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FUNDAMENTALS OF MARKETING


FUNDAMENTALS OFMARKETING

By

Dr Vikas Saraf Pawan ThakurPh.D., M.B.A, FDP-IIM, Indore M.C.A, M.A. (Eco.), M.Phil,

Professor & Director, Assistant Professor, Department of Computer

Vidyasagar Institute of Management, Bhopal. Application & Information Technology,

(Barkatullah University, Bhopal) Vidyasagar Institute of Management, Bhopal.

Former Joint Director, The Institute of Cost (Barkatullah University, Bhopal)

& Works Accountants of India (ICWAI) Secretary SCIT Group of Institutions, Bhopal

UNIVERSITY SCIENCE PRESS(An Imprint of Laxmi Publications (P) Ltd.)

BANGALORE CHENNAI COCHIN GUWAHATI HYDERABAD

JALANDHAR KOLKATA LUCKNOW MUMBAI RANCHI

NEW DELHI BOSTON, USA

FUNDAMENTALSOFMARKETING

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Printedandbound in IndiaTypeset at Excellent Graphics, Delhi

FirstEdi�on:2014

UFM-9731-250-FUNDOFMARKETING-SAR

ISBN978-93-83828-30-2

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ContentsChapters Pages

UNIT–I (1-60)

1. Marketing: Nature, Scope and Importance 3–161.1 Introduction ... 31.2 Evolution of Marketing ... 41.3 Meaning and Definition of Marketing ... 51.4 Features of Marketing ... 61.5 Marketing Management ... 61.6 Functions of Marketing Management ... 71.7 Nature of Marketing ... 81.8 The Marketing Concept ... 91.9 Difference between Marketing and Selling ... 111.10 Marketing Myopia ... 121.11 Scope/Functions of Marketing ... 121.12 Utilities of Marketing ... 131.13 Types of Marketing ... 141.14 Importance of Marketing ... 151.15 Role of Marketing in an Organization ... 16

2. Marketing Environment 17–242.1 Introduction ... 172.2 Meaning and Definition ... 172.3 Marketing Environment ... 182.4 Features of Business Environment ... 202.5 Environmental Scanning ... 202.6 Importance of Business Environment ... 23

3. Marketing Mix and Marketing Plan 25–343.1 Introduction ... 253.2 Meaning and Definitions of Marketing Mix ... 263.3 Features of Marketing Mix ... 263.4 Components of Marketing Mix ... 273.5 4cs of Marketing Mix ... 303.6 Introduction to Marketing Planning ... 313.7 Meaning and Definition of Marketing Planning ... 313.8 Elements of Marketing Plan ... 323.9 Process of Marketing Plan ... 323.10 Importance of Marketing Plan ... 33

4. Market Segmentation, Targeting and Positioning 35–454.1 Introduction ... 354.2 Meaning and Definition of Market Segmentation ... 36

( vii )


4.3 Market Segmentation Objectives ... 374.4 Bases of Market Segmentation ... 374.5 Levels of Market Segmentation ... 394.6 Importance of Market Segmentation ... 404.7 Market Targeting ... 404.8 Meaning and Definition of Market Targeting ... 414.9 Selection of Target Segments ... 414.10 Targeting Strategies ... 424.11 Positioning ... 424.12 Meaning and Definition of Positioning ... 434.13 Steps to Product Positioning ... 434.14 Positioning Strategies ... 44

5. Consumer Behaviour 46–605.1 Introduction ... 465.2 Meaning And Definition of Consumer Behaviour ... 475.3 Characteristics of Consumer Behaviour ... 475.4 Types of Consumer Buying Behaviour ... 485.5 Importance of Understanding Consumer Behaviour ... 495.6 Determinists of Consumer Behaviour ... 495.7 Process of Buying Decisions ... 515.8 Cognitive Dissonance ... 525.9 Consumer Behaviour Models ... 53

UNIT–II (61-126)

6. Product Concepts and Product Life Cycle 63–766.1 Introduction ... 636.2 Meaning and Definition of Product ... 646.3 Product Classification ... 646.4 Product Mix ... 666.5 Product Line ... 676.6 BCG Model ... 686.7 Product Life Cycle Concept and Meaning ... 726.8 Characteristics of Product Life Cycle ... 736.9 Stages of Product Life Cycle ... 736.10 Strategies of Product Life Cycle ... 76

7. Product Planning, Development and Product Identification 77–907.1 Introduction ... 777.2 Product Planning Concept and Meaning ... 787.3 Objectives/Need/Importance of New Product ... 787.4 Product Development ... 797.5 Steps Involved in New Product Development (NPD) Process ... 797.6 Product Identification: an Introduction ... 827.7 Branding ... 83

Chapters Pages

( viii )


7.8 Trademark ... 837.9 Distinction between Brand and Trademark ... 837.10 Objectives of Branding ... 847.11 Essentials of Good Brand ... 857.12 Brand Positioning ... 867.13 Packaging ... 877.14 Levels/Classification of Packaging ... 877.15 Objectives of Packaging ... 887.16 Functions/Importance of Packaging ... 89

8. Pricing 91–1008.1 Introduction ... 918.2 Meaning of Price ... 918.3 Importance of Pricing ... 928.4 Objectives of Pricing ... 928.5 Factors Affecting Pricing ... 938.6 Methods of Pricing ... 958.7 Pricing of New Products ... 988.8 New Product Pricing Methods and Strategy ... 98

9. Marketing Communication and Marketing Research 101–1209.1 Introduction ... 1019.2 Meaning and Definition ... 1029.3 Objective of Marketing Communication ... 1029.4 Process of Marketing Communication ... 1039.5 Barriers in Marketing Communication ... 1059.6 Elements of Marketing Communication Mix ... 1079.7 Tools of Marketing Communication ... 1079.8 Integrated Marketing Communication ... 1089.9 Introduction to Market Research ... 1099.10 Meaning and Definition of Marketing Research ... 1099.11 Nature and Scope of Marketing Research ... 1109.12 Need of Marketing Research ... 1119.13 Characteristics of Marketing Research ... 1119.14 The Marketing Research Process ... 1129.15 Marketing Information System (MIS) ... 1159.16 Types of Marketing Research ... 1179.17 Importance of Marketing Research ... 119

10. Promotion Mix 121–12610.1 Introduction ... 12110.2 Meaning and Definition ... 12110.3 Components of Promotion Mix ... 12210.4 Factors Governing Promotion Mix ... 124

Chapters Pages

( ix )


UNIT–III (127-204)

11. Advertising 129–14511.1 Introduction ... 12911.2 History of Advertising in India ... 13011.3 Evolution of Advertising ... 13211.4 Meaning and Definition ... 13211.5 Features of Advertising ... 13311.6 Essentials of Advertising ... 13311.7 The 5-Ms of Advertising ... 13411.8 Objectives/Functions of Advertising ... 13511.9 Types of Advertising ... 13711.10 Advertising Strategies for the Stages of the Product Life Cycle (PLC) ... 13811.11 Benefits or Importance of Advertisement ... 13911.12 Ethics in Advertising ... 14111.13 Steps in Scientific Advertising Campaign ... 14311.14 Criticisms of Advertising ... 144

12. Advertising Budget, Media and Public Relations 146–17012.1 Introduction ... 14612.2 Meaning and Definition ... 14712.3 Advertising Budgeting Methods ... 14712.4 Advertisement Copy ... 14812.5 Essentials of Effective Advertisement Copy ... 14912.6 Elements of Advertising Copy ... 15012.7 Measurement of Advertising Effectiveness ... 15112.8 Dagmar Model ... 15212.9 Methods of Advertising Evaluation ... 15312.10 Advertising Agencies ... 15712.11 Media ... 16312.12 Public Relations (PR) ... 16712.13 Objectives of Public Relations ... 16812.14 Components of Public Relations ... 16812.15 Importance of Public Relations ... 16912.16 Developing a Marketing Public Relations Plan ... 169

13. Personal Selling and Management of Sales Force 171–18713.1 Introduction ... 17113.2 Meaning and Definition ... 17213.3 Characteristics of Personal Selling ... 17213.4 Qualities of a Good Salesman ... 17613.5 Advantages and Disadvantages of Personal Selling ... 17713.6 Importance of Personal Selling ... 17813.7 Meaning of Recruitment ... 17813.8 Process of Recruitment ... 17913.9 Training of Salesmen ... 180

Chapters Pages

( x )


13.10 Importance of Sales Training ... 18113.11 Methods of Sales Training ... 18113.12 Remuneration of Salesmen ... 18313.13 Methods of Sales Remuneration ... 18313.14 Motivation of Sales Personnel ... 18513.15 Evaluation of Sales Force Performance ... 18513.16 Process of Evaluating Sales Force Performance ... 186

14. Sales Forecasting, Sales Promotion and Publicity 188–20414.1 Introduction ... 18814.2 Meaning and Definition ... 18914.3 Factors Affecting Sales Forecasting ... 18914.4 Main Characteristics of Sales Forecasting ... 19014.5 Methods/Techniques of Sales Forecasting ... 19014.6 Significance of Sales Forecasting ... 19214.7 Introduction of Sales Promotion ... 19314.8 Meaning and Definition of Sales Promotion ... 19314.9 Characteristics of Sales Promotion ... 19314.10 Distinguish between Advertising and Sales Promotion ... 19314.11 Objectives of Sales Promotion ... 19414.12 Techniques of Sales Promotion ... 19514.13 Advantages and Disadvantages of Sales Promotion ... 19714.14 Sales Promotion Budget ... 19814.15 Sales Promotion Programmes ... 19914.16 Publicity ... 19914.17 Difference between Advertisement and Publicity ... 20014.18 Role of Publicity ... 20114.19 Objectives of Publicity ... 20114.20 Publicity Techniques ... 20214.21 Importance of Publicity ... 202

UNIT–IV (205-256)

15. Physical Distribution 207–21915.1 Introduction ... 20715.2 Meaning of Physical Distribution ... 20815.3 Objective of Physical Distribution ... 20815.4 Element of Physical Distribution ... 20915.5 Process or Component of Physical Distribution ... 21015.6 Mode of Transportation ... 21215.7 Distribution Cost Analysis ... 21415.8 Customer Service in Logistics ... 21515.9 Marketing Logistics ... 21515.10 Trends in Logistics Development ... 21515.11 Vertical Marketing System (VMS) ... 21615.12 Horizontal Marketing Systems (HMS) ... 218

Chapters Pages

( xi )


15.13 Multi-channel Distribution Systems ... 21815.14 Importance of Physical Distribution ... 218

16. Channels of Distribution 220–23216.1 Introduction ... 22016.2 Meaning and Definition ... 22116.3 Characteristics of Distribution Channel ... 22116.4 Functions of Channels of Distribution ... 22216.5 Channel Management ... 22216.6 Factors Influencing the Choice of Distribution Channel ... 22316.7 Types of Channel ... 22516.8 Various Channels for the Distribution of Consumer Goods and

Industrial Goods ... 22616.9 Wholesalers ... 22716.10 Characteristics of Wholesalers ... 22716.11 Types of Wholesalers ... 22716.12 Functions of Wholesalers ... 22816.13 Retailers ... 22916.14 Characteristics of Retailers ... 22916.15 Functions of Retailers ... 22916.16 Types of Retailers ... 230

17. Strategic Marketing Planning and Competitive MarketingStrategies 233–24517.1 Introduction ... 23317.2 Meaning and Definition ... 23417.3 Characteristics of Strategic Planning ... 23417.4 Strategic Marketing Plan ... 23417.5 Role of Strategic Marketing Plan ... 23517.6 Strategic Marketing Planning Process ... 23617.7 Marketing Strategy Implementation ... 23817.8 Competitive Marketing Strategies ... 23817.9 Disadvantages of Porter’s Five Forces Model ... 24017.10 Porter’s Generic Competitive Strategies ... 24017.11 Ansoff Product Matrix (Marketing Strategies) ... 24117.12 Competitive Marketing Strategy Options ... 24217.13 Marketing Mix Strategies ... 244

18. Marketing Organizations and Control of Marketing Operations 246–25618.1 Introduction ... 24618.2 Meaning and Definition of Marketing Organization ... 24618.3 Need for the Organization ... 24718.4 Factors Affecting Marketing Organization ... 24718.5 Types of Marketing Organization Structures ... 24818.6 Definition and Meaning of Marketing Control ... 25218.7 Objectives of Marketing Control ... 252

Chapters Pages

( xii )


18.8 Marketing Control Process ... 25318.9 Techniques of Marketing Control ... 25318.10 Marketing Audit ... 25418.11 Characteristics of Marketing Audit ... 25418.12 Types of Marketing Audit ... 25518.13 Process of Marketing Audit ... 255

UNIT–V (257-312)

19. Rural Marketing 259–27219.1 Introduction ... 26019.2 Meaning and Definition ... 26019.3 Characteristics of Rural Marketing ... 26019.4 Scope of Rural Marketing ... 26119.5 Factors Contributing to Change in Rural Marketing ... 26119.6 Importance of Rural Marketing ... 26219.7 Changing Scenario ... 26319.8 Distinction between Rural and Urban Marketing ... 26319.9 Problems of Rural Marketing ... 26419.10 Strategies in Rural Marketing ... 26519.11 Agricultural Marketing ... 26619.12 Classification of Agri-Product ... 26619.13 Features of Agri-Product ... 26719.14 Problems of Agri-Products Marketing ... 26719.15 Types of Market ... 26819.16 Procedure and Methods of Trading ... 26919.17 Co-operative Marketing ... 26919.18 Aims and Objectives of Co-Operative Marketing ... 26919.19 Role of Co-Operative Marketing ... 27019.20 Functions of Co-Operative Marketing ... 27019.21 Importance of Co-Operative Marketing ... 27119.22 Present Scenario of Co-Operative Marketing ... 272

20. Marketing of Services Banking, Transport and Insurance 273–28620.1 Introduction ... 27320.2 Meaning and Definition ... 27420.3 Characteristics of Services ... 27420.4 Difference between Goods and Services ... 27520.5 Service Marketing Mix ... 27620.6 Bank Marketing ... 27620.7 Marketing Mix for Banking Organization ... 27720.8 Marketing Information System ... 27820.9 Component of Marketing Information System ... 27820.10 Transport Marketing ... 27920.11 Mode of Transport ... 280

Chapters Pages

( xiii )


20.12 Marketing in Indian Railways ... 28020.13 Marketing Mix for Rail Transport ... 28120.14 Marketing on Road Transport Corporation ... 28220.15 Marketing Mix-road Transport Corporation ... 28320.16 Airline Marketing Mix ... 28420.17 Risk and Insurance Marketing ... 28420.18 Life Insurance Corporation in India ... 28420.19 Marketing Mix in Insurance Sector ... 285

21. E-Commerce and CRM 287–30021.1 Introduction ... 28721.2 Meaning and Definition ... 28821.3 Benefits of E-Commerce ... 28821.4 Marketing Mix of E-Commerce ... 28921.5 E-Commerce Models ... 29021.6 Application of E-Commerce ... 29321.7 Advantages of E-Commerce ... 29321.8 Disadvantages of E-Commerce ... 29321.9 Introduction to Customer Relationship Management (CRM) ... 29321.10 Meaning and Definition ... 29421.11 Need and Objective of CRM ... 29421.12 Features of CRM ... 29521.13 Types of CRM ... 29521.14 Implementing CRM with Critical Success Factors (CSF) ... 29721.15 CRM Marketing ... 298

22. New Issues in Marketing: Globalization and Green Marketing 301–31222.1 Meaning of Globalization ... 30222.2 Characteristics of Globalization ... 30222.3 Factors Affecting Globalization ... 30322.4 Globalization of Business ... 30322.5 Impact of Globalization ... 30422.6 Impact of Globalization on India ... 30422.7 Meaning of Green Marketing ... 30522.8 Evolution and Need of Green Marketing ... 30622.9 Need of Green Marketing ... 30622.10 Green Products and their Characteristics ... 30622.11 Challenges in Green Marketing ... 30722.12 Marketing Mix of Green Marketing ... 30722.13 Importance of Green Marketing ... 30822.14 Consumerism ... 30822.15 Consumer Movement in India ... 30922.16 Consumer Protection Act, 1986 ... 30922.17 Neuro Marketing ... 310

Index 312–316

Chapters Pages

( xiv )


PREFACEThis book written in an extremely simple and lucid language with practical example

and diagrams. The original purpose of a preface to Fundamentals of Marketing is to deliver aclear and concise presentation of the fundamental principles of marketing. It is praised in themarket for its organization, format, clarity, brevity and flexibility. The text serves as an overviewfor critical issues in marketing principle. Its brief, format makes it a perfect fit for instructorswho assign cases, readings, simulations or offer modules on marketing fundamentals forgraduate and post graduate level students. The text also works in courses that implement across-functional curriculum where the students are required to purchase several texts. It isvery useful book for beginners who do not have much knowledge about marketing and want tounderstand the fundamentals of marketing at a fair amount of depth.

Chapter 1 introduces the basic concepts of marketing, nature, scope and importance ofmarketing. Chapters 2 to 5 introduces marketing environment, marketing mix and marketingplan, market segmentation, targeting, positioning and consumer behaviour. Chapters 6 to 10includes product concepts and product life cycle, product planning, development and productidentification, pricing, marketing communication and marketing research. Chapters 11 to 14discuss concepts of promotion activities like advertising, advertising budget, media and publicrelations, personal selling and management of sales force, sales forecasting, sales promotionand publicity. Chapters 15 to 18 we study about physical distribution, channels of distribution,strategic marketing planning and competitive marketing strategies, marketing organizationsand control of marketing operations. Chapters 19 to 21 introduces rural marketing, marketingof services, banking, transport and insurance, e-commerce and CRM. Chapter 22 closes ourdiscussion with new issues in marketing: globalization, green marketing, consumerism andneuro-marketing.

This book is a result of very strong passion—the passion for acquiring and sharingknowledge and also the passion to demystify, so that we all can learn and enjoy. To whatextend this goal has been achieved, only time will tell. Readers are most welcome to writeback their suggestions / criticism which will definitely be acknowledged in forthcoming edition.

— Authors

( xv )

Fundamentals of Marketing By Dr. VikasSaraf, Pawan Thakur

Publisher : Laxmi Publications ISBN : 9789383828302 Author : Dr. Vikas Saraf ,Pawan Thakur

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