Marketing Environment

Marketing Environment is the combination of external and internal factors and forces which affect the company’s
ability to establish a relationship and serve its customers.
The marketing environment of a business consists of an internal and an external environment. The internal
environment is company specific and includes owners, workers, machines, materials etc. The external environment
is further divided into two components: micro & macro.
“A company’s marketing environment consists of the actors and forces outside of marketing that affect marketing
management ability to build and maintain successful relationships with target customers”. – Philip Kotler
Components of Marketing Environment
The marketing environment is made up of the internal and external environment of the business. While internal
environment can be controlled, the business has very less or no control over the external environment.
1. Internal Environment:- The internal environment of the business includes all the forces and factors inside the
organisation which affect its marketing operations. These components can be grouped under the Five Ms of the
business, which are:
 Men
 Money
 Machinery
 Materials
 Markets
The internal environment is under the control of the marketer and can be changed with the changing external
environment. The internal marketing environment is as important for the business as the external marketing
environment. This environment includes the sales department, marketing department, the manufacturing unit, the
human resource department, etc.
2. External Environment:- The external environment constitutes factors and forces which are external to the
business and on which the marketer has little or no control. The external environment is of two types:
I) Micro Environment:- The micro component of the external environment is also known as the task environment.
It comprises of external forces and factors that are directly related to the business. These include suppliers, market
intermediaries, customers, partners, competitors and the public
 Suppliers include all the parties which provide resources needed by the organisation.
 Market intermediaries include parties involved in distributing the product or service of the organisation.
 Partners are all the separate entities like advertising agencies, market research organisations, banking and
insurance companies, transportation companies, brokers, etc. which conduct business with the organisation.
 Customers comprise of the target group of the organisation.
 Competitors are the players in the same market who targets similar customers as that of the organisation.
 Public is made up of any other group that has an actual or potential interest or affects the company’s ability
to serve its customers.
II) Macro Environment:- The macro component of the marketing environment is also known as the broad
environment. It constitutes the external factors and forces which affect the industry as a whole but don’t have a
direct effect on the business. The macro environment can be divided into 6 parts.
a) Demographic Environment
The demographic environment is made up of the people who constitute the market. It is characterised as the
factual investigation and segregation of the population according to their size, density, location, age, gender, race,
and occupation.
b) Economic Environment
The economic environment constitutes factors which influence customers’ purchasing power and spending
patterns. These factors include the GDP, GNP, interest rates, inflation, income distribution, government funding
and subsidies, and other major economic variables.
c) Physical Environment
The physical environment includes the natural environment in which the business operates. This includes the
climatic conditions, environmental change, accessibility to water and raw materials, natural disasters, pollution etc.
d) Technological Environment
The technological environment constitutes innovation, research and development in technology, technological
alternatives, innovation inducements also technological barriers to smooth operation. Technology is one of the
biggest sources of threats and opportunities for the organisation and it is very dynamic.
e) Political-Legal Environment
The political & Legal environment includes laws and government’s policies prevailing in the country. It also includes
other pressure groups and agencies which influence or limit the working of industry and/or the business in the
society.
f) Social-Cultural Environment
The social-cultural aspect of the macro environment is made up of the lifestyle, values, c ulture, prejudice and
beliefs of the people. This differs in different regions.
Importance of Marketing Environment
1. Essential for planning
2. Understanding Customers
3. Tapping Trends
4. Threats and Opportunities
5. Understanding the Competitors

Market Segmentation
Market Segmentation is a process of dividing the market of potential customers into different groups and segments
on the basis of certain characteristics. The member of these groups share similar characteristics and usually have
one or more than one aspect common among them.
Levels of market segmentation:-
Levels of market segmentation can be
1. Mass Marketing:- In mass marketing level of market segmentation, seller offer same product for all the buyers
with different needs. Here, seller engages in the mass pro duction, mass distribution, and mass promotion of one
product for all buyers. In mass marketing, the size of market will be larger and the promotion and advertising
expenses becomes generic to attract the entire customers.
It may lead to lower cost of production and higher profit margin due to mass production and distribution. However,
it may result in high competition.
For example mass marketing ,would be tooth paste, detergent, mosquito, coil, etc.
2. Segment Marketing: In segment marketing, a marketer divides a total market into several segment based on
consumers’ buying behaviour, purchasing power, demographic factors, socio-cultural factor, etc. Segment
marketing connects customer with the marketer in best possible way.
Many marketers use different type of segment marketing to market their entire lists of products. For example, the
car market can be segmented into:
 Low cost basic transport
 Luxurious driving experience
 Performance based, etc.
3. Niche Marketing: In Niche marketing, the customers are rich and require high end service. As competition is
not that stiff, marketer can quote premium price. The main requirements of Niche marketing segmentation are
listed as follows:
 Customers may have specific type of need.
 Customers may require special type of services.
 Marketer needs more skill and specialized knowledge.
For example, insurance policy for football players.
4. Local Marketing: In local marketing level of segmentation, the focus is on local market. Marketing program is on
local market. Marketing program is designed as per the need of local consumer group, cities, neighbourhood and
even specific stores. In that reference the focus is on local appeals, local flavour, local usage, etc.
Here, the cost of production and promotion of goods may be high due to low production but competition will also
be less since the marketers of other regions may not enter into the local market.
For example, locally manufactured foods and products being targeted to the main area.
5. Individual Marketing: Individual marketing focuses on satisfying the needs and wants of individual prospective
customer. Individual marketing also known as one-to-one marketing or customized marketing and micro marketing.
It’s the segmentation level where seller offer customized product to the consumer. I t is almost like the direct
marketing where the marketers target the individual customers through the direct communication channels or
salespeople.
This is mostly used in business-to-business where more attention is given to market the product or service. It may
require product demonstration to the individual customers and home services and installation.

Basis of Market Segmentation:-

Segmenting is dividing a group into subgroups according to some set ‘basis’.
1. Gender
2. Age group
3. Income
4. Place
5. Occupation
6. Usage
7. Lifestyle
Market Targeting
Market Targeting is a process of selecting the target market from the entire market. Target market consists of
group/groups of buyers to whom the company wants to satisfy or for whom product is manufactured, price is set,
promotion efforts are made, and distribution network is prepared.
A company cannot concentrate on all the segments of the market. The company can satisfy only limited segments.
The segments the company wants to serve are called the target market, and the process of selecting the target
market is referred as . Market segmentation results into dividing total market into various segments or parts.
Strategies for target market:-
1. Single Segment Concentration:
It is the simplest case. The company selects only a single segment as target market and offers a single product.
Here, product is one; segment is one. For example, a company may select only higher income segment to serve
from various segments based on income, such as poor, middleclass, elite class, etc. All the product items produced
by the company are meant for only a single segment.
2. Selective Specialization:
In this option, the company selects a number of segments. A company selects several segments and sells different
products to each of the segments. Here, company selects many segments to serve them with many products. All
such segments are attractive and appropriate with firm’s objectives and resources.
There may be little or no synergy among the segments. Every segment is capable to promise the profits. This multi-
segment coverage strategy has the advantage of diversifying the firm’s risk. Firm can earn money from other
segments if one or two segments seem unattractive. For example, a company may concentrate on all the income
groups to serve.
3. Product Specialization:
In this alternative, a company makes a specific product, which can be sold to several segments. Here, product is
one, but segments are many. Company offers different models and varieties to meet needs of different segments.
The major benefit is that the company can build a strong reputation in the specific product area. But, the risk is that
product may be replaced by an entirely new technology. Many ready-made garment companies prefer this
strategy.
4. Market Specialization:
This strategy consists of serving many needs of a particular segment. Here, products are many but the segment is
one. The firm can gain a strong reputation by specializing in serving the specific segment. Company provides all
new products that the group can feasibly use. But, reduced size of market, reduced purchase capacity of the
segment, or the entry of competitors with superior products range may affect the company’s position.
5. Full Market Coverage:
In this strategy, a company attempts to serve all the customer groups with all the products they need. Here, all the
needs of all the segments are served. Only very large firm with overall capacity can undertake a full market
coverage strategy.

Positioning
In marketing, positioning has come to mean the process by which marketers try to create an image or identity in
the minds of their target market for their product, brand, or organization. Brand position ing is at the heart of
marketing strategy.
Positioning Strategies:
1. Positioning by product attributes and benefits:
It is to associate a product with an attribute, a product feature, or a consumer feature. Sometimes a product can be
positioned in terms of two or more attributes simultaneously. The price/quality attribute dimension is commonly
used for positioning the products.
A common approach is setting the brand apart from competitors on the basis of the specific characteristics or
benefits offered. Sometimes a product may be positioned on more than one product benefit. Marketers attempt to
identify salient attributes (those that are important to consumers and are the basis for making a purchase
decision).
2. Positioning by price/quality:
Marketers often use price/quality characteristics to position their brands. One way they do it is with ads that reflect
the image of a high-quality brand where cost, while not irrelevant, is considered secondary to the quality benefits
derived from using the brand. Premium brands positioned at the high end of the market use this approach for
positioning the product.
Another way to use price/quality characteristics for positioning is to focus on the quality or value offered by the
brand at a very competitive price. Although price is an important consideration, the product quality must be
comparable to, or even better than, competing brands for the positioning strategy to be effective.
3. Positioning by use or application:
Another way is to communicate a specific image or position for a brand to associate it with a specific use or
application. Surf Excel is positioned as stain remover ‘Surf Excel haina!’ Also, Clinic All Clear – ‘Dare to wear black’.
4. Positioning by product class:
Often the competition for a particular product comes from out side the product class. For example, airlines know
that while they compete with other airlines, trains and buses are also viable alternatives. Manufacturers of music
CDs must compete with the cassette industry. The product is positioned against others that, while not exactly the
same, provide the same class of benefits.
5. Positioning by product user:
Positioning a product by associating it with a particular user or group of users is yet another approach. Motography
Motorola Mobile, in this ad the persona of the user of the product has been positioned.
6. Positioning by competitor:
Competitors may be as important to positioning strategy as a firm’s own product or services. In today’s market, an
effective positioning strategy for a product or brand may focus on specific competitors.
This approach is similar to positioning by product class, although the competition is within the same product
category in this case. Onida was positioned against the giants in the television industry through this strategy. Onida
colour TV was launched with the message that all others were clones and only Onida was the leader— ‘Neighbour’s
envy, owner’s pride’.
7. Positioning by cultural symbols:
This is an additional positioning strategy wherein the cultural symbols are used to differentiate the brands.
Examples are Humara Bajaj, Tata Tea, and Ronald McDonald. Each of these symbols has successfully differentiated
the product it represents from competitors.

Determinants of consumer buying behavior

The buying behavior of consumer is affected by a number of factors which are generally uncontrollable. These
factors are also known as determinants of consumer buying behavior. All these factors affect the buying behavior
of consumer differently.
I) Cultural factors affecting consumer buying behavior:-
1) Culture: culture affects a lot the consumer buying behavior. It is the family values, beliefs, perceptions and
preferences affect the consumer buying behavior.
2) Subculture: the culture includes subculture in it include nationality, religious group, and communities etc. which
affect the consumer behavior.
3) Social class: it means to divide the society in different social classes, the members of different social class has
different likings.
II) Social factor affecting consumer behavior:-
1) Family: the members of family also affect the buying behavior of consumer. Family includes of:-
Influencer- the person who senses the need to buy a product.
Decider- the person who takes final decision to buy the product.
User- the person who finally uses the product.
2) Reference group: family alone does not affect the consumer buying behavior but also the group outside the
family also affects the consumer behavior. It includes the persons with whom we interact like friends, neighbors,
co- workers etc.
3) Role and status: role played by the person in the society are so many. Like a person plays the role of son,
husband, brother, father, businessman etc. in his life. So the consumer buying behavior depends upon the role
played by him.
III) Personal factors affecting consumer behavior:-
1) Age and life style: the consumer buying behavior changes with the change in the age. Like very small child need
toys to play with them and when they grow they need games, computer etc. thus, liking of consumer changes with
the age.
2) Occupation: occupation also affects the consumer behavior to buy the goods. Like an worker needs simple
clothes while his boss needs expensive designer suits to wear.
3) Income: the income also affects the consumer buying behavior because if the person is rich he can buy anything
which he wants to buy but for a poor person it is not be easy to buy the things which are beyond his pocket.
4) Life style: it is the way of living of the person. Like some people like luxury livings while some in simple living.
5) Personality: personality includes extrovert or introvert which also affects the consumer buying behavior.
IV) Psychological factors affecting consumer behavior:-
1) Motivation: when the buyer’s need is raised to a particular level they become the motives which mean “I want to
achieve this” which ultimately affect the consumer buying behavior.
2) Perception: this is how the consumer receives, selects and organizes the information which helps him in buying
the goods.
3) Learning: learning experience is helpful in affecting consumer buying behavior.
4) Beliefs and attitude: belief means the opinion or mind set relating to a particular object; attitude means the
feeling of buyer towards the object. So the marketer should keep in mind the beliefs and attitude of the consumer.
Thus, all these buying characteristics influence consumer buying behavior.

THE CONSUMER DECISION MAKING PROCESS

The Consumer or Buyer Decision Making Process is the method used by marketers to identify and track the decision
making process of a customer journey from start to finish. It is broken down into 5 individual stages which we have
decided to demonstrate with our latest decision making journey surrounding some rather sorry loo king trainers.
1 – Problem Recognition
The first stage of the process is working out what exactly you or the customer needs. The customer feels like
something is missing and needs to address it to get back to feeling normal. If you can determine when you r target
demographic develops these needs or wants, it would be an ideal time to advertise to them.
2 – Information search
This is the search stage of the process. One that is continually changing from old fashioned shopping around to the
new shop front which is Google (other search engines are available - apparently). Information is not only gathered
about stuff and on things but from people via recommendations and through previous experiences we may have
had with various products.
3 - Evaluation of Alternatives
Once the customer has determined what will satisfy their want or need they will begin to seek out the best deal.
This may be based on price, quality, or other factors that are important to them. Customers read many reviews and
compare prices, ultimately choosing the one that satisfies most of their parameters.
4 – Purchase
The customer has now decided based on the knowledge gathered what to purchase and where to purchase what
they desire.
At this stage a customer has either assessed all the facts and come to a logical conclusion, made a decision based
on emotional connections/experiences or succumbed to advertising/marketing campaigns, or most likely a
combination of all of these has occurred.
5 – Post Purchase satisfaction or dissatisfaction
The review stage is a key stage for the company and for the customer likewise. Did the product deliver on the
promises of the marketing/advertising campaigns? Did the product match or exceed expectations?
If a customer finds that the product has matched or exceeded the promises made and their own expectations they
will potentially become a brand ambassador influencing other potential customers in their stage 2 of their next
customer journey, boosting the chances of your product being purchased again. The same c an be said for negative
feedback which, if inserted at stage 2, can halt a potential customer’s journey towards your product.

Demand Forecasting
Demand forecasting is an assumption of demand in future. By using demand forecasting, a company makes suitable
plans for upcoming challenges or demands and takes suitable action to tackle that them.
Demand forecasting can be divided into the following two major types −
 Short run forecasting − is made to fulfill short-term targets, like preparation of suitable sales policies to
increase the sales or proper planning for inventory as per the required demand.
 Long run forecasting − is assumption made for long-term targets like planning of capital or assets.
Short run and long run demand forecasting is used as per the requirement of the enterprise. These forecasting
types are explained in further section.

Product planning
Product planning is the process of searching ideas for new products, screening them systematically, converting
them into tangible products and introducing the new product in the market. It also involves the formation of
product policies and strategies.
Product planning includes improvements in existing products as well as deletion of unprofitable or marginal
products. It also encompasses product design and engineering which is also called product development. Product
planning comprises all activities starting with the conception of product idea and ending up with full scale
introduction of the product in the market.
Significance and Objects:
Product planning and development is a vital function due to several reasons. First, every product has a limited life
span and needs improvement or replacement after some time. Secondly, needs, fashions and preferences of
consumers undergo changes requiring adjustments in products.
Thirdly, new technology creates opportunities for the design and development of better products. Product planning
and development facilitate the profitability and growth of business. Development of new products enables a
business to face competitive pressures and to diversity risks. Product is the most important constituent of
marketing mix.
Thus, product planning is required for the following reasons:
(i) To replace obsolete products;
(ii) To maintain and increase the growth rate/sales revenue of the firm;
(iii) To utilise spare capacity;
(iv) To employ surplus funds or borrowing capacity; and
(v) To diversify risks and face competition.
Stages in new product development
#1. Idea Generation
Every product has to start with an idea. In some cases, this might be fairly simple, basing the new product on
something similar that already exists. In other cases, it may be something revolutionary and unique, which may
mean the idea generation part of the process is much more involved. In fact, many of the leading manufacturers
will have whole departments that focus solely on the task of coming up with ‘the next big thing’.
#2. Idea Screening
This step is crucial to ensure that unsuitable ideas, for whatever reason, are rejected as soon as possible. Ideas
need to be considered objectively, ideally by a group or committee.
Specific screening criteria need to be set for this stage, looking at ROI, affordability and market potential. These
questions need to be considered carefully, to avoid product failure after considerable investment down the line.
An organization may have plenty of ideas for a new product, but once it has selected the best of them, the next
step is to start researching the market. This enables them to see if there’s likely to be a demand for this type of
product, and also what specific features need to be developed in order to best meet the needs of this potential
market.
#3. Business Analysis
Once the concept has been tested and finalised, a business case needs to be put together to assess whether the
new product/service will be profitable. This should include a detailed marketing strategy, highlighting the target
market, product positioning and the marketing mix that will be used.
This analysis needs to include: whether there is a demand for the product, a full appraisal of the costs, competition
and identification of a break-even point.
#4. Product Development
If the new product is approved, it will be passed to the technical and marketing development stage. This is when a
prototype or a limited production model will be created. This means you can investigate exact design &
specifications and any manufacturing methods, but also gives something tangible for consumer testing, for
feedback on specifics like look, feel and packaging for example.
The next stage is the development of the product. Prototypes may be modified through various design and
manufacturing stages in order to come up with a finished product that consumers will want to buy.
#5. Test Marketing
Test marketing (or market testing) is different to concept or consumer testing, in that it introduces the prototype
product following the proposed marketing plan as whole rather than individual elements.
This process is required to validate the whole concept and is used for further refinement of all elements, from
product to marketing message.
Before most products are launched and the manufacturer spends a large amount of money on production and
promotion, most companies will test their new product with a small group of actual consumers. This helps to make
sure that they have a viable product that will be profitable, and that there are no changes that need to be made
before it’s launched.
#6. Commercialisation
When the concept has been developed and tested, final decisions need to be made to move the product to its
launch into the market. Pricing and marketing plans need to be finalised and the sales teams and distribution
briefed, so that the product and company is ready for the final stage.
#7. Launch
A detailed launch plan is needed for this stage to run smoothly and to have maximum impact. It should include
decisions surrounding when and where to launch to target your primary consumer group. Finally in order to learn
from any mistakes made, a review of the market performance is needed to access the success of the project.

Product Life Cycle

A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This
sequence is known as the product life cycle and is associated with changes in the marketing situation, thus
impacting the marketing strategy and the marketing mix.
The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below:
Product Life Cycle Diagram

Introduction Stage
In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The
impact on the marketing mix is as follows:
 Product branding and quality level is established, and intellectual property protection such as patents and
trademarks are obtained.
 Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover
development costs.
 Distribution is selective until consumers show acceptance of the product.
 Promotion is aimed at innovators and early adopters. Marketing communications seeks to build pro duct
awareness and to educate potential consumers about the product.

Growth Stage
In the growth stage, the firm seeks to build brand preference and increase market share.
 Product quality is maintained and additional features and support services may be added.
 Pricing is maintained as the firm enjoys increasing demand with little competition.
 Distribution channels are added as demand increases and customers accept the product.
 Promotion is aimed at a broader audience.

Maturity Stage
At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary
objective at this point is to defend market share while maximizing profit.
 Product features may be enhanced to differentiate the product from that of competitors.
 Pricing may be lower because of the new competition.
 Distribution becomes more intensive and incentives may be offered to encourage preference over
competing products.
 Promotion emphasizes product differentiation.

Decline Stage
As sales decline, the firm has several options:
 Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
 Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment.
 Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue
the product.
The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product
may be changed if it is being rejuvenated, or left unchanged if it is being harvested or liquidated. The price may be
maintained if the product is harvested, or reduced drastically if liquidated.

Branding
Branding can be the name, logo, concept, etc., which differentiate the product or service from the other
competitors in the market.
Reasons for Branding
Branding is aimed at promoting your own product. Let us now see why branding a product is essential.
 It makes the promotion process easy.
 It increases the rate of success in advertising.
 It creates an image of the product in customers’ minds, which he/she can relate to.
 Brand signifies the organization.
 Brand creates product loyalty and stabilizes sales.
 It differentiates the product from other competitors in market.
 It makes the introduction of a new product easier.
 Branding creates a difference from other products, which helps to tackle price competition.
has many upsides; by creating a brand, the product can be stabilized in the market for a longer duration.
Branding Strategies
Branding strategy can be divided into the following two types −
 Producer strategy
 Middleman strategy
Producer Strategy
The following need to be considered for producer strategies −
 Marketing under producer’s brand
 Developing a market preference for branded parts or materials
 Marketing the product under a renowned middleman brand
This strategy is used by the companies or manufacturers to build a brand.
Middleman Strategy
In this strategy, the manufacturer uses a known distributor brand to advertise the product.
 It is the middlemen or distributor brand policy.
 It is used by companies without adequate finance for advertisement and promotion.
 This can be an advantage to the producer in market.
Types of pricing
Premium Pricing
Businesses use a premium pricing strategy when they're introducing a new product that has distinct competitive
advantages over similar products. A premium-priced product is priced higher than its competitors.
Premium pricing is most effective in the beginning of a product's life cycle. Small businesses that sell goods with
unique properties are better able to use premium pricing.
To make premium pricing palatable to consumers, companies try to create an image in which consumers perceive
that the products have value and are worth the higher prices. Besides creating the perception of a higher quality
product, the company needs to synchronize its marketing efforts, its product packaging and even the decor of the
store must support the image that the product is worth its premium price.
Penetration Pricing
Marketers use penetration pricing to gain market share by offering their goods and services at prices lower than
those of the competitors. Marketers want to get their products out in the market so that the products raise
consumer awareness and induce buyers to try the products.
Although this lower price strategy may result in losses for the company -- at first -- but marketers expect that after
achieving a stronger market penetration that they will raise prices to a more profitable level.
Economy Pricing
An economy pricing strategy sets prices at the bare minimum to make a small profit. Companies minimize their
marketing and promotional costs. The key to a profitable economy pricing program is to sell a high volume of
products and services at low prices. Large companies, such as Walmart, are able to take advantage of this low-price
strategy, but small businesses will have difficulty selling enough products at low prices to stay in business.
Price Skimming
Price Skimming is a strategy of setting prices high by introducing new products when the market has few
competitors. This method enables businesses to maximize profits before competitors enter the market, when
prices then drop.
Psychological Pricing
Marketers use psychological pricing that encourages consumer to buy products based on emotions rather than on
common-sense logic. The best example is when a company prices its product at $199 instead of $200. Even though
the difference is small, consumers perceive $199 as being substantially cheaper. This is known as the "left-digit
effect."
Bundle Pricing
Businesses use bundle pricing to sell multiple products together for a lower price than if they were purchased
separately. This is an effective strategy to move unsold items that are simply taking up space. Bundling also creates
the perception in the mind of the consumer that he's getting a very attractive value for his money.
Bundle pricing works well for companies that have a line of complimentary products. For example, a restaurant
could offer a free dessert with an entree on a certain day of the week. Older video games that are reaching the end
of their lives are often sold with a Blu-ray to sweeten the deal.

The influencing factors for a price decision can be divided into two groups:
(A) Internal Factors and
(B) External Factors.
(A) Internal Factors:
1. Organisational Factors:
occur on two levels in the organisation. Over-all price strategy is dealt with by top executives. They determine the
basic ranges that the product falls into in terms of market segments. The actual mechanics of pricing are dealt with
at lower levels in the firm and focus on individual product strategies. Usually, some combination of production and
marketing specialists are involved in choosing the price.
2. Marketing Mix:
Marketing experts view price as only one of the many important elements of the marketing mix. A shift in any one
of the elements has an immediate effect on the other three—Production, Promotion and Distribution. In some
industries, a firm may use price reduction as a marketing technique.
Other firms may raise prices as a deliberate strategy to build a high-prestige product line. In either case, the effort
will not succeed unless the price change is combined with a total marketing strategy that supports it. A firm that
raises its prices may add a more impressive looking package and may begin a new advertising campaign.
3. Product Differentiation:
The price of the product also depends upon the characteristics of the product. In order to attract the custo mers,
different characteristics are added to the product, such as quality, size, colour, attractive package, alternative uses
etc. Generally, customers pay more prices for the product which is of the new style, fashion, better package etc.
4. Cost of the Product:
Cost and price of a product are closely related. The most important factor is the cost of production. In deciding to
market a product, a firm may try to decide what prices are realistic, considering current demand and competition in
the market. The product ultimately goes to the public and their capacity to pay will fix the cost, otherwise product
would be flapped in the market.
5. Objectives of the Firm:
A firm may have various objectives and pricing contributes its share in achieving such goals. Firms may pursue a
variety of value-oriented objectives, such as maximizing sales revenue, maximizing market share, maximizing
customer volume, minimizing customer volume, maintaining an image, maintaining stable price etc. Pricing policy
should be established only after proper considerations of the objectives of the firm.
(B) External Factors:
1. Demand:
The market demand for a product or service obviously has a big impact on pricing. Since demand is affected by
factors like, number and size of competitors, the prospective buyers, their capacity and willingness to pay, their
preference etc. are taken into account while fixing the price.
A firm can determine the expected price in a few test-markets by trying different prices in different markets and
comparing the results with a controlled market in which price is not altered. If the demand of the product is
inelastic, high prices may be fixed. On the other hand, if demand is elastic, the firm should not fix high prices, rather
it should fix lower prices than that of the competitors.
2. Competition:
Competitive conditions affect the . Competition is a crucial factor in price determination. A firm can fix the price
equal to or lower than that of the competitors, provided the quality of product, in no ca se, be lower than that of
the competitors.
3. Suppliers:
Suppliers of raw materials and other goods can have a significant effect on the price of a product. If the price of
cotton goes up, the increase is passed on by suppliers to manufacturers. Manufacturers, in turn, pass it on to
consumers.
Sometimes, however, when a manufacturer appears to be making large profits on a particular product, suppliers
will attempt to make profits by charging more for their supplies. In other words, the price of a finishe d product is
intimately linked up with the price of the raw materials. Scarcity or abundance of the raw materials also determines
pricing.
4. Economic Conditions:
The inflationary or deflationary tendency affects pricing. In recession period, the prices are reduced to a sizeable
extent to maintain the level of turnover. On the other hand, the prices are increased in boom period to cover the
increasing cost of production and distribution. To meet the changes in demand, price etc.
Several are available:
(a) Prices can be boosted to protect profits against rising cost,
(b) Price protection systems can be developed to link the price on delivery to current costs,
(c) Emphasis can be shifted from sales volume to profit margin and cost reduction etc.
5. Buyers:
The various consumers and businesses that buy a company’s products or services may have an influence in the
pricing decision. Their nature and behaviour for the purchase of a particular product, brand or service etc. affect
pricing when their number is large.
6. Government:
Price discretion is also affected by the price-control by the government through enactment of legislation, when it is
thought proper to arrest the inflationary trend in prices of certain products. The prices cannot be fixed higher , as
government keeps a close watch on pricing in the private sector. The marketers obviously can exercise substantial
control over the internal factors, while they have little, if any, control over the external ones.

Methods of Pricing: Cost-Oriented Method and Market-Oriented Method

The two methods of pricing are as follows: A. Cost-oriented Method B. Market-oriented Methods.
There are several methods of pricing products in the market. While selecting the method of fixing prices, a
marketer must consider the factors affecting pricing. The pricing methods can be broadly divided into two groups —
cost-oriented method and market-oriented method.
A. Cost-oriented Method:
Because cost provides the base for a possible price range, some firms may consider cost-oriented methods to fix
the price.
Cost-oriented methods or pricing are as follows:
1. Cost plus pricing:
Cost plus pricing involves adding a certain percentage to cost in order to fix the price. For instance, if the cost of a
product is Rs. 200 per unit and the marketer expects 10 per cent profit on costs, then the selling price will be Rs.
220. The difference between the selling price and the cost is the profit. This method is simpler as marketers can
easily determine the costs and add a certain percentage to arrive at the selling price.
2. Mark-up pricing:
Mark-up pricing is a variation of cost pricing. In this case, mark-ups are calculated as a percentage of the selling
price and not as a percentage of the cost price. Firms that use cost-oriented methods use mark-up pricing.
Since only the cost and the desired percentage markup on the selling price are known, the following formula is
used to determine the selling price:
Average unit cost/Selling price
3. Break-even pricing:
In this case, the firm determines the level of sales needed to cover all the relevant fixed and variable costs. The
break-even price is the price at which the sales revenue is equal to the cost of goods sold. In other words, there is
neither profit nor loss.
For instance, if the fixed cost is Rs. 2, 00,000, the variable cost per unit is Rs. 10, and the selling price is Rs. 15, then
the firm needs to sell 40,000 units to break even. Therefore, the firm will plan to sell more than 40,000 units to
make a profit. If the firm is not in a position to sell 40,000 limits, then it has to increase the selling price.
The following formula is used to calculate the break-even point:
Contribution = Selling price – Variable cost per unit
B. Market-oriented Methods:
1. Perceived value pricing:
A good number of firms fix the price of their goods and services on the basis of customers’ perceived value. They
consider customers’ perceived value as the primary factor for fixing prices, and the firm’s costs as the secondary.
The customers’ perception can be influenced by several factors, such as advertising, sales on techniques, effective
sales force and after-sale-service staff. If customers perceive a higher value, then the price fixed will be high and
vice versa. Market research is needed to establish the customers’ perceived value as a guide to effective pricing.
2. Going-rate pricing:
In this case, the benchmark for setting prices is the price set by major com petitors. If a major competitor changes
its price, then the smaller firms may also change their price, irrespective of their costs or demand.
The going-rate pricing can be further divided into three sub-methods:
a. Competitors ‘parity method:
A firm may set the same price as that of the major competitor.
b. Premium pricing:
A firm may charge a little higher if its products have some additional special features as compared to major
competitors.
c. Discount pricing:
A firm may charge a little lower price if its products lack certain features as compared to major competitors.
The going-rate method is very popular because it tends to reduce the likelihood of price wars emerging in the
market. It also reflects the industry’s coactive wisdom relating to the price that would generate a fair return.
3. Differentiated pricing:
Firms may charge different prices for the same product or service.
The following are some the types of differentiated pricing:
a. Customer segment pricing:
Here different customer groups are charged different prices for the same product or service depending on the size
of the order, payment terms, and so on.
b. Time pricing:
Here different prices are charged for the same product or service at different timings or season. It includes off -peak
pricing, where low prices are charged during low-demand tunings or season.
c. Area pricing:
Here different prices are charged for the same product in different market areas. For instance, a firm may charge a
lower price in a new market to attract customers.
d. Product form pricing:
Here different versions of the product are priced differently but not proportionately to their respective costs. For
instance, soft drinks of 200,300, 500 ml, etc., are priced according to this strategy.

Promotion
Definition: Promotions refer to the entire set of activities, which communicate the product, brand or service to the
user. The idea is to make people aware, attract and induce to buy the product, in preference over others.
Description: There are several types of promotions. Above the line promotions include advertising, press relea ses,
consumer promotions (schemes, discounts, contests), while below the line include trade discounts, freebies,
incentive trips, awards and so on. Sales promotion is a part of the overall promotion effort.
Promotion Mix
Definition: The Promotion Mix refers to the blend of several promotional tools used by the business to create,
maintain and increase the demand for goods and services.
The fourth element of the 4 P’s of Marketing Mix is the promotion; that focuses on creating the awareness and
persuading the customers to initiate the purchase. The several tools that facilitate the promotion objective of a
firm are collectively known as the Promotion Mix.
The promotional mix generally involves 5 components such as
1. Personal selling
2. Advertising
3. Direct marketing
4. Sales promotions
5. Public relations
1) Personal selling
It is a part of the promotional mix which involves a one to one communication between buyers and customers
(either potential or already customers). As it is a one-to-one communication, it generates direct contact with
prospects and customers. Even though it is considered to be one of the most expensive forms of promotion, it is
also considered to be the most successful as a seller-buyer relationship can be created and developed.
2) Advertising
One of the key factors in the promotional mix, which contributes to brand building and also how the market
perceives the company, is advertising. It is always a big part of the promotional mix because of the far and wide
reach of advertising and the message that you can send to your existing and potential customers. Good advertising
can build a solid brand for the company. On the other hand, bad advertising with a wrong message, can cause the
brand or product to fail.
3) Direct marketing
While advertising targets a mass-audience, direct marketing targets prospects and customers. Social media
marketing, Email marketing, Internet marketing are all types of direct marketing used by companies. They have
become important in the promotional mix lately because people are using internet far more than they used to a
decade back. Company’s employ direct marketing in order to engage in one-way communication with its
customers, about product announcements, special promotions, order confirmations as well as customer inquiries.
4) Sales promotions
Sales promotions are one of the most common types of promotion used by companies. Their main purpose is to
stimulate purchasing and sales. While it has the potential of increasing sales, it is also beneficial for informing
prospects about new products on the market or just to recapture old or lost customers. Such examples include:
coupons, product samples, etc.
5) Public relations
Lastly, public relations enable an organization to influence a target audience and through this, create a favorable
and positive image for the company. The company tries to connect with the audience by sharing information with
them about the company and about the product. If anything goes wrong on the information front, the public
relations department has to step forward and rebuild the public image.

Advertising
The activity or profession of producing information for promoting the sale of commercial products or services.
The nine main of advertising:
1. Provides information: Advertising's primary is to provide informatio n about products or services to prospective
buyers. The details of products such as , uses, prices, benefits, manufacturer's name, so on; are in the
advertisements. The key message and brand name are also there. The information supplied educate and guide
consumers and facilitate them to make a correct choice while buying a product.
2. Paid communication: Advertising is a form of paid communication. The advertiser pays to the media for giving
publicity to his AD message. He also decides the size, slogan, etc. given in the advertisement.
3. Non-personal presentation: Advertising is non-personal in character as against salesmanship, which is a
personal or face to face communication. Here, the message is given to all and not to one specific individual. This
rule is applicable to all media including the press. However, even in it, target consumers or target market can be
selected for making an AD appeal.
4. Publicity: Advertising publicizes goods, services, ideas and event events. It is primarily for giving information to
consumers. This information is related to the and benefits of goods and services of different types. It offers new
ideas to customers as its contents are meaningful. The aim is to make the popularize ideas and thereby promote
sales. For example, an advertisement for family planning, family welfare, and life insurance is useful for placing new
ideas before the people.
5. Primarily for Persuasion: Advertising aims at the persuasion of potential customers. It attracts attention
towards a particular product, creates a desire to have it, and finally induces consumers to visit the market and
purchase the same. It has a psychological impact on consumers. It influences their buying decisions.
6. Target oriented: Advertising becomes effective and result-oriented when it is target oriented. A targeted
advertisement intensively focuses on a specific market or particular groups of customers (like teenagers,
housewives, infants, children, etc.). Here, the selection of a particular market is called a target market.
7. Art, science and profession: Advertising is art, science and a profession, and this is now universally accepted. It
is an art as it needs creativity for raising its effectiveness. It is a science as it has its principles or rules. It is also a
profession as it has a code of conduct for its members and operates within standards set by its organized bodies. In
its field, AD Agencies and space brokers function as professionals.
8. The element of a marketing mix: Advertising is an important part of a marketing mix. It supports the sales
promotion efforts of the manufacturer. It makes a positive contribution to sales promotion provided other
elements in the marketing mix are reasonably favourable. It is alone inadequate for promoting sales. Many
companies now spend huge funds on advertisements and public relations.
9. Creativity: Advertising is a method of presenting a product in an artistic, attractive and agreeable manner. It is
possible through the element of creativity. The creative people (professionals) introduce creativity in
advertisements. Without it, the Ads won't succeed. Therefore, creativity is called the ‘Essence of Advertising.’

Personal selling
The Personal Selling Process
The personal selling process is a consecutive series of activities conducted by the salesperson , the lead to a
prospect taking the desired action of buying a product or service and finish with a follow-up contact to ensure
purchase satisfaction.
Prospecting
The first step in the process involves prospecting. With this step in the process, sales representatives look for new
customers that they can potentially sell their products to. This can be done by cold calling or by going out into the
market and talking to people. This part of the process is a numbers game, and the sales representative has to
contact many people.
Pre-Approach
The pre-approach is the second step in the personal selling process. At this time, the sales representative prepares
for the first contact with the potential customer. During this stage, the sales representative looks at any
information that he may have about the customer. He may practice his sales presentation and do anything
necessary to prepare for it. The pre-approach investigation is carried out on new customers but also on regular
customers. Systematic collection of information requires a decision about applicability, usefulness and how to
organise the information for easy access and effective use.
Approach
The salesperson should always focus on the benefits for the customer. This is done by using the product's features
and advantages. This is known as the FAB technique (Features, Advantages and Benefits).
*Features : Refers to the physical characteristics such as size, taste etc.
*Advantages : Refers to the performance provided by the physical characteristics eg it does not stain.
*Benefits : Refers to the benefits for the prospect. Eg. Saves you 20% on replacement cost.
Presentation
During this stage of the process, the sales representative makes a presentation. This can involve demonstrating the
product or service and showing the customer why they need it. The sales rep should focus on the features and
benefits of the product or service during this part of the process.

Overcome Objections
In some cases, the sales representative will have to overcome objections by the customer. Many customers have
questions and concerns at this point of the sales process. If the sales representative can answer the questions and
overcome any objections successfully, the barriers for a successful sale will be removed.
Closing
After the objections have been removed, the only thing left to do is close the sale. This can involve writing up an
invoice and providing any final information to the customer. At this stage of the process, you may need to
negotiate the final sales price and any payment terms. Closing a sale is only the confirmation of an understanding.
Fear will disappear if the salesperson truly believes that the prospect will enjoy benefits after the purchase of the
product.
Follow Up
The follow up is the last stage in the personal sales process. After the product or service has been delivered, the
sales representative follows up with the customer to find out if they are pleased. If there were any issues with the
product, the sales rep can work with the customer to get them resolved. If the customer is happy, the sales rep can
also try to obtain additional referrals from the customer.

Publicity
Definitions:
1. William J. Stanton:
“Publicity is any promotional communication regarding an organisation and/or its products where the message is
not paid for by the organisation benefiting from it.”
2. Philip Kotler:
“Non-personal stimulation of demand for the product or service, or business unit by placing commercially
significant news about it in public medium or obtaining favourable presentation of it upon radio, television, or
stage that is not paid for by the sponsor.”
Characteristics of Publicity:
1. Meaning:
Publicity is not a paid form of mass communication that involves getting favourable response of buyers by placing
commercially significant news in mass media. It involves obtaining favourable presentation upon radio,
newspapers, television, or stage that is not paid for by the sponsor.
2. Non-paid Form:
Publicity is not a paid form of communication. It is not directly paid by producer. However, it involves various
indirect costs. For example, a firm needs some amount for arranging function, calling press conference, inviting
outstanding personalities, decorating of stage, other related costs, etc.
3. Various Media:
Mostly, publicity can be carried via newspapers, magazines, radio, or television. For example, in case a product is
launched by popular personality in a grand function, the mass media like newspapers, television, radio, magazines,
etc., will definitely publicize the event.
4. Objectives:
Sales promotion is undertaken for a wide variety of purposes. They may include promotion of new product,
pollution control, special achievements of employees, publicizing new policies, or increase in sales. It is primarily
concerns with publishing or highlighting company’s activities and products. It is targeted to build company’s image.
In a long run, it can contribute to increase sales.
5. Control of Producer:
Company has no control over publicity in terms of message, time, frequency, information, and medium. It comes
through mass media like radio, newspapers, television, etc. It is given independently by the third party. It is
presented as a news rather than propaganda.
6. Credibility/Social Significance:
Publicity has high degree of credibility or reliability as it comes from mass media independently. It is given as news
for social interest. It has more social significance compared to other means of market promotion.
7. Part of Public Relations:
Publicity is a part of broad public relations efforts and activities. Public relations includes improving, establishing,
and maintaining direct relations with all publics. Publicity can help improve public relations.
8. Costs:
Publicity can be done at much lower cost than advertising. Company needs to spend a little amount to get the
event or function publicized.
9. Effect:
Publicity message is more likely to be read, viewed, heard, and reacted by audience. It has a high degree of
believability as it is given by the third party.
10. Repetition:
Frequency or repetition of publicity in mass media depends upon its social significance or the values for news.
Mostly, it appears only once.
Importance of Publicity:
Like advertising and sales promotion, sales can be increased by publicity, too. Publicity carries more credibility
compared to advertisement. Publicity is cost free; it doesn’t involve direct cost. Publicity offers a lot of benefits to
the producers and distributors. Importance of publicity can be made clear from the below stated points:
1. Publicity is an effective medium to disseminate message to the mass with more credibility. People have more
trust on news given by publicity.
2. The credibility level of publicity is much higher than advertising and other means of market promotion. People
express more trust on what the third party independently says. It appears directly through newspapers, magazines,
television, or radio by the third party. It is free from bias.
3. It provides more information as the valuable information is free from space and time constraints. Similarly,
publicity takes place immediately. No need to wait for time or space in mass media. It enjoys priority.
4. The firm is not required to pay for publicity. The indirect costs related to publicity are much lower than other
means of promotion.
5. It is a part of public relations. It is free from exaggeration; it carries more factual information about company. It is
more trustable. It helps establish public relations.
6. Generally, publicity covers the varied information. It normally involves name of company, its goods and services,
history, outstanding achievements, and other similar issues. The knowledge is more complete compared to
advertisement.
7. Publicity directly helps middlemen and sale persons. Their tasks become easy. Publicity speaks a lot about
products on behalf of middlemen and salesmen. Sellers are not required to provide more information to convince
the buyers.
8. It is suitable to those companies which cannot effort the expensive ways to promote the product.
9. Publicity increases credit or fame of the company. Publicity on company’s assistance in relief operations during
flood, earthquake, draught, and other natural calamities highlights its name and social contribution in mass media.
People hold high esteem to this company.
10. Publicity can be used by non-commercial organisations/institutes like universities, hospitals, associations of
blinds or handicaps, and other social and missionary organisations. They can publicize their noble works by the
medium of publicity.
Objectives of Publicity:
Publicity is aimed at a number of objectives.
The most common objectives of publicity have been discussed in brief as under:
1. Building Corporate Image:
Through publicity, a company can build or improve its corporate image. People trust more on what press reporters,
columnists, or newsreaders say via mass media independently than what the company says. Publicity highlights the
company’s name and operations. It popularizes the name of the company.
2. Economy:
It is a cost saving medium. Here, a company is not required to pay for message preparation, buying space and time,
etc. The cost involved is much lower than other means of market promotion. Financially poor companies may opt
for publicity.
3. Assisting Middlemen and Salesmen:
Publicity can help middlemen and salesmen in performing the sales-related activities successfully. Information
conveyed through publicity speaks a lot of things on behalf of sellers. Publicity makes selling tasks muc h easier.
4. Information with High Creditability:
Sometimes, publicity is targeted to disseminate information more reliably. Customers do not express doubts on
what publicity appeals. Customers assign more value to information supplied by mass media via publicity than by
the advertisement.
5. Removing Misunderstanding or Bad Image:
Company can defend the product that has encountered public problems. In many cases, publicity is aimed at
removing misunderstanding or bad impression. Whatever a publicity conveys is more likely to be believed.
6. Building Interest on Product Categories:
Publicity attracts attention of buyers. Due to more trusted news, people build interest in various products and
activities.
7. Newsworthiness Information:
Publicity publicizes the fact in an interesting ways. Publicity is eye-catching in nature. People do not skip the news
presented by publicity that more likely happens in case of advertising. For example, when a new product is
launched by the distinguished personalities like film star, eminent artist, or cricketer in a grand function, the
product becomes popular within no time.
Public relations
"Public relations is a strategic communication process that builds mutually beneficial relationships between
organizations and their publics." Public relations can also be defined as the practice of managing communication
between an organization and its publics.
Advantages of Public-Relation (PR)
1. It can bring home reward of Mutual Understanding:
The relations between individual and individuals, an organisation and organisations, and an organisation and
individuals will bring home the rich rewards of better mutual understanding. The risks involved in
misunderstandings, bickering between individuals, groups, governments and nations are uprooted.
2. Goodwill of customers:
PR is such a powerful tool or set of tools that it helps in winning friends, influencing favourably people, persuading
individuals, impelling and impressing groups and others in difficulties or difficult situations to bring birth to
goodwill, its growth, nurturing it for longer period so that the reputation and status are well guarded and
upgraded.
3. Image creation and Building:
Each person has an image of his own is the mirror of general public or society. Image is the imprint of its
personality. Companions are no exempt to this. Image speaks of the status of a company amongst various circles.
A business unit has to operate in many markets namely capital, labour product or service market. The strengths
and weaknesses of a company can be measured in terms of its share values, dividend rate, interest rate in
attracting and retaining capital; its remuneration range to employees in labour market.
It also speaks of employer relations. In product market, its market share, quality, quantity, dimension, timeliness of
delivery and exact place of delivery and so on. Together, all these minute points give public an image or opinion
formation.
4. Forestalling Attacks, Opposition and Politics:
Business is a game; it is a war where winning and losing, creating and destroying activities are going on. Public is
misled by rumours spread by competitors or opponents. Rumours spread very fast and in that fortunes of
companies are affected either favourably or unfavourably; loss of one is gain of another.
5. Educate the People to a point of view:
Educating the public is one of the major goals of PR. PR can educate the people about anything that affec ts them
directly or indirectly.
It may be importance of higher education, a particula r subject, about contents of the product not directly of
product.
6. Ability to attract the best personnel:
Organisations are structures of not only physical elements like very imposing building, latest machinery, use of A-
class materials and so on. What is important is organisational employees are more important who make the
success of an organisation. Many companies fail because they do not match ‘ability to work’ and “willingness to
work”.
It is PR by changing the attitude of employees towards works, work and workers, they are inspired to put their best
to contribute maximum where worker, company and society all stand to benefit.

Process of developing a public relation plan

To get you started, here are six steps for developing a PR strategy:
1. Determine the objectives of PR. Knowing how the business is performing, challenges your company faces, new
project launches coming down the pipe, and other key business initiatives planned for the year will all impact
where your PR efforts should be focused.
2. Define goal in achieving the subjective. Not just your individual goals or your department goals, but what are
your overall business goals? Is it to drive sales, increase leads, improve market share – everything you do from a PR
standpoint should relate back to these business goals. If they don’t – time to stop and re-evaluate.
3. Target audience. Who are you trying to reach? Do you understand them and their pain points? What it is that
your company/product offers that can help them solve their problems? Understanding your audience and what
actions you want them to take can help focus your efforts.
4. Scheduling. Outline the specific tactics to meet your goals whether it’s link-building strategies, influencer
outreach or media engagement.
5. Develop plan for attack. How will you track efforts, measure and report, and ultimately adjust your plan if
needed? Before starting any outreach efforts, you’ll need to establish key performance indicators (KPIs). Is it a top-
tier media placement in The New York Times, increased market share or increased leads? Whatever the goal, it’s
important to understand what you and your leadership team deem as a win.
6. Review the message. The review step is a key stage for the company. In this step the company will evaluate his
organisational goal.

Sales Promotion
Meaning and Definition:
Sales promotion is any initiative undertaken by an organisation to promote an increase in sales, usage or trial of a
product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or
promotions mix). Sales promotions are varied.
According to A.H.R. Delens, “Sales promotion means any steps that are taken for the purpose of obtaining an
increasing sale. Often this term refers specially to selling efforts that are designed to supplement personal selling
and advertising and by co-ordination helps them to become more effective.”
In the words of Roger A. Strong, “Sales promotion includes all forms of sponsored communication apart from
activities associated with personal selling. It, thus includes trade shows and exhibits, combining, sampling,
premiums, trade, allowances, sales and dealer incentives, set of packs, consumer education and demonstration
activities, rebates, bonus, packs, point of purchase material and direct mail.”
Objectives of Sales Promotion:
Sales promotion is a vital bridge or a connecting link between personal selling and advertising. Sales promotion
activities are undertaken to achieve the following objectives:
1. To increase sales by publicity through the media which are complementary to press and poster advertising.
2. To disseminate information through salesmen, dealers etc., so as to ensure the product getting into satisfactory
use by the ultimate consumers.
3. To stimulate customers to make purchases at the point of purchase.
4. To prompt existing customers to buy more.
5. To introduce new products.
6. To attract new customers.
7. To meet competition from others effectively.
8. To check seasonal decline in the volume of sales.
Techniques of sales promotion
Often they are original and creative, and hence a comprehensive list of all available techniques is virtually
impossible (since original sales promotions are launched daily!). Here are some examples of popular sales
promotions activities:
(a) Buy-One-Get-One-Free (BOGOF) – which is an example of a self-liquidating promotion. For example if a loaf of
bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit – especially if
there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic.
(b) Customer Relationship Management (CRM): incentives such as bonus points or money off coupons. There are
many examples of CRM, from banks to supermarkets.
(c) New media – Websites and mobile phones that support a sales promotion. For example, in the United Kingdom,
Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic
website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect.
(d) Free gifts e.g. Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card
was full the consumer was given a free sandwich.
(e) Discounted prices e.g. Budget airline such as EasyJet and Ryanair, e-mail their customers with the latest low-
price deals once new flights are released, or additional destinations are announced.
(f) Joint promotions between brands owned by a company, or with another compa ny’s brands. For example fast
food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with
promoted meals.
(g) Free samples (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red
Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol
stations (by a promotions team).
(h) Vouchers and coupons, often seen in newspapers and magazines, on packs.
(i) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on The Internet, and on packs.
(j) Finance deals – for example, 0% finance over 3 years on selected vehicles.

Media Selection
Media selection is the process of choosing the most efficient media for an advertising campaign.
Types of media:
1.Above the line media
 i. Press
ii. TV
iii. Outdoor poster
iv. Cinema
v. Radio
2. Below the line media
i. Direct mail
ii. Point-of-Sales (POS)
iii. Merchandising
iv. Sales promotion
v. Exhibition & sales literature
Role of MS
1. Objectives of Firm:
Company’s general and advertising objectives are the prime considerations in media selection. Those media
capable to meet company’s expectations are likely to be selected. Advertising objectives may be to inform, remind,
convince, create prestige, or to increase sales and profits. Different media have varying capacity to meet these
objectives.
2. Costs Media and Company’s Financial Position:
Media selection decision is highly influenced by media costs and firm’s ability to pay. Company has to pay for
buying space or time and preparing advertising copy fit for the media to be selected. TV, radio, films are costly in
terms of buying time and preparing advertising copy. Print media are relatively cheaper in both space and
preparation of advertising message. Some outdoor media are quite low in cost. As per media costs and company’s
financial capacity, the appropriate media should be selected.
3. Reach or Number of People Exposed to the Message:
It is an important criterion to choose among ad media. Reach means the number of different people exposed to a
particular medium at least once during a specified time period. Mass media are capable to reach millions of people
by just one exposure. Television has more exposure capacity compared to outdoor media in a particular time.
Local media can expose the message to limited persons. In the same way, frequency (the number of times within a
specified time period the average person exposed to the message), and impact (the impact created on audience by
an exposure through given medium) are also key criteria to choose among advertising media. Reach, frequency,
and impact are important variables that determine cost-effectiveness of various media.
4. Company’s Advertising Policy and Approach:
Company’s advertising policy and approach determine which of the media should be selected. For example, if
company’s policy is not to spend more money for advertisement and to offer the product at a low price, it may go
for cheaper media.
5. Type of Buyers:
People to be influenced should be taken into account while selecting the media. Buyers can be classified into
various classes as discussed in market segmentation. Each medium has its special viewers, readers, or audience. For
the firm, it is important to know whether the target groups can be exposed by the particular medium.
Television is the most common medium, but can be made more particular by selecting the special programme.
Magazines are capable to appeal particular sex, age groups, or professionals. Daily newspapers are again very
general in nature.
6. Condition under which Customers are Influenced:
Readers’/viewers’ mood and interest determine receptivity of message. Television is the best-fit medium to
associate advertising message when people are watching or enjoying related programmes. For example, advertising
TVS Victor motorbike on television during the live telecast of the TVS Cup One-day Series.
However, it is difficult to determine mood or interest of readers for daily newspapers. It is relatively easy to
determine mood of people during a specific programme in radio or television. In case of outdoors media, the place
is very important to judge mood of people. For example, hoardings, posters, or banner near gardens or picnic
places are more likely to be attracted.
7. Circulation/Coverage:
The area covered by (or number of people exposed to) the medium is an important criterion. Some media are
capable to cover the globe while some can cover only the limited locality. For example, the local newspapers cover
limited areas, the national newspapers like The Time of India and The Economic Times cover the whole nation.
Similarly, certain magazines have national and international circulation. And, the same is true with audio -visual and
outdoor media. As per geographical concentration of customers, the suitable media should be selected.
8. Repetition or Frequency:
Repetition or frequency implies the number of times within specific time period an average person is exposed to
the message by specific medium. Most of the outdoor media hold the message for relatively long time. Magazines
or periodicals publish monthly or quarterly; mostly they publish advertisements only in a particular edition.
The more is the repetition of advertising message, the more is the effect of the medium on people. Naturally,
advertisement appears frequently is more likely to read or attend than if it appears only once. However, repetition
in case of newspapers, TV, radio, etc., depends on company’s ability to pay.
9. Credibility and Image of Media:
In case of newspapers and magazines, the factor is critical. Naturally, advertising message appears in the reputed
newspapers or magazines carry heavy impression and effect than substandard media. People don’t trust the appeal
published in the lower standard media. Prestige of media becomes the prestige of advertiser. Firms opt for credible
or prestigious media to carry the advertising message.
10. Past Experience:
Company’s own past experience may be instrumental to decide on advertising media. For example, if company has
satisfactory experience of using a particular medium, there are more chances to use the same medium and vice
versa.
11. Experience of other Companies:
Experience of other companies is one of the important considerations in media selection. Company may try to
know what other companies say about applicability and usefulness of various media. Views of other companies
must be followed with care and caution.
12. Expert Opinion:
Marketing experts or consultants who work on professional basis can be consulted to suggest an appropriate
medium to carry the message. These experts, on the basis of analysis of market situations in relation to products to
be advertised, can recommend the suitable media. Since they have experience an d expertise in the field, they are
in better position to judge the suitability of each of the media in relation to product and company’s financial
position. They charge fees for their consultancy services.
13. Type of Advertising Message:
Each advertising message needs specific advertising vehicle. If a message is simple, print media are sufficient. If a
message is complicated, and the company wants to demonstrate and explain, audiovisual media suit the needs.

Physical distribution
Physical distribution is the group of activities associated with the supply of finished product from the production
line to the consumers. The physical distribution considers many sales distribution channels, such as wholesale and
retail, and includes critical decision areas like customer service, inventory, materials, packaging, order processing,
and transportation and logistics. You often will hear these processes be referred to as distribution, which is used to
describe the marketing and movement of products.
These elements are explained below:
1. Materials Handling:
It involves moving products in and out of a stock. It consists of routine tasks that can be performed through
mechanisation and standardisation. Efficiency is increased through use of electronic data processing to control
conveyor systems, order picking and other traffic flaws.
2. Inventory Planning And Control:
Inventory refers to the stock of products a firm has on hand and ready for sale to customers. Inventories are kept
to meet market demands promptly. Inventory is the link interconnecting the customer’s orders and the company’s
production activity.
In fact the entire management rotates around the inventory management. Marketing managers undertake an
inventory planning to develop adequate assortments of products for the target market and also try to control the
costs involved in obtaining and maintaining inventory.
3. Order Processing:
Order-processing and inventory control are related to each other. Order processing is considered as the key to
customer service and satisfaction. It includes receiving, recording, filling, and assembling of products for dispatch.
The amount of time required from the dates of receipt of an order up to the date of dispatch of goods must be
reasonable and as short as possible.
4. Transportation:
It is an essential element. It involves integrating the advantages of each transportation method by adopting
containers and physical handling producers to permit transfers among different types of carriers.
5. Communications:
It is a process of passing information and understanding from one person to another. This includes the information
system which should link producers, intermediaries, and customers. Computers, memory systems, display
equipment and other communication technology facilitate the flow of information among other members in the
channel.
A manager to be successful must develop an effective system of communication. So that he may issue instructions,
receive the reactions of the subordinates, and guide and motivate them.
6. Organisational Structure:
The person in charge should co-ordinate all Activities into an effective system to provide the desired customer
service in the most efficient manner. Examples of organizational consideration are: (i) How can the five elements of
best be coordinated so that a team effort results? How can compartmentalization thinking be avoided? (ii) If a
central head is established to direct all activities, to whom should he report—The Head of the Marketing or The
Chief Executive Officer?

Marketing Channels
A distribution/marketing channel is the route through which goods or services move from the company to the
customer or the transfer of payment happens from the customer to the company.
Distribution channels can mean selling of products directly or selling through wholesalers, retailers etc. The same
applies for payment transfer from customers to company; it can move through a path or can be sent d irectly to the
company.
Functions of Distribution Channels
Distribution channels basically function to deliver goods from the manufacturer to the customer.
The following are the functions of distribution channels −
i. Facilitate selling by being physically close to customers
ii. Gather information about potential and current customer competitions, other factors and forces of the
environment
iii. Provide distributional efficiency by bridging the gap between the manufacturer and the user efficiently and
economically
iv. Assemble products into assortments to meet buyers’ needs
v. Match segments of supply with segments of demand
vi. Assist in sales promotion
vii. Assist in introducing new products
viii. Assist in implementing the price mechanism
ix. Assist in developing sales forecast
x. Provide market intelligence and feedback
xi. Maintain records
xii. Take care of liaison requirements
xiii. Standardize transaction
Objectives of Distribution Channels
Objectives of a distribution channel are planned as per the target of the enterprise and executed respectively. The
following are the various objectives behind the planning of distribution channels −
i. To ensure availability of products at the point of sale
ii. To build channel member’s loyalty
iii. To stimulate channel members to put greater selling efforts
iv. To develop management efficiency in channel organization
v. To identify the organization at the level
vi. To have an efficient and effective distribution system for making the products and services available
readily, regularly, equitably and fresh.
Major Channels of Distribution
Here is a list of some of the major channels of distribution −
 Manufacturer → Consumer
 Manufacturer → Retailer → Customer
 Manufacturer → Wholesaler → Customer
 Manufacturer → Wholesaler → Retailer → Customer
 Manufacturer → Agent → Retailer → Customer
 Manufacturer → Agent → Wholesaler → Customer
 Manufacturer → Agent → Wholesaler → Retailer → Customer
Profit distribution decreases as the channel length increases.

Marketing information system

The Marketing Information System refers to the systematic collection, analysis, interpretation, storage and
dissemination of the market information, from both the internal and external sources, to the marketers on a
regular, continuous basis.
Features
A good marketing information system has the following features which can be called as the requisites or essentials.
These are:
1. It is a unified and centralised system:
The marketing information system of an organisation is to be conceived and managed as a single entity. The system
is made up of certain components which can be information components and activity components. These
components are to be integrated into a single whole and manned by a single central agency.
The chief of the marketing system is to work as the consultant, coordinator and the controller of all the information
and activity components of the system so perceived.
2. It is a decision supporting system:
To-day, marketing information system is not merely a data bank where data is collected, processed and stored.
Though data collection and evaluation are the basic tasks of such a system, it is to help the management in decision
making and controlling. It is responsible for improving the efficiency of modern management amidst the changing
atmosphere of risks and uncertainties.
The marketing information system assists in arriving at right choice among the competing alternatives and this
improves the organizational effectiveness and efficacy. This is how it can be called as a decision supporting system.
3. It is compatible with the organisation:
The marketing information system being the part of an organisation, it is to act as the subservient of the system.
Therefore, the marketing information system so designed is matching to the philosophy, culture and the level of
sophistication attained by the organisation.
There is cementing interrelationship between the marketing operation, the marketing control system and the
marketing communication flow. Good marketing information system reflects this relationship.
Further, the system must be of that level of sophistication and advancement that fits well within the capabilities of
people at work.
4. It is economical:
The marketing information system must be economical in the sense that it should meet accepted cost-value ratio
of the information. Cost and value variables are decided by the types of information needed, levels of organisation
needing it, purposes served authenticity and so on.
The value or the gain got must exceed the expenditure in terms of money, time and efforts. Given information can
be gathered, analyzed and presented by alternative information designs. There should be scientific assessment and
comparison of costs and benefits and their variations before selecting an information design.
5. It is need-based and use-oriented:
Marketing information system should not contend merely with the functions of finding, arranging, analysing,
coding, preserving and feeding the information because, it is not a courier service department.
It must not overload the organisation with redundant information though abundant information is to be provided.
It must be selective in knowing the exact requirements of each department and departmental executives. The
information so presented must be use-oriented in that it is handy and just to the requirement of users.
6. It is fast in communication:
The modern managers are to make not only sound decisions but quick decisions. Therefore, the marketing
information system must be speed-geared to assure fast movement of assimilated and analyzed data at different
levels to facilitate timely decisions. Quick decisions result in prompt actions.
The marketing information system is to adjust its level of sophistication and speed of the processing and reporting
wings so that our managers can sense and exploit the business opportunities and get ready to meet the challenges
of business threats associated with the incoming opportunities.
7. It is future oriented:
What we were and what we are? are not very important. What is more important is — what we will be? Marketing
information system is an on-going process of data collection, processing, storing and retrieving is more future
oriented. It is to anticipate and prevent and to solve the problems. It is both a corrective and preventive process.
Moreover, it believes in the dictum “prevention is bett er than cure”. It works industriously to guarantee a steady
flow of information regularly the right information to the right people at right time at right cost to make future
worthy.

Marketing Research
Various definitions of are given below:
“The systematic gathering, recording and analysis of data about problems relating to the marketing of goods and
services” —The American Marketing Association.
“The systematic objective and exhaustive research for and study of the facts relevant to any problem in the field of
marketing.” —Richard Crisp
“ is the careful and objective study of product design, markets, and such transfer activities as physical distribution
and warehousing, advertising and sales management.” —Clark and Clark
“ is the inclusive term which embraces all research activities carried on for the management of marketing work, the
gathering, recording and analysing of all facts about problems relating to the transfer and sale of goods and
services from producer to consumer.” —Harry Hapner
Objectives
(1) To Provide Basis For Proper Planning:
Marketing and sales forecast research provides sound basis for the formulation of all marketing plans, policies,
programmes and procedures.
(2) To Reduce Marketing Costs:
provides ways and means to reduce marketing costs like selling, advertisement and distribution etc.
(3) To Find Out New Markets for The Product:
aims at exploring new markets for the product and maintaining the existing ones.
(4) To Determine Proper Price Policy:
is considered helpful in the formulation of proper price policy with regard to the product s.
(5) To Study in Detail Likes and Dislikes of the Consumers:
tries to find out what the consumers, (the men and women who constitute the market) think and want. It keeps us
in touch with the consumers, minds and to study their likes and dislikes.
(6) To Know The Market Competition:
also aims at knowing the quantum of competition prevalent in the market about the product in question. The
company may need reliable information about competitor’s moves and strategies which are of immense
significance for further planning.
(7) To Study The External Forces and Their Impact:
provides valuable information by studying the impact of external forces on the organisation. External forces may
include conditions developing in foreign markets, govt, policies and regulations, consumer incomes and spending
habits, new products entering in the market and their impact on the company’s products.
Need and Importance of Marketing Research
The most important task of a marketer is to get the right product at the right place with the right price to the right
person. Besides, it was also necessary to go back and find whether consumer is getting optimum satisfaction, so
that consumer remains loyal. These aspects made it imperative for the marketers to conduct marketing research.
The following points explain the need for and importance of marketing research:
1. Identifying problem and opportunities in the market:
It helps in identifying new market opportunities for existing and new products. It provides information on market
share, nature of competition, customer satisfaction levels, sales performances and channel of distribution. This
helps the firms is solving problems.
2. Formulating market strategies:
Today, markets are no more local. They have become global. Manufactures find it difficult to contact customers
and control distribution channels. Competition is equally severe. The consumer needs are difficult to predict.
Market segmentation is a complicated task in such wide markets. The marketing intelligence provided through
marketing research not only helps in framing but also in implementing the market strategies.
3. Determining consumer needs and wants:
Marketing has become customer-centric. However, large-scale production needs intermediaries for mass
distribution. Due to prevalence of multi channels of distribution, there is an information gap. Marketing research
helps in collecting information on consumers from structured distribution research and helps in making marketing
customer oriented.
4. For effective communication mix:
In an era of micro- rather than mass-marketing, communication plays a vital role. Marketing research uses
promotional research to study media mix, advertising effectiveness and integrated communication tools. Research
on such aspects will help in promoting effectively a company’s product in the market.
5. Improving selling activities:
Marketing research is used to analyse and evaluate performances of a company within a market. It also studies
effectiveness of a sales force. It helps in identifying sales territories. Such information helps the companies in
identifying areas of shortcoming in sales. It also examines alternative methods for distribution of goods.
6. For sales forecasting:
The most challenging task for any production manager is to keep optimum levels of inventory. However,
production is undertaken in anticipation of demand. Therefore, scientific forecast of sales is required. Marketing
research helps in sales forecasting by using market share method, sales force estimate method and jury method.
This can also help in fixing sales quotas and marketing plans.
7. To revitalize brands:
Marketing research is used to study and find out the existing brand position. It finds out the recall value of brands.
It explores the possibilities of brand extension or prospects of changing existing brand names. The main purpose of
marketing is to create brand loyalty. Marketing research helps in developing techniques to popularize and retain
brand loyalty.
8. To facilitate smooth introduction of new products:
Marketing research helps in testing the new products in one or two markets on a small scale. This helps in finding
out consumer response to new product and develop a suitable marketing mix. It reveals the problems of the
customers regarding new products. Thus, it controls the risk involved in introducing a new product.
9. Determine export potentials:
The development in transport and communication has helped in globalization and digitalization of world trade. This
has helped in boosting the growth of international markets. Marketing research helps in conducting market survey
for export. It. collects information on marketing environment prevailing in a country. By collecting data on
consumers from different countries, it indicates export potentials.
10. Managerial decision-making:
Marketing research plays a vital role in the decision-making processes by supplying relevant, up-to-date and
accurate data to the decision-makers. Managers need up-to-date information to access customer needs and wants,
market situation, technological change and extent of competition.

Scope of Marketing Research

Scope of marketing research refers to the areas covered or the aspects studied under marketing research. In other
words, it implies where or on which areas marketing research can be applied. In fact, marketing research concerns
with almost each and every activity of marketing management. It has a wide and comprehensive scope.
The scope of marketing research covers following areas:
1. Research on Products:
Products involve goods and services. This branch of marketing research covers all the issues related to firm’s
products.
It studies and solves the product-related problems, such as:
i. Study of products’ qualities and performance
ii. Study of physical and psychological characteristics of product
iii. Determining uses of the existing products
iv. Comparative study of competitive products
v. Detecting consumers’ problems related to the products
vi. Determining need for developing new products
vii. Assessing success of a new product in market, including market testing
viii. Product life cycle and consumer adoption study
ix. Study of branding, packaging, labeling, after-sales services, and remarking
2. Research on Market:
This area of marketing research deals with market/consumers. It studies characteristics and compositions of the
target markets. It covers both current as well as potential markets.
This branch includes:
i. Defining and selecting target market
ii. Studying needs and wants of target market
iii. Study of size and location of current market
iv. Assessing the current market trends and projecting the future trend
v. Analysis of territorial sales opportunities and potential
vi. Setting sales territories and sales quotas
vii. Market share analysis
viii. Studies on relative profitability of different markets
ix. Estimating demand of a new product
3. Research on Sales Methods and Policies:
This area of marketing research, particularly, concerns with study and analysis of the sales- related activities.
Various aspects covered under this head may be listed as below:
i. Study and analysis of sales records
ii. Analysis of sales territories in terms of products, size of orders, times, terms and conditions and methods
iii. Study on activities and effectiveness of salesmen
iv. Evaluating existing selling methods
v. Sales force management including size, compensation, training, control, etc.
vi. Study on effect of various promotional tools such as advertising, personal selling, sales promotion, and publicity
tools on sales
vii. Study on organisation structure of sales department
4. Research on Advertising:
Advertising is one of the powerful methods of market promotion. Major part of promotional budget is devoted to
advertising activities. Therefore, it is imperative to conduct research on various aspects related to advertising.
Under this area, at least following aspects are covered:
i. Comparative study of various elements of promotion
ii. Study on advertising objectives, media and media selection, advertising message, theme, copy, and advertising
agency
iii. Social aspects of advertising – negative and positive effects of advertising on society at large
iv. Advertising role in different stages of product life cycle
v. Government restrictions on advertising
vi. Study on costs and contribution of advertising or evaluating advertising effectiveness
vii. Study of competitors’ advertising practices and strategy
5. Research on Pricing:
Price is an important element of marketing mix. In developing and underdeveloped countries, price plays a vital
role. Suitable pricing policies and methods can contribute positively in attainment of marketing goals. It is clear that
price has remained a major determinant of buying decision.
This branch covers:
i. Study on pricing objectives
ii. Study on effectiveness of pricing policies and strategies
iii. Study of various methods for setting price
iv. Quality v/s value analysis
v. New product and pricing policies
vi. Study on effect of discount, allowance, and seasonal variables
vii. Pricing strategies on different stages of product life cycle
6. Research on Distribution:
In today’s marketing, distribution has unique role to determine success of product. A marketer can contribute to
total consumer satisfaction by designing appropriate distribution network. Physical distribution and distribution
channel are two important components of such research.
This area includes:
1. Assessing role of distribution decisions in achieving marketing goals
2. Comparative study of between direct and indirect distribution
3. Physical distribution and ancillary services
4. Study on various types of channels of distribution
5. Study on relevant factors affecting channel decision/selection
6. Comparing company’s distribution strategies with competitors
7. Relevance of online marketing
8. Legal issues related to distributions
7. Research on Business Environment and Corporate Responsibility:
This area is not concerned with solving any marketing problem directly. In order to collect and analyze data related
to broad business environment, such research is conducted. The study on the area helps manager formulate
strategies for the current and the future market as well. It also helps assess strengths and weaknesses of marketing
department in relation to business environment. In today’s dynamic business environment, the study on various
economic, social, and cultural variables is extremely important. Similarly, it is necessary to analyze corporate
responsibility.
Main aspects covered under the head include:
i. Business analysis including demand, national income, per capita income, trade and industry, economic growth
rate, fiscal monetary policies, and export-import policy.
ii. Short-term and long-term business forecasting.
iii. Technological aspects.
iv. Availability and quality of productive resources.
v. Impacts of legal provisions and Acts.
vi. Study on consumerism and the consumer rights.
vii. Social and cultural values affecting business policy.
viii. Pollution and ecological imbalance, and social responsibility of business.