Chapter-11

MARKETING
Market- It refers to a set of actual and potential buyers of a product or service.

Meaning-Marketing refers to those business activities that direct the flow of goods and services from producers to
consumers.
OR
It is a social process by which people exchange goods and services for money or something of value to
them.
# Merchandising , selling and distribution are collectively called Marketing.
Need- Basic to human beings and do not pertain to a particular product / It is a state of felt deprivation.
Wants- Potential satisfier of needs.
FEATURES OF MARKETING
1. Needs and wants- A marketer's job in an organisation is to identify needs of the target customers and
develop products and services that satisfy such needs.
2.Creating a market offering- Market offering refers to a complete offer for a product or service having
given features like size,quality, taste etc, at a certain price, available at a given outlet or location etc. A
good product is developed after analysing the needs and wants of the potential buyer.
3.Customer value - Customers will purchase a product only if it is perceived to be giving the greatest
benefit or value for the money. The purpose of marketing is to generate customer value at a profit.
4.Exchange mechanism- The process of marketing involves exchange of goods and services for money
or for something of value to them. It is referred to as the essence of marketing.
Conditions of exchange- At least two parties, each party should be capable of offering, ability to
communicate,freedom to accept or reject the offer.

FUNCTIONS OF MARKETING-
1. Gathering and analysing market information- It is important to identify the needs of the customers so
that analysis can be done for available opportunities. It can be collected through the internet, SMS etc.

2 .Marketing planning- A marketer has to develop a complete market plan so that the marketing objective
can be achieved. For example- If a marketer's aim is to achieve market share from 10% to 20% in the next
3 years. For this he has to develop a complete marketing plan like production, promotion etc.

3. Product designing and development- It helps to make the product attractive to the target customers.
A good design can improve performance of a product and give it a competitive advantage in the market.

4.Standardization and grading- Standardisation refers to producing goods of predetermined

specifications which help in uniformity. Grading is the process of classification of products into different
groups on the basis of quality, price etc. Standardisation and grading ensures that goods belong to a
particular standard and quality.

5.Customer support service- It includes services like after sales services, handling customer complaints,
technical services etc.These services are very effective in bringing repeat sales from customers and
developing brand loyalty for a product.
6.Packaging and labelling- Packaging refers to designing and developing the container or wrapper.
Labelling refers to designing and developing the label to be put on the package.

7.Branding- The process of giving a name, sign, symbol etc. to a product is called branding. It helps in
identifying product and it also creates product differentiation.

8.Pricing of product- Price refers to an amount of money paid for any product. The marketer has to
analyse various factors to determine the price of a product.

9.Promotion-It involves informing the customers about the firm's product, its features etc.and persuading
them to purchase these products. Various promotional tools like sales promotion, advertisement etc. are
used for promotion of the product.

10.Physical distribution- It is concerned with making the goods and services available at the right place,
at the right time and the right quantity so that consumers can purchase the same.

11.Transportation- It involves physical movement of goods from the place of production to the place of
distribution.

12.Warehousing/storage- In order to maintain smooth flow of product in the market, there is a need for
proper storage of the products.

MARKETING MANAGEMENT PHILOSOPHIES/CONCEPTS

Basis Production Product Selling Marketing Societal

Concept Concept Concept Concept Concept

Starting point Factory Factory Factory Market Market and

society

Focus Quantity of Quality of Sale of existing Customer’s Customer’s

product product product needs needs and
satisfaction society’s well
being

Means Availability and Improvement Aggressive Integrated Integrated

affordability of in quality of selling and market market
product product promotional
tools

Ends Profit through Profit through Profit through Profit through Profit through
large volume of improving increasing customer customer
production quality sales satisfaction satisfaction
and social
welfare
MARKETING MIX- Marketing mix refers to a combination of variables chosen by a firm to prepare its
market offering.
OR
It is described as the set of marketing tools that a firm uses to pursue its marketing objective in a target
market.
ELEMENTS OF MARKETING MIX (4P's)
1. Product- It means anything of value or goods or services. Product mix is the combination of all
products offered for exchange by a company. It includes important decisions about the branding,
packaging and labeling of the products.
2. Price- It means the amount of money paid for purchase. Price mix involves the factors determining
the price like different pricing methods,pricing policies etc.and fix a price for the firm's products.
3. Place or physical distribution- It is concerned with availability of product at the right place, at the
right time and in the right quantity so that consumers can purchase the same. It includes decisions
regarding channels of distribution and physical movement of the product.
4. Promotion- It involves informing the customers about the firm's product, its features etc.and
persuading them to purchase these products. Various promotional tools like sales promotion,
advertisement etc. are used for promotion of the product.

PRODUCT
Product is a mixture of tangible and intangible attributes which can be exchanged for value.
It is a bundle of utilities which is purchased.
It includes branding,packaging and labeling.
BRANDING
Branding is the process of giving a name, a sign or a symbol to a product. It helps in identifying and
distinguishing it from the competitor's products.
Brand- A brand is a name,term,sign,symbol,design or some combination of them that is used to identify
the product and to differentiate them from other products e.g.Nike,Bata.
Brand Name -That part of a brand which can be spoken e.g Maggie,Uncle chips
Brand Mark-That part of a brand which cannot be spoken but can be recognised. For example Gattu of
Asian Paints.
Trademark- A brand or a part of a brand which is given legal protection against its use by other
firms.(Regd.brad name)
Features of a good brand name
1.The brand name should be short, easy to pronounce, spell,recognise and remember.
2. It should be suggestive and distinctive.
3. It should be adaptable to packaging or labeling.
4.It should be versatile, capable of being registered and should have staying power.

PACKAGING- Packaging means the act of designing and producing the container or wrapper of a product
and putting the product into it.
Levels of packaging
1.Primary Packaging- It refers to the immediate container of the product. It may be kept throughout the
entire life of the product e.g. a tube of paste.
2. Secondary Packaging-It refers to the additional layers of protection e.g. cardboard box.
3. Transportation Packaging-It refers to the package necessary for storage or transportation
e.g.corrugated box.

FUNCTIONS OF PACKAGING-
1. Product identification- Packaging helps in identification of the products. For example Colgate in red
colour or Ponds cream jar can be easily identified by its package.
2. Product protection- Packaging protects the content of a product from spoilage,breakage, leakage,
damage, climate effect etc.
3. Product promotion-It helps in promotion of the product as a good package attracts the attention of the
people at the time of purchase.
4.Facilitating use of the product- It facilitates use of the product to the customer through appropriate
size and shapes.

LABELING
Labeling is the process of designing the label to be put on the package.
Functions
1. Identification of the product or brand- It helps in identification of the product or brand.For example-
brand name of biscuits or Chips.
2.Providing information required by law- It provides information required by law e.g. statutory warning
on cigarette or Pan masala package , safety warnings etc.
3.Helps in promotion of product-It helps in promotion of product by attracting attention and giving
reason for purchase.It also contains sales promotion schemes like 40% extra free, Save Rs 15 etc.
4. Grading of product- It helps in grading of products into different categories e.g Brook Bond Red
Label,Green Label etc.
5.Product specification- It describes the product, its usage, cautions in use and specifies its contents
i.e.ingredients, net weight etc.

PRICE
Price is the amount of money paid by buyer to seller for purchase of a product or a service.
Factors affecting price determination
1.Product cost- This includes the cost of producing, distributing and selling the product. The cost sets the
minimum level or floor price of the product.Price should recover total costs eg.fixed costs, variable costs
and semi variable costs.
(Fixed costs- Which are fixed and do not vary with the volume of production e.g.rent of building,salary etc.
Variable costs-Which vary directly with the level of activity e.g.power, labour, raw material etc.
Semi variable costs- Which includes fixed and variable costs e.g fixed salary plus commission on sales to
a sales person)

2. The utility and demand- The utility and demand sets the upper limit of price.
In case of inelastic demand of product - a firm can fix higher price
In case of elastic demand- a firm should fix lower price.
3. Extent of competition in the market- This is affected by the nature and degree of competition.
If a firm does not face any competition then the firm has complete freedom to fix price.
In case of more competition, a firm has to fixm price as per the competitor’s price.
4. Govt. regulations- To protect the interest of consumers, the government fix the price of essential
commodities and services ie.medicines. Govt.does not allow the firms to charge a higher price than
declared price of these essential commodities.

5.Marketing methods used- The price is also affected by the other elements of marketing such as
distribution system,quality of advertising, type of packaging, after sales services etc.

6. Pricing objectives-
a.If the firm want to earn highest profit in short run then it will charge higher price but If the firm want to
earn highest profit in long run then it will charge lower price.
b.If firms wants larger market sharing then prices will be lower.
c. Higher prices are charged for attaining higher quality of product.
d. To survive in a competitive market the firm has to offer discounts.

PLACE/ PHYSICAL DISTRIBUTION- It is concerned with availability of product at the right place, at the
right time and in the right quantity so that consumers can purchase the same. It includes decisions
regarding channels of distribution and physical movement of the product.AL DISTRIBUTION
COMPONENTS OF PHYSICAL DISTRIBUTION
The main components of physical distribution are as follows-
1.Order processing- It is the first step in buyer -seller relationship. A good physical distribution system
should provide for an accurate and speedy processing of orders. In the absence of this goods would reach
the customers late or in the wrong quantity. It also results in customer dissatisfaction, danger of loss of
business and goodwill.
2. Transportation- It is the means of carrying goods and raw materials from the point of production to the
point of sale. Without physically availability of goods, the sale cannot be completed.
3.Warehousing- It refers to the act of storing products to create time utility. In case of larger number of
warehouses, a firm can serve large customers.but the cost of warehousing will be greater. So the firms
has to maintain a balance between cost of warehing and customer service.
4. Inventory control- It is a very important decision of deciding the level of inventory. Higher the level of
inventory- higher will be the level of customer service but the cost of inventory will also be high. So
balance is to be maintained between cost of inventory and customer’s satisfaction.
Imp.factors determining inventory levels- Firm’s policy, degree of sales forecasts distribution system and
cost of inventory.
CHANNELS OF DISTRIBUTION
1. Direct Channel (Zero level channel)
2. Indirect channel (One level channel, Two level channel, Three level channel)

Direct channel (Zero level) Where goods are made directly available by the manufacturers to customers.
For example own retail outlets like Bata, mail order selling, internet selling and
Manufacturers—---Customers selling through their own sales force like Eureka forbes etc.

One level channel Manufacturer—---Retailer—-Customer

Only one intermediary/middleman
Examples- Automobile companies like Maruti Suzuki etc.
 Two level channel Manufacturer–Wholesaler—Retailer—Customer
Use of two middlemen.
This channel is used distribution of consumable goods like soaps, oils etc.to cover
large market area.

Three level channel Manufacturer–Agent—-Wholesaler—Retailer—Customer

Manufacturer uses their own selling agents or brokers
This channel is used to cover wide market

PROMOTION MIX - It refers to combination of promotional tools or communication used by an

organisation to give information to the potential customers about the firm's product, its features etc.and
persuading them to purchase these products. Various tools of communication includes- Advertising,
Personal selling, Sales promotion and Public relation.
PROMOTIONL TOOLS/ ELEMENTS OF PROMOTION MIX
Advertising 1.Impersonal form of communication as their is no face to face contact
between the prospects and advertiser.
2. It is a paid form of communication
3. Identified sponsors- It is undertaken by some identified individual or
company who bear the cost of advertisement.

Personal selling It involves oral presentation of message in the form of communication

between one or more prospective customers for the purpose of sales
1. It is a personal form of communication as their is face to face
interaction between the seller and the buyer.t
2. Development of relationship because it allows a salesperson to
develop personal relationship with the customers.

Sales promotion It refers to short term incentives, which are designed to encourage the
buyers to make immediate purchase of a product or service e.g.free gift,
free samples etc. Companies use sales promotion tools to promote to-
1. Customers(e.g.free samples, discounts and contests)
2. Tradesmen/middlemen(e.g.cooperative advertising, dealer
discounts etc.)
3. Salespersons(e.g.bonus,special offers,salesmen contests)

Public relation It involves a variety of programmes designed to promote or protect a

company’s image and its individual products in the eyes of the public. For
example, sponsoring sports and cultural events, contributing money and
time to certain causes like children;s education, environment etc.
They are specially useful when there is negative publicity about the
company or its product.
DIFFERNCE BETWEEN ADVERTISING ND PERSONAL SELLING
Basis Advertising Personal Selling

Form It is an impersonal form of It is a Personal form of communication

communication

Flexiblility Less flexible as sandardised Flexible as message can be changed

Message are used

Interaction One-way communication Two-way communication

Feedback No direct feedback Direct and immediate feedback

Reach It reached masses Limited number of customers can be

contacted

Coverage Covers market in short time Takes long time to cover market

Cost Less cost as it covers large number of High cost as it covers limited

customers number of customers

Use of mass media Make use of mass media such as Do not make use of mass media

radio, T.V etc

Examples TV commercials, print ads, online Sales meetings, product demonstrations
banners