Complete Notes MKT 357

Theory Notes
Course No.: MKT 357 Credit: 1+1 =2
Course Title: Product Promotion Methods Semester: V (New)
No.1 & 2
Product Promotion Concept
Product it is defined as “anything which is capable of satisfying customer needs.”
Promotion:Promotion reference to the raising consumer awareness of product or brand which

helps in generating sales and create brand loyalty.
Or
Promotion is the marketing function of informing, persuading and influencing the consumer
decisions to buy company products.
Product Promotion it is defined as“Communicating with the public in an attempt to influence

them towards buyingyour products and or service”
It is an act of advertising a goods or service with short /long time goal of increasing Sales.
It is the process in which a marketers are engages in to advertise and sale their product to
consumer.
Objectives of Product Promotion
1. To create awareness or provide information of product:

Promotion is to tell the people about what the product is and its benefits and information about
the product depending on specific target market.
2. To increase the business or customer:
To attract new customer and this can be done by various promotional activities like
adevertising,organizing events, websites etc.to reach up to the potential customer and induce
them to purchase the particular product.
3. To increase the sale:
Once people become customer of business or organization another objective of promotion is to
encourage them to buy more. The promotional activities like discount, special offer, free gifts etc
helps to increase sale of product
Prof.O.R.Thorat (Theory Notes MKT – 357) Page 1

4. To retain customer:
Retention marketing promotion is to turn on one time customer into repeat purchase customer
and providing them information about special offer.
5. To create brand awareness:
To create brand name in mind of customer by keeping its name in front of the consumer and
reinforce its image in mind of customer.
6. To introduce new product:
To introduce new product in market by retaining existing customer and this will help
organization to increase product range and diversification of business.
7. To differentiate the product:
Through various promotional activities company is always try to differentiate its product from
other competitors so that consumer is able to purchase the product according to preference as
compare to other
Importance of Product Promotion
1. Introduce new product:
✓ If your product is new, or you want to introduce new potential customer base,
promotion is key.
✓ Using Experiences from other, Citing research or awards that validate your
productsEffectiveness & desirability &getting media to write & speak about your
product.
✓ Give information to all alert consumers to the fact that your product is available
2. Increase product knowledge & preference:-
✓ Just because Consumers know your product , doesn’t mean they will buy it
✓ Even if you get your product on shelves of major retailer, consumer may not
purchase it if they are familiar with it.
✓ Promotion lets you Communicate your products benefits to consumers and helps
convince them your product is something they need
✓ Helps to convince need

3. Increase sales
✓ Important tool to measure success
✓ many ads funny , cleaver ads but fail to convince
✓ after introduce your product you need to quickly follow with this promotions
✓ Itconvinces“your product better, less expensive or more prestigious than similar

brands.”
4. It helps to increase awareness of product Quality, features, price & functions.
5. Helps to create brand image
6. Helps to motivate consumer to buy
7. Helps to make huge profit through selling of goods.
8. Helps to convinces consumer to but product.
Promotional polices of Product Promotion
1. Loss leader pricing:

Supermarkets and department stores often drop the price on well-known brand to stimulate
additional store traffic. This pays if the revenue on the additional sales compensates for the lower
margins on the loss leader items. Manufactures of loss leader brands typically object because this
practice can dilute brand image and bring complaints from retailers who charge the retailer’s list
price.
2. Special event pricing:
Sellers will establish special prices in certain seasons to draw in more customers. Every august
there are back to school sales.
3. Cash rebates:
Auto companies and other customer goods companies offer cash rebates to increase purchase of
the manufactures product within a specified time period.rebeates can help clear inventories
without cutting the stated list price.
4. Low interest financing:
Instead of cutting its price the company can offer customer low interest finaning.Auto makers
have use no interest financing to try to attract customers.

5. Longer payment terms:
Sellers specially mortgage banks and auto companies stretch loans over longer periods and thus
lower the monthly payments period. Customers often worry less about the cost (the interest rate)
of loan and more about whether they can afford the monthly payment.
6. Warranties and service contracts:
Companies can promote sales by adding a free or low cost warranty or service contracts.
7. Psychological discounting:
This strategy involves setting and artificially high prize and then offering the product at
substantial selling’se.g. Rs.359 now Rs.299
Tools/Techniques/tools of Product Promotion
1. Advertising
2. Sales promotion
3. Public relations
4. Coupons
5. Demonstrations
6. Free samples
7. Discounts
8. Personal selling
9. web-sides
10. Telemarketing
11. Banners and posters
12. E-retailing
13. Sponsorship
14. Exhibits
15. Teleshopping
16. Direct marketing
1. Advertising:

Advertising is any form of paid non- personal presentation of ideas, goods or services for the purpose of
inducting people to buy. It is directed towards increasing the sales of business. Advertising is a paid form
of publicity It is non-personal. They are directed at a mass audience and nor at the individual as in the
case of personal selling. Advertisement is identifiable with their sponsor of originator which is not always
the case with publicity or propaganda
2. Sales promotion:
Sales promotions are the set of marketing activities undertaken to boost sale of the product or
services. Sales promotion is the kind of incentives and techniques directed towards consumers
and traders with the intention to produce immediate or short term sales effects.There are two basic
types of sales promotion: Trade and Consumer sales promotions. The schemes, discounts, commissions
and incentive given to the trade (retailers, wholesalers, distributers)
3. Public relations:
Public relations are defined as management function which identifies, establishes, & maintains mutually
beneficial relationships between and organization and the public’s upon which is success or failure
depends. Public relations consider multiple audiences (consumers, employees, suppliers, vendors etc.) and
uses two-way communication to monitor feedback and adjust both its message and the organization’s
actions for maximum benefit.
5. Demonstrations;
In marketing, a product demonstration (or “demo” for short) is a promotion where a product is
demonstrated to potential customers. The goal of such a demonstration is to introduce customers
to the product in hopes of getting them to purchase those items. Products often sampled during
demonstrations include new products or new versions of already existing products that have
recently been introduced to the commercial marketplace, which the manufactures are attempting
to advertise.
6. Free samples:
Under this method, the producer distributes free samples of his product among the consumers.
Sales representatives distribute these samples from door-to-door. This method is used mostly in
case of products of daily use. e.g., Washing Powder, Tea,
7. Discounts:
Under this method, the customers are offered products on less than the listed price. For example, giving a
discount of 30% on the basis of Liberty Shoes.
8. Personal selling:

Personal selling includes all person -to- person contact with customers with the purpose of
introducing the product to the customer, convincing him or her of the products value, and closing
the sale
9. Telemarketing:
Telemarketing is a method of direct marketing in which the salesperson solicits prospective
customers to buy products or services, either over the phone or through or subsequent face to
face or conferencing appointment scheduled during the call.
10. Banners and posters:
The signs, symbols, figures are helps to promote product. It also shows the direction of use of
product and also image which attracts consumer’s attention towards product.
11. E-retailing:
The sale of goods and services through the Internet. Electronic retailing, or e- retailing, can
include Business to Business and Business to consumer sales. E-retailing revenue can come from
the sale of the products and services, through subscriptions to website content, or through
advertising.
12. Exhibits:
Exhibits, or trade shows, are hybrid forms of promotion between business to business advertising
personal selling. Trade shows provide opportunities for face-to-face contact with prospect enable
a new company to create a viable customer base in a short period of time, and allow small and
midsize companies that may not be visited on regular basis by sales people to become familiar
with supplier and vendors
14. Teleshopping:
Tele- shopping is an e- shopping via video text or other interactive information services
15. Direct marketing:
Direct marketing, the oldest form marketing, is the process of communicating directly with target
consumer to encourage response by telephone, mail, electronic means or personal visit.

Lecture No.3
Market communication
Marketing communication Mix:
• Exchange of market information by marketer or company to the consumer through

various communication channels and compelling message about the organization and its
various products
• It is the set of all marketing tools used by retailer or sales manager to communicate about
products features, concepts and quality to potential consumer for increasing sale.
• Coordinate promotional messages delivered through one or more channels such as print,
radio television, mail, and personal selling.”
• It means firm attempt to inform and remind consumers directly or indirectly about the
product and brands that they sell.
• Marketing communication is the promotion part of the marketing mix.
Importance of Market communication:
1. Creating brand awareness

2. Expressing competitive advantages
3. Attracting talents
4. Informing investment communicating
5. Fastering goodwill
Elements of Communication Mix/Marketing Communication Mix:

1. Advertising:-
❖ Any paid form of personal and non-personal presentation and promotion of

product features in front of consumer for Increasing Sale.
❖ it is promotion of ideas , goods or service by identical sponsor.
❖ four characteristics
1) Persuasive 4) Non personal
2) Paid by identified sponsor
3) Disseminated through mass channels of communication
❖ It may promote the adoption of goods, services, persons or ideas.
❖ As compare to personal selling it is viewed much cheaper way of reaching consumers.
❖ it effects are best measured in terms of increasing awareness & changing attitudes &
opinions not creating sales.
❖ its impact on sale is difficult to isolate because many factors influence sales. (Long run
best viewed)
❖ by use of symbols & images can help to differentiate products & services that otherwise
similar.
❖ it helps to create & maintain Brand equity.
2. Public relation
“A management function which identifies, establish & maintain mutually beneficial relationships
between organizations & publics upon which success or failure depends”
➢ consider multiple audiences (Consumers, employees, suppliers , vendors ….etc)
➢ use 2 way communication to monitor feedback & adjust both its massage & the
organizations actions maximum benefit
3. Direct Marketing:-
✓ Oldest form of marketing
✓ it is the process of communicating directly with target customers to encourage

response by telephone , mail, electronic means , or personal visit.

✓ Users of direct marketing include retailers, wholesalers, manufacturers and
service providers and they use variety of methods including direct mail ,
telemarketing , direct response adv., online computer shopping services,
cable shopping networks & infomercials.
4. Direct selling or personal selling:-
❑ it includes all person to person contact with customers with purpose of introducing the
product to the customer , convincing him or her of the products value , and closing the
sale.
5. Sales promotion:-
“It is the marketing process which highlights the main points of the products for boosting sales.”
❑ it is direct inducements that offer extra incentives to enhance or accelerate the products
movements from producer to consumer.
❑ it directed at the consumer or trade
❑ Consumer promotion such as Coupons , sampling, premiums, price packs (Quantity with
low cost) low cost financing deals encourage repurchase etc
6. Sponsorship:-
✓ Sponsorships or event marketing, combine advertising and sales promotion we do with

public relations.
✓ Sponsorships increase awareness of company or product, build loyalty with specific

target audience, help to differentiate product from its competitors, provide merchandising
opportunities, and impact on bottom line.
✓ Build long term associations.
7. Exhibits:-
✓ Exhibits or trade shows are hybrid forms of promotion between business to business
advertising or personal selling.
✓ Trade show provide opportunities for face to face contact with prospects , enable new
companies to create viable customer base in short period of time.
✓ Many trade shows generate media attention; they have also become popular venues for
introducing new products.

Marketing Communication Process:
For Effective Communication, the marketer should know how communication works? Following are
the nine elements that are involved in the marketing communication process
1. Sender:
The party or person who is sending the message to the other party or person is the sender.
Sender must know what consumer wants their performance and also feedback from
thecustomer. He is person who wants to send a deliver message up to receiver e.g. advertising
company
2. Encoding:
The conversion of thought into the meaningful symbols is called encoding.
3. Message:
The group of symbols transmitted by the sender is called a message. This can be idea, concept
or new innovation information.
4. Media:
The channel of communication through which transfers the message from sender to receiver is
called media. e. g. Print, audio-video, leaflets etc.
5. Decoding:
The conversion of symbols into meaning by the receiver is called decoding.
6. Receiver:
The sent message received by another person or party is called the receiver. He is a person
who receive message from sender. e.g. consumer, farmer

7. Response:
The reaction shown by the receiver before the message is called response. Either positive or
negative or either consumer prefer that product or not.
8. Feed Back:
The portion of the response of the receiver that is sent back to the sender is called feedback.
9. Noise:
The unplanned distortion during the process of communication due to which the receiver
understands the wrong meaning of the original message is called noise. The effective message
is that where the process of encoding is matched with the decoding of messages. The message
sent should be consisted of words and symbols that are known to the receiver.
Steps in developing effective marketing communications:-
Identify the target audience
Determine objectives
Design Communication
Select Channels
Establish Budget
Decide on Media mix
Measure Results
Manage your Integrated Marketing Communication

Developing effective marketing communications requires eight steps.
1. Identifying the target audience :-

A potential buyer of the company’s products, current users, decides, or influences and
individuals group particular publics or the general public.
2. Determining the objectives :-
Category need, brand awareness, brand attitude, brand purchase intension.
3. Designing the communications :-
message strategy (management searches for appeals, themes, or ideas that will tie in the
brand positioning and help establish points of parity or points of different), creative
strategy (the way marketers translate their messages into a specific communications) and
message source (message delivered by attractive or popular sources can achieve higher
attention and recall which is why advertisers often the use celebrities as spokespeople).
4. Selecting the channels :-
Means to carry the message become more difficult as channels of communication become
more fragmented and cluttered.
5. Establishing the budget :-
Industries and companies vary considerably in how much they spend on marketing
communications. Expenditures might be 40 percent to 45 percent of sales in the
cosmetics industry, but only 5 percent to 10 percent in the industrial equipment industry,
with company to company variation
6. Deciding on the media mix :-
companies must allocated the marketing communications budget over the eight major
modes of communication: advertising, sales promotion, public relation and publicity,
events and experiences, direct marketing, interactive marketing world of mouth
marketing and the sales force.
7. Measuring the results :-
after implementing the communication plan, the company must measure is impact by
asking members of the target audience whether they recognize or recall the message, how
many times they saw it , what points they recall, how they felt about the message and
what are their previous and current attitudes towards the product and company.
8. Managing integrated marketing communications (IMC) :-

Define as a planning process designated to assure that all brand contacts received by a
customer or prospect for a product, service or organizations are relevant to that person
and consistent over time. This planning process evaluates the strategic roles of a variety
of communications disciplines and skillfully combines these disciplines to provide
clarity, consistency, and maximum impact through the seamless integration of messages.
Lecture No.4
Planning
Definition:
• Marketing managerial planning process it is the central instrument used for directing and
coordinating marketing efforts to achieve goals of organization
• Marketing planning is a logical sequence of activities leading to the setting of marketing
objectives and formulate of plans for achieving
The Marketing Planning Process:
Planning is vital for successful marketing. Business needs a plan that will help it to achieve its
objectives. This involves creating a successful marketing plan.
The marketing planning process is made up of the following steps:
Situational Analysis
Establishing Marketing Objectives
Identifying Target Markets
Developing Marketing Strategies
Preparing a Marketing Plan
Implementing, Monitoring and Controlling

1. Situational Analysis
The situational analysis asks questions like ‘where are we now’? It examines the marketing
environment, customer needs and wants. Market research is an important part of this step.
It looks at the market in terms of size and growth, needs of the target market and trends in
buyer behavior. The performances of products are examined and major competitors are
identified.
A major part of the situational analysis is the prediction of market opportunities, this is where
the SWOT analysis comes in which is explained in detail later.
2. Establishing Marketing Objectives
Marketing objectives need to be established; often the objectives in the business plan can be
used as a guide for marketing objectives. Marketing plan translates the businesses objectives into
marketing terms.
3. Identifying Target Markets
Businesses break down the market into smaller segments which is called market segmentation.
The business then decides on the customers it will focus on, this group is called the target
market.
4. Developing Marketing Strategies
Management must then design marketing strategies that will allow the business to satisfy the
wants of this market and achieve its marketing objectives.
Strategies should:
✓ Satisfy the needs of the target markets
✓ Meet the objectives of the business and marketing plans
✓ Capitalize on corporate strengths and minimize the effects of any weakness
✓ Work together in achieving overall marketing objectives
The marketing mix refers to the combinations of the four factors that make up the core of a
business’s marketing strategy. It is designed to satisfy the needs and wants of the target markets
and achieves the marketing objectives. The four elements of the marketing mix are the product,
price structure, promotional activities, distribution channels (place). Each element is
interdependent and the co-ordination of these variables makes up the business’s marketing
tactics.

5. Preparing a Marketing Plan
This involves drawing all the information discussed above into a coherent and logical report.
The marketing plan sets out how the plan will be implemented and includes a financial analysis.
It will also outline how performance will be monitored, including the various controls that will
be used.
6. Implementing, Monitoring and Controlling the Marketing Plan
Marketing management is the process of monitoring and modifying the marketing plan.
Monitoring compares actual performance against standards and then makes modifications
accordingly.
Product Positioning:
Definition:
Positioning:It refers to all the activities undertaken by a marketer to create and maintain the
image of product in the minds of customers as against competitor’s brand.
Product positioning:
• Itis the image that a product produces in the mind of customers in comparison to the
competitors’ products and also in comparison to other products of the same company.
• It is arranging for a product to occupy a clear distinctive and describe place relative to
competitive product in minds of target consumer.
Example
• The brand “Bisleri” stands for purity.
• The brand “CeatTyre” stands for better grip.
Elements of Product Positioning:
1. Product image:
This is one of the important elements which create impression in the minds of the customer due
to its products quality, design, price, features, packaging types of services and durability etc.
2. Company image:
A product will be identified in the name of the company due to its reputation and goodwill in the
market.
3. Competitor image:
A product image will be built in consumer mind keeping in view the competitors product.
Consumers have a tendency to compare a product always with that of market.

4. Consumer image:
Consumers mind is the ultimate place where positioning is to be made. The consumer behavior
process has to be kept in mind so as to positioning the product in the minds of consumers at an
appropriate time and places.
Product Positioning Strategies

1. Positioning by specific product attributes & benefits
2. Positioning for user category
3. Positioning for use / Application
4. Positioning by price/ quality
5. Positioning against another product class
6. Positioning against another competitors
7. Positioning by Corporate Identity
8. Positioning by cultural symbols
1. Positioning by Product Attributes and Benefits associating a product with an attribute, a
product feature or a consumer feature. Sometimes a product can be positioned in terms of two or
more attributes simultaneously. The price/ quality attribute dimension is commonly used for
positioning the products.
e.g. Colgate offers benefits of preventing cavity and fresh breath
2. Positioning by product user category
Here the persona (role) of the product is associated with the User.
Eg. Celebrity with cosmetic products
Remand suits by executives.
3. Positioning by price/ quality
The positioning is done based on price and quality of the product.
Premium products are positioned like this.
Eg. Olay.
4. Positioning by use or application
Specific image or position for a brand is to associate it with a specific use or application.
Eg. Surf Excel haina!
OPPO- Selfi expert

5. Positioning by product class
Positioning by product class can be done if two products lie in the same product class. Thus by
joint promotions, both of these products improve their positioning.
Example – Get a toothbrush with a tooth paste free.
6. Positioning by competitor
This is similar to positioning by product class, although in this case the competition is within the
same product category.
Eg. Two perfumes
7. Positioning against Corporate Identity
Some companies use their corporate name to endorse products.
Example, Tata, Godrej etc
8. Positioning by cultural symbols
The cultural symbols are used to differentiate the brands.
Examples: would be MDH-DegiMirch position as royal culture.
Air India by Mahajaja
Product Differentiation:
Definition:
• The process of distinguishing a product or offering from other to make it more attractive to a
particular target market.
• Product differentiation refers to many variation is product characteristics and features physical
products vary in their potential for differentiation
Differentiation variable related to Product are as follows:
1. Form
Many products can be differentiated in form, size, shape or physical structure of product.
2. Features
Most products can be offer with various features that supplement the products basic function being
first to introduce new features is one of the most effective way to compete.
3. Performance quality
Most products are established at performance quality at which product characteristics design,
appropriate level the target market and competitor’s performance levels.

4. Conformance quality
Buyers expect product to have high conformance quality which is the degree to which all the produce
units are identical and meet the promised specifications.
5. Durability
Durability is measure of the product expected life operating life under natural or stressful conditions
is valued attributes for certain products.
6. Reliability
Buyers refers product that are easy to repair reparability is the measure of easy of fixing product
when it malfunctions or fail.
7. Style and Design
Most buyers refer the product are differentiated on basis of product style and design i.e.
colour,attributes,functions,features,packaging material and brand awareness of product.
Objectives:
1. To develop unique position to potential consumer
2. To differentiate primary product to competitor product.
3. To move product from competing base such factor product characteristics distribution strategy and
promotional variables.
Difference between the Product differentiation and Product Positioning
Sr. No Product differentiation Product Positioning

1 Product differentiation is related with physical Product positioning is the concern with psychology
changes in product of consumer
2 It’s part of product mix It’s part of Promotion Mix
3 Product ingredient features design, style are Product,Brand,logo ,Tag line, symbol are important
important factors factor
4 It is a tangible element of marketing It is an intangible element of marketing
5 It requires innovation and creating different Positioning market communication with target
attributes and features in product audience is important
6 Market focuses on creating different features toFocuses on how product create its image against
differentiate product from competitor competitors product in minds of consumer
7 Attempt is made to endow the product with Attempt is made to launch that attributes in minds
certain attributes of consumer

Lecture No.5
Product Marketing
Market Segmentation
Market segments refer to the sub – classes of the market reflecting sub – classes of wants and the
process of conceptually distinguishing segments is known as the process of market segmentation.
Market segmentation is the identification of portions of the market that are different from one
another. Segmentation allows the firm to better satisfy the needs of its potential customers.
Segmentation:
Definition of Market Segmentation:
“Market segmentation is the process of dividing a market into distinct subgroups of consumers with
distinct needs, characteristics, or behavior, who might require separate products or marketing
mixes.”- (Philip Kotler)
Or.
Market segmentation is the sub division of market into homogeneous subset of customer.
Types/ Bases or criterion for Segmentation in consumer markets
The different bases for segmentation put different emphasis on what people in the market SAY,
ARE, or DO. Consumer markets can be segmented on the following customer characteristics.
1. Demographic segmentation
2. Psychographic segmentation
3. Geographic segmentation
4. Behavior segmentation
5. Multiple / Hybrid Segmentation
1. Demographic Segmentation:
It consists of dividing the market into groups based on variables such as age, gender family size,
income, occupation, education, religion, race and nationality. In general, the customers falling in
the same income, age category have similar type of needs/buying behavior. Hence demographic
segmentation is the most common basis of segmentation used for segmenting the retail
consumer. The variables of demographic segmentation used by most of the retailers are
described below:

1. Gender (Male / Female)
2. Age (Young / Middle Age / Old Age, etc.)
3. Income (Low / Medium / High)
4. Occupation (Service / Business)
5. Education (Illiterate / Secondary / Senior Secondary / Graduate / Post Graduate etc.)
6. Nationality (Permanent Resident of the country in which the person is residing; or not)
7. Social Class (Lower / Middle / Upper etc.)
2. Psychographic Segmentation:
It is based on the psychology related parameters such as Attitude, Interest, Opinion and values of the
target segment. It assumes that even the customers with the same demographic profile can have
varying psychographic behavior. E.g. organizations that deals with environment friendly products/
services needs to mainly target the customer who have a concern for the environment. Companies
which deal with health related products and services need to mainly target the buyers who are health
conscious. Companies which are dealing with herbal products needs to target the buyers who have
their values embedded in the traditional Indian system. Companies which are dealing with CSR need
to target shoppers who have a concern for the environment along with their needs.
3. Geographic Segmentation:
It is based on the geographic criteria nations, states, regions, countries, cities, neighborhoods, or zip
codes. Retailers which are manufacturing location specific products
/ providing location specific services have to take care of the geographical aspects such as:
Location of the Area: Which particular country/state/ district/ village etc.
Size of the Area: Highly populated/ less density of population etc.
Climate: Tropical Area/ Hot Weather Area/ Cold Weather Areas etc.
4. Product based/ Behavioral:
Every Customer expects a particular benefit from the product he purchase / the service he avails. This
expectation varies from person to person. According to this perception of the target customer, the
companies segment their target customer on the basic of:
Benefit sought: Value for money, one time users etc.
Usage Rate: Highly populated / less density of population etc.
Brand Loyalty: Brand loyal, Brand changers etc.
Occasions: Regular usage, Festival time usage of product etc.

5. Multiple / Hybrid Segmentation:
Marketers increasingly use combinations of segmentation bases to identify smaller, better defined
target groups. Companies often begin by segmenting their markets using a single base, then expand
using other bases. This is called Hybrid segmentation. One good example of multiple or hybrid
segmentation is ‘geodemographic segmentation’ which uses both geographic and demographic bases.
Types/ Bases or criterion for Segmentation in con markets
Following are the characteristics on which industrial markets are classified
1. Types of Organisation : Manufacturing, Manufacturing and Marketing, Trading,
Institutional, Government, Private, Multinational or Transnational.
2. Demographics : Size of employees, Size of Sales volume, Corporate Size, Number of
Manufacturing plants, Number of Offices and service centres, Location of office plants and
service centres.
3. Type of Product : Processing and value Addition, Food Processing, Meat and Meat
Processing, Fruits and vegetables processing, cereals and Pulses oilseed processing, Milk and
Milk Products,etc.
4. Type of Services : Buying, Selling, Retailing, Financing, banking, Distribution, Grading,
Packaging, Wholesaling and Transportation.
5. Raw material : Fuels, Chemicals, Cement, Sugar, Timber etc.
6. Source Loyalty : Weak , Medium, Strong, Absolute, First Preference, Second Preference.
7. Kind of Commitments : Contracts, Agreements, Financial Aids.
Benefits/Importance of Market Segmentation:
Segmentation helps the retailer to customize its products and tailor the promotional campaigns. The
purpose of this segmentation is to help the retailers identify the most favorable segment which can be
targeted at first and which segments to be targeted in the later stages. The significance of the retail
market segmentation recess is described below:
1. Development of Marketing Mix:
While deciding the 4 Ps (now extended to 7 P3) of marketing, a retailer has to take every decision of
Pricing, Promotional campaigns etc. depending on the target segment.
2. Store Location Decision:
Whenever a retailer has to open a store or has to consider expansion of his business, he analyzes
various areas to select the store location. Some of the areas have a very good visibility, excellent

parking facilities, and good traffic flow while others are exactly reverse. Now the retailer has to
identify that in which area his target customer segment is available. A very visible location but no
target buyer nearby is not worth, and vice versa.
3. Understanding Customer Behavior:
In the overall market, different customers behave differently due to difference in their tastes and
likings. Once the market segmentation, this heterogeneous market is divided into small groups with
similar needs and tastes. Now it becomes very easy for the retailer to understand the behavior of
every segment separately and to satisfy their needs accordingly.
4. Merchandising Decision:
Once the store location decision is finally made, a retailer has to decide the merchandise mix i.e.
which items to be stored in the retail store and which items are to be neglected. This is because it is
not possible for the retailer to store every item on the shelf as every square cm of the retail space has
a cost. So the retailer has to decide the merchandise mix very efficiently and the retailers prefer to
stock mainly the fast moving items on the shelf.
The segmentation helps the retailer to understand the target market needs. He comes to know that
what are the needs of the shoppers residing in around his retail store and this helps him in deciding
the perfect merchandising mix.
5. Promotional Campaigns:
There are various online, offline and personal ways of promoting a product / service to the target
customer. Some of the customers are attracted by the banners / hoardings. Some of the people like
wall paintings. Some of the tech savvy customers can be reached by online advertisements options.
Some customers can only be satisfied by meeting them personally and answering their queries. The
segmentation helps the retailer to reach the right type of consumer at the right time in the right way.
6. Positioning:
Segmentation helps a retailer in positioning itself in the minds of the target customer in a particular
Way. E.g. Dabber has positioned itself as the herbal brand, LIC ' (Life Insurance Corporation of
India) has positioned itself as the most reliable insurance services provider in the Insurance Industry,
etc.

Importance of Market Segmentation:
1. Identify potential buyer.

2. Identify needs of consumer.
3. Increases market share.
4. Effectively meet consumer needs.
5. Help to implement marketing strategy effectively.
6. Help to locate distinctive consume groups within a given market and helps to distinguish
them from one another.
7. Help to divide and conquer market.
8. Help to achieve the specialized in required product.
Demerits of Market Segmentation:

1. It increases the cost of production and marketing.
2. Selective segment are chosen the advertising and promotions make carry heavy expenses.
3. It also leads to increase in overhead expenses.
Market Targeting:
It is the process of choosing one or more segments for designing the marketing strategies to achieve
firm’s objective.
Patterns of target Market Selection:

1. Single Segment Concentration
2. Selective Specialization
3. Product Specialization
4. Market Specialization
5. Full Market Coverage Product Marketing
1. Single Segment Concentration
✓ Also known as the “be a big fish in a small pond”
✓ Through concentrated marketing, an industry achieves a strong understanding of the
segment’s needs,
✓ Developscompetitive advantages to accomplish a strong presence in the given segment.
✓ Through segment leadership, it captures an elevated return on investment.
✓ Mahindra and Mahindra – Tractors- Agriculture market.
2. Selective Specialization

✓ This is Multiple-segment strategy, also known as a Differentiated strategy.
✓ Different Marketing mix is offered to different segments.
✓ Product may or may not be different.
✓ This multi-segment strategy has the benefit of spreading a firm’s hazard and gives it
larger presence in an industry.
✓ Maruti- Four wheelers – for different classes like economy, luxury
3. Product Specialization
✓ A firm specializes in a specific product and vends it to numerous segments.
✓ For each market segment the company would have to appropriately modify several
elements of the marketing mix, but what it achieves is a strong repute in a particular
product area.
✓ The disadvantage of this strategy is a technological revolution that may threaten the
business of the company.
✓ A firm may specialize in water purifiers and may decide to target homes, institutions,
commercial research labs, and government establishments.
4. Market Specialization
✓ A firm concentrates on serving the various requirements of a specific customer
group.
✓ The firm achieves a well-built status in serving this customer group.
✓ The disadvantage of this strategy is major shift in the attractiveness of the given market
segment, would threaten the entire business of the company.
✓ Johnson & Johnson- baby products- children
5. Full Market Coverage
✓ The company tries to cover all market segments through their products.
✓ Huge firms can take on a full market coverage approach.
✓ Firms can cover the market through two ways:
a) Differentiated marketing or
b) Undifferentiated marketing.
✓ In differentiated marketing, the firm works in numerous markets, but designs an
explicit marketing mix for each market segment, that it selects to target.

✓ In undifferentiated marketing, the firm practices mass marketing by going after the entire
market with one marketing mix.

Lecture No.6
Product Mix
Product Mix
• A range of associated products that yields larger sales revenue when marketed together
then if they were marketed individually or in isolation from others.
• A product Mix is the set of all products & items of particular seller offer for sale
• Set of all products offered for sale by a company is called as product mix. Product is the basic
element of marketing mix because all other elements are required only when there is product.
It is the center of all the marketing activities.
Elements of Product Mix/Classification of Product Mix:
• Product line:A group of closely related products in market.
Every Products Mix includes 4 Important Elements:-
Width Total Numbers different Product lines of Company

E.g. HUL, Proctor and gamble, Godrej, Tata , Reliance having product mix width of
more than five lines
Length Total number of items in each line
The length element of product mix refers to number of products in a given product
line. You should also describe it as the number of stock keeping units or SKUs
accompany carries in a product line. For instance, the length of a grocery retailer’s
soft drink product line is the number of distinct brands it carries.
Depth No of variants brands offered of each product in each product line.
Depth is closely related to length in the product mix in the sense that it offers the
consumer options when selecting a given product in a product line. For instance, you
can buy soft drink in a 2 liter bottle, a six or 12pack of cans , a 20 ounce bottle or
other sizes. You can buy dish soap in liquid, powder or gel form. These options
further enhance your flexibility as a buyer.
e.g. Rin Comes in 2 scents, park Avenue Deo Comes in 3
Consistency How Closely related….
Degree or Extent of Similarity between Product lines with respect to end use,
technology , production techniques/ requirements and distribution channels or some
other way

Product
• It is defined as anything which is capable of satisfying customer needs.
• “A product is anything that can be offered to a market for attention, acquisition, use or
consumption and might satisfy a want or need.”(Philip kotler).
• Products refer to tangible and intangible goods like physical objects, services, events,
persons, places, organizations, ideas or combinations of these.
Components of product:-
• The core product

• The associated features
• The brand name
• The logo
• The package, and label
Product Classification:
Product can be broadly classified on the basis of (1) use, (2) durability, and (3) tangibility. Let us
have a brief idea about the various categories and their exact nature under each head, noting at
the same time that in marketing the terms ‘product’ and ‘goods’ are often used interchangeably.
1. Based on use,
The product can be classified as:
(a) Consumer Goods; and
(b) Industrial Goods.
(a)Consumer goods:
Goods meant for personal consumption by the households or ultimate consumers are called
consumer goods. This includes items like toiletries, groceries, clothes etc. Based on consumers’
buying behavior the consumer goods can be further classified as :
(i) Convenience Goods;
(ii) Shopping Goods; and
(iii) Specialty Goods.
(i)Convenience Goods: Categories of convenience goods which are bought frequently without
much planning or shopping effort and are also consumed quickly. Buying decision in case of
these goods does not involve much pre-planning. Such goods are usually sold at convenient retail
outlets.
(ii)Shopping Goods: These are goods which are purchased less frequently and are used very
slowly like clothes, shoes, household appliances. In case of these goods, consumers make choice
of a product considering its suitability, price, style, quality and products of competitors and
substitutes, if any. In other words, the consumers usually spend a considerable amount of time
and effort to finalize their purchase decision as they lack complete information prior to their
shopping trip. It may be noted that shopping goods involve much more expenses than
convenience goods.
(iii) Specialty Goods:Because of some special characteristics of certain categories of goods
people generally put special efforts to buy them. They are ready to buy these goods at prices at
which they are offered and also put in extra time to locate the seller to make the purchase. The
nearest car dealer may be ten kilometers away but the buyer will go there to inspect and purchase
it. In fact, prior to making a trip to buy the product he/she will collect complete information
about the various brands. Examples of specialty goods are cameras, TV sets, new automobiles
etc.
(b)Industrial Goods:
Goods meant for consumption or use as inputs in production of other products or provisions of
some service are termed as ‘industrial goods’. These are meant for non-personal and commercial
use and include
(i) Raw materials and parts:These includes raw materials and manufacturing materials and
parts e.g. farm products, cement wire etc
(ii)Capital items:These are industrial product that adds in the buyer’s production or operation
including installations, accessary equipment.
(iii) Operating supplies and services:suppliers are the convince products of the industrial field
because they are purchased with a minimum of efforts or comparisonsuch as lubricants,
stationery, legal advisory, management consultancy
2. Based on Durability
The products can be classified as :
(a) Durable Goods; and
(b) Non-durable Goods.
(a) DurableGoods:Durable goods are products which are used for a long period i.e., for months
or years together. Examples of such goods are refrigerator, car, washing machine etc. Such goods

generally require more of personal selling efforts and have high profit margins. In case of these
goods, seller’s reputation and pre- sale and after-sale service are important determinants of
purchase decision.
(b)Non-durable Goods: Non-durable goods are products that are normally consumed in one go
or last for a few uses. Examples of such products are soap, salt, pickles, sauce etc. These items
are consumed quickly and we purchase these goods more often. Such items are generally made
available by the producer through large number of convenient retail outlets. Profit margins on
such items are usually kept low and heavy advertising is done to attract people towards their trial
and use.
3. Based on tangibility
The products can be classified as:
(a) Tangible Goods; and
(b) Intangible Goods.
(a) Tangible Goods: Most goods, whether these are consumer goods or industrial goods and
whether these are durable or non-durable, fall in this category as they have a physical form that
can be touched and seen. Thus, all items like groceries, cars, raw-materials, machinery etc. fall in
the category of tangible goods.
(b) Intangible Goods: Intangible goods refer to services provided to the individual consumers or
to the organizational buyers (industrial, commercial, institutional, government etc.). Services are
essentially intangible activities which provide want or need satisfaction. Medical treatment,
postal, banking and insurance services etc., all fall in this category.

Marketing Channels:
Definition:
Marketing channel is a set of practices or activities necessary to transfer the ownership of goods
and to move goods from point of production to point of consumption and a such which concern
of all the institutions at all the marketing activities in the marketing process.
Role of Marketing Channel in marketing strategy:

1. To link between the producers to consumer
2. To perform the sales advertising and promotion
3. To influence the farm pricing strategy.
4. Offering the product strategy through branding policy willingness of stock.
5. Consumer profit install maintain of the credit.
Consumer and Industrial Marketing Channel:

1. Zero level channel or Direct marketing Channel:
It consist of a manufactures or producer directly selling to the end consumer their might be door
to door sales direct mail, online sale etc.
2. One level channel:

The one level channel is also known as intermediary channel. It has intermediary in between
producers and consumers.e.g.insurance in which there is company and the customer.
3. Two level channel:
Widely used marketing channel especially in the fiancé and consumer durable industry which
consist of wholesaler and retailer.
4. Three level marketing channel:
The three level channel can come in the role of distributers on top of dealer and retalier.the
distributer stock spread it into dealer who in term given it to retailer.
Consumer Marketing Channel:
1. Manufacturer or producer Consumer
2. Manufacturer or producer Retailer Consumer
3.Manufacturer or producer Wholesaler Retailer Consumer
Industrial Marketing Channel:
1. Zero level channels:
Manufacturer or producer Industrial Consumer
2. One level channel:
Manufacturer Industrial distributer Industrial Consumer
3. Two level channel:
Manufacturer Manufacturer representative Industrial Consumer
4. Three level marketing channel:
Manufacturer Manufactures sales branch
Push Strategy:
• It makes use of company sales force and trade promotion activities to create consumer
demand for a product.
• It takes the product to the consumer or the customer knows about the product when they
buy it.
• The producer promotes the product to wholesaler then retailers and retailer’s promote to
consumer.
• Push strategy communication between sellers and buyers.
• New businesses often adopt push strategy for their product in order to generate exposal
and concentrate brand establish company.

• E.g. tradeshows direct selling, selling insurance or holidays etc
Pull Strategy:
• It is one that requires high spending on advertising and consumer promotion to build up
consumer demand for a product.
• It brings the customer to the product. The customer is motivated buy it.
• Consumers ask to retailers for the product then retailer’s to wholesalers and wholesalers
to produce.
• In pull strategy requires highly visible product consumer want product retailer will stock
it.
• E.g.advertising, referrals, mouth publicity, promotion, discount.
Difference between push and pull strategy:
Sr. No. Push strategy Pull Strategy
1 Push strategy involves direction of Pull strategy involves promotion of
marketing efforts to channel partners marketing efforts to the final consumer
2 A strategy in which third party stocks A strategy in which customers demand
companies product companies product from sellers
3 Push strategy based on actual demand Pull strategy depend or based on forecast
demand
4 Push strategy promote the customer Pull strategy promote trader and retailer’s.
5 To may customer aware of the product To encourage customer to seek the
or brand product or brand
6 e.g. sales force, trade promotion, e.g. Advertising, promotion and other
money etc forms of communication
7 Brand loyalty is low Brand loyalty is high
A. Promotion Skills of Retailer:

1. Free samples: These are distributed to attract consumers to try out a new product and thereby
create new customers.
Common examples - shampoo, washing powder, coffee powder, etc.
2. Premium or Bonus offer: This is a reward given to the existing customers. This tool will help
increase the sales of the product among the existing customers itself.

A milk shaker along with Nescafe, mug with Bourn vita
3. Exchange schemes: It refers to offering exchange of old product for a new product at a price
less than the original price of the product. This is useful for drawing attention to product
improvement.
4. Price-off offer:
Under this offer, products are sold at a price lower than the original price. This type of scheme is
designed to boost up sales in off-season and sometimes while introducing a new product in the
market.
5. Coupons:
Sometimes, coupons are issued by manufacturers either in the packet of a product or through an
advertisement printed in the newspaper or magazine or through mail.
These coupons can be presented to the retailer while buying the product. The holder of the
coupon gets the product at a discount.
6. Fairs and Exhibitions:
Fairs and exhibitions may be organized at local, regional, national or international level to
introduce new products, demonstrate the products and to explain special features and usefulness
of the products.
A part from these small stalls is also placed in popular locations where the products are sold in
smaller quantity to attract more customers.
This creates confidence among the customers with regard to the quality of the product. This
technique is particularly useful while introducing new products in the market.
7. Scratch and win offer:
To induce the customer to buy a particular product 'scratch and win' scheme is also offered.
Under this scheme a customer scratch a specific marked area on the package of the product and
gets the benefit according to the message written there.
2. Promotion Skills of Wholesaler:
1. Free display:
There is provision of free display of material either at the point of purchase (POP) or at the point
of sale (POS) for increasing sale which benefits the dealer/ retailer.

2. Retail demonstrations:
These are arranged by manufactures for preparing and distributing the products as a retail
sample, for example, Nescafe Instant Coffee was served to consumers for trying the sample on
the spot of demonstration regarding the method of using the product.
3. Trade deals:
These are offered to encourage retailers to give additional selling support to the product,
e.g. tooth paste sold with 30% to 40% margin.
4. Buying allowance:
Sellers give buying allowance of a certain amount of money for a product bought.
5. Buy-back allowance:
It is offered to encourage repurchase of a product immediately after another trade deal. A buy
back is a resale opportunity.
6. Free goods:
Seller gives free goods, e.g., one piece free with two, or two pieces free with 10, are common
free deals.
7. Advertising and display allowance:
These are also offered to retailers to popularize the product and brand name of the manufacturer.
Retailer takes efforts for Advertising of company’s product.
8. Contents:
Sales contests are held for Distributors to increase sale.
9. Training for salesmen:
Company provide free training to salesmen of Dealer and distributor, which may be provided to
give them a better knowledge of a product and how to use it, which will help while convening
the customer .
10. Dealer loaders
A dealer loader is a premium that the manufacturer gives to the retailers for buying a certain
quantity of a product. There are generally 2 types of dealer loaders – buying loader and display
loader.
A buying loader is given to the retailer on purchase of a specified quantity of a particular
product.

A display loader is the premium given to the retailer for the window display. After the
promotion period is over, the item or items, are given to the retailer as a free premium.

Lecture No.7
Product life cycle

Definition of Product life Cycle
Product life cycle can be defined as "the change in sales volume of a specific product offered by
an organization, over the expected life of the product."
“The period of time for which the product is developed, brought to market and eventually
remove from market.”
Stages of the Product Life Cycle

The four major stages of the product life cycle are as follows:-
1. Development and Introduction,
2. Growth,
3. Maturity, and
4. Decline.
Developmentand Introduction Stage
At this stage the product is new to the market and few potential customers are aware with the
existence of product. The price is generally high. The sales of the product is low or may be
restricted to early adopters. Profits are often low or losses are being made, this is because of the
high advertising cost and repayment of developmental cost. At the introductory stage :-

The product is unknown,
The price is generally high,
The placement is selective, and
The promotion is informative and personalized.
Growth Stage
At this stage the product is becoming more widely known and acceptable in the market.
Marketing is done to strengthen brand and develop an image for the product. Prices may start to
fall as a competitor enters the market. With the increase in sales, profit may start to be earned,
but advertising cost remains high. At the growth stage:-
The product is more widely known and consumed,
The sales volume increases,
The price begin to decline with the entry of new players,
The placement becomes more widely spread, and
The promotion is focused on brand development and product image formation.
Maturity Stage
At this stage the product is competing with alternatives. Sales and profits are at their peak.
Product range may be extended, by adding both withe and depth. With the increases in
competition the price reaches to its lowest point. Advertising is done to reinforce the product
image in the consumer's minds to increase repeat purchases. At maturity stage :-
The product is competing with alternatives,
The sales are at their peak,
The prices reaches to its lowest point,
The placement is intense, and
The promotion is focused on repeat purchasing.
Decline Stage
At this stage sales start to fall fast as a result product range is reduced. The product faces reduced
competition as many players have left the market and it is expected that no new competitor will
enter the market. Advertising cost is also reduced. Concentration is on remaining market niches
as some price stability is expected there. Each product sold could be profitable as developmental
costs have been paid at earlier stage. With the reduction in sales volume overall profit will also
reduce. At decline stage :-

The product faces reduced competition,
The sales volume reduces,
The price is likely to fall,
The placement is selective, and
The promotion is focused on reminding.
Summary of Product Life Cycle Characteristics, Objective and Strategies
Characteristics Introduction Growth Maturity Decline
Sales Low sales Rapidly rising Peak sales Declining sales
sales
Costs High cost per Average cost Low Cost per Low Cost per
Customer per customer customer
Customer
Profits Negative Rising profits High Profits Declining
profits
Customers Innovators Early adopters Middle Majority Laggards
Competitors Few Growing Stable Number Declining
number number
Marketing Create product Maximize Maximize profit Reduce
Objectives awareness and market share while defending expenditure and
trial market share milk the brand
Strategies
Product Offer a basic Offer product Diversity brand Phase out weak
product extensions and models items
service,
warranty
Price Use cost - plus Price to Price to match Cut price
penetrate or
Market beat competitors
Distribution Build selective Build intensive Build more Go selective
distribution distribution intensive Phase out
distribution unprofitable

outlets
Advertising Build product Build awareness Stress brand Reduce to level

awareness and interest in differences and needed to retain
among early the mass market benefits hard loyal
adopters and
Dealers
Sales Promotion Use heavy sales Reduce to take Increase to Reduce to
promotion to advantage of encourage brand minimal level
entice trial heavy switching
consumer
demand
Lecture No.8
Product pricing
Price:
The price is the amount of money charged for a product or service.
Or Value expressed in terms of money is called as price
Pricing:
It is defined as the process of determining the value that is received by an organization in
exchange of its product or service.
Or Pricing is the method of determine the value of producer will get in the exchange of goods
and service.
Objectives of fixing pricing strategies:
Some common pricing objectives of organizations are given below:-
1. Profit maximization in the short run, and profit optimization in the long run.
2. Assured minimum return on investment or sales turnover.
3. Ensure a specified targeted sales volume or market share.
4. Make entry into new markets or achieve deeper market penetration in the existing market.
5. Maintain price leadership or price parity with competitors.

6. Launch price war to check competitor’s activity or keep competitors out of the race.
7. Improving cash flow through faster sales.
8. Liquidation of accumulated inventory of products
Pricing strategies-
Some categories of pricing methods are given below:
1. Market skimming
2. Market penetration
3. Price bundling
4. Leader pricing
5. Multi-unit pricing
6. Everyday low pricing
7. Odd pricing
8. Single pricing
9. Value pricing
10. Tender pricing
11. Affordability pricing
12. Differentiated pricing
13. Psychological pricing
The different methods normally used for pricing under these categories are explained
below:
1. Skimming Pricing strategy:-
The strategy is to charge initially high price and then reduce gradually. In skimming
pricing, the objective is to skim market and take the cream, by pricing the new product high and
concentrating on market segments which are not price sensitive .this strategy will bring in high
profits which could be ploughed back for further market development and promotion.
2. Market Penetration:-
It aims to capture a large market share by charging low prices. The low price charged to
stimulate purchase of and can discourage competitors from the market. If the new product is
likely to be highly price sensitive and if there is no affluent market for it, penetration pricing is
resorted to. Here the objective is to penetrate a large market using low prices. The large volume

of sales generated will bring in economies in unit cost of production and marketing cost. This
strategy is helpful to establish new product in the market.
3. Price Bundling:-
This form of pricing is a variation of multiple pricing where various products are
bundled together and sold as one unit. The products are put together as a package deal and are
charge as one price. Bundling is the practice of selling two or more separate products together
for a single price, i.e. bundling takes place when goods or service which could be sold separately
are sold as a package .
Example - Buy one, get second at half price offers. A camera is sold in box with a free film. A
hotel room often comes with accompanying breakfast.
Bundling is done in three ways-
i. Pure bundling: - It involves selling two products only as a package and not separately.
Ex- Reliance WLL cell phones handset and connection are only available together and
not available separately. Microsoft bundle of windows and internet explorer could be
considered a pure bundle.
ii. Mixed bundling:-It involves selling products separately as well as bundle. McDonald’s
value meal and Microsoft office are examples. Recently The Times of India and the
Economic Times could be purchased together for a week days for a price much less than
if purchased separately. In most cases mixed bundling provides price saving for
consumers.
iii. Tying:- It involves purchase of main products O(tying product) along with purchase of
another product (tied product) which is generally or additional or complementary
product. When you buy a Mach 3 razor you must buy the tied product, i.e. the cartridge
that fits into the Mach 3 razor.
4. Leader Pricing:-
The retailer sells one or few items at the deep discount to increase traffic and sells on
complementary items. The key to successful leader pricing is that the product must appeal to a
large number of people and should appear as a bargain.
EX- Bread, eggs, milk.
5. Multi-Unit Pricing:-
The retailer offers discounts to customer who buys product in large quantity (bulk) or who buy a
product in bundle. This involves value pricing for more than one of the same item.
Ex- One T-shirt being offered for 200 Rs and bundle of three T-shirt For500Rs. A can of soft
drink maybe priced at 15 Rs. While a pack of three may be sold at 40 Rs.
6. Every Day Low Pricing:-
EDLP is popular strategy of pricing adopted by retailers who continuously charged low price for
the products compared to other retailers.
Ex- Big Bazaar, Wal-Mart.
7. Odd pricing:-
Retail price set in such a manner that it ends into odd number. It is used to denote lower
sale price.
Ex- T-shirt 299 and 399, 49 and 99.
8. Single Pricing:-
Retailer charges the single price for each product under similar circumstances. It is also called
as One Price Policy or Single Price Policy.
9. Value Pricing:-
Value pricing is based on assumption that the objective of pricing is not to recover cost
but to realize value of products perceived by the customers. The merit of this method is the belief
that the customer is interested not in the cost of the product but only in the value When marketer
deliver value in excess of cost, their profit will be ensured along with customer loyalty.
10. Tender Pricing/Price Bidding:-
On many occasions, business organizations are required to go for price fixations on the
basis of tenders. This option is more applicable to business where institutional customers
normally call for competitive bidding through sealed tenders or quotations. These buyers look for
the best possible (lowest) price consistent with the minimum assured quality specifications. The
difficulty here is of fixing a price that takes care of all costs and profit and is low enough to get
the business.
11. Affordability –Based Pricing:-
In the context of product which form essential commodities group which meets the
basic needs of all segments of consumers, affordability- based pricing method is useful. The
pricing is done in such a way that all segments of total market can afford to buy and consume the
products as per their needs. Here a price is set independent of the cost involved and in some
cases governmental price, subsidy element is involved. Such items are also distributed through
public distribution systems. This method is known as social welfare pricing.
12. Differentiated Pricing:-

In this method, different prices are charged for the same products by the company, in
different market segments or zones. Price differentiation is also made occasionally, based on
customer class rather than geographic market territory. Another variation which is commonly
used is where differentiated pricing is done on the basis of purchase volume. Price is less for
bulk quantity buyers and higher for small volume buyers.
13. Psychological Pricing:-
Consumer buying decisions are influenced mostly by psychological factors. Many

marketers take this into account and try to avoid psychological barriers in respect to price with
psychological pricing instead of fixing the price at Rs. 300 or Rs.500, they fix it at Rs.295 or
Rs.495. Bata Shoe Company is the best example for this pricing method. It is also followed by
many marketers of consumer durable like TV. PC, washing machine, etc

Lecture No.9&10
Consumer behavior/Buyer Behavior /Human buying behavior
Consumer behavior/Buyer Behavior /Human Behavior:
• Consumer behavior refers to the selection, purchase and consumption of goods and
services for the satisfaction of their wants.
• It is behavior that consumer display in searching for purchasing,
using,evolution,disposing of product and service that they expect will satisfy their needs.
✓ There are different processes involve in the consumer behavior.
✓ Initially the consumer tries to find what commodities he would like to consumer, then he
select only those commodities that promise greater utility.
✓ After selecting the commodities, the consumer makes an estimate of the available money
which he can spend.
✓ Lastly, the consumer analyzes the prevailing prices of commodities and takes the
decision.
✓ About the commodities he should consume .meanwhile, there are various other factors
influencing the purchase of consumer such as social, cultural, personal, psychological.
Characteristics/Factors affecting Consumer Behavior:

A) Cultural Factors: Cultural factors have the broadest and deepest impact on consumer
behaviour. This set of factors mainly includes broad culture, sub-culture, and culture of social
classes.
1. Culture: Culture is a powerful and dominant determinant of personal needs and wants.
Culture can be broadly defined as: The way of living, way of doing, and way of worshiping.
Culture determines the total patter of life. Culture has a tremendous effect on needs and
preference. People react according to the culture to which they belong. Every culture has its
values, customs, traditions, and beliefs, which determine needs, preference, and overall
behaviour. The child acquires a set of values, perception, attitudes, interest, preference, and
behaviour from family and other key social institutions that control his/her behaviour. Every
member is bound to follow cultural values to which he belongs. Thesecultural factors determine
the way of reacting toward product and marketing strategies.
i. Family life/social system
ii. Role of women
iii. Woman education
iv. Approach to work and leisure
v. Approach to life
vi. Ethics in economic dealings
vii. Residence pattern
viii. Geographic factors

ix. Impact of other cultures, and so on.
These all factors affect what, when, where, how much, from whom, and how many times
the product should be purchased and used. Marketer must be aware of the relevant cultural
aspects, and marketing programme should be designed accordingly.
2. Subcultures: Each culture consists of smaller subcultures. Each subculture provides more
specific identification of members belong to it. Product and marketing programme should be
prepared in light of subcultures to tailor their needs.
Subculture includes:
i. Nationality: Every nation has its own unique culture that shapes and controls behaviour its
citizens. For example, Indian culture, American culture, Japanese culture, Chinese culture,
African culture, etc. Consumers of different nations hold different behaviour toward the
company’s products and strategies. The company can concentrate on one or more nations to
serve.
ii. Religion: It is a powerful determinant of consumer needs and wants. Every religion has its
culture in terms of rules, values, rituals, and procedures that have impact on its followers.
Commonly, consumer behaviour is directly affected by religion in terms of products that are
symbolically and ritualistically associated with the celebration of various religious events and
festivals/holidays.
iii. Racial Groups: In each culture, we find various racial groups; each of them tends to be
different in terms of needs, roles, professions, habits, preference, and use of products. Each
group responds differently to marketing offers due to different cultural backgrounds.
For example, in our country, we find a number of racial groups like Kshatriya, Banya, Patel,
Brahmin, Scheduled Caste, Scheduled Tribe, Shepherded, and so forth. These racial groups have
their cultural values, norms, standards, habits, etc., that govern their overall response toward the
company’s products.
iv. Geographical Regions: Each geographic region represents specific culture and differs in
terms of needs, preference, habits, usage rates, and uses of products. Clothing, residence, food,
vehicle, etc., are determined by regional climate and culture.

3. Culture of Social Classes: Philip Kotler defines: “Social classes are relatively homogeneous
and enduring divisions in a society, which are hierarchically ordered and whose members share
similar values, interest, and behaviour.” In many cases, social classes are based on caste system.
Members of different castes have their cultures and, accordingly, they perform certain roles.
Social classes reflect differences in income, occupation, education, their roles in society, and so
on. Every social class has its culture that affects behaviour of its members. Social classes differ
in their dress, speech patterns, recreational preferences, social status, value orientation, etc.
i. Upper-upper
ii. Lower upper
iii. Upper middle
iv. Middle class
v. Working class
vi. Upper lower
vii. Lower-lower
Normally, with reference to India, on the basis of income level, or status in society, we can
identity three social classes like upper class, middle class, and lower class. In every society,
percentage of each of these classes is subject to differ. Marketer should design his marketing
programme to cater the needs of specific social classes.
(B) Social Factors: Here, we examine the effect of social factors on consumer needs and
preferences (behaviour). Social factors affect consumer behaviour. Consumer response to
product, brand, and company is notably influenced by a number of social factors – family,
reference groups, and roles and statuses. Marketer needs to analyze these social factors of his
target market to cater its needs effectively.
1. Family: Family is one of the most powerful social factors affecting consumer behaviour. This
is more significant where there is joint family system, in which children use to live with family
for longer time. Values, traditions, and preferences are transmitted from parents to children
inherently. Family members constitute the most influential primary reference group. From
family, its member acquires an orientation toward religion, politics, ambition, self-worth, love,
respect, and so on. Need, preference, buying habits, consumption rate, and many other aspects
determined by family affect one’s behaviour. In every family, elders, husband-wife, other
members, and children have varying degree of influence on purchase decision, which is the

matter of interest for the marker to appeal them. Some products are children dominant; some
products are husband dominant; some products are wife dominant; while some products are
equal dominant.
2. Reference Groups: “A person’s reference group consists of all the groups that have a direct
(face-to-face) or indirect influence on the person’s attitudes or behaviour.” Groups having a
direct influence on the person are called membership groups.
Normally, following reference groups affect behaviour of their members:
i. Primary Reference Groups: They are informal groups such as family members, friends,
neighbors, relatives, and co-workers with whom the person interact fairly continuously. Habits,
life-style, and opinions of these groups have direct impact on the person.
ii. Secondary Reference Groups: They tend to be more formal groups such as religious groups,
professional groups, trade unions or associations, etc., that affect buying decisions of an
individual buyer.
iii. Aspiration (Aspired) Groups: A person is not the member of such groups. But, he likes to
belong to those groups. He imitates habits, preference and buying pattern of such groups. For
example, college students imitate/like to belong to film stars, sportsmen, or professional groups.
[[
iv. Dissociative (Disliked) Groups:

Theses reference groups include such groups whose values or behaviour a person rejects or
dislikes. He tends to behave differently than those groups. A marketer should identify reference
groups of his target market and should try to influence those groups. In case of television,
automobile, clothing, home furniture, books and magazines, cigarettes, etc., the reference groups
have more direct impact on buyers’ purchase decision.
3. Roles and Statuses: A person plays various roles in many groups throughout his life. He has
to play different roles in family, club, office, or social organisation. A role consists of the
activities that a person is expected to perform. For example, a person is father for his children,
husband for his wife, son for his parents, friend for his friends, boss for his department, and a
member of social organisation.
Each role carries status. For example, sales manager has more status than sales officer. People
choose those products that communicate or represent their roles and statuses in society.
Therefore, marketer must be aware of the status symbol potential of products and brands. The
marketer should also try to associate products and brands with specific roles and status.

4. Social Customs and Traditions: Social customs, beliefs or traditions can be associated with
religion, caste, or economic aspects. Such customs determine needs and preference of products in
different occasions and, hence, affect consumer behaviour.
5. Income Level: Income affects needs and wants of consumers. Preference of the rich
consumers and the poor consumers differ notably. In case of quality, brand image, novelty, and
costs, there is wide difference between the rich and the poor buyers. Marketer must be aware of
expectations of different income groups of his target market.
(C) Personal Factors: Along with cultural and social factors, personal factors also affect one’s
buying decision. Personal factors are related to the buyer himself. These factors mainly include
age and stage in life cycle, occupation, economic circumstances, life style, personality, and self-
concept. Let us briefly examine the effect of personal factors on consumer behaviour.
• Age and Stage in Life Cycle: A man passes through various stages of his life cycle, such as
infant, child, teenager, young, adult, and old. Need and preference vary as one passes through
different stages of life cycle. For example, child and adult differ to a great extent in terms of
needs and preference. Marketer may concentrate on one or more stages of his target consumers’
life cycle. Use of different product depends on age and stage of buyers’ life cycle.
• Occupation: Buying and using pattern of consumer, to a large extent, is affected by a person’s
occupation. For example, industrialist, teacher, artist, scientist, manager, doctor, supervisor,
worker, trader, etc., differ significantly in term of need, preference, and overall buying pattern.
Company can specialize its products according to needs and wants of special professional
groups.
• Economic Circumstances: Product preference, frequency of buying, quality, and quantity are
largely affected by consumers’ economic circumstances. Economic circumstances consist of
spendable income, income stability, level of savings, assets, debts, borrowing power, and
attitudes toward saving versus spending. People buy products keeping in mind these economic
circumstances.
• . Life Style: People with the same culture, social class, and occupation may differ in term of
their life style. Knowledge of life style of the target market is essential for marketer to design
more relevant marketing programme. Kotler defines: “Life style is the person’s pattern of living
in the world as expressed in the person’s activities, interest, and opinions.” It is generally
reflected in terms of activities, interest, clothing patterns, status consciousness, spending and

savings, helping others, achievements, working style, etc. Every product has potential to suit
different life styles.
• Personality: Personality is a distinguished set of physical and psychotically characteristics that
lead to relatively consistent and enduring response to one’s environment. Personality
characteristics, such as individualism, difference, self-confidence, courage, firmness, sociability,
mental balance, patience, etc., have a strong influence on needs and preferences. Every person
buys that product which suits his personality. In case of clothing, automobiles, shoes, perfumes,
etc., products are influenced by users’ personality characteristics.
• Self-concept: It is also referred as self-image. It is what person believes of him. There can be
actual self-concept, how he views himself; ideal self-concept, how he would like to view
himself; and others-self-concept, how he thinks other see him. Person purchases such product
that matches with his/her self-image. Marker must identify self-concept of his target buyers and
must try to match the products with them.
• Gender: Gender or sex affects buying behaviour. Some products are male-dominated while
some are female-dominated. Male customers react to those products which are closely suit their
needs and styles. Cosmetics products are more closely related to female customers than male.
Marketer must be aware of gender-effect on buying behaviour of the market.
• Education: Education makes the difference. Highly educated, moderately educated, less
educated, and illiterates differ considerably in terms of their needs and preferences. In the same
way, stage of education (like primary, secondary, college, etc.) affects buyers’ behaviour.
Education factor seems more relevant to academic institutes, book publishers, magazines, and
newspapers. Education affects one’s mindset. Buyers’ colour choice, quality-orientation,
services, and other aspects have more or less educational significance.
(D) Psychological Factors: Buying behaviour is influenced by several psychological factors.
The dominants among them include motivation, perception, learning, and beliefs and attitudes.
It is difficult to measure the impact of psychological factors as they are internal, but are much
powerful to control persons’ buying choice. Manager must try to understand probable role the
factors play in making buying decisions.
• Motivation: It has a significant impact on consumer behaviour. Motivation is closely related to
human needs. One has many needs at a given time. Some needs are biogenic or physiological in
nature arising from physiological states of tension, such as hunger, thirst, or discomfort.

Motivation comes from motive; motive is expression of needs; or intensified need become a
motive. A motivated person is ready to act/react. Marketer should identify why people buy the
products. What are the motives to purchase the products? If product is connected with their
motives, they definitely respond positively.
• Perception: Person’s motivation to act depends on his perception of situation. It is one of the
strongest factors affecting Behaviour. The stimuli – product, advertising appeal, incentives, or
anything – are perceived differently by different people due to difference in perception.
Marketer should know how people perceive marketing offers. “Perception is a process by
which an individual select, organize, and interpret information inputs to create a meaningful
picture of the world.”
• Learning: Most human behaviour is learned. Learning is basically concerned with experience
of an individual. Learning can be defined as: Relatively permanent changes arising from
experience. If an individual has satisfactory experience of buying and using the products, he is
more likely to talk favorably or repeat the same. Most of purchase decisions depend on self-
experience or experience of others, whose opinion carry value in buying decisions. Learning is
produced through the interplay of drives, stimuli, cues, responses, and reinforcement. Learning
theories help marketer to build up demand for the product by associating it with strong drives,
using motivating cues, and providing positive reinforcement. Beliefs: People hold beliefs about
company, company’s goods or services, and they act accordingly. Beliefs of the buyers affect
product and brand image. We can define the term as: Belief is a descriptive thought that a
person holds about something. Beliefs may be based on knowledge, opinion, or faith.
• Attitudes: An attitude is a person’s enduring favorable or unfavorable evaluations, emotional
feelings, and action tendencies toward some object or idea. Attitudes decide liking or disliking
of object. People can judge good or bad, beautiful or ugly, rich or poor, or desirable or
undesirable about an object, a product, or a person. Attitudes play a vital role in accepting or
rejecting, appreciating or criticizing the product or brand. People do not react to every object in
a fresh way. Object is evaluated by attitudes

Lecture No.11
Advertising
Advertising:
The word advertising is derived from the Latin word “Advertere” Add means towards and verto
means to turn. It means to turn people’s attention towards product.
Advertising:
Advertising is nothing but a paid form of non-personal presentation or promo0tion of ideas,

goods or services by an identified sponsor with a view to disseminate information concerning an
idea, product or service.
According to Wheeler, “Advertising is any form of paid non-personal presentation of ideas,

goods or services for the purpose of inducing people to buy.’
According to William J. Stanton, Advertising consist of all the activities involves in presenting to
a group, a non-personal, oral or visual sponsored message regarding disseminated through one or
more media and is paid for by an identified sponsor.”
History:
Over time, advertising has had to respond to changes in cultural context, business demands and
technology. While word-of-mouth advertising has probably existed since man first began to trade
and sell goods and services, the forms of advertising we know today came about thanks to the
development of the printing press and the expansion of newspapers. Paid advertisements started
appearing in newspapers in the 17th century. They were quite simple, with lots of informative
rather than persuasive text, and were used to announce things like the publication of a new book
or the performance of a play, as well as for personal ads like ‘lost and found’.
With the Industrial Revolution manufacturers were able to produce more goods in less time and
were no longer restricted to local markets. They needed to persuade consumers all over the
country – and sometimes in other parts of the world – about the benefits of their products
compared to those of their competitors. Newspapers, which had become cheaper and more
widely available, were the perfect way to reach this mass market of potential customers. These
first advertisements just had simple descriptions of the products, with the price. By the mid-19th
century it was possible to add illustrations. The language changed too and became more
persuasive. And by the late 19th century, as manufacturers faced increased competition and

began to understand the importance of advertising in getting their products known and sold, the
first advertising agencies were set up. They offered the services of illustrators and copywriters to
produce specifically designed adverts. They began to research the company and product, as well
as the target market, and also started to monitor sales in relation to advertising campaigns.
Posters and outdoor advertising were more common in Europe than in the USA, but with the
outbreak of World War I many countries started to use posters as propaganda – a way to enforce
government policies and to get men to enlist to fight against the enemy. These posters often used
psychological manipulation to frighten or shame the audience. With cinema and radio, there
were new ways for advertising to reach a mass audience and the idea of creating a need in the
consumer began to dominate advertising in the 1920s. The Great Depression negatively affected
advertising spend, so advertising got tougher. It started to use key ideas such as the desire to
belong, subconscious fears and sex appeal, marketing products as necessities rather than
luxuries.
Post-war affluence, a boom in consumer spending and the perfect way to reach a mass audience
– television – all meant an increase in advertising in the 1950s. At first companies sponsored,
and even produced, TV programmes, then television started to offer the commercial breaks we
still have today between programmes. Madison Avenue in New York became the center of the
US advertising business, and working in advertising was a well-paid and powerful profession,
particularly for men. David Ogilvy, for example, set up a world-class advertising agency and
introduced many ideas which are still part of advertising practice today. The same period,
however, also saw Vance Packard accuse the advertising industry of using hidden techniques to
manipulate and brainwash the public.
As the twentieth century started to near its end, the competition in advertising became fiercer,
with bigger and bigger agencies dealing with larger and larger clients, budgets and markets. The
arrival of the Internet and World Wide Web, with endless opportunities for pop up and banner
advertising, caused a big shake up in the advertising world, as did targeted ads, social marketing
and viral ad campaigns. A lot of advertising spend moved from traditional media to digital
media, in order to keep up with the changes in business and consumer demand.

Objective of advertising:
1. Preparing ground for new product

New product needs introduction because potential customers have never used
such product earlier and advertisement prepares a ground for that new product.
2. Creation of demand
The main objective of the advertisement is to create a favorable climate for
maintaining of improving sales. Customers are to be reminded about the product
and the brand. It may induce new customers to buy the product by informing them
its qualities since it is possible that some of the customers may change their
brands.
3. Facing the competition
Another important objective of the advertisement is to face to face competition.
Under competitive conditions, advertisement helps to build up brand image and
brand loyalty and when customers have developed brand loyalty, becomes
difficult for the middlemen to change it.
4. Creating or Enhancing Goodwill:
Large scale advertising is often undertaken with the objective of creating or
enhancing the goodwill of the advertising company. This, in turn, increases the
market receptiveness of the company’s product and helps the salesmen to win
customers easily.
5. Informing the Changes to the Customers
Whenever changes are made in the prices, channels of distribution or in the
product by way of any improvement in quality, size, weight, brand, packing, etc.,
they must be informed to the public by the producer through advertisement.
6. Barring new Entrants
From the advertiser’s point of view, a strongly built image through long
advertising helps to keep new entrants away. The advertisement builds up a
certain monopoly are for the product in which new entrants find it difficult to
enter. Advertising aims at benefiting the producer, educating the consumer and
supplementing the salesmen.
Benefits or Importance of Advertisement:
Benefits to Manufacturers
• It increases sales volume by creating attraction towards the product.

• It helps easy introduction of new product into the markets by the same manufacturer.
• It helps to create an image and reputation not only of the products but also of the
producer or advertiser. In this way, it creates goodwill for the manufacturer.

• Retail price, maintenance is also possible by advertising where price appeal is the
promotional strategy.
• It helps to establish a direct contact between manufacturer and customer.
• It leads to smoothen the demand of product. It saves the product from seasonal
fluctuations by discovering new and new usage of the product.
• It creates a highly responsive market and thereby quickens the turnover that results in
lower inventory.
• Selling cost per unit is reduced because of increased sales volume. Consequently, product
overheads are also reduced due to mass production and sale.
• Advertisement gives the employees a feeling of pride in their jobs and to be in the service
of such a concern of repute. It, thus inspires the executive and worker to improve their
efficiency.
• Advertising is necessary to meet the competition in the market and to survive.
Benefits to Wholesalers and Retailers
• Easy sale of the products is possible since customers are aware of the product and its
quality.
• It increases the rate of the turn-over of the stock because demand is already created by
advertisement.
• It supplements the selling activities.
• The reputation created is shared by the wholesalers and retailers a like because they need
not spend anything for the advertisement of already a well-advertised product.
• It ensures most economical selling because selling overheads are reduced.\
• It enables them to have product information.
Benefits to Consumers
• Advertising stresses quality and very often prices. This forms an indirect guarantee to the
consumers of the quality and price. Further large scale production assumed by
advertising enables the seller to seller product at a lower cost.
• Advertising enables in eliminating the middlemen by establishing direct contacts
between producers and consumers. It results in cheaper goods.
• It helps them to know where and when the products are available. This reduces their
shopping time.
• It provides an opportunity to the customers to compare the merits and demerits of
various substitute products.
• This is perhaps the only medium through which consumers could know the varied and
new uses of the product.
• Modern advertisements are highly informative.

Benefits to Salesmen
Salesmanship is incomplete without advertising. Advertising serves as the forerunner of a

salesman in the distribution of goods. Sales are benefited the advertisement in following ways:
• Introducing the product becomes quite easy and convenient because manufacturer has
already advertised the goods informing the consumers about the product and its quality.
• Advertising prepares necessary ground for a salesman to begin his work effectively.
Hence sales efforts are reduced.
• The contact established with the customers by a salesman is made permanent through
effective advertising because a customer is assumed of the quality and price of the
product.
• The salesman can weigh the effectiveness of advertising when he makes direct contact
with the consumers.
Types of advertising:
1. Television advertising /music in advertising: The TV is generally considered the most
effective mass-market advertising format as is reflected by the high prices TV networks charge
for commercial airtime during popular tv events.
2. Radio advertising: it is a form of advertising via the medium of radio .radio advertisements
are broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving
device.
3. Online advertising: is a form of promotion that uses the internet and world wide web for the
expressed purpose of delivering marketing messages to attract customers.
4. Press advertising: press advertising describes advertising in a printed medium such as a
newspaper, magazine, or trade journal; this encompasses everything from media with a very
broad readership base.
5. Billboard advertising: bill boards are large structures located in public places which display
advertisement to passing pedestrians and motorists. Most often they are located on main roads
with a large amount of passing motor and pedestrian traffic
6. Mobile billboard advertising: mobile billboards are generally vehicles mounted billboards or
digital screens. These can be on dedicated vehicles built solely for carrying advertisements along
routes preselected by clients.
7. In-store advertising: in store advertising is any advertisement placed in a retail store. It
includes placement of a product in visible locations in a store.

8. Street advertising: street advertising services to create outdoor advertising on street furniture
and pavement
9. Sheltered outdoor advertising: this type of advertising opens the possibility of combining
outdoor with indoor advertisement by placing large mobile.
10. Celebrity branding: this type of advertising celebrity power, fame, money, popularity to
gain recognition for their product and promote specific stores or products.
11. Consumer – generated advertising: This involves getting consumer to generate advertising
through blogs websites and forums for some kind of payment.
Classification of advertising:
1. Product advertising:
Normal characteristics of advertising to create primary demand for a product category
rather than for a specific brand. When the company tries to sale its product or services
through advertising it refers to as a product advertisng.e.g. Dettol’s, lux etc
2. Institutional advertising:
These advertisements are not always directed to consumer. It aims at many of the various
types of public (shareholders, creditors etc) .It is not product oriented but rather designed
to image of the company.
3. Primary demand advertising:
To stimulate primary demand for a new product or product category.it is heavily utilized
during a introduction stage of the lifecycles of the product.
4. Selective/competitive advertising:
When a product entries in growth stage of its life cycle and when competition being
advertising emergence and becomes selective. The goal of advertising is to increase
demand for a specific product or service with having brand name recalled.
5. Comparative advertising:
This type of advertising plays a important role an comparative future of two or more
specific brand in terms of product service attributes. It adopted in the maturity stage when
similar product fast appear in market causing though competition.

6. Co-operative advertising:
When manufacturer wholesaler and retailer jointly sponsor and share the expenditure on
advertising intakes the form of co-operative advertising.
7. Commercial advertising:
It also termed as business advertising as the name suggest such advertising is individual
meant for effective increase in sales.
8. Non-commercial advertising:
It includes publish by charitable institutions prefer to social general and financial view
(such as collection of donation or selling of tickets)
9. Direct action advertising:
Advertising that stresses and persuades immediate buying of a product is known as direct
action advertising. Direct mail advertising is capable of an achieving immediate action to
a large extent.

Lecture No.12
Advertising Campaign
Definition of Advertising Campaign:
• An Advertising Campaign is the series of advertising message that share a single idea and
then which make a integrated marketing communication.
• Advertising are the group of advertising message which are similar in nature.
• They Share same message and fix places in different types of media at some fix times
Steps of developing advertising campaign:
1. Identifying and analyzing the advertising target:

✓ Decides the group of people for which the advertisement is aimed at may direct campaign
at only a portion of the target market.
✓ Research and analyze advertising targets to establish an information base for a campaign.
Generally increase advertiser’s knowledge about their targets the more effective the
campaign.
✓ Understand the life-style, attitude, demographics of the target markets.

2. Defining advertising objectives:
What the firms hopes to accomplish from the campaign should be clear, precise,
measurable can help measure the success at the end of the campaign. Use abenchmark. At
what stage is the target market in the product adoption process. What are the goals of the
campaign to increase purchases to generate traffic in retail store.
Objectives should be decides as follows:-
1) Demand oriented objectives.
2) Image oriented objectives.
3) Increase product or brand awareness.
4) Change consumer attitudes reposition products.
5) Increase customer knowledge of the product features.
3. Creating the advertising platform:
Determine the total amount of money that a marketer allocates for advertising in a
specific period.
4. Determining the advertising appropriation or cost:
It is the function of the products features, uses and benefits. Must be aware of the
characteristics of the target market, different message to different target market
dependent on objectives of the campaign can use a suitable spoke persons.
Components of advertising message:-
Headlines:-It should attract reader’s attention.
Illustrations: - Give examples.
Sub-headlines:- It tells about product features.
Body copy: - It tells about the details information about use, benefits and features of
the products.
Signature.
5. Developing and selecting media plan
Effectiveness of the plan determines how many people in the advertisers target will be
exposed to the message.
The various alternative media available for advertising:-
TV channels/programs, Radio, Internet, Billboard, Moving vehicles, Banners posters,
Charts, Folders, Leaflets, Social web-sites.

6. Creating the advertising message
It requires extensive planning and co-ordination. Advertising agencies, production costs,
research organizations, media firms, printers, photographers, commercial artist etc.
Detailed schedules are needed to insure everything accomplished on time.
Three types of scheduling available:-
Continuous schedules.
Intermittent schedules.
Burst schedules.
7. Evaluating effectiveness of advertising
Measures the achievement of the objectives assessing the effectiveness of the media by
taking feedback of the customers.
Lecture No.13
Sales promotion
Meaning of Sales promotion:
Sales promotion collectively compresses the tools used to promote sales in a given specific time
they are short term in nature and design to stimulate quicker and greater purchase of particular
product by consumer
Definition of Sales promotion:
Sales promotion is the set of marketing activities undertaken to boost sale of the product or
services.
OR
Sales promotion is the kind of incentives and techniques directed towards consumers and traders
with the intention to produce immediate or short term sales effects.
Objectives of Sales Promotion:
1. To encourage sales either in short term or long term
2. To create awareness about an existing product or new product.
3. To gain customer and correct them to regular uses particularly for new or improved
products.
4. To wider the distribution of product.
5. To influence stock level which may to be high or too low.

6. To maintain economic production level.
7. To avoid the effect of price increase.
8. To create new interest in an establish product
Importance of Sales Promotion:
(i) Attracting Attention:
The first aim of sales promotion is to attract the attention of the prospective buyers and
inform them about the availability, characteristics and uses of a particular product.
(ii) Highlighting Utility of Product:
Promotion helps in letting the people know about the utility of the new products. It also tells
them how the concerned products will be helpful in satisfying their specific demands.
(iii) Stimulation of Demand of New Product:
Promotional activities are used to create interest in the new product and to persuade people to
buy the same. This helps in launching the new product.
(iv) Product Differentiation:
Promotion helps in differentiating a particular product of the firm from the competing
products of other firms. A firm can also use data revealing how its product compares with the
other products.
(v) Synergy in Promotional Activities:
Sales promotion activities supplement personal selling and advertising efforts of the firm.
They add to the overall effectiveness of the firm’s promotional activities.
(vi) Stabilization of Sales Volume:
In the modern age of competition, it is an important purpose of promotion to help in
stabilizing sales volume by reassuring the customers about the quality and price of the
product. It is possible that a customer using a particular brand may buy another because the
other brand is promoted in an effective manner.
(vii) Performance Appraisal or Marketing Control:
The management of a company can keep an effective check on the results achieved through
sales promotion schemes, because it is in a position to analyze the costs incurred and the
benefits derived.

Important techniques / tools of sales promotion are as follows:
1. Rebate: Under it in order to clear the excess stock, products are offered at some reduced price.
For example, giving a rebate by a car manufacturer to the tune of 12,000/- for a limited period of
time.
2. Discount: Under this method, the customers are offered products on less than the listed price.
For example, giving a discount of 30% on the sale of Liberty Shoes.
3. Refunds: Under this method, some part of the price of an article is refunded to the customer
on showing proof of purchase. For example, refunding an amount of 5/- on showing empty
packet of the product priced 100/-.
4. Product Combination: Under this method, along with the main product some other product is
offered to the customer as a gift.
5. Quantity Gift: Under this method, some extra quantity of main product is passed on as a gift
to the customer. For example, 25% extra toothpaste in a packet of 200 gm. toothpaste. Similarly,
a free gift of one RICH LOOK shirt on the purchase of two shirts.
6. Instant Draw and Assigned Gift: Under this method, a customer is asked to scratch a card on
the purchase of a product and name of the product is inscribed the thereupon which is
immediately offered to the customer as a gift. For example, on buying a car when the car is
scratched such gifts are offered – TV, Refrigerator, Computer, Mixer, Dinner Set, Wristwatch,
T- shirt, Iron Press etc.
7. Lucky Draw: Under this method, the customers of particular products are offered gifts on
fixed date and the winners are decided by draw of lots. While purchasing the product, the
customers are given a coupon with a specific number printed on it. On the basis of this number
alone the buyer claims to have on the gift. For example, „Buy bathing soap and get a gold coin
offer can be used under this method.
8. Full Finance @ 0%: Under this method, the product is sold and money received installment
at 0% rate of interest. The seller determines the number of installments in which the price of the
product will be recovered from the customer. No interest in charged on these installments.
9. Samples or Sampling: Under this method, the producer distributes free samples of his
product among the consumers. Sales representatives distribute this sample from door-to-door.
This method is used mostly in case of products of daily-use, e.g., Washing Powder, Tea,

Toothpaste etc. Thus, the consumers willy-nilly make use of free sample. If it satisfies them, they
buy it & this way sales are increased.
10. Contests: Some producers organize contests with a view to popularizing their products.
Consumer taking parts in the contest are asked to answer some very simple questions on a form
and forward the same to the company. The blank from is made available to that consumer to
buys the product first. Result is declared on the basis of all forms received by a particular date.
Attractive prizes are given to the winners of the contest. Such contests can be organized in
different ways.
Lecture No.14
Sales Force Management
Definitions of sales force management:
• It is defined as the division of the business which is responsible for forcefully selling of
product and services through its marketing representative is called ad sales force.
• Sales force management means of all marketing activity including sales promotion,
advertising, marketing research, physical distribution, pricing and product merchandising.
How to design sales force:
Design sales force
Sales forces objectives
Sales force Strategy
Sales force Structure
Sales force Size
Sales Force Compensation

1) Design sales force objective :-
The main objectives of sales force is selling, and sells your product to consumer on long
gone
2) Sales force strategy :
Formulate strategy of your Sales force in such a way that it achieves your target of selling
i. Prospecting :- search your target audience and identify them
ii. Contact and analyze:- contacting the target audience and analysis them according
to their product requirement
iii. Selecting :- select the audience which are in demand of your product
iv. Communicating :- communicate information of produce to select the target
audience positively
v. Convincing :- them to purchase your product
vi. Selling :- Ask for preparation of bill and close sell
vii. Servicing: - delivered your product within time. provide after sales service to
customer which create respect toward your company brand image of product in
customer mind
3) Decide sales force structure:-
It decides on the basis of the product line if company which sells structure of single
category of end users then it should be simple structure of sells representative. if company which
sells many product lines to many customer then it should be complex one . eg. Samsung
company wants to sell its product to their end users then it require technical,geographical ,
strategic , distributors representory .
4) Decide sales force size:-
sales force representation are most productive and expensive assets of company sales
force representative size is decided on the basis of total annual turnover of company and total
number of target audience
5) Sales force compensation:-
For attracting top quality sales representative the company has to develop an attractive
compensation packages

i. Fixed amount – salary bonus
ii. Variable amount – reward and profit
iii. Expense allowances – farewell, entertainment
iv. Health security – insurance
v. Job security
vi. Accommodation facility
vii. Low interest rate facility
➢ How to manage sales force/Steps in sales force management:
Establishing sale force objective
Recruitment and selecting sales representative
Training sales representative
Supervise and Monitor sales representative work
Motivate Sales Representative
Evaluate Sales Representative
Explanation
1. Establishing sale force objective:

This require that a sales manager must develop objectives in preside measurable terms
and should be specific regarding a time period and the geographic areas involved.
2. Recruitment And selecting sales representative
Recruit right sales person for right job at right place on the basis of qualification skill,
personality, communication ability etc. Different sources employment news, colleges,
constancy and business school.

3. Training :-
Training given to sales representative according to their product. They educate them,
develop their communication ability to achieve targets of company.
4. Supervise :-
Supervise a monitored the performance of and sales representative, check whether they
achieve the target of company.
5. Motivate :-
Encourage the sales representative to achieve their target by giving them bonus , extra
reward , attractive compensation
6. Evaluation :-
Evaluate the result of sales representative on the basis of their work performance.
Lecture No.15
Product Selling
Selling: The transfer of ownership of goods or services to buyers in exchange for money.
Personal selling:
• It is direct personal presentation by company sales force for sales and building customer
relationship.
• Personal selling can be defined as an oral presentation in conversation with one or more
prospective customers for the purpose of making sales.
Steps/Process involved in Personal selling process

1. Prospecting and evaluating:
Prospect in consisting developing a list of potential customers after developing the
prospect list a salesman evaluates each prospects to determine whether the prospect is
able willing an authorize to buy the product.
2. Preparing for the sale:
This step consisting finding and analyzing information regarding prospects, specific
product need current brands, being use feelings about other available brands and personal
characteristics.

3. Approaching the customers:
This is most critical steps because the prospect first impression of the salesman may be
lasting impression that has long run consciousness.
4. Presentation and Demonstration:
During a sales presentation the salesman must attract and hold attention of the prospect in
order to stimulate interest and convenience reuse or desire for the product.
5. Overcoming the objectives:
There are certain objectives which can be anticipate and their answer formulated before
the interview takes places.
6. Closing the sale:
This step is the climax of the selling process in which the salesman asks the prospect to
buy the product.
7. Following up:
After a sale is close they (wholesaler, retailer, and customer) properly follow up.
Lecture No.16
International Marketing
Global Marketing/ International Marketing Meaning of global marketing: Global marketing
refers to the marketing activities that direct the flow of goods and services to the customers or
users in more than one nation.
Designing Global Market Offerings/ Process of Global Marketing Major Decisions in
International Marketing
1. Deciding Whether to Go Abroad Reasons companies might consider international

expansion: Global competitors attacking the domestic market, Foreign markets might offer
higher profit opportunities, Domestic markets might be shrinking, Need an enlarged
customer base to achieve economies of scale, Reduce dependency on any one market,
Customers might be expanding abroad. Most companies do not act until some situation or event
thrusts them into the global arena.

2. Deciding Which Markets to Enter • How many markets to enter – The company must
decide how many country to enter and how fast to expand – Typical entry strategies: •
Waterfall approach • Sprinkle approach – Country’s attractiveness is influenced by the product
and by geography, income and population, and political climate • Developed versus Developing
Markets • Regional free trade zones – The European Union – NAFTA – MERCOSUL –
APEC – ASEAN • Evaluating potential markets – Psychic proximity
3. Deciding How to Enter the Market After selection of market, organization must decide
mode of entry into market which may… 1. Exporting 2. Licensing 3. Franchising 4. Special
Modes 5. Foreign Direct Investment (FDI) Amount of commitment, risk, control, and profit
potential is different in each mode.
4. Deciding on the Marketing program

International Companies must decide how much to adapt their marketing strategy to local
conditions. At one extreme are companies that use a globally standardized marketing mix
worldwide. At the other extreme is an adapted marketing mix where the producer adjusts the
marketing mix elements to each target market. Between the two extreme many possibilities exist.
Most brands are adapted to some extent. Example: Toyota.
Product Straight extension means introducing a product in the foreign market without any
change. Straight extension has been successful with electronic products, cameras, and many
machine tools.
Product Adaptation involves altering the product to meet local conditions or preferences. There
are several levels of adaptation. Companies can produce a regional version of a product or other
versions.
Product invention consists of creating something new. It can take two forms. Backward
invention is reintroducing earlier product forms that adapt well into the foreign markets. Forward
invention is creating a new product to meet a need in another country.
Companies can run the same advertising and promotion campaigns used in the home market or
change them for each local market, a process called communication adaptation. If it adapts both
the product and the communication, the company engages in dual adaptation. Messages and
colors can be changed to avoid taboos in some countries. Examples: Purple is associated with

death in Burma, White is a mourning colour in India and green is associated with diseases in
Malaysia.
Price
Multinationals companies face several pricing problems when selling abroad. They must deal
with price escalation, transfer prices, dumping charges, and gray markets. Because the cost
escalation varies from country to country, the question is how to set the prices in different
countries. Companies have three choices;
1. Set a uniform price everywhere (Poor & Rich countries)
2. Set a market-based price in each country (Affordability)
3. Set a cost-based price in each country
Place (Distribution Channels)

Multinationals companies should pay close attention to how the product moves within the
foreign country. From when the product leaves their port to another country, the company must
ensure the distribution channel effectively delivers the product to the final outlet and onto
consumers.
5. Deciding on the Marketing Organization

Export department - A firm normally gets into international marketing by shipping out its good.
With international sales expanding, companies organize export departments to include various
marketing services to be able to carry out its business more aggressively.
International Division – Many companies become involved in several international markets and
ventures. Sooner or later they create international division to handle all their international
activities.
Global Organization - Several firms have truly become global organizations. Their top corporate
management and staff plan worldwide manufacturing facilities, marketing policies, financial
flows and logistic systems. The global operating units reports directly to the chief executive or
executive committees. Executives are trained in worldwide operations.
[
The global firms distinguished three organizational strategies;

1. A global strategy treats the world as a single market

2. A multinational strategy treats the world as a portfolio of national opportunities
3. A “glocal” strategy standardizes certain core elements and localizes other elements
Modes of entry in to Global Market/ Ways to enter into Global Market

There are several ways to enter into Global Market
1. Exporting
2. Licensing
3. Franchising
4. Special Modes
5. Foreign Direct Investment (FDI)
(1) Exporting: Exporting is the most traditional way of entering into foreign market. Initially, a
domestic business unit starts its international business by exporting to one nation. Gradually, it
expands its exports to various nations. Exporting is very useful when a country has surplus
production capacity i.e., its domestic consumption is less than its production capacity. It
includes. a. Indirect exporting b. direct exporting c. Intra-corporate transfer
a. Indirect Exporting means that the firm participates in international business through an
intermediary and does not deal with foreign customers or markets. Exporting of goods and
services through various home-based exporters Manufacturers’ export agents Export
commission agents Export merchants International firms b. Direct Exporting means that the
firm works with foreign customers or markets without intermediary with the opportunity to
develop a relationship. c. Intra-corporate transfer is selling of goods / services by a firm in one
country to an affiliated firm in another
2. Licensing: is when a firm, called the licensor, leases the right to use its intellectual property—
technology, work methods, patents, copyrights, brand names, or trademarks—to another firm,
called the licensee, in return for a fee. The property licensed may include: Patents Trademarks
Copyrights Technology Technical know-how Specific business skills
Advantages • Low financial risks • Low-cost way to assess market potential • Avoid tariffs,
NTBs, restrictions on foreign investment • Licensee provides knowledge of local markets
Disadvantages • Limited market opportunities/profits • Dependence on licensee • Potential
conflicts with licensee • Possibility of creating future competitor

3. Franchising • under franchising, an independent organisation called the franchisee operates
the business under the name of another company called the franchisor. • In such an arrangement
the franchisee pays a fee to the franchisor. • Franchising is a form of Licensing but the
Franchisor can exercise more control over the Franchisee as compared to that in Licensing.
Franchising Agreements Franchisee has to pay a fixed amount and royalty based on sales.
Franchisee should agree to adhere to follow the franchisor’s requirements Franchisor helps the
franchisee in establishing the manufacturing facilities Franchisor allows the franchisee some
degree of flexibility. Eg. McDonalds, Subway, KFC
Advantages • Low financial risks • Low-cost way to assess market potential • Avoid tariffs,
NTBs, restrictions on foreign investment • Maintain more control than with licensing •
Franchisee provides knowledge of local market
Disadvantages • Limited market opportunities/profits • Dependence on franchisee • Potential

conflicts with franchisee • Possibility of creating future competitor
4. Special Modes a. Management Contract b. Turnkey Projects c. Contract Manufacturing
a. Management Contract A management contract is an agreement between two companies
whereby one company provides managerial assistance, technical expertise and specialized
services to the second company for a certain period of time in return for monetary compensation.
Eg. Schools, sports facilities, hospitals, office buildings, malls and large businesses have on-
site cafeterias, restaurants.
b.TurnkeyProjects A turnkey project is a contract under which a firm agrees to fully design,
construct and equip a manufacturing/business/service facility and turn the project over to the
purchaser when its ready for operation, for a remuneration.
c.Contract Manufacturing Contract manufacturing is outsourcing entire or part of
manufacturing operations. E.g.: pharmaceuticals, Personal Care products etc TheiPad and
iPhone, which are products from Apple Inc., are manufactured in China by Foxconn. Hence,
Foxconn is a contract manufacturer and Apple benefits from a lower cost of manufacturing
devices
5. Foreign Direct Investment (FDI) FDI without alliances Companies enter the international
market through FDI , invest their money, establish manufacturing and marketing facilities
through ownership and control. Greenfield strategy- is a form of market entry strategy with

establishment of a new wholly owned subsidiary in a foreign country by constructing its facilities
from start. Through Greenfield Venture, a business enters a new market without the help of
another business which is already present there.
Advantages • Best site • Modern facilities • Economic development incentives • Clean slate
Disadvantages • Huge time and patience needed •Expensive • Comply with local and national
regulation • Local workforce needed FDI with strategic alliances
Modes of FDI through alliances are: 1. Mergers 2. Acquisitions 3. Joint ventures
1. Merger • A transaction where two firms agree to integrate their operations on a relatively
coequal basis because they have resources and capabilities that together may create a stronger
competitive advantage. • A merger is a combination of two companies to form a new company. •
Example: Company A+ Company B= Company C.
Advantages:
• Increase Market Share. • Economies of scale • Profit for Research and development. • Benefits
on account of tax shields like carried forward losses or unclaimed depreciation. • Reduction of
competition.
Disadvantages:
• Clash of corporate cultures • Increased business complexity • Employees may be resistant to
change
2. Acquisition • A transaction where one firms buys another firm with the intent of more
effectively using a core competence by making the acquired firm a subsidiary within its portfolio
of business • It also known as a takeover or a buyout • It is the buying of one company by
another. • Example: Company A+ Company B=Company A/B.
Advantages • Increased market share. • Increased speed to market • Lower risk comparing to
develop new products. • Increased diversification • Avoid excessive competition
Disadvantages • Inadequate valuation of target. • Inability to achieve synergy. • Liability by
taking huge debt.
[
4. Joint Ventures: Joint venture is the cooperation of two or more individuals or business in
which each agrees to share profit, loss and control in a specific enterprise.
It is a common strategy for getting an entry into foreign market. In joint venture, foreign partner
makes an arrangement with local unit of other country in which ownership and management are

shared by Local unit and foreign partner. Local unit has thorough knowledge of domestic
conditions and it has its local set-up and infrastructure like manufacturing unit, distribution
network, service centres, etc.
Advantages: • Benefit from local partner’s knowledge. • Shared costs/risks with partner. •
Reduced political risk.
Disadvantages: • Risk giving control of technology to partner. • Shared ownership can lead to
conflict
Difference between Merger, Acquisition & Joint Venture
• Merger = two companies come together "permanently" for mutual gains or to reduce
competition
• Acquisition = one company buys another company which may or may not be doing well
• Takeover = same like "acquisition", but generally a company buys another company which is
not doing well or has gone bankrupt.
• Joint Venture = two companies come together "temporarily" for mutual gains for a particular
project/job. After the project/job is completed the joint venture is dissolved.

Complete Notes MKT 357

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Theory Notes

Course No.: MKT 357 Credit: 1+1 =2

Course Title: Product Promotion Methods Semester: V (New)

Product it is defined as “anything which is capable of satisfying customer needs.”

Promotion:Promotion reference to the raising consumer awareness of product or brand which

Product Promotion it is defined as“Communicating with the public in an attempt to influence

Objectives of Product Promotion

1. To create awareness or provide information of product:

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 1

Importance of Product Promotion

1. Introduce new product:

2. Increase product knowledge & preference:-

✓ Helps to convince need

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 2

✓ many ads funny , cleaver ads but fail to convince

✓ Itconvinces“your product better, less expensive or more prestigious than similar

4. It helps to increase awareness of product Quality, features, price & functions.

5. Helps to create brand image

6. Helps to motivate consumer to buy

7. Helps to make huge profit through selling of goods.

8. Helps to convinces consumer to but product.

Promotional polices of Product Promotion

1. Loss leader pricing:

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 3

Tools/Techniques/tools of Product Promotion

11. Banners and posters

16. Direct marketing

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 4

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 5

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 6

• Exchange of market information by marketer or company to the consumer through

Importance of Market communication:

1. Creating brand awareness

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 7

❖ Any paid form of personal and non-personal presentation and promotion of

❖ it is promotion of ideas , goods or service by identical sponsor.

1) Persuasive 4) Non personal

2) Paid by identified sponsor

3) Disseminated through mass channels of communication

❖ It may promote the adoption of goods, services, persons or ideas.

❖ As compare to personal selling it is viewed much cheaper way of reaching consumers.

❖ it helps to create & maintain Brand equity.

➢ consider multiple audiences (Consumers, employees, suppliers , vendors ….etc)

✓ Oldest form of marketing

✓ it is the process of communicating directly with target customers to encourage

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 8

4. Direct selling or personal selling:-

❑ it directed at the consumer or trade

✓ Sponsorships or event marketing, combine advertising and sales promotion we do with

✓ Sponsorships increase awareness of company or product, build loyalty with specific

✓ Build long term associations.

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 9

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 10

Steps in developing effective marketing communications:-

Identify the target audience

Decide on Media mix

Manage your Integrated Marketing Communication

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 11

1. Identifying the target audience :-

Prof.O.R.Thorat (Theory Notes MKT – 357) Page 12

Establishing Marketing Objectives

Identifying Target Markets

Developing Marketing Strategies