Marketing management

Q 1. Why must the managerial functions of marketing be sequential in nature? Answer: Introduction: The main purpose of marketing management is to direct those activities by which the marketing goals can be achieved. According to Cundiff & Still “To achieve the marketing objective-planning, organization, coordination & control is necessary. Whether he is a marketing manager, industrial middlemen or consumer retailer each &every one has to do planning, organization & control of activities to achieve the marketing goals. These activities are called as functions of marketing management or managerial function of marketing.” Above discussion shows that these managerial functions are necessary for every marketer to control over the market or to achieve desired objectives, also they are sequential in nature as one function is proceed by other function & implement after its proceeding function. According to W.J.Stanton There are six managerial functions under the management process. These include: - Determining marketing objectives Planning Organization & coordination Staffing & directing Operation & direction Analyzing & evaluating The brief explanation of these functions is as follows: - Determining marketing objectives: - Setting of objectives is the first and the foremost activity. In the managerial activities involved under marketing, selling of objectives is a first and foremost activity. The objectives determine the extent to which the firms want to move. Marketing objectives can be long-term objectives as well as short-term objectives. The objectives should be clear and unambiguous. The marketing objectives of an organization serve as a guide for the overall activities of an organization. b.Planning: - After deciding the objectives, the second activity is doing the planning. Planning involves manner by which the marketing objectives can be achieved. Planning involves deciding policies, strategy, tactics, procedure, rules & regulations and making programmes, budgets and schedule to achieve the long-term as well as short-term objectives. c.Organization & coordination: - Organization is one of the important functions in managerial functions. Organization means that process of organizing the various activities of various persons involved in achieving the marketing objectives effectively & efficiently. Organization helps in achieving the objectives by following the policies. Organizing activity involves giving information about the work, dividing the work and delegating authority and responsibility and then coordinating the various activities. Coordination also plays a very important role. Without coordination of activities, the activities would be haphazard and there would be underutilization of the resource also coordinating function not only involves coordination of different marketing activities but also coordination among the various departments. d.Staffing & Assembling other resources: - Planning and managing the human resources is also an important function of marketing management. If this function is not done effectively than there can create a lot of managerial problems Human resource is one of the most important resources because it is the only resource, which can take the decision itself. If this function is done effectively than half of problems are already solved. e.Operation & Direction: - After the planning is done accordingly organization structure depicting authority responsibility relationship is formed, adequate and effective manpower resources is hired & trained then there comes the problem of how human resource towards work involve three main ingredients: - Motivation, Communication and Leadership. No plan is worth much unless it is carried out effectively. Our planning can only be effectively carried out with proper direction & control. An effective & efficient leadership is provided to take work from the employees by effective reward & punishment system. Efficient employees are rewarded while inefficient are motivated to improve the performance. f.Analyzing & Evaluating: - It is the last but not the least function of marketing management evaluation of performance lead to employee know where he is going evaluation of performance leads to know how well we are able to utilize our resources and if there is any deviation from the desired performance than the measure are taken to correct it. Evaluation provides a framework so that we should not more too far to correct ourselves. To be effective it is necessary to analyze and evaluate the performance continuously. Managerial Functions of Marketing: - PlanningOrganizingControllingAppraisingMarketing Objectives Co-coordinatingQ 2. What is the basic purpose of a marketing information system? Answer: Marketing is all pervasive, interacts with the external environment. It has to adopt itself to the environment by following a change in its policies, strategies & tactics. Therefore a lot of information is required for all those purpose. Although marketing executive differ widely in their decision making, but there is no doubt that they need information for taking the decisions. Information does not make marketing decision; rather it helps managers to take decisions. Decision may be short or long term in organization but the recognition of the need for sound information on which to base marketing decision is important. So marketing executive require extensive amount of information for taking different type of decision. Marketing information systems includes a set of procedures & methods for the continuous analysis & presentation of information for decision-making. MIS also includes internal record decision support system and marketing research system. Kotler has defined, “ Marketing Information System (MIS) as a system that consists of people, equipment and procedures together, sort, analyze, evaluate and distribute needed, timely & accurate information to marketing decision maker”. According to W.J.Stanton “A marketing information system is an ongoing, further oriented structure designed to generate, process, store and later retrieve information to aid decision making in an organization’s marketing program”. As above definition clear the concept of MIS. It is the application of the systems approach to the task of collecting, organizing, analyzing & interpreting marketing information. After above discussion some characteristics are cleared of MIS, which tell the purpose of MIS. Features & Characteristics of MIS: - Data are regularly updated. They are continuously updated as environmental condition change. Data are converted into useful information i.e., it is an operating process, which convert input of raw data into meaningful & purposeful information. It is future oriented. It is also a storage device for marketing information. The data collected from various sources come form inside the firm (in the form of figure on sales, costs & inventory) & outside it (figure on competitors’ sales & costs, overall economic conditions, changing consumer attitudes etc.). Need and Purpose of a Marketing Information System: The basic purpose of a marketing information are Marketing activity is becoming more complex and broader in scope. The purpose of MIS is to cope up with it. There is a shortening of time space allotted to an executive for decision-making. Executive want readymade processed information to take the decision and it is only possible by a system of marketing information. Scarcity of resources have led the effective and efficient utilization of resources and MIS helps hare a lot by providing up to date information to the executives. The information explosion has led to develop a system, which can process, store and retrieve the information whenever required. There is a great need of framing, modifying and altering the programs & policies of the firm and MIS helps here by making available the required information at the right time. The basic purpose of MIS is clear by above points. One thing should be remembered while applying a MIS in an organization that inspite of some negative characteristics, informal information also plays a major role in people’s decision. Decision makers can not escape informal information, and it is likely to continue as part of input into decision as long as human being are making choices. Its purpose aims at solving problems, wherever information is available also its purpose is not only solve problems but preventing problems to occur. The following diagram gives a picture of Marketing Information System and its working which more clear the concept & purpose of MIS. EnvironmentMarketing Mix Recurrent, Monitored & Requested informationExternal InformationMarketing ManagerRequest for InformationMarketing ResearchMarketing ToolsExecutive ExperienceInternal ReportsInternal InformationEnvironmentWorking of MISMarketing IntelligenceMarketing Information SystemMarketing Environment consumers competitors Distribution Economic condition government technology otherInternal Marketing InformationMarketing ResearchInformation ProcessingMarketing decision-making.Request for analysis regular information.Request for special information.Analytical Systems Q 3. What are the two major types or stages in marketing research design? How do they differ? Answer The research design specifies the overall framework and the specific procedures for collecting and analyzing the data. This is one of the most important steps in marketing research process. Marketing research is carried out in a systematic and scientific manner to make it more effective and useful for marketing management. There are some sequential steps that apply to any research – industrial, commercial, public utilities etc. Marketing Research Design is that one of the step in marketing research process. The problem discovered & the consequent marketing problem definition is an incomplete process if it is done without looking at the broad dimensions of the marketing research design. The conversion of the management problem into the marketing research problem needs further input from marketing management in terms of the specific queries that are sought by them. This is done in the light of the specific available information and the constraints imposed by the organization. If management problem is piling up of stocks, the marketing problem could be the development of marketing strategies for clearance of stocks. Given the marketing problem, the top management / marketing management might feel that they have Rs. 50,000 and the result should be obtained within a month’s time. Research design is the task to decide that the research approach or research design is of which type. Marketing research design can be classified by two categories or is of two types or stages: - Functional Categories Methodology Categories 1. Functional Categories: - This type of marketing research design is further divided into following parts: Exploratory Research: - Exploratory research or study would be necessary if there is not much information available about the ways of clearing the stock i.e., sales promotion, advertisement etc. If the marketing researcher is aware of the availability of relevant information, the problem could be how to describe the relationship between the marketing problems and the available information i.e., increased sales promotion through coupons or freebies would help clear the piling stocks. So it is conducted when researcher need more information about the problem, when experimental hypotheses may be formulated or when new hypotheses are needed. Researchers often use focus group interviews techniques in exploratory research. In exploratory research a moderator leads six to twelve people through unstructured questions on a given topic to develop hypotheses that might lead to more specific research. Once the problem or opportunity is clearly defined, researcher try to describe a market or segment / part of a market by developing summary statistics Descriptive Research: - The descriptive research is the task to find adequate methods for collecting and measuring the data. There are several methods & techniques to collect & measure data. In this research that method is find out which is best suitable for the said purpose. Causal Research: - This research is conducted to test hypotheses about the relationship between dependent variables. For example: - Descriptive research may suggest that a price reduction leads to increased sales of a product but does not say definitely that the price cut was the actual cause the increase in sales. Sales may have increased because of other factors such as decrease in competitors marketing efforts. Causal research on the price cut is not the cause of increased sales or vice-versa. This requires the researcher to keep all factors other than price & sales constant. So if the marketing researcher gets signal from the top management / marketing management that there should be clearly defined solution out of the process of marketing research, the marketing research, the marketing research would have to go for causal type of research study i.e. whether free coupon worth Rs. 10 would pick up the sales by 5%? Predictive Research: - this research is used to forecast values such as numbers of votes, sales revenue etc. For example: - Political pollsters like MARG – India today have for years, used a predictive model to forecast how many seats each party will win in a coming election. Similarly, marketers try & estimates sales volume in different market condition in order to predict the performance of a particular product / brand 2. Methodological Categories: - Same as function category market research design can also be categorized according to the method. There are four methods, which are as follows: - Historical Research: - In historical research part experiences are used for finding the solution to marketing problems. In most marketing research, the preliminary exploration research, the primary exploration stage involves historical research. Survey Research: - In this research surveys are to be carried out for obtaining data’s from respondent in person, by telephone or by mail. Experimental Research: - A certain segment of market is selected under this method & conclusions are arrived on the basis of the information so received from that segment. For example: - The product manufactured is launched in some big cities & conclusions are arrived on the basis of the experiencing obtained from them. Experimental research focus on observing the effect’s that controlled changes in the independent variables like advertising & pricing have on a dependent variable like sales. This is done by attempting to hold at other factors but one being studied constant. The company uses all these methods of marketing research design as per requirement & any one method out of them is not used permanently. Some companies study a single problem by resorting to two methods simultaneously so that the other can examine variety of one method. The difference between both the category of marketing research design can be clear from the following example: - As discusses above sales promotion or sales forecasting is a predictive type of marketing research whose function is to predict. For performing this function research methods are used. So functional category is the part for the completion of which methodological category is used. Q 4. What is the difference between market segmentation and concentrated marketing? Answer: Market Segmentation: Consumers differ widely in terms of space, time, perception & value. They are not homogeneous. If the market is made up of people whose characteristics and wants are different, the market is heterogeneous. Marketers who wish to do an effective job of marketing to people in such a market must identify the characteristics and wants of different groups of people within the overall market, because one marketing mix will not satisfy all of them. Market Segmentation is the process of identification of smaller markets that exists within a large market. These groups are called market segments. According to Phillip Kotler “Market Segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix”. Therefore to be competitive, segmentation has to be carried out. Several brands are now available in the market – HMT, Titan, Timex, Prestige, Ajanta etc. with variety of features. These different brands are available in different places – Company’s showroom, SuperBazar, Co-operative stores, retailers etc. There are many customers living at different places, having different beliefs, perception, life-styles, choices etc. So market Segmentation aims at on or more homogeneous groups of customers & marketers try to develop different marketing-mix for each segment. The purpose is to satisfy all of them. Benefits of market Segmentation: - There may be different demand curves in different in different market segmentation. By segmentation marketers may produce higher sales in markets where they have monopolistic conditions. The benefit occurring from segmentation is explained below: - Minimizes Aggregation Risk: - By adopting one marketing mix strategy for all segments; marketers enhance risk of not being able to satisfy customer needs. An innovative marketer might segment and take away the market. For example: - Maruti entered in Indian Market with small cars in different markets segments too away most of business. Helps know company capabilities: - By looking at a particular segment, company can carry SWOT analysis, which details out the strength & weakness within the company & opportunities and threats outside the company. It enhances company’s capabilities for marketing its product in a particular segment. Provides opportunities to expand market: - By segmenting market, a marketer is able to create new markets for their products. For example: - Ultra Duox has entered into kids shampoo category or promise has entered into just for kids (JFK) toothpaste in 1996. Creates Gains to Customer: - Segmentation results in many wars within the segment such as Coke vs. Pepsi, Polo vs. Mint ‘O’, Tata Salt vs. Captain cook etc. Each time a war goes on, customer is the manner, in terms of added quantity & verity. Limitations of Market Segmentation: - While market segmentation can provide a lot of benefits, this strategy has some drawbacks with respect to cost & market coverage. Some of limitation of market segmentation is as follows: - Market segmentation can be an expensive proposition in both production & marketing of products. From marketing point of view, the marketer has to develop different marketing-mix for different segments. In production, producing in mass quantities is much cheaper than making variety of products. Other expenses like keeping adequate inventories of each style, color, and promotional exp. Also go up. Administrative exp. Also go up because marketer must plan & implement several different marketing programmes. 2. Concentrated Marketing: - Concentrated marketing is one of the market segmentation strategies that a company chooses. It is a market coverage strategy in which company follows one product-one segment principle. The company tries to position its products in the middle of the segment to attract maximum clientele. Foe example: - Ashok Leyland produces-large chassis of machine, which can be used for buses & trucks. The manufacturer gets maximum knowledge about the segments needs and therefore acquires special reputation. Concentrated marketing strategy can also help the small company to stand against a large corporation because the small company can create niches in its one-product one-segment approach by providing maximum verities. Benefits of concentrated marketing: - Because in concentrated marketing its total focus on a single segment of the market, the firm can enjoy the following advantages: - 1.Through research the segment’s wants: - In concentration marketing a firm can thoroughly research the segment and all concentration is on that segment only. For example: - Hero cycles manufacturer can thoroughly research the wants of its segment. 2.Lower Risk: - Because there is a single segment in the market, a firm has a lower risk of not begin able to satisfy its target market. 3.Large scale production: - In production producing in mass quantities in much cheaper than making variety of products. Therefore long run production may be possible under market concentration. 4.Distribution, promotion & price can be keyed to satisfy one segment. 5.Administrative expenses also save because marketer has to make plan & important only one marketing program for its single segment. 6.A firm that is trying to enter a market dominated by a few large firms may gain easier entry by targeting a small segment that the existing competitors are overlooking. The survival of small firms more & more on their ability to concentrate on those specialized segments that are not attract to their large rivals. 7.Stiff competition among competitors for the big segments develops while smaller segments are left untouched. Disadvantages of Concentration: - The organization cannot spread its risk. Thus a decline in the selected segment buying power or a change in tastes or the entry of rivals can have a negative impact on profitability. Sometimes a firm that focuses exclusive on one segment develops a specialist image in that segment. As a result it may encounter difficulties in directing its efforts to other segments. When a firm has limited resources, engaged in only one or few products then concentrated marketing can be used otherwise in case of large market segments, having large resources and existing firm having different product line can use market segmentation and take benefits of minimize risk, more satisfying customers, opportunities to expand markets etc. Q 5. What are the four criteria for effective use of market segment? Answer: The buyers constitute markets and the buyers are all different to each other. It is therefore, necessary to understand & introduce with the buyers in context to different needs. While introducing market, we defined the target market with the needs, money and willingness to spend money. All customers have different needs and also there are several brands are available in the markets i.e. HMT, Titan, Timex, Prestige, Ajanta, Konika etc. with variety of features. Therefore all markets are formed in segments & there segments can further be divided in sub-segments division of market into several segments is called Market Segment. Market segment is the process of dividing a potential market into distinct sub-markets of consumers with common needs and characteristics. A group / Section of customer is very first recognized as per their different choices & necessities & then market can be divided in the sets of consumers. According to Philip Kotler “ Market Segmentation is the sub-dividing of a market into homogeneous subsets of customers, where any subsets of customers, where any subset may be a distinct marketing mix”. According to A. Robert “ Market Segmentation is the strategy of dividing markets in order to conquer them”. Above said definition depict clearly that single marketing systems cannot win all kinds of customers. When any producer divides the customers in separate groups on the basis of their sex, age, income etc. and does efforts to satisfy the basic needs of their respective groups, the process of efforts of marketing so made is called segmentation of market. Criteria for effective use of Market Segmentation: - The seller does not want to deal uniformly with all customers nor he wants to deal separately with each & every customers. He would have made wide sets / classes of the customers. The problem he then faces as to how an efficient segmentation of market is to be made. Which will match with the characteristics of the buyers. While selecting appropriately the characteristics of customers for the segmentation of market, the seller should focus on some requirements so that effective use of market segmentation could be done. To be useful, segmentation of market must exhibit some characteristics that are as follows: - Measurable and obtainable: - The size, profile and other relevant characteristics of the segment must be measurable and obtainable in terms of data. If the information is not obtainable, no segmentation can be carried out. For example: - Customer can be segmented on the basis measurable through AIOD framework, it might not be obtainable because of time limits or budgetary constraints. Substantial: - The segment should be large enough to be profitable. For consumer markets, the small segment might disproportion ally increase the cost and hence products might be priced too high. This might make the segment non-profitable. However for business markets even a single customer might mean big business. For example: - House construction takes several months but with the information technologies under way, CAD & CAM have made it possible to take on even smaller segments from consumer markets. Accessible: - The segments should be accessible through existing network of people at a cost that is affordable. For example: - Targeting rural population can be through Television, Radio and by opening outlets locally. It might not be easy to access hilly terrains for actual distribution of products. Differentiable: - The basis of segmentation should be such that it leads to different segments. For example: - If young & old people behave in almost same way in tempting to eat chips, Ruffle’s Lays must not have fried the two targets as one by combining the segments. Actionable: - The segments, which a company wishes to pursue, must be actionable in the sense that there should be sufficient finance, personnel and capacity to take them all. Hence, depending upon the reach of the company, depending upon the reach of the company, the segments should be selected. General Considerations: - Apart from the above requisites, the segment must have growth potential, be profitable, carriers no unusual risk and has competitors who do not fight directly with the product or brand. These are some requisites for effective use of market segmentation. Once a market has evaluated the different segments for their size, growth & attractiveness and found that they compatible with the company objectives, resources, the obvious step is to go far selecting the market segments. Kotler has suggested five patterns of target market selection: - Single Segment Concentration: - The concentrated marketing strategy normally provides higher returns & therefore it is possible that competitor might be attracted to find their place in the segment. For example: - Reebok concentrated itself in the sports shoe market at premium-end in Oct 1995, there were Nike, Puma & Adidas in that segment. Selective Segment Specialization: - This is known as multistage coverage because different segments are sought to be captured by the company. For example: - Bata shoes were mostly in popular segment until beginning of 1990s. Then it turned itself into premium segment, but it couldn’t help Bata to gain full control of market. After 1995, it has come back again to popular segment. Market Specialization: - Here company takes up a particular market segment for supplying all relevant products to the target groups. For example: - Dhanpat Rai & Co. publishes & sell books covering all types of customers needs – competition books, books for school, colleges, universities etc. Product Specialization: - Product specialization occurs when a company sells certain products to several potential customers wherever they are located. Full coverage: - Big companies can go for full market coverage. For example: - Castrol for lubricants & Coca-Cola for soft drinks follow market coverage. After selection of target market, the next criteria for effective use of market segmentation is to select the strategy of marketing as to which the strategy of marketing as to which is best according to given circumstances & nature of product. An overview of three market coverage strategies will help choose one for a particular company: - Comparison of market Coverage Strategies: FocusUndifferentiated MarketingDifferentiating MarketingConcentrated MarketingProductOne / FewManyOne / FewSegmentAllManyOne / FewMarketing MixOneManyOne / Few Choosing a Market coverage Strategy: Undifferentiated MarketingDifferentiating MarketingConcentrated MarketingConstrained Firm ResourcesMore SuitableLeast SuitableMore SuitableCommon Usage ProductsMore SuitableMore SuitableLeast SuitableDifferent need satisfying productLeast SuitableMore SuitableMore Suitable Market Segment is not merely meant for division of homogeneous customers for the seller but the will have also kept in mind that (i) Segment of market match with the item or not (ii) Is it possible to analyze the segment of market (iii) whether the person, will attract to promotion policies etc. Therefore for effective use of market segmentation above requisites, strategies are to be analyzed & after that implementation of best one. Q 6. Why is it necessary for markets to understand how family roles influence buyer behavior? Answer The modern marketing concept makes customer at the center – stage of organization efforts. Every consumer is unique & this uniqueness is manifest etc. Thus, marketers must properly understand consumer behavior. Consumer behavior is that process by which the decisions relating to the purchase of any product or brand and the selection. It is the new & innovative field of study. It is an effort to understand the portfolio of human purchase & making of predictions. Meaning & Definitions of Buyer Behavior: - Buyer Behavior includes the activities of both end users & intermediate users. It is very necessary for marketer to analyze buyer behavior for finding answer to following questions: - When do the consumer buy? Who does the buying? How does the consumer buying? Where do the consumer buy? Buyer Behavior can be defined as, “ Buying Behavior is the study of all psychological, social and physical behavior of potential consumers as they become aware of, evaluate, purchase, consume & tell other about product& services.” There are several factors that influencing buyer behavior. Buyer behavior does not remain uniform always and it meets changes rapidly. It reasons mainly are the regular variations being introduced in the factors that influence the buyer behavior are as follows: - Cultural Factors: - Culture Sub culture Social Class Social Factors Reference Groups Family Roles & Status Personal Factors Age & life Cycle Stage Economic Circumstances Occupation Life Style Personality & Self Psychological Factors: - Motivation Perception Learning Belief & Attitudes Out of above said factors according to question it is very necessary for marketer to understand how family roles (social factor) influence buyer behavior because of the following reasons: - Family Roles: - Family members constitute the most influential primary reference group shaping a buyer’s behavior. A person’s world starts with the family in which he / she is born. The family has major influence on the behavior of its members. Today, the concept of family has changed in urban population from joint family to nuclear family. So a marketer has to understand both phases of family roles. However the importance of family roles influencing buying behavior can be seen from the advertisements run by Titan watches, Maruti Esteem & Mylanta. We can distinguish between two families in buyer’s life: - Family of Orientation consists of one’s parents. From parents person acquires & orientation toward religion, politics, economics & a sense of ambition, self-worth & love. The parent’s influence on the unconscious behavior of the buyer can be significant. Family of Procreation influence directs on everyday buying behavior namely one’s spouse & children. The family is the most important consumer buying organization in society & has been extensively researched. Each decision made by consumer is taken within the family and are affected by the desires, attitudes, value of the other family members. The family affect on consumer behavior can be traced in two ways: - The family influence on the individual personality characteristics, attitude and the evaluate criteria, Family is both a purchasing and consuming unit & marketing manager is keenly interested to know the customer. These are: Who influence the purchase? Who does make decision of purchase? Who does family purchase? Who does actual use of the product? It is seen often that: - It is mostly the house-wife that has an upper hand in influence the purchase Husband, wife and the children can take decisions of purchase jointly, sometime, opinion of children is given more important, especially when there is product of their use. Any person out of husband, wife & children can bring the product. It is impossible that the purchaser does not actually use the goods. The marketer needs to determine which member normally has the greater influence in choosing various products. Some typical products patterns are: - Husband Dominant:Insurance, Car & Television Wife Dominant:Washing Machines, Kitchenware, Food Equal:Vocation, Housing & Entertainment At the same time, the family members influence can vary with different sub-decisions made within a product category. Thus for a marketer it is very necessary to understand the family roles that influence buyer behavior. If marketer has an-idea of it he can make best strategy for them and serve customers with their choice of products & services. Q 7. For marketing purpose, it is useful to see learning as involving five major concepts. What are these concepts? Explain each one? Answer Marketing concept is a philosophy, an attitude, or a course of business thinking. It holds that satisfaction of the wants of the customers is the economic and social justification of a company’s existence. The customer is the fulcrum around which all business activities (production, financing, purchasing, marketing etc) must revolve under marketing concept, the emphasis is a selling satisfaction and not merely on selling a product. The marketing concept is a consumer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying Organizational goals. According to Phillip Kotler “ The marketing concept may be define as a management orientation that holds that the key task of the organization is to determine the needs wants & values of a target market and to adopt the organization to delivering the desired satisfaction more effectively and efficiently than its competitors”. For marketing purpose, Phillip Kotler has shown five major competing concepts for carrying out marketing activities in any organization. These five concepts are: - The production concept The product concept The selling concept The marketing concept The societal marketing concept The explanation of each concept is as follows: - The production concept: - This concept holds that high production efficiency and wide distribution coverage would sell the product offered to the market. The high production efficiency means that the input-output ratio is favorable. It will lead to economies of scale & decline in cost per unit. Thus, the concept holds that customer favors products with low offered price & easily available product. This orientation of the organization is mostly practiced in situation where demand exceeds supply or product cost is high that can be brought down by mass production. The market situation in most of the developing countries is such that while demand are not available Now there is question arises. “ Is marketing inapplicable in countries where demand exceeds supply for most of the products and the most of the times”? The answer is ‘Yes’. Marketing activities can still be applied in such market situation. For Example: - In India amusement parks are very few, but demand is high. In Appu Ghar (Delhi), it is found that there is great rush on weekends & holidays and even on other day, Appu Ghar is overburdened. What can be done under the circumstances? Discourage demand when overburdened. Raise entry & riding charges Reduce promotion & services Provide alternative amusement parks. In other words, solution lies in demarcating where the purpose is not to destroy but reduce demand to desire levels. Thus we see production concept is applicable in situations where demand exceeds supply. 2.The product concept: - The firm following this concept believes that by making superior products and improving their quality over time, they will be able to attract customer. The underlying assumption is that customer favors quality, performance, innovative features etc. The buyer will admire such products. Given the product concept, superior products are perhaps always welcomed by the customer. But, product is only one element of the total marketing-mix. Thus, better product at high price (because improvement is quality might be at a cost) will not disturb customer budget, it is believed. However, as we shall see pricing is one of the elements of segmentation basis. The division of demographic-on economic grounds of afford-ability would come in the way of implementing such better quality products at high prices. Companies that are technology-driven follow the concept. But a simple ‘love-affair ‘ with the product, without adapting to the market situation, would fail to appreciate that the market for the product might be less receptive of the new products that are with high price tags, not easily available, or customer doesn’t know about them. This means that new product development or improvement of product is desirable if customer is receptive. The total marketing-mix strategy should adapt to such situation where one P-product is emphasized at the cost of other Ps (place, promotion & price) 3.The selling Concept: - The concept adoption comes when there is aggressive selling and promotional efforts. The consideration of this concept is customer buying inertia & resistance. The assumption is that customer, is left alone, and would not buy enough of the company’s product. This sort of customer attitude is mostly found for unsought goods like surgery, insurance, videophone etc. Here hard-sell takes place. The other areas are from the non-profit organization. When used for sought goods like scooters, television, refrigerators, the hard-sell approach entails bad worth of month, complaint, litigation & action by consumer protection agencies. 4.The marketing Concept: - Consumer oriented marketing has rise to the new concept in business known as ‘ Marketing concept’. The marketing concept emphasizes the determination of the requirements of potential customers & supplying products to satisfy the requirements. Marketing should be viewed as integrated process of identification, assessment and satisfaction of human wants. The marketers following consumer orientation regard the creation of customer & satisfaction of his wants as the justification of business. Determination of wants of the customers takes precedence over production. In other words, product is developed & produced to satisfy the needs of the customers. Thus, the emphasis is a selling satisfaction and not merely on selling goods. 5.The societal marketing concept: - Whether customer’s needs and wants should get priority over society’s concern for environment, bottlenecks, poverty, social overheads etc? Do excellent companies concern more for the society or customer? The answer to these basic questions would take company’s missions beyond its own imagination. This concept gives priority to the customer’s need. Thus, a customer prefers Frooti and Dhara in tetra pack. Tetra pack are bio-non degradable. They litter the environment with waste materials. Customer prefer automobile without the use of catalytic converter or CNG or battery because it will mean more price. The central government notified in 1993 that after two-and-a-half year, it would enforce new auto emission standards. In April 1996 the central govt. announced their intention to enforce the notification. Similarly the various washing powders like Surf, Ariel etc. have to add more chemical to make cloths whiter, but they pollute rivers & kill fish. The above situation limit the role of the marketing concept which need redesigning on the part of marketers who propagate such products which might harm social interests. The solution is also provided by many organizations. For example: - Khadi Gramodyog sells recycled eco-friendly paper, chart, greeting cards etc. Thus all marketing concepts holds one thing that the emphasis on selling satisfaction & not merely on selling a product. Modern authors view marketing more than a physical process of distributing goods & services. They feel that marketing represents a distinct philosophy or concept of business or a course of business thinking that has emerged over the recent years. They perceive the creation of customer & satisfaction of his wants as the justification of business. Q 12. The most useful way to classify products is according to whether they are consumer products or industrial products. What are some other ways to classify products into groups? Answer For the success of a firm, it is of utmost importance to plan its product-mix, that covers existing as well as new goods & services that the firm decides to market to its target customers. Successful market operations are built around two essential elements: - Product and Market. The term product is not merely the physically product but the total product including brand, package, label, status of manufacturer. A product may be defined as a bundle of utilities consisting of various product features & accompanying services. Customer does not buy merely physical & chemical attributes of a product. He is really buying want satisfaction. According to William J. Stanton “ A product is a complex of tangible and intangible attributes, including packaging, color, price, manufacturer and retailer’s services, which the buyer may accept as offering satisfaction of wants or needs”. The most useful way to classify product is according to weather they are consumer product or industrial products. But besides above classification the other way to classify the product is according to their durability or tangibility. The following diagram shows the product classification according to their use as well as their durability. Product Classification ProductUsesConsumerIndustrialServicesTangibleIntangibleNon-Durable GoodsDurable GoodsDurabilityTangibility Above diagram shows the classification of product on the basis of their use, i.e., consumer goods & producer’s or industrial goods as well as their durability or tangibility. Following is the brief explanation of it: - Durability of Goods / Product: - Non – Durable Goods: - These are goods, which are normally consumed with one or few uses. These goods are mostly purchased very frequently. For Example: - Food items, toiletries etc. These can be made for mass consumption at the most of the shops with small margin, needing heavy advertisements. For Example: - Surf Excel is advertised most heavily, Tata Salt is available at most of shops with small margin. Durable Goods: - These products are remaining in use months after months and years after years. They are mostly sold through personal selling with high margins at specialty shops. For Example: - Video / Audio systems. Washing machines, Vacuum Cleaner etc. Tangibility of Goods: - Tangible Goods: - Tangible goods are those goods or product, which can be used directly or indirectly by ultimate consumers or industrial consumers. Thus both durable & non-durable goods are tangible goods. Intangible Goods: - The service is normally intangible, perishable and is inseparable from the place or the performer. These are activities or benefits that provide satisfaction to the customers. The activities are the physique clubs, fitness centers and the benefits are repair works and the satisfaction through eating at restaurant or attending a coaching course. Uses of Goods: - Besides above classification of goods the main classification of goods / Products is according to their use: - Consumer Good: - These are meant for use of consumption by the ultimate consumer. For Example: - Bread, Butter, T.V., Cosmetics, Garments are all consumer goods. These are further classified into these categories: - Convenience Goods: - This includes items that consumer buys frequently – Cold Drinks, Cigarettes, Newspapers etc. Shopping Goods: - This includes items which consumer select & buy after making comparison of substitutes on such criteria as suitability, quality, price, style etc. Specialty Goods: - Items in this category must posses unique feather or have a number of brand names or both. E.g., Fancy goods, Stamps, coins, prestige brands of men’s suits etc. Unsought Goods: - They are might be new or existing but are not sought by customers or do not fall in any of above categories. E.g., Solar-operated buses, High definition T.V. etc. Industrial or Producer’s Goods: - These are meant for use in making other products or for rendering a service in the operation of a business organization. They are classified on the basis of use instead of buying habits as in case of consumers goods into five categories: - Raw Material: - Which will become part of another product. It may be natural, agricultural & animal products. E.g., Minerals, Wheat, Cotton, Egg, Raw milk etc. Fabricating materials & Parts: - These are partial or complete items which become part of the final product. They undergo further processing. E.g., pig iron into steel, yarn being woven into cloth, leather being shaped into shoes etc. Installation: - These are long life & expensive major equipments of an industrial user, necessary for further production. E.g., Heavy machinery, Diesel Engines, Trucks etc. Accessory Equipments: - Includes industrial goods usually less expensive & having shorter life then installation e.g., portable drills, hand tools, forklift trucks etc. Operating Supplies: - These are short-lived and low priced items usually purchased with a minimum of efforts usually purchased with a minimum of efforts. E.g., pins, pen, pencil, paper, floor wax, lubricants oils. They are convenience goods of industries. Because the classification system is based on buyer’s behavior, it is actually consumers who determine which category a given product belongs to in a given situation. Thus any given product may be classified differently by different consumers or by the same consumer in different situation. Q 8. Briefly describe the major differences between One – Price Policy & Flexible price policy? Answer: Every firm has to take decisions regarding price from time to time depending upon its pricing policies & conditions prevailing in the market. Companies do not set a single price but rather a pricing structure that reflect variation in the changing situations. A product price policy is a firm’s day-to-day reference point in its day-to-day pricing decision list prices are frequently adjusted to remain flexible and responsive to company and customer requirements, in light of competitors pricing activities. So there are a number of price policies various price policies can be classified under various classes. One of the classes is ‘ Price Flexibility’. Price Flexibility: - A marketer also has to decide whether to sell a product at the same price to all buyer or at different prices to different buyers. The choice is between a one price policy and flexible price policy. The brief discussion about both and major differences between both are as follows: - One Price Policy or Uniform Price Policy: - In case of one-price, the seller charges the same price to similar quantities of the product under essentially the same term of sale. The price may vary according to the quantity of purchase. However, prices charged for different quantities to different customers are the same. For Example: - A seller may sell his product @ Rs. 1,000 per unit if less than one dozen units are purchased and @ Rs. 900 per unit if one dozen or more units are purchased. On the other hand, a seller may follow a single price policy under which the price per unit of a product remains the same regardless of the number of units being purchased. Therefore under one-price policy it is easy to administer prices and eliminates the risk of losing customer goodwill due to differential price treatment. But there is no room for tailoring the price to the customer. So this can be a big problem, especially in industrial marketing where prices are often negotiated between buyer and seller. Flexible – Price Policy: - In case of flexible price policy or variable price policy, the seller sells similar quantities to similar buyers at different prices. For Example: - A seller may offer the same quantity of goods to old customer at lower rates. It is possible that bargaining and haggling between the buyer and seller determine the final price. Generally, prices of customer durables such as refrigerators, automobiles, televisions etc. are negotiated. Difference in price, quantum of purchase, place of delivery, bargaining power of seller & buyer, purchasing parity of the customer, relations of customers with sellers etc. are the cause for bringing out any change in the price. Marketers who practice differential pricing set two or more prices for a product in order to appeal to different market requirements, based upon the segments price elasticity of demand for the product. Thus lower prices are set for the more price elastic market segment and higher prices are set for the more price inelastic market segments. Thus differential pricing can be based upon difference in products, customers, location & time as discussed above. For example: -An appliances manufacturer sets different prices on different models of same basic product are differentiating on a product basis. Lesser of space in office building who charge different prices per square foot based upon floor level are differentiating on a location basis. Hotels that offer discounts to customers over, the age of sixty are differentiating on a customer basis. Difference between both One – Price policy & Flexible – price Policy: - After the above discussion about One – Price policy & flexible price policy the major differences between both policies can be described as follows: - 1.One – Price Policy builds customer confidence in the seller. Persons who have weak bargaining power prefer the stores offering one – price. On the other hand, customers who have high bargaining power prefer flexible price policy. 2.One – Price policy saves time of the buyer and the seller because of no tension of changing in prices, on the other hand, flexible price policy consumer time & preferred by customers who have sufficient time for bargaining & seller who have sufficient time for time to time change in its product according to product, price, place, location & customers. In One – Price policy it is easy to administer price & eliminates the risk of losing customer goodwill due to a differential price treatment. While in flexible price – policy this type of risk remain always. One – Price policy is generally preferred by the small customers while flexible price – policy is widely practiced to tailor their prices to a prospect’s situation refried to as price – shading. There are several more risks associated with flexible pricing than that of One – Price policy such as proactively suffering when devoting two much time & effort to price negotiation, making downward price adjustments routinely etc. while in One – Price policy these risks are not there. There is also less control over pricing under flexible price policy when sales people operate it. While in one – price policy proper control can be made over it. Thus according to market situation any one of price policy can be implemented. When there are a large number of buyers & market is divided into various segments & customers have high bargaining power than flexible price policy can be used otherwise one – price policy may be used. But it is depend on the customer preference & market situation. Q 9. What are the three most important criteria for marketers to consider choosing a channel of distribution? Answer: Distribution of products constitutes an important element of marketing mix of a firm. After development of the product, the marketing manager has to decide channels or routes through which the product will flow from the factory to the potential customers. He has a number of alternatives available to him. The marketer may choose to distribute the product directly to customers or he may use middlemen. But important point is that product should move efficiently & at minimum possible cost from the company’s production department to the ultimate customers. According to Richard Buskrik “ Distribution channels are system of economic institutions through which a producer of goods delivers them into the hands of their users”. According to McCarthy “ Any sequence of institutions from producer to the consumer, including one or any number of middlemen, is called channel of distribution”. Criteria for choosing Distribution Channels: - There is many channels through which the product can be distribute to the customers. But the question arise that given all the channels of distribution to marketers, how do they determine which channel or channels to use. This is very important thing. The decisions regarding be made in terms of company’s overall marketing objectives & strategies. There are two important factors, which place them in the important policy decision area. Firstly, the channels chosen for the firm’s product intimately affect every other marketing decision. Secondly, the channels chosen involve the firm in relatively long term commitments to other firm. Therefore, it is very important that channels decisions are taken with great care. The producers of products, who are guided by three overall criteria, make most decisions: - Market Coverage Control Costs The explanation of these three criteria is as follows: - Market Coverage: - The most important criteria in choosing or selecting a distribution channel is the size of the potential market that needs to be served. The nature of the market is the key factor influencing the choice of channels of distribution. The following features of the market should be analyzed to determined the channels: - Consumer or industrial product market: - If product is indented for industrial market / users, channel of distribution will be short one, because they purchase in large quantity. But in case of consumer product, retailer may have to be included in channel of distribution. Number of potential customers: - If no. Of customer is small, manufacturer may able to sell directly by using his own sales force as customer handling would not be difficult. Size of order: - Direct selling is convenient & economical where customers place order in big lots as in case of industrial goods. But where product is sold in small quantities, middlemen are used to distribute such products. So he uses different channels. Buying habits of customers: - The customer buying habits affect the choice of distribution channels. For example: - Cigarettes are purchased in ones & twos & rarely in packets. This calls for need for retail stalls. Geographical concentration of market: - Use of wholesalers & retailers may become essential to sell the product to the widely dispersed consumers or industrial users. So market coverage is an important dimension for many markets. It should be clear, then, that a major consideration in the choice of a distribution channel is the desired level if market coverage, which depends on the nature & size of the market to be served. Control: - Another important criteria that marketer’s use in determining which distribution channel to select is control over the product. Because control of product changes as change in the title of the product through various channels i.e., it depends upon the size of channel. Short channel of distribution gives greatest control to producer or long channels gives control to middleman. The nature & type of product also influence the control over the product that a marketer has to determine to distribute it. The following factors also affect the decisions regarding the selection of channel for control over the product: - Unit Value: - If unit value of product is lower & turnover is high, channel of distribution will be longer or vice-versa. Product Line: - If manufacturer producing several products channel of dist will be long or vice-versa. Standardized Product: - These products can be distributed through longer channels because their brand names are very popular. Technical Nature: - Technical nature i.e., industrial product, consumer or any other type also affect the decision of choosing channel of distribution. Bulk & Weight & Perish ability also affect the decision. Additionally, many products need products need aggressive selling activity & servicing by retailers in order for exchange to occur. Marketers want to use only those intermediaries who can & will provide such activities in selling the product. Therefore, they will choose a shorter, more direct distribution channel. Costs: - The last important criteria in selecting a distribution channel marketer also must consider costs. Many consumers believe that the shorter the channel, lower the cost of distribution. Also advertisements to sell the product increase the cost & that says – “Avoid the middleman – buy directly from the factory & save!” But intermediaries are performed distribution functions more efficiently than producers can. Thus by using middleman cost of distribution are usually lower. From above points it is clear that a shorter distribution channel generally results in limited market coverage, less control over the product and reduced costs. Marketers must decide which of these alternatives as well as consumer’s needs. Different products, markets & manufactures, of course require different distribution arrangements. In deciding what kind of channel to use, marketers must consider such factors as the market’s size & location, whether the product is intended for industrial use or consumers use. Only then does the real task of distributing products get under way.

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