Marketing management

Q 1. Why must the managerial functions of marketing be sequential in nature?

Answer:

Introduction: The main purpose of marketing management is to direct those activities by

which the marketing goals can be achieved.

According to Cundiff & Still “To achieve the marketing objective-planning,

organization, coordination & control is necessary. Whether he is a marketing manager,

industrial middlemen or consumer retailer each &every one has to do planning,

organization & control of activities to achieve the marketing goals. These activities are

called as functions of marketing management or managerial function of marketing.”

Above discussion shows that these managerial functions are necessary for every

marketer to control over the market or to achieve desired objectives, also they are

sequential in nature as one function is proceed by other function & implement after its

proceeding function.

According to W.J.Stanton There are six managerial functions under the management

process. These include: -

1. Determining marketing objectives

2. Planning

3. Organization & coordination

4. Staffing & directing

5. Operation & direction

6. Analyzing & evaluating

The brief explanation of these functions is as follows: -

a. Determining marketing objectives: - Setting of objectives is the first and the

foremost activity. In the managerial activities involved under marketing, selling

of objectives is a first and foremost activity. The objectives determine the extent

to which the firms want to move.

Marketing objectives can be long-term objectives as well as short-term objectives.

The objectives should be clear and unambiguous. The marketing objectives of an

organization serve as a guide for the overall activities of an organization.

b. Planning: - After deciding the objectives, the second activity is doing the

planning. Planning involves manner by which the marketing objectives can be

Marketing Management Page 1 of 35

achieved. Planning involves deciding policies, strategy, tactics, procedure, rules

& regulations and making programmes, budgets and schedule to achieve the long-

term as well as short-term objectives.

c. Organization & coordination: - Organization is one of the important functions

in managerial functions. Organization means that process of organizing the

various activities of various persons involved in achieving the marketing

objectives effectively & efficiently. Organization helps in achieving the

objectives by following the policies. Organizing activity involves giving

information about the work, dividing the work and delegating authority and

responsibility and then coordinating the various activities.

Coordination also plays a very important role. Without coordination of

activities, the activities would be haphazard and there would be underutilization

of the resource also coordinating function not only involves coordination of

different marketing activities but also coordination among the various

departments.

d. Staffing & Assembling other resources: - Planning and managing the human

resources is also an important function of marketing management. If this function

is not done effectively than there can create a lot of managerial problems Human

resource is one of the most important resources because it is the only resource,

which can take the decision itself. If this function is done effectively than half of

problems are already solved.

e. Operation & Direction: - After the planning is done accordingly organization

structure depicting authority responsibility relationship is formed, adequate and

effective manpower resources is hired & trained then there comes the problem of

how human resource towards work involve three main ingredients: - Motivation,

Communication and Leadership. No plan is worth much unless it is carried out

effectively. Our planning can only be effectively carried out with proper direction

& control. An effective & efficient leadership is provided to take work from the

employees by effective reward & punishment system. Efficient employees are

rewarded while inefficient are motivated to improve the performance.


f. Analyzing & Evaluating: - It is the last but not the least function of marketing

management evaluation of performance lead to employee know where he is going

evaluation of performance leads to know how well we are able to utilize our

resources and if there is any deviation from the desired performance than the

measure are taken to correct it. Evaluation provides a framework so that we

should not more too far to correct ourselves. To be effective it is necessary to

analyze and evaluate the performance continuously.

Managerial Functions of Marketing: -


Planning

Organizing

Co-coordinating

Controlling

Appraising

Marketing Objectives

Q 2. What is the basic purpose of a marketing information system?

Answer:

Marketing is all pervasive, interacts with the external environment. It has to adopt

itself to the environment by following a change in its policies, strategies & tactics.

Therefore a lot of information is required for all those purpose. Although marketing

executive differ widely in their decision making, but there is no doubt that they need

information for taking the decisions. Information does not make marketing decision;

rather it helps managers to take decisions. Decision may be short or long term in

organization but the recognition of the need for sound information on which to base

marketing decision is important. So marketing executive require extensive amount of

information for taking different type of decision. Marketing information systems includes

a set of procedures & methods for the continuous analysis & presentation of information

for decision-making. MIS also includes internal record decision support system and

marketing research system.

Kotler has defined, “ Marketing Information System (MIS) as a system that consists of

people, equipment and procedures together, sort, analyze, evaluate and distribute

needed, timely & accurate information to marketing decision maker”.

According to W.J.Stanton “A marketing information system is an ongoing, further

oriented structure designed to generate, process, store and later retrieve information to

aid decision making in an organization’s marketing program”.

As above definition clear the concept of MIS. It is the application of the systems

approach to the task of collecting, organizing, analyzing & interpreting marketing

information. After above discussion some characteristics are cleared of MIS, which tell

the purpose of MIS.

Features & Characteristics of MIS: -

1. Data are regularly updated. They are continuously updated as environmental

condition change.

2. Data are converted into useful information i.e., it is an operating process, which

convert input of raw data into meaningful & purposeful information.


3. It is future oriented.

4. It is also a storage device for marketing information.

5. The data collected from various sources come form inside the firm (in the form of

figure on sales, costs & inventory) & outside it (figure on competitors’ sales &

costs, overall economic conditions, changing consumer attitudes etc.).

Need and Purpose of a Marketing Information System:

The basic purpose of a marketing information are

1. Marketing activity is becoming more complex and broader in scope. The purpose

of MIS is to cope up with it.

2. There is a shortening of time space allotted to an executive for decision-making.

Executive want readymade processed information to take the decision and it is

only possible by a system of marketing information.

3. Scarcity of resources have led the effective and efficient utilization of resources

and MIS helps hare a lot by providing up to date information to the executives.

4. The information explosion has led to develop a system, which can process, store

and retrieve the information whenever required.

5. There is a great need of framing, modifying and altering the programs & policies

of the firm and MIS helps here by making available the required information at

the right time.

The basic purpose of MIS is clear by above points. One thing should be remembered

while applying a MIS in an organization that inspite of some negative characteristics,

informal information also plays a major role in people’s decision. Decision makers can

not escape informal information, and it is likely to continue as part of input into decision

as long as human being are making choices. Its purpose aims at solving problems,

wherever information is available also its purpose is not only solve problems but

preventing problems to occur.

The following diagram gives a picture of Marketing Information System and its

working which more clear the concept & purpose of MIS.



Marketing Mix

Marketing Environment consumers competitors Distribution Economic condition government technology other

Marketing Information System

Internal Marketing Information

Analytical Systems

Marketing Intelligence

Information Processing

Marketing decision-making.1. Request for analysis regular information.2. Request for special information.

Marketing Research

Working of MIS

Internal Reports

Executive Experience

Marketing Research

Marketing Tools

Internal Information

Environment

External Information

Request for Information

Recurrent, Monitored & Requested information

Marketing Manager

Environment

Q 3. What are the two major types or stages in marketing research design? How do

they differ?

Answer

The research design specifies the overall framework and the specific procedures for

collecting and analyzing the data. This is one of the most important steps in marketing

research process. Marketing research is carried out in a systematic and scientific manner

to make it more effective and useful for marketing management. There are some

sequential steps that apply to any research – industrial, commercial, public utilities etc.

Marketing Research Design is that one of the step in marketing research process.

The problem discovered & the consequent marketing problem definition is an

incomplete process if it is done without looking at the broad dimensions of the marketing

research design. The conversion of the management problem into the marketing research

problem needs further input from marketing management in terms of the specific queries

that are sought by them. This is done in the light of the specific available information and

the constraints imposed by the organization.

If management problem is piling up of stocks, the marketing problem could be the

development of marketing strategies for clearance of stocks. Given the marketing

problem, the top management / marketing management might feel that they have Rs.

50,000 and the result should be obtained within a month’s time.

Research design is the task to decide that the research approach or research design

is of which type. Marketing research design can be classified by two categories or is of

two types or stages: -

a. Functional Categories

b. Methodology Categories

1. Functional Categories: - This type of marketing research design is further divided into

following parts:

a. Exploratory Research: - Exploratory research or study would be necessary if

there is not much information available about the ways of clearing the stock i.e.,

sales promotion, advertisement etc. If the marketing researcher is aware of the

availability of relevant information, the problem could be how to describe the


relationship between the marketing problems and the available information i.e.,

increased sales promotion through coupons or freebies would help clear the

piling stocks.

So it is conducted when researcher need more information about the problem,

when experimental hypotheses may be formulated or when new hypotheses are

needed. Researchers often use focus group interviews techniques in exploratory

research. In exploratory research a moderator leads six to twelve people through

unstructured questions on a given topic to develop hypotheses that might lead to

more specific research. Once the problem or opportunity is clearly defined,

researcher try to describe a market or segment / part of a market by developing

summary statistics

b. Descriptive Research: - The descriptive research is the task to find adequate

methods for collecting and measuring the data. There are several methods &

techniques to collect & measure data. In this research that method is find out

which is best suitable for the said purpose.

c. Causal Research: - This research is conducted to test hypotheses about the

relationship between dependent variables. For example: - Descriptive research

may suggest that a price reduction leads to increased sales of a product but does

not say definitely that the price cut was the actual cause the increase in sales.

Sales may have increased because of other factors such as decrease in

competitors marketing efforts. Causal research on the price cut is not the cause

of increased sales or vice-versa. This requires the researcher to keep all factors

other than price & sales constant.

So if the marketing researcher gets signal from the top management / marketing

management that there should be clearly defined solution out of the process of

marketing research, the marketing research, the marketing research would have

to go for causal type of research study i.e. whether free coupon worth Rs. 10

would pick up the sales by 5%?

d. Predictive Research: - this research is used to forecast values such as numbers

of votes, sales revenue etc. For example: - Political pollsters like MARG –

India today have for years, used a predictive model to forecast how many seats


each party will win in a coming election. Similarly, marketers try & estimates

sales volume in different market condition in order to predict the performance

of a particular product / brand

2. Methodological Categories: - Same as function category market research design can

also be categorized according to the method. There are four methods, which are as follows:

-

a. Historical Research: - In historical research part experiences are used for

finding the solution to marketing problems. In most marketing research, the

preliminary exploration research, the primary exploration stage involves

historical research.

b. Survey Research: - In this research surveys are to be carried out for obtaining

data’s from respondent in person, by telephone or by mail.

c. Experimental Research: - A certain segment of market is selected under this

method & conclusions are arrived on the basis of the information so received

from that segment. For example: - The product manufactured is launched in

some big cities & conclusions are arrived on the basis of the experiencing

obtained from them.

Experimental research focus on observing the effect’s that controlled changes in

the independent variables like advertising & pricing have on a dependent variable

like sales. This is done by attempting to hold at other factors but one being

studied constant.

The company uses all these methods of marketing research design as per requirement &

any one method out of them is not used permanently. Some companies study a single

problem by resorting to two methods simultaneously so that the other can examine

variety of one method. The difference between both the category of marketing research

design can be clear from the following example: - As discusses above sales promotion or

sales forecasting is a predictive type of marketing research whose function is to predict.

For performing this function research methods are used. So functional category is the part

for the completion of which methodological category is used.


Q 4. What is the difference between market segmentation and concentrated

marketing?

Answer:

Market Segmentation: Consumers differ widely in terms of space, time, perception &

value. They are not homogeneous. If the market is made up of people whose

characteristics and wants are different, the market is heterogeneous. Marketers who wish

to do an effective job of marketing to people in such a market must identify the

characteristics and wants of different groups of people within the overall market, because

one marketing mix will not satisfy all of them. Market Segmentation is the process of

identification of smaller markets that exists within a large market. These groups are

called market segments.

According to Phillip 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”.

Therefore to be competitive, segmentation has to be carried out. Several brands

are now available in the market – HMT, Titan, Timex, Prestige, Ajanta etc. with variety

of features. These different brands are available in different places – Company’s

showroom, SuperBazar, Co-operative stores, retailers etc. There are many customers

living at different places, having different beliefs, perception, life-styles, choices etc. So

market Segmentation aims at on or more homogeneous groups of customers & marketers

try to develop different marketing-mix for each segment. The purpose is to satisfy all of

them.

Benefits of market Segmentation: - There may be different demand curves in different

in different market segmentation. By segmentation marketers may produce higher sales in

markets where they have monopolistic conditions. The benefit occurring from

segmentation is explained below: -

1. Minimizes Aggregation Risk: - By adopting one marketing mix strategy for all

segments; marketers enhance risk of not being able to satisfy customer needs. An

innovative marketer might segment and take away the market. For example: -

Maruti entered in Indian Market with small cars in different markets segments too

away most of business.


2. Helps know company capabilities: - By looking at a particular segment,

company can carry SWOT analysis, which details out the strength & weakness

within the company & opportunities and threats outside the company. It enhances

company’s capabilities for marketing its product in a particular segment.

3. Provides opportunities to expand market: - By segmenting market, a marketer

is able to create new markets for their products. For example: - Ultra Duox has

entered into kids shampoo category or promise has entered into just for kids (JFK)

toothpaste in 1996.

4. Creates Gains to Customer: - Segmentation results in many wars within the

segment such as Coke vs. Pepsi, Polo vs. Mint ‘O’, Tata Salt vs. Captain cook etc.

Each time a war goes on, customer is the manner, in terms of added quantity &

verity.

Limitations of Market Segmentation: - While market segmentation can provide a lot of

benefits, this strategy has some drawbacks with respect to cost & market coverage. Some

of limitation of market segmentation is as follows: -

1. Market segmentation can be an expensive proposition in both production &

marketing of products. From marketing point of view, the marketer has to develop

different marketing-mix for different segments. In production, producing in mass

quantities is much cheaper than making variety of products.

2. Other expenses like keeping adequate inventories of each style, color, and

promotional exp. Also go up.

3. Administrative exp. Also go up because marketer must plan & implement several

different marketing programmes.

2. Concentrated Marketing: - Concentrated marketing is one of the market

segmentation strategies that a company chooses. It is a market coverage strategy in which

company follows one product-one segment principle. The company tries to position its

products in the middle of the segment to attract maximum clientele. Foe example: -

Ashok Leyland produces-large chassis of machine, which can be used for buses & trucks.

The manufacturer gets maximum knowledge about the segments needs and therefore

acquires special reputation.


Concentrated marketing strategy can also help the small company to stand against

a large corporation because the small company can create niches in its one-product one-

segment approach by providing maximum verities.

Benefits of concentrated marketing: - Because in concentrated marketing its total focus

on a single segment of the market, the firm can enjoy the following advantages: -

1. Through research the segment’s wants: - In concentration marketing a firm can

thoroughly research the segment and all concentration is on that segment only. For

example: - Hero cycles manufacturer can thoroughly research the wants of its

segment.

2. Lower Risk: - Because there is a single segment in the market, a firm has a lower

risk of not begin able to satisfy its target market.

3. Large scale production: - In production producing in mass quantities in much

cheaper than making variety of products. Therefore long run production may be

possible under market concentration.

4. Distribution, promotion & price can be keyed to satisfy one segment.

5. Administrative expenses also save because marketer has to make plan & important

only one marketing program for its single segment.

6. A firm that is trying to enter a market dominated by a few large firms may gain easier

entry by targeting a small segment that the existing competitors are overlooking. The

survival of small firms more & more on their ability to concentrate on those

specialized segments that are not attract to their large rivals.

7. Stiff competition among competitors for the big segments develops while smaller

segments are left untouched.

Disadvantages of Concentration: -

1. The organization cannot spread its risk. Thus a decline in the selected segment buying

power or a change in tastes or the entry of rivals can have a negative impact on

profitability.


2. Sometimes a firm that focuses exclusive on one segment develops a specialist image

in that segment. As a result it may encounter difficulties in directing its efforts to

other segments.

When a firm has limited resources, engaged in only one or few products then

concentrated marketing can be used otherwise in case of large market segments, having

large resources and existing firm having different product line can use market

segmentation and take benefits of minimize risk, more satisfying customers, opportunities

to expand markets etc.


Q 5. What are the four criteria for effective use of market segment?

Answer:

The buyers constitute markets and the buyers are all different to each other. It is

therefore, necessary to understand & introduce with the buyers in context to different

needs. While introducing market, we defined the target market with the needs, money and

willingness to spend money. All customers have different needs and also there are several

brands are available in the markets i.e. HMT, Titan, Timex, Prestige, Ajanta, Konika etc.

with variety of features. Therefore all markets are formed in segments & there segments

can further be divided in sub-segments division of market into several segments is called

Market Segment.

Market segment is the process of dividing a potential market into distinct sub-markets of

consumers with common needs and characteristics. A group / Section of customer is very

first recognized as per their different choices & necessities & then market can be divided

in the sets of consumers.

According to Philip Kotler “ Market Segmentation is the sub-dividing of a market

into homogeneous subsets of customers, where any subsets of customers, where any subset

may be a distinct marketing mix”.

According to A. Robert “ Market Segmentation is the strategy of dividing markets in order to

conquer them”.

Above said definition depict clearly that single marketing systems cannot win all

kinds of customers. When any producer divides the customers in separate groups on the

basis of their sex, age, income etc. and does efforts to satisfy the basic needs of their

respective groups, the process of efforts of marketing so made is called segmentation of

market.

Criteria for effective use of Market Segmentation: - The seller does not want to deal

uniformly with all customers nor he wants to deal separately with each & every

customers. He would have made wide sets / classes of the customers. The problem he

then faces as to how an efficient segmentation of market is to be made. Which will match

with the characteristics of the buyers. While selecting appropriately the characteristics of

customers for the segmentation of market, the seller should focus on some requirements

so that effective use of market segmentation could be done.


To be useful, segmentation of market must exhibit some characteristics that are as

follows: -

1. Measurable and obtainable: - The size, profile and other relevant characteristics of

the segment must be measurable and obtainable in terms of data. If the information is

not obtainable, no segmentation can be carried out. For example: - Customer can be

segmented on the basis measurable through AIOD framework, it might not be

obtainable because of time limits or budgetary constraints.

2. Substantial: - The segment should be large enough to be profitable. For consumer

markets, the small segment might disproportion ally increase the cost and hence

products might be priced too high. This might make the segment non-profitable.

However for business markets even a single customer might mean big business. For

example: - House construction takes several months but with the information

technologies under way, CAD & CAM have made it possible to take on even smaller

segments from consumer markets.

3. Accessible: - The segments should be accessible through existing network of people

at a cost that is affordable. For example: - Targeting rural population can be through

Television, Radio and by opening outlets locally. It might not be easy to access hilly

terrains for actual distribution of products.

4. Differentiable: - The basis of segmentation should be such that it leads to different

segments. For example: - If young & old people behave in almost same way in

tempting to eat chips, Ruffle’s Lays must not have fried the two targets as one by

combining the segments.

5. Actionable: - The segments, which a company wishes to pursue, must be actionable

in the sense that there should be sufficient finance, personnel and capacity to take

them all. Hence, depending upon the reach of the company, depending upon the reach

of the company, the segments should be selected.

6. General Considerations: - Apart from the above requisites, the segment must have

growth potential, be profitable, carriers no unusual risk and has competitors who do

not fight directly with the product or brand.

These are some requisites for effective use of market segmentation. Once a market has

evaluated the different segments for their size, growth & attractiveness and found that


they compatible with the company objectives, resources, the obvious step is to go far

selecting the market segments. Kotler has suggested five patterns of target market

selection: -

1. Single Segment Concentration: - The concentrated marketing strategy normally

provides higher returns & therefore it is possible that competitor might be

attracted to find their place in the segment. For example: - Reebok concentrated

itself in the sports shoe market at premium-end in Oct 1995, there were Nike,

Puma & Adidas in that segment.

2. Selective Segment Specialization: - This is known as multistage coverage

because different segments are sought to be captured by the company. For

example: - Bata shoes were mostly in popular segment until beginning of 1990s.

Then it turned itself into premium segment, but it couldn’t help Bata to gain full

control of market. After 1995, it has come back again to popular segment.

3. Market Specialization: - Here company takes up a particular market segment for

supplying all relevant products to the target groups. For example: - Dhanpat Rai &

Co. publishes & sell books covering all types of customers needs – competition

books, books for school, colleges, universities etc.

4. Product Specialization: - Product specialization occurs when a company sells

certain products to several potential customers wherever they are located.

5. Full coverage: - Big companies can go for full market coverage. For example: -

Castrol for lubricants & Coca-Cola for soft drinks follow market coverage.

After selection of target market, the next criteria for effective use of market segmentation

is to select the strategy of marketing as to which the strategy of marketing as to which is

best according to given circumstances & nature of product. An overview of three market

coverage strategies will help choose one for a particular company: -


Comparison of market Coverage Strategies:

Focus Undifferentiated

Marketing

Differentiating

Marketing

Concentrated

Marketing

Product One / Few Many One / Few

Segment All Many One / Few

Marketing Mix One Many One / Few

Choosing a Market coverage Strategy:

Undifferentiated

Marketing

Differentiating

Marketing

Concentrated

Marketing

Constrained Firm

Resources

More Suitable Least Suitable More Suitable

Common Usage

Products

More Suitable More Suitable Least Suitable

Different need

satisfying product

Least Suitable More Suitable More Suitable

Market Segment is not merely meant for division of homogeneous customers for the

seller but the will have also kept in mind that (i) Segment of market match with the item

or not (ii) Is it possible to analyze the segment of market (iii) whether the person, will

attract to promotion policies etc. Therefore for effective use of market segmentation

above requisites, strategies are to be analyzed & after that implementation of best one.


Q 6. Why is it necessary for markets to understand how family roles influence buyer

behavior?

Answer

The modern marketing concept makes customer at the center – stage of organization

efforts. Every consumer is unique & this uniqueness is manifest etc. Thus, marketers

must properly understand consumer behavior. Consumer behavior is that process by

which the decisions relating to the purchase of any product or brand and the selection. It

is the new & innovative field of study. It is an effort to understand the portfolio of human

purchase & making of predictions.

Meaning & Definitions of Buyer Behavior: -

Buyer Behavior includes the activities of both end users & intermediate users. It is very

necessary for marketer to analyze buyer behavior for finding answer to following

questions: -

1. When do the consumer buy?

2. Who does the buying?

3. How does the consumer buying?

4. Where do the consumer buy?

Buyer Behavior can be defined as, “ Buying Behavior is the study of all

psychological, social and physical behavior of potential consumers as they become aware

of, evaluate, purchase, consume & tell other about product& services.”

There are several factors that influencing buyer behavior. Buyer behavior does not

remain uniform always and it meets changes rapidly. It reasons mainly are the regular

variations being introduced in the factors that influence the buyer behavior are as follows:

-

1. Cultural Factors: -

a. Culture

b. Sub culture

c. Social Class

2. Social Factors


a. Reference Groups

b. Family

c. Roles & Status

3. Personal Factors

a. Age & life Cycle Stage

b. Economic Circumstances

c. Occupation

d. Life Style

e. Personality & Self

4. Psychological Factors: -

a. Motivation

b. Perception

c. Learning

d. Belief & Attitudes

Out of above said factors according to question it is very necessary for marketer to

understand how family roles (social factor) influence buyer behavior because of the

following reasons: -

Family Roles: - Family members constitute the most influential primary reference group

shaping a buyer’s behavior. A person’s world starts with the family in which he / she is

born. The family has major influence on the behavior of its members. Today, the concept

of family has changed in urban population from joint family to nuclear family. So a

marketer has to understand both phases of family roles. However the importance of

family roles influencing buying behavior can be seen from the advertisements run by

Titan watches, Maruti Esteem & Mylanta.

We can distinguish between two families in buyer’s life: -

a. Family of Orientation consists of one’s parents. From parents person acquires &

orientation toward religion, politics, economics & a sense of ambition, self-worth &


love. The parent’s influence on the unconscious behavior of the buyer can be

significant.

b. Family of Procreation influence directs on everyday buying behavior namely one’s

spouse & children. The family is the most important consumer buying organization in

society & has been extensively researched.

Each decision made by consumer is taken within the family and are affected by the desires,

attitudes, value of the other family members. The family affect on consumer behavior can

be traced in two ways: -

a. The family influence on the individual personality characteristics, attitude and the

evaluate criteria,

b. Family is both a purchasing and consuming unit & marketing manager is keenly

interested to know the customer. These are:

i. Who influence the purchase?

ii. Who does make decision of purchase?

iii. Who does family purchase?

iv. Who does actual use of the product?

It is seen often that: -

It is mostly the house-wife that has an upper hand in influence the purchase

Husband, wife and the children can take decisions of purchase jointly,

sometime, opinion of children is given more important, especially when there

is product of their use.

Any person out of husband, wife & children can bring the product.

It is impossible that the purchaser does not actually use the goods.

The marketer needs to determine which member normally has the greater influence in

choosing various products. Some typical products patterns are: -

Husband Dominant: Insurance, Car & Television

Wife Dominant: Washing Machines, Kitchenware, Food

Equal: Vocation, Housing & Entertainment


At the same time, the family members influence can vary with different sub-decisions

made within a product category.

Thus for a marketer it is very necessary to understand the family roles that influence

buyer behavior. If marketer has an-idea of it he can make best strategy for them and serve

customers with their choice of products & services.


Q 7. For marketing purpose, it is useful to see learning as involving five major

concepts. What are these concepts? Explain each one?

Answer

Marketing concept is a philosophy, an attitude, or a course of business thinking. It holds

that satisfaction of the wants of the customers is the economic and social justification of a

company’s existence. The customer is the fulcrum around which all business activities

(production, financing, purchasing, marketing etc) must revolve under marketing

concept, the emphasis is a selling satisfaction and not merely on selling a product.

The marketing concept is a consumer orientation backed by integrated marketing

aimed at generating customer satisfaction as the key to satisfying Organizational goals.

According to Phillip Kotler “ The marketing concept may be define as a management

orientation that holds that the key task of the organization is to determine the needs

wants & values of a target market and to adopt the organization to delivering the desired

satisfaction more effectively and efficiently than its competitors”.

For marketing purpose, Phillip Kotler has shown five major competing concepts for

carrying out marketing activities in any organization. These five concepts are: -

1. The production concept

2. The product concept

3. The selling concept

4. The marketing concept

5. The societal marketing concept

The explanation of each concept is as follows: -

1. The production concept: - This concept holds that high production efficiency and

wide distribution coverage would sell the product offered to the market. The high

production efficiency means that the input-output ratio is favorable. It will lead to

economies of scale & decline in cost per unit. Thus, the concept holds that customer

favors products with low offered price & easily available product.

This orientation of the organization is mostly practiced in situation where demand

exceeds supply or product cost is high that can be brought down by mass production.


The market situation in most of the developing countries is such that while demand

are not available

Now there is question arises. “ Is marketing inapplicable in countries where

demand exceeds supply for most of the products and the most of the times”?

The answer is ‘Yes’. Marketing activities can still be applied in such market

situation. For Example: - In India amusement parks are very few, but demand is high. In

Appu Ghar (Delhi), it is found that there is great rush on weekends & holidays and even

on other day, Appu Ghar is overburdened. What can be done under the circumstances?

a. Discourage demand when overburdened.

b. Raise entry & riding charges

c. Reduce promotion & services

d. Provide alternative amusement parks.

In other words, solution lies in demarcating where the purpose is not to destroy but

reduce demand to desire levels. Thus we see production concept is applicable in

situations where demand exceeds supply.

2. The product concept: - The firm following this concept believes that by making

superior products and improving their quality over time, they will be able to attract

customer. The underlying assumption is that customer favors quality, performance,

innovative features etc. The buyer will admire such products. Given the product

concept, superior products are perhaps always welcomed by the customer. But,

product is only one element of the total marketing-mix. Thus, better product at high

price (because improvement is quality might be at a cost) will not disturb customer

budget, it is believed. However, as we shall see pricing is one of the elements of

segmentation basis. The division of demographic-on economic grounds of afford-

ability would come in the way of implementing such better quality products at high

prices.

Companies that are technology-driven follow the concept. But a simple ‘love-

affair ‘ with the product, without adapting to the market situation, would fail to

appreciate that the market for the product might be less receptive of the new products

that are with high price tags, not easily available, or customer doesn’t know about


them. This means that new product development or improvement of product is

desirable if customer is receptive. The total marketing-mix strategy should adapt to

such situation where one P-product is emphasized at the cost of other Ps (place,

promotion & price)

3. The selling Concept: - The concept adoption comes when there is aggressive selling

and promotional efforts. The consideration of this concept is customer buying inertia

& resistance. The assumption is that customer, is left alone, and would not buy

enough of the company’s product. This sort of customer attitude is mostly found for

unsought goods like surgery, insurance, videophone etc. Here hard-sell takes place.

The other areas are from the non-profit organization. When used for sought goods

like scooters, television, refrigerators, the hard-sell approach entails bad worth of

month, complaint, litigation & action by consumer protection agencies.

4. The marketing Concept: - Consumer oriented marketing has rise to the new concept

in business known as ‘ Marketing concept’. The marketing concept emphasizes the

determination of the requirements of potential customers & supplying products to

satisfy the requirements. Marketing should be viewed as integrated process of

identification, assessment and satisfaction of human wants. The marketers following

consumer orientation regard the creation of customer & satisfaction of his wants as

the justification of business. Determination of wants of the customers takes

precedence over production.

In other words, product is developed & produced to satisfy the needs of the

customers. Thus, the emphasis is a selling satisfaction and not merely on selling

goods.

5. The societal marketing concept: - Whether customer’s needs and wants should get

priority over society’s concern for environment, bottlenecks, poverty, social

overheads etc? Do excellent companies concern more for the society or customer?

The answer to these basic questions would take company’s missions beyond its own

imagination.


This concept gives priority to the customer’s need. Thus, a customer prefers Frooti and

Dhara in tetra pack. Tetra pack are bio-non degradable. They litter the environment with

waste materials. Customer prefer automobile without the use of catalytic converter or

CNG or battery because it will mean more price. The central government notified in 1993

that after two-and-a-half year, it would enforce new auto emission standards. In April

1996 the central govt. announced their intention to enforce the notification. Similarly the

various washing powders like Surf, Ariel etc. have to add more chemical to make cloths

whiter, but they pollute rivers & kill fish.

The above situation limit the role of the marketing concept which need redesigning on the

part of marketers who propagate such products which might harm social interests. The

solution is also provided by many organizations. For example: - Khadi Gramodyog sells

recycled eco-friendly paper, chart, greeting cards etc.

Thus all marketing concepts holds one thing that the emphasis on selling satisfaction &

not merely on selling a product. Modern authors view marketing more than a physical

process of distributing goods & services. They feel that marketing represents a distinct

philosophy or concept of business or a course of business thinking that has emerged over

the recent years. They perceive the creation of customer & satisfaction of his wants as the

justification of business.


Q 12. The most useful way to classify products is according to whether they are

consumer products or industrial products. What are some other ways to classify

products into groups?

Answer

For the success of a firm, it is of utmost importance to plan its product-mix, that covers

existing as well as new goods & services that the firm decides to market to its target

customers. Successful market operations are built around two essential elements: -

Product and Market. The term product is not merely the physically product but the total

product including brand, package, label, status of manufacturer.

A product may be defined as a bundle of utilities consisting of various product

features & accompanying services. Customer does not buy merely physical & chemical

attributes of a product. He is really buying want satisfaction.

According to William J. Stanton “ A product is a complex of tangible and intangible

attributes, including packaging, color, price, manufacturer and retailer’s services, which

the buyer may accept as offering satisfaction of wants or needs”.

The most useful way to classify product is according to weather they are consumer

product or industrial products. But besides above classification the other way to classify

the product is according to their durability or tangibility. The following diagram shows

the product classification according to their use as well as their durability.

Product Classification


Product

Durability Tangibility Uses

Durable Goods

Non-Durable Goods

Intangible Tangible

ServiceConsume Industrial

Above diagram shows the classification of product on the basis of their use, i.e., consumer

goods & producer’s or industrial goods as well as their durability or tangibility. Following is

the brief explanation of it: -

1. Durability of Goods / Product: -

i. Non – Durable Goods: - These are goods, which are normally consumed with

one or few uses. These goods are mostly purchased very frequently. For Example:

- Food items, toiletries etc. These can be made for mass consumption at the most

of the shops with small margin, needing heavy advertisements. For Example: -

Surf Excel is advertised most heavily, Tata Salt is available at most of shops with

small margin.

ii. Durable Goods: - These products are remaining in use months after months and

years after years. They are mostly sold through personal selling with high

margins at specialty shops. For Example: - Video / Audio systems. Washing

machines, Vacuum Cleaner etc.

2. Tangibility of Goods: -

i. Tangible Goods: - Tangible goods are those goods or product, which can be used

directly or indirectly by ultimate consumers or industrial consumers. Thus both

durable & non-durable goods are tangible goods.

ii. Intangible Goods: - The service is normally intangible, perishable and is

inseparable from the place or the performer. These are activities or benefits that

provide satisfaction to the customers. The activities are the physique clubs, fitness

centers and the benefits are repair works and the satisfaction through eating at

restaurant or attending a coaching course.

3. Uses of Goods: - Besides above classification of goods the main classification of

goods / Products is according to their use: -

i. Consumer Good: - These are meant for use of consumption by the ultimate

consumer. For Example: - Bread, Butter, T.V., Cosmetics, Garments are all

consumer goods. These are further classified into these categories: -


1. Convenience Goods: - This includes items that consumer buys frequently

– Cold Drinks, Cigarettes, Newspapers etc.

2. Shopping Goods: - This includes items which consumer select & buy

after making comparison of substitutes on such criteria as suitability,

quality, price, style etc.

3. Specialty Goods: - Items in this category must posses unique feather or

have a number of brand names or both. E.g., Fancy goods, Stamps, coins,

prestige brands of men’s suits etc.

4. Unsought Goods: - They are might be new or existing but are not sought

by customers or do not fall in any of above categories. E.g., Solar-operated

buses, High definition T.V. etc.

ii. Industrial or Producer’s Goods: - These are meant for use in making other

products or for rendering a service in the operation of a business organization.

They are classified on the basis of use instead of buying habits as in case of

consumers goods into five categories: -

1. Raw Material: - Which will become part of another product. It may be

natural, agricultural & animal products. E.g., Minerals, Wheat, Cotton,

Egg, Raw milk etc.

2. Fabricating materials & Parts: - These are partial or complete items

which become part of the final product. They undergo further processing.

E.g., pig iron into steel, yarn being woven into cloth, leather being shaped

into shoes etc.

3. Installation: - These are long life & expensive major equipments of an

industrial user, necessary for further production. E.g., Heavy machinery,

Diesel Engines, Trucks etc.

4. Accessory Equipments: - Includes industrial goods usually less

expensive & having shorter life then installation e.g., portable drills, hand

tools, forklift trucks etc.

5. Operating Supplies: - These are short-lived and low priced items usually

purchased with a minimum of efforts usually purchased with a minimum


of efforts. E.g., pins, pen, pencil, paper, floor wax, lubricants oils. They

are convenience goods of industries.

Because the classification system is based on buyer’s behavior, it is actually consumers

who determine which category a given product belongs to in a given situation. Thus any

given product may be classified differently by different consumers or by the same

consumer in different situation.


Q 8. Briefly describe the major differences between One – Price Policy & Flexible

price policy?

Answer:

Every firm has to take decisions regarding price from time to time depending upon its

pricing policies & conditions prevailing in the market. Companies do not set a single

price but rather a pricing structure that reflect variation in the changing situations. A

product price policy is a firm’s day-to-day reference point in its day-to-day pricing

decision list prices are frequently adjusted to remain flexible and responsive to company

and customer requirements, in light of competitors pricing activities.

So there are a number of price policies various price policies can be classified

under various classes. One of the classes is ‘ Price Flexibility’.

Price Flexibility: - A marketer also has to decide whether to sell a product at the same

price to all buyer or at different prices to different buyers. The choice is between a one

price policy and flexible price policy.

The brief discussion about both and major differences between both are as

follows: -

1. One Price Policy or Uniform Price Policy: - In case of one-price, the seller charges

the same price to similar quantities of the product under essentially the same term of

sale. The price may vary according to the quantity of purchase. However, prices

charged for different quantities to different customers are the same. For Example: - A

seller may sell his product @ Rs. 1,000 per unit if less than one dozen units are

purchased and @ Rs. 900 per unit if one dozen or more units are purchased. On the

other hand, a seller may follow a single price policy under which the price per unit of

a product remains the same regardless of the number of units being purchased.

Therefore under one-price policy it is easy to administer prices and eliminates the

risk of losing customer goodwill due to differential price treatment. But there is no

room for tailoring the price to the customer. So this can be a big problem, especially

in industrial marketing where prices are often negotiated between buyer and seller.


2. Flexible – Price Policy: - In case of flexible price policy or variable price policy, the

seller sells similar quantities to similar buyers at different prices. For Example: - A

seller may offer the same quantity of goods to old customer at lower rates. It is

possible that bargaining and haggling between the buyer and seller determine the

final price. Generally, prices of customer durables such as refrigerators, automobiles,

televisions etc. are negotiated.

Difference in price, quantum of purchase, place of delivery, bargaining power of

seller & buyer, purchasing parity of the customer, relations of customers with sellers

etc. are the cause for bringing out any change in the price. Marketers who practice

differential pricing set two or more prices for a product in order to appeal to different

market requirements, based upon the segments price elasticity of demand for the

product.

Thus lower prices are set for the more price elastic market segment and higher

prices are set for the more price inelastic market segments.

Thus differential pricing can be based upon difference in products, customers,

location & time as discussed above. For example: -An appliances manufacturer sets

different prices on different models of same basic product are differentiating on a product

basis. Lesser of space in office building who charge different prices per square foot based

upon floor level are differentiating on a location basis. Hotels that offer discounts to

customers over, the age of sixty are differentiating on a customer basis.

Difference between both One – Price policy & Flexible – price Policy: -

After the above discussion about One – Price policy & flexible price policy the major

differences between both policies can be described as follows: -

1. One – Price Policy builds customer confidence in the seller. Persons who have weak

bargaining power prefer the stores offering one – price. On the other hand, customers

who have high bargaining power prefer flexible price policy.

2. One – Price policy saves time of the buyer and the seller because of no tension of

changing in prices, on the other hand, flexible price policy consumer time & preferred

by customers who have sufficient time for bargaining & seller who have sufficient


time for time to time change in its product according to product, price, place, location

& customers.

3. In One – Price policy it is easy to administer price & eliminates the risk of losing

customer goodwill due to a differential price treatment. While in flexible price –

policy this type of risk remain always.

4. One – Price policy is generally preferred by the small customers while flexible price

– policy is widely practiced to tailor their prices to a prospect’s situation refried to as

price – shading.

5. There are several more risks associated with flexible pricing than that of One – Price

policy such as proactively suffering when devoting two much time & effort to price

negotiation, making downward price adjustments routinely etc. while in One – Price

policy these risks are not there.

6. There is also less control over pricing under flexible price policy when sales people

operate it. While in one – price policy proper control can be made over it.

Thus according to market situation any one of price policy can be implemented. When

there are a large number of buyers & market is divided into various segments &

customers have high bargaining power than flexible price policy can be used otherwise

one – price policy may be used. But it is depend on the customer preference & market

situation.


Q 9. What are the three most important criteria for marketers to consider choosing

a channel of distribution?

Answer:

Distribution of products constitutes an important element of marketing mix of a firm.

After development of the product, the marketing manager has to decide channels or

routes through which the product will flow from the factory to the potential customers.

He has a number of alternatives available to him. The marketer may choose to distribute

the product directly to customers or he may use middlemen. But important point is that

product should move efficiently & at minimum possible cost from the company’s

production department to the ultimate customers.

According to Richard Buskrik “ Distribution channels are system of economic

institutions through which a producer of goods delivers them into the hands of their

users”.

According to McCarthy “ Any sequence of institutions from producer to the consumer,

including one or any number of middlemen, is called channel of distribution”.

Criteria for choosing Distribution Channels: - There is many channels through which

the product can be distribute to the customers. But the question arise that given all the

channels of distribution to marketers, how do they determine which channel or channels

to use. This is very important thing. The decisions regarding be made in terms of

company’s overall marketing objectives & strategies.

There are two important factors, which place them in the important policy decision area.

Firstly, the channels chosen for the firm’s product intimately affect every other marketing

decision. Secondly, the channels chosen involve the firm in relatively long term

commitments to other firm. Therefore, it is very important that channels decisions are

taken with great care.

The producers of products, who are guided by three overall criteria, make most decisions:

-

a. Market Coverage

b. Control

c. Costs


The explanation of these three criteria is as follows: -

a. Market Coverage: - The most important criteria in choosing or selecting a

distribution channel is the size of the potential market that needs to be served. The

nature of the market is the key factor influencing the choice of channels of

distribution. The following features of the market should be analyzed to determined

the channels: -

i. Consumer or industrial product market: - If product is indented for industrial

market / users, channel of distribution will be short one, because they purchase in

large quantity. But in case of consumer product, retailer may have to be included

in channel of distribution.

ii. Number of potential customers: - If no. Of customer is small, manufacturer

may able to sell directly by using his own sales force as customer handling would

not be difficult.

iii. Size of order: - Direct selling is convenient & economical where customers place

order in big lots as in case of industrial goods. But where product is sold in small

quantities, middlemen are used to distribute such products. So he uses different

channels.

iv. Buying habits of customers: - The customer buying habits affect the choice of

distribution channels. For example: - Cigarettes are purchased in ones & twos &

rarely in packets. This calls for need for retail stalls.

v. Geographical concentration of market: - Use of wholesalers & retailers may

become essential to sell the product to the widely dispersed consumers or

industrial users.

So market coverage is an important dimension for many markets. It should be clear, then,

that a major consideration in the choice of a distribution channel is the desired level if

market coverage, which depends on the nature & size of the market to be served.

b. Control: - Another important criteria that marketer’s use in determining which

distribution channel to select is control over the product. Because control of product

changes as change in the title of the product through various channels i.e., it depends

upon the size of channel. Short channel of distribution gives greatest control to

producer or long channels gives control to middleman. The nature & type of product


also influence the control over the product that a marketer has to determine to

distribute it. The following factors also affect the decisions regarding the selection of

channel for control over the product: -

i. Unit Value: - If unit value of product is lower & turnover is high, channel of

distribution will be longer or vice-versa.

ii. Product Line: - If manufacturer producing several products channel of dist will

be long or vice-versa.

iii. Standardized Product: - These products can be distributed through longer

channels because their brand names are very popular.

iv. Technical Nature: - Technical nature i.e., industrial product, consumer or any

other type also affect the decision of choosing channel of distribution.

v. Bulk & Weight & Perish ability also affect the decision.

Additionally, many products need products need aggressive selling activity & servicing

by retailers in order for exchange to occur. Marketers want to use only those

intermediaries who can & will provide such activities in selling the product. Therefore,

they will choose a shorter, more direct distribution channel.

c. Costs: - The last important criteria in selecting a distribution channel marketer also

must consider costs. Many consumers believe that the shorter the channel, lower the

cost of distribution. Also advertisements to sell the product increase the cost & that

says – “Avoid the middleman – buy directly from the factory & save!”

But intermediaries are performed distribution functions more efficiently than

producers can. Thus by using middleman cost of distribution are usually lower.

From above points it is clear that a shorter distribution channel generally results in

limited market coverage, less control over the product and reduced costs. Marketers must

decide which of these alternatives as well as consumer’s needs. Different products,

markets & manufactures, of course require different distribution arrangements. In

deciding what kind of channel to use, marketers must consider such factors as the

market’s size & location, whether the product is intended for industrial use or consumers

use. Only then does the real task of distributing products get under way.


Business

Marketing management