FINANCE ACCOUNT AND AUDITING

4th SEMESTER

MARKETING MANAGEMENT

1.MARKETING

2.PRODUCT

CONCEPT AND

CLASSIFICATION

3.PRICING

STRATEGY

4.DISTRIBUTION

5.PROMOTION

CONTENT

Marketing management is a broad scope of the study of marketing focusing on the practical application of the techniques and marketing activities of a certain company or business. This business discipline encompasses marketing planning and strategy, orientations, and processes needed in attaining company goals by providing value to clients. Since it has a wide coverage involving all factors required to satisfy customers, marketing management must be all-pervasive and part of every employee’s scope of work, from the subordinates to those in the higher management.

Marketing management is a broad scope of the study of marketing focusing on the practical application of the techniques and marketing activities of a certain company or business. This business discipline encompasses marketing planning and strategy, orientations, and processes needed in attaining company goals by providing value to clients. Since it has a wide coverage involving all factors required to satisfy customers, marketing management must be all-pervasive and part of every employee’s scope of work, from the subordinates to those in the higher management.

Putting the customer first

A business ethos

A planning process

Core to sustained business success

Allocating resources to achieve your goals

Marketing has often been described as “the art of selling products.” But Peter Drucker, says that the aim of marketing is to make selling superfluous. Ideally, marketing should result in a customer who is ready to buy.

“Marketing Management is the analysis, planning, implementation anc control of programmes designed to bring about the desired exchanges with target audiences for the purpose of personal and mutual gain. It relies heavily on adoption and coordination of the product, price, promotion and place for achieving response”.

(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Export market.

(v) Development in the means of communication and modes of transportation within and outside the country.

(vi) Rise in per capita income and demand for more goods by the consumers.

1.The first and foremost difference between the two is that while traditional marketing focused on selling the products which were produced by the company whereas modern marketing first looks at from customer satisfaction point of view and then produce the product according to needs of the customers subsequently selling those goods to target customers.

2.Another difference between the two is that while traditional market used to think from company’s point of view as their whole focus was on selling the goods to the customer no matter whether they required the goods or not. Whereas modern marketing is customer oriented as under this type of marketing company first assesses the need of the customer and then the product is customized to suit the customer needs.

3.While traditional market used mediums like flex boards, pamphlets, radio and television for advertising whereas modern marketing not only uses traditional medium of advertising but also uses modern methods like social media marketing, internet marketing and other such means to advertise the products

4.Traditional marketing is one dimensional as the only target of it was to sell the goods for profit whereas modern marketing is multidimensional as apart from selling goods for profit it also lays emphasis on customer satisfaction, planning, after sales service and many other variables

The term "marketing environment" relates to all of the factors (whether internal, external, direct or indirect) that affect a firm's marketing decision-making/planning. A firm's marketing environment consists of three main areas, which are:

1.The macro-environment, over which a firm holds little control.

2.The micro-environment, over which a firm holds a greater amount (though not necessarily total) control.

3.The internal environment, which includes the factors inside of the company itself

1. MACRO ENVIRONMENT A firm's marketing macro-environment consists of a variety of external factors that manifest on a

large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm's macro-environment is via a PESTLE (Political, Economic, Social, Technological, Legal, Ecological) analysis. Within a PESTLE analysis, a firm would analyze national political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology's impact on its S0cial trend and the business processes within the society

2.MICRO ENVIRONMENT A firm's micro-environment comprises factors pertinent to the firm itself, or stakeholders closely connected

with the firm or company.

A firm's micro-environment typically spans:

Customers/consumers

Employees

Suppliers

The Media

By contrast to the macro-environment, an organization holds a greater degree of control over these factors.

3. INTERNAL ENVIRONMENT A firms internal environment consists of factors inside of

the actual company. These are factors controlled by the firm and they affect the relationship that a firm has with its customers. These include factors such as:

Labor

Inventory

Company Policy

Logistics

Budget

Capital Assets

Market Segmentation is a process of dividing the market of potential customers into different groups and segments on the basis of certain characteristics. The member of these groups share similar characteristics and usually have one or more than one aspect common among them.

Segmenting is dividing a group into subgroups according to some set ‘basis’. These bases range from age, gender, etc. to psychographic factors like attitude, interest, values, etc.

Geographic segmentation divides the market on the basis of geography. This type of market segmentation is important for the marketers as people belonging to different regions may have different requirements. For example, water might be scarce in some regions which inflates the demand for bottled water but, at the same time, it might be in abundance in other regions where the demand for the same is very less.

People belonging to different regions may have different reasons to use the same product as well. Geographic segmentation helps marketer draft personalized marketing campaigns for everyone.

Demographic segmentation is one of the simplest and most widest type of market segmentation used. Most companies use it to get the right population in using their products. Segmentation generally divides a population based on variables. Thus demographic segmentation too has its own variables such as Age, gender, family size, income, occupation, religion, race and nationality. To read more, click on this link for demographic segmentation.

Demographic segmentation can be seen applied in the automobile market. The automobile market has different price brackets in which automobiles are manufactured. For example – Maruti has the low price bracket and therefore manufactures people driven cars. Audi and BMW have the high price bracket so it targets high end buyers. Thus in this case, the segmentation is being done on the basis of earnings which is a part of demography. Similarly, Age, life cycle stages, gender, income etc can be used for demographic type of market segmentation.

This type of market segmentation divides the population on the basis of their behavior, usage and decision making pattern. For example – young people will always prefer Dove as a soap, whereas sports enthusiast will use Lifebuoy. This is an example of behavior based segmentation. Based on the behavior of an individual, the product is marketed.

This type of market segmentation is in boom especially in the smart phone market. For example – Blackberry was launched for users who were business people, Samsung was launched for users who like android and like various applications for a free price, and Apple was launched for the premium customers who want to be a part of a unique and popular niche

Psychographic segmentation is one which uses lifestyle of people, their activities, interests as well as opinions to define a market segment. Psychographic segmentation is quite similar to behavioral segmentation. But psychographic segmentation also takes the psychological aspects of consumer buying behavior into accounts. These psychological aspects may be consumers lifestyle, his social standing as well as his AIO. Do refer more to Activities, interests and opinions.

Application of psychographic segmentation can be seen all across nowadays. For example – Zara markets itself on the basis of lifestyle, where customers who want the latest and differential clothing can visit the Zara stores. Similarly Arrow markets itself to the premium office lifestyle where probably your bosses and super bosses shop for the sharp clothing. Thus, this type of segmentation is mainly based on lifestyle or AIO.

PRODUCT CONCEPT AND CLASSIFICATION

PRODUCT: PRODUCT IS A BUNDAL OF BENEFITS PROVIDED TO COSTUMER BY THE PRODUCER TO FULLFILL IS NEEDS OR REQUIREMENT

WHAT IS A 'PRODUCT LINE'

A product line is a group of related products under a single brand sold by the same company. Companies sell multiple product lines under their various brands. Companies often expand their offerings by adding to existing product lines, because consumers are more likely to purchase products from brands with which they are already familiar.

THIS IS THE TOTAL TIME WHICH THE PRODUCT SPENDS DURING HIS LIFE AND THIS TIME PERIOD IS DIVIDED UNDER FOUR MEASURE HEAD.

1 . INTRODUCTION STAGE

2. GROWTH

3. MATURITY

4. DECLINE

0% 20% 40% 60% 80%

100%

YEAR

SALE

PRODUCT MIX-IT IS THE LIST OF ALL THE PRODUCT OFFERED FOR SALE BY COMPANY

FOR EXAMPLE- L.G. OFFERED FRIDGE,T.V.,MOBILE

ETC.

THE PRODUCT MIX CONSISTS OF –

1. BREADTH

2. DEPTH

3. CONSITENCY

1.Width

The width of the mix refers to the number of product lines the company has to offer.

For e.g. If a company produce only soft drinks and juices, this means its mix is two products wide. Coca-Cola deals in juices, soft drinks, and mineral water and hence the

product mix of Coca-Cola is three products wide. 2.Depth

The depth of the product mix refers to the total number of products within a product line. There can be variations in the products of the same product line. For e.g. Colgate has different variants under the same product line like Colgate advanced, Colgate active salt, etc.

3.Consistency

Product mix consistency refers to how closely products are linked to each other. Less the variation among products more is the consistency. For example, a company dealing in just dairy products has more consistency than a company dealing in all types of electronics.

1. AVAILABILITY OF RAW MATERIAL.

2. CHANGE IN MARKET DEMAND’

3. COST OF PRODUCTION.

4. GOVERNMENT POLICY

5. QUALITY OF PRODUCTION

6. COMPANY POLICY

7. COMPETITOR OF THE COMPANY

8. RESOURCES OF THE COMPANY

1. Step 1: Generating

2. Step 2: Screening The Idea

3. Step 3: Testing The Concept

4. Step 4: Business Analytics

5. Step 5: Beta / Marketability Tests

6. Step 6: Technicalities + Product Development

7. Step 7: Commercialize

8. Step 8: Post Launch Review and Perfect Pricing

. MEANING-A brand is a name, picture, design, or symbol, or combination of those items, used by a seller to identify its offerings and to differentiate them from competitors’ offerings. Branding is the set of activities designed to create a brand and position it in the minds of consumers

I. Advantages to Producers (i) Brand name helps in advertising in an easier way. (ii) Brand name establishes the permanent identity of the

product. (iii) Brand name promotes repurchasing. (iv) Competition becomes easier with the help of brand loyalty. II. Advantages to Consumers (i) Shopping consumes lesser time as branded products can be

easily identified. (ii) The quality of branded product undoubtedly is better. (iii) Prices of branded products are fixed by the companies

themselves and there are no frequent changes. (iv) The branded products own the responsibility for its

usefulness.

According to W.J.Stanton, “Packaging may be defined as the general group of activities in product planning which helps in value designing and producing the container or wrapper for a product.”

According to Pride and Farell, “Packaging involves the development of container and a graphic design for a product.”

OBJECTIVE OF PAKAGING

1- Safety

2- Agglomeration

3- Information

4- Advertising through labeling

5- Marketing by attractive packaging

ADVANTAGES OF PACKAGING

Packaging protects the product.

Packaging keeps the product from going bad.

Packaging decreases costs.

Packaging informs.

Packaging provides hygiene.

Packaging means economy.

Packaging is a preventive measure.

Price is the value that is put to a product or service and is the result of a complex set of calculations, research and understanding and risk taking ability. A pricing strategy takes into account segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors.

Cost-based Pricing: Cost-based pricing refers to a pricing method in which some

percentage of desired profit margins is added to the cost of the product to obtain the final price. In other words, cost-based pricing can be defined as a pricing method in which a certain percentage of the total cost of production is added to the cost of the product to determine its selling price. Cost-based pricing can be of two types, namely, cost-plus pricing and markup pricing.

Demand-based Pricing: Demand-based pricing refers to a pricing method in which the

price of a product is finalized according to its demand. If the demand of a product is more, an organization prefers to set high prices for products to gain profit; whereas, if the demand of a product is less, the low prices are charged to attract the customers.

Competition-based Pricing: Competition-based pricing refers to a method in which an

organization considers the prices of competitors’ products to set the prices of its own products. The organization may charge higher, lower, or equal prices as compared to the prices of its competitors.

Value Pricing: Implies a method in which an organization tries to win loyal

customers by charging low prices for their high- quality products. The organization aims to become a low cost producer without sacrificing the quality. It can deliver high- quality products at low prices by improving its research and development process. Value pricing is also called value-optimized pricing.

1. Internal or controllable pricing factors Under the internal organization factors include the objective of the business firm, production and distribution cost, marketing mix, nature of products, firm's expectations and reputation, etc. They are called internal pricing determinants and can be controlled by marketer.

a. Organization's objectives The objectives of a marketing organization greatly influence pricing. A manufacturing company, at the introductory stage of its new product , determines low price to bring them to markets. But some other firms may determine high introductory price of their products to recover their investment or to get expected return from the investment. Whatever the objective of the company may be, it affects price determination.

b. Cost of manufacturing and marketing The manufacturing and distribution cost greatly as well as directly affects pricing. If the cost for production and distribution is high, it becomes impossible to determine low price.

c. Other marketing mix components The other components of marketing mix i.e. product, place and promotion prepared by a business organization all affect pricing. The nature of products does not only make it possible bust also make it is essential to determine price of the product. Similarly, reputation or goodwill of organization also affect price determination. Likewise promotion cost also affects pricing .

2. External or independent pricing factors The external factors include customers, channel members, competitors, government, economic condition of country etc. These are independent factors and cannot be controlled by marketer.

a. Consumers and market Consumers and target markets also affect pricing of products. Those who determine price should pay careful attention to the elements of buying behavior and methods. More attention should be given to the characteristics of target market, condition of the products, consumers' perception, thought and attitudes towards the price and quality of the products etc.

b. Channel members Pricing is also affected by the members of distribution channal. The necessity and objective of channel members matching with pricing policy of the marketer can make distribution possible. The discount given to wholesalers or retailers is the important component in the profit to middlemen. So, the price determiner should get knowledge about the distributors' attitude towards the price and what price will they sell the products to consumers. Without written agreement, manufacturers cannot provide authority or direct the middlemen to fix final price, but can give suggestions.

c. Competition Price of most of products is determine by considering the competition in market price. The company with having large market share becomes the price leader. When it increases or decreases price of its products, other company also do the same or adopt the same policy. But if there is no domination or influence of any single company in the market, the marketer analyses and evaluates the prices of all main competitor companies, collects reactions and draws conclusion. In this way, competition among manufacturers affects price determinate.

d. Government Government policy and decisions also affect pricing. The government of each country have their own policy, decisions, rules and regulations. Price should be determined considering price control policy of government, sale tax, income tax policy etc. Prices of some products are controlled by government direction and the government itself determines prices of some products.

ANY SEQUENCE OF DISTRIBUTION FROM THE PRODUCER FROM THE PRODUCER TO THE CONSUMER INCLUDING ANY NUMBER OF MIDDLEMAN IS CALLED CHANNAL OF DISTRIBUTION

DISTRIBUTION CHANNEL ARE SYSTEM OF ECONOMIC INSTITUTION THROUGH WHICH A PRODUCER OF GOOD DELIVER THEN INTO THE HAND OF THEIR USERS

the path taken by the goods in its movement is termed as channel of distribution. The goods may be sent to the consumer directly or indirectly through middlemen. The channel of distribution may be classified as:

Selling through direct channels This is the oldest, shorter and the simple channel of

distribution. The producer sells the product directly without involvement of any middle man. The sale can be made door to door through salesman, retail stores and direct mail. Certain industrial and consumer goods such as clothes, shoes, books, hosiery goods, cosmetics, household appliances, electronic goods etc., may be sold through direct contact. Perishable goods such as vegetable and fruits can also be sold directly.

Producers -> Wholesalers -> Retailers -> Customer Two level Channel: It is commonly used channel of distribution. It is also known as traditional or normal channel of distribution. This channel is useful for small producers for small means. The channel is used for consumer goods. The common practice is that the manufacturer sells goods in large quantity to wholesalers, who sell goods to retailers in small quantity. Finally goods are sold to customers in pieces.

Producer -> Agent -> Retailer -> Consumer or Two level Channel: The common practice in this two level channel is that the goods are sold to the agent in bulk. The agent sells goods to retailer, who sells goods to customers in pieces. This channel is suitable where the retailers are few and geographically centered. This channel is commonly used in textile, machinery, equipment and agricultural products.

Producer -> Agent -> Wholesaler -> Retailer -> Customer or Three level Channel: The common practice in this three level channel is that goods are sold by the producer to the agent, who sells it to the wholesaler, who sells to the retailers who finally sells goods to customers. This is the longest channel of distribution. This practice is useful, when the producer wants to the relieved of the problem of distribution. This channel is popularly used in textile.

Producer -> Retailer -> Customer or one level Channel: Under this channel the producer sells goods to retailers, who sell the goods to customers. This channel is popular with the departmental stores, chain stores and supermarkets etc., because these are large scale retailers. Generally readymade garments, shoes home appliances and automobiles are sold through this channel.

1. Factors Related to Products: Product is a prime factor in channel selection. Product-related factors are among most relevant and powerful factors affecting channel decision. Channel must be fit the type and nature of company’s products. a. Perishability of Product b. Technical Aspects c. New v/s Existing Product d. Complexity and Risk Related to Use of Product e. Size of Product f. Divisibility of Product h. Legal Aspect

2. Market considerations:

The nature and type of customers is an important consideration in the choice of a channel of distribution. Following factors relating to the market are particularly significant.

(a) Consumer or industrial market:

The purpose of buying has an important influence on channel. Goods purchased for industrial or commercial use are usually sold directly or through agents.

This is because industrial users buy in a large quantity and the producer can easily establish a direct contact with them. To ultimate consumers, goods are sold normally through middlemen.

(b) Number and location of buyers:

When the number of potential customers is small or the market is geographically located in a limited area, direct selling is easy and economical. In case of large number of customers and widely scattered markets, use of wholesalers and retailers becomes necessary.

(c) Size and frequency of order:

Direct selling is convenient and economical in case of large and infrequent orders. When articles are purchased very frequently and each purchase order is small, middlemen may have to be used.

A manufacturer may use different chan­nels for different types of buyers. He may sell directly to departmental and chain stores and may depend upon wholesalers to sell to small retail stores.

(d) Customer's buying habits:

The amount of time and effort which customers are willing to spend in shopping is an important consideration. Customer expectations like desire for one-stop shopping, need for personal attention, preference for self-service and desire for credit also influence the choice of trade channel.

3. Company considerations:

The nature, size and objectives of the firm play an important role in channel decisions.

(a) Market standing:

Well-established companies with good reputation in the market are in a better position to eliminate middlemen than new and less known firms.

(b) Financial resources:

A large firm with sufficient funds can establish its own retail shops to sell directly to consumers. But a small or weak enterprise which cannot invest money in distribution has to depend on middlemen for the marketing of its products.

(c) Management:

The competence and experience of management exercises influence on channel decision. If the management of a firm has sufficient knowledge and experience of distribution it may prefer direct selling. Firms whose managements lack marketing know-how have to depend on middlemen.

(d) Volume of production:

A big firm with large, output may find it profitable to set up its own retail outlets throughout the country. But a manufacturer producing a small quantity can distribute his output more economically through middlemen.

(e) Desire for control of channel:

Firms that want to have close control over the distribution of their products use a short channel. Such firms can have more aggressive promotion and a thorough understanding of customers' requirements. A firm not desirous of control over channel can freely employ middlemen.

4. Middlemen considerations:

The cost and efficiency of distribution depend largely upon the nature and type of middlemen as reflected in the following factors:

(a) Availability:

When desired type of middlemen is not available, a manufacturer may have to establish his own distribution network. Non-availability of middlemen may arise when they are handling competitive products as they do not like to handle more brands.

(b) Attitudes:

Middlemen who do not like a firm's marketing policies may refuse to handle its products. For instance, some wholesalers and retailers demand sole selling rights or a guarantee against fall in prices.

(c) Services:

Use of middlemen is profitable who provide financing, storage, promotion and after sale services.

(d) Sales potential:

A manufacturer generally prefers a dealer who offers the greatest poten­tial volume of sales.

1. HELP IN PRODUCTION FUNCTION

2. MATCHING DEMAND AND SUPPLY

3. FINANCING THE PRODUCTION

4. AID IN COMMUNICATION

5. STABILIZING THE PRICES

6. HELP IN FORCASTING DEMAND

Promotion is the component of a company's marketing system that involves delivery of messages to target customers that emphasizes the benefits of your brand, products and services. A few common communication tools are used in a promotional plan. Goals of promotion include building brand awareness, creating favorable brand attitudes, gaining market share, inducing buying, building loyalty and growing sales.

In marketing, the promotional mix describes a blend of promotional variables chosen by marketers to help a firm reach its goals. It has been identified as a subset of the marketing mix.] It is believed that there is an optimal way of allocating budgets for the different elements within the promotional mix to achieve best marketing results, and the challenge for marketers is to find the right mix of them. Activities identified as elements of the promotional mix vary, but typically include the following:

Advertising is the paid presentation and promotion of ideas, goods, or services by an identified sponsor in a mass medium. Examples include print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, mobile apps, motion pictures, web pages, banner ads, emails. Personal selling is the process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation, often in a face-to-face manner or by telephone. Examples include sales presentations, sales meetings, sales training and incentive programs for intermediary salespeople, samples, and telemarketing.

Sales Promotion is media and non-media marketing communication used for a pre-determined limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include coupons, sweepstakes, contests, product samples, rebates, tie-ins, self-liquidating premiums, trade shows, trade-ins, and exhibitions.

Public relations or publicity is information about a firm's products and services carried by a third party in an indirect way. This includes free publicity as well as paid efforts to stimulate discussion and interest. It can be accomplished by planting a significant news story indirectly in the media, or presenting it favorably through press releases or corporate anniversary parties. Examples include newspaper and magazine articles, TVs and radio presentations, charitable contributions, speeches, issue advertising, seminars.[

Direct Marketing is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate directly to the customer, with methods such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertisin

Definition: Advertising is a means of communication with the users of a product or service. Advertisements are messages paid for by those who send them and are intended to inform or influence people who receive them, as defined by the Advertising Association of the UK.

The major advantages of advertising are: (1) introduces a new product in the market, (2) expansion of the market, (3) increased sales, (4) fights competition, (5) enhances good-will, (6) educates the consumers, (7) elimination of middlemen, (8) better quality products, (9) supports the salesmanship, (10) more employment opportunities, (11) reduction in the prices of newspapers and magazines, (12) higher standard of living!

Meaning of Personal Selling:

Personal-selling or salesmanship are synonymous terms; with the only difference that the former term is of recent origin, while the latter term has been traditionally in usage, in the commercial world.

Since a salesman, in persuading a prospect to buy a certain product, follows a personal approach; salesmanship, in the present-day-times in often popularly called as personal selling.

Sales promotion includes several communications activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.

PUBLICITY is mention in the media. Organizations usually have little

control over the message in the media, at least, not as they do in advertising. Regarding publicity, reporters and writers decide what will be said.

Upbeat

Passionate

Ingenious

Empathetic

Accountable

Well Prepared

Tech-Savvy

Highly Engaged

Goal Oriented

Relationship Driven