Marketing Management I & II PDF

UNIT I AND II Marketing Management ***Unit I:** Marketing- Fundamental Concepts and Approaches- Marketing Mix- Segmentation- Buyer behavior- Four P's - Role of Middlemen- Arguments FOR and AGAINST - Pricing Policies and strategies.* ***Unit II:** Advertising -Media- Copy- Effectiveness- Consumer rights and protection- Recent Trends in Advertising.* The development of marketing is evolutionary not revolutionary one. ***"Marketing is what a marketer does".*** The traditional objective of marketing had been to make the goods available at places where they are needed. This idea was later on changed by shifting the emphasis from ***"exchange" to "satisfaction of human wants".*** **[EVOLUTION OF MARKETING]** **1. Barter system:** Here the goods are ***exchanged against goods,*** without any other medium of exchange, like money. **2. Production orientation:** This was a stage where producers, instead of being concerned with the consumer preference, concentrated on the ***mass production of goods*** for the purpose of profit. They cared very little about the customers. **3. Sales orientation:** The stage witnessed major changes in all the spheres of economic life. The ***selling activity becomes the dominant factor,*** without any efforts for the satisfaction of the consumer needs. **4. Marketing orientation:** Customers' importance was realized but only as a means of disposing of goods produced. Competition became more stiff. ***Aggressive advertising, personal selling, large scale sales promotion etc. are used as tools to boost sales.*** **5. Consumer orientation:** Under this stage only such products are brought forward to the market which are capable of satisfying the tastes, preferences and expectations of the consumers -- consumer satisfaction. **6. Management orientation:** The marketing function assumes a managerial role to coordinate all interacting business activities with the objective of planning, promoting and distributing want-satisfying products and services to the present and potential customers. **[MARKET -- MEANING AND DEFINITIONS]** ***The word "Market" is derived from the Latin word "Marcatus"*** meaning merchandise, wares, traffic, trade or a place where business is conducted. The common usage of market means ***a place where goods are bought or sold.*** The following are the various definitions given by various authorities. 1\. "Market includes both place and region in which buyers and sellers are in free competition with one another." -- ***Pyle*** 2\. "The term market refers not to a place, but to a commodity or commodities and buyers and sellers who are in direct competition with one another." ***-- Chapman*** **[NEED FOR MARKETS]** The following necessitate the existence of the market. 1\. To exchange (barter) goods and services. 2\. To adjust demand and supply by price mechanism. 3\. To improve the quality of life of the society. 4\. To introduce new modes of life. 5\. To increase production (development of markets encourage production). **[CLASSIFICATION OF MARKETS]** **I. CLASSIFICATION BASED ON GEOGRAPHICAL AREA** **1. FAMILY MARKET**: When ***exchanges are confined within a family***, or close members of the family, such a market can be called as family market. **2. LOCAL MARKET**: When buyers ***and sellers, belong to a local area or areas, say a town or village, participate in market, it is called local market.*** **3. NATIONAL MARKET**: For a certain type of commodities, ***a country may be regarded as a market, through the fast development of industrialization; it is called a national market.*** **4. WORLD MARKET** : World or international market comes up when buyers and sellers of goods evolve on world level i.e., involvement of buyers and sellers beyond the boundaries of a nation. **II. CLASSIFICATION BASED ON COMMODITIES / GOODS** **COMMODITY MARKET**: Produced goods or consumption goods are bought and sold. Commodity markets are sub-divided into: **1. PRODUCE EXCHANGE MARKET**: This type of market is found only in developed industrial centres or cites. ***One market deals in one commodity only.*** e.g., Wheat Exchange Market of Hapur, the Cotton Exchange Market of Bombay etc. **2. MANUFACTURED GOODS MARKET**: Such type of market deals with manufacture goods e.g., Leather goods, machinery etc. The Leather Exchange Market at Kanpur, Piece Goods Exchange of Bombay are examples of such markets. **3. BULLION MARKET :** This type of market deals with the purchase or sale of gold, silver etc. Bullion markets of Bombay, Calcutta, Kanpur etc., are examples of such markets. **CAPITAL MARKET** Financial needs of concerns are generally met by capital markets. They are of three types. **1. MONEY MARKET :** In this type of market money is borrowed or lent. London is the world biggest money market. **2. FOREIGN EXCHANGE MARKET:** It is an international market. This type of market helps the exporters and importers , in converting their currencies into foreign currencies and vice versa. **3. THE STOCK EXCHANGE MARKET:** This is a market where shares, debentures, bonds etc., of companies are dealt with purchased or sold. It is also known as Security Market. **III. ON THE BASIS OF ECONOMICS** **1. PERFECT MARKET** :A market is said to be a perfect market, if it satisfies the following conditions: \(i) Large number of buyers and seller are there. \(ii) Prices should be uniform throughout the market. \(iii) Buyers and sellers have a perfect knowledge of market. \(iv) Goods can be moved from one place to another without restrictions. It should be remembered that such types of markets are rarely found. **2. IMPERFECT MARKET:** A market is said to be imperfect when \(i) Products are similar but not identical. \(ii) Prices are not uniform. \(iii) There is lack of communications. \(iv) There are restrictions on the movement of goods. **III. ON THE BASIS OF TRANSACTION** **1. SPOT MARKET:** In such a market goods are exchanged and the physical delivery of goods takes place immediately. **2. FUTURE MARKET:** In such a market contracts are made over the price for future delivery. The dealing and settlement take place on different dates. **IV. ON THE BASIS OF REGULATION** **1. REGULATED MARKET:** These are types of markets which are organized, controlled and regulated by statutory measures. Example : Stock Exchanges of Mumbai, Chennai, Kolkata etc. **2. UNREGULATED MARKET:** This is a free market. There is no control with regard to price, quality, commission etc. Demand and supply determine the price of goods. **V. ON THE BASIS OF TIME** **1. VERY SHORT PERIOD MARKET:** Markets which deal in perishable goods like, fruits, milk, vegetables etc. are for a very short period. **2. SHORT PERIOD MARKET:** In certain goods, supply is adjusted to meet the demand. The demand is greater than supply. Such markets are known as Short Period Market. **3. LONG PERIOD MARKET:** This type of market deals in durable goods. **V. ON THE BASIS OF VOLUME OF BUSINESS** **1. WHOLESALE MARKET:** In wholesale market goods are supplied in bulk quantity to dealers. **2. RETAIL MARKET:** In retail market goods are sold in small quantities directly to the users or consumers-consumer market. **VI. ON THE BASIS OF IMPORTANCE** **1. PRIMARY MARKET:** The Primary producers of farm produce sell their output or products through this type of markets to wholesalers or consumers. **2. SECONDARY MARKET:** The commodities arrive from other markets. The dealings are commonly between wholesalers or between wholesalers and retailers. **3. TERMINAL MARKET:** The ultimate consumer gets the goods from such markets. Here the final disposal of goods takes place. **MARKETING** The essence of marketing is an exchange or a transaction, intended to satisfy human needs or wants. ***Marketing, in legal aspect*** is said to be the effort by which the transfer of ownership in goods between the seller and buyer is effected- emphasizes ownership transfer. ***Marketing in economic point*** of view, is defined as the exchange function by maintaining supply and demand in equilibrium. ***Marketing, in its descriptive*** definition, explains the functions involved in the activities of goods from the producer to the consumer. "That performance of business activities that direct the flow of goods and services from the producer to the consumer or user." **MICRO MARKETING AND MACRO MARKETING** The term 'marketing' can be defined from two view points --micro and macro; that is, firm's point of view and national point of view. **MICRO-MARKETING** Under micro-marketing, a firm formulates and implements such strategies (viz., product development. pricing, promoting and distribution), that ensures flow of need satisfying goods and services at profit. ***In the words of Stanton,*** ***"marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services to present and potential customers".*** ***The ultimate aim of micro-marketing is satisfaction of human needs and wants***, that is, it is consumer --oriented. ***According to Kotler marketing is a social and exchange process.*** The concept of micro-marketing reveals two aspects. First, marketing must ensure need satisfying goods and services. That is, ***marketing begins with the customer and not with the production process.*** Secondly marketing rather than production should determine what products are to be made. **MACRO-MARKETING** Macro-marketing is the complex system of organizations and processes by which a nation's resources are distributed among the people , to satisfy their needs and wants **WHAT IS MARKETED?** Marketing involves ten types of entities: goods, services, experiences, events, persons, places, properties, organization, information and ideas. 1\. GOODS 2. SERVICES 3\. EXPERIENCES 4. EVENTS 5\. PERSONS 6. PLACES 7\. PROPERTIES 8. ORGANISATIONS 9\. INFORMATION 10. IDEAS **DEFINITIONS OF MARKETING** Marketing is defined in different ways. A few definitions of notable authorities are given below: 1\. "Marketing includes all activities involved ***in the creation of place, time and possession utilities.*** Place utility is created when goods and services are available at the places they are needed; time utility, when they are need; and possession utility, when they are transferred to those who need them." **-- Converse, Hugey and Mitchell** 2\. "Marketing is a **total system of business activities** designed to plan, price, promote and distribute want-satisfying goods and services to present and potential customers." -**W.J. Stanton** **OBJECTIVES OF MARKETING** **Barker and Anshen** say, "The end of all the marketing activities is the satisfaction of human wants." The following are the aims of marketing: 1\. Intelligent and capable application of modern marketing policies. 2\. To develop the marketing field. **IMPORTANCE OF MARKETING TO THE SOCIETY** 5\. Marketing creates modern cultivators. The poor farmer gets the new and developed methods of cultivation-useful implements, tools, fertilizers etc. at his door and thus embraces the advantages of developed cultivation method. 6\. Marketing removes the imbalances of supply by transferring the surplus to deficit areas, through better transport facilities. 7\. Marketing helps to maintain economic stability and rapid development in underdeveloped or developing countries. 8\. Marketing includes all activities in the creation of utilities-form, place, time and possession. 9\. Scientific marketing has a stabilizing effect on the price level. 10\. Marketing helps to create awareness for non-business items society's benefit like, family-planning, population--control, child-labour, child-abuse, and smoking campaign, polio immunization programmes and AIDS awareness campaigns etc. **IMPORTANCE TO THE INDIVIDUAL FIRMS** 1\. Marketing generates revenue to firms. 2\. Marketing section of a firm is the source of information to the top management for taking overall decisions on production. 3\. Marketing and innovations are the two basic functions of all business. 4\. Marketing facilitates the development of business and creates employment opportunities for people. **MERCHANDISING** ***Merchandising is only product planning***. It aims at the internal planning relating to products or services for marketing at the right time, right price and in proper colour, qualities and sizes. Thus it is only a part of marketing study. **SELLING** This is the ***last process of marketing***. It is the needs of the sellers. It is an internal aim of a business. **SELLING VS. MARKETING** +-----------------------------------+-----------------------------------+ | **Selling** | **Marketing** | +===================================+===================================+ | 1\. Emphasises on the product. | 1\. Emphasises on customer's | | | wants. | | 2\. Sales are the primary | | | motive. | 2\. Satisfaction of the customer | | | is primary. | | 3\. First production, then | | | selling takes place at a profit | 3\. First customer's need is | | without knowing customer's | known and | | needs. | | | | then production takes place; then | | 4\. Internal, company | | | orientation. | the product is sold at a profit | | | | | 5\. Company's need is the | 4\. External, market | | motive. | orientation. | | | | | 6\. Cost determines price. | 5\. Buyer's need is the motive. | | | | | 7\. 'Selling' views the | 6\. Consumer determines price; | | customers | price determines cost. | | | | | as the last link in the business. | 7\. "Marketing' views the | | | customer as the very purpose of | | 8\. It is an activity that | the business. | | converts | | | | 8\. It is a function that | | the goods into cash. | converts the consumer needs | | | into products. | | 9\. Core of business activity is | | | the seller | 9\. Buyer is the core of all | | | activity. | | 10\. Business is a | | | goods-producing process. | 10\. Business is a | | | customer-satisfying process. | +-----------------------------------+-----------------------------------+ **DISTRIBUTION** It means the ***physical transfer of goods***. It ***It is concerned with physical movement of goods from producer to the wholesaler, from wholesaler to the retailer, from retailer to the consumers.*** **BUSINESS** The term 'business' originates from the word 'busy' which denotes a state of engagement in some work. ***Business means either producing or purchasing of goods and services and selling those goods and services for the purpose of earning a profit.*** Profit is an inseparable element in business or business aims at profit. **KINDS OF GOODS** Goods may also be called as product. They are tangible. They are **A. CONSUMER'S GOODS** ***This*** ***type of goods are purchased by ultimate users or consumers for their personal use.*** For example, food, biscuits, toys, clothes etc. are purchased by consumers to satisfy their non-business wants. These goods may be further classified as: **(I) CONVENIENCE GOODS:** Consumers or purchasers get commodities such as ***bread, drug, perfumery, soap, sugar, tooth paste, newspapers, petrol, cold drinks, stationery items etc., at minimum effort and at low cost.*** They are often required by the consumers.. **(II) SHOPPING GOODS:** Before making final selection, the consumers make an enquiry as to the products' comparative prices, durability, style etc., from different shops. Goods like jewelry, furniture, ready-made garments etc., are more costly than convenience goods. ***Their need is also less when compared to the convenience goods*** **(III) SPECIALLY GOODS:** Certain products possess special attraction to the consumers. As such the consumer may wait or suffer inconveniences to get the desired goods. ***This type of goods are of high value and manufactured by reputed firms.*** For example, ***cars, refrigerators, fancy goods televisions, fans, scooters, photographic equipments, high grade shoes, stereo equipment, electrical appliances etc.*** **B. INDUSTRIAL GOODS** ***Goods which are used for production or used in producing other products are industrial goods.*** ***The difference between the consumer products and industrial goods is based on their ultimate use.*** If a product is brought by ultimate consumer, it is consumer goods. If a product is bought and used form making other products, it is an industrial product. The industrial goods can be further classified as:- (**I) RAW MATERIALS:** Raw materials are the basic materials entering physically into the final products. For example, building stones, raw jute etc. **(II)FABRICATED MATERIALS:** Materials of this category will enter physically into the final products, but some type of processing is already undergone. For example, bricks, copper sheets, leather, yarn etc. As the processing is incomplete, further processing is required. **(III) COMPONENT PARTS:** Such type of parts are already undergone some processing and more or less the parts can be called as final products. That is, ***the assembly of several component parts, makes the final products.*** The components are visible in the final products, such as batteries, tyres, speedometer, spark plugs, spare parts etc. **(IV) INSTALLATION:** Machines, buildings, equipments etc., do not enter into final products and are durable for a long period. They are essential for production. For example, ***gas, power installation etc.*** They need heavy expenses for installation and sometimes decide the nature, scope and efficiency of an organization. **(V) ACCESSORIES:** They are light machines or tools which are used for the operation of a business. This is not used for manufacturing a product. For example, hand-tools, cash-register in retail shop, type-writers, calculators, accounting machines etc. **SERVICES** ***Services are intangible activities which are offered for sale as such or in connection with sale of goods. For example, consultation, banking etc.***Services may be two types. ***(i) Personal:*** It comprises of education, communication, medical legal services etc., ***(ii) Business services***: It comprises of advising, mercantile credits, collection agencies etc. **MARKETING A SCIENCE OR ART?** This is a matter of debate. Science is a classified and systematized body of knowledge. Art means the application of principles laid down, to the practical life. The word art means, it is the application of a set of rules to practice. The application needs skill. Skill must be developed by applying the rules. In short, it can be said that art involves the exercise of systematic knowledge to reap a good result. Marketing, we can conclude, ***is both a science and art base.*** **APPROACH TO THE STUDY OF MARKETING** **1. PRODUCT OR COMMODITY APPROACH:** Under the commodity approach the ***focus is placed on the product*** or it is an approach on the marketing on commodity wise basis. In other words, the ***study relates to the flow of a certain commodity and its movement*** from the original producer right up to the ultimate customer. The ***subject-matter,*** ***under this study, is commodity***. **2. INSTITUTIONAL APPROACH:** In the institutional approach, the focus is on the ***study of institutions- middlemen, wholesalers, retailers, importers, exporters, agencies, warehousing etc., engaged in the marketing during the movement of goods.*** The approach is ***also known as middlemen approach***. Here, emphasis is given to understand and analyse the functions of institutions, who are discharging their marketing functions. **3. FUNCTIONAL APPROACH:** The functional approach gives importance on the ***various functions of marketing***. In other words, one concentrates attention on the specialized services or functions performed by marketers. In this approach, marketing is split into ***many functions buying, selling, pricing, standardization, storage, transportation, advertising, packing etc.*** **4. MANAGEMENT APPROACH:** ***This approach is the latest and scientific***. It concentrates upon the activities or ***marketing functions and focuses on the role of decision-making at the level of firm.*** This approach is mainly concerned with how managers handle specific problems and situations.. **5. SYSTEM APPROACH:** The system approach can be defined as ***"a set of objects together with the relationship among them and their attributes".*** Here, the aim is to secure profit through customer -- satisfaction. Markets can be understood only through the study of marketing information. **6. SOCIETAL APPROACH:** This ***approach has been originated recently.*** The ***marketing process is regarded as a means by which society meets its own consumption needs.*** This system gives no importance as to how the business meets the consumer's needs. Therefore, attention is paid to ecological factors (sociological, cultural, legal etc.,) and marketing decisions and their impact on the society's well- being. **7. LEGAL APPROACH:** This approach emphasizes ***only one aspect*** ie., ***transfer of ownership to buyer.*** It explains the regulatory aspect of marketing. In India, the marketing activities are largely controlled by Sales of Goods Act, Carrier Act etc. The study is concentrated only on legal aspects leaving other important aspects. **8. ECONOMIC APPROACH:** This approach deals with ***only the problems of supply, demand and price***. These are important from the economic point of view, but fail to give a clear idea of marketing. **MODERN MARKETING** Modern marketing covers all business activities in order to ascertain the demand, product planning, distribution and facilitating the entire marketing programme process. ***The modern marketing emphasizes the need for integrated and well--coordinated marketing programme.*** It aims to attract the customers. The features of modern marketing are: **1. CONSUMER ORIENTATION:** The managerial attention was focused on the market and the consumer. The management becomes consumer or marketing-orientated. Consumer orientation or market- orientation may be defined as ***'the managerial state of mind concerned with consumer satisfaction and profit, and not sales volume alone'.*** Consumer becomes the pivot of all business decisions. **2. MODERN MARKETING BEGINS WITH THE CUSTOMERS:** ***Levitt says, " Instead of trying to market what is easier for us to make, we must find out much more about what the consumer is willing to buy. In other words, we must apply our creativeness more intelligently to people, and their wants and needs, rather than to products."*** **3. MODERN MARKETING BEGINS BEFORE PRODUCTION:**. The ***information from the market or the consumer will decide the future of the product***. ***Thus, product planning and development is undertaken before the actual production takes place.*** The pricing, distribution etc. are secondary. These enable a market to face the customer, who is the king of the market **4. MODERN MARKETING IS A GUIDING ELEMENT:** The ability of the marketer depends on the ability of finding a consumer and to satisfy him. **RELATIONSHIP MARKETING** ***The goal of relationship marketing is to satisfy the customer in such a manner that he becomes loyal to the company and is unlikely to switch to the competitors.*** Companies try to convert the customer into clients by giving them special treatment and then try to convert these clients into members who join the company's club to avail of special benefits. Organizations need to retain their existing customers because the cost of retaining a customer is much lower than the cost of acquiring a new customer. **THE IDEAS OF THE MODERN MARKETING CONCEPT** **(A) CONSUMER'S NEED ORIENTATION:** "Selling focuses on the need of the buyer. Selling is preoccupied with the seller's need to convert his product into cash; marketing, with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it." It is expressed in the following ways also. \* Consumer has voice and tops in the organization chart. \* Consumer's need and desire are considered in production planning. \* Consumer's need and desires are shaped through products. \* Firms produce acceptable products and nit product easy manufacture **(B) INTEGRATED MARKETING:** All the ***departments in an organization recognize the importance of buyers***. **(C) CONSUMER SATISFACTION**: In the concept of consumer satisfaction, there are short- run consumer satisfaction and long-run consumer welfare. The main premises on which the marketing concept base are: 1\. The customer's needs and wants are varied and many and these must be understood and suitable products and services be offered to match the requirements. 2\. The market consists of different segments and these segments can be grouped according to the customers' characteristics. 3\. The consumers in any market look for products and services which carry attributes of features and these are perceived closest to solving their needs and wants and consumers' preference will be for such products and services. 4\. The consumers in any market may not buy a product if they feel that it will not serve the purpose of solving their needs and wants. 5\. The success of marketing concept lies in proper analysis of market research, segmenting the market and offering products specific to the segments, along with proper marketing programmes. **FACTORS INFLUENCING MARKETING CONCEPT** There are several factors responsible of the thought of "modern concept of marketing." A firm operating under the concept, receives direction from the market, i.e., information regarding the customers' wants, needs and desires through market. 1\. Population Growth: 2. Increasing Households: 3\. Disposal of Income: 4. Surplus Income: 5\. Technological Development: 6. Mass Communication Media: 7\. Credit Purchases: 8. Changing Social Behaviour: 9\. Transport Facilities: 10. Increases Competition: **BENEFITS OF MARKETING CONCEPT** The following are the advantages of marketing concept: 1\. It is possible to enjoy long-term success when the enterprise recognizes the likes and needs of the buyers. 2\. It enables the firm to capitalize on market opportunities. 3\. Marketing risks can be avoided on knowing the market needs. 4\. Consumers are the king. This prestige gives prominent importance to the consumers. 5\. Product- planning becomes more effective. 6\. The demand for goods equalizes the supply position on the basis or research and innovation. 7\. Marketing concept assures the integration of the different departments of a firm 8\. Profit through service is emphasized 9\. Marketing research is a management tool for making fruitful decisions and future plans. 10\. Examples are not few, when ample opportunity for improving after sales services is adopted by enterprises. **SOCIAL MARKETING** "Social marketing is the design, implementation and control of programmes seeking to increase ***the acceptability of a social idea or practice in a target group.*** It utilizes concepts of market segmentation, consumer research idea, configuration, communication, facilitation, incentives and exchange theory to maximize target group response." ***Philip Kolter.*** Social market advises the type of products acceptable to the consumer, distribution system to be adopted etc. Social marketers may pursue different objectives. A few examples are: \* Doctors want people to stop smoking in order to safeguard them against cancer. \* Government has introduced family planning programmes in order to control the alarming population growth \* The Tamil Nadu Government has made it compulsory that all children above 5 should be schooled to increase literacy. \*The Tamil Nadu Government supplies tooth powders free of cost to school children to keep their teeth clean against decay. Government compels scooter user to wear helmets to avoid fatal head injuries. **ELEMENTS OF SOCIETAL MARKETING** 1\. The social marketing technique is used ***to achieve the society's satisfaction*** as a whole as against consumer self- interest. 2\. The social marketing is an instruments ***to achieve the aim of the society.*** For example population control, introduction of computer as a subject in schools etc. 3\. ***Creating a health and favorable attitude among people***. "The social marketing concept is a management- orientation aimed at generating customer satisfaction and long- run consumer and public welfare as the key to satisfying organizational goals and responsibilities." **MARKETING MIX** Marketing mix is ***the policy adopted by the manufacture to get success in the field of marketing.*** Those days, when goods were matched with the market, have gone. The modern market concept emphasizes the importance of the consumer's preference. All the marketing effort focuses attention around the consumer's need. Marketing departments perform the operations and the market offering mix is the result. ***According to Stanton***, "Marketing mix is the term used to describe the combination of the four inputs which constitute the core of a company's marketing system- the product, the price structure, the promotional activities and the distribution system." The term marketing mix is used to describe a combination of four elements- the product, price, physical distribution and promotion. These are popularly known as ***"Four Ps."*** **1. PRODUCT:** The product itself is the first element. Products must satisfy consumer needs. ***The product mix combines the physical product, product services, brand and packages.*** A firm may offer a single product (manufacture) or several products (seller). Not only the production of right goods but also their shape, design, style, brand, package etc., are of importance. **2. PRICE:** The second element to effect the volume of sales is the price. The marked or announced amount of money asked from a buyer is known as basic price-value placed on a product. **3. PROMOTION:** The product may be made known to the consumers. ***Firms must undertake promotion work-advertising, publicity, personal selling etc., which are the major activities.*** **4. DISTRIBUTION (PLACE):** ***Physical distribution is the delivery of products at the right time and at the right place.*** The distribution mix is the combination of decisions to marketing channels, storage facility, inventory control, location transportation warehousing etc., **THE SUB-COMPONENTS IF "THE FOUR PS"** +-----------------+-----------------+-----------------+-----------------+ | PRODUCT | PRICE | PLACE | PROMOTION | +=================+=================+=================+=================+ | Features | Credit Terms | Channels | Advertising | | | | | | | Design | Payment Period | Location | Sales Promotion | | | | | | | Brand | Discount | Stock | Publicity | | | | | | | Package | Commission | Delivery | Selling | | | | | | | Service | Price | Transport | Communication | | | | | | | Warranty | Differentials | Wholeselling | | | | | | | | Quality | | Retailing | | | | | | | | Style | | | | +-----------------+-----------------+-----------------+-----------------+ +-----------------------------------+-----------------------------------+ | **Companies should view the four | | | Ps in terms of the customer' four | | | Cs.** | | +===================================+===================================+ | Four Ps | Four Cs | +-----------------------------------+-----------------------------------+ | Product | Customer needs | | | | | Price | Cost to the customer | | | | | Place | Convenience | | | | | Promotion | Communication | +-----------------------------------+-----------------------------------+ ***A firm's marketing efforts should start and end with the customers***. The marketing mix-four Ps, are the important tools or instruments used by the marketing manager in formulating marketing planning to suit the customer's needs.. **CONCEPT OF MARKETING MIX** The concept of marketing mix, ***according to Borden,*** consists of (I) a list of the important elements or ingredients that make up the marketing programme, and (II) a list of the forces that bear on the marketing operation of a firm and to which the marketing manager must adjust in his search for a mix or programme that can be successful. In brief, the four "ingredients" in the mix are interrelated. ***These are also known as marketing decision variables.*** **ELEMENTS OF MARKETING MIX OF MANUFACTURERS** 1\. **Product Planning**, comprises policies and procedures relating to: \(a) Product line to be offered -- qualities and design -- and also services. \(b) Markets to sell: Whom, where, when and in what quantity. \(c) New product policy -- Research and development programmes. 2\. **Pricing,** policies and procedures relating to: \(a) Price level to adopt \(b) Specific prices to adopt \(c) Price policy, for example, one price or varying prices, price maintenance, use of list price etc. \(d) Margins to adopt, for company, for the trade. 3\. **Branding,** policies and procedures relating to: \(a) Selection of trademarks \(b) Brand policy -- individualized or family brand \(c) Sale under private label or unbranded. 4\. **Channels** **of distribution**, policies and procedures relating to \(a) Channels to use between plant and consumer. \(b) Degree of selectivity among wholesalers and retailers. \(c) Efforts to gain cooperation of the trade. 5\. **Personal selling,** policies and procedures relating to: \(a) Manufacturer's organization. \(b) Wholesale segment of the trade. \(c) Retail segment of the trade. 6\. **Advertising,** policies and procedures relating to: \(a) The amount to spend. b\) Copy platform to adopt: (1) product image desired and (2) corporate image desired. \(c) Mix of advertising : to the trade, through the trade, to customers. 7\. **Promotions,** policies and procedures relating to: \(a) Special selling plans or devices directed at or through the trade. \(b) Form of these devices for consumer promotions, for trade promotions. 8\. **Packing**, policies and procedures relating to formulation packages and labels. 9\. **Display,** policies and procedures relating to: \(a) Amount to be spent on display to help effect sale. \(b) Methods of adopt to secure display. 10\. **Servicing**, policies and procedures relating to services needed 11\. **Physical handling**, policies and procedures relating to: \(a) Warehousing \(b) Transportation \(c) Inventories 12\. **Fact finding and analysis,** policies and procedures relating to: Securing, analysis and use of facts in marketing operations. **MARKETING PROCESS** ***Marketing is a process by means of which goods and services are exchanged.** T*he flow of goods from the use of origin to the place of destination, involves a number of activities which is not a simple ask. ***These activities of transfer, are functions which are known as marketing process.*** The marketing process involves three major activities viz., \(1) Concentration (2) Dispersion and (3) Equalisation **(1) CONCENTRATION:** The first process of marketing is concentration, Concentration aims at the collection of products at a central place. **(2) DISPERSION** Concentration takes place because of dispersion, otherwise concentration has no meaning. The goods of products, assembled at a central place, have to be distributed to the consumers. Some of the products are dispersed to manufacturers or processors and the remaining goods are dispersed to the final consumers through a chain of wholesalers, retailers, agents, middlemen etc. (**3) EQUALISATION** Between the two activities i.e concentration and dispersion, there is the equalization process It implies ***the reconciliation between demand and supply through storage and transportation***, in needed quantity and quality at the required time and place. Adjustments of supply to demand are ffected. ***Concentration, dispersion and equalization constitute the soul of marketing***. All the function are performed by middlemen. **MARKETING FUNCTIONS** ***The marketing functions link the producer and the ultimate consumer.*** **CLASSIFICATION OF MARKETING FUNCTIONS** ***Pyle*** has classified the marketing functions into two major groups-concentration and dispersion. The classification is repetitive, as it contains duplication of functions -- storing, grading, finance etc. The classification is shown below: **MARKETING FUNCTIONS** 1\. Buying or assembling 1. Selling 2\. Transporting 2. Transporting 3\. Storing 3. Storing 4\. Grading 4. Grading 5\. Financing 5. Financing 6\. Risk- bearing 6. Risk-bearing 7\. Dividing ***Conversely, Huegy and Mitchell*** ***classified the function from the economic point of view.*** According to them, marketing function are those which are capable of creating time, place, possession and form utilities. It is elaborate and includes functions like accounting, supervision etc., which are non-essential. The classification is reproduced next: **MARKETING FUNCTIONS** **Physical Movement** **Movement of Ownership** **Market Management** (Creating time & place utility) (possession utility) 1\. Transportation 1. Determining needs 1. Formulating policies (gathering information) 2\. Storing 2. Creating demand 2. Financing 3\. Packing 3. Finding buyers& sellers 3. Providing organizational equipment 4\. Dividng 4. Negotiating(prices& terms) 4. Supervising 5\. Grading (inspecting testing, 5. Giving advice 5. Accounting Sorting) (adjusting goods& services to the needs of buyers) 6\. Order assembly 6. Transporting title 6. Securing information especially by research 7\. Risking ***Clark and Clark*** divided the marketing functions under three major groups- functions of exchange, functions of physical supply and facilitating functions. All the essential functions are included. It is an accepted classification. The classification is shown below. **MARKETING FUNCTIONS** **Functions of exchange** **Functions of Physical supply** **Facilitating function** 1\. Selling 1. Transportation 1. Financing 2\. Assembling 2. Storage 2. Risk- Bering (Buying) 3. Standardisation 4\. Market formation 5\. Promotion Thus the marketing functions are classified as under for the present purpose: **1. Exchange function** \(a) Buying and Assembling \(b) Selling **2. Physical functions** \(a) Storage \(b) Transport **3. Facilitating functions** \(a) Financing \(b) Risk- bearing \(c) Standardisation \(d) Market information \(e) Promotion **BUYING** The person who buys the product is called the buyer. ***Pyle defines***, " Buying comprises those activities involved in finding a suitable source of supply, selecting the desired quantity, quality, grade, style and size coming to an agreement with reference to the price, delivery data and other conditions" **KINDS OF BUYERS** Buyers can be classified into the following groups, depending upon the purpose of the purchase. They are 1\. Manufacturers and businessman 2\. Middlemen 3\. Consumer **PROBLEM OF BUYING** 1\. What to buy? 2\. How much to buy? 3\. When to buy? 4\. Where and how to buy? 5\. How to negotiate prices and terms? **PURCHASING METHODS** The following purchasing methods are followed by the manufacturers or purchasing manager. **1. Concentrated buying-** The buyer purchases all his needs from a single seller. **2. Diversified buying**- Purchases are made from a large number of sources. **3. Reciprocal buying-** The buyer and seller enter into a contract to buy and sell their products mutually. **4. Hand to mouth buying/conservation buying**- It meets the needs of the business. So it is called as 'current nee' buying. **5. Forward buying/speculative buying-** It is a big lot purchase. By expecting a higher price in the future, the buyers make a lot of purchase. 6**. Contract purchasing-** Goods are purchased under a contract for a long period with fixed supplies. **7. Buying by inspectio**n- It is the oldest method. The buyer buys the goods examining the goods directly. **8. Buying by samples-** The seller sends the sample and the buyer orders for the goods by seeing the sample. **9. Period buying-**Buying the goods regularly, i.e., weekly or monthly or yearly etc., **10. Buying by description-** The buyer makes the purchase on the basis of description given by the seller. **11. Buying by requirements-** Purchasing is done according the demand. **12. Open market buying-** When the price is reduced , the goods are purchase in the open market. **MARKETING INFORMATION** Market information includes all facts, estimates, opinions, etc., considered in making decisions which affect the marketing of goods. **IMPORTANCE OF MARKET INFORMATION** 1\. Successful marketing of the products greatly depends upon "sound knowledge of the market" 2\. Risk bearing can be minimize by collecting timely information. 3\. Mass production followed by mass distributions are based on consumer-demand in anticipation. 4\. Technical progress and innovations appear quite often. 5\. The marketing information is major tool , to be used by the management in solving problems relating to marketing and taking decisions. **BENEFITS OF MARKET INFORMATION SYSTEM** The various benefits that flow from the market information are as follows. 1\. It helps marketing planning by making available correct information on the external environment and the internal company realities. 2\. The information if free from any bias towards the pre-conceived conclusion will have more value than otherwise. 3\. It facilitates the development of action programmes for achieving the set goals. 4\. It helps the controlling of marketing opportunities and effective defence against marketing threats. 5\. It helps controlling of marketing activities. 6\. It helps effective tapping of marketing opportunities and effective defence against marketing threats. 7\. It helps the firms to adjust its product and services to the needs and tests of customers. 8\. It provides market intelligence to the firm. **MARKETING RESEARCH** Marketing research is defined as, " The systematic and exhaustive serach for the study of the fact relevant to any problem in the field of marketing" The main aim of marketing research is to know more about the consumers, dealers, and products. **OBJECTIVE OF MARKETING RESEARCH** 1\. To understand the economic factors affecting the sales volume and their opportunities. 2\. To understand the competitive position of rival products. 3\. To evaluate the reactions of consumers and customers. 4\. To study the price trends. 5\. To evaluate the system of distribution. 6\. To understand the advantages and limitations of the products 7\. To find the new methods of packaging by comparing other similar packages. 8\. To analyse the market size. 9\. To know the estimation of demand. 10\. To evaluate the profitability of different markets. **AREAS OF MARKETING RESEARCH** 1\. Research on markets. 2\. Research on sales. 3\. Advertising and promotion research. 4\. Corporate growth research. 5\. Research on products. 6\. Business economic research. **TYPES OF MARKETING RESEARCH** **1. EXPLORATORY:** Exploratory research is concerned with identifying the real nature of research problems and perhaps of formulating relevant hypotheses for various tests A market researcher uses this type of research when very little is known about the problem being examined. **2. DESCRIPTIVE RESEARCH:** Descriptive research is concerned with measuring and estimating the frequencies with which things occur or the degree of correlation or association between various variables. **3. CASUAL RESEARCH:** Casual research is basically concerned with establishiung cause and effect relationship and an attempt to explain why things happen. **4. PREDICTIVE RESEARCH:** The main purpose of predictive is to arrive at a forecast or prediction or some measurement of interest to the researcher. **USERS OF MARKETING RESEARCH** 1\. Consumers 2. Market intermediaries 3. Business firms 4\. Market research agencies 5. Government 6. Producers **MARKETING RESEARCH PROCESS** The following is the procedure generally followed in handling marketing problems through marketing research 1\. Defining the problem. 2\. Determining the information needed. 3\. Determining the source of information. 4\. Deciding the research methods. 5\. tabulation, Analysis and Interpretation of the Data. 6\. Preparation of the report. 7\. Follow up study. **DEMAND SITUATIONS** **1. NEGATIVE DEMAND:** ***Major part of the market dislikes the produc***t. This is also referred to as conversional marketing. **2. NO DEMAND:** As far as certain products or services are concerned , ***people are indifferent towards them.*** Thus there is a stage of no demand.. Therefore, the marketing management has to stimulate the situation, which is a difficult task, by trying to convert demand from 'no demand' to 'positive demand'. This is referred to as stimulational marketing. **3. LATENT DEMAND:** Many consumers may share a strong desire for something that cannot be satisfied by the existing products or services. ***The latent or hidden desire for the products is an opportunity to management in developing or improving the existing products;*** or services. Development marketing is thus, a process by which the latent demand is converted into actual demand. **4. FALLING DEMAND:** Certain firms may find a falling tendency of demand for the products or service. Falling demand for the products refers to ***a situation in which the demand is less than the target.*** **5. IRREGULAR DEMAND:** In certain organizations, seasonal demand causes the problems of idle capacity or overworked capacity. This type of irregular demand may be converted into regular demand and this process , taken by the management , is known as synchromarketing. **6. FULL DEMAND**: Organisation face full demaqnd for their products. It is known as maintenance marketing. **7. OVERALL DEMAND:** Some organization may have more demands for their products. The firm may not be able to meet all the demands. Thus, ***marketing management face the marketing task and tries to find ways to reduce the demand.*** This is known as demarketing **8. UNWHOLESOME DEMAND:** Smoking, use of alcohol, spurious drugs etc., are unwholesome. Certain goods or services have good demand. In such a situation , the sales of such unwholesome items are discouraged. This situation is known as counter-marketing or unselling. **PLANNING FOR BUSINESS GROWTH** There are three main strategic options that seen to appropriate to accomplish intensive growth. **1. MARKET PENETRATION:** It is a strategy of increasing sales of existing products in current markets. **2. MARKET DEVELOPMENT:** It refers to increasing sales by introducing current products into new markets. This strategy often involves expanding business in new geographic areas. **3. MARKET DEVELOPMENT:** It means increasing sales by improving current products in some way or developing entirely new products for current markets. **MARKETING ENVIRONMENT** The marketing environment is made up of 1\. Micro-environment 2\. Macro-environment **1. MICRO-ENVIRONMENT:** The micro environment of the company consists of various forces in its immediate environment that affect its ability to operate effectively in its chosen markets. This includes the following. (a) the company, (b) company's suppliers , (c) marketing intermediaries, (d) customers, (e) competitors and (f) public. **2. MACRO-ENVIRONMENT:** The macro-environment consists of broader forces that not only affect the company and the industry, but also other factors in the micro-environment. The components of a macro-environment are: (a) demographic environment, (b) economic environment, (c) physical environment, (d) technological environment, (e) political environment , (f) legal environment and (g) socio and cultural environment **MARKET SEGMENTATION** ***The process of dividing a market into smaller homogeneous markets with similar characteristics is called market segmentation.*** The firm will focus only on those submarkets which can be served most effectively the basis of their evaluation of market requirements. This is called target marketing. ***According to Philip Kotler***, "Market segmentation is the sub-dividing of market into homogeneous sub- section of customers, where any sub- section may conceivably be selected as a market target to be reached with a distinct marketing mix." **CRITERIA FOR MARKET SEGMENTATION** The market segmentation to be worthwhile six criteria, as shown below, must be satisfied. **1. IDENTITY:** The marketing manager must have some means of identifying members of the segment. **2. ACCESSIBILITY**: It must be possible to reach the different segments in regard to both promotion and distribution. **3. RESPONSIVENESS:** A clearly defined segment must react to changes in any of the elements of the marketing mix. **4. SIZE:** The segment must be reasonably large enough to be a profitable target. It depends upon the number of people in it and their purchasing power. This is often called as substantiality. **5. NATURE OF DEMAND:** It refers to the different quantities demanded by various segments. Segments Segmentation is required only if there are marked differentiation in items of demand. **6. MEASURABILITY:** The purpose of segmentation is to measure the changing behaviour pattern of consumers. **BASES FOR CONSUMER MARKET SEGMENTATION** **1. GEOGRAPHIC SEGMENTATION** In geographic segmentation, ***the whole market is divided into different geographical units. Generally, the market is divided into regions -- northern, southern, western, eastern and so on.*** Each region consist states and districts. A national marketer may treat the whole nation as his market and divide it on the basis of region or zone for business operations **2. DEMOGRAPHIC SEGMENTATION** In demographic segmentation, ***the market is sub divided into different parts on the basis of demographic variables -- age, sex, family size, income, occupation, family life cycle, religion, nationality etc.*** Demographic variables have long been the most popular bases for distinguishing significant groupings in the market place.. **3. PSYCHOGRAPHIC SEGMENTATION** **Consumers are subdivided into different groups on the basis of personality, life style and values. These characteristics lead to psychographic segmentation.** **4. SOCIO ECONOMIC CHARACTERISTICS** Income, occupation, education, religion and social classes are the important socio- economic data required for market segmentation. These are all components of socio- economic characteristics of a target population. **5. BENEFIT SEGMENTATION** Buyers can be classified according to the benefits they seek. On a purchase of same product different customers look for different benefit because of which they buy products from different companies which satisfy their specific needs. Let us take the example of a car. The basic function of a car is transportation. But people prefer different cars because they seek different benefits. **(a) Quality:** There are people for whom the quality is important: they buy Mercedes Benz Skoda Octavia **(b) Services:** People buy things to avail some specific service: they buy Ambassador Bullet proof car. **(c) Economy:** The price may be important deciding factor in case of any purchase: They buy Maruti 800. **(d) Sepciality:** People can be adventurous and sporty in purchase decision. they buy Ferari. **6. USER STATUS** The users of a product of service can be classified as heave users, medium users and light users- heavy buyers, medium buyer and light buyers **7. USAGE RATE** Markets can be segmented into various classes depending on usage rate. Considering the cosmetics usage, the different categories of usage rate are as follows. **(a) Light:** These are the categories of the users who are very infrequent users **(b) Medium:** The fashion-conscious teenagers are the medium users of cosmetics, that is they use it frequently. **(c) Heavy:** There are people for whom the cosmetics are the most important purchase and they are heavy users of it.. **8. LOYAL STATUS** Consumers have varying degrees of loyalty to specific brands, stores and other entities. Buyers can be divided into four groups according to brand loyalty status. **(a) Hard-core Loyals:** Consumers who buy one brand at all time. **(b) Split or Safe Core Loyals**: Consumers who are loyals to two or three brands. **(c) Shifting loyals:** Consumers who shift from one brand to another. **(d) Switchers:** Consumers who show no loyalty to any brand. These are the people who will buy brand that is available in the market. **9. ATTITUDE** Five attitude groups can be found in a market. **(a) Enthusiastic:** These are people having tendency of impulsive purchase. They may not carry cash all the time but suddenly decide to buy something. They definitely need credit cards. **(b) Positive:** They are serious but mobile people who need to buy suddenly at any time. **(c) Indifferent:** There are some people who are technology averse with systematic purchasing pattern. They do not prove to be potential users of credit cards. **(d) Negative:** People can be spend thrifts who fear of loosing money or misusing it. They would never go for a credit card. **(e) Hostile:** People at times become very much irritated either by sales- people calling or meeting any time, giving false promise or by the service provided. For example, in case of credit cards, there are some hidden costs which are not clarified by the sales- person during selling. **BENEFITS OF MARKET SEGMENTATION** Benefits from segmentation are: 1\. Segmentation helps in focusing strategies more sharply on target groups. 2\. It helps the company to know demand pattern of each segment thus increases the sale volume of the products. 3\. It helps the marketer to understand the needs, behaviors, habits, tastes and expectation of consumers of different segments. Thus marketing opportunities increases. 4\. It is possible to satisfy a variety of customers with a limited product range by using different promotional activities. 5\. Marketing can be more specialized when there is segmentation as the element of marketing mix. 6\. Segmentation helps in adopting different policies, programmers and strategies for different markets based on rival's policies, programmes and strategies. 7\. New customers are attracted because of segmentation strategy and thus opportunities created for growth. 8\. Customers are benefited as the products that serve customers interest and satisfy the needs and wants. 9\. Segmentation supports the development of niche strategies. 10\. It helps to achieve a better competitive position for existing brands. **THE PHILOSOPHIES OF MARKET SEGMENTATION** The marketer adopts several approaches to segmenting a market. The various approaches are as follows. **I. MASS MARKETING:** O***ffering of the same product and applying the same marketing- mix to all customers assuming that there is no significant difference among consumer in terms of their needs and wants.*** **II. PRODUCT VARIETY MARKETING:** Once it is learnt that consumers would not accept standard products, the marketer might try to provide different sizes, colours, shapes, features, qualities, etc. to attract them. **III. TARGET MARKETING :** The modern marketing concept starts with the definition or target markets. The target marketing has its root in the marketing age. The target marketing requires marketer to take three steps: \(a) Market Segmentation \(b) Market Targeting \(c) Market Positioning **4. MICRO MARKETING :** The target marketing is being changed to micro marketing. Micro marketing occurs when target market is further bifurcated and the needs of the small customer groups are addressed on a local basis.. It has four levels. **(a) Segment Marketing:** A market segment consists of a large identifiable group within a market with similar wants, purchasing power, geographical location, buying attitudes or buying habits **(b) Niche Marketing:** A niche is a more narrowly defined group whose needs are not well served. It has the following characteristics: \(i) The customers in the niche should have distinct set of needs. \(ii) They will pay a premium to the firm that best satisfies their needs. \(iii) The niche in not likely to attract other competitors. \(iv) The niche gains certain economics through specialization. \(v) The niche has size, profit and growth potential. **(c) Local marketing:** Target is leading to marketing programmes being tailored to the needs and wants of local customers. **(d) Individual Marketing:** The ultimate level of segmentation leads to "one-to-marketing" or "customized marketing". Mass customization is the ability to prepare on a mass basis individually designed products and communication to meet each customer's requirements. **5. CUSTOMISED MARKETING:** The focus of the target marketing is further shifting from local basis to individual customer basis. **6. PERSONALISED MARKETING:** Although in case of customized marketing, the requirements for a customer are met by a custom-made product, but still the customers might not be willing to retain his loyalty with the company because of competitionHeil, Parker and Stephens provide TEN RULES for building relationships with customers: **MARKET TARGETING STRATEGY** **1. CONCENTRATED MARKETING:** It is concerned with ***"focusing all available resources on one segment within the total market".*** **2. DIFFERENTIATED MARKETING:** It attempts to ***appeal to the entire market by designing different products and marketing programmes for different segment of the market.*** This type of marketing is followed by most medium and large sized firms doing business in many markets with a broad produce line. **3. UNDIFFERENTIATED MARKETING:** ***It treats the entire market as its target by competing successfully using the same marketing mix.*** Such marketing is resorted to when it is found that there are some products which have a broad-based appeal and hence there is no need for their segmentation. **MARKET TARGETING AND POSITIONING** Once the process of segmentation of the market has been achieved, the next step follows, that is, selection of suitable segment or segments which the firm can serve most effectively. Thus, target marketing is the act of evaluating, selecting and focusing on these market segments that the company intends to offer its marketing programme and serve it most effectively. Market segmentation is the prelude to targeting. **SELECTION OF TARGET MARKETS** The selection of target markets helps the market to correctly identify the markets and the group of target customers for whom the products or services are produced. It helps in dub-diving the market into many segments, and then deciding to offer a suitable marketing offer to some selected segments. ***Market targeting is the act of evaluating and comparing the identified groups and then selecting one or more of them as the prospects with the highest potential.*** **EVALUATING MARKET SEGMENT** ***The company should enter only segments in which can offer superior value and gain advantages over competitors.*** Several models for measuring segment attractiveness exist, although arguably the most useful is Michael Porter's five-force model, thus profitability is affected by the five factors: 1\. Industry competitors and the threat of segment rivalry. 2\. Potential entrants to the market, and the threat of mobility. 3\. The threat of substitute products. 4\. Buyers and their relative power. 5\. Suppliers and their relative power. In deciding where to focus the marketing effort the strategist needs to give consideration to three elements: 1\. The size and growth potential of each segment 2\. The structural attractiveness of different segments 3\. The organisation's objectives and resources. Once, a decision has been made on the breadth of market coverage the strategist needs them to consider how best to position the organization, the product range and brand within each target segment. However, the following three most common positioning errors should be avoided. 1\. Confused Positioning 2\. Over Positioning 3\. Under Positioning **SELECTING THE MARKET SEGMENT** Once a marketer has evaluated the different segments for their size, growth and attractiveness, and found that they are compatible with the company's objectives and resources, the obvious step is to go for selecting the market segments. There are five patterns of the target market selection which was first putforward by D.F. Abell: 1\. Single Segment Concentration 2.. Selective Segment Specialisation 3\. Product Specialisation 4\. Market Specialisation 5\. Full Market Coverage **1. SINGLE SEGMENT CONCENTRATION:** In this case the organization ***focuses on just one segment.*** That is, the marketer prefers to go for single segment. The company targets a segment and goes for a larger market share instead of a small share in larger market segment. **2. SELECTIVE SEGMENT SPECIALISATION**: In selective specialization, the firm selects a number of segments, each objectively attractive and appropriate, as per the company's objectives and resources. There may be little or no synergy strong these segments, but segment promises to be a money-maker. This market coverage strategy has the advantage of diversifying the firm's risk. **3. PRODUCT SPECIALISATION:** Under product specialisation, the firm concentrates on making a certain product that it sells to several segments. Product specialization promises strong recognition of customers within the product areas. **4. MARKET SPECIALISATION:** Here the organization concentrates on satisfying the range of needs of a particular target group. **5. FULL MARKET COVERAGE:** When a firm attempts to serve all consumer --groups, with all the product that they might need, it is called the Full Market Concept, only very large firms can adopt this strategy. Examples are IBM (Computer Market). General Motors (Vehicle Market) and Coca Cola (drink market). They cover the whole market, in two broad ways: \(a) Undifferentiated markets \(b) Differentiated markets **(A) UNDIFFERENTIATED MARKETS:** Here the firm ignores market segment differences and goes after the whole market, with only one market offer. It primarily focuses on buyer's needs. It designs its product and its marketing programme and will appeal to the largest number of buyers, a sort of mass distribution. **(B) DIFFERENTIATED MARKETING :** Under this method, the firm designs different programmes for each segment. This type of marketing typically creates more total sales, than undifferentiated marketing. However, it also increases the costs of doing business, which includes: **PRODUCT POSITIONING** ***Positioning is the act of designing the company's offering and image to occupy a distinctive place-in the target market's mind.*** The position of a product is the sum of those attributes normally ascribed to it by the consumers -- its standing, its quality, the type of people who use it, its strengths, its weaknesses, any other unusual or memorable characteristics it may possess, its price and the value it represents. It facilitates the brand to get through to the target consumer. Positioning is the act of fixing the locus of the product offer in the minds of the target consumers. In positioning, the firm decides how and around what parameters, the product offer has to be placed before the target consumers. ***Positioning of a product or service is nothing but creating an image in the consumers' mind.*** Consumers generally tend to use images. While making a purchase, they buy brand images rather than actual products. There are many brands that have a powerful influence on the consumer's mind. Brand names add to the offering and create a "meta product", an emotional loyalty with consumers. Consumers associate brand names with life-styles, social positions, professional roles and those associations combine to form an image or position. The terms "position" or positioning" are frequently used to mean 'image'. To build up a brand image or corporate image, marketer generally used advertising as a tool. **PRODUCT DIFFERENTIATION** Product differentiation and product positioning are central themes in the marketing strategy of a firm. The two ideas are also closely interlinked. When the firm is through with the differentiation and positioning strategy for a given product, it completes one significant part of the marketing strategy formulation for the product. A company's offer has to be distinct from those of its competitor and should fulfill the requirements of the customers of its target markets. Company's positioning is the result of whatever the company does. Marketing mix is the most tangible and the most flexible tool to create the desired positioning. Companies use their marketing mix to create something specific and special for the customer. **POSITIONING APPROACHES** There are several approaches to positioning of product and service offerings: **1. POSITIONING BY PRODUCT ATTRIBUTES OR CUSTOMER BENEFIT** This approach to positioning is probably the most common and involves setting the brand just from competitors based on specific brand attributes or the benefits offered. Many products, such as autos, cameras and other durable product brands offer excellent examples.. **2. POSITIONING BY PRICE-QUALITY** This approach justifies various price-quality categories of products. Manufacturers deliberately attempt to offer more in terms of service, features or performance in case of certain products known as premium products and in return, they charges higher price, to cover higher costs and partly to communicate the fact that they are of higher quality. 3**. POSITIONING BY PRODUCT-USER** This deals with positioning a product keeping in mind a specific user or class of users. **4. POSITIONING BY USE OR APPLICATION** The idea behind this approach for positioning is to find and occasion or time of use **5. POSITIONING BY CORPORATE CATEGORY** This positioning is used so that the brand is perceived to belonging to another product category. This is often a strong positioning strategy when the existing product category is crowded. The consumers then perceive the brand in different context. **6. POSITIONING BY CORPORATE IDENTITY** Companies that become tried and trusted household names, use their names to imply the competitive superiority of their new brands.Corporate credentials are added as a by-line. This offers a strong positioning and is used in line extensions or brand extensions. **7. POSITIONING BY COMPETITOR** Positioning by competitor may be used because the competitor enjoys a well- established image in the market. The marketer wants the consumers to believe that the brand is superior, or at least as good as the brand offered by the competitor. **PRODUCT PLANNING** Good products are key to market success. The product represents ***a bundle of expectations of the consumers.*** The product Satisfies the needs of society. A successful product ensures its own promotion if satisfies the needs of consumers, that is the product is right to the market. Therefore, ***want-satisfying is the basic characteristic of a product.*** A firm's marketing is the basic characteristic of a product. A firm's marketing plan must begin with the determination of its offerings-products or services- to the target market. Customers always expect a benefit while buying a product. The success of business can prosper only by satisfying the needs of customers. **PRODUCT** ***Anything that possesses utility is described as goods.*** A product is both what a seller has to sell and what a buyer has to buy. Thus, any enterprise that has something to sell, as tangible goods or not, is selling a product. A product is one which satisfies the needs of customers. ***According to Philip Kotler***, "A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organization and ideas". A product is anything that can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. **FEATURES OF A PRODUCT** **1. Tangibility:** It should be perceptible by the touch. An item to be called a product, should have a tangibility character touch, seen or feeling. **2. Intangible Attributes**: The product may be intangible, in the form of services, for instance, banking insurance services, repairing etc. It is an associated feature. **3. Associated Attributes:** Such attributes may be brand, package, warranty etc. **4. Exchange Value:** Whether the product is tangible or intangible, it should have exchange value and must be capable of being exchanged between seller and buyer for mutually agreed price. **5. Consumer Satisfaction:** Products should have the ability to offer value satisfaction to the consumer. The satisfaction may be both real or/and psychological. **CLASSIFICATION OF PRODUCTS OR GOODS** In marketing the term goods is used in synonym for products. The products may be classified into the following categories. **1. Industrial Goods:** Industrial goods are those which are used for further production of goods or services, and include capital goods, raw materials, component parts etc. These are used as input in producing other products **2. Consumer Goods:** Consumers goods are meant for final consumption by consumers and not for sale. They are of three types: **(a) Convenience Goods:** Items, the consumer buys frequently, immediately and with minimum shopping effort are convenience goods. For instance, food items, newspapers, drugs, soap, tooth paste, biscuit etc. **(b) Shopping Goods:** There are goods purchased by the consumers, only after a careful comparison-suitability, quality, price, style etc. For example, clothes, furniture, household, appliances, fans etc. **(c)** **Speciality Goods:** These are goods with unique characteristics or brand identification and the purchasers make a special purchasing effort, for instance, fancy goods, special eating items etc. According to durability or tangibility, products can be classified into three 1\. Non-durable goods, such as soap, salt etc. 2\. Durable goods, such as clothing, tools, refrigerators etc. 3\. Services, such as repair, haircut etc. **PRODUCT ATTRIBUTE** Product attribute involves deciding the quality, features and design of the product. \(a) Product quality: It refers to the ability of the particular product item to perform its intended functions, and as such it summarises factors such as durability, reliability, precision, performance and ease of operation. \(b) Product features: Product features also qualify as an important source of product differentiation. \(c) Product design: A product design indicates its usefulness as well as makes it attractive. **PRODUCT POLICIES** Product policies are the general rules set up by the management itself in making product decisions. A product policy, generally covers the following: **I. PRODUCT PLANNING AND DEVELOPMENT** The product planning means and attempt to establish the product in line with market needs. It is defined "the act of making out and supervising the search, screening, development, and commercialization of new products, the modification of existing lines and the discontinuance of marginal or unprofitable items". It involves 1\. Evolution and introduction of new products 2\. Bringing alterations in the existing lines to suit the requirements of the market. 3\. The discontinuance of elimination or marginal or unprofitable products. The product planning and product development include the decision-making of the following 1\. Which products should the firm make and which should it buy? 2\. Should the company expand or simplify its line? 3\. What new uses are there for each item? 4\. What brand, package and label should be used for each product? 5\. How should the product be styled and designed, and in what sizes, colours and materials should they be produced? 6\. In what quantities should each item be produced? 7\. How should the product be priced? **II. PRODUCT LINE** "A product line is a group of products that are closely related, either because they function in a similar manner, or are sold to the same customer groups, or are marketed through the same types of outlets, or fall within given price ranges". ***According to Stanton,*** "A broad group of products, intended for essentially similar uses and possessing reasonably similar physical characteristics, constitute a product line". In other words, a broad group of products, which are meant for essentially similar uses and possess reasonably similar physical characteristics, constitute a product line. **PRODUCT LINE DECISION STRATEGIES** Taking of decisions or changing the composition of the product line, by either adding or subtracting products, depends upon a number of factors: 1\. Consumer's preference 2. The tactics of competitors 3\. The firm's cost structure 4. Changes in market demand 5\. Buying habits 6. Marketing influences 7\. Product influences 8. Company objectives 9\. Product specialization 10. Elimination of obsolete product **III. PRODUCT MIX** "A product mix (also called product assortment) is the set of all product lines and items that a particular seller offers for sale to buyers." It has four main characteristics***: (1) Length (2) Width (3) Depth (4) Consistency.*** ***Length of product mix*** refers to the total number of items in its product mix. ***Width or breadth of the product mix*** refers to the number of different product lines offered by the company. ***Depth of the product mix*** refers to the average number of items offered by the company in each product line. ***Consistency of the product mix*** refers to how closely the various product lines are related in production requirements, distribution, channels etc. **GOALS OF PRODUCT MIX** The following are the goals of of product mix. \(a) Market penetration (b) Market development \(c) Product development (d) Diversification **FACTOR INFLUENCING THE PRODUCT MIX** Changes in the product mix may be due to the following factors. \(a) Changes in demand of a product due to population changes. \(b) Changes in purchasing power or behaviour of the customers. \(c) Development of by-products by using residuals , at low cost. \(d) The competitor's actions and reactions. \(e) To utilize the available marketing capacity fully. \(f) Financial influences of the firm. \(g) Advertising and distribution factors. \(h) Goodwill of the firm. \(i) Possibility of adding new product to its product at less cost. **MAJOR PRODUCT MIX STRATEGIES** The following strategies are generally employed by the producer or wholesaler of the product. **(1) Expansion of Product Mix** It is also referred to diversification. A firm may expand its present product mix by increasing the number of product lines or increasing the number of product items within the same line. **(2) Contraction of Product Mix (Product line contraction)** In certain circumstances, the management has to drop the production of unprofitable products. A firm may either eliminate an entire line or simplify the assortment within a line, this is termed as contraction of product mix. This is also termed as simplification. The process of avoiding or stopping the production of particular product is called simplification. Simplification may be defined as deleting or eliminating those produce items, which are unsatisfactory or unnecessary, from the product line. It is opposite to product diversification. It is also termed as pruning, deletion elimination, contraction, dropping or abandonment. **(3) Alteration of Existing Products** As an alternative to developing a completely new product, management should take a fresh look at the company's existing products. Often improving an established product can be more profitable and less risky than developing a completely new one. Alterations may be made in the designs size, colour, packaging, quality etc. **(4) Positioning the Product** When a product can offer satisfaction in the manner the buyer gets, a strong position is created in the market. The product's position is the image which that product projects in relation to rival products. A product's features will attract the customers or prove attractive to the customers. The positioning of the product is attained by (1) product differentiation (2) market segmentation and (3) market aggregation. There is a match between product attributes and consumer expectations. **(5) Trading Up and Trading Down** **Trading Up** **Trading Up** refers to ***adding of higher priced and more prestigious products*** to their existing line, in the hope of increasing the sales of existing low priced products. **Trading Down** is the opposite to trading up. A company is said to be trading down, when ***it adds a low priced items to its line of prestige products in the hope that people who cannot effort the original products,*** will want to buy the new one, because it carries some of the status of the higher priced product. **(6) Product Differentiation and Market Segmentation** When there is a fundamental difference between one product and another, there will be a product differentiation. The product differentiation involves developing and promoting an awareness of differentiation between the advertiser's products and the products of others. **MAJOR DETERMINING FACTORS FOR PRODUCT DIFFERENTIATION:** 1\. The characteristics of the product that are considered important by the customers. 2\. The extent of appreciation by the customers as to the differences or distinguishing features of the product. 3\. The extent of money consideration that the customers are ready to pay for the extra quality of the product. 4\. Generally speaking, the more a product or service can be differentiated from its competition, the more successfully price can be used to enhance this differentiation. **PRODUCT INNOVATION** Innovation is the design and development of something new, as yet unknown and not in elements. The following factors are considered for product innovation: **(1) Market Changes** **(2) Change in Technology** **(3) Profitless Price Competition** ***According to Stanton:*** Three recognizable categories of new products are: 1\. Products that are really innovative-truly unique. 2\. Replacements for existing products that are significantly different from the existing goods. 3\. Imitative products that are new to a company but not new to the market. **REASONS FOR PRODUCT INNOVATION** 1\. To meet market changes. 2\. To adopt technological changes. 3\. To avoid profitless competitions. 4\. To adjust diversification of risk. 5\. To incorporate changes in fashion. 6\. To effect development of new market. 7\. To meet consumer needs. 8\. To cover inadequacy of present lines. 9\. To serve buyers better. 10\. to adopt product differentiation. **PRODUCT LIFE CYCLE** ***Products, like human beings, have length life.*** ***This has been described as life cycle in human being and when applied to products, it is called as product life cycle.*** The product life cycle is generally termed as product market life cycle because it is related to a particular market. Every product moves through a life cycle, having five phases and they are: **1. INTRODUCTION:** This is the ***first stage*** in the life of a product. This is an infant stage. The product is a new one. The new product means " a product that opens up an entirely new market, replaces an existing product, or significantly broadens the market for an existing product". The initial stage needs greater amount for investment. In this stage, the product is introduced into the market and made available to the customers with a slow rise in sales. The profit may be low because of heavy advertising and sales promotion in order to stimulate the demand. **2. GROWTH:** The product satisfies the market. In this stage, a product gains acceptance from the part of consumers and businessmen. Sales of the product increase. Profit also increases. This is the stage where competitors appear along with substitute products in large numbers. Previous buyer continue in their purchase and new buyers appear. Firms may find it difficult to meet the demand. ***The success of firms depends upon the efficient manufacturing and distributing systems of the product.*** **3. MATURITY:** At this stage, keen competition increases. Sales continue to increase for a while, but at a decreasing rate. Competitors go for mark-down price by increasing advertising deals. Market expenses increase, even after mark-down prices, which enable to face competition. Thus, ***profit is thinned***. Additional expenses are involved in product modification and improvement in the marketing mix or and product mix or style changes, to attract the customers and retain the market. Overall marketing effectiveness becomes the key factor in this stage. **4. SATURATION:** In the saturation stage, the sales are at the peak and further increase is not possible. ***The demand for the products is stable.*** The rise and fall of sale depend upon supply and demand. At this stage, a replacement of product is needed, because the sale of the existing product cannot be increased. **5. DECLINE:** When sales start declining, buyers go for newer and better products. This is because of many reasons technological advances, consumer shifts in taste, increased competition etc. At this stage, ***the product cannot stand in the market, many firms withdraw from the market, when sales and profits decrease.*** Price becomes the competitive weapon. Under such a situation, firms shift their attention to other products. The product becomes out of date and fashion. Then the firm will drop the product from the product line. **MANAGEMENT OF PRODUCT LIFE CYCLE** **1. MANAGEMENT OF INTRODUCTION STAGE** Introducing a product category is relatively expensive, challenging, time consuming and quite risky. The aim of every company is to move quickly through the introduction stage and for this research, engineering, production, are critically important to ensure the availability of quality products. ***The company must be able to provide promptly post-purchase service and availability of spares, if required.*** To encourage trial and repeat purchase, consumer goods companies use combination of demonstrations on TV, samples, special introductory prices and coupons. The company also tries to gain distribution and shelf space with retailers. **2. Management of Growth Stage** This stage is marked by a rapid climb in sales. Potential buyers start buying the product. Buyers compare this product with the rival product, because new competitors enter the market with new product features and thus competition increases. The number of outlets are increased. Companies maintain their promotional expenditures at the same or at a slightly raised level to meet competition. Since this is a crucial stage, the marketing manager should: \*Improve product quality \*Add new product features and improved styling \*Enter into new market segment \* Enter into new distribution channels \* Reduce the prices to attract buyers \* Increase promotional activities **Characteristics of this stage:** 1\. New market segments are opened 2. Sales increases rapidly 3\. Company earns higher profit 4. Unit manufacturing cost falls faster 5\. Competition enters the market 6. Competitors engage in frequent price cuts 7\. Competitors increase promotion activities **3. Management of Maturity Stage** During this stage, a manufacturer gets maximum profit through maximum sales. Price competition becomes increasingly severe. A novel method of pushing sales as creative selling is called for. The sales and profits start scale down as the products gradually lose their significance in the presence of better goods substitutes. For an effective management, the marketing manager should \*Improve the quality of the product \* Give proper attention to increase the usage among the current customers \* Try to convert non-users into users of the product, that is, creating new buyers. \* Give proper emphasis, to advertisement and promotional programmes. \* Try to discover new uses for the product. \*Market Modification \*Product Modification \*Marketing mix Modification \*Systematic framework.(for the matured product) **4. Management of Saturation Stage** This is a stage where a ***manufacturer finds it difficult to expand the sales volume beyond a particular point***, that is, sales are at the peak and further increase is not possible, Since the sale of product cannot be increased, the marketing manager should. 1\. Introduce new models 2\. Pursue new uses for the product 3\. Introduce new package and repricing 4\. Middlemen's margin is to be increased 5\. If the price is heavy. offer the product on instalment basis **5. Management of Decline Stage** This is the last and most crucial stage. ***Sales may decline for a number of reasons -***technical advances, arrival of new products at low cost, changes in fashion. Sales and profits continue to fall at this stage. If the substitutes are more attractive and in latest fashion, buyers may turn their eyes towards them. At this stage, cost control is increasingly important to enervate profits by the following alternatives which is suggested ***by Stanton.*** 1\. Improve the product in a functional sense, or revitalize it in some manner. 2\. Make sure that the marketing and production progrmmes are as efficient as possible. 3\. Streamline the product assortment by prunning out unprofitable sizes and models, Frequently this tactic will decrease sales and increase profits. 4\. "Run out" the product that is, cut all costs to the bare minimum level that will optimize profitability over the limited remaining life of the product 5\. Abandon the product. **DEVELOPMENT OF NEW PRODUCTS** A Company can add new products through acquisition or development. The acquisition can take three forms. \(1) The company can buy other firms. \(2) The company can buy a license or franchise :or \(3) The company can buy patents The development route can take two forms: \(1) The company can develop new products in its own laboratories or \(2) It can contract with independent researchers or new-product development firms to develop specific new products. We can identity six categories of new products **1. New-to-the-world-products:** New products that create an entirely new market. **2. New product lines:** New products that allow a company to enter an established market for the first time. **3. Additions to existing product lines:** New products that supplement established product lines (package sizes, flavours etc.) **4. Improvements and revisions of existing product**: New products that provide improve performance or greater perceived value and replace existing products. **5. Repositioning:** Existing products that are targeted to new markets or market segments **6. Cost reductions:** New products that provide similar performance at lower cost. **MANAGING NEW PRODUCT DEVELOPMENT** The companies handle the organizational aspect of new product in following ways: **1. PRODUCT MANAGERS:** The manager in charge of a specific product division is bestowed the responsibility of new product development. **2. NEW PRODUCT MANAGERS:** A new type of managers are appointed to take care of new product development professionally. **3. NEW PRODUCT COMMITTEE:** This is a high-level body constituted of top level managers from all the functional departments. **4. NEW PRODUCT DEPARTMENT:** A separate department for new product may be created to undertake new product development systematically on a continuous basis. **5. NEW PRODUCT VENTURE TEAM:** Some companies assign new product development to venture teams. It is a unit within the company responsible for creating entirely new products aimed at new markets. Team members are generally drawn from different functional area of the company. **PRODUCT PLANNING PROCESS** The new product planning is the function of the top management personnel and specialists drawn from sales and marketing, research and development, manufacturing and finance. This group considers and plans new and improved products in different phases, as given bellows: 1\. Idea generation (Idea Formulation) 2\. Screening of ideas (Evaluation) 3\. Concept Testing 4\. Business analysis 5\. Product development 6\. Test marketing 7\. Commercialization (market introduction) **1. IDEA GENERATION:** Product planning starts with the creation of product ideas. The continuous search for new scientific knowledge provides the clues for meaningful idea formation. ***Drucker suggested*** that the sources can broadly be divided into: (a) Internal Source (within the company) and (b) External Sources (outside the company). **2. SCREENING THE IDEAS (EVALUATION)** It means critical evaluation of product ideas generated. After collecting the product ideas, the next stage is screening of these ideas. ***The main object of screening is to abandon further consideration of those ideas which are inconsistent with the product policy of the firm.*** **3. CONCEPT TESTING:** After the new product idea passes the screening stage, it is subjected to 'concept testing'. ***Concept testing is different from test marketing which takes place at a later stage.*** What is tested at this stage is the 'product concept' itself-whether the prospective consumers understand the product idea, whether they are receptive towards the idea, whether they actually need such a product and whether they will try out such a product if it is made available to them. **4. BUSINESS ANALYSIS (MARKET ANALYSIS):** This stage is of special importance in the new product development process, because several vital decisions regarding the projects are taken based on the analysis done at this stage. ***Estimates of sales, costs and profits are important components of business analysis and forecasts of market penetration and market potential are essential.*** Business analysis will prove the economic prospects of the new product. **5. PRODUCT DEVELOPMENT:** ***The idea on paper is converted into product.*** The product is shaped corresponding to the needs and desire of the buyers. Product development is the introduction of new products in the present markets. New or improved products are offered by the firm to the market so as to give better satisfaction to the present customers. **6. TEST MARKETING:** By test marketing, we mean, ***what is likely to happen, by trial and error method when a product is introduced commercially into the market.*** These tests are planned and conducted in selected geographical areas, by marketing the new products. The reactions of consumers are watched. It facilitates to uncover the product fault, if any, which might have escaped the attention in the development stage. This type of pre-testing is essential for a product before it is mass produced and marketed. **7. COMMERCIALIZATION (MARKET INTRODUCTION):** This is ***the final stage of product planning.*** At this stage, production starts, marketing programme begins to operate and products flow to the market for sale. It has to compete with the existing products to secure maximum share in the market-sales, and profits. When a product is born, enters into the markets; and like human beings, has a life span-product life cycle. **FACTORS THAT HINDER THE NEW PRODUCT DEVELOPMENT** 1\. Shortage of ideas 2. Shorter PLC 3. Higher expenditure 4\. Fragmented markets 5. Inappropriate incentives 6. High gestation period 7\. Non --Cooperation of staff **PRODUCT DIVERSIFICATION:** Diversification occurs when a firm seeks to enter the market with a completely new product. "Diversification is a policy of an operating company, so that its business and profits come from a number of courses, usually from diverse products that differ in market or production characteristics". Generally, ***it means adding a new product to the existing product line***. It may be new products, new markets, new technologies etc. It is just the opposite of product line contraction and is **also, referred to product line expansion.** This product is different from the existing product. The reasons for the diversification are: 1\. To take advantage of the existing reputation 2\. To arrest the declining profit margins 3\. To meet new products of competitors 4\. To use more effectively the existing facilities 5\. To increase the sales of existing products 6\. To maintain market share 7\. To meet the customers' demand 8\. To utilize the existing spare capacity of factory 9\. To eliminate cyclical slumps 10\. To curtail market expenditure 11\. To compensate the loss of another product **KINDS OF DIVERSIFICATIONS** **1. PRODUCTS SHARING A COMMON BASE :** It is an ***introduction of new products, which are akin to the present line***. The new products, which are introduced into the market, will not affect the present product, in any way. **2. PRODUCTS OF RELATED INDUSTRIES:** It is an introduction of a ***new product, a complementary item.*** The new product may be used as an input for the old product. **3. PRODUCTS OF UNRELATED INDUSTRIES:** The products of unrelated industries or lateral diversification as a move to expand product line, beyond the confines of the industry. That is, the company can produce any produces. **PRODUCT ELIMINATION :** It means that a product is removed from the product line. When there is no demand for a product or when the demand declines to obsolescence, marketing of such product is of no use. The indicator for elimination: 1\. Downward profit trend 2. Decreasing price trend 3. Declining sales trend 4\. Cheaper substituted are appeared 5. Greater utilization of executive's time 6\. Contribution is not covering the fixed expenses. 7. Unfavourable customer reaction. 8\. Emergence of superior substitute products. 9. Decreasing marketing share. 10\. The product may be in the last stage of PLC. **PRODUCTION MODIFICATION:** ***The existing product has to be modified in order to suit the changing conditions, because of fashion change.*** When one makes improvements in the existing product, by changing its quality size, form or design etc., the process is said to product modification. When changes are made, the existing product may look almost new. ***The purpose of this change is to increase the sales and to attract the customers***. Modification may facilitate: (1) Satisfying the additional needs of buyers (2) Changing to attractive design, colour, shape etc. (3) Upgrading or down the quality of a product to suit the market- rich or poor (4) Meeting the consumers' demand or for social responsibility. **REASONS FOR PRODUCT FAILURE:** Generally it is witnessed that many products entering into the market, may not reach the target of sales and profits. Introduction of new substitutes, technological innovations, consumers, who are selective in their choice of products etc. reduce the span of life of products. The following are general causes for the failure. 1\. Conception of product idea or specification of the product may be faulty. 2\. Design of product may not match with production facility. 3\. The strength of competitions may not be accounted. 4\. Marketing may be inefficient and insufficient. 5\. Cost of production may be higher than the estimated cost. 6\. The product performance may be unsatisfactory. 7\. Operations may not be within control. 8\. Market changes may not be understood properly. 9\. Producers may be ignorant of consumers' preference. 10\. Technical and production problems might have been underestimated. **IV PRODUCT BRANDING** ***Branding is the process by which companies distinguish their product offering from competition.*** Marketers develop their products into brands which help to create a unique position in the minds of customers. A brand is created by developing a distinctive name, packaging and design, and arousing customer expectations about the offering. Products are the children of manufacturers. Unlike human children, product children are never brought into the world by accident. Brand is a ***"name, term symbol or design to identify the goods or services and to differentiat

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