Marketing Ppt

MARKETING MANAGEMENT 1.MEANING 2.DEFINITION 3.EVOLUTION OF MARKETING 4.ROLE OF MARKETING IN BUSINESS AND SOCIETY 5.OBJECTIVES 6.NATURE 7. DISTINCT MARKETING CONCEPT 8.DIFFERENCE BETWEEN MARKETING AND SELLING 9.FEATURES OF MARKETING CONCEPT 10.WHO BENEFITS FROM MARKETING CONCEPT

MARKETING MANAGEMENT Meaning: Marketing means selling of goods and services. In other words, it is the process by which goods are made available to ultimate consumers from their place of origin. Marketing consists of those activities which are concerned with the transfer of ownership of goods from producers to consumers. Marketing is regarded as production/sales oriented.

Definition The American Marketing Association (AMA) defines marketing as ‘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.” Marketing deals with products.A product can be a good,service or idea. A good;A good is a physical entityi.e. it is a tangible product that can be touched and feel.e.g. a shirt or a bar of chocolate. A service:A service has no physical form or it is an intangible product.A service is created when human efforts are clubbed with mechanical efforts to provide intangible benefits,it gives some value to the consumer.e.g.laundry,healthcare,transportation,banking etc. An idea:Ideas provide intellectual or spiritual benefits to consumers.e.g.politician selling idea like protection of human rights to political activities.

Evolution of Marketing 1.The Stage of Barter;Before the evolution of industrial revolution,the agriculturist,whether he produced corn or cotton,meat or butter,disposed off the surplus in his immediate neighbourhood.These products were required in the neighbourhood by those people who were not engaged in the same activity.The agriculturist barterd the corn,cotton,meat and butter produced by him for leather,hand tools,utensils and furniture produced by the craftsman.there was no elaborate distribution system.This represented the stage of barter in the evolution of marketing. 2.The Stage of Money Economy;No fundamental or far reaching change took place in this stage of production and distribution of goods.The change was replacement of barter systemby the money system,pricing became the mechanism of the exchange process.

3.The Stage of Industrial Revolution;Far reaching changes took place in this stage.It introduced beginning of new business system.It introduced new products,new systems of manufacture,new modes of transportation and methods of communication and brought about changes in the physical and economic environment.Mass production lead to variety of low priced goods.It lead to income revolution,giving a great deal of disposable income to large mass of people. 4.The Stage of Competition;Themass production and mass distribution brought by Industrial revolution soon led to stage of competition.The situation demanded the firms to make concious efforts to make sure their products were preffered overs those by their competitors.

5.The Emergence of Marketing;After the Second World War,the size and characteristics of markets in many countries of the world changed enormously.There was substantial increase in the population;the disposable increase per family increased,new industrial concerns sprang up,a great variety of new products and services strengthened the rapidly developing consumer market;so selling of products and services became very difficult and competitive.Abundant choices were made available to the consumer and consumer occupied a place of great importance.The indusrial firms realized that it was not enough to make one time sale and they ensure that consumers come and buy their products again and again.They also ensure that product was made availabole at a place convenient to the consumer.Theyalso ensure best price of the product and also if any complaint then after sale service to be provided to the consumer.This lead to emergence of marketing.

Modern Concept of Marketing Modern concept of marketing According to the modern concept, marketing is concerned with creation of customers. Creation of customers means identification of consumer needs and organising business to satisfy these needs. Marketing in the modern sense involves decisions regarding the following matters; 1. Products to be produced 2. Prices to be charged from customers 3. Promotional techniques to be adopted to contact and influence existing and potential customers. 4. Selection of middlemen to be used to distribute goods & services. This concept of marketing is regarded as consumer oriented as the emphasis of business is laid on consumer needs and their satisfaction.

Role of marketing Role of marketing in business

Marketing involves ascertaining the needs and requirements of customers.This enables the firms to produce goods and services accordingly. Demand for goods and services is created through the techniques of advertising and personal selling.The role of marketing in business success has become vital because of the following reasons. 1. Technological changes are taking place at fast pace. 2. Competition has become intense in the market. 3. Consumer tastes and preferences are changing very fast. 4. Production is organised on a large scale.

Role of marketing in society Marketing has also an important role in society.; 1.It makes new and better products available to people. 2.Increasing their standard of living. 3. It helps in creation of new jobs. 4.It bridges the gap between production and sale of goods, making economic activity possible. It integrates agricultural and industrial sectors. Overall it leads to economic development of the country.

Objectives of marketing

Marketing activities are organised to achieve the following objectives: 1. Consumer satisfaction : Marketing activities are organised with the objective of ensuring that consumers get maximum satisfaction from the use of the product. Consumer satisfaction ensures steady and growing demand for firm’s products. 2. Product development : This objective aims at developing new and better products, which may provide greater satisfaction to consumers. Product development is necessary for the survival and growth of the firm. 3. Sustaining Customer loyalty : If customers continue to make repeated purchases of goods and services, it is possible to sustain the demand for the products of the firm.

4.Earning profits : Business must earn sufficient profit. Marketing activities are organised with the objective of earning adequate profits for the firm. 5. To secure competitive advantage : This objective of marketing ensures that a firm’s products are preferred over competitor’s product. Competitive advantage is achieved through cost efficiency and quality improvements of the products. 6. Growth in Sales : Marketing aims at increasing the sale of firm’s products. This is necessary to maintain or increase the market share of the firm. Market share means percentage demand satisfied by the firm for a particular product. Growth in sales ensures survival of the firm in the long run. 7. Creation of goodwill : This objective of marketing ensures that a business firm is regarded as a useful part of society engaged in satisfying consumer needs. This help business firms to survive and grow.

Nature of marketing 1.Marketing is essentially a managerial activity; It involves decisions regarding product, prices, promotion and place with the objective of providing satisfaction to consumers for the money they pay and earning profits for the business firms. 2.Marketing starts with the identification of consumer needs;Once consumer needs are identified, goods and services are designed and developed to satisfy those needs. Goods are produced by production department according to market requirements and as determined by the marketing department. This requires proper co-ordination between the two departments. 3.Advertising and personal selling are important tools of marketing; They create an awareness among consumers of their needs for goods and services. These activities help in creating demand for products. This demand is met by distribution of goods and services through various channels. After-sale service is also provided to consumers.

DISTINCT MARKETING CONCEPTS Studies have revealed that different organisations have different perceptions of marketing and it has lead to the formation of different concepts of marketing such as: 1.The Exchange concept: a)Exchange of product between seller and buyer. b)marketing is much more broader than exchange and exchange is only a part of it. c)it does not cover other aspects of marketing like : 1.concern for the customer 2.creative selling 3.generation of value satisfactions 4.integrated action for serving the customer

2.The Production concept: a)All the focus is on the production. b)Concentrate on achieving high production efficiency, low cost& mass distribution. c)This concept also fail to understand the needs of the customer as they believe that the steep decline in the unit cost arising from the maximization of output would bring them all the customers and the profit they need but this will not give them the customer support as the customers are motivated by the variety of considerations in their purchases. d)As a result ,the production concept also fails to serve the right marketing philosophy. e.g.Inexpensive Toys,electronics

3.The Product concept: a)This concept is based on product excellence-improved products,new products and ideally designed and engineered products. b)It also places the emphasis on quality assurance. c)They spend considerable time and money on research and development and bring in new variety of products yet they fail in the market. d)They do not bother to study the market and the consumer in depth. e)they get so engrossed in their product that they forget to find out what the customer actually need and what they would gladly accept. f)It leads to marketing myopia.

Marketing Myopia a)‘marketing myopia’ means crooked perception of marketing and short sightedness about business. b)Excessive attention to the production or product or selling aspects at the cost of customer and his actual needs,creates a myopia. c)it leads to wrong or inadequate understanding of the market and hence failure in the market place. d)It also leads to a wrong understanding or inadequate understanding of the very nature of the business thereby affecting its future. e)Since The business keep changing with times but the basic fundamental characteristics related to human need which business seek to serve amd satisfy through its products should be maintained. f)they should define their business according to their fundamentals and not in the terms of the products and services manufactures at given point of time. E.g. movie makers should define their business as entertainment.

4.The Sales concept: a)The sales concept maintains that a company cannot expects its product to get picked up automatically by the customers. b)The company has to consciously push its products. c)Aggressive advertising,high power personal selling,large scale promotion,heavy price discounts,strong publicity and public relations are the normal tools that rely on this concept. d)In this kind of concept companies believed that selling is synonymous with marketing but in reality there is a great deal of difference between selling and marketing.

Marketing 1.Marketing starts with the customer ,present and potential and focuses constantly on the need of the buyer.Buyer is the centre of the business universe.activities follow the buyer and his needs.

Selling 1.Selling starts with the seller.It focuses on the need of the need.Seller is the centre of the business universe.activities starts with sellers existing products.

2.Emphasis on identification of a market opportunity 2.Emphasis on saleable surpluses available within the and fulfilling the needs of the customer. corporation. 3.Seeks to convert customer ‘needs’ into ‘products’.

3.Seeks to convert ‘product’into ‘cash’,concerns itself with the tricks and techniques of getting the customers to buy the product available with the salesman in exchange of cash.

4.View business as ‘customer satisfying process’.

4.View business as a ‘goods producing process’.

5.It is concern with the ‘value satisfaction ‘ customer 5.Overemphasis the ‘exchange’aspectwithout caring for should get from the exchange. the ‘value satisfaction’ inherent in the exchange. 6.The firm makes a ‘total product offering’that would 6.The firm makes the product first and then figure out match and satisfy the identified needs of the how to sell it and make profit. customers. 7.Adopting more innovative technology to provide better value to the customer.

7.Emphasis on staying with the existing technology and reducing the cost of production.

8.If the enterprise has a customer orientationconcerned more about his needs,and make genuine efforts to satisfy those needs ,then it is practising ‘Marketing’.

8.If the enterprise has internal orientation concerned more about itself and its products and the need to dispose off its products,then it is practicing ‘Selling’.

Marketing

Selling

9.Consumer determines price;price 9.Costs determine price. determines cost. 10.They are seen as vital services 10.Transportation,storage and to be provided to the customers other distribution functions are keeping in mind their convinience. merely a part of production function. 11.In firms practising 11.In firms practising ‘marketing’,marketing is the ‘selling’,production is the central central function of the business;the function of the business. entire company is organised around the marketing the function. 12.’Marketing’views customer 12.’Selling’ views the customer as as the very purpose of the the last link in the business. business;sees business from point of view of the customer.

Features of Marketing Concept 1.Consumer Orientation;Consumer orientation places consumer at the beginning as well as at the end of the business cycle.Consumer becomesthe focal point of the business.Organisations should strive,adapt and alter products to keep pace with the ever changing customer preferences and desires. 2.Long term profitability;Customer satisfaction,which is a major theme of the marketing concept does not preach that a firm must generate consumer and forget the other goals of the organisation.Instead it should treat customer as a pathway to the attainment of all the goals of the organisation.And ,inthis process,the Organisational goals including profits are automatically realised.The Market Concept never suggests that profit is unimportant to the firm but are essential for the survival and growth of any business.

3.Integrated Management action;All Organisational departments should be well coordinated keeping marketing as the pivot.Lack of coordination between different departments or function can hamper the performance of the organisation.Themarketing department should be well coordinated with other departments like R&D,finance,personnel and manufacturing. The organisations that do not practice integrated management,the departments are preoccupied with the optimisation of their specific activities thus effecting the overall result. e.g. the engineering department may create a substandard product to save cost of production.

Who benefits from the Marketing Concept 1.The Organisation;The organisation keep itself in the pace with the times and through contineous marketing audit,market research and consumer testing.It is quick to respond to changes in the buyer behaviour,rectify its products and give great importance to planning,research and innovation. 2.The Consumer;As the organisation improve its products,it benefits its consumers as they get better quality,low price,improved/new products and ready stocks at convinient places. 3.The Society;Since the Organisations are producing products as per the consumers so it ensures that the society’s economic resources are channelised in the right direction.It also creates entrepreneurs and managers in the given society.It improves the standard of living of the people and accelerates economic development of the society as a whole.

Marketing Environment The Performance of the firm depends upon its sales and sales depend upon the marketing environment that influence its market activities.The marketing activities focus on satisfying customer needs.With the market environment becoming increasingly dynamic,it is necessary for the firm to keep pace with the changing environment. A variety of internal and external forces have an impact on an organisation and its marketing environment. Internal forces are inherent to the firm and can be controlled by the management. External forces are dynamic and any change in them bring uncertainties,threats and opportunities to the marketers.

Business Environment of a Firm H u m a n R e so u rce s Pro d u ctio n Fa cility In te rn a l E n viro n m e n t

R &D C o m p a n y Lo ca tio n Fin a n cia l C a p a b ility C o m p a n y Im a g e

Firm

D e m o g ra p h ic S u p p lie rs M icro E n viro n m e n t M a rke t In te rm e d ia rie s C u sto m e rs E xte rn a l E n viro n m e n t

Le g a l Po litica l

Te ch n o lo g ica l

S o cio -cu ltu ra l E co n o m ic

M a cro E n viro n m e n t

N a tu ra l

Macro Environment Macro environmental forces do not affect the operations of a company aand its relationship with its customers and suppliers,directly and immediately.However,they affect the company in the long run. 1.Demographic Environment;Demographics is a branch of sociology that deals with the study of the characteristics of human population such as size,growth,density,distribution,gender and marital status. E.g.demand for smaller houses and household items has increased significantly due to rise in the smaller families. Since no of children in a family has reduced and more women are taking up professions,the average income is on rise and the amont spent on each person has increased,people are looking for more lifestyle products.

Cosumer Groups;Demographic variables help in distinguishing consumer groups.Condumer groups that attract the attention of marketers can be classified as; Infants:The population of India is growing at an alarming rate and the average spending per family is increasing,so the demand for toys,baby care products,clothes and diapers is increasing. Children(School going-teens):the demand for school dress,bags,shoes,stationary,confectionaries ,bicycles and other teen-oriented products like i-pod,laptops,computers are increasing. Young Adults:Young adults in the age group of 19-30 years with products like motorbikes,music systems,clothes,fast food joints and sports car,the demand for these products are increasing. Adults(35-50):Consumers in this age group are more health concious,so industries like pharmaceuticals,fitness products,gym equipment,real estate,cars,home appliances,insurance sector,cars etc.

Senior citizens:This group has increased the demand for healthcare services,retirement housing,select skin care products.Companies like Tranquility have come up with products like wipers and mattress protectors for seniors with bowel and bladder problems.

Apart from Age other demographic factors that influence marketer’s decisions are: Women:Women constitute nearly 50% of the population and since they are taking professional jobs there is greater demand for child care and convinient products that saves times in cooking,cleaning and shopping.e.g. companies like MTR,ITC,Knorr have come up with products like precooked vegetables,noodles,chapatis. Singles:Nearly one third of the population in India are Single.This group includes single men and women,and divorcees.Spending habits of single are different like small houses,less and convinient furniture,fewer and smaller appliances,smaller packages of products ,spend heavily on travel,convinient food,restaurants and entertainment.

Occupation and Literacy:A literate customer is more demanding and conscious to advertising.The awareness is high.They gather information and then buy the product.e.g. advertisements in magazines and newspapers create more demand for personal care products,clothing and shoes. Location:Geographical location is another vital element,which determines the demand for the products.A product may be well accepted in one region whereas fail in another region. Cultural diversity:As a result of more liberalization and globalization people from various part of the world work together.Hipanics,Asians,Latinos and American Africans constitue a significant part of US population.People with different cultural backgroung have different needs,wants,tastes and preferences.

2.Political Environment Government policies shape the economic conditions and trade relationships and are influenced by the political environment.Government policies influence the marketing decisions and strategies of a firm.Organisations should closely monitor all the political environment of the countries.Foreign investment is lower in less stable countries. Domestic politics: When Organizations help in electing candidates that support their industry by funding election campaigns and sometimes run political ads for them.A company may contribute to one party at a time. International Politics:MNCs try to influence foreign politicians and governments through the domestic governments.

3.Economic Environment: The economic performance of a country is measured by its Gross Domestic Product(GDP).The gap in GDP between rich and poor countries has increased primarily due to higher population growth in poor countries.Purchasing power parity(PPP) is used to compare incomes across nations.The higher the (PPP) of a country,the more buying power it enjoys. Buying Power:The buying power of a person depends upon the financial resources and the state of the economy. E.g.Due to inflation the prices of goods and services increases so a person can buy fewer goods if the income is constant.It means the purchasing power decreases.So marketers should study fluctuations in the demand for their products,and develop appropriate strategies.

The major sources Financial Resources of buying power are: A.Income:The income of an individual refers to the total amount of money earned by him over a fixed period of time.Sources of income are;wages,rent,investments,dividends and salary. a)Disposable income:The income left to consumers after tax is disposable income. b)Discretionary income:The income left after purchasing the basic needs is known as discreationary income.Customers use them for their future savings or purchasing non-essentials.Change in this income affect sales.So the marketers should pay closer attention to the changes in the income levels. B.Credit:Credit is obtained from financial institutions,banks and Stores.Marketers can lure customers to use credit by offering them attractive rates and payment plans. C.Wealth:It refers to accumulated money of individuals,a group of individuals.Wealth ca n be generated through savings,inheritence,gambling,gifts and theft.It can be in the form of Bonds,property,jewellery and antiques.Wealth increases the buyer power of the person.

4.Socio-Cultural Socio-Cultural forces refer to the attitude,beliefs,norms,values and lifestyles of individuals in a society. e.g.-As life style changes due to both husband and wife working ,the market for ready made food and garments have increased and the shopping time is reduced significantly so this has given boost to shopping malls,supermarkets where individuals can get everything under one roof.Changes in the lifestyle of people affect the marketing environment.To a great extend,social forces determine what customers buy,how they buy,where they buy,when they buy,and how they use the products.

5.Technology Today ,technology guides the way we lead our lives.Our eating habits,sleeping patterns,health care,and work style,are all influenced by technology.With the advantage of internet we can work from homes.Advancement in technology has direct impact on the economic growth and the business which do not keep pace with the technology often fail to survive in the market. Therefore it is important for marketers to know the type of technology used,level of technological development in country. Business functions that are directly influenced by technology are listed below. 1.Product: Technology can help improve the product design,reduce the cost of manufacturing the existing products or come up with the new product. E.g-technology developed by Microsoft,Windows,has changed the way world uses personal computing and millions use the software. E.g-Earlier Automated Teller Machine(ATM) were offered by limited Banks so they enjoyed competitive advantage,now all the banks are offering this service it has become standard feature of a saving account.

2.Price:As the Technology is available at cheaper rates,more and more business are adapting it fast.So the companies are reducing their cost of products by which the price of the product will reduce therefore enabling marketing managers to manage supply,forecast demand and establish prices. 3.Promotion:Technology has revolutionized the way we communicate with a vast number of people.buyers and distributors through various media like e-mail,voice mail,cell phones,and fax machines.Stores and Supermarkets have tied up with phone providers to promote them.So technology has reduced the time of transmission of data helping business to obtain competitive advantage. E.g.-Hutch and Reliance Infocomhave provided discount coupons for various products in selected stores.

4.Advertising:Technological advancement has brought about a signifivant change in the way business advertise.Creative ads can be developed in short time.Ad agencies are gaining business.Apart from entertainment radio and televisionprovide vast media for advertising.The jingles of certain ads are etched on the memory of people soon even though the shelf life of commercials is small. E.g. Pepsi-’Youngistan can Wow.’ Kelvinator-’It’s the coolest one’ thums up-’Taste the Thunder.’ 5.Distribution:Technological advancement in the transportation industry has helped bringing market closer.A sales person can provide the valuable information about the product like –the price,order processing or status of stock by accessing company database. E.g.- transit companies like FedEx promise to deliver light weight products within twenty four hours via their overnight carriers.

6.Natural Technological developments have disturbed ecological balance. E.g.-Global warming,Ozone layer deplition,increase in harmful gases due to pollution. So many manufacturing companies are developing products that do not harm the environment. Like Refrigerators indicate on their packaging that they are Chloro floro carbon(CFC) free. A.Resources:Since companies uses raw materials to convert them into finished product the companies have now realised that natural resources are limited.Therefore some companies are demarketing their products. E.g.-Indian Oil Corporation are compaigning-”Save oil-save india”. B.Weather:In summers demand for water coolers,AC,soft drinks,icecream ,cotton clothes goes up.Whereas demand for Woolen clothes,room heaters and spicy food goes up in winters.A city like Delhi demand for seasonal products is significant.

C.Pollution:Industrialization has brought with it hazards of pollution,air ,water,noise,bio non-degradable wastes and CFC causing environmental degradation.So the companies are using environmental friendly products like recycled paper,paper bags instead of polythene bags. D.Government intervention:The policies of government,regarding the natural environment varies fron one another.Some countries restrict the import of goods that cause ecological balance.

7.Legal The laws and regulations of a country have a major impact on the way a company conducts its business.Therefore,marketers must be updated with the important rules,regulations and Acts that have a significant effect on their businesses. E.g. Consumer protection Act-It came into force to safeguard the interest of consumers.It is applicable in the Whole of India. Consumer can seek legal help when; A)A trader adopts unfair practices or restrictive trade practices. B)Goods suffer from one and more defects. C)A trader charges higher prices for the same goods. D)Services offer suffer from deficiences. E)Goods hazardeous to life are being offered to general public for sale,against provisions of any law.

Types of Competitive Structures 1.Monopoly:It is a structure when one firm completely controls the supply of a product, which has no closer substitute. Due to the absence of competition the firm controls the supply and price of the product. E.g.-Railroad business 2.Oligopoly:It is a structure where few sellers control the major supply of the product. Companies operating in the oligopoly structure usually sell branded products. Marketing and Advertising are the key features of such markets. 3.Monopolistic competition: In this structure, many firms compete with one another. Each firm has a relatively small market share. E.g.-textile industry and publishing industry,footwear,clothing,children books. 4.Pure competition: Any body can enter into such markets. It is an ideal structure in which a large number of sellers compete to offer relatively similar products. E.g-Unregulated agriculture market

Marketing Planning STRATEGIC MARKETING PLANNING Strategic marketing planning involves answering questions like where should be company 5 years down the line? Which are the markets it should serve? What are the products it should offer? Should there be any product line or brand extentions,and,if yes then at what intervals? Importance of Strategic planning The strategic planning process not only helps an organization gain a clear picture of its future, but it also helps in maintaining good relationships among its various departments. Strategy planning involves devising the brand strategy, the product strategy, sales strategy, sales promotion strategy, and the advertising strategy.

Scope of Strategic planning Companies need to formulate effective strategies to deal with emerging technological change, ever-changing customer needs, turbulent market situations,unpredictible competitions, and changes in political,legal,social,economic,and technological environments.

Case Study Oxemberg’s down –to- Top Strategy Oxemberg,a Rs.65 crore menswear brand belonging to the Rs 400 crore Siyaram Silk mills company, was launched in 1992.Since 2002,it adopted a top-down- strategy. The brand targeted B and C class cities where few people could afford premium brands.These cities accounted for about 75 percent of the brand sales. The remaining 25 percent sales come from A class cities. When the brand was launched initially, A class cities were crowded with major brands like Raymond’s, park Avenue, Madura Garments, Louis Philippe and Bombay dyeing Vivaldi among others. According to Vijay Laxmi Poddar,E.D.,Siyaram SilkMills,it was difficult to compete with these established brands in A class cities. Hence they concentrated to small towns in the western and southern parts of the country, as the climatic conditions in these two regions were similar. The company increased its distributors in the south to 40 by the beginning of 2003.Of these, only two or three focused on A class cities. The sales in the southern region accounted for about 35 to 40 percent of the entire sales. One reason of Oxemberg success in the B and C class cities was that the retailers stock fewer brands as compared to the A class cities. The company price the brand at Rs.300 onwards and offered various incentive schemes to retailers. Today ,the company has a strong presence in the B and C class cities with about 70 percent exclusive distributers,as compared to the 30 percent exclusive distributors in 1995. Another reason for the brand’s success in the B and C class cities was that there was no major player operating in this segment who could offer premium brand menswear at a low price. But recently, Oxemberg has been facing stiff competition as peter England (Rs 395 onwards),Arvind Mills Excalibur(Rs.450 to Rs.850) and indigo nation(Rs 400 to Rs.800) start focusing on B and C classes.

Definition Strategic planning is the process of identifying an organization's long-term goals and objectives and then determining the best approach for achieving those goals and objectives.

CORPORATE AND DIVISIONAL STRATEGIC PLANNING Companies that have different business units undertake corporate planning through a series of meetings. The head quarters provide guidelines for the business units to formulate strategic plans. Corporate plan has to be developed in such a way that it adds value to the organization. The Corporate vision and mission paves the way for the creation of long-term and short-term objectives, the planning strategies are adopted to realize these objectives.

There are five basic activities that companies undertake; 1.Corporate mission 2.Establishment of SBUs(Strategic Business units) 3.Resource Allocation of SBUs 4.Planning new business activities and 5.downsizing existing businesses

1.Corporate mission The corporate mission of an organization explains the business of the organization. It also explains- the type of customers the company is serving its products and services, its business,technological,and functional capabilities. The corporate mission statement should be developed keeping in mind the core values of the organization. Mission statements should be framed in such a way that they are easily understandable by the employees and give a clear picture of what company is trying to achieve. Mission statement should be authentic and different from other companies. 2.Establishment of SBUs(Strategic Business Units) It is a separate and self-sufficient business unit operating in the market with its own customers and competitors. Each SBU should have its own head who is responsible for its planning. 3.Resources Allocation to SBUs Resources allocation to strategic business units is done by differentiating the company’s businesses according to their potential and identifying whether they are profitable. For that estimations we use BCG competitive model

BCG Market Growth/Market Share Matrix

Question Marks-These business units are characterized by low market share and high growth rate. These organizations have to make huge investment in advertising and promotion because potential users are not aware of their products. With the market growing rapidly, it is easier to gain market share. Since their growth rate is uncertain that results from changes in technologies, distribution channel, So only a few question marks move to stars. Stars-These business units have large market share in fast growing markets or industries. Firms need to invest in stars as the industry is still emerging and the market share is growing. But once the industry reaches the stage of maturity, the stars hardly need any investment and become major resources for the firms. Cash Cows-These business units have a large market share in a mature and slow growing industry. These businesses have a strong business position and negligible investment requirements and so the returns from these business are often more than their investment requirements. Dogs-These business units have a low market in an intensely competitive, mature industry generating low profits. A dog does not need much investment, but it ties up its capital in the industry to earn better results.

Planning New Businesses Companies have to deal with situations where there is a gap between actual and projected sales. The firm then has to devise strategies to fill this gap or rather increase the sales. Downsizing Existing Businesses Companies need to consider the importance of growth, and similarly the importance of gradually removing old and sick businesses that are not adding any value to the company. The removal of these businesses is vital so that resources can be allocated to new and lucrative business activities.

SWOT Analysis SWOT Analysis is the process of analyzing the company and the environment in which it is operating. This analysis helps in formulating effective strategies for the company and ready for competition. Strength-The strength can be anything that add value to the business.Infrastructure,its employees, its marketing team, its latest product innovation, its international quality standards. Weakness-Incompetent management, untrained employees, poor marketing strategies, low quality products or lack of proper financial capabilities. They are external factors. Opportunities-They are external factors and are critical for its effective functioning. Opportunity can be new potential market with ample scope of growth, opportunities to collaborate through partnerships. Threats-New competitor in the market, price reduction in the competitor’s products or a new product introduced in the market that will eat the company’s share.

Steps in the Planning Process

MARKETING PLAN

A C h a rt S p e cifyin g th e C o n te n ts

E xe cu tive S u m m a ry

O p p o rtu n ity a n d Issu e A n a lysis

M a rke tin g S tra te g y

A ctio n Pro g ra m s

o je cte d Pro fit a n d Lo ss S ta te m e n t

MARKETING PLAN C o n tro l

MARKET SEGMENTATION AND MARKET TARGETING Segmentation is all about dividing the market to serve them better value prepositions. Dividing the market by grouping the customers with similar tastes and preferences into one segment is called segmentation. If marketers know which segment of the market they are targeting, they can design their marketing mix to suit the customer in the segment. NEED FOR SEGMENTING MARKETS Market segmentation looks at markets consisting of customers who differ in their wants and needs. MARKET SEGMENTATION LEVELS A market consists of different consists consumers possessing innumerable tastes and preferences. Depending on their marketing approach and the nature of the products, marketers can adopt different levels of segmentation. 1.Segment marketing 2.Individual Marketing 3.Niche Marketing 4.Local marketing

1.Segment Marketing; Marketers divide the target market into different segments on the basis of similar needs. The focus on segmenting the market by providing satisfaction to that segment to large extend. It is also to identify, capturing and retaining potential new markets. For e.g.- Tata entered the jewelry market with the brand name Tanishq.it segmented the market on the basis of the level of purity required by people and targeted people who wanted 24 carat gold unlike other conventional jewelers. E.g.Oyzterbay-it segmented the market by selling daily wear jewelers between the range of Rs.500-Rs.5000.

2.Individual marketing; It is the extreme level of segmentation where marketers focus on individual customers. E.g.-Most companies are approaching individuals through e-mails to promote their product. 3.Niche Marketing; A niche is a small segment of the market that has some specific unsatisfied needs. For niche marketing to be successful a company should understand its strengths and weaknesses, its customers and its competitors. The firm should also clearly differentiate itself from its competitors. For e.g.-Saint Gobain,a French glass company, has carved out a niche’ for itself by entering the fragmented glass market.

4.Local Marketing; Most marketers who have a global presence tend to offer customized products to suit the local markets. Even if the product is successful globally, it may fail in the local market because of unmatched tastes and preferences. E.g.-Mc Donald's entered Indian market in 1996,initially it had burgers and other related items on the menu which were foreign to Indian taste, therefore to suit the Indian taste they introduced indianized products like Mc Aloo tikki,Paneer salsa etc.

THE SELECTION OF SEGMENTATION VARIABLES Before segmenting the market a company should evaluate whether segmenting will be profitable to the company and whether it will help increasing its sales and market share. Consumer markets are mostly segmented based on 1.Geographic segmentation 2.Demographic segmentation 3.Psychographic segmentation

1.Geographic segmentation; The market is divided into according to geographical areas such as localities,regions,cities,states and countries. in such segmentation, a marketer need to have clear idea about what to serve. E.g.-T.O.I. publishes local editions to different regions such as delhi times. 2.Demographic segmentation; The market is divided into groups based on demographic attributes such as age,gender,income,occupation,religion,race,nationality,social class, family size etc.The following are some of the demographic variables used to segment the market: 1.Age and Life cycle stage; The taste and preferences keep changing.E.g.-a 12 year boy might like chocolates but might dislike at the age of 30.So Cadbury's starting focus on youth and old people to boost up its sales in 14 years and above segment.

2.Gender;Many products like garments,watches,shoes,jewellery,wristwatches,magazines etc. are segmented according to gender. There are certain brands which are positioned exclusively for a specific sex. E.g.-Raymond is a brand exclusively for men. Gillette have shaving accessories exclusively for men but now they have also produced products specially for women. This is the case where products were manufactured to suit one gender but later switched to another gender. 3.Income;Marketers tend to segment products and services such as apparels,automobiles,travel,etc. on the basis of income groups. Now even the middle income group consumers can have excess to luxuries such as cars, homes due to loan and installment facilities. E.g. –Titan have introduced Sonata, targeting the lower end. Regalia, the upper end and fast track aimed at younger generation.

4.Generation;Generation also plays a major role in segmenting the market. E.g.-various activities like Movies,Cars,music etc.affect their product purchase patterns. 5.Social class; Social class segmentation is influenced by customer choices of automobiles, interior decorators, clothing preferences. The tastes and preferences of the social class also change with the times. E.g.-Allen Solly was men’s formal wear now focusing on Women’s wear, due to changing social habits.

3.Psychographic segmentation; in psychographic segmentation ,variables to segment the consumer markets are lifestyle,personality,values ,motivation and beliefs. It helps marketers to understand buyer behavior better and design products, which will appeal the consumers. People also buy products that reflect their lifestyle e.g.-A rich person will move in mercedes,will wear a Rolex, perfume will be Valentino and will use pen like Mont Blanc reflects his life style. Lifestyle; Since different people lead different life styles they buy products accordingly to suit their lifestyle.E.g. –Top manager will usually buy formal wear or Titan introduced fast track to young urbanities.

Personality; Personality characteristics such as aggression,masculinity,extroversion etc. also influence the buyer behavior of individuals. Marketers presume that people who either have a particular characteristic or aspire to have the particular characteristic, will be influenced positively to buy that particular brand. Values; Values affect the customer behavior and marketers believe that if the values of the customers can be influenced, their impact on the customer will be for a longer period. Marketers can use values and beliefs to segment the markets.

4.Behavioral Segmentation; Organizations can divide markets on the basis of behavior that customers show towards the usage of the products. This segmentation is most suitable for product driven organizations. But its usage is restricted when new customers come to the marketer. Various variables are occassions,benefits,user status, loyalty ,etc. Occassions:Markets can also be classified on the basis of various occasions because people need different products for different occasions. E.g.-Kellogg’s promoted its cereals as a breakfast item.Archies came out with special cards like mother’s day, father's day, valentine’s day.etc. Benefits: In this segmentation market is divided on the basis of the benefits customers seek from the products.

Usage rate: The usage rate of a particular product/service can be divided into heavy ,medium or light. E.g. – Indian Airlines gives the ‘frequent flier status’ to its heavy users. Customer earn mileage points, which can be exchanged to host of services ranging from a stay in luxury hotels to free travel to international destinations. Loyalty status: loyalty status of a particular market can be divided into four groups. 1.Hard core loyals;Consumers,who are extremely brand loyal. e.g.- the beetle Automobile of Volkswagen achieved that status. 2.Split loyals;Split royals are those customers who use more than one brands.E.g- a customer may use two or three brands of perfumes. 3.Shifting loyals;Customers who shift their loyalty from one brand to another E.g.-A customer use cinthol soap for some time may shift to Dove 4.Switchers;Switchers are those customers who are not brand specific These people might buy any brand on impulse or to seek variety.

TOTAL QUALITY MANAGEMENT Total Quality management is essentially the constant striving to produce what the customer wants, by carefully eliminating defects prior to and after the products have been delivered to the customers. The team in charge of maintaining quality in organizations, usually undertake three steps when something goes wrong in the process. 1.The team members try to identify the problem. 2.rectify it 3.Communicate the process to the entire organization so that care can be taken to avoid such problems in the future. The team responsible should also interact with R&D department to understand the root of the problem and how they can be avoided in the future. The joint efforts of the R&D and the Quality management team provide better results for the organization.

PRODUCT AND PRODUCT LINES PRODUCT PERSONALITY; The following constitute the components of a product. A. Core features; A core feature is the basic component of a product. In designing any product, a company has to first define the core benefits that a product offers. All the marketing activities can be built upon the core benefits of the product. E.g.-Car –its core feature is as a private means of transport. B.Associated Features; Every product has a set of associated features. For e.g.- Car its associated features are its shape, its size and capacity, power stering,suspension system, the auto locking system,color,automatic glass pane rolling, brand name rolling etc. Firms selling the similar product compete on the basis of the associated features cause the core features are the same for all. Marketers try to innovate around the associated features to make the product distinct from the competitor’s product.

Brand name;Brand name is the most important associated feature of the product.The Product is identified by the Brand name.It identifies the product offered by one seller from another.The brand includes a name,symbol,design or a combination of these.Companies invest a lot of time and money in building a brand. E.g.- A customer no longer asks for a product alone but they ask for a specific brand like Colgate tooth paste, Gillette shaving cream,Revlon lipstick,luxor Pen etc. Packaging ;main purpose of packaging is to protect the product from damaging and smooth handling at distribution stage.Packaging also plays a vital role in promoting a product.The size,color,design and labelling of the package helps in attracting customer’s attention. E.g.-Calcium Sandoz tablets are packed in the puppy shape bottle thus attracting children who are ultimate consumers.

labelling; Every product has its unique label. A label contains written information about the attributes of the product. It helps the buyer in understanding the features and composition of the product. It also gives other information like the date of manufacture, date of expiry,barcodes,batch no. etc.

Nature of the product

1.Generic Product:generic product are unbranded,plainly packed products and are less expensive than branded products. 2.Expected Products:After developing the basic product,the marketers adds attributed to transform the product into expected product.Marketers try to identify attributes and conditions required by the customers and try to build these into their products. 3.Augmented product:Companies do not limit the attributes of a product rather they try to put in additional attributes in the product to differentiate it from the competitor’s product.Augumented products usually exist in mature markets or where the customers are reasonably sophisticated. 4.Potential product: Potential products are products which include all the improvements that are possible under given technological,economic and competitive conditions.Only big companies with huge resources make significant investments in producing potential products.

Product Hierarchy It is an organizational chart that depicts the array of products offered in a given market.

a)Product Class:Product class can be divided into cars,trucks,bikes etc. b)Product form:The Cars can be divided into Sports car,family car or trucks can be classified as heavy duty and semi heavy duty trucks. c)Variation in the form:cars with two doors,with four doors etc. d) brands: For cars we have Fiat,chevrolet,Skoda etc. For trucks we have tata,Mahindra etc.

Product Classification Products have been classified on the basis of characteristics like; 1.Usage 2.Durability 3.Tangibility Durability and Tangibility: Based on durability and tangibility, products can be classified into three groups 1.Non-durables 2.durables 3.services 1.Non durables:Non durables goods are tangible in nature.They are consumed over a short period of time..For e.g.—All fast moving consumer goods(FMCG) like soaps,tooth paste, petrol etc.They are consumed by the consumers at a fast rate,hence they are purchased frequently by the consumers. 2.Durables:Durable goods are tangible in nature.They are consumed over a relatively longer period of time,usually two or three years or more.

Services: Servicesare intangible and perishable by nature. Services can be independent like hair cut or free home delivery or after sale service offered with the main product. Usage: Based on usage of the products, they are divided into: a)Consumer products; Since no consumers think alike and depending upon time, money and risks( social, functional and physical) involved in buying the product. Hence single product can fit into several categories at the same time. 1.Convinience products 2.Shopping products 3.Speciality products 4.Unsought products b)Industrial products 1.Production goods 2.Support Goods

1.Convinience products;They are relatively inexpensive and bought frequently.These products are usually bought with minimum of thought and efforts.they are not affected by fashion and fad.Convinience products can be catagorized into staple goods(milk,bread,newspapers etc.).Marketers sell convinience products through retail stores stock them in self-service shelves. For E.g.-Wrigley’s chewing gum,Femina magazine,Gillette Sensor,etc. are placed at counters and shelves near the check-out points at Food World outlets,so that a customer is bound to look at them while waiting for his turn at the check out counter. Marketers also try to use screen displays at the entrance of the store. E.g.-Ponds beauty care displaying its products.

2.Shopping Products;Shopping products are products for which a buyer is willing to spend time and effort in planning and making purchase decisions.These products are expected to have longer life and are purchased less frequently.They are more expensive and available at limited outlets.Buyers evaluate features like price,product features,warranties,quality,after sales services,etc in a brand. E.g.-home appliances,cameras,T.V. 3.Speciality Products;Speciality products are products which have one or more unique features.These products are available at few selected outlet or single outlet.Customer are person or brand loyal. E.g.-Mercedes-Benz car,Mont blanc pen etc. 4.Unsought Products;Unsought products are products that a customer purchases when he is faced with sudden problem. E.g.-Umbrellas, Insurance policies etc.

Industrial Products;Industrial products are the products that are purchased to produce other products or facilitate the smooth functioning of an organisation. 1.Production Goods;production goods are the goods that are used solely for the production of a manufacturer’s products; 1.Raw material;they are required in bulk. E.g.-Fabric,crude oil,chemicals,farm products etc. 2.Component parts;Acomponent is a finished product or a product that needs little processing before becoming a part of main product. E.g.-Wheels,seats,glass panes are components of car. 3.Process material;They are used directly in the production of the final product. E.g.-Perfumes have alcohol as base for its product. Preservatives for processed food

Support products;Support products are products that facilitate the production.They do not become a part of the final product. 1.Capital equipment;it comprises of large tools and machines that are used for production of goods or for providing services.They are usually expensive. 2.Accessory equipment;Accessories are those products that help in production or office activities.They are relatively less expensive.They are purchaesdmore frequently and demand less services. E.g.-Computers,calculators,furniture etc. 3.Consumable supplies;Consumable supplies are consumed during production and delivery but are not part of final product. E.g.-pencil,paper,Envelopes(office stationary),brooms(maintainence items),repair items(handy tools,replacement parts). 4.Business services;They are intangible in nature.Organizations require them for smooth functioning of their operations. E.g.-legal services,finance services,marketing research,temporary workers.

Product mix

The product mix is the set of all the products that an organization offers to its customers. A company may decide to a single or a variety of products,add new products, or withdraw certain products. Relevant decisions are made keeping in view the scope of marketing. Such decisions are called product line or product mix decisions. E.g.-HLL offers detergents,shampoos,hair care products,cosmetics beverages. It has certain characteristic features like ; 1.Width;This is total no of product lines a company carries.HLL has 10 lines. 2.Length;The length of the product mix is the total number of items in that mix. 3.Depth;The depth is the assortment of sizes,colors and variations offered for each product in the product line. E.g.-Lifebuoy Active Red comes in three sizes:125gm,100gm and 60gm cakes. 4.Consistency;It refers to how close are the product lines as far as production requirement,distribution,end usage is concerned as they are consumer goods. E.g.-HLL products are consumer goods so they have same distribution channels and produced in similar manufacturing facilities.

Product mix of HLL

Confectionarie Colour s cosmetics

Hair care

Skin care

Max

lakme

Sunsilk

Aviance

Clinic

u ct lin e e p th

Oral care

Deodrants

Soaps and detergent

Toilet soaps Beverages

Fair & lovelyPepsodent

Axe

Surf

Liril

Lipton Yellow labe

Pond’s

Pond’s

Rin

Lifebuoy

Lipton Green label

Rexona

Wheel

Lux

Red label

Denim

Ok

Breeze

Lipton Ice tea

501

Pears

Taj Mahal

Vim

Hamam

Brooke Bond Taaza

Close-up

Sunligh Rexona Bru t Ala Dove

Positioning the Product Product positioning is the image projected by the product against the competitor’s product and other products of the same firm.Marketers use various strategies to position the product in the market. Some of these strategies are: a) Positioning the product in relation to the competitors product. E.g.-Pepsi and Coke-They position themselves directly against each other. b)Position the product in relation to the target market. E.g.-Coke targeted its Diet Coke at calorie conscious people. c)Positioning in relation to product class.Either by associating or dissassociating it from a common class of products. E.g.-Tropicana fruit juices,available in 7 flavours,position all its products as containing no preservatives,no added sugar or colouring. d)Positioning by price and Quality.Some retail outlets like Croma are known for their high quality merchandise and high prices,while others like(Big bazaar) offer same products at a lower price and ‘value for money).

Product Life Cycle Product life cycle, helps in deciding about the product or products which should be offered in different markets. It is a very valuable tool in the hand of a marketer.A typical product goes through four stages in its life,i.e. a)Introduction b)Growth c)Maturity d)Decline

The Four Stages of product Life Cycle

1.Introduction Stage; When any product is introduced in the market, heavy expenditure is incurred on advertising and other methods of increasing the sale. This is known as introductory stage.Introductory stage is marked by zero profits and negligible sales. 2.Growth Stage; During the growth period, sale of the product increases fast and cost of production comes down due to increase in scale of production.Profits earned increase substantially. 3.Maturity Stage;During the maturity stage, the growth in sale of the product slows down. Profits also start declining. After the maturity stage there is a stage of decline, when the product starts losing its acceptance. There is a pressure for price cut. Firms generally start withdrawing the product after maturity stage. In this stage the customers try out new products and substitutes. 4.Decline Stage;During this stage,the sales of the product fall rapidly,forcing firms to withdraw from the market.The reason for decline in sales could be 1)technological advances 2)increase in competition 3)shift in consumer’s tasts and preferences.

Marketing Mix Introduction The basic task of marketing is the delivery of product(s) to consumers so that their needs are fulfilled and organizational objectives are also achieved. This involves several important decisions, e.g. deciding about the product or products which should be offered for sale, price of the product, markets where products may sell and the means of communication with the consumer for the sale of the product. All these decisions form part of marketing-mix.

The elements of marketing mix have been classified under four heads – 1.product, 2.price, 3.place and 4. promotion. That is why marketing mix is said to be a combination of 4 P’s.

1.Product

Product refers to a physical product or a service or an idea which a consumer needs and for which he is ready to pay. Products is the key element of any marketing mix. The decisions concerning product may relate to a) Product attributes; Product attributes refer to the quality, features and design of the product.A product should serve the purpose for which it is made, in terms of utility and quality. In a competitive market, products are differentiated on the basis of certain features or design. b) Branding; Brand is an identification of product. In a competitive market, many products are sold by brand names. It plays an important role in creation of demand while branding a product, it should be ensured that the name is simple, easy to read and pronounce and if possible, it should have an appeal.

c) Packaging and labelling; Packaging means putting the products in suitable containers or packets such as tin, plastic jar or card board box, etc. Packaging should be such that product is protected and easily handled. Labelling serves the purpose of indicating the contents, weight or measure, instructions for use, price, name of the producer, date of manufacture and expiry, etc. The information on the label is essential for various reasons. d) Product support service; Service may be by way of installation service, training in product use, after sale service, credit and financing service, etc. It should be decided whether services would be provided free or against separate charge. e) Product mix; A company may decide to a single or a variety of products,add new products, or withdraw certain products. Relevant decisions are made keeping in view the scope of marketing. Such decisions are called product line or product mix decisions.

2.Price; Price is the amount charged for a product or service. It is the consideration paid by consumers for the benefit of using any product or service. Price fixation is an important aspect of marketing. Pricing decisions of a company are affected by both internal as well as external factors. There may be two methods of price-fixation:  1. Cost-based approach; This is the simplest method of pricing. Generally companies add a certain percentage of Profit, to the total cost of the product. The total cost of the product is calculated after taking all types of costs into consideration. 2. Competition-based approach; The prices are determined on the basis of conditions in the market. Companies may follow any one of the following three approaches. a) Price-in-line b) Market-plus c) Market-minus

a.Price-in-line; means prices fixed nearly equal to the prices of close alternatives. Prices are decided by the market forces of demand and supply. b. Market-plus;When companies charge (fix up) a price which is more than the priceof existing substitutes, it is called market plus pricing. This approach is adopted when the quality of a product is better, or it has a popular brand name, or its packaging is attractive and useful. Consumers will pay more only when they find distinctive differences in the product and its substitutes. c) Market-minus;Sometimes business enterprises get ready to supply products at a price lower than the market price. It may be adopted to grab a larger market share or to make a newly introduced product more popular. This approach is called market-minus approach.

Promotion Promotion refers to using methods of communication with two objectives : (i) informing the existing and potential consumers about a product (2) to persuade consumers to buy the product. It is an important element of marketing mix. Various tools of communication form part of promotion mix. The tools should be combined. These decisions are known as promotionmix decisions.

Tools of Promotion-mix 1.Advertising 2.personal selling 3.sales promotion and 4. publicity

Advertising Advertising is an impersonal form of communication for which the seller pays in order to promote a physical product or service. It may be Print form; 1. newspapers 2.magazines, or Audio form; 1. radio and other similiar methods Audio-visual forms; 1. Television, 2.cinema screen, etc.

Personal selling Personal selling is a personal communication with one or more prospective buyers for the purpose of selling a product or service. These days, personal selling is considered to be the most effective tool. - it involves personal interaction, hence feed back is received immediately; - it is quite flexible, salesman can adjust communication according to the level of customer’s under-standing. - it is more persuasive; buyers can be convinced about the utility of the product; - impressive salesman leaves an impression on the prospective buyer; it may increase sales in the future.

Sales Promotion Sales promotion means the use of short-term incentives which are designed to encourage immediate purchase of a product or service by the buyer. Most of the sales promotion activities come in the form of some incentive for the buyer; hence sales generally increase immediately. sales promotion tools while introducing a new product. It includes ; 1.offer of discounts 2.free gifts 3.free sample 4.coupons 5.demonstration 6.store display, etc. E.g.-One tooth brush free with one 100gm of Close-up dental cream .

Publicity Publicity takes place when a favourable presentation is made through mass media about a product or service. People believe more on such news than in advertising. It covers people who do not entertain personal selling and sales promotion approaches. It is a non-paid form of communication. Very few products or services are covered by publicity. Packaging It is also considered as a powerful sales promotion tool these days. It immediately attracts the buyer and makes him buy the product. This tool has produced good results in case of consumer goods.

Place Once the goods are manufactured, packaged, priced and promoted, they must be made available to the consumers. Place is another important element of marketing mix as it covers Activities related to placing the products. It ensures various facilitating services need to be arranged like; 1. transportation 2.warehousing, 3.inventory control 4.order processing. Two elements of ‘place’are; (A) Channels of distribution (B) Physical distribution

(A) Channels of Distribution : There can be various levels of channel. It is for the producer to decide which level would suit the sale of his product. Number of Channel Levels Distribution channel starts from the producer and ends with the consumer.

Channels of Communication

Channel 1 Manufacturer

Consumer

Channel 2 Manufacturer

Retailer

Consumer

Channel 3 Manufacturer Wholesaler

Retailer

Consumer

Channel 4 Manufacturer Wholesalers

Jobers

Retailer

Consumer

Channel 1 is called a direct marketing channel. It has no intermediary level. Producers sell products directly to the consumers. Channel 2 includes one intermediary which is generally a retailer. Retailers buy products directly from the manufacturer and sell these to the consumers. Generally electronic goods like televisions, computers, are sold through this channel level. Channel 3 consists of two levels, typically a wholesaler and a retailer. This channel is often used by small manufacturers of food items, and other products. Channel 4 contains three middlemen levels. Jobbers usually come between wholesalers and retailers. They buy from wholesaler and sell to small retailers who generally are not served by wholesalers.

(B) Physical Distribution : Physical distribution comprises all those activities which deliver customer satisfaction by supplying right type of products at right place and at right time regularly.

Components of physical distribution :(i) Order Processing:Physical distribution begins with customers’ order. Both the company and customer are benefitted if order processing is carried out quickly and accurately. These days computers are used which establish a link between retailers and producers. (ii) Warehousing;Every company must store goods to maintain a proper flow.Storage facilities are important because production and consumption cycles generally do not match. (iii) Inventory;Inventory level also affects customer satisfaction. Marketers wouldlike that company having enough stock to ful fill all customers’ order immediately. (iv) Transportation;Transportation has infact, facilitated the physical distribution of goods and services over a larger area. Modes of transportation may include road, rail, water, air, etc. The choice of mode of transport affects the pricing and condition of goods.

Marketing research Marketing research provides information about consumers and markets,and their reactions to various products,prices,distribution,and promotion strategies.Marketing research involves collection and analysis of relevant facts to solve marketing problems. It is a logical method of solving marketing problems.

Marketing research may consist of any or all of the following : (1) Research on markets: This is a study of customers and their characteristics. (2) Research on Products: This is a study of products, which involves development and introduction of new products, improvement of existing products and withdrawal of old productsfrom the market. (3) Research on marketing methods and policies: This branch of marketing research studies issues relating to advertising, personal selling, pricing and channels of distribution.

The marketing research process has following steps: 1.Formulating the problem;The purpose of conducting marketing research is to find a suitable solution for a specific and immediate problem faced by a business manager. 2.Developing objectives of the research;The objectives of the research should be clear and specific.The objectives should cover all the questions regarding the purpose of the study,how the study to be conducted. 3.Designing an effective research plan;It is using the tools and techniques to conduct marketing research. The research instruments generally used to collect primary data are; 1.Questionnaires 2.Mechanical instruments.

4.Data collecting techniques 1.Questionnaires;Questionnaires are formal set of questions to collect the required information.This is ome of the most effective techniques used in the surveys.The contents,phrasing and the sequence of the questionnaireshould be clear and non-confusing. 2.Mail interviews; The cost is relatively low.The questionnaire is sent on the mail and the customer can respond at his convinience. The identity can be kept secret and the customer can express their ideas openly. 3.Telephonic interviews;They are conducted when the information required is not great and need to be collected quickly. 4.personal interviews;They are conducted when interviewer and interviewee are physically present at one place.They can be one to one or one to many.Theinterviewer can ask questions and records the responses from the respondents. 5.Mechanical instruments;Instruments like galvanometers measure the responses on various parameters such as emotions,interest etc.

Secondary Data;Secondary data is collected from company’s external and internal resources. Company’s internal resources include; 1.annual reports 2.Sales reports Company’s external resources could be; 1.Independant magazines 2.journals 3.legal documents

5.Evaluating the data and preparing a research report;Once the information is collected,it is edited and coded.The coded data is then tabulated and evaluated and detailed research report is made.This reprt is submitted to the management to make effective decisions to attract potential business opportunities.

Retailing Meaning retailing is a business activity that involves selling products/services to customers for non-commercial’individual or family use.Normally,retailing is the last stage of the distribution process. Over the past few years,industrial gaints like Tata’s westside,Eureka forbes,Pantaloons,Big Bazaar,Shopper’s stop and lifestyle have made a foray into the Indian retail market. Globalization and the increase in the double income households has given a tremendous boost to the spending power of consumers thereby opening a plethora of opportunities for retailers. Since both parents are working and people have less time for shopping the shopping time has reduced but the disposable income has increased.Hence,customers are on the lookout for instant products and services to save time.

Generally retailers are classified into four catagories: 1.Retailing based on ownership 2.Retailing based on the extent of product lines handled 3.Retailing based on the services vs.goods lines handled 4.Non-store based retailing

1.Ownership;

a)It primarily includes independent retailers,where a retailers own only a single retail unit.Individual retailing units can be set up with minimum licensing requirements.However,the market share of the individual retailers is significantly low as compared to other form of retail ownership. b)Chain retailership;These retailers own several retail outlets.Purchasing decisions and activities are carried out centrally from these various outlets. E.g.-Pantaloons and Food World. c)leased department;A retailer takes a portion of a major store or outlet on lease or rent and is responsible for decorating his section of the store.In return for the leased or rental space,the retailer pays an amount equal to a percentage of his sales to the store owner. E.g-Big Bazaar

d)Vertical Market Units;In vertical market unit,all the three functions of business –manufacturing,wholesaling and retailing- may be owned by a single person,and comprise a fully integrated system.When the three functions are owned by two persons,it comprises a partially integrated system,and when owned by three different individuals,they are called independent systems. e)Consumer cooperatives;they are retail outlets that are owned and operated by a group of consumers.The representatives of these consumers look after the day-to-day operations of the retail outlet. E.g.-AMUL(Anand Milk Producers’ Union Limited) are successful milk cooperatives.

2.The extend of Product Lines handled

It includes speciality stores,departmental stores,discount stores,supermarkets and hypermarkets. a)Speciality stores;Speciality stores offer a wide selection of specially chosen goods pertaining to a single product line.Thexse stores provide a narrow product line but a wide assortment of choice within this product line.These stores target small segment of market for sales. E.g.-Health and Glow stores by Goenka group and they offer solutions for better health in the form of Ayurvedic products. b)Departmental Stores;They offer wide selection of product for consumers.There is considerably large retail space with separate sections allocated for toiletories,food stuff,body care products etc. E.g.-Westside,Shopper’s Stop and Lifestyle.

c)Discount Stores;They offer products at less than the retail price.The purpose of doing so is to obtain profits on large volume sales.Discount stores are targeted to middle and lower level class who are price concious. d)Supermarkets;They are based on the concept of self service.The customers can pick and choose products on their own from a variety of brands displayed on the shelf. e)Hypermarkets;They are very large supermarkets with the shop floor area ranging between two lakh to three lakh square feet.They offer wide variety of products ranging from needle to household equipment.

3.Service vs.Goods Retail Strategy Mix;

Retailing business can also be classified into goods and services. A)In goods retailing,physical products are sold such as groceries. B)In services retailing,the consumer does not get the ownership of a product such as spa or beauty parlours. C)There are other retailers who offer a combination of both goods and services such as video parlours. They sell and rent video CDs. The Service sector are growing faster than manufacturing and the goods sector globally. Service retailing can be divided into; 1.Rented goods services;In this case,the consumer pay the fees for the time but he does not own it.E.g.-Hertz car rental offer cars on rent. 2.Owned goods service retailing;The service provider does not own the goods that he services.E.g.-Annual PC maintainence or AC maintainence contracts. 3.Non –goods service retailing;Personal services are provided.No physical goods are involved.E.g.-Tutors,personal trainers,real stoke brokers etc.

4.Non-Store based retailing It can be in the form of;

1.Direct selling;It is the process of selling the products directly to the consumers by meeting them personally in their homes,offices or other non store locations.Products sold using this method include vaccuum cleaners,water purifiers,milk,news paper and magazines etc. 2.Direct marketing;It is the process of exposing the consumer to the product or service,through mailers,telephone calls,cable,satellite television,or radio and ask for direct response from customers. E.g.-TSN(Tele Shopping Network) promote their products through television channels and invite direct response from customers. 3.Automatic Vending;It is a type of non store retailing in which vending machines are used to dispense goods and services to customers without any sales person.When customer inserts the coin in the vending machine,it delivers the product or service to the customer,For e.g.-Cold drink vending booths,telephone booths etc.

Francising Meaning Franchising is a contractual and legal binding agreement between a franchiser and a franchisee. A franchiser may be the owner of thea trademark or a tradename,a producer of goods and services provider.Hegives the right to the franchisee the right to do the business under his trade mark,trade name,product.or service.

Strategic Issues in Retailing A retail strategy has six major elements as described below; 1.Situation analysis;Before venturing into the business the vendor should conduct a situational analysis to assess the current position of his business and directiond it must take.This include evaluation of his strengths and weaknesses. Making decisions whether to start business on a sole proprietorship,partnership and whether to invest in entire new business,buy an existing business,or start a franchise. Taking management decisions whether to manage business of his own or to9 hire a professional and decisions whether to centralize or decentralize his business. 2.Setting objectives;He should set long or short term targets.It includes an overall growth in sales,stability in sales and profits and achieving higher market share.It also includes customer satsfaction,meet the expectation of stock holders and enhance the image of the store.

3.Identification of Target markets and consumers;In this the retailer can choose between: 1.Mass marketing;When he has to sell his products and services to a large number of customers. 2.Concentrated marketing;When the products and services are targeted at a specific group of customers. 3.Differentiated marketing;When the products are targeted at two or more distinct groups of customers. when a company attempts to appeal to two or more clearly defined market segments with a specific product and unique marketing strategy tailored to each separate segment. differentiated marketing creates more total sales and it also increases the costs of doing business. E.g.-Firms such as Maruti-Suzuki use differentiated marketing to attract all segments. Others, such as Hyundai, and Microsoft appeal to two or more segments, but not all segments.

4.Developing an Overall Strategy;This is done by taking into account two or more variables; 1.Controllable variables;The controllable variables are that can be controlled by the retailer such as; 1.Working hours 2.investment capital 3.location of the outlet 4.advertising and promotional strategies etc. 2.Non-controllable variables;They are those elements that are cannot be controlled by the retailer and to which he has to adapt himself. 1.Technological advancement 2.Competition 3.Government regulations

5.Developing specific activities;it involves decisions based on day to day operations activities like pricing of the products and communicating with the customers. 1.Location;Location of the store is of significant strategic importance. A retailer can adapt himself to changing market conditions by changing his product,price,promotion or distribution strategy but changing the store location is very difficult and can impact business in the long-term.Therefore to choose an appropriate location is releventeven if there are future market changes.Scientific research has to be conducted.Next,the researchers study the capability of the store to attract maximum customers from different geographic locations.Then an analysis is done to estimate the sales that an outlet can generate.In this way,a location that will generate maximum sales can be selected.

6.Store Image Decisions;The store image is an important factor influencing the consumer’s choice of the store.If the retail store is targeting mass market,then the store’s appeal should be balanced as to attract as many people as possible. The younger generation is attracted to a young trendy store images.They consider aspects like the aesthetics of the store,the responsiveness of the sales staff and the quality of the merchandise. The older generation like to associate with those stores that have evolved with the times along with them.

Case Study BCPL’s Petrol Pump Retail Revolution Petrol pumps in India have come a long way from being dusty, poorly lit places manned by shabbily clothed and indifferent personnel, to the shopping malls of the early 21st century.Bharat Petroleum Corporation Ltd.(BCPL),a leading player in the Indian petroleum industry, received wide acclaim for having brought about this change in the Indian fuel retailing business. In the mid 1990s,the oil industry felt the need to establish strong brand identities. Until then, the industry seemed to have adopted an indifferent approach towards customer service. With the deregulation of the oil industry in April 2002,Indian players realized that they needed to become more customer focused.BPCL’s pioneering efforts in creating brand awareness for its products were thus a welcoming change.BPCL’s first foray into petrol pump retailing was through Bharat Shell Ltd.(Shell).The store, offering eatables, soft drinks,stationary,newspapers,magazines,frozen foods, light bulbs, audio cassettes and CDs,came as a pleasant surprise to Indian consumers. By July 1999, 35 of BCPL’s retail outlets across the country had the ‘Bazaar, stores running successfully, in october,2000,BCPL,pioneered another revolutionary concept by launching a McDonalds’s fast food outlet at a petrol pump near Mathura (UP) on the Delhi –Agra highway. The 4000 sq.ft,180 seat outlet was set up at a cost of Rs.40 million.Mc.Dold’s paid a fixed rent, besides a percentage of its sales to BCPL,for using the facility. In January 2001,BCPL further upgraded the ‘Bazaar’ stores ,and a month later, launched the’In & Out’stores at around 40 outlets in Bangalore,Mumbai,Delhi,Kolkata and Chennai. To offer enhanced services to its customers,BCPL tied up with the various companies from a number of different industries:fast food,photography,music,financial services,ISPs,ecommerce portals,document centres,ticketing,greeting cards,ATMs,and courier services.

International Marketing Meaning According to The American Marketing Association (AMA) ,International marketing is the multinational process of planning and executing the conception,pricing,promotion and distribution of ideas,goods and services to create exchanges that satisfy individual and organizational objectives.

International marketing Vs Domestic Marketing International

Domestic Marketing 1Marketing . In te rn a tio n a l m a rke tin g stu d ie s 1.Domestic marketing studies th e " h o w " a n d " w h y " a p ro d u ct about a product sales in the su cce e d s o r fa ils a b ro a d a n d h o w market. m2.Marketing a rke tin g e ffomethods rts a ffe ctused th e outside national 2.Domestic marketing is o u tco m e .

the home marketing are foreign concerned with the marketing 3. International marketing 3.Domesticmarketing involves marketing. practices within the marketer’s involves two or more sets of one setcountry. of uncontrollables derived home environmental uncontrollable from the domestic market. variables originating from various contries.

Trade Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce or transaction. A mechanism that allows trade is called a market. It is the commercial exchange (buying and selling on domestic or international markets) of goods and services. GATT General Agreement of Tariff and Trade is an agreement among more than 120 countries,the purpose of which is to lower barriers to the free flow of goods and services between nations.

Instruments of trade Policy They are called as trade barriers.There are six main instruments of trade policy; 1.tarriffs 2.Subsidies 3.Import Quotas 4.Voluntary export restrictions 5.Local content requirements 6.Administrative policies

1.Tarriffs; A tarriff is a tax levied on imports.A tarriff raises the cost of imported goods relative to products produced in domestic market. The principle objective of tarriff is to protect domestic producers and employees against foreign competition,they also raise revenue for the government.The government gains because tariffs increases government revenues.The Domestic producers gain because tarriff makes foreign goods more expensive so people will buy more domestic products.Customers loose because they have to pay more for certain imports. 1.Protective tariff;It is to protect home industry,agriculture,and labor against foreign competitors by trying to keep foreign goods out of the Country. 2.Revenue tariff;It is to generate tax revenues for the government.It is relatively low as compared to protective tariff. For e.g.-When Japanese and other foreign cars are exported into States,there is a 3 % duty.

2.Subsidies; A subsidy is a government payment to a domestic producer.By lowering costs,subsidies help domestic producers in two ways; 1.They help them compete against low cost foreign imports. 2.They help domestic producers to gain foreign market. Subsidies are in the form of; 1.Cash grant 2.Tax breaks 3.low interest loans etc. 3.Import Quotas; Quotas is a limit on the amount of exports that can come into the country in a year.It reduces quantity of imports.

4.VER’s-Voluntary-Exports Restrictions; A trade restriction on the quantity of a good that an exporting country is allowed to export to another country. This limit is self-imposed by the exporting country. E.g.-When the automobile industry in the United States was threatened by the popularity of cheaper more fuel efficient Japanese cars, a 1981 voluntary restraint agreement limited the Japanese to exporting 1.68 million cars to the U.S. annually. 5.Local content requirements;When a foreign company makes products in a country, the materials, parts etc that have been made in that country rather than imported. A minimum level of local content is sometimes a requirement under trade laws when giving foreign companies the right to manufacture in a particular place. 6.Administrative policies;In order to restrict imports and boost exports the government use range of informal policies.Administrative trade policies are bureacratic rules that are designed to make it difficult for imports to enter a country.

Taxes; A fee charged by a government on a product, income, or activity. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning. Taxes are collected at a particular point of distribution or when purchases and consumption occur. Indirect taxes are of four kinds; 1.Single-stage sales tax;it is a tax collected only at one point in the manufacturing and distribution chain. 2.A value-added tax(VAT);it is a national sales tax levied at each stage of the production and distribution system,though only on the value added at that stage.In other words,each time a product changes hands,even between middlemen,a tax must be paid.

3.Cascade tax; They are collected at each point in the manufacturing and distribution chain and are levied on the total value of a product,including taxes borne by the product at early stage. 4.An excise tax; it is a one-time charge levied on the sales of specified products.E.g.-Alcoholic beverages and cigarettes.

The Balance of payments and International Economic Linkages. The balance of payments is an accounting statement that summerizes all the economic transactions between residents of the home country and residents of all other countries. The statistics are followed closely by : business people,economists,bankers,and foreign exchange traders.

Credits; Currently inflows are recorded as credits.Credits shows with plus sign.Export of goods and services are credits.Capital inflows appear as credits since the nation is selling(exporting to foreigners valuable assets like land,building,machine,stock,bonds and other financial claims-and receiving cash in return. Debits; Currently outflows are recorded as debits.Debits show with minus sign.Capital outflows show up as debits because they represent purchases(import of valuable foreign assets).

The balance of Payments

The balance of payments statement is based on double entry book keeping.Every economic transaction recorded as credit brings about equal and offsetting debit entry,and vice-versa.Because double entry book keeping ensures that debits equal credits,the sum of all transactions are zero. For e.g.-If a foreigner sells a painting to an Indian resident,a credit is recorded to reflect an increase in liabilities(payment to the painting) and debit is recorded to indicate an increase in purchase made by the indian(the painting). There are three major balance of payments catagories; 1.Current account;which records flow of goods,services and transfers. 2.Capital account;which shows public and private investment and lending activities. 3.Official’s reserves account;which measures changes in holdings of gold and foreign currencies-reserve assets-by official monetary institutions.