Introduction to Marketing Management
1. ‘Value-added services’ means_________
1)
Better value at a premium
2)
Costlier services
3)
Additional services
4)
Better value at a discount
5)
At par services
Ans. (3)
2. ‘Customization’ means_______
1)
Tailor-made products for each customer
2)
Customers selling goods
3)
Tailor-made products for each
staff
4)
A selling process
5)
None of these
Ans. (1)
3. Cross-selling means_______
1)
Selling with a cross face
2)
Cross country marketing
3) Selling other products to existing customers
4)
Selling to friends
5)
Selling to employees
Ans. (3)
4. Bancassurance means_______
1)
Banks promising to give loans
2)
Bank promising to pay interest
3)
Banks selling insurance products
4)
Assurance to repay loans
5)
None of these
Ans. (3)
5. Selling process includes
1)
Publicity
2)
Lead generation
3)
Cross-country contacts
4)
Product designing
5)
Product re-designing
Ans. (2)
6. Referral means_______
1)
Sales person
2)
All customers
3)
Lead provided by operation
staff
4)
Calling the existing purchasers
5)
All purchasers
Ans. (3)
7. “USP”
in marketing means________
(1)
Unique selling practices
(2)
Uniform selling practices
(3)
United sales persons
(4)
Unique selling proposition
(5)
Useful sales person
Ans. (4)
8. Full form of DSA is______
1)
Delivery Staff Agency
2)
Direct Selling Agent
3)
Direct Supplier Agent
4)
Distribution and Supply Agency
5)
Driving Sales Ahead
Ans. (2)
9. Testing before launching a product is known
as ........
1)
Acid Test
2)
Concept Testing
3)
Market Test
4) Test Marketing
Ans. (4)
10. Market in which gold and silver are sold
Ans. Bullion
market
11. Which product is MOST likely to
be purchased through routine decision making?
1)
Soft drink
2)
Television set
3)
Car
4)
Shirt
Answer: Soft drink
12. Which one of the following factor relates to family that influence behavior?
1)
Personal
2)
Social
3)
Cultural
4)
Business
Answer: Social
13. What is the basic
property of a service which makes it different from a product?
1) Size
2)
Intangibility
3) Very expensive
4) Shape
Answer: Intangibility
14.
The extended Ps of service marketing mix is________
1)
Product, Process,
Physical Environment
2)
People, Product,
Place
3)
Physical Evidence, Process, People
4)
Price Physical
Evidence, Promotion
Answer: Physical Evidence, Process, People
15. The four unique
elements to services include__________
1)
Independence,
intangibility, inventory, and inception
2)
Intangibility,
independence, inseparability, and inventory
3)
Independence,
increase, inventory, and intangibility
4)
Intangibility, inconsistency, inseparability and
inventory.
Answer: Intangibility, inconsistency, inseparability and
inventory.
16. Which of the following is the example
of Dunlop ?
1)
Branding
2)
Brand
3)
Brand Name
4)
Brand Mark
Ans: 3
17
. The collection of Utilities is known as:
1)
Purchaser
2)
Seller
3)
Product
4)
Market
Ans: 3
18.
______ refers to the combination of all decisions relating to the product.
1)
Product
2)
Product Mix
3)
Market
4)
Market Mix
Ans: Product
Mix
19.
_______ refers to special word , symbol, letter or the mixture of all these.
1)
Brand
2)
Branding
3)
Brand Name
4)
Brand Mark
Ans: Brand
20.
______ refers to the combination of promotion tools used by the business to
inform and persuade the customers about the products
1)
Price mix
2)
Product mix
3)
Promotion mix
4)
Place mix
Ans: Promotion Mix
21.
Rebate, discount, refunds, contests are major techniques of:
1)
Personal Selling
2)
Sales promotion
3)
Public relations
4)
Marketing
Ans: Sales
Promotion
|
1)
The term marketing
mix was coined by ___. |
|
Ans.
D Neil H. Borden |
|
2)
___
contributed to the mix by adding an additional 3 Ps to the existing mix –
People, process, and physical evidence. |
|
Ans.
Boom and Bitner |
|
3)
What adds the value
of time and place utility in the supply chain? Ans. Logistics |
|
4)
Who is the Father of Modern Marketing? |
|
(a) Philip Kotler (b) Peter F Drucker (c) Abraham Maslow (d) Raymond Kroc Answer: (a) Philip Kotler |
|
5) ___ is the key term in AMA's definition of
marketing? |
|
(a) Sales (b) Promotion (c) Value
(d) Profit Answer: (C)
Value |
|
6)
What does
the term "marketing" refer to? |
|
(a) New product development
(b) Advertising and other promotional activities (c) Achieving sales and profit targets (d) Creating customer value and satisfaction Answer: D)
Creating customer value and satisfaction |
|
7)
In the
service industry how many Ps comprise the marketing mix? |
|
(a) 4 Ps (b) 7
Ps (c) 8 Ps (d) 10 Ps Answer: B) 7 Ps |
|
8)
Producers,
wholesalers, and retailers act as a unified system to form a? |
|
(a) Vertical marketing
system (b) Horizontal marketing system (c) Traditional
marketing system (d) Hierarchical marketing system Answer: A) Vertical marketing system |
|
9)
The major
objective of any marketing activity is to? |
|
(a)
Sell
(b) Promote
(c)
Create (d) Increase awareness Answer: A) Sell |
|
10) At
which stage of the product cycle is the profit typically negative? |
|
(a) Decline
stage (b) Growth stage (c) Maturity stage (d) Growth stage Answer: D) Growth stage |
1. Analysing Market Opportunities: Marketing management collects and analyses information related to consumer’s needs, wants and demands, competitor’s marketing strategies, changing market trends and preferences. This helps to identify market opportunities.
2. Determination of Target Market: Marketing management helps to identify the target market that the organization wishes to offer its product.
3. Planning and Decision Making: Marketing management helps to prepare future course of action. Planning relates to product introduction, diversification. Decision making regarding pricing, selection of promotional mix, selection of distribution channel is taken by the marketing management.
4. Creation of Customer: Consumers determine the future of the market .Therefore providing the best product to the consumer according to their preference is the important task of marketing. Marketing management helps in creation of new customers and retention of current customers.
5. Helps in Increasing Profit: Marketing caters to the varied and unlimited needs of consumers. Marketing management helps to increase profit and sales volume. This is achieved by expansion of market and increasing customers.
6. Improvement in Quality of Life: Marketing management aims at providing innovative product and services to the customers. Marketers continuously strive to incorporate new technology and mechanism in their product to provide more satisfaction to customers than before. This improves quality of life and makes life of consumers easier than before.
7. Employment Opportunities: Marketing process is a combination of different activities like research work to assess the marketing environment, product planning and development, promotion, distribution of product to customers and after sales service. Marketing process requires researcher, production engineer, different distribution intermediaries, sales personnel also creates employment opportunities in advertisement section. Thus marketing management opened up different employment avenues thus creating employment opportunities.
Difference between Marketing & Selling:-
|
No. |
The Selling Concept |
The Marketing
Concept |
|
1 |
undertakes a
large-scale selling and promotion effort |
undertakes
activities such as; market research, |
|
2 |
The Selling Concept
is suitable with unsought goods—those that buyers do not normally think of
buying, such as insurance or blood donations. |
The Marketing
Concept is suitable for almost any type of product and market. |
|
3 |
Focus on the selling
concept starts at the production level. |
Focus on the
marketing concept starts at understanding the market. |
|
4 |
Any company
following the selling concept undertakes a high-risk |
Companies that are
following the marketing concept require to bare less risk and uncertainty. |
|
5 |
The Selling Concept
assumes –“customers who are coaxed into buying the product will like it. Or,
if they don’t like it, they will possibly forget their disappointment and buy
it again later.” |
Instead of making an
assumption, The marketing concept finds out what really the consumer requires
and acts accordingly to them. |
|
6 |
The Selling Concept
makes poor assumptions. |
The marketing
concept works on facts gathered by its “market and customer first” approach. |
Marketing
concepts:-
1)
Production
Concept:- This concept is one of the oldest Marketing management
orientations that guide sellers.
The idea of production concept –
“Consumers will favor products that are available and highly affordable.”
Companies adopting this
orientation run a major risk of focusing too narrowly on their operations and
losing sight of the real objective.
Most times, the production concept can lead to marketing
myopia. Management focuses on improving production and distribution efficiency.
Although, in some situations, the production concept is still a useful
philosophy.
If a firm decides to operate based on this concept, it
will try to minimize production costs by making the production process
efficient. Moreover, for its products to be favored by the consumers, it will
try to make its distribution as extensive as possible.
This production
concept is found to be applicable if two situations prevail.
Ø
One, when the demand
for a product exceeds supply. This is seen in markets that are highly
price-sensitive and budget-conscious. Under such situations, consumers will
basically be interested in owning the product, not the quality or features of
it. Thus, producers will be interested in increasing their outputs.
Ø
Two, if the production
costs are very high, that discourages consumers from buying the product. Here,
the company puts all of its efforts into building production volume and
improving technology to bring down costs.
Reduction in
production costs helps the firm to reduce, helping the market size to increase.
A company can thus try to create a dominant position in the market where it
operates.
The application of
this concept is also seen in service firms such as hospitals. Application of
this concept in service firms such as hospitals is also criticized because it
may cause deterioration in the firm’s service.
Production Concept example:- You see, in Amazon or retail stores, the market is
flooded with cheap products from china. Everything from the cheap plastic
product from China is on your cart now.
The best example of the production concept is Vivo, the Chinese Smartphone brand. Their phones are available in almost every corner of the Asian market. You can walk into any phone shop in Asia and can walk out with the latest and greatest Smartphone from Vivo.
2)
Product
Concept:- The product concept holds that consumers will favour
products that offer the most quality, performance, and innovative
features. Here, Marketing strategies are
focused on making continuous product improvements.
Product
quality and improvement are important parts of marketing strategies, sometimes
the only part. Targeting only on the company’s products could also lead to
marketing myopia.
During
the first three decades of the twentieth century, more and more industries were
adopting mass production techniques. The supply of manufactured goods was
exceeding demand by the early 1930s. Manufacturers were facing excess
production capacity and competition for customers. They started realizing that
buyers will favour well-made products and are willing to pay more for product
extras, and the product concept started taking place in the minds of many
producers.
The
product concept assumes that consumers will favour those products that are
superior in quality, performance, innovative features, designs, and so on.
Product Concept example:- For example, suppose a company makes the best quality
Floppy disk. But a customer does need a floppy disk?
She
or he needs something that can be used to store the data. It can be achieved by
a USB Flash drive, SD memory cards, portable hard disks, etc. So that the
company should not look to make the best floppy disk, they should focus on
meeting the customer’s data storage needs.
When
you think of high-quality products, Apple will be one of the top ones. Their
products are so good that they set industry trends and standards.
Logitech
makes very high-quality computer products such as keyboard, mouse, and webcams.
These high-quality products are priced higher, but people still buy, and they
get almost free advertisement from independent reviews.
3)
Selling
Concept:- The selling concept holds the idea- “consumers will not buy
enough of the firm’s products unless it undertakes a large-scale selling and
promotion effort.”
Here
the management focuses on creating sales transactions rather than on building
long-term, profitable customer relationships. In other words, the aim is to
sell what the company makes rather than making what the market wants. Such an
aggressive selling program carries very high risks. In selling concept, the
marketer assumes that customers will be coaxed into buying the product will
like it; if they don’t like it, they will possibly forget their disappointment
and buy it again later. This is usually a very poor and costly assumption.
Typically
the selling concept is practiced with unsought goods. Unsought goods are that
buyers do not normally think of buying, such as insurance or blood donations. These
industries must be good at tracking down prospects and selling them on a
product’s benefits.
The selling concept also developed at the same time, and
the product concept developed and still predominant in many industries.The great depression in America proved that producing
enough goods or quality goods is no more a problem. The problem is to sell those
products.
Selling Concept example:- Every
saw an ad online or TV commercial that you almost can’t escape and hide from?
The Selling Concept is in play.
Almost
all companies eventually fall into this concept. “Mountain Dew” ads are hard to
miss. If people like Mountain Dew or not, that is debatable, but you can see
that PepsiCo is pushing it hard using ads.
Almost
all soft drinks and soda drinks follow the selling concept. These drinks have
no health benefits ( actually harm your health more); you can easily replace
them with water ( the most available substances on the earth).
4)
Marketing Concept:- The marketing concept holds- “achieving
organizational goals depends on knowing the needs and wants of target markets
and delivering the desired satisfactions better than competitors do.”
Here
marketing management takes a “customer first” approach. Under the marketing
concept, customer focus and value are the routes to achieve sales and profits. The
marketing concept is a customer-centered “sense and responds” philosophy. The
job is not to find the right customers for your product but to find your
customers’ right products. The marketing concept and the selling concepts are
two extreme concepts and different from each other.
When
companies started achieving the capability to produce in excess of existing
demand, executives started realizing the need to reappraise marketing in
business operations. They also started recognizing the significant changes in
the market, in the field of technology, and how to reach and communicate with
markets. These changes had led to the evolution of the “marketing concept,”
which, in essence, is a philosophy of management.
The
marketing concept can be contrasted with earlier concepts in terms of the
principles of orientation. In the earlier concepts, goods would be brought to
the market in the hope of finding customers. On the contrary, the marketing
concept suggests that marketing starts with the customers and works back to the
production of desired products in the right amounts and with the right
specifications.
As
Joseph C. Seibert says, “marketing management does not have the objective of
creating customers insofar as it is responsible for creating or building
markets. The orientation is directed toward making markets rather than making
products.”
5)
Societal
Marketing Concept:- Societal marketing concept questions
whether the pure marketing concept overlooks possible conflicts between
consumer short-run wants and consumer long-run welfare.
The societal marketing concept holds “marketing strategy
should deliver value to customers in a way that maintains or improves both the
consumer’s and society’s well-being.”
It
calls for sustainable marketing, socially and environmentally responsible
marketing that meets consumers’ and businesses’ present needs while also
preserving or enhancing future generations’ ability to meet their needs. The
Societal Marketing Concept puts human welfare on top before profits and
satisfying the wants.
The
global warming panic button is pushed, and a revelation is required to use our
resources. So companies are slowly either fully or partially trying to
implement the societal marketing concept. This is basically a management
orientation that holds that the key task of the firm is to determine the needs
and wants of target markets and to adapt the organization to delivering the
desired satisfactions more efficiently and effectively than its competitors in
a way that preserves and enhances the well-being of the consumers in particular
and the society in general. It calls upon marketers to balance three
considerations in setting their marketing policies: company profits, consumer
want satisfaction and public interest.
Companies
may adopt the societal marketing concept if it does not result in competitive
disadvantage or loss in the company profits. It is because any contemporary
company’s basic goal is to keep its customers happy and make profits through
serving and satisfying customers.
Societal Marketing Concept example:- While large companies sometimes launch programs or
products that benefit society, it is hard to find a company that is fully
committed socially.
We
can see Adidas doing great as they continue to support Colin Kaepernick despite
pressure from various parties. Tesla promises a big push for green energy with
electric cars and solar roof panels/tiles.
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(Unit II)
Market Segmentation:- Market segmentation is the
method for achieving maximum market response from initial marketing resources
by recognizing differences in the response characteristics of various parts of
the market. In this sense market segmentation is the strategy of divide and
conquer, i.e., dividing market in order to conquer them.
Market
segmentation enables the marketers to give better attention to the selection of
customers and offer an appropriate marketing mix for each chosen segment or a
group of buyers having homogenous demand. Each subdivision or segment can be
selected as a market target to be reached with a distinct marketing mix.
Market
segmentation is defined as the segmentation or division of markets into various
homogenous groups of customers, each of them reacting differently to promotion,
communication, pricing and other variables of the marketing mix. Market
segments should be formed in such a way that difference between buyers within
each segment is as small as possible.
Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them.
As per SJ.Skinner, “Market segmentation is the process of dividing a total market into groups of consumers who have relatively similar product needs.”
According to Philip Kotler, “Market
segmentation is sub-dividing a market into distinct and homogeneous subgroups
of customers, where any group can conceivably be selected as a target market to
be met with distinct marketing mix”.
According to William J.
Stanton, “Market segmentation consists of taking the total heterogeneous market
for a product and dividing it into several sub-market or segments, each of
which tends to be homogeneous in full significant aspects”.
According to R. S. Davar,
“Grouping of buyers or segmenting the market is described as market
Segmentation.”
According to Schiffman and Kanuk, “Market Segmentation can be defined as the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix”.
The bases for market segmentation can be broadly classified into following groups:
1. Customer based segmentation
2. Product related segmentation
3. Competition
related segmentation.
1. Customer Based Segmentation:- Customer based segmentation further classifies as follows:
a. Geographic Location of Customers:- The starting point of all market segmentation is the geographic location of customers. It helps the firm in planning the marketing offer. The common method is to classify according to rural and urban, metro or non-metro markets. There are also other classifications like district and block markets. We all know that here was the perception that the rural markets are different from urban markets and naturally the product promotion, pricing and distribution were accordingly designed to meet those markets.
But now with the development of technology and the advent of various modes of communication like TV, the customers in the rural areas are much exposed and are more aware of the availability market. Today the rural customer buys the same branded product which is purchased by urban customer.
b. Demographic Characteristics:- Factors like age, sex, income, occupation, family size, education; marital status is used singly or in combination to segment the market.
i.
Age:- Age
is one of the most important factors for segmenting the market. The market the
producer should know for what age group his product could be most suited so
that he can plan his pricing policy, advertisement policy, marketing policy and
strategy accordingly.
For example, Cloth market or Garment market may be segmented on this basis of age as –
Children b/w the age group of 3-12yrs
Children b/w the age group of 13-15yrs
Teenagers’ b/w the age group of 16-20yrs
Adults’ b/w the age group of 21-30yrs and so on
ii. Income:- The manufacturer should also bear in mind while preparing his marketing policy, the income of the prospective buyers of his product. Consumer’s needs, behaviour, persuasion etc. differ in different income groups. For example, people in high-income group prefer quality of goods, design, fashion-oriented products, etc. hence they can be motivated on these factors. People in low-income group attract towards low price.
iii. Sex:- Marketers may also be divided on the basis of sex i.e., male and female. Some products are exclusively produced for women while some others are for men. For example, Lip Stick is meant for a woman and on the other hand Shaving cream is only meant for men.
iv. Occupation:- Occupation is also another variable in segmenting the market. An individual’s employment does definitely affect the consumption; different categories of segments can be identified like doctors, consultants, entrepreneurs, lecturers etc.
v. Education:- Education of the consumer also affects the preference and taste. The choice of literate person would obviously differ from that of an illiterate, as a literate he would be having a lot of exposure to the outside worlds where as an illiterate although exist the same environment would lack the ability to understand, when we look at all these aspects it is easy to indicate that education plays an important role in the life of an individual as it creates awareness about the environment, the availability of different products in the market and awareness about their rights.
Accordingly based on education, the Indian Market can be segmented as illiterates, literates-high school, college and university educated.
vi. Marital Status:- Marital status is another demographics variable used. The behavioral of single and married people differs. Married people are more conservative than unmarried people.
vii. Family Size and Structure:- Markets may also be segmented on the basis of size of family Refrigerators and cookers are produced in different sizes to suit the needs of families of different sizes.
c. Psychographics Variables:- No two consumers act in the same manner though they two may be of the same age, from the same profession, same education and have same income. Each of the customers may have different attitudes because of personality and life-style differences. Markets are using psychographics variables to segment their market.
For example, Citibank, Diners card, Titan Watch, Savvy has used Psychographics variables to segment its market and distance itself from all others, including Femina. Savvy Women is identified as the highly liberated independent strong women, who have a definite plan in the society and to whom career would be extremely important.
d.
Buyer Readiness:-
Buyers are at different stages of readiness. People may be unaware, people who
are aware but are not interested, people who are interested and desires to buy
and those who will buy the product. The relative proportion of buyers at
different stages will affect the marketer’s tasks.
2. Product Related Segmentation:- Different customers use the same product in different situations for example; Rasna – for parties, unexpected guests, and a drink for quenching thirst etc. A market makes the product versatile so that it can be used in different situation. A consumer may buy different brands of the same product for different situations for e.g., saree for kitty party, work place.
Thus depending
upon the situation, a product or a brand may be selected by the customers.
Knowing these situations marketer can plan the positioning strategy. Another
product related variable is the benefit segmentation. The marketer identifies
benefits that the customer looks for when buying a product.
3. Competition Based Segmentation:- The success in marketing depends on the number of loyal customers. Customer loyalty therefore is an important factor to determine the competitive position of the firm.
On the basis of brand loyalty further the market could be classified as:
i. Hard core loyal – These are the customers who buy the same brand, for examples Newspaper readers, tea drinkers etc.
ii. Soft-core loyal – Customers who are loyal to two or three brands in a product group, for e.g., Housewife buying toilet soap (Lux, Cinthol, Pears). The marketers have to watch such customers and shift them to the core loyal.
iii. Switchers – Customers who never stick to a brand. This is a slipping market segment for the marketer. The marketer has to find out why customers keep switching from brand to brand and from the existing to the competing brand. This can help the firm to strengthen its competitive position in the market. The marketer should also take into amount factors like price, non-availability of brands, indifferent habit etc.
******************************************************
Segmentation of target markets has several advantages.
1. Determining
market opportunities: Market segmentation enables to identify market
opportunities. The marketer can study the needs of each segment in the light
of current offerings by the competitors. From such study, the marketer can find
out the current satisfaction of customers.
Segments
with low level of satisfaction from present offering may represent excellent
market opportunities. For example, customers may not be satisfied with the
current offering of water purifiers in terms of product or after-sale service.
Such situation enables a marketer to launch a new range of water purifiers and
market them well.
2. Adjustments
in marketing appeals:
Sellers can make best possible adjustments of their product and marketing
appeals. Instead of one marketing programme aimed to draw in all potential
buyers, sellers can create separate marketing programmes designed to satisfy
the needs of different customers. Proper advertising and sales promotional
appeals can be made depending on the target audience.
3. Developing
marketing programmes:
Companies
can develop marketing programmes and budgets based on a clearer idea of the
response characteristics of specific market segments. They can budget funds to
different segments depending on their buying response.
4. Designing a
product:
Market
segmentation helps in designing products that really match the demands of the
target audience. Products with high market potential can be designed and
directed to meet the satisfaction of the target market.
5. Media
selection: It
helps in selection of advertising media more intelligently and in allocating
funds to various media. The funds are allocated to various media depending on
the target audience, impact of the media, competitor advertising, and so on.
6. Timing of
marketing efforts: It
helps in setting the timings of the promotional efforts so that more emphasis
is placed during those periods when response is likely to be at its peak. For
instance, consumer goods can be heavily advertised to Christians during
Christmas season and to Hindus during Diwali time.
7. Efficient use
of resources: By
tailoring marketing programme to individual market segments, management can do
a better marketing job and make more efficient use of the marketing resources.
For example, a small firm can effectively use its limited resources – money,
sales force, etc. – in one or two segmented markets rather than unsuccessfully
aiming at a wider market.
8. Better
service to customers:
Market segmentation enables a company to concentrate its marketing efforts in
a particular market area, thereby, providing a better service to the target
customers. Proper marketing segmentation can facilitate customer satisfaction.
9. Helps in
fixing prices: The
marketing segmentation also enables to fix prices of the goods and services.
Since different market segments have different price perceptions, it is
necessary to adopt different pricing strategies for the markets. For instance,
the prices for lower-income groups have to be lower and the product and
promotional efforts are adjusted accordingly.
10. Assist in
distribution strategies: Segmentation also assists in adopting suitable
distribution strategies. Different market segments may require different
distribution mix. For example, if the product is of very high quality intended
to target the upper class, then it must be distributed at prestigious outlets
located at selective places.
Market
Targeting:- Market
targeting is a process of selecting the target market from the entire market.
Target market consists of group/groups of buyers to whom the company wants to
satisfy or for whom product is manufactured, price is set, promotion efforts
are made, and distribution network is prepared.
A company cannot concentrate
on all the segments of the market. The company can satisfy only limited
segments. The segments the company wants to serve are called the target market,
and the process of selecting the target market is referred as market targeting.
Market segmentation results into dividing total market into various segments or
parts.
Such segments may be on
the basis of consumer characteristics or product characteristics or both. Once
the market is divided into various segments, the company has to evaluate various
segments and decide how many and which ones to target. It is simply an act or
process of selecting a target market.
Company may opt for any one of the following strategies for market
targeting based on the situations:
1. Single Segment Concentration:
It is the simplest case.
The company selects only a single segment as target market and offers a single
product. Here, product is one; segment is one. For example, a company may
select only higher income segment to serve from various segments based on income,
such as poor, middleclass, elite class, etc. All the product items produced by
the company are meant for only a single segment.
Single segment offers some merits like:
Ø Company can gain strong knowledge of segment’s needs and
can achieve a strong market position in the segment.
Ø Company can specialize its production, distribution, and
promotion.
Ø Company, by capturing leadership in the segment, can earn
higher return on its investment.
It suffers from following demerits like:
Ø Competitor may invade the segment and can shake company’s
position.
Ø Company has to pay high costs for change in fashion,
habit, and attitude. Company may not survive as risk cannot be diversified.
Ø Mostly, company prefers to operate in more segments.
Serving more segments minimizes the degree of risk.
2. Selective Specialization:
In this option, the
company selects a number of segments. A company selects several segments and
sells different products to each of the segments. Here, company selects many
segments to serve them with many products. All such segments are attractive and
appropriate with firm’s objectives and resources.
There may be little or no
synergy among the segments. Every segment is capable to promise the profits.
This multi-segment coverage strategy has the advantage of diversifying the
firm’s risk. Firm can earn money from other segments if one or two segments
seem unattractive. For example, a company may concentrate on all the income
groups to serve.
3. Product Specialization:
In this alternative, a
company makes a specific product, which can be sold to several segments. Here,
product is one, but segments are many. Company offers different models and
varieties to meet needs of different segments. The major benefit is that the
company can build a strong reputation in the specific product area. But, the
risk is that product may be replaced by an entirely new technology. Many
ready-made garment companies prefer this strategy.
4. Market Specialization:
This strategy consists of
serving many needs of a particular segment. Here, products are many but the
segment is one. The firm can gain a strong reputation by specializing in
serving the specific segment. Company provides all new products that the group
can feasibly use. But, reduced size of market, reduced purchase capacity of the
segment, or the entry of competitors with superior products range may affect
the company’s position.
5. Full Market Coverage:
In this strategy, a
company attempts to serve all the customer groups with all the products they
need. Here, all the needs of all the segments are served. Only very large firm
with overall capacity can undertake a full market coverage strategy.
Importance of creating a Market Targeting
Strategy
1. Segmenting Your
Markets:- A
market targeting plan begins with market segmentation. With market
segmentation, you can find out niches and audiences that you can target.
Segmentation
helps your firm stay one step ahead of businesses that use the ‘one size fits
all model.’
Markets can be
segmented based on many variables, some of them are:
- Demographic
- Lifestyles
- Beliefs
& Values
- Location
Ask yourself
these questions to analyze your decision:
- Is my
product affordable for the people in this segment?
- Will my
target benefit from my product/service?
- Can I reach
them with my message?
Identify what
segment appeals the most to your business and then weigh in on its
attractiveness.
2. Attractiveness:- Before we start targeting a
market, we need to evaluate its attractiveness on the following grounds:
- Size
- Profitability
- Existing
Competition
- Firm’s
ability to serve this market
Choose only
one segment to focus on at one time.
This
evaluation will help you get a concise image of what the market offers, how
well you can serve them, and if you can thrive in that segment.
For example: Consider
a clothing company that sells kidswear, formal wear, and student uniforms. Out
of all the three, they realize that the most profitable segment for them
currently is kidswear. Statistics reveal it is a fairly bigger market than
the other two. Then, it’s the segment you should go with.
3. Match Your Message
with Your Audience :- The whole
purpose of opting for a market targeting strategy is to send the right message,
at the right time, to the right person. Tailor your marketing plans and
ads as per your audience. Curate a message that hits home with the
audience gets better conversion rates.
Why is personalization so
necessary?
Because 86% of marketers have seen a
measurable lift in business results from their personalization campaigns. (Source)
Trust us, such a payoff is so worth it.
4. Reach Out to Your Audience:- Now that you’ve singled out your market segment and also decided what message goes with it, it’s time to act and reach out to your audience. There are multiple ways you can do this, for example sending personalized emails. Even a luxury store like Tiffany & Co. makes sure that they tailor their marketing by sending customized letters as ads. Make sure that your advertising and marketing plans are curated based on your target audience profile and characteristics.
For example, if your target market includes
teenagers, it wouldn’t be so wise to place your ads on newspapers or magazines,
rather use social media for such a market segment!
5. Auditing the Performance:- Once you’ve targeted a market and implemented your strategies, it’s time to monitor its performance. Check if the message is resonating with the audience and how much of a difference has occurred since your previous plan. Don’t just make assumptions, conduct customer surveys with your new and former customers, ask them what they liked or didn’t.
You can even use Google Analytics to check
the average time users spent on your page, bounce rates (users who left without
performing any action), and more. Make sure your referral traffic is optimized
and if not, find ways to improve it.
Join in on social listening and keep an eye
on what people think about your brand on social media.
All in all, your first attempt may not be a
100% hit, but it’ll get better with time as you understand your market segments
better. Keep applying adjustments and tweaks till you’ve found the perfect mix
that not only appeals to the audience but gives back shining results.
And that’s about it.
Market Positioning:- Marketing positioning is the process of developing a
marketing mix that puts the product in a unique position to the targeted
segments for attracting potential buyers. Marketing positioning involves
arranging for a product to occupy a clear, distinctive, and desirable place relative
to competing products in the minds of target consumers, which is accomplished
through formulating competitive positioning for a product and a detailed
marketing mix.
A
product’s position is how consumers define the product on important attributes.
It indicates the place the product occupies in consumers’ minds relative to
competing products.
Market Positioning Strategies:- To be successful, a company should decide on the number and type (s) of differences planning to promote. Let us now have some idea of how a company can decide on this issue. There are differences in opinions among marketing experts and writers about how many differences a company should promote.
Some argue that it is
always wise to find one suitable attribute and promote that aggressively,
highlighting the company’s strength in it. The need to invest distinctive
benefits in a product gives rise to the concept of the Unique Selling
Proposition or USP. This is the feature or feature in a product that offers
unique benefits not found in its competitors.
To understand the
concept, let us take the example of holiday marketing companies. Several
holiday companies specialize in the organization of package tours aimed at the
young (18-30) travel market. While the product offered is similar in many
respects, companies focusing on this market segment seek ways to differentiate
their product from others.
Thus, company ‘A’ may
emphasize that their hotels are used exclusively by their customers. In
contrast, company ‘B’ may place stress on the added adventure and, company ‘C’
may focus on the blatant sexual promise of their holidays. USP basically
highlights on picking one attribute and trying to be number one in that
attribute.
There are many
attributes available to which a company may pick one and try to establish it as
number one because number one always draws more attention than others. The
attributes could be ‘quality,’ ‘service,’ ‘price,’ ‘value,’ ‘reliability,’
‘safety,’ ‘speed,’ ‘customization,’ ‘modern’ etc.
Marketers
can adopt various positioning strategies.
Ø Products
can be positioned on specific product attributes – Sunsilk keeps hair soft and
shining.
Ø Products
can be positioned on the needs they satisfy or the benefits they give – Peps
Flouride prevents tooth decay.
Ø Products
can also be positioned on usage occasions – no Eid without Banoful vermicelli.
Ø Products
can also be positioned for certain classes of users – Lifebuoy for athletes.
Ø A
product can also be positioned against a competing product. For example, in its
ads, Citibank VISA compares itself directly with American Express, saying,
“You’d better take your VISA card because they don’t take American Express.”
Ø Another
approach is to position the product away from competing products. For many
years, 7-up has positioned itself as the “Un-cola,” the fresh and
thirst-quenching alternative to Coke and Pepsi.
Ø Products
are also positioned for different product classes. For example, some hair
creams are positioned against hair oils. Marketers often use a combination of
the strategies discussed above.
Importance of Market Positioning
1. Positioning as the interface between brand identity and brand
image:- Brand identity in
the marketplace depends on positioning. Customer’s perception of the brand
develops only when the Market Positioning is proper.
2. Positioning as a source of competitive advantage:-Better marketing
positioning will give the company a competitive advantage over other firms on
the market.
3. Market Differentiation with Positioning – Positioning breaks
the clutter of noise:- The are plenty of products, and the number of firms
delivering them is several. Positioning will help a firm to stand out in the
crowd of sellers.
Repositioning:- Repositioning
refers to the process of altering the existing space a brand occupies in the
brains of the customers. In simple terms, it is a process of changing how the
target market perceives the brand or its offering with respect to its –
i. Features, and
ii. Competitors.
With repositioning, the business
tries to change the way the customer view the brand without always altering the
bond between the customer and the business. It involves changing the brand’s
promise and personality with an updated or refreshed –
·
Marketing mix,
·
Brand identity,
·
Target customer, and
·
Brand essence.
Reasons For
Repositioning:- A brand would want to
change the customer perception because of innumerable industry related, brand
related, future related, competition related, and customer related reasons.
Some of them are –
Increased Competition:- Often times, increased competition in the market results
in the lack of perceived differentiation of the brand compared to its
competitors. This requires the brand to reposition itself in order to highlight
its particular advantages.
Faulty Existing Positioning:- There are cases when a brand is –
·
Under-positioned:
The existing positioning is too weak or vague to make customers associate
emotions, traits, feelings, and sentiments with it.
·
Over-positioned:
The existing positioning is too narrowly defined which restricts its growth.
Either condition is bad for the brand and requires it to
reposition itself.
Evolved Products:- When the business invests in a substantial product
improvement, it is likely to offer additional benefits and cater to a wide
audience. This often requires the brand to reposition itself.
Changes In Macro Environment:- The macro environment of the business includes factors
that are not in its hands, like –
·
Industry level
changes,
·
Changes in
government policies,
·
Economic conditions,
·
Technological
advances, etc.
·
These changes often
force the business to reposition its brand(s).
Failed Extensions:- Brand extension (also called brand stretching) is a
marketing strategy where the company makes use of its existing established
brand name for a new product or a new product category. Sometimes, these brand
extensions fail, affecting the existing brand image negatively. This requires
the brand to reposition itself to change the perception.
· Future Plans:- The future plans of the business also act as triggers to make it reposition its brand.
· Acquisition Plans: The brand has plans to acquire and expand, or being acquired by a bigger business.
· Opportunity Capitalisation: The brand sees an opportunity that can be more
profitable in future.
· Threat Aversion:
The brand is expecting some threats in the future that require it to change its
positioning strategy.
Introduction to Branding:- Branding is a process which involves creating a specific name, logo,
and an image of a particular product, service or company. This is done to
attract customers. It is usually done through advertising with a consistent
theme.
Branding aims to
establish a significant and differentiated presence in the market that attracts
and retains loyal customers. A brand is a name, term, symbol, or
other feature that distinguishes an organization or product from its rivals in
the eyes of the customer. Brands are used
in business, marketing, and advertising.
Features of Branding:- They are as
follows-
1. Targetability :- Branding should be planned
according to the targeted audience. No business firm can target the entire
population. Business owners should identify the type of people who are buying
their products and services. Research should be done on the basis of age,
gender, income, the lifestyle of their customers, etc.
2. Awareness:- The percentage of people who are
aware of a brand is known as brand awareness. Well established companies have
the benefit of a high level of brand awareness. Brand awareness can be
increased with the help of advertisement on TV, radio, newspaper or social
media marketing and advertising. Logos also help companies build brand
awareness, as people often recognize brands by these symbols or diagrams.
3. Loyalty:- Brand loyalty is the highest
achievement or apex of any company. A customer who buys the product of a
particular company extensively is known as a brand loyalist. Many
consumers prefer using certain brands of clothing, deodorants or tubes of
toothpaste, for example. They like how these brands benefit them. Brand loyalty
can be build by staying in touch with the customers, asking them for their
reviews.
4. Consistency:- Consistency is necessary for a brand. A brand must
remain consistent. Small businesses make numerous promises in commercials
and ads about their brands, and consumers expect companies to continue living
up to these promises. Their products should also be effective
Product
Levels:- Customers will choose a product based on their
perceived value of it. Satisfaction is the degree to which the actual use of a
product matches the perceived value at the time of the purchase. A customer is
satisfied only if the actual value is the same or exceeds the perceived value.
Kotler attributed five levels to products:
The five product levels are:
Core benefit:- The fundamental need or want that consumers satisfy by consuming
the product or service. For example, the need to process digital images.
Generic product:- A version of the product containing only those attributes or
characteristics absolutely necessary for it to function. For example, the need
to process digital images could be satisfied by a generic, low-end, personal
computer using free image processing software or a processing laboratory.
Expected product:- The set of attributes or characteristics that buyers normally
expect and agree to when they purchase a product. For example, the computer is
specified to deliver fast image processing and has a high-resolution, accurate
colour screen.
Augmented product:- The inclusion of additional features, benefits, attributes or
related services that serve to differentiate the product from its competitors.
For example, the computer comes pre-loaded with a high-end image processing
software for no extra cost or at a deeply discounted, incremental cost.
Potential product:- This includes all the augmentations and transformations a product
might undergo in the future. To ensure future customer loyalty, a business must
aim to surprise and delight customers in the future by continuing to augment
products. For example, the customer receives ongoing image processing software
upgrades with new and useful features.
Product
Mix:- Product Mix, product assortment, or product
portfolio is the categories of products that a firm offers. In other words, the
product mix is the number of product lines a firm has under its umbrella.
Moreover, this concept belongs to the Marketing stream. There could be one or
more products under a product line. All the product lines together constitute a
product mix.
For example, Coca-Cola deals in soft drinks,
juices, and more. These are its product lines. A product line includes similar
items that a company makes or the products that a consumer uses together. A
company, however, may have separate product lines.
Width:- The number
of product lines that a firm has suggested is what is called the width of a
product mix. For example, If Coca-Cola sells only juices and soft drinks, it
means it has two product lines. And, if it also sells mineral water, it would
mean it has three product lines.
Length:- The length refers to the products
in a product mix. For instance, if a company has 4 product lines, and under
each product line it has four products each, then the length of the company’s
product is 16.
Depth:- It is the total number of variations of a product in
a product line. The differences can be in the form of size, flavor, or any
other product characteristic. For example, Colgate, in its toothpaste product
line, sells different flavors of toothpaste, such as Colgate advanced, Colgate
active salt, and more. Moreover, if it sells in various sizes, that will also
count as depth. Suppose, Colgate sells toothpaste in three sizes and two
flavors, it would mean a depth of six.
Consistency:- It means the relationship between
the products in a product mix. The relation is mainly about the production and
distribution channels. More consistency is advantageous for a company as it
would mean lower costs and better distribution. Moreover, more compatibility
also means brand image aligning with the products that a company makes. Nestle,
for example, has more consistency in its product line.
Factors Affecting Product Mix:-
Age:- A new company would have fewer products in its lineup. On the other hand, an older company is likely to produce more products.
Financial Position:- A company that is doing well and has
good financial standing is likely to have more products in the product mix,
than a company that is not doing well financially. A company not doing well
would slash its product line or products.
Area of Operation:- If a company is in an industry where it can afford more products or making more products is feasible, then it should do so. For example, there is more scope of innovation in the smartphone industry than in the chip industry.
Brand Identity:- Sometimes a brand becomes so big that it can easily add new (related and unrelated) product lines or items. For instance, there were rumors of Apple coming up with a car.
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New Product Development:-
a) New Product Development is a process which is
designed to develop, test and consider the viability of products which are new
to the market in order to ensure the growth or survival of the organization.
b) New Product Development can be defined as the
process of innovating and inventing new ideas and concepts, with a view to
developing a successful new product in the anticipation of customer needs.
c) The new product development can be defined as
the term used to describe the complete process of bringing a new product or
service to market.
1. Idea
Generation:- The new product development process starts with
a search for ideas. New products come from many sources customers, scientists,
employees, competitors, channel members and top management. The developers of
the new idea need to define the product and markets along with stating how much
effort need to be devoted in developing breakthrough products, modifying
existing products, and copying competitors products.
2. Idea Screening:- Any company can
attract ideas by organizing itself properly. In screening ideas the company
must avoid two types of errors. A Drop error where in the company dismisses an
otherwise good idea and a Go error where the company permits a poor idea to
move into development and commercialization. The purpose of screening is to
drop poor ideas as early as possible.
3. Concept
Development and Testing:- Attractive ideas must be refined into testable product
concepts. (Product concept is an elaborated version of the idea expressed in
meaningful consumer terms)The product concept has to letter on be changed to a
brand concept. Concept testing calls for testing product concepts with an
appropriate group of target consumers, then getting those consumers reactions
4. Market Strategy
Development:- After testing the new product the manager must develop a
preliminary marketing strategy plan for introducing the new product into the
market. The marketing strategy plan consists of three parts-
Ø Target market size, structure, and behavior,
planned product positioning and sales market share and profit goals sought in
the first few years form part one.
Ø Second part consists of outlining the products
planned price, distribution strategy and marketing budget for the first year.
Ø The third part will be the long run sales and
profit goals marketing mix strategy over time.
1.
Business
Analysis:- After management
develops the product concept and marketing strategy; it can evaluate the
proposals business attractiveness. Management needs to estimate whether sales
will be high enough to yield satisfactory profit.
6. Product Development:- If the product
passes the business test it moves to R&D and engineering to be developed
into physical product. The R&D department will develop one or more physical
versions of the product concept. Its goal is to find a prototype that consumers
see as embodying the key attributes described in the product statement, that
performs safely under normal use and conditions, and that can be produced
within the budgeted manufacturing costs. Once the prototype is ready it needs
to pass through rigorous functional test (test conducted in laboratories) and
consumer tests.
7. Market Testing: After
management is satisfied with the products functional and psychological
performance, the product is ready to be dressed up with a brand name, packaging
and preliminary marketing program. The goal is to test the product in more
authentic consumer settings and to learn how large the market is, how consumers
and dealers react to handling using and repurchasing the actual product.
8. Commercialization:
Market testing gives management enough information to
finally launch a new product. The commercialization is one of the largest costs
the company will have to face as against the costs faced till date. The company
will have to contract for manufacture or build or rent a full scale
manufacturing facility. Also other factors the company will have to take under
consideration in commercialization are timing i.e.
market entry time, geographical strategy where to
launch the product single locality, region, several regions, etc., target
market prospects i.e. within the rollout markets, the company
must target its distribution and promotion to the best prospect groups. And
finally the introductory market strategy wherein the
company must target its distribution and promotion to the best prospect groups.
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Product Life Cycle:- The stages that a product
moves through the marketplace.
The Product Life Cycle (PLC) defines the
stages that a product moves through in the marketplace as it enters, becomes
established, and exits the marketplace. In other words, the product life cycle
describes the stages that a product is likely to experience. It is a useful
tool for managers to help them analyze and develop strategies for their
products as they enter and exit each stage.
Stages
in the Product Life Cycle
The four stages in the product life cycle
are:
·
Introduction
·
Growth
·
Maturity
·
Decline
1.
Introduction Stage:- When a
product first launches, sales will typically be low and grow slowly. In this
stage, company profit is small (if any) as the product is new and untested. The
introduction stage requires significant marketing efforts, as customers may be
unwilling or unlikely to test the product. There are no benefits from economies
of scale, as production capacity is not maximized.
The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product. There are two price-setting strategies in the introduction stage:
- Price Skimming:- Charging an initially high price and gradually reducing (“skimming”) the price as the market grows.
- Price Penetration:- Establishing a low price to quickly enter the marketplace and capture market share, before increasing prices relative to market growth.
2.
Growth Stage:- If the
product continues to thrive and meet market needs, the product will enter the growth
stage. In the growth stage, sales revenue usually grows exponentially from the
take-off point. Economies of scale are realized as sales revenues increase
faster than costs and production reaches capacity.
Competition in the growth stage is often fierce,
as competitors introduce similar products. In the growth stage, the market
grows, competition intensifies, sales rise, and the number of customers
increases. Price undercutting in the growth stage tends to be rare, as
companies in this stage can increase their sales by attracting new customers to
their product offerings.
3.
Maturity Stage:- Eventually,
the market grows to capacity, and sales growth of the product declines. In this
stage, price undercutting and increased promotional efforts are common as
companies try to capture customers from competitors. Due to fierce competition,
weaker competitors will eventually exit the marketplace – the shake-out. The
strongest players in the market remain to saturate and dominate the stable
market.
The biggest challenge in the maturity stage
is trying to maintain profitability and prevent sales from declining. Retaining
customer brand loyalty is key in the maturity stage. In addition, to
re-innovate itself, companies typically employ strategies such as market development,
product development, or marketing innovation to ensure that the product remains
successful and stays in the maturity stage.
4. Decline Stage:- In the decline stage, sales of the product start to fall and profitability decreases. This is primarily due to the market entry of other innovative or substitute products that satisfy customer needs better than the current product. There are several strategies that can be employed in the decline stage, for example:
- Reduce marketing efforts and attempt to maximize the life of the product for as long as possible (called milking or harvesting).
- Slowly reducing distribution channels and pulling the product from underperforming geographic areas. Such a strategy allows the company to pull the product out and attempt to introduce a replacement product.
- Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-profit product while retaining loyal customers.
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Branding:- Branding gives personality to a product; packaging and labelling put a face on the product. Effective packaging and labelling work as selling tools that help marketer sell the product.
According to Philip Kotler - “Brand is a name, term, sign, symbol, design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors”
Branding is “a seller’s promise to deliver a specific set of features, benefits and services consistent to the buyers.
Branding is a process of creating a unique name and image
for a product in the mind of consumer, mainly through advertising campaigns. A
brand is a name, term, symbol, design or combination of these elements, used to
identify a product, a family of products, or all products of an organisation.
Branding is an important component of product planning
process and an important and powerful tool for marketing and selling products.
Elements of Branding:- Brand includes various elements like - brand
names, trade names, brand marks, trademarks, and trade characters. The
combination of these elements form a firm's corporate symbol or name.
- Brand Name -
It is also called Product Brand. It can be a word, a group of words,
letters, or numbers to represent a product or service. For example - Pepsi,
iPhone 5, and etc.
- Trade Name - It is also called Corporate Brand. It identifies and promotes a company or a division of a particular corporation. For example - Dell, Nike, Google, and etc.
o Brand Mark - It is a unique symbol, colouring, lettering, or other design element. it is visually recognisable, not necessary to be pronounced. For example - Apple's apple, or Coca-cola's cursive typeface.
Trade Mark - It is a word, name, symbol, or combination of these elements. Trade mark is legally protected by government. For example - NBC colourful peacock, or McDonald's golden arches. No other organisation can use these symbols.
o Trade Characters - Animal, people, animated characters,
objects, and the like that are used to advertise a product or service, that
come to be associated with that product or service. For example - Keebler Elves
for Keebler cookies.
Branding Strategies:- There are various branding strategies on which
marketing organisations rely to meet sales and marketing objectives. Some of
these strategies are as following :-
- Brand Extension - According to this strategy, an existing brand
name is used to promote a new or an improved product in an organisation's
product line. Marketing organisations uses this strategy to minimise the
cost of launching a new product and the risk of failure of new product.
There is risk of brand diluting if a product line is over extended.
- Brand Licensing - According to this strategy, some organisations
allow other organisations to use their brand name, trade name, or trade
character. Such authorisation is a legal licensing agreement for which the
licensing organisation receives royalty in return for the authorisation.
Organisations follow this strategy to increase revenue sources, enhance
organisation image, and sell more of their core products.
- Mixed Branding - This strategy is used by some manufacturers and
retailers to sell products. A manufacturer of a national brand can make a
product for sale under another company's brand. Like this a business can
maintain brand loyalty through its national brand and increase its product
mix through private brands. It can increase its profits by selling private
brands without affecting the reputation and sales of its national brand.
- Co-Branding - According to this strategy one or more brands
are combined in the manufacture of a product or in the delivery of a
service to capitalise on other companies' products and services to reach
new customers and increase sales for both companies' brands.
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Packaging:- Packaging is the other side of the product identification.
Traditionally, the function of packaging was to protect goods. However, it is a
promotional tool and the major image builder contributing to the product
success. It is a point of sale display that develops a favourable consumer
appeal.
‘Packing’ is a process that speaks of company’s ability to contain economically man made or natural products for shipment, storage, sale or final use. It comprises the activities of wrapping or creating the product for performing the marketing functions more easily and economically.
In simple words, packing is the act of housing the product in the packages or containers like tins, cans, bags, jars, bottles, boxes, kegs, casks, and the like. A ‘package’ is a wrapper or a container in which a product is enclosed, encased, housed or sealed.
‘Packaging’ on the other hand, deals with activities of planning and designing of different means of packing the products. What are clothes to human-beings, so are the packages for the products.
“Packaging is the general group of activities in designing the containers or wrappers for the products”. Professor William Stanton
“Package design is the unique combination of colours, graphics and symbols to distinguishing the products.” John Bull
“Packaging is an activity which is concerned with the protection, economy, convenience and promotional considerations”. Professor Philip
Thus, it embraces the functions of package selection, manufacture, filling and handling. It is worth noting, here, that the word ‘packing’ is more comprehensive and, hence, covers ‘packaging’. Packing is concerned with product protection while packaging with product promotion.
functions of good packaging are summed up as under:
1. It protects the contents:- The basic function of packaging from the time is to protect the contents of it from damage, dust, dirt, leakage, pilferage, evaporation, watering, and contamination and so on. The intrinsic values or the properties or the quality standards are maintained intact. Thus, the contents are kept fresh, clean, un-spoilt and unaffected.
Seasonal fluctuations in demand may be smoothened out through packaging. The canning and deep freezing of some perishable products like straw berries, orange juice, and mango pulp enable all the year round consumption on the part of consumers.
2. It provides product density:- It is packaging that increases the product density. Product density implies selecting such package materials, design and shape that it helps to use the limited space in the best way. Product density improves relations with common carriers, permits better use of space in storage and usage and increases the grace and poise of arrangement.
3. It acts as promotional tool:- Good packaging can sell more easily and quickly as it works as a promotional tool. It is a ‘silent’ salesman. As a promotional tool, it does self advertising, displaying, publishing and acts as an advertising medium.
Attractive package enhances the opportunity of impulse buying. It is the package, size, design, colour combinations and graphics that decide its ability to attract the valuable attention of customers or the prospects.
4. It provides user convenience:- Convenience in storage, transportation, handling and usage the product is another requirement. Good packaging does this in greater degree. As a result the marketing functions of the transportation, storage and handling are performed with ease and without wastage.
Consumers are greatly assisted so long as the product is in usage. In fact, neat packaging has brought home reduction in inventory costs, packing costs, space and time costs.
5. It facilitates product identification:- Product differentiation is the hall-mark of these days of keen competition. This process of product differentiation is furthered by effective product identifiers; one is branding and another is packaging.
The product package identifies the product no matter where you see it, under what circumstances you see it, or when you see it. A package is product’s personality, its reality. Product identification goes easy with distinguished packaging as it adds to its personality or image. Consumers’ confusion over the large variety need not confound them and mislead them in consumer decision making because, they go by distinctive product packaging.
6. It allows easy product-mix:- Product-mix relates to the product-lines and assortment of sizes, colours, measures, grades, and package types etc., offered by the selling house. Changes in product-mix can be possible as packaging is to influence weight, size and dimensions of the products.
Such a selected sales or product-mix will facilitate product pricing, shipping, storage, stocking, handling, display and so on, in diversified market segments.
7. It extends product life-cycle:- The package of a product may be used in an effort to extend the product life- cycle. Updating design may help to give the pack a more contemporary image.
It is increasingly difficult to come up with totally new products, but any variety of packaging innovation can be introduced which offers features of a consumer wants and willingness to pay for a form of product innovation. This can be achieved through improved convenience to not only consumers but also to wholesalers and retailers by which packages are easy to stock, price, mark, display and identify.
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Channel of Distribution:- The word
‘distribution’ means the allocation of something to its recipients. Hence, the
term, ‘channels of distribution refers to the various mediums used for the
purpose of distribution.
Channels of
Distribution or Distribution Channel can be defined as the path taken by the good or service when they move
from manufacturer to the end consumers. The movement of the goods
implies the physical distribution of the goods or the transfer of ownership.
It is the network
of intermediaries such as wholesalers, retailers, distributors, agents, etc.,
who carry out a number of interrelated and coordinated functions in the flow of
goods from its source to its destination. Additionally, it creates utility of
time, place, form, and possession to the product by the quick and efficient
performance of the function of physical distribution.
Types of Channels of
Distribution
Channels of Distribution implies the means
through which the good or service need to pass to reach the intended consumer.
Based on the number of intermediaries involved, the channel of distribution can
be short or long. Further, it has a great impact on the company’s sales, as the
higher the availability of the goods, the more will be its sales.
Depending on the type of the product, i.e.
good or service, different marketing channels are employed by the companies.
There are three main types of channels of
distribution, discussed hereunder:
Direct Channel:- Prior to reaching the hands of the consumers, goods
and services pass through various hands. However, there are certain instances
when the producer sells goods directly to their customer, then such a channel
is known as a direct channel.
Hence, no middlemen exist in the case of the direct
channels. And to do so, the company can supply the product to the customer via
their own online or retail store, or salesman at the customer’s doorstep and
arranging their own delivery system. It is also called a Zero Level Channel. Example: Consultancy firms, Passenger and freight
transport services, banks, etc.
Indirect Channel:- When the producer produces
goods on a large scale, it is difficult to make direct selling of the goods to
the customers. In this way, middlemen come into the picture to ensure the
availability of the goods to its customers. It may include wholesalers and
retailers. So, we can say that when there are a host of intermediaries involved
in the distribution process, it amounts to the indirect channel of distribution.
·
One Level Channel:
Where only one middleman (either wholesaler or retailer) is involved.
·
Two Level Channel: Where two middlemen (both wholesaler and retailer) are
involved.
· Hybrid
Channels:- The combination of the direct channel and indirect channel is
called the hybrid channel of distribution. When the manufacturer uses more than
one channel to reach the final consumer, it is said to be using the hybrid
channel. This attracts more consumers and facilitates more sales. Suppose
a manufacturer owning their own retail outlet and simultaneously, offering
goods to customers via e-commerce platforms or other retailers.
Functions of Channel
of Distribution
The functions performed by the channels of distribution are
divided into three main categories:
1.
Transactional
Functions: Functions like
buying, selling, and risk-bearing which are relevant to a transaction are
called transactional functions. Producers sell goods to intermediaries, who
further sell them to the customers. In this way, the title of goods changes
hands, and goods flow from producer to consumer. In the absence of any buying
and selling, there won’t be any transaction.
2.
Logistical
Functions: It involves the
physical exchange of the goods such as assembling, storage, sorting, grading,
packing, and transportation. This is to make certain that goods must reach the
marketplace at right time and sell to the consumers conveniently.
3.
Facilitating
Functions: Functions like
post-purchase service, maintenance, financing, information dissemination,
channel coordination, etc form part of facilitating functions.
Objectives of Distribution
channels
- To increase the availability of the
product to the potential customers.
- To fulfill customer’s requirements
by providing quality rich services.
- To obtain promotional support from
channel members.
- To procure timely and detailed
market information.
- To increase cost-effectiveness.
Factors Influencing Choice
of Distribution Channels
a)
Market Consideration:- Size of the Customer, potential volume of sales,
concentration of buyers, size of the purchase order, and so forth are some of
the factors which are considered before choosing the distribution channel.
b)
Product Considerations:- Factors related to perishability, bulkiness, product
value, etc. related to the product are taken into consideration while making a
choice between the channels of distribution.
c)
Middlemen Considerations:- Types of intermediaries, services provided by
middlemen, the attitude of middlemen, availability of middlemen, and channel
competition are the factors that influence the choice of channel.
d)
Company Considerations:- Cost of distribution, management’s ability, services
provided by seller, long-run effect on profit, the extent of channel control,
financial resources, and experience and ability are the company considerations.
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Pricing
Strategy:- Pricing products can be a tricky business,
but it’s one of the most important activities an enterprise can do. Finding the
right pricing strategy is crucial to locking in sales while ensuring your
revenue levels are healthy enough to stay afloat.
So, which pricing strategy is best for your business?
Here we’ll look at a range of options to help you make the right choice,
covering off:
The 7 main product pricing strategies
1. Value-based pricing
2. Competitive pricing
3. Price skimming
4. Cost-plus pricing
5. Penetration pricing
6. Economy pricing
7. Dynamic pricing strategies
1. Value-based pricing:- Value-based pricing does what it says on the tin. A business using this approach will price their products based mainly on what the actual or perceived value of the goods or service is.
It often works best for tailor-made goods, bespoke or expert services, and craft products – for example, jewellery, high-end fashion, or premium alcohol. It can also work well for items that come with ‘extras’ or those made popular because of associations with high-profile people or events.
This strategy is the opposite of the ‘undercut the competitors’ approach, and more about making a statement about why your product is worth the higher price. That doesn’t mean you won’t want to know what your competitors are selling for and where you fit in. But once you’re comfortable with the lay of the land, it’s about knowing how your product will improve your customers’ lives – whether it’s helping them achieve their goals, saving them time and hassle, or adding to their social status and perceived desirability.
2. Competitive pricing:- Competitive pricing is all about setting a price-point in relation to similar products sold by other companies – one that will give you a competitive advantage. This strategy is often used in saturated markets and with mass-sold goods that are well-established – for example, chewing gum, ‘big box’ beer, household products, or services like cleaning or dinning.
It
can also work for businesses with a wide range of goods who want to use the
price-point of one product as an entry point for customers to buy other
products.
3. Price skimming:- Price skimming is about setting the price of a new product high to capitalise on consumer demand, and then eventually lowering it over time. It works best for products that are highly anticipated, innovative, or of the moment – and which have no real competition.
Electronics
and gaming is a big one for price-skimming. Think about the new Apple products
selling at a premium, or the latest PlayStation that customers are willing to
pay top-dollar for – even knowing the price will eventually drop, or that a new
version will be released 1-2 years down the line.
4. Cost-plus pricing:- Cost-plus pricing is one of the more common pricing mechanisms used – often by grocery and department stores with a wide range of common products, as well as smaller businesses who aren’t able to spend huge amounts on market research. The idea is as the name says – calculate the cost it takes to make a product (or deliver a service) and then add a mark-up depending on what you hope to make as profit.
It’s a simple way of calculating costs and can also help brands justify their prices because of the easy-to-understand pricing system.
Businesses using a cost-plus pricing strategy must beware of hidden production costs. Because this approach relies heavily on the actual cost of making a unit, it’s imperative to get that right, or those missed costs will likely eat into your profit margin. Make sure you account for things like materials, as well as labour, and overheads.
5. Penetration pricing:- Penetration pricing uses the opposite approach to price skimming. It’s when a business looking to break their product into a market offers a low initial price point in order to reel buyers in and lure them away from competitors. The idea is that once the product has a following and has established itself in the market, the price can gradually be adjusted upwards.
It
can be an effective marketing tool to introduce a large audience to the product
or brand. It’s a common approach with online subscriptions where you might be
offered one month free, or 50% off the regular price in the hope that you will
remain with the service once your offer period ends. We also see it used with
taxi services like Uber and its competitors.
6.
Economy
pricing:- Economy pricing is where budget items live. Production costs are
kept low so that prices can be kept low too. This works best with products
manufactured at scale – and is something big business like pharmaceutical
companies or airlines can easily take advantage of to sideline the competition
and drive sales.
Grocery stores often use economy pricing by producing their own no-frill lines of common products such as biscuits or condiments. It can be incredibly effective when done right as there is always a market for thrifty consumers, or those tightening their purse strings to save or get out of debt.
7.
Dynamic
pricing:- Dynamic pricing is an agile pricing system to help maximise
profits. It’s where a business will change the price of their products
depending on who they’re selling to, where, and when.
Even though dynamic pricing can benefit customers, they often don’t like this approach. It has been known to cause backlash amongst buyers who find out they’ve been sold a service or item at a higher price point than someone else – even though they themselves may have gotten a better price than someone else.
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Promotion:- In marketing, promotion refers to any type of marketing
communication used to inform target audiences of the relative
merits of a product, service, brand or issue, most of the time persuasive in
nature. It helps marketers to create a distinctive place in customers' mind, it
can be either a cognitive or emotional route. The aim of promotion is
to increase brand awareness, create interest, generate sales or
create brand loyalty. It is one of the basic elements of the market
mix, which includes the four Ps, i.e., product, price, place, and promotion.
Promotion is also one of the elements in
the promotional mix or promotional plan. These are personal
selling, advertising, sales promotion, direct
marketing publicity, word of mouth and may also include event
marketing, exhibitions and trade shows. A promotional plan specifies
how much attention to pay to each of the elements in the promotional mix, and
what proportion of the budget should be allocated to each element.
Promotion covers the methods of communication that a
marketer uses to provide information about its product. Information can be
both verbal and visual.
Elements
of promotional mix are also called as tools, means, or components. Basically,
there are five elements involved in promotional mix. Some authors have
considered more elements, too. However, we will consider five elements as shown
in Figure 1.
Top 5 Elements of Promotion Mix (With Diagram):- Elements of promotional mix are also called as tools,
means, or components. Basically, there are five elements involved in
promotional mix. Some authors have considered more elements, too. However, we
will consider five elements as shown in Figure 1.
Elements
of market promotion mix
1. Advertising:- Advertising
is defined as any paid form of non-personal presentation and promotion of
ideas, goods, and services by an identified sponsor. It is a way of mass
communication. It is the most popular and widely practiced tool of market
promotion. Major part of promotional budget is consumed for advertising alone.
Various advertising media – television, radio, newspapers, magazines, outdoor
means and so forth – are used for advertising the product.
Characteristics
of advertising are as follow:
|
1 |
Adverting is non-personal or mass
communication. Personal contact is not possible. |
|
2 |
It is a paid form of communication. |
|
3 |
It is a one-way communication. |
|
4 |
Identifiable entity/sponsor-company or person gives
advertising. |
|
5 |
It is costly option to promote the sales. |
|
6 |
It can be reproduced frequently as per need. |
|
7 |
Per contact cost is the lowest. |
|
8 |
Various audio-visual, print, and outdoor media can be
used for advertising purpose. |
|
9 |
It is a
widely used and highly popular tool of market promotion. |
2. Sales Promotion:- Sales
promotion covers those marketing activities other than advertising, publicity,
and personal selling that stimulate consumer purchasing and dealer effectiveness.
Sales promotion mainly involves short-term and non-routine incentives, offered
to dealers as well consumers. The popular methods used for sales promotion are
demonstration, trade show, exhibition, exchange offer, seasonal discount, free
service, gifts, contests, etc.
Characteristics
of sales promotion are as follows:
|
1 |
The primary purpose of sales promotion is to induce
customers for immediate buying or dealer effectiveness or both. |
|
2 |
Excessive use of sale promotion may affect sales and
reputation of a company adversely. |
|
3 |
It is taken as supplementary to advertising and
personal selling efforts. |
|
4 |
It involves all the promotional efforts other than
advertising, personal selling, and publicity. |
|
5 |
It consists of short-term incentives, schemes, or plans
offered to buyers, salesmen, and/ or dealers. |
|
6 |
It involves non-routine selling efforts. |
3. Personal Selling:- Personal
selling includes face-to-face personal communication and presentation with
prospects (potential and actual customers) for the purpose of selling the
products. It involves personal conversation and presentation of products with
customers. It is considered as a highly effective and costly tool of market
promotion.
Characteristics
of personal have been listed below:
|
1 |
Personal selling is an oral, face-to-face, and personal
presentation with consumers. |
|
2 |
Basic purpose is to promote products or increase sales. |
|
3 |
It involves two-way communication. |
|
4 |
Immediate feedback can be measured. |
|
5 |
It is an ability of salesmen to persuade or influence
buyers. |
|
6 |
It is more flexible way of market communication. |
|
7 |
Per contact cost is higher than advertising. |
|
8 |
It involves teaching, educating, and assisting people
to buy. |
4. Publicity: Publicity
is also a way of mass communication. It is not a paid form of mass communication
that involves getting favourable response of buyers by placing commercially
significant news in mass media. William J. Stanton defines: “Publicity is any
promotional communication regarding an organisation and/or its products where
the message is not paid for by the organisation benefiting from it.”
It is the
traditional form of public relations. Publicity is not paid for by the
organisation. Publicity comes from reporters, columnists, and journalists. It
can be considered as a part of public relations. Publicity involves giving
public speeches, giving interviews, conducting seminars, charitable donations,
inauguration by film actor, cricketer, politician or popular personalities,
stage show, etc., that attract mass media to publish the news about them.
Main characteristic of publicity include:
|
1 |
Publicity involves obtaining favourable
presentation about company or company’s offers upon radio, television, or stage that is not
paid for by the sponsor. |
|
2 |
It is a non-paid form of market promotion. However,
several indirect costs are involved in publicity. |
|
3 |
It may include promotion of new product, pollution
control efforts, special achievements of employees, publicizing new policies,
etc., for increasing sales. It is primarily concerns with publishing or
highlighting company’s activities and products. It is targeted to build
company’s image. |
|
4 |
Mostly, publicity can be carried via newspapers,
magazines, radio or television. |
|
5 |
Company has no control over publicity in terms of
message, time, frequency, information, and medium. |
5. Public Relations:- The
public relations is comprehensive term that includes maintaining constructive
relations not only with customers, suppliers, and middlemen, but also with a
large set of interested publics. Note that public relations include publicity,
i.e., publicity is the part of public relations.
William Stanton defines:
“Public relations activities typically are designed to
build or maintain a favourable image for an organisation and a favourable
relationship with the organization’s various publics. These publics may be
customers, stockholders, employees, unions, environmentalists, the government,
and people in local community, or some other groups in society.” Thus, public
relations include organization’s broad and overall communication efforts
intended to influence various groups’ attitudes toward the organisation. Some
experts have stated that the public relations are an extension of publicity.
Main
characteristic of public relation are as under:
|
1 |
Public relations is a paid form of market promotion.
Company has to incur expenses. |
|
2 |
Public relations activities are designed to build and maintain a
favourable image for an organisation and a favourable relationship with the organization’s
various publics. |
|
3 |
It is an
integral part of managerial function. Many companies operate a special
department for the purpose, known as the public relations department. |
|
4 |
It involves a number of
interactions, such as contacting, inviting, informing, clarifying,
responding, interpreting, dealing, transacting, and so forth. |
|
5 |
Public relations covers a number of publics – formal and informal
groups. These publics may be customers, stockholders, employees, unions,
environmentalists, the government, people of local community, or some other
groups in society. |
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Media Selection:- Media choice is determined by a number of factors such
as—Number of viewers, readers, listeners, characteristics of
audience-education, sex, income, family size, relative cost of various media.
Media selection helps the advertiser to find out which type of media to be used.
1. Displays, shows, exhibitions, trade
fairs, point of purchase materials are normally included in sales promotion
devices.
2. Advertising specialties such as calendars, diaries,
blotters, pen stands, ball pens, pencils, key rings, and many other novelties
are partly for advertising and partly for sales promotion. These are business
gifts and means of publicity and patronage.
Media of Advertising:
(i) Print Media – Newspapers, Magazines, Trade Journal and
Periodicals.
(ii) Direct Mail – Catalogues, Leaflets, Pamphlets, Brochures,
Price Lists, Sales Letters/Circulars.
(iii) Transit Advertising – Railways, Buses, Aeroplanes, Trams,
Taxis, Auto Rickshaws, Cars.
(iv) Broadcast Media – Radio, T.V., Film, Screen Slides, Internet.
(v) Out-Door or Mural – Posters, Hoardings, Sky advertising,
Electrical
(vi) Other Forms – Window displays, point of purchase,
Exhibitions, Directives, Showrooms, Trade fairs, Advertising specialities such
as calendars, diaries, pen-stands, ball-pens Key-rings etc.
Characteristics of Important Media:
1. Mural Advertising: Mural or outdoor advertising has long
life. It has a general and wide appeal. It can attract attention of numerous
people; it is good to remind prospects. An advertiser has ample scope to use
his skill and art in advertising.
2.
Press Advertising: Newspapers have a general and wide
appeal. It is very common method of publicity. Newspapers are flexible and
timely. Repeat advertising is possible. Periodical change in size and contents
is also easy. Selective advertising to some extent is available. Effectiveness
of advertising can be estimated by having keyed advertisements. Newspapers
offer promotional assistance. They cure the best source of market information.
3.
Film Advertising:
It has a wide appeal. It can overcome language barriers. Audio-visual (sound and sight) technique has maximum impact on audience. Sound and sight both are employed for communicating our message. Repeat advertising is possible. However, both cost of production as well as cost of distribution of slides and films are quite high. Selective advertising is not possible. Effectiveness cannot be measured. Waste in film publicity can be considerable.
4. Radio Advertisements: Of all the media, radio has the shortest closing times. Radio uses only an audio (sound) signal, the copy can be submitted up to air time. Announcements can be made very quickly. It can secure dealer support. It has a very wide appeal. It is suitable even for illiterate people. Repeat message is quite common. Spoken word has greater impact than written word.
5.
Television Advertisement:
Television uses both video (sight) and audio (sound)
signals. Television has all the advantages of radio, namely, sound and
explanation, plus the additional advantage of sight. It can appeal through ear
as well as eye. Products can be demonstrated with explanation. Television
reaches the audience almost like personal face-to-face contact. To that extent
it is just like personal salesmanship.
6.
Transit Advertising:
Transit advertising consists of car-card advertising,
which is located within buses, subways, railways, and outside displays, which
appear on the fronts, sides, and backs of buses or other public transport and
at transportation terminals. Transit advertising is the lowest-cost media.
7.
Direct Mail:
Direct mail is any advertising sent by mail (postal
transmission) including sales letters, folders, pamphlets, booklets,
catalogues, and the like. Direct mail is the most personal and selective media.
It reaches only the desired prospects. It has minimum waste in circulation. The
advertising copy can be very flexible. It has maximum possible personal
features even without personal contact.
8.
Advertising Specialties:
These include a wide variety of items, such as calendars,
books, matches, pens, pencils, knives, key rings, diaries, memo pads, cigarette
lighters, blotters, paper weights, purses, rain-hats and so on. They are given
to advertising targets without cost or obligation. Advertiser’s name, address,
phone number, and a short sales message are imprinted on the item.
9.
Point-of-Purchase Advertising:
It really represents sales promotion devices. It covers
the display material used in advertising programme. Such point-of-purchase
material may include advertising on the package, window banners, shelf-talkers,
merchandise tags, package stutters, information folders and booklets and such
other displaying materials.
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UNIT V
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Market
Research: A marketing manager can draw from many sources
of information which vary on the basis of their availability, cost, usefulness,
and the time needed to obtain information. Research study is an important
method or strategy for obtaining market information.
American Marketing Association, “Marketing Research is
the systematic gathering, recording, and analysing of data about problems
relating to the marketing of goods and services.”
American Marketing Association defines marketing research
{1987)—”Marketing research is the function which links the consumer, customer,
and public to the marketer through information—information used to identify and
define marketing opportunities and problems; generate, refine and evaluate
marketing actions; monitor marketing performance; and improve understanding of
marketing as a process.
Marketing Research specifies the information required to
address these issues; designs the method for collecting information; manages
and implements the data collection process; analyses the results; and
communicates the findings and their implications.”
Thus, market research may be
defined as the systematic and objective process of collecting, generating,
analysing, and interpreting information and communicating the findings for use
in making marketing decisions. Hence, marketing research is a special effort
rather than a haphazard attempt at gathering information.
Objectives of Market Research:
1.
To link the consumer
with the company through information to know more about him.
2.
To investigate the
real needs and requirements of customers.
3.
To search for and
analyse information that can be used for evolving some marketing decision
alternatives and finally arriving at the best alternative.
4.
To suggest necessary
changes in the goods and services in order to meet the market demands.
5.
To find out reasons
for slowly loosing market share, and to identify ways and means for
strengthening company’s position in the market, within and outside the country.
6.
To identify
opportunities and threats in the external environment of the company.
7.
To know about the
reactions of the people in the market about the existing or newly introduced
products of the company.
8.
To know in advance
what kind of target markets exist in the economy where the company may launch
its products as an innovation in the line.
Marketing
Research Process:- There are seven steps in marketing research process: define the
research problem, determine the research design, choose the method for
collecting primary data, design the sample, collect the data, analyze and
interpret the data, prepare the research report. Though those steps, marketers
will make conversant decisions or reduce the risk of their decisions.
1.
PROBLEM DEFINITION:- This is the
starting point in the marketing research exercise. Invariably, in any
enterprise, there are several marketing issues that may require examination,
and invariably every decision maker perceives his information need as being the
most important. In problem definition it is important to be specific, avoiding
ambiguities and generalities. Care should also be taken, not to define problems
in too narrow a field as that may distract the researcher’s perspective. This
may even affect creativity in the research.
2. RESEARCH
OBJECTIVES:- Once the problem is
defined, the next logical step is to state what the researcher wants to
achieve. This statement is called objectives. To be meaningful and help focus
the researcher’s attention, these objectives should be specific, attainable
& measurable. The purpose of these objectives is to act as a guide to the
researcher and help him in maintaining a focus all through the research.
3. RESEARCH
DESIGN:- The third stage in the
marketing research process is deciding on the research design. There are three
types of research designs, namely:
a)
Exploratory: This kind of research is conducted
when the researcher does not know how & why a certain phenomenon occurs,
for example, how does the consumer evaluate the quality of a bank or a hotel or
an airline? Since the prime goal of an exploratory research is to know the
unknown, this research is unstructured. Focus groups, interviewing key customer
groups, experts and even search for printed or published information are some
common techniques.
b)
Descriptive: This research is carried out to describe a
phenomenon or market characteristics. For example, a study to understand buyer
behavior & describe characteristics of the target market is a descriptive
research. Continuing the above example of service quality, a research done on
how consumers evaluate the quality of competing service institutions can be
considered as an example of descriptive research.
c)
Causative: This kind of research is done
to establish a cause and effect relationship, for example the influence of
income & lifestyle on purchase decision. Here the researcher may like to
see the effect of rising income & changing lifestyle on consumption of
select products.
4. SOURCES
OF DATA
Once
the research design has been decided upon, the next stage is that of selecting
the sources of data. Essentially there are two sources of data or information-
secondary & primary
- Secondary data: This refers to the information that has been
collected earlier by someone else. Often this includes printed or
published reports, news items, industry or trade statistics etc. this also
includes internal documents like invoices, sales reports, payment history
of customers etc. these are important to the researcher as they provide an
insight to the problem. Often the preliminary investigation is restricted
to secondary data.
- Primary data: To overcome the limitations of
incompatibility, obsolescence and bias, the researcher turns to the
primary data. This is also resorted to when the secondary data is
incomplete. Primary sources refer to data collected directly from the
market place- customers, traders & suppliers often are the major
sources. They are often reliable data sources and help in overcoming
limitations of secondary data. The problem in primary data is its cost,
both In terms of money & time, and often a researcher bias also creeps
in.
5. DATA COLLECTION:- The researcher
is now ready to take the plunge. But still he or she needs to be clear about
the following.
Procedure
for data collection:- Data can be collected through any or combination of the
following techniques.
- Observation: This technique involves observing how a
customer behaves in the shopping area, how he or she dresses up & what
does the customer say when he or she sees the product.
- Experimentation: This is a technique that involves
experimenting new product ideas, advertising copies & campaigns, sales
promotion ideas & even pricing & distribution strategies with the
target customer group. These experiments can be conducted in an
uncontrolled environment or in a controlled & simulated market
environment.
Tools
for data collection
The
researcher has to decide on the appropriate tool for data collection. These
tools are:-
- Questionnaire — used for the survey method
- Interview schedule — used mainly for exploratory
research
- Association test — primarily used in qualitative
research, also called as TAT (Thematic Apperception Test)
6. DATA
ANALYSIS:- The
next stage is that of data analysis .It is important to understand raw data has
no usage in marketing research .hence appropriate analytical tools must be
used. The most elementary is the arithmetic analysis using percentile and
ratios. Statistical analysis like mean, median, mode, percentages, standard
deviation and coefficient of correlations should be used wherever applicable
7. REPORT
& PRESENTATION:- The last stage is that of
writing out a report and making a presentation to the Decision —maker. It is
important that the report has summary, called the executive summary, giving a
bird’s-eye view of the research. This is because most senior managers have little
time for going through the entire report in depth. The executive summary can
direct the reader’s attention to specific issues by turning to the relevant
sections in the report and should not exceed thousand words.
The
report should be structured and pages chronologically numbered generally, the
structure of a good repot is somewhat like the following:
a)
Introduction
to the problem
b)
Marketing
research finding or survey findings
c)
Interpretation
of research finding
d)
Policy
implications
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Marketing Information System:- The marketing information
system refers to the use of technology for the arrangement of the relevant data
related to the market, sales, promotion, price, competition and allocation of
goods and service. This information is acquired after a proper analysis and
understanding of the marketing environment to ensure effective decision making
in the organization.
It Majorly deals with the input (i.e.,
gathering appropriate internal and external data), generating useful
information out of it (with the help of the various marketing information
system components) and then communicating the outcome so acquired to the
decision-makers.
Characteristics:- The marketing information system
is presently used by all kinds of organizations to attain a competitive edge
and success in their business.
Let us now understand its
multiple features to grab a clear understanding of the concept:
i. Computer-Based
System: In the marketing
information system, all the information is gathered, analyzed and communicated
through a computer device, and the useful marketing information is stored in
microfilms.
ii. Quick, Selective and Accurate Information: The organization can maintain relevant marketing
database through marketing information system which can be immediately and
accurately accessed anytime.
iii. Easy Accessibility:
The information maintained with the help of the marketing information system
can be easily viewed and utilized through a computer system.
iv.
Inter-related Components:
In marketing decisions and communication, all the four components are inter-linked,
i.e., the information provided by one element is useful for the functioning of
the other aspects.
v.
These interconnected
components include internal report, marketing research, marketing intelligence
and marketing decision support systems.
vi.
Future-Oriented: The
marketing information system initiates strategy formulation and planning for
future marketing operations.
vii.
Supports Decision Making:
Since this system provides an accurate marketing database, it can be certainly
used for instantaneous decision making, by the marketing managers.
viii.Consistent
Information: Marketing information
system enables the management and decision-makers to assess relevant, updated
and valuable marketing information.
ix.
Applicable at All Levels of Management: Every manager uses the marketing information system to
decide marketing strategies, plans, policies and procedures prepared at all
managerial levels.
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Components of Marketing Information System:- The marketing information system integrates
data collection, processing, analysis, and reporting for streamlining marketing
activities using the four primary techniques or components. These components
function within a framework of marketing decisions and communication. The
following image represents its functioning:
Let us now discuss each of these components in detail
below:
Internal
Reporting System:- The data
available in the internal business records available in the various books of
accounts on the sales, cash flows, receivables, payables, stock, research,
marketing personnel and cost is recorded, analyzed, monitored, compared and
communicated to the relevant departments involved in decision making.
Marketing Research
System:- A marketing research system
is an advanced tool which studies the perceived marketing issue or problem. It
is done with the help of primary or secondary data collected and presented in
tabular format, to draw meaningful conclusions.
It also provides
decision-makers with possible solutions and proposes multiple marketing
opportunities.
Marketing Intelligence System:- The marketing intelligence system collects,
analyzes and keeps the organization aware of the daily updates.
These updates include
external marketing environment, recent trends, developments, transforming
customer needs, technological advancement, competitor’s strategy and market
conditions. This leads to prepare for the upcoming challenges and plan for
future business opportunities.
Marketing Decision
Support System:- In
marketing decision support system, various mathematical and economic tools
(regression, linear programming, optimization, statistics, time series
analysis, etc.) are used to process, analyze and convert the raw data to obtain
useful marketing information to support the decision-making activities.
Importance of Marketing Information
System:- The marketing information system has simplified the
task of decision making for the marketing managers and has also provided as a
useful tool for strategic planning of the business activities.
Let us now understand its various other benefit
·
Fills up
Information Gap: Marketing
information system facilitates the companies involved in global
retailing and other international trade practices. The purpose is to meet
their information needs and being aware of the world-wide scenario.
· Facilitates
Decision Making: It is a useful
tool for future decision making involving the strategic, operational and
control related decisions.
·
Marketing
Planning: Marketing information
system assesses the market demand and prospective sales to ensure effective
planning of the marketing operations.
·
Competing
Over Non-Price Factors: MIS is used
for adopting non-price competition strategies. It facilitates brand image,
product customization, product differentiation, public relations,
additional services, etc., to retain consumers without any price war.
·
Demand Creation
and Fulfilment: It also provides
information on customer requirements. Thus, generating the need for those
products which are desired by the consumer’s subconscious mind, through
marketing research and then meeting such needs in reality.
·
Saves Cost
and Time: Marketing information
system targets the problem area and take desired decisions to avoid the wastage
of time, cost and efforts on unnecessary activities.
·
Systematic
Recording of Data: It provides for
an orderly arrangement of the gathered data to provide useful information for
further marketing planning and decision making.
·
Better
Evaluation and Control: Marketing
information system helps to monitor and evaluate the marketing operations and
programmes. It also provides for taking corrective actions in case of not
acquiring the desired outcomes.
·
Coping Up
with Marketing Environment and Trends:
It regularly keeps an eye on any changing trends in the economic, political,
technological and competitive environments. It helps to grab new opportunities
and prepare for the upcoming challenges.With the development of technology and
modernization, the management of business activities has become a lot more simple
than it was before. We can now keep up with the current happenings and recent
trends on our computer systems with just a simple click.
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Consumer Behaviour:- The “Consumer” more
generally refers to anyone engaging in any of the activities (evaluating,
acquiring, using or disposing of goods and services) used in the definition of
consumer behaviour.
Consumer behaviour is a decision
process and physical activity individuals engage in when evaluating, acquiring,
using or disposing of goods and services.
Consumer behavior is the
study of consumers’ action during searching for, purchasing, using, evaluating
and disposing of products and services they expect will satisfy their need. It
helps marketers in understanding consumer decision-making process.
Consumer behaviour can be defined as “activities people undertake when
obtaining, consuming, and disposing of products and services” is provided and
detailed.
Consumer behavior is the process whereby
individuals decide what, when, where, how and from whom to purchase goods and
services. -
Walters and Paul
Consumer behaviour as “The
dynamic interaction of cognition, behaviour and environmental events by which
human beings conduct the exchange aspect of their lives.
- American Marketing Association
(AMA)
Consumer behaviour refers to the actions
and decision processes of people who purchase goods and services for personal
consumption.
- Peter D. Bennett, ed.
Dictionary of Marketing Terms, 2nd ed. 1995
Consumer Buying Process:-
In consumer
buying process, generally, the
purchaser passes through five distinct stages in consumer buying process namely need or problem recognition, information search, alternative
evaluation, purchase decision and post-purchase behaviour.
1. Stage of Problem Recognition:- The
recognition of a need is likely to occur when a consumer is faced with a
‘problem’. A buying process starts when a consumer recognises that there is a
substantial discrepancy between his current state of satisfaction and
expectations in a consumption situation.
2. Stage of Information Search:- After need
arousal, the behaviour of the consumer leads towards a collection of available
information about various stimuli i.e. products and services in this case from
various sources (personal, public, commercial, experiential) for further
processing and decision-making.
3.
Stage
of Alternative Evaluation:- Once interest in a
product(s) is aroused, a consumer enters the subsequent stage of evaluation of
alternatives.
When evaluating potential
alternatives, consumers tend to use two types of information:
a) a list of brands (or models) from which they plan to make
their selection
b) the criteria they will use to evaluate each brand (or
model).
Cognitive evaluation: When the consumer uses objective
choice criteria.
Affective evaluation: Using emotional reasons for
evaluating the alternatives.
4. Stage of Purchase Decision:- Finally, the consumer arrives at
a purchase decision. Purchase decisions can be one of the three viz. no buying,
buying later and buy now. No buying takes the consumer to the problem
recognition stage. A postponement of buying can be due to a lesser motivation
or evolving personal and economic situation. If positive attitudes are formed
towards the decided alternative, the consumer will make a purchase.
There are three more important
considerations in taking the buying decision:
- Attitude of others such as wife, relatives and friend.
- Anticipated situational factors such as expected family income, expected total cost of the product and the expected benefits from the product.
- Unanticipated situational factors, like accidents, illness etc.
5. Stage of Post Purchase Behaviour:-
Post-purchase
behaviour refers to the behaviour of a consumer after his commitment to a
product has been made. So post-purchase behaviour leads to three situations,
namely customer is satisfied; customer is delighted and the customer is
dissatisfied.
Factors Influencing Consumer Behaviour:- The consumer decision process explains the internal process as well as individual behaviour for making product or service decisions.
Cultural Factor:-
Culture: The set of basic values,
perceptions, wants, and behaviours learned by a member of society from family
and other important institutions.
Consumers live in a complex
social and cultural environment. The types of products and services they buy
can be influenced by the overall cultural context in which they grow up to
become individuals.
Below are some of the
important cultural factors given:
·
Culture
·
Subculture
·
Social Class
Social
factors, in turn, reflect a constant and dynamic influx through which
individuals learn different consumption meanings. Below are some of the
important social factors given:
·
Family
·
Reference Groups
·
Roles and status
Personal Factors:- A
person’s consumption behaviour is shaped by his personal characteristics. Below
are some of the important personal Factors given:
·
Age
·
Income
·
Personality
·
Self-concept
·
Occupation
·
Lifestyle
·
Gender
Psychological
Factors:- Psychological factors also
influenced consumers. Internal psychological factors also direct the
decision-making process. These factors influence the reason or ‘why’ of buying.
Below
are some of the important psychological factors given:
·
Motivation
·
Learning
·
Attitudes and Beliefs
·
Perception
Economic Factors:- Economic
factor also has a significant influence on buying decision of consumer behavior.
Below are some of the important economic factors given:
·
Personal and Family Income
·
Income Expectations
·
Consumer Credit
·
Liquid Assets
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