COMPREHENSIVE REVISION NOTES:

PRINCIPLES OF MARKETING (DSC-3.3)

I. UNIT 1: FOUNDATIONS OF MARKETING AND THE
ENVIRONMENT
1.1. Introduction to Marketing: Concept, Scope, and Importance
Marketing is fundamentally defined as a social process through which individuals and groups
acquire what they require and desire by engaging in the creation, offering, and free exchange of
valuable products and services with others. This process is managerial in nature, involving
planning, implementation, and control of programs designed to achieve profitable exchanges
that result in long-term relationship building.

1.1.1. Core Concepts of Marketing

The philosophy of marketing rests on a foundational understanding of key concepts that drive
exchange behavior:
1. Needs, Wants, and Demands: The process begins with the recognition of human
requirements. Needs are the basic states of deprivation (e.g., food, safety, belonging). Wants
are the manifestation of those needs, shaped by an individual’s culture and personality (e.g.,
needing food but wanting a specific ethnic meal). Demands are wants that are supported by
purchasing power and willingness to buy. Marketers engage in activities to increase demand by
strategically making products more attractive, affordable, and readily available to the consumer
base.
2. Products (Offerings): Products encompass any tangible good, service, idea, place, or
person that can be offered to a market to satisfy a need or want. The definition of a product,
therefore, extends beyond the physical object to include intangible services and concepts.
3. Value, Satisfaction, and Quality: Value is a central determinant of choice, representing the
customer’s assessment of the product’s capacity to satisfy their needs relative to the costs
incurred. Satisfaction is the degree to which a product’s perceived performance matches the
buyer’s expectations. Quality is directly linked to satisfaction; high quality generally leads to
greater customer retention and higher perceived value.
4. Exchange, Transactions, and Relationships: Exchange is the act of obtaining a desired
object from someone by offering something in return, forming the basis of marketing. A
transaction is the unit of measure in exchange—a trade of values between two parties. Modern
marketing focuses heavily on developing and maintaining long-term, mutually beneficial
relationships with customers and other key stakeholders.
5. Markets: Historically, a market was viewed simply as a physical location where goods and
services were exchanged. In contemporary marketing, a market is conceptualized as the set of
all actual and potential buyers of a particular product or service.
1.1.2. Scope and Functions of Marketing

The comprehensive scope of marketing activities can be delineated through the essential
functions that an organization must perform to facilitate the flow of goods and services from
producer to consumer. These functions demonstrate that marketing permeates the entire
business operation, extending far beyond advertising or sales.
1. Functions of Exchange: These functions involve the negotiation and final execution of the
transfer of ownership. They include Buying and Assembling, which refers to acquiring and
gathering the necessary raw materials and components, and Selling, which involves the crucial
steps of finding buyers, informing them, negotiating prices, and transferring title.
2. Functions of Physical Supply: These activities manage the physical movement and storage
of tangible products. They comprise Transportation, ensuring products reach their intended
destinations efficiently, and Storage and Warehousing, providing timely inventory management
to match production with consumption cycles.
3. Functions of Facilitation: These functions support the exchange and physical supply
processes by standardizing quality, gathering information, and providing financing. Crucial
facilitating functions include Product Planning and Development, Marketing Research to
understand customer needs, Standardization and Grading to ensure consistent quality, and,
importantly, Packaging, Branding, Sales Promotion, and Financing.

1.2. Marketing Philosophies (Concepts)

Marketing philosophies, or concepts, guide organizational efforts and determine the relative
emphasis placed on customer satisfaction, sales volume, and production efficiency. These
philosophies represent an evolutionary thought process, culminating in a highly customer- and
societal-centric approach.
1. Production Concept: This philosophy holds that consumers will favor products that are
widely available and inexpensive. Management thus concentrates on achieving high production
efficiency, low costs, and mass distribution. The risk inherent here is known as "Marketing
Myopia," where the focus becomes internal operations rather than actual customer needs.
2. Product Concept: This asserts that consumers prefer products that offer the most quality,
performance, and features. Strategy focuses on continuous product improvement. This
orientation can also suffer from myopia if managers become enamored with their product
without rigorously verifying market demand for the superior features.
3. Selling Concept: This philosophy dictates that consumers will not purchase enough of the
firm’s products unless the firm undertakes large-scale selling and promotion efforts. It is often
utilized for "unsought goods" (like insurance). The danger is that the focus is on generating high
transaction volumes rather than building profitable, long-term customer relationships.
4. Marketing Concept: This is arguably the most crucial modern philosophy, asserting that
achieving organizational goals depends on knowing the needs and wants of target markets and
delivering the desired satisfactions more effectively and efficiently than competitors. At its very
core is the satisfaction of the customer.
5. Societal Marketing Concept: This requires marketers to balance three considerations in
setting their marketing policies: consumer satisfaction, company profits, and society’s long-run
well-being. It moves beyond pure customer need fulfillment to address ethical, environmental,
and social concerns, reflecting a responsible approach to business.
The prevailing business perspective demonstrates a significant shift from an internal focus
(Production, Product, Selling) toward an external, relationship-oriented approach (Marketing and
Societal Concepts). The early philosophies prioritized the firm’s output or sales volume. The
Marketing Concept fundamentally introduced the necessity of customer satisfaction as the
primary driver of organizational profit. This transformation highlights a fundamental business
principle: short-term profits derived from high-pressure sales (Selling Concept) are far less
sustainable than long-term profitability achieved through building enduring customer
relationships, which requires balancing value delivery with ethical and social responsibility.

1.3. Services Marketing and the Extended Marketing Mix (7 Ps)

The Marketing Mix refers to the combination of strategic tools utilized by a firm to execute its
marketing plan and achieve its marketing objectives. Initially codified as the 4 Ps, this framework
was later extended to 7 Ps to effectively address the unique challenges presented by services
marketing.

1.3.1. The Traditional 4 Ps (Product Marketing)

The 4 Ps framework is the cornerstone of any marketing strategy:

1.​ Product: The offering itself, encompassing all features, quality levels, branding, and
packaging. Marketers must consider the intended user and their motivation for acquiring
the item.
2.​ Price: The monetary amount customers must pay, or are willing to pay, for the offering.
Determining a competitive and profitable price point is frequently a critical challenge.
3.​ Place (Placement): Relates to distribution—the channel and location where the product
or service can be accessed and used by the customer. For certain businesses, such as
restaurants, the physical location is paramount.
4.​ Promotion: Activities that communicate the merits of the product and persuade target
customers to buy. This includes advertising, public relations, sales promotion, and
personal selling, defining how frequently and where communication materials appear.

1.3.2. The Extended Marketing Mix (7 Ps) for Services

Services possess characteristics (intangibility, variability, inseparability, perishability) that render

the 4 Ps inadequate. The extended marketing mix adds three essential elements—People,
Process, and Physical Evidence—to enable a cohesive strategy that accounts for the interactive
and experiential nature of services.
1.​ People: This element encompasses all human actors who play a part in service delivery
and thus influence the buyer's perceptions, including the firm’s employees, management,
and even other customers. For services, the quality of the staff (their training, appearance,
and behavior) is inseparable from the service outcome.
2.​ Process: This refers to the systematic procedures, mechanisms, and flow of activities by
which a service is delivered. A well-designed process ensures consistency, reliability, and
efficiency in service delivery, crucial factors in managing the inherent variability of
services. Examples include the flow of a delivery service or the seamless user experience
(UX) of an application.
3.​ Physical Evidence: Since services are intangible, customers look for tangible cues to
evaluate quality and brand experience. Physical evidence involves providing these
tangible cues—such as the environment where the service is delivered (store layout,
design), staff appearance, digital artifacts (receipts), customer testimonials, and even the
 physical product packaging. This helps customers "see" what they are buying and
reinforces the brand experience.
The 7 Ps framework is instrumental for executing a strategy in a material way, particularly
guiding decisions regarding service delivery, pricing, promotion, and distribution. The elements
of the mix are highly interdependent in delivering value. For instance, achieving a premium
value proposition (reflected in a high Price) must be continuously supported by the excellence of
the service staff (People), the efficiency and reliability of the delivery Process, and the
reinforcing nature of the Physical Evidence (e.g., store ambience). If the delivery process is
flawed, it compromises the entire value proposition constructed by the other elements.

1.4. Analyzing the Marketing Environment

Effective marketing strategy demands continuous monitoring of the environment to identify
emerging opportunities and potential threats. The environment is typically categorized into the
Micro environment (close to the company) and the Macro environment (larger societal forces).

1.4.1. The Micro Environment

The micro-environment comprises forces directly interacting with and close to the company,
influencing its ability to serve customers. These factors are somewhat more controllable or
adaptable by the company.
1.​ The Company: Internal departments (R&D, Finance, Operations) and management
structures influence marketing decisions. Marketing strategy must align with overall
corporate objectives and secure resources efficiently.
2.​ Suppliers: Provide essential resources for producing goods and services. Reliability and
cost stability of suppliers are critical; shortages, quality control issues, or price hikes can
directly disrupt the firm’s ability to satisfy customer demand.
3.​ Marketing Intermediaries: Entities that assist the company in promoting, selling, and
distributing its products. These include resellers (wholesalers, retailers), physical
distribution firms, and marketing services agencies.
4.​ Customers: The firm must study its customer markets closely, which include consumer
markets, business markets, reseller markets, government markets, and international
markets. The nature of the customer market dictates the selection of appropriate
marketing tactics.
5.​ Competitors: Organizations offering similar or substitute products. Marketers must
analyze competitive strategies to gain and maintain strategic advantage and position their
offerings effectively.
6.​ Publics: Any group that has an actual or potential impact on the organization's ability to
achieve its objectives (e.g., media publics, financial publics, local communities, and the
general public).

1.4.2. The Macro Environment

The macro-environment consists of large, external societal forces that influence the entire
micro-environment and are generally beyond the direct control of the organization.
1.​ Demographic Factors: The study of human populations, including age, gender, location,
density, occupation, and size. Shifts in demographic structures (e.g., the youth bulge in
developing economies or aging populations in developed nations) create profound
 changes in market size and composition, directly informing target market selection.
2.​ Economic Factors: Elements that affect consumer purchasing power and spending
patterns. Key indicators include disposable income levels, savings rates, credit availability,
and the overall health of the economy (e.g., recession, inflation). These factors determine
the feasibility of various pricing and product strategies.
3.​ Natural Forces: Involve the physical environment and natural resources used as inputs
or affected by marketing activities. Trends such as increasing resource scarcity, rising
costs of energy, and greater environmental pollution concern are forcing companies to
adopt sustainable practices and comply with environmental regulations. This area
underpins the rise of "Conscious Consumerism".
4.​ Technological Factors: Forces creating new technologies, new products, and new
market opportunities. Rapid technological change mandates continuous investment in
R&D and flexibility in marketing operations, particularly concerning digital platforms and
distribution channels.
5.​ Political-Legal Factors: Laws, government agencies, and pressure groups that restrict
and influence organizations and individuals. Regulations covering product quality, safety
standards, competition, and advertising require marketers to operate within defined legal
boundaries.
6.​ Socio-Cultural Factors: Institutions and forces that shape a society’s basic values,
preferences, perceptions, and behaviors. These factors can dictate consumption
patterns—for instance, the strong emphasis on family values and collective
decision-making in Indian society influences purchasing decisions and requires tailored
marketing campaigns.
The essential difference between the two environments lies in scope and control. The micro
environment is narrow and focused on the company’s direct relationships, allowing for quicker
adaptation to changes (e.g., switching suppliers). The macro environment is broad, external,
and uncontrollable, requiring long-term strategic adjustments based on monitoring larger trends.
Both environments must be systematically evaluated during marketing strategy development.
Macro forces establish the broader strategic limits and opportunities for the entire industry, while
the micro environment determines the firm’s tactical capacity to successfully navigate or
capitalize on those forces.

II. UNIT 2: CONSUMER BEHAVIOUR AND MARKET

SELECTION (STP)
2.1. Understanding Consumer Behaviour and Decision Making
Consumer behaviour is the study of how individuals, groups, or organizations select, buy, use,
and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.
Understanding this process is vital for designing effective marketing programs.

2.1.1. Stages in the Consumer Buying Decision Process

The consumer typically moves through a sequence of five distinct stages when making a
purchase decision. This model provides a framework for marketers to strategically intervene at
each point.
1. Problem Recognition: The process begins when the buyer perceives a difference between
their actual state and a desired state, recognizing a need for a product or service. This
recognition can be triggered internally (e.g., feeling thirsty) or externally (e.g., seeing an
advertisement for a new gadget).
2. Information Search: Following need recognition, the consumer actively gathers data to learn
more about potential solutions. Information sources are diverse, ranging from personal contacts
(friends, family), commercial sources (advertising, salespeople), public sources (mass media,
consumer reports), and experiential sources (handling or testing the product).
3. Evaluation of Alternatives: At this critical stage, the prospective buyer has developed a set
of evaluative criteria for what they seek in a product (e.g., quality, price, features). The
consumer weighs the various choices against these criteria and comparable alternatives to
narrow down the consideration set.
4. Purchase Decision: The consumer reaches the point of actual acquisition. The decision
involves not only the product choice but also decisions about the where, when, and how of the
purchase. This decision can be influenced by others' attitudes or unexpected situational factors,
such as a sudden financial change or stock-outs.
5. Post-purchase Evaluation: After using the product, the consumer assesses their
experience. Satisfaction occurs if the product performance meets or exceeds expectations,
leading to potential repeat purchases and positive word-of-mouth. Dissatisfaction leads to
unfavorable attitudes, complaints, and abandonment of the brand.

2.1.2. Factors Influencing Consumer Buying Decisions

Consumer behaviour is driven by complex forces that can be broadly categorized into cultural,
social, personal, and psychological factors.
1. Cultural Factors: These provide the most fundamental influence on a person's wants and
behavior, encompassing the basic values, perceptions, and beliefs learned from family and
society.
2. Social Factors:
●​ Family: In societies like India, the family is an exceptionally strong external influence,
often acting as a unit of collective decision-making for household purchases. Marketers
frequently design products and promotions tailored specifically to meet the needs and
dynamics of the family unit, often linking them to festive seasons and social gatherings.
●​ Reference Groups and Social Networks: Consumers’ purchasing decisions are
significantly shaped by the opinions and behaviors of groups they belong to or aspire to
belong to. The analysis of modern consumption patterns indicates that social media and
creator-led commerce play a dominant role in shaping purchase decisions and
establishing trust, acting as powerful external information and influence channels.
3. Personal Factors: These include life cycle stage, occupation, economic situation, and
lifestyle. Economic factors are particularly influential, encompassing income, disposable income,
credit availability, and general economic conditions (such as inflation or recession), which define
what consumers can afford.
4. Psychological Factors: These internal drivers include motivation, perception, learning, and
beliefs and attitudes. Modern consumers are increasingly driven by values-based
decision-making. Today’s buyers show preference for brands that align with environmental and
ethical awareness (Conscious Consumerism), making purpose-driven marketing a competitive
necessity. Furthermore, consumers increasingly crave personalization and unique experiences
(the Experience Economy), making relevance and tailored interactions crucial determinants of
satisfaction and long-term loyalty, often outweighing mere price considerations.

2.2. Market Selection: Segmentation, Targeting, and Positioning (STP)

The Segmentation, Targeting, and Positioning (STP) model is a scientific, strategic marketing
approach that allows businesses to identify where they can provide unique value, personalize
communications, and ultimately achieve profitability. It ensures the marketing effort is focused,
relevant, and personalized for the chosen audience.

2.2.1. Market Segmentation

Market Segmentation is the process of dividing a broad consumer market into smaller, distinct
subgroups or segments that share similar characteristics, needs, or behaviors. The aim is to
create homogeneous groups within a heterogeneous market.
Criteria for Effective Segmentation (MASDA): To be useful, segments must meet specific
criteria:
1.​ Measurable: The size, purchasing power, and key characteristics of the segment must be
quantifiable.
2.​ Accessible: The market segment must be effectively reached and served through
available distribution and communication channels.
3.​ Substantial: The segment must be large, durable, and profitable enough to warrant
separate marketing efforts.
4.​ Differentiable (Heterogeneous): The segments must be conceptually distinguishable
and respond differently to the various marketing mix elements.
5.​ Actionable (Responsive): The company must be able to design and implement effective
programs to attract and serve the segment.
Bases for Segmenting Consumer Markets: Marketers utilize five primary categories of
variables to segment consumer markets :
1.​ Geographic Segmentation: Dividing the market based on physical location (e.g., region,
city size, density, climate). The rise of "Regional Powerhouses" and hyper-local trends in
markets like India necessitates focusing on regional languages, culture, and identity.
2.​ Demographic Segmentation: Dividing the market based on measurable population
variables such as age, gender, income, occupation, education, religion, and family size.
3.​ Psychographic Segmentation: Dividing consumers based on psychological criteria such
as lifestyle, personality characteristics, and social class.
4.​ Behavioral Segmentation: Dividing buyers based on their knowledge of, attitude toward,
use of, or response to a product. Key behavioral variables include:
○​ Benefits Sought: Segmenting by the primary reason or motivation for purchase,
such as economy, convenience, or prestige.
○​ User Status: Non-users, potential users, first-time users, or regular users.
○​ Readiness Stage: Segmenting based on how informed and interested people are in
buying the product.
○​ Loyalty Status: Dividing markets by the degree of brand or company loyalty
exhibited by consumers.

2.2.3. Market Targeting

Targeting involves evaluating the attractiveness of each segment and selecting one or more
segments to enter. The chosen segment(s) should be the optimal fit for the company’s
resources and objectives.
Targeting Strategies:
1.​ Undifferentiated (Mass) Marketing: Targeting the entire market with a single offer,
ignoring segment differences.
2.​ Differentiated (Segmented) Marketing: Targeting several market segments and
designing distinct offers for each (e.g., a major food chain offering a diverse menu for
families and young adults).
3.​ Concentrated (Niche) Marketing: Focusing on securing a large share of one or a few
small segments or niches.
4.​ Micromarketing (Local/Individual): Tailoring products and marketing programs to suit
the needs of specific individuals or local groups, which is becoming highly relevant in the
context of hyper-local marketing growth.

2.2.4. Product Positioning

Positioning is the final step in the STP sequence, involving activities aimed at creating a clear,
distinctive, and desirable image (or place) for the product relative to competing products in the
minds of the target consumer.
Bases for Positioning: The strategic approach defines the unique value proposition.
1.​ Attribute-based Positioning: Positioning based on a specific, unique product feature or
selling point.
2.​ Benefit-based Positioning: Emphasizing how the product solves a customer problem or
delivers value (e.g., greater efficiency).
3.​ Competitor-based Positioning: Explicitly showing how the product is better than a rival’s
offering.
4.​ Price-based Positioning: Offering superior value for money compared to competitors.
5.​ Prestige-based Positioning: Positioning the product to grant customers a status boost
or align it with a high-end image.
6.​ Consumer-based Positioning: Focusing on how perfectly the product aligns with a
specific psychological or functional consumer need.
The entire STP model functions as an integrated strategic continuum. The criteria and variables
used during segmentation (e.g., dividing the market by prestige/psychographics) directly
constrain and dictate the selection of an effective positioning strategy (e.g., using
prestige-based positioning). This strategic link ensures that the perceived value proposition
aligns flawlessly with the core motivations and characteristics of the targeted audience,
guaranteeing focused and relevant marketing communications.

III. UNIT 3: PRODUCT DECISIONS AND NEW

PRODUCT DEVELOPMENT
3.1. Product Decisions: Concept, Levels, and Product Mix
3.1.1. Product Concept and Classification

From the manufacturer's point of view, a product is a collection of ingredients, features, and
benefits offered to the market. However, a comprehensive definition must also incorporate the
consumer’s perspective (what need it satisfies) and the perspective of relevant publics (e.g.,
regulatory standards like food quality). Success depends on satisfying all three perspectives.
Product Classification: Products are generally classified into:
●​ Consumer Products: Purchased by the final consumer for personal consumption (e.g.,
convenience, shopping, specialty, unsought products).
●​ Industrial Products: Purchased for further processing or for use in conducting a
business (e.g., materials, capital items).

3.1.2. Levels of Product (The Five-Level Model)

Marketers differentiate their offerings by layering value onto the core product. Understanding
these five levels helps position the product strategically and create a comprehensive value
package.
1. Core Benefit (The Fundamental Need): This is the most basic level, representing the
underlying fundamental need or service the customer is truly buying. For instance, the core
benefit of purchasing a car is transportation or mobility.
2. Basic Product: This level converts the core benefit into a tangible product, including
essential features and functionality necessary for it to function. For a car, this includes the
engine, wheels, and basic structure.
3. Expected Product: These are the attributes and conditions buyers normally expect when
purchasing the product. This level defines the minimum market standards for reliability and
performance, such as a car’s basic safety features and acceptable fuel efficiency. Meeting these
expectations builds baseline customer satisfaction.
4. Augmented Product: This level includes extra services, benefits, and features that exceed
customer expectations, providing a critical source of competitive differentiation. Examples for a
car include a premium sound system, extended warranties, or complimentary maintenance
services.
5. Potential Product: This encompasses all possible augmentations and transformations the
product could undergo in the future. This level is crucial for anticipating competitive shifts and
planning long-term product development and innovation.

3.1.3. Product Mix Decisions

The product mix (or product assortment) is the complete set of all product lines and items a
seller offers. It is described by four critical dimensions:
●​ Width: The number of different product lines carried by the company.
●​ Length: The total number of items or specific products within all the lines.
●​ Depth: The number of versions (e.g., flavors, sizes, models) offered of each product in
the line.
●​ Consistency: How closely related the various product lines are in end use, production
processes, distribution requirements, or other ways.

3.2. Designing Value: Product-Mix, Branding, Packaging, and Labeling

Effective product design focuses on generating value through five vital elements: aesthetics,
usability, functionality, user experience (UX), and engineering. Prioritizing user experience, in
particular, has become a crucial element of differentiation.

3.2.1. Branding Decisions

Branding is vital as it creates a unique product identity, allows for differentiation from
competitors, communicates value, builds loyalty, and enables the company to command
premium prices.
●​ Significance: A strong brand simplifies the purchasing process for consumers by
signaling quality and reducing perceived risk.
●​ Qualities of a Good Brand Name: Should be easy to pronounce and remember,
distinctive, suggestive of the product's benefits, and legally protectable.
●​ Brand Extension: A crucial decision where an existing brand name or mark is utilized to
launch a new product category or line, leveraging existing brand equity.

3.2.2. Packaging Decisions

Packaging is a dual-function tool, serving both functional (protection) and marketing (promotion)
roles.
●​ Functional Roles: Packaging protects the product from damage, contamination, and
leakage during handling, storage, and distribution.
●​ Marketing Roles: Effective design attracts consumer attention, communicates crucial
information, and creates a positive brand impression. Unique designs (e.g., Coca-Cola’s
iconic contour bottle) differentiate the product and reflect the brand’s identity. Packaging
can also target specific segments, such as eco-conscious consumers, by highlighting
sustainability through biodegradable materials. Logistically, efficient packaging (like
flat-pack designs) reduces shipping costs and environmental footprint.

3.2.3. Labeling Decisions

Labeling is essential for identifying and describing the product. It must also comply with legal
requirements.
●​ Functions: Identification (brand, model), Description (ingredients, usage instructions),
and Promotion (attracting attention and reinforcing brand claims).
●​ Legal Compliance: Labeling must adhere to stringent legal requirements, including
accurate nutritional information for food products and adherence to trademark and safety
standards.

3.2.4. Product Support Services

These services (such as warranties, customer helplines, installation, repair, and training) are
crucial components of the Augmented Product. They extend the product’s value proposition
beyond its physical existence, ensuring long-term customer satisfaction and loyalty, particularly
for complex and high-value items. Furthermore, elements like the seamless and enjoyable User
Experience (UX) of a product or service (such as the simple interface of the Google search
engine ) are increasingly recognized as essential elements of product design. Prioritizing the UX
aspect of functionality not only helps a product stand out from competitors but also reinforces
brand connection and drives customer loyalty.
3.3. New Product Development (NPD) Process
New Product Development is a structured managerial and operational process designed to
transform initial ideas into profitable, marketable products. A rigorous, multi-stage process is
vital for minimizing risk and ensuring efficient resource allocation.
The NPD process typically involves 7-8 sequential stages:
1. Idea Generation (Ideation): The continuous and systematic search for new product
concepts. This involves brainstorming, utilizing market research to uncover unmet customer
needs, and employing techniques like SCAMPER to stimulate cross-functional innovation.
2. Idea Screening and Evaluation: Filtering the generated pool of ideas to identify the most
promising ones while rejecting infeasible or inconsistent concepts early. Ideas are assessed
against criteria such as market potential, technical feasibility, and alignment with the company's
core strategy and financial resource requirements.
3. Concept Development and Testing: Selected ideas are refined into detailed product
concepts. This involves defining the target segment, developing a clear value proposition, and
creating visualizations (sketches, 3D models). Concept testing involves presenting the detailed
concept (not the actual physical product) to target consumers to gauge their potential appeal
and purchase intent.
4. Marketing Strategy Development and Business Analysis: This stage involves designing
the initial plan for launching the product.
●​ Marketing Strategy: Defining the target market, the desired positioning, and calculating
initial objectives for sales, market share, and profitability.
●​ Business Analysis: Reviewing the projections (sales, costs, and profits) to ensure the
concept satisfies the company’s strategic financial objectives.
5. Product Development (Design and Prototyping): The physical translation of the concept
into a working product. This phase includes defining detailed functional requirements and
technical specifications, building prototypes for iterative testing, and focusing on Design for
Manufacturability (DFM) to optimize the product for efficient and cost-effective production.
6. Testing and Validation (Market Testing): This ensures the product meets quality standards
and customer expectations before mass production.
●​ Prototype Testing: Conducting functional and stress tests.
●​ Market Testing: Introducing the product to a limited, realistic market segment to gauge
real-world customer acceptance, assess pricing strategies, and identify potential issues in
distribution or support.
7. Commercialization: The final phase where the product is fully launched into the market. This
involves scaling up production capacity (production planning), establishing the full supply chain,
developing the comprehensive marketing launch strategy, and coordinating all activities to
ensure adequate inventory and customer support are ready for the market debut.
The sequential nature of the NPD process is primarily a mechanism for risk mitigation. The
rigorous screening and analysis stages (2, 3, and 4) serve as crucial checkpoints (gates) to
prevent costly failures. Identifying and eliminating a weak idea during Concept Development
costs significantly less than discovering that same flaw after investing heavily in product design
and commercialization. Therefore, the structured NPD process balances the need for innovation
with the strategic requirement to minimize technical, market, and financial risks.

3.4. Product Life Cycle (PLC): Concept and Strategies

The Product Life Cycle (PLC), a concept established by economist Theodore Levitt , charts the
progression of a product from its initial ideation through development, market entry, growth,
maturity, and eventual market withdrawal. This framework is essential for managerial
decision-making, allowing marketers to align their strategies (pricing, promotion, product
modification) with the product’s current market reality.

3.4.1. PLC Stages and Characteristics

1.​ Development: High R&D investment; sales are zero; profits are negative due to costs.
Focus is purely internal on product refinement.
2.​ Introduction: Slow sales growth as the product is new to the market; profits remain low
or negative due to heavy launch expenses (promotion, distribution).
3.​ Growth: Rapid market acceptance and accelerating sales; profits improve substantially
as economies of scale are achieved and distribution expands.
4.​ Maturity: Sales growth slows down and eventually plateaus; profits peak and then begin
to decline due to increased competition and the rising cost of defending market share.
5.​ Decline: Sales volume and profits drop sharply as consumer preferences shift or newer
technologies emerge.

3.4.2. Marketing Strategies Across PLC Stages

The primary marketing objective must shift at each stage, requiring corresponding adjustments
to the 4 Ps (Product, Price, Place, Promotion).
Table: Marketing Strategies Across Product Life Cycle Stages
PLC Stage Marketing Product Pricing Promotion Place Strategy
Objectives Strategy Strategy Strategy
Introduction Create product Offer basic Skimming High Limited,
awareness and product (high) or expenditure to selective
trial. version. Penetration inform early distribution.
(low) pricing. adopters and
distributors.
Growth Maximize Improve quality, Maintain or Shift focus from Intensive
market share add features, lower prices awareness to distribution
and switch to extend support slightly to preference; channels;
product services. attract mass build brand increase
preference. market. image. coverage.
Maturity Defend market Product Match or Focus on Maximize
share; modification aggressively reminder coverage;
maximize profit (restyle, beat advertising and adjust
while improve competitors' differentiation. distribution for
maintaining quality) or pricing. efficiency.
market. market
modification
(finding new
users/uses).
Decline Reduce Phase out Maintain price Minimal, only Selective
expenditure weak models or (harvest) or cut required to pruning of
PLC Stage Marketing Product Pricing Promotion Place Strategy
Objectives Strategy Strategy Strategy
and harvest lines. drastically maintain unprofitable
remaining (liquidate). loyalty. outlets.
profits or
divest.
The PLC model acts as a vital predictive tool for marketing management. The strategic
framework dictates that the 4 Ps must be aligned with the product's current stage to maximize
returns. For example, the objective during the Introduction phase is to build awareness and
secure trial, requiring heavy promotional spending. As the product enters Growth, the objective
shifts to gaining preference and market share, necessitating rapid product improvements and
expansion of distribution. Failing to adapt the marketing mix—for instance, continuing a slow,
introduction-style distribution in the highly competitive Maturity phase—would lead to substantial
loss of market share and profitability.

Conclusions
The mastery of the Principles of Marketing requires an understanding of the subject as a holistic
system, moving from conceptual philosophy to tactical execution.
1.​ Holistic Strategic Alignment: Effective strategy is contingent on the continuous interplay
between external forces and internal capabilities. Macro environmental analysis
establishes opportunities and constraints, while the Micro environment defines the tactical
adaptability of the firm. Failure to continuously monitor shifts in demographics, technology,
or culture risks strategic obsolescence.
2.​ Customer-Centric Value Creation: Modern marketing success is predicated on the
Marketing and Societal Concepts, prioritizing satisfaction and long-term relationships over
short-term transactions. This is demonstrated through the application of the extended 7
Ps, where service delivery is inextricably linked to the performance of People, Process,
and Physical Evidence, thereby mitigating the inherent challenges of service intangibility.
3.​ Precision in Market Selection: The STP framework is indispensable for efficiency. The
integrity of the strategic effort hinges on selecting measurable, accessible, and substantial
segments, ensuring that the chosen segmentation bases (e.g., psychographic or
behavioral) directly inform and support the ultimate positioning strategy (e.g.,
prestige-based or benefit-based).
4.​ Risk Management in Product Innovation: The multi-stage New Product Development
process is fundamentally a system of phased risk mitigation, designed to contain costs by
rigorously screening and validating ideas before heavy financial commitment.
Concurrently, the Product Life Cycle serves as a strategic roadmap, dictating that the
marketing mix elements must evolve sequentially, shifting strategic focus from building
initial awareness to defending mature market share, thereby ensuring the longevity and
profitability of the product portfolio.