutinizes its core competences, it may discover that its various core competences
may be combined in a new way to serve a new market.

ii. For too long, companies have viewed a market as a set of customer needs and product
functionalities to serve these needs. But they should begin to ask as to why the product has to be like
this. Can the customer needs be satisfied with some other product form?

iii. A company should question conventional price and performance relationships. It should explore
the possibility of providing the same value at lesser price or try to make the customers pay more by
serving their needs in a new or better way. A more rigorous market research may reveal more
sophistication in customers’ needs which the company can serve with a novel product.

iv. Customers rarely ask for truly innovative products. A company can try to lead customers by
imagining unarticulated needs rather than simply following them. It involves a blend of creativity and
understanding the needs, lifestyles and aspirations of people.

v. A company should examine competitors’ products at frequent intervals. Though copying

competitors’ products may not inspire many developers, a company can use competitors’ products to
identify features and benefits that its product lacks.

If a competitor’s product is more advanced or sophisticated the company can use the competitor’s
product as a base and develop the product further.

vi. Retailers deal in the company’s customers and can give very useful ideas.

Retailers experience the anguish and glee of customers firsthand and handle both repeat purchases
and product returns. These experiences of retailers can provide very useful information about
customers’ experience with the company’s offerings.

vii. Customers are the original sources of new product ideas. Lead users, who are the most
sophisticated users of a product, are excellent sources of ideas for new products, as they are most
likely to encounter new problems due to the increased sophistication of their needs.

Business customers who are innovators and market leaders in their own marketplace are sources of
new product ideas, as they have advanced needs and are likely to face problems before other
product users.

viii. Customers can give feedback about the products that they are familiar with, and these inputs can
be used to drive innovations which will be incremental in nature. But for breakthrough innovations,
ideas must come from other sources such as the R&D team.

c) Idea screening:

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Screening of ideas is done to evaluate their commercial worth. At this stage, the company needs to
ascertain whether the new products being developed fit in with the company’s strategy and resource
availability.

Simultaneously, the company also evaluates the market potential for the new product by evaluating
criteria such as projected sales, profit potential, extent of competition and return on investments.
Unique designs that lower costs or give performance advantages are also considered.

d) Concept testing:

At the developmental stage, every idea can be developed into several product concepts. Each
concept is then tested with a small sample of customers from the target market to know their degree
of acceptance. A product concept is a particular combination of features, benefits and price. Alternate
product concepts are evaluated by customers.

An instrument such as a questionnaire is used to know the likes and dislikes of customers, which
customers are likely to find the product most attractive, what price point would best suit the customer,
what trade-offs is the customer willing to make while evaluating the product, the immediacy of the
product requirement and how frequently he would buy the product.

These features or benefits are then incorporated into the product development process, which is likely
to lead to competitive advantage for the company.

e) Business analysis:

Estimates of sales, cost and profits are made. The company identifies the target market, its size and
projected product acceptance over a number of years. The company considers various prices and
their implications on sales revenues. Costs and breakeven point are estimated.

Sensitivity analysis is done in which variations from given assumptions about price, cost, customer
acceptance is checked to see how they would impact on sales revenue and profit.

f) Product development:

The product concept that has found the best acceptance is then developed into a physical product.
Components have to be designed in terms of length, width, diameter, angle etc., and arranged to be
assembled in a manner which provides the features and benefits of the selected product concept.

At this stage, the product is tested to analyse its functional performance and the degree of customer
acceptance. Paired comparison tests are used to compare the new product with existing or potential
competitors in order to give a realistic feel to the consumer decision making process.

Customers compare and judge the overall preference for the product, as well as preference for
specific features or benefits offered by various choices available to them.

In monadic placement tests, only the new product is given to users for trial. Experts can also be used.
When testing products in business markets, products may be placed with customers free of charge,
to check preference.

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Products are set up to fail during this stage of innovation process. It is important to exercise certain
precautions during this stage.

i. Developers are left to their own devices during this stage. They feel relieved that marketers and
other commercially minded people have finally got off their back.

They feel that they can finally get in their laboratories and on their workstations and do the real things
of getting a blockbuster product to the market. They feel that they can now work in solitude and in
isolation.

This is dangerous. Developers have to be kept in the loop in this stage, as they may commit the
company to a product that was never envisaged or discussed in any of the earlier stages. It is
important to remember that the real and concrete innovation takes place only at this stage. In all prior
stages only ideas were being discussed, analyzed and evaluated.

Developers may claim that the physical form has turned out to be better than the idea itself and since
they have something tangible to show for their claim, they will look more credible than the people who
will insist that the original idea was better.

Developers should not be allowed to run amok at this stage as they are capable of coming up with a
physical form that will nullify all the hard work of market research and commercial analysis that the
company might have put in.

ii. Developers are wary of showing their incomplete designs to other people in the organization
because they fear that anybody and everybody will have a suggestion to make, and if they went
about incorporating those suggestions there would be nothing in the product that they could call their
own. They insist on releasing only their final design.

And when this final design reaches manufacturing people, they may express their inability to produce
the design or at least not at a reasonable cost. The design is relayed back to the developers who
have to modify the design to make it fit for production.

This may happen many times and lot of time is wasted before developers and manufacturers settle
on a design fit for production. But more dangerously, since the developer is modifying his original
design to enhance its reducibility, he may lose sight of the customer needs that his original design
was meant to serve.

So, the modified design may be more easily produced but it may have digressed so much from the
original design that it may not be serving the customers’ needs truthfully. This often happens because
the focus of design modification is reducibility and not customer needs.

iii. A developer sets out to serve defined customer needs with available set of technologies. But both
customer needs and technologies are likely to change during the development process itself. The
developer has to anticipate these changes and allow them to be incorporated in the final design.

The developer has to set up mechanisms by which the changing customers’ needs and technologies
are allowed to creep in and the design process forced to pay heed to them. The developer can delay

29
freezing those parts of the design which are likely to be impacted by changing customer needs and
technologies.

At some point in time the developer has to stop taking cognizance of changing customer needs and
technologies as it may delay the project by an unacceptable period. But a developer has to realize
that it is futile rushing to the market with a product, which is already obsolete at the time of its launch
to serve customer’s needs which no longer exist.

iv. Product concept has already been tested with customers but a description of the product can
never match the physical product in eliciting real reactions of customers.

Before the developer freezes the design, he has to get it approved by customers. The physical
product has to be tested by the customer in actual use, if true worth of the design has to be known. It
is undeniably costly and cumbersome to make limited number of products before manufacturing
facilities are set up, but companies have to manage it if they do not want to set up manufacturing
facilities for products, that customers would not like and would have told them so if they had been
given the opportunity to use the product. decide the success or failure of a new product and
customers can get a real ‘hang’ of the product only from a real product.

v. It is important to understand that a company should be willing to do ‘anything’ to increase the

probability of success of a new product. The probability of success of the new product should govern
every decision that the company takes about the innovation process.

If a new product fails, all the effort, time and money expended in developing it comes to naught. If a
few more million dollars, and a few more months can improve the chances of the new product
succeeding in the market, the company should go ahead and commit itself to them It is never a good
idea to save a few million dollars and few months and sink a few billion dollars and few years in the
bargain.

g) Market testing:

So far in the product development process, potential customers have been asked if they intend to buy
the product, but have never been placed in the position of having to pay for it. Now customers are
forced to vote with their money.

The company seeks to have a limited launch for the product in the marketplace so that it can gauge
the initial customer response in true test conditions.

Ideally, the feedback that is obtained from the test sample should be as realistic as possible, i.e., the
profile of the sample of respondents should closely resemble the profile of prospective customers in
the actual marketplace, and they should be buying the product from a realistic retail setup as they
would actually do.

Test marketing involves the launch of the new product in one or few geographical areas chosen to be
representative of its intended market. The product is positioned and promoted the same way as it
would be done in case of a full-scale launch.

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The new product is made available in select distribution outlets so that the real-time response of
customers in terms of parameters such as purchase, amount of time spent in evaluation, or repeat
purchase can be tracked vis-a-vis competing products.

As the characteristics and composition of customers in the test market resemble the characteristics of
customers in the entire target market, the results of test marketing can be extrapolated for the entire
market. Marketers take decisions about the modification of some part of the marketing mix, and even
about the continuation of the product launch according to the results of test marketing.

Test towns and areas may not be representative of the national market and thus sales projections
may be inaccurate. Competitors may invalidate the test market by giving distribution incentives to
stock their product, thereby denying the new product shelf space.

Test markets need to be long enough to measure the repeat purchase rate for the product. This can
mean a delay in national launch stretching to many months and years.

h) Commercialization and diffusion of innovation:

Choice regarding target market to whom the product should be sold first and product positioning that
will be attractive to the first target market has to be made. The fundamental process that defines the
success of an innovation is its diffusion rate.

Therefore, the target market for the innovation has to be decided by understanding the process of
diffusion of innovation. The spread of an innovation is called diffusion, and when an individual
customer unit buys the new product, it is called adoption.

Thus, when many customers adopt the new product quickly, the diffusion is fast, and the diffusion
rate is high. The new product is successful. And when either the number of customers who adopt the
new product is low, or the process of adoption is slow, the diffusion rate is low.

The rate of diffusion depends on:

i. The characteristics of the innovation, i.e., an innovation having a relative advantage over existing
options in the market, that fulfill the same needs of the customers, is more likely to be successful,
ii. The social system or the target market where the innovation is introduced,
iii. The channels of communication used by the marketer to explain the innovations to prospective
customers and,
iv. The amount of time that has lapsed since the introduction of the innovation.

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Fundamentally, all members of the target market are not equally receptive to the new product as they
are in different states of readiness, and ability to take risk varies. It is important that in the initial phase
of launch, the company targets customers who are more likely to buy the new product than others.

The process of adoption will be slower if the company targets the whole market in the initial phase of
the launch, as a large part of the market will not be interested in the product or will be suspicious
about it at this stage. A launch targeting the whole potential market will also be expensive compared
to the adoption achieved.

In every product category, there would be customers who would know more about the product, or
would want the best product, or would know more about whether a certain product would work or not.
The average customers look up to such savvy or knowledgeable customers for advice or
reassurance. It is important to place new products in the hands of such people who act as references
or guides for average customers.

The first set of customers who should be targeted are the ones who are most likely to buy the new
product. These first buyers are called Innovators. It is difficult to characterize innovators because
they differ from one category to another.

The set of customers who buy the product next are called early adopters. Early adopters cannot take
the risk of buying the product first. They feel assured that someone before them has bought and used
the product, so that they could observe how the product works.

Among the innovators and early adopters are a group of people called the opinion leaders. Opinion
leaders are critical in hastening the process of diffusion of the new product as they influence other
prospects to adopt the new product.

The next categories of consumers are the early majority and the late majority, who usually
comprise more than two-thirds of the market for the new product.

The Early majority are deliberate and cautious.

And the Late majority are more cautious and skeptical than the Early majority.
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The last category of consumers is Laggards. They are traditional. Usually, they comprise of the
older, less educated and not very well-off portion of the target market.

The diffusion of innovation curve is strongly linked to the product life cycle curve. During the
introduction phase, few consumers buy the product, coinciding with the small percentage of
Innovators in the market. The sales gradually increase, signifying the entry of the early majority.

The main purpose of the marketing strategy of a company is to yield competitive advantage. Initially,
it is critical for the company to understand the characteristics and needs of the Innovators and the
early adopters as they are vital for the success of an innovation. In the initial phase of the launch, the
positioning of the new product should be for innovators and early adopters.

Marketers should devise launch strategies that allow low cost- and risk-free trial of more expensive
innovations. A company can offer the product on lease or offer to take back the product if the
customers do not find it useful or can arrange and manage a sharing arrangement between
customers.

Communication to consumers should be clear and convincing. Promotion showing opinion leaders
accepting and using the product is important. Marketers must always remember that consumers give
up an existing way of solving a problem in order to adopt a new one-they do not merely adopt the
new product. Therefore, they must evaluate what the consumer is giving up in order to gain the new
product.

PRODUCT LIFE CYCLE AND MARKETING MIX.

A new product passes through set of stages known as product life cycle. Product life cycle applies to
both brand and category of products. Its time period varies from product to product. Modern product
life cycles are becoming shorter and shorter as products in mature stages are being renewed by
market segmentation and product differentiation.

Companies always attempt to maximize the profit and revenues over the entire life cycle of a product.
In order to achieving the desired level of profit, the introduction of the new product at the proper time
is crucial. If new product is appealing to consumer and no stiff competition is out there, company can
charge high prices and earn high profits.

Stages of Product Life Cycle

Product life cycle comprises four stages:

1. Introduction stage
2. Growth stage
3. Maturity stage
4. Decline stage

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➢ Introduction Stage

At this stage the product is new to the market and few potential customers are aware with the
existence of product. The price is generally high. The sales of the product are low or may be
restricted to early adopters. Profits are often low or losses are being made, this is because of the high
advertising cost and repayment of developmental cost.

At the introductory stage: -

• The product is unknown,

• The price is generally high,

• The placement is selective, and

• The promotion is informative and personalised.

At introduction stage, the company core focus is on establishing a market and arising demand for
the product. So, the impact on marketing mix is as follows:

• Product

Branding, Quality level and intellectual property and protections are obtained to stimulate consumers
for the entire product category. Product is under more consideration, as first impression is the last
impression.

• Price

High(skim) pricing is used for making high profits with intention to cover initial cost in a short period
and low pricing is used to penetrate and gain the market share. company choice of pricing strategy
depends on their goals.

• Place

Distribution at this stage is usually selective and scattered.

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• Promotion

At introductory stage, promotion is done with intention to build brand awareness. Samples/trials are
provided that is fruitful in attracting early adopters and potential customers. Promotional programs are
more essential in this phase. It is as much important as to produce the product because it positions
the product.

 Growth Stage

At this stage the product is becoming more widely known and acceptable in the market.

Marketing is done to strengthen brand and develop an image for the product. Prices

may start to fall as competitors enters the market. With the increase in sales, profit may

start to be earned, but advertising cost remains high.

At the growth stage: -

• The product is more widely known and consumed,

• The sales volume increases,

• The price begins to decline with the entry of new players,

• The placement becomes more widely spread, and

• The promotion is focused on brand development and product image formation.

During this stage, firms focus on brand preference and gaining market share. It is market acceptance
stage. But due to competition, company invest more in advertisement to convince customers so
profits may decline near the end of growth stage. Effect on 4 P’s of marketing is as under:

• Product

Along with maintaining the existing quality, new features and improvements in product quality may be
done. All this is done to compete and maintain the market share.

• Price
Price is maintained or may increase as company gets high demand at low competition or it may be
reduced to grasp more customers.
• Distribution
Distribution becomes more significant with the increase demand and acceptability of product. More
channels are added for intensive distribution in order to meet increasing demand. On the other hand,
resellers start getting interested in the product, so trade discounts are also minimal.
• Promotion

At growth stage, promotion is increased. When acceptability of product increases, more efforts are
made for brand preference and loyalty.

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  Maturity Stage

At this stage the product is competing with alternatives. Sales and profits are at their

peak. Product range may be extended, by adding both withe and depth. With the

increases in competition the price reaches to its lowest point. Advertising is done to

reinforce the product image in the consumer's minds to increase repeat purchases. At

maturity stage: -

• The product is competing with alternatives,

• The sales are at their peak,

• The prices reach to its lowest point,

• The placement is intense, and

• The promotion is focused on repeat purchasing.

At this stage, there are more competitors with the same products. So, companies defend the market
share and extending product life cycle, rather than making the profits, By offering sales promotions to
encourage retailer to give more shelf space to the product than that of competitors. At this stage
usually loyal customers make purchases.

Marketing mix decisions include:

• Product

At maturity stage, companies add features and modify the product in order to compete in market and
differentiate the product from competition. At this stage, it is best way to get dominance over
competitors and increase market share.

• Price

Because of intense competition, at maturity stage, price is reduced in order to compete. It attracts the
price conscious segment and retain the customers.

• Distribution

New channels are added to face intense competition and incentives are offered to retailers to get
shelf preference over competitors.

• Promotion

Promotion is done in order to create product differentiation and loyalty. Incentives are also offered to
attract more customers.

 Decline Stage

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At this stage sales start to fall fast as a result product range is reduced. The product faces reduced
competition as many players have left the market and it is expected that no new competitor will enter
the market. Advertising cost is also reduced.

Concentration is on remaining market niches as some price stability is expected there. Each product
sold could be profitable as developmental costs have been paid at earlier stage. With the reduction in
sales volume overall profit will also reduce.

At decline stage: -

• The product faces reduced competition,

• The sales volume reduces,

• The price is likely to fall,

• The placement is selective, and

• The promotion is focused on reminding.

At this stage market becomes saturated so sales declines. It may also be due technical obsolescence
or customer taste has been changed.

At decline stage company has three options:

1. Maintain the product, reduce cost and finding new uses of product.

2. Harvest the product by reducing marketing cost and continue offering the product to loyal niche
until zero profit.

3. Discontinue the product when there’s no profit or a successor is available. Selling out to
competitors who want to keep the product.

At declining stage, marketing mix decisions depends on company’s strategy. For example, if
company want to harvest, the product will remain same and price will be reduced. In case of
liquidation, supply will be reduced dramatically.

LIMITATIONS OF PRODUCT LIFE CYCLE (PLC)

Product life cycle is criticized that it has no empirical support and it is not fruitful in special cases.
Different products have different properties so their life cycle also vary. It shows that product life cycle
is not best tool to predict the sales. Sometimes managerial decisions affect the life of products in this
case Product Life Cycle is not playing any role. product life cycle is very fruitful for larger firms and
corporations but it is not hundred percent accurate tool to predict the life cycle and sales of products
in all the situations.

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BRANDING STRATEGY

Many companies are multi product companies, serving multi markets. Some of these products are
weak and others are strong. Some products will require investment to finance their growth, others will
generate more cash than they need. Companies must decide how to distribute their limited resources
among competing needs of products to achieve the best performance for the company. Management
needs to decide which brands/ product lines to the company. Management needs to decide which
brands/ product lines to build, hold or withdraw support. Portfolio planning is the process of managing
groups of brands and product lines.

A brand is more than just a product. It is a contract between the customer and the creator. It
embodies a meaning, gives direction and defines unique.

There are various branding strategies on which marketing organisations rely to meet sales and
marketing objectives. Some of these strategies are as following: -

 Brand Extension - According to this strategy, an existing brand name is used to promote a new
or an improved product in an organisation's product line. Marketing organisations uses this
strategy to minimize the cost of launching a new product and the risk of failure of new product.
There is risk of brand diluting if a product line is over extended.
 Brand Licensing - According to this strategy, some organisations allow other organisations to
use their brand name, trade name, or trade character. Such authorization is a legal licensing
agreement for which the licensing organization receives royalty in return for the authorization.
Organisations follow this strategy to increase revenue sources, enhance organisation image,
and sell more of their core products.
 Mixed Branding - This strategy is used by some manufacturers and retailers to sell products. A
manufacturer of a national brand can make a product for sale under another company's brand.
Like this a business can maintain brand loyalty through its national brand and increase its
product mix through private brands. It can increase its profits by selling private brands without
affecting the reputation and sales of its national brand.
 Co-Branding - According to this strategy one or more brands are combined in the manufacture
of a product or in the delivery of a service to capitalize on other companies' products and
services to reach new customers and increase sales for both companies' brands.

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 Branded: First we take decision to have brand name or un brand name for our product. But
sometimes some products have no brand names in market.

Unbranded: Some products have no brand names due to legal procedures. So some companies
decide to have no need of brand names for products. But some advantageous are there for
branding some of them are given below:

Brand Sponsored:

 Manufacturer Brand: Real manufacture of a product may have chance to put his own
name for product. It is called manufacturer’s brand.
 Distributor Brand: It is called store brand, reseller brand, house brand or private brand.
Here it not manufacturer but they can get finished products from another maker, but they
sell in market with his name it is called distributor brand.
 Licensor Brand: Some companies may get license from branded companies to use their
brands for other manufacturer products for the period licensed term.

Brand Name

 Individual Brand: From every company many products are being produced, but every
product has its own name. This policy helps for the company in a situation of any particular
product fails in market. For example EENADU has its own different goods like ETV,
EENADU, PRIYA, KALANJALI, BRISHA and MARGADARSHI. This the policy of individual
brand.
 Separate Brand Family brand names:A family brand name is used for all products. By
building customer trust and loyalty to the family brand name, all products that use the
brand can benefit. Good examples include brands in the food industry, including Kellogg’s,
Heinz and Del Monte. Of course, the use of a family brand can also create problems if one
of the products gets bad publicity or is a failure in a market. This can damage the
reputation of a whole range of
 Blanket Brand: One of the strategies that are available in brand name decision. In this
strategy, every product the company offers to market bears the same brand name.
Usually, this name is a company name. This strategy offers certain advantages such as
the development cost is less because there is no need for name research or heavy
advertising expenditures to create brand name recognition. Furthermore, sales of neW
product are likely to be strong if the manufacturer’s name is well known.

Brand Strategy

 Line extension: Line extension occurs when a company introduces additional items in the
same product category under the same brand name, usually with new flavours, forms,
colours, added ingredients, package sizes and so on. Line extensions generally have a
higher chance of survival than new products. On the down side extensions may lead to the
brand name losing its specific meanings; Ries and Trout call this “Line Extension Trap .”

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  Brand Extension: Brand Extension also involves risks. The new product might disappoint
buyers and damage their respect for company’s other products. The brand name may lose
its special positioning in the consumer’s mind through over extension - a phenomenon
called “brand dilution.”
 New Brands: When a company launches products in a new category, it may find that none
of its current brand names are appropriate. When the present brand image is not likely to
help the new product, companies are better off creating new brand names
 Multi Brands: A company will often introduce additional brands in the same product
category. One of the motives for multi branding is to establish different features and/or
appeal to different buying motives. It also enables the company to lock up more distributor
shelf space and protest its major brand by setting up flanker brands
 Co –branding: Co-branding occurs when two different companies pair their respective
brands in a collaborative marketing effort. Each brand sponsor expects that other brand
name will strengthen brand preference or purchase intension.

PACKING:

Introduction: Product packaging plays an important role in the marketing mix. Packaging plays an
important role as a medium in the marketing mix, in promotion campaigns, as a pricing criterion, in
defining the character of new products, as a setter of trends and as an instrument to create brand
identity and shelf impact in all product groups.

The top ten requests about packaging: Even though the consumer is not dissatisfied with the
packaging available on the market, he would still like to be tempted by functional and attractive
packaging ideas, by multisensory appeal and creative design – preferably with packaging ideas made
from board. He acknowledges additional benefits and appeal and is even willing to pay an extra
charge for them. Good starting points for improvements, changes, innovations which optimise the
features of packaging that determine buying decisions and thus generate new market potential can
be summarised in consumers' top ten requests about product packaging:

1. Eye-catching appearance A distinctive, unmistakable and eye-catching appearance is a signal at

the POS to which all consumers and particularly the younger ones respond positively. Whatever
stands out clearly in the monotonous competitive environment, whatever is surprising scores points
with the consumer. Special effort makes a special impression - and is allowed to cost more too.

2. Design, shape and colour The purpose of well-considered design, creative printing and

finishing is to entice the consumer to devote attention to the pack and its contents at the POS.
Aesthetics and attractiveness are major distinctive features - and are in fact essential in some product
segments: beautiful packaging design is of central importance in the cosmetics and confectionery
product groups. Consumers like to buy agreeably designed and decorative products!

2. Functionality Functional aspects are the basis for all successful packaging and for thus greater
product success too. Product and aroma protection, hygiene and tightness, environmental

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responsibility and practical handling (in both use and storage) are just as important here as ideas that
improve comfort: closure mechanisms, portioning, see-through windows, for example.

3. Innovation Novelty has exceptionally strong appeal. An innovative pack can even make "new
products" out of familiar ones. Unusual solutions, functional new developments and originality not
only set design trends but also boost sales!

4. Material What is printed on board is read particularly willingly, while what is packaged in board sells
particularly well. Sustainability, easy disposal and, above all, great design variety and potential are
particular features of the material. Popular with consumers, particularly high appeal and many other
advantages too.

5. Efficient communication The packaging is the credible medium at the point of sale and is consulted
willingly and intensively (see "Material"). This makes it an efficient means of communication and, in
addition, one that gets closer to the consumer than all others. If several of his senses are appealed to
as well, he can be persuaded particularly successfully.

6. Multisensory appeal Anyone who approaches consumers via several of his senses attracts greater
attention, intensifies perception and stimulates interest in buying. Packaging that can be felt, smelled
and heard as well as looked at wins the customer's favour. So much so that he is willing to pay a
higher price for this multisensory appeal.

7. Appropriateness for the product: Packaging is considered to be an important indicator of quality.

The quality of the product therefore has to be communicated by good packaging and not just by
promises of quality made in the text on the packaging. A credible "overall work of art" is created as a
result, in which the contents and the packaging are coherent and the consumer is convinced by their
consistency.

8. Value Packaging is an excellent way to communicate sophistication, class and value. This makes it
an ideal strategic option for expressing premium positioning - as well as being the instrument of
choice when a product needs to be upgraded or a brand needs to be revitalised. Products in classy
packaging are particularly popular presents too.

9. Additional benefits Successful packaging not only combines what is pleasant with what is
functionally useful but also provides additional benefits. For example, as a gift or for presentation,
with entertaining components or simply by making it possible to continue using the packaging for
something else after the product has been consumed.

Functions of packing:

1. Product Identification: Packaging serves as an identification of the product. A product is packed in

special sized, coloured and shaped container for keeping its difference from the products of
competitors.

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2. Product Protection: The main function of packaging is to provide protection to the product from dirt,
insects, dampness and breakage. For example, the products like biscuit, jam, chips, etc., need to be
protected from environmental contact. That is why they are tightly packed.

3. Convenience: Packaging provides convenience in the carriage of the product from one place to
another, in stocking and in consuming. For example, the new pet bottles of COKE make the carriage
and stocking easier. Similarly, the pack of FROOTI provides convenience in its consumption.

4. Product Promotion: Packaging simplifies the work of sales promotion. Packing material in the
house reminds the consumers constantly about the product. In this way, the packaging performs the
role of a passive salesman. Consequently, it increases the sales.

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