1 Essentials of Marketing

DREAM, THINK & WORK
AS
MARKETING MASTERS
FOR ALL
OUR CAREER SUCCESS
SUDERSHAN CHAKRAVARTHY, PGDM-MAREKTING MANAGEMENT
www.studyMarketing.org 1
Contents
1. Marketing Mix and Key Marketing Activities
2. Developing Market Segmentation
3. Product Planning and Development
4. Promotion Mix : Advertising, Publicity, Personal

Selling and Sales Promotion
5. Distribution Planning and Pricing Strategy
Marketing Mix and
Market Segmentation
Marketing Credo
There is only one valid definition

of business purpose : to create a
customer
Peter Drucker
Marketing Mix
Product Price
Target
Market
Place Promotion
Key Marketing Activities
Consumer Analysis
Distribution
Product Planning
Planning
Promotion
Price Planning
Planning
Examination and evaluation of consumer

Consumer Analysis characteristics, needs, and purchase
processes
Development and maintenance of products,

Product Planning product assortments, product positions,
brands, packaging, options, and deletion of
old products
Outlines price ranges and levels, pricing

Price Planning techniques purchase terms, price
adjustments, and the use of price as an
active or passive factor
Establishment of channel relations, physical

Distribution
distribution, inventory management,
Planning warehousing, transportation, allocation of
goods, and wholesaling
Promotion Combination of advertising, publicity,

Planning personal selling, and sales promotion to
drive sales revenue
Product/Market Matrix
Existing Products New Products
Market Product
Existing Markets
Penetration Development
Market Diversification
New Markets
Development
• The firm seeks to achieve growth with
Market
existing products in their current market
Penetration
segments, aiming to increase its market
share
• Effective when the market is growing or not
yet saturated
Market • The firm seeks growth by targeting its existing

Development products to new market segments
• Effective when a local or regional business
looks to wider its market, new market segments
are emerging due to changes in consumer life-
style/demographics, and innovative uses are
discovered for a mature product
• The firms develops new products
Product
Development targeted to its existing market segments
• Effective when the firm has a core of
strong brands
• The firm seeks growth by targeting its

Diversification
existing products to new market
segments
• Diversification is utilized so that the
firm does not become overly
depend-ent on one product line
Market Segmentation
Market The division of a market into

Segment different homogeneous groups of
consumers
Should be:
• measurable
• accessible by communication and distribution
channels
• different in its response to a marketing mix
• durable (not changing too quickly)
• substantial enough to be profitable
Types of Market Segmentation
Based on regional variables such as

Geographic region, climate, population density, and
population growth rate.
Based on variables such as age, gender,

Demographic ethnicity, education, occupation, income,
and family status
Types of Market Segmentation
Based on variables such as values,

Psychographic attitudes, and lifestyle
Based on variables such as usage rate

Behavioral and patterns, price sensitivity, brand
loyalty, and benefits sought
Step in Planning A Segmentation Strategy
Determining Analyzing Developing

characteristics and consumer consumer
needs of consumers similarities and group
for the product differences profiles
category of the
company
Selecting Positioning Establishing

consumer company’s an
segment (s) offering in appropriate
relation to marketing
competition. plan
Product Planning and
Development
Products : Types of Goods
Convenience
Goods
Types of Shopping
Goods
Goods
Specialty
Goods
Convenience Goods
• Those purchased with a minimum of effort,
Convenience because the buyer has knowledge of
Goods product characteristics prior to shopping
• The consumer does not want to search for

additional information (because the item
has been bought before) and will accept a
substitute rather than have to frequent
more than one store
Convenience Goods
• Staples are low-priced items that are
Convenience routinely purchased on a regular basis,
Goods such as detergent, milk, and cereal
• Impulse goods are items that the
consumer does not plan to buy on a
specific trip to a store, such as candy, a
magazine, and ice cream
• Emergency goods are items purchased out
of urgent need, such as an umbrella during
a rainstorm, a tire to replace a flat, or
aspirin for a headache
Shopping Goods
• Those for which consumers lack

Shopping
sufficient information about product
Goods
alternatives and their attributes, and
therefore must acquire further
knowledge in order to make a
purchase decision
Shopping Goods
• For attribute-based shopping goods,
Shopping consumers get information about and then
Goods evaluate product features, warranty,
performance, options, and other factors.
The goods with the best combination of
attributes is purchased. Sony electronics
and Calvin Klein clothes are marketed as
attribute-based shopping goods
• For price-based shopping goods,
consumers judge product attributes to be
similar and look around for the least
expensive item/store
Specialty Goods
• Those to which consumers are brand
Specialty loyal.
Goods • They are fully aware of these products

and their attributes prior to making a
purchase decision.
• They are willing to make a significant
purchase effort to acquire the brand
desired and will pay a higher price than
competitive products, if necessary.
• For specialty goods, consumers will not
make purchases if their brand is not
available. Substitutes are not acceptable.
Services
Rented-
goods
Service
Type of Owned-goods
service
Services
Non-goods
Services
Rented- Involves the leasing of a good for a specified

period of time. Examples include car, hotel room,
goods
apartment, and tuxedo rentals
Service
Involves an alteration or repair of a good owned by

Owned-goods the consumer. Examples include repair services
service (such as automobile, watch, and plumbing), lawn
care, car wash, haircut, and dry cleaning
Provides personal service on the pan of the seller;

Non-goods it does not involve a goods. Examples include
accounting, legal, and consulting services
Characteristics of Services
• The intangible nature of many services makes the

consumer's choice more diffi-cult than with goods
• The producer and his or her services are often

inseparable
• The perishability of services prevents storage and

increases risks
• Service quality may be variable
Product Life Cycle
Growth Maturity
Introduction Decline
Product Life Cycle
Characteristics Introduction Growth
Marketing objective Attract innovators and Expand distribution and
opinion leader to new product line
product
Industry sales Increasing Rapidly increasing
Competition None or small Some
Industry profits Negative Increasing
Customers Innovators Affluent mass market
Product mix One or two basic Expanding line
models
Distribution Depends on product Rising number of
outlets
Pricing Depends on product Greater range of prices
Promotion Informative Persuasive
Product Life Cycle
Characteristics Maturity Decline
Marketing objective Maintain differential (a) cut back,
advantage as long as (b) revive,
possible (C) terminate
Industry sales Stable Decreasing
Competition Substantial Limited
Industry profits Decreasing Decreasing
Customers Mass market Laggards
Product mix Full product line Best-sellers
Distribution Greatest number of Decreasing number of
outlets outlets
Pricing Full line of prices Selected prices
Promotion Competitive Informative
New Product Planning
Idea Product Concept Business

Generation Screening Testing Analysis
Product Test Commercial-

Development Marketing ization
• A continuous, systematic search for new

Idea
product opportunities
Generation
• It involves delineating sources of new
ideas and methods for generating them
• After the firm identifies potential

Product products, it must screen them
Screening • Many companies use a new-product
screening checklist for preliminary
evaluation
Screening Checklist
GENERAL CHARACTERISTICS OF NEW PRODUCTS
Profit potential
Existing competition
Potential competition
Size of market
Level of investment
Patentability
Level of risk
MARKETING CHARACTERISTICS OF NEW PRODUCTS
Fit with marketing capabilities
Effect on existing products (brands)
Appeal to current consumer markets
Potential length of product life cycle
Existence of differential advantage
Impact on image
Resistance to seasonal factors
PRODUCTION CHARACTERISTICS OF NEW PRODUCTS
Fit with production capabilities
Length of time to commercialization
Ease of product manufacture
Availability of labor and material resources
Ability to produce at competitive prices
• Concept testing presents the consumer with a
proposed product and measures attitudes and
Concept intentions at this early stage of development
Testing
• Concept testing is a quick and inexpensive
way of measuring consumer enthusiasm
• Business analysis for the remaining product

concepts is much more detailed than product
Business screening
Analysis • Because the next step is expensive and time-
consuming product development, critical use
of business analysis is essential to eliminate
marginal items
Business Analysis Variables
Factors Considerations
Demand projections Price/sales relationship; short- and long-run sales potential;
speed of sales growth; rate of repurchases; channel intensity
Cost projections Total and per unit costs; use of existing facilities and
resources; startup vs. continuing costs; estimates of future
raw materials and other costs; econo-mies of scale; channel
needs; break-even point
Competition Short-run and long-run market shares of company and

competitors; strengths and weaknesses of competitors;
potential competitors; likely competitive strategies in
response to new product by firm
Required investment Product planning (engineering, patent search, product

development, testing); promotion; production; distribution
Profitability Time to recoup initial costs; short- and long-run total and per-
unit profits; control over price; return on investment (ROI)
• Product development converts a product idea
Product into a physical form and identifies a basic
Development marketing strategy
• It involves product construction, packaging,
branding, product positioning, and attitude and
usage testing.
• Test marketing involves placing a product for

sale in one or more selected areas and observing
Test
its actual performance under the proposed
Marketing marketing plan.
• The purpose is to evaluate the product and
pretest marketing efforts in a real setting prior to
a full-scale introduction
• After testing is completed, the firm is ready
Commercial- to introduce the product to its full target
ization market. This is commercialization and
corresponds to the introductory stage of the
product life cycle
• Commercialization involves implementing a
total marketing plan and full production
Promotion Mix :
Advertising, Publicity, Personal
Selling and Sales Promotion
Promotion Mix
Advertising Publicity
Target
Market
Personal Sales
Selling Promotion
Promotion Mix
Factor Advertising Publicity Personal Selling Sales Promotion
Audience Mass Mass Small (one-to-one) Varies

Message Uniform Uniform Specific Varies
Cost Low per viewer or None for media space High per customer Moderate per
reader and time; can be customer
moderate costs for
press releases and
publicity materials
Sponsor Company No formal sponsor in Company Company
that media are not
paid
Flexibility Low Low High Moderate
Control over content High None High High
and placement
Credibility Moderate High Moderate Moderate
Major goal To appeal to a mass To reach a mass To deal with individual To stimulate short-run
audience at a audience with an consumers, to resolve sales, to increase
reasonable cost, and independently reported questions, to close impulse purchases
create awareness and message sales
favorable attitudes
Example Television ad for a Newspaper article Retail sales personnel A Kodak video camera
Kodak video camera reporting on the explaining how a displayed at consumer
unique features of a Kodak video camera photography shows
Kodak video camera works
Four Key Steps to Advertise
Determine
message content
and devise an ad
Specify the
location of an ad
(media placement)
Choose how many

Outline a promotion
variations of a
schedule
basic message to
utilize
Things to Consider in Advertising
Waste is the portion of an audience that is

Waste not in a firm's target market. Because
media appeal to mass audiences, waste
is a significant factor in advertising.
Reach refers to the number of viewers or

Reach readers in the audience
Frequency is how often a medium can be
Frequency used. It is greatest for newspapers, radio, and
television, where ads may appear daily and
advertising strategy may be easily changed
Message permanence refers to the number

Message
of exposures one advertisement gener-ates
permanence
and how long it remains with the audience
Persuasive impact is the ability of a medium
Persuasive to stimulate consumers. Television often has
impact the highest persuasive impact because it is
able to combine audio, video, color, animation,
and other appeals.
Clutter involves the number of ads that are

Clutter
contained in a single program, issue, etc. of a
medium. Clutter is low when a limited number
of ads is presented and high when many ads
are presented.
Publicity : Poor and Good Response
Situation Poor Response Good Response
Fire breaks out in Requests for information by Company spokesperson explains the cause of
a company plant media are ignored. the fire and company precautions to avoid it
and answers questions.
New product Advertising is used without Pre-introduction news releases, product
introduced publicity samples, and testimonials are used.
News story about Requests for information by media Company spokesperson states that tests are
product defects are ignored, blanket denials are being conducted on products, describes
issued, hostility is exhibited toward procedure for handling defects, and answers
reporter of story. questions.
Competitor The advertising campaign is Extensive news releases, statistics, and
introduces new stepped up. spokespeople are made available to media to
product present company's competitive features.
High profits Profits are rationalized and positive Profitability is explained, data (historical and
reported effects on the economy are cited. current) are provided, uses of profits are
detailed: research, community development.
Overall view of There is an infrequent need for There is an ongoing need for publicity, strong
publicity publicity; crisis fighting is used planning, and contingency plans for bad
when bad reports are circulated. reports.
Developing a Publicity Plan
Setting Outlining
objectives types of
publicity
Creating
Selecting
publicity
media
messages
Timing
publicity
messages
Publicity Type
Publicity Type Example
News publicity Macy's describes its decision to sell its stores in the Midwest.
Business feature article Toyota explains its goals and objectives for the 2020.
Service feature article A trade association offers 10 tips on how to reduce home heating
costs.
Finance release General Electric distributes quarterly financial data about the
company.
Product release Intel announces its new, fast-speed microprocessor
Pictorial release Apple distributes photos showing all of its personal computer
products and related software
Background editorial Mc Kinsey presents a biography of its president and his rise
release through the company.
Emergency publicity The Red Cross makes a request for aid to tornado victims.
Specific Personal Selling Objectives
Type of Objective Illustrations
Demand-Oriented
Information To fully explain all good and service attributes
To answer any questions
To probe for any further questions
Persuasion To clearly distinguish good or service attributes from those of competitors
To maximize the number of sales as a per cent of presentations
To convert undecided consumers into buyers
To sell complementary items, e.g., film with a camera
To placate dissatisfied customers
Reminding To ensure delivery, installation, etc.
To follow up after a good or service has been purchased
To follow up when a repurchase is near
To reassure previous customers when making a new purchase
Image-Oriented
Industry and company To maintain a good appearance by all personnel in contact with consumers
To follow acceptable sales practices
Personal Selling Process
Customer
Prospecting Approach
(blind, lead) Wants
Sales Answering
Presentation Questions
(questions and
objections)
Follow up
Close (satisfaction,
referrals,
repurchase)
Types of Sales Promotion
Type Characteristics Illustration
Coupons Manufacturers or retailers advertise P&G mails consumers a 25-cents-
special discounts for customers who off coupon for Sure deodorant,
redeem coupons. which can be redeemed at any
supermarket.
Refund or A consumer submits proof-of- First Alert home fire alarms
rebate purchase (usually to the provides $5 rebates to consumers
manufacturer) and receives an extra submitting proof of purchase.
discount.
Samples Free merchandise or services are When Sunlight dishwashing liquid

given consumers, generally for new was introduced, free samples were
items. mailed to consumers.
Contests or Consumers compete for prizes by Publishers Clearinghouse sponsors

sweepstakes answering questions (contests) or annual sweepstakes and awards
filling out forms for random drawings automobiles, houses, and other
of prices (sweepstakes). prices.
Types of Sales Promotion
Type Characteristics Illustration
Bonus or Consumers receive discounts Some stores run I-cent sales,
multipacks for purchasing in quantity whereby the consumer buys one
item and gets a second one for a
penny.
Point-of- In-store displays remind Chewing gum sales in
purchase customers and generate supermarkets are high because
displays impulse purchases. displays arc placed at checkout
counters.
Special Manufacturers or retailers Virtually every major league
events sponsor celebrity appearances, baseball team has an annual "Old
fashion shows, and other Timers' Day," which attracts large
activities. crowds.
Gifts Consumers are given gifts for Savings banks offer a range of
making a purchase or opening gifts for consumers opening new
a new account. accounts or expanding existing
ones.
Sales Promotion Advantages
• It helps attract customer traffic and maintain brand or store
loyalty
• Quick results can be achieved
• Some forms of sales promotion (calendars, t-shirts. Pens,

etc) provide value to the consumer and are retained by
them; and these forms can provide a reminder function
• Impulse purchases can be increased through in-store

displays
Sales Promotion Disadvantages
• The image of the firm may be lessened if it continuously runs
promotions. Consumers may view discounts as representing a
decline in product quality and believe the firm could not sell its
offerings without them.
• When coupons, rebates, or other special deals are used

frequently, consumers may not make purchases if the items are
sold at regular prices. Instead, they will stock up each time there
is a promotion.
Sales Promotion Disadvantages
• Sometimes sales promotions shift the focus away from the
product onto secondary factors. Consumers may be attracted by
calendars, coupons, or sweepstakes instead of by product
quality, functions, and durability. In the short run this generates
consumer enthusiasm. In the long run this may have adverse
effects on a brand's image and on sales, because a product-
related differential advantage has not been developed.
Distribution Planning and
Pricing Strategy
Distribution Planning
• Distribution planning is systematic decision making
regarding the physical movement and transfer of
ownership of a product from producer to consumer.
• It includes transportation, storage, and customer
transactions.
• Distribution functions are carried out through a channel of
distribution, which is comprised of all the organizations or
people involved in the process.
• These organizations or people are known as channel
members or middlemen.
Intensity of Channel Coverage
Characteristics Exclusive Selective Intensive
Distribution Distribution Distribution
Objectives Prestige image, Moderate market Widespread
channel control and coverage, solid market coverage,
loyalty, price image, some channel
stability and high channel control and acceptance, sales
profit margins loyalty, good sales volume and profits
and profits
Channel Few in number, Moderate in number, Many in number,

members well-established well-established, all types
reputable stores better stores of outlets
Customers Few in number, Moderate in number, Many in number,
trend setters, brand conscious, convenience-
willing to travel to somewhat willing to oriented
store, brand loyal travel to store
Intensity of Channel Coverage
Characteristics Exclusive Selective Intensive

Distribution Distribution Distribution
Marketing Personal selling, Promotional mix, Mass
Emphasis pleasant pleasant shopping advertising,
shopping conditions, good nearby location,
conditions, good service items in stock
service
Major Limited sales May be difficult to Limited channel
Disadvantages potential carve out a niche control
Examples Automobiles, Furniture, Groceries,

designer clothes, clothing, watches household
caviar products,
magazines
Methods of Channel Cooperation
Factor Manufacturer Action Channel Member Action
New-product Thorough testing, adequate Good shelf location and

introduction promotional space, enthusiasm for
support product, assistance in test
marketing
Delivery Prompt filling of orders, adherence to Proper time allowed for
scheduled dates delivery, shipments
immediately checked for
accuracy
Promotion Sales force training, sales force Attractive in-store displays,

incentives, development of national knowledgeable salespeople,
advertising campaign, cooperative participation in cooperative
programs programs
Product Product guarantees Proper installation and

quality servicing of products
Pushing and Pulling Strategy
Pushing Strategy Pulling Strategy
Manufacturer Manufacturer
Channel Channel
members members
Consumers Consumers
Price Planning
Represents the value of a

good or service for both the
A Price seller and the buyer
Systematic decision making

Price by an organization regarding
Planning all aspects of pricing
Factors Affecting Pricing Decisions
Consumers Competitors Cost
Channel
Government
Members
Total Effects
on Price
Decisions
Consumers and Price Decisions
• The relationship between price and

consumer purchases and perceptions is
Consumers
explained by two economic principles —
the law of demand and price elasticity of
demand
• The law of demand states that consumers
usually purchase more units at a low price
than at a high price
• The price elasticity of demand defines the
sensitivity of buyers to price changes in
terms of the quantities they will purchase
Elastic • Elastic demand occurs if relatively small changes in

price result in large changes in quantity demanded
Demand
• Numerically, price elasticity is greater than 1
• With elastic demand, total revenue goes up when
prices are decreased and goes down when prices
rise
In-elastic • Inelastic demand takes place if price changes have

little impact on quantity demanded
Demand
• Price elasticity is less than 1
• With inelastic demand, total revenue goes up when
prices are raised and goes down when prices decline
Unitary • Unitary demand exists if changes in price are

Demand exactly offset by changes in quantity demanded,
so that total sales revenue remains constant.
• Price elasticity is 1
Competitors and Price Decisions
• Another element contributing to the

Competitors degree of control a firm has over
prices is the competitive environment
within which it operates
Market- • Characterized by a high level of

controlled com-petition, similar goods and services,
price and little control over price by individual
environment companies
Company- • Characterized by moderate competi-tion,

controlled well-differentiated goods and services, and
priced strong control over price by individual firms
environment
Government- • Characterized by prices set by the

controlled government. Examples are public utilities,
price buses, taxis, and state universities
environment
Channel Members and Price Decisions
• A wholesaler or retailer can gain stronger

Channel control over price by stressing its importance as
Members a customer to the manufacturer, refusing to
carry unprofitable product, stocking competitive
items, and developing strong dealer brands so
that consumers are loyal to the seller and not
the manufacturer
• Sometimes retailers engage in selling against

the brand, whereby they stock merchandise,
place high prices on it, and then sell other
brands for lower prices. This is often done to
increase the sales of their own brands
Channel Members and Price Decisions
• To ensure channel member cooperation with

Channel price decisions, the manufacturer needs to
Members consider four factors: channel member profit
margins, price guarantees, special deals, and
the impact of price increases
Government and Price Decisions
Price fixing regulations
Prohibitions against price

discrimination among
Government channel members
Unfair sales acts :

predatory pricing
Cost and Price Decisions
Cost of raw
Cost materials and
supplies
Labor cost
Pricing
Decisions
Advertising Cost
Distribution Cost
Price Strategy
Cost-based Price
Strategy
Price Demand-based
Strategy Price Strategy
Competition-
based Price
Strategy
Price Strategy
With a cost-based price strategy, the
Cost-based Price marketer sets prices by computing
Strategy merchandise, service, and overhead
costs, and then adding the desired profit
to these figures
The marketer sets prices after

Demand-based researching con-sumer desires and
Price Strategy ascertaining the range of prices
acceptable to the target market
Price Strategy
• The marketer sets prices in
Competition-
accordance with competitors
based Price
Strategy • Prices may be below the market, at
the market, or above the mar-ket,
depending on customer loyalty,
services provided, image, real or
perceived differences between
brands or stores, and the competitive
environment
Recommended Further Readings
1. Joel Evans and Barry Berman, Marketing, Prentice Hall
2. Phillip Kotler, Marketing Management, Prentice Hall
End of Material

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DREAM, THINK & WORK

2. Developing Market Segmentation

3. Product Planning and Development

4. Promotion Mix : Advertising, Publicity, Personal

5. Distribution Planning and Pricing Strategy

There is only one valid definition

Examination and evaluation of consumer

Development and maintenance of products,

Outlines price ranges and levels, pricing

Establishment of channel relations, physical

Promotion Combination of advertising, publicity,

Existing Products New Products

Market • The firm seeks growth by targeting its existing

• The firm seeks growth by targeting its

Market The division of a market into

Based on regional variables such as

Based on variables such as age, gender,

Based on variables such as values,

Based on variables such as usage rate

Determining Analyzing Developing

Selecting Positioning Establishing

• The consumer does not want to search for

• Those for which consumers lack

Goods • They are fully aware of these products

Rented- Involves the leasing of a good for a specified

Involves an alteration or repair of a good owned by

Provides personal service on the pan of the seller;

• The intangible nature of many services makes the

• The producer and his or her services are often

• The perishability of services prevents storage and

• Service quality may be variable

Idea Product Concept Business

Product Test Commercial-

• A continuous, systematic search for new

• After the firm identifies potential

• Business analysis for the remaining product

Competition Short-run and long-run market shares of company and

Required investment Product planning (engineering, patent search, product

• Test marketing involves placing a product for

Audience Mass Mass Small (one-to-one) Varies

Choose how many

Waste is the portion of an audience that is

Reach refers to the number of viewers or

Message permanence refers to the number

Clutter involves the number of ads that are

Product release Intel announces its new, fast-speed microprocessor

Samples Free merchandise or services are When Sunlight dishwashing liquid

Contests or Consumers compete for prizes by Publishers Clearinghouse sponsors

• Quick results can be achieved

• Some forms of sales promotion (calendars, t-shirts. Pens,

• Impulse purchases can be increased through in-store

• When coupons, rebates, or other special deals are used

Channel Few in number, Moderate in number, Many in number,

Characteristics Exclusive Selective Intensive

Examples Automobiles, Furniture, Groceries,

New-product Thorough testing, adequate Good shelf location and

Promotion Sales force training, sales force Attractive in-store displays,

Product Product guarantees Proper installation and

Pushing Strategy Pulling Strategy

Represents the value of a

Systematic decision making

Consumers Competitors Cost