Marketing Management Defination The application, tracking and review of a company's marketing resources and activities.The scope of a business' marketing management depends on the size of the business and the industry in which the business operates. Effective marketing management will use a company's resources to increase its customer base, improve customer opinions of the company's products and services, and increase the company's perceived value.American Marketing Association :- Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals The Chartered Institute of Marketing :- ‘Marketing is the management ‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’ profitably’Adcock et al :- ‘The right product, in the right place, ‘The right product, in the right place, at the right time, and at the right price’ at the right time, and at the right price’Kotler 1980 :- ‘Marketing is the human activity ‘Marketing is the human activity directed at satisfying human needs and wants through an exchange process’ process’Kotler 1991 :- ‘Marketing is a social and managerial ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ others’Definition of MarketingAccording to American Marketing Association, "Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders."Definition of ManagementAccording to Harold Koontz, "Management is the art of getting things done through and with people in formally organised groups."Management consists of the interlocking functions of creating corporate policy and organising, planning, controlling, directing an organisation's resources in order to achieve the objectives of the policy.Definition of Marketing ManagementAccording to Philip Kotler, "Marketing Management is the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target audiences for the purpose of personal and of mutual gain. It relies heavily on the adoption and coordination of product, price, promotion and place for achieving responses.".Marketing management is a business process, to manage marketing activities in profit seeking and non profit organisations at different levels of management. Marketing management decisions are based on strong knowledge of marketing functions and clear understanding and application of supervisory and managerial techniques.Nature of Marketing ManagementIt Combines the Fields of Marketing and ManagementAs the name implies, marketing management combines the fields of marketing and management. Marketing consists of discovering consumer needs and wants, creating the goods and services that meet those needs and wants; and pricing, promoting, and delivering those goods and services. Doing so requires attention to six major areas - markets, products, prices, places, promotion, and people.Management is getting things done through other people. Managers engage in five key activities - planning, organising, staffing, directing, and controlling. Marketing management implies the integration of these concepts.Marketing Management is a Business ProcessMarketing management is a business process, to manage marketing activities in profit seeking and non profit organisations at different levels of management, i.e. supervisory, middle-management, and executive levels. Marketing management decisions are based on strong knowledge of marketing functions and clear understanding and application of supervisory and managerial techniques. Marketing managers and product managers are there to execute the processes of marketing management. We, as customers, see the results of such process in the form of products, prices, advertisements, promotions, etc. Marketing Management is Both Science and Art“Marketing management is art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value.” (Kotler, 2006). Marketing management is a science because it follows general principles that

guides the marketing managers in decision making. The Art of Marketing management consists in tackling every situation in an creative and effective manner. Marketing Management is thus a science as well as an art.

Nature of Marketing1. Marketing is an Economic FunctionMarketing embraces all the business activities involved in getting goods and services , from the hands of producers into the hands of final consumers. The business steps through which goods progress on their way to final consumers is the concern of marketing.2. Marketing is a Legal Process by which Ownership Transfers In the process of marketing the ownership of goods transfers from seller to the purchaser or from producer to the end user. 3. Marketing is a System of Interacting Business Activities Marketing is that process through which a business enterprise, institution, or organisation interacts with the customers and stakeholders with the objective to earn profit, satisfy customers, and manage relationship. It is the performance of business activities that direct the flow of goods and services from producer to consumer or user.4. Marketing is a Managerial function According to managerial or systems approach - "Marketing is the combination of activities designed to produce profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of the market." According to this approach the emphasis is on how the individual organisation processes marketing and develops the strategic dimensions of marketing activities. 5. Marketing is a social process Marketing is the delivery of a standard of living to society. According to Cunningham and Cunningham (1981) societal marketing performs three essential functions:-1. Knowing and understanding the consumer's changing needs and wants;2. Efficiently and effectively managing the supply and demand of products and services; and3. Efficient provision of distribution and payment processing systems.6. Marketing is a philosophy based on consumer orientation and satisfaction7. Marketing had dual objectives - profit making and consumer satisfaction

Scope of Marketing1. Study of Consumer Wants and NeedsGoods are produced to satisfy consumer wants. Therefore study is done to identify consumer needs and wants. These needs and wants motivates consumer to purchase.

2. Study of Consumer behaviourMarketers performs study of consumer behaviour. Analysis of buyer behaviour helps marketer in market segmentation and targeting.3. Production planning and developmentProduct planning and development starts with the generation of product idea and ends with the product development and commercialisation. Product planning includes everything from branding and packaging to product line expansion and contraction.4. Pricing PoliciesMarketer has to determine pricing policies for their products. Pricing policies differs form product to product. It depends on the level of competition, product life cycle, marketing goals and objectives, etc.5. DistributionStudy of distribution channel is important in marketing. For maximum sales and profit goods are required to be distributed to the maximum consumers at minimum cost.6. PromotionPromotion includes personal selling, sales promotion, and advertising. Right promotion mix is crucial in accomplishment of marketing goals.7. Consumer SatisfactionThe product or service offered must satisfy consumer. Consumer satisfaction is the major objective of marketing.8. Marketing ControlMarketing audit is done to control the marketing activities.

PROCESS IntroductionThe activities of marketers both reflect and shape the world we live in. Every year new products and services are launched and some of them

succeeds on an unprecedented scale. As in the case of Apple's iPod, iPhone, and also iPad. They all are great inventions and highly successful in market.According to marketing concept, the organisation must find ways to discover unfulfilled customer needs and wants and bring products that satisfy those needs and wants. This can be done in a sequence of steps that is called marketing process.After reading this you will understand - what is marketing process, and the steps involved in marketing process.Meaning of Marketing ProcessThe Marketing Process of a company typically involves identifying the viable and potential marketing opportunities in the environment, developing strategies to effective utilise the opportunities, evolving suitable marketing strategies, and supervising the implementation of these marketing efforts.Marketing process involves ways that value can be created for the customers to satisfy their needs. Marketing process is a continual series of actions and reactions between the customers and the organisations which are making attempt to create value for and satisfy needs of customers. In marketing process the situation is analysed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are taken, plan is implemented, and results are monitored.

Steps in Marketing ProcessFollowing are the steps involved in the Marketing Process :- Situation Analysis Marketing Strategy Marketing Mix Decision Implementation and Control1. Situation AnalysisAnalysis of situation in which the organisation finds itself serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. Situational and environmental analysis is done to identify the marketing opportunities, to understand firms own capabilities, and to understand the environment in which the firm is operating.2. Marketing StrategyAfter identifying the marketing opportunities a strategic plan is developed to pursue the identified opportunities.3. Marketing Mix DecisionsAt this step detailed tactical decisions are made for the controllable parameters of the marketing mix. It includes - product development decisions, product pricing decisions, product distribution decisions, and product promotional decisions.4. Implementation and ControlFinally, the marketing plan is implemented and the results of marketing efforts are monitored to adjust the marketing mix according to the market changes.

IntroductionIn today's world of marketing, everywhere you go you are being marketed to in one form or another. Marketing is with you each second of your walking life. From morning to night you are exposed to thousands of marketing messages everyday. Marketing is something that affects you even though you may not necessarily be conscious of it.

After reading this you'll understand - what exactly the marketing is, different definitions of marketing, and what are the different approaches of marketing.

Definition and Meaning of MarketingAccording to American Marketing Association (1948) - "Marketing is the performance of business activities directed toward, and incident to, the flow of goods and services from producer to consumer or user."

AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user."

The above definitions are based on the economic approach of marketing. Marketing embraces all the business activities involved in getting goods and services , from the hands of producers into the hands of final consumers. The business steps through which goods progress on their way to final consumers is the concern of marketing.

Consumer's Approach of Marketing According to Star et al. (1977) - "Marketing is that process through which a business enterprise, institution, or organisation 1. selects target customers or constituents, 2. assesses the needs or wants of such target

customers, and 3. manages its resources to satisfy those customer needs or wants."

The above definition is based on the consumer's approach of marketing. According to this approach marketing consists of four general activities:-1. Identifying and selecting the type of  customer, understanding their needs and desires;2. Designing product or services that suits the customers' desires;3. Persuading customers to buy at the firm's offerings; and4. Storing, moving, and displaying goods after they leave the production site.Societal Approach of Marketing According to Mazur (1947) - "Marketing is the delivery of a standard of living to society."This definition is based on the societal approach of marketing. According to Cunningham and Cunningham (1981) societal marketing performs three essential functions:-1. Knowing and understanding the consumer's changing needs and wants;2. Efficiently and effectively managing the supply and demand of products and services; and3. Efficient provision of distribution and payment processing systems.Managerial or Systems ApproachAccording to Eldridge (1970) - "Marketing is the combination of activities designed to produce profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of the market."

The above definition is based on the managerial or systems approach of marketing. According to this approach the emphasis is on how the individual organisation processes marketing and develops the strategic dimensions of marketing activities.

A Broader Approach of MarketingAccording to Kotler (2000) - "A societal 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."

According to AMA (2004) - "Marketing is an organisational function and set of processes for creating, communicating and delivering value to customers and for managing relationships in a way that benefits both the organisation and the stakeholder."

MARKETING MIX The Marketing Mix

Summary (Click to go directly)

Introduction to Marketing Mix Definition of Marketing Mix  Meaning of Marketing Mix 4P's - Producer-oriented Model 4C's - Consumer-oriented Model

Introduction to Marketing MixMarketing is the process of identifying, anticipating, and satisfying customers' requirements with the purpose to make profits. In this process marketing managers and marketing representatives have to take various marketing decisions to make the operations profitable. They have to decide what combination of marketing policies and procedures be adopted to bring about desired behaviour of trade and consumers at minimum cost. They have to decide how can advertising, personal selling, pricing, packaging, channels, warehousing, and the other elements of marketing be manipulated and mixed to make marketing operations profitable. More specifically, they have to decide a marketing mix - a decision making method in relation with the product, price, promotion, and distribution.

The term Marketing Mix was introduced by Neil H. Borden in his article - "The Concept of Marketing Mix". He learned about it in a research bulletin on the management of marketing costs, written by his associate, Prof. James Culliton. in 1948. In this study of manufacturers' marketing costs he described the business executive as a "decider," an

"artist" - a "mixer of ingredients," who sometimes follows a recipe prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe to the ingredients immediately available, and sometimes experiments with or invents ingredients no one else has tried. 

Definition of Marketing MixAccording to Philip Kotler - "Marketing Mix is the combination of four elements, called the 4P's (product, Price, Promotion, and Place), that every company has the option of adding, subtracting, or modifying in order to create a desired marketing strategy"

According to Principles of Marketing, 14e, Kotler and Armstrong, 2012 - "The Marketing Mix is the set of tactical marketing tools - Product, Price, Promotion, and Place - that the firm blends to produce the response it wants in the target market."

Meaning of Marketing MixThe Marketing Mix is a marketing tool used by marketing professionals. It is often crucial when determining product or brand's offering, and it is also called as 4P's (Product, Price, Promotion, and Place) of marketing. However, in case of services of different nature the 4 P's have been expanded to 7P's or 8P's.

In recent times, giving more importance to customer a new concept have been introduced, i.e. Concept of 4C's. The Concept of 4C's is more customer-driven replacement of 4P's. According to Lauterborn's the 4C's are - Consumer, Cost, Communication, and Convenience. According to Shimizu's the 4C's are  -Commodity, Cost, Communication, and Channel.4P's - Producer-oriented Model of Marketing Mix Product - Products are offerings that a marketer offers to the target audience to satisfy their needs and wants. Product can be tangible good or intangible service. Tangible products are goods like - cellphone, television, or motor car, whereas intangible products are services like - financial service in a bank, health treatment by a doctor, legal advice of a lawyer.  Price - Price is the amount that is charged by marketer of his offerings or the amount that is paid by consumer for the use or consumption of the product. Price is crucial in determining the organisation's profit and survival. Adjustments in price affects the demand and sales of the product. Marketers are required to be aware of the customer perceived value of the product to set the right price.  Promotion - Promotion represents the different methods of communication that are used by marketer to inform target audience about the product. promotion includes - advertising, personal selling, public relation, and sales promotion.  Place - Place or distribution refers to making the product available for customers at convenient and accessible places.In case of services, the producer-oriented model of marketing mix is consists of 7P's. Including the above 4P's there are additional 3P's - Physical Evidence, People, and Process. Physical evidence refers to elements like uniform of employees, signboards, and etc. People refers to the employees of the organisation comes in contact with the customers in the process of marketing. Process refers to the systems and processes followed within organisation.4C's - Consumer-oriented model of marketing Mix Consumer - In this model the Product is replaced by Consumer. Marketers focuses more on consumer satisfaction. The product is designed and produced keeping in consideration the requirements of consumer.  Cost - Price is replaced by Cost. Here the cost refers to the total cost of owning a product. It includes cost to use the product, cost to change the product, and cost of not choosing the competitor's product.  Communication - Promotion is replaced by Communication. Communication includes advertising, public relation, personal selling, and any method that can be used for proper,timely, and accurate communication between marketer and consumer. Convenience - Place is replaced by Convenience. it focuses on ease of buying, convenience in reaching to the store/product, and convenience in getting product information.

Product Life Cycle ConceptWe have a life cycle, we are born, we grow, we mature, and finally we pass away. Similarly, products also have life cycle, from their introduction to decline they progresses through a sequence of stages. The major stages of the product life cycle are - introduction, growth, maturity, and

decline. Product life cycle describes transition of a product from its development to decline.

The time period of product life cycle and the length of each stage varies from product to product. Life cycle of one product can be over in few months, and of another product may last for many years. One product reach to maturity in years and another can reach it in few months. One product stay at the maturity for years and another just for few months. Hence, it is true to say that length of each stage varies from product to product.

Product life cycle is associated with variation in the marketing situation, level of competition, product demand, consumer understanding, etc., thus marketing managers have to change the marketing strategy and the marketing mix accordingly.

Product life cycle can be defined as "the change in sales volume of a specific product offered by an organisation, over the expected life of the product."

Stages of the Product Life CycleThe four major stages of the product life cycle are as follows :-1. Introduction,2. Growth,3. Maturity, and4. Decline. Introduction Stage

At this stage the product is new to the market and few potential customers are aware with the existence of product.  The price is generally high. The sales of the product is low or may be restricted to early adopters. Profits are often low or losses are being made, this is because of the high advertising cost and repayment of developmental cost. At the introductory stage :- The product is unknown, The price is generally high, The placement is selective, and The promotion is informative and personalised.Growth Stage

At this stage the product is becoming more widely known and acceptable in the market. Marketing is done to strengthen brand and develop an image for the product. Prices may start to fall as competitors enters the market. With the increase in sales, profit may start to be earned, but advertising cost remains high. At the growth stage :- The product is more widely known and consumed, The sales volume increases, The price begin to decline with the entry of new players, The placement becomes more widely spread, and The promotion is focused on brand development and product image formation.Maturity StageAt this stage the product is competing with alternatives. Sales and profits are at their peak. Product range may be extended, by adding both withe and depth. With the increases in competition the price reaches to its lowest point. Advertising is done to reinforce the product image in the consumer's minds to increase repeat purchases. At maturity stage :- The product is competing with alternatives, The sales are at their peak, The prices reaches to its lowest point, The placement is intense, and The promotion is focused on repeat purchasing.Decline StageAt this stage sales start to fall fast as a result product range is reduced. The product faces reduced competition as many players have left the market and it is expected that no new competitor will enter the market. Advertising cost is also reduced. Concentration is on remaining market niches as some price stability is expected there. Each product sold could be profitable as developmental costs have been paid at earlier stage. With the reduction in sales volume overall profit will also reduce. At decline stage :- The product faces reduced competition, The sales volume reduces, The price is likely to fall, The placement is selective, and The promotion is focused on reminding.

MARKETING ENVIRONMENT IntroductionIn today's world of marketing, everywhere you go you are being marketed to in one form or another. Marketing is with you each second of your walking life. From morning to night you are exposed to thousands of marketing messages everyday. Marketing is something that affects you even though you may not necessarily be conscious of it.

Definition of MarketingAccording to American Marketing Association (2004) - "Marketing is an organisational function and set of processes for creating, communicating and delivering value to customers and for managing relationships in a way that benefits both the organisation and the stakeholder."

According to Kotler (2000) - "A societal 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."

Marketing EnvironmentThe term Marketing Environment refers to the forces and factors that affects the organisation ability to built and maintain good relationship with its customers. Marketing environment surrounds the organisation and it impacts upon the organisation. Marketers have to interact with internal and external people at micro and macro level and builds internal and external relationships. The key elements of marketing environment are as follows :-1. Internal Environment,2. Micro Environment, and 3. Macro Environment.Internal EnvironmentInternal factors like men, machine, money, material, etc., on which marketing decision depends consists internal marketing environment. The internal environment refers to the forces that are within the organisation and affects its ability to serve its customers. It includes marketing managers, sales representatives, marketing budget, marketing plans, procedures, inventory, logistics, and anything within organisation which affects marketing decisions, and its relationship with its customers.

Micro EnvironmentIndividuals and organisations that are close to the marketing organisation and directly impacts its ability to serve its customers, makes Marketing Micro Environment. The micro environment refers to the forces that are close to the marketing organisation and directly impact the customer experience. It includes the organisation itself, its suppliers, marketing intermediaries, customers, markets or segments, competitors, and publics. Happenings in micro environment is relatively controllable for the marketing organisation.

Macro EnvironmentMacro environment refers to all forces that are part of  the larger society and affects the  micro environment. It includes demography, economy, politics, culture, technology, and natural forces. Macro environment is less controllable.

MARKETING RESEARCHMarketing Research is used to identify and define marketing opportunities and problems: to generate, refine and evaluate marketing actions; to monitor marketing performance and to improve understanding of the marketing process.INFORMATION ANALYSISInformation gathered by the company’s marketing intelligence and marketing research systems require detailed analysis. This include use of advanced statistical analysis. Information analysis might also involve a collection of mathematical models that will help marketers make better decisions. Each model represents some real system, process, or outcome. These models can help answer the questions of what, if and which is best.DISTRIBUTING INFORMATIONThe information gathered through marketing intel igence and marketing research must be distributed to the marketing managers at the right time. Most companies have centralized marketing information systems that provide managers with regular performance reports, intel igence updates, and reports of research studies. Mangers need these routine reports for making regular planning, implementation, and control decisions.

Developments in information technology have caused a revolution in information distribution. With recent advances in computers, software and telecommunication, most companies are decentralizing their marketing information systems. In many companies marketing managers have direct access to the information network through personal computers and other means. From any location, they can obtain information from internal records or outside information services, analyze the information using statistical packages and models, prepare reports on a work processor or desk-top publishing system, and communicate with orders in the network through electronic communications. Such systems offers exciting prospects. They al ow the managers to get the information they needed directly and quickly and to tailor it to their own needs.MARKETING RESEARCHMarketing basically consists of identifying the consumers and satisfying them in the best possible way. Marketing research plays a key role in this process. Marketing research helps the firm to acquire a better understanding of the consumer, the competition and the marketing environment. It also helps the formulation of right marketing mix, which include decisions on product, price, place and promotion.The conduct of marketing research has become so complex due to increasing complexity of marketing and hence requires specialized skil s and sophisticated techniques. Marketing research has been variously defined by marketing researches.Richard Crisp defined marketing research “as the systematic, objective and exhaustive search for and study of the facts relating to any problem in the field of marketingAccording to Green and Tul , marketing research is “the systematic and objective search for and analysis of information relevant to the identification and solution of any problem in the field of marketing’.America Marketing Association defined marketing research, “as the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.An analysis of above definitions clearly highlights the salient features of marketing research:It is a search for data which are relevant to marketing problems; It is carried out in a systematic and objectives manner; It involves a process of gathering, recording and analysis of data.None of the definitions is explicit about the managerial purposes of marketing research, except saying that data are required for solving marketing problem.A better definition of marketing research is, that it is an objective, and systematic collections, recording and analysis of data, relevant to marketing problems of a business in order to develop an appropriate information base for decision making in the marketing area.

MARKET RESEARCHMarket research is different from marking research. Market research is a systematic study of ‘facts about market only – who, what, where, when, why, and how of actual and potential buyers. On the other hand the scope of marketing research is to wide that it includes al functional areas of marketing including market. IMPORTANCE OF MARKETING RESEARCHThe emergence of buyer’s market requires continuous need of marketing research to identify consumer’ need and ensure their satisfaction.The ever expanding markets require large number of middlemen and intensive distribution. Marketing research should help identify and solve the problems of middlemen and distribution.There is always a change in the market conditions and the requirements of consumers. Marketing research enables to anticipate and meet any such changes. Marketing research can help bring about prompt adjustments in product design and packaging. It can help find out effectiveness of pricing.It can help find out the effectiveness of sales promotion and advertisement.It can help identify the strength and weakness of sales force. The impact of economic and taxation policies on marketing could also be known through marketing research. In short, marketing research enables the management to identify and solve any problem in the area of marketing and help better marketing decisions.

SCOPE OF MARKETING RESEARCHThe scope of marketing research stretches from the identification of consumer wants and needs to the evaluation of consumer satisfaction. It comprises of research relating to consumer, products, sales, distribution, advertising, pricing

and sales forecasting. A clear view of the scope of marketing research may be obtained by the following classification of marketing research activity. Market ResearchThe purpose of market research is to gather facts about markets and the forces operating therein. The areas of market research broadly include:Study of the market size/ potentialStudy of the market profileMarket share analysisStudy of market segmentsMarket trends Sales forecastingStudy of seasonal trends

Consumer ResearchThe aim of this research is to develop an understanding about present and potential consumers and the level of satisfaction expected and derived by them from company’s products. The broad areas of consumer research are:Study of consumer profileStudy of consumer brand preferences, tastes and reactionsStudy of consumer satisfaction/ dissatisfaction, reasons, etc.Study of shifts in consumption patterns.Product ResearchReviewing product line, product quality, product features, product design etc.Study on the actual uses of a given productStudy on new uses of an existing productTesting of new productsStudy of related productsStudy of packing, packaging design Study of brand name/ brand mark/ its impact

Distribution ResearchThe purpose of this research is to identify the appropriate distribution channels for intermediaries, storage, transport problems etc. The board areas include:Assessing the general pattern of pricing fol owed by the industryMeasuring price elasticity of demandEvaluating the pricing strategy of the firmAdvertising and Promotion ResearchThe purpose of this research is to develop most appropriate advertising and promotion schemes and evaluate their effectiveness. The broad areas include:Advertising copy researchMedia researchAssessing the effectiveness of advertisingAssessing the efficacy of sales promotional measures.Sales ResearchThe purpose is to find out the sales potential and appraise sales performance of company’s products. The broad areas include:Testing new sales techniquesAnalyzing of salesmen’s trainingMeasuring salesman’s effectivenessStudy of sales compensationAnalyzing methods of setting sales quota and sales territories.

Research on CompetitionThe purpose of this research is to find out the intensity and effect of competition to the firm. The broad areas include:Study of competitive structure of the industry and individual competitors.Study of competitors marketing strategies.The scope of marketing research described above is only indicative and not exhaustive. Further, the above research areas are not watertight compartments. They are closely interrelated. The actual scope depends on the needs of a company and the marketing situations.

BENEFITS OF MARKETING RESEARCHIt is apparent that the scope of marketing research activity is very wide. It covers almost all aspects of marketing. The major contribution of marketing research is that it augments the effectiveness of marketing decisions. Marketing research uncovers facts from both outside and within the company relevant to marketing decisions and provides a sustainable and logical base for making decisions.The specific contributions of marketing research to the effectiveness of the marketing programme of a firm are as follows:1. With the guidance of research, products should be better suited to the demand and prices reasonably. 2. Specific markets having the greatest sales potentialities could be identified. 3. Research can help to identify the best sales

appeal of the products, the best way of reaching the potential buyers and the most suitable timing of promotion etc. 4. Research can also help minimize marketing costs by making marketing efforts more efficient and effective. 5. Research can also find out the effectiveness of sales force management such as right selection procedure, effective training programmes, scientific compensation schemes and effective control mechanisms.The contributions of marketing research are considerable. It facilitates both the decision-making and the operational tasks of marketing management effective and efficient and thereby contributes to consumers satisfaction and organization’s efficiency.

LIMITATIONS OF MARKETING RESEARCHThe marketing research is not without its share of limitations.1. Marketing Research cannot provide complete answer to theproblems because there are many intervening variables which aredifficult to be controlled.2. Some marketing problems do not lend themselves to valid research conclusions due to limitations of tools and techniques involved. There are many intangible and variables operating which are difficult to be measured.3. In a fast changing environment, the data collected become obsolete soon and the research findings based on them will become little use.4. It only provides a base for predicting future events; it cannot guarantee with any certainty their happening.5. Marketing research involves more time, effort and high cost. But it is very often said that marketing research is cheaper than costly marketing mistakes.PROCEDURE IN CONDUCTING MARKETING RESEARCHIn marketing research, the fol owing procedure is general y adopted.1. Defining the problem and its objectives2. Determine the information needed and the sources of information3. Deciding on research methods4. Analysis and Interpretation of data5. Preparing research report1. Determine the ProblemThe first basic step is to define the marketing problem in specific terms. Only if the marketing researcher knows what problem management is trying to solve, he cannot do an effective job in planning and designing a research project that wil provide the needed information. After the problem has been defined, the researcher’s task is to learn as much about it as the time permits. This involves getting acquainted with the company, its business, its products and market environment, advertising by means of library consultation and extensive interviewing of company’s officials. The researcher tries to get a “feel” of the situation surrounding the problem. He analyses the company, its markets, its competitions and the industry in general. This phase of preliminary exploration is known as situation analysis. This analysis enables the researcher to arrive at a hypothesis or a tentative presumption on the basis of which further investigations may be done. When a problem has been identified, objectives of the research have to be determined. The objectives of the project may be to determine exactly what the problem is and how it can be solved.2. Determine the Specific Information Needed and Sources of InformationThe researcher should then determine the specific information needed to solve the research problems. For successful operations of production and sales departments, what information is required depends to a large extent on the nature of goods and the method used for placing it in the hands of the consumers. The investigator must identify the sources from which the different items of information are obtainable and select those that he wil use. He may collect information through primary data, secondary data or both. Primary data are those which are gathered specifical y for the project at hand, directly e.g. through questionnaires and interviews. Primary data sources include: Company salesmen, middlemen, consumers, buyers, trade associations executives, and other businessmen and even competitors. Secondary data are generally published sources, which have been collected original y for some other purpose. They are not gathered specifical y to achieve the objectives of the particular research project at hand, but are already assembled. Such sources are internal company records; government publiscations; reports and journals, trade, professional and business associations’ publications and reports, private business firms’ records, advertising media, University research organizations, and libraries.3. Deciding on Research MethodIf it is found that the secondary data cannot be of much use, collection of primary data become necessary. These widely used methods of gathering primary data are: (i) Survey, (i ) Observation, and (ii )Experimentation. Which method is to be used wil depend upon the objectives, cost, time, personnel and facilities available.

(i) Survey Method: In this method, information is gathered directly from individual respondents, either through personal interviews or through mail, questionnaires or telephone interviews. The questions are used either to obtain specific responses to direct questions or to secure more general response to “open end” questions.(ii) Observational Method: The research data are not gathered through direct questioning of respondents but rather by observing and recording their actions in a marketing situation. The customer is unaware that he/she is being observed, so presumably he/she acts in his/her usual fashion. Information may be gathered by personal or mechanical observation. This technique is useful in getting information about the caliber of the salesman or in determining what brands he pushes. In another situation, a customer may be watched at a distance and noticed, what motivates him to purchase(ii ) Experimental Method: This method involves carrying out a smal -scale trial solution to a problem, while, at the same time, attempting to control all factors relevant to the problems. The main assumption here is that the test conditions are essential y the same as those that wil be encountered later when conclusion derived from the experiment are applied to a broader marketing area. The technique consist of establishing a control market in which al factors remain constant and one or more test markets in which one factor is varied.4. Analysis and Interpretation of Data After the necessary data have been col ected, they are tabulated and analyzed with appropriate statistical techniques to draw conclusions and findings. This stage is regarded as the end product.5. Preparation of Report

The conclusions and recommendations, supported by a detailed analysis of the findings should be submitted in a written report. The report should be written in clear language, properly paragraphed, and should present the facts and findings with necessary evidence. The choice of the words, adequate emphasis, correct statistical presentation, avoidance of flowery language and ability to express ideas directly and simply in an organized framework are essential for a good report.MACRO ENVIRONMENTMacro environment consists of six major forces viz, demographic,economic, physical, technological, political/ legal and socio-cultural. Thetrends in each macro environment components and their implications onmarketing are discussed below:DEMOGRAPHIC ENVIRONMENTDemography is the study of human population in terms of size,density, location, age, gender, occupation etc. The demographicenvironment is of major interest to marketers because it involves peoplethe people make up markets.The world population and the Indian population in particular isgrowing at an explosive rate. This has major implications for business. Agrowing population means growing human needs. Depending onpurchasing powers, it may also mean growing market opportunities. Onthe other hand, decline in population is a threat so some industrial andthe boon to others. The marketing executives of toy-making industryspend a lot of energy and efforts and developed fashionable toys, andeven advertise “Babies are our business-our only business”, but quietlydropped this slogan when children population gone down due todeclining birth rate and later shifted their business to life insurance forold people and changed their advertisement slogan as “the company hasnot babies the over 50s”.The increased divorce rate shall also have the impact on marketingdecisions. The higher divorce rate results in additional housing units,furniture, appliances and other house-hold appliances. Similarly, whenspouses work at two different places, that also results in additionalrequirement for housing, furniture, better clothing, and so on.

Thus, marketers keep close tract of demographic trendsdevelopments in their markets and accordingly evolve a suitablemarketing programme.ECONOMIC ENVIRONMENTMarkets require purchasing power as well as people. Totalpurchasing power is functions of current income, prices, savings andcredit availability. Marketers should be aware of four main trends in theeconomic environment.(i) Decrease in Real Income GrowthAlthough money incomer per capita keeps raising, real income percapita has decreased due to higher inflation rate exceeding themoney income growth rate, unemployment rate and increase in thetax burden.These developments had reduced disposable personal income;which is the amount people have left after taxes. Further, manypeople have found their discretionary income reduced aftermeeting the expenditure for necessaries. Availability ofdiscretionary income shall have the impact on purchasingbehaviour of the people.(ii)Continued Inflationary PressureThe continued inflationary pressure brought about a substantialincrease in the prices of several commodities. Inflation leadsconsumers to research for opportunities to save money, includingbuying cheaper brands, economy sizes, etc.(iii) Low Savings and High DebtConsumer expenditures are also affected by consumers savingsand debt patterns. The level of savings and borrowings amongconsumers affect the marketing. When marketers make availablehigh consumer credit, it increases market opportunities.(iv) Changing Consumer Expenditure PatternsConsumption expenditure patters in major goods and servicescategories have been changing over the years. For instance, whenfamily income rises, the percentage spent on food declines, thepercentage spent on housing and house hold operations remainconstant, and the percentage spent on other categories such astransportation and education increase.These changing consumer expenditure patterns has an impact onmarketing and the marketing executives need to know suchchanges in economic environment for their marketing decisions.PHYSICAL ENVIRONMENTThere are certain finite renewable resources such as wood andother forest materials which are now dearth in certain parts of world.Similarly there are finite non-renewable resources like oil coal andvarious minerals, which are also not short in supply. In such cases, themarketers have to find out some alternative resources. For instance, themarketers of wooden chairs, due to shortage and high cost of woodshifted to steel and later on fiber chairs. Similarly scientists all over theworld are constantly trying to find out alternative sources of energy foroil due to dearth in supply.There has been increase in the pollution levels in the country dueto certain chemicals. In Mumbai-Surat-Ahemedabed area, are facingincreased pollution due to the presence of different industries.Marketers should be aware of the threats and opportunitiesassociated with the physical environment and have to find our alternativesources of physical resources.SOCIO CULTURAL ENVIRONMENTThe socio-cultural environment comprises of the basic beliefs,values and norms which shapes the people. Some of the main cultural

characteristics and trends which are of interest to the marketers are:(i) Core Cultural ValuesPeople in a given society hold many core beliefs and values, thatwill tend to persist. People’s secondary beliefs and values are moreopen to change. Marketers have more chances of changingsecondary values but little chance of changing core values.(ii)Each Culture Consists of Sub-CulturesEach society contains sub-cultures, i.e. groups of people withshared value systems emerging out of their common lifeexperiences, beliefs, preferences and behaviors. To the extent thatsub-cultural groups exhibit different wants and consumptionbehaviour, marketers can choose sub-cultures as their targetmarkets.Secondary cultural values undergo changes over time. For example‘video-games’, ‘playboy magazines’ and other cultural phenomenahave a major impact on children hobbies, clothing and life goals.Marketers have a keen interest in anticipating cultural shifts inorder to identify new marketing opportunities and threats.TECHNOLOGICAL ENVIRONMENTTechnology advancement has benefited the society and also causeddamages. Open heart surgery, satellites all were marvels of technology,but hydrogen bomb was on the bitter side of technology. Technology isaccelerating at a pace the many products seen yester-years have becomeobsolete now. Alvin Toffler in his book ‘The Future Shock’ has made aremark on the accelerative thrust in the invention, exploitation anddiffusion of new technologies. There could be a new range of productsand systems due to the innovations in technology.This technology developments has tremendous impact onmarketing and unless the marketing manager cope up with thisdevelopment be cannot survive in the competitive market.POLITICAL AND LEGAL ENVIRONMENTMarketing decisions are highly affected by changes in the political/legal environment. The environment is made up of laws and governmentagencies that influence and constraint various organizations andindividuals in society.Legislations affecting business has steadily increased over theyears. The product the consumes and the society against unethicalbusiness behaviour and regulates the functioning of the businessorganizations. Removal of restrictions to the existing capabilities,enlargement of the spheres open to MRTP and FEMA companies andbroad banding of industrial licenses were some of the schemes evolvedby the government. The legal enactments and rules and regulationsexercise a specific impact on the marketing practices, systems andinstitutions in the country. Some of the acts which have direct bearing onthe marketing of the company include, the Prevention of FoodAdulteration Act (1954), The Drugs and Cosmetics Act (1940), TheStandard Weights and Measures Act (1956) etc. The PackagedCommodities (Regulative) Order (1975) provides for clearly making theprices on all packaged goods sold in retail excluding certain items.Similarly, when the government changes, the policy relating to

commerce, trade, economy and finance also changes resulting in changesin business. Very often it becomes a political decisions. For instance, oneGovernment introduce prohibition, and another government lifts theprohibition. Also, one Government adopts restrictive policy and anotherGovernment adopts liberal economic policies. All these will have impacton business.Hence, the marketing executives needs a good working knowledgeof the major laws affecting business and have to adapt themselves tochanging legal and political decisions.All the above micro environmental actors and macro environmentalforces affect the marketing systems individually and collectively. Themarketing executives need to understand the opportunities and threatscaused by these forces and accordingly they must be able to evolveappropriate marketing strategies.

Scanning the major macro environment Environmental scanning is a process of gathering, analyzing, and dispensing information for tactical or strategic purposes. The environmental scanning process entails obtaining both factual and subjective information on the business environments in which a company is operating or considering entering Kinds of environmental scanningAd-hoc scanning - Short term, infrequent examinations usually initiated by a crisisRegular scanning - Studies done on a regular schedule (e.g. once a year)Continuous scanning (also called continuous learning) - continuous structured data collection and processing on a broad range of environmental factors Environmental scanning usually refers just to the macro environment, but it can also include industry, competitor analysis, marketing research (consumer analysis), new product development (product innovations) or the company's internal environment.

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:Political EconomicSocialTechnologicalThe acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro environmental factors. Political Factors :-Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:

tax policy employment laws environmental regulations trade restrictions and tariffs political stability

Economic Factors :-Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macro economy:

economic growth interest rates exchange rates inflation rate

Social Factors Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. Some social factors include:

health consciousness population growth rate age distribution emphasis on safety

Technological Factors :-Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:

R&D activity Automation technology incentives rate of technological change

PRODUCT-MARKET INTEGRATION STRATEGIESProduct differentiation and Product positioning Introduction of Product Product, a component of the marketing-mix, can help achieve themarketing objectives only when there is integration between theproduct and market. Product-market integration may be defined asa state wherein both product image and consumer self-image arein focus; there is a match between product attributes and consumerexpectations – both economic and non-economic. Such matching iscrux of the modern marketing concept, because it is essential forevery marketer to develop such a product image which iscompatible with the self-image of his consumers. This should bethe essence and objective of all product management exercises.INTEGRATION PROBLEMSNevertheless, there are always problems associated with suchexercises. The problems steam from the fact that while product is one orlimited in number, consumers are numerous and their self-images manyand varied. Under this situation, if a company attempts to meetconsumer’ individual self-images then it would have to introduce asmany products as there are wrinkles on an old man’s face – possibly evenmore. Such an attempt would be highly uneconomical from thestandpoint of cost of production.As such, a marketer is faced with dilemma whether to meetconsumer self-images or to avoid penalties of product economics. If theformer is to be opted, then product-time proliferation and cost escalationare inevitable; in the latter case, the product line will be narrow and thecost structure balanced. However, both options are not inescapable andwithout problems. It is, therefore, always advisable to develop inOptimum Matching Strategy (OMS) between the company’s products andmarkets.Optimum Matching Strategy (OMS)Optimum matching strategy may be defined as the method ofmatching product and consumer self-images in such a way that in somemarket segments there is full matching whereas in others not so, so thatthe cost-revenue equilibrium is maintained. The strategy comprisesmarket segmentation, product offering and product differentiation.

The whole market is divided into three segments, viz. core, fringeand zone of indifference. In the core market , the company attempts toattain a full match between the product and the self-image of the groupsof consumers. In the fringe market , the match between the productimage and the self-image of consumers may be only partial. This partialmatch may be in terms of less than full ocmpatibality in respect of theproduct image and all the variables of consumer self-image, namely,economic and non-economic – psychological, sociological and cultural –or alternatively, full matching in respect of others. In the zone ofindifference, there is absolutely no attempted matching between productimage and consumer self-image. Whatever matching that may emerge isonly random.Where the strategy of full matching is employed, a higher make-upmay be attempted relative to partial and no matching strategies in orderto earn larger profits from the core market and to compensate for theloss of consumer satisfaction in the fringe market and zone ofindifference arising out of the non-0fulfilment of the non-economicexpectations.In the fringe market and the zone of indifference, since there isonly partial and random matching respectively, the company may attemptproduct differentiation so as to convey an impression of matching. Thismay be attained with the effective use of advertisement and salespromotion. Through this strategy, consumer may be made to perceiveproducts in such a way that semblance of matching is attained andproducts are bought. In reality, in this way, a company attempts toreshape consumer self-images so as to fit with the product image.The other strategies through which product-market integrationmay be attained include product positioning, diversification,simplification, planned obsolescence and branding and packaging.PRODUCT POSITIONINGPositioning is the set of activities which help create a perceptibledifference between a brand and its competitors in the mind of theconsumer. Positioning goes beyond the physical or functionalcharacteristics of a brand. It includes also the non-functional orpsychological characteristics of a brand. In the consumer’s mind-space, abrand occupies a ‘position’ in relation to competitive brands. Surf andAriel are perceived to be closer to each other while Wheel and Nirma are‘Positioned’ in quite another space. The perceived image of a brand is theproperty of the consumer’s mind. Two brands of a product may beidentical in terms of physical attributes but could be perceived differentlyby the consumer. Positioning involves placing a brand in certain distinctand preferably unique way in the consumer’s mind. Basically, one maytake either the ‘information route’ or the ‘imaginary route’ to build a

position. In the 100cc motorbikes category, T.V.S. Suzuki took theinformation route, Kawasaki Bajaj took the imagery route and Hero Hondaused a skilful combination of both – and it is easy to recognize that thesebrands are perceived differently by the consumer although they may notbe generically very different.If one consider a consumer’s mind space as allotting specificpositions for various brand of a product, the extent of competitions abrand faces can be studied depending upon the distance between thebrand and other brands in the space. Such a graphical representation iscalled a perceptual map. CORE, the marketing research division of ClarionAdvertising conducted a positioning study of some toilet soap brand andfound the results to be as depicted in this figure:Here the Y axis represents the cosmetic benefit or “feels good”factors and the Health related benefits or the “does good” factors. The Xaxis represents popular pricing versus high or premium pricing. As thefigure shows, there are hardly any brands in the luxury – cosmeticsegment, while the utility – cosmetic segment is crowded. Margo is thesole purveyor of the Health related – utility segment. This study wasconducted in 1989, among women in West Bengal. It would be interestingto include Camay, Medimix, Lesancy, Pears, Rexona, Evita, Palmolive,Lifebuoy, Nirma Bath, Moti, Santoor, Dove, Ganga, Dettol – the list isexhausting! Further, the men’s toilet soap category has also opened up,the baby soaps category boasts of a few brands and the liquid soapscategory presents its international appeal. Positioning alone candetermine the brands that will keep going and the goners!TYPES OF POSITIONINGA product’s image is created among the consumers based on thefollowing aspects:1. Product Attribute ImagesSince some of the brands have excellent product features theydirectly appeal to consumers. Exide is considered to be the batterwhich has no troubles at all. Promotion message, each time,concentrates on the consumer gains resulting from productperformance. Philip emphasizes the quality plank and BPL audiosemphasis on the fidelity platform.2. Symbolic ProjectionsIn those products with not much differentiation with othercompetitors, position arises from broad symbolizations rather thanthe product performance. Beer advertising is one such. Since theproduct does not differ in many brands, the emotional moods areused as product attributes. ONIDA has used the devil to sell itsproducts as depicted in their advertisements, on seeing a devil oneimmediately recognize ONIDA television.3. Direct Competitive PositioningIn this approach, a products’ position use the competitor’sposition as a reference point. Classic example is that of pepsi andcoke. 7-up position itself as an uncola. Videocon uses the salesfigures of competitors as selling point. Indian Airlines have alsostarted advertising with response to the private airlinesadvertisement.REPOSITIONING

A brand does not have to be stuck with the image it has o0nccreated. Since the competitive environment and nature of the productchanges it is imperative to reposition the product among the consumers.Repositioning will sometime give new life to the sales of the brand. Thisis done also in the cases of declining market share. Any change in marketshare provide a direct indication of competitive standing market potentialdata may reflect on the expansion, contraction or stability of industryvolume. In the case of declining market share it is advisable to repositionthe product into new market. An expanding or growing marketrepresents additional opportunities in the long term. Repositioning maybe necessary when share in a growing market declines. Such a declinesuggests that the brand in not getting additional sales in proportion towhat it had in the past. In the case of increasing share is an expandingmarket, repositioning is not required.PRODUCT DIVERSIFICATIONIn the pursuit of product-market integration, a number of policyand strategy option are available to a company. One among them isproduct diversification. “Diversification is a policy or managementphilosophy of operating a company so that its business and profits comefrom a number of sources, usually from diverse products that differ inmarket or production characteristics”.Unlike other product policies and strategies, the distinguishingfeature of the policy of diversification is “to increase the number ofproducts in the product portfolio of the company”. It involvesfundamental change in the old product, say, in its modular construction,but not merely a tactical adjustment in the design, style, colour of size ofthe product to gain temporary market advantage.Reasons for DiversificationA study of the business literature and analysis of the companyhistories reveal that the questions of corporate survival, stability andgrowth are the prime movers of diversification.The following are the specific reasons for diversification:SurvivalTo offset declining or vanishing markets.To compensate for technological obsolescence.To offset obsolete facilities.To arrest declining profit margins.To offset an unfavourable geographic location brought about bychanging economic factors.StabilityTo eliminate of offset slumps.To offset cyclical fluctuations.To maintain employment of labour force.To provide a balance between high and low margin products.To provide a balance between old and new products.To maintain market share.To meet new products of competitors.To maintain an assumed source of supply.To reduce dependence on existing products.Kinds of Diversification:Horizontal diversification may be described as introduction to newproducts which are akin to the industry’s product-line. They newproducts so introduced may not contribute anything to the presentproducts in any way but may cater to the mission which lie within therealm of the industry of which the company is a member.

Vertical diversification may be described as inclusion of newproducts such as components, parts, and materials in the current productportfolio of the company. These new products perform distinct anddifferent missions from that of the original products.Lateral diversification may be described as a move to expandproduct line beyond the confines of the industry. It may include may kindof product which may be totally different. For instande, the Bata whichare primarily in footwear business have diversified their business intoreadymade garments. Similarly, the Raymonds who are basically in textilebusiness have diversified their business into footwear.PRODUCT-LINE SIMPLIFICATIONSimplification may be defined as, deleting or eliminating from theproduct-line those product items which no more satisfy the criteria laiddown by a company for retaining products in the line. It is the opposite ofproduct diversification and involves all those managerial exercises whichaim at product-line rationalization.Need for Product SimplificationDeclining absolute sales volume.Sales volume decreasing as a percentage of the firm’s total sales.Decreasing market share.Past sales volume not up to projected amounts.Expected future sales disappointing.Future market potential not favourable.Return on investment below minimally acceptable level.Variable cost exceeds revenues.Various costs as percentage of sales consistently increasing.Increasingly greater percentage of executive time required.Price must be consistently lowered to maintain sales.Promotional budgeted must be consistently increased to maintainsales.Once a decision to abandon a product is taken, company mustformulate a programme for its smooth deletion so that it isimplemented with minimum of problems.PLANNED OBSOLESCENCEThe word ‘obsolescence’ means to ‘wear out’ or ‘fall into disuse’.When applied to products, obsolescence means wearing our or fallinginto disuse of products in terms of consumer acceptance.When it is known that every product is liable to get out of use,there are two options available to a marketer. The first option is toallow the product to die out in a natural way. In this, marketers, acceptproduct death as fait accompli after having suffered sufficient costpressures and lost profit opportunities.The second option is to plan its death in advance so that it quits ata time desired by the management. It wears out and fall into disse onthe expiry of a fixed time period. This is called the strategy of PlannedObsolescence and has been defined as, “a purposeful programme ofvendors to shorten the time span or number of performance overwhich a product continues to satisfy customers – thus presumableyencouraging an early purchase for replacement.The obsolescence of a product may be due to following factors.:Physical incapacity of the product to continue performance of heintended service or function due to breakage, wear or corrosion.Availability of close and better substitutes of current liabilities.Changes in consumer perception about products’ acceptable

usefulness.

MARKET SEGMENTATIONLearning ObjectivesAfter reading this lesson, you should to able to understand-The meaning, bases and benefits of the concept of marketsegmentation;The concept of target market;Meaning and types of positioning and its implicationsAll firms must formulate a strategy for approaching their markets. On theone hand, the firm may choose to provide one product to all of itscustomer; on the other hand, it may determine that the market is soheterogeneous that it has no choice but to divide or segment potentialusers into submarkets.Segmentation is the key to the marketing strategy of many companies.Segmentation is a demand-oriented approach that involves modifying thefirm’s product and/or marketing strategies to fit the needs of individualmarket segments rather than those of the aggregate market.According to William Stanton, “Market segmentation is the process ofdividing the total heterogeneous market for a product into severalsub-markets or segments each of which tend to be homogeneous in allsignificant aspects.Market segmentation is basically a strategy of ‘divide and rule’. Thestrategy involves the development of two or more different marketingprogrammes for a given product or service, with each marketingprogramme aiming at each segment. A strategy of market segmentationrequires that the marketer first clearly define the number and nature ofthe customer groupings to which he intends to offer his product orservice. This is a necessary condition for optimizing efficiency ofmarketing effort.RATIONALE FOR MARKET SEGMENTATIONThere are three reasons why firms use market segmentations:Because some markets are heterogeneousBecause market segments respond differently to differentpromotional appeals; andBecause market segmentation consider with the marketing concept.Heterogeneous Markets:Market is heterogeneous both in the supply and demand side. Onsupply side, many factors like differences in production equipments,processing techniques, nature of resources or inputs available to differentmanufactures, unequal capacity among the competitors in terms ofdesign and improvement and deliberate efforts to remain different fromother account for the heterogeneity. Similarly, the demand side, whichconstitute consumers – is also different due to differences in physical andpsychological traits of consumer. Modern business managers realize thatunder normal circumstances they cannot attract all of the firm’s potentialcustomers to one product, because different buyers simply have differentneeds and wants. To accommodate this heterogeneity, the seller mustprovide different products. For example, in two wheelers, the TVS

Company first introduced TVS50 Moped, but later on introduced a varietyof two wheelers, such as TVS XL, TVS Powerport, TVS Champ, TVS Sport,TVS Scooty, TVS Suzuki, TVS Victor, to suit the requirements of differentclasses of customers.2. Varied Promotional Appeals:A strategy of market segmentation does not necessarily mean thatthe firm must produce different products for each market segment. Ifcertain promotional appeals are likely to affect each market segmentdifferently, the firm may decide to build flexibility into its promotionalstrategy rather than to expand its product line. For example, manypolitical candidates have tried to sell themselves to the electorate byemphasizing one message to labour, another to business, and a third tofarmers.As another example, the Sheraton Hotel serves different districtmarket segments, such as conventioneers, business people and tourists.Each segments has different reasons for using the hotel. Consequently,Sheraton uses different media and different messages to communicatewith the various segments.3. Consistency with the Marketing ConceptA third reason for using market segmentation is that it isconsistent with the marketing concept. Market segmentation recognizesthe existence of distinct market groups, each with a distinct set of needs.Through segmentation, the firm directs its product and promotionalefforts at those markets that will benefit most from or that will get thegreatest enjoyment from its merchandise. This is the heart of themarketing concept.Over the years, market segmentation has become an increasinglypopular strategic technique as more and more firms have adopted themarketing concept. Other historical forces being the rise of marketsegmentation include new economies of scale, increased education andaffluence, greater competition, and the advent of new segmentationtechnology.Bases of Market SegmentationThere are a number of bases on which a firm may segment its market1. Geographic basisa. Nationsb. Statesc. Regions2. Demographic basisa. Ageb. Sexc. Incomed. Social Classe. Material Statusf. Family Sizeg. Educationh. Occupation3. Psychographic basisa. Life styleb. Personalitiesc. Loyalty statusd. Benefits soughte. Usage rate (volume segmentation)

f. Buyer readiness stages (unaware, aware, informed, interested,desired, intend to buy)g. Attitude stage (Enthusiastic, positive, indifferent, negative,hostile)METHODS OF SEGMENTATIONOn the basis of the bases used for the market segmentation,various characteristics of the customers and geographical characteristicsetc., common methods of market segmentations could be done. Commonmethods used are:Geographical SegmentationWhen the market is divided into different geographical unit asregion, continent, country, state, district, cities, urban and rural areas, itis called as geographical segmentation. Even on the geographic needsand preference products could be made. Even through Tata Tea is sold ona national level, it is flavoured accordingly in different regions. Thestrength of the tea differs in each regions of the country. Bajaj hassub-divided the entire country into two distinct markets. Owing to thebetter road conditions in the north, the super FE Sector is promotedbetter with small wheels; whereas in the case of south, Bajaj promotesChetak FE with large wheels because of the bad road conditions.Demographic SegmentationDemographics is the most commonly used basis for marketsegmentation. Demographic variables are relatively easy to understandand measure, and they have proven to be excellent segmentation criteriafor many markets. Information in several demographic categories isparticularly useful to marketers.Demographic segmentation refers to dividing the market intogroups on the basis of age, sex, family size cycle, income, education,occupation, religion, race, cast and nationality. In better distinctionsamong the customer groups this segmentation helps. The abovedemographic variables are directly related with the consumer needs,wants and preferences.Age: Market segments based on age are also important to manyorganizations. Some aspects of age as a segmentation variable are quiteobvious. For example, children constitute the primary market for toys andpeople 65 years and older are major users of medical services. Age andlife cycle are important factors. For instance in two wheeler market, asBajaj has ‘Sunny’ for the college girls; ‘Bajaj Chetak’ for youngsters;‘Bajaj Chetak’ for the office going people and Bajaj M80 for rural people.In appealing to teenagers, for example, the marketing executivemust continually monitor their ever-changing beliefs, political and socialattitudes, as wells as the entertainers and clothing that are most popularwith young people at a particular time. Such factors are important indeveloping effective advertising copy and illustrations for a productdirected to the youth market.Sex segmentation is applied to clothing, cosmetics, magazines and

hair dressing. The magazines like Women’s Era, Femina, (in Malayalam),Mangaiyar Malar (in Tamil) are mainly segmented for women. Recentlyeven a cigarette exclusively for women was brought out. Beauty Parloursare not synonyms for the ladies.Income segmentation: It has long been considered a good variablefor segmenting markets. Wealthy people, for example, are more likely tobuy expensive clothes, jewelleries, cars, and to live in large houses. Inaddition, income has been shown to be an excellent segmentationcorrelate for an even wider range of commodity purchased products,including household toiletries, paper and plastic items, furniture, etc.Social Class segmentation: This is a significant market segment.For example, members of different social classes vary dramatically intheir use of bank credit cards. People in lowe4r social classes tend to usebank credit cards as installment loans, while those in higher socialclasses use them for convenience purposes. These differences inbehaviour can be significant when segmenting a market and developing amarketing program to serve each segment.Psychographic SegmentationOn the basis of the life style, personality characteristics, buyers aredivided and this segmentation is known as psychographics segmentation.Certain group of people reacts in a particular manner for an appealprojected in the advertisements and exhibit common behaviouralpatterns. Marketers have also used the personality variables asindependent, impulsive, masculine, aggressive, confident, naïve, shy etc.for marketing their products. Old spice promotes their after shave lotionfor the people who are self confident and are very conscious of theirdress code. These advertisements focus mainly on the personalityvariables associated with the product.Behavioural SegmentationBuyer behavioural segmentation is slightly different frompsychographic segmentation. Here buyers are divided into groups on thebasis of their knowledge, attitude, use or response to a product.Benefit segmentation: The assumption underlying the benefitsegmentation is that markets can be defined on the basis of the benefitsthat people seek from the product. Although research indicates that mostpeople would like to receive as many benefits as possible from a product,it has also been shown that the relative importance that people attach toparticular benefits varies substantially. These differences can then besued to segment markets.Once the key benefits for a particular product/ market situationare determined, the analyst must compare each benefit segment with therest of the market to determine whether that segment has unique andidentifiable demographic characteristics, consumption patterns, or mediahabits. For example, the market for toothpaste can be segmented interms of four distinct product benefits; flavour and product appearance,

brightness of teeth, decay prevention and price.The major advantage of benefit segmentation is that it is designedto fit the precise needs of the market. Rather than trying to createmarkets, the firm indentifies the benefit or set of benefits thatprospective customers want from their purchases and then designsproducts and promotional strategies to meet those needs. A second andrelated advantage is that benefit segmentation helps the firm avoidcannibalizing its existing products when it introduces new ones.Buyers can be divided based on their needs, to purchase productfor an occasion. The number of times a product is used could be alsoconsidered as a segmentation possibility. A tooth paste manufacturerurges the people to brush the teeth twice a day for avoiding tooth decayand freshness. Either a company can position in single benefit or doublebenefit which the product offers. The status of the buyers using theproduct and the number of times they use the product can also revealthat behavioural patterns of consumers vary on a large scale.Life-Style SegmentationLife-style segmentation is a relatively new technique that involveslooking at the customer as a “whole” person rather than as a set ofisolated parts. It attempts to classify people into segments on the basisof a broad set of criteria”.The most widely used life-style dimensions in market segmentationare an individual’s activities, interests, opinions, and demographiccharacteristics. Individuals are analyzed in terms of (i) how they spendtheir time, (ii) what areas of interest they see as most important, (iii) theiropinions on themselves and of the environment around them, and (iv)basic demographics such as income, social class and education.Unfortunately, there is no one best way to segment markets. Thisfacts has caused a great deal of frustration for some marketingexecutives who insist that a segmentation variable that has proveneffective in one market/product context should be equally effective inother situations. The truth is that a variable such as social class maydescribe the types of people who shop in particular stores, but proveuseless in defining the market for a particular product. Therefore, inusing a segmentation criteria in order to identify those that will be mosteffective in defining their markets.UNDERSTANDING MARKETINGHere the company operates in most of the segments of the marketby designing separate programmes for each different segment. Bajaj,TVS-Suzuki, Hero Cycle are those companies following this strategy.Usually differentialted marketing creaters mreo sales thanundifferentiated marketing, but the production costs, productmodification and administrative costs, inventory costs, and productpromotional budgets and costs would be very high. The main aim of thistype of marketing is the large volume turnover for a particular brand.

Requirements for effective segmentations1. Measurability – the degree to which the size and purchasing powerof the segments can be measured.2. Accessibility – the degree to which the segments can be effectivelyreached and served.3. Substantiality – the degree to which the segments are large and/orprofitable enough.4. Actionability – the degree to which effective programmes can beformulated for attracting and serving the segments.BENEFITS OF MARKET SEGMENTATIONMarket segmentation gives a better understanding of consumer needs,behaviour and expectations to the marketers. The information gatheredwill be precise and definite. It helps for formulating effective marketingmix capable of attaining objectives. The marketer need not waste hismarketing effort over the entire area. The product development iscompatible with consumer needs, pricing matches consumerexpectations and promotional programmes are in tune with consumerwillingness to receive, assimilate and positively react to communications.Specifically, segmentation analysis helps the marketing manager.To design product lines that are consistent with the demands of themarket and that do not ignore important segments.To spot the first signs of major trends in rapidly changing markets.To direct the appropriate promotional attention and funds to themost profitable market segments.To determine the appeals that will be most effective with eachmarket segments.To select the advertising media that best matches thecommunication patterns of each market segment.To modify the timing of advertising and other promotional effortsso that they coincide with the periods of greatest market response.In short, the strength of market segmentation lies in matching productsto consumer needs that augment consumer satisfaction and firm’s profitposition. However, the major limitation of market segmentation is theinability of a firm to take care of all segmentation bases and theirinnumerous variables. Still, the strengths of market segmentationoutweigh its limits and offers considerable opportunities for marketexploitation.FEATURES OF CONSUMER MARKETINGConsumer goods are destined for use by ultimate consumers orhouse-holds and in such form that they can be used without commercialprocessing.Consumer goods and services are purchased for personalconsumption.Demand for consumer goods and services are direct demand.Consumer buyers are individuals and households.Impulse buying is common in consumer market.Many consumer purchases are influenced by emotional factors.The number of consumer buyers is relatively very large.The number of factors influencing buying decision-making isrelatively small.Decision-making process is informal and often simple.Relationship marketing is less significant.Technical specifications are less important.Order size is very small.Service aspects are generally less important.

Direct marketing and personal selling are less important.Consumer marketing depends heavily on mass media advertising.Sales promotion is very common.Supply efficiency, is not as critical as in industrial marketing.Distribution channels are generally lengthy and the numbers ofresellers are very large.Systems selling is not important.The scope for reciprocity is very limited.Vendor loyalty is relatively less important.Line extensions are very common.Branding plays a great role.Packaging also plays a promotional role.Consumers are dispersed geographically.Demand for consumer goods is price elastic.FEATURES OF INDUSTRIAL MARKETINGIn industrial marketing, the markets is concerned with themarketing of industrial goods to industrial users. The industrial goodsare those intended for use in producing of other goods roe rendering ofsome service in business. The industrial users are those individuals andorganizations who buy the industrial goods for use in their own business.The segments for industrial goods include manufacturing, mining andquarrying, transportation, communication, agriculture, forestry, finance,insurance, real estate etc.Industrial goods are services are bought for production of othergoods and services.Demand for industrial goods and services is derived demandIndustrial buyers are mostly firms and other organizations.Impulse buying is almost absent in industrial market.Industrial buying decisions are based on rational, economic factors.The number of business buyers is relatively small.The number of factors influencing buying decision-making isrelatively large.Decision-making process tends to be complex and formal.Relationship marketing is more relevant and significant.Technical specifications are more important.Order size is often very large.Service aspects and performance guarantees are very important.Direct marketing and personal selling are highly important.Specific media like trade journals are more important for industrialmarketing.Sales promotion is not common.Supply efficiency is very critical because supply problem can evencause suspension of the entire business.Distribution channels are generally tend to be direct or short andthe number of resellers are small.Systems selling is very important.The scope for reciprocity is very large.Vendor loyalty tends to be high.Line extension is limited by justification of clear benefit to thebuyer.Conformity to product specifications and reputation of themanufacturer supplier are more important.Packaging hardly has a promotional role.Business buyers in many cases are geographically concentrated.Price sensitivity of demand for industrial goods is low.FEATURES OF SERVICES MARKETINGService market is represented by activities, benefits andsatisfactions offered for sale by providers of services. These services maybe labour services, personal services, professional services orinstitutional services. The peculiar characteristics of services createchallenges and opportunities to the service markets. These are givenbelow:

INTANGIBILITYServices are essentially intangible. Because services areperformance or actions rather than objects, they cannot be seen, felt,tasted, or touched in the same manner that we can see sense tangiblegoods. For example, health-care services are actions (e.g. surgery,diagnosis, examinations, treatment) performed by providers and directedtoward patients and their families. These services cannot actually be seenor touched by the patient may be able to seen and touch certain tangible,components of the services (e.g. equipment, hospital room). In fact, manyservices such as health care are difficult for the consumer to grasp evenmentally. Even after a diagnosis or surgery has been completed thepatient may not fully comprehend the service performed.INSEPARABILITYServices are created and consumed simultaneously and generallythey cannot be separated from the provider of the service. Thus theservice provider – customer interaction is a special feature of servicesmarketing.Unlike the tangible goods, services cannot be distributed usingconventional channels. Inseparability makes direct sales as the onlypossible channel of distribution and thus delimits the markets for theseller’s services. This characteristics also limits the scale of operation ofthe service provider. For example, a doctor can give treatment to limitednumber of patients only in a day.This characteristic also emphasizes the importance of the quality ofprovider – client interaction in services. This poses another managementchallenge to the service marketer. While a consumer’s satisfactiondepends on the functional aspects in the purchase of goods, in the caseof services the above mentioned interaction plays an important role indetermining the quality of services and customer satisfaction. Forexample, an airline company may provide excellent flight service, but adiscourteous onboard staff may keep off the customer permanently fromthat company.There are exemptions also to the inseparability characteristic. Atelevision coverage, travel agency or stock broker may represent and helpmarketing the service provided by another service firm.HETEROGENEITYThis characteristic is referred to as variability by Kotler. We havealready seen that services cannot be standardized. They are highlyvariable depending upon the provider and the time and place where theyare provided. A service provided on other occasions. Also the standard ofquality perceived by different consumers may differ according to theorder of preference given by them to the various attribute of serviceactuality. For example, the treatments given by a hospital to differentpersons on different occasion cannot be of the same quality. Consumers

of services are aware of this variability and by their interaction with otherconsumers they also esseneflunced or influence others in the selection ofservice provider.PERISHABILITY AND FLUCTUATING DEMANDPerisbabilaty refers to the fact that services cannot be saved,stored, resold or returned. A seat on an airplane or in a restaurant, anhour or a lawyer’s time, or telephone line capacity not used cannot bereclaimed and used or resold at later time. This is in contract to goodsthat can be stored in inventory or resold another day, or even returned ifthe consumer is unhappy.TARGET MARKETINGTarget marketing refers to selection of one or more of manymarket segments and developing products and marketing mixes suited toeach segments.STEPS IN TARGET MARKETINGTarget marketing essentially consist of the following steps:1. Define the relevant marketThe market has to be defined in terms of product category, theproduct form and the specific brand.2. Analyze characteristics and wants of potential customersThe customers wants and needs are to be analyzed in terms ofgeographic location, demographics, psychographics and productrelated variable.3. Identify bases for segmenting the marketFrom the profiles available identify those has strength adequate to asegment and reflection the wants to kjdfgkjsdfgjsdkgjsfdkgjsf4. Define and describe market segmentsAs any one basis, say income is meaningless by itself, a combinationof various bases has to be arrived as such that each segment isdistinctly different from other segments in buying behaviour andwants.5. Analyze competitor’s positionsIn such segment gdfkgjxfkgnfdkg dxngmdf gkdfjgkdfjdfkjgdfk by theconsumers are to found our kjgfksjdfgds fgs consumers and the listof attributes which they consider important is determined.6. Evaluate market segmentsThe market segments have to be evaluated in terms of revenuepotential and cost of the marketing effort. The former involvesestimating the demand for the product while the latter is an estimateof costs involved in reaching each segment.7. Select the market segmentChoosing dfkjgdfkjgfd the available segments in the market one hasto bear in mind the ksdfjgksjgkjd and resources, the presence orabsence of competitors in the sdkjgksjdf and the capacity of the growin size.8. Finalise the marketing mixThis involves decisions on product, distribution, promotions and price.Product decisions will gkjsdf into account product attributed fdgkdjfwanted by consumers, choice of appropriate brand name and imagewill help in promoting the product to the chosen segment and pricingcan be done keeping the purchase behaviour in mind.Hence, it can be seen that targeted marketing consists ofsegmenting the market, choosing which segments to serve anddesigning the marketing mix in such a way that it is attractive to thechosen segments. The third step takes into account the uniqueness of

a company’s marketing mix in a relation to that of competitors. Theuniqueness or differentiation may be tangible or intangible dependingupon the physical attributes or the psychological attributes of theproduct. Establishing and communicating these distinctive aspects istermed positioning.MARKETING MIXMarketing mix is one of the major concepts in modern marketing.It is the combination of various elements which constitutes thecompany’s marketing system. It is set of controllable marketingvariables that the firm blends to produce the response it wants in thetarget market. Though there are many basic marketing variables, it isMcCarthy, who popularized a four-factor classification called the fourPs: Product, Price, Place and Promotion. Each P consists of a list ofparticular marketing variables.The first P – Product consists of(i) Product planning and development;(ii) Product mix policies and strategies; and(iii) Branding and packaging strategies.The second P – Price consists of(i) Pricing policies and objectives; and(ii) Methods of setting prices.The third P – Place consists of(i) Different types of marketing channels;(ii) Retailing and wholesaling institutions; and(iii) Management of physical distribution systems.The fourth P – Promotion consists of(i) Advertising;(ii) Sales promotion; and(iii) Personal selling.A detailed discussion on each of the above four P’s follows now:PRODUCTProduct stands for various activities of the company such asplanning and developing the right product and/or services, changing theexisting products, adding new ones and taking other actions that affectthe assortments of products. Decisions are also required in the areassuch as quality, features, styles, brand name and packaging.A product is something that must be capable of satisfying a needor want, it includes physical objects, services, personalities places,organisation and ideas. Thus, a transport service, as it satisfiers humanneed is a product. Similarly, places like Kashmir and Kodaikanal, as theysatisfy need to enjoy the cool climate are also products.The second aspect of product is product planning and development.Product planning embraces all activities that determine a company’s likeof products. It includea)Planning and developing a new product;b) Modification of existing product lines; andc) Elimination of unprofitable items.Product development encompasses the technical activities ofproduct research, engineering and decision.The third aspect of product is product mix policies and strategies.Product mix refers to the composite of products offered for sale by acompany. For example Godrej company offers cosmetics, steel furnitures,office equipments, locks etc. with many items in each category.The product mix is four dimensional. It has breadth, length, depthand consistency.Yet another integral part of product is packaging.

PRICEThe second element of marketing mix is price. Price stands for themonetary value that customers pay to obtain the product. In pricing, thecompany must determine the right price for its products and then decideon strategies concerning retail and wholesale prices, discounts,allowances and credit terms.Before fixing prices for the product, the company should be clearabout its pricing objectives and strategies. The objectives may be set lowinitial price and raising it gradually or o set high initial price and reducingit gradually or fixing a target rate of return or setting prices to meet thecompetition etc. But the actual price setting is based on three factorsnamely cost of production, level of demand and competition.Regarding retail pricing, the company may adopt two policies. Onepolicy is that he may allow the retailers to fix any price withoutinterfering in his right. Another policy is that he may want to exercisecontrol over the products. Discounts and allowances result in a deductionfrom the base price.PLACEThe third element of marketing mix is place or physical distribution.Place stands for the various activities undertaken by the company tomake the product accessible and available to target customers. There arefour different level channels of distribution. The first is zero-levelchannel which means manufacture directly selling the goods to theconsumers.The second is one-level channel which means supplying the goodsto the consumer through the retailer. The third is two-level channelwhich means supplying the goods to the consumer through wholesalerand retailer. The fourth is three-level channel which means supplyinggoods to the consumers through wholesaler-jobber-retailer andconsumer.There are large-scale institutions such as departmental stores,chain stores, mail order business, super-market etc. and small-scaleretail institutions such as small retail shop, automatic vending,franchising etc. The company must chose to distribute their productsthrough any of the above retailing institutions depending upon the natureof the products, area of the market, volume of scale and cost involved.The actual operation of physical distribution system requiredcompany’s attention and decision-making in the areas of inventory,location of warehousing, materials handling, order processing andtransportation.PROMOTIONThe fourth element of the marketing mix is promotion. Promotionstands for the various activities undertaken by the company tocommunicate the merits of its products and to persuade target customersto buy them. Advertising, sales promotion and personal selling are themajor promotional activities. A perfect coordination among these threeactivities can secure maximum effectiveness of promotional strategy.

For successful marketing, the marketing manager ahs to develop a bestmarketing mix for his product.

advertising The finest products, the most attractive price tags, and the best marketing channels are of no mean if the target customers don't know the product; and the chances of product success is low. Effective marketing communication is crucial for the success of a product or a business. In marketing communications advertising plays an important role.

Role of Advertising in Marketing CommunicationMarketing communications are the means by which organisations attempt to inform, persuade, and remind consumers about products, services, or brands. Marketing communications inform and make consumers aware about the availability of the product or service, about its usage, price and special offers. Marketing Communications attempt to persuade potential consumers to purchase and try the product. Marketing communications can also be used to reinforce experiences, or to remind consumers about their needs and their past experiences related to the product with a view to convince them for repurchases. Marketing communication also differentiate products in markets where there is little to separate competing products and brands.

Advertising is a paid form of a non-personal message communicated through the various media by industry, business firms, nonprofit organisations, or individuals. Advertising is persuasive and informational and is designed to influence the purchasing behavior and/or thought patterns of the audience.

The advertising message has to reach a billion people, speaking different languages, practicing many religions. Advertisers can reach their audiences through television, radio, cinema, print medium, outdoor advertising, sales promotion and the Internet. Hence, advertising is a form of mass communication.

Process of AdvertisingFollowing are the steps that are required to be followed for development and execution of advertising :-1. Briefing - Advertising process starts with briefing - a document confirming understanding between client and advertising agency on - what product to advertise, objective of advertising, time-frame of ad campaign, strategies to reach the audience, and total estimated cost.2. Market Research - After briefing market research will done. Research include - comparison of advertiser's product or service with competitor's product or service, consumers' perception of their brand in comparison to their competitors, study of competitors' advertising, and response of consumers to competitors' advertising.3. Identify Target Audience - Next step is to identify target audience. Using the market research, the advertising agency will identify the target audience.4. Media Selection - Using the research, the advertising agency or the media agency will select the media that should be used to reach the target audience in the most cost effective way.5. Ad Designing & Ad Creation - At this step the creative people of advertising agency will convert the advertising communication into words and pictures. The copywriter will write the copy of advertising and the art director will visually implement the copywriter's message.The advertising agency may get the filming or taping done by outside production companies.6. Decide Place & Time - This step is to decide where and when the advertisement will be shown. Traffic department within the advertising agency will ensure that the commercials are ready on time and all required legal approvals have been granted. 7. Execution - Finally the advertisement will be executed.8. Performance Check - Once the advertisement is executed, the media agency will check its performance.Following the above steps the client or marketer can effectively communicate its marketing messages with its target audience.

Barriers to Effective Communication, continuedEncoding Barriers.  The process of selecting and organizing symbols to represent a message

requires skill and knowledge.  Obstacles listed below can interfere with an effective message. 1. Lack of Sensitivity to Receiver.  A breakdown in communication may result when a message is not adapted to its receiver.  Recognizing the receiver’s needs, status, knowledge of the subject, and language skills assists the sender in preparing a successful message.  If a customer is angry, for example, an effective response may be just to listen to the person vent for awhile.  2. Lack of Basic Communication Skills.  The receiver is less likely to understand the message if the sender has trouble choosing the precise words needed and arranging those words in a grammatically-correct sentence.  3. Insufficient Knowledge of the Subject.  If the sender lacks specific information about something, the receiver will likely receive an unclear or mixed message.  Have you shopped for an item such as a computer, and experienced how some salespeople can explain complicated terms and ideas in a simple way?  Others cannot. 4. Information Overload.  If you receive a message with too much information, you may tend to put up a barrier because the amount of information is coming so fast that you may have difficulty comfortably interpreting that information.  If you are selling an item with twenty-five terrific features, pick two or three important features to emphasize instead of overwhelming your receiver (ho-hum) with an information avalanche. 5. Emotional Interference.  An emotional individual may not be able to communicate well.  If someone is angry, hostile, resentful, joyful, or fearful, that person may be too preoccupied with emotions to receive the intended message.  If you don’t like someone, for example, you may have trouble “hearing” them. Transmitting Barriers: Things that get in the way of message transmission are sometimes called “noise.”  Communication may be difficult because of noise and some of these problems: 1. Physical Distractions.  A bad cellular phone line or a noisy restaurant can destroy communication.  If an E-mail message or letter is not formatted properly, or if it contains grammatical and spelling errors, the receiver may not be able to concentrate on the message because the physical appearance of the letter or E-mail is sloppy and unprofessional. 2. Conflicting Messages.  Messages that cause a conflict in perception for the receiver may

result in incomplete communication.  For example, if a person constantly uses jargon or slang  to communicate with someone from another country who has never heard such expressions, mixed messages are  sure to result.  Another example of conflicting messages might be if a supervisor requests a report immediately without giving the report writer enough time to gather the proper information.  Does the report writer emphasize speed in writing the report, or accuracy in gathering the data? 3. Channel Barriers.  If the sender chooses an inappropriate channel of communication, communication may cease.  Detailed instructions presented over the telephone, for example, may be frustrating for both communicators.  If you are on a computer technical support help line discussing a problem, it would be helpful for you to be sitting in front of a computer, as opposed to taking notes from the support staff and then returning to your computer station.

4. Long Communication Chain.  The longer the communication chain, the greater the chance for error.  If a message is passed through too many receivers, the message often becomes distorted.  If a person starts a message at one end of a communication chain of ten people, for example, the message that eventually returns is usually liberally altered.

 Decoding Barriers.  The communication cycle may break down at the receiving end for some of these reasons: 1. Lack of  Interest.  If a message reaches a reader who is not interested in the message, the reader may read the message hurriedly or listen to the message carelessly.  Miscommunication may result in both cases. 2. Lack of  Knowledge. If a receiver is unable to understand a message filled with technical information, communication will break down.  Unless a computer user knows something about the Windows environment, for example, the user may have difficulty organizing files if given technical instructions.  3. Lack of Communication Skills.  Those who have weak reading and listening skills make ineffective receivers.  On the other hand, those who have a good professional vocabulary and who concentrate on listening, have less trouble hearing and interpreting good communication.   Many people tune out who is talking and mentally rehearse what they are going to say in return.  We’ll see some techniques for improving listening skills in Chapter 2.  4. Emotional Distractions.  If emotions interfere with the creation and transmission of a message,

they can also disrupt reception.  If you receive a report from your supervisor regarding proposed changes in work procedures and you do not particularly like your supervisor, you may have trouble even reading the report objectively.  You may read, not objectively, but to find fault.  You may misinterpret words and read negative impressions between the lines.  Consequently, you are likely to misunderstand part or all of the report. 5. Physical Distractions.  If a receiver of a communication works in an area with bright lights, glare on computer screens, loud noises,  excessively hot or cold work spaces, or physical ailments, that receiver will probably experience communication breakdowns on a regular basis.  Responding Barriers—The communication cycle may be broken if feedback is unsuccessful. 1.   No Provision for Feedback.  Since communication is a two-way process, the sender must search for a means of getting a response from the receiver.  If a team leader does not permit any interruptions nor questions while discussing projects, he may find that team members may not completely understand what they are to do.  Face-to-face oral communication is considered the best type of communication since feedback can be both verbal and nonverbal.  When two communicators are separated, care must be taken to ask for meaningful feedback. 2.   Inadequate Feedback.  Delayed or judgmental feedback can interfere with good communication.  If your supervisor gives you instructions in long, compound-complex sentences without giving you a chance to speak, you may pretend to understand the instructions just so you can leave the stress of the conversation.  Because you may have not fully understood the intended instructions, your performance may suffer.  

IntroductionCommunication is the process of sharing our ideas, thoughts, and feelingswith other people and having those ideas, thoughts, and feelingsunderstood by the people we are talking with.When we communicate wespeak, listen, and observe.The way we communicate is a learned style. As children we learn fromwatching our parents and other adults communicate. As an adult we canlearn to improve the way we communicate by observing others who communicateeffectively, learning new skills, and practicing those skills.

Attention: The ability to effectively communicate at work, home, and inlife is probably one of the most important sets of skills a person needs.What would our life and world be like without communication? We cannotget along without it. It is also not easy, and we all have probably hadexperiences where our communication failed or ran into a barrier. So, ifwe can understand the communication process better and improve

Introduction of Communication Channel In an organization, information flows forward, backwards and sideways. This information flow is referred to as communication. Communication channels refer to the way this information flows within the organization and with other organizations.

In this web known as communication, a manager becomes a link. Decisions and directions flow upwards or downwards or sideways depending on the position of the manager in the communication web.

For example, reports from lower level manager will flow upwards. A good manager has to inspire, steer and organize his employees efficiently, and for all this, the tools in his possession are spoken and written words.

For the flow of information and for a manager to handle his employees, it is important for an effectual communication channel to be in place.

The Working of a Communication ChannelThrough a modem of communication, be it face-to-face conversations or an inter-department memo, information is transmitted from a manager to a subordinate or vice versa.

An important element of the communication process is the feedback mechanism between the management and employees.

In this mechanism, employees inform managers that they have understood the task at hand while managers provide employees with comments and directions on employee's work.

Importance of a Communication ChannelA breakdown in the communication channel leads to an inefficient flow of information. Employees are unaware of what the company expects of them. They are uninformed of what is going on in the company.

This will cause them to become suspicious of motives and any changes in the company. Also without effective communication, employees become department minded rather than company minded, and this affects their decision making and productivity in the workplace.

Eventually, this harms the overall organizational objectives as well. Hence, in order for an organization to be run effectively, a good manager should be able to communicate to his/her employees what is expected of them, make sure they are fully aware of company policies and any upcoming changes.

Therefore, an effective communication channel should be implemented by managers to optimize worker productivity to ensure the smooth running of the organization.

Types of Communication ChannelsThe number of communication channels available to a manager has increased over the last 20 odd years. Video conferencing, mobile technology, electronic bulletin boards and fax machines are some of the new possibilities.

As organizations grow in size, managers cannot rely on face-to-face communication alone to get their message across.

A challenge the managers face today is to determine what type of communication channel should they opt for in order to carryout effective communication.

In order to make a manager's task easier, the types of communication channels are grouped into three main groups: formal, informal and unofficial.

Formal Communication Channels

A formal communication channel transmits information such as the goals, policies and procedures of an organization. Messages in this type of communication channel follow a chain of command. This means information flows from a manager to his subordinates and they in turn pass on the information to the next level of staff.

An example of a formal communication channel is a company's newsletter, which gives employees as well as the clients a clear idea of a company's goals and vision. It also includes the transfer of information with regard to memoranda, reports, directions, and scheduled meetings in the chain of command.

A business plan, customer satisfaction survey, annual reports, employer's manual, review meetings are all formal communication channels.

Informal Communication Channels

Within a formal working environment, there always exists an informal communication network. The strict hierarchical web of communication cannot function efficiently on its own and hence there exists a communication channel outside of this web. While this type of communication channel may disrupt the chain of command, a good manager needs to find the fine balance between the formal and informal communication channel.

An example of an informal communication channel is lunchtime at the organization's cafeteria/canteen. Here, in a relaxed atmosphere, discussions among employees are encouraged. Also managers walking around, adopting a hands-on approach to handling employee queries is an example of an informal communication channel.

Quality circles, team work, different training programs are outside of the chain of command and so, fall under the category of informal communication channels.

Unofficial Communication Channels

Good managers will recognize the fact that sometimes communication that takes place within an organization is interpersonal. While minutes of a meeting may be a topic of discussion among employees, sports, politics and TV shows also share the floor.

The unofficial communication channel in an organization is the organization's 'grapevine.' It is through the grapevine that rumors circulate. Also those engaging in 'grapevine' discussions often form groups, which translate into friendships outside of the organization. While the grapevine may have positive implications, more often than not information circulating in the grapevine is exaggerated and may cause unnecessary alarm to employees. A good manager should be privy to information circulating in this

unofficial communication channel and should take positive measures to prevent the flow of false information.

An example of an unofficial communication channel is social gatherings among employees.

ConclusionIn any organization, three types of communication channels exist: formal, informal and unofficial.

While the ideal communication web is a formal structure in which informal communication can take place, unofficial communication channels also exist in an organization.

Through these various channels, it is important for a manager to get his/her ideas across and then listen, absorb, glean and further communicate to employees.

PROMOTION4.1 Promotional activitiesFrom a market perspective, promotion serves three essential roles-it informs, persuadesand reminds prospective and current customers and other selected audience about a company andits products.To inform:-The most useful product or brand will be consider failed, if no one knows that it isavailable. Because distribution channels are often long, a product may pass through many handsa producer and consumers. Therefore, a producer must inform middleman as well as businessusers and ultimate consumers about a product. Wholesalers in turn must inform retailers andretailers must inform consumers.To persuade:-Another purpose of promotion is to persuade. The intense competition among differentindustries as well as among different firms in the same industry puts a tremendous pressure onpromotional programs of sellers. In our economy of a abundance, we need strong persuasivepromotion, because consumers have many alternatives to choose from.

For example, in case of luxury product, for which sales depend on its ability to convinceconsumers that the product’s benefit exceed those of other luxuries, persuasive is even moreimportant.To remind:-Consumer also must be reminded about products availability and its potential to satisfy.4.2 Promotional mix- sales promotionDetermining the promotional mix:-A promotional mix is an organization’s combination of personal selling, advertising salespromotion and public relation. An effective promotional mix is a critical part of virtually all69 | P a g emarketing strategies. Product differentiation, market segmentation, trading up and trading downand branding all requires effective promotion.Designing effective promotional mix involves a number of strategic decisions about fivefactors.1) Target audience:-Decision on promotional mix will be greatly influenced by target audience. The targetmay be final consumer, who could be further defined as existing customer or new prospects. Insome order to gain their support in distributing a product or in case of a company about to makea stock offering.A promotion program aimed primary at middlemen is called push strategy and promotionprogram directed primarily at end users is called pull strategy.Using a push strategy means a channel member directs its promotion primarily at the

middlemen that are next link forward in the distribution channel. With a pull strategy, promotionis directed at end users usually ultimate consumers.2) Promotion objectives:-A target audience can be in any one of six stages of buying readiness. These stagesawareness, knowledge, liking, preference, conviction, and purchase are called hierarchy ofeffects, because they represent stages a buyer goes through in moving toward a purchase andeach describes a possible objective or effect of promotion. The goal of promotion is to get theprospect to the final or purchase stage.i) Awareness: -At the awareness stage, the seller’s task is to let the buyer know that the product or brandexists. Here the objective is to build familiarity with product and brand name.ii) Knowledge: -Knowledge goes beyond the awareness to learning about a product’s feature.70 | P a g eiii) Liking: -Liking refers to how the market feels about the product. Promotion can be used to move aknowledgeable audience from being indifferent to liking a brand. A common technique is toassociate the item with an attractive symbol or person.iv) Preference: -Creating preference involves distinguishing among brands such that the market findsyour brand more attractive than alternative. It is not uncommon to like several brands of thesame product but the customer can’t make a decision until one brand is preferred over the other.v) Conviction: -Conviction entails the actual decision or commitment to purchase. For example a student

may prefer IBM over a clone, and not yet be convinced to buy a computer. The promotionobjective here is to increase the strength of buyer’s need.vi) Purchase: -Purchase can be delayed or postponed indefinitely, even for customers who areconvinced they should buy a product. There may be some situational factor involved such as nothaving enough money at that moment or natural resistance to price.3) Nature of Product:-Several product attributes influences the promotional mix. We consider three that aresignificant are:i) Unit value: -A product with low unit value is usually relatively uncomplicated, involves little risk forbuyer and must appeal to mass market to survive. As a result, advertising would be primarypromotional tools. In contrast high unit value products are complex and complicated.71 | P a g eii) Degree of customization: -If a product is adapted to an individual customer need, personal selling is important.However the benefits of most standardized products can be effectively communicated inadvertising. Although this principle holds true for many products, it is being challenged by firmimplementing mass customization.iii) Presale and Post sale services: -Products that must be demonstrated for which there are trade in, or that require frequentservicing to stay in good working order lend themselves to personal selling.iv) Stages in product life cycle: -Promotional strategies are influenced by product life cycle-stages. When a new product is

introduced prospective buyer must be informed about its existence and its benefits andmiddlemen must be convinced to carry it. Thus both advertising and personal selling are criticalin a product introductory stage. At introduction a new product also may be something of novelty,offering excellent opportunities for publicity. Later, if a product becomes successful, competitionintensities and more emphasis is placed on persuasive advertising.v) Funds available: -Regardless of the most desirable promotional mix, the amount of money available forpromotion is often the ultimate determinant of mix. A business with more funds can make moreeffective use of advertising than a firm with limited financial resources.For example, television advertising can carry a particular promotional message to for morepeople and at a lower cost per person then most other media.72 | P a g e4.3 Personal sellingPERSONAL SELLING PROCESSPersonal selling is the individual to individual communication. It has some advantagesover advertising. Personal selling provides the human touch that is backing in adverting.The value of personal selling as a promotional activity depends on the product beingoffered and market involved.Inexpensive consumer products can be marketed successfully through personal selling.Personal selling process:-The personal selling process is a logical sequence of four steps that a sales person takes indealing with a perspective buyer. The process is designed to produce some desired consumer

actions and ends with a follow-up to ensure customer satisfaction. The desired action usually is apurchase by the customer.Prospecting Reproach Presentation Post sale service(i) Identifyingprospective customers.(ii) Qualifyingprospects(i) Information(ii)Habits(iii) PreferencesAIDA(i) Attention(ii) Interest(iii)Desire(iv)Action(i)Reduce decisionBuild good willSteps: -1) Prospecting: -The first step in personal selling process is really two related steps. Prospecting consistsof identifying possible customers and then qualifies them that are determining whether they havenecessary potential to buy. They are combined as a single step because they are typically done atthe same time.73 | P a g ea) Identifying: -The identification process is an application of market segmentation. By analyzing thefirm’s database of pas and current customers, a sales rep can determine characteristics of an idealprospect. Comparing this profile to a list of potential customers will produce a set of prospect.A List of potential customers can be constructed using suggestions from currentcustomers, trade associations and industry directories.Qualifying prospects:-After indentifying prospective customers, a seller should qualify them, that is determine

whether they have necessary willingness, purchasing power and authority to buy. To determinewillingness to buy, a seller can seek information about any changes in the prospect’s situation.For example, a business firm or a household consumer may have had a recent problemwith an insurances provider. In this case there may be an opportunity for a sales person from acompeting insurer to get that prospect’s business.To determine a prospect’s financial ability to pay, a seller can refer to credit ratingservices. For household consumers or small business, a seller can get credit information from alocal credit bureau.Indentifying who has authority to buy is a business or a household can be difficult. Forexample, a purchasing agent may have buying authority, but what he or she buys may depend onthe recommendation of an office secretary.(2) Re-approach to individual prospects:-Before calling on prospects, sales people should conduct a pre approach-learning allabout the companies and persons to whom they hope to sell. This might includes finding thatwhat products the prospects have used in the past, what they are now using and their reactions tothese products. In business to business selling a sales person or selling team should find out howbuying decisions are made in customer’s organization.74 | P a g eSales people should try to get all the information, so they will be able to tailor theirpresentation to individual buyer.(3) Presenting the sales messages:-

With the appropriate pre approach information, a sales person can design a salespresentation that will attract the prospect’s attention. The sales person will then try to hold theprospect’s interest while building a desire for the product, and when the time is right, attempts tostimulate action by closing sales. This approach is called AIDA (Attention interest, desire andaction) is used by many organization.a) Attract attention the approach:-First task in a sales presentation is to attract the prospect’s attention and to generatecuriosity. In case where the prospect is aware of a need and is seeking a solution by simplystating the Sellers Company and product may be enough, provided by company.For example, if sales person was offered to the prospects by a customer, the right approach mightbe to start out by mentioning this common acquaintance, or a sales person might suggest theproduct benefits by making some startling statement.b) Hold interest and arouse desire:-After attracting the prospect’s attention the challenge for sales rep is to hold it andstimulate a desire for product with a sales presentation.For example, some companies train their sales people to use a canned sales talk, a memorizedpresentation designed to cover all points determined by management to be important.c).Meet objections and close the sale:-After explaining products and its benefits, a sales person should try to close the sale, thatis obtain action on the consumer’s part. Periodically in a presentation, the sales person mayventure a trial close to test the prospect’s willingness to buy.

75 | P a g eThe trial close tends to uncover the buyer’s objection. A sales person should encouragethe buyer to state their objections. Then the sales person has an opportunity to meet theobjections and bring out additional product benefit or reemphasize previously stated points.(4) Past sale services:-An effective selling job does not end when the order is written up. The final stage of aselling process is a series of post sale activities that can build customer goodwill and lay thegroundwork for future business.Post sale services reduce the customer’s post purchase cognitive dissonance. In this finalstage of personal selling, a sales person can minimize the customer’s dissonance by(1) Summarize the products, benefit after purchase.(2) Repeat why product is better than other alternative.(3) Emphasizing how satisfied customer will be with product.ADVERTISINGAdvertising is an art of influencing the customers through paid non-personal presentationto purchase and posses a product. It can also be defined as “any paid form of non-personalpresentation and promotion of ideas goods or services by an identified sponsor. The two mainobjectives of advertising are to expose a product to a large market and to encourage the buyer toaccept the product.4.4 Nature and importance of advertisingNature Objectives of advertising:-Establish advertising objectives to optimize performance of the product or service, andMeet advertiser needs.

1) Communication effects are analyzed and assessed for their ability to achieve Specifiedresponses.76 | P a g e2) Brand awareness objectives that enhance buyer empathy with the product or service aredeveloped, evaluated, and determined.3) Brand attitude objectives that enhance positive buyer brand evaluation and distinguish rationaland emotional responses to brand attitude are developed, evaluated, and determined.4) Brand purchase intention objectives that encourage buyer purchase action are developed,evaluated, and determined.5) Objectives that achieve the required effects for the product or service are developed andintegrated to meet overall brand strategy and advertising objectives.6) Proposed advertising objectives are assessed for their compatibility with advertiser needs forthe development and execution of effective messages and advertisements that achieveadvertising and marketing objectives.7) Provisions are made for monitoring, evaluating, and adjusting advertising responses to ensurethat these continue to meet brand strategy and advertising objectives.Importance of advertising:-Advertising is of great importance in our world of competition. It is important for bothseller and buyer. Even the government cannot do without it. First, of all, advertising introducesnew products to general public.For example, the public come to know about useful new medicines for some diseases. We oftenlearn about new machines for agriculture and industry for ads.Secondly:-

Advertising introduces different brands of same product. Advertisement tells about qualities ofeach brand and we can easily select.For example:-There are three different brands of bicycle produced by same company.77 | P a g eThirdly:-Government can very profitably advertise its schemes and policies. It can tell general publicwhat it might do for good of nation.Fourthly:-It is through advertisements that we come to know of new service jobs. Qualified people applyfor them and get adjusted in life.Fifthly:-Advertisement is a dependable and effective means of expanding education and of bringingstudents to educational institutions. Schools, colleges and universities advertise their classes,courses, and fees and attract students for admission.Advertising can also be harmful. When advertisement misstates qualities of their products, theymisguide public. When manufacturers advertise harmful products like cigarettes, they da adisservice. Advertising is useful a\within proper limits. These limits Cleary lay down by religion,law and our traditions.4.5 Types of advertisingTypes of advertising:-Mentioned below are the various categories or types of advertising:Print Advertising – Newspapers, Magazines, Brochures, FliersThe print media have always been a popular advertising medium. Advertising productsvia newspapers or magazines is a common practice. In addition to this, the print media also

offers options like promotional brochures and fliers for advertising purposes. Often thenewspapers and the magazines sell the advertising space according to the area occupied by theadvertisement, the position of the advertisement (front page/middle page), as well as thereadership of the publications. For instance an advertisement in a relatively new and less popularnewspaper would cost far less than placing an advertisement in a popular newspaper with a highreadership. The price of print ads also depend on the supplement in which they appear, for78 | P a g eexample an advertisement in the glossy supplement costs way higher than that in the newspapersupplement which uses a mediocre quality paper.Outdoor Advertising – Billboards, Kiosks, Tradeshows and EventsOutdoor advertising is also a very popular form of advertising, which makes use ofseveral tools and techniques to attract the customers outdoors. The most common examples ofoutdoor advertising are billboards, kiosks, and also several events and tradeshows organized bythe company. The billboard advertising is very popular however has to be really terse and catchyin order to grab the attention of the passers by. The kiosks not only provide an easy outlet for thecompany products but also make for an effective advertising tool to promote the company’sproducts. Organizing several events or sponsoring those makes for an excellent advertisingopportunity. The company can organize trade fairs, or even exhibitions for advertising their

products. If not this, the company can organize several events that are closely associated withtheir field. For instance a company that manufactures sports utilities can sponsor a sportstournament to advertise its products.Broadcast advertising – Television, Radio and the InternetBroadcast advertising is a very popular advertising medium that constitutes of severalbranches like television, radio or the Internet. Television advertisements have been very popularever since they have been introduced. The cost of television advertising often depends on theduration of the advertisement, the time of broadcast (prime time/peak time), and of course thepopularity of the television channel on which the advertisement is going to be broadcasted. Theradio might have lost its charm owing to the new age media however the radio remains to be thechoice of small-scale advertisers. The radio jingles have been very popular advertising media andhave a large impact on the audience, which is evident in the fact that many people still rememberand enjoy the popular radio jingles.Covert Advertising – Advertising in MoviesCovert advertising is a unique kind of advertising in which a product or a particular brandis incorporated in some entertainment and media channels like movies, television shows or evensports. There is no commercial in the entertainment but the brand or the product is subtly ( or79 | P a g esometimes evidently) showcased in the entertainment show. Some of the famous examples for

this sort of advertising have to be the appearance of brand Nokia which is displayed on TomCruise’s phone in the movie Minority Report, or the use of Cadillac cars in the movie MatrixReloaded.Surrogate Advertising – Advertising IndirectlySurrogate advertising is prominently seen in cases where advertising a particular productis banned by law. Advertisement for products like cigarettes or alcohol which are injurious toheath are prohibited by law in several countries and hence these companies have to come up withseveral other products that might have the same brand name and indirectly remind people of thecigarettes or beer bottles of the same brand. Common examples include Fosters and Kingfisherbeer brands, which are often seen to promote their brand with the help of surrogate advertising.Public Service Advertising – Advertising for Social CausesPublic service advertising is a technique that makes use of advertising as an effectivecommunication medium to convey socially relevant messaged about important matters and socialwelfare causes like AIDS, energy conservation, political integrity, deforestation, illiteracy,poverty and so on. David Oglivy who is considered to be one of the pioneers of advertising andmarketing concepts had reportedly encouraged the use of advertising field for a social cause.Oglivy once said, "Advertising justifies its existence when used in the public interest - it is muchtoo powerful a tool to use solely for commercial purposes.". Today public service advertising has

been increasingly used in a non-commercial fashion in several countries across the world inorder to promote various social causes. In USA, the radio and television stations are granted onthe basis of a fixed amount of Public service advertisements aired by the channel.Celebrity AdvertisingAlthough the audience is getting smarter and smarter and the modern day consumergetting immune to the exaggerated claims made in a majority of advertisements, there exist asection of advertisers that still bank upon celebrities and their popularity for advertising theirproducts. Using celebrities for advertising involves signing up celebrities for advertising

Direct marketing is a channel-agnostic form

of advertising which allows businesses and

nonprofit organizations to communicate

straight to the customer, with advertising

techniques that can include cell phone text

messaging, email, interactive consumer

websites, online display ads, database

marketing, fliers, catalog distribution,

promotional letters, targeted television

commercials, response-generating

newspaper/magazine advertisements, and

outdoor advertising. Amongst its

practitioners, it is also referred to as Direct

Response.

Direct marketing messages emphasize a

focus on the customer, data, and

accountability. Hence, besides the actual

communication, creation of actionable

segments, pre- and post-campaign analytics,

and measurement of results, are integral to

any good Direct Marketing campaign.

Characteristics that distinguish direct

marketing are:

A database of names (prospects,

customers, businesses, etc.), often with

certain other relevant information such as

contact number/address, demographic

information, purchase habits/history,

company history, etc., is used to develop

a list of targeted entities with some

existing common interests, traits or

characteristics. Generating such a

database is often considered part of the

Direct Marketing campaign.

Marketing messages are addressed

directly to this list of customer and/or

prospects. Direct marketing relies on

being able to address the members of

a target market. Addressability comes in

a variety of forms including email

addresses, phone numbers, Web

browser cookies, fax numbers and postal

addresses.

Direct marketing seeks to drive a specific

"call to action." For example, an

advertisement may ask the prospect to

call a free phone number, mail in a

response or order, or click on a link to a

website.

Direct marketing emphasizes trackable,

measurable responses, results and costs

from prospects and/or customers—

regardless of medium.

Direct marketing is practiced by businesses

of all sizes—from the smallest start-up to the

leaders on the Fortune 500. A well-executed

direct advertising campaign can prove a

positive return on investment by showing

how many potential customers responded to

a clear call-to-action. General advertising

eschews calls-for-action in favor of

messages that try to build prospects’

emotional awareness or engagement with a

brand. Even well-designed general

advertisements rarely can prove their impact

on the organization’s bottom line. The

demonstrable result of Direct Marketing is

the reason for its increasing popularity.

Benefits

Direct marketing is attractive to

many marketers because its positive results

can be measured directly. For example, if a

marketer sends out 1,000 solicitations by

mail and 100 respond to the promotion, the

marketer can say with confidence that

campaign led directly to 10% direct

responses. This metric is known as the

'response rate,' and it is one of many clearly

quantifiable success metrics employed by

direct marketers. In contrast, general

advertising uses indirect measurements,

such as awareness or engagement, since

there is no direct response from a consumer.

Measurement of results is a fundamental

element in successful direct marketing. The

Internet has made it easier for marketing

managers to measure the results of a

campaign. This is often achieved by using a

specific website landing page directly

relating to the promotional material. A call to

action will ask the customer to visit the

landing page, and the effectiveness of the

campaign can be measured by taking the

number of promotional messages distributed

(e.g., 1,000) and dividing it by the number of

responses (people visiting the unique

website page). Another way to measure the

results is to compare the projected sales or

generated leads for a given term with the

actual sales or leads after a direct

advertising campaign.

Challenges and solutions

While many marketers recognize the

financial benefits of increasing targeted

awareness, some direct marketing efforts

using particular media have been criticized

for generating poor quality leads, either due

to poor message strategy or because of

poorly compiled demographic databases.

This poses a problem for marketers and

consumers alike, as advertisers do not wish

to waste money on communicating with

consumers not interested in their products.

Success of any Direct Marketing campaign,

in terms of number of times the desired

response may vary between the best vs. the

worst of the following parameters, depends

on:

List or targeting (best targeting may yield

up to 6 times the response, as compared

with the worst targeting)

Offer (best offer may yield up to 3 times

the response, as compared with the

worst offer)

Timing (best timing for the campaign may

yield up to 2 times the response, as

compared with the worst timing)

Ease of response (best/multiple ways

offered to respond may yield up to 1.35

times the response, as compared with

not-so-friendly response mechanism/s)

Creativity (most creative messaging may

yield up to 1.2 times the response, as

compared to the least creative

messaging)

Media employed. The medium/media

used to deliver a message can have a

significant impact on responses. It's

difficult to truly personalize a DRTV or

radio message. One can even attempt to

send a personalized message via email

or text message, but a high quality direct

mail envelope and letter will typically

have a better chance of generated a

response in this scenario.

Channels[edit]

Any medium that can be used to deliver a

communication to a customer can be

employed in direct marketing, including:

Email marketing[edit]

Sending marketing messages through email

or email marketing is one of the most widely

used direct-marketing methods.[11] One

reason for email marketing's popularity is

that it is relatively inexpensive to design,

test, and send an email message. It also

allows marketers to deliver messages

around the clock, and to accurately measure

responses.

Online tools[edit]

With the expansion of digital technology and

tools, direct marketing is increasingly taking

place through online channels. Most online

advertising is delivered to a focused group of

customers and has a trackable response.

Display Ads are interactive ads that

appear on the Web next to content on

Web pages or Web services. Formats

include static banners, pop ups, videos,

and floating units. Customers can click on

the ad to respond directly to the message

or to find more detailed information.

According to research by eMarketer,

expenditures on online display ads rose

24.5% between 2010 and 2011.[12]

Search: 49% of US spending on Internet

ads goes to search, in which advertisers

pay for prominent placement among

listings in search engines whenever a

potential customer enters a relevant

search term, allowing ads to be delivered

to customers based upon their already-

indicated search criteria.[13] This paid

placement industry generates more than

$10 billion for search companies.

Marketers also use search engine

optimization to drive traffic to their sites.

Social Media Sites, such as Facebook

and Twitter, also provide opportunities for

direct marketers to communicate directly

with customers by creating content to

which customers can respond.

Mobile[edit]

Through mobile marketing, marketers

engage with prospective customers and

donors in an interactive manner through a

mobile device or network, such as a

cellphone, smartphone, or tablet. Types of

mobile marketing messages

include: SMS (short message service)—

marketing communications are sent in the

form of text messages, also known as

texting. MMS (multi-media message service)

—marketing communications are sent in the

form of media messages.

Telemarketing[edit]

Another common form of direct marketing

is telemarketing, in which marketers contact

customers by phone. The primary benefit to

businesses is increased lead generation,

which helps businesses increase sales

volume and customer base. The most

successful telemarketing service providers

focus on generating more "qualified" leads

that have a higher probability of getting

converted into actual sales.

Voicemail marketing[edit]

Voicemail marketing emerged from the

market prevalence of personal voice

mailboxes, and business voicemail systems.

Voicemail marketing presented a cost

effective means by which to reach people

directly, by voice. Abuse of consumer

marketing applications of voicemail

marketing resulted in an abundance of

"voice-spam," and prompted many

jurisdictions to pass laws regulating

consumer voicemail marketing. Voice-mail

courier is a similar form of voice-mail

marketing with both business-to-business

and business-to-consumer applications.

Broadcast faxing[edit]

Broadcast faxing, in which faxes are sent to

multiple recipients, is now less common than

in the past.[citation needed] This is partly due to

laws in the United States and elsewhere

which regulate its use for consumer

marketing. In 2005, President Bush signed

into law S.714, the Junk Fax Prevention Act

of 2005 (JFPA), which allows marketers to

send commercial faxes to those with whom

they have an established business

relationship (EBR), but imposes some new

requirements.

Couponing[edit]

Couponing is used in print and digital media

to elicit a response from the reader. An

example is a coupon which the reader

receives through the mail and takes to a

store's check-out counter to receive a

discount.

Digital Coupons: Manufacturers and retailers

make coupons available online for electronic

orders that can be downloaded and printed.

Digital coupons are available on company

websites, social media outlets, texts, and

email alerts. There are an increasing number

of mobile phone applications offering digital

coupons for direct use.

Direct response marketing[edit]

Direct Response Marketing is designed to

generate an immediate response from

consumers, where each consumer response

(and purchase) can be measured, and

attributed to individual advertisements.[18] This form of marketing is differentiated

from other marketing approaches, primarily

because there are no intermediaries such as

retailers between the buyer and seller, and

therefore the buyer must contact the seller

directly to purchase products or services.

Direct-response marketing is delivered

through a wide variety ofmedia,

including DRTV, radio, mail, print

advertising, telemarketing, catalogues, and

the Internet.

Direct response mail order[edit]

Mail order in which customers respond by

mailing a completed order form to the

marketer. Mail order direct response has

become more successful in recent years due

to internet exposure.[19]

DEFINATION

Demand forecasting is an estimation of sales

in money or physical units for a specified

future period under a proposed marketing

plan.

We can thus define demand forecasting as

the scientific and analytical estimation of

demand for a product(good or service) for a

particular period of time.

FEATURES

It is the basis of planning production

program.

It is an estimate or a forecast of sales in

future.

It depends on market planning.

It tries to find out lines or profitable

investment.

It is done for a particular period.

It tries to arrange appropriate promotional

efforts, advertisement, sales etc…

To produce required quantity.

To access probable demand.

Sales forecasting.

Control of business.

Inventory control.

To plan investment and employment.

To help Govt. to import a export policies.

Man power planning.

To call for team work

PURPOSE OF SHORT-RUN FORCASTING

Appropriate production scheduling.

Helping the firm in reducing costs of

purchase of raw materials.

Determine appropriate price policy to

maintain consistent sales.

Forecasting short term financial

requirements.

METHODS

There are two methods of demand

forecasting.

Subjective method

consumer’s opinion method-in this

method buyers are asked about their

future buying intentions of products.

sales force method-in this method

salespersons are asked about their

estimated sales targets in their

respective sales territories in a given

period of time.

Expert opinion method (Delphi

method)-in this method a group of

experts come to a consensus on the

demand of a particular good(generally

a new one).It is less expensive.

Market simulation- Firms may create

artificial market where consumers are

instructed to shop with some money.

Test marketing- in this market

product is actually sold in certain

segments of the market, regarded as

test market.

Quantitative method

trend projection method

a. Secular trend-change occurring

consistently over a long time and is relatively

smooth in its path.

b. Seasonal trend-seasonal variations of

data within a year. e.g. demand for woolen,

ice cream.

c. Cyclic trend- cyclic movement in

demand for a product that may have a

tendency to recur in a few year

d. Random Events-these are natural

calamities, social unrest etc.

Different Methods of trend projection-

a. Graphical method

b. Least square method

Graphical method

This is the simplest technique to determine

the trend. All values of output or sells for

different years are plotted on a graph.

Year

1990

1991

1992

1993

1994

90 91 92 93 940

10

20

30

40

50

60

least square method

We can find out the trend values for each of

the 5 years and also for the subsequent

years making use of a statistical equation,

the method of Least Squares.

In a time series, x denotes time and y

denotes variable. With the passage of time,

we need to find out the value of the variable.

To calculate the trend values i.e., Yc, the

regression equation used is-

Yc = a+ bx.

As the values of ‘a’ and ‘b’ are unknown, we

can solve the following two normal equations

simultaneously.

(i) ∑ Y = Na + b∑x

(ii) ∑XY = a∑x + b∑ x2

Where,

∑Y = Total of the original value of sales ( y)

N = Number of years,

∑X = total of the deviations of the years

taken from a central period.

∑XY = total of the products of the deviations

of years and corresponding sales (y)

∑x2 = total of the squared deviations of X

values .

When the total values of X. i.e., ∑X = 0

Barometric techniques

In barometric forecasting we construct an

index of a relevant economic indicator and

forecast future trends on the basis of these

indicators.

Regression analysis

Regression analysis relates a dependent

variable to one or more independent variable

in the form of linear equation.

Y = a+bx

Where , y indicates future demand

a indicates fixed demand

b indicates rate of change of demand

x indicates value of related variables

like price,income of consumer,price of

related commodity etc.

limitations of demand forecasting

Change in fashion- it is an inevitable

consequence of advancement of

civilisation.Results of demand forecasting

have short lasting impacts especially in a

dynamic business environment

Consumers’ psychology - results of

forecasting depend largely on consumers’

psychology, understanding which itself is

difficult.

Uneconomical - forecasting requires

collection of data in huge volumes and their

analysis, which may be too expensive for

small firms to efforts.

Lack of experts - accurate forecasting

necessitates experienced experts who may

not be easily available.

Lack of past data - demand forecasting

requires past sales data, which may not be

correctly available.

PRICING DECISIONS

The pricing of new project.Among the different components of the marketing-mix, price playsan important role to bring about product-market integration. Priceis the only element in the marketing-mix that products revenue.In the narrowest sense, price is the amount of money charges for a

product or service. More broadly, price is the sum of all the valuesthat customer exchange for the benefits of having or using theproduct or service. Price may be defined as the value of productattributes expressed in monetary terms which a customer pays oris expected to pay in exchange and anticipation of the expected oroffered utility.

Pricing helps to establish mutually advantageous economicrelationship and facilities the transfer of ownership of goods andservices from the company to buyers. The managerial tasksinvolved in product pricing include establishing the pricingobjectives, identifying the price governing factors, ascertainingtheir relevance and relative importance, determining product valuein monetary terms and formulation of price policies and strategies.Thus, pricing play a far greater role in the marketing-mix of acompany and significantly contributes to the effectiveness andsuccess of the marketing strategy and success of the firm.

FACTORS INFLUENCING PRICINGPrice is influenced by both internal and external factors. In each ofthese categories some may be econo0mic factors and some psychologicalfactors; again, some factors may be quantitative and yet othersqualitative.Internal Factors influencing pricing.Corporate and marketing objectives of the firm. The commonob jectives are survival, current profit maximizaitn,market-share leadership and product-quality leadership.The image sough by the firm through pricing.

The desirable market positioning of the firm.The characteristics of the product.Price elasticity of demand of the product.The satge of the product on the product life cycle.Turn around rate of the product.Costs of manufacturing and marketing.Product differentiation practiced by the firm.Other elements of marketing mix of the firm and theirinteraction with pricing.Consumption of the product line of the firm.External Factors Influences PricingMarket characteristicsBuyers behaviors in respect to the given product.Bargaining power of the customer.Bargaining power of the major suppliers.Competitor’s pricing policy.Government controls/ regulation on pricing.Other relevant legal aspectsSocial considerations.Understanding, if any, reached with price cartels.

PRICING PROCEDUREThe pricing procedure usually involves the following steps:1. Development of Information BaseThe first step in determining the basic price of a company’s product(s)is to develop an adequate and up-to-date information base on whichprice decisions can be based. It is composed of decision-inputs suchas cost of production, consumer demand, industry, prices andpractices, government regulations.2. Estimating Sales and ProfitsHaving developed the information base, management should developa profile of sales and profit at different price levels in order toascertain the level assuring maximum sales and profits in a given setof situation. When this information is matched against pricing

objectives, management gets the preview of the possible range of theachievement of objectives through price component in themarketing-mix.3. Anticipation of Competitive ReactionPricing in the competitive environment necessitates anticipation ofcompetitive reaction to the price being set. The co0mpetition forcompany’s product(s) may arise from similar products, closesubstitutes. The competitor’s reaction may be violent or subdued oreven none. Similarly, the reaction may be instant or delay. In order toanticipate such a variety of reactions, it is necessary to collectinformation about competitors in respect of their production capacity,cost structure, market share and target consumers.4. Scanning The Internal EnvironmentBefore determining the product price it is also necessary to scanand understand the internal environment of the company. Inrelation to price the important factors to be considered relate tothe production capacity sanctioned, installed and used, the ease ofexpansion, contracting facilities, input supplies, and the state oflabour relations. All these factors influence pricing decisions.5. Consideration of Marketing-mix ComponentsAnother step in the pricing procedure is to consider the role ofother components of the marketing-mix and weigh them inrelation to price. In respect of product the degree of perishabilityand shelf-life, shape the price and its structure; faster theperishability lower is likely to be the price.6. Selections of Price Policies and StrategiesThe next important step in the pricing procedure is the selection of

relevant pricing policies and strategies. These policies andstrategies provide consistent guidelines and framework for settingas well as varying prices to suit specific market and customerneeds.7. Price DeterminationHaving taken the above referred steps, management may now bepoised for the task of price determination. For determination ofprice, the management should consider the decisions inputsprovided by the information base and develop minimum andmaximum price levels. These prices should be matched against thepricing objectives, competitive reactions, government regulations,marketing-mix requirements and the pricing policing andstrategies to arrive at a price. However, it is always advisable to testthe market validity of its price during test marketing to ascertain itsmatch with consumer expectations.

GENERAL PRICING APPROACHESCompanies set prices by selecting a general pricing approach thatincludes one or more of the following three approaches:(1) The cost-based approachCost-Plus PricingBreak-Even Analysis and Target-Profit Pricing(2) The Buyer-based approachPerceive-Value Pricing(3) The Competition based approachGoing-Rate PricingSealed-Bid Pricing1. Cost-Plus PricingThis is the easiest and the most common method of price setting.In this method, a standard mark up is added to the cost of aproduct to arrive at its price. For example, the cost ofmanufacturing a fan is Rs. 1000/- adds 25 per cent mark up and

sets the price to the retailer at Rs. 1250/-. The retailer in turn, maymark it up to sell at Rs. 1350/- which is 35 per cent market up oncost. The retailer’s gross margin in Rs. 1500/-.But this method is not logical as it ignores current demand andcompetition and is not likely to lead to the optimum price. Stillmark up price is quite popular for three reasons:i) Seller have more certainty about costs than about demandand by tying the price to cost, they simplify their pricing taskand need not frequently adjust price with change in demand.ii) Where all firms in the industry use this pricing method, theirprices will similar and price competition will be minimized tothe benefit of al of them;iii) It is usually felt by many people that cost plus pricing isfairer to buyers as well as to seller.2. Break-Even Pricing and Target-Profit PricingAn important cost-oriented pricing method is what is calledtarget-profit pricing under which the company tries to determine theprice that would product the profit it wants to earn. This pricingmethod uses the popular ‘break-even analysis’. According to it, priceis determined with the help of a break-even chart. The break-evencharge depicts the total cost and total revenue expected at differentsales volume. The break-even point on the chart if that when the totalrevenue equals total cost and the seller neither makes a profit norincurs any loss. With the help of the break-even chart, a marketer canfind out the sales volume that he has to achieve. In order to earn thetargeted profit, as also the price that he has to charge for his product.Buyer-based Approach

Perceive-Value PricingMany companies base their price on the products perceived value.They take buyer’s perception of value of a product, and not the seller’s cost, as the key to pricing. As a result, pricing begins with analyzingconsumer needs and value perceptions, and price is set to matchconsumers’ perceived value.Such companies use the non-price variables in their marketing mixto build up perceived value in the buyer’s minds, e.g. heavyadvertising and promotion to enhance the value of a product in theminds of the buyers. Then they set a high price to capture theperceived value. The success of this pricing method depends on anddetermination of the market’s perception of the product’s value.Competition-based Approach1. Going Rate PricingUnder this method, the company bases its prices largely oncompetitor’s prices paying less attention to its own costs ordemand. The company might charge the same prices as charged byits main competitors, or a slightly higher or lower price than that.The smaller firms in an industry follow the leading firm in theindustry and change their prices when the market leader’s priceschanges. The marketer thinks that the going price reflects thecollective wisdom of the industry.2. Sealed-Bid PricingThis is a competitive oriented pricing, very common in contractbusinesses where firms bid for jobs. Under it, a contractor baseshis price on expectations of how competitors will price rather thanon a strict relation to his cost or demand. As the contractor wantsto win the contract, he has to price the contract lower than the

other contractors. But a bidding firm cannot set its price belowcosts. If it sets the price much higher than the cost, its chance ofgetting the contract will be lesser.

PRICING OBJECTIVESA businesses firm will have a number of pricing objectives. Some ofthem are primary; some of them are secondary; some of them arelong-term while others are short-term. However, all pricing objectivesemanate from the corporate and marketing objectives of the firm.Some of the pricing objectives are discussed below:1. Pricing for a target return.2. Pricing for market penetration.3. Pricing for market skimming.4. Discriminatory pricing5. Stabilizing pricing.1. Pricing for a target return.This is a common objectives found with most of the establishedbusiness firms. Here, the objective is to earn a certain rate ofReturn On Investment (ROI) and the actual price policy is workedout to earn that rate of return. The target is in terms of ‘return oninvestment’. There are companies which set the target at, forexample, 20% return on investment after taxes. The target may befor a short-term or a long-term. A firm also may have differenttargets for its different products but such targets are related to asingle overall rate of return target.2. Pricing for market penetration.When companies set a relatively ‘low price’ on their new product ininitial stages hoping to attract a large number of buyers and win alarge market-share it is called penetration pricing policy. They aremore concerned about growth in sales than in profits. Their mainaim is capturing and to gain a strong foothold in the market. This

object can work in a highly price sensitive market. It is also donewith the presumption that unit cost will decrease when the level ofsales reach a certain target. Besides, the lower price may makecompetitors to stay our. When market share increases considerably,the firm may gradually increase the price.3. Pricing for market skimming.Many companies that launch a new product set ‘high prices’initially to skim the market. They set the highest price they cancharge given the comparative benefits of their product and theavailable substitutes. After the initial sales slow down, they lowerthe price to attract the next price-sensitive layer of customer.4. Discriminatory pricingSome companies may follow a differential or a discriminatorypricing policy-charging different prices for different customers orallowing different discounts to different buyers.Discrimination may be practices on the basis or product or place ortime. For example, doctors may charge different fees for differentpatients; railways charge different fares for usual passengers andregular passengers/ students. Manufacturers may offer quantitydiscounts or quote different list prices to bulk-buyers, institutionalbuyers and small buyers.5. Stabilizing pricing.The objective of this pricing policy is to prevent frequentfluctuations in pricing and to fix uniform or stable price for areasonable period. When price is revised, the new price will beallowed to remain for sufficiently a long period. This pricing policyis adopted, for example, by newspapers and magazines.

PRODUCT PRICING

Pricing a new product is an art. It is one of the most important anddazzling marketing problems faced by a firm. The introduction of a newproduct may involve some problems in as much as there neither anestablished market for the product nor a demonstrated demand for it.The firm may expect a substantial demand for the product though it isyet to be established. Even if there are some near substitutes the actualdegree of substitution has to be estimated. Again, there may be noreliable estimate of the direct costs of marketing and manufacturing theproduct.Moreover, the cost patterns are likely to change with greaterknowledge and increasing volume of production. Yet the basic pricingpolicy for a new product is the same as for established product – it mustcover full in the long run and direct costs in the short run. Of course,there is greater uncertainty aobut both the demand and costs of theproduct.Apart from the problem of estimating the demand for an entirelynew product, certain other initial problems likely to be faced are:1) Discovering a competitive range of price.2) Investigating probable sales at several possible prices, and3) Considering the possibility of relation from products substituted byit/In addition, decisions have to be taken on market targets, design, thepromotional strategy and the channels of distribution.Test marketing can be helpful in deciding the suitable pricingpolicy. Under test marketing, the product is introduced in selected areas,often at different prices in deferent areas. These tests will provide themanagement an idea of he amount and elasticity of the demand for the

product, the competition it is likely to face, and the expected salesvolume and profits simulation of full-scale production and distribution.Yet it may provide very useful information for better planning of thefull-scale effort. It also permits initial pricing mistakes to be made onsmall rather than on a large scale.The next important question is “whether to charge high initial priceor a low penetration price”.A high Initial Price (Skimming Price)A high initial price, together with heavy promotional expenditure,may be used to launch a new product if conditions are appropriate. Forexample:(a) Demand is likely to be less price elastic in the early stages thanlater, since high prices are unlikely to deter pioneering consumers.A new product being a novelty commands a better price.(b) Is the life of the products promises to be a short one, a high initialprice helps in getting as much of it and as fast as possible.(c) Such a policy can provide the basis for dividing the market intosegments to differing elasticities. Bound edition of a book isusually followed by a paper back.(d) A high initial price may be use4ful if a high degree of productionskill is needed to make the product so that it is difficult and timeconsuming for competitors to enter on an economical basis.(e) It is a safe policy where elasticity is not knows and the product notyet accepted. High initial price may finance the heavy costs ofintroducing a new product when uncertainties block the usualsources of capital.A Low Penetration PriceIn certain conditions, it can be successful in expanding marketrapidly thereby obtaining larger sales volume and lower unit costs. It is

appropriate where:(a) there is high short-run price elasticity;(b) there are substantial cost savings from volume production;(c) the product is acceptable to the mass of consumers;(d) there is no strong patent protection; and(e) there is a threat of potential competition so that a big share ofthe market must be captured quickly.The obvjective of low penetratiojn price is to raise barriers againstthe entry of prospective competitors. Stay-out pricing isappropriate:i) where are total demand is expected to be small. If themost efficient size of the plant is big enough to supplya major portion of the demand, a low-price policy cancapture the bulk of the market and successfully holdback low-cost competition.ii) When potential of sales appears to be great, pricesmust be set as their long-run level. In such cases, theimportant potential competitor in a largemulti-product firm for whom the product in question isprobably marginal. They are normally confident thatthey can get their costs down to competitor’s level ifthe volume of product is large.

PRODUCT-MIX PRICING STRATEGIESThe strategy for setting a project’s price often has to be changedwhen the product is apart of a product mix. In this case, the firm looksfor a set of prices that maximizes the profits on the total product mix.Pricing is difficult because the various products have related demand andcosts and face different degrees of completion.Product-mix Pricing SituationsProduct Line Pricing

Companies usually develop product lines rather than singleproducts. In product line pricing, management must decide on the pricesteps to be set between the various products in a line.The price steps should take into account cost differences betweenthe products in the line, customer evaluations of their different features,and competitor’s prices. if the price difference between two successiveproducts is small, buyers usually will buy the more advanced product.This will increase company profits if the cost difference is smaller that theprice difference. If the price difference is large, however, customers willgenerally buy the less advanced products.Optional-Product PricingMany companies use optional-product pricing – offering to selloptional or accessory products along with their main product. Forexample, a car buyer may choose to order power widows, centrallocking system, and with a CD player. Pricing these options is asticky problem. Automobile companies have to decide which itemsto include in the base price and which to offer as options. Theeconomy model was stripped of so many comforts andconveniences that most buyers rejected it. More recently, however,General Motors has followed the example of he Japanese automakers and included in the sticker price many useful itemspreviously sold only as options. The advertised price now oftenrepresents a well-equipped car.Captive-Product Pricing:Companies that make products that must be used along with a manproduct are using captive-product pricing. Examples of captive productsare razor blades, camera film, and computer software. Producers of the

main products (razors, cameras, and computers) often price them lowand set high markups on the supplies. Thus, Kodak prices its cameraslow because it makes its money on the film it sells.In the case of services, this strategy is called two-part pricing. Theprice of the service is broken into a fixed fee plus a variable usage rate.Thus, a telephone company charges a monthly rate – the fixed fee – pluscharges for calls beyond some minimum number – the variable usage rate.The service firm must decide how much to charge for the basic serviceand how much for the variable usage. The fixed amount should be lowenough to induce usage of the service, and profit can be made on thevariable fees.By-Product Pricing:In producing petroleum products, chemicals and other products,there are often by-products. If the by-products have not value and ifgetting rid of them is costly, this will affect the pricing of the mainproduct. Using by-product pricing, the manufacturer will seek a marketfor these by-products and should accept any price that covers more thanthe cost of storing and delivering them. This practice allows the seller toreduce the main product’s price to make it more competitive. By productscan even turn out to be profitable.Product-Bundle Pricing:Using product-bundle pricing, sellers often combine several oftheir products and offer the bundle at a reduced price. Thus computermakers include attractive software packages with their personalcomputers. Price bundling can promote the sales of products consumersmight not otherwise buy, but the combined price must be low enough toget them to buy the bundle.

PRICE-ADJUSTMENT STRATEGIES

Companies usually adjust their basic price for various customerdifferences and changing situations.Types of Price-Adjustment Strategies(1)Discount and Allowance Pricing: Reducing prices to rewardcustomer response such as paying early or promoting the product.(2)Segment Pricing: Adjustment prices to allow for differnecs incustomers, product, or locating.(3)Psychological Pricing: Adjusting prices for psychological effort.(4)Promotional Pricing: Temporarily reducing prices to increaseshort-run sales.(5)Value Pricing: Adjusting prices to offer the right combination ofquality and service at a fair price.(6)Geographical Pricing: Adjusting prices to account for thegeographic location of customers.(7)International Pricing: Adjustment prices for international markets.Discount and Allowance Pricing:Most companies adjust their basic price to reward customers forcertain responses, such as early payment of bills, volume purchases andoff-season buying. These price adjustments – called discounts andallowances – can take many forms.A cash discount is a price reduction to buyers who pay their billspromptly. A quantity discount is a price reductions to buyers who buylarge volumes. A seasonal discount is a price reduction to buyers whobuy merchandise or services out of season.A trade discount is offered byt eh seller to trade channel memberswho perform certain functions, such as selling, storing andrecord-keeping. Manufacturers may offer different functional discountsto different trade channels because of the varying services they perform.Allowances are another type of reduction from the list price. Trade

allowance is given, for example, or exchange offers. Promotionalallowances are payment or price reductions to reward dealers forparticipating in advertising and sales-support programs.Segmented PricingCompanies often adjust their basic prices to allow for differences incustomers, products and locations. In segmented pricing, the companysells a product or service at two or more prices, even though thedifference in prices is not based on differences in costs. Segmentedpricing takes several forms.Customer-segment pricing : Different customers pay differentprices for the same product or service. Railways, for example, charge aconcessional fare to children and senior citizens.Product-form pricing: Different version of the product are perioddifferently, but not according to differences in their costs.Location pricing: Different locations are priced differently, eventhough the cost of offering each location is the same. For instance,theaters vary their seat prices because of audience preferences for certainlocations, and state universities charge high tuition fee for foreignstudents.Time pricing: Prices vary by the season, the month, the day, andeven the hour. Public utilities vary their prices to commercial users bytime of day and weekend versus weekday. The telephone company offerslower “off-peak” charges.Psychological Pricing:Price says something about the product. For example, manyconsumers use price to judge quality. In using psychological pricing,sellers consider the psychology of prices and not simply the economics.For example, one study of the relationship between price and quality

perceptions of cards found that consumers perceive higher-priced cardas having higher quality. By the same token, higher quality cars areperceived to be even higher priced than they actually are.Another aspect of psychological pricing is reference prices – pricesthat buyers carry in their minds and refer to when looking at a givenproduct. The reference price might be formed by noting current prices,remembering past prices, or assessing the buying situation. Sellers caninfluence of use these consumers’ reference prices when setting price.For example, a company could display its product next to more expensiveones in order to imply that it belongs in the same class.Promotional Pricing:With promotional pricing, companies will temporarily price theirproducts below list price and sometimes even below cost. Promotionalpricing takes several forms. Supermarkets and departments stores willprice a few products as loss leaders to attach customers to the store inthe hope that they will buy other items at normal markups. Sellers willalso usespecial event pricing in certain seasons to draw more customers.Value PricingMarketers adopt value pricing strategies – offering just the rightcombination to quality and good service at a fair price. In many cases,this has involved the introduction of less expensive versions ofestablished, brand name products.Geographical PricingA company must also decide how to price its products tocustomers locate in different parts of the country or world. There are fivegeographical pricing strategies.1) FOB Pricing: This means the goods are placed free on board acarrier.

2) Uniform Delivered Pricing: The Company charges the same priceplus freight to all customers, regardless of their location.3) Zone Pricing: All customers within a given zone pay a singletotal price; the more distant the zone, the higher the price.4) Basing-point pricing: The seller selects a given city as a “basingpoint” and charges all customers the freight cost from that cityto the customer location, regardless of the city from which thegoods actually are shipped.5) Freight-absorption Pricing: The sellers absorbs all or part of theactual freight charges in order to get the desired business.International Pricing:Companies that market their products internationally must decidewhat prices to charge in the different countries in which they operate. Insome cases, a company can set a uniform worldwide price.ADMINISTERED PRICEIn real live business situations, product price is nto determined asenvisaged in the price theory, but is administered by the company’smanagement. An administered or administrative price is set by acompany official in contrast to the competitive market prices described intheory. Administered price may, therefore, be defined as the priceresulting from managerial decisions of the company. From this, thefollowing characteristics of the administrated price emerge:(1) Price determination is a conscious and deliberate administrativeaction rather than a result of the demand and supply interaction.(2) Administered price is fixed for a period of time or for a series ofsale transactions; it does not frequently change.(3) This price is usually not subject to negotiation; price structure

incorporating differentiation; price structure incorporatingdifferent variations may, however, be developed to meet specificconsumer needs.The administrative price is set by management after considering allrelevant factors impinging on it, viz, cost, demand and competitors’reactions. Since all companies set administrative prices on more or lessidentical considerations, the prices in respect of similar productsavailable in the market tend to be uniform. The competition, therefore, isbased on non-price differentiation through branding, packaging andadvertising, etc. It is with this administrative price that marketers areconcerned with and, as natural corollary, our won concern throughout thesubsequent pages will be with the administrative price.REGULATED PRICEThe concept of administrative price may possibly impart a notionthat a company is free to fix whatever price if deems fit and buyer havebut one choice – either to buy or not to buy. But in real life situation it isnot like this. For fear of damages to consumer and national interests,administered prices are subject to state regulation. Therefore, wheneverthe administered price is et and managed within the state regulation it istermed as regulated price. It may assume two forms. First, the price maybe set by some State agency, say, the Bureau of Industrial Cost a andPrices or the Tariff Commission and the company just accepts it as given.Second, the price may be set by a company within the framework or onthe basis of the formula given by the State. In India companies, forexample, the fertilizer, aluminium and steel industries sell their productsat prices fixed by the government, while companies, for example, the

cotton textile industry sell products at the price fixed on the basis of agiven formula.In conclusion, it may be said that in the real life Indian businesssituation it is the ‘regulated administrative price’ that is relevant forcompanies and at which products are offered for sale to targetconsumers.PRICING OVER THE PRODUCT LIFE CYCLEThe price policy can be considered in terms of product life cycle. Anew product, with no competitors has an advantage, and therefore,market skimming policy may be applied. This policy is aimed at gettingthe ‘cream’ of the market (the top of the demand curve) at a high beforecatering to the more price-sensitive segments of the market. In the initialstages the skimming policy can be useful for getting a betterunderstanding of the extent of demand or consumer response as well asto earn adequately to cover the product development costs. The policymay then lead to slow reduction of the price with a view to expand themarket. For the new company (as compared with the new product)producting a product in the maturity stage, the preferred object would bepenetration pricing – the opposite of skimming. This is unavoidable whenthe whole demand is elastic and the new entrant company’s first aim is togain entry, a standing or recognition in the market even at a loss for ashort period. This policy may also be applied for new product, if the firmsexpects serious competition very soon after introduction.Finally, it may be said ‘there is not way in which the various factorsanalyzed earlier can be fed into a computing machine to determine the‘right’ price. Individual factors assume varying importance at differenttimes. Basically it is the judgment of the price marker which is the

catalytic agent that fuses these various factors into a final decisionconcerning price. Pricing is an art, not a science. The ‘feel’ of the marketof the price market is far more significant than his adeptness with acalculating machine.GOVERNMENT CONTROL ON PRICINGPrice controls refer to the Governmental regulations in respect ofprice fixation.Usually statutory price control entails imposition of price ceiling sothat it does nto exceeds consumer capacity to pay. Currently for example,the price of petrol in under statutory price controls. The firsmanufacturing these products are assured retention prices which arebased on costs, and ensure fair return on investment.In case of sugar, a dual pricing system has been introduced. Underthis system, a manufacturer is required to compulsorily sell a part of itsproduction to the Government at substantially low prices, called levyprice.The rest of production may be sold in the open market as a pricethe firm deems fit. The statutory price control also envisages theannouncement of ‘support price’ for certain agricultural products likecotton, food grains etc, so as to protect cultivators from priceflunctuation.Voluntary price control envisages formulation of price controlmeasures by the respective industry association under the direction of

and according to the guidelines by the

Government.