MARKETING

MARKS:14 PREPARED RY COMMERCE DEPARTMENT, DPSN

Topies:
1. Marketing - concept and funetions
2. Marketing manage ment philosophies
3. Marketing Mix- concept
4. Product -concept, branding, Iabeling and packaging
$. Price - factors determining price
6. Physical Distribution - concept ,channels of distribution :ty pes ,choice of channels,
components of physieal distribution
7. Promotion- concept and elements: advertising- concept, role ,objections against
advertising, personal selling-concept andqualities of agood salesnan sales promotion -
concept and techniques , public relations - concept and role.
MARKET
TraditioDally the tem 'market' refers to a place wherc the buyer and seller gather to enter into
transactions involving exchange of goods and services. The other ways in which this term is being
used is in context of
[a)a product market (cotton market, gold or share marker):]
(b]geographic mariket (rnational and international market);
(c]types of buyers (consumer and industrial market) and
[dJthe quantity of goods transacted( retail market and wholesale market).
Inmodern teras, market refers toa set of actual and potential buyers of a product or service. For
example.when afashion designer designs anew dress and offers it for exchange. all the people who
are willing to buy and cffer some valuc for it, can be consider as the market for that dress.
MARKETER
It refers to any person whotakes more active part in the process of ex change. Normally, it is the seller
who is more active in the process of exchange as he analyse the needs of the potential buyers, develops
a marketoffering and persuade the buyers to buy the product. However, there may be cetain
situztiors where the buyer may take an active part in the process of marketing. For example; in
sinatiors of rare supply,the buyer may be taking extra eforts in persuading the seller to sell the
product to him. In that case. the buyer may be treated as the masketer.
MARKETING
Traditionally, marketing has been refemed 10 as performance of business activities that direct the flow
of goods and services from producers to consumers.
lamodera times, marketing is described as asocialprocess whereby people exchapge goods and
services for money or for something of value to them . According to Phillip Kotder "Marketingis a
social process by which individual groups obiain what they need and want through creatingoTerings
and frecly ex changing product and services of value with others"
PEATURES OF MARKETING
Need and waat - Aneed is a state of felt deprivaion or feeling of being deprived of something. If a
néed is lefh unsutisfied, itleaves aperson unsatisfied and unhappy

Ch l(Markeling) Page 1of 26 1

 potential satisfiers of neeis in
are
hand, wants arc culturally defined objects that factors like, culture. personalt,,
On the other human needs influenced by various
othet words, wants are the
given
rel1gion etc.
refers to a complete offer for a product or serv ice. having
Creating a market offering -It one which is developed after ana!s
zin: the needs
offer is the
features like size,taste etc. a good market
buyers.
and preferences of the potential
a price for the product only when he gets satisfaction or
3. Customer value - Customer is ready to give Marketer must add value to the product
only when the product is offering utilities matching tothe price.
so that customers prefer their product over the competitor's product.

4. Exchange mechanism - 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 returm. it is the essence of the markcting
Conditions for exchange mechanism are
Involvement of at least two parties - buyers and sellers
Each party should be able of offering, something of value to the other. For example; seller offers
product and buyer offers money.
Both the parties are free to accept or reject the offer
" Each party should have the ability to communicate and deliver the product or service.
The parties should be willing to enter into transactions with each other.
WHAT CAN BE MARKETED

PRODUT-Ilis bundle of utilities or a source of satisfaction of human needs and wants. It refers to
anvthing that can be offered to the customer for their uses. Apart from the product the other things that
can be marketed are:
V Physical products- DVD players, Motor cycles etc.
Services -Insurance, health care, Easy bill service etc.
Ideas- Polio Vaccination, Heip age, Donation of Blood etc.
Person - For clection of candidates for ceriain posts.
Experience - Custómized experience as Dinnes with a celebrity, experience of balloon riding,
mountaineering etc.
Place -Visit Agra- The City of Love' ; "Mysore- The City of Gardens etc.
Properties - Intangible rights of ownership of real estate in financial property ( shares,
debentures)
Events - Sports events, Music concerts, Fashion shows ete.
Information - Rescarch infornation, technological information etc.
MARKETING MANAGEMENT
It refers to the planning, organizing, directing and control of the activities which facilitates exchange of
goods and services between producers and consumers or users of goods and services. According to
Phllip Kotler,"Marketing management is the art and science of choosing target markets and getting.
keeping and growing customers through creating, delivering and communicating superior customer's
values of managemert."

Ch. 11(Marketing) Page 2 of 26

 Fom the abovedefiniton, the proxess of marketing maayenent nvolves the following
steps
Choosing atargct market. for eanple a mmayet may hoose to sll teady made garnents
for children up to ayc of Svets
* The nc1l step is to focus on geting, keeping ns well as growing customery In ther wrds.
markcterhas tr cteate demandfor his prexluct, krep them sal1sfied witth firm's product and elsn
attrat orr customers o the finn's poduct so that the firm can grow
The last step in the proccss is to create sujerior values among the customers so that the
customers Are attacted to the product and communicate the same values to the other pot ential
buyers Itimplies to create such special fealures in company's product as nay enable the
cmpany to surpass of competitor's product
tor cxample. acompany offering two years free service on electronic products.
FUNCTONS OF MARKETING
I Gathering and analyzing the market information- The marketing begins with the research conducted
by the markcter.The research is conducted to find out the needs of the customers. On the basis of this
rescarch, the product, is label,its brand name etc is designed. Research is important for making
analysis of opportunities and threats, strength and weaknesses of the organization.
Market planaing - Afer conducting research, the marketer has to develop appropriate marketing plans
so that the marketing objertives of the organization can be achieved. For example: amarketer of
colour television, having 10% of thecurrent market share in the country aims a enhancing his market
share to 20% in the next three years. He will have to develop a complete marketing plan for that.

3. Product designing and devedopment- The design of the product contributes to making the product
attractive to the target customers. A good design can improve performance of a product and also give it
a competitive advanlage in the market. It includes decisions like, shape, style, colour of the product etc.

4. Standardizatioa and Grading- Standardizationmeans maintaining quality standards to achieve

uniformiy in the product. It ensures the buyers that goods conform to the predeterained standards of
quality, price, packaging etc. Grading, on the other hand, isthe process of classification of products
into different groups on the basis of some of its important characteristics lke quality, size etc. It is
particularly necessary for products which are not produced according to pre determined standards like
agicultural product - wheat, oranges etc.

$. Packaging and Lsbelliog- Packaging is a set of decisions which are concerned with the designing an
ppropriate package for the produc1. It not only protects the product but also serve as promotional tool.
aCs As asilent salesman, Labelliagrefers to designing the labelto be put on the package which gives
infornation about the product, price, expiry date ete,

6. Braadiag- It involves aset of decisions which are concerned with the designing an appropriate name of
he product. The brand name must be selected very carefully

7. Castomer support services- It refers to afer sale services, handling customer grievances, maintenance
services ete. they prove very effective in bringing repeat sales from the customers and developing brand
loyalty for s produc.

Ch. 11(Marketing) Page 3of26 3

 to the money which customers have to pay The
to buy a
refers market.
of a product- Price ofthe product suCcess and failure of aproduct inthe
Pricing factor afleetinp the
poduct I is an imrtant p1ice.
neIsely related to its
demand for the product is etc. and
customers about the firm'sproduct, its features
I'romotion- Itinohes informing the promotion are - advertising.
puchae tier product. The four important tools of
persu.dng them to activities.
public relation
Nrsonal scllng. sales pronotion and
major decisions
io Physical distribution- It includes two internediaries ( like wholesalers, retailers etc)
distribution of the marketing
A) Channels of where it isconsumed
Physicalmovements of product from where it is produced to a place
B)
marketer
Transportation- There is a gap between production and consumption. To cover this gap the
I.
has to analyse its transportation needs after
makesuse of various modes of transport. Amarketing firm market.
considering factors like nature of product, cost and location of larget
goods and their sales. Tt is
12. Storage or Warehousing- There is time gap between production of gap. Thus, there is a
necessary to keep the goods safe and prevent them against spoilage, theft in this
need for storage of adequate stock of goods to protect against unavoidable delays in delivery or mect
contingencies in demand.

DIFFERENCE BETWEEN MARKETING AND SELLING

Basis Marketing Selling
Marketing is a wider term consisting of
number of activities such as Selling is a part of narketing and is
identification of customer's needs, concerned with promoting and
developing the products to satisfy these transferring possession and
needs) fixing prices, promoting the sale ownership of goods from the seller
Scope of product. to the buyer.
Marketing activities start before the
Start and end of product is produced and continue even Selling activities start after the
activities after product has been sold. product has been developed.
Profit through
maximizing sales Marketing activities are directed towards
sCUstomer maximizing customer satisfaction and Maximizing profits through increase
i satisfaction thereby increasing profits. in sales volume.
Oifferent in the Developing the product as per the needs Bending or molding the customer as
Emphasis of the cUstomers per the product.
It uses integrated marketing efforts
involving strategies of product, It involves strategies like promotion
Difference in promotion, pricing and physical and persuasion for selling the
Strategies distribution product.

Ch. 1l(Marketing) Page 4 of 26

MARKETING PHIL.OSO11IES
The plhilosophy or the concept to be dopted is inportant as itdeternines the emphasis or the
weightagr to be put on different factors, in achieving the organizational objectives.
For example,whether the marketing eflorts of an organization willfocus on the product- say designing
its features etc or on selling techniques or on customer's nceds or the social concerns.

.PRODUCTION CONCEPT - According to this concept, profits canbe maximized by producing at large
ScaBe, thereby reducing the average cost of production. It was assumed that consumer would prefer those
products which are widely available at affordable price. Thus, availability and affordability were the key words
for the success toa fitn. The major drawback of this concept was that mere affordability and availability of the
product ould not cnsured increase in sales.

2. PRODUCT CONCEPT- According to this concept, the business goals could be realized when the products
of high quality are produced. Therefore, theemphasis of the firms was shifted from quantity to quality of
products. Thus, product improvement became the key for profit maximization of a firm. However, product
quality and availability did not ensure the survival and growth of the firm because of large number of sellers
selling the quality product.

3. SELLING CONCEPT- This concept is based on the adoption of aggressive selling and promotional efforts
because of consumers' buying inertia and resistance. The assumption is that if the consumer is left alone, he
would not buy or not buy enough unless they are motivated to do so. The firm must put its products through
aggressive selling and promotional efforts. However, buyers can't be manipulated every time, therefore this
strategy is good only in short term.

4.MARKETING CONCEPT- It implies that focus on satisfaction of consumer's needs is the key to the
success of business firm. hassumes that in the long run an organization can schieve its objectives of
mAximization of profits by identifying the needs of its present and prospective buyers. The firms don't sell what
they can make;rather they make what they can sell.

The following are the pillars of marketing Concept

Identification of market or consumers who are chosen as the target of marketing efforts.

Understanding needs and wants of consumers in the target market

Development of products or services for satisfying needs of the target market.

Satisfying the needs of target market better then the consumers

Doing all this at profit.

. SOCIETAL CONCEPT- The critics of the marketing concept argue that blindly following the goal of
identifying customers' needs andsatisfying them has led to some social and
pollution, wastage of natural resources etc. In other words, marketing shouldenvironmental problems such as
also enhance social well being.
Ch. 11 (Marketing) Page S of 26
 market1ng Socal
ecological andethical aspectof
beovencd about the
need to
Thus, the businessfinns importarKC
objccves mustbe gven duc
MARKIING M1ANAGEMENT PHILOSOPUILS
DUHRINCES IN

Marketing Societal
Product Selling
Philosophies/ Production concept
Concept
Concept Concept
Basis Concept
Market Market and
Factory Factory society
Starting point Factory

Customner Customer
Main focus Quantity of Quality, Existing needs and
product needs
product performance, society's
features of
product wellbeing

Means Availability and Product Selling and integrated Integrated

aflordability of improvements promoting marketing marketing
products

Eads Profits through Profit through Profit Profit through Profit

volume of product quality through sales Customer through
production volume satisfaction customner
satisfaction
andsocial
welfare
o REFER TO GREY BOX -where do companies do their business ,future of global brands.
MARKETING MIX

According to William J. Stanton, " Marketing mix is the tern used to describe the combination of the
four inputs which constitue the core of acompany's marketing system, the product, the price, the
promotional activities and distribution system." There arce large numbers of factors affecting
marketing decisions. These are broadly divided into two categories:
a) Controllable facton- These are the factors which can be influenced at the level of the fim. For
eXample;deciding upon the brand name of the product, fixing up of price of the producl ct..
b) Umcontrollable factors -These are the factors which affect the decision but are not controllable at the
fim's level. For example, Government policy relating to technical and financial collaborat1on in the
area of softdrinks elc.

Ch. Il(Marketing)Page 6 of 26
Accordng u .),
a) Idutmia Me.(wty,
thee te o njclemwnty of matketing nx
) MaemuA
) omoton m

PRODUT MIN
A product may be defined as anything that can beoflered to umarket to satisfy a want or need It is
offered for attention, acquisition,use or consumption
Product Mix refers to imporiont decisions rclated to the product such as quality of the product,
design of the product, package of the product branding, and labelling of the product, Aproduct is
SOnsidercd as a bundle of utilities as it provides following benefits to the customers:
a) Functionalbenefits- The fundanental or the basic benefit thatthe consumer seeks in the product or
service which he buys.l provides functionaiutility. For example, the core benefit offered by acar is
transportation facility
b) Psychological benefits - The second level of the benefit is the expectation of the customer, i.e. what
customer cxpccts in the product or service which he is buying. for example, a customer expects the car
to be comfortable in driving. good shape and style ete. it satisfies the need for prestige and esteem.
c) Social Benefits- t provides social bencfit by the way of acceptance from by riding motorbike.
Aproduct mix involves the following decisions:
> Branding- Generic name refers to the name of the wtole class of aproiuct. For example, a book, a
wTist waich, tyre etc. The process of giving name or sign, or symbol ete to a product which helps in
identifying and in distinguishing the product rom that of its competitors' product. is called branding. It
Consist of
a) Brand name- That par of the brand which can be spoken is called a brand name. Inother
words, it is the verbal componcnt of the brand. EG : Airlndia
b) Brand mark- That part of brand which can be recognized but which cannot be spoken is called
brand mark. It appears in the fom of symbol, design, colour etc. Maharaja sign of Air India
c) Trade mark- A brand or part of brand that is given legal protection is called trademark. In
this
case, no other firm can use such brand name or mark.

Characteristics ofa good brand name

i) The brand name should be short and easy to pronounce cg.,
A brand tname should be suggestive and should tell
Ponds, Vim
about the product's benefits or
qualities cg.,Boost, Genteel
ii) It should be distinctive cg.,Liril, Zodiac
iv) It should be adaptable to packaging or
V) It should be versatile eg., Maggi, Coalgate
labeling requirements.
VI) It should be capable of being registered and
protected
vii) Chosen name should have staying power i.e., it should legally.
not get out of date.

Ch. 1l(Marketing) Page 7 of 26

 distinguishing its
Adntaes ofbrd0ptu keters
differentiation- Branding helps a firm in the marketfor
rkin:oduct the firn to secure and control
a) Tnabl coetitors.Itcnnbles
iomthtot it

people aware
programmes - Branding not only makes
and display these benefits.
h) Mels in advertising product but also about the brand which can provide
abut the features of the
charge high price
pricing- With an established brand name the firn can easily
c) Dilerential product.
for its product as compared to its competitor's
companies which use their company's narme as
d) Ease inintroduction of new product- Thc
their brand name can casily popularize the new product

Advantages of branding to the customers

a) Helps in product identification- Branding helps the customer to select the products easily
as the brand which isgiving them satisfaction can be selected easily over the competitors'"
product.

b) Ensures quality- Brand name quality assurance and customers can buy branded goods
with no doubts the quality of the product

c) Status symbol- Some brands become status symbols because of their quality. Use of
branded goods add to the status symbol of customers and adds to their confidence level

Functions of branding (Supplementary)

A- Product Differentiation- Branding helps a firrn in distinguishing its product from that of
its
competitors. It enables the firm to secure and control the market for its product.

B- Product Promotion- Branding not only makes people aware

about the features pf the product but also
about the brand which can provide these benefits.

C- Differential pricing- With an established brand name the firm can easily charge high
product as compared to its competitors product. price for its

D- Ease in introductior1 of new product- The

companles which use
name, use the same name to introduce and popularize the new their company's name as their brand
established brand and get off to an excellernt start. product, to enjoy the glory of already

E- Product identification- Consumers can easily identify branded products and also facilitates repeat
purchase of products.
 }'ackaging- l relers on set of aivities wlich are
ate packnc on wpr or a poxduct For coMCerned witlh the desipn and productinn of
Taciitae cavy resvinp of the topportion by thunbgumple, Detol Iuid comes in a package that
and ultinate release of liqusd
llon package is dilTerent fronn
I'arkage iv the wrapper in hichpackaging
produet is wrapped.
Levels of packagin:
a) Priary packaging- It rcfers tothe product's
immediate container. For example.
tothypaste tube, malch box tec.
b) Secondary packaging- It refers to additional layers of
protection that are kept till the
product is ready to use. For cxample, a tube of shaving crean usually comes in a
box which is disposed off as the consumer starts using the cardboard
product.
c) Transport packaging- It refers to further packaging
components necessary for storage,
identification or transporration. For example, corTugated boxes may be used to transport
Kurkure, Lays etc.
REFER TOPiCTURE OF LEVELS OF PACKAGINGIN NCERT
Importance of packaging
a) Rising standard of health and
sanitation- Packaging has become essentiai because of
rising standard of health and sanitation. In a packed good there are
less chances of
contamination of products. People prefer packed products over loose products as there are
less chances of adulteration in a packed food.

b) Selfservice outlet- The self service retail outlets are

these stores the products are generally wrapped in becoming popular day by day. In
up by buycrs casity.
attractive packing wbich could be picked

c) Ionovational opportunities- Recent development in packaging have

the marketing. For example, nevw packing completely
in soft drinks, chips, biscuits keeps themchanged
for a longer period of time. Even milk can be fresh
stored for 4-5 days without refrigeration.
d) Product differentintion- Packing helps the
the basis of quality as with the type of consumers to differentiate between goods on
goods.
packing ,customer can guess about the quality of the
Funetions of packaging
a) Product identification-
Packaging greatly helps in identification of the products. For
example, with the yellow and black packing and alphabet K we can recognise from far off
that it is a Kodak product.

b) Product protection- The fundamental function of

packaging is that it protects the
trom damage. Appropriate packaging
protccts thc plvduct lrom sun, rains, moisture.product
Ch. 11 (Marketing)Page 9 of 26
9
 biscuits clc
kct are used tor chps,
nthtontamcs and
eakae c. fhyc\ame

shajpe o the packape shoukd be such that it

and
tacilitating use of pluct lhe s1zeand usc fuor the cosumets t also makes it convenicnt
hmement oyen, handle
new pet bottles of
ntt nm one plave to another lercrampic,
t t r an sh the middlemen to tansport it, supply it and store it
t l hncmade it ern cay foN

promotion- P'ackaging plays a significant role of silent salesman

PraduNt the roduct. The attractive colourful
and
hwaumtev enhances the sale of product
Aing attacts 1hc custonters especially if the product is children's
.mnatiC
package which gives information about the
-flattlrng It reters tr designing the label to be put on the

Feections of labeling
Descnthe the prod uct and specifs is contents- The manufacturer cannot communicate
centh ing personally 1o cach and every customer. So, if he wants to share some
:nfra:tnatvu! the product with customer it can be done easily through labelling.

b ldentiication of theproduct or brand- The other important function performed by labels

is to help in kdentifying the product or brand. For example, we can identify a Cadbury
chocoiate from the various chocolates kept in the shelf of a shop by its colour, shape etc.

Grading of a product- Sometimes marketer assign different grades to indicate different

fcatufes ot çuai1ty of a product For eAampie, a popuiar brand of hair shampoo is sold under
different labels for diflerent types of hair like, normal hair, oily hair etc.
Helps in prumotion of product- Labels play important role in sales promotional schemes
launched tby cumpanics For cxample, a pachage of toothpaste mentioning free toothbrush
i.side
e) Pruviding information required by law- The label is also used to fulfillthe legal
fequifefments as it is legsicompulsion to print batch no. , retail prise ete On some produsts
gng satulury warning is also a legal compulsion and these legal requirements are
fulfilled through label

REFER 10GREY BOX ind1cat1ng pcpsi co acquisilons and marketng ot sen wes

Pricemi.
Price maybe definedas the amount of money paid by a buyer (or received by a seller) in consideration of the
purchase of apruduct or a service. Pricing involves delermination of the price of the product which is the most
crucial decision for the firms
tors affecting priee deternination
Irodetcost: t ncludes the total cost of oc ng, distributing and selling the product Totat cost
neludes three tves ofcost- InelCosts, Vaiable (osts nd Semi Var1able Costs The cost sets the
minimum levclorthe Mr pove at which the proxluctnay be sold.
Fived enst is the cost which does not change with the level of output like rent, salary, insurance
'ariable cost is the cost which varics directly with level of output, like: payment for raw materials,
ages, oner ctc

Semi lariable costis the cost which varics with output level, but not in direct proportion. Some
propontion is fixed and some varics with output.
Generally, all the fims sct a price which covers the total cost and reasonable profit.
The utility and demand: The utility provided by a product and the intensity of demand of the buyers
sct the upper limit of the price. The buyer may be ready to pay the price up to the point where the utility
from the product is at least equal to the sacrífice made in terms of price paid. The price is also affected
by the price elasticity of demand. In case of inelastic demand, fin can charge higher price. However,
for the products with elastic demand, a slight rise in the price adversely affects the demand.
Extent of competition io the market: Price of a product cannot be fixed without considering the
competitor's price. If the firn docs not face any competition, then it enjoys complete freedom in fixing
the price. However, in case of severe competition, the fim has to consider the price, quality and
features of competilors' product.
Government and legal regulations: Government can intervene and regulate the price of commodities.
t can declare a product as essential product and regulate its price. For eg., the cost of essentiat
commodities may be fixed by Govermment.

5. maximization
Pricing objectives: The pricing objectives of thefim also influences the price ofa produet.Profit
is one of the main pricing objective .If the firms aims to maximize profits in the short un,
then it would fix high price for its products. However, if the profits are to be maximized in the long
then low price is fixed to capture larger market sharc and carn greater profits through increased sales.run,
Apart from profit maximization, the pricing obiectives of im may inciude:
Obtaining market share leadership: If the firms aim to capBure larger market share, then it will fix low
price to attract large number of people. For example; Reliance isable to capture large share in
services duc to its low price policy. Mobile
Surviving in aCompetitive market: Ifafirm faces difticulties to survive in the competitive market,
then it may offer discount on its products or may use other
promotional methods to clear its stock.
Auaining product quality leadership: If the fim aims to obtain leadership in quality product, then fin
normally charges higher prices to cover higher cost of research and development.
6. Marketing Metbods Used: Price fixation is also
such as distribution syslenm, quality of salesrmen aflecied by marketing methods used,
promotion eflorts etc. employed, degree of advertising, sales
 DSRWON'LACE MIN
"U)s
the right
DINTUON is coNemed with makingthe goods andservices available at
YNCA
N . that peepiewan puhase the samc

Yar-mi inv olhes twoimportant decisions:

a) ph1seal movementof goods from producers to consumers and
channels of distribution of goods
(HANNELS OF DSTRIBUTION

Channels of distribution refer to ateam of merchants, agents, wholesalers, retailers ctc. Channels of
distnihution smoothen the flow of goods by creating possession, place and time utilities.
PESOF CHANNELS OF DISTRIBUTION
DIRECT CHANNEL (ZERO LEVEL) -When-the goods are directly sold by the
manufacturers to the customers without using any intermediary it is called zero level channel
eg mail order selling ,intermct selling,selling through own sales force (EUREKA
FORBES)

INDIRECT CHANNELS When a manufacture employs one or

move goods , such a distribution network is called indirect more intermediaries to
TYPES OF INDIRECT CHANNELS OF DISTRIBUTION
1. MANUFACTURERS-
RETAILERS CONSUMER(ONE LEVEL CHANNEL)
When the manufacturer sells goods to the retailers who in tum sells it to thecustomers it is
called one level channel .eg MARUTI sells cars through
company approved retailers.

2.
MANUFACTURERS - WHOLESALERS
CHANNEL)
When the
-RETAILERS-CUSTOMERS TWO LEVEL
manufacturer sells
the retailers who supply to thegoods the wholesalers in bulk who sells in small quantities to
to
customers.
clothes, rice this distribution network is ,jit is called two level channel.eg For soaps, oils,
prcferred.

Ch. ll (Marketing)Page 12 of 26
3. MANUFACTURFSAGENT-WOLESAL.ERS-REIAILERS-USTOMERS(I IIEE.
LEVELCHANE)
willh
their OWn sellinp ayents who conet them be covercd
In tkS method manufacturer use maket is to
nethod is prelered when larpe
whesalers and then the retailers lhis

CHANNEIS
FACTORS DETERMINIG CHOICE OF

1. PRODUCT RELATED FACTORS

he unit valuc is high direct salc is preferred but for
LINE:IF
A) VALUE OF PRODUCT channcls are preferred.
less expensive goods, longer advice so
COMPLEXITY: Technically complex products rcquire cxpert be used.
B) PRODUCT preferred whereas for simple products ,indirectchannels can
direct channel is
Industrial or custonized products require direct interaction
indirect
PRODUCT: for standardized goods
C) NATURE OF channels are preferred whercas
with customers so direct
channels can be used.
vegetables
AND NON PERISHABLE: Perishable goods like non
D) PERISHABLE therefore direct channels are prefered whereas for
fruits have short sheifage
channels can be used.
perishable or durable goods ,indirect

RELATED FACTORS
2. COMPANY
strong
FINANCIAL STRENGTH OF A COMPANY- Ifthecompany is financially indirect
A) funds then
then direct channels are used but if
the company does not have huge
channels can be used.
control over the
the management wants to have greater
B) DEGREE OF CONTROL: If the management does not want more
miðdlemen, it adopts direct channel whereas if
longer channels of distribution.
control over the middlemen, it adopts
FACTORS
3. MARKET RELATED
customers is large then indirect channel are
A) SIZE OF MARKET: If the number of then direct channels can be preferred
preferred whereas if the number of customers are small
When buyers are concentrated in a small
B) GEOGRAPHICAL CONCENTRATION: channel can be
direct channels are pre•erred whereas if customers are scattered, indirect
arca,
used
in case of industrial customers
C) QUANTITY PURCHASED: If the order size is large as is small as in the case of convenient
then directchannel are pre•ered Whercas if the order size
goods then indirect channels can be used.
13
Ch. 1I(Marketing) Page 13 of 26
 4. COMPTIINTEACTORS
0TERCOMPANIES IN THE SAME INDUSTRY:
)CWANLSSEL.ECFD B) competitor and
companes may scleetthe same channel as selected by the will
Smenes
husincssmenprefer to sclcct a different channcl of distribution. Thus it diflerent
wnelime to be with the competitor or be
deron the nleof the fin whcther it wants
tiom them

S. FVIRONMENTAL FACIORS
lt includcs factors like legal constraints, trade policy, economic conditions. marketers
or eg, In a depressed economy, moreemphasis is laid on cost cutting .therefore
usc dinect channeis to distribute goods in an economical manner.

PHYSICAL DISTRIBUTION OF GOODS

PHY SICAL DISTRIBUTION OF GOODS means physical handling and movement of goods
from plzce ef production to placc of consumption. It is also called as logistics management
COMPONENTS DECISIONS RELATED TO PHYSICAL DISTRIBUTION
The main components of physical distribution are explained as follows:
Order Processing: Products flow from manufacturers to customers via
flow in the reverse direction, from customer to the
channel members while orders
manufacturers. good physical distribution
system should provide for an accurate and speedy processing of
A
would reach the customers late in wrong quantity or orders, in the absence of which goods
specifications. It would resutt in customer
dissatisfactior, loss of business and goodwill.
2. Transportation: Transportation is the means of carrying goods and raw materials from the point of
production to the point of sale. It is important because unless the goods are physically made
the sale cannot be completed. available,
3. Warehousing: Warehousing refers to the act of storing and
utility in then. The basic purpose of assorting products in order to create time
warehousing
provide facilities to store them. Generally more activities is to arrange placement of
goods
the time taken in serving the number warehouses a firm has, lesser and
of
cUstomers at different locations but greater would be would be
warehousing and vice-versa. Thus the firm has to strike a balance
the cost of
and the levelof customer
service. For products requiring long- termbetween the cost of warehousing
products) the warehouses are storage (such as
are bulky and hard toship located near production sites. On the other hand, the agricultural
(machinery, automobiles) as well as products which
(bakery,meat,vegetables) are kept at different locations near theperishable
market.
products
4. Inventory Control: Avery important decision in
respect of inventory isdeciding about
inventory. Higher the level of inventory, higher will
be the levelof the levelof
carrying the inventory willalso be high. service to customers but the
cUstomer satisfaction. The decision Thus a balance is to be maintained in respect of the costcost of
regarding level of inventory involves and
prediction about the demand
Ch. 11(Marketing) Page 14 of 26
 for the product. Acoret esmate of tthe demand helps to hold
minimuIm irnventory and cost level down to a
The najor laos detemimy
nventoy level include:
d im s poicy regard1ng the level of customer service to be offered. Higher the level of service Preater
will
be the need lo keep more
inventories.
D DegTee of acCUracy of the sales forecasts. In case more accurate estimates are available, the need 1or
Aeeping very high level of inventory can be minimized.
Kesponsveness of the distribution system Lè. ability of the systerm to transmit inventory needs back to
tne tactory and get products in the market. In case the time required to respond to the Ydditornal
demand for the products is high there is a need to maintain higher inventory. But if the additional
demand can be met inless time,the need for inventory willalso be low.
d Cost of inventory.which includes holding cost such as cost of warehousing, tied up capital etc. And the
manufacturing cost.
PROMOIION MIX
Promotion refers tothe use of communication with twin objective of infoming potentialcustomers
about a product and persuading them to buy it.
Promotion Mix refers to combination of promotional tools used by an organization to promote sale
of products and services. The important decisions of promotion-mix are selecting advetising media,
selecting prmotional technique, using publicity measures and public relations.
DVERTISING
lt isan impersonal foran oi comuuunicctin, which is paid for by the markeics (SpUnsorsy io promote
some goods or services. According to American Marketing Acscciation, advertising is "any paid form
of non personal presentation and promotion of idcas, goode and services by an identificd sponsor."
FEATURES

1. PAID FORM: Advertising is paid form of

commFunication and hence conmercial in nature.
The snonsors have to bear the cost of communicating with the prospective buyers.
2. IMPERSONALITY: Advertising is an
face to face contact between the customerimpersonal method of promotion as there is no direct
and advertiser. It creates a monologue and nota
dialogue.
3. IDENTIFIED SPONSOR: Advertising is undertaken by some
company. The name or identity of the company identified individual or
is disclosed in the
advertisement.
ADVANTAGESIMERITS/ ROLE
1. MASS REACH: Asa
communication
c.g. one commercial aired
through T.V.
tool advertising enjoys the
or All lndia radio can reachbenefit of mass reach. For
customers living in different pars of the a very large number of
country.
Ch. 11 (Marketing) Page 15 of 26
 CONEIDENCE: Aderisng the
SATISEACTION AND assured ahoutthe qual1 o
F\H\CNGCUSIOMERS comfortable and
customcrs feclmote
fiTCJsCs wnidene as
dramatise messagc with
provides enough opportunities to
tANRESS"VINESS: Advertis1ng
pictures, mustc etc.
the help wf dawings, colours, other tools of promotion
economical as comparedto
A FCONOMY: Advertising is considered customer is verY Io*.
customers. As a resultcost per
as it reaches large number of
helps to prOvide to
INTRODLCTION OF NEW PRODUCIS: Advertising
HELPSIN
cg advertiscments of OLAYantiaging products have
provide oi new products orbrands .
heiei P&G earm huge profits.
AND MAKINGSHOPPING EASIER:
HEl.PS IN EDCATING CONSUMERS features of
ert1sing hclps consumers by informing them about the new products and new
Adt
the cisting products.

GROWTH OFTHE ECONOMY :Advertising leads to large scale production crcating more
employment opportunities.
8 CREATES DEMAND: Advertising creates steady demand for the products of a manufacturer.
It arouses interest and creates a desire to purchase. It also creates new customers and widen the
market for the product.
9. DEVELOPS GOODWILL: Advertising helps in creating a good image of the fim and
reputation for is products. It enables manufacturers to secure repeated sale;r. .cquCKly
accept the new products of a reputed firm.
REFER TO GREY BOX indicating ceiebrities influence on brands and Top five
advertisers

OBJECTIONS TO ADVERTISING
1. UNDERMINES SOCIAL VALUES:
Tht major objection on advertisement is that it promotes materialism It
among people as they come to know about more and more different breeds discontent
products. Some
advertisements show new lifestyles which do not find social approval
This criticism is not entirely true.
customers by informing them about Advertisements
in fact increases the knowledge of
new
inform the customers, the final choice of products
and their utilities.The advertisements onl
2. ADDS TO COST:
buying or not lie with the customers.

Tbe most serious criticism against

because it spends huge amount on advertisement is that it increases the price of product
pay a higher price for the product oradvertisemer!
service.
whichadds to cost and the customer has to
This objection is not correct because
increases which increases sales and leadswith advertisemens the demand for the product
to increase in
production, companes enjoy economies of scale whuch lowers productiorn. With increase in
ad.crliscuen! is uscd prupeily it brings (cdulivn i wst i he the cost of production If
luig rutN
Ch )(Market.ng Page 16 o1 26
 3.
(ONFUSES TIIE BUYERS:
Another erilicisnn against advertisement is that there are s0
Companes lor the same product and cach company clainns lo bemany ad verti:ements of dilterent
better than othcrs that thee
claims by dilerent companics confuse the
customers
This criticism is not correct becausc allcustomers are rational human beings who can make
an infonned choice by analyzing the information provided by
advertisements.
4. ENCOURAGES SALE OF INFERIOR PRODUCTS:
Another criticism against advertisement is that advertising docs not distinguish belween
cunior and inferior products and persuades pcople to buy even inferior products.
Jhis eriticism is not correct because what is superior and what is inferior depends on the
economicstalus and preference. Everybody can not buy superior quality expensive products.
The real crilicism is that it promotes sale of duplicate products by making falseclaims about
the quality of the products.
S. SOME ADVERTISEMENTS ARE IN BAD TASTE:
advertiserments distort
Another objection is that some advertisements use bad language, some
Some
reiativnslip betwecn cmployer-cmployce, mother-in-law & daughter-in-law ctc.
advertisements show women dancing when not required.
person. h
This criticismis not fully correct because good or bad taste differs from person to
is a matter of personalopinion as to what is good or bad.

PERSONAL SELLING

MEANING
k mcans face to face communication between a seller and buyer. It involves oral presentation of
message in the form of conversation with one or more prospective customers for the purpose of
making sales. It involves two way communication.
FEATURES
J. PERSONAL FORM: Itis direct face to face communication between seller and the buyer. lt
Jeads to interactive discussion and personal contact between the two.

2. DEVELOPMENT OF RELATIONSHIP: It allows asalesperson to develop personal

relationships with the prospective customers, which may beconme important in making sales.
3. ORAL CONVERSATION: It involves oral presentation of message in the form of
conversation with one or more prospective customers for the purpose of making sales
4. NARROW COVERAGE: It has limited coverage as it involves contact with limited
number
of target group persons.

S. FLEXIBILITY: It is highly flexible as sales presentation can be adjusted to fit the specific
nccds of individual customers.

Ch 11(Market:ing) Page 17 of 26
 fit the specifc
MERITS presentationcan be adjustedto
is higbly flexible as sales
I. FLENRILITY: customers
nceds of individual
direct feed back from the
totake a
FEEDBACK: In personalIsclling ilispossible of the prospects.
2 DIRECT prescntation according to the
nceds
Customer and to adaptthe
pre
waslage of time and effort and as compay
is minimum
MINIMUM WASTAGE: Ihere making anycontact with them.
belorc
decides the targetcustomers
AND PERSONAL SELLING
DIFFERICE BETWENADVERTISING
PERSONAL SELLING
ADVERTISING of
BASIS
Itis an impersonal form of It is personal form
KIND OF communication
COMMUNICATION communication
Message is not unifom and
UNIFORMITY OF I transmit uniform message
to all consumers. has to be adjusted as per
MESSAGE customers.
It is flexible as message can
FLEXIB1LITY lt is inflexible as message
be adiusted.
can't be adjusted
It reaches large number of Itreaches limited people
REACH
people
Cost per person isvery low Cost per person is very high
COST It needs a lot of time to
ItcoverS market in short
TIME cover the market.
time
Direct feedback is not Direct feedback is possible
FEEDBACK
possible
OBJECTIVE It aims to create demand for It ains to mmediately
effect the decision to
the product
purchase.

SALES PROMOTION

MEANING
itrefers to short- term incentives,which ae designed to encourage the buyers to make immediate
puchase of aproduct. It includes offering cash discounts, free gift offers, and free sample distribution
ctc.
MERITS OF SALES PROMOTION

I. ATTENTIONVALUE: Itcreates attention value by offering short-tem incentives to

custamers. Whenever any new incentive is afered to customers, they pay more atention to it.
2. USEFUL IN NEW PRODUCT LAUNCH: Promotional activities are used to create interest
in the new product and to persusde people to buy the sme.

Ch. 11(Maketing) Page 18 of 26

 )ARGYINTOTAL. PROO\MOTIONAL EFFORTS:Sales prom ot. . a:ties
supplement personal seling and advertising etorts of the fi. Ttey adi tro:era!!
eecuveness of he tim spromotional activities.

LINMITATIONS OF SALES PROMOTION

promotion actis ities ma, give the impression Uhat

1. REFLECTS CRISIS: Frequent use of sales takers of its product
the firm is unable tomarage its sales or there arc no
the iage of preduct.
SPOILS PRODUCT IMAGE: Lse of sales promotion t00!s ma: af)ec: not appropriateiy
2. quality or is
bayers may perceive that either the product is not of g00d
Ihe

KCHNIQUES/TOOLS
for a limited
1. REBATES
special price which is less than the ornigina! price arnounces to
product at a Maruti
It refers to selling a usually done toclcar off excessive inventor. For eg..
period of time. This is time.
Rs.5,000 for a limited period of
sell Alto at a discount of
period of time.
price from lis: price for a limitedSolly, 50+40% off
2. DISCOUNTS
of certain percentage of
It refers to reduction buy more. For eg., Upto 50% off
at Allen
Such discounts induce customers to
at Koutons.

3. REFUNDS commonly
presenting the proof of purchase. It is Ruffie's Lays.
to refund of price paid by customer on of
t refers 5off on presentation of ernpty pack
used by food product companies. For eg., Rs.
4. PRODUCT COMBINATIONS
the purchase of aproduct. For eg..
Under this scheme another product isoffered as gifi along with Memory Card frce witha Digicam
Mug free with Bournvita, toothbrush free with toothpaste, 1 GB
etc.
5. QUANTITY GIFT
Itrefers to oflering extra quantity of he product in a special package at iess price. For eg., Buy 3
get 1free for soaps, S500 ml extra in Pepsi.
6. INSTANT DRA WS AND ASSIGNED GIFTS
t includes offers like 'Seratch aCard' and win instantly a refrigerator,Car, T-shirt with the
purchase of a TV.

7. LUCKY DRAW
In this technique draws are taken out by including the billno. or names of customers who have
purchasedthe goods and lucky winner gets free car, computer, T.V. etc.
8. LSABLE BENEFITS
This in:ludes offers like. 'Purchase gonds worth Ps S.00) and get a t.ol:dy
discount voucher tor accessones on apparcl purchasc ul Rs 1.G9and abo,c
pachi: trec',Get .

Ch. I|(Marketiag1Page 19 of 26
19
 interest on
(o
offer dated
automohilesetc with post
ten pods, rernaning18
duratles kc chet pay ment and
n)kctesofinmert opad as Iront
ALans mstallnots charges etc
Ior
eg.4CaN
citcful abvut the tile
finan
enc <heult be . . HUL
hyin lowcver product For eg.
ofa new
10. S4VIPLING atthe ime oflaunch
sample of a roductwhen launched the sarne
Itreters to ofler of free AllClear
of Chnic
drstr1buted free samples or luck and
ofskills
application Bourvita QUz
1COTESTS whichinvolve competition,
competitive events by fin
organises painting
I refers to rganising reuard For eg.Canlin
some
irers arc given
(ontest cic
IN NCERT
TO saies promotiontechniques drawn
REFER
SALESPERSON
QUALITIES OF GOOD lookingand must have an
salesperson should be good
PHYSICAL QUALITIES -Agood
1)
alluring posture be friendiy and
QUALITIES:A good salesperson should
MENTALPSYCHOLOGICAL
2)
patient listener
should have knowledge about the fim as
QUALITIES: A good salesperson
3) TECHNICAL working for.
well as the fim he is
skills.
SKILLS:A good salesperson reqires effective communication
4) COMMUNICATION
sale.
PERSISTENT :Good salesperson are persistent. They never give up until they finalize
5)
polite. Courtesy costs nothing but wins a reputation
6) COURTESY:A salesperson must be very
informing his duties.
7) HONESTY: He must be honest and sincere in
inspire trust
8) CAPACITY TOINSPIRE TRUST: He must have the quality to

PUBLIC RELATIONS

CONCEPT Public Relations include a variely of programmes to promote and protect the image of a
company and its products by crealing and managing successful relations with the public ,including
customers, suppliers, shareholders, govermment , wholesalers, reailers etc
According to Public Association Relations , public relation is define as " The art and social science
of analyzing trends, predicting their consequences,counseling organizational leaders and
implementing planned progranume of action which will scrve both the organization and the public
interest."

Ch. 11(Marketing) Page 20 of 26

joOLS OF PUBLIC
RELATIONS
> NEWS letters ,Annual reports,
> EVENTS--Seminars, Contests Brchures-- SPEECHES-- by the corporate leaders
>
PUBLICATIONS-----.Magazines , arnual reports
> PUBLICSERVICE ACTIVITIES. Expenditure on upkecp on parks and gardens
SPONSORSHIPS---sponsoring sports
ROLE OF PUBLIC RELATIONS
1. PRESS RELATIONS Information about the organization need to be presented in a positive
contact with mediato present true facts
in
manner in the press. The public relation department
news gets distorted.
and a correct picture about the company otherwise special efforts ta publicise them.The
products require
2. PRODUCT PUBLICITY New products by arranging sports or cultural events like
company can draw attention to new
seminars, exhibitions etc. articles ,
COMMUNICATION Newsletter, annual reports, brochures , Company
3. CORPORATE improve the image of the company.
Speeches by
audiovisual material is used to associations or trade fairs can boost their image.Interviews
executives at a meetings of trade
public relations.
with TV channels helps to promote to deal with government officials and various ministers
organization has promoting
4. LOBBYING The industry. Public relations department has to be proactive in
relating to business and
their working.
or defeating regulations that affect
relations departmA WARENESSent advises the
management
5. COUNSELLING The public and money on cause
general issues which affect public. Itadvises company's to spend time
on wildlife, education etc.
related issues like environment ,
MARKETING
PUBLIC RELATIONS HELPS TO ACHIEVE
OBJECTIVES BY: stories and
BUILDING AWARENESS public relations department can place
drarmatize the product in the media. This willcreate favourable imnpression on the target
customers as well as build market place excitement before the product reaches the
market.
BUILDING CREDIBILITY
If news abouta product comes in the media it always lends credibility and people
believe in the product since it is in the news.
STIMULATES SALES FORCE
It becomes easier for the sales force deal with retailers as well as dealers.If they have
already heard about the product before it is launched".Retailers and dealers also find it
easier to convince and sell the product to the final consumer.
LOWERS PROMOTION COST
Maintaining good public relations costs much less than advertising. However it requires
lot of communication to convince the media to give space and time for the
organization and its product.
TEST
> Name the function of
marketing that
and helps in realizing higher prices forensures that goods belong to a particular quality
highquality output.-
Ch. 11 (Marketing) Page 21 of 26
 and persuade them to
inform potentialcustomer
that helps to
Name the tool ofmarketing overcomingthe various
time ,
buyit. and services by
movcment of goods
facilitate the conccpt. 10%to 20%. Name the marketing
P They possession barriers.name theshare from
place and increasc his market
Marketeraims to theM--
create products and sell
function. fill them b)
concepts a)find wants and
Name the channels.
prefer to sell through indirect
conditions vou would
> inder what
compulsory labeling by law.
Give one enample of
revive the lost image of the company
concept that helps to
> Nane the

and Multidisciplinary questions

Case Based
Marketing management
important decisions that a
contains one of the most
elerments of market mix which Sales Manager of
t is one of the sales. This decision was taken by Mr. Sunder, ensured quality and
promote identification and hence
marketer has to take to customers in product satisfaction as the
facilitated the
Creative Ltd., which
and help in increasing their level of
their confidence that are harmful
safety norms. It also built up protected against marketing of such goods and services
consumers have a ight to be
Sunder mentioned
to ife and health.
marketing mix and the important decision taken by Mr.
Identiy the element of
above.
of marketing mix.
b. Name the other elements
being referred above.
C. ldentify the consumer right ensuring quality products for the customers.
d. ldentify the value being emphasized by
increased rapidly.
by keeping convenience products .The sale
2. Big Bazaar opened its outlet and started Bazaar excelled in this area too and its now the
It then thought of keeping shopping products also. Big Consumers have the freedom to choose
biggest retailchain. Moreover Big Bazaar ensured that the
products of their choice.
in the above case.
a. Name the element of marketing mix involved
b. Name some of the convenience products.
c. ldentify the consumer right being referred above.
d Give two features of convenience products.

3. Mr. Dev, working as Sales Executive in Mahadev Ltd., possesses goodmarketing techniques. His
techniques involve oral presentation of message in the form of conversation with one or more
prospective customers for the purpose of making sales. Mr. Dec ensures that consumers are protected
against the malpractices like misleading advertising, black marketing etc.
a. Name the element of marketing mix under which the above technique falls.
b. ldentify the technique used by Mr. Dev.
C. Give any one merit of the technique identified in (b) above.
d. ldentify the importance of consumer protection from the point of view of
relerred above. consumer being

Ch. 1i (Marketing) Page 22 of 26 22