Fundamentals Of Marketing Notes PDF

# NOTES ## FUNDAMENTALS OF MARKETING ### By: Dr. Shilpi A. Lokre ## UNIT 1. ### Definition of Market: -“the aggregate demand of the potential buyers for a product or service.” - American marketing association. - A market is an area for potential exchanges. - Philip Kotler - A market is a group...

# NOTES ## FUNDAMENTALS OF MARKETING ### By: Dr. Shilpi A. Lokre ## UNIT 1. ### Definition of Market: -“the aggregate demand of the potential buyers for a product or service.” - American marketing association. - A market is an area for potential exchanges. - Philip Kotler - A market is a group of buyers and sellers interested in negotiating the terms of purchase/sale for goods/services. ### Three Concepts of Market: 1. **Place Concept:** A market is a convenient meeting for buyers and sellers to gather together in order to conduct buying and selling activities e.g. a spot, a cash or physical market, wholesale or retail market. 2. **Area Concept:** A market is an area, small or large, in which price making forces of demand and supply tend to operate freely through modern means of communication and where informed buyers and sellers can establish close and continuous contact. 3. **Demand Concept:** Market means people with needs to satisfy, the money to spend and the will to spend money to satisfy their varied and ever changing wants. ### Types of Markets: - On the basis of area—local, national, international markets. - On the basis of article traded—cotton market, bullion markets. - On the basis of nature of exchange dealings — spot or cash markets and future or forward markets. - On the basis of nature of goods sold — consumers good mkt. industrial goods mkt. - On the basis of nature and magnitude of selling — wholesale and retail mkts. ### Kinds of Goods: - **Convenience Goods**: Designed for masses. Demanded by consumers frequently in small quantities but must be immediately available at easily accessible retail shops. E.g. toothpastes, soaps, food products. - **Shopping Goods**: Demand evaluation and comparison. Need special efforts and special visits to central markets; these are not urgent purchases e.g. furniture, jewellery, domestic appliances. - **Specialty Goods**: Goods with unique features, sold in specialty shops. Cars, fancy watches. ## MARKETING - Definitions. - The human activity directed at satisfying needs and wants through exchange processes — Philip Kotler. - The process of creating, distributing, promoting and pricing goods, services and ideas to facilitate satisfying exchange relationships with customers in a dynamic environment — William Pride. - Marketing may be defined as the process of exchange between seller and buyer. It involves a number of interrelated activities designed to plan, promote, distribute and price a product or service in order to meet the wants and needs of both the parties in exchange transaction. ### Implications of the Definitions: 1. All business activities are directed towards one objective viz., consumer satisfaction or serving consumer needs and desires. 2. These activities are in the form of integrated business plans and programmes based on comprehensive analysis of internal and external environmental forces. A business plan is market or customer oriented plan. 3. A product or service is designed to satisfy present and potential consumer wants. 4. We have a tailor made marketing programme offering the best combination of product, price, promotion and distribution to the selected market segment. 5. The marketing programme is expected to accomplish twin goals of profitability and customer satisfaction. 6. Marketing programme tries to solve two marketing problems, viz stimulation of demand through pricing and promotion, and physical distribution i.e. serving demand through transport, storage and inventory control. ## Evolution of the Marketing Concept ### Marketing Concept: - A philosophy that an organization should try to satisfy customer's needs through a coordinated set of activities that also allows the organization to achieve its goals. - A management philosophy guiding a organization's overall activities— not just marketing activities but also production, finance, accounting, human resources etc. - It is not a philanthropic philosophy aimed at helping customers at the expense of the organization. - A firm that adopts the marketing concept must satisfy not only its customer's objectives but also its own. ### Evolution: 1. **The Production Orientation** - Ford Car, Coca Cola created by hand the Seupt - During the second half of the nineteenth century, the Industrial Revolution was in full swing in the U.S.. Electricity, rail, transportation, assembly lines and mass production made it possible to produce goods more efficiently. With new technology and new ways of using labour, products poured into the marketplace, where demand for manufactured goods was strong. (Caveat emptor - buyer beware). - High production efficiency, low costs & maih dist 2. **The Sales Orientation.** - In the 1920s, strong demand for products subsided and businesses realized they would have to sell products to buyers. From the mid 1920s to the early 1950s, businesses viewed sales as the major means of increasing profits, and this period came to have a sales orientation. Businesspeople believed the most important marketing activities were personal selling, advertising and distribution. Today some people incorrectly equate marketing with a sales orientation. Well Inpressed by Coca Cola V.P to fill more stuff mopheney in ander to make mere for maki mere to 3. **The Marketing Orientation** - By the early 1950s, some businesspeople began to recognize that efficient production and extensive promotion did not guarantee that customers would buy products. These businesses and many others since, found that they must first determine what customers want and then produce it rather than making the products first and then trying to persuade customers that they need them. As more organizations realized the importance of satisfying customer's needs, U.S. businesses entered the marketing era, one of marketing orientation. (Caveat vendor - seller beware). The job is not to find the right customers for your products but to find the customere right producte for you ### Benefits/Significance of Marketing Concept: 1. Customer needs, wants and desires receive top consideration in all business activities. 2. Greater attention is given to the product planning and development so that the merchandising can become more effective. 3. Demand side of the equation of exchange is honoured more and supply is adjusted to changing demand. Hence, more emphasis is given to research and innovation. 4. Marketing system based on the marketing concept assures integrated view of business operations and indicates interdependence of different departments of a business organization. 5. Interests of the enterprise and society can be harmonized as profit through service is emphasized. 6. Marketing research is now an integral part of the marketing process, a managerial tool in decision making in the field of marketing. ## Selling Concept 1. Product enjoys the supreme importance. 2. Emphasis on corporate needs. 3. Company oriented selling efforts 4. Goods are already produced. 5. Selling aims at short-term objectives 6. Top priority is given to sales volume rather than profits — top priority is given to profitable volume of sales and market share at fair prices and reasonable risk ## Increasing Sales - Rising commission to salesmen. ## Marketing Process - Marketing has been viewed as an ongoing or dynamic process involving a set of interacting activities dealing with a market offering by producers to consumers on the basis of reliable marketing anticipation (sales and demand forecasts). - Marketing is a matching process by which a producer provides a marketing mix (product, price, promotion and physical distribution) that meets consumer demand or a target market within the limits of society. The process is based on corporate goals and corporate capabilities. - Marketing process brings together producers and consumers, the two main participants in exchange. ### The Marketing Process Covers: 1. Marketing agencies or channels of distribution 2. Marketing functions 3. Flow of goods to satisfy market demand 4. The marketing management which is in charge of planning, directing, and controlling of goods and accomplish the primary marketing objective, viz., satisfaction of market demand. - Marketing research is the starting point in the process of marketing to know customer demand through market analysis and investigation. Resources of men, money, materials and management are employed in the marketing system to perform marketing functions in order to satisfy customer demand. - Marketing functions needed to serve market demand constitute the second part of the marketing process. ## Classification of Marketing Functions: ### A) Functions Involving Ownership/Transfer 1. Concentration Buying and assembling 2. Selling—function of exchange ### B) Functions Involving Physical Distribution 1. Transport 2. Storage ### C) Facilitating Functions (A&B) 1. Standardization and grading 2. Branding 3. Packing 4. Salesmanship 5. Advertising 6. Sales Promotion 7. Insurance (Risk Bearing) 8. Marketing Research 9. Market Intelligence 10. Finance ## Marketing is done through the performance of marketing functions. - These marketing functions are performed by the manufacturer and middlemen in the machinery of distribution. - Marketing intermediaries act as clearing houses for collection and distribution of goods. - Some of the marketing important marketing functions are briefly described. ### 1) Selling: - It is one function of the equation of exchange. - Selling creates demand for a product. - Selling function involves: a. product planning and development b. finding out or locating buyers c. demand creation through salesmanship, advertising and sales promotion d. negotiation of terms of sale, such as price, quantity, quality, etc. e. sale contract leading to the transfer of title and possession of goods ### 2) Buying: - It is the second function of the equation of exchange. - It requires planning of purchases, intelligent search for probable sellers, selection of goods to be sold, assembling of goods in the right quantity and quality, at the right place and time, and the right price. - In a formal exchange, the buyer has to negotiate terms of purchase and enter into a contract of purchase. ### 3) Standardization and Grading: - In agricultural marketing, standardization and grading play a very important role. - Standardization makes sale by description possible. - It assures quality. - It promotes uniformity of products. - It widens the market for commodities. - Standdisation means setting standards of quality. - Grading means separating or inspecting products according to established standards. - Each grade has uniformity in all attributes. - Grading enhances marketing efficiency. ### 4) Financing: - Finance is the lifeblood of commerce. - We have monetary exchange. - Value of goods is expressed in money and it is denoted by price to be paid by a buyer to a seller. - Credit is necessary in marketing. - It plays an important role in retail trade, particularly in the sale of consumer goods. ### 5) Marketing Intelligence: - Marketing intelligence means spreading of market information among buyers and sellers. - As marketing conditions are dynamic and they may affect industry in any way and to any degree, producers are interested in securing up-to-date information on changing positions of supply, demand and price ruling the markets. - Marketing executives are interested in knowing trends in market demand, supply, prices and related market information. - Equipped with latest market information, the risk of loss can be reduced in purchasing, in pricing, in forecasting market demand and in facing competition in the market. - Securing and using market information is a mark of good marketing management. - Market information service has assumed unique importance in our business system as decision making processes in the field of marketing can be based on adequate, up-to-date, reliable and timely market information. - Organized markets, banks, government agencies act as clearing houses of vital market information. ## The systems Approach to the study of marketing. - In the model of systems approach we have: 1) Objectives 2) Inputs 3) Processing 4) Outputs and 5) Feedback. - It is the best model to represent marketing. - The output establishes the purpose of the objective of a system. - The objective is profits through serving the demands of consumers and the community. - The output is the sale of goods. - Correct inputs must be available to the processor, i.e. marketing management, in order to produce desirable outputs or sales and satisfaction. - These inputs are the four elements of the marketing mix. - Systems approach stresses marketing linkages inside and outside the firm. - It emphasizes changing environment. - It provides a framework of control. - Information feedback gives information regarding consumer, dealer and community reaction to the marketing mix. This helps revision of the marketing mix and marketing operations. - Feedback ensures accomplishment of marketing objectives. ### 1) External environmental forces: - Such as competition, buyer behaviour, technology, economic, social, political and legal conditions provide marketing environment. ### 2) Marketing system: - It is an important element or segment of the total business system. - It represents integrating marketing pointing out interrelationships between internal and external factors affecting business. ### 3) Each company evolves its own marketing mix based on: - Market research - Product research - Distribution research - Promotion research ### 4) The business subsystem has a number of subsystems closely interrelated and integrated viz., - Marketing subsystem - Finance subsystem - Production subsystem - Personnel subsystem ### 5) External forces governing a marketing mix are: - Consumer behaviour - Dealer attitude - Competition and rival’s behavior - Legislative control and restrictive trade practices to ensure free competition and fair trading to protect consumers. pprovic ### 6) Marketing begins and ends with customers. - Most of the marketing problems center around consumers. - Under the marketing concept, customers occupy the center of the marketing system. - In fact, the sole purpose of any business is the creation and retention of customers. ### 7) Marketing mix itself must be dynamic. - It must adjust to changes in internal as well as external factors relevant to the business. - The marketing system must be flexible, dynamic, and adaptive. ### 8) A systems approach demands quantitative data on which managerial decisions are based. - Marketing research offers concrete information on any marketing problem. - It is a valuable aid in decision making. ### 9) The controller, i.e., management through feedback information modifies inputs and/or processing, e.g. marketing mix, and ensures the desirable outputs which will achieve planned objectives. ## Relevance/ Importance of Marketing in a Developing Economy. ### 1) Marketing is important to Business and the Economy. - Marketing activities help produce the profits that are essential not only to the survival of individual businesses but also to the health and ultimate survival of the economy. - Profits drive economic growth because without them businesses find it difficult, if not impossible, to buy raw materials, hire more employees, attract more capital, and create additional products that in turn make more profits. - Without profits, marketers cannot continue to provide jobs and contribute to social causes. ### 2) Marketing is used in Non-Profit Organisations. - Although the term marketing brings to mind advertising for McDonald's, Vodafone, Pepsi, marketing is also important in organizations working to achieve goals other than ordinary business objectives such as profit. - The Health Ministry of The government of India issues messages and advertisements for prevention of AIDS, Family Planning and other health related issues. - Advertisements are also flashed for consumer protection from illegal trade practices. - Universities and colleges engage in marketing activities to recruit new students. ### 3) Marketing Knowledge Enhances Consumer Awareness: - Studying marketing allows us to assess a product's value and flaws more effectively. - For e.g. an unsatisfactory experience with a warranty makes you wish for stricter law enforcement so that sellers will fulfill their promises. - Understanding marketing enables us to evaluate corrective measures (such as laws, rules, regulations, and industry guidelines) that could stop unfair, damaging, or unethical marketing practices. - Thus, marketing activities help improve the quality of our lives and help us become better customers. ### 4) Marketing connects people through technology. - New technology related to computers and telecommunication, helps marketers understand and satisfy more customers than ever before. - Through toll-free telephone numbers, customers can provide feedback about their experiences. - This helps marketers to refine and improve their and better satisfy customer needs. - The Internet, especially the World Wide Web, allows companies to provide tremendous amounts of information about their products to customers and to interact with them through e-mail. ### 5) Socially Responsible Marketing can Promote the Welfare of customers and Society. - The success of our economic system depends on marketers whose values promote trust and cooperative relationships in which customers are treated with respect. - The public is increasingly insisting that social responsibility and ethical concerns be considered in planning and implementing marketing activities. - E.g. Myers Squibb Co. and Merck & Co. recently announced lowering the prices charged for their AIDS treatment medicines in developing countries like Africa. - The Government of India also promotes Family planning by providing free contraceptives and counseling to the weaker section of the society. ### 6) Marketing offers many Exciting Career Prospects. - The marketing field offers a variety of interesting and challenging career opportunities throughout the world, such as personal selling, advertising, packaging, transportation, storage, marketing research, product development, wholesaling, and retailing. - In addition, many individuals working for non-business organizations engage in marketing activities to promote political, educational, cultural, church, civic and charitable activities. - Marketing knowledge and skills are valuable personal and professional assets. ### 4) Helps Increases in the generating National Income and the standard of living. ## Role and Functions of a Marketing Manager. 1. Sales and Market Analysis. 2. Determination of marketing goals. 3. Sales forecasting and marketing budget. 4. Evolving an appropriate marketing mix or programme. 5. Formulation of marketing plans, policies, and procedures. 6. Organising of all activities marketing activities included in the marketing mix. 7. Assembling of necessary resources, such as marketing personnel, finance and physical facilities, etc. to execute marketing campaigns. 8. Active participation in the product planning and development to establish best correlation between the product attributes and customer demands. 9. Effective communication, proper control and coordination of all marketing functions. ## UNIT -3 ## Marketing Mix - Marketing mix is the set of controllable variables that a firm can use to influence the buyer's response within a given marketing environment (consisting of political, social, cultural, economic, and marketing institutional influences). - The environmental influences are uncontrollable elements, whereas the ingredients of the marketing mix are controllable factors. - The blend or combination of these ingredients constitutes the marketing mix and this marketing mix or programme is expected to be in line with the environmental influences. - For each market segment and market environment, we will have a specific and an appropriate marketing mix. - Marketing mix is developed to satisfy anticipated and perceived needs of an identified market within a given environment. - Variations in external environment forces will directly influence the components of the marketing mix and they will have to be adjusted to the changes in the business environment. Then only a businessman can secure favourable buyer response and secure planned sales volume through serving consumer demand in the best manner possible. - Marketing mix offers an optimum (least cost) combination of all marketing ingredients so that we can have realization of company goals such as profit, return on investment, sales volume, market share, and so on. - It is based on market research and marketing information. - Before marketers develop a marketing mix, they must collect indepth, up-to-date information about customer needs. - Such information may include data about the age, income, ethnicity, gender and educational level of people in the target market, their preferences for product features, their attitude towards competitor's products and the frequency with which they use the products. - Marketing is more than simply advertising or selling a product; it involves developing and managing a product that will satisfy customer needs. - It focuses in making a product available in the right place and at a price acceptable to buyers. - It also requires communicating information that helps customers determine if the product will satisfy their needs. - These activities are planned, organized, implemented, and controlled to meet the needs of customers within the target market. - Marketers refer to these activities - product, physical distribution, promotion, and pricing as the marketing mix, because they decide what type of each element to use, and in what amounts. ## DIAGRAMMATIC REPRESENTATION OF MARKETING MIX 1. All elements are essential, equally important, and interdependent. 2. Decisions on the four elements must be taken simultaneously, and together they give us a total marketing programme. 3. For each market segment or division, we have separate market mix. ## Product Variable/Product Concept/Product Mix - A product can be a good, service, or an idea. - A good is a physical entity you can touch. - A FORD car, A BRITNEY SPEARS compact disc, an EVEREADY BATTERY, and a KITTEN in a pet store are examples of goods. - A Service is an application of human and mechanical efforts to people or objects to intangible benefits to customers. - AIR TRAVEL, DRY CLEANING, BANKING are examples of services. - Ideas include concepts, philosophies, images, and issues. For instance, a marriage counselor gives spouses ideas to help improve their relationship. Other marketers of ideas include political parties, churches, and schools. - The product is a thing possessing a bundle of utilities. - It covers the physical attributes, the packaging, branding, labeling, warranties, and services accompanying the product. - Product is evolved in consultation with the marketing manager. - Product variable decisions and related activities are important because they are directly involved with creating products that address customer’s needs and wants. - To maintain an assortment of products that helps an organization achieve its goals, marketers must develop new products, modify existing ones, and eliminate those that no longer satisfy enough buyers. ### The product concept has three dimensions: 1. **Managerial Dimension:** It covers the core specifications or physical attributes, related services, brand, package, product life cycle, and product planning and development. - As a basis to planning, product is second only to market and marketing research. - The product offering must balance with consumer-citizen needs and desires. - Product planning and development can assure normal rate of return on investment and continuous growth of the enterprise. 2. **Consumer Dimension:** To the consumer, a product is actually a group of symbols or meanings. People buy things not only for what they can do, but also for what they mean. - E.g. Nivea, Johnson and Johnson, Shahnaz Hussain’s products. - A product conveys a message indicating a bundle of expectations to a buyer. - Consumer’s perception of a product is critical to its success and failure. - A relevant product is one that is perceived by the consumer as per intentions of the marketer. - Once a product is bought by a consumer and his evaluation, i.e., post purchase experience is favourable, marketers can have repeat orders. 3. **Societal Dimension:** To the society, salutary products and desirable products are always welcome as they fulfill the expectations of social welfare and social interests. - Salutary products yield long-run advantages but may not have immediate appeal. - Desirable products offer both benefits, immediate satisfaction and long-run consumer welfare. - Marketers have to fulfil the following social responsibilities while offering products to consumers: a. Conservation and best use of resources b. Safety to users c. Quality of life d. Long-run satisfaction to consumers e. Concern for better environment f. Fulfillment of regulations relating to composition, packaging, and pricing of many products. - The product is a bundle of all kinds of satisfaction, of both material and non-material kinds, ranging from economic utilities to satisfaction of a socio-psychological nature. - A famous quote by the maker of Revlon beauty products: “In the factory we make mascara and skin cleaner, but in the store we sell hope and beauty.” - A toothpaste may be a product to the producer, to the consumer it means hopes and expectations: whiter teeth, pleasant taste, fewer cavities, stronger gums and sweet smelling breath. - The consumer buys hopes and expectations. - These hopes and expectations are called market offering and they act as selling points of a product. ### Selling Points of a Product: 1. Physical attributes—design, colour, shape, style, finish 2. Brand, package and label 3. Price 4. Services 5. Company image 6. Safety to users ## BRANDING - A brand is a name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers. - A brand may identify one item, a family of items, or all items of that seller. - A good brand is distinct and memorable; without one, a firm cannot differentiate its products, and shoppers’ choices would essentially be arbitrary. ### A brand name: - Is that part of a brand that can be spoken - including letters, words, and numbers such as 7up. - A brand name is often a product’s distinguishing characteristic. - Without the brand name, a firm cannot differentiate its products. - To consumers, a brand name is as fundamental as the product itself. - Indeed, many brand names have become synonymous with the product, such as Xerox copiers, Cadbury’s chocolates. ### The element of a brand that is not made up of words— often a symbol or design, is a brand mark. - Golden arches which identify McDonald’s restaurants. ### A trademark: - is a legal designation indicating that the owner has exclusive use of a brand and others are prohibited by law from using it. - To protect a brand name or brand mark an organization must register it as a trademark with patent and trade mark office. ### A trade name: - is the full and legal name of an organization such as Maruti Udyog Ltd. ## Value of Branding: 1. **Product differentiation:** Product differentiation by branding enables a manufacturer to establish his own price and eliminate competition to some extent. A branded product enjoys a separate individuality. - E.g. Levis. 2. **Brand Image:** The seller can build up a bright image of his product around the brand. - Sellers benefit from branding because each company’s brands identify its products, which makes repeat purchasing easier for customers. - Branding helps a firm introduce a new product that carries the name of one or more of its existing products because buyers are already familiar with the firm’s existing brands. 3. **Creation of Market:** Ever-increasing competition leads to branding of product by a manufacturer to face competition and create an exclusive market for your product. 4. **Branding facilitates Promotional Efforts:** Because the promotion of each branded product indirectly promotes all other similarly branded products. - E.g. Coke and Diet Coke. 5. **Fosters Brand Loyalty:** Development of loyal customers, acting as talking advertisements and repeat buyers is the greatest reason in favour of branding. 6. **Helps Brand Recognition:** Branding not only gives separate identity but it also creates special brand preference and brand recognition. - Branding is a powerful instrument of demand creation and demand retention. - E.g.. Vim, Lux, Surf. ### 1) Brand loyalty: - A customer's favourable attitude towards a product. ### 2) Brand recognition: - A customer's awareness that a brand exists and is an alternative purchase if the preferred brand is not available (mildest form of brand loyalty). ### 3) Brand Preference: - A stronger degree of brand loyalty; a customer definitely prefers one brand over competitive offerings and will purchase this brand if available. ### 4) Brand Insistence: - The degree of brand loyalty in which a customer strongly prefers a specific brand and will accept no substitute. ## Packaging: - Packaging involves the development of a container and a graphic design for a product. - A package is a vital part of a product making it more versatile, safer, and easier to use. - Like a brand name, a package can influence a customer’s attitudes towards a product and so affect their purchase decisions. - For e.g. Several producers of jellies, sauces, and ketchups have packaged their products in squeezable containers to make use and storage more convenient. - E.g. Maggie Pichkoo, Kissan Squeezy. - Package characteristics help shape buyer’s impressions of a product at the time of purchase or during use. - Packaging, branding, and labeling go together and constitute an integral part of product planning and development. - Package itself is a forceful though silent and colourful salesman at the point of purchase. - It is an effective tool encouraging impulse buying. ## Packaging Functions: - Effective packaging means more than simply putting products in containers and covering them with wrappers. - Packaging serves the following purposes: 1. Packaging materials serve the basic purpose of protecting the product and maintaining its functional form. - E.g. Fluids like milk, orange juice, or ketchup need packaging that preserves and protect them. - The packaging should prevent damage that could affect the product’s usefulness and thus lead to higher costs. 2. Tampering of products has become a problem; several packaging techniques have been developed to counter this danger. 3. Packaging offers convenience to consumers. - E.g. small individual size boxes or plastic bags appeal to children and young adults with active lifestyles. - Small single serving cans of vegetables, for instance, may prevent waste and make storage easier. 4. Packaging is to promote a product, a product by communicating its features, benefits, and images. - Sometimes a reusable package is developed to make the product more desirable. - Thus, packaging is a sales tool. ## Major Packaging Considerations: 1. It must be cost-effective. 2. It should be tamper resistant. 3. It has a definite promotional value; therefore, a designer must consider the size, shape, texture, color, and graphics. 4. It must meet the need of resellers. Wholesalers and retailers consider whether the package facilitates, storage, and handling. 5. To develop product packages that are environment friendly. ## LABELLING. - Labelling is very closely related with packaging and is used for identification, promotional, informational and legal purposes. - Labels can be small or large relative to the size of the product, and carry varying amounts of information. - A label can be a part of the package itself or a separate feature attached to the package. - Information presented on a label may include the brand name and mark, the registered trademark symbol, packaging size and content, product features, nutritional information, type and style of the product, number of servings, care instructions, directions for use, safety precautions, the name and address of the manufacturer, expiry dates, seals of approval, and other facts. - For many products, the label includes a Universal Product Code (UPC), a series of thick and thin electronically readable lines identifying the product and providing inventory and pricing information. - Labels can facilitate the identification of a product by displaying the brand name with a unique graphic design or colour. - E.g. Maggie. - Red Label. - Wah Taj. - Labels may contain such promotional messages as the offer of a discount or a larger package size at the same price or information about a new or improved product feature. ## PRODUCT LIFE CYCLE. - The Product life cycle concept derives from the fact that a product’s sales volume and sales revenue follow a typical pattern of a five-phase cycle. - The life cycle is a fact of existence for every product. - It is similar to the human life cycle. - The length of the life cycle, the duration of each phase and the shape of the curve vary widely for different products. - But in every instance, obsolescence or decay eventually occurs when the need disappears or a better, cheaper and more convenient product may suit the same need or a competitive product due to superior marketing strategy suddenly gains a decisive advantage. - As a product moves through its cycle, the strategies relating to competition, promotion, distribution, pricing and market information must be periodically evaluated and possibly changed. - Astute marketing managers use the life cycle concept to make sure the introduction, alteration, and termination of a product are timed and executed properly. - By understanding the typical life cycle pattern, marketers are able to maintain profitable products and drop unprofitable ones. - The product life cycle should be preferably termed as product market life cycle as it is related to a given particular market. - For e.g. an old product (in the US market) will have a new life cycle when it is introduced into a foreign market, say, India. - The product life cycle concept indicates that the product is born or introduced, grows, attains maturity and the point of saturation in that market, and then sooner or later it is bound to enter its declining stage, i.e. decay in its sales (history). - The life cycle of a product is depicted below: 1. **Introduction:** Sales are starting. 2. **Growth:** Rising sales at an increasing rate. 3. **Maturity:** Rising sales at a decreasing rate. 4. **Saturation:** Stable sales. 5. **Decline:** Falling sales. ### 1) Introduction: - In the early stage, when the product is introduced in a market, sales revenue begins to grow but the rate of growth is very slow. - Profit may not be there as we have low sales volume, large production and distribution costs. - We may require heavy advertising and sales promotion. - Products are bought cautiously on a trial basis. - Weaknesses may be revealed and they must be promptly removed. - Cost of market development may be considerable. - In this stage, product development and design are considered critical. - 1-TV, Movie, Men Ms Channa ### II) Growth: - During the growth stage, the rate of increase of sales turnover is very rapid. - Profits also increase at an accelerated rate. - In spite of competition, we may have rising sales and profits. - The firm gives top priority to sales volume and quality maintenance may have secondary preference. - For marketing success, manufacturing and distribution efficiency are vital factors. - In mathematical terms, the end of the growth period is at the inflection point on the sales curve. - In this stage, effective distribution is considered a key factor. - wifi Tata ### III) Maturity: - During the growth stage, keen competition brings pressure on prices. - Increasing marketing expenditure and falling prices (in the battle for market share) will reduce profits. - Additional expenditure is involved in product modification and improvement or broadening of the product line. - Marketers have to adopt measures to stimulate demand and face competition through additional advertising and sales promotion. - Overall marketing effectiveness becomes the key factor in the stage of maturity. - Reliance 2.1mbps ### IV) Saturation: - The saturation point occurs in the market when all buyers are using the product, and we have only replacement sales. - Consumption achieves a constant rate and the marketers have to concentrate exclusively on a fight for market share (with higher marketing expenses). - Prices may fall rapidly and profit margins may become small unless the firm makes substantial improvements and realizes cost economies. ### V) Decline: - Once the peak or saturation point is reached, product inevitably enters the decline stage. - It may be gradually displaced by some new innovation. - Sales drop severely, competition dwindles and even then the product cannot stand in the market. - It may be priced out of the market by other competitors/innovations. - At this stage, price becomes the primary weapon of competition, and we have to reduce considerably expenditure on advertising and sales promotion. - Cost control becomes the key to generate profits. - Manti8+0, BAJAJ Scootere - In reality, many products do not follow the life cycle curve given above. - Time interval for each stage varies widely from product to product. - For e.g. salt remains in maturity stage forever. - Marketers can alter the product life cycle primarily through product improvement (alterations in product offering) and then changes in the rest of the marketing mix. ## UNIT-4. ## The Distribution Variable/ Place mix. - To satisfy customers, products must be available at the right time and in convenient locations. - In dealing with the distribution variable, a marketing manager makes products available in the quantities desired to as many target market customers as possible. - A marketing manager may also select and motivate intermediaries (wholesalers and retailers), establish and maintain inventory control procedures, develop and manage transportation and storage systems. - The advent of the Internet and electronic commerce has also dramatically influenced the distribution variable. - The distribution channel can be defined as the set of marketing institutions participating in the marketing activities involved in the movement or the flow of goods or services from the primary producer to the ultimate consumer. - Channels of distribution are best understood as alliances of various marketing institutions performing specific marketing functions. ## Functions of marketing institutions in the machinery of distribution. 1. The searching out of buyers and sellers (contacting). 2. Matching of goods to the requirements of the market. (merchandising). 3. Persuading and influencing the prospective buyers to favour a certain product and its sponsor (promotion). 4. Pricing the product or service in such a manner that it is acceptable to the buyers and it can ensure effective distribution and 5. Transport and warehousing of goods at each stage in the process of distribution (physical distribution). ## Sub