Revision Notes for Class 12 Business Studies

Chapter 10 – Marketing
Meaning of Market

The term "market" refers to the gathering place of buyers and sellers to conduct
transactions involving the exchange of goods and services. The term "market" comes from
the Latin word "Marcatus," which means "to trade."

Marketing

Marketing is defined as "a human activity aimed at satisfying needs and desires through an
exchange process."

Philip Kotler

Marketing concept is a key to determining the needs, and desires of target markets,
delivering the desired satisfactions more efficiently and effectively by competitors is
critical to achieving organizational goals.

Features of Marketing

1. Needs and Wants:

• The marketing process assists consumers in obtaining what they require and desire.

• A need is said to be known as a state of deprivation or the feeling that one is depriving
oneself of something.

• Needs are fundamental to human beings and are unrelated to a specific product.

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 2. Creating a Market Offering:

Market offering is the process of offering and introducing a product or service with
specific features such as size, quality, taste, and so on for selling.

3. Customer Value:

Marketing is used to facilitate the exchange of goods as well as services between buyers
and sellers.

4. Exchange Mechanism:

• The exchange mechanism is used in the marketing process.

• Exchange refers to the process where two or more parties come together to get the
desired goods or services from someone in exchange for something. For example,
money is the medium of exchange used to purchase or sell a product or service.

The following conditions need to be met for an exchange to take place:

a. There must be at least two parties.

b. providing something of value to the other party

c. communication

d. freedom to accept or reject an offer

e. willingness of the parties to enter into a transaction

What can be Marketed?

1. Physical product

2. Services

3. Ideas

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 4. Person

5. Palace

6. Experience

7. Properties

8. Events

9. Information

10. Organisation

Marketer

• A marketer is anyone who makes an extra effort to identify the needs of the
consumers and offer the product or service as well as persuade them to buy in the
process of exchange.

• Sellers, as marketers, are the ones who provide satisfaction. They make
products/services available and sell them to customers to meet their needs and desires.

They are classified as follows:

a. goods marketers (such as Hindustan Lever)

b. services marketers (such as Indian Airlines)

c. other marketing experiences or places (such as Walt Disney) (like tourist destinations).

Marketing activities are those undertaken by marketers to facilitate the exchange of goods
and services between producers and consumers.

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 Marketing Management

Marketing management is the administration of marketing functions.

It is considered the process of organizing, directing as well as controlling the activities

associated with marketing goods and services to meet the needs of customers and achieve
organizational goals.

“Marketing management is defined as the art and science of selecting target markets and
acquiring, retaining, and growing customers by creating, delivering, and communicating
superior customer service.”

The Process of Management of Marketing Involves:

a. Identifying a target market

b. Creating demand by producing products that meet the needs and interests of customers.

c. Create, develop, and communicate superior customer values: To provide superior value
products/services to prospective customers, and to communicate these values to other
potential buyers to persuade them to purchase the product/service.

Marketing and Selling

Marketing: It refers to a broad range of activities, of which selling is only one component.
Before making a sale, a marketer must plan the type, design, and price of the product, as
well as select the distribution channels and the appropriate promotional mix for the target
market.

Selling: refers to the sale of a product or service through advertising, promotion, and
salesmanship. The product's title is transferred from the seller to the buyer. The primary
goal of selling is to turn a product into cash.

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 Difference Between Marketing and Selling

Basis Marketing Selling

It is a broad term that encompasses a

variety of activities such as identifying It is only a part of
Scope customer needs, product development, the marketing
pricing, distribution, promotion, and process.
selling.

Title transfer from

Satisfying the needs and desires of the
Focus the seller to the
customers to the greatest extent possible.
consumer

Profits are
Profits are generated as a result of generated by
Aim
customer satisfaction. increasing sales
volume.

Creation of products
that can meet the
Emphasis Customer bending based on the product
needs of the
customers.

Start and
It begins before a product is It begins after a
end
manufactured. product is created.
activities

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 Efforts such as
Product, promotion pricing, and physical promotion and
Strategies
distribution are all part of the effort. persuasion are
required.

Marketing Management Philosophies

Marketing Concepts/Philosophies usually refer to determining the needs as well as wants

of the target markets & then delivering the desired satisfactions more efficiently and
effectively by competitors is critical to achieving organizational goals.

1. Production Concept:

Because the number of producers was limited in the early days of the Industrial
Revolution, industrialists assumed that consumers were only interested in easily and
widely available goods at an affordable price.

2. Product Concept:

• As time passed, supply improved, and customers began to prefer products that were
superior in performance, quality, and features.

• As a result, product improvement has become the key to a company's profit

maximization.

3. Selling Concept:

• Increased production scale resulted in increased competition among sellers. Because

there were so many companies selling similar products, product quality and
availability were insufficient to ensure survival.

• Consumers will not buy products unless the company engages in aggressive sales and
promotional activities.

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 4. Marketing Concept :

• Marketing begins with determining what consumers want to satisfy consumers and
profit.

• Customer satisfaction is a prerequisite for achieving the firm's goals and objectives.

5. Social Marketing Concept:

• Customer satisfaction is supplemented by social welfare in this concept.

• A company that adopts the societal concept must balance the company's profits,
consumer satisfaction, and societal interests.

Functions of Marketing :

• Gathering and Analyzing Market Information: Collecting data on customer needs,

brand preferences, etc.

• Marketing Planning: Creating plans to meet marketing objectives.

• Product Designing and Development: Decisions on product attributes like quality

and packaging.

• Standardization and Grading: Ensures product uniformity and categorization.

• Packaging and Labeling: Designing product packages and labels for protection and
promotion.

• Branding: Differentiates products, builds loyalty, and promotes sales.

• Customer Support Services: Provides after-sales services to enhance customer

satisfaction.

• Pricing of Product: Setting prices that reflect product value and market demand.

• Promotion: Informing and persuading customers to buy products.

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 • Physical Distribution: Ensuring products are available where and when needed.

• Transportation: Moving goods from production to consumption points.

• Storage or Warehousing: Storing products to maintain supply consistency.

Marketing Mix

• A large number of factors influence marketing decisions; these are classified as ‘non-
controllable factors' and ‘controllable factors.'

• Controllable factors are those that can be influenced at the firm level.

• Environmental variables are factors that influence a decision but are not controllable
at the firm level.

• To be successful, a company must make sound decisions after analyzing controllable

factors and keeping environmental factors in mind.

• Marketing Mix refers to the set of marketing tools that a company employs to achieve
its marketing objectives in the target market.

• The success of a market offer is determined by how well these ingredients are
combined to provide superior value to customers while also meeting sales and profit
goals.

Elements of Marketing Mix

The marketing mix consists of four main elements

A. Product

B. Price

C. Place/Physical Distribution

D. Promotion

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 These elements are popularly known as the 4 P’s of marketing.

1. Product: A product is defined as "anything of value" that is offered for sale in the
market. Colgate, Dove, and so on.

2. Price: the sum of money that a customer must pay to obtain a product or service.

3. Place: Physical product distribution, i.e. making the product available to customers at
the point of sale.

4. Promotion: Informing customers about the products and convincing them to purchase
them.

Product

A product, in the eyes of the customer, is a collection of utilities that is purchased because
of its ability to meet a specific need.

Classification of Products

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 Products can be classified into two categories:

(i) Consumers ‘products,

(ii) Industrial products.

A. Shopping Efforts Involved

Based on the buyers' time and effort.

1. Convenience Products: Convenience goods are consumer products that are frequently
purchased for immediate use. Medicines, newspapers, stationery, toothpaste, and so on.

2. Shopping Products: Shopping products are those in which buyers spend a significant
amount of time comparing the quality, price, style, suitability, and so on at various stores
before making a final purchase. For example, electronic goods, automobiles, and so on.

3. Specialty Products: Specialty products are goods that have unique characteristics that
compel customers to go out of their way to purchase them. For example, art, antiques, and
so on.

B. Durability of Products

1. Non-durable Products: These are consumer goods that are consumed in a short period.
For example, milk, soap, stationery, and so on.

2. Durable Products: Tangible items that can withstand repeated use, such as a
refrigerator, radio, bicycle, and so on.

3. Services: Intangible services are those activities, benefits, or satisfactions that are sold,
such as dry cleaning, watch repairs, hair cutting, postal services, doctor services, and so
on.

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 Industrial Products

Industrial products are those that are used as inputs in the manufacturing process.

Characteristics

• Number of Buyers

• Channel Levels

• Geographic Concentration

• Derived Demand

• Role of Technical Considerations

• Reciprocal Buying

• Leasing Out

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 Classification

• Materials and Parts: items that are completely incorporated into the manufacturer's
products.

• Capital Items: the manufacture of finished goods, such as installations and

equipment.

• Supplies and Business Services: short-term goods and services that aid in the
development or management of the final product. Repairs and maintenance, for
example.

Branding:

Branding is the process of creating a corporate brand identity for consumers and
imprinting that brand identity on their minds, which necessitates brand positioning and
brand management.

Amazon's Jeff Bezos

The process of developing a product's distinct identity. It is the process of identifying a

product by using a name, term, symbol, or design alone or in some combination.

Brand: A name, term, sign, design, or some combination of the above used to identify and
differentiate the seller's products from those of competitors.

Advantages to the Marketers

• It helps in distinguishing its product from that of its competitors.

• Aids in the development of advertising and display programs

• It allows a company to charge different prices for different products.

• Ease of New Product Introduction

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 Advantages to the Customers

• Product Identification: Assists customers in identifying products.

• Ensures Quality: Ensures product quality

• Status Symbol: Brands become status symbols due to their quality As an example,
consider Benz automobiles.

Characteristics of Good Brand Name

• Short, simple to say, spell, recognize, and remember

• Suggest the product's advantages and characteristics.

• Different from other products

• Adaptable to packing or labeling requirements, as well as different advertising media

and languages.

• Versatile enough to accommodate new products;

• Legally registered and protected

Packaging

Packaging: The act of designing and developing a product's container or wrapper.

Because good packaging often aids in the sale of a product, it is referred to as a silent
salesman.

Levels of Packaging

1. Primary Package: This is the product's immediate container/covering, such as toffee in

a wrapper, a matchbox, a soap wrapper, and so on.

2. Secondary Package: It's all about additional layers of protection that are kept until the
product is ready for use, such as a red cardboard box for Colgate toothpaste.

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 3. Transportation Package: refers to additional packaging components required for
storage, identification, and transportation, such as putting a package of toffees into
cardboard boxes for storage at a manufacturer's warehouse and transportation.

Functions of Packaging

• Product Identification: Packaging aids in product identification.

• Product Protection: The primary function of the packaging is to protect the product.

• Facilitating Product Usage: It makes transportation, stocking, and consumption

easier.

• Product Promotion: Packaging makes sales promotion easier.

• Rising Health and Sanitation Standards: It is believed that there is minimal

adulteration in packaged goods.

• Self-Service Outlets: Good and appealing packaging can help to promote a product.

• Opportunities for Innovation: Packaging innovation has increased the shelf life of
products.

For example, tetra packs for milk.

• Product Differentiation: The color, size, material, and other characteristics of

packaging influence customers' perceptions of the product's quality.

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 Labeling involves placing identification marks on a product's package. Labels provide
essential information such as the product name, manufacturer, contents, expiry and
manufacturing dates, and usage instructions.

Functions of Labelling:

1. Product Identification: Helps customers identify the product, e.g., the purple color
of a Cadbury chocolate label.

2. Describe Product Contents: Provide detailed information about the product's

contents.

3. Product Grading: Classifies products into different categories, e.g., Brooke Bond
Red Label, Yellow Label, and Green Label.

4. Helps in Promotion: Attractive labels can entice customers, e.g., "40% extra free" on
detergent.

5. Legal Information: Includes required legal details like batch number, MRP, and
safety warnings.

Pricing
Meaning of Price:
Price is the sum of money paid by a buyer or received by a seller in exchange for a product
or service.

Factors Determining Price:

1. Pricing Objectives: Aim to maximize profits. Short-term goals may lead to higher
prices, while long-term goals focus on capturing market share with competitive
pricing.

2. Product Cost: Price should cover all costs and include a reasonable profit margin.
Costs set the floor price, and prices should ideally cover total costs in the long run.

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 3. Utility and Demand: The maximum price is determined by the product's utility and
demand. If demand is elastic, small price changes lead to larger demand changes,
allowing for price adjustments.

4. Extent of Competition: Competitor prices and actions must be considered before

setting prices.

5. Government Policies: Government regulations may influence pricing to protect

public interests.

6. Marketing Methods Used: Factors like distribution, promotion, packaging, and

product differentiation impact price determination.

Physical Distribution
Physical distribution involves ensuring that products are available in sufficient quantities,
at the right time, and in the right place.

Key Components:

1. Order Processing: Accurate and timely processing is crucial to avoid delays and
maintain customer satisfaction.

2. Transportation: Efficient transport ensures that goods reach customers promptly.

3. Inventory Control: Proper inventory management meets additional demand while

minimizing stock levels.

4. Warehousing: Storing and sorting products to create time utility, bridging the gap
between production and consumption.

Components of Physical Distribution:

Functions of Distribution Channels

1. Sorting: Middlemen obtain supplies of goods from a variety of sources, which are not
always of the same quality.

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 2. Accumulation: the accumulation of goods into larger homogeneous stocks that aid in
the maintenance of a continuous flow of supply.

3. Allocation entails dividing homogeneous stock into smaller, more marketable lots.

4. Assorting: the collection of products for resale.

5. Product Promotion: Middlemen take part in activities such as demonstrations, special

displays, and so on.

6. Bargaining: Manufacturers, intermediaries, and customers bargain over price, quality,

and other issues.

7. Risk Taking: Merchant middlemen take title to the goods, assuming risks such as price
and demand fluctuations, spoilage, destruction, and so on.

Channels of distribution consist of a network of firms, individuals, merchants, and

functionaries that assist in transferring a product from the producer to the end consumer.
Intermediaries help cover large areas, improve distribution efficiency, and provide
convenience by offering a variety of products in one location.

Types of Channels:

1. Direct Channel (Zero Level):

a. The manufacturer directly interacts with the customer.

b. Examples: Mail order, internet, door-to-door sales.

2. Indirect Channel:

a. Involves intermediaries between the manufacturer and the customer.

b. One Level Channel: Manufacturer → Retailer → Customer

Used for high-end products like watches and automobiles.

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 c. Two Level Channel: Manufacturer → Wholesaler → Retailer → Customer
Common for consumer goods like soaps and salt.

d. Three Level Channel: Manufacturer → Agent → Wholesaler → Retailer →

Customer
Used when manufacturers employ agents or brokers.

Factors Determining Choice of Channels:

1. Product Related Factors: Depends on whether the product is industrial or

consumer goods, perishable, etc.
2. Company Characteristics: Financial strength and the desired level of control
over intermediaries affect channel selection.
3. Competitive Factors:Channels used by competitors may influence the choice.
4. Market Factors:Market size and buyer concentration are crucial.
5. Environmental Factors:Legal constraints and economic conditions influence
the channel choice.

Promotion
Promotion involves communication aimed at informing and persuading potential
customers about a product or service, encouraging the exchange of goods and services.

Promotion Mix:

1. Advertising:

a. A paid, non-personal form of promotion widely used across newspapers,

magazines, television, and radio.

b. Features:

▪ Paid for by sponsors.

▪ Lacks personalization.

▪ Has an identified sponsor.

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 c. Merits:

▪ Mass Reach: Can reach large audiences across geographical areas.

▪ Expressiveness: A powerful communication medium.

▪ Economy: Cost-effective due to its wide reach.

d. Limitations:

▪ Less forceful, no direct feedback, inflexible, and may have low efficacy.

2. Personal Selling:

Direct interaction between the seller and the buyer.

3. Sales Promotion:

Short-term incentives to encourage product purchase.

4. Publicity:

Non-paid promotion, often through media coverage.

Objections to Advertising

Some critics argue that advertising is a social waste because it raises costs, multiplies
people's needs, and undermines social values.

1. Adds to Cost: Unnecessary advertising raises the cost of the product, which is then
passed on to the buyer in the form of high prices.

2. Undermines Social Values: It undermines social values while encouraging materialism.

3. Confuses the Buyers: A similar product of the same nature/quality confuses the buyer.

4. Encourages Sale of Inferior Products: It makes no distinction between superior and

inferior goods.

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 5. Some Advertisements are in Bad Taste: These depict something that some people do
not agree with.

2. Personal Selling

Personal selling entails personally contacting prospective buyers of a product, i.e.

engaging in a face-to-face interaction between the seller as well as the buyer for sale.

Features of the Personal Selling

1. Under personal selling, personal contact is established.

2. Establishing relationships with prospective customers, which are critical in closing

sales.

3. Oral communication

4. Quick response to queries.

Merits of Personal Selling

1. Flexibility

2. Direct Feedback

3. Minimum wastage

Role of Personal Selling

Importance to Business Organisation

(i) Effective Promotional Tool

(ii) Versatile Tool

(iii) Reduces Effort Wastage

(iv) Consumer Attention

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 (v) Long-Term Relationship

(vi) Personal Relationship

(vii) Role in the Introduction Stage

(viii) Customer Relationship

Importance to Customers

(i)Assist in the Identification of Needs

(ii) Up-to-date market information

(iii) Expert advice

(iv) Customers are enticed

Importance to Society

(i)Converts the most recent demand

(ii) Employment Possibilities

(iii) Job Opportunities

(iv) Salesperson Mobility

(v) Standardization of Products

3. Sales Promotion

Short-term incentives or other promotional activities that aim to pique a customer's interest
in purchasing a product are referred to as sales promotions.

Merits of Sales Promotion

• Attention Value: Using incentives, to attract people's attention.

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 • Useful in New Product Launch: Sales promotion tools persuade people to abandon
their usual purchasing habits and try new products.

• Synergy in Total Promotional Efforts: Sales promotion activities contribute to the

overall effectiveness of a company's promotional efforts.

Limitations of Sales Promotion

• Reflects Crisis: A company that frequently relies on sales promotion activities may
give the impression that it is unable to manage its sales and that its products are
unpopular.

• Damages Product Image: Customers may believe that the products are of poor
quality or are overpriced.

Commonly Used Sales Promotion Activities

• Product Combination: Including another product as a free gift with the purchase of
one.

• Rebate: Providing products at reduced prices.

• Instant draws and assigned gifts: Scratch a card and instantly win a prize with the
purchase of a TV, Tea, or Refrigerator, for example.

• Lucky Draw: a lucky draw coupon for free gasoline when a certain amount is
purchased, and so on.

• Useful Benefit: 'Purchase goods worth Rs 3000 and get a holiday package worth Rs
3000 free,' and so on.

• Full finance at 0%: Many marketers of consumer durables such as electronics,

automobiles, and so on offer simple financing schemes such as "24 easy instalments"
and so on.

• Contests: Holding competitive events that require the use of skills or luck, etc.

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 • Quantity Gift: Providing an extra quantity of the product, for example, "Buy three,
get one free."

• Refunds: Refunding a portion of the price paid by the customer upon presentation of
proof of purchase.

• Discount: Selling products at a lower price than the list price.

• Sampling: Provide free product samples to potential customers. Typically used at the
time of a product's introduction.

4. Publicity

Publicity occurs when favorable news about a product or service is broadcast in the mass
media. For example, if a manufacturer makes a breakthrough in the development of a car
engine and this news is covered by television, radio, or newspapers as a news item.

Features of Publicity

1. Uncompensated Communication:

o Publicity involves communication that is not paid for by the organization.

2. No Identified Sponsor:

o Publicity does not have a direct sponsor identified in the message, making it
appear more neutral or objective.

Public Relations (PR)

Public relations involve various strategies aimed at providing information to independent
media with the hope of gaining favorable coverage. It is also concerned with promoting
specific products, services, events, and the overall brand of an organization.

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 Role of Public Relations:

1. Press Relations:

Issuing press releases to announce events, performances, or other newsworthy items,

aiming to attract positive media coverage.

2. Product Promotion:

Drawing attention to new products through organized events such as news conferences,
seminars, and exhibitions.

3. Corporate Communication:

Promoting the organization’s image through newsletters, annual reports, brochures, and
other communication materials.

4. Lobbying:

Maintaining good relations with government officials and ministers, especially concerning
business and economic policies.

5. Counseling:

Advising management on general public issues and positioning the company favorably in
public discourse.

Maintaining Good Public Relations also Helps in Achieving the Following Marketing
Objectives:

(a) Building awareness

(b) Building Credibility

(c) Stimulates sales force

(d) Lowers promotion costs

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 Difference Between Advertising and Personal Selling

Advertising

• An impersonal mode of communication

• The transmission of standardised messages

• An inflexible mode of communication

• Broad reach

• Low cost per person reached

• Cover the market in a short time.

• Makes use of mass media

• Lacks direct feedback

• Effective in generating and maintaining interest

• Consumers are the primary target market

Personal Selling

• Personal form of communication

• Non-standardised messages

• Flexibility

• Limited reach

• High cost per person

• Extensive efforts to cover the entire market

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 • Makes use of sales personnel.

• Immediate and direct feedback

• Plays an important role in the awareness stage

• The Target market is comprised of industrial buyers

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