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Marketing is sum of 4Ps. Explain
4Ps of Marketing:
McCarthy classified all these marketing tools under four broad categories:
These four elements are the basic components of a marketing plan and are collectively called 4 P’s of
marketing. 4 P’s pertain more to physical products than services. Below is an illustration for marketing mix.
Product is the actual offering by the company to its targeted customers which also includes value
added stuff. Product may be tangible (goods) or intangible (services).
What to offer?
After sale services
Price includes the pricing strategy of the company for its products. How much customer should pay for
a product? Pricing strategy not only related to the profit margins but also helps in finding target customers.
Pricing decision also influence the choice of marketing channels. Price decisions include:
Pricing Strategy (Penetration, Skim, etc)
It not only includes the place where the product is placed, all those activities performed by the
company to ensure the availability of the product to the targeted customers. Availability of the product at the
right place, at the right time and in the right quantity is crucial in placement decisions.
Placement decisions include:
selection of channel members
Promotion includes all communication and selling activities to persuade future prospects to buy the
product. Promotion decisions include:
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Define marketing. Write down a note on marketing concept:
The action or business of promoting and selling products or services, including market research and
The Marketing Concept
After World War II, the variety of products increased and hard selling no longer could be relied upon to
generate sales. With increased unrestricted income, customers could afford to be selective and buy only those
products that precisely met their changing needs, and these needs were not immediately obvious. The key
What do customers want?
Can we develop it while they still want it?
How can we keep our customers satisfied?
In response to these discerning customers, firms began to adopt the marketing concept, which involves:
Focusing on customer needs before developing the product
Aligning all functions of the company to focus on those needs
Realizing a profit by successfully satisfying customer needs over the long-term
When firms first began to adopt the marketing concept, they typically set up
Separate marketing departments whose objective it was to satisfy customer needs. Often these departments
were sales departments with expanded responsibilities.
While this expanded sales department structure can be found in some companies today, many firms have
structured themselves into marketing organizations having a company-wide customer focus. Since the entire
organization exists to satisfy customer needs, nobody can neglect a customer issue by declaring it a
"marketing problem" - everybody must be concerned with customer satisfaction.
The marketing concept relies upon marketing research to define market segments, their size, and their needs.
To satisfy those needs, the marketing team makes decisions about the controllable parameters of the
The Selling Concept
By the early 1930's however, mass production had become commonplace, competition had increased, and
there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling
concept), under which companies not only would produce the products, but also would try to convince
customers to buy them through advertising and personal selling. Before producing a product, the key
Can we sell the product?
Can we charge enough for it?
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The sales concept paid little attention to whether the product actually was needed; the goal simply was to
beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was
performed after the product was developed and produced, and many people came to associate marketing
with hard selling. Even today, many people use the word "marketing" when they really mean sales.
How to attract and retain the customer:
You attract by building know, like and trust:
You must know whom you are ideally suited to attract
You must be able to communicate a difference that makes you stand out
You must create content that addresses a need of a narrowly defined customer
You must advertise and generate word of mouth buzz surrounding your content
You must be in so many places and linked to so many sources that you are easily found
You must build a team of strategic partners, sponsors and customer champions willing to help
You retain customers by focusing on repeat and referral
You must study every potential customer contact point and turn it into a remarkable experience
You must develop a customer orientation process as part of your lead conversion process
You must communicate fully, often and truthfully during transactions and service
You must build follow-up routines that include opportunities to share additional education, training
You must create a process that allows you to measure and communicate the value you product or
service has delivered to a customer
You must stop what you are doing often and show appreciation fully
You must find ways to bring your customers together and facilitate building community for them
You must expect to receive a referral from 100% of your customers and help them bring value to
others they would like to help
Accomplishing everything on the both lists above is the secret to success for any business, regardless of
industry or geography – there’s actually nothing very hard about it, the key is intention.
Topic: Write a note on External macro environmental forces:
The external environment of an organization is those factors outside the company that affect the company's
ability to function. Some external elements can be manipulated by company marketing, while others require
the organization to make adjustments. Monitor the basic components of your company's external
environment, and keep a close watch at all times.
Social factors include the demographic and cultural aspects of the external macro environment. These factors
affect customer needs and the size of potential markets. Some social factors include:
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population growth rate
emphasis on safety
Political factors include government regulations and legal issues and define both formal and informal
rules under which the firm must operate. Some examples include:
Trade restrictions and tariffs
Technological factors can lower barriers to entry, reduce
minimum efficient production levels, and influence outsourcing
decisions. Some technological factors include:
rate of technological change
Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The
following are examples of factors in the macro economy:
Topic: Explain the factors affecting the consumer buying behavior:
A consumer’s buyer behavior is influenced by four major factors:
Following are the factors that affect consumer buying behavior:
01) Cultural Factors:
CULTURAL factors include a consumer’s culture, subculture and social class. These
factors are often inherent in our values and decision processes.
02) Social Factors:
SOCIAL factors include groups (reference groups, inspirational groups and member
groups), family, roles and status. This explains the outside influences of others on our purchase decisions
either directly or indirectly.
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03) Personal Factors:
PERSONAL factors include such variables as age and lifecycle stage, occupation,
economic circumstances, lifestyle (activities, interests, opinions and demographics), personality and self
concept. These may explain why our preferences often change as our `situation' changes.
04) Psychological Factors:
PSCHOLOGICAL factors affecting our purchase decision include motivation (Maslow's
hierarchy of needs), perception, learning, beliefs and attitudes.
Topic: Explain the steps of consumer decision making process:
A consumer goes through several stages before purchasing a product or service.
EVALUATION OF ALTERNATIVES
PURCHASE OF PRODUCT/SERVICE
POST PURCHASE EVALUATION?
Need is the most important factor which leads to buying of products and services. Need in-fact is the
catalyst which triggers the buying decision of individuals.
An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in
such cases steps such as information search and evaluation of alternatives are generally missing. These two
steps are important when an individual purchases expensive products/services such as laptop, cars, and
mobile phones and so on.
When an individual recognizes his need for a particular product/service he tries to gather as much
information as he can.
An individual can acquire information through any of the following sources:
EVALUATION OF ALTERNATIVES
The next step is to evaluate the various alternatives available in the market. An individual after
gathering relevant information tries to choose the best option available as per his need, taste and pocket.
PURCHASE OF PRODUCT/SERVICE
After going through all the above stages, customer finally purchases the product.
POST PURCHASE EVALUATION
The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers
to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need
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Topic: Why segmentation? Discuss the niche segment and its advantage to manufacture:
A market segment is a subgroup of people or organizations that have one or more characteristics in
common that cause them to have the same product needs.
Everyone needs water to drink, but does everyone need bottled water? For companies to successfully reach
their precise customer, they need to divide a market into similar and identifiable segments through market
Niche Segment and its advantages:
By definition, a niche market is a subset of a market on which a particular product is
focused. Niche marketing defines product features, production qualities, demographics and price range to
satisfy specific marketing needs.
It is a highly specialized market segment, which targets a niche of particular enthusiasts and aims to survive
among the competition from many super companies. Niche marketing is a useful approach, which can help
businesses to increase their financial gain margins.
Niche marketing is extremely cost-effective. For instance, if you are offering a product for a selected
demographic, you could advertise the product using a local media so that marketing budget go a lot further,
allowing you to use a more comprehensive media mix. Niche marketing works well when you understand the
The Advantages of Niche Marketing
Unlike in generalized marketing where market competition is still, niche marketing has quite less
competition for the possible customers purchasing the products.
Niche marketing makes it possible for businesses to build their brand loyalty. This marketing approach
lets you provide customers with products and services they need and desire. You end up having a leg up on
the competition because items in a niche market are difficult to find in general products.
Best for giving marketing insight
Niche marketing is all about selling to a segmented market. It is about taking your products to people
who have an interest in receiving them. This can help you redefine your business, leading it in a new product
directions and services. You will end up creating new opportunities for your business by selling similar or
support products. Once you begin to concentrate fully on niche marketing, you will learn about new products,
innovations and ideas about the market.
Saving on your marketing dollars
This is a type of marketing where you will never throw away money hoping for returns. Niche
marketing makes it easy for you to save on your marketing dollars. Generally, you do not have to send over
ten thousand flyers to one or several neighborhood. Instead, send less than a thousand flyers to a target
audience that meets the requirements for your niche. With this approach, you will be able to reach a larger
percentage of people who are more likely to use your services or purchase your products.
Topic: Write a note on market segmentation, targeting and positioning:
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Market segmentation involves grouping your various customers into segments that have common
needs or will respond similarly to a marketing action. Each segment will respond to a different marketing mix
strategy, with each offering alternate growth and profit opportunities.
Some different ways you can segment your market include the following;
After segmenting the market based on the different groups and classes, you will need to choose your
targets. No one strategy will suit all consumer groups, so being able to develop specific strategies for your
target markets is very important.
There are three general strategies for selecting your target markets:
Positioning is developing a product and brand image in the minds of consumers. It can also include
improving a customer's perception about the experience they will have if they choose to purchase your
product or service. The business can positively influence the perceptions of its chosen customer base through
strategic promotional activities and by carefully defining your business' marketing mix.
Effective positioning involves a good understanding of competing products and the benefits that are sought by
your target market. It also requires you to identify a differential advantage with which it will deliver the
required benefits to the market effectively against the competition. Business should aim to define themselves
in the eyes of their customers in regards to their competition.
Topic: How mass market is different from niche market explain with example:
By definition, a niche market is a subset of a market on which a particular product is focused. Niche
marketing defines product features, production qualities, demographics and price range to satisfy
specific marketing needs.
The market for goods that are produced in large quantities
A mass market is a general population which can be targeted at wide for the sales and marketing of a product.
To explain a mass market, it can simply be compared with a niche market. A niche market is one where a very
small market segment exists.
Example – Tractors are a niche market. They are applicable only to agricultural lands.
But a mass market on the other hand is much larger and has diverse demographics.
For example – Automobiles – cars and two wheelers, usually target the mass markets
with heterogeneous ages, locations and preferences. . However these mass markets can be further diversified
into smaller segments. Products which target a mass market generally vary their promotion strategies
according to the market.
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Example – An automobile company or a telecom company targets a mass market. However each individual
might have a different preference for automobiles or telecom service providers. Does within the mass market,
there exist individual segments.
A smart marketer will try to promote his product to the biggest chunk of the mass market.
For example – In soft drinks, Pepsi is targeting the youth, but on the other hand coke is targeting whole
families through defining values. Thus coke has a bigger market and it is a more widely recognized brand when
compared to Pepsi.
Topic: Discuss the 4 types of consumer products with example and classes of
All the four types of consumer products are, of course, represented by certain goods or services. All the
offerings are available in the market, promoted and sold for bringing profit to the company. However,
products that represent each of the 4 groups differ by marketing strategies applied to them, consumers’
perception, and channels of delivering particular products to customers.
Convenience offerings are usually products that people use in everyday life, such as bread, milk or
matches. People do not devote too much time to choosing what particular brand to buy. Some people do
prefer some brands, but will buy another if the favorite one is not available. Convenience products are usually
comparatively cheap and sold in many places.
Somewhat different are shopping offerings. These products and services are usually more expensive
and, therefore, consumers usually do some preliminary research. People compare quality and prices of
different manufacturers and retailers, as well as compare brands. Since such purchases are rather significant
events for the consumer, he or she devotes some time to exploring opportunities and options.
A totally different thing is specialty offerings. Specialty products are expensive, not manufactured in
large quantities, and not sold in many places. Marketing of luxury products usually calls for building a strong
brand name. These items are not purchased too often, but many people wish to own them as attributes of
status and authority. Among such products would be a Harley Davidson motorcycle, a Ferrari or a dress from
Unsought offerings are a very specific category of products and services. People usually have no desire
to shop for such items, because in most cases these are goods and services people don’t need or use unless
some special occasion requires.
Topic: Explain the industrial products:
Individuals and organizations that acquire goods and services to be used, directly or indirectly, in the
production of other goods and services or to be resold
Classification is done on the basis of three broad groups:
MATERIAL AND PARTS
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Goods that enter the product directly, the cost of these items are treated by the purchasing company as the
part of manufacturing cost. Material and parts are further segregated into three parts that are:
These are the basic products which enter into the production process with little or no alterations. They
may be marked to user customers or OEMs (Original Equipment Manufacturers). Such as iron ore,
crude oil, vegetables.
That also includes those raw materials that are subjected to some amount of processing before
entering the production process. Such as acids, fuel oil, steel and chemicals
These are the semi finished parts that can installed directly into the products with little or no
additional change. Such as small motors, batteries and tires
Capital items are those which are used in the production process. They are normally treated as user
customers. Capital items are classified into three groups:
These are the major and long term investments such as general purpose and special purpose machines,
turbines, generators and earth moving equipments.
Light equipments and tools which have lower purchase prices and are not considered as the part of
heavy equipment such as typewriters, computers and small electric motors
Plants and Buildings:
These are the real estate property of the company. It includes the firm offices, plant, warehouses,
warehouses and parking lots.
SUPPLIES AND SERVICES
Supplies and services support the operations of the purchasing organization. They are not considering
as the part of the finished goods. They are further segregated into two parts:
These items are generally standardized and are marketed to a wide cross section of industrial users.
Such as paints, oils, greases, pencils, stationary etc.
Company needs a wide range of services like building maintenance services, auditing services, legal
services, courier services and many more.
Discuss the steps involved in new product development:
New Product Development:
Developing a new product involves a number of stages which typically center on the following key areas:
Stage 1: Idea Generation
New product ideas have to come from somewhere. But where do organizations get their ideas for NPD?
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Distributors and Suppliers
Stage 2: Idea Screening
This process involves shifting through the ideas generated above and selecting ones which are possible and
practical to develop. Pursing impractical ideas is expensive and a waste of resources.
Stage 3: Concept Development and Testing
The organization may have come across what they believe to be a feasible idea; however, the idea needs to be
taken to the target audience. What do they think about the idea? Will it offer the benefit that the organization
hopes it will? Or have they overlooked certain issues? Will there be a demand for the product? Note the idea
taken to the target audience is not a working prototype at this stage, it is just a concept.
Stage 4: Marketing Strategy and Development
How will the product/service idea be launched within the market? A proposed marketing strategy will be
written laying out the marketing mix strategy of the product, the segmentation, targeting and positioning
strategy and expected sales and profits.
Stage 5: Business Analysis
The company has a great idea, the marketing strategy seems feasible, but will the product be financially
worthwhile in the long run? The business analysis stage looks more deeply into the Cash flow the product
could generate, what the cost will be, how much market shares the product may achieve and the expected life
of the product.
Stage 6: Product Development
At this stage the prototype is produced. The prototype will experience serious tests, and will be presented to a
selection of people made up of the target market segment to see if changes need to be made.
Stage 7: Test Marketing
Test marketing means testing the product within a specific geographic area. The product will be launched
within a particular region so the marketing mix strategy can be monitored and if needed modified before
Stage 8: Commercialization
If test marketing is successful the product is ready for national launch. The following decisions regarding the
national launch need to be made
Timing of the launch
How the product will be launched
Where the product will be launched
Will there be a national roll out or will it be
region by region?
Discuss with market examples the advantages and disadvantages of
skimming pricing strategy:
Price skimming is a pricing strategy which companies adopt when they launch a new product, in this strategy
while launching a product company sets high price for a product initially and then reduce the price as time
passes by so as to recover cost of a product quickly.
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An example of price skimming would be mobiles which have some added features and due to those features
they are sold initially at higher prices and then prices began to decline as time passes by, another example of
price skimming would be 3D televisions which are right now being sold. Given below are some of the
advantages and disadvantages of price skimming –
Advantages of Price Skimming
Price skimming helps the company in recovering the research and development costs which are
associated with the development of new product.
If the company caters to consumers who are quality conscious rather than price conscious than this
type of strategy can work in a great way for a company.
Disadvantages of Price Skimming
This strategy can backfire if there are close competitors and they also introduce same products at lower price
than consumers will think that company always sells the products at higher prices which will result in
consumers abandoning other products of the company also.
Price skimming is not viable option when there are strict legal and government regulations regarding
If the company has history of price skimming than consumers will never buy a product when it is newly
launched, they would rather wait few months and buy the product at lower price.
Topic: Write a short note on discounts with examples:
In simple terms, Discount is an allowance or concession in price. Discount is given so that the buyer is induced
(lured) to place an order and later to make payment in time.
Discount can be also referred to as a deduction in price. The seller deducts the discount from the gross or total
price, and the buyer is supposed to pay the net amount.
Cash discount is an allowance or concession given by the seller to the buyer. This discount is offered to
encourage the buyer for quick payment or settlement. It is allowed for immediate payment of cash or
payment within a short period.
The cash discount is normally shown in the quotation and invoice. It is deductible from the total price and the
buyer is requested to pay only to the net amount. Cash Discount is usually stated in the percentage form.
Trade Discount is a reduction in the catalogue price of the goods allowed only if the quantity ordered
by the buyer is quite large. Its purpose is to encourage the buyer to make bulk purchases. It is allowed on cash
as well as credit sales.
The trade discount is not shown in the books of account. The trade discount is calculated as some percentage
of the catalogue price. It varies according to the quantity of order.
An incentive offered to a buyer that results in a decreased cost per unit of goods or materials when
purchased in greater numbers. A quantity discount is often offered by sellers to entice buyers to purchase in
larger quantities. The seller is able to move more goods or materials, and the buyer receives a more favorable
price for the goods. At the consumer level, a quantity discount can appear as a BOGO (buy one, get one
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discount) or other incentives such as buy two, get one free.
A deviation from the basis grade or location allowable when delivering commodities under the terms of
a futures contract Allowances represent a premium or discount to the standards outlined in the futures
Topic: Why branding? Discuss the advantages of branding:
o Branding is the building of trust with employees, customers and stakeholders.
o In marketing terms, the definition of branding is the sum total of a company’s value, including
products, services, people, advertising, positioning and culture.
o Brands give potential clients a firm idea of what they are buying before they buy it, making the
purchasing decision easier.
o Customers trust strong brands because they know what to expect.
o The term ‘brand’ should not be confused with Brand Identity or Corporate Identity. Brand Identity is an
element of the brand experience and we’ll talk about brand identity below.
Advantages of branding:
o The most important reason is that it can help increase your sales. This means that when you need to
increase your prices (because you are a small company, and there are only so many hours in the day)
then your target audience will be accepting of your price increase. Think about it like this - if your
company is built upon a solid brand base, you can build up to the next stage successfully without losing
the trust of your customers.
o Branding also encourages confidence and trust in your product/service - If you do experience a one-off
issue with a product or service, your customers would be more likely to understand, if your brand
ethos proves that you’ll do what it takes to resolve the problem.
o Branding also develops the uniqueness of your product.
Topic: Discuss the concept of product mix in context of width, length, depth and
Product mix or product assortment refers to the number of product lines that an organization offers to
The width of an organization’s product mix related to the number of product lines that the organization
is offering. For example, Hindustan Uni Lever offers wide width of its home care, personal care and beverage
products. Width of HUL product mix includes Personal wash, Laundry, Skin care, Hair care, Oral care,
Deodorants, Tea, and Coffee.
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The length of an organization’s product mix related to the total number of products or items in the
product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23 products; hence, the
length of product mix is 23.
The depth of an organization’s product mix related to the total number of variants of each product
offered in the line. Variants include size, color, flavors, and other distinguishing characteristics. For example,
Close-up, brand of HUL is available in three formations and in three sizes. Hence, the depth of Close-up brand
is 3*3 = 9
the consistency of an organization’s product mix refers to how closely relate the various product lines
are in use, production, distribution, or in any other manner.
Topic: Discuss the uses of intermediaries:
Marketing intermediaries, also known as middlemen or distribution intermediaries are an important part of
the product distribution channel. Intermediaries are individuals or businesses that make it possible for the
product to make it from the manufacturer to the end user, essentially facilitating the sales process.
The agent as a marketing intermediary is an independent individual or company whose main function
is to act as the primary selling arm of the producer and represent the producer to users. Agents take
possession of products but do not actually own them. Agents usually make profits from commissions or fees
paid for the services they provide to the producer and users.
Wholesalers are independently owned firms that take title to the merchandise they handle. In other
words, the wholesalers own the products they sell. Wholesalers purchase product in bulk and store it until
they can resell it. Wholesalers generally sell the products they have purchased to other intermediaries, usually
retailers, for a profit.
Related Reading: Examples of Advertising to Intermediaries
Distributors are similar to wholesalers, but with one key difference. Wholesalers will carry a variety of
competing products, for instance Pepsi and Coke products, whereas distributors only carry complementary
product lines, either Pepsi or Coke products. Distributors usually maintain close relationships with their
suppliers and customers. Distributors will take title to products and store them until they are sold.
A retailer takes title to, or purchases, products from other market intermediaries. Retailers can be
independently owned and operated, like small “mom and pop” stores, or they can be part of a large chain, like
Wal-Mart The retailer will sell the products it has purchased directly to the end user for a profit.
Topic: Briefly differentiate advertising and publicity:
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Advertising is a communications tool which is used to convince viewers, listeners, or readers to do something
about a product, an idea, or a service. It is designed to positively influence people to patronize a product or
It is usually a paid announcement or promotion to entice people to notice and patronize a company’s product
through the use of various media such as radio, television, newspapers, magazines, through fliers, and the
When a company decides to have an advertisement placed in a certain publication, TV, or radio show, it
controls how it is presented on the medium which carries it. It can specify the size, scope, and content of the
advertisement containing its product. Since it is a paid promotion, customers view advertisements as
questionable. It contains only the information that the company specified which is meant to be beneficial to it and
no feedback from customers who have tried it.
Following are the advantages of Advertising:
o Introduces a New Product in the Market:
Advertising plays significant role in the introduction of a new product in the market. It stimulates the
people to purchase the product.
o Expansion of the Market:
It enables the manufacturer to expand his market. It helps in exploring new markets for the product
and retaining the existing markets. It plays a sheet anchor role in widening the marketing for the
manufacturer’s products even by conveying the customers living at the far flung and remote areas.
o Increased Sales:
Advertisement facilitates mass production to goods and increases the volume of sales. In other words,
sales can be increased with additional expenditure on advertising with every increase in sale, selling expenses
o Fights Competition:
Advertising is greatly helpful in meeting the forces of competition prevalent in the market. Continuous
advertising is very essential in order to save the product from the clutches of the competitors.
o Elimination of Middlemen:
It aims at establishing a direct link between the manufacturer and the consumer, thereby eliminating
the marketing intermediaries. This increases the profits of the manufacturer and the consumer gets the
products at lower prices.
o Enhances Good-Will:
Advertising is instrumental in increasing goodwill of the concern. It introduces the manufacturer and
his product to the people. Repeated advertising and better quality of products brings more reputation for the
manufacturer and enhances goodwill for the concern.
Publicity, on the other hand, is the promotion and management of the public’s impression towards a subject.
It is the process of creating news through sponsorship, exhibitions, staging a debate, organizing a tour of the
business, and inventing and presenting an award. Through involvement in these activities, the individual or
company’s name will be extensively mentioned in the media and attract the attention of people to the
individual or for consumers to a company’s products and services.
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Publicity is usually an unpaid promotion, although a minimal cost is incurred for the materials used in the
publicity. Since it is featured in a magazine or newspaper, the company’s name and products being mentioned
by a writer or editor, consumers will see them as a positive feedback about the product and the company.
People will believe in the product if somebody else talks about it.
Topic: Differentiate among pricing approaches:
Pricing is an integral part of the marketing process. The right price can generate more sales; the wrong price
can make your potential customers and clients look elsewhere. The following are six of the most common
approaches to setting prices.
If you're just getting started in your business, offer your customers an introductory rate that's set at a
point somewhere between what other, established businesses charge and the amount you would be paid if
you were doing the work on salary for an employer.
The going rate:
Set your price at the going rate and differentiate your business through things other than price, such as
better customer service.
Splitting the difference:
If your competitors offer a range of prices for the same products or services — some high, some low,
and some in between — split the difference between the top and the bottom of the range so you can be sure
that your price is neither too high nor too low.
Percentage of the results:
Rather than focusing on price, focus on results by tying your fees to the outcomes that you bring about.
For example, if you run a collections business out of your home, you may charge a percentage of the money
that you collect, say 40 percent, or 40 cents of every dollar collected.
If you really want to generate a lot of business quickly, you can dramatically undercut your
competitors' prices. Before you try this approach, understand that some potential clients may be wary of
buying products and services that are priced substantially below the competition. Understand, too, that you
may not be able to keep this approach up for long without doing serious financial damage to your company.
Another option is to set the price at a premium, above your competition. This approach works well
when the product or service you sell can be differentiated from those offered by your competition, and you
can add value that your clients and customers can see and appreciate.
Topic: What are the different pricing strategies? Discuss any two
Pricing is one of the four elements of the marketing mix, along with product, place and promotion. Pricing
strategy is important for companies who wish to achieve success by finding the price point where they can
maximize sales and profits. Companies may use a variety of pricing strategies, depending on their own unique
marketing goals and objectives.
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Premium pricing strategy establishes a price higher than the competitors. It's a strategy that can be
effectively used when there is something unique about the product or when the product is first to market and
the business has a distinct competitive advantage. Premium pricing can be a good strategy for companies
entering the market with a new market and hoping to maximize revenue during the early stages of the
product life cycle.
An example of products using this strategy would be Harrods, first class airline services, Porsche etc.
A penetration pricing strategy is designed to capture market share by entering the market with a low
price relative to the competition to attract buyers. The idea is that the business will be able to raise awareness
and get people to try the product. Even though penetration pricing may initially create a loss for the company,
the hope is that it will help to generate word-of-mouth and create awareness amid a crowded market
A television satellite company sets a low price to get subscribers then increases the price as their customer
Economy pricing is a familiar pricing strategy for organizations that include Wal-Mart, whose brand is
based on this strategy. Aldi, a food store, is another example of economy pricing strategy. Companies take a
very basic, low-cost approach to marketing--nothing fancy, just the bare minimum to keep prices low and
attract a specific segment of the market that is very price sensitive.
Businesses that have a significant competitive advantage can enter the market with a price skimming
strategy designed to gain maximum revenue advantage before other competitors begin offering similar
products or product alternatives.
A games console company reduces the price of their console over 5 years, charging a premium at launch and
lowest price near the end of its life cycle.
Psychological pricing strategy is commonly used by marketers in the prices they establish for their
products. For instance, $99 is psychologically "less" in the minds of consumers than $100. It's a minor
distinction that can make a big difference.
The seller will therefore charge 99p instead £1 or $199 instead of $200. The reason why this methods work, is
because buyers will still say they purchased their product under £200 pounds or dollars, even thought it was a
pound or dollar away. My favorite pricing strategy
What are the channels of distributions? Explain it with examples
Manufacturer-consumer (Direct selling):
o Shortest and simplest channel
o No middleman between the producer and consumer
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o Producers sell directly to customers through door-to-door salesmen, direct mail, own retail
stores, e.g. BATA India Ltd.
o Used generally for selling shoes, clothes, books, etc.
o Very fast and economical
o Expert services of middlemen are not available
o Large investment is required
Manufacturer sells to one or more retailers who sell to consumers. This channel is popular when
retailers are big and buy in large quantities, e.g. departmental stores, super markets. Generally used for
distribution of consumer durables and products of high value like automobiles, home appliances, etc. Relieves
manufacturer of the burden of selling and provides control over distribution.
o Traditional or normal channel
o Suitable where producers have limited finance and narrow product line
o Channel used in case of consumer durables which are not subject to frequent changes in
o Used when retailers are few or geographically concentrated
o Commonly used to sell agricultural products, machinery and equipment, etc
o Longest channel
o Producer hands over entire output to the agent who sales them to wholesalers
o In case of cloth this channel is widely used
o Results in wider distribution of products
Topic: Discuss the essential role of channel member:
The channel is composed of different institutions that facilitate the transaction and the physical
Functions of a Channel
The primary purpose of any channel of distribution is to bridge the gap between the producer of a product
and the user of it, whether the parties are located in the same community or in different countries thousands
of miles apart. The channel of distribution is defined as the most efficient and effective manner in which to
place a product into the hands of the customer. The channel is composed of different institutions that
facilitate the transaction and the physical exchange.
Institutions in channels fall into three categories:
o The producer of the product: a craftsman, manufacturer, farmer, or other extractive industry producer
o The user of the product: an individual, household, business buyer, institution, or government
o Certain middlemen at the wholesale and/or retail level
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A channel performs three important functions. Not all channel members perform the same function. The
o Transactional functions: buying, selling, and risk assumption
o Logistical functions: assembly, storage, sorting, and transportation
o Facilitating functions: post-purchase service and maintenance, financing, information dissemination,
and channel coordination or leadership
These functions are necessary for the effective flow of product and title to the customer and payment back to
Topic: Write a short note on personal selling:
Discuss the successive steps in the selling process:
Personal selling occurs where an individual salesperson sells a product, service or solution to a client.
Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling
involves the development of longstanding client relationships.
A Five Stage Personal Selling Process
Prospecting is all about finding prospects, or potential new customers. Prospects should be ‘qualified,’ which
means that they need to be assessed to see if there is business potential, otherwise you could be wasting your
time. In order to qualify your prospects, one needs to:
Plan a sales approach focused upon the needs of the customer.
Determine which products or services best meet their needs.
In order to save time, rank the prospects and leave out those that are least likely to buy.
Approach means the meeting of the prospect in person by the salesman where he makes face to face contact
with prospects to understand them better. Approach is such a delicate and critical stage of the sales process
that the sales are either won or lost.
It is best to be excited about your product or service. If you are not excited about it, don’t expect your
prospect to be excited. Focus on the real benefits of the product or service to the specific needs of your client,
rather than listing endless lists of features.
Each salesman should understand the reasons as to why prospects raise objections because; each objection
has its roots in the buying decision. An objection is the expression of disapproval of an action taken by
salesman; it is an adverse reason or an argument indicating clearly that the prospect is not yet ready to buy.
All the earlier stages of sales talk namely, prospecting, pre-approach; approach, presentation and handling the
objections have been designed to induce the prospect to make decision to buy so that a sale can be
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Topic: Discuss the importance of sales promotion:
Sales promotion" refers to activities or inducements meant to make people come and buy more of
your product, especially in the short term. Some examples are:
Games or competitions
Free gifts when you buy...
Displays in stores
Loyalty cards or programs
I'll briefly explain four of these:
Games or competitions are meant to make it more fun to consume a product and they also
give the chance that you will get an extra tangible benefit. My favorite of these was when
McDonalds gave away food based on what medals American athletes won at the 1984
Olympics in LA. It was great because the Eastern Europeans boycotted so the US won
everything and we got lots of free food...
Loyalty cards are ones where you present the card at the store and get discounts over stated
Displays are just advertising at the point of sale meant to make you notice the product
Refunds give you cash back as an incentive to buy.
Topic: Product Life cycle and its stages
A new product progresses through a sequence of stages from introduction to growth, maturity, and decline.
This sequence is known as the product life cycle.
The product life cycle is an important concept in
marketing. It describes the stages a product goes
through from when it was first thought of until it finally
is removed from the market. Not all products reach this
final stage. Some continue to grow and others rise and
The main stages of the product life cycle are:
Introduction – researching, developing and then
launching the product
When sales are increasing at their fastest rate
Sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in market or
Final stage of the cycle, when sales begin to fall
Topic: With diagrammatic illustration list down the characteristics of growth,
maturity, introductory and decline (THIS IS BASICALY COVER THE 4 QUESTIONS)
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In this stage, company’s sales and profits starts increasing and competition also begin to increase. The product
becomes well recognized at this stage and some of the buyers repeat the purchase patterns. During this stage,
firms focus on brand preference and gaining market share. It is market acceptance stage. But due to
competition, company invest more in advertisement to convince customers so profits may decline near the
end of growth stage.
Affect on 4 P’s of marketing is as under:
The first of the four product life cycle stages is the Introduction Stage. Any business that is launching a new
product needs to appreciate that this initial stage could require significant investment. This isn’t to say that
spending a lot of money at this stage will guarantee the product’s success. Any investment in research and
new product development has to be weighed up against the likely return from the new product, and an
effective marketing plan will need to be developed, in order to give the new product the best chance of
achieving this return.
At the introduction stage, you should focus on the following marketing factors:
At maturity stage, brand awareness is strong so sale continues to grow but at a declining rate as compared to
past. At this stage, there are more competitors with the same products. So, companies defend the market
share and extending product life cycle, rather than making the profits, by offering sales promotions to
encourage retailer to give more shelf space to the product than that of competitors. At this stage usually loyal
customers make purchases.
Decline in sales, change in trends and unfavorable economic conditions explain decline stage. At this stage
market becomes saturated so sales declines. It may also be due technical obsolescence or customer taste has
At decline stage company has three options:
Maintain the product, Reduce cost and finding new uses of product.
Harvest the product by reducing marketing cost and continue offering the product to loyal niche until zero
Discontinue the product when there’s no profit or a successor is available. Selling out to competitors who
want to keep the product
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Sales Promotion supplements the advertisement explains:
Advertising and Sales Promotion
Advertising and sales promotion both are important tools of promotion mix of a business organization.
Effectiveness of ad-campaign can be enhanced through sales promotion efforts. If sales promotion and
advertising programmers are well-coordinated, they can have significant effect on sales. Announcement of
sales promotion schemes in advertisement-copy helps to make it more eye-catching and helps to break
media-clutter, i.e. even if there are many ad-copies in the media, the ad-copy giving information about some
sales-promotion scheme, viz. free-gift, off-season discount, etc. gets immediate attention. Advertising
develops brand-awareness and brand-popularity. The sales-promotion-schemes of a popular-brand get
customer attention easily while sales-promotion schemes of unpopular-brands do not get much attention.
Hence advertising supplements sales-promotion, i.e. both should be used in combination. However, sales-
promotion should not be used as a long term measure to increase sales, because it is very costly measure.
Following are the main differences between advertising and sales promotion:
Objective of advertising is to inform, persuade, and remind the target customers about the product of
Main objective of sales promotion is to promote the sales. It is directly related to promoting sales.
Short Term, Long Term
Advertising has both short term and long term effect on sales. Advertising creates brand-awareness. Sales
promotion has short term effect on sales..
Advertising may or may not offer any extra economic value or incentive.
Sales promotion offers extra economic value or incentive to the customers, dealers, sales force.
Advertising is more frequent and repetitive than sales-promotion. Sales promotion schemes are launched less
Advertising is very cost effective for communicating message to large audience. Sales promotion is a costly
method as some economic-incentive is given in the form of free gifts, free sample, extra discounts viz. off-
season discount, etc.
Modes of physical distribution
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Supplying distribution is when businesses transport materials from supply to stock. After creating the
products, manufacturers must move these products from the manufacturing plant to the retail store where
the manufactured products will be purchased. Along the way, manufactured products often move to a dealer
and to a distribution center. Supplying logistics also ensures that no steps of the process end up with surpluses
of products, since facilities often have limited space to store products.
When shipping products, businesses can either hire a contract carrier to perform deliveries for a negotiated
price or can hire common carriers, which are businesses that transport products in a given area for a set rate.
The common carriers will provide transportation services to any business. Hired carriers will often not provide
special handling, such as when the business needs a product transported with a special truck.
Businesses often use more than one form of transportation to move products, known as intermodal
transportation. For example, trains can move products over long distances very cheaply, but trains lack
flexibility. Businesses often move products across long distances on a train and then move the products to
specific locations via truck.
In addition to consistent distribution channels, businesses also sometimes send products to consumers very
quickly, such as when customers request that a product arrive by first class. Air cargo can bring products more
quickly to customers. Sometimes, businesses need a temporary place to store the product before the product
is distributed to the customer.
Sales and Distribution
Sales and distribution modules focus on the process of getting in contact with customers, determining a price
through negotiation with the customer and determining how the products will arrive at the customer's
doorstep. Customers must provide an address, choose between shipping options and confirm that a product