Marketing

Category :

11. Marketing

Introduction

The chapter includes the marketing- its concept, functions and management. It describes marketing mix, taking into view elements like the product, its price, physical distribution and methods of promotion. It examines the role of marketing in the development of an economy.

Chapter at a Glance

CONCEPTS IN MARKETING

Meaning of Market

The concept of market is very important in marketing. It can be understood in traditional sense and modern sense.

· In the traditional sense, Market refers to a place where buyers and sellers come together to exchange goods and services.

· In the modern sense, Market refers to a set of actual and potential buyers of a product or service.

Classification of Markets

Markets may be classified on the basis of:

· Product, i.e. Cotton market, Gold market, etc.

· Geographical location, i.e. National Market and International Market.

· Quantity of Goods Transacted i.e. Retail Market and Wholesale Market.

What is Marketing

There are two approaches to marketing: Traditional and Modern.

· In the traditional sense, Marketing refers to performance of business activities that direct the flow of goods and services from producers to consumers. Traditional approach lays emphasis on selling of goods after these have been manufactured.

· In the modern sense, Marketing refers to a social process by which individual groups obtain what they need and want, through creating offerings and freely exchanging products and services of value with others.

Under modern concept, marketing starts before the production process and continue even after the goods have been sold. It consists of all those activities, which satisfy needs and wants of present and potential customers better than the competitors.

Features of Marketing

1. Needs and wants:

(i) The process of marketing helps individuals and groups in obtaining what they need and want.

(ii) A need is a state of felt deprivation. If unsatisfied, it leaves a person unhappy and uncomfortable.

(iii)) For example, need for food makes a hungry person uncomfortable and he starts looking out for objects to satisfy hunger.

(iv) A marketers job in an organisation is to identify needs of the target customers and develop the products and services to satisfy such needs.

Note: Needs are basic to human beings and do not pertain to a particular product whereas, Wants are culturally defined objects that are potential satisfiers of needs. For example, basic needs for food may take various forms such as want for dosa for a south Indian or want of chapatti for a north Indian person.

2. Creating Market Offering:

(i)On the part of the marketers, the effort involves creation of a market offering.

(ii) Market offering refers to a complete offer for a product or service, having given features like size, quality, taste, etc., at a certain price, available at a given outlet or location etc.

(iii)) A good market offer is developed after analysing the needs and preferences of the potential buyers.

3. Customer Value:

(i) Marketing facilitates exchange of products and services between the buyers and the sellers.

(ii) A product will be purchased only if it is perceived to be giving greatest benefit or value for the money.

(iii)) Marketer, should therefore attempt to add value to the product so that the customers prefer it in relation to the competing products and decide to purchase it.

4. Exchange Mechanism:

(i) Exchange refers to the process through which two or more parties come together to obtain the desired product or service from someone, offering the same by giving something in return.

(ii) In the modern world, goods are produced at different places and are distributed over a wide geographical area through various middlemen, involving exchanges at different levels of distribution.

(iii)) Exchange is, therefore, referred to as the essence of marketing.

Essential Conditions Required for Exchange Mechanism

1. Presence of at least two parties - buyer and seller or customer and marketer or offer or and taker.

2. Each party should be capable of offering something of value to the other. For example, the seller offers a product and the buyer, money.

3. Each party should have the ability to communicate and deliver the product or service. No exchange can take place if the buyers and sellers are not able to communicate with each other or if they can not deliver something of value to the other.

4. Each party should have freedom to accept or reject other partys offer.

5. The parties should be willing to enter into transaction with each other. Thus, the acceptance or rejection of the offer takes place on voluntary basis rather than on the bases of any compulsion.

What can be marketed?

1. It involves answer to the question that whether it is product, service or something else that can be marketed.

2. A product is a bundle of utilities or source of satisfaction, that can be used to satisfy human needs and wants.

3. It is not confined to physical objects, such as motor cycle, biscuit, bulb and pencil but also refers to other things of value such as services, ideas, places, etc. that can be offered to the potential buyers for their use.

4. Anything that can be of value to the buyer can be termed as a product. It can be tangible i.e. which can be felt, seen and touched physically such as a pencil, a cycle or an intangible such as services rendered by a doctor, hairdresser or a lawyer.

5. Apart from the product, what can be marketed is a service or a person or an idea or a place. It can be a product or a service or a person or a place or an idea or an event or an organisation or experience or properties.

Who is Marketer?

(i) Marketer refers to any person who takes more active part in the process of exchange.

(ii) Normally it is the seller who is more active in the exchange process as he/ she analyses the needs of the potential buyers, develops a market offering and persuades the buyers to buy the product.

(iii)) However, there may be certain situations where the buyer may be taking more active role in the exchange process. For example, defense deals of company.

Marketing Management

(i) Marketing management means management of the marketing function.

(ii) Marketing management refers to planning, organising, directing and control of the activities which facilitate exchange of goods and services between producers and consumers or users of products and services.

(iii)) According to Philip Kotler, Marketing management is the art and science of choosing target market and getting keeping and growing customers through creation delivering and communicating superior customer values managements.

Process of Marketing Management

(i) Target market: The manufacturer has to decide the target market i.e. the class of people for whom the product is made. For example, readymade garments for children up to the age of 5 years.

(ii) Creation of Demand: Marketer has to create demand for his products so that the target customers purchase the product, keep them satisfied with the firms products and also attract more customers to the firms products so that the firm can grow.

(iii) Superior value for the customer: Marketing involves creating, developing and communicating superior values for customers so that the customers are attracted towards the product or service.

MARKETING AND SELLING

(i) The concept of marketing and selling cannot be viewed as identical terms.

(ii) Marketing is a broad concept than selling.

(iii)) Marketing involves whole range of activities relating to Planning, Pricing, Promotion and distribution of products that satisfy customer needs.

(iv) Selling is restricted to promotion of goods and services through advertising publicity, salesmanship and other short term incentives which help the seller to easily convert it into cash.

Difference between Marketing and Selling

Selling		Basis of Distinction	Marketing
Selling is only a part of the process of marketing and is concerned with promoting and transferring possession and ownership of goods from the seller to the buyer. Thus, selling is merely a part of marketing.	1.	Part of process vs. Wider Term	Marketing is a much wider term consisting of number of activities such as identification of the customers needs, developing the products to satisfy these needs, fixing prices and persuading the potential buyers to buy the same.
Selling focuses on the needs of the seller. It focuses on affecting transfer of title and possession of goods from seller to buyer.	2.	Transfer of title vs. Satisfying Customer	Marketing focuses on the needs and wants of the customer or target market.
The seller seeks profits through sales volume.	3.	Profit through maximising sales vs. Customer Satisfaction	Marketer seeks profit through customer satisfaction.
Selling starts with the product and ends once the product is sold.	4.	Start and end of activities	Marketing starts with the customer need and continuous even when the product is sold.
The seller attempts to bend the customer according to the product.	5.	Difference in Emphasis	The marketer bends himself according to the customer needs.
The seller uses selling efforts like promotion, persuasion etc.	6.	Difference in the strategies	Marketer uses integrated marketing efforts involving marketing efforts involving strategies in respect of product, promotion, pricing and physical distribution.
Selling is internal oriented.	7.	Orientation	Marketing is external oriented
It has narrow scope because it focuses only on the needs of the seller.	8.	Scope	It has wider scope because it focuses on the needs of the customers.
It presupposes the existence of demand of the product.	9.	Demand	It focuses on the creation and maintenance of consumer demand.

MARKETING MANAGEMENT PHILOSOPHIES

1. Production Concept:

(i) Meaning: Production concept holds the view that potential exchange would be realized when the products are inexpensive and are widely available.

(ii) Focus: The focus of the firms following the production concept is on lowering the cost of production by means of mass production and distribution. Quantity is emphasized.

(iii) Drawback: Customer do not always buy products which are inexpensive and available

(iv) Suitability: The production concept leads to the success of the marketing efforts where the customers are governed by cost and availability considerations.

2. Product Concept

(i) Meaning: Product concept holds the view that business goals would be realised when the products of high quality are produced.

(ii) Focus: The focus of the firms following the product concept is on the production of superior products and improvement of the products over a period of time. Quality is emphasized.

(iii) Drawback: Customers may not buy a product just because it is of high quality unless they need it. For example, a customer who has black hair would not like to buy hair dye even if it is of very high quality.

3. Selling Concept:

(i) Meaning: Selling concept holds the view that the customers if left alone would not buy or not buy enough of a firms products. In other words, in order to make a customer buy a product he or she needs to be convinced, lured and attracted.

(ii) Focus: The focus of the firm following selling concept is on pushing the products by undertaking aggressive selling and promotion efforts to make customers buy what is offered to them even when the customers have no intention of buying the product. In other words, they sell what they have.

(iii) Fundamental Assumption: Customers can be lured, coaxed and persuaded into buying.

(iv) Drawback: Selling relies on buyers manipulation. All buyers cannot be manipulated and a buyer cannot be manipulated many times. The customers once wrongly lured can spoil the image of the firm by spreading bad word, which would foreclose all opportunities to sell for the firm leading it to fail. Selling can succeed in the short run but not in the long run.

Thus,

(a) Selling starts with sellers need; (b) Selling seeks sellers satisfaction;

4. Marketing Concept:

(i) Meaning: Marketing concept holds the view that the firm can achieve its goals by identifying the needs of customers in a chosen market and satisfying them better than the competitors.

(ii) Focus:

(a) The focus of the firm following the marketing concept is on the development of those products or services which can satisfy the needs of the customers better than the competitors.

(b) In other words, they dont sell what they can make, rather they make what they can sell.

(iii) Pillars:

The following are the pillars of the marketing concept.

(a) Identification of market or customers who are chosen as the target of marketing efforts;

(b) Understanding needs and wants of customers in the target markets;

(d) Satisfying needs of targets market better than the competitors.

(e) Doing all this at a profit.

5. The Societal Marketing Concept

(i) Meaning: Societal Marketing Concept emphasise that along with customers satisfaction, due importance should be given to welfare of the customer and the society.

(ii) This concept believes that company should not blindly follow the goal of customer satisfaction. For example, a company should not produce anything (say drugs) just to satisfy a customer.

(iii) Objective: The objective of Societal marketing concept is to prevent many social and environmental ills like pollution, plundering of earths resources, extinction of many species, drug abuse, etc.

Differences in the Marketing Management Philosophies

Philosophies/ Basis	Production Concept	Product Concept	Sales Concept	Marketing Concept	Societal Concept
1. Starting Point	Factory	Factory	Factory	Market	Market, Society
2. Main Focus	Quality of product	Quality, performance, features of product	Existing product	Customers needs	Customers needs and societys well being
3. Means	Availability and affordability of product	Product improvements	Selling and promoting	Integrated marketing	Integrated marketing
4. Ends	Profit through volume of production	Profit through product quality	Profit through sales volume	Profit through customer satisfaction	Profit through customer satisfaction and social welfare

FUNCTIONS OF MARKETING

1. Gathering and Analysing market information:

(i) One of the important functions of a marketer is to gather and analyse market information.

(ii) This helps to identify the needs of the customers and take various actions for the successful marketing of the products and services.

(iii) It involves an analysis of the available opportunities and threats as well as strengths and weaknesses of the organisation.

2. Marketing planning:

(i) Another important area of work of a marketer is to develop appropriate marketing plans so that marketing objectives of the organisation can be achieved.

(ii) For example a marketer of Mobile sets, having 10 percent of the current market share in the country aims at enhancing his market share to 20 percent, in the next two years.

(iii)) He will have to develop a complete marketing plan covering various important aspects including the plan for increasing the level of production, promotion of the products, etc and specify the action programmes to achieve these objectives.

3. Product designing and development:

(i) The design of the product contributes to attractiveness of product.

(ii) A good design can improve performance of a product and also give it a competitive advantage in the market.

(iii)) For example, when we plan to buy any product say a motorbike, we not only see its features like cost, mileage, etc. but also the design aspects like its shape, style, etc.

4. Standardisation and Grading:

(i) Standardization refers to producing goods of predetermined specifications, which helps in achieving uniformity and consistency in the output.

(ii) Standardization ensures the buyers that goods conform to the predetermined standards of quality, price and packaging and reduces the need for inspection, testing and evaluation of the products.

(iii) Grading is the process of classification of products into different groups on the basis of some of its important characteristics such as quality, size, etc.

(iv) Grading is particularly necessary for products which are not produced according to predetermined specifications.

5. Packaging and labelling:

(i) Packaging

(a) Packaging refers to designing the package for the products.

(b) Package is the container, which carries the product, is called package.

(ii) Labelling:

(a) Labelling refers to designing the label to be put on the package.

(b) Label may vary from a simple tag to complex graphics.

6. Branding:

(i) An important decision area for marketing of most consumer products is whether to sell the product in its generic name (name of the category of the product, say fan, pen etc.) or to sell them in a brand name (such as polar fan or rotomac pen).

(ii) Brand name helps in creating product differentiations i.e. providing basis for distinguishing the product of a firm with that of the competitor, which in turn, helps in building customers loyalty and in promoting its sale.

(iii) It involves deciding the branding strategy, like whether each product will be given a separate brand name or the same brand name will be extended to all products of the company.

7. Customer support services:

(i) This area of marketing management relates to developing customer support services such as after sales services, handling customer complaints and adjustments, procuring credit services, maintenance services technical services and consumer information.

(ii) All these services aim at providing maximum satisfaction to the customers, akey to marketing success.

8. Pricing of products:

(i) Price of product refers to the amount of money customers have to pay to obtain a product. The demand for a product or service is related to its price.

(ii) Generally lower the price, higher would be the demand for the product and vice versa.

(iii) The marketers have to properly analyse the factors determining the price of a product and take several crucial decisions in this respect, including setting the pricing objectives, determining the pricing strategies, determining the price and changing the prices.

9. Promotion:

(i) Promotion of products and services involves informing the customers about the firms product, its features, etc. and persuading them to purchase these products.

(i) The four important methods of Promotion:

· Advertising

· Sales promotion

· Personal selling

· Publicity

A proper combination of these methods ensure effective marketing.

10. Physical distribution:

(i) This function of marketing involves deciding the distribution of goods and services from place of production to place of consumption.

(ii) It involves two major decisions:

(a) Decisions regarding channels of distribution.

(b) Decision regarding physical movement of goods, i.e., deciding the inventory level, storage and transportation of goods.

(iii) The important decision areas under physical distribution include managing inventory, storage and warehousing and transportation of goods from one place to the other.

11. Transportation:

(i) Transportation involves physical movement of goods from one place to the other.

(ii) Marketing firm analyses its transportation needs after considering factors like nature of the product, cost, location of the market, etc.

(iii) Transportation includes decisions like choice of mode of transportation and other related aspects.

12. Storage or warehousing:

(i) The need for storage arises because of a time lag between production (supply) and consumption (demand).

(ii) To protect the goods from various damages due to weather changes, moisture, insects, rodents, thefts etc. during this period, goods are stored in owned or hired warehouses.

(iii)) Thus, by bridging the gap between the time of production and consumption storage creates time utility.

MARKETING MIX

(i) The combination of variables chosen by a firm to prepare its market offering is also called marketing mix.

(ii) There are large number of factors affecting marketing decisions. These can broadly be divided into two categories (a) controllable factors and (b) non-controllable factors.

(a) Controllable factors are those factors which can be influenced at the level of the firm. For example, decision regarding packaging, brand name, selling price, etc.

(b) Non-controllable factors or environmental variables are those which affect the marketing decision but are not controllable at the firms level. For example, it is very difficult to control political factors like government policy or economic factors like inflation rate.

(c) To be successful, the decisions regarding controllable factors are to be taken keeping the environmental variables into consideration.

ELEMENTS OF MARKETING MIX

(a) Product (c) Place

(b) Price (d) Promotion

(a) Product:

(i) Product means goods or services or anything of value, which is offered to the market for exchange.

(i) The concept of product relates not only to physical product but also the benefit offered by it from customer point of view such as handling complaints, after sale services.

(iii) The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.

(b) Price:

(i) Price may therefore be defined as the amount of money paid by a buyer (or received by a seller) in consideration of the purchase of a product or a service.

(ii) As, we know consumers are highly price sensitive, that is why, it is considered as very crucial element of marketing mix.

(iii) Price mix refers to important decisions related to price of a product such as objectives of price setting, factors affecting price, etc.

(i) Place or Physical Distribution include activities that make firms products available to the target customers.

(ii) The two major decision areas under this function are:

(a) Decision regarding channels of distribution (like wholesalers, retailers) to be used.

(b) Physical Distribution means physical movement of the product from the place of production to the consumers for their consumption or use.

(iii) The other decision areas relate to managing inventory, storage and warehousing and transportation of goods from the place it is produced to the place it is required by the buyers.

(d) Promotion:

(i) Promotion of products and services include activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it.

(ii) The four important tools of promotion are advertising, personal selling, sales promotion and public relation.

PRODUCT

(i) Product means goods or services or anything of value, which is offered to the market for exchange.

(i) The concept of product relates not only to physical product but also the benefit offered by it from customer point of view such as handling complaints, after sale services.

(iii) The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.

(iv) A product may provide three types of benefits to a consumer. For example, car provides:

(a) Functional Benefits in -the form of means of transportation.

(b) Psychological benefits by satisfying need for prestige and esteem.

Thus, all these aspects should be considered while planning for a product.

BRANDING

(i) Branding is the process that is used to create a distinct identity of the product.

(ii) Branding can be defined as the process of using a name, term, symbol or design individually or in some combination to identify a product.

(iii) Now branding is not only done to identify the seller or the maker but also to differentiate it from competitors. It involves decision regarding marketing of firms product in a brand or generic name.

Important Terms Related to Branding

1. Brand

(i) A brand is a name, term, sign, symbol, design or some combination of them, used to identify the productsgoods or services of one seller or group of sellers and to differentiate them from those of the competitors.

2. Brand name:

(i) Brand name refers to that part of a brand, which can be spoken.

(ii) In other words, brand name is the verbal component of a brand.

(iii) For example, Asian Paints, Safola, Maggie, Lifebuoy, Dunlop, and Uncle Chips are the brand names.

3. Brand Mark:

(i) Brand mark refers to that part of a brand which cannot be spoken, but can be recognised easily in the form of sign, symbol or design.

(ii) For example, Nike sign of arrow, mercedez sign of star, pepsi sign of red and blue ball.

4. Trade mark

(i) A brand or part of a brand that is given legal protection is called trademark.

(ii) The protection is given against its use by other firms.

(iii) Thus the firm, which got its brand registered, gets the exclusive right for its use. In that case, no other firm can use such name or mark in the country.

Advantages of Branding to the Marketers

(i) Enables Marking Product Differentiation:

(a) Branding helps a firm in distinguishing its product from that of its competitors.

(b) This enables the firm to secure and control the market for its products.

(ii) Helps in Advertising and Display Programmes:

(a) A brand aids a firm in its advertising and display programmes.

(b) Without a brand name, the advertiser can only create awareness for the generic product and can never be sure of the sale for his product.

(iii) Differential Pricing:

(a) Branding enables a firm to charge different price for its products than that charged by its competitors.

(b) This is possible because if customers like a brand and become habitual of it, they do not mind paying a little higher for it.

(iv) Ease in Introduction of New Product:

(a) If a new product is introduced under a known brand, then the new product can enjoy all the advantages of k own brand.

(b) For example, Food Specialties Ltd. had a successful brand Maggie (Noodles), it extended this name to many of its new products introduced such as Tomato Ketchup, Soups, etc. Similarly Samsung extended the brand name of its Television to Washing Machines and other durable products, like Microwave oven.

Advantages of Branding to the Customers

(i) Helps in Product Identification:

(a) Branding helps the customers in identifying the products.

(b) For example, if a person is satisfied with a particular brand of a product, say tea leaves or detergent soap, he need not make a close inspection every time, he has to buy that product. Thus, branding greatly facilitates repeat purchase of the products.

(ii) Ensures Quality:

(a) Branding ensures a particular level of quality of the product.

(b) Thus, whenever there is any deviation in the quality, the customers can have recourse to the manufacturer or the marketer.

(iii) Status Symbol:

(a) Some brands become status symbols because of their quality

(b) The consumers of those brands of products feel proud of using them and adds to the level of satisfaction of the customers.

Characteristics of Good Brand Name

1. Short and Simple: Brand name should be short and simple which can be read and remembered without much effort. For example Lux, Dettol or Surf are short.

2. Suggestive: It should be suggestive because it can convey product attributes or benefits. For example, Sunsilk suggests shine like sun and softness of silk. Hajmola suggests digestive properties, Ujjala suggests brightness.

3. Distinctive: It should be distinctive. A brand is distinctive when it stands apart from others in the category. For example Ariel, Tide, Shell, Cinthol, Perk are all distinctive brand names.

4. Adaptable: The brand name should be adaptable to packing or labelling requirements, to different advertising media and to different languages.

5. Versatile: The brand name should be sufficiently versatile to accommodate new products, which are added to the product line e.g. Maggie, Colgate.

6. Legal Protection: It should be capable of being registered and protected legally.

7. Staying power: Chosen name should have staying power i.e. it should not get out of date.

8. Easily Pronounceable: It should be easily pronounceable.

9. Universal/Appropriate Meaning: It should be selected after considering its meaning in other languages and cultures. Some words may be perfect in one country but may become inappropriate in other countries. For example, in India we have a car by the name Ambassador Nova, but Nova in Spanish speaking countries means does not go.

PACKAGING

(i) Packaging at a very basic level can be defined as a set of tasks or activities, which is concerned with the design and production of an appropriate container or wrapper for the product.

(ii) The container, which carries the product, is called package.

(iii)) For Example: Pepsi in Bottle, Nirma in Plastic Bag. AC in hard wood carton.

Levels of Packaging

1. Primary Package:

(i) It refers to the products immediate container.

(ii) In some cases, the primary package is kept till the consumer is ready to use the product (e.g. plastic packet for socks);

(iii) Whereas in other cases, it is kept throughout the entire life of the product (e.g. a toothpaste tube, a match box, etc.)

2. Secondary Packaging:

(i) It refers to additional layers of protection that are kept till the product is ready for use, e.g. a tube of shaving cream usually comes in a card board box.

(ii) When consumers start using the shaving cream, they will dispose off the box but retain the primary tube.

3. Transportation Packaging:

(i) It refers to further packaging components necessary for storage, identification or transportation.

(ii) For example a toothpaste manufacturer may send the goods to retailers in corrugated boxes containing 10, 20 or 100 units.

Importance of Packaging

1. Rising Standards of Health and Sanitation: Because of the increasing standards of living in the country, more and more people have started purchasing packed goods as the chances of adulteration in such goods are minimised.

2. Self-service Outlets:

(i) The self-service retail outlets are becoming very popular, particularly in major cities and towns.

(ii) Because of this some of the traditional role assigned to personal selling in respect of promotion has gone to packaging.

3. Innovational Opportunity:

(i) An innovative opportunity package enables the marketer to capture new customer segments.

(ii) For example, by selling shampoo in small pouches, marketer could reach the rural or lower income market. Even milk can now be stored for 4-5 days without refrigeration in the recently developed packing materials

4. Product Differentiation:

(i) Packaging is one of the very important means of creating product differentiation.

(ii) The colour, size, material etc., of package makes real difference in the perception of customers about the quality of the product.

(iii)) For example, by looking at the package of a product say Paint or hair oil, one can make some guess about quality of the product contained in it.

Functions of Packaging

1. Product Identification:

(i) Packaging greatly helps in identification of the products.

(ii) For example, Colgate in red colour, or Ponds cream jar can be easily identified by its package.

2. Product Protection:

(i) Packaging protects the contents of a product from spoilage, breakage, leakage, pilferage, damage, climatic effect, etc.

(ii) This kind of protection is required during storing, distribution and transportation of the product.

3. Facilitating Use of the Product:

(i) The size and shape of the package should be such that it should be convenient to open, handle and use for the consumers.

(ii) For example Cosmetics, medicines and tubes of toothpastes.

4. Product Promotion:

(i) It acts like a silent salesman.

(ii) In current self-service retailing, an attractive package can attract the attention of a customer and can describe product contents and induce him to make a purchase.

LABELLING

(i) Labelling at a very basic level can be defined as a set of tasks or activities which is concerned with the design and production of an appropriate carrier of information attached to product package.

(ii) Label is the carrier of informational which is attached to the product package. Labels are useful in providing detailed information about the product, its contents, methods of use etc.

Functions/ Importance of Label

Labelling is essential because it performs variety of functions such as:

1. Provides Information: It provides information to the customers such as:

(a) Name of Product

(b) Name & Address of Manufacturer and Marketer

(d) Batch of Manufacturing

(e) Date of Expiry (Compulsory in case of processed foods, drugs)

(f) Contents and ingredients

(g) Directions for use (Compulsory in case of drugs)

(h) Maximum Retail Price (Whether including or excluding Local Taxes)

(i) Statutory Warning (For example in case of Cigarette & Pan Masala)

(j) Safety Warning in case of hazardous or poisonous products.

2. Helps in Identification:

(i) It identifies the product or brand.

(ii) For example, the name Lux imprinted on toilet soap helps the customer to know which soap out of several is Lux.

3. Helps in Grading:

(i) It enables the manufacturer to grade the products into different categories.

(ii) For example, Hindustan Lever sells different types of tea under yellow, red and green label categories.

4. Helps in promotion of Products:

(i) A carefully designed attractive label can attract attention, describe the product and give reason to purchase.

(ii) For example, the label on the package of a Shaving Cream mentions, 40% Extra Free or package of a toothpaste mentioning, Tree Toothbrush Inside, or Save ` 15

5. Provides Information relating to Law:

(i) Labelling performs the function of providing information required by law.

(ii) For example, the statutory warning on the package of cigarette or Pan Masala, Smoking is injurious to Health or Chewing Tobacco is injurious to health.

(iii) Such information is required on processed foods, drugs and tobacco products. In case of hazardous or poisonous material, appropriate safety-warning need to be put on the label.

PRICING

(i) Price may be defined as the amount of money paid by a buyer (or received by a seller) in consideration of the purchase of a product or a service.

(ii) In a marketing exchange, price is the value which a buyer passes on to the seller in lieu of the product or service provided.

(iii) It is one of the elements of marketing mix which seller mixes with the other variables in order to achieve the desired number of transactions with the customers. Price may be called by different names.

(a) Price for education: TUITION FEE

(b) Price for Transportation: FARE

(d) Price for labour: WAGE

(iv) Price should neither be too high to get out of competitive market nor be too low to recover costs.

Factors Affecting Price Determination

1. Product Cost:

(i) Cost sets the lower limit of the price.

(ii) Cost is an important consideration while pricing. Costs set the floor for pricing decisions.

(iii) It is important that the price should recover all costs including a fair return for undertaking the marketing effort and risk.

(iv) The manager must analyse the behaviour of costs to find out how they behave in short and long run and their relationship with the production level.

(v) There are three types of costs:

Type of cost		Meaning	Example
1.	Fixed Costs	These are the costs which do not vary with the production.	Rent of the factory, salaries of the permanent staff
2.	Variable Costs	These are the costs which vary with the production.	Direct Material Costs, Direct Labour Costs, Direct Expenses
3.	Semi Variable Cost	Semi variable costs are those costs which vary with the level of activity but not in direct proportion with it.	Compensation of a sales person may include a fixed salary of say ` 10,000 plus a commission of 5 per cent on sales.

(vi) Total Costs are the sum total of the fixed, variable and semi-variable costs for the specific level of activity,

2. The Utility and demand:

(i) While the product costs set the lower limits of the price, the utility provided by the product and the intensity of demand of the buyer sets the upper limit of price, which a buyer would be prepared to pay.

(ii) In fact the price must reflect the interest of both the parties to the transaction the buyer and the seller.

(iii) The buyer may be ready to pay up to the point where the utility from the product is at least equal to the sacrifice made in terms of the price paid. The seller would, however, try to at least cover the costs.

(iv) According to the law of demand, consumers usually purchase more units at a low price than at a high price.

(v) The price of a product is affected by the elasticity of demand of the product. Finally, the price elasticity of customer demand must be taken into consideration.

Just For Understanding: It refers to the degree of responsiveness of quantity demanded to changes in price of the product.

Price Elasticity		Pricing
1.	In case of Ielastic Demand	The Marketer can choose higher price without much loss of demand. So, total revenue rises as consumer is still buying more at a higher price.
2.	In case of Elastic Demand	The marketer can get larger revenue only by lowering price.

3. Extent of Competition:

(i) Degree of competition affects the degree of pricing freedom enjoyed by a firm in the market.

Case		Degree of pricing freedom
1.	There is no competitor	Firm enjoys complete pricing freedom and becomes the price maker.
2.	If There are competitors	Firm does not enjoy complete pricing freedom and must set the price in line with the competitors.

(ii) For example Maruti was the price maker before the launching of brands like Santro Indica, Palio but now it is forced to set the price in line with the competitors.

4. Government and Legal Regulations:

(i) In order to protect the interest of public against unfair practices in the field of price fixing, Government can intervene and regulate the price of commodities.

(ii) Government can declare a product as essential product and regulate its price.

(iii) For example, the cost of a drug manufactured by a company having monopoly in the production of the same come to ` 20/- per strip of ten and the buyer is prepared to pay any amount for it, say ` 200/-. In the absence of any competitor, the seller may be tempted to extort the maximum amount of ` 200/- for the drug and intervene to regulate the price.

(iv) Usually in such a case, the Government does not allow the firms to charge such a high price and intervene to regulate the price of the drug. This can be done by the Government by declaring the drug as essential commodity and regulating its price.

5. Pricing Objectives:

(i) The objective of pricing is no doubt to maximize profit. Maximizing profits in the short run, it would tend to charge the maximum price for its products.

(ii) To maximize profits in the long run it would have a lower price per unit in order to capture the market.

Apart from profit maximization, the pricing objective includes

(a) Obtaining market share leadership: If a firms objective is to obtain larger share of the market; it will keep the price of its products at lower levels so that greater number of people are attracted to purchase the products.

(b) Surviving in a competitive market: If a firm facing difficulties in surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor, it may resort to discounting its products or running a promotion campaign to liquidate its stock; and

(c) Attaining product quality leadership: In this case, normally higher prices are charged to cover high quality and high cost of Research and Development.

6. Marketing Methods Used:

(i) Price fixation process is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer services provided.

(ii) For example, if a company provides free home delivery, it has some of flexibility in fixing prices. Similarly, uniqueness of any of the elements mentioned above gives the company a competitive freedom in fixing prices of its products.

PHYSICAL DISTRIBUTION/ PLACE MIX

(i) Place in the context of marketing mix refers to a set of decisions that need to be taken in order to make the product available to the customers for purchase and consumption.

(ii) The product should be made available to the customers at the right place, in right quantity and in right time otherwise the customers would not be able to buy them.

(iii) Making the products available to the customers require; (a) development of channels of distribution and (b) physical distribution of products.

(iv) Thus, it is a process by which the goods are transferred from the place of production to the place of consumption.

CHANNELS OF DISTRIBUTION

(i) Channels of distribution refer to the path taken by the goods in their movement to the customers.

(ii) The term channels of distribution is a network of people or institutions or organisations (like agents, dealers, wholesalers, retailers) that perform a variety of interrelated and coordinated functions in the movement of goods from the place of production to the place of consumption.

(iii) In other words the channels of distribution refer to the various intermediaries who help in moving the product from the producer to the consumer. These are a variety of middlemen and merchants who act as intermediaries between the producers and consumers.

Channels of Distribution Used For a Consumer Product Types of Channel

1. Zero Level Channel (or Direct Channel):

(i) When the producers sell their goods directly to the consumers, it is called a direct channel.

(ii) No middlemen is present between the producer and the consumer. There can be two types of direct channels as follows:

(a) Through Salesman:

(i) The producers employ salesmen to book orders by contacting the potential users and supply goods out of the stock held by them. The main point in favour of this type of direct selling is the need:

(a) To enlighten about the additional features of product, and

(b) To educate the user about how to use the product.

(ii) For Example: Direct selling of Vacuum Cleaners and Water Purifying Equipment by Eureka Forbes Ltd. (EFL), a Mumbai based company.

Asian Sky Shop sells through television only. This direct channel can be shown below:

(b) Through Owned Retail Shop/Showroom:

(i) The producers set up retail shops/showrooms in different localities and sell goods directly to the consumers.

(ii) This direct channel can be shown below:

Example: Bata Shoes, Usha Sewing Machines, McDonalds, Raymonds.

2. Indirect Channels: When a manufacturer employs one or more intermediary to move goods from the point of production to the point of consumption, the distribution network is called indirect Channels. This may take any of the following forms:

(i) Manufacturer-Retailer Consumer (One Level Channel):

(a) The manufacturer supply goods directly to retailers who in turn sell to the ultimate consumers. In this channel only one intermediary (i.e. Retailers) is involved.

(b) This type of network enables manufacturers to cover wide area of market while retaining control over channels. This indirect channel can be shown below:

(ii) Manufacturer-Wholesaler-Retailer- Consumer (Two Level Channel):

(a) The manufacturer supply goods in bulk to the wholesalers who sell goods in relatively small quantity to the retailers who in turn sell these goods to the ultimate consumers.

(b) In this channel two intermediaries (i.e. wholesalers and retailers) are involved. This indirect channel can be shown below:

(iii)) Manufacturer-Agent-Wholesaler- Retailer-Consumer (Three Level Channel):

(a) The manufacturer supply goods in bulk to the mercantile agents who in turn sell the goods to the wholesalers who in turn sell the goods to the retailers who in turn sell the goods to the ultimate consumers.

(b) In this channel three intermediaries (i.e. mercantile agent, wholesalers and retailers) are involved. This indirect channel can be shown below:

Factors Determining Choices of Channels

1. Product Related Factors: Product related factors affect the choice of channels of distribution as follows:

Product Related Factors

Suitable Channel of Distribution

1. Unit Value

(a) High like Diamond Jewellery

(b) Low like Salt/ Matchsticks

(a) Shorter Channels: A product like diamond is highly priced, it is preferable to avoid the intermediaries, and adopt the short and direct channel of distribution.

(b) Longer Channels: If the unit value of the product is low as it is seen with most of the convenience goods the long and indirect channel is preferred.

2. Product Complexity

(a) Technically Complex like Aircraft, Heavy Machinery

(b) Simple like Stationery

(a) Industrial and engineering products which are highly complex and having certain technical specifications should adopt the short direct channel.

(b) Products that are non-complex and do not have any technical details can be easily distributed by using the long indirect channel.

3. Nature of Product

(a) Customised like Furniture

(b) Industrial products like Machinery.

(a) These are products which are generally non technical, less expensive, standardized and purchased frequently. For such products it is best to have long/indirect channel, consisting of various middlemen.

(b) These are products which are generally technical, expensive, purchased by limited buyers and made to order. Hence these products require the short/direct channel.

4. Perishability

(a) Perishable goods like Eggs, Milk

(b) Durable goods like TV, AC

(a) Shorter Channels: These are products that have a very short life such as fruits, vegetables and dairy products. For such products, it is best to adopt short direct channel.

(b) These are products which have a longer life such as soaps, vegetable oil, cloths, etc. The suitable channel of distribution for such products are the long/indirect channel.

2. Company Related Factors: Company related factors also affect the choice of channels of distribution as follows:

Company Related Factor

Suitable Channel of Distribution

1. Financial Position

(a) Strong

(b) Weak

(a) Companies which are financially strong and having adequate funds can open their own retail outlets/ showrooms. In such cases there is direct and short channel.

(b) Companies which do not have adequate finance or do not want to make a huge Investment, will adopt a long and indirect channel of distribution using various intermediaries.

2. Degree of Control Desired on Distribution Channel

(a) High

(b) Low

(a) Companies which want to exercise a greater control on the distribution channel will avoid the intermediaries and hence adopt the short and direct channel.

(b) If the company does not want to exercise much control on the distribution channel it will adopt a long and direct channel.

3. Competitive Factors:

(i) The choice of channel is also affected by the channel selected by competitors in the same industry.

(ii) If the competitors have selected a particular channel say chemist shops for the sale of toiletry products like hair oil, the other firm may also like to select the similar channel.

(iii) In some cases producers may want to avoid the channels used by competitors. For example if other cosmetic producers have chosen big retail stores for the sale of their products, a particular firm may like to adopt door to door selling.

(iv) Thus, it will depend upon the policy of the firm, whether it wants to go with the competitors or be different from them.

4. Market Factors: Market related factors affect the choice of channels of distribution as follows:

Market Related Factors

Suitable Channel of Distribution

1. Size of Market

(a) Small Size

(b) Large Size

(a) If the size of the market is small the firm can short direct channel.

(b) If the size of the market is large a long indirect can be adopted.

adopt a channel

2. Geographic Concentration

(a) Limited geographic area

(b) Wide geographic area

(a) If the potential buyers are concentrated in a Limited geographic area, the firm can introduce a short direct channel.

(b) If the potential buyers are scattered or widely situated, the firm can adopt long indirect channel.

3. Order Size

(a) Small

(b) Large

(a) If the size of the order is small as in the case of consumer products a number of intermediaries are required and hence the long indirect channel is used.

(b) If the size of the order is large then the intermediaries can be avoided and the short direct channel may be used.

4. Quantity Purchased

(a) Small

(b) Large

(a) If the number of buyers is small such as customers of industrial products, the short direct channel is preferred.

(b) If the number of buyers are large as in the case of convenience goods (toothpaste, soap, etc.) the long indirect channel can be used.

5. Environmental Factors:

(i) Other important factors affecting the choice of channels of distribution include environmental factor such as economic condition and legal constraints.

(ii) In a depressed economy, marketers use shorter channels to distribute their goods in an economical way.

PHYSICAL DISTRIBUTION

(a) Once goods are manufactured, packaged, branded, priced and promoted, these must be made available to customers at the right place, in right quantity and at the right time.

(b) It is an important responsibility of the marketers to make the product physically available at a place where the customers would like them to buy.

(c) The physical handling and movement of goods from place of production to the place of distribution, which is a very important element of marketing mix.

(d) Important activities involved in physical distribution include transportation, warehousing, material handling, and inventory control. These activities constitute major components of physical distribution.

Components of Physical Distribution

(i) Order Processing:

(a) Products flow from manufacturers to customers via channel members while orders flow in the reverse direction, from customers to the manufacturers.

(b) A good physical distribution system should provide for an accurate and speedy processing of orders, in the absence of which goods would reach the customers late or in wrong quantity or specification.

(ii) Transportation:

(a) Transportation is the means of carrying goods and raw materials from the point of production to the point of sale. Is one of the major elements in the physical distribute of goods.

(iii) Warehousing:

(a) Warehousing refers to the act of storing and assorting products in order to create time utility.

(b) The need for warehousing arises because there may be difference between the time a product is produced and the time it is required for consumption.

(c) Generally, the efficiency of a firm is serving its customers will depend on where these warehouses are located and where are these to be delivered.

(d) The firm has to strike a balance between the cost of warehousing and the level of customer service.

(e) For products requiring long-term storage (such as agricultural products) the warehouses are located near production sites.

(f) On the other hand, the products which are bulky and hard to ship (machinery, automobiles) as well as perishable products (bakery, meat, vegetables) are kept at different locations near the market.

(iv) Inventory Control:

(a) A very important decision in respect of inventory is deciding about the level of inventory. Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock.

(b) With advancements in computers and information technology the need for keeping higher inventory is reducing and the new concept of Just-in-Time-Inventory decision is becoming popular in an increasing number of companies.

· Firms policy regarding the level of customer service to be offered. Higher the level of service greater will be the need to keep more inventories.

· Degree of accuracy of the sales forecasts. In case more accurate estimates are available, the need for keeping very high level of inventory can be minimised.

· Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs back to the factory and get products in the market.

· Cost of inventory, which includes holding cost such as cost of warehousing, tied up capital, etc and the manufacturing cost.

PROMOTION

(i) It refers to the use of communication with the twin objectives of informing potential customers about a product and persuading them to buy it.

(ii) In other words, promotion is an important element of marketing mix by which marketers makes use of various tools of communication to encourage exchange of goods and services in the market.

Elements of Promotion Mix

(i) Promotion mix refers to combination of promotional tools used by an organisation to achieve its communication objectives.

(ii) These include,

(a) Advertising

(b) Personal Selling

(d) Publicity

ADVERTISING

(i) Advertising refers to any paid form of non- personal presentation and promotion of goods and services by an identified sponsor.

(ii) The most common modes of advertising are newspapers, magazines, television, and radio.

Features of Advertising

(a) Paid Form:

(i) Advertising is a paid form of communication.

(ii) This implies that the sponsor has to pay for every advertisement, on the basis of the time taken or the space used.

(b) Impersonality:

(i) It is an impersonal method as there is no direct face-to-face contact between the prospect (customer) and the advertiser.

(ii) Advertising creates a monologue and not a dialogue.

(i) Advertising is undertaken by some identified individual or company, who makes the advertising efforts and also bears the cost of it.

(ii) It means that it is not a secret.

Role/ Importance of Advertising

(i) Creates Demand:

(a) Advertising is a medium through which a large number of people can be reached over a vast geographical area.

(b) This enables to create demand by making people aware of new products.

(ii) Enhancing customer satisfaction: Advertising creates confidence amongst prospective buyers as they feel more comfortable and assured about the product quality and hence feel more satisfied.

(iii) Expressiveness:

(a) Advertising enables the advertiser to prepare message with the help of latest techniques, graphics and multimedia. Drawings, colour, illustration, sound, pictures, music, etc.

(b) This enables the advertiser to achieve enhanced communication effectiveness.

(iv) Economy:

(a) It is economical since it is capable of delivering message to a large audience.

(b) The cost of reaching a prospect tends to be much less than other forms of communication.

(c) For example, the cost of a ten seconds television commercial during the prime time may be as high as ` 10 lac, but given the reach of the television the per prospect exposure would be very low.

(v) Elimination of Middlemen:

(a) A manufacturer can establish direct link with his prospective customer through advertisement.

(b) By this, price of the products will decrease and better quality products will be available at cheaper rate as there is elimination of middlemen.

(vi) Higher Standard of living:

(a) By advertising people get information regarding new products.

(b) By consuming this new products, their standard of living increases.

Objections to Advertising

1. Adds to cost:

(i) Advertising adds to the cost of the product. The customer is required to pay more on account of the cost incurred on advertisement since no manufacturer pays for the advertisement costs out of his own pocket.

(ii) Against this Objection: The above criticism is not always true especially in those cases where the advertising, by increasing the demand for a product, has led to large-scale production and enabled the manufacturers to produce goods at a lower cost per unit and accordingly sell at a lower price.

2. Undermines Social Values:

(i) Advertising promotes materialism and hence it is becoming a main source of discontentment. People feel discontented when they are not in a position to get all the products which are advertised. Certain advertisements have appeared in the new life styles which do not find social approval.

(ii) Against this Objection:

(a) Advertisement in fact helps buyers by informing them about the new products, which may be improvement over the existing products. If the buyers are not informed about these products, they may be using inefficient products.

(b) Further, the job of an advertisement is to inform. The final choice to buy or not to buy anyway rests with the buyers. They will buy if the advertised product satisfies some of their needs. They may be motivated to work harder to be able to purchase these products.

3. Confuses the buyers:

(i) Advertising creates confusion in the minds of people by providing numbers of products which make their choice difficult and sometimes there are wasteful expenditure.

(ii) Each brand claims to be better than the other. For example, it is difficult to choose among Ariel washing powder or Wheel washing powder or Surf Exel washing powder. Although some cheaper varieties of washing powders (which are not advertised) are available in the market, yet the choice is made out of the well-advertised costly powders.

(iii) Against this Objection:

(a) The supporters of advertisement, however, argue that we are all rational human beings who make our decisions for purchase of products on factors such as price, style, size, etc.

(b) Thus the buyers can clear their confusion by analysing the information provided on the advertisements and other sources before taking a decision to purchase a product. However, this criticism cannot be completely overruled.

4. Encourages sale of inferior products:

(i) Some critics of advertising feel that it encourages the sale of inferior and dubious products by giving attractive display of the product.

(ii) Manufacturers through advertisements make false claims about the utility of the products and thereby cheat the innocent customers who think advertisement that appeared in TV or newspaper must be authentic.

(iii) They argue that with the help of advertising almost anything can be sold in the market.

(iv) Against this Objection:

(a) In fact superiority and inferiority depends on the quality, which is a relative concept. The desired level of quality will depend on the economic status and preferences of the target customers.

(b) Advertisements sell products of a given quality and the buyers will buy if it suits their requirements. No advertisement should however, make false claim about the quality of a product. If a firm makes a false claims it can be prosecuted for the same.

5. Some Advertisements are in bad taste:

(i) Sometimes the advertisements are prepared without considering the peoples tastes. Sometimes the matter of advertisement has no relationship with the products. Some advertisements are in bad taste. For example, an advertisement showing women running after a man because he is wearing a particular suiting is not certainly in good taste.

(ii) Against this Objection: Whether the advertisement is in good taste or bad taste is a matter of personal opinion. Even standards of taste change over a period of time as what was not accepted five years ago may be acceptable today.

PERSONAL SELLING

(i) Personal selling involves oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making sales.

(ii) Personal selling is a process of persuasion that influences people to buy goods and services.

Features of Personal Selling

1. Personal form: In personal selling a direct face-to-face dialogue takes place that involves an interactive relationship between the seller and the buyer.

2. Development of relationship: Personal selling allows a salesperson to develop personal relationships with the prospective customers, which may become important in making sale.

3. Minimum Wastage: The wastage of efforts in personal selling can be minimised as company can decide the target customers before making any contact with them.

Qualities of a Good Salesman

1. Physical Qualities:

(i) A good salesman must have sound health. He must be well-built and free from physical defects. He must have an attractive personality.

(ii) Good grooming, clean and tidy appearance and a good posture are the main aspects of such personality.

(iii) A salesman must always have a cheerful smile on his face. Pleasing personality, clear voice and natural tone of speaking helps to create a good impression on the customer.

2. Mental Qualities:

(i) A good salesman must have the power of observation and a sound memory.

(ii) He must be able to recognize customers and their buying motives.

(iii) A successful salesman also requires wide knowledge about his company and its product.

(iv) He must possess presence of mind, self-confidence and sense of responsibility. Ego-drive will helps a salesman to effectively influence the customer.

(v) It means the personal need to make sales as a measure of personal success and recognition rather than just for money. Creative imagination, keen observation, good judgement are necessary.

3. Social Qualities:

(i) A good salesman must have good manners. Courtesy, empathy and tact are the main aspects of good manners.

(ii) Courtesy means polite expressions and the practice of greeting and thanking customers. Empathy is the ability to look at problems form the customers viewpoint. Tact means the ability to say the right thing without offending others.

(iii)) A successful salesman needs to be sincere, dependable, cooperative and loyal. He requires a sound character. He must perform his duties sincerely and honestly. He should have self-confidence and optimistic outlook.

4. Vocational Qualities:

(i) A good salesman requires specialized knowledge and good communication skills. He needs training and experience.

(ii) Sound knowledge and skills enable a salesman to handle objections and to convince buyers.

(iii) Moreover, a person cannot be a good salesman without the ambition and enthusiasm to be successful.

(iv) A good salesman must have adequate knowledge of competition, customers and selling techniques.

Difference between Advertising and Personal Selling

Advertising	Basis	Personal Selling
Advertising is an impersonal form of communication.	Kind of communication	Personal selling is a personal form of communication.
Advertising involves transmission of standardised messages, i.e., same message is sent to all the customers in a market segment.	Uniformity of message	In personal selling, the sales talk is adjusted keeping in view customers background and needs.
Advertising is inflexible as the message cant be adjusted to the needs of the buyer.	Flexibility	Personal selling is highly flexible as the message can be adjusted.
It reaches masses, i.e., a large number of people can be approached.	Reach	Only a limited number of people can be contacted because of time and cost considerations.
In advertising the cost per person reached is very low.	Cost	The cost per person is quite high in case of personal selling.
Advertising can cover the market in a short time.	Time	Personal selling efforts take a lot of time to cover the entire market.
Advertising makes use of mass media such television, radio, newspaper, and magazines.	Medium	Personal selling makes use of sales staff, which has limited reach.
Advertising lacks direct feedback. Marketing research efforts are needed to judge customers reactions to advertising.	Feedback	Personal selling provides direct and immediate feedback. Sales persons come to know about the customers reactions immediately.
Advertising is more useful in creating and building interest of the consumers in the firms products.	Objective	Personal selling plays an important role at the awareness stage of decision making.
Advertising is more useful in marketing to the ultimate consumers who are large in numbers.	Type of custumers	Personal selling is more helpful in selling products to the industrial buyers or to intermediaries such as dealers and retailers who are relatively few in numbers.

SALES PROMOTION

(i) Sales promotion refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service.

(ii) Sales promotion draws stronger and quicker response from the target audience. It creates some sense of immediacy or urgency to respond.

Merits of Sales Promotion

(i) Attention Value: Sales promotion activities attract attention of the people because of the use of incentives.

(ii) Useful in New Product Launch: Sales promotion tools can be very effective at the time of introduction of a new product in the market. It induces people to break away from their regular buying behaviour and try the new product.

(iii) Synergy in Total Promotional Efforts: Sales promotion activities are designed to supplement the personal selling and advertising efforts used by a firm and add to the overall effectiveness of the promotional efforts of a firm.

Limitations of Sales Promotion

(i) Reflects Crisis: If a firm frequently rely on sales promotion, it may give the impression that it is unable to manage its sales or that there are no takers of its product.

(ii) Spoils Product Image: Use of sales promotion tools may affect the image of a product. The buyers may start feeling that the product is not of good quality or is not appropriately priced.

Sales Promotion Techniques

1. Rebate: Offering products at special prices, to clear off excess inventory. Example, a car manufacturers offer to sell a particular brand of car at a discount of ` 10,000, for a limited period.

2. Discount: Offering products at less than list price. Example, a shoe companys Discount Up to 50% or a shirt marketers offer of 50 + 40% Discount.

3. Refunds: Refunding a part of price paid by customer on some proof of purchase, say on return of empty foils or wrapper. This is commonly used by food product companies to boost their sales.

4. Product Combinations: Offering another product as gift along with the purchase of a product, say offer of a pack of ` 2 kg of rice with the purchase of a bag of Aatta (wheat flour), or Get 128 KB Memory Card Free with a Digicam or Buy a TV of 25 + and Get a 1 Vacuum Cleaner Free or 100 Gm Bottle of Sauce Free With 1 kg Detergent.

5. Quantity Gift: Offering extra quantity of the product commonly used by marketer of toiletry products. For example, a shaving creams offer of 40% Extra or A Hotels offer of Take a 2 Night 3 Days Package At the Hotel and Get an Extra Night Stay At Just Rs 500 or Buy 2 Get 1 Free offer of a marketer of shirts.

6. Instant Draws and Assigned Gift: For example, Scratch a Card or Burst a Cracker and instantly win a Refrigerator, Car, T-shirt, Computer, with the purchase of a TV,

7. Lucky Draw: For example, the offer of a bathing soap to win a gold coin on lucky draw coupon for free petrol on purchase of certain quantity of petrol from given petrol pump or lucky draw coupon on purchase of easy undergarment and win a car offer.

8. Usable Benefit: Purchase goods worth ` 3000 and get a holiday package worth ` 3000 free or Get a Discount Voucher for Accessories on Apparel Purchase of ` 1000 and above

9. Full finance @ 0%: Many marketers of consumer durables such as Electronic goods, automobiles etc. offer easy financing schemes such as 24 easy instalments, Eight Up Front and 16 To Be Paid as Post Dated Cheques. However, one should be careful about the file charges, which sometimes is nothing but interest recovered in advance.

10. Sampling: Offer of free sample of a product, say a detergent powder or tooth paste to potential customers at the time of launch of a new brand.

11. Contests: Competitive events involving application of skills or luck, say solving a quiz or answering some questions.

CONCEPT OF PUBLIC RELATIONS

(i) Public relation is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its public.

(ii) The concept of Public Relations (PR) involves a variety of programmes to promote or protect companys image or its products. It means to strengthen relations with various stakeholders, like customers, shareholders, employees, investors, suppliers, etc. often public relations are conducted through media, i.e., news, T.V., magazines, websites, etc.

Role of Public Relations

The role of public relations can be discussed with respect to the functions which the department performs. The public relations department performs five functions:

1. Press relations:

(i) Information about the organisation needs to be presented in a positive manner in the press.

(ii) Generating news requires skills in developing and researching a story and getting the media to accept press releases is a difficult task.

(iii) The public relations department is in contact with the media to present true facts and a correct picture about the company. Otherwise news can get distorted if taken from other sources.

2. Product publicity:

(i) New products require special effort to publicise them and the company has to sponsor such programmes.

(ii) The public relations department manages the sponsoring of such events.

(iii) The company can draw attention to new products by arranging sports and cultural events like news conferences, seminars and exhibitions.

3. Corporate Communication:

(i) The image of the organisation needs to be promoted through communicating with the public and the employees within the organisation.

(ii) This is usually done with the help of newsletter, annual reports brochures, articles and audio-visual materials to reach the influence their target markets.

(iii) Speeches by the companys executives at a meeting of trade associations or trade fairs can really boost the companys image.

(iv) Even interviews with TV channels and responding to queries from the media go a long way in promoting public relations.

4. Lobbying:

(i) The organisation has to deal with government officials and different ministers in charge of corporate affairs, industry, finance with respect to policies relating business and the economy.

(ii) The government also seeks to maintain a healthy relationship with associations of commerce and industry and solicits the opinion of major stakeholders while formulating industrial, telecom, taxation policies, etc.

(iii) The public relations department then has to be really proactive in promoting or defeating regulations that affect them.

5. Counselling:

(i) The public relations department advises the management on general issues which affect the public and the position the company would like to the take on a particular issue.

(ii) The company can be build goodwill by contributing money and time to certain causes like environment, wildlife, childrens rights, education, etc.

(iii) Such cause-related activities help in promoting public relations and building goodwill.

In addition, maintaining good public relations also helps in achieving the following marketing objectives:

(a) Building awareness:

(i) Public relations department can place stories and dramatise the product in the media.

(ii) This will build marketplace excitement before the product reaches the market or media advertising takes place.

(iii) This usually creates a favourable impression on the target customer.

(b) Building credibility: If news about a product comes in the media whether print or electronic it always lends credibility and people believe in the product since it is in the news.

(i) It becomes easier for the sales force to deal with the retailers and convince dealers if they have already heard about the product in the news before it is launched.

(ii) Retailers and dealers also feel it is easier to sell the product to the ultimate consumer.

(d) Lowers promotion costs:

(i) Maintaining good public relations costs much less than advertising and direct mail.

(ii) However, it requires a lot of communication and interpersonal skills to convince the media to give space or time for the organisation and its product.

Words that Matter

1. Market: Market refers to a group of present and potential buyers and sellers who can conduct buying and selling activities even without meeting at a place, by telephone, mail or internet.

2. Marketing: Marketing is a social process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.

3. Market offering: Market offering refers to a complete offer for a product or service, having given features like size, quality, taste, etc., at a certain price, available at a given outlet or location etc.

4. Exchange: Exchange refers to the process through which two or more parties come together to obtain the desired product or service from someone, offering the same by giving something in return.

5. Marketer: Marketer refers to any person who takes more active part in the process of exchange.

6. Marketing management: Marketing management refers to planning, organising, directing and control of the activities which facilitate exchange of goods and services between producers and consumers or users of products and services.

7. Production concept: Production concept holds the view that potential exchange would be realised when the products are inexpensive and are widely available.

8. Product concept: Product concept holds the view that business goals would be realized when the products of high quality are produced.

9. Selling concept: Selling concept holds the view that the customers if left alone would not buy enough of a firms products. In other words, in order to make a customer buy a product he or she needs to be convinced, lured and attracted.

10. Marketing concept: Marketing concept holds the view that the firm can achieve its goals by identifying the needs of customers in a chosen market and satisfying them better than the competitors.

11. Societal marketing concept: Societal Marketing Concept emphasise that along with customers satisfaction, due importance should be given to welfare of the customer and the society.

12. Marketing mix: The combination of variables chosen by a firm to prepare its market offering is also called marketing mix.

13. Product: Product means goods or services or anything of value, which is offered to the market for exchange.

14. Branding: Branding is the process that is used to create a distinct identity of the product.

15. Brand: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the productsgoods or services of one seller or group of sellers and to differentiate them from those of the competitors.

16. Brand name: Brand name refers to that part of a brand, which can be spoken.

17. Brand mark: Brand mark refers to that part of a brand which cannot be spoken, but can be recognised easily in the form of sign, symbol or design.

18. Trademark: A brand or part of a brand that is given legal protection is called trademark.

19. Packaging: Packaging at a very basic level can be defined as a set of tasks or activities, which is concerned with the design and production of an appropriate container or wrapper for the product.

20. Primary packaging: It refers to the products immediate container.

21. Secondary packaging: It refers to additional layers of protection that are kept till the product is ready for use, e.g. a tube of shaving cream usually comes in a card board box.

22. Transportation packaging: It refers to further packaging components necessary for storage, identification or transportation.

23. Labelling: Labelling at a very basic level can be defined as a set of tasks or activities which is concerned with the design and production of an appropriate carrier of information attached to product package.

24. Pricing: Price may be defined as the amount of money paid by a buyer (or received by a seller) in consideration of the purchase of a product or a service.

25. Place mix: Place in the context of marketing mix refers to a set of decisions that need to be taken in order to make the product available to the customers for purchase and consumption.

26. Channels of distribution: The term channels of distribution is a network of people or institutions or organisations (like agents, dealers, wholesalers, retailers) that perform a variety of interrelated and coordinated functions in the movement of goods from the place of production to the place of consumption.

27. Zero level channel (Direct channel): When the producers sell their goods directly to the consumers, it is called a direct channel.

28. Indirect channels: When a manufacturer employs one or more intermediary to move goods from the point of production to the point of consumption, the distribution network is called indirect channels.

29. Promotion mix: Promotion mix refers to combination of promotional tools used by an organisation to achieve its communication objectives.

30. Advertising: Advertising refers to any paid form of non-personal presentation and promotion of goods and services by an identified sponsor.

31. Personal selling: Personal selling is a process of persuasion that influences people to buy goods and services.

32. Sales promotion: Sales promotion refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service.

33. Public relation: Public relation is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its public...

Notes - Time and Clocks

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