Difference between Market Segmentation,

Targeting and Positioning

A market refers to a set up where two or more parties are involved in transaction of goods and services in
exchange of money. The two parties here are known as sellers and buyers.

It is the responsibility of the marketers to create awareness of their products amongst the consumers. It is essential
for the individuals to be aware of the brand’s existence. The USPs of the brands must be communicated well to the
end-users.

An organization can’t afford to have similar strategies for product promotion amongst all individuals. Not every
individual has the same requirement and demand.

The marketers thus came with the concept of STP.

STP stands for:

S - Segmentation
T - Targeting
P - Positioning

The first step in the process of product promotion is Segmentation

The division of a broad market into small segments comprising of individuals who think on the same lines and show
inclination towards similar products and brands is called Market Segmentation.

Market Segmentation refers to the process of creation of small groups (segments) within a large market to bring
together consumers who have similar requirements, needs and interests.

The individuals in a particular segment respond to similar market fluctuations and require identical products.

In simpler words market segmentation can also be called as Grouping.

Kids form one segment; males can be part of a similar segment while females form another segment. Students
belong to a particular segment whereas professionals and office goers can be kept in one segment.

Targeting
Once the marketer creates different segments within the market, he then devises various marketing
strategies and promotional schemes according to the tastes of the individuals of particular segment. This
process is called targeting. Once market segments are created, organization then targets them.

Targeting is the second stage and is done once the markets have been segmented.

Organizations with the help of various marketing plans and schemes target their products amongst the various
segments.

Nokia offers handsets for almost all the segments. They understand their target audience well and each of their
handsets fulfils the needs and expectations of the target market.

Tata Motors launched Tata Nano especially for the lower income group.

Positioning
Positioning is the last stage in the Segmentation Targeting Positioning Cycle.

Once the organization decides on its target market, it strives hard to create an image of its product in the minds of the
consumers. The marketers create a first impression of the product in the minds of consumers through positioning.
Positioning helps organizations to create a perception of the products in the minds of target audience.

Ray Ban and Police Sunglasses cater to the premium segment while Vintage or Fastrack sunglasses target the
middle income group. Ray Ban sunglasses have no takers amongst the lower income group.

Garnier offers wide range of merchandise for both men and women.

Each of their brands has been targeted well amongst the specific market segments. (Men, women, teenagers as well
as older generation)

Men - Sunscreen lotions, Deodorant

Women - Daily skin care products, hair care products
Teenagers - Hair colour products, Garnier Light (Fairness cream)
Older Generation - Cream to fight signs of ageing, wrinkles

A female would never purchase a sunscreen lotion meant for men and vice a versa. That’s brand positioning.

Product Positioning Process - Steps in Product Positioning

The process of creating an image of a product in the minds of the consumers is called as positioning.
Positioning helps to create first impression of brands in the minds of target audience. In simpler words positioning
helps in creating a perception of a product or service amongst the consumers.

Example

The brand “Bisleri” stands for purity.

The brand “Ceat Tyre” stands for better grip.

Steps to product Positioning

Marketers with the positioning process try to create a unique identity of a product amongst the customers.

1. Know your target audience well

It is essential for the marketers to first identify the target audience and then understand their needs and
preferences. Every individual has varied interests, needs and preferences. No two individuals can think on
the same lines.

Know what your customers expect out of you.

The products must fulfill the demands of the individuals.

2. Identify the product features

The marketers themselves must be well aware of the features and benefits of the products. It is rightly said
you can’t sell something unless and until you yourself are convinced of it.

A marketer selling Nokia phones should himself also use a Nokia handset for the customers to believe him.

3. Unique selling Propositions

Every product should have USPs; at least some features which are unique. The organizations must create
USPs of their brands and effectively communicate the same to the target audience.

The marketers must themselves know what best their product can do.

Find out how the products can be useful to the end-users ?

 Why do people use “Anti Dandruff Shampoo?”

Anti Dandruff Shampoos are meant to get rid of dandruff. This is how the product is positioned in the minds
of the individuals.

Individuals purchase “Dabur Chyawanprash “to strengthen their body’s internal defense mechanism and
fight against germs, infections and stress. That’s the image of Dabur Chyawanprash in the minds of
consumers.

USP of a Nokia Handset - Better battery backup.

USP of Horlicks Foodles - Healthy snack

Communicate the USPs to the target audience through effective ways of advertising. Use banners, slogans,
inserts and hoardings.

Let individuals know what your brand offers for them to decide what is best for them.

4. Know your competitors

 A marketer must be aware of the competitor’s offerings. Let the individuals know how your product
is better than the competitors?
 Never underestimate your competitors.
 Let the target audience know how your product is better than others.
 The marketers must always strive hard to have an edge over their competitors.
5. Ways to promote brands
 Choose the right theme for the advertisement.
 Use catchy taglines.
 The advertisement must not confuse people.
 The marketer must highlight the benefits of the products.
6. Maintain the position of the brand
 For an effective positioning it is essential for the marketers to continue to live up to the expectations
of the end - users.
 Never compromise on quality.
 Don’t drastically reduce the price of your products.
 A Mercedes car would not be the same if its price is reduced below a certain level.
 A Rado watch would lose its charm if its price is equal to a Sonata or a Maxima Watch.

What is Repositioning?

Repositioning refers to the major change in positioning for the brand/product. To successfully
reposition a product, the firm has to change the target market’s understanding of the product.
This is sometimes a challenge, particularly for well-established or strongly branded products.

Firms may consider repositioning a product due to declining performance or due to major shifts
in the environment. Many firms choose to launch a new product (or brand) instead of
repositioning because of the effort and cost required to successfully implement the change.
 Definition of repositioning

Elsewhere in this study guide, we have summarized the definition of positioning as:

 Positioning is the target market’s perception of the product’s key benefits and features, relative
to the offerings of competitive products.

Therefore, in definition terms, repositioning is “implementing a major change” in the perception

of the product, resulting is the relatively similar definition of:

 Repositioning is the task of implementing a major change the target market’s perception of the
product’s key benefits and features, relative to the offerings of competitive products.

This view of repositioning as being a change of the established product positioning is reinforced
by the following two quotes:

 “Sometimes, marketers feel the need to change the present position of the brand to make it more
meaningful to the target segment. This change in position, and finding a new position for the
brand, is called brand repositioning.” (Vashisht, 2005).

 “Repositioning is changing consumers’ perceptions of a brand in relation to competing brands.”

(Lamb, Hair, & McDaniel, 2009).

Both definitions carry the word ‘change’ as the key issue. The first definition, however, suggests
that repositioning is focused upon the same target market. But, as will be discussed, a product
can be repositioned in order to appeal to a wider or different target market.

Examples of Repositioning
Here are three different examples of how and why products are repositioned. These are examples
that are important to understand your marketing course, as discussed elsewhere, there are a
number of viable alternatives to deciding to reposition product.

Mother Energy Drink (Coca-Cola)

The first example relates to Mother Energy Drinks, which was launched into the Australian
market in 2006 by the Coca-Cola Company.

Coca-Cola used a heavy launch program to generate trials of the product. In particular, they had
a series of TV commercials that have a look and feel similar to the Madagascar movie that was
popular at the time. They leveraged their extensive distribution channels and were able to get the
product in many retailers, with prominent point-of-sale displays. The can’s packaging had a
tattoo look about it, again tapping into the popular culture of the time.
While the launch campaign was professionally and effectively executed, the taste of the product
was not great and repeat purchases were quite low as a consequence.

Obviously, Coca-Cola is a major firm in beverage, so a poorly performing product is simply not
suitable for them. Therefore, they had to decide whether to improve and reposition the product or
to withdraw it and replace it with a new brand and product. The firm decided to reposition the
product. This is because they had done such a good job with the launch, that the brand awareness
(a key part of brand equity) was very high in the marketplace.

With the relaunch and repositioning project, their biggest challenge was to convince consumers
to re-trial the product. As a result, they changed the packaging, increased the size of the can and,
of course, improved the product’s taste.

However, they approached the problem of the product’s perceived poor taste head-on. For
instance, on the can’s packaging, in quite prominent letters, they had “New Mother, tastes
nothing like the old one”. Their TV commercials for the relaunch (see below), which used a
humor appeal, showed commandos breaking into the lab to get the scientists that invented the
original formula.

As a consequence, they are able to reposition the product as having a great taste and many
consumers were willing to re- trial the product and today the product enjoys a good share of the
Australian market and is performing to the firm’s expectations.

Napisan

Napisan is a laundry detergent product that was designed to wash baby diapers (called nappies in
Australia, hence the name of the product). Napisan was a very popular product up until around
the 1980s when there was a significant change in consumer lifestyles. As consumers became
more time poor, as a consequence of both parents working, there was a big shift from using
washable cloth diapers to using disposable ones.

Therefore, sales of the NapiSan product fell in line with the decrease in consumer demand. This
is a good example of repositioning being required due to the change in the macro environment.

The firm had a good quality product, so they had to decide whether to reposition the product or
to bring out the same product under a new brand name. They decided to reposition it because it
had good brand equity (high awareness and it was trusted by consumers).

Over recent years the NapiSan product has been successfully repositioned for a new use; being
the ideal laundry detergent for tough stains.
Repositioning a Credit Union

The final example demonstrates how a credit union was repositioned because it did not have a
clear positioning space. As shown in the perceptual map (below), the credit union was competing
in a local market with a local bank which was substantially bigger than itself. Both were best
perceived as local and conservative, but the much larger financial institution was generating
more market share.

As you can see, there was a clear market gap in the bottom right-hand quadrant and the credit
union decided to reposition itself into that space. This move allowed them to keep the positioning
aspect of being local, but required them to modify their positioning from being conservative to
being more innovative.

As part of this repositioning process, the credit union introduced a range of new products, set up
a customer relationship management (CRM) program, modified their sales and customer service
staffing structure, and changed their tagline to “leading the way”.

These marketing mix changes were able to clearly communicate their new positioning and the
credit union grew by 60% over the next three years.

Market Positioning

Perceptual Mapping/ Positioning Map

Introduction

Firms use perceptual or positioning maps to help them develop a market positioning strategy for
their product or service. As the maps are based on the perception of the buyer they are sometimes
called perceptual maps. Positioning maps show where existing products and services are
positioned in the market so that the firm can decide where they would like to place (position)
their product. Firms have two options they can either position their product so that it fills a gap in
the market or if they would like to compete against their competitors they can position it where
existing products have placed their product.

The diagram below is a Perceptual Map of UK chocolate confectionery Brands

Drawing a Perceptual (Positioning) Map

Theoretically a perceptual map can have any number of lines, to keep things simple they usually
have 2 lines the x and y axis. The x axis goes left to right and the y axis goes bottom to top. Any
criteria can be used for the map for example price, quality, status, features, safety and reliability.
Once the two lines have been drawn and labelled existing products will be placed onto the map.

Example Perceptual Map

In the example below two dimensions price and quality have been used. If we plot the UK
chocolate market, we can identify where existing chocolate brands have been positioned by
manufacturers. For example our fictional brand of Belgian chocolates called Belgium Chocolates
are high quality and high price so they are placed in the top right hand box, whilst Twix is an
affordable "every day" treat chocolate so it has been placed in the bottom left hand square, in the
low quality low price brand box.
The Purpose Of Perceptual Maps

Perceptual maps can help identify where (in the market) an organisation could position a new
brand. In our example this could be at the medium price and medium quality position, as there is
a gap there. There is also a gap in high price low quality but consumers will not want to pay a lot
of money for a low quality product. Similarly the low price high quality box is empty because
manufacturers would find it difficult to make a high quality chocolate for a cheap price or make
a profit from selling a high quality product at a low price.

Summary

We must remember that perceptual maps are based on the buyer's perception this is challenging:
what may be viewed as a quality product by one buyer, may not be perceived as a quality
product by another buyer. Perceptual maps help firms understand how customers view their
products. However as perception is very subjective, firms need to ensure that the data they use to
plot the map is accurate. If customer perception data is wrong, the map will be wrong and this
will affect the success of any marketing strategy based on the perceptual (positioning) map.
Perceptual maps may help organisations identify gaps in the market. Before deciding to fill any
gaps in the market firms need to ensure that there is likely to be a demand for a product
positioned in that gap.
 Retrenchment Strategies Followed by Organizations

A retrenchment grand strategy is followed when an organization aims at a contraction of its activities through
substantial reduction or the elimination of the scope of one or more of its businesses in terms of their respective
customer groups, customer functions, or alternative technologies either singly or jointly in order to improve its
overall performance. Eg: A corporate hospital decides to focus only on special treatment and realize higher revenues
by reducing its commitment to general case which is less profitable.

The growth of industries and markets are threatened by various external and internal developments (External
developments – government policies, demand saturation, emergence of substitute products, or changing customer
needs. Internal Developments – poor management, wrong strategies, poor quality of functional management and so
on.) In these situations the industries and markets and consequently the companies face the danger of decline and
will go for adopting retrenchment strategies. Eg: fountain pens, manual type writers, teleprinters, steam engines, jute
and jute products, slide rules, calculators and wooden toys are some products that have either disappeared or face
decline.

There are three types of retrenchment strategies – Turnaround Strategies, Divestment Strategies and Liquidation
strategies.

1. Turnaround Strategies

Turnaround strategies derives their name from the action involved that is reversing a negative trend. There are
certain conditions or indicators which point out that a turnaround is needed for an organization to survive. They are:

 Persistent Negative cash flows

 Negative Profits
 Declining market share
 Deterioration in Physical facilities
 Over manning, high turnover of employees, and low morale
 Uncompetitive products or services
 Mismanagement

An organization which faces one or more of these issues is referred to as a ‘sick’ company.

There are three ways in which turnarounds can be managed

 The existing chief executive and management team handles the entire turnaround strategy with the advisory support
of a external consultant.
 In another case the existing team withdraws temporarily and an executive consultant or turnaround specialist is
employed to do the job.
 The last method involves the replacement of the existing team specially the chief executive, or merging the sick
organization with a healthy one.

Before a turn around can be formulated for an Indian company, it has to be first declared as a sick company. The
declaration is done on the basis of the Sick Industrial Companies Act (SICA), 1985, which provides for a quasi
judicial body called the Board of Industrial and Financial Reconstruction (BIFR) which acts as the corporate doctor
whenever companies fall sick.

2. Divestment Strategies

A divestment strategy involves the sale or liquidation of a portion of business, or a major division. Profit centre or
SBU. Divestment is usually a part of rehabilitation or restructuring plan and is adopted when a turnaround has been
attempted but has proved to be unsuccessful. Harvesting strategies a variant of the divestment strategies, involve a
process of gradually letting a company business wither away in a carefully controlled manner
 Reasons for Divestment

 The business that has been acquired proves to be a mismatch and cannot be integrated within the company. Similarly
a project that proves to be in viable in the long term is divested
 Persistent negative cash flows from a particular business create financial problems for the whole company, creating
a need for the divestment of that business.
 Severity of competition and the inability of a firm to cope with it may cause it to divest.
 Technological up gradation is required if the business is to survive but where it is not possible for the firm to invest
in it. A preferable option would be to divest
 Divestment may be done because by selling off a part of a business the company may be in a position to survive
 A better alternative may be available for investment, causing a firm to divest a part of its unprofitable business.
 Divestment by one firm may be a part of merger plan executed with another firm, where mutual exchange of
unprofitable divisions may take place.
 Lastly a firm may divest in order to attract the provisions of the MRTP Act or owing to oversize and the resultant
inability to manage a large business.

Eg: TATA group is a highly diversified entity with a range of businesses under its fold. They identified their non –
core businesses for divestment. TOMCO was divested and sold to Hindustan Levers as soaps and a detergent was
not considered a core business for the Tatas. Similarly, the pharmaceuticals companies of the Tatas- Merind and
Tata pharma – were divested to Wockhardt. The cosmetics company Lakme was divested and sold to Hindustan
Levers, as besides being a non core business, it was found to be a non- competitive and would have required
substantial investment to be sustained.

3. Liquidation Strategies

A retrenchment strategy which is considered the most extreme and unattractive is the liquidation strategy, which
involves closing down a firm and selling its assets. It is considered as the last resort because it leads to serious
consequences such as loss of employment for workers and other employees, termination of opportunities where a
firm could pursue any future activities and the stigma of failure

The psychological implications

 The prospects of liquidation create a bad impact on the company’s reputation.

 For many executives who are closely associated firms, liquidation may be a traumatic experience.

Legal aspects of liquidation: Under the Companies Act 1956, liquidation is termed as winding up. The Act defines
winding up of a company as the process whereby its life is ended and its property administered for the benefit of its
creditors and members. The Act provides for a liquidator who takes control of the company, collect its assets, pay it
debts, and finally distributes any surplus among the members according to their rights.
Difference Between Strategy Formulation and Strategy Implementation

Strategy Formulation and Strategy Implementation are the two most important phases of
strategic management process. Strategy Formulation means crafting a combination of strategies
and picking out the best one to achieve the organizational goals and objectives and thereby
reaching the vision of the organization. It involves a number of steps which are performed in
chronological order.

On the other hand, Strategy Implementation refers to the execution of the opted strategy, i.e. it
converts the chosen strategy into action, for the realization of organizational goals and
objectives. There are many management students, who often juxtapose the two terms. But there
exist a fine line of differences between strategy formulation and strategy implementation, which
has been explained in the article below.

Content: Strategy Formulation Vs Strategy Implementation

1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart

BASIS FOR STRATEGY

STRATEGY FORMULATION
COMPARISON IMPLEMENTATION

Meaning Strategy Formulation refers to the Strategy Implementation

preparation of a well thought means to bring the formulated
strategy, that helps in the strategy into action.
achievement of organizational
goals.
 BASIS FOR STRATEGY
STRATEGY FORMULATION
COMPARISON IMPLEMENTATION

Concept Placement of forces before action Managing forces at the time of

takes place. strategy execution.

Process type Logical Operational

Emphasis on Effectiveness Efficiency

Responsibility Top Management Functional Management

Orientation Planning Execution

Activity type Entrepreneurial Administrative

Requirement of Analytical skills Leadership skills

Definition of Strategy Formulation

Strategy Formulation is concerned with the crafting and designing of strategies, and picking the
best strategy for execution, to achieve the desired organizational goals and objectives. It is the
second stage of the Strategic Management Process. The following are the three major aspects
of Strategy Formulation:

 Corporate Level Strategy

 Business Level or Competitive Level Strategy
 Functional Level Strategy

Strategy Formulation involves evaluating the current business strategy and determining measures
to improve them. Ascertaining the major areas where business needs any help from the external
environment of business. In this phase, the present issues and problems of the organization are
resolved first. Alternative courses of action are prepared, taking all the items into account. After
that, the strategy is formulated accordingly for implementation, after all, considerations.

Definition of Strategy Implementation

This is the third and final phase of Stage of Strategic Management Process, where the formulated
strategy is put into action to meet out the organizational goals and objectives. Strategy
Implementation is a process of converting planned decisions into action.

Strategy Implementation Model

It includes directing the ongoing strategy so that it can work in an efficient manner and taking
corrective measures to improve its performance time to time, to reach the targeted results. The
following activities are involved in it:

 Allocation of resources like the man, material, money, machinery, etc.

 Designing the organizational structure for handling new strategy.
 Training manpower.
 Ascertaining functional process.
 A devising system in the organization.

Key Differences Between Strategy Formulation and Strategy Implementation

The following are the major differences between strategy formulation and strategy
implementation:

1. Strategy Formulation refers to designing the strategy. Strategy Implementation means,

execution of the opted strategy.
2. Strategy Formulation putting all forces into its place before an action takes place while
Strategy Implementation focuses on managing those forces during execution.
3. Strategy Formulation is a logical process, whereas Strategy Implementation is an
operational process.
4. Strategy Formulation puts emphasis on effectiveness, but Strategy Implementation gives
stress on efficiency.
 5. Strategy Formulation is the responsibility of top management. Conversely, middle
management is responsible for Strategy Implementation.
6. Strategy Formulation requires intuitive skills. In contrast to, Strategy Implementation,
which needs motivational skills.
7. Strategy Formulation is an entrepreneurial activity. On the other hand, Strategy
Implementation is an administrative activity.
8. Strategy Formulation is related to planning, but Strategy Implementation is concerned
with action.

Conclusion

Strategic Management Process is a combination of three processes, i.e. Strategy Analysis,

Strategy Formulation, Strategy Implementation. First of all, in depth diagnosis (analysis) on the
business environment, organizational goals, resources, and competencies is performed, which is
followed by strategy choice (formulation) where alternative strategies are prepared and after
taking into consideration various matters the best action plan is chosen to reach the desired goals.
Then finally comes the strategy execution (implementation), where the decision is brought into
action. Without implementation, the strategy would be of no use to the organization.
5 Important Factors Affecting the Choice of Channels of Distribution by the
Manufacturer

(A) Considerations Related to Product

When a manufacturer selects some channel of distribution he/she should take care of such factors
which are related to the quality and nature of the product. They are as follows:

1. Unit Value of the Product:

When the product is very costly it is best to use small distribution channel. For example,
Industrial Machinery or Gold Ornaments are very costly products that are why for their
distribution small distribution channel is used. On the other hand, for less costly products long
distribution channel is used.

2. Standardised or Customised Product:

Standardised products are those for which are pre-determined and there has no scope for
alteration. For example: utensils of MILTON. To sell this long distribution channel is used.

On the other hand, customised products are those which are made according to the
discretion of the consumer and also there is a scope for alteration, for example; furniture. For
such products face-to-face interaction between the manufacturer and the consumer is essential.
So for these Direct Sales is a good option.

3. Perishability:
A manufacturer should choose minimum or no middlemen as channel of distribution for such an
item or product which is of highly perishable nature. On the contrary, a long distribution channel
can be selected for durable goods.

4. Technical Nature:
If a product is of a technical nature, then it is better to supply it directly to the consumer. This
will help the user to know the necessary technicalities of the product.
(B) Considerations Related to Market
Market considerations are given below:
1. Number of Buyers:
If the number of buyer is large then it is better to take the services of middlemen for the
distribution of the goods. On the contrary, the distribution should be done by the manufacturer
directly if the number of buyers is less.

2. Types of Buyers:
Buyers can be of two types: General Buyers and Industrial Buyers. If the more buyers of the
product belong to general category then there can be more middlemen. But in case of industrial
buyers there can be less middlemen.

3. Buying Habits:
A manufacturer should take the services of middlemen if his financial position does not permit
him to sell goods on credit to those consumers who are in the habit of purchasing goods on
credit.

4. Buying Quantity:
It is useful for the manufacturer to rely on the services of middlemen if the goods are bought in
smaller quantity.

5. Size of Market:
If the market area of the product is scattered fairly, then the producer must take the help of
middlemen.

(C) Considerations Related to Manufacturer/Company

Considerations related to manufacturer are given below:
1. Goodwill:
Manufacturer’s goodwill also affects the selection of channel of distribution. A manufacturer
enjoying good reputation need not depend on the middlemen as he can open his own branches
easily.
2. Desire to control the channel of Distribution:
A manufacturer’s ambition to control the channel of distribution affects its selection. Consumers
should be approached directly by such type of manufacturer. For example, electronic goods
sector with a motive to control the service levels provided to the customers at the point of sale
are resorting to company owned retail counters.

3. Financial Strength:
A company which has a strong financial base can evolve its own channels. On the other hand,
financially weak companies would have to depend upon middlemen.

(D) Considerations Related to Government

Considerations related to the government also affect the selection of channel of distribution. For
example, only a license holder can sell medicines in the market according to the law of the
government.

In this situation, the manufacturer of medicines should take care that the distribution of his
product takes place only through such middlemen who have the relevant license.

(E) Others
1. Cost:
A manufacturer should select such a channel of distribution which is less costly and also useful
from other angles.

2. Availability:
Sometimes some other channel of distribution can be selected if the desired one is not available.

3. Possibilities of Sales:
Such a channel which has a possibility of large sale should be given weight age.
 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 Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion, Public
Relations and Direct Marketing. The marketers need to view the following questions in order to
have a balanced blend of these promotional tools.

 What is the most effective way to inform the customers?

 Which marketing methods to be used?
 To whom the promotion efforts be directed?
 What is the marketing budget? How is it to be allocated to the promotional tools?
Elements of Promotion Mix

1. Advertising: The advertising is any paid form of non-personal presentation and promotion of
goods and services by the identified sponsor in the exchange of a fee. Through advertising, the
marketer tries to build a pull strategy; wherein the customer is instigated to try the product at
least once.The complete information along with the attractive graphics of the product or service
can be shown to the customers that grab their attention and influences the purchase decision.
2. Personal Selling: This is one of the traditional forms of promotional tool wherein the salesman
interacts with the customer directly by visiting them. It is a face to face interaction between the
company representative and the customer with the objective to influence the customer to
purchase the product or services.
3. Sales Promotion: The sales promotion is the short term incentives given to the customers to
have an increased sale for a given period.Generally, the sales promotion schemes are floated in
the market at the time of festivals or the end of the season. Discounts, Coupons, Payback offers,
Freebies, etc. are some of the sales promotion schemes.With the sales promotion, the company
focuses on the increased short-term profits, by attracting both the existing and the new
customers.
4. Public Relations: The marketers try to build a favourable image in the market by creating
relations with the general public. The companies carry out several public relations campaigns
with the objective to have a support of all the people associated with it either directly or
indirectly.The public comprises of the customers, employees, suppliers, distributors,
shareholders, government and the society as a whole. The publicity is one of the form of public
relations that the company may use with the intention to bring newsworthy information to the
public.
 E.g. Large Corporates such as Dabur, L&T, Tata Consultancy, Bharti Enterprises,
Services, Unitech and PSU’s such as Indian Oil, GAIL, and NTPC have joined hands with
Government to clean up their surroundings, build toilets and support the swachh Bharat Mission.

5. Direct Marketing: With the intent of technology, companies reach customers directly without
any intermediaries or any paid medium.The e-mails, text messages, Fax, are some of the tools of
direct marketing. The companies can send emails and messages to the customers if they need to
be informed about the new offerings or the sales promotion schemes.

E.g. The Shopperstop send SMS to its members informing about the season end sales and extra
benefits to the golden card holders.

Thus, the companies can use any tool of the promotion mix depending on the nature of a product
as well as the overall objective of the firm.

Kinds of Promotion
Definition: The Promotion is a mode of communication that companies use to create awareness
among the prospective customers about the product, product line, brand and the company with an
objective to generate sales and create a brand loyalty.

The companies having different objectives choose different kinds of promotion. These are:
1. Informative Promotion: The primary objective of every promotional activity is to disseminate
information about the product, product line, brand, and the company. The informative promotion
is prevalent at every stage of product life cycle and is an essential ingredient for creating the
primary demand. The marketers adopt this promotion strategy to convince customers to try a
product at least once. It is based on the notion that the customer will purchase the product only if
he has the adequate information about it.
2. Persuasive Promotion: The persuasive promotion is prevalent at the growth stage of a
product where the primary objective of the management is to persuade people to buy. The
basic purpose of this promotion strategy is to stimulate purchase and create a positive image of
the product in the minds of customers in order to influence their long-term behaviors. Many
firms do not adopt this kind of promotion as it involves high-pressure selling.
3. Reminder Promotion: The reminder promotion is often adopted at the stage when a product
reaches its maturity. The purpose of such promotion is to keep the product alive in the
minds of the customers. Here, the firm emphasizes on the product’s utility, features, brand
names with the intent to make customers remind the product. This promotion strategy acts as
a “memory jogger” that enables the customers to remember the product and influences their
long-term buying behavior.
4. Buyer behavior Modifications: The effect of promotional strategies could be accessed through
the modifications in the consumer behavior. The constant personal selling and repeated
advertisements could be used to measure the effectiveness of such promotional schemes.

Thus, the companies can choose any of the promotions depending on the nature of the product
and the pursued objectives.

Hierarchy Of Effects Model

Introduction

Introduction

The Hierarchy of Effects Model was created in 1961 by Robert J Lavidge and Gary A Steiner. This
marketing communication model, suggests there are six steps from viewing a product advertisement
(advert) to product purchase. The job of the advertiser is to encourage the customer to go through the six
steps and purchase the product.
The diagram below shows the steps in The Hierarchy Of Effects Model

Awareness

The customer becomes aware of the product through advertising. This is a challenging step, there is no
guarantee that the customer will be aware of the product brand after they view the advert. Customers see
many adverts each day but will only remember the brand of a tiny fraction of products.

Knowledge

The customer begins to gain knowledge about the product for example through the internet, retail advisors
and product packaging. In today's digital world this step has become more important as consumers expect
to gather product knowledge at the click of a button. Consumers will quickly move to competitor brands
if they do not get the information they want. The advertiser's job is to ensure product information is easily
available.

Liking

As the title states, this step is about ensuring that the customer likes your product. As an advertiser what
features can you promote to encourage the customer to like your product?

Preference
Consumers may like more than one product brand and could end up buying any one of them. At this stage
advertisers will want the consumer to disconnect from rival products and focus on their particular product.
Advertisers will want to highlight their brand's benefits and unique selling points so that the consumer can
differentiate it from competitor brands.

Conviction

This stage is about creating the customer's desire to purchase the product. Advertisers may encourage
conviction by allowing consumers to test or sample the product. Examples of this are inviting consumers
to take a car for a test drive or offering consumers a free sample of a food product. This reassures
consumers that the purchase will be a safe one.

Purchase

Having proceeded through the above stages, the advertiser wants the customer to purchase their product.
This stage needs to be simple and easy, otherwise the customer will get fed up and walk away without a
purchase. For example a variety of payment options encourages purchase whilst a complicated and slow
website discourages purchases.

Six Steps and Behaviour

Lavidge and Steiner suggested that the six steps can be split into three stages of consumer behaviour:
cognitive, affective and conative.

 Cognitive (thinking) so that the consumer becomes product

aware and gathers product knowledge
 Affective (feeling) so that the consumer likes the product
brand and has conviction in it
 Conative (behaviour) so that the consumer buys the product
brand

The job of the advertiser is to promote the three behaviours so that the consumer proceeds to Conative
behaviour and purchases the product.

Conclusion

This model is known as a "hierarchy" because the number of consumers moving from one stage to the
next reduces, as you move through the model. There may be a lot of consumers that see the product
advert but not everyone will make a purchase. It takes a lot of work to take a consumer from awareness to
the final stage of purchase, so businesses need to ensure that they try their utmost to get customers from
conviction to complete the final stage of purchase.

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