What is Marketing ?
Marketing may be narrowly defined as a process by which goods and services are
exchanged and the values determined in terms of money prices. That means
marketing includes all those activities carried on to transfer the goods from the
manufacturers or producers to the consumers. We shall be learning later in the
lesson that marketing is more than a mere physical process of distributing goods
and services. It is the process of discovering and translating consumer wants into
products and services. It begins with the customer (by finding their needs) and
ends with the customer (by satisfying their needs).
The scope of marketing can be understood in terms of functions that an
entrepreneur has to perform. These include the following:
1. Functions of exchange : which include buying and assembling and selling?
2. Functions of physical supply : include transportation, storage and warehousing
3. Functions of facilitation : Product Planning and Development, Marketing
Research, Standardisation, Grading, Packaging, Branding, Sales Promotion,
Financing
The Marketing Concept
The marketing concept holds that the key to achieving organizational goals
consists in determining the needs and wants of target markets and delivering the
desired satisfactions more effectively and efficiently than competitors1. Under
marketing concept, the emphasis is on selling satisfaction and not merely on the
selling a product. The objective of marketing is not the maximization of profitable
sales volume, but profits through the satisfaction of customers. The consumer is
the pivot point and all marketing activities operate around this central point. It is,
therefore, essential that the entrepreneurs identify the customers, establish a
rapport with them, identify their needs and deliver the goods and services that
would meet their requirements.
The components of marketing concept are as under:
Satisfaction of Customers: In the modern era, the customer is the focus of
the organization. The organization should aim at producing those goods and
services, which will lead to satisfaction of customers.
Integrated marketing: The functions of production, finance and marketing
should bem integrated to satisfy the needs and expectations of customers.
Profitable sales volume: Marketing is successful only when it is capable of
maximizing profitable sales and achieves long-run customer satisfaction.
Marketing in Simple words
Marketing is nothing but to Tell about your product and to Sell it. The technical
definition is “Marketing is the process of planning and executing the concepts,
pricing, promotion and distribution of ideas/goods/services to satisfy
individual's/organizational”
Types of Marketing
There are several types of marketing are there, some of them are
Bench Marketing
o The Bench Marketing is nothing but the comparison of the business
processes with competitors and improving prevailing ones.
For more Materials and Previous Papers visit us at www.Gr8AmbitionZ.com
Like our Facebook page www.facebook.com/Gr8AmbitionZ for daily updates
Drip Marketing
o Drip Marketing is nothing but sending promotional items to Clients.
Viral Marketing
o Viral Marketing is nothing but, Marketing by the word of the mouth,
having a high pass-rate from person to. The best example for this is
Creating a 'buzz' in the industry.
Guerilla Marketing
o Guerilla Marketing is an Unconventional marketing intended to get
maximum results from minimal resources. (just remember
Maximum results from Minimum resources)
Social Media Marketing
o Marketing using online communities, social networks, blog
marketing etc is called the social media marketing.
Direct Marketing
o If the company directly reaches to the customers on a personal basis
(ex : phone calls, private mailings, etc) rather than raditional channel
of advertising (like TV, Newspapers, etc) then that type of marketing
is called the Direct Marketing.
Types : There are number of types in direct marketing, Some
of them are……
Direct Mail Marketing : Advertising material sent
directly to home and business addresses (This is the
most common form of direct marketing)
Telemarketing : It is the second most common form
of direct marketing, in which marketers contact
consumers by phone.
Email Marketing : This type of marketing targets
customers through their email accounts (you might
have observed them in your e mails too)
Indirect Marketing
o Distributing a particular product through a channel that includes one
or more resellers is called Indirect Markeging (simply we can say
that telling about our product indirectly)
Difference between Direct and Indirect Marketings :
o In Direct marketing you advertise your own products or services.
But in Indirect marketing you advertise somebody else’s Product.
Ex : Example of direct marketing is Shivani Sharma… As she
markets her blog on her own. Example of Indirect marketing
is Katrina Kaif, as she markets LUX but she doesn’t own that
company ;)
Internet Marketing :
o Marketing of products or services over the Internet is called Internet
Marketing. It is also know as i-marketing, web-marketing, onlinemarketing,
Search Engine Marketing (SEM) and e-Marketing.
Digital Marketing :
o The marketing which uses digital advertising is called digital
marketing. Television, Radio, Internet, mobile etc.
Marketing Mix (4 Ps) :
The Marketing Mix model (also known as the 4 P's) is a tool used by marketers
while defining the marketing strategy. Iif you could identify the right combination
of these elements, your marketing would succeed. E. Jerome McCarthy introduced
the 4 P's of Marketing as a way to describe the mix of factors required to
successfully market a product.
The 4 P’s are :
Product
Price
Promotion
Place (distribution)
5 P’s of Marketing :
4 P’s
o Product
o Price
o Promotion
o Place (distribution) and
People
Packaging
Process
7 P’s of marketing
Product
Price
Place
Promotion
People
Process
Physical evidence
Important Note : Here the first 4 P's are considered as the basis of any marketing
process. The last 3 P's are a recently added.
SWOT Analysis
SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) is a tool for
auditing an organization and its environment. The SWOT Analysis is the first
stage of planning and helps marketers to focus on key issues. Strengths and
weaknesses are internal factors. Opportunities and threats are external factors.
Customer Relationship Management (CRM)
In order to sell my product, I should maintain good Customer Relations. I mean I
should interact with customers and know their needs and according to that I have
to design my product. This is called Customer Relationship Management (CRM in
short). The CRM concerns the relationship between the organization and its
customers (to learn more about customers' needs and behaviors in order to develop
stronger relationships with them).
Three Levels of a Product
Core Product
Actual Product
Augmented Product
Market Research
Researching (or gathering information) about Customers or Market. I mean, to
discover what customers want, need, or believe (and ofcourse, how the Act). Once
you came to know all the details then you can easilea get an idea on how to market
your product.
Market Information
The Information about Market. I mean the information like the prices of the
different commodities in the market, and getting the Demand and Supply
information.
Market Segmentation
Market Segmentation is nothing but dividing the market into Parts. Into different
homogeneous groups of consumers. The purpose of this is to allow your marketing
program to focus on the subset of prospects that are "most likely" to purchase your
offering. If done properly this will help to insure the highest return for your
marketing expenditures.
Branding
Displaying the importance of the product and other things in the form of Logo is
called Branding (this logo may consists some symbols, colours and letters)
Marketing versus Selling
The basic difference between marketing and selling lies in the attitude towards
business. The selling concept takes an inside-out perspective. It starts with the
factory, focuses on the company’s existing products, and calls for heavy selling
and promoting to produce profitable sales. The marketing concept takes an
outside-in perspective2. It starts with a well-defined market, focuses on customer
needs, coordinates all the activities that will affect customers, and produces profits
through creating customer satisfaction.
For more Materials and Previous Papers visit us at www.Gr8AmbitionZ.com
Like our Facebook page www.facebook.com/Gr8AmbitionZ for daily updates
Importance of Marketing in Small Business
Since marketing is consumer oriented, it has a positive impact on the business
firms. It enables the entrepreneurs to improve the quality of their goods and
services. Marketing helps in improving the standard of living of the people by
offering a wide variety of goods and services with freedom of choice, and by
treating the customer as the most important person.
Marketing generates employment both in production and in distribution areas.
Since a business firm generates revenue and earns profits by carrying out
marketing functions, it will engage in exploiting more and more economic
resources of the country to earn more profits.
A large scale business can have its own formal marketing network, media
campaigns, and sales force, but a small unit may have to depend totally on
personal efforts and resources, making it informal and flexible. Marketing makes
or breaks a small enterprise. An enterprise grows, stagnates, or perishes with the
success or failure, as the case may be, of marketing. “Nirma” is an appropriate
example of the success of small scale enterprise.
Marketing of Services
The services sector is more than twice the size of the manufacturing sector. The
growing competitive market for services means that a marketing orientation has
become essential for the survival for service industries too.
India’s high capabilities in Information Technology are well known. In addition,
there is the most popular segment of its services sector, the entertainment industry,
For more Materials and Previous Papers visit us at www.Gr8AmbitionZ.com
Like our Facebook page www.facebook.com/Gr8AmbitionZ for daily updates
particularly films and TV happens to be one of the fastest growing in the world.
Indian films are popular across West Asia, Afghanistan, Central Asia, Russia,
South Africa and South East Asia. They are now penetrating the western world.
Marketing information can be collected from the following sources
:
Marketing Research
Marketing research is the means by which the information necessary to run a
business is obtained. It helps an entrepreneur to take decisions concerning the type
of product, the price policy, the channel of distribution, and sales promotion can
be made rightly with the help of marketing information at the right time. It is the
gathering, recording, and analysis of all facts about problems relating to the
transfer and sale of goods and services from producer to consumer. For example, a
hotel should find out what all services are needed to satisfy its customers and the
For more Materials and Previous Papers visit us at www.Gr8AmbitionZ.com
Like our Facebook page www.facebook.com/Gr8AmbitionZ for daily updates
soft toy manufacturer making teddy bears needs to find out if children really want
purple teddy bears and so on. Every company, irrespective of size, must research
its market, customers and competition; initially to set it on the right course and
then continually to monitor its performance. Small-scale firms are often unable to
afford continuous marketing research. However, they can use personal contacts
and other informal methods for collecting required information about markets.
Market Segmentation
A market consists of large number of individual customers who differ in terms of
their needs, preferences and buying capacity. Therefore, it becomes necessary to
divide the total market into different segments or homogeneous customer groups.
Such division is called market segmentation. They may have uniformity in
employment patterns, educational qualifications, economic status, preferences, etc.
Market segmentation enables the entrepreneur to match his marketing efforts to
the requirements of the target market. Instead of wasting his efforts in trying to
sell to all types of customers, a small scale unit can focus its efforts on the
segment most appropriate to its market.
A market can be segmented on the basis of the following variables :
Geographic Segmentation : The characteristics of customers often differ across
nations, states, regions cities or neighborhoods. The entrepreneur can decide to
operate in one or a few or all the geographic areas, but pay attention to differences
in geographic needs and preferences.
Demographic Segmentation : Variables such as age, sex, family size, income,
occupation, education, religion, race and nationality are widely used for market
segmentation.
Psychological variables : Personality, life style, social class, etc. can also be used
for market segmentation. For example, some products like pens, watches,
cosmetics and briefcases are designed differently for common men and status
seekers.
Behavioural Segmentation : Buyers are divided into groups on the basis of their
knowledge, attitude, use or response to a product.
Marketing Mix
In order to cater to the requirements of identified market segment, an entrepreneur
has to develop an appropriate marketing mix. Marketing mix is a systematic and
balanced combination of the four inputs which constitute the core of a company’s
marketing system – the product, the price structure, the promotional activities and
the place or distribution system”. These are popularly known as “Four P’s” of
marketing.
An appropriate combination of these four variables will help to influence demand.
The problem facing small firms is that they sometimes do not feel themselves
capable of controlling each of the four variables in order to influence the demand.
1. Product :
The first element of marketing mix is product. A Product is anything
that can be offered to a market for attention, acquisition, use, or consumption
that might satisfy a want or need. Products include physical objects, services,
events, persons, places, ideas or mixes of these. This element involves
decisions concerning product line, quality, design, brand name, label, after
sales services, warranties, product range, etc. An appropriate combination of
features and benefits by the small firm will provide the product with USP
(unique selling proposition). This will enhance the customer loyalty in favour
of its products.
Products and services are broadly classified into consumer products and
industrial products. Consumer products are bought for final consumption;
where as Industrial products are bought by individuals and organisations for
further processing or for use in conducting business.
Other ways of classifying products are as follows :
a. Convenience products : These are consumer products that the customer
buys very frequently, without much deliberation. They are low priced of
low value and are widely available at many outlets. They may be further
subdivided as :
Staple Products : Items like milk, bread, butter etc. which the family
consumes regularly. Once in the beginning the decision is programmed
and it is usually carried on without change.
Impulse Products : Purchase of these is unplanned and impulsive.
Usually when the consumer is buying other products, he buys these
spontaneously for e.g. Magazines, toffees and chocolates. Usually these
products are located where they can be easily noticed.3
Emergency products : Purchase of these products is done in an
emergency as a result of urgent and compelling needs. Often a
consumer pays more for these. For example while traveling if someone
has forgotten his toothbrush or shaving kit; he will buy it at the
available price.
b. Shopping products : These are less frequently purchased and the customer
carefully checks suitability, quality, price and style. He spends much more
time and effort in gathering information and making comparisons. E.g.
furniture, clothing and used cars.
c. Specialty products : These are consumer goods with unique characteristics
/ brand identification for which a significant group of buyers is willing to
make a special purchase effort. For example, Mitsubishi Lancer, Ray ban
glasses.
d. Unsought product : These are products that potential buyers do not know
exist or do not yet want .For example Life Insurance, a Lawyers services in
contesting a Will.
The above product decisions are very important to ensure the sale of products.
A product has both tangible and intangible components. While buying a
product, the customer does not merely look for the physical product, but a
bundle of satisfaction. Thus the impact that any product has upon a buyer goes
well beyond its obvious characteristics. There is a psychological dimension to
all customer purchases; what a customer thinks about a product is influenced
by far more than the product itself. For example, the buyer of an air conditioner
is not purchasing cooling machine only. He looks for attractive colour and
design, durability, low noise, quick cooling, etc. These influencing factors
must be considered by the small firms to meet the requirements of different
kinds of customers.
2. Price :
The second element is the price, which affects the volume of sales. It is
one of the most difficult tasks of the marketing manager to fix the right price.
The variables that significantly influence the price of a product are: demand of
the product, cost, competition and government regulation. The product mix
includes: determination of unit price of the product, pricing policies and
strategies, discounts and level of margins, credit policy, terms of delivery,
payment, etc. Pricing decisions have direct influence on the sales volume and
profits of the firm. Price, therefore, is an important element of the marketing
mix. Right price can be determined through pricing research and by adopting
test-marketing techniques.
Small firms should think of pricing as a method whereby prices are set with
regard to costs, profit targets, competition and the perceived value of products.
Because of their simplicity, costplus- pricing are attractive to small businesses,
though this is not the only mode of pricing utilized by small firms. For
example, the profit margin in the cost-plus approach may well be fixed after
examining both the nature of the market and the competitor activity within it. It
is a mistake for small firms to rely wholly on cost-plus, but very often small
firms do that to the detriment of profits and market share. The pricing policies
mainly followed by the small firms are:
a. Competitive pricing : This method is used when the market is highly
competitive and the product is not differentiated significantly from the
competitor’s products.
b. Skimming-the-cream pricing : Under this pricing policy, higher prices are
charged during the initial stages of the introduction of a new product. The
aim is to recover the initial investment quickly. This policy is quite
effective when the demand for a product is likely to be more inelastic with
respect to price in its early stages; to segment the market into segments that
differ in price elasticity of demand and to restrict the demand to a level,
which a firm can easily meet.
c. Penetration pricing : Under this policy, prices are fixed below the
competitive level to obtain a larger share of the market. Penetration pricing
is likely to be more successful when the product has a highly elastic
demand; the production is carried out on a large scale to achieve low cost of
production per unit; and there is strong competition in the market.
3. Promotion :
Promotion refers to the various activities undertaken by the
enterprise to communicate and promote its products to the target market. The
different methods of promoting a product are through advertisement, personal
selling, sales promotion and publicity.
4. Place or Physical Distribution :
This is another key marketing mix tool,
which stands for the various activities the company undertakes to make the
product available to target customers. Place mix or delivery mix is the physical
distribution of products at the right time and at the right place. It refers to
finding out the best means of selling, sources of selling (wholesaler, retailers,
and agents), inventory control, storage facility, location, warehousing,
transportation, etc. This includes decisions about the channels of distribution,
which make the product available to target customers at the right time, at the
right place and at the right price. By selecting wrong distribution channels or
by using the ones it has traditionally used, a small firm could be depriving it of
new market opportunities. In a situation where a small firm has only one
primary product, the general rise and fall of sales will lead to a rise and fall of
the firm, unless the firm learns to consistently adjust its marketing mix to
match consumer demand.
A marketing mix must be consistent for any product. Pricing, for example, must be
consistent with packaging and perceived product quality. If one of these is not in
line with others, then sales might suffer as a consequence. A manager selecting a
marketing mix is like a cook or chef preparing meal. Each knows through
experience that there is no ‘one best way’ to mix the ingredients. Different
combinations may be used depending upon one’s needs and objectives. In the
marketing as in cooking, there is no standard formula for a successful combination
of ingredients. Marketing mixes vary from company to company and from
situation to situation. The right marketing mix is important for any product to have
a long life cycle.
PRODUCT LIFE CYCLE: CONCEPT AND
SIGNIFICANCE
Every product passes through four stages in its life namely, introduction, growth,
maturity and decline. The concept of Product Life Cycle (PLC) highlights that
sooner or later all products die and that if an entrepreneur wishes to sustain its
revenues, he must replace the declining products with the new ones. With the
product passing through different stages the small scale entrepreneur faces varying
challenges, opportunities and problems. Smaller businesses have a good reputation
for innovation. Their greatest advantage is the speed at which they can respond to
the demands of the market, but only if they understand the market.
Every firm makes sales forecasts during introduction, growth, and maturity stages
of the PLC. To achieve the sales target, it formulates promotional, pricing and
distribution policies. Thus the concept of PLC facilitates integrated marketing
policies relating to product, price, promotion and distribution. The advantages of
forecasting the life cycle of a product to a firm are as follows:
1) When the PLC is predictable, the entrepreneur must be cautious in
taking advance steps before the decline stage, by adopting product
modification, pricing strategies, distinctive style, quality change, etc.
2) The firm can prepare an effective product plan by knowing the PLC of a
product.
3) The entrepreneur can find new uses of the product for the expansion of
market during growth stage and for extending the maturity stage.
4) The entrepreneur can adopt latest technological changes to improve the
product quality, features and design.
STAGES IN PRODUCT LIFE CYCLE
and decline. As the product moves through different stages of its life cycle, sales
volume and profitability change from stage to stage as shown in the figure below.
The entrepreneur’s emphasis on the marketing mix elements also undergoes
substantial changes from stage to stage. A brief discussion of the marketing
strategies in different stages of the PLC is given below:
Introduction :
The first stage of a product life cycle is the introduction or
pioneering stage. Under this state the fixed costs of marketing and production will
be high, competition is almost non-existent, markets are limited and the product is
not known much. Prices are relatively high because of small scale of production,
technological problems and heavy promotional expenditure. Profits are usually
non-existent as heavy expenses are incurred for introducing the product in the
market
To introduce the product successfully, the following strategies may be adopted:
a) Advertisement and publicity of the product. ‘Money back’ guarantee may
be given to stimulate the people try the product.
b) Attractive gift to customers as an ‘introductory offer’.
c) Attractive discount to dealers.
d) Higher price of product to earn more profit during the initial stages.
Growth :
The sales as well as the profits increase rapidly as the product is
accepted in the market. The promotional expenses remain high although they tend
to fall as a ratio to sales volume. Quite often, smaller firms move into the market
during the growth phase. With their flexibility they can move very quickly and
capture a valuable part of the market without the huge investment risks of the
development phase. In this stage, the competition increases and distribution is
greatly widened. The marketing management focuses its attention on improving
the market share by deeper penetration into the existing markets and entry into
new markets. Sometimes major improvements also take place in the product
during this stage.
The following strategies are followed during the growth stage:
a) The product is advertised heavily to stimulate sale.
b) New versions of the product are introduced to cater to the requirements of
different types of customers.
c) The channels of distribution are strengthened so that the product is easily
available wherever required.
d) Brand image of the product is created through promotional activities.
e) Price of the product is competitive.
f) There is greater emphasis on customer service.
Maturity:
The product enters into maturity stage as competition intensifies further
and market gets stabilized. There is saturation in the market as there is no
possibility of sales growth. The product has been accepted by most of the potential
buyers. Profits come down because of stiff competition and marketing
expenditures rise. The prices are decreased because of competition and
innovations in technology. This stage may last for a longer period as in the case of
many products with long-run demand characteristics. But sooner or later, demand
of the product starts declining as new products are introduced in the market.
Product differentiation, identification of new segments and product improvement
are emphasized during this stage.
In order to lengthen the period of maturity stage, the following strategies may be
adopted :
a) Product may be differentiated from the competitive products and brand
image may be emphasized more.
b) The warranty period may be extended.
c) Reusable packaging may be introduced.
d) New markets may be developed.
e) New uses of the product may be developed
.
Decline :
This stage is characterized by either the product’s gradual displacement
by some new products or change in consumer buying behaviour. The sales fall
down sharply and the expenditure on promotion has to be cut down drastically.
The decline may be rapid with the product soon passing out of market or slow if
new uses of the product are found. Profits are much smaller and companies need
to assess their investment policies, looking towards investing in newer and more
profitable product lines.
As far as possible, attempts should be made to avoid the decline stage. But if it has
started, the following strategies may be useful:
a) The promotion of the product should be selective. Wasteful advertising
should be avoided.
b) The product model may be abandoned and all the good features may be
retained in the new model of the product.
c) Economical packaging should be introduced to revive the product.
No comments:
Post a Comment