MARKETING MIX Marketing strategy defines the broad principles by which the business unit expects to achieve its

marketing objectives in a target market. It consists of basic decisions on total marketing expenditure, marketing mix, and marketing allocation. Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. There are literally dozens of marketing-mix tools. McCarthy popularized a four-factor classification of these tools called the Four Ps: product, price, place (i.e., distribution), and promotion. The company's marketing mix at time t for a particular product can be represented by the vector (P1,P2,P3,P4) where PI = product quality, P2 = price, P3= place, and P4 = promotion. If Atlas develops product quality at 1.2 (with 1.00 = average), prices it at $1,000, spends $30,000 a month on distribution and $20,000 a month on promotion, its marketing mix at time t is (1.2, $1,000, $30,000, $20,000). Finally, marketers must decide on the allocation of the marketing dollars to the various products, channels, promotion media, and sales areas. How many dollars should support Atlas's electric versus electronic typewriters? Direct versus distributor sales? Direct mail advertising versus trade magazine advertising? East Coast markets versus West Coast markets? We can represent a distinct allocation in the following way: Suppose management sets product quality at 1.2, price at $1,000, a monthly distribution budget of $5,000, and a monthly advertising budget of $10,000 for product i selling to customer-type j in area k at time t. This is represented by the vector (1.2,$1000,$5000,$10000)i ,j,k ,t

FIG: MARKETING

MIX

To make these strategic allocations, marketing managers use the notion of sales-response functions that show how sales would be affected by the amount of dol1ars put in each possible application. The most basic marketing tool is product, which stands for the firm's tangible offer to the market, including the product features, packaging, branding, and servicing policies. Thus Atlas manages a product line of typewriters that differ in features, quality, styling, and packaging. Atlas also provides various services, such as delivery, repair, and training. Another important marketing-decision tool is price, namely, the amount of money that customers have to pay for the product . Atlas has to decide on wholesale and retail prices, discounts, allowances, and credit terms. Its price should be commensurate with the perceived value of the offer, or else buyers will turn to competitors in choosing their products.

Place stands for the various activities the company undertakes to make the product easily accessible and available to target consumers, Atlas must identify, recruit, and link various middlemen and marketing facilitators so that its products and services are efficiently supplied to the target market. It must understand the various types of retailers, wholesalers, and physical distribution firms and how they make their decisions. Promotion stands for the various activities the company undertakes to communicate its products' merits and to persuade target customers to buy them. Thus Atlas has to buy advertising, set up sales promotions, arrange publicity, and dispatch sales people to promote its product MARKETING ENVIRONMENT A company's marketing environment consists of the external actors and forces that affect the company's ability to develop and maintain successful transactions and relationships with its target customers. The actors and forces in a company's marketing environment are shown in following Figure. We can distinguish between the company's microenvironment and macro environment. The microenvironment consists of the actors in the company's immediate environment that affects its ability to serve its markets: the company, suppliers, market intermediaries, customers.

Fig: Major Actors & Forces in companys Marketing Environment

There are six major forces, namely, demographic, economic, physical, technological, political/legal, and socio/cultural. We will examine the mega trends in each macro environment component and their implications for marketing in the coming years. Demographic Environment Demographic The first environmental fact of interest to marketers is population because people Environment make up markets. Marketers are keenly interested in the size of the world's population; its geographical distribution; density; mobility trends; age distribution; birth, marriage, and death rates; and racial, ethnic, and religious structure. We will examine the major, demographic trends and their implications for marketing planning.

Worldwide Explosive Population Growth Slowdown in U.S. Birthrate Aging of U.S. Population The Changing American Family The Rise of Nonfamily Households Geographical Shifts in Population A Better-educated and White-collar Population Changing Ethnic and Racial Population Shift From a Mass Market to Micromarkets

Economic Environment Markets consist of purchasing power as well as people. Total purchasing power is a function of current income, prices, savings, and credit availability. Marketers should be cognizant of major trends in the economic environment.

Slow Real-lncome Growth Lower Savings and High Debt Changing Consumer Expenditure Patterns.. Some of these changes were observed over a century ago by Ernest Engel, a German statistician who studied how people shifted their expenditures as their income rose. He observed that as family income rises, the percentage spent on food decline, the percentage spent on housing and household

operations remains constant, and the percentage spent on other categories (clothing, transportation, recreation, health, and education) and the percentage put into saving" Physical Environment Marketers should be aware of the threats and opportunities associated with four trends in the physical environment. Potential Shortages of Certain Raw Materials it would appear at present that the quantities of platinum, gold, zinc, and lead are not sufficient to meet demands. ..silver, tin, and uranium may be in short supply even at higher prices by the turn of the century. By the year 2050, several more minerals may be exhausted if the current rate of consumption continues. Unstable Cost of Energy Increased Levels of Pollution Changing Role of Government in Environment Protection

Technological Environment The most dramatic force shaping people's lives is technology. Technology has released Environment such wonders as penicillin, open-heart surgery, and the birth-control pill. It has released such horrors as the hydrogen bomb, nerve gas, and the submachine gun. It has also released such mixed blessings as the automobile, video games, and white bread. One's attitudes toward technology depend on whether one is more enthralled with its wonders or its horrors. Every new technology is a force for "creative destruction." Transistors hurt the vacuum-tube industry, xerography hurts the carbon-paper business, autos hurt the railroads, and television hurts the movies. Instead of old industries moving into the new, many fought or ignored them, and their businesses declined. Each technology creates major long-run consequences that are not always foreseeable. The contraceptive pill, for example, led to smaller families, more working wives, and larger discretionary incomes-resulting in higher expenditures on vacation travel, durable .goods, and other things. The marketer should watch the following trends in technology. Accelerating Pace of Technological Change Unlimited Innovational Opportunities High R&D Budgets Concentration on Minor Improvement Rather Than on Major Discoveries

 Increased Regulation of Technological Change Political/Legal Environment Marketing decisions are substantially impacted by developments in the political/legal environment. This environment is composed of laws, government agencies, and pressure groups that influence and constrain various organizations and individuals in society. The main political trends and their implications for marketing management are discussed below. 12-

Substantial Amount of Legislation Regulating Business The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair The third purpose of government regulation is to protect the larger interest of society

business practices. 3Changing Government Agency Enforcement Growth of Public-Interest Groups Socio/Cultural Environment The society that people grow up in shapes their basic beliefs, values, and norms. Environment .They absorb, almost unconsciously, a world view that defines their relationship to themselves, to others, to nature, and to the universe. Here are some of the main cultural characteristics and trends of interest to marketers. Core Cultural Values Have High Persistence Each Culture Consists of Subcultures Secondary Cultural Values Undergo Shifts Through Time People's relation to themselves( me-society) People's relation to others( we-society) People's relation to institutions Peoples relation to society.. Marketers can view life-way groups as market segments with specific symbolic and material needs. Makers are high achievers who collect success symbols, such as elegant homes, expensive automobiles, and fine clothes, whereas changers live more austerely, drive smaller

cars, and wear simpler clothes. Escapers go in for motorcycles, chic clothes, surfing, and disco. In general, the consumption patterns of Individuals will reflect their orientation toward society. People's relation to the nature People's relation to the universe.

Other-centeredness to Self-fulfillment ,Postponed gratification to Immediate gratification, Hard work to The easy life ,.Formal relationships to Informal & open relationships, Religious orientation to Secular orientation. DISTRIBUTION/PLACE When there is a refrigerator not a refrigerator? When it is in Pittsburgh at the time it is desired in Houston. J.L.Haskett, R.M.Ivie In today's economy, most producers do not sell their goods directly to the final users. , Between them and the final users stand a host of marketing intermediaries performing a variety of functions and bearing a variety of names. Some intermediaries--such as wholesalers and retailers-buy, take title to, and resell the merchandise; they are called merchant middlemen. Others-such as brokers, manufacturers' representatives, and sales agents- search for customers and may negotiate on behalf of the producer but do not take title to the goods; they are called agent middlemen. Still others-such as transportation companies, independent warehouses, banks, and advertising agencies--assist in the performance of distribution but neither take title to goods nor negotiate purchases or sales; they are called facilitators.

FIG: There is a difference between channels of distribution and physical distribution CHANNELS OF DISTRIBUTION A channel of distribution is the network of companies that carry out marketing activities as goods and services move from producers to customers. Channel distributions are not the same as physical distribution. The following figure illustrates the difference between channels of distribution and physical distribution. The channel of distribution extends from manufacturer to wholesalers to retailers to customers. The physical distribution pattern, on the other hand, is made up of product movements through carriers from one location to another. MARKETING CHANNELS Marketing channels can be viewed as sets of interdependent organizations involved in the process of making a product or service available for use or consumption." Following Figure shows one major source of the economies effected by the use of middlemen. Part (a) shows three producers, each using direct marketing to reach three customers. This system requires nine different contacts. Part (b) shows the three producers working through one distributor, who contacts the three customers. This system requires only six contacts. In this way, middlemen reduce the amount of work that must be done.

FIG: How a Distributor Affects an Economy of Effort Number Marketing channels Number Marketing channels can be characterized by the number of channel levels. We will use the number of intermediary levels to designate the length of a channel. Following Figure illustrates several consumer goods marketing channels of different lengths. !

A zero-level channel (also called a direct-marketing channel) consists of a manufacturer selling directly to consumers. The three major ways of direct selling are door-to- door, mail order, and manufacturer-owned stores. Avon's sales representatives sell cosmetics to women on a door-todoor basis; Franklin Mint sells collectible objects through mail order; and Singer sells its sewing machines through its own stores. A one-level channel contains one selling intermediary, such as a retailer. A two-level channel contains two intermediaries. In consumer markets, they are typically a wholesaler and a retailer. A three-level channel contains three intermediaries. For example, in the meat packing , industry, a jobber usually intervenes between the wholesalers and the retailers. The jobber buys from wholesalers and sells to the smaller retailers who generally are not serviced by the large wholesalers. Higher-level marketing channels are also found but with less frequency. From the producer's point of view, the problem of attaining information and exercising control in- creases with the number of channel levels, even though the manufacturer typically deals only with the adjacent level.

FIG: Consumer Marketing Channels

Following Figure shows common industrial marketing channels. The industrial goods manufacturer can use its sales force to sell directly to industrial customers. Or it can sell to

industrial distributors who sell to the industrial customers. Or it can sell through manufacturers' representatives or its own sales branches directly to industrial customers, or use them to sell through industrial distributors. Thus zero, one, and two-level marketing channels are quite common in industrial goods marketing channels.

FIG: Industrial Marketing Channel Advertising Doing business without advertising is like winking at a girl in the dark. You know what you are doing, but nobody else does -Stuart Henderson, American Educator. Simply advertising could be defined as a paid message inserted in a medium According to a broader definition, advertising is any paid form of non-personal presentation of ideas, service, or product through mass medium by an identical sponsor. Advertising primarily involves the mass media, such as news papers, television, magazines, radio and billboards. Advertising is used by marketers to reach target markets such as business firms, not-for-profit organisations, or individuals identified in the message.

Types of Advertising An organization's objectives in its advertising program determine, to a great extent, what type of advertising that organisation will use. Advertisements fall into two broad categories: Product Advertising, and Institutional Advertising. 1. Product advertising, is non-personal selling of a particular good or service. This is the type of advertising the average person usually thinks of when talking about most promotional activities. 2. Institutional advertising, in contrast, promotes a concept, an idea, a philosophy, or the goodwill of an industry, organisation, place, person, or government agency. Objectives of Advertising Marketers use advertising messages to accomplish three primary objectives: to Inform, to Persuade, and to Remind. These objectives may be used individually or, more typically, in conjunction with each other. i) Informative Advertising Informative advertising seeks to develop initial demand for a good or service, organisation, place, idea, or cause. The promotion of any new market entry tends to pursue this objective because marketing success at this stage often depends simply on announcing availability. Therefore, informational advertising is common in the introductory stage of the product life cycle. ii) Persuasive Advertising Persuasive advertising attempts to increase demand for an existing good or service, organisation, place, person, or cause. Persuasive advertising is a competitive type of promotion suited to the growth stage and the early part of the maturity stage of the product life cycle. iii) Reminder Advertising Reminder advertising tries to reinforce previous promotional activity by keeping the name of good, service, organisation, place, person, or cause before the public. Reminder advertising is common in the latter part of maturity stage and throughout the decline stage of the product life cycle. Advertising Strategies

Effective advertising strategies accomplish at least one of three tasks: Informing, Persuading, or Reminding consumers. The secret to success in choosing the best strategy is developing a message that best positions a firm's product in the audience's mind. Among the advertising strategies available for use by 21st marketers are Comparative, Celebrity, Interactive, and Retail Advertising. Marketers often combine several of these advertising strategies to ensure that the advertisement accomplishes set objectives. i). Comparative Advertising Comparative advertising is an advertising strategy that emphasizes messages with direct or indirect promotional comparisons between competing brands. Firms whose goods and services are not the leaders in their markets often favor comparative advertising. Generally speaking, where there is competition through advertising, prices tend to go down because people can shop around. ii). Celebrity Advertising Many marketers hire celebrity spokespeople to try to boost the effectiveness of their advertising messages. Primary advantage of celebrity advertising is improved product recognition in a promotional environment filled with hundred's of 15, 30 second advertisements. A celebrity testimonial succeeds when the celebrity is a credible source of information for the product being promoted. Celebrity advertising helps in improving the product's believability, product recall, brand recognition, and also create positive attitudes,. Leading to greater bra~ equity. iii) Retail Advertising Retail advertising includes all advertising by retail stores that sell goods and services directly to consuming public. Or Retail advertising is the non-personal selling by stores that offer goods and services directly to the consuming public. A retailer often shares advertising costs with the manufacturer in a technique called cooperative advertising. iv) Interactive Advertising Interactive media are communication channels in which message recipients actively participate in the promotional effort. Interactive advertising creates a dialogue, providing more materials as the user asks. Multimedia technology, the internet, and commercial online services are changing the nature of advertising from a one-way, passive communication technique to a more effective way to facilitate two-way marketing communications. The advertiser's challenge is to gain and hold consumer's interest in an environment where these consumers control what they want to see.