Awash Valley College

Principle of Marketing
Chapter 1
Overview of Marketing
BY: Aman G
 Awash Valley College

Course: Principle of Marketing

BY: Aman G
marketing is the process of planning and executing
the conception, pricing, promotion and distribution
of ideas, goods, and services to create exchanges
that satisfy individual and organizational goals .

On the other hand marketing may also be defined

as managing profitable customer relationships.

Marketing can be also defined as a social and

managerial process by which individuals and groups
obtain what they need and want through creating
and exchanging products and value with others.
BY: Aman G
 core marketing concepts
I. Needs, wants, and demands; The most basic concept
underlying marketing is that of human needs.
 Needs can not created by marketers; but they are a basic
part of the human makeup.
 It include :
 Basic physical needs for food, clothing, warmth and safety;
 social needs for belonging and affection; and
 individual needs for knowledge and self-expression.
 Wants are the form human needs take as they are shaped
by culture and individual personality. Wants are shaped by
one’s society and are described in terms of objects that will
satisfy needs.
 When backed by buying power, wants become demand.
BY: Aman G
II. Marketing offers (products, services, and
experiences ) a set of benefits that they promise to
consumers to satisfy their needs.
 Marketing offer-some combination of products,
services, information, or experiences, persons,
places, organizations, information, and ideas.
 Marketing offers are not limited to physical
products.
 It offers tangible and intangible items

BY: Aman G
III. Value and Satisfaction: Consumers usually face a
broad array of products and services that might
satisfy a given need.
 Customer value is the difference between the
values the customer gains from owning and using
a product and the costs of obtaining the product
 Customer satisfaction with a purchase depends
on how well the product’s performance lives up to
the customer’s buy again and tell others about
their good experiences.
 Dissatisfied customers often switch to competitors
and disparage the product to others.
BY: Aman G
Iv. Exchanges, Transactions,and Relationships : Marketing
occurs when people decide to satisfy needs and wants
through exchange, Exchange is the act of obtaining a desired
object form someone by offering something in return.
 Whereas exchange is the core concept of marketing, a
transaction, in turn, is marketing’s unit of measurement.
 A transaction consists of a ride of values between two
parties: one party gives X to another party and gets Y in
return.
 Marketing consists of actions taken to build and maintain
desirable exchange relationships with target audiences
involving a product, service, idea, or other object

BY: Aman G
 V, Markets: The concepts of exchange and relationships
lead to the concept of market.
 A market is the set of actual and potential buyers of a
product.
 The size of a market depends on the number of people
who exhibit the need, have resources to engage in
exchange, and are willing to exchange these resources
for what they want.
 Basically the term market stood for the place where
buyers and sellers gathered to exchange their goods .
 Economists use the term market to refer to a collection
of buyers and sellers who transact in a particular product
class

BY: Aman G
 Importance of Marketing
 Marketing Helps in Transfer, Exchange and
Movement of Goods:
 Marketing Is Helpful In Raising and Maintaining
The Standard Of Living Of The Community:
 Marketing Creates Employment:
 Marketing as a Source of Income and Revenue:
 Marketing Acts as a Source of New Ideas:
 Marketing Is Helpful In Development of An
Economy

BY: Aman G
 The scope of marketing
 The scope of marketing deals with the question, ‘what is
marketed ?
 marketing people are involved with ten types of entities
 Goods
 Services
 Events
 Experiences
 Persons
 Places
 Properties
 Organizations
 Information
 Idea BY: Aman G
Marketing Management Orientations
 There are five alternative concepts used
which organizations conduct their marketing
activities:
 production concepts
 Product concepts
 Selling concepts
 Marketing concepts
 societal marketing concepts.

BY: Aman G
 The production Concept: The production concept holds
that consumers will favor products that are available and
highly affordable.
 Therefore, management should focus on improving
production and distribution efficiency
 The Product Concept: The product concept holds that
consumers will favor products that offer the most in
quality, performance, and innovative features.
 Thus, an organization should devote energy to making
continuous product improvements.
 the Selling Concept: Many companies follow the selling
concept, which holds that consumers will not buy enough
of the firm’s products unless it undertakes a large-scale
selling and promotion effort.
BY: Aman G
 The Marketing Concept: The marketing concept holds
that achieving organizational goals depends on knowing
the needs and wants of target markets and delivering the
desired satisfactions better than those competitors do
 The Societal Marketing Concept: The Societal marketing
concept holds that the organization should determine the
needs, wants, and interests of target markets.
 It should then deliver superior value to customers in a
way that maintains or improves the consumer’s and the
society’s well-being.
 Societal marketing concept calls on marketers to balance
three considerations in setting their marketing policies:
Company profits, consumer wants, and society’s interests.

BY: Aman G
 The Goal of Marketing :
is to obtain competitive advantage by meeting
consumer wants and needs more effectively than
competing firms.
 maximize consumption
 maximize customer satisfaction
 maximize choice
 maximize like quality

BY: Aman G
 chapter Two

Marketing Environments

BY: Aman G
 Marketing Environments
 Developing and implementing marketing plans involves a
number of decisions.
 Making those decisions is both an art and a science.
 To provide insight into and inspiration for marketing
decision making, companies must possess
comprehensive, up-to-date information on macro trends
as well as more micro effects particular Environment to
their business.
 Marketing environment is all of the internal and external
forces that affect a marketer’s ability to create,
communicate, deliver and exchange offerings of value

BY: Aman G
 Marketing Environment
Basically there are two broad categories of
marketing Environment
1. Internal Environment
2. External Environment

BY: Aman G
Internal environment:
Internal environment: Refers to the organization itself and
the factors that are directly controllable by the organization
The parts of the organization, the people and the processes
used to create, communicate, deliver and exchange offerings
that have value.
The organization can directly control its internal environment.
Strengths and weaknesses are internal factors that positively
and negatively affect the organization
Internal organization is affected by the personal and political
natures of the people who make it up.

BY: Aman G
The main parts of a typical organization usually include:
 Senior management responsible for making decisions
about the overall objectives and strategy of the
organization
 Middle management typically responsible for a
department or a geographic region.
 Makes decisions about the overall objective and strategy
of the department or geographic region for which they
have responsibility.
 To make sure the objective for their department or region
are aligned with the objectives of the organization as a
whole

BY: Aman G
 Functional department’s organizations can be structured
around functional departments and/or regions. It makes
decisions about the overall objective and strategy of their
department. It includes:
 Marketing
 Sales
 Research and development
 Customer service
 Distribution/logistics
 Manufacturing
 Finance
 Human resources
 Administration
Aim: to make sure the objectives of the organization and to
manage their departments to ensure the departmental
objectives are achieved. BY: Aman G
 External Environment
External Environment can be :
 Micro Environment and
 Macro Environment

BY: Aman G
 BUSINESS MICRO ENVIRONMENT:
 Micro environment are the forces within an organizations
industry that affects its ability to serve its customers and
clients target markets, partners and competitors
Micro Environment Consists :
 Customers
 Clients
 partners,
 competitors
 other parties
 Not directly controllable by the organization
 In analyzing the micro environment, marketers need to
consider those stakeholders

BY: Aman G
 Business organization has to consider
 The Company
In designing marketing plans, marketing management takes other
company group/department into account .
 Suppliers
They provide resources needed by the company’s system to produce its
goods and services. Marketing manager must watch also supply
availability and suppliers reliability. .
  Marketing Intermediaries
These groups help the company to promote, sell and distribute its
goods to final buyers. It includes:
Resellers: distribution channel firms that help the company find final
customers.
Physical distribution firms: help stock and move goods from their
points of origin to their destination;
Financial intermediaries: include banks, credit associations and
companies, insurance companies and other business that help finance
BY: Aman G
 Marketing services agencies They are marketing
research firms, advertising agencies, media firms and
marketing consulting firms which differ based on
creativity, quality, service and price.
 Customers These groups influence the company’s effort.
The magnitude of their influence depends upon their
nature.
 Consumer market:
 Business market:
 Resellers market:
 Government market
 International market
 Competitors: A company must provide greater customer
value and satisfaction than its competitors .
 
 Publics: It is any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its objectives.
 Financial publics: influence the company’s ability to obtain fund.
Development banks, investment houses, and private banks which
facilitate the firm’s ability to obtain funds are taken as financial public.
 Media publics: carry news, features and editorial opinion. Fortune
newspapers, magazines, FM radio, ETV are good examples.
 Government publics: companies must ask an advice on safety and other
matters of their products which the gov. might release legislation
 Citizen-action public: a company’s marketing decisions may be
questioned by consumer organizing environmental groups, minority
groups and others.
 Local publics: include neighbourhood residents and community
organizations. As they are the first to be affected physically, they always
question how a company is considerate in treating its waste
 General publics: a company should think about the general public’s
attitude toward its products and activities .
 Internal publics: include workers, managers, volunteers and the board
of directors . BY: Aman G
 BUSINESS MACRO ENVIRONMENT:
 The company and all of the other actors operate in a
larger macro environment are forces that shape
opportunities and pose threats to the company.
 These forces are uncontrollable and very determinant for
existence Business organization
 It includes :
 Demographic Environment
 Economic Environment
 Technological Environment
 Natural Environment
 Political And Legal Environment
 Socio-cultural Environment

BY: Aman G
 Demographic Environment
 Age
 Educational levels
 Gender composition
 Population size, growth rate and density
 Growth rate
 Density
 Social composition
 Migration :
 Rural-rural:
 rural-urban
 Urban-rural .
 Urban – urban
 Ethnic (race) composition

BY: Aman G
Economic Environment
 Income:
 Growth and recession
 Savings and debt
 Spending patterns
 Credit availability
 Prices

BY: Aman G
 Technological Environment
Any technical change related with products produce from
direct or substitute competition is categorized in such
environment.
Computer hardware replaces mechanical type, washing
machines extinct manual cleaning, wireless or mobile
telephones are preferred to fixed phones. Distinguished
factors under such conditions include:
 Government policy or society
 Conservative culture
 Research and development .
It has become vital for strategists to be able recognize the
limits of their core technologies, know which new
technologies are emerging, and decide when to incorporate
new technology in their products
BY: Aman G
 NATURAL ENVIRONMENT:
Marketers need to be aware of the threat and opportunities
in natural environment. Natural environment might claim
concern of the public or government based on its
characteristics or renewable or non-renewable. In the
former case policies are in favour of developing alternative
sources to replace the depleted natural and in the latter case
once raw material is carefully used .
 The increased cost of energy
 The shortage of raw materials
 Increased population levels:
 The changing role of

BY: Aman G
 POLITICAL AND LEGAL ENVIRONMENT:
 The politics of a country are inevitably linked with government
attitudes to business and to the freedom with which they are allowed
to operate.
 A marketing division should not only be superficial level of government
commitment but also the political change that may completely paralyze
its function.
 A company specifically highlights the following profiles of political
system in any part of the world.
 What type of government is in power? Democratic, socialist,
communist? Etc...
 How stable has the political system proved to be
 What is the incident of strikes?
 How effective have the government economic policies been?
 How is the government viewed in regional as well as international
institutions?
 The other issue is the legal factors.there should be a legal adviser
responsible to a company’s managing director or marketing officer.
BY: Aman G
CULTURAL AND SOCIAL ENVIRONMENT:
 Conducting business across or within national territories
demands, interactions with people who are made ups of set
of values, attitudes, and expectations and their social
organization. Marketers then ought to approach culture in
rigorous manner bearing to:
 Its patterns of social interaction; like identifying the role
and importance of each social class
 Language and the scope that exists for any wrong meaning
 Religion and its influence upon the acceptability of certain
products
 Ethnic and how they influence certain behaviour patterns
 As a marketer prior to marketing of products, cross cultural
analysis is mandatory owing to dependency of customers
purchase on their cultural influence
BY: Aman G
 CHAPTER THREE
CONSUMER BUYING BEHAVIOUR

BY: Aman G
CONSUMER BUYING BEHAVIOUR
 The distinguishing feature of consumer buying behaviour
consists of the activities involved in the buying and using
of products or services for personal and household use
 Its deals with what the factor that affect the consumer
preference
 Consumer purchase behaviour can be affected by:
• Environmental factors
• Individual factors
 That mean what the consumer hear from their
environment and what they perceive can personally
influence their buying behaviour.
 Both these types of influence are carried, consciously or
subconsciously, within the consumer’s memory.
BY: Aman G
Environmental influences
 1. Firm’s marketing communication
• When marketing communications are made by
companies some of the information is retained in memory.
• And then we have an image of companies and the
goods and services they provide.
• Lead to a motivation to purchase the product( or be
aware)
2. Culture:
Norms, beliefs and customs that are learned from society
and lead to common patterns of behaviour. So, as behaviour
is learned, culture determines the broad values and attitudes
an individual holds. The socio-cultural includes subculture,
social class, and group and family influences. Subculture
refers to groups in society that have
BY: Aman G distinct cultural
Reference group affect individuals in three ways:
1. They influence self images and attitudes
2. They expose individuals to new behaviour
3. They create pressure to conform
In family decision-making, individual members may assume different
roles. These are:
1. Information gatherer
2. Influencer
3. Decision maker
4. Purchaser
5. Consumer
So for the purchase of a holiday a mother and daughter may go into
travel agents and pick up brochures; all the family will influence the
decision. .
 5. Situational factors:-
 Product availability, change in price and the existence of queues may
have an effect on purchase behaviour.
BY: Aman G
Individual influences
Psychological factors include perceptions,
motivations, attitudes and personality.
Demographic variables
Lifestyle variables
The economic situation
This again will have consequences for
purchase behaviour.
marketers build up brand awareness so that
a personality for the brand is developed in
the minds of existing or potential buyers
BY: Aman G
TYPES OF BUYING DECISIONS BEHAVIOUR
 There are four types of buying decision behaviour.

BY: Aman G
 After the purchase, consumers might experience post purchase
dissonance (after-sale –discomfort) when they notice certain
disadvantage of the purchased product brand or hear
favourable things about brands not purchased. To counter such
dissonance, the marketer’s after sale communication should
provide evidence and support to help consumers feel good
about the brand choices.
BY: Aman G
BY: Aman G
CONSUMER BUYING PROCESS

BY: Aman G
ORGANIZATIONAL BUYING BEHAVIOR
Business Market
The business market is huge volume.
Business markets involve far more money than do
consumer markets.
 Business buying behaviour:
 It refers to the buying behaviour of the
organizations that buy goods and services for use
in the production of other products and services
that are sold, rented or supplied to others at a
profit.

BY: Aman G
 Reciprocity
BY: Aman G
BY: Aman G
BUSINESS BUYING PROCESS:

BY: Aman G
Major factors affecting business buying decision

BY: Aman G
The End!!
BY: Aman G
 CHAPTER FOUR
MARKET SEGMENTATION,
TARGETING AND POSITIONING

BY: Aman G
 Market segmentation
Market segmentation is dividing a market into
distinct groups of buyers with different needs,
characteristics, or behavior who might require
separate products or marketing mixes.
BY: Aman G
BY: Aman G
 Levels of market segmentation
Market segmentation can be carried out at many different levels which
extend from total market to focus on individual customers.
Mass marketing: - The starting point for discussing segmentation is mass marketing.
In mass marketing, the seller engages in the mass production, mass distribution and mass
promotion of one product for all buyers. The argument for mass marketing is that it creates the
largest potential market, which leads to the lowest costs, which in turn can lead to lower prices
or higher margins.
Segment marketing:-Isolating broad segments that make up a market and adapting the
marketing to match the needs of one or more segments.
A market segment:-Consists of group customers who share a similar set of wants.
The marketer does not create the segments; the marketers’ task is to identify the segments and
decide which one(s) to target.
Niche marketing
Niche:-Is more narrowly defined group seeking a distinctive mix of benefits.
An attractive niche is characterized as follows:-
 The customers in the niche have a distinct set of needs
 They will pay a premium to the firm that best satisfies their needs.
 The niche is not likely to attract other competitors
 The nicher gains certain economies through specialization
 The niche has size , profit ,and growth potential

BY: Aman G
BY: Aman G
 Bases for segmenting business markets
 The business market consists of four broad
segments:
 producers
 Resellers
 Institutions
 governments.
 Whether marketers focus on only one or on
all four of these segments, they are likely to
find diversity among potential customers.

BY: Aman G
 So the bases for segmenting this business markets are the
following:
A. company characteristics: company characteristics, such as
geographic location, type of company, size of company and product
use, can be important segmentation variables.
Some markets tend to be regional because buyers prefer to purchase
from local suppliers, and distant suppliers may have difficulty of
competing in terms of price and service.
Volume of purchase (heavy, moderate, light) is a commonly used bases
for business segmentation.
B. Buying processes:
companies can segment some business markets by ranking key
purchasing criteria, such as price, quality, technical support and
services.
C. Customer relationship: more and more, companies are beginning to
go beyond the traditional segmentation variables by focusing on the
type of relationship they have with their customers. .
BY: Aman G
Criteria for successful segmentation
Uniqueness: Uniqueness refers to large between-group differences in the segments. Greater
differences in a group’s desired benefits render segments that are more unique. The best basis
for forming market segments is the one that creates segments that are most unique. The
objective of market segmentation is to achieve competitive power by translating the
segmentation scheme into integrated strategic and tactical actions. The more unique the
segments are, the easier it is to translate the segmentation results into strategic and tactical
actions.
Responsiveness: If we design specific strategic and tactical actions for a particular segment,
then we would expect that segment to be more responsive than another segment
Action ability: Action-ability is the extent to which the marketing manager can take action on
the results of the segmentation analysis.
Stability: Managers hopes that the segments formed are stable over time with respect to
desired end benefits and classification factors.
Profitability: These techniques need to be applied to the segments to ensure that they are
consistent with the firm’s mission and objectives.
Substantiality: a segment must be large enough to warrant developing and maintaining a
special marketing mix.
Identifiability and measurability: segments must be identifiable and their size measurable.
Accessibility: the firm must be able to reach members of targeted segments with customized
marketing mixes. Some market segments are hard to reach. For example, senior citizens
(especially those with reading or hearing disabilities), individuals who don’t speak English and
the illiterate. BY: Aman G
 STEPS OF SEGMENTING A MARKET
The purpose of segmenting market, in both customer and
business market, is to identify marketing opportunities. To
effectively segment markets, marketers should follow the
following steps.
1. Select a market or product category for study: define the
over all market or product category to be studied.
2. Choose a basis or bases for segmenting the market: this
step requires managerial insight, creativity and market
knowledge. .
3. Select segmentation descriptors: After choosing one or
more bases, the marketer must select segmentation
descriptors.. For example, if companies select demographics
as a base of segmentation, it may use age, occupation, and
income as descriptors. BY: Aman G
4, Profile and analyze segments: the profile should
include the segments size, expected growth, purchase
frequency, current brand usage, brand loyalty, and long
term sales and profit potential. .
5. Select target markets: selecting target markets is not
a part of segmentation but a natural out come of the
segmentation process. It is a major decision that
influences and often directly determines the firm’s
marketing mix.
6.Design, implement and maintain appropriate
marketing mixes: the marketing mix has been described
as product, distribution, promotion and pricing strategies
intended to bring about mutually satisfying exchange
relationships with target markets.
BY: Aman G
 Market targeting
 Once the firm has identified its market-segment opportunities, it has to
decide how many and which ones to target.
 Having evaluated different segments, the company can consider five
patterns of target market selection:
1. single- segment concentration: - Through concentrated marketing, the firm:
Gains a strong knowledge of the segment’s needs and achieves a strong market
presence.
The firm enjoys operating economies via specializing its production, distribution,
and promotion.
2. Selective specialization: - The firm selects a number of segments, each
objectively attractive and appropriate. This multi-segment strategy has the
advantage of diversifying the firm’s risk.
3. Product specialization: - The firm makes a certain product that it sells to
several segments. The risk of this type is that the product may be substituted by
a new product.
4. Market specialization: - The firm concentrates on serving many needs of
particular customer group. The firm gains a strong reputation in serving this
customer group. The downside risk if customer group suffers budget cuts.
5. Full market coverage: - The firm attempts to serve all customer groups with all
BY: Aman G
the products they might need.
 Large firms can cover a whole market in two broad ways:
 Undifferentiated marketing
 Differentiated marketing.
In undifferentiated marketing: the firm ignores segment differences
and goes after the whole market with one offer.
 It designs a product and a marketing program that will appeal to
broadest number of buyers.
 It relies on mass-distribution and mass- advertising.
 It aims to endow the product with a superior image in people’s
minds.
 Undifferentiated marketing is “the marketing counterpart to
standardization and mass production in manufacturing.
 The narrow product line keeps down costs of research and
development, production, inventory, transportation, marketing
research, advertising, and product management. The
undifferentiated advertising program keeps down advertising costs.
Presumably, the company can turn its lower costs into lower prices
to win the price-sensitive segment of the market. BY: Aman G
In differentiated marketing: the firm operates in several market
segments and designs different products for each segment. E.G.
General Motors & IBM offer their products for many different segments
in the auto and computer markets, respectively.
Differentiated marketing typically creates more total sales than
undifferentiated marketing. However, it also increases the costs of
doing business. The following costs are likely to be higher:
Product modification costs: Modifying a product to meet different
market-segment requirement usually involves R&D, engineering, and
special tooling costs.
Manufacturing costs: It is usually more expensive to produce 10 units
of 10 different products than 100 units of one product.
Administrative costs: The Company has to develop separate marketing
plans for each market segment. .
Inventory costs: It is more costly to mange inventories containing many
products.
Promotion costs: The Company has to reach different market segments
with different promotion programs.
BY: Aman G
Additional Considerations:
Four other considerations must be taken into
account in evaluating and selecting segments:
 ethical choice of market targets,
 segment interrelationships and super segments,
 segment-by segment invasion plans,
 inter -segment cooperation
Product positioning
 All marketing strategy is built on STP- segmentation, targeting and
positioning.
 A company discovers different needs and groups in the market
place, targets those needs and groups that it can satisfy in a superior
way and then its offerings so that the target market recognizes the
company’s distinctive offering and image.
 If a company does a poor job of positioning, the market will be
confused as to what to expect.
 If a company does an excellent job of positioning, then it can work
out the rest of its marketing planning and differentiation from its
positioning strategy.
 Positioning is the act of designing the company’s offering and image
to occupy a distinctive place in the mind of the target market.
 The end result of positioning is the successful creation of a
customer-focused value proposition, a great reason why the target
market should buy the product.
BY: Aman G
Positioning is all about putting your product head of other
In general, a company must avoid four major positioning
errors:
Under positioning: some companies discover that buyers
have only a vague idea of the brand. The brand is seen as just
another entry in a crowded market place.
Over positioning: buyers may have too narrow image of the
brand. Thus a consumer might think that a product may offer
a maximum benefit which is not attainable.
Confused positioning: buyers may have confused image of
the brand which may result from the company’s making too
many claims or changing the brand’s positioning too
frequently.
Doubtful positioning: buyers may find it hard to believe the
brand claims in view of the product’s features, price or
manufacturer.
End of the chapter

BY: Aman G
 Chapter Five
Managing Marketing Mix
Elements

BY: Aman G
Product Planning
A product is anything that can be offered to market
to satisfy needs and wants of a given target group.

 It involves set of tangible and intangible features

including color , packaging, price, manufacturers
prestige, retailers` prestige and manufacturers and
retailers` services which satisfy the needs and wants
of customers

BY: Aman G
Five product levels
 According to Philip Kotler, who is an economist
and a marketing guru, a product is more than a
tangible ‘thing’.
 A product meets the needs of a consumer and in
addition to a tangible value this product also has
an abstract value.
 For this reason Kotler states that there are five
product levels that can be identified and
developed.
 In order to shape this abstract value, kotler uses
five product levels in which a product is located or
seen from the perception of the consumer.
BY: Aman G
These five product levels indicate the value that consumers attach to a
product. The customer will only be satisfied when the specified value is
identical or higher than the expected value.
1. Core Product This is the basic product and the focus is on the purpose for
which the product is intended. For example, a warm coat will protect you from
the cold and the rain.
2. Generic Product This represents all the qualities of the product. For a warm
coat this is about fit, material, rain repellent ability, HQ fasteners,
3. Expected Product all aspects the consumer expects to get when they
purchase a product. That coat be really warm and protect from the weather
and the wind and be comfortable when riding a bicycle.
4. Augmented Product This refers to all additional factors which sets the
product apart from that of the competition. And this particularly involves
brand identity and image. Is that warm coat in style, its color trendy and made
by a well-known fashion brand? But also factors like service, warranty and
good value for money play a major role in this.
5. Potential Product This is about augmentations and transformations that the
product may undergo in the future. For example, a warm coat that is made of
a fabric that is as thin as paper and therefore light as a feather that allows rain
to automatically slide down
Product Classification

BY: Aman G
Classification of products on the
basis of Durability & tangibility
Non-durable goods
Durable goods
Services
Classification of products on the basis of Durability & tangibility
 Non-durable goods
These are tangible goods that are low priced and normally consumed in
one or few uses everyday or anytime of the day such as soaps, biscuits,
shampoos, deodorants, etc.  As these goods are consume quickly and
purchased frequently, the appropriate strategy is to make them
available in many locations, charge only a small mark up and advertise
heavily to induce trial and build preference.
 Durable goods
These are also tangible goods that remain in use months after months
and year after year. Normally, they require more personal selling and
service, guarantee, higher margin, etc. For example: couches or chairs,
vacuum cleaners, washing machines, etc.
 Services
These are intangible, inseparable, variable and perishable products. As
a result, they normally require more quality control, supplier
creditability and adaptability. Example- hair cut, legal advices, appliance
repair, financing, etc. BY: Aman G
Classification of products on the basis of Uses
In this part, the goods or services can be classified into two broad categories . 

 Consumer goods and

 Industrial goods
 Consumer goods classification
These are meant for use of consumption by ultimate consumers for the satisfaction of their
needs and wants. According to American Marketing Association (AMA), “Consumer products are
those products which are used by ultimate consumers in their original form without commercial
processing.” These are classified into following ways:
 Convenience goods
These are those products which a consumer purchases frequently, immediately and with
minimum efforts from convenient locations. For example, tooth paste, bread, newspaper,
cigarette, match box, medicine, soap, cold drinks, grocery items, etc.
Shopping goods
These are those goods where consumers devote considerable time in making selections before
they buy. On the basis of durability, suitability, quality , price and style, the selection and
purchasing of the goods takes place. For example, household furniture, refrigerators, sewing
machines, ordinary clothing .
Specialty goods
These goods possess unique characteristics and brand identification for which a sufficient
number of buyers are willing to make a special purchasing effort. For example, luxury goods
photographic equipment , mobile phones, mercedes Cars, Jewelry, &Suits Mercedes is a
specialty good because buyers will travel far to buy one. Specialty goods do not involve
comparisons
Unsought goods
These are those goods which the consumer does not know about or does not normally think of
buying. These goods require advertising and personal-selling support. The classic examples of
known but unsought goods are Example, life insurance, encyclopedias, and
reference books, etc.
 Industrial goods classification
These are those goods that are meant for use in making other
products or for rendering a service in the operation of business
organization.   These are classified as Raw Material (are also
known as feedstock or unprocessed material)
These are basic industrial materials that are used to produce
goods, finished products, energy, or intermediate materials,
which are feedstock for future finished products. They are
divided into following parts:
Natural products: Minerals, land, and products of the forests and
the seas.
Agricultural products: wheat, cotton, tobacco, fruits, live-stocks,
etc.
Animal products: Eggs, raw milk, etc.
The demand for raw material depends upon the demand of
finished goods. These are usually graded for standardized quality.
 Fabricating material and parts
These are partial or complete manufactured goods that are used without any
substantial change in their form and become a part of the finished goods. For
example, electric motors, batteries, automobile parts, spark plugs, tyres and tubes,
components of electrical appliances, etc. These products are directly supplied to the
industrial users.
 Installation
Installations have long life and are expensive major equipment's of an industrial user.
They are usually bought directly from the producers with the capital sale preceded by
long negotiation period. For example, heavy machinery, diesel engines, trucks, factory
sites and production lines.
 Accessory equipment's
These are those industrial goods which are usually less expensive and have short life
than installation. They are required for manufacture of final products though they
don’t form part of finished products. Example, Portable factory equipment and tools
(hand tools, fork lift trucks) and office equipment's (personal computers, desktops,
 Operating supplies
Operating supplies are short-lived and low priced items usually purchased with a
minimum of effort. They are the ‘convenience goods’ of industries. They do not have a
significant impact on the long run profitability of an organization. Supplies include
floor wax, lubricating oils, heating fuel and office stationary like pins, pens, pencils,
papers, etc. BY: Aman G
Product life-cycles
Most product life-cycle curves are portrayed as bell-shaped.
This curve is typically divided into four stages: introduction,
growth, maturity and decline.
Introduction: a period of slow growth as the product is
introduced in the market. Profits are non-existent because of
the heavy expenses incurred with product introduction.
Growth: a period of rapid market acceptance and substantial
profits improvement.
Maturity: a period of slow down in sales growth because the
product has achieved acceptance by most potential buyers.
Profits stabilize and decline because of increased competition.
Decline: the period when sales show a down ward implication
and profits erode.
BY: Aman G
BY: Aman G
 1, Marketing strategies at introduction stage
 Because it takes time to roll out a new product sales growth tends to be
slow at this stage.
 Profits are negative or slow in the introduction stage.
 Promotional expenditures are at their highest ratio to sales cause of
 inform potential consumers
 induce product trial and
 Secure distribution in retail outlets.
 Firms focus on those buyers who are the readiest to buy, usually
higher-income groups.
 Prices tend to be high because costs are high.
 Generally, alert firms use the following strategies
at the introduction stage:
o Massive advertising
o Pioneer advantage
o Production of high quality product
o Different positioning strategies be practiced
o Maximize price
o Lower price if the firm can produce mass product
by lower cost
2, Marketing strategies at growth stage
The growth stage is marked by a rapid climb in sales.
 Early adopters like the product and additional consumers
start buying it.
New competitor enters attracted by the opportunities.
They introduce new product features and expand
distribution.
 Sales rise much faster than promotional expenditures
causing a welcome decline in the promotion-sales ratio.
Profits increase during this stage as promotion costs
decline
. Firms have to watch for a change from an accelerating to
a decelerating rate of growth in order to prepare new
strategies.
 During this stage firms use several strategies to sustain rapid market
growth:
 It improves product quality and ads new features and improved
styling.
 It adds new models and flanker products(i.e. products of different
sizes, flavors and so forth that protect the main product)
 It enters new market segments.
 It increases its distribution coverage and enters new distribution
channels.
 It shifts from product awareness advertising to product preference
advertising.
 It lowers prices to attract the next layer of price sensitive buyers.
These market expansion strategies strengthen the firm’s competitive
position.
 By spending money on product improvement, promotion, and
distribution, it can capture a dominant position.
It foregoes maximum current profit in the hope of making even greater
profits nextt stage
3. Marketing strategies at maturity stage
 At some point, the rate of sales growth will slow and the product will
enter a stage of relative maturity.
 This stage normally lasts longer than the previous stages and poses
formidable challenges to marketing management.
 The maturity stage is divided into three phases: growth, stable and
decaying maturity.
 In the first phase, the sales growth rate starts to decline. There are no
new distribution channels to fill.
 In the second phase, sales flatten on a per capita basis because of
market saturation. Most potential consumers have tried the product
and future sales are governed by population growth and replacement
demand.
 In the third phase, decaying maturity, the absolute level of sales starts
to decline and customers begin switching to other products.
 The increase R&D budgets to develop product improvements and line
extensions.
 They make deals to supply private brands. A shakeout begins and
weaker competitors withdraw.
 Generally, the following strategies are applicable at the
maturity stage:
 Market modification: the company might try to expand
the market for its mature brand by working with the two
factors that make up sales volume:
 it can expand the number of brand users by
1. converting non-users
2. entering new market segments
3. winning competitors` customers.
 Volume also can be increased by convincing current users
to increase their brand usage by
(1) use the product on more occasions
(2) uses more of the product on each occasions
(3) use the product on new ways.
 Product modification: managers also try to stimulate sales by modifying the
product’s characteristics through quality improvement, feature
improvement or style improvement.
 Quality improvement aims at increasing the product’s functional
performance.
 A manufacturer can often overtake its competition by launching a new and
improved product.
 This strategy is effective to the extent that the quality is improved, buyers
accept the claim of improved quality and a sufficient number of buyers will
pay for higher quality.
 A strategy of style improvement aims at increasing the product’s aesthetic
appeal. A style strategy might give the product a unique market identity.
 Yet style competition has problems. First it is difficult to predict whether
people and which people will like a new style. Second, style change usually
requires discontinuing the old style and the company risks losing
customers.
 Marketing mix modification (program modification)
 Product managers might also try to stimulate sales by modifying other
marketing mix elements. Things related to price, distribution, advertising,
sales promotion, personal selling, and services should be modified.
 Marketing strategies at decline stage
 Sales decline for a number of reasons including
technological advances, shifts in consumer tests and
increased domestic and foreign competition.
 All lead to over capacity, increased price cutting and profit
erosion.
 The decline might be slow.
 Sales may plunge to zero or they may petrify at a low level.
 As sales and profits decline, some firms withdraw from the
market.
 Those remaining may reduce the number of products they
offer.
 They may withdraw from smaller market segments and
weaker trade channels and they cut their promotion budgets
and reduce prices further.
There are five decline strategies available to firms:
 Increasing the firm’s investment (to dominate the market or
strengthen its competitive position)
 Maintaining the firm’s investment level until the uncertainties about
the industry are resolved.
 Decreasing the firm’s investment level selectively, by dropping
unprofitable customer groups, while simultaneously strengthening the
firm’s investment in lucrative niches.
 Harvesting (milking) the firm’s investment to recover cash quickly.
 Divesting the business quickly by disposing of its assets as
advantageously as possible.
• The appropriate strategy depends on the industry’s relative
attractiveness and the company’s competitive strength in that
industry.
• A company that is in unattractive industry but possesses competitive
strength should consider shrinking selectively. A company that is in an
attractive industry and has competitive strength should consider
strengthening its investment
A product mix (or product assortment):-Is the set of all product lines and
items that a particular seller offers for sale to buyers.
The definition in turn requires defining product lines and product items.
Product line is a group of products with in the product mix intended for
essentially similar uses and processing reasonably similar physical
characteristics.
Product item is distinct unit with in a product line that is distinguishable
by size, appearance, or some other attributes.
A firm’s product mix has certain: width, length, depth, and consistency.
The width of a product mix refers to how many different product lines the
company carries.
The length of a product mix refers to the total number of items in the mix.
The depth of a product mix refers to how many variants are offered of each
product line.
The consistency of a product mix refers to how closely related various
product lines are: in end-use, production requirements, distribution
channels, or some other way.
 Product features
A product can be expressed by using the following features:

 Branding
 Packaging
 labeling
Branding is a major issue in product strategy. .
Brand name: the part of a brand, which consists of words, letters and
numbers which can be vocalized.
Brand mark: the part of brand which can be recognized but is not utterable. It
can appear in the form of a symbol, design, distinctive coloring or lettering.
Trade mark: a part of brand that has been given legal protection so that the
owner has exclusive rights to its use.
Typically, there are three kinds of labels.
Brand label: simply the brand alone applied to the product or to the package.
Grand label: a label which identifies the quality with the letter, number or
word.
Descriptive label: it gives objective information about the use, construction,
care, performance or other features BY:of the Gproduct. Sometimes it is called
Aman
BY: Aman G
Importance of brand
1. The brand makes it easier for the seller to process orders and track down problems.
2. The seller’s brand name and trade mark provide legal protection of unique product
features.
3. Branding gives the seller the opportunity to attract a loyal profitable set of
customers and helps to increase the control and share of the market.
4. Branding helps the seller to segment markets and expands the product mix.
5. Good brands help to build the corporate image because it advertises the quality
and size of the company.
6. Brands make it easy for customers to identify products and services.
Requirements of good brand
Among the desirable qualities of a brand the following are very important. A good
brand should:
 Be easy to pronounce, recognize and remember.
 Be distinctive
 Suggest something about the product’s benefits or characteristics.
 Suggest about the product qualities such as action or use.
 Be large enough to be applicable to new products that may be added to the
product line.
 Have a possibility of registration and legal protection.
A brand is a complex symbol that can convey up to six levels of
meaning:
Attributes:-A brand brings to mind certain attributes. Mercedes
suggests expensive, well-built, well-engineered, durable, high-prestige
automobiles.
Benefits: - Attributes must be translated into functional and emotional
benefits. The attribute durable translate into the functional benefit.
Expensive-emotional.
Values: - The brand also says something about the producer’s values.
Mercedes stands for high performance, safety and prestige.
Culture: - The brand may represent a certain culture. The Mercedes
represents German culture: organized, efficient, high quality.
Champaign and Wine represent French culture: Love, affection and etc.
Personality: - The brand can project certain personality. Respected &
capable manager (person). A Palace (object).
6. User: - The brand suggests the kind of consumer who buys or uses
the product.
BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
 The end of
chapter 5!!!
BY: Aman G
 Chapter Six
Pricing of Products

BY: Aman G
 Pricing
 price is the amount of money charged for a
product or service or the sum of values that
consumers exchange for the benefits of
having or using the product or service.
 Price is the only element in marketing mix
that produces revenue; all other elements
represent costs.

BY: Aman G
Objectives of pricing
Return on investment
Market share
Profit maximization
To meet or prevent competition
Price stabilization
Survival etc

BY: Aman G
Factors affecting pricing decisions
A company’s pricing decisions are
affected by both:
 Internal factors
External factors

BY: Aman G
 Internal company factors
Internal factors include:
 company’s marketing objectives
 marketing mix strategy
 costs(costs at different level of production and
costs as function of production experience) and
 organizational considerations (who within the
organization should set prices).

BY: Aman G
External factors
these include:
 the nature of market and demand
 competition
 other environmental factors.
Whereas costs set the lower limit of prices, the market and
demand set the upper limit.
Both industrial and consumer buyers balance the price of a
product or service against the benefits of owning it. Thus,
before setting prices, the marketer must understand the
relationship between price and demand for its product. In
addition to this the type of market (perfectly competitive
market, monopolistically competitive market, oligopolistic
market and monopoly market) and consumers’ perception of
price and value should be BY:
considered.
Aman G
Procedures of price setting
We will describe a six-step procedure
(1) Selecting the pricing objective
(2) Determining demand
(3) Estimating costs;
(4) Analyzing competitors’ costs,
prices, and offers;
(5) Selecting a pricing method; and 3cs
(6) Selecting the final price.
BY: Aman G
Distribution (placement) of Products
 Successful value creation needs successful value delivery.
Holistic marketers are increasingly taking a value network
view of their businesses.
 Instead of limiting their focus to their immediate
suppliers, distributors, and customers, they are examining
the whole supply chain that links raw materials,
components, and manufactured goods and shows how
they move toward the final consumers. .
Marketing Channels and Value Networks
 Most producers do not sell their goods directly to the
final users; between them stands a set of intermediaries
performing a variety of functions.
 Formally, marketing channels are sets of interdependent
organizations involved in the process of making a product
 Some intermediaries—such as wholesalers and
retailers—buy, take title to, and resell the
merchandise; they are called merchants.
 Others brokers, manufacturers' representatives,
sales agents search for customers and may
negotiate on the producer's behalf but do not take
title to the goods; they are called agents.
 Still others transportation companies, independent
warehouses, banks, advertising agencies assist in
the distribution process but neither takes title to
goods nor negotiates purchases or sales; they are
called facilitators.
BY: Aman G
 The Importance of Channels
 A marketing channel system is the particular set of
marketing channels employed by a firm.
 Marketing channels also represent a substantial
opportunity cost.
 One of the chief roles of marketing channels is to
convert potential buyers into profitable orders.
 Marketing channels must not just serve markets,
they must also make markets.
 The channels chosen affect all other marketing
decisions.
 channel decisions involve relatively long-term
commitments to other firms as well as a set of
policies and procedures.
Factors Affecting Channel decision
The final choice depends on the analysis of several factors, which often
interact. These factors can be grouped as market factors, product factors and
producer factors.
Market factors
Among the most important market factors affecting the choice of distribution
channel are target customer considerations. Specifically, supply chain
managers should answer the following questions: who are the potential
customers? What do they buy? Where do they buy? When do they buy? How
do they buy?
Product factors
Products that are more complex, customized and expensive tend to benefit
from shorter and more direct marketing channels. The types of products sell
better through a direct sales force. On the other hand, the more standardized a
product is, the longer its distribution channel can be and the greater the
number of intermediaries that can be involved. The product’s life cycle is also
an important factor in choosing a marketing channel.
Producer factors
In general, producers with large financial, managerial and marketing resources
are better able to use more direct channels.
BY: Aman G
 Chapter Seven
Promotion of Products

BY: Aman G
BY: Aman G
BY: Aman G
BY: Aman G
 1. Advertising
Any paid form of non-personal presentation and promotion of ideas, goods, or
services by identified sponsor. It has the following qualities:
 Public presentation. Advertising is a highly public mode of communication. Its
public nature confers a kind of legitimacy to the product and also suggests a
 Standardized offering. Because many persons receive the same message, buyers
know that their motives for purchasing the product will be publicly understood.
 Pervasiveness. Advertising is a pervasive medium that permits the seller to
repeat a message many times. It also allows the buyer to receive and compare
the messages of various competitors.
 Amplified expressiveness. Advertising provides opportunities for dramatizing
the company and its products through the artful use of print, sound, and color.
Impersonality. Advertising cannot be as compelling as a company sales representative.
The audience does not feel obligated to pay attention or respond
 Major decisions in advertising
 Marketing management must make five important decisions when developing
an advertising program. These are
(a). Setting advertising objectives (mission)
Advertising objective:-Is a specific communication task to be accomplished
with specific target audience during a specific period of time. Advertising
objectives can be classified by primary purpose –whether the aim is to inform,
persuade or remind.
 Informative advertising:-Advertising used to inform consumers about a new
product or feature and to build primary demand.
 Persuasive advertising:-Advertising used to build selective demand for a
brand by persuading consumers that it offers the best quality for their money.
 Comparison advertising:-Advertising that compares one brand directly or
indirectly to one or more other brands.
 Reminder advertising:-Advertising used to keep consumers thinking about a
product. It stimulates repeat purchase.
 Reinforcement advertising: - advertising that tells customers as they have
made the right choice after sell of products take place. Used to convince current
purchasers.
(b). Setting the advertising budget (money)
There are some specific factors that should be considered
when setting the advertising budget .
 Stage in the product life cycle: - New products typically
need large advertising budgets
 Market share: - High market share brands usually need
more advertising spending as a percent of sales than do
low market share.
 Competition and clutter: - advertising needs high budget
in the market in which there is intense competition.
 Advertising frequency: - frequent advertising consumes
high budget.
 Product differentiation: - A brand that closely resembles
other brands in its product class requires heavy
advertising to set it apart.
BY: Aman G
BY: Aman G