LECTURE NOTES

ON

SALES AND DISTRIBUTION MANAGEMENT

MBA II YEAR III SEMESTER

MR. AKASH CHOUDHARY

ASST. PROFESSOR

DEPARTMENT OF MANAGEMENT STUDIES

INFINITY MANAGEMENT AND ENGINEERING COLLEGE

Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 1

 UNIT- 1 INTRODUCTION TO SALES
MANAGEMENT
Introduction

“Sales management” as the term implies means management of sales. Often it is considered
synonymous with the management of personal sales. It involves an understanding of the effort
that goes into the management of the sales force and the various processes of sales. Sales
management initially was meant to be the direction of sales force personnel. Later the term took
on a broader significance apart from personal selling and the term “sales management” included
managing of all the sales related activities including below the line advertising, sales promotion,
physical distribution, pricing and product merchandising. Sales management is a business
discipline which is focused on the practical application of sales techniques and the management
of a firm's sales operations. It is an important business function as net sales through the sale of
products and services and resulting profit drive most commercial business. These are also
typically the goals and performance indicators of sales management.

Sales management can involve any of the following activities:

(1) Formulation of sales strategy through development of account management policies, sales
force compensation policies, sales revenue forecasts, and sales plan,

(2) Implementation of sales strategy through selecting, training, motivating, and supporting the
sales force, setting sales revenue targets, and

(3) Sales force management through development and implementation of sales performance,
monitoring, and evaluation methods, and analysis of associated behavioral patterns and costs.

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 Nature
1. Pervasive Function
2. Continuous Function
3. Part of Marketing Management
a. Marketing research
b. Market logistics
c. Promotion
d. Customer service
e. Coordination
4. Exchange Relationships
5. Variety of Jobs

Scope
 Sales Planning
(a) Analyzing the environment of business
(b) Forecasting sales
(c) Sales budgeting decision
(d) Selecting the sales strategy
 Sales Organizing
 Sales Directing
 Sales Coordinating
 Sales Controlling

Importance of Sales Management

1. Goal Setting: To achieve sales goals, your company needs to set sales numbers or goals for
the staff. One way for a company to achieve and maintain growth is to increase its sales
numbers. Sales managers can set sales goals that will promote growth and are attainable by the
sales staff. Many sales managers use cash bonuses or other incentives to motivate staff to achieve
the goals.

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2. Tracking: Sales management enables management to track the overall sales of the company
as well as the individual sales of each employee. Using sales tracking, management is able to tell
if the company is on track to meet its goals or if individual members of the sales team are not
producing enough sales. By keeping the sales force constantly up to date on the status of their
sales, you can help them to adjust their sales techniques and productivity to achieve the
company's sales goals.

3. Reporting: Using sales management, a company can produce sales reports that can be used to
track the performance of its sales force over different periods. For example, you can use sales
reports to compare the sales of the company on different years over the same period. The sales
reports can determine the direction your company must take based on the results. For example, if
the sales reports determine that your company is experiencing substantial growth year after year,
it may indicate that expansion is a possible direction for the company.

4. Sales System: As a company grows, it can become more difficult to track and manage the
sales process without a system in place. Sales management provides companies with a system to
train and manage employees while streamlining the sales process from the individual sales
employee to the customer. This is beneficial because if there is a problem at any point of the
sales process that may affect the company's bottom line, it can be quickly identified and
corrected.

Background of Sales Management

Primitive family economy: In the initial days of economic life, a family produced whatever it
required and consumed all that it produced. Therefore, there was neither the need for exchange
nor any surplus to exchange. Every family was self- sufficient.
The Barter System: As people began to specialize in the occupations of their liking, need for
exchange arose. Whenever a person makes more than he/she wants or wants more than he/she
makes, the foundation for selling is laid. People became weavers, farmers, shoemakers, black
smiths and so on. A farmer exchanged his grains with shoes made by the shoe – maker and
clothes made by the weaver. This exchange of goods with other goods or services came to know
as the barter system.
The rise of money: Introduction of money in the form of metals, coins and currency notes
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solved the problem of measurement of value of goods as suffered by Barter system.
Small Scale Manufacturing: Before the Industrial Revolution which began in 1760 AD
 manufactured the products on a small scale with the help of hand tools and simple machines.
Manufacturing was the main problem and goods could easily be sold to nearby customers.
Therefore, there was no need to employ professional sales people.

Industrial Revolution: After Industrial Revolution, large scale manufacturing started. It was no
longer possible to sell the large quantities of goods manufactured in factories in nearby markets.
It became necessary to expand markets. Wholesalers and retailers were needed to sell goods on a
large scale. A separate marketing department was created in larger firms. This department began
to use advertisement, personal selling, and sales promotion to increase the demand.

Role and Competencies of Sales Managers

Role of the Sales Managers:
 Lays down sales objectives, policies and strategies.
 Prepare a sales plan and programme to implement sales strategies.
 Design and administer suitable sales organization.
 Designing sales territories & deciding the size of sales force.
 Formulation of personal selling objectives, organizing sales forces selection, recruitment
socializing (orientation) and placement.
 Training and development, career planning, transfers and promotion.
There are two opinions on the success of sales managers.
1. Sales abilities are inborn qualities
2. Sales abilities are developed. Some of the sales abilities like gift of gap, pleasing manner,
extrovert nature are inborn. However, others like analytical ability, negotiation skills, leadership,
etc. are developed.

Competencies of a Successful Sales Manager

(1) Conceptual and decision skills – these skills involves managers ability to see the organization
as a whole and relationships among its parts. It is also involves thinking and planning abilities.
(2) People skills- Involve manager ability to work with and through other people and to work
effectively as a group.
(3) Technical skills – Are the ability to perform a specialized task that involves a certain method
or process. They included mastery of the methods, techniques & equipment involved in specific
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functions such as [Link]., [Link]
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Sales Strategies
There are 5 steps to a successful sales strategy:
1. Define your target market: Knowing this is critical to your sales success. You aren’t going
to do business with everyone. And even if you were, you have to start somewhere. You have to
have a place where you can focus in order to build up that momentum we talked about. Once you
have the market defined, create a list. This list should be large enough to give you the
Opportunity to really delve in and repeat the process a couple of times. If your target market is
too small your odds of success decrease. You may have to merge two similar target markets in
order to have the numbers working in your favor.
2. Determine your outreach: Once you’ve defined your target and created the list, reach out to
your networks to see if you are connected in any way to the person or organization you seek.
This includes direct outreach – emailing or calling them – and exploring your LinkedIn contacts.
Remember, you are looking for an introduction. That’s it! You want the opportunity to meet with
the prospect. When your friend or associate introduces you to the prospect, follow up and set up
the meeting. Next, take the ones on the list you don’t have a connection to and cold call them.
This could mean sending them an introductory letter or postcard, or picking up the phone and
calling them. If you send an introductory letter or postcard, you must tell them that you will call
to follow up – and then follow up! You can’t leave the action in their hands. The process is yours
to conduct, not theirs.
3. Know your questions: Before you go on a sales appointment, create a list of questions to ask
the prospect. This is the time for you to really get to know them, their needs, and their business
practices. It is not the time for you to talk endlessly about your product or service. If they look
like a qualified prospect, provide them with a quote. If they don’t, walk away.
4. Deliver and build. Deliver on what you said you were going to do for the prospect. Then
make
sure you build the relationship. Don’t expect them to stay with you or use you for other needs if
you aren’t taking the time to build the relationship with them. The sales process doesn’t end with
the sale.

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 5. Monitor. This is one of the most critical aspects of a successful sales strategy. As you move
Forward with your plan you must keep track of how well it is working. On the first day of each
Month, take a look back at the previous month. Ask yourself these questions:

How did it go?

What worked?
What didn’t work?
Did I hit my numbers?
Knowing what works and what doesn’t give you the opportunity to tweak your process. Adjust
or get rid of what doesn’t work, and keep what does. If you hit your numbers, celebrate! Then
prepare for the coming month. What’s the goal? What’s the plan?
If you didn’t hit your numbers, determine what might need to be changed and change it.
Then add the missed amount to the coming month’s goal. You don’t want to give up on the
overall goal by just letting the past month drop. You want to take the sales dollars you didn’t get
and add them to your goal for the coming month. Now plan for how you are going to achieve
that – and get going.

Sales strategy formulation

1. Setting Organizations’ objectives
2. Evaluating the Organizational Environment
3. Setting Quantitative Targets
4. Aiming in context with the divisional plans
5. Performance Analysis
6. Choice of Strategy

Emerging Trends in Sales management in context

to Indian Market
• Global perspective: Global competition is intensifying. Domestic companies who never
thought about foreign competitors are suddenly finding them in their backyard. This is a
challenge which sales managers and salesperson must take on, they have to improve their
personal selling efforts not only in their countries but also in foreign countries. Selling goods and

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• services in global markets presents a challenge due to differences in culture, language, needs
and requirements.

• Revolution in technology: Digital revolution and management information system have

greatly increased the capabilities of consumers and marketing organizations. Consumer today
can get information about products, compare it with other brand, place an order and place an
order instantly over the internet. This has led to a different kind of sales force who collects
information about internet users, markets and prospects of internet buyers. It is mandatory for all
companies to have their website now.

• Customer relationship management (CRM): Combining information technology with

relationship marketing has resulted in customer relationship management. Interestingly, the
concept of relationship marketing came about earlier by bringing quality, customer service and
marketing together. Relationship marketing aims in building long term satisfying relations with
key customers distributors and suppliers in order to earn and retain their long term preference
and business. CRM enable companies to provide excellent real-time service by focusing on
meeting the individual needs of each valued customer, through the use of CRM software
packages.

• Sales force diversity: The demographic characteristics of sales force is changing and
becoming more varied. For example, more and more women are taking up careers in sales
management and selling. Also the education level of sales people is going up most of them
holding a college degree or a post graduate degree. Sales managers now have to handle a sales
force of these varied demographic, expectations of each and every individual is different and
sales manager needs to use different motivational tools against each one of them.

• Team selling approach: The practice of team selling is more widely followed by most
companies in recent years. Team selling approach is used when company wants to build a long
term mutually beneficial relationship with major customers, who have high sales and profitable
potential. It is used for selling a technically complex product or a service to a potential customer.
The composition of team may vary depending upon the customer from top management,
technical specialist, customer service, etc

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 • Managing multi-channels: Multi-channel marketing system occurs when organization uses
two or more marketing channels to target one or more customer segments. Major benefits of
multichannel marketing system are:

1. Lower channel cost

2. Increased market coverage

3. Customized selling

Multi-channel may also lead to conflicts and control problems, as two or more channels may
compete for same customer. A successful sales manager will have to effectively manage conflict
between the channels.

• Ethical and social issues: Sales managers have ethical and social responsibilities. Sales people
face ethical issues such as bribery, deception (or misleading) and high pressure sales tactics.
Today’s sales managers have no choice but to ensure ethical standards from sales force otherwise
they may be out of business or even land up in legal problems.

Changing trend in Sales Management

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 UNIT II PERSONAL SELLING CONCEPT

Personal selling is a method in which salesperson uses his skills and techniques for
making personal relationships with the customer. According to American marketing Association,
“Personal Selling is an oral presentation in a conversation with one or more prospective
purchaser for the purpose of making sales”. Personal selling involves personal contact, face-to-
face meetings or via a telephone conversation, Internet including using video conferencing or
text messaging (e.g., online chat).

Personal Selling Process

8Follow– up-Post Sale Action

7Closing the sales
6Handling Objectives
5Demonstration
4. Presentation
3. Approach- Panning the call
2. Pre- approach
1. Prospecting – Identify and Qualify Potential Customers

Importance and challenges

Importance:
Benefits to Consumers Benefits to Businessmen Benefits to Society
Provides knowledge and Helps locate prospective It stimulates consumption and
education about new products customers and create demand accelerates the rate of
and new uses of existing by winning the confidence of production
products. customers.
Helps consumers in selecting Explores new markets and It creates employment
products best suited to their makes new products popular opportunities for a large

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needs, tastes and preferences. in the market number of people.
Communicates grievances and Enables businessmen to secure It increases the national
suggestions of consumers to the economies of large scale income of the country.
producers and traders. production and marketing.
Enables consumers to get Creates continuous demand It helps to raise the standard of
quality products at fair prices. thereby reducing seasonal living of people.
fluctuations in demand cut –
throat competition in the
market.

Challenges:

1. The face-to-face interaction between a seller and a buyer is very flexible but the
flexibility comes at a cost. Salespersons run huge bills besides their salaries. In industrial
marketing, 70 % of the marketing budget is spent on the sales force. This is due to the
technical nature of products and he need to maintain close personal relationship between
the selling and the buying organization.

2. A sale on an average takes six visits but good salespersons visit their clients even when
they know that the client is not going to buy in the near future. Maintaining relationships
with clients between their purchases is as important as the interaction that takes place
when the salesperson is trying to sell. A salesperson learns of the impending purchases of
the buyer and is likely to be considered favorably by the buyer when the salesperson
maintains a relationship with him.

3. Few salespeople sell products that ore clearly superior to the competitors on most
criteria. Salespeople need to capitalize on what advantage their products have over
similar competitive offerings. Under such conditions of product parity, salespersons who
understand the requirements of their buyers better will exaggerate the benefits that the
buyer requires and win on order. The relationship that the salesperson has developed and

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 maintained with the buyer will hold him in good lead when his product is not superior to
his competitors’.

4. As buyer needs are becoming more complex, salespeople need to be able to produce a
package of products and services to provide a solution. Buyers do not want to buy many
sub-components from many suppliers and then assemble these themselves. They want
their suppliers to do this job. They want total solutions to their needs.

5. Industrial buyers are experts in their area of operations and ore very clear about what they
ore looking for in the product. Their choice criteria are clear and precise. Customers in
the consumer market are also developing clarity and precision in their choice criteria.
Customers are technology savvy, are linked to other customers who might have used the
product and are generally more willing to consider alternative solutions to their needs.

Types of Selling

Transactional Selling: It is a one – time exchange with the purpose of getting sales or orders
from customers with low profits potential. Its main tools are availability of products and services
at low cost with minimum selling efforts.
Relationship Selling: Here, the objective of the seller is to become the preferred supplier. In
order to achieve this objective, efforts are made to build a strong and ever lasting relationship
with the customer.
Value- Added Selling: it focuses on correctly understanding the current and future needs of the
customers and meeting those needs better than the competition.

Transactional and Relationship Selling

Basis Transactional Selling Relationship selling

Purpose To get sales To become sole or preferred
supplier

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No. & types of customers Several customers with low Few customers with high
profit potential profit potential
Sales Team 1 or 2 junior sales persons 3 to 5 junior and senior sales
persons
Selling Efforts Low to medium involving few High involvement of several
functions functions
Pricing strategy Lowest or competitive price to Mutually acceptable prices
get sales
Length of Relationship Short (days) Longer (years)

Sales Forecasting Methods

1. Jury Of Executive Opinion Method:

In the Jury of executive opinion method of Sales Forecasting, appropriate managers within the
organization assemble to discuss their opinions on what will happen to sales in the future. Since
these discussion sessions usually resolve around hunches or experienced guesses, the resulting
forecast is a blend of informed opinions.

A similar, forecasting method, which has been developed recently, is called the DELPHI
Method. Delphi Method also gathers, evaluates, and summarizes expert opinions as the basis for
a forecast, but the procedure is more formal than that for the jury of executive opinion method.

The Delphi Method has the following steps:

STEPS 1 – Various Experts are asked to answer, independently and in writing, a series of
questions about the future of sales or whatever other area is being forecasted.

STEP 2 – A summary of all the answers is then prepared. No expert knows, how any other expert
answered the questions.

STEP 3 – Copies of summary are given to the individual experts with the request that they
modify their original answers if they think it necessary.

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STEP 4 – Another summary is made of these modifications, and copies again are distributed to
the experts. This time, however, expert opinions that deviate significantly from the norm must be
justified in writing.

STEP 5 – A third summary is made of the opinions and justifications, and copies are once again
distributed to the experts. Justification in writing for all answers is now required.

STEP 6 – The Forecast Is Generated From All Of The Opinions And Justifications That Arise
From Step

2. Sales Force Estimation Method:

The Sales Force Method Is A Sales Forecasting Technique That Predicts Future Sales By
Analyzing The Opinions Of Sales People As A Group. Salespeople Continually Interact With
Customers, And From This Interaction They Usually Develop A Knack For Predicting Future
Sales. As With The Jury Of Executive Opinion Method, The Resulting Forecast Normally Is A
Blend Of The Informed Views Of The Group.

The Sales Force Estimation Method Is Considered Very Valuable Management Tool And Is
Commonly Used In Business And Industry Throughout The World. This Method Can Be Further
Improved By Providing Sales People With Sufficient Time To Forecast And Offering Incentives
For Accurate Forecasts. Companies Can Make Their Sales People Better Forecasters, By
Training Them To Better Interpret Their Interactions With The Customers.

3. Time Series Analysis Method:

The Time Series Analysis Method Predicts The Future Sales By Analyzing The Historical
Relationship Between Sales And Time. Although The Actual Number Of Years Included In A
Time Series Analysis Will Vary From Company To Company, As A General Rule, Managers
Should Include As Many Years As Possible To Ensure That Important Sales Trends Do Not Get
Undetected.

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4. Projections Of Past Sales:
This method of sales forecasting takes a variety of forms. This is very simple. To set the sales
forecast for the coming year either we choose the same figures as the current year’s actual sales
or forecast may be made by adding a set percentage to last year’s sales or to several past years.
The formula of calculating the next year’s sale is:

Next year’s sales = this year’s sales/ Last year’s sales.

5. Econometric Model Building and Simulation

This is very attractive method of sales forecasting. This stimulation method is used for
companies marketing durable goods. In this, set of equation is used which represent the
relationship between sales and demand. By “plugging in” various for each independent variable
sales are forecasted.

Econometric Model
It shows the relationship among a set of variables and parameters are estimated by statistical
analysis of past date. It is expressed in equation form. For e.g. the sales equation of durable
goods can be written as follows:

S= R + N

S= Total Sales R= Replacement Demand N= New Owner Demand

Total sales of durable goods consist of purchase made to replace units that have been scraped and
purchases by new owners.

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UNIT III SALES FORCE RECRUITMENT
AND SELECTION PROCESS

The recruitment and selection of a sales force often is the key to success for an organization. A
successful sales team leads to profitability and future growth. Most organizations that hire sales
professionals use a very detailed, well-orchestrated process to ensure that the candidates selected
will meet or exceed targeted sales goals.

Recruitment means the process of searching for needed employees and encouraging them to
apply for jobs in the company. It involves the sources of recruits that are consistent with the type
of person desired, selecting the sources to be used, and contacting the recruits.
Selecting the sources of recruits entails an evaluation of the costs and potential effectiveness of
different sources. Thus recruitment includes all activities involves in securing individual who
will apply for the job.

Sources of Recruitment

Internal: (A) Transfers (B) Promotions (C) Re- employment of former employees.
External: (A) Advertisement (B) Employment Agencies (C) Educational Institutions (D) other
firms (E) Referrals.

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 Recruitment Process

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Selection Process (Method / Procedure of Selection)

1) Application Blank
2) Personal Interviews – types ( patterned, unpatented, semi structured, stress
interview)
3) Psychological tests – types (intelligence tests, Aptitude tests, interest tests,
personality tests, trade test)
4) Medical testing
5) Reference Check
6) Job Offer
7) Socialization and orientation

Sales Force Training

Training is the process of increasing the knowledge, skills and other traits of individuals for
performing a particular job. It involves finding the facts, coaching, practice with the purpose of
developing selling skills.
It is an ongoing process for new and seasoned salespeople
It covers more than selling practices
On-the-job training is the most popular
Individual instruction taught by experienced salespeople.

Principles of Sales Force

Training
1) Clearly recognized purpose
2) Proper Contents
3) Good trainers
4) Clarity of Presentation
5) Planned Repetition
6) Systematic Review
7) Orderly Development of Material
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 Methods:
1) Lecture
2) Conference
3) Demonstration
4) Role playing
5) Case Discussion
6) Internship training
7) Committee
8) Panel method
9) Brain Storming
10) Each – one train one method

Importance and Role of Training Programmes

Training is crucial for organizational development and success. It is fruitful to both employers
and employees of an organization. An employee will become more efficient and productive if he
is trained well.

Training is given on four basic grounds:

1. New candidates who join an organization are given training. This training familiarizes them
with the organizational mission, vision, rules and regulations and the working conditions.
2. The existing employees are trained to refresh and enhance their knowledge.
3. If any updating and amendments take place in technology, training is given to cope up with
those changes. For instance, purchasing new equipment, changes in technique of production,
computer impartment. The employees are trained about use of new equipments and work
methods.
4. When promotion and career growth becomes important. Training is given so that employees
are prepared to share the responsibilities of the higher level job.
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The Importance of training
1. Improves morale of employees- Training helps the employee to get job security and job
satisfaction. The more satisfied the employee is and the greater is his morale, the more he will
contribute to organizational success and the lesser will be employee absenteeism and turnover.
2. Less supervision- A well trained employee will be well acquainted with the job and will need
less of supervision. Thus, there will be less wastage of time and efforts.
3. Fewer accidents- Errors are likely to occur if the employees lack knowledge and skills
required for doing a particular job. The more trained an employee is, the less are the chances of
committing accidents in job and the more proficient the employee becomes.
4. Chances of promotion- Employees acquire skills and efficiency during training. They
become more eligible for promotion. They become an asset for the organization.
5. Increased productivity- Training improves efficiency and productivity of employees. Well
trained employees show both quantity and quality performance. There is less wastage of time,
money and resources if employees are properly trained.

Role:
Generating income and revenue are the primary roles of the sales force. A sales team must work
together to increase brand awareness and drive sales forward. Small businesses hiring
salespeople for the first time must overcome the challenges of finding a cohesive team to work
well together.

Motivation and Compensation of Sales Personnel

Motivating:
1) Motivation is derived from Latin word “movere”, which means “ to move ”
2) Motivation is the effort the salesperson makes to complete various activities of the sales job
3) 10-15 percent salespeople are self-motivated
4) Majority of salespeople are not adequately motivated
5) Importance of motivating salespeople is recognized, because financial performance of the
Company depends upon the achievement of sales volume objective

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 Motivational tools in a
motivational mix

Financial Motivation Techniques:-

1) Salary
2) Commission/Incentive
3) Bonus
4) Combination
5) Sales contests
6) Benefits in kind (“fringe benefits”)
7) Time-rate pay
8) Piece-rate pay
9) Commission
10) Shares and options
11) Pensions

Non-financial methods of
motivation:-
1. Promotion
2. Sense of accomplishment
3. Personal growth opportunities
4. Recognition
5. Job security
6. Sales meetings
7. Sales training programmes
8. Job enrichment
9. Supervision
10. Financial compensation plan

Compensating:
A good compensation plan should consider objectives from the company’s and salespeople’s
Viewpoint

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 Objectives of compensation plan from the
company’s viewpoint
• To attract, retain, and motivate competent salespeople
• To control salespeople’s activities

• To be competitive, yet economical: It is difficult to balance these two objectives

• To be flexible to adapt to new products, changing markets, and differing territory sales
Potentials
• Connect Individual with Organization
• Influence Work Behavior
• Organizational Choice
• Influence Satisfaction
• Feedback
• Reinforcement

Objectives of
compensation plan from
salesperson’s viewpoint
• Regular income by fixed salary to take care of living expenses
• Incentive income for above average performance
To have a simple plan, for easy understanding
• This is in conflict with the objective of flexibility
• To have a fair payment plan
To have both regular and incentive income
• Fair or just payment to all salespeople is ensured by selecting measurable and controllable
Factors

Designing An Effective
Sales Compensation Plan
Designing a new compensation plan or revising an existing plan consists of the following steps:
1) Examine job descriptions
2) Set choudhary
Akash up [Link].,
objectivesDept.
for salespeople
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3) Decide levels of pay / compensation
4) Develop the compensation mix
5) Decide indirect payment plan or fringe benefits
6) Pretest, administer, and evaluate the plan

Decide levels of pay /

compensation
• It means the average pay or money earned per year (or month)
• It is important to decide levels of pay for all sales positions
It is decided based on the following factors:
• Levels of pay for similar positions in the industry
• Levels of pay for comparable jobs in the company
• Education, experience, and skills required to do sales job
• Cost of living in different metros and cities
• Annual average pay levels vary between industries, within the same industry, and sometimes
within the company
• Firms decide a range of average pay, instead of a specific pay
• Salespeople earn pay depending on their and company performance

Develop the
compensation mix
• Widely used elements of compensation mix are: (1) salaries, (2) commissions, (3) bonuses, (4)
Fringe benefits (or perquisites)
• Expense allowances or reimbursements like travel, lodging, etc are not included
• Basic types of compensation plans are:
1. Straight salary
2. Straight commission
3. Combination of salary, commission, and / or bonus

• 68 percent companies use combination plan and balance 32 percent firms use straight salary or
Straight commission

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 1. Straight – Salary Plan Characteristics:

 100 percent compensation is salary, which is a fixed component

 No concern for sales performance or salesperson’s efforts
 This plan is suitable for sales trainees, missionary salespeople, and when a company
wants to introduce a new product or enter a new territory

2. Straight – Commission (or Commission Only) Plan

Characteristics:
• It is opposite of straight-salary plan
• Most popular commission base is sales volume or profitability
• Commission rate is a percentage of sales or gross profit
• This plan is generally used by real estate, insurance, and direct-sales (or network marketing)
industries

2. Combinatio n Plan Characteristics:

1. Combines straight salary & straight commission plan
2. Four types of combination plans used by companies:
a) Salary plus commission: suitable for getting improved sales and customer service
b) Salary plus bonus: a bonus is a lump sum, single payment, for achieving short-term objectives.
This plan is used for rewarding team performance
c) Salary plus commission plus bonus: suitable for increasing sales, controlling sales force
activities, and achieving short-term goals. Also suitable for selling seasonal products like fans
d) Commission plus bonus: Not popular. Used for team selling activities for selling to major
customers

Sales Territories
A sales territory is the customer group or geographic district for which an individual salesperson
or sales team holds responsibility. Territories can be defined on the basis of geography, sales
potential, history, or a combination of factors. Companies strive to balance their territories
because this can reduce costs and increase sales.
The purpose of a sales force coverage (or sales territory) metric is to create balanced sales
territories. There are a number of ways to analyze territories. "Most commonly, territories are
Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 24
compared on the basis of their potential or size. This is an important exercise. If territories differ
sharply or slip out of balance, sales personnel may be given too much or too little work. This can
lead to under- or over servicing of customers."
"When sales personnel are stretched too thin, the result can be an under-servicing of customers.

This can cost a firm business because over-taxed salespeople engage in sub-optimal levels of
activity in a number of areas. They seek out too few leads, identify too few prospects, and spend
too little time with current customers. Those customers, in turn, may take their business to
alternate providers."

Benefits of sales territories

• Increase market / customer coverage
• Control selling expenses and time
• Enable better evaluation of sales force performance
• Improve customer relationships
• Increase sales force effectiveness
• Improve sales and profit performance

Sales Quotas
Sales quotas are sales goals or targets set by a company for its marketing / sales units for a time
period
• Marketing / sales units are regions, branches, territories, salespeople, and intermediaries
• Generally, company sales budget is broken down to sales quotas for various marketing units

A quota refers to an expected performance objective. Quotas are routinely assigned to sales units,
such as regions and districts. Quotas also are assigned to individual sales people.

Objectives of sales quotas are:

To use quotas as performance standards or performance goals
• To control performance
• To motivate people by linking quotas to compensation plans

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• To identify strengths and weaknesses of the company

Types of quotas
Organizations set many types of sales quotas:
1. Sales volume,
2. Financial,
3. Expense Quotas
4. Activity,

1. Sales volume quotas

• For effective control, sales volume quota should be set for the smallest marketing units, such as
salesperson, districts / branches, product items / brands
• Sales volume quotas can be stated in (a) rupees / dollars, (b) units, or (c) points • Rupees /
dollars sales volume quotas are appropriate when salespeople are required to sell many products
• Unit sales volume quotas are suitable when salespeople are selling a few products
• Prices of the product fluctuate rapidly • Price of each product / service is high • Point sales
volume quotas are appropriate when the company wants salespeople to sell products that
contribute more to profits

2. Financial Quotas
• Financial quotas control (a) gross margin or net profits, and (b) expenses of marketing units
•Gross-margin / Net-profit quotas
• Calculate gross margin by subtracting ‘cost of goods sold’ (i.e. cost of manufacturing) from
sales volume. Sales managers are not responsible for cost of manufacturing
• Net profit quotas are generally accepted by sales mangers as it is calculated by subtracting
direct selling expenses from the gross margin

3. Expense Quotas
In many companies, expense quotas are stated as a percentage of sales Expense quotas to be
administered with flexibility, to make salespeople cost conscious, allowing reasonable expenses

4. Activity Quotas

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• These are set when salespeople perform both selling and non-selling activities • Objective is to
direct salespeople to carry out important activities

• For effective implementation, activity quotas are combined with sales volume and financial
quotas
• e.g. Calling on high potential customers, payment collection from defaulting customers

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 UNIT IV ROLE AND IMPORTANCE OF
SALES PERSONNEL

A company's sales force consists of its staff of salespeople. The role of the sales force depends
to a large extent on whether a company is selling directly to consumers or to other businesses. In
consumer sales, the sales force is typically concerned simply with taking and closing orders.
These salespeople are not responsible for creating demand for the product, since, theoretically,
demand for the product has already been created by marketing efforts such as advertising
campaigns and promotional activities. Salespeople may provide the consumer with some product
information, but individuals involved in consumer sales are often not concerned with
maintaining long-term customer relationships. Examples of consumer sales forces include
automobile salespersons and the sales staffs found in a variety of retail stores.

Traditional Sales Force Roles

The conventional model on which sales management is conducted with the sales force has been
one of “pushing the numbers.” Quotas are set for salespeople and the salespeople are expected to
meet them. The sales manager regularly checks to see if the reps are making those quotas and
pushes them along, and also checks to see that there are enough leads for salespeople to work.
The reps are simply expected to sell, to enter data into CRM and to provide reports; they have
little to do with analysis, forecasting, or innovation when it comes to creating their own sales.
Forecasting and analysis rest on the shoulders of the sales manager, reps are told how to sell and
given very little latitude, and it’s very much a “leader-follower” type of arrangement.

Revealing the Inner Entrepreneur

An entrepreneur is a highly unusual, innovative and creative person. If you take a closer look at
the qualities of a sales rep, you’ll see that salespeople and entrepreneurs share much in common.
Both are “self-starters” in the extreme. Either would rather live or die by their own self-created
incomes. Both can see opportunity that most others would miss. Thus you can see that sales reps
are actually “entrepreneurs in the enterprise.”

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 Given that sales reps possess these characteristics, it can be seen why it is that forward-thinking
organizations are beginning to treat salespeople as such. They are being allowed input into
marketing and sales campaigns, and even product development.

CRM Solution
Without a leading-edge CRM solution, this kind of salesperson empowerment is impossible.
First, such a CRM must allow a clear view of a sales rep’s pipeline. In order for that to happen,
the CRM application must be highly flexible and reflect the company’s sales process. With such
a solution in place, the sales force—and anyone else who needs it—are given a highly useful tool
for management of their own sales. The data they do have to enter is data that is truly useful, so
the “data-entry clerk” aspect of their jobs disappears.
Second, such a CRM solution provides analytic capabilities so that sales reps can quickly
analyze and forecast their own sales. Not only does this functionality lead to far more control for
the salesperson, it also ultimately leads to a changing of roles for the sales rep and sales manager.

The Changing Roles

If the members of a sales force are fully in charge of managing, analyzing and forecasting their
sales, where then does that leave sales management?

Forecasting and analysis have traditionally been the purview of sales managers only, and have
been a great portion of their responsibility. It has required weekly meetings with sales reps and
compilation of all the data collected. But with sales reps now being able to easily perform these
functions, a sales manager can simply take forecasts and analyses sent them by the sales reps,
automatically combine them into one report and forward it on—another another feature of
leading-edge CRM solutions.

The sales manager becomes more of a coach. Where needed, the sales manager also tags. In
short, the sales manager is seeing to the quality of the salespeople and their performance, not
simply worrying about the quantity of their numbers. The combination is far more effective
moving a company toward its goals.
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 Sales Budgets
A sales budget is a budget that indicated the anticipated sales volume and selling expenses for
the coming year.

• It includes estimates of sales volume and selling expenses

• Sales volume budget is derived from the company sales forecast – generally slightly lower than
the company sales forecast, to avoid excessive risks
• Selling expenses budget consists of personal selling expenses budget and sales administration
expenses budget
• Sales budget gives a detailed break-down of estimates of sales revenue and selling expenditure

Objectives:
1) Planning
2) Coordination
3) Control

Procedure:
1) Situation Analysis
2) Identification of Problems and opportunities
3) Development of Sales forecast
4) Formulation of Sales Objectives
5) Determination of Sales Task
6) Specification of Resources Requirements
7) Finalization and projection
8) Presentation and review
9) Modification and Revising
10) Budget Approval

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 Sales Audits

The Sales Audit is an objective review of the structure, systems, style, staff, skills, strategy, and
shared values of your sales effort, with special emphasis on people and motivation (including
compensation). The focus of a Sales Audit is to advise sales management on how to hire, how to
evaluate, how to coach people, how to develop effective sales strategies, how to design and
implement appropriate departmental structures and systems, how to teach selling skills, and how
to develop effective sales management styles.

Types:
Audits can be internal, external, or a combination of both. Some companies choose to combine
technology with the audit process and install audit software on sales staff computers as a means
to “audit on demand” using information from daily or weekly reports. This can be especially
useful in a highly competitive market.
An external or third party auditor normally looks at how the on-paper sales process meshes with
what is actually happening. The objectivity supplied by an annual external audit can help
discover opportunities for improvements that may otherwise remain unseen.

Process:
Auditing the people factor involves meetings with both management and the sales staff.
Meetings with management assess the organization of the structure, department divisions, and
support staff. Meetings with sales staff members focus on depth of product knowledge, skills
assessment, determination of factors that differentiate the successful from the mediocre, identify
areas requiring further training.

Auditing the customer factor involves asking questions to determine how well the company and
sales staff know their prospects. Surveys sent to randomly chosen customers can reveal a great
deal, individual or group meetings with members of the sales staff can help identify just how the
sales staff perceives the customer, their wants and needs, their motivation to buy. Taken

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altogether, members of the sales management team have the information they need to ensure an
accurate and complete customer profile.

Auditing the sales plan involves taking a look back and a look forward. Sales plan audits track
progress toward long-term strategies, sales tactics put in place to help achieve these goals, and
the progress toward, or overall success of short-term goals. Reports and historical data from
numerous departments such as finance, product development, and human resources give sales
managers information they need for comparison. Information gathered in the first two phases of
the sales audit combine to reveal opportunities for change to help ensure the realization of
company goals.

Legal and Ethical Issues in Sales Management

Legal:
1) Price Fixing
2) Price Discrimination
3) Bribes
4) Consumer Protection

Ethical:
 Gifts
 Misrepresentation
 Entertainment
 Damaged Merchandise
 Inflated Expenses
 Taking Away Customers

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 Role of Information Technology in Sales
Management

IT simply means the technology used to collect process and transmit information.

Role:
It helps in reducing the time involved in selling.

It helps in the reduction of cost involved in selling

It helps to improve the quality services to customers.

Way Technology Changes the role of Sales

Management:
1. Collaborative customer relationship management (CRM): Organizations must assemble
and integrate customer relationship management (CRM) systems that enhance customer
collaboration and build customer loyalty and exit barriers.

2. Outsourcing sales and marketing functions: Organizations must strategically outsource

sales and marketing budgets to a new generation of businesses, including marketing agencies, e-
commerce utilities and service providers, and e-channel partners to obtain talent, technical
expertise, and cost efficiencies.

3. Customer-centric organizations: Organizations must recast their familiar organizational and

functional models, transforming them into a natural extension of customer segmentation,
enterprise selling processes, and complex demand chain partnerships.

4. Operational zing e-care: Organizations must adopt enterprise-wide management of the

customer care processes to ensure seamless service and enhanced intimacy across multiple-
channel interfaces and throughout the customer lifecycle.

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5. Hybrid distribution systems: Organizations must build multi-channel, hybrid distribution
systems that leverage low-cost, high-touch technologies to improve cost efficiency, market
coverage, and overall selling performance.

6. Value-added direct sales: Organizations must migrate the role of direct sales to better align
high-touch, face-to-face selling interactions with high-value and high-margin products and
services.

7. Demand chain remediation: Organizations must restructure demand chain relationships to

maximize value creation and customer access while leveraging costs and value-added channel
partnerships.

8. Customer interaction centers: Organizations must consolidate and integrate call center,
Web, e-mail, fax, and marketing technology assets to better manage selling resources,
technology infrastructure, and customer interactions.

9. Product channel readiness: Organizations must design modular, "channel-ready" products

optimized for specific sales channels, partners, and customer segments, improving
personalization, ease of doing business, and transaction costs.

10. Dynamic pricing and trading: Organizations must creatively manage the impact of buy-
and sell-side technologies and trading communities on margins and pricing.

11. Changing role of branding: Organizations must aggressively build brand equity in e-
channels, in virtual communities, and across multiple selling partners, channels, and points of
interaction (POI).

12. Interactive direct marketing: Organizations must deploy new tools, approaches, and
strategies for anticipating or influencing the way customers buy.

Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 34

 References:
Books:

[Link], Sales Management, Scholar Tech Press, 2012

Nair. R. K., Banerjee. A. K., Agarwal. V.K., Sales and Distribution Management, Pragati Prakashan 2002

Websites:
[Link]

[Link]

[Link]

[Link]

[Link] marketing

Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 35

 UNIT -I

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 UNIT-1
Understanding Marketing Management:
1. Concepts of marketing,
2. Role of Marketing,
3. Marketing Process,
4. Marketing Environment,
5. Consumer behavior,
6. Business buying behavior,
7. Analyzing competitors,
8. Qualities of Marketing manager.

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1. Concepts of marketing,
Introduction: Marketing, as indicated in the term, denotes a process that is continuous in
nature. The market should be continuously involved in initiating, conducting and finalizing
transactions and exchange. This is an unending process and would continue till production
and consumption cease to exist in the world.
Meaning: The term ‘marketing’ can be defined analytically or operationally. The analytic way
of explaining the terms to show how marketing differs from various other activities of a
firm, marketing deals with identifying and meeting human and social needs. One of the
shortest definitions of marketing is “ meeting needs profitably”.
Definitions: According to kotler: “Marketing is the science and art of exploring, creating, and
delivering value to satisfy the needs of a target market at a profit. Marketing identifies
unfulfilled needs and desires”
According to American management association: “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 objectives”.
Thus marketing may be defined as those as those business functions which are most
directly and primarily concerned with three activities
 The recognition of the demand,
 The stimulation of demand
 The satisfaction of demand

Communication

Goods / services
Industry Market
Collection of Collection of buyers
Money/ value

Order

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Core concepts of marketing:
Marketing Management is a social and managerial process by which individuals or firms obtain
what they need or want through creating, offering, exchanging products of value with each
other. the total marketing can be fulfilled the core concepts of business.

 NEED/ WANT/ DEMAND:

Need: It is state of deprivation of some basic satisfaction. eg.- food, clothing, safety,
[Link]: Desire for specific satisfier of need. eg.- Indians needs food – wants paneer
tikka / tandoori chicken. Americans needs food- wants hamburger / French [Link]:
Want for a specific product backed up by ability and willingness to buy.
eg.- Need – transportation. Want – Car (say, Mercedes)……but able to buy only
Maruti. Therefore, Demand is for Maruti.
 PRODUCTS- GOODS/ SERVICES/ PLACE.
Product is anything that can satisfy need / [Link] components are Physical Good.,
Service,[Link]. Fast food- burger / pizza. Physical Good – material eaten. Service –
purchase of raw material/ cooking, Idea – speed of computer / processing power.
 VALUE/ COST/ SATISFACTION:
o Decision for purchase made based on value / cost satisfaction delivered by

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 product / offering..Product fulfills / satisfies Need / Want. Value is products
capacity to satisfy needs / wants as per consumer’s perception or
[Link] product would have a cost / price elements attached
o Satisfaction – Estimated in terms of time lead & travel comfort.
o VALUE– Products capacity to satisfy.
o COST– Price of each products.
 EXCHANGE/ TRANSACTION:
EXCHANGE: – The act / process of obtaining a desired product from someone by offering
something in return. For exchange potential to exist, the following conditions must be
fulfilled.
There must be at least two parties.
Each party has something of value for other party.
Each party is capable of communication & delivery

Each party is free to accept / reject the exchange offer.

Each party believes it is appropriate to deal with the other party.
 TRANSACTION: – Event that happens at the end of an exchange. Exchange is a
process towards an agreement. When agreement is reached, we say a transaction
has taken place.
Barter transaction.
Monetary Transaction.
At least two things of value.
Condition agreed upon.
Time of agreement.
Place of agreement.
May have legal system for compliance.

 RELATIONSHIP/ NETWORKING:
Relationship marketing:- It’s a pattern of building long term satisfying relationship with
customers, suppliers, distributors in order to retain their long term performances and
business. Achieved through promise and delivery of ,high quality, good service, fair
pricing, over a period of time.
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  MARKETING NETWORK: It is made up of the company and its customers,
employees, suppliers, distributors, advertisement agencies, retailers, research &
development with whom it has built mutually profitable business relationship.
Competition is between whole network for market share and NOT between companies alone.
 MARKET:
A market consists of all potential customers sharing particular need / want who may be willing
and able to engage in exchange to satisfy need / want.
Market Size = fn (Number of people who have need / want; have resources that interest others,
willing or able to offer these resources in exchange for what they want.
 MARKETERS/ PROSPECTS: Working with markets to actualize potential exchanges
for the purpose of satisfying needs and wants. One party seeks the exchange more
actively, called as “Marketer”, and the other party is called “Prospect”. Prospect is
someone whom marketer identifies as potentially willing and able to engage in
exchange. Marketer may be seller or buyer. Most of time, marketer is seller.
A marketer is a company serving a market in the face of competition.
Marketing Management takes place when at least one party to a potential exchange thinks
about the means of achieving desired responses from other parties.
Main concepts of marketing: Studies reveal that different organizations have
different perception of marketing and these different perception have led to the
formation of different concept of marketing studies also reveal that at least five distinct
concept of marketing have guided and still guiding business firms.
1. Production Concept
2. Product Concept
3. Selling Concept
4. Marketing Concept
5. Societal Marketing Concept

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 1. Production Concept: Those companies who believe in this philosophy think that if
the goods / services are cheap and they can be made available at many places, there
cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in
reducing the cost of production and strengthening their distribution system. In order to
reduce the cost of production and to bring it down to the minimum level, these companies
indulge in large scale production.
2. Product Concept:Those companies who believe in this philosophy are of the opinion
that if the quality of goods or services is of good standard, the customers can be easily
attracted. The basis of this thinking is that the customers get attracted towards the
products of good quality. On the basis of this philosophy or idea these companies direct
their marketing efforts to increasing the quality of their product.
3. Selling Concept: Those companies who believe in this concept think that leaving
alone the customers will not help. Instead there is a need to attract the customers
towards them. They think that goods are not bought but they have to be sold.
4. Marketing Concept: Those companies who believe in this concept are of the opinion
that success can be achieved only through consumer satisfaction. The basis of this
thinking is that only those goods / service should be made available which the
consumers want or desire and not the things which you can do.

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Differences between selling and marketing:
SELLING MARKETING
Selling starts with seller Marketing starts with buyer
Selling based on existing activities Marketing based on all activities
Selling refers goods and services Marketing refers customer satisfaction
What is offered? is enough What should be offered? will think
Packing is enough for product protection Packing is for convenient to customers
Cost determines price Consumer determines price
Customer is last Customer is first

5. Societal Marketing Concept: This concept stresses not only the customer satisfaction
but also gives importance to Consumer Welfare / Societal Welfare. This concept is almost a
step further than the marketing concept. Under this concept, it is believed that mere
satisfaction of the consumers would not help and the welfare of the whole society has to be
kept in mind.

1.2 Role of Marketing,

Introduction: Marketing is perhaps the most important activity in a business because it has a
direct effect on profitability and sales. Larger businesses will dedicate specific staff and
departments for the purpose of marketing. It is important to realise that marketing cannot be
carried out in isolation from the rest of the business.
For example:The marketing section of a business needs to work closely with operations,
research and development, finance and human resources to check their plans are possible.
Operations will need to use sales forecasts produced by the marketing department to plan their
production schedules.
Sales forecasts will also be an important part of the budgets produced by the finance
department, as well as the deployment of labour for the human resources department.
A research and development department will need to work very closely with the marketing
department to understand the needs of the customers and to test outputs of the R&D section.
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.

1. [Link] Process,

Introduction: The activities of marketers both reflect and shape the world we live in.
Every year new products and services are launched and some of them succeeds on an
unprecedented scale. As in the case of Apple's iPod, iPhone, and also iPad. They all are
great inventions and highly successful in market.

Meaning of Marketing Process

The Marketing Process of a company typically involves identifying the viable and potential
marketing opportunities in the environment, developing strategies to effective utilise
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 the opportunities, evolving suitable marketing strategies, and supervising the
implementation of these marketing efforts.
Marketing process involves ways that value can be created for the customers to satisfy
their needs. Marketing process is a continual series of actions and reactions between
the customers and the organisations which are making attempt to create value for and
satisfy needs of customers. In marketing process the situation is analysed to identify
opportunities, the strategy is formulated for a value proposition, tactical decisions are
taken, plan is implemented, and results are monitored.
Steps in Marketing Process
Following are the steps involved in the Marketing Process :-
 Situation Analysis
 Marketing Strategy
 Marketing Mix Decision
 Implementation and Control


1. Situation Analysis:Analysis of situation in which the organisation finds itself serves as

the basis for identifying opportunities to satisfy unfulfilled customer needs. Situational
and environmental analysis is done to identify the marketing opportunities, to
understand firms own capabilities, and to understand the environment in which the
firm is operating.
2. Marketing Strategy :After identifying the marketing opportunities a strategic plan is
developed to pursue the identified opportunities.
3. Marketing Mix Decisions: At this step detailed tactical decisions are made for the
controllable parameters of the marketing mix. It includes - product development
decisions, product pricing decisions, product distribution decisions, and product
promotional decisions.
4. Implementation and Control: Finally, the marketing plan is implemented and the
results of marketing efforts are monitored to adjust the marketing mix according to the
market changes.

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Marketing Environment,
Introduction: Environmental analysis is a strategic tool. It is a process to identify all the
external and internal elements, which can affect the organization’s performance. The analysis
entails assessing the level of threat or opportunity the factors might present. These evaluations
are later translated into the decision-making process. The analysis helps align strategies with the
firm’s environment.
Our market is facing changes every day. Many new things develop over time and the whole
scenario can alter in only a few seconds. There are some factors that are beyond your
control. But, you can control a lot of these things.
Businesses are greatly influenced by their environment. All the situational factors which
determine day to day circumstances impact firms. So, businesses must constantly analyze the
trade environment and the market.
There are many strategic analysis tools that a firm can use, but some are more common. The
most used detailed analysis of the environment is the PESTLE analysis. This is a bird’s eye
view of the business conduct. Managers and strategy builders use this analysis to find where
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their market currently. It also helps foresee where the organization will be in the future.
 Political factors
 Economic factors
 Social factors
 Technological factors
 Legal factors
 Environmental factor

P for Political factors: The political factors take the country’s current political situation. It
also reads the global political condition’s effect on the country and business. When conducting
this step, ask questions like “What kind of government leadership is impacting decisions of the
firm?” Some political factors that you can study are:
 Government policies
 Taxes laws and tariff
 Stability of government
 Entry mode regulations
E for Economic factors: Economic factors involve all the determinants of the economy and its
state. These are factors that can conclude the direction in which the economy might move. So,
businesses analyze this factor based on the environment. It helps to set up strategies in line with
changes. Here listed some determinants you can assess to know how economic factors are
affecting your business below:
 The inflation rate
 The interest rate
 Disposable income of buyers
 Credit accessibility
 Unemployment rates
 The monetary or fiscal policies
 The foreign exchange rate
S for Social factors: Countries vary from each other. Every country has a distinctive
mindset. These attitudes have an impact on the businesses. The social factors might
ultimately affect the sales of products and services. Some of the social factors you should
study are:
Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 47
  The cultural implications
 The gender and connected demographics
 The social lifestyles
 The domestic structures
 Educational levels
 Distribution of Wealth

T for Technological factors: Technology is advancing continuously. The advancement is

greatly influencing businesses. Performing environmental analysis on these factors will
help you stay up to date with the changes. Technology alters every minute. This is why
companies must stay connected all the time. Firms should integrate when needed.
Technological factors will help you know how the consumers react to various trends. Firms
can use these factors for their benefit:
 New discoveries
 Rate of technological obsolescence
 Rate of technological advances
 Innovative technological platforms
L for Legal factors: Legislative changes take place from time to time. Many of these
changes affect the business environment. If a regulatory body sets up a regulation for
industries, for example, that law would impact industries and business in that economy. So,
businesses should also analyze the legal developments in respective environments . Here
mentioned some legal factors you need to be aware of:

 Product regulations
 Employment regulations
 Competitive regulations
 Patent infringements
 Health and safety regulations
E for Environmental factors: The location influences business trades. Changes in climatic
changes can affect the trade. The consumer reactions to particular offering can also be an issue.
This most often affects agri-businesses. Some environmental factors you can study are:
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  Geographical location
 The climate and weather
 Waste disposal laws
 Energy consumption regulation
 People’s attitude towards the environment
There are many external factors other than the ones mentioned above. None of these factors are
independent. They rely on each other.
If you are wondering how you can conduct environmental analysis, here are 5 simple steps you
could follow:
1. Understand all the environmental factors before moving to the next step.
2. Collect all the relevant information.
3. Identify the opportunities for your organization.
4. Recognize the threats your company faces.
5. The final step is to take action.

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Consumer behavior.
Introduction: The modern marketing management tries to solve the basic problems of
consumers in the area of consumption. To survive in the market, a firm has to be
constantly innovating and understand the latest consumer needs and tastes. It will be
extremely useful in exploiting marketing opportunities and in meeting the challenges
that the Indian market offers. It is important for the marketers to understand the
buyer behaviour due to the following reasons.

The study of consumer behavior for any product is of vital importance to marketers in shaping
the fortunes of their organizations.
 It is significant for regulating consumption of goods and thereby maintaining
economic stability.
 It is useful in developing ways for the more efficient utilisation of resources of
marketing. It also helps in solving marketing management problems in more
effective manner.
 Today consumers give more importance on environment friendly products.
They are concerned about health, hygiene and fitness. They prefer natural
products. Hence detailed study on upcoming groups of consumers is essential
for any firm.
 The growth of consumer protection movement has created an urgent need to
understand how consumers make their consumption and buying decision.
 Consumers’ tastes and preferences are ever changing. Study of consumer
behaviour gives information regarding colour, design, size etc. which
consumers want. In short, consumer behaviour helps in formulating of
production policy.
 For effective market segmentation and target marketing, it is essential to have
an understanding of consumers and their behaviour.
Consumer behavior Models : Many models have been developed describing the buying
process. These models called as consumer behavior models treat a consumer as a decision
maker who comes to a market place to buy the products brand for his satisfaction of needs.
The buying process has been discussed below through the consumer behaviors models. The

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 important models of buyer behaviors are as follows:
6. Economic model
7. Sociological model
8. Howard-sheath model
Economic model: - This model says as “purchasing decision are the result of largely rational
and conscious economic calculations. The individual buyer seeks to spend his income on
goods that will deliver the must utility (satisfaction) to his tastes and the relative price.
Social model.: - The S.M. has been explained by sociologists studying the behaviors of a
group of individuals and the manner in which it influences the behaviors of an individual.
The models says that the individual is always influenced by a group as he lives in a society
where in many group exist like family, reference group etc.

Another classification of consumers :

 Harvard sheath model - The H-S model assumes problem-solving approach in
buying and assumes input output approach in buying behavior, this model is a
comprehensive model and largely approved.
 Another way of classification of buyer behavior:
 Complex buying behavior: This type of consumers have involvement in purchasing
a brand with high difference among goods with brands.
 Dissonance reducing buying behavior: This type of consumers have low
difference in branding preference with high involvement of purchasing
 Variety seeking buying behavior: This type of customers are switching brands
often. But they have low involvement of purchasing.
 Habitual buying behavior: This type of customers are regularly buy goods in
habitual manner. So they have less involvement in purchasing and changing brands.

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 High involvement low involvement

High difference Complex buyer Variety seeking

Behavior buyer Behavior

Dissonance reducing Habitual buying

Low difference Buying Behavior Behavior

General classification of consumers

1. Personal Consumers
2. Organizational Consumers
3. Impulse Consumers
4. Need-based Consumers
5. Discount Driven Consumers
6. Habitual Consumers
 Personal Consumers: This type of consumer is an individual consumer who buy
products or services for own use, or for family, or for household use. Finished
products are purchased by personal consumer and the purchases are done in small
quantities.
 Organisational Consumers: This type of consumer can be a business, government,
profit or non-profit organisation, or agency who purchases goods or services for
organisation to function or for resale purpose. Purchases are done in the form of
raw-materials that are processed to finished goods and offered for sale to other
consumers.
 Impulse Consumers:his type of consumer do unplanned purchases. Purchasing a
particular product was not a priority, but when the consumer encounter that
product, he makes swift buying decision. Impulse consumer purchases what seems
good at the time.

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  Need Based Consumer: This type of consumer has a specific intention to purchase
a particular type of product. Need-based Consumer is driven by a specific need. He
makes buying decision when he actually need that product and not any other time.
 Discount Driven Consumers: This type of consumers do purchases when they get
some lucrative offer or discount. Their buying decision is highly based on offers or
discounts.
 Habitual Consumers: Person who is habitual to the usage or consumption of a kind
of product is called habitual consumer. For example - person who smoke.

Consumer Decision Making Process

1. Problem or Need Recognition: Consumer decision making process begins with an

unsatisfied need or problem. Every day we face multiple problems which individuals
resolve by consuming products or services. Consumer problem can be routine or
unplanned. For example – run out of milk or cooking oil, car indicating low level of fuel,
are some of the routine problems that individuals face. Such problems are quickly
recognised, defined, and resolved. Recognition of unplanned problem may take much
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 longer time as it may evolve slowly over time. For example - need of a new refrigerator
as existing one is not working properly.

2. Information Search: Information search is done to know about product or

service, price, place and so on. In the process of decision making, the consumer engages
in both internal and external information search. Internal information search involves
the buyer identifying alternatives from his memory. Internal information search is
sufficient for low involvement products or services. For high involvement product or
service, buyers are more likely to do external information search. The amount of efforts a
buyer put in information search depends on various factors like market, competition,
difference in brands, product characteristics, product importance, and so on.
3. Alternatives Evaluation :At this step the buyer identifies and evaluates different
alternatives to choose from. It is not possible to examine all the available alternatives.
So, buyer develops evaluative criteria to narrow down the choices. Evaluative criteria
are certain characteristics that are important to buyer such as price of the product, size,
colour, features, durability, etc. Some of these characteristics are more important than
others. To narrow down the choices the buyer considers only the most important
characteristics.
4. Purchase Decision :The earlier mentioned evaluation step helps the consumer in
arriving at a purchase intention. In the decision evaluation stage, the consumer forms
preferences among the brands in the choice set. The consumer may also form a
purchase intention and lean towards buying the most preferred brand. However factors
can intervene between the purchase intention and the purchase decision. A buyer who
decides to execute a purchase intention will be making up to five purchase decisions
brand decision, vendor decision, quantity decision, timing decision and payment-
method decision.
5. Post-purchase Use and Evaluation : Once the buyer makes a decision to purchase a
product or service there can be several types of additional behaviour associated with
that decision such as decisions on product uses and decision on services related to the
product purchased.

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 The level of satisfaction experienced by the buyer after his purchase will depend on the
relationship between his expectations about the product and performance of the
product. If the buyer is satisfied then he will exhibit a higher probability of repeat
purchase of the product or service. The satisfied buyer will also tend to say good words
about the product or service. Whereas a highly dissatisfied buyer will not buy the
product or service again and spread negative words about service and company.

3. Business buying behavior, :

Introduction: The business market is comprised of organizations that, in some form, are
involved in the manufacture, distribution or support of products or services sold or
otherwise provided to other organizations. The amount of purchasing undertaken in
the business market easily dwarfs the total spending by consumers. Because the
business market is so large it draws the interest of millions of companies worldwide
that market exclusively to business customers. For these marketers understanding how
businesses make purchase decisions is critical to their organizations’ marketing efforts.

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Consumer decision making process:

Marketin
External Buyers
g Buyers decision Buyers purchase
stimu stimuli charac
process decisions
li teri
stic
s

Product Economic
Product choice
al Cultural Problem recognition

Price
Technical Brand choice
Social Information search

Place Dealer choice

Political Evaluation of
alternatives
Personal Purchase timing
Promotio
Purchasing behavior
n Cultural
Purchase
amount
Psychologic
al
Post-purchase behavior

Analyzing competitors.

Introduction: Process of Analyzing Competitors: Analyzing competitors calls for

considering a lot of aspects. A company needs to know everything about its
competitors. Note that analyzing competitors is not incidental task, a manager must
know about his competitors on a continuous basis. So, it must develop a system to

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 facilitate the task on regular basis.

A detailed and systematic process of analyzing competitors, as described by Philip Kotler,

consists of eight steps, see Figure 1.

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1 Identifying Competitors: Process of analyzing competitors begins with knowing who our
competitors are. A company can easily identify its competitors. For example, Coca-Cola
knows that Pepsi-Cola is its main competitor, Hero Honda knows that Bajaj Auto is its major
competitor; Sony knows that Philips and LG are its [Link] involves:
 Studying their areas of operations,
 Identifying the customer needs they are trying to satisfy,
 Finding the territories in which they are selling the products,
 Estimating their market share, and
 Assessing their capabilities, objectives, and strategies.

2. Identifying Competitors’ Strategies: After exactly recognizing who are our competitors, the

next step is to get insight into competitors’ strategies. A firm needs to identify the strategic
group – a group of firms that follows the same strategy in a given target market.
A company requires a full profile of each of the competitors in terms of following
aspects:
 Competitors’ main business
 Marketing activities of competitors
 Technology and manufacturing methods used by them
 Resources capabilities – financial, technological, and human resources
 Product mix – types, qualities, and features
 Customer services
 Pricing policies
 Distribution network
 Sales force strategy
 Publicity and public relations efforts
 Advertising and sales promotion strategies, etc.

Determining Competitor’s Objectives: : After identifying competitors and their strategies, a firm
must ask: What are their objectives?
Competitor’s objectives may be:
 To maximize current and / or long-term profits

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  To satisfy customers
 To increase market share
 To maximize cash flow
 To achieve and / or maintain technological leadership
 To achieve and / or maintain quality leadership
 To achieve and / or maintain service leadership, etc.
Assessing Competitors’ Strengths and Weaknesses: Clearly, effectiveness of competitors’
Strategies in achieving objectives depends on resources and capabilities. To assess
competitors’ strengths and weaknesses, a firm must gather data on key criteria.

Key criteria used to assess competitors’ strengths and weaknesses include:

 Competitors’ sales
 Customer awareness
 Customer loyalty
 Market share
 Product quality
 Distribution system
 Profit margin and return on investment and cash flow
 Sale force efficiency
 New investment capacity
 Future plan
 Capacity utilization, etc.
4. Estimating Competitors’ Reaction Patterns: Knowledge of competitors’ strategies,
objectives, and strengths and weaknesses can help manager anticipate (project) their likely
reactions to the company’s strategies. Additionally, each competitor has certain philosophy
of doing business, specific culture, and guiding beliefs that determine its reaction pattern.

On the basis of reaction patterns, competitors can be classified into four categories:

 The Laid-back Competitor: This competitor doesn’t react quickly or strongly to any
of the opponents’ moves / attacks. There may be a number of reasons why the laid-
back competitors don’t react immediately, like they may feel that customers are
loyal;.
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  The Selective Competitor: A competitor that reacts only to certain types of attacks
and not to all. For example, it may react to price-cut, but not to increased or
improved promotional efforts.
 he Tiger Competitor: A competitor that react (like a tiger) swiftly and strongly to
any attack on its terrain or arena. The tiger competitor wants to signalize the rival
firms that it is a tiger and it would be better not to attack because defender (the
tiger) will/ can fight to finish them.
 The Stochastic (Unpredictable) Competitor: A competitor that doesn’t exhibit a
predictable reaction pattern. There may be many reasons why the stochastic
competitor doesn’t react. For example, it may not like to react on a specific occasion;
it may not have favourable economic situations;

5. Designing Competitive Intelligence System: Information regarding competitors is

very critical for designing marketing strategies and improving them over time. Market
intelligence is the system or arrangement that provides regular information on
competitive dynamics. A firm must carefully design its market (competitive)
intelligence system to avail necessary information regarding competitors on regular
basis. In fact, customers, dealers, suppliers, and other stakeholders must be given
incentives to spot competitive information and pass it on the relevant officials of the
firm.

6. Selecting Competitors to Attack and Avoid: Now, managers find is easy to design
competitive strategies. They can judge to whom they can effectively compete within the
market. Sometimes, managers conduct customer value analysis to assess the company’s
strengths and weaknesses relative to competitors. The basic purpose of such analysis is to
determine the benefits the customers in target market want, and how they perceive relative
value of competitors’ offers.
The customer value analysis consists of five steps:

 Identifying Major Product Attributes:

 Assigning Weight to Attributes:
 Evaluating Company’s Performance:
 Comparing Company’s Performance for each of the Attributes:

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8 . Qualities of Marketing manager.

Introduction: Eight characteristics of a good marketing manager What is it that separates the
good marketing managers from the average marketing managers in South Africa? After
chatting to a ton of marketing managers in South Africa over the past few years, I have
identified some common characteristics of good marketing managers.
So, if you are in marketing and looking for a promotion, and wondering what you can do to
improve yourself, or if you are looking to hire a new marketing manager; these are the
characteristics of a good marketing manager.

1. Follow international marketing trends: As a result of the financial crisis in many

developed countries; marketing strategies and tactics had to evolve and marketing
managers needed to find innovative new ways of achieving objectives at lower costs.

In South Africa, we experienced less of a financial crisis, so most marketing managers

have carried on doing the same thing as before. One of the characteristics of good
marketing managers is to follow international marketing trends and stay on top of the
game by implementing the relevant trends.

2. Be obsessed with analytics and ROI: If something cannot be measured, it is best

not to do it at all. Increased brand awareness or knowledge that can be measured by
an annual brand survey is not good enough; as everyone knows, the research results
can be easily manipulated. You also need benchmarks to improve though, so just
because you need to be able to show return on investment, it does not mean you
should not try new things that you have not done before.

3. Do not brief an agency for everything: Agencies have other clients, so when you
brief them, you get placed fairly in a queue and this slows things down. Becoming an
agile marketer that can quickly take advantage of situations means you need to be
able to respond quickly. Plus, you should understand your industry and target
market better than any agency, so you should be able to put together great
strategies very quickly.

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 4. Present to customers and prospects: Instead of sitting in your office creating
great presentations and marketing strategies, spend a portion of your time going out
to see customers and prospects with your sales team. Then when you are out, use
the presentation templates you have created and try to present. This will highlight
areas that need improvement instead of continually hearing complaints that you do
not understand from your sales team.

5. Read marketing news and thought leadership You are fantastic, but getting
perspective by reading the views of other fantastic peers will only make you more
fantastic!

Unless you have time and budget to attend many marketing conferences, reading is
also the best way to keep up with marketing trends, especially international trends.
A characteristic of good marketing managers it they schedule time in their diaries
everyday to read, do the same.

6. Work towards a revenue target: Initially, set yourself a revenue target that you
need to achieve through your marketing strategies by finding new business and by
increasing billing of existing customers, but do not tell anyone. This will allow you to
set a benchmark of what you can achieve and will also highlight any issues with
tracking performance and linking it to marketing campaigns.

7. Encourage people to criticize your work: This is one of the most difficult things to
do in marketing. When you put so much effort into campaigns; the last thing you
want to hear is negativity. Whenever someone says something negative about
something you have done, ask them how they would have done it better. The
insights you will receive by doing this will only result in better campaigns in future.
8. Aim to achieve one revenue-generating goal a day; Everyday you need to be able
to easily identify one thing you did that directly and tangibly touched customers or
prospects resulting in revenue being generated for the company. ]

Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 62

 UNIT -II

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 UNIT-2
Market segmentations and Marketing Strategies:-
1. Market Segmentation,
2. Target Market,
3. Differentiating and positioning,
4. New Product Development,
5. Product Life Cycle.

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[Link] Segmentation,
Introduction: Market consists of buyers and buyers differ in on or more respects. They may
differ in the wants, resources, geographical, location, buying attitudes and buying practices.
Any of these variable can be used to segment a market. Each buyer is potentially a separate
market because of unique needs and wants. Ideally a seller management design a separate
product and or marketing program for each buyer. Most sellers will not find it worth wile to
“customize”. Their product to satisfy each specific buyer. Instead the saver identifiers broad
classes of buyers who differ in their product requirement and or marketing responses.
As a market is segmented using more characteristics such as age, income, etc., the seller
achieves finer precision but at the price of multiplying the no. of segments and thinking gout
the population of the segments.
Types of market segmentation:
1. Homogeneous preferences: A market where all consumers have roughly the same
preference. We would predict the existing brands would be similar and located in the
center of the preferences as shown in the below.

2. Clustered preference: The market might reveal district preference cluster, called
natural market segments. The first firm in this market has three options. It might
position is self in the center hoping to appeal to all the groups (undifferentiated
marketing). It might position itself in the largest market segment (consummated
marketing). It might marketing several brands, each positioned in a different segment
(differentiated marketing) clearly if it is developed only one brand, competition would
enter and introduce brands in other segments.

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3. Diffused preferences: As the other extreme consumer preferences can the scattered
throughout the space showing that consumer differ in what they want from the product.
If one brand exists the market, it is likely to be positioned in the center minimizes sum
of total consumer dissatisfaction. A new competitor could take step to the first brand
and fight for market share of the competition could locater in a center to win over a
customer group that not satisfied with the center brand. If several brands are in the

market, they are likely to be positioned throughout the space show real differences to march
consumer preference difference.

Bases for segmenting consumer market:

 Geographic segmentation
 Demographic segmentation
 Psychographics segmentation
 Behavioral segmentation

1. Geographic segmentation: - Geographical segmentation for dividing the market into

different geographical units such as nations, states, regions, countries, citizen of
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 neighbor hoods. The company can decide to operate in one or a few demographic areas
of operate in all but pay attention to variations in geographic needs and preferences.
Ex: General foods Maxwell house ground coffee is sold nationally but is flavored regionally.
Its coffee is flavored stronger in the west than the east
2. Demographic segmentation: -Demographic segmentation consists of dividing the
market into groups on the basis of demographic variables such as age, sex, family size,
family life cycle, income, occupation, education, religion, race and nationality.
Demographic variables are the most popular bases for distinguishing customer groups.

3. Psychographics segmentation: -In psychographics segmentation, buyers are divided

into different groups on the basis of their social class life style and or personality
characteristics. People with in the same demographic groups can exhibit very different
Psychological profiles.
4. Behavioral segmentation: - In behavioral segmentations buyers are divide into groups
on the basis of their knowledge attitude use and response to a products many
marketers believe that behavioral are best starting point for constructing market
segments. A). Occasions: - B). Benefits: - C). User status: - D). Usage rate: - E). Loyalty
status: - F). Buyer readiness stage: -

Target Market,

Introduction: TARGETING : Once the firm has identified its market-segment opportunities, it
has to decide how many and which ones to target.
 Single-segment Concentration:

M1 M2 M3

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 P1 P – Product
M - Market
P
The company may select a single segment. Volkswagen concentrates on the small-car
market and Porsche on the s2ports car market. Through concentrated marketing the fir m
gains a strong knowledge of the segment’s needs and achieves a strong market
presence. Furthermore, the firm enjoys operating economies through specializing its
production, distribution, and promotion. If it captures segment leadership, the firm can
earn a high return on its investment.
 Selective specialization :

M1 M2 M3

P1 P – Product
M - Market
P

Here the firm selects a number of segments each objectively attractive and
appropriate. There may be litt2le or no synergy among the segments, but each segment

promises to be a money market. This multi segment coverage strategy has the
advantage of diversifying the firm’s risk.
 Product specialization :
M1 M2 M3

P1 P – Product
M - Market
P

Here th2
e firm specializes in making a certain product it sells to several segments. An
example would be a microscope manufacturer that sells microscope to university
laboratories, government laboratories, and commercial laboratories. The firm makes
different microscopes for different customers groups but does not manufacturer other
Akash choudhary [Link]., Dept. of MBA, IMEC,SAGAR Page 68
 instruments that laboratories might use. Through a
product specialization strategy, the firm builds a strong reputation in the specific product
area. The downside risk is that the product may be supplanted by an entirely new
technology.
 Market specialization

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 M1 M2 M3
P1
P2

P – Product M - Market

Here the firm concentrates on serving many needs of a particular

customer group. An example would be a firm that sells an assortment of products only

to university laboratories, including microscopes, oscilloscopes, Bunsen burners, and

chemical flasks. The firm gains a strong reputation in serving this customer group and
becomes a channel for further products that the customer group could use. The downside
risk is that the customer group may have its budgets cut.

 Full market coverage

M1 M2 M3
P1 P – Product
M - Market
P

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 Here a firm att2
e mpts to serve all customer groups with all the products
they might need. Only very large firms can undertake a full market coverage strategy.
Examples include I B M, General Motors, and Coca-Cola. Large firms can cover a whole
market in two broad ways: through undifferentiated marketing or differentiated
marketing.
2.3. Positioning,

Introduction: Positioning is the act of designing the company’s offering and image to
occupy a distinctive place in the target market’s mind.
1. 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 marketplace. When Pepsi
introduced its clear Crystal Pepsi in 1993, customers were distinctly unimpressed. They
didn’t see “clarity” as an important benefit in a soft drink.
2. Over positioning: Buyers may have too narrow an image of the brand. Thus a
consumer might think that diamond rings at Tiffany start at $5,000 when in fact Tiffany
now offers affordable diamond ring starting at $1,000.
3. Confused positioning: buyers might have a confused image of the brand resulting from
the company’s making too many claims or changing the brand’s positioning too
frequently. This was the case with Stephen job’s sleek and powerful next desktop
computer, which was positioning first for students, then for engineers, and then for
businesspeople, all unsuccessfully.
4. Doubtful positioning: Buyers may find it hard to believe the brand claims in view of
the product’s features, price, or manufacturer. When GM’s Cadillac division introduced
the Cimarron, it positioning the car as a luxury competitor with BMW, Mercedes, and
Audit. Although the car featured leather seats, a luggage rack, lots of chrome, and a
Cadillac logo stamped on the chassis, customers saw the car as merely a dolled-up
version of Chevy’s Cavalier and Oldsmobile’s firenza. Although the car was positioned
as “more for more”, the customers saw it as “less for more”.
The theme park company can now recognize the different positioning strategies that are
available.
 Attribute positioning: A company positions itself on an attribute, such as size

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 or number of years in existence. Disneyland can advertise itself as the largest
theme park in the world.

 Benefit positioning: The product is positioned as the leader in a certain benefit.

Kott’s Berry Farm may try to position itself as a theme park that delivers a
fantasy experience, such as living in the old west.
 Use or application positioning: Positioning the product as best for some use or
application. Japanese Deer Park can position itself for the tourist who has only
an hour to catch some quick entertainment.
 User positioning: Positioning the product as best for some user group. Magic
Mountain can advertise itself as best for “thrill seekers”.
 Competitor positioning: The product claims to be better in some way then a
named competitor. For example, Lion Country safari can advertise having a great
variety of animals than Japanese deer park.
 Product category positioning: The product is positioned as the leader in a
certain product category. Mainland of the pacific can position itself not as a
“recreational theme park” but as an “educational institution.
 Quality or price positioning: The product is positioned as offering the best
value. Busch Gardens can position itself as offering the “best value” for the
money.

New Product Development,

Introduction: The new product development is process of eight sequential stages.
“New product” includes original products, improved products, modified products and
new brands that the firm develops through its own R&D efforts.
New products include
 New-to-the-word products: - New products that create an entirely new market.
 New-product lines: - New products that allow a company to enter an established
market for the first time.
 Additions to the existing product lines: - New products that supplement a
company’s establishment product lines.

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  Improvements are to existing products: – New products that provide improved
performance or greater perceived value and replace existing products.
 Repositioning: - Existing products that are targeted to new markets of market
segments.
 Cost Reductions: - New products that provide similar performance at lower cost.
 Why New Product Fail:

 A high level executive pushes a favorite idea in research findings.

 The idea is good, but the market size is over estimated.
 The product is not well designed.
 Development costs are higher than expected.
 Competitors fight bat harder than expected.
 Bases for New Product Development:

 Social and governmental constraints.

 Costliness of the new-product development process.
 Capital shortage.
 Shortened time span to completion.
New Product Development Process
1. Idea Generation
2. Screening
3. Concept Development and Testing
4. Marketing Strategy
5. Business Analysis
6. Product Development
7. Market Testing
8. Commercialization

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  Idea Generation: -“The systematic search for new product ideas”. At Gillette of
Every 45 carefully developed new product ideas. Major sources of new product
ideas include internal sources, customers, competitors, distributors & suppliers and
others.
 Idea Screening: - Screening new-product ideas in order to spot good ideas and drop
poor ones as soon as possible. The write u describer the product, the target market;
and the competition. It maker some rough estimates of market size, product rice,
development time & costs, manufacturing costs & rate of return. The committee
than evaluates the idea against a set of general criteria.

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  Concept Development:- A detailed version of the new product idea stated in
meaningful consumer terms.
 Concept Development: Attractive ideas need to be developed in to finer product If
they are to be tested, here a testing distinction can be made between a product idea,
a product concept & a product stage.
 Concept Testing: Testing new product concepts with a group of target consumers to
find out it the concepts have strong consumer appeal.
Concept development and testing methodology applies to any product,
service, or idea, such as an electric car, a new machine tool, a new banking service,
of a new health plan.
 Marketing Strategy Development: - Designing as initial marketing strategy for a
new product based on the product concept. The marketing strategy statements
consist of 3 parts. The first art describes the target market, the planned product
positioning & the sales, market share & profit goals for the first few years.
The second art of the marketing strategy statement cut-lines the
product’s planned price; distributor & marketing budget for the first year. The third part
of the marketing strategy statement describes the planned long run sales; profit goals &
marketing mix strategy
 Business Analysis: - A review of the sales, costs & profit projection for a new
product to find out whether these factors satisfy the company’s objectives. After
preparing the sales forecast, management can estimate the expected costs & profits
for the product, including marketing, R&D, manufacturing, accounting & finance
costs, The company then uses the sales & costs figures to analyze the new products
financial attractiveness.
 Product Development: - Developing the product concept into a physical product in
order to assure that the product idea can be turned into a workable product.
 Commercialization: - Introducing the new product in to the market. The company
launching a new product must first decide on introduction timing. The company
must decide where to launch the new product larger companies, however, may
quickly introduce new models into several regions or in to the full national market.
 Test Marketing: - The stage of new product development in which the product &

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 marketing program are tested in more realistic market segments, Company test the
product & its entire marketing program – positioning strategy, advertising,
distribution, pricing, branding & packaging & budget levels.
2.5. Product Life Cycle.
Meaning: -Products, like people, have a certain length of like, during which they pass
through different stages. For some the life cycle may be as short as a month, while for
other it may last for quite a sufficiently long period.
Definition :The product life cycle (PLC) is an important concept in marketing that provides
insight into a product competitive dynamics. The PLC is an attempt to recognize distinct
stages in the sales history of the product.
To say that a product has a life cycle is to assert four things
 Products have a limited life.
 Product sales pass through distinct stages each posing different challenger to the
seller.

 Product profits rise and full at different stages of the PLC.

 Products require different marketing, financial, manufacturing, purchasing and
personnel strategies in the different stages of their life cycle.

PLC Stages:- PLC life being with its market introduction next it goes through a period
during which its market grows rapidly. Ultimately it reaches marketing maturity offer
which its market declines and finally the product dies. It is worth noting that the

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 duration each stage is different among products. Some take years to pass through the
introduction stages.
1. Introduction stage: -During this stage of the products life cycle, it is put in the market
with full-scale production and marketing program. The company is an innovator-may be
the whole industry. The entire product may be new or the basic product may be well
known but a new feature or accessory is in the introduction stage.
Four marketing strategies in introduction stage:
Price Promotion
High Low

High Rapid skimming Strategy Slow skimming Strategy

Low
Rapid penetration Strategy Slow Penetration Strategy
2. Growth stage: - In this stage the product is produced in the sufficient quantity and
put in the market without delay. The demand generally continues to outpace supply.
The sales and profit curves rise, often at a rapid rate. Competitors enter in the market in
large number if the profit out look appears to be very attractive. Some strategies in
growth stage:
• It improves product quality and adds new product features and improved styling.
• It adds new models and flanker products ( products of different sizes, flavors ).
• It enters new market segments.
• It increases its distribution coverage and enters new distribution channels.
• It lowers prices to attract the next layer of price-sensitive buyers.
• It shifts from product-awareness advertising to product-preference advertising.

[Link] stage: - During this stage, sales continue to increase but at a decreasing rate,
while the sales carve is leveling off the profits of both the manufacturer and the
retailers are starting to decline because of rising expenditure and lowering of prices.
The following strategies should follow in this stage
 Market Modification:
 Expand number of users :
- Convert non-users
- Enter new market segments

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 - Win competitors’ customers
 Increase annual usage :
- More frequent use
- More usage per occasion
- New and more varied uses
 Product Modification
• A strategy of quality improvement aims at increasing the product’s functional
performance - its durability, reliability, speed, taste.
• A strategy of feature improvement aims at adding new features ( for example - size,
weight, materials, additives, accessories ) that expand the product’s versatility,
safety, or convenience.
• A strategy of style improvement aims at increasing the product’s aesthetic appeal.
The periodic introduction of new car models amounts to style competition rather
than quality or feature competition.

 Marketing Mix Modification

 Prices
 Distribution
 Advertising
 Sales Promotion
 Personal Selling
 Services

4. Market decline stage: -This stage is characterized by either the products gradual
placement by some new innovation or by an evolving change in consumer buying
behavior. The buyers do not buy as much as they did before. New and superior products
are being introduced to the market many of which meet the consumer’s demand and
need more closely. some strategies in decline stage :
 Continuation Strategy :Increasing the firm’s investment ( to dominate the market
or strengthen the competitive position ). Maintaining the firm’s investment level

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 until the uncertainties about the industry are resolved
 Concentration Strategy :- Decreasing the firm’s investment level selectively, by
dropping unprofitable customer groups, while simultaneously strengthening the
firm’s investment in lucrative niches.

 Harvesting Strategy :- Divesting the business quickly by disposing of its assets as

advantageously as possible.
 The Drop Strategy- When a company decides to drop a product, it faces further
decisions. If the product has strong distribution and residual goodwill, the company
can probably sell it to another firm. If the company can’t find any buyers, it must
decide whether to liquidate the brand quickly or slowly. It must also decide on how
much parts inventory and service to maintain for past customers.

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 UNIT -III

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 UNIT-3
Planning Marketing Programs
1. Levels of product,
2. Product lines,
3. Product mix,
4. Brand and Packing,
5. Managing services,
6. Managing marketing channels,
7. Managing direct and on-line marketing.

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Levels of product,
Definition of Product : We define a product is any thing that can be offered to a market for
attention, acquisition, use or consumption and that might satisfy a want or need. Products
include more than just tangible goods. It includes physical objects, services, persons, place,
organizations, ideas or mixtures of these entities. Products are almost always combinations
of the tangible and intangible. The entire package is sometimes referred to as the augmented
product. The mix of tangibles and intangibles in the augmented product varies from one
product or service to another.
Levels of the product:
1) Core Product / Core Benefit: The fundamental service or benefit that the customer is really
buying.
(2) Basic Product: At the same level, the marketer has to turn the core benefit into a basic
product.
(3) Expected Product: A set of attributes and conditions buyers normally expect when they
purchase this product.
4) Augmented Product: The marketer prepares an augmented product that exceeds
customer expectations. Today’s competition essentially takes place at the product-
augmentation level.
5) Potential Product: encompasses all the possible augmentations and transformations the
product might undergo in the future. Companies search for new ways to satisfy
customers and distinguish their offer.

In case of a car, the 5 levels of a product are:

1. Core product: Transportation from one place to another.
2. Actual Product: Brand of the car, looks and design of the car etc.
3. Expected Product: Decent mileage, proper engine, inflated tyres etc.
4. Augmented Product: After-sale services, insurance policy etc.
5. Potential Product: May run more smoothly as it wears off a
 Classification of the product

Products are classified into 2 types.

 Consumer product.

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  Industrial product.

Consumer product: On the basis of the product characteristics:

1. Non durables
2. Durables
3. Services
 Non durables: These are tangible goods normally consumed in one or few uses.
Because these goods are consumed quickly and purchased frequently, the
appropriate strategy is to make them available at many locations, charge only a
small mark up and advertise heavily to induce trial and build preference.
 Durables; These are tangible goods that normally survive many uses. Normally
require more personal selling and service, command a higher margin, and require
more seller guarantees.
 Services: These are intangible, inseparable, variable and perishable products.
Normally require more quality control, superior credibility, and adaptability.
On the basis of customer shopping habits
(1) Convenience goods
(2) Shopping goods
(3) Specialty goods
(4) Unsought goods

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Convenient goods: These goods that the customer usually purchases frequently, immediately,
and with a minimum of efforts. This type of goods can divide into the following way:
(A) Staples: Consumers purchase on a regular basis.
(B) Impulse Goods: are purchased without any planning or search efforts.
(C) Emergency Goods: are purchased when a need is urgent.
Shopping goods: These goods that the customer in the process of selection and purchase,
characteristically compares on such basis as suitability, quality, price and style.
Specially goods : These goods with unique characteristics or brand identification for
which buyer is willing to make a special purchasing effort.
Unsought goods: These goods the consumer does not know about or does not normally
think of buying. These goods require advertising and personal selling support.
Industrial products: -
o Material and parts: Raw materials consists of form product-wheat,
cotton, live stock, fruits, vegetables manufactured material, iron, yarn,
cement and wires.
o Capital items: installations consist of major purchases such as buildings-
factories, offices. Accessory equipment-hand tools lift trucks.

o Suppliers and services: Suppliers-lubricants, coal, paper, pencils,

advisory services-legal, management consulting, and advertising.

Base for classification Classification

Tangibility Goods
Service
Purpose of use House hold goods
commercial goods
Function of product Consumable
Durable
Habits Convenience goods
Shopping goods
Specialty goods
Price Mass goods
Premium goods

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 Product development Innovative goods
Imitative goods
Product hierarchy Global product
National product
Regional product
Local product
Unbranded product
Commodities

Product lines.
Introduction: In marketing jargon, product lining is offering several related products for
sale individually. Unlike product bundling , where several products are combined into
one group, which is then offered for sale as a unit, product lining involves offering the
products for sale separately. A line can comprise related products of various sizes,
types, colors, qualities, or prices.

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 Product mix,
Introduction: Product mix, also known as product assortment, refers to the total number
of product lines that a company offers to its customers. For example, a small company
may sell multiple lines of products. Sometimes, these product lines are fairly similar,
such as dish washing liquid and bar soap, which are used for cleaning and use similar
technologies. Other times, the product lines are vastly different, such as diapers and
razors. The four dimensions to a company's product mix include width, length, depth
and consistency.

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Width: The width of a company's product mix pertains to the number of product lines that
a company sells. For example, if a company has two product lines, its product mix width
is two. Small and upstart businesses will usually not have a wide product mix. It is more
practical to start with some basic products and build market share. Later on, a

company's technology may allow the company to diversify into other industries and build
the width of the product mix.

Length: Product mix length pertains to the number of total products or items in a
company's product mix, according to Philip Kotler's textbook "Marketing Management:
Analysis, Planning, Implementation and Control." For example, ABC company may have
two product lines, and five brands within each product line. Thus, ABC's product mix
length would be 10. Companies that have multiple product lines will sometimes keep
track of their average length per product line. In the above case, the average length of
an ABC Company's product line is five.

Depth:Depth of a product mix pertains to the total number of variations for each product.
Variations can include size, flavor and any other distinguishing characteristic. For example, if a
company sells three sizes and two flavors of toothpaste, that particular brand of toothpaste has a
depth of six. Just like length, companies sometimes report the average depth of their product
lines; or the depth of a specific product line.
Consistency: Product mix consistency pertains to how closely related product lines are to
one another--in terms of use, production and distribution. A company's product mix may
be consistent in distribution but vastly different in use. For example, a small company may
sell its health bars and health magazine in retail stores. However, one product is edible and
the other is not. The production consistency of these products would vary as well.
Brand and packing,
Introduction: There are millions of products and services all over the world, each claims to be
the best among their category. But, every product is not equally popular. Consumer doesn't
remember every product, only few products are remembered by their name, logo, or slogan.
Such products generate desired emotions in the mind of consumer. It is branding that makes

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 product popular and known in the market; branding is not an activity that can be done
overnight, it might takes months and even years to create a loyal and reputed brand.

Definition of Branding
According to American Marketing Association - Brand is “A name, term, design, symbol, or
any other feature that identifies one seller’s good or service as distinct from those of other
sellers. The legal term for brand is trademark. A brand may identify one item, a family of
items, or all items of that seller. If used for the firm as a whole, the preferred term is trade
name.”
According to Philip Kotler - “Brand is a name, term, sign, symbol, design, or a combination
of them, intended to identify the goods or services of one seller or group of sellers and
to differentiate them from those of competitors”
Meaning of Branding
Branding is a process of creating a unique name and image for a product in the mind of
consumer, mainly through advertising campaigns. A brand is a name, term, symbol,
design or combination of these elements, used to identify a product, a family of
products, or all products of an organisation.

Elements of Branding
Brand includes various elements like - brand names, trade names, brand marks, trade marks,
and trade characters. The combination of these elements form a firm's corporate symbol or
name.
Brand Name - It is also called Product Brand. It can be a word, a group of words, letters, or
numbers to represent a product or service. For example - Pepsi, iPhone 5, and etc.
Trade Name - It is also called Corporate Brand. It identifies and promotes a company or a
division of a particular corporation. For example - Dell, Nike, Google, and etc.
Brand Mark - It is a unique symbol, colouring, lettering, or other design element. It is visually
recognisable, not necessary to be pronounced. For example - Apple's apple, or Coca-cola's
cursive typeface.

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Trade Mark - It is a word, name, symbol, or combination of these elements. Trade mark is
legally protected by government. For example - NBC colourful peacock, or McDonald's
golden arches. No other organisation can use these symbols.
Trade Characters - Animal, people, animated characters, objects, and the like that are used
to advertise a product or service, that come to be associated with that product or
service. For example - Keebler Elves for Keebler cookies

Branding Strategies

There are various branding strategies on which marketing organisations rely to meet sales
and marketing objectives. Some of these strategies are as following :-
 Brand Extension - According to this strategy, an existing brand name is used to
promote a new or an improved product in an organisation's product line. Marketing
organisations uses this strategy to minimise the cost of launching a new product and
the risk of failure of new product. There is risk of brand diluting if a product line is
over extended.
 Brand Licensing - According to this strategy, some organisations allow other
organisations to use their brand name, trade name, or trade character. Such
authorisation is a legal licensing agreement for which the licensing organisation
receives royalty in return for the authorisation. Organisations follow this strategy to
increase revenue sources, enhance organisation image, and sell more of their core
products.
 Mixed Branding - This strategy is used by some manufacturers and retailers to sell
products. A manufacturer of a national brand can make a product for sale under
another company's brand. Like this a business can maintain brand loyalty through
its national brand and increase its product mix through private brands. It can
increase its profits by selling private brands without affecting the reputation and
sales of its national brand.
 Co-Branding - According to this strategy one or more brands are combined in the
manufacture of a product or in the delivery of a service to capitalise on other
companies' products and services to reach new customers and increase sales for
both companies' brands.
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Brand decision making Process: r product.

Brand Sponsored BrandStrategy

Brand ecision Brand Name Line Extension
Manufacturer Brand
Branded Individual Brand Brand
Distributor Brand Brand Extension
Unbranded Repositioning
cisi Licensor Brand Separate Brand New Brands
Blanket Brand Multi Brands

Branded: First we take decision to have brand name or un bra But

nd name for ou
some times some products have no brand names in market.

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Unbranded: Some products have no brand names due to legal procedures. So some
companies decide to have no need of brand names for products. But some
advantageous are there for branding some of them are given below:
Brand Sponsored:
Manufacturer Brand: Real manufacture of a product may have chance to put his
own name for product. It is called manufacturer’s brand.
Distributor Brand: It is called store brand, reseller brand, house brand or private
brand. Here it not manufacturer but they can get finished products from another
maker ,but they sell in market with his name it is called distributor brand.
Licensor Brand: Some companies may get license from branded companies to use
their brands for other manufacturer products for the period licensed term.
Brand Name
Individual Brand: From every company many products are being produced, but
every product has its own name. This policy helps for the company in a situation of
any particular product fails in market. For example EENADU has its own different
goods like ETV, EENADU, PRIYA, KALANJALI, BRISHA and MARGADARSHI. This the
policy of individual brand.

Separate Brand Family brand names:A family brand name is used for all products.
By building customer trust and loyalty to the family brand name, all products that
use the brand can benefit. Good examples include brands in the food industry,
including Kellogg’s, Heinz and Del Monte. Of course, the use of a family brand can
also create problems if one of the products gets bad publicity or is a failure in a
market. This can damage the reputation of a whole range of
Blanket Brand: One of the strategies that are available in brand name decision. In
this strategy, every product the company offers to market bears the same brand
name. Usually, this name is a company name. This strategy offers certain advantages
such as the development cost is less because there is no need for name research or
heavy advertising expenditures to create brand name recognition. Furthermore,
sales of new product are likely to be strong if the manufacturer’s name is well
known.
Brand Strategy
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 Line extension :Line extension occurs when a company introduces additional items
in the same product category under the same brand name, usually with new
flavours, forms, colours, added ingredients, package sizes and so on. Line extensions
generally have a higher chance of survival than new products. On the down side
extensions may lead to the brand name losing its specific meanings; Ries and Trout call
this “ Line Extension Trap .”
 Brand Extension: Brand Extension also involves risks. The new product might
disappoint buyers and damage their respect for company’s other products. The
brand name may loose its special positioning in the consumer’s mind through over
extension - a phenomenon called “ brand dilution .”
 New Brands: When a company launches products in a new category, it may find that
none of its current brand names are appropriate. When the present brand image is
not likely to help the new product, companies are better off creating new brand
names
 Multi Brands: A company will often introduce additional brands in the same
product category. One of the motives for multi branding is to establish different
features and / or appeal to different buying motives. It also enables the company to
lock up more distributor shelf space and protest its major brand by setting up
flanker brands
 co –branding: Co-branding occurs when two different companies pair their
respective brands in a collaborative marketing effort. Each brand sponsor expects
that other brand name will strengthen brand preference or purchase intension.

Packing:
Introduction: Product packaging plays an important role in the marketing mix .Packaging
plays an important role as a medium in the marketing mix, in promotion campaigns, as
a pricing criterion, in defining the character of new products, as a setter of trends and as
an instrument to create brand identity and shelf impact in all product groups.

The top ten requests about packaging :Even though the consumer is not dissatisfied with
the packaging available on the market, he would still like to be tempted by functional
and attractive packaging ideas, by multisensory appeal and creative design - preferably
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 with packaging ideas made from board. He acknowledges additional benefits and
appeal and is even willing to pay an extra charge for them. Good starting points for
improvements, changes, innovations which optimise the features of packaging that
determine buying decisions and thus generate new market potential can be
summarised in consumers' top ten requests about product packaging:
1. Eye-catching appearance A distinctive, unmistakable and eye-catching appearance
is a signal at the POS to which all consumers and particularly the younger ones
respond positively. Whatever stands out clearly in the monotonous competitive
environment, whatever is surprising scores points with the consumer. Special effort
makes a special impression - and is allowed to cost more too.

2. Design, shape and colour The purpose of well-considered design, creative printing and
finishing is to entice the consumer to devote attention to the pack and its contents at

the POS. Aesthetics and attractiveness are major distinctive features - and are in fact
essential in some product segments: beautiful packaging design is of central importance in
the cosmetics and confectionery product groups. Consumers like to buy agreeably designed
and decorative products!
2. Functionality Functional aspects are the basis for all successful packaging and for
thus greater product success too. Product and aroma protection, hygiene and
tightness, environmental responsibility and practical handling (in both use and
storage) are just as important here as ideas that improve comfort: closure
mechanisms, portioning, see-through windows, for example.
3. Innovation Novelty has exceptionally strong appeal. An innovative pack can even
make "new products" out of familiar ones. Unusual solutions, functional new
developments and originality not only set design trends but also boost sales!
4. Material What is printed on board is read particularly willingly, while what is
packaged in board sells particularly well. Sustainability, easy disposal and, above all,
great design variety and potential are particular features of the material. Popular
with consumers, particularly high appeal and many other advantages too.
5. Efficient communication The packaging is the credible medium at the point of sale
and is consulted willingly and intensively (see "Material"). This makes it an efficient
means of communication and, in addition, one that gets closer to the consumer than

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 all others. If several of his senses are appealed to as well, he can be persuaded
particularly successfully.
6. Multisensory appeal Anyone who approaches consumers via several of his senses
attracts greater attention, intensifies perception and stimulates interest in buying.
Packaging that can be felt, smelled and heard as well as looked at wins the
customer's favour. So much so that he is willing to pay a higher price for this
multisensory appeal.
7. Appropriateness for the product Packaging is considered to be an important
indicator of quality. The quality of the product therefore has to be communicated by
good packaging and not just by promises of quality made in the text on the
packaging. A credible "overall work of art" is created as a result, in which the
contents and the packaging are coherent and the consumer is convinced by their
consistency.
8. Value Packaging is an excellent way to communicate sophistication, class and value.
This makes it an ideal strategic option for expressing premium positioning - as well
as being the instrument of choice when a product needs to be upgraded or a brand
needs to be revitalised. Products in classy packaging are particularly popular
presents too.
9. Additional benefits Successful packaging not only combines what is pleasant with
what is functionally useful but also provides additional benefits. For example, as a
gift or for presentation, with entertaining components or simply by making it
possible to continue using the packaging for something else after the product has
been consumed.

Functions of packing:
1. Product Identification:Packaging serves as an identification of the product. A
product is packed in special sized, coloured and shaped container for keeping its
difference from the products of competitors. For ex
2. Product Protection: The main function of packaging is to provide protection to the
product from dirt, insects, dampness and breakage. For example, the products like
biscuit, jam, chips, etc., need to be protected from environmental contact. That is
why they are tightly packed.

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 3. Convenience:Packaging provides convenience in the carriage of the product from
one place to another, in stocking and in consuming. For example, the new pet bottles
of COKE makes the carriage and stocking easier. Similarly, the pack of FROOTI
provides convenience in its consumption.
4. Product Promotion:Packaging simplifies the work of sales promotion. Packing
material in the house reminds the consumers constantly about the product. In this
way, the packaging performs the role of a passive salesman. Consequently, it
increases the sales.
Managing services,
Definition of service : “Service is an act or performance offered by one party to another that is
essentially intangible and does not result in the ownership of anything.”
Trends in service sector
 Service industry known as tertiary industry (primary – agri, mining; secondary –
manufacturing)
 Share of services, industry, and agriculture in India's GDP is 55.1 per cent, 26.4 per
cent, and 18.5 per cent respectively
 A KPMG survey of BRIC countries (Brazil, Russia, India and China), has revealed
highest confidence among the service sector in India with 60% of the Indian firms
expect rise in activity, a few notches above than that of China

Factors contributing to growth:

1. Government Policies
– Govt. regulations,
– Privatisation
2. Social Changes
– Rising customer expectations
– More affluence
– Increased desire for buying experiences vs products
3. Business trends
– Mfrs. Adding value through services
– Quality Movement
– Growth of franchising
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 4. Advances in Information Technology
– Growth of internet
– Convergence of computers & telecommunications
The various sectors that combine together to constitute service industry in India are:
 Trade
 Hotels and Restaurants
 Railways
 Other Transport & Storage
 Communication (Post, Telecom)
 Banking
 Insurance
 Dwellings, Real Estate
 Business Services
 Public Administration; Defence
 Personal Services
 Community Services
 Other Services
Service elements within an organization that facilitate creation of--or add value to--its final
Output
 Includes:
 accounting and payroll administration
 recruitment and training
 legal services
 transportation
 catering and food services
 cleaning and landscaping
 Increasingly, these services are being outsourced
Differences between goods & services
 Customers do not obtain ownership of services
 Service products are ephemeral & cannot be inventoried
 Intangible element

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  Customers maybe involved in production process
 Other people part of product
 Greater variability in operational inputs & outputs
 Services are difficult for customers to evaluate
 Time factor assumes more importance
 Distribution channel take different forms
Classification of services
People process

People processing
 Customers must physically enter the service system as they are integral part of
process
 They must spend time interacting & co-operating with service providers
 Process & output is important
Possession processing
 Providing treatment to possession. Customers less physically involved
 Customer’s involvement – to drop item that needs treatment, requesting the service,
explaining problem & later picking it up & paying the bill.
 If object to be processed is difficult to move then “service factory” comes to
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 customer
Mental stimulus processing
 These services interact with the customer’s minds which has the power to shape
their attitude & behaviour. Core content is information
 Customers not physically present, but mentally connected with information
presented.
 Recipients have to make investment of time
Information processing
 Information is most intangible but can be made tangible by letters, reports, books
 Financial & professional services are strong examples of collection & processing of
information
 No requirement of personal contact with supplier of service. Contact could be over
e-mail, telephone
Implications of service process Designing
Service Factory (people proc.)
 When customers have to be physically present throughout delivery, process must be
designed with them in mind – right from the moment they arrive the service factory.
 Choose convenient location

 These factors assume importance

 exterior & interior facilities,
 encounters with service personnel,
 interactions with self-service equipment
 characteristics of other customers
For possession-processing, mental-stimulus processing, or information processing services,
alternatives include:
 Customers come to the service factory
 Customers come to a retail office
 Service employees visit customer’s home or workplace
 Business is conducted at arm’s length through
 physical channels (e.g., mail, courier service)
 electronic channels (e.g., phone, fax, email, Web site)
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Making most of Information Technology
 All services can benefit from IT, but mental stimulus processing and information-
processing services have the most to gain.
 Remote delivery of information-based services “anywhere, anytime”
 New service features through websites, email, and internet (e.g., information,
reservations)
 More opportunities for self-servi ce
Balancing Supply & Demand
 Problems arise because service output can’t be stored
 If demand is high and exceeds supply, business may be lost. If demand is low,
productive capacity is wasted
 Services that process people & possession face more capacity limitations. Increasing
capacity entails huge costs. Managing demand becomes more important.
People becoming part of Product
 When people become part of service, their attitude, behaviour & appearance can
enhance it or detract it
 Managers should be concerned about employees’ appearance, social skills, technical
skills
Three Overlapping Sub-systems
Service Operations (front stage and backstage)
 Where inputs are processed and service elements created.
 Includes facilities, equipment, and personnel
Service Delivery (front stage)
 Where “final assembly” of service elements takes place and service is delivered to
customers
 Includes customer interactions with operations and other customers
Service Marketing (front stage)
 Includes service delivery (as above) and all other contacts between service firm and
customers
Managing marketing channels,

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Marketing channels: Physical distribution involves planning implementing and
controlling the physical flows of materials and final goods from points of origin to
points of use to meet customer needs at a profit. The main elements of total physical
distribution costs of a product are transportation, warehousing inventory carrying
receiving and shipping packaging administration and other processing. Experts believe
that substantial savings can be affected in the physical distribution area, which has been
described, as “the last frontier for cost economic” and “the economy’s dark continent.
Objectives: -
 Hitting the right goods to the right places at the right time for the least cost.
 Maximum customer service implies large inventories, premium transportation
&multiple warehouses, all of which arise distribution cost.
 Minimum distribution cost implies cheap transportation, low stocks and few
warehouses.
Components of physical distribution:-
 Order processing :- Processing deals receiving, recording, filling & assembling of
product for dispatch. The possible time required from the data of receipt of an
order up to the data of dispatch of goods most be reasonable & as start as possible.
Order cycle time must not exceed & days.
 Inventory management:- Inventories are reservoirs of goods held in anticipation
promptly, inventories are kept to meet market demands promptly, inventory
means, money is held temporarily in the form of raw materials component parts
supplies in process goods and finished goods, 20% to 30% of the total assets of a
firm are locked up-inventory.
 Location of warehouses:-Storage means holding the stock of goods for a relatively
longer period as the goods are not immediately in demand warehouses also
provide the following services breaking bulk, dispatch of smaller consignments to
retailers, holding the stocks for retailers, regulating the goods
 Determining material handling system:- once the layout for the factories design the
next task is to develop efficient material handling system to move the material from
are stage of production to another stage. Little handling involves moving, packaging,
storing, all the materials used by the firm with the development of technology a

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 variety of material handling requirements have been developed to economic the cost
reduce the effort of workers improve the safety for men & materials.
 Selecting of a method of transport system: - marketers need to take an interest in
their company’s transportation decisions. The choice of transportation carries
affects the pricing of products, delivering performance and condition of the goods
when they arrive all of which will affect customer satisfaction. In shipping goods to
its ware houses, dealers and customers. The company can choose among 5
transportation models: trail, truck, water, pipeline and air.

Distribution channel functions:

 Information: Gathering and distributing marketing research and intelligence
information about actor and faces in the marketing environment immediate for
planning and aiding exchange.

 Promotion: Developing and speeding persuasive communication about an offer.

 Contact: Finding and communication with prospective buyers.
 Negotiation: Reaching an agreement on price and other terms of the offer so that
ownership or possession can be transferred.
 Physical distribution: Transporting and storing goods.
 Matching: Shaping and fitting the offer to the buyer’s needs, including activities
such as manufacturing, grading, assembling and packing.
 Financing: Acquiring and using funds to cover the cost of the channel work.
 Risk taking: Assuming the risks of carrying out the channel work
Factors of distribution channel:
 Nature of market
 Nature of product
 Buying habits of the customer
 Competition
 Financial resources
 Channel cost
Role of Distribution channel: Besides making the product available to the customer,
middlemen perform several other roles and functions. Some of these key roles are

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 summarized below.
 Information: Middlemen have a role in providing information about the market to
the manufacturer. Developments like changes in customer demography,
psychograph, media habits and the entry of a new competitor or a new brand and
changes in customer preferences are some of the information that all
manufacturer’s want. Since these middlemen are present in the market place and
close to the customer they can provide this information at no additional cost.
 Price stability: Maintaining price stability in the market is another function a
middlemen performs. Many a time the middlemen absorbs an increase in the price
of the products and continues to charge the customer the same old price. This is
because of the intra middlemen competition. The middlemen also maintains price
stability by keeping his overheads low.
 Promotion: Promoting the product / s in his territory is another function that
middlemen perform. Many of them design their own sales incentive programmes,
aimed at building customer traffic at their outlets.
 Financing: Middlemen finance manufacturer’s operations by providing the
necessary working capital in the form of advance payments for goods and services.
The payment is in advance even though credit may be extended by the
manufacturer, because it has to be made even before the products are bought,
consumed and paid for by the ultimate customer.
 Title: Most middlemen take the title to the goods, services and trade in their own
name. This helps in diffusing the risks between the manufacturer and middlemen.
This also enables middlemen to be in physical possession of the goods, which in turn
enables them to meet customer demand at the very moment it arises.
Types of channels :
1. Producer --> Customer
The producer sells the goods or provides the service directly to the consumer with no
involvement with a middle man such as an intermediary, a wholesaler , a retailer , an agent,
or a reseller.

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 2. Producer --> Retailer --> Consumer
Retailers, like Walmart and Target, buy the product from the manufacturer and sell
them directly to the consumer. This channel works best for manufacturers that produce
shopping goods like, clothes, shoes, furniture, tableware , and toys. Since consumers
need more time with these items before they decide to purchase them, it is in the best
interest of the manufacturer to sell them to another user before it gets into the hand of
the consumers
3. Producer --> Wholesaler/Distributor --> Customer
Wholesalers, like Costco, buy the products from the manufacturer and sell them to the
consumer. In this channel, consumers can buy products directly from the wholesaler in bulk.
By buying the items in bulk from the wholesaler the prices of the product are reduced. This
is because the wholesaler takes away extra costs, such as service costs or sales force costs,
that customers usually pay when buying from retail; making the price much cheaper for the
consumer.
4. Producer --> Agent/Broker --> Wholesaler or Retailer --> Customer
This distribution channel involves more than one intermediary before the product gets into
the hands of the consumer. This middleman, known as the agent, assists with the
negotiation between the manufacturer and the seller. Agents come into play when the
producers need to get their product into the market as quickly as possible.

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 Managing direct and on-line marketing.
Introduction: Direct marketing is a type of advertising campaign that seeks to elicit an
action (such as an order, a visit to a store or Web site, or a request for further
information) from a selected group of consumers in response to a communication from

the marketer. The communication itself may be in any of a variety of formats including
postal mail, telemarketing, direct e-mail marketing, and point-of-sale (POS)
interactions. Customer response should be measurable: for example, the marketer
should be able to determine whether or not a customer offered a discount for online
shopping takes advantage of the offer.
Forms of direct marketing:
 Personal selling direct marketing
 Direct-mail direct marketing
 Catalog direct marketing
 Telephone marketing
 Direct-response television marketing
 Kiosk marketing
 Digital direct marketing
 Online marketing

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 UNIT -IV

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 UNIT-4
Pricing strategies and promotions
1. Pricing decisions,
2. Methods of pricing,
3. Selecting the final price,
4. Price discounts,
5. Advertising and sales promotions,
6. Managing the sales force.

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[Link] decisions,

Introduction: The company first decides where it wants to position its market offering.
The clearer a firm’s objectives, the easier it is to set price.
Five major objectives through pricing:
 Survival ness
 Maximum current profit,
 Maximum market share,
 Maximum market skimming,
 Product-quality leadership.
The following are the price setting methods.
 Market pricing / cost pricing: - The most elementary pricing method is to add
standard markup to the cost of the product. Construction companies omit job bids
by estimating the total project cost and adding a standard markup for profit.
Lawyers, accountants and other professions typically price by adding a standard
markup to their costs.
 Target return pricing: - Another cost oriented pricing approach is target return
pricing. The firm tries to determine the price that is at would yield the target rate of
return on investment. This pricing method is also used by public utilities that are
constrained to make a fair return on their investment.
 Perceived value pricing: - It fits in well with modern product positioning thinking.
The key to perceived value pricing is to accuracy determine the market’s perception
of the offer is value. Market research is needed to established the market perception
of value as a guide to effective pricing. They use the non-price variables in the
marketing mix to build up perceived value in the buyers’ minds.
 Going rate pricing: - In going rate pricing, the firm bases its rice largely on
competitors prices, with less attention aid to its own cost or demand. The firm might
change the same, more or less than its major competitors. Going rate pricing is quite
popular. Where costs are difficult to measure or competitive response is uncertain
firms feel that the going rice represents a good solution.

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  Sealed- bid pricing: - Competitive oriented pricing also dominates where firms bid
for jobs. The firm bases its price on expectations of who competitors will rice rather
than on a rigid relation to the firm a costs or demand. The firm wants to win the
contract and this requires pricing lower than the other firms. The higher its sets its
rice above the costs the lower its chance of getting the contract.

PRICE STRATEGIES:-Companies do not set a single price but set a pricing structure that
covers different products and items in the line and reflect variations in geographical demand
and costs market segment intensity of demand, purchase timing and other factors.
 Geographical pricing: - Geographical pricing involves company in deciding how to
price its products to customers located in different parts rice of the country.
Companies have evolved few different approaches to geographical pricing strategy.
They are as follows.
 Uniform delivered pricing.

 Basic-point pricing.
 Zeno pricing.
 Promotional pricing: - Under certain circumstances, companies will temporalit y
price their products below the list price and sometimes even below cost
promotional pricing takes several forms.
 Loss leader pricing: - Here supermarkets and departments stores drop the
price on well-known brands to stimulate additional traffic.
 Special event pricing: - This will be used by sellers in certain seasons to draw
in more customers. Thus lines are promotionally priced every January to
attract shopping-weakly customers into the stores.
 Cash rebates: - consumers are offered cash rebates to get them to buy that
manufacturer’s product, with in a specified time period. The rebate can help
the manufacturer clean inventories without having to cut the list price.
 Low-interest financing: - This is another tool for stimulating sales without
lowering the price.
 Psychological discounting: - This involves putting an artificially high rice on a
product and then offering it at substantial savings.

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  Warranties and service contracts: - The company can promote sales by
adding a free warranty offer or serves contract. This is a way reducing the
price.
 Discriminatory pricing: - Discriminatory pricing describes the situation where the
company sells a product or service at two or more prices that do not reflect a
proportional deference in costs. It takes several forms.
 Customer segment pricing: - Here different customer groups are charged different prices
for the same products or service museums will change a lower admission fee to students and
senior citizens.
 Product form pricing: - Here different versions of the product are priced differently but
not proportionality to their respective costs.
 Image pricing: - Some companies will price the same product at two different levels
based on image differences.

 Location pricing: - Here different locations are priced differently even through the cost
of offering each location in the same. A theater varies its seat prices because of audience
references for curtain locations.
 Time pricing: - Here prices are varied seasonally by the day and even by the hour public
utilities vary their energy raises to commercial users by time of day and weekend versus week
day.
 Product mix pricing: - Price-setting logic has to be modified when the product is a part of
a product-mix. In this case, the firm searches for a mutual set of prices that maximize the
profits on the total product mix.

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 Strategy Description
 Discount & allowances
- Reducing prices to reward
Pricing Customer response such as paying
Early or promoting the product.
- Cash discount, quantity, descant,
Functional discount, seasonal Discount.
 Segment pricing - Adjusting prices to allow for differences
in customers, products or locations.
 Psychological pricing - Adjusting prices for psychological effect.

 Promotional pricing - Temporarily reducing prices to increase

Short-run sales.
 Geographical pricing - Adjusting prices to account for the
Geographical locations of customers.
 Interaction pricing - Adjusting prices for international market.

ess of pricing decision making:

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 Proc
1. Setting the pricing objectives
2. Determine demand
3. Estimating cost
4. Analyzing competitive price
5. Selecting the price method
6. Select final price

Advertising and sales promotions,

Introduction: “Advertising is a nonpersonal communication of information usually paid for

and usually persuasive in nature about products, services or ideas by identified sponsors
through the various media." Explain.
Definition of Advertising - "Advertising is the non-personal communication of
information usually paid for and usually persuasive in nature about products, services
or ideas by identified sponsors through the various media." Now let's take this
statement apart and see what it means.
 Non-personal:Basically sales is done either personally or non-personally. Personal
selling requires the seller and buyer to get together. Personal selling has its on
advantages and disadvantages. Whereas advertising is non-personal selling.
Personal selling has many advantages over advertising like direct communication,
bargaining, enough time to discuss in detail about the product, seller can easily
locate potential buyer. Advertising has none of the advantages of personal selling,
very little time to present sales message, message is cannot be changed easily.
 Communication:Communication means passing information, ideas, or feelings by a
person to another. Communication uses all the senses like smell, touch, taste, sound,
sight. Only two senses - sound and sight are really useful in advertising. In
advertising, what appears is everything the writer thinks the customer needs to

know about the product in order to make a decision about the product. That information
will generally be about how the product can benefit the customer.

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  Paid For:Advertiser has to pay for the creation of ad and for placing it in the media.
Cost of ad creation and cost of time / space in the media must be paid for. Cost of
advertising depends on TRP of media, reach of media, and frequency of ad to be
displayed.
 Persuasive:"Persuasive" stands to reason as part of the definition of advertising. The
basic purpose of advertising is to identify and differentiate one product from
another in order to persuade the consumer to buy that product in preference to
another.
 Identified Sponsors:Identified sponsors means whoever is putting out the ad tells the
audience who they are. There are two reasons for this: first, it's a legal requirement,
and second, it makes good sense. Legally, a sponsor must identify himself as the
sponsor of ad. By doing so the sponsor not only fulfils the legal requirements, but it
also makes a good sense, if the sponsor doesn't do so, the audience may believe that
the ad is for any competitor's product, thus wasting all the time and money in
making and placing the ad.
Functions of Advertising -
1. To distinguish product from competitors' products:There are so many products of same
category in the market and they competes with each other, advertising performs the
function of distinguishing advertiser's product from competitors.
2. To communicate product information:Product related information required to be
communicated to the targeted customers, and advertisement performs this function.
3. To urge product use:Effective advertisement can create the urge within audience for a
product.
4. To expand product distribution:When the market demand of a particular product
increases, the number of retailer and distributor involved in sale of that product also
increases, hence product distribution get expanded.
5. To increase brand preference:There are various products of different bands are
available, the brand which is effectively and frequently advertised is preferred most.
6. To reduce overall sale cost:Advertising increases the primary demand in the market.
When demand is there and the product is available, automatically the overall cost will
decrease, simultaneously the cost of sales like distribution cost, promotional cost also
get decreased.
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Classification of Advertising –
A) Classification on the basis of function
 Informative advertising: This type of advertising informs the customers about the
products, services, or ideas of the firm or organization.
 Persuasive advertising: This type of advertising persuades or motivates the
prospective buyers to take quick actions to buy the products or services of the firm.
Example: “Buy one, get one free”.
 Reminder advertising: This genre of advertising reminds the existing customers to
become medium or heavy users of the products or services of the firm that have
been purchased by them at least once. This type of advertising exercise helps in
keeping the brand name and uses of the products in the minds of the existing
customers.

B) Classification on the basis of region

Advertisements can also be classified on the basis of the region, say:
 Global advertising: It is executed by a firm in its global market niches. Reputed
global magazines like Time, Far Eastern Economic Review, Span, Fortune, Futurist,
Popular Science. Cable TV channels are also used to advertise the products through
out world. Supermodels and cinema stars are used to promote high-end products
Examples: Sony, Philips, Pepsi, Coca Cola, etc.
 National advertising: It is executed by a firm at the national level. It is done to
increase the demand of its products and services throughout the country. Examples:
BPL (Believe in the best). Whirlpool Refrigerator (Fast Forward Ice Simple) etc.
 Regional advertising: If the manufacturer confines his advertising to a single region
of the country, its promotional exercise is called Regional Advertising. This can be
done by the manufacturer, wholesaler, or retailer of the firm. Examples:
Advertisements of regional newspapers covering those states or districts where
these newspapers are circulated. Eg. The Assam Tribune (only for the NE region)
etc.
 Local advertising: When advertising is done only for one area or city, it is called
Local Advertising. Some professionals also call it Retail Advertising.

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 It is sometime done by the retailer to persuade the customer to come to his store
regularly and not for any particular brand. Examples: Advertisements of Ooo la la,
Gupshup (Local FM channels) etc.
C) Classification on the basis of target market
Depending upon the types of people who would receive the messages of advertisements,
we can classify advertising into four subcategories:
 Consumer product advertising: This is done to impress the ultimate consumer. An
ultimate consumer is a person who buys the product or service for his personal use.
This type of advertising is done by the manufacturer or dealer of the product or
service. Examples: Advertisements of Intel, Kuttons (shirt), Lakme (cosmetics) etc.
 Industrial product advertising: This is also called Business-to-Business
Advertising. This is done by the industrial manufacturer or his distributor and is so
designed that it increases the demand of industrial product or services
manufactured by the manufacturer. It is directed towards the industrial customer.
 Trade advertising: This is done by the manufacturer to persuade wholesalers and
retailers to sell his goods. Different media are chosen by each manufacturer
according to his product type, nature of distribution channel, and resources at his
command. Hence, it is designed for those wholesalers and retailers who can
promote and sell the product.
 Professional advertising: This is executed by manufacturers and distributors to
influence the professionals of a particular trade or business stream. These
professionals recommend or prescribe the products of these manufacturers to the
ultimate buyer. Manufacturers of these products try to reach these professionals
under well-prepared programmes. Doctors, engineers, teachers, purchase
professionals, civil contractors architects are the prime targets of such
manufacturers.

 Financial advertising: Banks, financial institutions, and corporate firms issue

advertisements to collect funds from markets. They publish prospectuses and
application forms and place them at those points where the prospective investors
can easily spot them.

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D) Classification on the basis of desired responses
An ad can either elicit an immediate response from the target customer, or create a favourable
image in the mind of that customer. The objectives, in both cases, are different. Thus, we
have two types of advertising under this classification.
 Direct action advertising: This is done to get immediate responses from
customers. Examples: Season's sale, purchase coupons in a magazine.
 Indirect action advertising: This type of advertising exercise is carried out to make
a positive effect on the mind of the reader or viewer. After getting the advertisement
he does not rush to buy the product but he develops a favourable image of the brand
in his mind.
 Surrogate advertising: This is a new category of advertising. In this type of
promotional effort, the marketer promotes a different product. For example: the
promotion of Bagpiper soda. The firm is promoting Bagpiper Whisky, but
intentionally shows soda. They know that the audience is quite well aware about the
product and they know this fact when the actor states, "Khoob Jamega Rang Jab Mil
Baithenge Teen Yaar ... Aap ... Main, Aur Bagpiper").

E) Classification on the basis of the media used in advertisement

The broad classification based on media is as follows:
 Audio advertising: It is done through radio, P A systems, auto-rickshaw
promotions, and four-wheeler promotions etc.
 Visual advertising: It is done through PoP displays, without text catalogues, leaflets,
cloth banners, brochures, electronic hoardings, simple hoardings, running hoardings
etc.
 Audio-visual: It is done through cinema slides, movies, video clips, TV
advertisements, cable TV advertisements etc.
 Written advertising: It is done through letters, fax messages, leaflets with text,
brochures, articles and documents, space marketing features in newspapers etc.
 Internet advertising: The world wide web is used extensively to promote products
and services of all genres. For example Bharat Matrimony, [Link],
[Link] etc.
 Verbal advertising: Verbal tools are used to advertise thoughts, products, and

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 services during conferences, seminars, and group discussion sessions. Kinesics also
plays an important role in this context.
Advertisement management process-5Ms
1) Mission: What’s the mission of your advertising campaign? An advertiser must
understand the underlying reason for the campaign, and its targets; ensure the brief you
receive includes strong information on this.
There may be more than one mission: a single campaign can aim to increase sales, improve
brand awareness, and develop brand loyalty. When considering the appropriate channels,

and visual design, for your campaign, it will help the ad to be focused and successful if you
select one of these as the core mission and make others the sub-goals.
2) Money: Advertising doesn’t come cheap, especially if blended across printed and digital
channels. But for an advertising campaign to give useful metrics on return-on-investment,
it’s important to establish an advertising budget ahead of time, and stick to it.
If you’re advertising a mass market product, then you can consider using the most expensive
(high-exposure and high-frequency) medias: national television and radio advertisements. Any
expenses incurred should be calculated to pay for themselves in terms of increased sales, so
understand the product and budget accordingly.
3) Message: The message is the memorable part of your advertising campaign: ensure you
create a tagline and tone which is geared to the target market. It must pitch both your
product and your brand accurately and attractively.
Consider hiring a creative agency to work with you in creating relevant, engaging messages that
can be adapted across all media channels. Also consider running a pre-test on a small sample
audience to be sure the message response is what you’re hoping for.
4) Media: Media considerations are: the different channels you’ll be using in your
advertising campaign, the percentage split between the usage of these media types, and the
date and length of period your advertisements will be available across different platforms.
Different media channels include internet (encompassing banner ads, videos, email
marketing and more), television, print, and radio. Select the media based on reaching your
target audience: where are they (geographically and also in terms of their preferred
media), and what is the most high-impact way to grab their attention?
5) Measurement: The measurement section assesses the reach of the campaign’s core
mission, and analyses whether each section of media being used is contributing to this goal.
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Managing the sales force.
Sales Force Components
Sales Force Objectives
A Sales Force will have one or more of the following tasks.
 Prospecting – search for leads
 Targeting – allocation of time between prospects and customers
 Communicating – info about company and products
 Selling – Approach, presentation, answering objections, closing sales
 Servicing – consulting, technical, financing, etc.
 Info gathering – market research
 Allocating – scarce products to customers.
Sales Force Strategy
Ways sales reps work with customers to maintain company competitive edge:
 Rep to buyer – discuss issues with a prospect or customer
 Rep to buyer group – rep gets to know as many members of buyer group as possible
 Sales team to buyer group –
 Conference selling – company sales rep and resource group to customer to talk big
problems or opportunities
 Selling Seminar – Company team to group of buyers / customers
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  Once company has strategy can go with direct sales force or contractual force. Direct
sales force is standard sales force with office and field reps, while contractual reps
are purely commission sales forces.
Sales Force Structure
 Territorial – each rep gets own piece of land to work equally divided by workload or
potential – result is no customer confusion as to who the rep is
 Product – generates specific product knowledge
 Market – industry or customer type delineation
 Complex – combination
Sales Force Size
Depends upon the of customers you want to reach then:
 Group customers into classes by annual sales volume
 Establish desired call frequency
 Classes size time freq. = workload
 Determine # of calls a rep can make a year
 Workload divided by rep calls per year = number of reps needed
Sales Force Compensation
 Salary. Straight salary provide reps secure income, reps more willing to do non
selling activities, reps have less incentive to overstock customers, lower company
administrative activities and lowers turnover.
 Commissions. Straight commission attracts higher sales performers, provides more
motivation and requires less supervision, while controlling selling costs.
 Benefits
 Expense allowance



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Managing the Sales Force
Recruiting and Selecting Reps
1. Determine what you want your sales people to be like
2. Recruitment
3. Select the best applicants
4. Train the new reps – vital to protect company image as well as get orders – Program
should have the goals of having reps:
 know and identify with the company – what has the company done
 know the company’s products
 know the customers, and competition characteristics
 know how to make an effective presentation
 understand field procedures and responsibilities – dividing time between active
accounts and prospecting etc.
Supervising the Sales Force
 Develop norms for customer calls – and how much sales volume should be
generated per call
 Develop Norms for prospect calling – needed to motivate reps to look for new
business
 Ensuring efficient use of time and assets – direct supervision or training
Motivating Sales Reps – often not too difficult as sellers are usually self motivated.
Supervisors must work through expectancy theory: 1) Hard work will get sales -2) Sales
will get you a reward, and 3) you will like the reward. All three are linked.
Sales Quotas – three schools: High quotas to spur effort, Modest – to achieve buy-in,
Variable – to account for differences between sales people.
Supplemental Motivators – sales meetings and contests provide social occasion to meet,
share ideas and accomplishments, or get extra effort from the force.
Evaluating Sales Reps
Sources of information
 Sales reports – give activity plan and activity results
 Call reports – give activities of reps and status of various accounts and prospects
 Other reports like expense account info, new bus reports, lost bus report economic

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 conditions.
Formal evaluation
 Current to past Sales performance – did you sell more or less, and of what product.
 Customer Satisfaction reports –
 Qualitative evaluations – reps knowledge of company or products, personality
characteristics of reps, knowledge of the laws that pertain to the rep.
Principals of Personal Selling
 Prospecting and Qualifying – the art of finding good leads – cold calls to asking
current customer for names to joining professional organizations
 Pre-approach – learn about the prospects business and decided the best approach to
take
 Approach – know how to get off to a good start / get a foot in the door
 Presentation
o get the customers interest, show benefits and features
o use canned approach

o formulated approach – uses buyers needs and desires to pull out the right
formula to use in the presentation
o need satisfaction approach – listen and then use problem solving skills to fix
customers problems
 Overcoming Objections – either psychological or logical – sales rep must handle any
type. Logical are the easiest if the product can handle the issue. Both types may
require negotiation skills.
 Closing – ask for the sale
 Follow up and Maintenance – ensures you will be allowed back into the customers
office. Builds both rep and company reputations

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 UNIT -V

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 UNIT-5
Managing the marketing efforts-
1. Organizing, implementing,
2. Evaluating and controlling marketing activities,
3. Social responsible marketing,
4. Retailing, trends in retailing,
5. Rural Marketing.

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 Organizing, implementing, evaluating marketing activities,

Introduction : Business organizations do marketing planning to incorporate overall marketing

objectives, strategies, and programs of actions designed to achieve marketing objectives.
Marketing Planning involves setting objectives and targets, and communicating these targets
to people responsible to achieve them.
Definition of Marketing Control
Marketing Control can be defined as "the process of measuring and evaluating the results of
marketing strategies and plans, and taking corrective action to ensure that marketing
objectives are achieved."
Marketing Control can also be defined as "the set of practises and procedures employed by firms
to monitor and regulate their marketing activities in achieving their marketing objectives."
Meaning of Marketing Control
Developing and implementing marketing plan is not enough to reach marketing objectives;
marketing plans and strategies are required to be monitored, evaluated, and adapted to meet
the changing market environment, needs, and opportunities. Marketing control ensures
performance improvement by minimising gap between desired results and actual results. If
the actual results are found deviated from the expected results, plans and strategies are
adapted to bring the results back to the desired level.
Marketing Control Process: Marketing control is a four step process :-

1. Define Marketing Objectives

2. Set Performance Standards
3. Compare Results Against Standards
4. Corrections and Alterations

Resources are scarce and costly so it is important to control marketing plans. Controlling
marketing plan is not an one time activity, it is a series of actions, and it is required to be
done regularly. Marketing control process starts with the review of the marketing objectives.
After defining/redefining marketing objectives, performance standards are set. Performance
standards provide benchmarks to enable managers and employees to decide how they are

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 progressing towards achieving objectives.
Actual results are compared against standards. If the actual results are in direction to the
expected results, their is no problem in marketing plan and its execution.
If actual results are deviated from the expected results, their is requirement to correct and alter
marketing plan to bring the results back to the desired level.
Social responsible marketing,
Introduction :In today's world of cut throat competition every organisation is investing heavily
in advertising. Advertising is necessary to make a new product popular in the market and to
increase the sales of existing brands. Advertising plays an important role in brand building
and informing public about available products so that they can make informed choice among
different products or brands.
Advertising is a powerful medium of mass communication. As advertising is a form of mass
communication and thus just like other popular forms it too have some social responsibilities

associated with it. However, the question is whether advertising fulfil its social
responsibilities or not.
Advertisements are meant for the masses and people relate themselves with this medium. Thus,
for understanding its responsibilities towards the public, its positive and the negative aspects
needs to understood.
Positive and Negative Aspects of Advertising:As like any other medium of mass
communication, advertising also have positive as well as negative aspects. Advertising
increases sales, advertising makes the product popular, advertising helps in brand formation,
advertising makes the public aware with the available brands or products. Advertising is the
largest financial source for mass media. Advertising is sometimes subjected to wide
criticism. Many of the advertisements are criticised as deceptive or manipulative. Other
criticism focus on the social or environmental impact of advertising, the effect of advertising
on our value system, commercial clutter, stereotypes, and offensiveness.

Ethics in Advertising:Ethics means a set of moral principles which govern a person's

behaviour or activities. Ethics in advertising means a set of well defined principles which
govern the ways of communication taking place between the seller and buyer.

Advertising benefits advertisers in many ways, similarly it makes the public aware with the
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 available brands so that they can make informed choice among the available products or
brands. But, some of the advertisement doesn't match the ethical norms of advertising, such
ads causes political, cultural, or moral harm to society. Ethical ad is one which is in the limit
of decency, make no false claims, and doesn't [Link] advertisements are highly
exaggerated and a lot of puffing is used. .

Ethical and Moral principles of Advertising:Advertisers must have sufficient knowledge

of ethical norms and principles, so that they can understand and decide what is correct and
what is wrong. We can identify several ethical and moral principles that are particularly
relevant to advertising. We are speaking briefly of three as follows:-

1. Truthfulness in advertising;
2. The dignity of the human person; and
3. Social responsibility.

Truthfulness in Advertising:Truth in advertising promotes a highly efficient, functioning

economy by:

 Discouraging deceptive business practices;

 Encouraging the provision of accurate and truthful information;
 Enhancing competition by ensuring a level playing field; and
 Enabling informed consumer choice.

The Dignity of the Human Person

 The dignity of human beings should be respected; advertisements should not insult the
dignity of human beings;
 Different cultures and ethnic groups should be presented in advertising as equal with the
majority of the population;
 Special care should be given to weak and vulnerable groups like - children, poor people,
or elderly people.

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Advertising and Social Responsibility
Advertising has a strong social responsibility, independent of its known commercial
responsibility. Advertisers should have a deeper sense of social responsibility and should
develop their own set of ethical and social norms taking into consideration the values of their
society.
Retailing, trends in retailing,
Introduction: Retailing includes all activities in selling goods or services directly to final
customers for personal and non business use.
Why is retailing important?
 Retailers add value to products by making it easier for manufacturers to sell and
consumers to [Link] would be very costly for consumers to locate, contact and make a
purchase from a manufacturer every [Link] out retailing there is no sale to end user
for personal purpose
 Push up sale is not possible without retailingRetailing is the last activity of any selling
strategy to earn revenue Retailers also provide service and information back-up that
makes buying less risky and more fun in an environment ,Retailers may provide many
extra services, from personal shopping to gift wrapping to delivery, that increase the
value of products and services to consumersCorporate retailing helps for brand building
Classification of retailers based on:
1. Product type
2. Relative price
3. Control of outlets
4. Type of store cluster
1. Product Type
 Specialty Stores
 Departmental Stores
 Supermarkets
 Convenience Stores
 Superstores
 Combination stores
 Hypermarkets

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Specialty Stores :
 Carry a typical type of products
 With a deep assortment within that type
 Specialty stores are flourishing increasing use of market segmentation, market targeting
and product specialization

Departmental Stores: Carries a wide variety of product types .Each type is operated as a
separate department managed by specialist buyers and merchandisers
Supermarkets: Are large, low-cost, low-margin, high volume, self-service stores that carries a
wide variety of food, laundry, and household products
Convenience Stores:
 Are small stores that carry a limited line of high-turnover convenience goods
 Such recognized stores are limited in India but our milk shops, selling related products
are in the same category
 Convenience Stores
 Such stores are located near residential areas and remain open long hours, seven days a
week
 The convenience stores may charge high prices to make up for higher operating costs and
lower sales volume , but they satisfy an important consumer need
Superstores:
 Are larger than the conventional supermarket
 Many leading chains are moving toward superstores because their wider chain assortment
allows prices to be 5-6% higher than conventional markets
Combination stores:
Are stores are combined with two related needs like food drug stores, hospital and medicine
shop , puncture and tyre shop etc.
Hypermarkets:
 Hypermarkets combine discount ,supermarket and warehouse retailing
 They operate like a warehouse
 They usually give discounts to customers who carry their own heavy appliances and
furniture out of the store
2. Relative prices
 Discount stores
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  Off-price retailers
 Chain stores
Discount stores:
 Sell standard merchandise at lower prices by accepting lower margins and higher volume
 Occasional discounts or specials do not make a store a discount store, a true discount
store regularly sells its merchandise at lower prices, offering mostly national brands, not
inferior goods
Off-price retailers:
 They obtain a changing and unstable collection of higher-quality merchandise , often
leftover goods, overruns, and irregulars at reduced prices from manufacturers or other
retailers
 E.g. factory outlets, independent outlet and ware house clubs
 They buy at less than regular wholesale and charge customers less than retail
Chain stores:
Are two or more outlets are commonly owned and controlled, employ central buying and
merchandising, and sell similar type of merchandise
3. Control of outlets
 Corporate chain
 Voluntary chain

 Retailer cooperative
 Franchise organization
 Merchandising conglomerate

4. Types of store cluster

 Central business districts
 Shopping centre
Non-Store Retailing
“Non-store retailing now accounts for more than 15% of all consumer purchases, and it may
account for over 1/3 of all sales by the end of the century”
Non-Store Retailing
 Direct marketing
 Direct selling
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  Automatic vending
Levels of service
Self-service retailers
 Convenience goods e.g. super markets
 Nationally branded, fast moving consumer goods e.g. Mc Donalds outlets
Limited –service retailers
 Provide more sales assistance
 Shopping goods about which customer need information
 Their increased operating costs result in higher prices
Full-service retailers
 Specialty stores
 First class department stores
 Have sales people to assist customer in every phase of shopping process
 Provide liberal polices like various credit plans, free delivery, home servicing
Rural Marketing.
Introduction: In an economy like India where around 70% of the population live in villages,
Rural Marketing as a subject is being accepted with open arms across B-Schools and
Universities. However, the problem is that not many people understand or can define the
actual meaning of Rural Marketing. The term, Rural Marketing, means different things to
different people. Off late with the opening up of the Indian Economy and the huge
opportunity identified by global giants in rural India now demands serious attention towards
the subject.
One of the closest definitions of Rural Marketing states Rural Marketing is the process of taking
region specific goods and services to the rural market leading to exchanges between urban
and rural markets simultaneously satisfying consumer demand and achieving organisational
objectives.
Factors responsible for boom in Rural Marketing in India:
1. Increasing Population of India: The growth of Indian population to being the world’s
second most inhabited country with 1.252 billion (2013) residing in the nation has
propelled increasing demand for consumer goods, services, banking facilities etc- And as
stated above, with 70% of this population living in rural areas, a spike in the need for
creating rural market specific strategies is inevitable.
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 2. Rise in Rural Income: India turns to be a $1.7 trillion economy with per capital income
soaring by 10.4% in 2013-14 to Rs 74,920, the purchasing power of both rural and urban
India is growing every year.
3. Government Rural Development Programs: Various initiatives taken by the Indian
government has boosted growth the rural economy. Department of Rural development
under the Ministry of Rural Development has initiated many schemes which has been
facilitating and boosting the growth of rural India. Mahatma Gandhi National Rural
Employment Guarantee Act, Swarnjayanti Gram Swarozgar Yojna, Pradhan Mantri
Gram Sadak Yojna, Indira Awaas Yojana and National Social Assistance Programme are
the few successful government schemes.
4. Development of Transport and Communication Networks: Easy & quick access to
information and to nearby developed cities has made the rural areas dynamically connect
to their urban counterparts.
5. Foreign Investments: Foreign investments in NGOs, working towards the betterment of
rural areas, have gradually increased in the country. Consequently, there has been a
steady rise in rural growth.

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