Marketing Flashcards
Define marketing and market
to move the goods and services from the producer to consumers, a number of activities, such as product designing or merchandising, packaging, warehousing, transportation, branding, selling, advertising and
pricing are required. All these activities are referred to as marketing activities. It may be noted here that 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. For example, activities such as identification of customer needs, collection of information for developing the product, designing suitable product package and giving it a brand name are performed before commencement of the actual production. In modern times, emphasis is placed on describing marketing as a social process. It is a process whereby people exchange goods and services for money or for something of value to them. Taking the social perspective, Phillip kolter has defined marketing as, “a social process by which individual groups obtain what they need and want through creating offeringsandfreelyexchangingproducts and services of value with others
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.
Features of marketing
Features
- Needs and wants -
Focus of the marketing process is on satisfaction of the needs and wants of individuals and organisations.
A need is a state of felt deprivation or feeling of being deprived of something. If unsatisfied, it leaves a person unhappy and uncomfortable. For example, on getting hungry, we become uncomfortable and start looking for objects that are capable of satisfying our hunger. Needs are basic to human beings and do not pertain to a particular product.
Wants, on the other hand, are culturally defined objects that are potential satisfiers of needs. In other words, human needs shaped by such factors as culture, personality and religion are called wants. A basic need for food, for example, may take various forms such as want for dosa and rice for a South Indian and chapatti and vegetables for a North Indian person. - CREATING MARKET OFFERING
Market offering refers to a complete offer for a product or service, having given features like size, quality, taste, etc; at a certain price; available at a given outlet or location and so on. Let us say the offer is for a cell phone, available in four different versions, on the basis of certain features such as size of memory, television viewing, internet, camera, etc., for a given price, say between Rs. 5,000 and Rs. 20,000 (depending on the model selected), available for sale at say firm’s exclusive shops. - CUSTOMER VALUE
The buyers, however, make buying decisions on their perceptions of the value of the product or service in satisfying their need, in relation to its cost. A product will be purchased only if it is perceived to be giving greatest benefit or value for the money. The job of a marketer, therefore, is to add to the value of the product
MARKETING – features
•3. EXCHANGE MECHANISM
The individuals (buyers and sellers) obtain what they need and want through the process of exchange. For any exchange to take place, it is important that the following conditions are satisfied:
•involvement of at least two parties viz., the buyer and the seller.
•each party should be capable of offering something of value to the other. For example, the seller offers a product and the buyer, money.
•each party should have the ability to communicate and deliver the product or service. each party should have freedom to accept
Various marketing management philosophies
- The Production concept
•During the earlier days of industrial revolution, the demand for industrial goods started picking up but the number of producers were limited. As a result, the demand exceeded the supply. Selling was no problem. Anybody who could produce the goods was able to sell. The focus of business activities was, therefore, on production of goods.
• It was believed that profits could be maximised by producing at large scale, thereby reducing the average cost of production. It was also assumed that consumers would favour those products which were widely available at an affordable price. Thus, availability and affordability of the product were considered to be the key to the success of a firm. Therefore, greater emphasis was placed on improving the production and distribution efficiency of the firms. - The Product concept
•As a result of emphasis on production capacity during the earlier days, the position of supply increased over period of time. Mere availability and low price of the product could not ensure increased sale and as such the survival and growth of the firm.
• Thus, with the increase in the supply of the products, customers started looking for products which were superior in quality, performance and features. Therefore, the emphasis of the firms shifted from quantity of production to quality of products. The focus of business activity changed to bringing continuous improvement in the quality, incorporating new features, etc. Thus, product improvement became the key to profit maximisation of a firm, under the concept of product orientation. - The SELLING concept
•Customers would not buy, or not buy enough, unless they are adequately convinced and motivated to do so. Therefore, firms must undertake aggressive selling and promotional efforts to make customers buy their products. The use of promotional techniques such as advertising, personal selling and sales promotion were considered essential for selling of products.
•Thus, the focus of business firms shifted to pushing the sale of products through aggressive selling techniques It was assumed that buyers can be manipulated but what was forgotten was that in the long run what matters most is the customer satisfaction, rather than anything else.
. The MaRKETING concept
•Marketing orientation implies that focus on satisfaction of customer’s needs is the key to the success of any organisation in the market.
•It assumes that in the long run an organisation can achieve its objective of maximisation of profit by identifying the needs of its present and prospective buyers and satisfying them in an effective way.
•All the decisions in a firm are taken from the point of view of the customers. In other words, customer’s satisfaction become the focal point of all decision making in the organisation.
•To sum up, the marketing concept is based on the following pillars:
•(i) Identification of market or customer who are chosen as the target of marketing effort.
•(ii) Understanding needs and wants of customers in the target market.
• (iii) Development of products or services for satisfying needs of the target market.
• (iv) Satisfying needs of target market better than the competitors.
• (v) Doing all this at a profit.
- The SOCIETAL MRKETING concept
•Any activity which satisfies human needs but is detrimental to the interests of the society at large cannot be justified. The business orientation should, therefore, not be short-sighted to serve only consumers’ needs. It should also consider large issues of long-term social welfare like environmental pollution, deforestation, shortage of resources, population explosion and inflation.
Thus, the societal marketing concept is the extension of the marketing concept as supplemented by the concern for the long-term welfare of the society
Functions of marketing
MARKETING - fUNCTIONS
1. Gathering and Analysing Market Information:
•One of the important functions of a marketer is to gather and analyse market information. This is necessary to identify the needs of the customers and take various decisions for the successful marketing of the products and services. This is important for making an analysis of the available opportunities and threats as well as strengths and weaknesses of the organisation and help in deciding what opportunities can best be pursued by it.
•With the growth of computers, a new trend has emerged in the collection of market information. More and more companies are using interactive sites on the internet, to gather customer views and opinions, before taking important business decisions.
- Marketing Planning: Another important activity or area of work of a marketer is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved. For example a marketer of colour TV, having 10 per cent of the current market share in the country, aims at enhancing his market share to 20 per cent, in the next three years. He will have to develop a complete marketing plan covering various important aspects including the plan for increasing the level of production, promotion of the products, etc., and specify the action programmes to achieve these objectives.
3 Product Designing and Development : The design of the product contributes to making the product attractive to the target customers. A good design can improve performance of a product and also give it a competitive advantage in the market. For example, when we plan to buy any product say a motorbike, we not only see its features like cost, mileage, but also the design aspects like its shape, style, etc.
- Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications, which helps in achieving uniformity and consistency in the output. Standardisation ensures the buyers that goods conform to the predetermined standards of quality, price and packaging and reduces the need for inspection, testing and evaluation of the products. Grading is the process of classification of products into different groups, on the basis of some of its important characteristics such as quality, size, etc. Grading is particularly necessary for products which are not produced according to predetermined specifications, such as in the case of agricultural products, say wheat, oranges, etc.
- Packaging and Labelling:
Packaging refers to designing and developing the package for the products. Labelling refers to designing and developing the label to be put on the package. The label may vary from a simple tag to complex graphics. Packaging and labelling have become so important in modern day marketing that these are considered as the pillars of marketing. Packaging is important not only for protection of the products but also serves as a promotional tool. Sometimes, the quality of the product is assessed by the buyers form packaging. - Branding:
A very important decision area for marketing of most consumer products is whether to sell the product in its generic name (name of the category of the product, say Fan, Pen, etc.) or to sell them in a brand name (such as Pollar Fan or Rottomac Pen). Brand name helps in creating product differentiation, i.e., providing basis for distinguishing the product of a firm with that of the competitor, which in turn, helps in building customer’s loyality and in promoting its sale. The important decision areas in respect of branding include deciding the branding strategy, say whether each product will be given a separate brand name or the same brand name will be extended to all products of the company, say Phillips bulbs, tubes and television - Customer Support Services: A very important function of the marketing management relates to developing customer support services such as after sales services, handling customer complaints and adjustments, procuring credit services, maintenance services, technical services and consumer information. All these services aim at providing maximum satisfaction to the customers, which is the key to marketing success in modern days Customer support services are very effective in bringing repeat sales from the customers and developing brand loyality for a product.
- Pricing of Product:. Generally lower the price, higher would be the demand for the product and vice-versa. The marketers have to properly analyse the factors determining the price of a product and take several crucial decisions in this respect, including setting the pricing objectives, determining the pricing strategies, determining the price and changing the prices.
- Promotion: Promotion of products and services involves informing the customers about the firm’s product, its features, etc., and persuading them to purchase these products. The four important methods of promotion include advertising, Personal Selling, Publicity and Sales Promotion. A marketer has to take several crucial, decisions in respect of promotion of the products and services such as deciding the promotion budget, the promotion mix, i.e., the combination of the promotional tools that will be use, the promotion budget, etc.
- Physical Distribution: The two major decision areas under this function include (a) decision regarding channels of distribution or the marketing intermediaries (like whole salers, retailers) to be used and (b) physical movement of the product from where it is produced to a place where it is required by the customers for their consumption or use. The important decision areas under physical distribution include managing inventory (levels of stock of goods), storage and warehousing and transportation of goods from one place to the other.
- Transportation: Transportation involves physical movement of goods from one place to the other. As generally the users of products, particularly consumer products are wide spread and geographically separated from the place these are produced, it is necessary to move them to the place where it is needed for consumption or use, A marketing firm has to analyse its transportation needs after taking into consideration various factors such as nature of the product, cost and location of target market and take decisions in respect of mode of transportation to be chosen and other related aspects.
- storage or Warehousing: Usually there is a time gap between the production or procurement of goods and their sale or use. It may be because of irregular demand for the products such as in the case of woollen garments or raincoats, or there may be irregular supply because of seasonal production such as in the case of agricultural products (sugarcane, rice, wheat, cotton, etc.). In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. Further, there is a need for storage of adequate stock of goods to protect against unavoidable delays in delivery or to meet out contingencies in the demand. In the process of marketing, the function of storage is performed by different agencies such as manufacturers, wholesalers and retailers.
Define marketing mix and its elemenets
MARKETING MIX
There are large number of factors affecting marketing decisions. These can broadly be divided into two categories: (i) controllable factors, and (ii) non-controllable factors. Controllable factors are those factors which can be influenced at the level of the firm.
The controllable variables become marketing tools, which are constantly shaped and reshaped by marketing managers, to achieve marketing success. The controllable variables become marketing tools, which are constantly shaped and reshaped by marketing managers, to achieve marketing success. from a number of alternatives available a firm chooses a particular combination to develop a market offering. The combination of variables chosen by a firm to prepare its market offering is also called marketing mix. Thus, marketing mix is described as the set of marketing tools that a firm uses to pursue its marketing objectives in a target market.
ELEMENTS OF MARKETING MIX
These are: (i) Product, (ii) Price, (iii) Place, and (iv) Promotion
PRODUCT
•Product may be defined as anything that can be offered to a market to satisfy a want or need. It is offered for attention, acquisition, use or consumption
The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
The concept of product relates to not only the physical product but also the benefits offered by it from customer’s view point (for example toothpaste is bought for whitening teeth, strengthening gums, etc.).
Besides physical objects, we also include services, ideas, persons, and places in the concept of product.
The concept of product also include the extended product or what is offered to the customers by way of after sales services, handling complaints, availability of spare parts etc. These aspects are very important.
•From the customer’s point of view, a product is a bundle of utilities, which is purchased because of its capability to provide satisfaction of certain need. A buyer buys a product or service for what it does for her or the benefit it provides to her.
•There can be three types of benefits a customer may seek to satisfy from the purchase of a product, viz., (i) functional benefits, (ii) psychological benefits, and (iii) social benefits.
•Thus, 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
Place MIX
•Place or Physical Distribution include activities that make firm’s products available to the target customers.
•There are two important decisions relating to this aspect—one regarding physical movement of goods from producers to consumers or users and two, regarding the channels or using intermediaries in the distribution process.
•Important decision areas in this respect include selection of dealers or intermediaries to reach the customers, providing support to the intermediaries (by way of discounts, promotional campaigns, etc.). The intermediaries in turn keep inventory of the firm’s products, demonstrate them to potential buyers, negotiate price with buyers, close sales and also service the products after the sale.
•The other decision areas relate to managing inventory, storage and warehousing and transportation of goods from the place it is produced to the place it is required by the buyers
price MIX
•Price is the amount of money customers have to pay to obtain the product.
•In case of most of the products, level of price affects the level of their demand. The marketers have not only to decide about the objectives of price setting but to analyse the factors determining the price and fix a price for the firm’s products.
•Decisions have also to be taken in respect of discounts to customers, traders and credit terms, etc. so that customers perceive the price to be in line with the value of the product.
•In the conditions of perfect competition, most of the firms compete with each other on the basis of PRICE..
•It is also the single most important factor affecting the revenue and profits of a firm.
promotion MIX
•Promotion of products and services include activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it.
•Promotion mix refers to combination of promotional tools used by an organisation to achieve its communication objectives. Various tools of communication are used by the marketers to inform and persuade customers about their firm’s products. These include: (i) Advertising, (ii) Personal Selling, (iii) Sales Promotion, and (iv) Public Relations. These tools are also called elements of promotion mix and can be used in different combinations, to achieve the goals of promotion.
•For example consumer goods firms may use more of advertising through mass media while the industrial goods firms may be using more of personal selling. What combination of these elements is used by a firm will depend upon various factors such as nature of market, nature product, the promotions budget, objectives of promotion, etc
Componenets of product mix and explain them
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- Explain branding
Characterstics of good brand name - Levels of packaging
- Functions of packaging
- Functions of labelling
PRODUCT MIX - bRANDING
•Generic name refers to the name of the whole class of the product. For example, a book,
•If products were sold by generic names, it would be very difficult for the marketers to distinguish their products from that of their competitors. Thus, most marketers give a name to their product, which helps in identifying and distinguishing their products from the competitors’ products. This process of giving a name or a sign or a symbol etc., to a product is called branding.
•1. Brand: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products—goods or services of one seller or group of sellers and to differentiate them from those of the competitors. Brand is a comprehensive term, which has two components—brand name and brand mark.
- Brand Name: That part of a brand, which can be spoken, is called a brand name. In other words, brand name is the verbal component of a brand. For example, Asian Paints, Safola, Maggie.
•3. Brand Mark: That part of a brand which can be recognised but which is not utter able is called brand mark. It appears in the form of a symbol, design, distinct colour scheme or lettering. For example, the Gattu of Asian Paints or Devil of Onida or symbol of Yogkshma of LIC.
•4. Trade Mark: A brand or part of a brand that is given legal protection is called trademark. Thus the firm, which got its brand registered, gets the exclusive right for its use. In that case, no other firm can use such name or mark in the country.
characteristics of a good brand name
•(i) The brand name should be short, easy to pronounce, spell, recognise and remember e.g., Ponds, VIP, Rin, Vim, etc.
•(ii) A brand should suggest the product’s benefits and qualities. It should be appropriate to the product’s function. e.g., Rasika, Genteel, Promise, My Fair Lady and Boost.
•(iii) A brand name should be distinctive e.g., Liril, Sprit, Safari, Zodiac.
•(iv) The brand name should be adaptable to packing or labelling requirements, to different advertising media and to different languages.
•(v) The brand name should be sufficiently versatile to accommodate new products, which are added to the product line e.g., Maggie, Colgate.
•(vi) It should be capable of being registered and protected legally
•(vii) Chosen name should have staying power i.e., it should not get out of date.
packaging
•Packaging refers to the act of designing and producing the container or wrapper of a product.
•THERE CAN BE THREE DIFFERENT LEVELS OF PACKAGING.
•1. Primary Package: It refers to the product’s immediate container. In some cases, the primary package is kept till the consumer is ready to use the product (e.g., plastic packet for socks); whereas in other cases, it is kept throughout the entire life of the product (e.g., a toothpaste tube, a match box, etc.).
•2. Secondary Packaging: It refers to additional layers of protection that are kept till the product is ready for use, e.g., a tube of shaving cream usually comes in a card board box. When consumers start using the shaving cream, they will dispose off the box but retain the primary tube.
•3. Transportation Packaging: It refers to further packaging components necessary for storage, identification or transportation. For example a toothpaste manufacturer may send the goods to retailers in corrugated boxes containing 10, 20, or 100 units.
MIX functions of packaging
(i) Product Identification: Packaging greatly helps in identification of the products. For example, Colgate in red colour, or Ponds cream jar can be easily identified by its package.
(ii) Product Protection: Packaging protects the contents of a productfrom spoilage, breakage, leakage, pilferage, damage, climatic effect, etc. This kind of protection is required during storing, distribution and transportation of the product.
(iii) Facilitating Use of the Product: The size and shape of the package should be such that it should be convenient to open, handle and use for the consumers. Cosmetics, medicines and tubes of toothpastes are good examples of this.
(iv) Product Promotion: Packaging is also used for promotion purposes. A startling colour scheme, photograph or typeface may be used to attract attention of the people at the point of purchase. Sometimes it may work even better than advertising. In self-service stores, this role of packaging becomes all the more important
functions of a label
•Describe the Product and Specify its Contents: The label on the package of a local tea company describes the company as ‘ Mohini Tea Company, an ISO 9001:200C Certified Company’; a popular brand of Prickly Heat Powder, describes how the product provides relief from prickly heat and controls bacterial growth and infection, giving caution forbidding its application on cuts and wounds. Package of fast food products like ready to eat Dosa, Idli or Noodles, describe the procedure of cooking these products; the Package of a toothpaste brand lists the ‘Ten Teeth and Gum Problems’, which the product claims to fight with its ‘Complete Germicheck Formula’; the Package of a brand of Coconut Oil describes the product as pure coconut oil with Heena, Amla, Lemon and specifies how these are good for Hair. Thus, one of the most important functions of labels is to DESCRIBE THE PRODUCT, ITS USAGE, CAUTIONS IN USE, ETC. AND SPECIFY ITS CONTENTS.
•2. Identification of the Product or Brand: The other important function performed by labels is to help in identifying the product or brand. For example, the brand name of any product, say Biscuits or Potato Chips imprinted on its package helps us to identify, from number of packages, which one is our favourite brand. Other common identification information provided by the labels INCLUDE NAME AND ADDRESS OF THE MANUFACTURER, NET WEIGHT WHEN PACKED, MANUFACTURING DATE, MAXIMUM RETAIL PRICE AND BATCH NUMBER.
- Grading of Products: Another important function performed by labels is to help grading the products into different categories. Sometimes marketers assign DIFFERENT GRADES TO INDICATE DIFFERENT FEATURES OR QUALITY OF THE PRODUCT. For example, a popular brand of Hair Conditioners comes in different categories for different hair, say for ‘normal hair’ and for other categories. Different type of tea is sold by some brands under Yellow, Red and Green Label categories.
- Helps in Promotion of Products: An important function of label is to aid in promotion of the products. A carefully designed label CAN ATTRACT ATTENTION AND GIVE REASON TO PURCHASE. We see many product labels providing promotional messages for example, the pack of a popular Amla Hair Oil states, ‘Baalon mein Dum, Life mein Fun’. The label on the package of a brand of Detergent Powder says, ‘Keep cloth look good and your machine in top condition’. Labels play important role in sales promotional schemes launched by companies. For example the label on the package of a Shaving Cream mentions, ‘40% Extra Free’ or package of a toothpaste mentioning, ‘Free Toothbrush Inside’, or ‘Save Rs 15.
- Providing Information Required by Law: Another important function of labeling is to provide information required by law. For example, THE STATUTORY WARNING on the package of Cigarette or Pan Masala, ‘Smoking is Injurious to Health’ or ‘ChewingTobacco is Injurious to Health’. Such information is required on processed foods, drugs and tobacco products. In case of hazardous or poisonous material, APPROPRIATE SAFETY-WARNING need to be put on the label.
Place mix
Channels and components of place mix
Place MIX – types of channel
•(i) Direct Channel (zero level): Manufacturer- Customer
•Indirect Channel : (ii) One level Channel: Manufacturer- Retailer-Customer
•(iii) Two level Channel: Manufacturer- Wholesaler- Retailer-Customer
•(iv) Three level Channel: Manufacturer -Agent -Wholesaler –Retailer-Customer
Components of Physical Distribution
•Order Processing: In a typical buyer-seller relationship order placement is the first step. Products flow from manufacturers to customers via channel members while orders flow in the reverse direction, from customers to the manufacturers. A good physical distribution system should provide for an accurate and speedy processing of orders, in the absence of which goods would reach the customers late or in wrong quantity or specifications. This would result in customer dissatisfaction, with the danger of loss of business and goodwill.
•Transportation: Transportation is the means of carrying goods and raw materials from the point of production to the point of sale. It is one of the major elements in the physical distribution of goods. It is important because unless the goods are physically made available, the sale cannot be completed.
- Warehousing: Warehousing refers to the act of storing and assorting products in order to create time utility in them. The basic purpose of warehousing activities is to arrange placement of goods and provide facilities to store them. The need for warehousing arises because there may be difference between the time a product is produced and the time it is required for consumption.
Generally the efficiency of a firm in serving its customers will depend on where these warehouses are located and where are these to be delivered. Generally larger the number of warehouses a firm has, lesser would be the time taken in serving customers at different locations but greater would be the cost of warehousing and viceversa. Thus the firm has to strike a balance between the cost of warehousing and the level of customer service. For products requiring long-term storage (such as agricultural products) the warehouses are located near production sites. This helps in minimising the charges on transportation of the goods.
On the other hand, the products which are bulky and hard to ship (machinery, automobiles) as well as perishable products (bakery, meat, vegetables) are kept at different locations near the market. - Inventory Control:. A very important decision in respect of inventory is deciding about the level of inventory. Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock. With advancements in computers and information technology the need for keeping higher inventory is reducing and the new concept of Justin-Time-Inventory decision is becoming popular in an increasing number of companies. The decision regarding level of inventory involves prediction about the demand for the product. The major factors determining inventory levels include:
firm’s policy regarding the level of customer service to be offered. Higher the level of service greater will be the need to keep more inventories;
(b) degree of accuracy of the sales forecasts. In case more accurate estimates are available, the need for keeping very high level of inventory can be minimised;
(c) responsiveness of the distribution system i.e., ability of the system to transmit inventory needs back to the factory and get products in the market. In case the time required to respond to the additional demand for the products is high there is a need to maintain higher inventory. But if the additional demand can be met in less time, the need for inventory will also be low; and
(d) cost of inventory, which includes holding cost such as cost of warehousing, tied up capital, etc and the manufacturing cost.
Factors affecting price determination
factors affecting price determination
1. product cost
•Those costs which vary in direct proportion with the level of activity are called variable costs. For example, the costs of raw material, labour and power are directly related with the quantity of goods produced.
•Semi variable costs are those costs which vary with the level of activity but not in direct proportion with it. For example, compensation of a sales person may include a fixed salary of say Rs. 10,000 plus a commission of 5 per cent on sales. With an increase in the volume of sales, the total compensation will increase but not in direct proportion with the change in the volume of sale.
•At the time of recession the price should atleast cover variable cost.
- THE UTILITY AND DEMAND
•While the product costs set the lower limits of the price, the utility provided by the product and the intensity of demand of the buyer sets the upper limit of price, which a buyer would be prepared to pay.
•Infact the price must reflect the interest of both the parties to the transaction – the buyer and the seller.
•The buyer may be ready to pay up to the point where the utility from the product is at least equal to the sacrifice made in terms of the price paid.
•The seller would, however try to atleast cover the costs.
• According to the law of demand, consumers usually purchase more units at a low price than at a high price. - EXTENT OF COMPETITION IN THE MARKET
•Between the lower limit and the upper limit where would the price settle down? This is affected by the nature and the degree of competition.
•The price will tend to reach the upper limit in case there is lesser degree of competition while under conditions of free competition, the price will tend to be set at the lowest level.
•Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. Not only the price but the quality and the features of the competitive products must be examined carefully, before fixing the price - GOVERNMENT AND LEGAL REGULATIONS
•In order to protect the interest of public against unfair practices in the field of price fixing, Government can intervene and regulate the price of commodities. Government can declare a product as essential product and regulate its price.
•For example, the cost of a drug manufactured by a company having monopoly in the production of the same come to Rs 20 per strip of ten and the buyer is prepared to pay any amount for it, say Rs 200. In the absence of any competitor, the seller may be tempted to extort the maximum amount of Rs 200 for the drug and intervene to regulate the price. Usually in such a case, the Government does not allow the firms to charge such a high price and intervene to regulate the price of the drug. This can be done by the Government by declaring the drug as essential commodity and regulating its price - PRICING OBJECTIVES
• Generally the objective is stated to be maximise the profits. But there is a difference in maximising profit in the short run and in the long run.
• Apart from profit maximisation, the pricing objectives of a firm may include: (a) Obtaining Market Share Leadership: If a firms objective is to obtain larger share of the market; it will keep the price of its products at lower levels so that greater number of people are attracted to purchase the products;
•(b) Surviving in a Competitive Market: If a firm is facing difficulties in surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor, it may resort to discounting its products or running a promotion campaign to liquidate its stock; and
•(c) Attaining Product Quality Leadership: In this case, normally higher prices are charged to cover high quality and high cost of Research and Development
- MARKETING METHODS USED
• Price fixation process is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer services provided.
•For example, if a company provides free home delivery, it has some of flexibility in fixing prices. Similarly, uniqueness of any of the elements mentioned above gives the company a competitive freedom in fixing prices of its products.
Components of promotion mix
ELEMENTS OF MARKETING MIX
promotion MIX - ADVERTISING
•Advertising is perhaps 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 most common modes of advertising are ‘newspapers’, ‘magazines’, ‘television’, and ‘radio’.
•The important distinguishing features of advertising are as follows:
(i) Paid Form: Advertising is a paid form of communication. That is, the sponsor has to bear the cost ofcommunicating with the prospects.
(ii) Impersonality: There is no direct face-to-face contact between the prospect and the advertiser. It is therefore, referred to as impersonal method of promotion. Advertising creates a monologue and not a dialogue.
(iii) Identified Sponsor: Advertising is undertaken by some identified individual or company, who makes the advertising efforts and also bears the cost of it.
PERSONAL SELLING
•Personal selling involves oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making sales. It is a personal form of communication. Companies appoint salespersons to contact prospective buyers and create awareness about the product and develop product preferences with the aim of making sale.
•Features of Personal Selling
• (i) Personal Form: In personal selling a direct face-to-face dialogue takes place that involves an interactive relationship between the seller and the buyer.
•(ii) Development of Relationship: Personal selling allows a salesperson to develop personal relationships with the prospective customers, which may become important in making sale.
SALES PROMOTION
•Sales promotion refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service. These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales.
•Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution. Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling.
•Companies use sales promotion tools specifically designed to promote to customers (e.g., free samples, discounts, and contests), tradesmen or middlemen (e.g., cooperative advertising, dealer discounts and dealer incentives and contests) and to sales person (e.g., bonus, salesmen contests, special offers)
puBliC relaTions
Managing public opinion of an organisation is an important task which can be performed by the marketing department. The business needs to communicate effectively to customers, suppliers, and dealers, since they are instrumental in increasing the sales and profit. Besides those who come into direct contact with the organisation or its products, there are other members of the general public whose voice or opinion is equally important. This public may be interested in the company and its product and have an impact on the business ability to achieve its objectives. Thus, it becomes imperative to manage public opinion and the company’s relation with the public on a regular basis. Therefore, public relations involve a variety of programmes designed to promote or protect a company’s image and its individual products in the eyes of the public.
Differ between advertising and personal selling
advertising no.
Personal selling
1. Advertising is an impersonal form of communication.
2. Advertising involves transmission of standardised messages, i.e., same message is sent to all the customers in a market segment.
3. Advertising is inflexible as the message can’ t be adjusted to the needs of the buyer.
4. It reaches masses, i.e., a large number of people can be approached.
5. In advertising the cost per person reached is very low.
6. Advertising can cover the market in a short time.
7. Advertising makes use of mass media such television, radio, newspaper, and magazines.
8. Advertising lacks direct feedback. Marketing research efforts are needed to judge customers’ reactions to advertising.
9. Advertising is more useful in creating and building interest of the consumers in the firms products.
10. Advertising is more useful in marketing to the ultimate consumer’s who are large in numbers.
Personal selling is a personal form of communication.
In personal selling, the sales talk is adjusted keeping view customer’s background and needs.
Personal selling is highly flexible. as the message can be adjusted.
Only a limited number of people can be contacted because of time and cost considerations.
The cost per person is quite high in the case of personal selling.
Personal selling efforts take a lot of time to cover the entire market.
Personal selling makes use of sales staff, which has limited reach.
Personal selling provides direct and immediate feed back. Sales persons come to know about the customers’ reactions immediately.
Personal selling plays important role at the awareness stage of decision making.
Personal selling is more helpful in selling products to the industrial buyers or to imtermediaries such as dealers and retailers who are relatively few in number
