chapter

10
markeTing
Learning Objectives Where Do Companies Do Their Business?
In the Markets or in the Society?
After studying this chapter,
It is an undisputed fact that a company’s survival
you should be able to: does not depend upon its consumers alone, but a
diverse set of stakeholders like the government,
¾ explain the meaning of religious leaders, social activists, NGOs, media,
‘marketing’; etc. Hence, earning the satisfaction of these
segments is also as imperative as they add to the
¾ distinguish between power of the brand by word of mouth.
‘marketing’ and The social concern adds to the strength of the
‘selling’; brand. Corporates that embraced the deepest
social values, have been successful in building
¾ list out important powerful brand, and, eventually, robust customer
functions of marketing; relationship. The area of corporate social justice
fall under two broad categories. The issues such
¾ examine the role of as the nutrition of children, child care, old-age
marketing in the homes, amelioration of hunger, offering aid to
development of an those affected by natural calamities, etc. needing
economy in a firm, instant attention with humanitarian perspective,
to the society and to comes under the first category.
consumers; The issues that contribute to making society a
pleasant place to live in the long run, may be grouped
¾ explain the elements of under the second category. The issues which come
marketing-mix; under this category are health awareness and aid,
education, environmental protection, women’s
¾ classify products into employment and empowerment, preventing unjust
different categories; discriminations (on the basis of caste, community,
religion, ethnicity, race, and sex), eradication
¾ analyse the factors of poverty through employment, preservation
affecting price of a of culture, values, and ethics, contribution to
product; research, etc.
Procter and Gamble’s (P&G) philosophy is that it
¾ list out the types should lead the industry in implementing a global
of channels of environmental programme. P&G is one of the
distribution; and first companies in the world to actively study the
influence of consumer products on the environment
¾ explain the major and introduce concentrated products, recycled
tools of promotion, viz. plastic bottles, and refill packages to the industry.
P&G contributes to sustainable development
advertising, personal
and addresses environmental and social issues
selling, sales promotion connected with its products and services.
and publicity.
Source: Adapted from ‘Effective Executive’

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The term marketing has been described pricing are required. All these activities
by different people in different ways. are referred to as marketing activities.
Some people believe that marketing is Thus, ‘merchandising’, ‘selling’ and
same as ‘shopping’. Whenever they go distribution are all parts of a large
out for shopping of certain products or number of activities undertaken by
services, they describe it as marketing. a firm, which are collectively called
There are some other people who marketing.
confuse marketing with ‘selling’ and It may be noted here that marketing
feel that marketing activity starts is not merely a post- production
after a product or service has been activity. It includes many activities
produced. Some people describe it to that are performed even before goods
mean ‘merchandising’ or designing a are actually produced, and continue
product. All these descriptions may be even after the goods have been
partly correct but marketing is a much sold. For example, activities such
broader concept, which is discussed as identification of customer needs,
as follows: collection of information for developing
Traditionally, marketing has been the product, designing suitable product
described in terms of its functions or package and giving it a brand name are
activities. In this respect, marketing performed before commencement of
has been referred to as performance of the actual production. Similarly, many
business activities that direct the flow follow up activities are required for
of goods and services from producers maintaining good customer relations
to consumers. for procuring repeat sale.
As we know, most of the In modern times, emphasis is placed
manufacturing firms do not produce on describing marketing as a social
goods for their own consumption process. It is a process whereby people
but for the consumption or use exchange goods and services for money
by others. Therefore, to move or for something of value to them. Taking
the goods and services from the the social perspective, Phillip kolter has
producer to consumers, a number of defined marketing as, “a social process
activities, such as product designing by which individual groups obtain what
or merchandising, packaging, they need and want through creating
warehousing, transportation, offerings and freely exchanging products
branding, selling, advertising and and services of value with others”.

“Business is not financial science, it’s about trading, buying and selling. It’s about
creating a product or service so good that people will pay for it.”
— anta roddick
“Marketing takes a day to learn. Unfortunately it takes time to master.”
— Philip Kotler

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Understanding Market
In the traditional sense, the term ‘market’ refers to the place where buyers and sellers
gather to enter into transactions involving the exchange of goods and services. It is
in this sense that this term is being used in day to day language, even today. The
other ways in which this term is being used is in the context of a product market
(cotton market, gold or share market), geographic market (national and international
market), type of buyers (consumer market and industrial market) and the quantity
of goods transacted (retail market and wholesale market).
But in modern marketing sense, the term market has a broader meaning. It refers
to a set of actual and potential buyers of a product or service. For example, when a
fashion designer designs a new dress and offers it for exchange, all the people who
are willing to buy and offer some value for it can be stated to be the market for that
dress. Similarly, market for fans or bicycles or electric bulbs or shampoos refers to
all the actual and potential buyers for these products.

Thus, marketing is a social process Needs are basic to human beings

where in people interact with others, and do not pertain to a particular
in order to persuade them to act in product. Wants, on the other hand,
a particular way, say to purchase are culturally defined objects that are
a product or a service, rather than potential satisfiers of needs. In other
forcing them to do so. A careful analysis words, human needs shaped by such
of the definition shows the following factors as culture, personality and
important features of marketing: religion are called wants. A basic need
1. needs and Wants: The process for food, for example, may take various
of marketing helps individuals and forms such as want for dosa and rice
groups in obtaining what they need for a South Indian and chapatti and
and want. Thus, the primary reason or vegetables for a North Indian person.
motivation for people to engage in the A marketer’s job in an organisation
process of marketing is to satisfy some is to identify needs of the target
of their needs or wants. In other words, customers and develop products and
the focus of the marketing process is services that satisfy such needs.
on satisfaction of the needs and wants 2. creating a Market Offering: On
of individuals and organisations. the part of the marketers, the effort
A need is a state of felt deprivation involves creation of a ‘market offering.
or feeling of being deprived of Market offering refers to a complete
something. If unsatisfied, it leaves a offer for a product or service, having
person unhappy and uncomfortable. given features like size, quality, taste,
For example, on getting hungry, we etc; at a certain price; available at a
become uncomfortable and start given outlet or location and so on. Let
looking for objects that are capable of us say the offer is for a cell phone,
satisfying our hunger. available in four different versions,

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Customer Creating a Needs and Exchange
Value Market Wants mechanism
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offering 245
It is imp. to eat cone before doing o
Marketing
on the basis of certain features such offering the same by giving something
as size of memory, television viewing, in return. For example, a person
internet, camera, etc., for a given price, feeling hungry may get food by offering
say between ` 5,000 and ` 20,000 to give money or some other product
(depending on the model selected), or service in return to someone who
available for sale at say firm’s exclusive is willing to accept the same for food.
shops in and around all metropolitan In the modern world, goods are
cities in the country. A good ‘market produced at different places and are
offer’ is the one which is developed after distributed over a wide geographical
analysing the needs and preferences of area through various middlemen,
the potential buyers. involving exchanges at different levels
3. customer value: The process of distribution. exchange is, therefore,
of marketing facilitates exchange of referred to as the essence of marketing.
products and services between the For any exchange to take place, it is
buyers and the sellers. The buyers, important that the following conditions
however, make buying decisions on are satisfied:
their perceptions of the value of the (i) Involvement of at least two parties
product or service in satisfying their viz., the buyer and the seller.
need, in relation to its cost. A product (ii) each party should be capable
will be purchased only if it is perceived of offering something of value to
to be giving greatest benefit or value the other. For example, the seller
for the money. The job of a marketer, offers a product and the buyer,
therefore, is to add to the value of the money.
product so that the customers prefer it
(iii) each party should have the ability Legal
in relation to the competing products
to communicate and deliver the Studies
and decide to purchase it.
product or service. No exchange
4. exchange Mechanism: The process can take place if the buyers and
of marketing works through the sellers are not able to communicate
exchange mechanism. The individuals with each other or if they can not
(buyers and sellers) obtain what they deliver something of value to
need and want through the process of
the other.
exchange. In other words, the process
of marketing involves exchange of (iv) each party should have freedom to
products and services for money or accept or reject other party’s offer.
something considered valuable by (v) The parties should be willing to
the people. enter into transaction with each
exchange refers to the process other. Thus, the acceptance or
through which two or more parties rejection of the offer takes place on
come together to obtain the desired voluntary basis rather than on the
product or service from someone, bases of any compulsion.

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The points listed above are the standards of people and providing
necessary conditions for an exchange medication to the sick.
to take place. Whether the exchange
actually takes place or not depends on markeTing managemenT
the suitability of the act of exchange to Marketing management means
both the parties, whether it makes the management of the marketing function.
parties better off or at least not worse off. In other words, marketing management
Another important point to be refers to planning, organising, directing
noted is that Marketing is not merely a and control of the activities which
business phenomena or confined only facilitate exchange of goods and services
to business organisations. Marketing between producers and consumers or
activities are equally relevant to non- users of products and services. Thus
profit organisations such as hospitals, the focus of marketing management
schools, sports clubs and social and is on achieving desired exchange
religious organisations. It helps these outcomes with the target markets.
organisations in achieving their goals Taking a management perspective, the
such as spreading the message of term marketing has been defined as
family planning, improving the literacy “the process of planning and executing

What can be Marketed?

Physical Products : DVD player, Motor cycle, ipods, Cell phone, Footwear,
Television, refrigerator.
services : Insurance, Health Care, Business Process Outsourcing,
Security, easy Bill service, Financial Services
(Investment),Computer education, Online Trading.
ideas : Polio Vaccination, Helpage, Family Planning, Donation of
Blood (red cross), Donation of money on Flag Day (National
Foundation for Communal Harmony).
Persons : For election of Candidates for Certain Posts.
Place : ‘Visit Agra – ‘City of Love’, ‘Udaipur – ‘The City of Lakes’,
‘Mysore – The City of Gardens’, ‘When Orisa celebrates,
eleven the God Join In’.
events : Sports events (say Olympics, Cricket series), diwali mela,
fashion show, music concert, film festival, elephant race
(kerala Tourism).
information : Production packaging and distribution of information by
organisations such as by universities, research organisation,
providing information as market information (marketing
research agencies), technology information.

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the conception, pricing, promotion prospective buyers and persuade

and distribution of ideas, goods and them to buy these products.
services to create exchanges that satisfy Marketing management involves
individual and organisational goals” by performance of various functions
American Management Association, such as analysing and planning the
similarly Philip kotler has defined
marketing activities, implementing
Marketing management as the art and
marketing plans and setting control
science of choosing target markets
mechanism. These functions are
and getting, keeping and growing
to be performed in such a way that
customers through creating, delivering
and communicating superior customer organisation’s objectives are achieved
values of management. at the minimum cost.
A careful analysis of the definition Marketing management generally
reveals that the process of management is related to creation of demand.
of marketing involves: However, in certain situations, the
(i) Choosing a target market, say a manager has to restrict the demand.
manufacturer may choose to make For example, if there is a situation of
readymade garments for children ‘overfull demand’, i.e., the demand
up to the age of 5 years; being more than what the company
(ii) In respect of the target market can or want to handle, (like what
chosen, the focus of the process of the situation in our country was
management is on getting, keeping before the adoption of policies of
as well as growing the customers. liberalisation and globalisation, in
That means the marketer has to early 90’s, in most consumer products
create demand for his products be it automobiles or electronics goods
so that the target customers or other durable products. The job of
purchase the product, keep them marketing mangers, in these situations
satisfied with the firm’s products would be to find ways to reduce the
and also attract more customers demand temporarily by say reducing
to the firm’s products so that the the expenditure on promotion or
firm can grow; and increasing the prices. Similarly, if the
(iii) The mechanism for achieving demand is ‘irregular’, such as in case of
the objective is through creating, seasonal products, (say fans, woollen
developing and communicating clothes) the marketer’s job is to change
superior values for the customers. the time pattern of demand through
That means, the primary job such methods as providing short-term
of a marketing manager is to incentives, to the buyers. Thus, the
create superior values so that marketing management in not only
the customers are attracted to concerned with creating demand but
the products and services and with managing the demand effectively,
communicate these values to the as per the situation in the market.

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Marketing versus selling

Many people confuse ‘selling’ for ‘marketing’. They consider these two terms as one
and the same. Marketing refers to a large set of activities of which selling is just one
part. For example, a marketer of televisions, before making the sale, does a lot of
other activities such as planning the type and model of televisions to be produced,
the price at which it would be sold and selecting the distribution outlets at which the
same would be available, etc. In short, marketing involves whole range of activities
relating to planning, pricing, promoting and distributing the products that satisfy
customer’s needs.
The function of selling, on the other hand, is restricted to promotion of goods and
services through salesmanship, advertising, publicity and short-term incentives so
that title of the product is transferred from seller to buyer or in other words product
is converted into cash.
100%
chances of
markeTing managemenT coming goods started picking up but the
philosophies in exam number of producers were limited.
As a result, the demand exceeded
In order to achieve desired exchange the supply. Selling was no problem.
outcomes with target markets, it is Anybody who could produce the goods
important to decide what philosophy or was able to sell. The focus of business
thinking should guide the marketing activities was, therefore, on production
efforts of an organisation. An of goods. It was believed that profits
understanding of the philosophy or could be maximised by producing
the concept to be adopted is important at large scale, thereby reducing the
as it determines the emphasis or average cost of production. It was
the weightage to be put on different also assumed that consumers would
factors, in achieving the organisational favour those products which were
objectives. For example, whether the widely available at an affordable price.
marketing efforts of an organisation will Thus, availability and affordability
focus on the product—say designing of the product were considered to
its features etc or on selling techniques be the key to the success of a firm.
or on customer’s needs or the social Therefore, greater emphasis was
concerns. placed on improving the production
The concept or philosophy of and distribution efficiency of the firms.
marketing has evolved over a period
of time, and is discussed as follows. the Product concept
the Production concept As a result of emphasis on production
capacity during the earlier days, the
During the earlier days of industrial position of supply increased over
revolution, the demand for industrial period of time. Mere availability and
bhejo bacho
Philosophy Par S M S ko

The Societal
Production Product Selling Marketing Marketing Concept
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low price of the product could not advertising, personal selling and sales
ensure increased sale and as such the promotion were considered essential
survival and growth of the firm. Thus, for selling of products. Thus, the focus
with the increase in the supply of the of business firms shifted to pushing
products, customers started looking the sale of products through aggressive
for products which were superior in selling techniques with a view to
quality, performance and features. persuade, lure or coax the buyers
Therefore, the emphasis of the firms to buy the products. Making sale
shifted from quantity of production through any means became important.
to quality of products. The focus of It was assumed that buyers can be
business activity changed to bringing manipulated but what was forgotten
continuous improvement in the quality, was that in the long run what matters
incorporating new features, etc. Thus, most is the customer satisfaction,
product improvement became the key rather than anything else.
to profit maximisation of a firm, under
the concept of product orientation. the Marketing concept
Marketing orientation implies that
the selling concept focus on satisfaction of customer’s
With the passage of time, the marketing needs is the key to the success of
any organisation in the market.
environment underwent further
It assumes that in the long run
change. The increase in the scale of
an organisation can achieve its
business further improved the position
objective of maximisation of profit by
with respect to supply of goods,
identifying the needs of its present
resulting in increased competition
and prospective buyers and satisfying
among sellers. The product quality
them in an effective way. All the
and availability did not ensure the decisions in a firm are taken from
survival and growth of firms because the point of view of the customers. In
of the large number of sellers selling other words, customer’s satisfaction
quality products. This led to greater become the focal point of all decision
importance to attracting and persuading making in the organisation. For
customers to buy the product. The example, what product will be
business philosophy changed. It was produced, with what features and at
assumed that the customers would what price shall it be sold, or where
not buy, or not buy enough, unless shall it be made available for sale will
they are adequately convinced and depend on what do the customers
motivated to do so. Therefore, firms want. If the customers want features
must undertake aggressive selling like double door in a refrigerator or a
and promotional efforts to make separate provision for water cooler in
customers buy their products. The it, the organisation would produce a
use of promotional techniques such as refrigerator with these features, would

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price it at a level which the customers (i) I d e n t i f i c a t i o n o f m a r k e t o r

are willing to pay and so on. If all customer who are chosen as the
marketing decisions are taken with target of marketing effort.
this prospective, selling will not be any (ii) Understanding needs and wants
problem. It will automatically follow. of customers in the target market.
The basic role of a firm then is to (iii) Development of products or
‘identify a need and fill it’. The concept services for satisfying needs of
implies that products ad-services are the target market.
bought not merely because of their
(iv) Satisfying needs of target market
quality, packing or brand name,
better than the competitors.
but because they satisfy a specific
need of a customer. A pre-requisite (v) Doing all this at a profit.
for the success of any organisation, Thus, the focus of the marketing
therefore, is to understand and concept is on customer needs and the
respond to customer needs. customer satisfaction becomes the
To sum up, the marketing concept means to achieving the firms’ objective
is based on the following pillars: of maximising profit. The purpose of

Differences in the Marketing Management Philosophies

Tony's
Philosophies/ Production Product selling Marketing societal
chocolate
bases concept concept concept concept concept

1. Starting Factory Factory Factory Market Market,

Point Society

2. Main Quantity of Quality, existing Customer Customer

Focus product performance, product needs needs and
features of society’s
product well being

3. Means Availability Product Selling Integrated Integrated

and improve- and marketing marketing
affordability ments promoting
of product

4. Ends Profit through Profit through Profit Profit Profit

volume of product through through through
production quality sales customer customer
volume satisfaction satisfaction
and social
welfare

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marketing is to generate customer to consumers or users in such a way

value at a profit. that maximises the satisfaction of
customers’ needs. From the view point
the societal Marketing concept of management function, number of
activities are involved, which have
The marketing concept, as described
been described as below:
in the preceeding section cannot be
1. gathering and analysing Market Already
considered as adequate if we look explained
at the challenges posed by social information: One of the important
problems like environmental pollution, functions of a marketer is to gather
deforestation, shortage of resources, and analyse market information. This
population explosion and inflation. It is is necessary to identify the needs
so because any activity which satisfies of the customers and take various
human needs but is detrimental to the decisions for the successful marketing
interests of the society at large cannot of the products and services. This
be justified. The business orientation is important for making an analysis
should, therefore, not be short-sighted of the available opportunities and
to serve only consumers’ needs. It threats as well as strengths and
should also consider large issues of long- weaknesses of the organisation and
term social welfare, as illustrated above. help in deciding what opportunities
The societal marketing concept can best be pursued by it. For example,
holds that the task of any organisation rapid growth is predicted in several
is to identify the needs and wants areas in the Indian economy, say in
of the target market and deliver the the use of the Internet, market for cell
desired satisfaction in an effective phones and several other areas. Which
and efficient manner so that the long- of these areas a particular organisation
should enter, or in which area should
term well-being of the consumers and
it expand, requires a careful scanning
the society is taken care of. Thus,
of the strengths and weaknesses of the
the societal marketing concept is the
organisation, which is done with the
extension of the marketing concept
help of careful market analysis.
as supplemented by the concern for
With the growth of computers,
the long-term welfare of the society.
a new trend has emerged in the
Apart from the customer satisfaction,
collection of market information.
it pays attention to the social, ethical
More and more companies are using
and ecological aspects of marketing.
interactive sites on the internet, to
There are large number of such issues
gather customer views and opinions,
that need to be attended. before taking important business
decisions. One of the popular TV
FunCTions oF markeTing
News Channel (in Hindi) seeks viewers
Marketing is concerned with exchange choice (through SMS) on which of the
of goods and services from producers given four or five main news stories

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of the day would be broadcasted as and consistency in the output.

detailed story at the prime time, to Standardisation ensures the
ensure that the viewers get to listen buyers that goods conform to the
to the story of their own choice. predetermined standards of quality,
2. Marketing Planning: Another price and packaging and reduces
important activity or area of work of the need for inspection, testing and
a marketer is to develop appropriate evaluation of the products.
marketing plans so that the marketing Grading is the process of
objectives of the organisation can be classification of products into different
achieved. For example a marketer of groups, on the basis of some of its
colour TV, having 10 per cent of the important characteristics such as
current market share in the country, quality, size, etc. Grading is particularly
aims at enhancing his market share necessary for products which are not
to 20 per cent, in the next three years. produced according to predetermined
He will have to develop a complete specifications, such as in the case
marketing plan covering various of agricultural products, say wheat,
important aspects including the plan oranges, etc. Grading ensures that
for increasing the level of production, goods belong to a particular quality
promotion of the products, etc., and and helps in realising higher prices for
specify the action programmes to high quality output.
achieve these objectives. 5. Packaging and Labelling: Packaging
3.Product Designing and refers to designing and developing the
Development: Another important package for the products. Labelling
marketing activity or decision refers to designing and developing the
area relates to product designing label to be put on the package. The
and development. The design of label may vary from a simple tag to
the product contributes to making complex graphics.
the product attractive to the target Packaging and labelling have
customers. A good design can improve become so important in modern day
performance of a product and also marketing that these are considered
give it a competitive advantage in the as the pillars of marketing. Packaging
market. For example, when we plan is important not only for protection
to buy any product say a motorbike, of the products but also serves as
we not only see its features like cost, a promotional tool. Sometimes, the
mileage, but also the design aspects quality of the product is assessed by
like its shape, style, etc. the buyers form packaging. We have
4. standardisation and grading: seen that in the success of many of the
Standardisation refers to producing consumer brands in recent times such
goods of predetermined specifications, as Lays or Uncle Chips potato wafers
which helps in achieving uniformity Clinic Plus shampoos, and Colgate

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Toothpaste, etc., packaging has played Customer support services are very
an important role. effective in bringing repeat sales from
6. branding: A very important decision the customers and developing brand
area for marketing of most consumer loyality for a product.
products is whether to sell the product 8. Pricing of Product: Price of
in its generic name (name of the product refers to the amount of money
category of the product, say Fan, Pen, customers have to pay to obtain a
etc.) or to sell them in a brand name product. Price is an important factor
(such as Pollar Fan or rottomac Pen). affecting the success or failure of a
Brand name helps in creating product product in the market. The demand
differentiation, i.e., providing basis for for a product or service is related to
distinguishing the product of a firm its price. Generally lower the price,
with that of the competitor, which in higher would be the demand for the
turn, helps in building customer’s product and vice-versa. The marketers
loyality and in promoting its sale. have to properly analyse the factors
The important decision areas in determining the price of a product and
respect of branding include deciding take several crucial decisions in this
the branding strategy, say whether respect, including setting the pricing
each product will be given a separate objectives, determining the pricing
brand name or the same brand name strategies, determining the price and
will be extended to all products of the changing the prices.
company, say Phillips bulbs, tubes 9. Promotion: Promotion of products
and television or Videocon washing and services involves informing the
machine, television, and refrigerator. customers about the firm’s product,
Selection of the brand name plays its features, etc., and persuading
an important role in the success of a them to purchase these products.
product. The four important methods of
7. customer support services: promotion include advertising,
A very important function of the Personal Selling, Publicity and
marketing management relates Sales Promotion. A marketer has
to developing customer support to take several crucial, decisions in
services such as after sales services, respect of promotion of the products
handling customer complaints and services such as deciding the
and adjustments, procuring credit promotion budget, the promotion
services, maintenance services, mix, i.e., the combination of the
technical services and consumer promotional tools that will be use,
information. All these services aim the promotion budget, etc.
at providing maximum satisfaction 10. Physical Distribution: Managing
to the customers, which is the key to physical distribution is another
marketing success in modern days. very important function in the

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marketing of goods and services. 12. storage or Warehousing:

The two major decision areas under Usually there is a time gap between
this function include (a) decision the production or procurement of
regarding channels of distribution goods and their sale or use. It may
or the marketing intermediaries (like be because of irregular demand for
whole salers, retailers) to be used the products such as in the case
and (b) physical movement of the of woollen garments or raincoats,
product from where it is produced or there may be irregular supply
to a place where it is required by the because of seasonal production such
customers for their consumption or as in the case of agricultural products
use. The important decision areas (sugarcane, rice, wheat, cotton, etc.).
under physical distribution include In order to maintain smooth flow
managing inventory (levels of stock of products in the market, there
of goods), storage and warehousing is a need for proper storage of the
and transportation of goods from one products. Further, there is a need for
place to the other. storage of adequate stock of goods to
11. transportation: Transportation protect against unavoidable delays in
delivery or to meet out contingencies
involves physical movement of goods
in the demand. In the process of
from one place to the other. As
marketing, the function of storage
generally the users of products,
is performed by different agencies
particularly consumer products
such as manufacturers, wholesalers
are wide spread and geographically
and retailers.
separated from the place these are
produced, it is necessary to move
them to the place where it is needed
markeTing mix
for consumption or use, For example, The marketing mix consists of various
tea produced in Assam has to be elements, which have broadly been
transported not only within the state classified into four categories, popularly
but to other far off places like Tamil known as four Ps of marketing. These
Nadu, Punjab, Jammu and kashmir are: (i) Product, (ii) Price, (iii) Place,
and Haryana, rajasthan, where it is and (iv) Promotion. These are briefly
consumed. discussed as follows:
A marketing firm has to analyse 1. Product: Product means goods
its transportation needs after taking or services or ‘anything of value’,
into consideration various factors which is offered to the market for
such as nature of the product, cost sale. For example, Hindustan lever
and location of target market and
offers number of consumer products
take decisions in respect of mode
like toiletries (Close-Up toothpaste,
of transportation to be chosen and
Lifebuoy soap, etc.), detergent powder
other related aspects.
(Surf, Wheel), food products (Refined

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20rs price

MArkeTING
Cosco
promotion
255

Vegetable Oil); Tata offers Tata Steel, etc. These aspects are very important,
Trucks, Salt and a large number of particularly in the marketing of
other products; LG electronics offers consumer durable products (like
televisions, refrigerators, colour Automobiles, refrigerators, etc.). The
monitors for computers, etc; Amul important product decisions include
offers a number of food products deciding about the features, quality,
(Amul milk, ghee, butter, cheese, packaging, labelling and branding of
chocolates, etc.). the products.
The concept of product relates 2. Price: Price is the amount of money
to not only the physical product as customers have to pay to obtain
mentioned in the above examples but the product. In case of most of the
also the benefits offered by it from products, level of price affects the level
customer’s view point (for example of their demand. The marketers have
toothpaste is bought for whitening not only to decide about the objectives
teeth, strengthening gums, etc.). of price setting but to analyse the
The concept of product also include factors determining the price and fix a
the extended product or what is price for the firm’s products. Decisions
offered to the customers by way have also to be taken in respect of
of after sales services, handling discounts to customers, traders and
complaints, availability of spare parts credit terms, etc., so that customers

Marketing Mix: elements

Product Price
Product Mix Price Level
Product Quality Margins
New Product Pricing Policy
Design and Development Pricing Strategies
Packaging Price Change
Labelling
Branding
Place Promotion
Channel Strategy Promotion Mix
Channel Selection Advertising
Channel Conflict Personal Selling
Channel Cooperation Sales Promotion
Physical Distribution Publicity
Public relations

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perceive the price to be in line with the newspaper, magazines, the objections
value of the product. of customers, etc.).
3. Place: Place or Physical Distribution The success of a market offer will
include activities that make firm’s depend on how well these ingredients
products available to the target are mixed to create superior value for
customers. Important decision areas the customers and simultaneously
in this respect include selection of achieve their sale and profit objectives.
dealers or intermediaries to reach the Let us say a firm would like to achieve
customers, providing support to the necessary volume of sale at a cost that
intermediaries (by way of discounts, will permit a desired level of profit.
But so many alternative mixes can
promotional campaigns, etc.). The
be adopted by a firm to achieve this
intermediaries in turn keep inventory
objectives. The issue before a firm then
of the firm’s products, demonstrate
is to decide what would be the most
them to potential buyers, negotiate
effective combination of elements to
price with buyers, close sales and
achieve the given objectives.
also service the products after the
sale. The other decision areas relate
proDuCTs
to managing inventory, storage and
warehousing and transportation of From the customer’s point of view, a
goods from the place it is produced to product is a bundle of utilities, which
the place it is required by the buyers. is purchased because of its capability
4. Promotion: Promotion of products to provide satisfaction of certain need.
and services include activities that A buyer buys a product or service
communicate availability, features, for what it does for her or the benefit
it provides to her. There can be three
merits, etc., of the products to the
types of benefits a customer may
target customers and persuade them to
seek to satisfy from the purchase of a feel
buy it. Most marketing organisations, good
product, viz.,
undertake various promotional benefit
(i) functional benefits,
activities and spend substantial
amount of money on the promotion (ii) psychological benefits, and
of their goods through using number (iii) social benefits.
of tools such as advertising, personal For example, the purchase of a
selling and sales promotion techniques motorcycle provides functional utility
(like price discounts, free samples, of transportation, but at the same
etc.). A large number of decisions time satisfies the need for prestige and
are to be taken in each of the area esteem and provides social benefit by
specified above. For example, in the the way of acceptance from a group,
respect of advertising it is important to by riding a motorbike. Thus, all these
decide about the message, the media aspects should be considered while
to be used (example, print-media– planning for a product.

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Classification of Products 1. convenience Products: Those

consumer products, which are purchased
Products may broadly be classified
frequently, immediately and with least time
into two categories — (i) consumers’
products, and (ii) industrial products. and efforts are referred to as convenience
The consumer products may further goods. examples of such products
be classified into different groups, as are cigarettes, ice creams, medicines,
detailed below: newspaper, stationery items toothpaste
etc. These products have low unit-value
Consumer proDuCTs and are bought in small qualities.
2. shopping Products: Shopping
Products, which are purchased by
products are those consumer goods
the ultimate consumers or users for
where buyers devote considerable
satisfying their personal needs and
time, to compare the quality, price,
desires are referred to as consumer
products. For example, soap, edible style, suitability, etc., at several stores,
oil, eatables, textiles, toothpaste, fans, before making final purchase. Some
etc. which we use for our personal and of the examples of shopping products
non-business use are consumer goods. are clothes, shoes, jewellery, furniture,
We can classify the consumer product radio, television, etc.
into the following three categories as 3. speciality Products: Speciality
here under: products are those consumer goods

Products

Consumer Products Industrial Products

Durability Basis Shopping efforts Involved

Non- Durable Services Conven- Shopping Speciality

Durable ience Products Products
Products

Classification of Products

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Convenience Products

which have certain special features DuraBiliTy oF proDuCTs

because of which people make special
On the basis of their durability,
efforts in their purchase. These the consumer products have been
products are such, which have reached classified into three categories—
a brand loyalty of the highest order, Durable, Non-durable and Services.
with a significant number of buyers. 1 . n o n - d u r a b l e P r o d u c t s : The
The buyers are willing to spend a lot consumer products which are
of time and efforts on the purchase normally consumed in one or
of such products. For example, if few uses are called non-durable
there is a rare collection of artwork products. For example, products like
or of antiques, some people may be toothpaste, detergents, bathing soap
willing to spend a lot of shopping and stationary products etc. From
effort and travel long distance to buy the marketing point of view, these
such products. In our day-to-day life, products generally command a small
we see people going to a particular margin, should be made available
hair-cutting saloon or restaurant, or in many locations and need to be
heavily advertised.
a tailor. The demand for these goods
is relatively inelastic, i.e., even if the 2. Durable Products: Those tangible
price is increased, the demand does consumer products which normally
survive many years, for example,
not come down.

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Shopping Products

refrigerator, radio, bicycle, sewing inDusTrial proDuCTs

machine and kitchen gadgets are
Industrial products are those products,
referred to as durable products. which are used as inputs in producing
These goods are generally used for other products. The examples of such
a longer period, command a higher products are raw materials, engines,
per unit margin, require greater lubricants, machines, tools, etc. In
personal- selling efforts, guarantees other words, industrial products are
and after sales services, on the part meant for non-personal and business
of the seller. use for producing other products.
3. services: By services we mean The market for industrial products
those intangible activities, benefits consists of manufacturers, transport
agencies, banks and insurance
which are offered for sale, e.g., dry
companies, mining companies and
cleaning, watch repairs, hair cutting,
public utilities. Industrial products
postal services, services offered by a are those products, which are used as
doctor, an architect and a lawyer. inputs in producing other products.
The examples of such products are

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Speciality Products

raw materials, engines, lubricants, petroleum, iron ore), fish and lumber;
machines, tools, etc. In other words, and (b) manufactured material and
industrial products are meant for parts. These are again of two types –
non-personal and business use for component materials like glass, iron,
producing other products. plastic and component parts such as
The market for industrial products tyre, electric bulb, steering, and battery.
consists of manufacturers, transport (ii) capital items: These are such
agencies, banks and insurance goods that are used in the production
companies, mining companies and of finished goods. These include: (a)
public utilities. installations like elevators, mainframe
Computers, and (b) equipments like
Classification Hand Tools, Personal Computer, Fax
The industrial goods are classified Machines, etc.
into the following major categories: (iii) supplies and business services:
(i) Materials and Parts: These include These are short lasting goods and
goods that enter the manufacture’s services that facilitate developing or
products completely. Such goods managing the finished product. These
are of two types: (a) raw material: include: (a) maintenance and repair
including farm products like cotton, items like Paint, Nails, etc., and (b)
sugar cane, oil seed and natural operating supplies like Lubricant,
products such as minerals (say crude Computer Stationary, Writing Paper, etc.

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Industrial Goods

Materials and Capital Items Supplies and

Parts Business Services

raw Manufactured Installations equipments Maintanence Operating

Material Material and Parts and repair Supplies
items

Farm Natural Component Component

Products Products Material Parts

Classification of Industrial Goods

BranDing If products were sold by generic

names, it would be very difficult for the
One of the most important decisions
marketers to distinguish their products
that a marketer has to take in the area from that of their competitors. Thus,
of ‘product’ is in respect of branding. most marketers give a name to their
He has to decide whether the firm’s product, which helps in identifying and
products will be marketed under distinguishing their products from the
a brand name or a generic name. competitors’ products. This process of
Generic name refers to the name of giving a name or a sign or a symbol
the whole class of the product. For etc., to a product is called branding.
example, a book, a wristwatch, tyre, The various terms relating to branding
camera, toilet soap, etc. We know are as follows:
that a camera is a lens surrounded 1. brand: A brand is a name, term, sign,
by plastic or steel from all sides and symbol, design or some combination of
having certain other features such them, used to identify the products—
as a flash gun and so on. Similarly goods or services of one seller or group
book is a bunch of papers, which of sellers and to differentiate them from
are in a bound form, on which some those of the competitors. For example,
useful information about a subject some of the common brands are Bata,
is printed. Thus, all products having Lifebuoy, Dunlop, and Parker. Brand
these characteristics would be called is a comprehensive term, which has
by the generic name such as camera two components—brand name and
or book. brand mark.

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2. Brand Name: That part of a brand, (ii) A brand should suggest the
which can be spoken, is called a brand product’s benefits and qualities.
name. In other words, brand name is It should be appropriate to the
the verbal component of a brand. product’s function.
3. Brand Mark: That part of a brand (iii) A brand name should be distinctive.
which can be recognised but which is (iv) T he b rand nam e sho u ld b e
not utterable is called brand mark. It adaptable to packing or labelling
appears in the form of a symbol, design, requirements, to different
distinct colour scheme or lettering. advertising media and to different
Airlines
4. Trade Mark: A brand or part of a languages.
brand that is given legal protection (v) T h e b r a n d n a m e s h o u l d
is called trademark. The protection is be sufficiently versatile to
given against its use by other firms. ITC
accommodate new products, which
Thus the firm, which got its brand are added to the product line.
registered, gets the exclusive right for (vi) It should be capable of being
its use. In that case, no other firm can registered and protected legally.
use such name or mark in the country.
(vii) Chosen name should have staying
Though branding adds to the cost delululu
power i.e., it should not get out
e.g., to the cost of packaging, labelling, is solulu
of date.
legal protection, and promotion, it
provides several advantages to the
sellers as well as the consumers. Packaging
One of the most important developments
Characteristics of Good Brand Name affecting the business world in
Choosing the right brand name is recent years has been in the area of
not an easy decision. What makes packaging. Many products, which we
this decision important is the fact thought could never lend themselves
that once a brand name is chosen to packing because of their nature,
and the product is launched in have been successfully packed e.g.,
the market, changing the brand Pulses, Ghee, Milk, Salt, Cold Drinks,
name is very difficult. So, getting it etc. Packaging refers to the act of
right the first time is very essential. designing and producing the container
Following are some of the considerations, or wrapper of a product. Packaging
which should be kept in mind while plays a very important role in the
choosing a brand name. marketing success or failure of many
(i) The brand name should be short, products, particularly the consumer
easy to pronounce, spell, recognise non-durable products. In fact if one
Zara VS
and remember e.g., Ponds, VIP, makes an analysis of the reasons for
Dolce
the success of some of the successful
Gabana Rin, Vim, etc.

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products in the recent past, it can be product (e.g., a toothpaste tube, a

noted that packaging has played its match box, etc.).
due role. For example, it was one of 2. Secondary Packaging: It refers to
the important factors in the success of additional layers of protection that are
products like Maggie’s Noodles, Uncle kept till the product is ready for use,
Chips or Crax wafers. e.g., a tube of shaving cream usually
comes in a card board box. When
Levels of Packaging consumers start using the shaving
There can be three different levels of cream, they will dispose off the box
packaging. These are as below: but retain the primary tube.
1. Primary Package: It refers to the 3. Transportation Packaging: It refers
product’s immediate container. In to further packaging components
some cases, the primary package is necessary for storage, identification
kept till the consumer is ready to use or transportation. For example, a
the product (e.g., plastic packet for toothpaste manufacturer may send the
socks); whereas in other cases, it is goods to retailers in corrugated boxes
kept throughout the entire life of the containing 10, 20, or 100 units.

Levels of Packaging

2024-25
 H O I
Packaging is imp. to
save it from
BUSINESS shichan
STUDIES Rising standards of Self Service Outlets Innovational
264who says HOI
Health and Sanitation Opportunity

Importance of Packaging perception of customers about the

quality of the product. For example,
Packaging has acquired great
by looking at the package of a
significance in the marketing of goods
product say Paint or Hair Oil, one
and services, because of following
can make some guess about quality
reasons:
of the product contained in it.
(i) R i s i n g S t a n d a r d s o f H e a l t h
Tetra
and Sanitation: Because of the
pack Functions of Packaging
increasing standards of living
in the country, more and more As stated above, packaging performs a
people have started purchasing number of functions in the marketing
packed goods as the chances of of goods. Some of the important
adulteration in such goods are functions are as follows:
minimised. (i) Product Identification: Packaging
(ii) Self Service Outlets: The self- greatly helps in identification
branded fruit service retail outlets are becoming of the products. For example,
very popular, particularly in major Colgate in red colour, or Ponds
cities and towns. Because of cream jar can be easily identified
this, some of the traditional role by its package.
assigned to personal selling in (ii) Product Protection: Packaging
respect of promotion has gone to protects the contents of a product
packaging. from spoilage, breakage, leakage,
(iii) Innovational Opportunity: Some of pilferage, damage, climatic effect,
the recent developments in the etc. This kind of protection
area of packaging have completely is required during storing,
changed the marketing scene distribution and transportation
in the country. For example, of the product.
milk can now be stored for 4-5 (iii) Facilitating Use of the Product: The
days without refrigeration in size and shape of the package hunny
the recently developed packing should be such that it should be
materials. Similarly, in the area convenient to open, handle and
of pharmaceuticals, soft drinks, use for the consumers. Cosmetics,
etc., lots of new innovations have medicines and tubes of toothpastes
Packaging
come in respect of packaging. As a are good examples of this.
result, the scope for the marketing Ferrero
(iv) Product Promotion: Packaging is rocher
of such products has increased. also used for promotion purposes.
(iv) Product Differentiation: Packaging A startling colour scheme,
is one of the very important means photograph or typeface may be
of creating product differentiation. used to attract attention of the
The colour, size, material, etc., of people at the point of purchase.
package makes real difference in the Sometimes it may work even better
Packaging function -{Identification} Logo ka then done {use of the
Product} for their {protection}
Real intention 2024-25
{product promotion}
 C ko Law ne Pakda
Describe the Grading of Identification providing helps in
product and Products of the product information
MARkETING promotion of
specify its or brand required by 265 products
contents law

than advertising. In self-service ‘Complete Germicheck Formula’;

Galat function karte
hue pakda gaya
stores, this role of packaging the Package of a brand of Coconut
becomes all the more important. Oil describes the product as pure
coconut oil with Heena, Amla, Lemon
Labelling and specifies how these are good for
Hair. Thus, one of the most important
A simple looking but important task functions of labels is to describe the
in the marketing of goods relates to product, its usage, cautions in use,
designing the label to be put on the etc. and specify its contents.
package. The label may vary from a
simple tag attached to the product 2. Identification of the Product
(such as in case of local unbranded o r b r a n d : The other important
products like sugar, wheat, pulses, function performed by labels is
etc.) indicating some information to help in identifying the product
about the quality or price, to complex or brand. For example, the brand
graphics that are part of the package, name of any product, say Biscuits
like the ones on branded products. or Potato Chips imprinted on its
Lables are useful in providing detailed package helps us to identify, from
information about the product, its number of packages, which one is
contents, method of use, etc. The our favourite brand. Other common
various functions performed by a label identification information provided
are as follows: by the labels include name and
address of the manufacturer, net
1. Describe the Product and specify weight when packed, manufacturing
its contents: Let us look at some of the date, maximum retail price and
labels of the products used by us in our Batch number.
day to day life. The label on the package
3. Grading of Products: Another
of a local tea company describes the
important function performed by
company as ‘Mohini Tea Company, an
labels is to help grading the products
ISO 9001:200C Certified Company’; a
into different categories. Sometimes 3 Star
popular brand of Prickly Heat Powder,
marketers assign different grades to Ac VS
describes how the product provides
indicate different features or quality of 5 Star
relief from prickly heat and controls
the product. For example, a popular
bacterial growth and infection, giving
brand of Hair Conditioners comes in
caution forbidding its application on
different categories for different hair,
cuts and wounds. Package of fast food
say for ‘normal hair’ and for other
products like ready to eat Dosa, Idli
categories. Different type of tea is sold
or Noodles, describe the procedure of
by some brands under Yellow, red and
cooking these products; the Package
Green Label categories.
of a toothpaste brand lists the ‘Ten
Teeth and Gum Problems’, which 4. Helps in Promotion of Products:
the product claims to fight with its An important function of label is to

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aid in promotion of the products. A represent the sum of values that

carefully designed label can attract consumers exchange for the benefit
attention and give reason to purchase. of having or using the product and is
We see many product labels providing referred to as the price of the product.
promotional messages for example, Similarly, money paid for the services
the pack of a popular Amla Hair Oil such as fare for the transport service,
states, ‘Baalon mein Dum, Life mein premium for an insurance policy, and
Fun’. The label on the package of a fee to a doctor for his medical advise
brand of Detergent Powder says, ‘keep represent the price of these services.
cloth look good and your machine in Price may therefore be defined as the
top condition’. Labels play important amount of money paid by a buyer (or
role in sales promotional schemes received by a seller) in consideration
launched by companies. For example of the purchase of a product or
the label on the package of a Shaving a services.
Cream mentions, ‘40% Extra Free’ or Pricing occupies an important
package of a toothpaste mentioning, place in the marketing of goods and
‘Free Toothbrush Inside’, or ‘Save ` 15’. services by a firm. No product can
be launched without a price tag or
5. Providing Information Required at least some guidelines for pricing.
by Law: Another important function Pricing is often used as a regulator of
of labeling is to provide information the demand of a product. Generally,
required by law. For example, if the price of a product is increased,
packaged food articles must have list its demand comes down, and
of ingredients declaration regarding vice-versa.
Food vegetarian or non-vegetarian food Pricing is considered to be an
Pharmer additives and date of manufacturing effective competitive weapon. In the
or packing on the label. Such conditions of perfect competition,
information is required on processed most of the firms compete with each
foods, drugs and tobacco products. other on the basis of this factor. It is
In case of hazardous or poisonous also the single most important factor
material, appropriate safety-warning affecting the revenue and profits of a
need to be put on the label. firm. Thus, most marketing firms give
Thus, labels perform number high importance to the fixation of price
of important functions relating to for their products and services.
communicating with the potential
buyers and promoting the sale of Factors affecting Price
the products. Determination
There are number of factors which
Pricing
affect the fixation of the price of a
When a product is bought, some product. Some of the important factors
money is paid for it. This money in this regard are discussed as below:

2024-25
 Legal D E
Hai vo factors jo affect karte hai Price determination

Govt. and Marketing Product Pricing Utility and

MARkETING Extent of
Legal Methods used Cost objectives demand 267 competition in
Regulations the market
1. Product cost: One of the most Semi variable costs are those costs
important factor affecting price which vary with the level of activity
of a product or service is its cost. but not in direct proportion with it.
This includes the cost of producing, For example, compensation of a sales
distributing and selling the product. person may include a fixed salary of
The cost sets the minimum level or say ` 10,000 plus a commission of 5
the floor price at which the product per cent on sales. With an increase
may be sold. Generally all marketing in the volume of sales, the total
firms strive to cover all their costs, compensation will increase but not in
at least in the long run. In addition, direct proportion with the change in
they aim at earning a margin of profit the volume of sale.
over and above the costs. In certain Total Costs are the sum total of the
circumstance, for example, at the time fixed, variable and semi-variable costs
of introducing a new product or while for the specific level of activity, say
entering a new market, the products volume of sales or quantity produced.
may be sold at a price, which does not 2. The Utility and Demand: While
cover all the costs. But in the long run, the product costs set the lower limits supreme
a firm cannot survive unless at least of the price, the utility provided by the
all its costs are covered. product and the intensity of demand of
There are broadly three types of the buyer sets the upper limit of price,
costs: viz., Fixed Costs, Variable Costs which a buyer would be prepared
and Semi Variable Costs. Fixed costs to pay. In fact the price must reflect
are those costs, which do not vary with the interest of both the parties to the
the level of activity of a firm say with transaction—the buyer and the seller.
the volume of production or sale. For The buyer may be ready to pay up to
example, rent of a building or salary the point where the utility from the
product is at least equal to the sacrifice
of a sales manager remains the same
made in terms of the price paid. The
whether 1000 units or 10 units are
seller would, however, try to at least
produced in a week.
cover the costs. According to the law of
Those costs which vary in direct
demand, consumers usually purchase
proportion with the level of activity are
more units at a low price than at a
called variable costs. For example, the
high price.
costs of raw material, labour and power
are directly related with the quantity of 3. Extent of Competition in the
goods produced. Let us say, if the cost Market: Between the lower limit and
of wood for manufacturing one chair the upper limit where would the price
comes to ` 100 the cost of wood for 10 settle down? This is affected by the
chairs would be ` 1000. Obviously, nature and the degree of competition.
there will be no cost of wood if no chair The price will tend to reach the upper
is produced. limit in case there is lesser degree of

2024-25
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268

competition while under conditions of maximising profit in the short run and
free competition, the price will tend to in the long run. If the firm decides to
be set at the lowest level maximise profits in the short run, it
Competitors’ prices and their would tend to charge maximum price
anticipated reactions must be for its products. But if it is to maximise
considered before fixing the price its total profit in the long run, it would
of a product. Not only the price but opt for a lower per unit price so that it
the quality and the features of the can capture larger share of the market
competitive products must be examined and earn greater profits through
carefully, before fixing the price. increased sales.
Apart from profit maximisation, Reliance Jio
Martin 4. Government and Legal Regulations:
the pricing objectives of a firm may initial
Shrekli In order to protect the interest of public investment
against unfair practices in the field of include:
at
price fixing, Government can intervene (a) Obtaining Market Share Leadership: Rs150,000
and regulate the price of commodities. If a firms objective is to obtain crore
Government can declare a product larger share of the market; it will
as essential product and regulate its keep the price of its products at
price. For example, the cost of a drug lower levels so that greater number
manufactured by a company having of people are attracted to purchase
monopoly in the production of the the products;
same come to ` 20 per strip of ten (b) Surviving in a Competitive Market:
and the buyer is prepared to pay any If a firm is facing difficulties in
amount for it, say ` 200. In the absence surviving in the market because of
of any competitor, the seller may intense competition or introduction
be tempted to extort the maximum of a more efficient substitute
amount of ` 200 for the drug and by a competitor, it may resort
intervene to regulate the price. Usually to discounting its products or
in such a case, the Government does running a promotion campaign to
not allow the firms to charge such a liquidate its stock; and
high price and intervene to regulate the (c) A t t a i n i n g P r o d u c t Q u a l i t y
price of the drug. This can be done by Leadership: In this case, normally phones
the Government by declaring the drug higher prices are charged to cover
as essential commodity and regulating high quality and high cost of
its price. research and Development.
5 . P r i c i n g O b j e c t i v e s : Pricing Thus, the price of a firm’s products
objectives are another important factor and services is affected by the pricing
affecting the fixation of the price of a objective of the firm.
product or a service. Generally the 6. Marketing Methods Used: Price
objective is stated to be maximise the fixation process is also affected by
profits. But there is a difference in other elements of marketing such

2024-25
 MARkETING
269
Boat
as distribution system, quality of promoted, these must be made
salesmen employed, quality and available to customers at the right
amount of advertising, sales promotion place, in right quantity and at the right
efforts, the type of packaging, product time. For example, a person convinced
differentiation, credit facility and about the quality, etc. of a product, say,
customer services provided. For a detergent bar, wants to purchase the
example, if a company provides Physicalfree
Distribution Channels
same. He/She goes to a retail outlet and
home delivery, it has some of flexibility asks for the product. If that product is
in fixing prices. Similarly, uniqueness not available in that shop, he/she may
of any of the elements mentioned purchase some of the alternative brand
above gives the company a competitive available. This way a sure sale is lost
freedom in fixing prices of its products. because goods were not available at
the place where the customer wanted
Physical Distribution to purchase. Thus, it is an important
responsibility of the marketers to make
The fourth important element
the product physically available at a
of marketing mix is the physical
place where the customers would like
distribution of products and services.
Through this component of marketing them to buy. The physical handling
mix, the goods and services are made and movement of goods from place of
available at right place, at right time production to the place of distribution
to right people without change. is referred to as physical distribution,
Once goods are manufactured, which is a very important element of
packaged, branded, priced, and marketing mix.

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270

Physical distribution covers all customers to the manufacturers. A

the activities required to physically good physical distribution system
move goods from manufacturers to should provide for an accurate and
the customers. Important activities speedy processing of orders, in
involved in the physical distribution the absence of which, goods would
include transportation, warehousing, reach the customers late or in wrong
material handling, and inventory quantity or specifications. This would
control. These activities constitute result in customer dissatisfaction,
major components of physical with the danger of loss of business
distribution. and goodwill.
2. Transportation: Transportation is
Components of Physical the means of carrying goods and raw
Distribution materials from the point of production
The main components of physical to the point of sale. It is one of the major
distribution are explained as follows: elements in the physical distribution
1. Order Processing: In a typical of goods. It is important because
buyer-seller relationship, order unless the goods are physically
placement is the first step. Products made available, the sale cannot
flow from manufacturers to customers be completed.
via channel members while orders 3. Warehousing: Warehousing refers
flow in the reverse direction, from to the act of storing and assorting

Nothing Beats Word of Mouth in India

Nothing sways an Indian buyer’s choice more than a word of reassurance from
the people he knows. Even for the purchases like cars, mobile phones and home
loans, majority of the consumers in India rely on the references from their friends
and relatives while making their decisions.
The story is different in developed economies. Take the case of automobiles.
In markets like the US, Canada and Japan, more people are influenced by
conventional advertising by automobile companies, in developing markets like
India, Malaysia and Thailand it’s the neighbour or the colleague who tips the
scales one way or the other. “In case of luxury goods, the psyche of Indians has
always been different. Buying a car is a family decision, so it is only natural that
all the members of the family will talk to all the other users of a similar products,
who they know”, General Motors India director P Balendran said.
When the whole world is going crazy with Internet and mobile marketing, it is
interesting that for Indians it’s still conventional advertising and word of mouth
campaigns that sways their choices. Unlike in the West, Indians come from a very
closely-knit society where people get influenced by their peers, relatives and local
celebrities. People are more than willing to accept a brand if it’s endorsed by their
favourite superstar or is recommended by their close associates.

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products in order to create time level of inventory, higher will be the

utility in them. The basic purpose of level of service to customers but the
warehousing activities is to arrange cost of carrying the inventory will also
placement of goods and provide be high because lot of capital would be
facilities to store them. The need for tied up in the stock. Thus, a balance is
warehousing arises because there to be maintained in respect of the cost
may be difference between the time a and customer satisfaction.
product is produced and the time it is
required for consumption. Generally
Promotion
the efficiency of a firm in serving its
customers will depend on where these A company may produce a good quality
warehouses are located and where are product, price it appropriately and
these to be delivered. make it available at the selling points,
Generally larger the number which are convenient to customers. But
of warehouses a firm has, lesser in spite of all this, the product may not
would be the time taken in serving sell well in the market. There is a need
customers at different locations for developing proper communication
but greater would be the cost of with the market. In the absence of
warehousing and vice-versa. Thus communication, the customers would
the firm has to strike a balance not be able to know about the product
between the cost of warehousing and and how it can satisfy their needs and
the level of customer service. wants or may not be convinced about
For products requiring long- its utility and benefits.
term storage (such as agricultural Promotion refers to the use of
products) the warehouses are located communication with the twin objective
near production sites. This helps in of informing potential customers
minimising the charges on transportation about a product and persuading them
of the goods. On the other hand, the to buy it. In other words, promotion
products which are bulky and hard to is an important element of marketing
ship (machinery, automobiles) as well mix by which marketers makes use
as perishable products (bakery, meat, of various tools of communication
vegetables) are kept at different locations
to encourage exchange of goods and
near the market.
services in the market.
4. Inventory Control: Linked to
warehousing decisions are the
Promotion mix
inventory decisions which hold key
to success for many manufacturers, Promotion mix refers to combination
especially those where the per unit of promotional tools used by an
cost is high. A very important decision organisation to achieve its
in respect of inventory is deciding communication objectives. Various
about the level of inventory. Higher the tools of communication are used

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M C
A U
R ADVERTISING PERSONAL SELLING
S
k T
E O
PUBLIC RELATIONS SALES PROMOTION
T M
E E
R Promotion Mix R

Marketing Communications

by the marketers to inform and Advertising is perhaps the most

persuade customers about their commonly used tool of promotion. It is
firm’s products. These include: (i) an impersonal form of communication,
Advertising, (ii) Personal Selling, (iii) which is paid for by the marketers
Sales Promotion, and (iv) Publicity. (sponsors) to promote some goods
These tools are also called elements or service. The most common modes
of promotion mix and can be used of advertising are ‘newspapers’,
in different combinations, to achieve ‘magazines’, ‘television’, and ‘radio’.
the goals of promotion. For example, The important distinguishing features
consumer goods firms may use of advertising are as follows:
more of advertising through mass (i) Paid Form: Advertising is a paid
media while the industrial goods form of communication. That I
firms may be using more of personal is, the sponsor has to bear the
selling. What combination of these cost of communicating with the
elements is used by a firm will prospects.
depend upon various factors such
(ii) Impersonality: There is no direct
as nature of market, nature product,
face-to-face contact between P
the promotions budget, objectives
of promotion, etc. Let us first know the prospect and the advertiser.
about these elements in some details. It is therefore, referred to as
impersonal method of promotion.
Advertising creates a monologue
aDvertising
and not a dialogue.
We generally come across hundreds of (iii) Identified Sponsor: Advertising
advertising messages everyday, which is undertaken by some identified S
tell us about various products such ind ivid u al or com p an y , w ho
as toilet soaps, detergent powder, soft Officer
makes the advertising efforts and pasand hai
drinks and services such as hotels, also bears the cost of it.
insurance policies, etc.

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Marketing
expressed in economy 273

Merits of advertising of goods and services, it attracts

lot of criticism. the opponents of
advertising, as a medium of communi-
advertising say that the expenditure
cation, has the following merits: on advertising is a social waste as it
(i) Mass Reach: advertising is a adds to the cost, multiplies the needs
medium through which a large of people and undermines social
number of people can be reached values. the proponents, however,
over a vast geographical area. argue that advertising is very useful
For example, an advertisement as it increases the reach, brings the
message placed in a national daily pay unit cost of production down and
reaches lakhs of its subscribers. adds to the growth of the economy. it
(ii) Enhancing Customer Satisfaction is therefore, important to examine the
and Confidence: a d v e r t i s i n g major criticisms against advertising
creates confidence amongst and see the extent to which these are
prospective buyers as they feel true. this is taken up as follows:
more comfortable and assured 1. Adds to Cost: the opponents of
about the product quality and advertising argue that advertising
hence feel more satisfied. unnecessarily adds to the cost of Pepsi
(iii) E x p r e s s i v e n e s s : W i t h t h e product, which is ultimately passed
developments in art, computer on to the buyers in the form of high
designs, and graphics, advertising prices. an advertisement on tV, for
has developed into one of a few seconds, for example, costs the
the most forceful medium of marketers several lakhs of rupees.
communication. With the special Similarly an advertisement in print
effects that can be created, even media say in a newspaper or a magazine
simple products and messages can costs the marketers a large amount of
money. the money spent adds to the
look very attractive.
cost, which in an important factor in
(iv) Economy: advertising is a very fixation of the price of a product.
economical mode of communication true, advertisement of a product
if large number of people are to be costs lot of money but it helps to
reached. Because of its wide reach, increase the demand for the product
the overall cost of advertising
as large number of potential buyers
gets spread over numerous
come to know about the availability
communication links established.
as a result the per-unit cost of of the products, its features, etc. and
reach comes low. are persuaded to buy it. the increased
demand leads to higher production,
which brings with it the economies
ObjectiOns tO Advertising of scale. as a result, the per unit cost
though advertising is one of the most of production comes down as the
frequently used medium of promotion total cost is divided by larger number

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of units. Thus, the expenditure on of tooth or ‘feelings of freshness’ in

advertisement adds to the total cost competing brands of toothpaste that
but the per unit cost comes down, it is sometimes confusing to us as to
which in fact lessens the burden which one to buy.
of consumers rather than adding The supporters of advertisement,
to it. however, argue that we are all rational
2. Undermines Social Values: Another human beings who make our decisions
important criticism of advertising for purchase of products on factors
is that it undermines social values such as price, style, size, etc. Thus the
and promotes materialism. It breeds buyers can clear their confusion by
discontent among people as they come analysing the information provided on
to know about new products and feel the advertisements and other sources
dissatisfied with their present state before taking a decision to purchase
of affairs. Some advertisements show a product. However, this criticism
new life styles, which don’t find social cannot be completely overruled.
approval. 4. Encourages Sale of Inferior
This criticism is not entirely true. Products: Advertising does not
Advertisement in fact helps buyers distinguish between superior and
by informing them about the new inferior products and persuade
products, which may be improvement people to purchase even the inferior
over the existing products. If the products.
buyers are not informed about these In fact superiority and inferiority
products, they may be using inefficient depends on the quality, which is
products. Further, the job of an a relative concept. The desired
advertisement is to inform. The final level of quality will depend on the
choice to buy or not to buy anyway economic status and preferences of
rests with the buyers. They will buy if the target customers. Advertisements
the advertised product satisfies some sell products of a given quality and
of their needs. They may be motivated the buyers will buy if it suits their
to work harder to be able to purchase requirements. No advertisement
these products. should however, make false claim
3. Confuses the Buyers: Another about the quality of a product. If a
criticism against advertisement is that firm makes a false claims it can be
so many products are being advertised prosecuted for the same.
which makes similar claims that the
buyer gets confused as to which one Personal selling
is true and which one should be relied
upon. For example, we may note similar Personal selling involves oral
claims of whiteness or stain removing presentation of message in the form
abilities in competing brands of of conversation with one or more
detergent powder or claims of whiteness prospective customers for the purpose

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educaptain says

Not in syllabus
of making sales. It is a personal form role of Personal selling
of communication. Companies appoint
Personal selling plays a very important
salespersons to contact prospective
role in the marketing of goods and
buyers and create awareness services. The importance of personal
about the product and develop selling to businessmen, customers and
product preferences with the aim of society may be described as below.
making sale.
Importance to Businessmen
Features of Personal selling
Personal selling is a powerful tool for
(i) Personal Form: In personal selling creating demand for a firm’s products
a direct face-to-face dialogue takes and increasing their sale. The importance
place that involves an interactive of personal selling to a business
relationship between the seller and organisation may be described as follows:
the buyer. (i) Effective Promotional Tool: Personal
(ii) Development of Relationship: Personal selling is very effective promotional
selling allows a salesperson to tool, which helps in influencing
develop personal relationships the prospects about the merits of
with the prospective customers, a product and thereby increasing
which may become important in its sale.
making sale. (ii) Flexible Tool: Personal selling is
more flexible than other tools of
Merits of Personal selling promotion such as advertising and
sales promotion. It helps business
(i) Flexibility: There is lot of flexibility persons in adopting their offer in
in personal selling. The sales varying purchase situations.
presentation can be adjusted
(iii) Minimises Wastage of Efforts:
to fit the specific needs of the
Compared with other tools of
individual customers.
promotion, the possibility of
(ii) Direct Feedback: As there is direct wastage of efforts in personal
face-to-face communication in selling is minimum. This helps
personal selling, it is possible the business persons in bringing
to take a direct feed back from economy in their efforts.
the customer and to adapt the (iv) Consumer Attention: There is an
presentation according to the opportunity to detect the loss of
needs of the prospects. consumer attention and interest
(iii) Minimum Wastage: The wastage in a personal selling situation.
of efforts in personal selling can This helps a business person in
be minimised as company can successfully completing the sale.
decide the target customers before (v) Lasting Relationship: Personal
making any contact with them. selling helps to develop lasting
ankur aggarwal
F L A M E

Flexible Lasting Customer Minimises Effective

tool Relationship Attention Wastage of Promotional
Efforts tool
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relationship between the sales identifying their needs and wants

persons and the customers, which and in knowing how these can best
is very important for achieving the be satisfied.
objectives of business. (ii) L a t e s t M a r k e t I n f o r m a t i o n :
(vi) Personal Rapport: Development of Customers get latest market
personal rapport with customers information regarding price
increases the competitive strength changes, product availability
of a business organisation. and shortages and new product
(vii) Role in Introduction Stage: Personal introduction, which help them in
taking the purchase decisions in
selling plays very important role
a better way.
in the introduction stage of a new
product as it helps in persuading (iii) Expert Advice: Customers get
customers about the merits of the expert advice and guidance in
product. purchasing various goods and
services, which help them in
(viii) Link with Customers: Sales people making better purchase.
play three different roles, namely
(iv) Induces Customers: Personal selling
persuasive role, service role and
induces customers to purchase
informative role, and thereby link
new products that satisfy their
a business firm to its customers. needs in a better way and thereby
helps in improving their standards
Importance to Customers of living.
This role of personal selling becomes
more important for the illiterate and Importance to Society
rural customers, who do not have Personal selling plays a very productive
many other means of getting product role in the economic progress of a
information. society. The more specific benefits of
The customers are benefited by personal selling to a society are as
personal selling in the following follows:
ways: (i) Converts Latest Demand: Personal
(i) Help in Identifying Needs: Personal selling converts latest demand into
selling helps the customers in effective demand. It is through this

Personal Selling
‘Most people think ‘selling’ is the same as ‘talking’. But the most effective
salespeople know that listening is the most important part of their job.’
—Roy Bartell
‘You don’t close a sale, you open a relationship if you want to build a long-term,
successful enterprise.’
—Patricia Fripp

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ankur
aggarwal Denji ME Chor
Converts latest Product Mobility of Employment Career
demand Standardisation Sales People opportunities
Marketing
opportunities
277

cycle that the economic activity in efforts such as advertising and

the society is fostered, leading to personal selling.
more jobs, more incomes and more Companies use sales promotion tools
products and services. that is how specifically designed to promote to
economic growth is influenced by customers (e.g., free samples, discounts,
personal selling. and contests), tradesmen or middlemen
(ii) Employment Opportunities: Personal (e.g., cooperative advertising, dealer
selling offers greater income and discounts and dealer incentives and
employment opportunities to the contests) and to sales person (e.g.,
unemployed youth. bonus, salesmen contests, special
(iii) Career Opportunities: Personal offers). Sales promotions include only
selling provides attractive career those activities that are used to provide
with greater opportunities for short term incentives to boost the sales
advancement and job satisfaction of a firm.
as well as security, respect, variety,
interest and independence to Merits of Sales Promotion
young men and women. (i) Attention Value: Sales promotion
(iv) Mobility of Sales People: there is a doesn't
activities attract attention of
greater degree of mobility in sales divert
the people because of the use of
people, which promote travel and people by
incentives.
tourism in the country. snatching
(v) Product Standardisation: Personal
(ii) Useful in New Product Launch: their
selling increases product
Sales promotion tools can be very attention
effective at the time of introduction towards
standardisation and uniformity
of a new product in the market. it their new
in consumption pattern in a
diverse society. induces people to break away from energy
their regular buying behaviour product
and try the new product.
SaleS Promotion
(iii) Synergy in Total Promotional
Sales promotion refers to short- Efforts: Sales promotion activities
term incentives, which are designed are designed to supplement the
to encourage the buyers to make personal selling and advertising
immediate purchase of a product or efforts used by a firm and add to
service. these include all promotional the over all effectiveness of the
efforts other than advertising, promotional efforts of a firm.
personal selling and publicity, used
by a company to boost its sales. Sales Limitation of Sales Promotion
promotion activities include offering
cash discounts, sales contests, free gift (i) Reflects Crisis: If a firm frequently
offers, and free sample distribution. rely on sales promotion, it may
Sales promotion is usually undertaken give the impression that it is
to supplement other promotional unable to manage its sales

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or that there are no takers of Commonly used sales Promotion

its product. activities
(ii) Spoils Product Image: Use of sales
1. Rebate: Offering products at special
promotion tools may affect the
image of a product. the buyers prices, to clear off excess inventory.
may start feeling that the product example, a car manufacturer’s offer
is not of good quality or is not to sell a particular brand of car at a
appropriately priced. discount of ` 10,000, for a limited period.

Sales Promotion

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2. Discount: Offering products at draw coupon on purchase of easy

less than list price. Example, a shoe undergarment and win a car offer.
company’s offer of ‘Discount Up to 8.Usable Benefit: Purchase goods
50%’ or a shirt marketer’s offer of worth ` 3000 and get a holiday
‘50+40% Discount’. package worth ` 3000 free’ or ‘Get
3. Refunds: refunding a part of price a Discount Voucher for Accessories
paid by customer on some proof of on Apparel Purchase of ` 1000 and
purchase, say on return of empty foils or above.’
wrapper. This is commonly used by food 9. Full finance @ 0%: Many marketers
product companies, to boost their sales. of co nsu m er d u ra b les su ch a s
4. Product combinations: Offering Electronic goods, automobiles etc
another product as gift along with the offer easy financing schemes such as
purchase of a product, say offer of a ‘24 easy instalments, Eight Up Front
pack of ½ kg of rice with the purchase and 16 To Be Paid as Post Dated
of a bag of Aatta (wheat flour), or Cheques’. However, one should be
‘Get 128 kB Memory Card Free with careful about the file charges, which
a Digicam’ or Buy a TV of 25+ and sometimes is nothing but interest
Get a Vacuum Cleaner Free’ or ‘100 recovered in advance.
Gm Bottle of Sauce Free With 1 kg 10. Sampling: Offer of free sample of
Detergent.’ a product, say a detergent powder or
tooth paste to potential customers at
5. Quantity gift: Offering extra
the time of launch of a new brand.
quantity of the product commonly
used by marketer of toiletry products. 11.Contests: Competitive events
For example, a shaving cream’s offer of involving application of skills or bournvita
luck, say salving a quiz or answering 's little
‘40% extra’ or A Hotel’s offer of “Take
some questions. champ
a 2 Night 3 Days Package At the Hotel
contests
and Get an extra Night Stay At Just
` 500” or ‘Buy 2 Get 1 Free’ offer of a Public relations
marketer of shirts. Managing public opinion of an When a
company
6. Instant Draws and Assigned organisation is an important task which want to
Gift: For example, ‘Scratch a Card’ or can be performed by the marketing inprove
‘Burst a Cracker’ and instantly win a department. The business needs to their image
refrigerator, Car, T-shirt, Computer, communicate effectively to customers, before
with the purchase of a TV. suppliers, and dealers, since they are public

7. Lucky Draw: For example, the offer instrumental in increasing the sales
of a bathing soap to win a gold coin and profit. Besides those who come into
direct contact with the organisation or
on lucky draw coupon for free petrol
its products, there are other members
on purchase of certain quantity of
of the general public whose voice
petrol from given petrol pump or lucky

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or opinion is equally important. like an emergency to improve public

This public may be interested in the image. The public relations department
company and its product and have then has to do something drastic so
an impact on the business ability to that damage to company’s images
achieve its objectives. Thus, it becomes is controlled and minimised. They
imperative to manage public opinion also advise top management to adopt
and the company’s relation with the certain programmes which will add
public on a regular basis. Therefore, to their public image and ensure that
public relations involve a variety of negative publicity does not take place
programmes designed to promote or at all.
protect a company’s image and its
individual products in the eyes of the Role of Public Relations
public. The role of public relations can
The business relates with a be discussed with respect to the
number of groups including suppliers, functions which the department
shareholders, intermediaries, activist performs. Public relations itself is an
groups, and the government. For important tool in the hands of the
example, active support of middlemen marketing department, which can be
is needed if the firm wants to survive used to the advantage of the business.
in a competitive selling environment. The public relations department
Similarly, consumer activist groups performs five functions:
need to be satisfied because they can 1. Publicity: P u b l i c i t y i s s i m i l a r tesla
impose restriction on the sales of the to advertising, in the sense
firm’s products directly by urging that it is a non-personal form
customers to refrain from buying them of communication. However, as
or through the imposition of laws. Most against advertising it is a non-
organisations, business or otherwise paid form of communication.
nowadays, have a separate department Publicity generally takes place
to manage public relations. They may when favourable news is presented
also utilize the services of any outside in the mass media about a
public relations agency. product or service. For example,
Their main task is to disseminate if a manufacturer achieves a
information and build goodwill about breakthrough by developing a
the business. Concrete steps are to be car engine, which runs on water
taken to monitor the attitude of the instead of petrol, and this news
general public and generate positive is covered by television or radio
publicity. They are especially useful or newspapers in the form of a
when there is negative publicity about news item. It would be termed
the company or its products. At that as publicity because the engine
time, the situation has to be tackled manufacturer would benefit from

public relations department says to public,

PR Chod Le Churan
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such dissemination of information rely on these materials to reach

about its achievement by the media and influence their target markets.
but would not bear any cost for Speeches by the company’s
the same. Thus, the two important executives at a meeting of trade
features of publicity are that: associations or trade fairs can
(i) Publicity is an unpaid form of really boost the company’s image.
communication. It does not involve even interviews with TV channels
any direct expenditure by the and responding to queries from the
marketing firm; and media go a long way in promoting
(ii) There is no identified sponsor for public relations.
the communication as the message 4. Lobbying: The organisation has
goes as a news item. Income
to deal with government officials tax
In publicity, as the information and different ministers in charge of return
is disseminated by an independent corporate affairs, industry, finance
source, e.g., the press in the form of with respect to policies relating
news stories and features, the message to business and the economy.
has more credibility than if that comes The government also seeks to
as a sponsored message in advertising. maintain a healthy relationship
2. Press release: Information about with associations of commerce
the organisation needs to be and industry and solicits the
DU
presented in a positive manner opinion of major stakeholders while
Press release
in the press. Generating news formulating industrial, telecom,
requires skill in developing and taxation policies, etc. The public
researching a story and getting the relations department then has to
media to accept press releases is a be really proactive in promoting
difficult task. The public relations or decoding regulations that affect
department is in contact with the them.
media to present true facts and a 5. C o u n s e l l i n g : T h e p u b l i c Mark
correct picture about the company. Zucketburg
relations department advises the
Otherwise news can get distorted Speech
management on general issues
if taken from other sources. which affect the public and the
3. C o r p o r a t e c o m m u n i c a t i o n : position the company would like
The image of the organisation to the take on a particular issue.
needs to be promoted through The company can build goodwill
communicating with the public by contributing money and time to
and the employees within the certain causes like environment,
organisation. This is usually done wildlife, children’s rights, education,
with the help of newsletter, annual etc. Such cause-related activities
reports, brochures, articles and help in promoting public relations
audio-visual materials. Companies and building goodwill.

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The major differences between advertising and personal selling are as follows:

Difference between Advertising and Personal Selling

S. Advertising Personal Selling

No.

1. Advertising is an impersonal form of Personal selling is a personal form of

communication. communication.
2. Advertising involves transmission of In personal selling, the sales talk is
standardised messages, i.e., same adjusted keeping view customer’s
message is sent to all the customers background and needs.
in a market segment.
3. Advertising is inflexible as the message Personal selling is highly flexible. as
can’ t be adjusted to the needs of the the message can be adjusted.
buyer.
4. It reaches masses, i.e., a large number Only a limited number of people can
of people can be approached. be contacted because of time and cost
considerations.
5. In advertising the cost per person The cost per person is quite high in
reached is very low. the case of personal selling.
6. Advertising can cover the market in a Personal selling efforts take a lot of
short time. time to cover the entire market.
7. Advertising makes use of mass media Personal selling makes use of sales
such television, radio, newspaper, and staff, which has limited reach.
magazines.
8. Advertising lacks direct feedback. Personal selling provides direct and
Marketing research efforts are needed immediate feed back. Sales persons
to judge customers’ reactions to come to know about the customers’
advertising. reactions immediately.
9. Advertising is more useful in creating Personal selling plays important role
and building interest of the consumers at the awareness stage of decision
in the firms products. making.
10. Advertising is more useful in marketing Personal selling is more helpful in
to the ultimate consumer’s who are selling products to the industrial
large in numbers. buyers or to imtermediaries such as
dealers and retailers who are relatively
few in numbers.

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pr also helps in Achieving objective of ac pe fal rakhna
Building
Building Stimulates Lowers Promotion
Marketing
Awareness costs
credibility Sales force 283
in addition, maintaining good (c) Stimulates sales force: it becomes
public relations also helps in achieving easier for the sales force to deal
the following marketing objectives: with the retailers and convince
(a) B u i l d i n g a w a r e n e s s : P ub lic dealers if they have already heard
a new phone's relations department can place about the product in the news
(feature) leaks stories and dramatise the product before it is launched. retailers
in the media. this will build and dealers also feel it is easier
marketplace excitement before to sell the product to the ultimate
the product reaches the market consumer.
or media advertising takes (d) L o w e r s p r o m o t i o n c o s t s :
place. this usually creates a Maintaining good public relations
favourable impression on the costs much less than advertising
target customer. and direct mail. However, it
(b) Building credibility: if news about requires a lot of communication
a product comes in the media and interpersonal skills to
whether print or electronic it always convince the media to give space
lends credibility and people believe or time for the organisation and
in the product since it is in the news. its product.

Key Terms
Marketing trade Mark Labelling
Marketing Management Marketing Mix advertising
Channels of Distribution Physical Distribution Publicity
Consumer Product Sales Promotion Promotion Mix
Convenience Product Shopping Product Personal Selling
Public relations Brand

SUMMARY
in the traditional sense, the term ‘market’ refers to the place where buyers
and sellers gather to enter into transactions involving the exchange of goods
and services. But in modern marketing sense, it refers to a set of actual and
potential buyers of a product or service.

Marketing: the term marketing has been described as performance of business

activities that direct the flow of goods and services from producers to consumers.

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Marketing is not merely a post-production activity. It includes many activities

that are performed even before goods are actually produced and continue even
after the goods have been sold.

Functions of Marketing: The important functions of marketing include

Gathering and Analysing Market Information, Marketing Planning, Product
Designing and Development, Standardisation and Grading, Packaging and
Labelling, Branding, Customer Support Services, Pricing of Products, Promotion,
Physical distribution, Transportation, Storage or Warehousing.

Role of Marketing: By adopting marketing orientation, an organisation whether

profit making or non-profit making, can achieve its goals in the most effective
manner. Also marketing acts as a catalyst in the economic development of a
country and helps in raising the standards of living of people.

Marketing Mix: is a set of marketing tools that the firm uses to pursue its
marketing objectives in a target market. The variables or elements of marketing
mix have been classified in to four categories, popularly known as four Ps
of marketing viz., Product, Price, Place and Promotion. These elements are
combined to create an offer.

Product In common parlance, the word ‘product’, is used to refer only to the
physical or tangible attributes of a product. In marketing, product is a mixture
of tangible and intangible attributes, which are capable of being exchanged for a
value, with ability to satisfy customer needs. It is anything that can be offered to
a market to satisfy a want or need. Products may broadly be classified into two
categories—industrial products and consumers’ products. Products, which are
purchased, by the ultimate consumers or users for satisfying their personal needs
and desires are referred to as consumer products. On the basis of shopping efforts
involved, the products are classified as Convenience Product, Shopping Products
and Speciality Products. On the basis of their durability, consumer products have
been classified into categories—Durable, Non-durable, and Services.
Those activities, benefits or satisfactions, which are offered for sale, e.g., dry
cleaning, watch repairs, hair cutting, are called services.
Industrial products are those products, which are used as inputs in producing
other products. These are broadly classified in to (i) Materials and Parts,
(ii) Capital Items, and (iii) Supplies and Business Services.

Packaging: The act of designing and producing the container or wrapper

of a product is referred as packaging. There can be three different levels of
packaging viz., Primary package, Secondary packaged, Transport package.

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Packaging performs a number of functions in the marketing of goods. Some

of the important functions, include Product identification; Product protection;
Facilitating the use of the product and Promotion of goods and services.

Labelling: A simple looking but important task in the marketing of goods

relates to designing the label to be put on the package. The label may vary
from a simple tag attached to the product to complex graphics that are part
of the package. The most important functions of labels include i) describing
the product ii) help in identifying the product or brand; iii) help in grading the
products into different categories; and aids in promotion of the products.

Pricing: Price may be defined as the amount of money paid by a buyer or

received by a seller in consideration of the purchase of a product or service.
Generally, if the price of a product is increased, its demand comes down, and
vice-versa. Pricing is considered to be an effective competitive weapon. It is also
the single most important factor affecting the revenue and profits of a firm.
The factors affecting price determination are (i) Product Cost (ii) The Utility
and Demand (iii) Competition (iv) Government and Legal regulations and (v)
Marketing Methods Used.

Physical Distribution: There are two important decisions relating to this aspect-
one regarding physical movement of goods and two, regarding the channels.
Physical Distribution covers all the activities required to physically move
goods from manufacturers to the customers. The main component of physical
distribution are (i) Order Processing; (ii) Transportation; (iii) Warehousing; and
(iv). Inventory Control: Just-in-Time-Inventory.

Promotion: Promotion refers to the use of communication with the twin

objective of informing potential customers about a product and persuading
them to buy it. There are four major tools, or elements of promotion mix,
which are — (i) Advertising, (ii) Personal Selling, (iii) Sales Promotion, and (iv)
Publicity. These tools are used in different combinations to achieve the goals
of promotion.

Advertising is the most commonly used tool of promotion. It is an impersonal

form of communication, which is paid for by the marketers (Sponsors) to
promote some goods or service. The merits of advertising, as a medium of
communication, include (i) Mass reach; (ii) Enhancing customer satisfaction
and confidence; (iii) Expressiveness; and (iv) Economy.
The limitations of advertising are that it is (i) less forceful (ii) lacks Feedback (iii)
inflexibility (iv) low effectiveness. The most common Objections to Advertising

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are that it (i) adds to cost; (ii) undermines social Values; (iii) confuses the buyers;
and (iv) encourages sale of Inferior Products.
Most of the criticisms against advertising are not fully true. Advertising is
therefore considered an essential function of marketing.

Personal selling involves oral presentation of message in the form of

conversation with one or more prospective customers for the purpose of making
sales. Personal Selling plays important role for the business persons as well
as for the society.

Sales Promotion refers to short-term incentives, which are designed to

encourage the buyers to make immediate purchase of a product service.
These include promotional efforts other than advertising, personal selling
and publicity, used by a company to boost its sales. Commonly used Sales
Promotion Activities include rebate, Discount, refunds, Product Combinations,
Quantity Gift, Instant Draws and Assigned Gift, Lucky Draw, Usable Benefit,
Full Finance @ 0%, sampling, and contests.
Publicity is similar to advertising, in the sense that it is a non-personal form
of communication. However, as against advertising it is a non-paid form
of communication. In publicity, as the information is disseminated by an
independent source. However, an important limitation of publicity is that as a
medium of promotion, it is not within the control of a marketing firm.

Public Relations: It is about managing organisations image in the eyes of all

stake holders. It has five components publicity, public relations, corporate
communication, lobbying and counselling.

EXERCISES

Very Short Answer Type

1. State any two advantages of branding to marketers of goods and services?
2. How does branding help in differential pricing?
3. What is the societal concept of marketing?
4. Enlist the advantages of packaging of consumer products.
5. List five shopping products purchased by you or your family during the
last few months.

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6. A marketer of colour TV having 20% of the current market share of the

country aims at enhancing the market share to 50 per cent in next three
years. For achieving this objective he specified an action programme. Name
the function of marketing being discussed above. (Ans. Marketing planning.)

Short Answer Type

1. What is marketing? What functions does it perform in the process of
exchange of goods and services? Explain.
2. Distinguish between the product concept and production concept of
marketing.
3. Product is a bundle of utilities. Explain.
4. What are industrial products? How are they different from consumer
products? Explain.
5. Distinguish between convenience product and shopping product.
6. Describe the functions of labeling in the marketing of products.
7. Discuss the role of intermediaries in the distribution of consumer
non-durable products.
8. Define advertising? What are its main features? Explain.
9. Discuss the role of ‘sales promotion’ as an element of promotion mix.
10. As the marketing manager of a big hotel located at an important
tourist destination, what societal concerns would be faced by you and
what steps would you plan to take care of these concerns? Discuss.
11. What information is generally placed on the package of a food product?
Design a label for one of the food products of your choice.
12. For buyers of consumer durable products, what ‘customer care services’
would you plan as a manager of a firm marketing new brand of motorcycle.
Discuss.

Long Answer Type

1. What is marketing concept? How does it help in the effective marketing
ofgoods and services.
2. What is marketing mix? What are its main elements? Explain.
3. How does branding help in creating product differentiation? Does it help
in marketing of goods and services? Explain.
4. What are the factors affecting determination of the price of a product or
service? Explain.

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5. Explain the major activities involved in the physical distribution of

products.
6. ‘Expenditure on advertising is a social waste.’ Do you agree? Discuss.
7. Distinguish between advertising and personal selling.
8. Explain the factors determining the choice of channel of distribution.

Project Work
Identify a product or service for a new launch for attracting potential
consumers for your product. Prepare a project file to—
(a) Advertise the product or service selected.
(b) Write a Press Release for the launch of new product or service.
(c) Publicity of your product as a PR tool.

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