MARKETING MANAGEMENT AKU

 

Introduction:

 

The marketing concept come out in the mid- 1950s and challenged the proceeding concepts. For understanding the meaning of marketing, firstly understand the meaning of market. The word Market is derived from the Latin word MARCATUS which means merchandise or trade or a place where business is conducted. Marketing is not only a place of exchange but an arrangement that provides an opportunity of exchanging goods and services for money.

 

Peter Drucker, a leading management theorist, puts it this way –

“There will always one can assume, be need for some selling. But the aim of marketing is to make selling super fulvous. The aim of marketing is to know and understand the customer so well that the product or services fits him and sells it. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or services available.”

 

Marketing is a broader concept which includes all human activities in relation to the market .it includes product planning and development, buying and assembling, pricing distribution and selling, branding and packaging, standardization and grading , transportation and warehousing, promotion and advertising, financing, risk bearing, analysis of market in terms of its present and potential customers.

 

3. Origin and Meaning of Marketing :

 

In mid 1950s most firms were production oriented i.e. the manufacture emphasized only on production of quality products and then looked for people to purchase them. With the passage of time and technological advancement, the focus shifted to an effective sales force to find that customers for their increasing output. After 1950s the marketing shifted to impressive concern that the manufacturer first looks into consideration the customers wants and then manufactured their goods according to their interest.

 

The American Marketing Association defines

“Marketing as the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives.”

 

Marketing is a broader and comprehensive term and it includes set of activities and important resources necessary to direct and facilitate the flow of goods and services from the producer to the consumer. Marketing also availing the right goods and services to the right people, at the right place and at the right time.

 

4. Core Concept of Marketing:

 

Philip Kotler explained the core concept of marketing in his book – “Marketing Management” as,

 

Core Concept of Marketing

 

According to him, every human being has endless needs and demands . There are many products which can satisfy human wants and demands. These wants and demands can be fulfilled by exchange of goods and services . Marketers try to increase demand by making products more attractive , affordable and easily available .Market is a place where goods and services exchanged. Marketing means all those activities that take place in relation to market. Hence , the marketing is a social process by which individual and groups obtain what they need and want through exchanging products and values with others.

 

5. Definitions of Marketing :

 

To understand the concept of marketing different authors define marketing in their own way. Some definitions of Marketing are as follows:

 

5.1 According to Pyle,(Principles of Marketing) – “ Marketing comprises both buying and selling activities.”

5.2 According to Tousley ,Clark and Clark ( Principles of Marketing ) – “Marketing consists of those efforts which affect transfers in the ownership of goods and services and which provide for their physical distribution.”

5.3 According to Paul Mazur – “ Marketing is the delivery of standard of living.”

5.4 According to William J. Stanton – “ Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying products and services to present and potential customers.”

5.5 According to H.L. Hansen (Marketing )- “Marketing is the process of discovering and translating consumer needs and wants into product and service specifications, creating demand for these products and services and then in turn expanding the demand.”

 

6 Marketing Concepts :

 

To understand the meaning of modern marketing , one should be clear the meaning of marketing concepts. Marketing concepts has two words: Marketing and Concepts. A concept is a philosophy, an attitude and course of thinking. Marketing concept is the philosophy that guides the activities of marketing.

 

6.1 Definitions of Marketing Concept :

 

i) According to Philip Kotler in his book,” Marketing management “states that ,”Marketing concept is customer oriented backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organizational goals.”

ii) According to Arthur P. Felton, “ Marketing concepts is a corporate state of mind that insists on the integration and coordination of all marketing functions, which in turn are welded with all the other corporate functions, for the basic objective of producing maximum long range corporate profits.”

 

7. Development of Marketing Concept :

 

The history of development of marketing concept is divided into four stages:

7.1    1st Stage : Production – oriented Philosophy (1900 to 1930 )

 

Till 1930‟s , USA was facing shortage of production and at that time the general philosophy of business was ,” produce as much as u can , because there is a limitless market “. In this stage the main focus on increasing the production not the selling. Producers were busy to find and implement the ways and means which increases production. That‟s why this stage is called as production – oriented stage. The assumptions of this philosophy are :

• Anything that can be produced can be sold.
• To keep the cost of production is low
• Produce only certain basic products.

    7.2 2nd Stage : Sales – Oriented Philosophy ( 1930 to 1950 )

 

This stage lies between the periods from Great Depression to the end of World War II. During this stage the main problem was not production, but how to sell it. In this stage the focus of businessmen was shifted towards sales and this stage is called as sales – oriented stage. The main assumptions of this philosophy are:

• Production of good quality product
• Finding new buyers of the product
• Convince the buyers through good selling tactics.

    7.3 3rd Stage : Customer – Oriented Philosophy ( 1950 to 1990)

 

In this stage the needs of the consumer determined and then integrated efforts were taken to produce the goods that satisfied these needs and wants. The main assumptions of the philosophy are :

• Only desired products by consumer should be produced,
• Consumer is treated as a king of the market,
• To integrate all activities to satisfy consumer wants.
• Focus on long range profits rather than „quick sales‟.

    7.4  4th Stage : Social – Oriented Philosophy (1990 to update )

 

In this stage focus not only consumer satisfaction but also for consumer welfare or social welfare. The assumptions of social orientation philosophy are :

• Only those products produced which are desired by the consumers,
• The purpose of the firm is long term profit objective rather than quick sales,
• The firm should discharge its social responsibilities .

    8. Different Concepts of Marketing :

 

Marketing has been defined by different people in different ways. Some important concepts are as follows:

 

8.1 Production Concept :

 

This is one of the oldest concept of Marketing. According to that concept, producer believed that if the product is good and reasonably priced, it will be most popular if no special marketing efforts are made. In other words, customer prefer those products which are low priced and easily available.

 

According to Philip Kotler , “ the production concept hold that consumer will favour those products that are widely available and low in cost management in production oriented organization concentrate on achieving high production efficiency and Distribution coverage.”

 

This concept is very useful in Banks , General Hospitals and Industries which producing convenience products.

 

8.2 Product Concept :

 

According to this concept, producer believed that by making superior products and improving their quality, they will attract more customer. Superior products are always prefer by the customer.

 

According to Philip kotler, “ The product concept holds that consumer will favour those products that offer the most quality performance and features. Management in these product oriented organizations focus their energy on manufacturing good quality products and improving them over time.

 

This concept is useful for specialized nursing homes, bakeries and Industries which are producing electronic products.

 

8.3 Selling Concept:

 

According to that concept, the customer will not normally purchase the product unless they are convinced through proper advertising, sales promotion and salesmanship efforts. It shows that even the best products cannot have assured sales without the help of sales promotion. So, a marketing concept points out that goods are not bought but they sold with the help of salesmanship efforts, aggressive advertising and intensive sales promotion. This concept change the attitude of marketers as sales – oriented. Some important aspects of selling are:

• It provides a human touch to business transactions.
• It enhances the customer‟s confidence in the seller.
• It provides prospective customers of the product.

    This concept is practiced in the NGO‟s, college admissions, offices and political parties.

 

8.4 Marketing Concept :

 

This concepts focus on the determination of the requirements of potential customers and supplying product to satisfy their requirements. This concept highlights that the primary task of every business enterprise is to study the needs, desires and values of potential customers. The market concept focus on the four points :

• Target market
• Customer Needs
• Integrated Marketing
• Profit through Customer Satisfaction.

   8.5 Distribution of goods and services concept :

 

This is the traditional concept of marketing. According to this concept, marketing starts when the production process is completed and ends when goods are sold. It has no concern with the pre- production activities and after sales activities. Under this concept the firms are more concerned with maximizing their profits by maximizing their sales.

 

According to American Marketing Association, “Marketing is the performance of business activities that directs the flow of goods and services from producer to consumer or user.”

 

8.6 Creation of Utility concept :

 

According to this concept marketing is the creation of different types of utilities in goods and make them valuable.

 

According to Richard Buskirk, “ Marketing is an integrated system of action that creates value in goods through the creation of form, place, time and ownership utility.” It means there are four types of utilities: Form Utility, Time utility, Place Utility, Possession Utility.

 

For Example:

• Product Planning and development create form utility.
• Transportation and distribution channels create place.
• Storage and warehousing create time utility.
• Salesmanship and Advertising create possession utility.

    8.7 Societal Marketing Concept :

 

This is the new and broader concept of marketing. This concept focuses that the organization should first determine the needs, wants and interests of the target markets. It emphasized on producing goods and services which are beneficial for the society.

 

According to Philip Kotler, “ Societal marketing concept is customer- orientated concept backed by integrated marketing aimed at generating customer satisfaction and long-run customer welfare as the key to attaining long – run profitable volume.”

 

This concept is based on the following assumptions:

• The organization shall offer long – run consumers and public welfare,
• The mission of an organization is to create satisfied customers,
• The organization will offer only those products to the customers which are beneficial both to the consumers and the society.

    8.8 Delivery of Standard of living Concept :

 

According to this concept, marketing includes all those activities which create and provide a better standard of living to the society. Consumers are motivated to purchase new products that are easily available in the market. This concept is a customer-oriented concept and is more close to the modern concept of marketing.

 

Acc .to Paul Mazur, “Marketing is the creation and delivery of standard of living to the society.”

 

Acc. to Prof. Malcolm McNair, “Marketing is the creation and delivery of standard of living to the society.”

 

9. Difference between Traditional and Modern Concepts of Marketing:

 

10. Some New Concepts of Marketing :

 

10.1 Relationship concept :

Acc to Philip Kotler- “Relationship marketing is the process of building long–term, trusting, WIN-WIN relationship with customers, distributors, dealers and suppliers. Relationship marketing promises and delivers high quality, efficient services and fair prices to the other party overtime. It is accomplished by strengthening the economic, technical and social ties between members of the two organizations or between the markets and the individual customer.”

 

10.2 Mass Marketing Concept :

Mass Marketing means to sell the mass produced goods. This concept focus on sale of mass production by using tools of mass marketing i.e. mass advertising, mass promotion, mass distribution to large group of customers.

 

10.3 Niche Marketing Concept :

Niche Marketing is a concept where marketer plays a role of specialist in particular segments. For example: Quality Specialist for manage low or high quality of the products, Service Specialist for providing best services which are not provided by other firms, Product line Specialist for availing only one product line or product.

 

10.4 Strategic Marketing Concept :

Strategic marketing is a decision-making process which includes the analysis of internal potential and external environments of a firm in order to efficiently use the various marketing resources to achieve organizational objectives.

 

10.5 Stimulation Marketing Concept :

In this concept a proper stimulation is provided to customers for buying the product. There is no demand in this situation and people are not interested to purchasing the products, so to create demand stimulation is provided.

 

10.6 Synchromarketing Concept :

In this concept there is a state of irregular demand or we can say that demand is more than supply. In other seasons, whatever is supplied goes to waste for want of demand.

 

10.7Demarketing Concept :

Under this concept the demand for a product exceeds the supply and this is also known as overfull demand. the term overfull demand is defined as a situation in which demand exceeds the level at which the marketer feels able or motivated to supply it.

 

10.8Remarketing :

Remarketing is associated with the term “ faltering demand “ , which is invariably for all kinds of products, services, places, organization etc. In this state, there is a decline in demand for the products is possible, if no preventive action is taken to enhance the target market.

 

10.9 Database Marketing Concept :

Database Marketing is a process of collecting and using data on our customers and markets helps us to acquire a better understanding of the market so that we can utilize sales and marketing techniques in a more precise and cost effective way.

 

10.10 Network Marketing :

Network means a strong interdependence between the firms controlling different activities, i.e. firms are components of a value chain . So that is why the success of the value chain is not only dependent on its performance but is closely related to the interactions between all the firms making that chain. According to Kotler ( 1991)- “ Marketing started out as an analysis of how commodities are produced and distributed through an economic system. Subsequently, we became interested in distribution channels themselves and the functions marketers perform. What I think we are witnessing today is a movement away from a focus on exchange in the narrow sense of transaction towards a focus on building value- laden relationships and marketing networks …..”

 

 

 

 

 

 

Meaning of Marketing

 

Marketing refers to performance of set of activities essential to direct, regulate and facilitate the flow of goods and services from the manufacturer to ultimate consumer in the process of distribution. These activities include market analysis, market planning, product planning, product development, pricing of product or services, physical distribution, warehousing, financing, risk bearing etc.

 

As per American Marketing Association, ‘marketing is a process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives.’

 

Paul Mazur defined marketing as ‘the creation and delivery of standard of living to society.’

 

3. Nature of Marketing 

The follow points describe the nature of marketing:

• Marketing is a process of discovering and translating consumer wants into products and services.
• Marketing is a concept and way of thinking.
• Marketing is a dynamic process.
• Marketing relates with movement of goods and services from producer to ultimate consumer.
• Marketing creates time, place and possession utilities through warehousing, transportation and selling.
• It focuses on satisfaction of customer’s wants. Customer is considered as the ‘King’ of the market. All activities of marketing begin and end with customers.
• Marketing involves various activities such as product planning and development, product pricing, promotion, physical distribution and selling.
• Marketing is wider than selling. It not only aims at physical movement of goods but also focuses on customer satisfaction.
• Marketing involves creative thinking which provides a competitive edge to the organisation.
• Marketing information system as well as integrated marketing is essential to achieve marketing goals.

    4. Scope of Marketing

 

The scope of marketing is very wide. Various functions are performed under it. Different authors have included different functions in marketing. However, the general functions of marketing have been grouped under three major categories. These functions have been described as follows:

 

4.1     Merchandising Functions

It means those activities which are essential to make possible the availability of goods and services to the market. Various activities that are covered under merchandising functions have been described as follows:

• Product Planning and Development: Planning for product, is the first step of marketing programme in a firm. It implies all activities which are associated with the determination of line of products which a firm can offer. It involves extensive marketing research so as to provide a product or service as per customer’s needs. It helps in development and commercialization of new product, modification of existing lines and discontinuance of unprofitable product lines.

    Product development comprises of technical activities of product engineering and design. Product planning and development involves certain activities as described below:

    (i) Creation of Idea

(ii) Screening of Idea

(iii) Assessing technical feasibility

(iv) Analyzing its business prospects

(v) Designing the product i.e. giving shape, testing, packaging and labelling etc.

(vi) Test marketing (offering product as sample or launching it in small segment of market)

(vii) Analysing the reactions of customers and modifying the product accordingly

(viii) Pricing the product

(ix) Producing the product for sale in the local, national or international market (commercialization)

• Standardisation and Grading : Standardisation refers to the process of setting up standards so as to ensure that goods are produced as per those standards. A standard is a constant physical feature of the product like design, shape, size and colour. Standardisation brings uniformity in quality which further helps in marketing. A buyer can buy goods only by examining the sample rather than inspecting the whole lot. This saves lot of time and botheration of buyers and sellers. Grading means dividing the products into different classes as per their size, quality and other features. Products with similar features are placed in one grade and are distinguishable from other products. Since, all products of the manufacturer may not be of same quality, so they are divided into different groups in accordance with specifications set in standards and are given different grades. e.g. Basmati rice differs in quality, so they are classified according to quality and grades are assigned. Thus grading creates heterogeneity among groups but homogeneity within the group. Grading provides various benefits such as (i) sale of goods by description (ii) raising of loan by giving graded goods as collateral security (iii) smooth trading in commodity exchanges (iv)  winning buyer’s confidence as he is assured of a particular standard of goods.

• Product Pricing : Product pricing is vital function of marketing and involves the determination of adequate price which can achieve pricing objectives. There are various methods of pricing viz. cost- based method, demand based method, competition based method and perceived utility method. Prices of the products are determined by selecting an appropriate method. Correct pricing is necessary for generating long term demand of the product. There is a need to follow proper pricing strategies to survive in this highly competitive market. Prices should be fixed in such a manner that on one hand, customer’s preference for product is created and on the other hand, genuine profits are earned.

• Buying and Assembling: Buying means procuring goods at right time, at right price, in right quantity and quality and from a right source. It involves transfer of ownership from seller to buyer. Buying is an important function of marketing. Manufacturers have to purchase raw materials and other things. Trading houses buy goods for the purpose of selling them to others. Wholesalers and retailers buy good for resale purpose. Good buying ensures acquiring of such goods which can profitably be sold to customers. Buying decisions can be facilitated by gathering information through marketing research, consumers and salesperson.

Buyers follow different buying practices while making purchases such as:

(i) Hand to mouth buying : This is also known as conservative buying. Under this system, buyers purchase goods strictly as per their requirement.

 

(ii) Concentrated buying : It is the practice under which buyers make purchases from few suppliers or from a single supplier. They are able to secure certain benefits from the seller being their ‘loyal buyers’.

 

(iii) Diversified buying : This is also called as scattered buying. This practice refers to buying from different suppliers. Buyer can get competitive price, better service and wider choice.

 

(iv) Reciprocal buying : This refers to buying on reciprocal basis, i.e. if you buy from me, I will buy from you. Under this, there is assured market for the buyer.

 

(v) Speculative buying : It is practice of making bulk purchases so as to sell them at higher price in near future.

 

Assembling refers to collecting goods from different production houses and bringing them to a central place for sale. Assembling facilitates in providing goods of different variety at a place and time they are demanded. There are number of intermediaries who are involved in the process of assembling.

• Selling : Selling implies the process of transfer of title to goods or services in exchange of money. The buyer gets the ownership of goods but may or may not hold their possession immediately. Selling is considered as the vital function of marketing. In fact, all marketing activities are directed towards effective selling. A firm can earn profit only through successfully selling i.e. disposing of goods at reasonable prices. It is through selling that goods or services reach to ultimate consumer. Selling consists of personal and non-personal activities aimed at creating, maintaining and even developing demand for products or services. A seller has to establish contact with the buyer, create demand, negotiate terms and conditions of exchange, complete all formalities and finally enter into contract of sale i.e. legally transferring ownership of goods from seller to buyer. Selling is a creative and difficult art. A seller should have zeal, imagination and presence of mind. Best selling practices will ensure repeated or more sales. Selling can be personal or impersonal. Personal selling refers to face to face interaction between buyer and seller. It usually includes sales talk, demonstrations, handling prospective buyer’s queries, negotiations and transfer of ownership in exchange of money which may be collected immediately or at some future date as happens in case of credit transactions. Impersonal selling means selling the goods or services not through face to face interaction but by making use of courier or postal services. The orders are received over phone, through e-mail or by post and then goods are dispatched. Money can be collected before transferring ownership i.e. before goods are delivered or at the time of transferring ownership i.e. by V.P.P.

    There exists various methods of selling such as :

(i) Sale by Description

(ii) Sale by Inspection

(iii) Sale by Sample

(iv) Sale on Approval or Return basis

(vi) Hire purchase selling.

 

4.2 Physical distribution functions

 

It involves activities which are essential to move products from the place of production to the place of consumption. Various activities carried out under physical distribution functions are as follows:

• Warehousing: Warehousing means storing the goods from the time of their production till they are demanded and it involves certain other functions like sorting, packing in convenient lots, risk- taking etc.

    Need for warehousing

Warehousing is primarily needed to adjust demand and supply of goods in the market. Its need has been highlighted in the following points :

• Middlemen have to keep stock of goods to earn profits by supplying goods on time.
• Certain commodities are required to be stored to improve their quality like liquor, curing of tobacco etc.
• Warehousing is needed for goods which are produced regularly but have seasonal consumption.
• There are certain commodities which have consistent consumption throughout the year but they are produced seasonally like wheat. Such commodities are produced in large quantity and then stored.
• Sometimes there is need to break-up lots and repack goods in small lots which can be delivered to retailers. For this, bulk purchases are first stored in warehouses.
• Warehousing aids in widening the market and also in foreign trade

    Warehousing provides following benefits / services :

• It creates time utility in goods. Goods which are produced regularly but have seasonal consumption are stored so as to deliver them when they are in demand.
• Warehousing creates place utility in goods by making goods available at places of demand. Sometimes transported goods have to be stored before their final disposal. Warehouses located at different places help in it.
• It stabilizes prices by matching demand and supply of goods in the market.
• Warehousing helps in securing loan against security of goods deposited in the warehouses.
• Public warehouses share the risk of loss of damage of goods in storage.
• Sometimes, warehousing creates form utility in goods by improving their quality through storage like tobacco, liquor etc.
• Storage enables accumulation of stock and then transporting in bulk quantity. It saves transportation cost.
• Economies of large scale can be availed by producer or wholesaler. Goods produced in bulk or purchased in bulk, can be stored in warehouses.

• Transportation : Consumers are usually scattered geographically. They are made available goods and services at their places through various means of transport like airways, waterways, roadways and railways. Each mode of transport has its own merits and limitations. These modes are selected by considering factors like nature of product, speed, performance, cost, and availability of mode of transport. Goods are also made available to wholesalers and retailers through various means of transport for resale. Transportation creates place utility in goods.
• Inventory Management : Inventory management is important function of marketing. It aims at reconciliation of two conflicting goals of management i.e. (i) to offer better customer service by strictly dispatching orders as per scheduled delivery dates and (ii) to minimize capital investment and cost of handling inventory. Inventory acts as a link between customer’s orders and company’s production activity. There is a need to maintain an adequate inventory level which calls for effective inventory management. The size of inventory is determined by keeping in mind market demand and inventory cost. However, the optimum size is also decided by considering responsiveness of distribution system and desired level of customer service. The firm determines maximum stock level and minimum stock level. Maximum stock level helps in meeting sudden rise in demand whereas minimum stock level points out the need to replenish the stock and avoids in running out of stock position. Hence, inventory control is exercised to avoid (i) out of stock position and (ii) piling up a large undesired stock.

    4.3 Auxiliary Functions

These functions facilitate the process of transfer of goods from the manufacturer to the consumers and are described below:

• Risk bearing : The process of transfer of goods from the place of production to the ultimate consumer involves many risks and loss during transportation and warehousing such as theft, damage, pilferage, obsolescence, breakage, fall in demand etc. There is also a risk of loss due to non-payment by buyer. Marketers are confronted with these risks. However, insurance and banking facilities try to mitigate these losses or risks.
• Financing : Finance is considered as lubricant of marketing machinery. Production of goods does not mean immediate consumption too. There is time gap between the production of goods and their sale. This results in blockage of working capital. However, funds are required to purchase raw material and for paying warehouse rent and other associated warehousing costs. It is also required to pay for transportation cost. There is further need of finance when sales are made on credit basis. Many financial institutions and banks provide loan facilities to meet financial requirements of firms and middlemen. Many a times, finance is raised against goods which are presented as collateral securities. Thus, banking companies and financial institutions act as facilitators in marketing of goods and services.
• Packing and packaging: Goods may get damaged during transportation or they may be damaged in warehouses. Goods are packed in suitable containers so as to protect them from leakage, spoilage or breakage. Packing means to wrap or fill goods with the purpose of their protection and convenient handling. It will also increase their durability. Package means specially designed wrapper, container or case which is used for packing goods. It gives identity to the product. Packaging refers to putting goods in convenient sized lots like bottles, jars, cans, bags etc. It will help in making goods familiar with consumers. Packaging facilitates branding and advertising of goods.
• Branding : Branding means giving name or symbol to a product so as to enable consumer to distinguish it from other similar products. Branding helps in popularizing the products. Mass advertising media plays an important role in creating popularity of certain products among consumers. However, to survive in market, producers should provide quality in branded goods. Further it is necessary that brand name should be attractive, suggestive and easy to spell and remember. Branding can be done by giving special names to the product like Dalda Ghee, Dove Shampoo or by using names of manufacturers such as LG refrigerators, Bata Shoes etc.
• Advertising and Sales Promotion : These activities are necessary to create, maintain and develop demand for the product. Even best products may fail to attract customer due to lack of proper advertising and sales promotion.
• Market analysis : Marketing involves the study of market environment which consists of political, legal, cultural, social, technical and ecological factors. These factors constitute remote environment. There is need to collect information about consumers, competitors and suppliers that constitute operating marketing environment. The analysis of market environment provides information about opportunities and threat prevailing in the external environment. Marketers can make or adjust plans according to the trends prevailing in the market. The marketing information will enable firms to produce products as per customers’ needs and wants and develop a good marketing mix. It will also help in accelerating sales by proper product positioning and pricing.

    5. Importance of Marketing

 

Marketing is indispensable in today’s business world. It plays a significant role in smooth transfer of goods and services from the place of production to the place of consumption. The following points highlight the importance of marketing:

• Marketing facilitates exchange of goods: Marketing helps in the possession of goods and transfer of ownership from seller to buyer. Marketing through promotion brings together the buyers and sellers and facilitates sale of goods as per need and wants of the consumers. It creates possession, place and time utilities in goods and services. Through transportation, goods are provided to the consumers who may be scattered throughout the geographical area or region. Warehousing provides time utilities by holding the stock of goods when they are not in demand.
• Marketing increases market base: Marketing locates the untapped areas, stimulates demand and creates demand for new product and services. Banking, insurance and financing facilities ensure smooth flow of goods to distant markets. It, thus, widens the market. The manufacturers are able to increase production as well as sale of their products.
• Marketing gives boost to other activities: Marketing increases demand of various related activities like banking, insurance, warehousing and transport. Advertising, sales promotion and direct marketing efforts also get a boost as they are needed more to accelerate sales.
• Marketing raises standard of living of people: A society enjoys a better standard of living when necessities, comforts and luxuries are within the reach of a large number of people. Large scale production and availability of wide variety of products have become possible due to marketing. Transportation and warehousing functions have facilitated the transfer of goods to distant places. People living in remote areas or other places are able to use a variety of goods at affordable prices. Thus, people are enjoying a better standard of living.
• Marketing provides satisfaction of human wants: Marketing informs and guides the people about product availability and its utility. People come to know about variety of products. They are able to select the product which can satisfy their need and wants in best possible manner. Marketing makes possession of goods easier for consumers and thus provides satisfaction.
• Marketing creates job opportunities: In the highly competitive market, only organized marketing programs can be implemented. It calls for the need of services of people who are specialized in their fields. Marketing of goods has become complex. Therefore, organisation creates a separate department for marketing which is headed by a marketing manager. Other staff is also appointed to assist him. Thus, gainful employment is provided to large number of people. Apart from this, demand for product has been extended to a larger region. During the process of transfer of goods, services of various agencies are required. The increasing volume of trade has increased demand for these specialized services. Many people are now employed in insurance sector, banking sector and advertising companies.
• Marketing creates stable economy: Marketing creates a link between production and consumption. Goods are easily available at any part of the country or even in other countries due to fast means of transportation, communication and warehousing facilities. There is no shortage of goods. Goods are produced in abundance and stored to supply as per their demand. Hence, prices of goods do not fluctuate. Marketing creates and maintains demand for product through various promotion tools. Large scale production, higher demand, more employment and minimum price fluctuation create a stable economy.
• Marketing helps in optimum use of resources: The unused plant capacity increases cost per unit as that portion of plant does not contribute anything but consumes resources in the form of maintenance charges, rent of plant, insurance charges and depreciation. Marketing creates more demand. To meet this demand, plants are used at maximum capacity. Standing charges are justified due to increase in volume of production and as a result cost per unit reduces. Thus, men, machinery, money and plant are optimally utilized and benefit (in the form of less cost) is passed to consumers.
• Marketing helps in increasing national income: Marketing activities help in more production of goods and services and increase in sales. It also improves earning capacity of people due to employment opportunities. The net effect of marketing efforts is thus increase in per capita income as well as national income.
• Marketing provides base for making production decisions: Marketing research is an important marketing function. Customer needs and wants are assessed through market surveys. Consumer demands are forecasted on the basis of surveys as well as retailers and wholesalers’ estimates. The buying pattern of customers is analyzed. This provides valuable information to producer regarding what to produce, when to produce and how to produce. Thus, decision regarding production becomes more effective.
• Marketing serves various sections of society: Marketing helps producer in increasing sales. Consumers are benefited as they get products and services to satisfy their wants. Government gets more revenues in the form of taxes. NGO gets more funds to carry on welfare activities. Society at large is benefited in terms of more employment opportunities, optimum utilization of resources, better services, innovations and reasonable cost of products.

Thus, marketing is the driving force of the economy. No economic activity can be imagined without marketing. It provides invaluable services to various sections of society. It is responsible for the progress of the nation.

 

 

Introduction

 

Production has no meaning unless it reaches to the persons who want them. People have wants and needs. These wants and needs are fulfilled through the process of production and exchange of goods and services. But goods and services do not move automatically. There is a mechanism to facilitate the process of exchange. This mechanism is a set of activities and is termed as marketing. Thus, marketing encompasses all tasks and activities of exchange conducted by manufacturers and intermediaries with an aim of satisfying demand of consumers. Marketing includes selling. However, the term selling and marketing are used interchangeably. There is a need to understand the concept of selling and marketing and the difference between the two.

 

3. Selling

 

Selling implies the process of transfer of title to goods or services in exchange of money. It is through selling that goods or services reach to ultimate consumer. Selling is considered as the vital function of marketing. In fact, all marketing activities are directed towards effective selling. A firm can earn profit only through successfully selling its goods i.e. disposing of goods at reasonable prices. Selling consists of personal and non-personal activities aimed at creating, maintaining and even developing demand for products or services.

 

The selling process includes following steps:

•  Establishing contact with the buyer
• Creating demand
• Negotiating terms and conditions of exchange
• Completing all formalities
• Entering into contract of sale i.e. legally transferring ownership of goods from seller to buyer.

    Selling is a creative and difficult art. A seller should have zeal, imagination and presence of mind. Best selling practices will ensure repeated or more sales.

 

3.1 Types of selling

Selling can be classified on the basis of channels used for distribution of goods. It can be:

(i) Direct selling (ii) Wholesaling (iii) Retailing (iv) Franchising

 

3.1.1. Direct selling (Channelless Retailing )

Direct selling means transferring the title to goods and their possession directly to the buyer. It aims at serving the customers without engaging any middleman. Under direct selling, various means of promotion are used to induce customers. Advertising is used to create awareness and interest. Personal selling is required to convince the prospect and secure sale. Sales promotion is employed for impulse buying.

 

Direct selling can be personal or impersonal. Personal selling refers to face to face interaction between buyer and seller. It usually includes sales talk, demonstrations, handling prospective buyer’s queries, negotiations and transfer of ownership in exchange of money which may be collected immediately or at some future date as happens in case of credit transactions.

 

Impersonal selling means selling the goods or services not through face to face interaction but by making use of courier or postal services. The orders are received over phone, through e-mail or by post and then goods are dispatched. Money can be collected before transferring ownership i.e. before goods are delivered or at the time of transferring ownership i.e. by V.P.P.

 

There are various means of direct selling which are summarized as follows :

(i) Mail order Sale : Mail order sale means selling by post. The seller approaches the customers through post office by using mail publicity i.e. sending catalogue, pamphlets, booklets etc. Orders are collected through the mail or over the telephone. However, orders are executed through V.P.P. Books, toys, clothes, footwear and cutlery are the common examples of goods which are sold by mail order. Follow up method is generally used in mail order by sending a series of reminding letters to persuade the prospect.

 

(ii) Door to door selling : Goods may be sold directly by door to door selling through salesmen. Initial contact can be made over phone or mailed in coupon. This is an effective method but costly. This method can be employed to create market for novel product.

 

(iii) Telephone shopping or teleshopping : Telephone shopping means making direct phone contact with the prospects and giving them details about product to convince and secure orders over phone. In teleshopping, products are demonstrated on T.V. screen and toll free numbers or contact numbers are also displayed. Orders are received on phone or through e-mail. Free home delivery is provided to a customer which is a convenient and cheaper method for shopping. In-store sale is facilitated through telemarketing. It also reduces in-home selling cost as salesperson is not required to convince the prospect.

 

(iv) Automatic vending machines : Well known brands are sold by vending machines. Cold drinks, Coffee or Shakes are some products which are suitable to be sold by vending machines.

 

(v) Manufacturer’s showrooms : In this method of direct selling, sales are undertaken through manufacturer’s outlets or exclusive showrooms. In India, textile industry is making extensive use of showrooms. These showrooms also act as promotion tool. For instance, one can find a large number of Vimal, Raymond showrooms in most of the urban areas across the country.

 

(vi) Factory Outlets : These outlets are owned and used by manufacturers to sell surplus goods. Goods are generally sold at less price which may be as much as fifty percent below the retail price.

 

3.1.2 Wholesaling

It means selling the product through wholesaler. Wholesaler as merchant middleman buys goods from manufacturers in bulk quantity and sells them to retailers or buyers in relatively small lots. However, wholesaler as agent middleman does not take title to goods. He only facilitates the exchange process and charges commission for his services. He is an important link in distribution chain and performs various functions.

 

3.1.3 Retailing

It refers to selling goods through retailers who buy goods from wholesaler in small quantity and sell them to customers in much smaller lots. Big retailers buy directly from manufacturers. Retailer is also an important link in distribution chain. He deals directly with consumers and collects information about their needs which is helpful to producers.

 

3.1.4 Franchising

Franchising is a system of selling under which an exclusive right is granted by the manufacturer to certain dealers to sell his product in specified areas. The franchiser (manufacturer) provides equipment and also managerial services to franchisee (dealer). The franchiser retains control over the style or technique by which products are sold.

 

3.2 Methods of selling

There exists various methods of selling which are explained as follows :

    (i) Sale by Description : In this method, goods are sold by description given by the buyer regarding shape, brand, design, content and such other features. There is no inspection of goods before purchase. In such transactions, there is an implied condition that goods will be in conformity to the description otherwise the buyer is entitled to cancel the agreement.

 

(ii) Sale by Inspection : This method refers to inspection of goods by the buyer before making actual purchase. The goods are sold only after buyer is satisfied about product in all respects.

 

(iii) Sale by Sample : It refers to selling goods by showing only sample i.e. small portion which is expected to represent the whole lot of actual goods. There is implied condition that lot of goods supplied by the seller shall correspond to the sample shown.

 

(iv) Sale on Approval or Return Basis: In this method, goods are sent to prospective buyer (i.e. who may become actual buyer in future). If he is satisfied with goods, he sends an intimation of approval to the seller. However, the buyer will have to return the goods within the specified period if he does not like them. He cannot keep goods for long if no intimation of approval or disapproval is given.

 

(v) Hire Purchase Selling : This is a system of selling under which an agreement is entered into between seller and buyer that buyer will take possession of goods and will make payment in instalments at a fixed interval. The ownership of goods will be transferred to buyer after the payment of last instalment.

 

4. Marketing

 

Marketing is a network of activities essential to transfer goods and services in exchange of money or money’s worth for the mutual benefit of consumers and manufacturers. Marketing focuses on consumer satisfaction. Marketing plans, policies, strategies and programmes are formulated to effectively serve the customer demand. Marketing research is conducted to get adequate and latest information regarding target markets and current consumer wants. Marketing aims at creating form, place, time, possession and awareness utilities.

 

Marketing as per, Philip Kotler, ‘is a customer oriented approach backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organisational goals.’ Marketing starts and ends with customers. Marketing information and planning, integrated marketing activities and feedback and control are the foundations of marketing. These have been discussed in detail as follows:

 

(I) Marketing information and planning

 

Marketing can be effective only when it has sound information system and planning. For this marketing analysis is necessary. There is also a need to develop strategy and marketing programme.

• Analyzing marketing environment : Marketing starts with collecting information to develop a data base for effective decision making. Therefore, marketing environment is analysed. As the goods produced are to be offered to the consumers or buyers, the study of their preferences, tastes, buying motives, willingness to buy, paying capacity and desire for credit helps in assessing their needs, desires and developing product accordingly to ensure maximum consumer satisfaction. The intensity of competition which may emerge from existing firms, new entrants and firms dealing in substitute products is assessed. Competitors’ marketing strategies and policies are studied. It provides direction for effective marketing decisions regarding product, price, distribution and promotion. Apart from this, political, economic, social, cultural, technological, legal, political, demographic and ecological factors are analysed. This analysis reveals opportunities or threats for the firm. It also gives clue about potential demand. On the basis of this analysis, the firm prepares itself with effective marketing plans and programmes to act as early beginners for availing opportunities or protect from threats emerging from the environment. The firm carries out marketing research and prepares the customers’ profile, suppliers’ profile, industry profile, market profile and competitor profile for better assessment of environment, market segmentation and selection of target market.
• Assessing the internal environment : The firm assesses the internal environment to determine its own strengths and weaknesses. It may be its production capacity, product, manpower, technology, financial resources or marketing capabilities. Assessment of internal environment is essential so as to develop the marketing mix with limited resources in a way that it will suit the marketing needs in a best possible manner.
• Developing marketing strategy : Marketing strategy is a comprehensive and integrated plan of action designed to achieve marketing objectives. For formulating marketing strategy, a firm first decides target market by analyzing the market and selecting some segments as it thinks appropriate i.e. market segmentation is done and target market is selected. The customers’ profile, characteristics, buying behaviour or motives in target market is studied which will help in finalizing marketing mix. Further product positioning and product differentiation is decided. After this, an appropriate marketing mix is developed. The relative weightage of each component i.e. product, price, promotion and distribution in total marketing programme is decided and the impact of uncontrollable factors on this marketing mix is determined. Various product, price, distribution and promotion strategies are decided for the target market. Different strategies are co-ordinated for developing overall marketing strategy.
• Formulating functional plans and programmes : For the success of marketing strategy, detailed functional plans are prepared such as sales-force plan, pricing plan, sales and profit plan, product mix plan, distribution channels plan, sales promotion plan, cash flow plan and advertising plan. The functional plans are activity related plans. These plans or sub programmes are consolidated into marketing programme. This comprehensive marketing programme becomes the marketing plan.

    (II) Integrated marketing activities

For serving the customers in a better way, various activities are performed in a co-ordinated manner. These activities are essential and if performed in an organised way, these provide synergic effect. Various activities which are performed for smooth flow of goods and services are as under:

• Product designing : The execution of marketing plan starts with designing and developing the product as per requirement of target market. Design is the major selling feature of all products. Good design provides attractiveness, safety, utility, ease of operation and advertising feature.
• Product line simplification: It means eliminating from product line those products which provide no incentive to the firm to continue their production. A firm goes for simplification in case of decreasing marketing share, increasing promotional budgets, decreasing sales volume as a percentage of firms’ total sales or increasing variable costs as compared to revenue.
• Diversification: Diversification means increasing the number of products in product portfolio of the organisation. A company opts for diversification for corporate survival, stability or growth purpose.
• Branding: Branding means giving name or symbol to a product so as to enable consumer to distinguish it from other similar products. Branding helps in popularizing the products.
• Packaging: Package means specially designed wrapper, container or case which is used for packing goods. It gives identity to the product. Packaging refers to putting goods in convenient sized lots like bottles, jars, cans, bags etc. Packaging facilitates branding and advertising of goods.
• Product labelling: Labels are fixed to products to describe their quantity, quality, ingredients, and other features. Labelling is compulsory by the manufacturers in case of drug, cosmetics and food items. They are required to give their name, date and place of manufacture, expiry date and batch number.
• After-sale services: Manufacturers or dealers of machines, instruments, equipments, gadgets etc. provide after sales services.
• Standardisation and Grading : Standardisation refers to the process of setting up standards so as to ensure that goods are produced as per those standards. Grading means dividing the products into different classes as per their size, quality and other features.
• Product Pricing : Product pricing is vital function of marketing and involves the determination of adequate price which can achieve pricing objectives. Prices are fixed in such a manner that on one hand, customer’s preference for product is created and on the other hand, genuine profits are earned.
• Buying: Buying is an important function of marketing. Manufacturers have to purchase raw materials and other things. Trading houses buy goods for the purpose of selling them to others. Good buying ensures acquiring of such goods which can be profitably sold to customers.
• Inventory Management : Inventory management is important function of marketing. It aims at reconciliation of two conflicting goals of management i.e. (i) to offer better customer service by strictly dispatching orders as per scheduled delivery dates and (ii) to minimize capital investment and cost of handling inventory.
• Warehousing: Warehousing means storing the goods from the time of their production till they are demanded and it involves certain other functions like sorting, packing in convenient lots, risk- taking etc.
• Transportation : Consumers are usually scattered geographically. They are made available goods and services at their places through various means of transport like airways, waterways, roadways and railways. Goods are also made available to wholesalers and retailers through various means of transport for resale.
• Advertising and Sales Promotion : These activities are necessary to create, maintain and develop demand for the product. Even best products may fail to attract customer due to lack of proper advertising and sales promotion.
• Selling : Selling implies the process of transfer of title to goods or services in exchange of money. The buyer gets the ownership of goods but may or may not hold their possession immediately. Selling is considered as the vital function of marketing.

    (III) Feedback and control

 

The marketing activities aim at securing maximum customer satisfaction and increasing profitability. Therefore, post sale research is conducted. The customer satisfaction level is assessed through surveys. Their opinions and problems are noted. If required, necessary modifications are made to provide better product in future. Changes may also be initiated in pricing, distribution and promotion policies as per the information collected through customers, distributors, wholesalers and retailers. Thus, feedback helps in improving marketing effectiveness, profitability and customer satisfaction.

 

5. Selling Versus Marketing

Selling and marketing are not same. These can be distinguished as follows:

 

Emerging Concepts in Marketing

Introduction

 

Marketing is one of the important parts of doing business. Marketing is managing the profitable customer relationships. The basic objective of marketing is to attract the new customers by promising and offering superior value and to retain and grow current customers by delivering satisfaction. Marketing deals with customers more than any other business function and deals mainly with the customers. Building customer relationships based on the customer value and satisfaction is at the very core of modern marketing. Sound marketing is essential for the success of any company. Marketing is practised by the large profit making organisations like Microsoft, IBM, Reliance, Godrej, etc. as well as it is practiced by the non profit making organisations like churches, schools, colleges and charitable institutions like CRY, Help Age, etc. . In the modern era, new methods of marketing and concepts came into way of life. One cannot be successful by sticking to the old. So, in order to survive in this age of competition, every business concern should adopt the new advancements in production sector, selling sector as well as in marketing and so on.

 

The historical evolution of marketing is found to have moved through the distinct stages. The major eras are the production era, sales era, marketing era and the relationship era. The production era was based on the philosophy that good products at affordable prices will sell by itself. When this philosophy failed and piles of unsold inventory resulted as the goods did not sell themselves, the sales era started. Selling was the prime importance in this era and the major concern was to find customers for inventories that went unsold. Next came the era of marketing with more importance on the identification of customer needs and wants prior to producing the product. During the marketing era, marketing moved to the forefront of the business strategy and satisfying the customer needs become the responsibility of everyone in the organisation. Then came the relationship marketing era which stressed on the customer oriented marketing, value and potential of the customer retention and creating the long-term relationships by providing reasons to keep existing customers.

 

3. Meaning of Marketing

 

Marketing is a process through consumer and producer came together to exchange the goods and services in order to get their respective benefits. In marketing, the product physically and mentally moves from producer to the consumer. In other words, marketing is an organisational function and is a set of functions for creating, communicating and delivering values to customers and also for managing customer relationships in such ways that benefits the organisations and all other stakeholders. Marketing includes selling also. The main preference is given to the consumers. Thus, it focuses on the customer needs.

 

 

4. Definitions of Marketing

 

“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging of products and value with others.”

–Philip Kotler

 

“Marketing in a free economy is the skill of selecting and fulfilling consumer desires so as to maximise the profitability per unit of capital employed in the enterprises”

–Professor Glasser

 

“Marketing is concerned with all the resources and activities involve in the flow of goods and services from the producer to the consumer”

–Wheeler

 

“Marketing includes all those activities having to do with effecting changes in ownership and possessions of goods and services. It is that part of economics which deals with the creation of time, place and possession Utilities and that phase of business activity through which human wants are satisfied by the exchange of goods and services for some valuable considerations.”

–American Marketing Association.

 

5. Objectives of Marketing

 

The main aim of any business is to earn maximum profits. Thus, for achieving this aim of earning higher profits, products and services are to be sold to the consumers in a very effective and efficient manner in the market. Consumers will buy commodities only if the products satisfy their needs. Therefore, following are the objectives of the marketing:

• Creation of Demand: The first and foremost step of marketing is to create the demand. Products should be produced according to the demand and preferences of the consumers as ‘consumer is the king of the market’. Demand can be created by attracting the customers through creative advertisement, personal selling, sales and promotion.
• Capturing Market Share: Marketing also aims at capturing reasonable market share. More the share higher will be the profits. New and innovative high quality products can attract the consumers more. Market share can also be captured through advertisement, low cost products, and better after sales services and etc.
• Services to the Society: It is the acute need of every business so as of marketing to serve the society. Marketing aims to provide services to society by-

1. Providing large variety of goods and services.
2. Supply new and socially useful goods.
3. Providing better quality products at very reasonable prices.
4. Generating employment opportunity.

• Marketing Policies: Policies are the guidelines to action. Marketing manager must formulate effective and intelligent policies of marketing for the better results. Marketing objectives can be achieved by keeping close to the customers and by knowing their tastes and preferences. In order to fulfil this, policies should be developed and implemented.
• Build Goodwill: Goodwill is the image and reputation of the business. It effects the sales of the business to a great extent and hence the profits too. Marketing also aims at enhancing the goodwill through the marketing techniques such as providing good quality products at affordable prices, timely supply of the goods, satisfying the customer needs and so on.
• Profitability: No business can live without earning the profits. So, marketing plays a vital role in earning the profits. As profit has direct relation to the sales, therefore, marketing management tries to increase its sales by market development and exchanging goods. However, such profits should not be earned at the cost of customers because customer can affect the sales of the business. In order to earn the products only those goods are to be produced which are needed by the customers.

    6. Emerging Issues in Marketing

 

Marketing, which originated as mere an exchange of goods and services, has changed its force with the passage of time and due to economic reforms including globalisation, liberalisation and privatisation. In the present scenario, various new advancements have taken place which helps in the growth and development. Enormous issues are there in every field of life whether it is business, education, medical, banking etc. Moreover, internet has changed the life of everyone. Products and services can be sold online. This gives rise to many contemporary issues in the area of marketing. Like online banking, online marketing has also come into existence for the benefit of producers and consumers. This technology made the life easier for people and it is very economical also.

 

Various new emerging issues in marketing are as follows:

 

6.1 E-Marketing: – E-Marketing or Internet Marketing means marketing via electronic medium. It refers to advertising and marketing efforts that use internet in order to sell the goods to the customers worldwide by assessing web with the help of electronic commerce. E-Marketing is the application of the broad range of the information technologies in marketing functions so as to achieve the following:

• Transform marketing strategies to create more customer value through more effective segmentation, targeting, differentiation and positioning strategies.
• More efficient planning and execution of the conception, distribution, promotion and pricing of goods and services and ideas.
• Create exchanges that satisfy individual consumer and business customer‟s needs and wants.

   E-marketing is the result of application of information technology applied to the traditional marketing. It increases efficiency in all traditional marketing functions. The technology of e-marketing transforms many marketing strategies resulting in the new business models that add customer value and increases the company‟s profitability.

 

E-marketing evolves from the company‟s overall e-business strategies and selected business models. It starts from the business environment where legal, technological, competitive, and market-related and other environmental factors external to the company create both opportunities and threats. Companies perform SWOT (Strength, Weakness, Opportunity and Threats) analyses to discover what strengths they have to deploy against threats and towards opportunities. This SWOT analysis leads to e-business and e-marketing strategies. Companies select e-business strategies and e-business models, and create e-marketing plans that will help the company accomplish its overall goals. The final step is to determine the success of the strategies and plans by measuring the results.

 

Kotler and Armstrong defines internet marketing: “Internet marketing is the company’s efforts to market products and services and build customer relationships over the internet.”

 

6.1.1 Types of E-Markets: E-Marketing is basically carried out in the following types:

• B2B: This involves business to business marketing or intercompany business online. Business organisations sell their products online and services to other business organisations using the internet. It covers the purchasing, service, support and payment systems.
• B2C: This involves business to customer marketing, where the products and services are marketed by business organisations directly to the ultimate consumers using the internet. Activities include sales, services, customer information and customer support.
• C2C: This involves consumer to consumer marketing, where consumers directly sell their products or services to other consumers using the internet. Firms like eBay provide such facilities.

   Among these types, the maximum e-marketing activities take place and the maximum online marketing opportunities lie in the B2C where marketers sell directly to ultimate consumers.

 

6.1.2 Benefits of e- marketing

Benefits to consumers	Benefits to companies
Comprehensive product information	Reduced cost of sales
Anytime, anywhere service	Enhanced brand loyalty
Most economical and saves time	Quick adjustment to market conditions
More convenient	Relationship building

   6.2 Social Marketing: – Social marketing is the systematic application of marketing along with other concepts and techniques to achieve specific behavioural goals for a social good. It can be applied to promote, for example make the society avoiding demerit goods and thus to promote the society‟s well being as a whole. It can include persuading people not to smoke in public areas, using helmets while driving two-wheelers, and wearing seatbelts while driving cars. Social marketing began as a formal discipline in 1971, with the publication of “social marketing‟ by father of marketing Philip Kotler and Gerald Zaltman in 1971 in their article “Social Marketing: An approach to planned social change.” Social marketing aims at providing benefits to the society as whole and to promote the quality of life of human beings on long term sustainable basis. Moreover, social marketing has welfare objectives and is also concerned with ideas, behaviour and practices.

 

In the words of W. Smith, “Social marketing is a process of influencing human behaviour on a large scale using marketing principle for the purpose of social benefit rather than commercial profit.”

 

6.2.1. Features of Social Marketing:

• Consumer oriented process to realise organisational (social) goals.
• Emphasis on the voluntary exchange of goods and services between producers and consumers.
• Social marketing is consumer oriented.
• It focuses on the consumer behaviour.
• Using social networks for the distribution of products.
• Continuous monitoring and revision of program helps in removing various obstacles and help to achieve the desired goals.

    6.2.2 Evolution of Social Marketing

 

Social marketing began as a formal discipline in 1971, with the publication of “Social Marketing: An Approach to Planned Social Change” in the Journal of Marketing by marketing experts Philip Kotler and Gerald Zaltman. Kotler used the term “Social Change Campaigns” to describe activities expected to promote behavioural changes. According to him, a social change campaign is an organised effort conducted by one group which attempts to persuade others to accept, modify or abandon certain ideas, attitudes, practices or behaviour. In 1988, Craig Lefebure and June Flora introduced social marketing to the public health community, where it has been most widely used and explored. They were convinced that there was a need for large scale, broad-based, behavioural change focussed programmes, to improve public health and outlined eight essential components of social marketing that still hold good today. They are as following:

• A consumer oriented to realise the organisational goals.
• An emphasis on the voluntary exchanges of goods and services between providers and consumers.
• Research in audience analysis and segmentation strategies.
• The use of formative research in product and message design and the pretesting of these materials.
• An analysis of distribution channels.
• Use of the marketing mix- utilising and blending product, price, place and promotion characteristics in intervention planning and implementation.
• A process tracking system with both integrative and control functions.
• A management process that involves problem analysis, planning, implementation and feedback functions.

    Examples of Social Marketing:

• Ariel: Ariel is a detergent manufactured by Procter and gamble. Ariel runs special fund raising campaigns for deprived classes of the world specifically the developing countries. It also contributes the part of earning for the development of the society.
• Body Shop: It is a cosmetic company found by the Anita Roddick. The company uses only vegetable based materials or the products. It is also against animal testing. Thus completely follow the concept of social marketing.

    6.3 Green Marketing: – The concept of green marketing came into existence for the safety and for making the environment clean. Green marketing is the holistic marketing concepts in which the production, marketing, consumption and disposal of products and services happen in such a way that it cause less or no harms to the environment. It is quite broad concept and includes recycling, reuse, refill, eco friendly, phosphate free etc. This concept of green marketing is concerned with the ecological environment. Thus, Green marketing emphasises on protection of long term welfare of the consumers and society by providing them pure and pollution less goods and services. Green marketing also affects the health of people in a positive manner.

 

American Marketing Association defines Green Marketing as “The study of positive and negative aspects of marketing activities on pollution, energy depletion and non-energy resource depletion.”

 

Examples of Green Marketing

• Digital Tickets by Indian Railways: – Recently IRCTC has followed its customers to carry PNR number of their E-Tickets on their laptop and mobiles. Customers do not need to carry the printed version of their ticket anymore.
• No Polythene Carry Bags For Free: – Forest & Environmental Ministry of India has ordered to retail outlets like Big bazaar, more, Reliance Stores, d mart etc. that they could provide polythene carry bags to customers only if customers are ready for pay money for it.

    6.3.1. Importance of Green Marketing

Green marketing shows the combined effort for purity in production and consumption of goods. Various significant points of importance are as follows:

• Providing eco- friendly products to the customers.
• Encouraging customers to not to use plastic bags.
• The firms using green marketing have competitive advantage over those firms which do not use this concept of green marketing.
• With the use of Green Marketing, companies get higher profits due to cost reduction. Moreover, it is very time saving and economical.
• It helps in making and keeping the environment and Nation clean as well as pollution free.
• King of the market i.e. consumer is more satisfied with green marketing as compared to traditional marketing.
• Green products help people to keep fit and healthy. It encourages worldwide efforts to recycle waste of the consumers and industrial products.
• Increased use of herbal medicines, therapies and yoga.
• It is a long term investment opportunity for the investors and corporate sector. It also taken into consideration the corporate social responsibility which is becoming mandatory for every company.
• Green marketing uses the strategies of reconsumption, redirection, reorientation and reorganisation. It increases the efficiency.
• Green marketing leads to extension of the business. There is optimum utilisation of the resources when concept of green marketing is adopted.

    6.4 Service Marketing: Marketing of different services requires varied approaches. Service marketing may be defined as the exchange of services from seller to the customer. A service is any act or performance that one party offers to another which is usually intangible. These are economical activities.

 

6.4.1. Classification of Services-

 

 

6.4.2. Service Marketing Mix

 

In addition to the main 4 P‟s of marketing mix, 3 more P‟s are there in service marketing mix. All the seven factors or P‟s are necessary to provide qualitative and effective service to the customers. Now the 7 P‟s of service marketing are given below:

• Product: Product here services refers to the activities which are performed by the marketer and offer the service to the buyer which results in the satisfaction of a need or want of the customer. So it should be according to the needs and preferences of the ultimate consumer. These services are intangible in nature and must be of good quality, branded, prompt service.
• Price: Price is the main factor in marketing. It is the consideration to be paid by the customer to the service provider for getting the service. So the price should be affordable for the customer. Various pricing strategies should be adopted in order to get higher earnings.
• Place: Place is concerned with the delivering aspect. Here the services are exchanged between the buyers and sellers. The place should be assessable. There are various distribution channels to perform the activities like electronic and physical, door to door, wholesaler and retailer.
• Promotion: It is used to communicate the information about the services to the ultimate consumers. It can be done through personal selling, advertising on television, radio, newspaper etc.
• People: Human resources including employees in addition to customers are very essential in the marketing process. The staff providing services should be skilled and trained. It is necessary to put the right man on the right job at the right time.
• Physical evidence: Physical evidence means from where the services are delivered. This element will distinguish the company from its competitors. It includes positivity, clear cleanliness, tangible facilities, equipments etc.
• Process: The process refers to the method or the way of performing the services. It refers to the system that is used for delivering the services to the customers.

    6.5 Global Marketing

 

We are living in a borderless world today which is a global market. Global marketing involves a company focusing its resources and activities on global opportunities and threats. Global marketing requires the thorough understanding of the relevant concepts, considerations and strategies that must be skilfully applied in conjunction with the universal marketing fundamentals to ensure the success in global markets. Global marketing is the process of marketing at global level. It is the process of planning, producing, placing, promoting the products and services all over the world. It provides diversified products. Global marketing reflects the trend of selling service and goods at international level. It is concerned with finding and satisfying global customers. According to Oxford University Press, “Global marketing refers to marketing on world wide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives.”

 

There are three main principles of global marketing and these are explained as below:

• Customer Value Creation: The main task of a marketer is creation of customer value. It can be created and increased by recuperating product or service excellence and benefits or by dropping price or by both.
• Competitive Advantage: The competitive advantage can exist in any element of the company‟s offers may be product, price, promotion or distribution of product or service.
• Focus: The focus means deliberation of concentration. This is necessary in current competitive environment to achieve success in the chore of creating customer value.

    6.5.1 Forces Affecting Global Marketing

 

Global marketing is affected by many forces which could be grouped into driving forces (favourable) and restraining forces (unfavourable).

• Driving Forces: Technology is a major driving force in global marketing. When a new technology is developed, it soon becomes available all over the world. Satellite TV, internet, mobile phones, computers all are examples. Consumer needs and wants around the world are converging today and global customers are emerging with similarities in product preferences and buying habits. Heavy cost of new product development is a driving force for going global, to recover the expenses faster. High quality standards, uniformity and cost reduction are all driving forces. Economic growth all over the world has been a driving force for the growth of global marketing. It created market opportunities, reduced local resistance by governments and introduced privatisation and deregulation of businesses by opening up the economies.
• Restraining Forces: These forces that restrain a company‟s efforts to go global are mainly of three types. Myopic or nearsighted management will not consider global marketing opportunities. National trade controls and trade barriers restrict access in some global markets.

    6.5.2 Examples of Global Marketing

• Coca cola is now selling their products in more than 200 countries.
• McDonald‟s provide different types of eatables in various countries.
• Starbucks also provide different meals in different countries according to the local taste.

    6.5.3 Advantages and Disadvantages Of Global Marketing

 

Global marketing is one of the contemporary issues in the marketing. It is very opportunistic and came into existence after the economic reforms. It has various advantages and disadvantages:-

 

6.6 Rural Marketing: – It is crystal clear from the name itself that the practice of producing placing and promotion done for the people of rural areas is called rural marketing. Here, needs and demands of the rural people are satisfied because more than half of the Indian population is living in rural areas. The environment is eco-friendly. Thus, rural marketing refers to distinct activity of attracting and serving rural markets. According to National Commission on Agriculture, Rural Marketing is a process which starts with the decision to produce a saleable farm commodity and involves all the aspects of market system and includes pre and post harvest operations i.e. assembling, grading, storage, transportation and distribution.” Rural marketing is a two way process in which inflow of products into rural markets for consumption or production along with this there is outflow of products to urban areas. The rural to urban flow consists of agricultural products like wheat, rice, sugar, tobacco, cotton & vegetables. Products of cottage & village industries like handloom textiles, silk saris & handicrafts also enter urban areas. The movement of rural production takes place within rural areas also. the movement of urban to rural flow consists of agricultural inputs, FMCG like soaps, detergents, cosmetics, textiles & consumer durables like two wheelers & cars, television sets and electrical appliances.

 

6.6.1 Significance of Rural Marketing

 

The unexploited market provides vast opportunities to the corporate world. There are number of factors which have attracted the attention of various companies, some of these are:

• Large And Scattered Market: Rural markets in India are quite large in numbers. According to census 2011, the number of villages in India was 640,867.
• Agriculture Productivity: Due to modernisation, the agriculture productivity has been improved significantly in the recent time. Many new methods of cultivation came into existence.
• Increase in literacy and Education level: In India, the literacy rate has improved. Various programs have been organised by the regulating authorities and corporate houses. This results into rise in awareness level and thus, income level.
• Strengthen Rural Credit System: The government has taken various initiatives to strengthen the credit system of rural areas by expanding branches of commercial banks. Moreover, various housing finance institutions put efforts for the development of rural sector like NABARD, SIDBI etc.

    6.7 Reverse Marketing: – Reverse marketing is that marketing process in which the customer seeks the firm rather than the seller seeks customer. In other words, reverse marketing is where the customer becomes marketer. The best example of this is Social Media. Reviews are also the example of reverse marketing. It is also known as value or attraction marketing. It focuses on building trust and letting customers to know and assess the brand. It is a great way to increase the goodwill of the firm.

 

 

  

6.8 Introduction of 5th P in marketing

 

Father of marketing Philip Kotler added 5th P in addition to other 4 Ps in marketing. This P stands for Purpose. He said purpose of every business is to earn more profits. He felt that this is not enough in country like India. Every firm should have higher purpose with the regular purpose. The purpose should be two-fold. The marketer should try to make your country more advanced in technology. Secondly, you should try to uplift the life of poor people.

 

 

 

Marketing Mix

Meaning of marketing mix

 

The term ‘marketing mix’ was coined by Neil H. Bordan. It means the combination of firm’s inputs which form the core of its marketing system i.e. the product, the price structure, the distribution system and the promotional activities. Marketing mix comprises of important elements which constitute the marketing programme of an organisation and forces that influence its marketing activities and programmes. The marketer adjusts his marketing programs as per the external forces so as to develop a mix or programme that can achieve marketing objective.

 

3. Elements of marketing mix

 

The term marketing mix has been popularized by the marketing experts in terms of four P’s and accordingly the elements of marketing mix has been classified as follows:-

•  Product

•  Price

•  Place (Distribution)

•  Promotion

 

Each element of marketing mix comprises of certain sub variables. These major element of marketing mix and their sub variables have been explained as below:

 

3.1 Product

 

Product is one of the important components of marketing mix. It is the starting point of all marketing operations. It is bundle of satisfaction than physical object only. Product is considered as the sum total of physical and psychological satisfaction it gives to buyer. Product includes not only tangible attributes like design, package, label, color but also includes intangible or psychological attributes such as prestige of manufacturers, warranty, credit and delivery terms. The term product extends to tangible products like scooter, toothpaste as well as to intangible products i.e. services such as banking, insurance, repairing etc.

 

Product is the core ingredient of marketing mix. Without a product, there is nothing to price, promote or distribute. Product is the vehicle through which company provides consumer satisfaction. It represents bundle of expectations to consumers and society. Marketing managers are required to take crucial decisions regarding the product of the company so that it will be accepted by the target market.

 

The term ‘product mix’ refers to the entire range of products which a company offers for sale. It has three dimensions i.e. (i) width, (ii) depth (iii) consistency which need special attention in effective marketing management. ‘Width’ of product mix refers to the number of product lines offered by the company. The term ‘depth’ means number of product items within each product line. ‘Consistency’ means how closely related the different product lines are in end use, distribution channels, and product requirements. Thus, there will be consistency when products have research affinity, marketing affinity and production affinity.

 

It is important to mention here that product mix may consist of unrelated products. For example, Hindustan machine tools offer product mix with diverse range of products like tractors, machine tools, watches etc.

 

The product mix includes the following variables:

•  Product quality, features, design, colour, size, line and range

•  Diversification and simplification of product lines

•  Branding, packaging, labelling

•  After sales services

 

Thus product mix decisions extend to above mentioned areas. It involves decisions regarding product design, product line, branding, packaging, labelling and after sales services.

• Product design : The marketing decisions start with designing the product as per requirement of target market. The colour and line of products are planned to provide beauty and functional utility. Design is the major selling feature of all products. Good design provides attractiveness, safety, utility, ease of operation and advertising feature. Product design is influenced by production capacity, available capital, use, external appearance required and service requirements.

• Product line simplification: It means eliminating from product line those products which provide no incentive to company to continue their production. A company can go for simplification in case of decreasing marketing share, increasing promotional budgets, decreasing sales volume as a percentage of firms’ total sales or increasing variable costs as compared to revenue. The managers must chalk out a proper simplification programme focusing on right timing of product elimination without causing much disturbance to existing customers, keeping stock of repair parts to provide services for most recent sales, managing core demand tactfully and selling the stock of discontinued product in phased manner.

• Diversification: Diversification means increasing the number of products in product portfolio of the organisation. Many companies in India have diversified their product lines and added heterogeneous product in their product portfolio such as Hindustan Machine Tools Ltd. with diversified products like wrist watches, tractors, printing machines and lamp making machines etc. A company can opt for diversification for corporate survival, stability or growth purpose. For successful diversification strategy, company must carry out self appraisal i.e. determining its strengths and weaknesses in terms of personnel, production, markets, policies, costs and profits. It is necessary to lay out objectives of diversification like acquiring desired market share, or utilizing idle plant capacity etc. Opportunities for diversification should be measured against objectives. It will involve analyzing the strategy in terms of sales, cost, cash flow or receivables. On getting positive indications, the company should decide about horizontal, vertical or lateral diversification depending upon the long term sales objectives.

• Branding: Brand means a name, number, symbol or design used to create identification of the product. When a brand receives legal protection enabling producer to make its exclusive use, it is termed as trade mark. Branding means giving name or symbol to a product so as to enable consumer to distinguish it from other similar products. Branding helps in popularizing the productions. Mass advertising media plays an important role in creating popularity of certain products among consumers. However, to survive in market, producers should provide quality in branded goods. Further it is necessary that brand name should be attractive, suggestive and easy to spell and remember. Branding can be done by giving special names to the product like Dalda Ghee, Dove Shampoo or by using names of manufacturers such as LG refrigerators, Bata Shoes etc. The marketers can opt from different brand strategies like multibrand product strategy, single brand strategy, distributors’ brand strategy or mixed brand strategy for branding the product.

• Packaging: Goods may get damaged during transportation or they may be damaged in warehouses. Goods are packed in suitable containers so as to protect them from leakage, spoilage or breakage. Packing means to wrap or fill goods with the purpose of their protection and convenient handling. It will also increase their durability. Package means specially designed wrapper, container or case which is used for packing goods. It gives identity to the product. Packaging refers to putting goods in convenient sized lots like bottles, jars, cans, bags etc. It will help in making goods familiar with consumers. Packaging facilitates branding and advertising of goods. The marketers have to formulate packaging policies and strategies. For this, first of all, packaging concept should be developed i.e. description of package and its functions and then package should be developed by taking in account consumer requirements, retailers requirements, protection of product and cost involved. Different packaging policies are in existence such as periodic packaging changes, family packaging, re-use packaging, multiple packaging or ecological packaging. Marketers have to select appropriate packaging policy to fulfil marketing objectives.

• Product labelling: Labels are fixed to products to describe their quantity, quality, ingredients, and other features. Labelling is compulsory by the manufacturers in case of drug, cosmetics and food items. They are required to give their name, date and place of manufacture, expiry date and batch number.

• After-sale services: Manufacturers of machines, instruments, equipments, gadgets etc. have to frame service policy to chalk out the plan for servicing such products after sale. It is to be decided that who will provide after sale service i.e. manufacturer, wholesaler, dealer or distributor. If after sale services are to be provided by middlemen, then they are to be trained properly.

Apart from focusing on above mentioned variables, marketing managers should fulfil social obligations while offering the products to consumers such as optimum use of resources; better quality of life; long term satisfaction of the consumers; safety to users; complete fulfilment of government regulations regarding packaging, labeling, composition, and pricing of product; and eco- friendly concern.

 

3.2 Price

 

Price of the product, is the most important constituent of marketing mix. The term price can be defined as the monetary considerations asked for or exchanged for a specific unit of goods or services offering some utility. Pricing decision is important as price of the product affects producers, sellers and consumers.

 

Pricing is the act of determining product value in monetary terms before it is offered for sale. Prices are generally determined by market forces. Still marketers make efforts to determine price as per objectives of pricing and cost considerations. The price mix decisions extend to the following areas:

• Ascertaining appropriate price i.e. right price.
• Pricing methods, policies and strategies.
• Discounts, margins, rebates.
• Terms of delivery and mode of payment.
• Credit policy.
• Resale price maintenance.

   The prices of products are fixed according to the objectives to be achieved through pricing. The various pricing objectives can be profit maximization, achieving a target rate of return on investment, securing a large market share, facing competition or mobilizing resources for expansion of firm.

 

For ascertaining the appropriate price, the marketers usually consider the cost of production, practices and prices prevailing in the industry, government regulations, arrangements with foreign collaborations, probable competitive reaction, interactive role of other components of marketing mix and estimated sales.

 

The marketers make selection of best suitable method for fixing price of product.

There are various methods of pricing such as:

 

a) Cost based method: In this method, cost of production serves as base for price determination. Management adds some amount called as mark up to this cost. This mark up is a certain percentage of cost. The cost can be taken as total cost or incremental cost.

 

b) Demand based method: Under this method, prices are determined on the basis of demand. The management can fix price which the buyer can pay or it can determine it on the basis of historical demand data available in company records or even test marketing can be resorted to before fixing actual price.

 

c) Cost and Demand based method: This method uses both cost and demand factors to determine price. Usually break even analysis is done to fix price so as to cover cost and earn some profit.

 

d) Competition based method: In this method, price is determined on the basis of price being charged by competitors. It may be fixed little high or low than the price of competitors.

 

e) Customer’s perception of value pricing: This method refers to determining price on the basis of consumers’ perceptions of the value of product. Here, the consideration is the relationship of benefit to cost. The argument in the support of this method is that the consumer will buy the product if value obtained from the product is more than the cost incurred. Hence, the management will have to understand total use of the product, analyze the benefits and cost variables and then make cost benefit trade offs.

 

The marketers have not only to select the suitable method for pricing, they are also required to choose the best pricing strategy depending upon the stages of product life cycle. There are various pricing strategies such as skimming pricing strategy, penetrating pricing strategy, pre-emptive and extinctive pricing strategy.

 

It is important to mention that the pricing decisions are taken within the framework of guidelines provided under pricing policies of the company. There are various pricing policies open to the marketers which are described as below:

 

a) Geographical price policies: It means charging different prices depending upon the location of customers and associated varying transportation cost.

 

b) Price variation policies: In this, company tries to vary prices with a purpose to match them with marketing needs. There can be variable price policy (price differ from buyer to buyer) or non variable price policy(price differs from class of buyers to other class of buyers but within class remains same).

 

c) Price differentials policies: Under this policy, actual price charged is less than the quoted price and difference is termed as price differentiation. Price differentials are the tactics used by the marketers to meet competitive pressures, to allow incentives to buy or to achieve specific financial objectives. The price differentials are usually designed in following forms:

 

Discounts: These are allowed to buyers as a result of specific services provided by them or meeting managerial expectations. These can be categorized as:

• Trade discount
• Quantity discount
• Cash discount.

  Trade discount is allowed as deduction from quoted price to buyers occupying specific position in distribution channels like wholesalers, retailers.

 

Quantity discount is allowed to all the buyers as a result of purchasing a specific quantity of goods. They get deduction from quoted price.

 

Cash discount is allowed to the buyers who pay the price within a stipulated time. They get deduction from invoice price i.e. quoted price-rebate-trade or quantity discount.

 

Rebates: These are allowed to buyer by way of deduction from quoted price to accommodate various claims of buyers like defective deliveries of goods , delay in transit etc.

 

d) Leader price policy: In this, firm sets its price to act as leader in the market. It can happen only when firm is established and deals in highly standardized products like steel, cement etc.

 

Pricing plays an important role in marketing. It regulates demand of firms’ product or services, acts as a competitive weapon and determines profitability. Therefore, a correct pricing decision is of utmost importance. Appropriate pricing policies or strategies should be followed by the marketers depending upon the marketing requirements and company pricing objectives.

 

There is need of framing clear cut policies regarding terms of delivery i.e, quantity, time, place and conditions of delivery. Credit terms are also required to be determined by keeping in mind the nature of product, cost involved, credit facilities provided by bank and competitors’ terms. Further , decisions regarding resale price maintenance may be taken to prevent excessive price cuttings by wholesalers and retailers.

 

3.3 Place (Distribution)

 

Distribution means using external and/or internal sources for effective movement of goods and services and performing various activities like transport, warehousing, inventory management and packaging to achieve marketing goals of the firm. Effective distribution creates time, place and possession utilities in products and delivers high level of customer satisfaction at less cost. It increases sales, provides smooth flow of goods and reduces order processing and material handling cost.

 

The distribution mix involves the following variables:

• Channels of distribution decisions
• Order processing
• Inventory level
• Warehousing decisions
• Product  handling decisions
• Transportation decisions

• Channels of distribution: The companies can use different intermediaries to sell their products or it can directly sell to customers. The decision regarding the selection of channel structure will depend on various factors such as: type, value and usage of product; product positioning required; size of market; financial strength; infrastructural facilities; image and services of intermediaries; degree of desired contol over channel; promotional activities of company; reputation and size of company; preferences of competitor for distribution system; marketing environment; and distribution intensity required (intensive distribution, selective distribution or extensive distribution). Decision are required to be taken about number of wholesalers, retailers, dealers, distributors; franchising and legal issues associated with it. It will require a detailed distribution survey.

• Order Processing : Order processing refers to receiving, recording and assembling the products for dispatch. It is necessary that the time gap between receipt of order and dispatch of order is kept reasonable and short as far as possible. Marketing manager has to devise standard procedure for handling orders which may also relate to invoicing, collection of accounts and grant of credit.

• Inventory level: Inventory act as a link between customer’s orders and company’s production activity. There is a need to maintain an adequate inventory level. The size of inventory is determined by keeping in mind market demand and inventory cost. However the optimum size is also decided by considering responsiveness of distribution system and desired level of customer service. The firm decides the maximum stock level and minimum stock level. Maximum stock level will help in meeting sudden rise in demand whereas minimum stock level will point out the need to replenish the stock and avoid in running out of stock position. Hence, inventory control is exercised to avoid (i) out of stock position and (ii) piling up a large undesired stock.

• Warehousing: Warehousing creates time utility in goods and stabilizes prices by regulating supplies as per changing market demand. Goods are stored in warehouses till they are demanded. There are private warehouses which are owned by the users as well as public warehouses which are owned and controlled by others. Public warehouses charge commission or fee for providing storage space and performing warehousing functions.

   Each firm requires a certain number of warehouses to provide desire level of customer service. However it has to keep in mind that physical distribution cost does not raise beyond a limit.

 

Now a days, a full service warehouse called as distribution centre is becoming popular. Distribution centre serves a regional market. It makes use of computer and latest sophisticated material handling equipments for processing, material handling and inventory control.

 

A firm can establish one distribution centre in one region where market for its goods exists. It will facilitate order taking, order filling and delivery of goods directly to the customers through an integrated system. The centralized accounting system will help in quick dispatching of invoices and ensuring earlier payments.

 

Thus, marketers need to decide about type, location and number of warehouses. A wise decision will help in saving time and cost of delivery.

• Product handling: During warehousing and transportation, there is need of product handling. Product handling can be manual or mechanical. Now automated product handling devices are available and marketers can use these modern devices. New techniques of packaging like containerization lead to considerable cost reduction. Containerization means packing and transporting of good in standard sized containers.

  Product handling devices have appreciably speeded up the order processing as well as movement of consignments. The sophisticated product handling devices and protective packaging have led to better customer service and lower physical distribution costs.

 

The marketing manager of a firm has to decide about the material handling method i.e. to use manual handling or mechanized handling after considering some factors like (i) nature of product like fragile products which need to be moved by mechanical methods for safety (ii) fund availability (iii) operational cost involved as it will be high for mechanized methods if volume of product movement is not sufficient, and (iv) plant layout

 

Marketing manager should assess the relative merits and demerits of both methods and make choice of method or combination of method. However, company’s product handling needs should primarily be assessed.

• Transportation : Warehousing and transportation constitute major activities in whole distribution system. Physical distribution involves storage of goods at different places which are interconnected by transport links. Goods need to be transported from the place of supply to the place of demand . This consumes time and cost. Product handling cost can be reduced by reducing the number of times goods are handled and also by shortening the time for each handling during transportation.

    There are various modes of transport like waterways, roadways, railways, airplanes & pipelines. Marketing manager has to decide the mode/ modes of transport. Decisions regarding mode of transport are primarily based on size and nature of inventory as well as location of warehouse. Apart from this, certain other factors are also considered such as speed, availability, frequency of services, operational cost, dependability and safety of modes of transport. It is preferable to assign weight to different factors to facilitate selection of mode.

 

3.4 Promotion

 

Promotion is a process of marketing communication which attempts to inform, persuade and remind its target markets, through personal and impersonal means, about company and its brand. Once product has been decided, its price determined and distribution structure decided, it becomes necessary to make customer aware of the product. There is need to promote the product and for this various means are available. Promotion mix consists of a group of communication tools which marketing executives use to communicate with their target audience. The marketer tries to create a most favourable blend of all promotion elements to influence buyer’s behaviour and his process of decision making. Sales can be promoted through an effective promotion mix.

 

Advertising, sales promotion, personal selling, public relations are important elements of promotion mix.

• Advertising : Advertising is paid form of communication of goods, services or ideas by an identified sponsor which is directed at mass audience. Magazines, newspapers, radio, television, posters, hoardings, direct mail are different media used by advertisers to influence and induce the viewers, readers or listeners to buy the advertised products. Choosing a right media, to convey message and persuade target audience to buy product or services, is a difficult task. Marketers select media by considering (i) communication requirements (ii) advertising budget (iii) nature of the product (iv) extent of competition (v) geographical area coverage requirements (vi) literacy level of target group (vii) cost of media and services provided.

• Sales Promotion: Sales promotion refers to short term special selling efforts to accelerate sales. It is a promotional activity which provides monetary and non-monetary incentives to spark an immediate reaction from target consumers (consumer sales promotion) and dealers or firm’s salesperson (Trade promotions). Consumer Sales promotion pull a product or service by stimulating demand and trade promotions push a product or service by arousing enthusiasm among channel members to sell more of a particular brand. Dealer contests, price reduction, free gifts, retail outlet displays are important sales promotion tools. Sales promotion influences purchase behaviour and provides immediate incentive to buy. Sales promotion tools provide marvellous results when supported by advertising and personal selling.

• Personal Selling: Personal selling refers to direct personal contact between a sales representative and one or more prospective customers to influence the customer in a purchase situation. It involves securing information about buyer’s unsatisfied needs and wants by the salesman and supplying information about goods and services to the prospective buyer. Sales talk and product demonstrations play an important role in personal selling.

• Public relations and Publicity: Public relations and publicity aims at protecting and promoting company’s image through number of programmes and activities. Publicity and public relations increase effectiveness of promotion as consumers are now more interested in evaluating company brand or product on the basis of what is written about it in the media.

   Marketing manager has to decide the appropriate combination of various promotion tools i.e. effective promotion mix. This decision depends on the marketing objectives and certain other factors such as nature of product; sex, age and background of target market; stage of product in life cycle; availability of funds; type of buying decisions and push or pull promotion strategy.

 

For effective promotion, it is necessary that promotion strategy should be intelligently formulated and must pass through various stages such as: identifying the target, determining the objectives, designing the promotion message, selecting appropriate channel of promotion and establishing the promotion budget.

 

The above discussion has highlighted the various elements of marketing mix and their related strategies. The marketer can manipulate these elements of marketing mix and evolve the specific marketing programme for the product in a given environment. The appropriate marketing mix will require the right combination of four Ps of marketing mix which will involve the choice of appropriate marketing activities and allocation of marketing efforts to each of them.

 

It is noteworthy that marketing mix of a company keeps on changing as per changes in customer’s requirements, level of competition and other environmental forces. Different marketing mix is required for different market at different points of time. Therefore, marketing manager should keep evolving such marketing mix that will fit in dynamic marketing environment to the best interest of firm and customers.

Marketing Environment

Introduction An organisation operates in ever changing environment that has direct or indirect influence on its strategies. Organisation can become successful by understanding, anticipating and taking advantage of changes within its environment.

 

The dynamic business environment has three types of forces :

1.      External uncontrollable forces (demography, economic climate, socio-cultural, environment, technology)

2.    External partially controllable forces (customers, suppliers, market intermediaries)

3.    Internal controllable forces (human and non-human resources such as men, money, materials, machinery)

    An organisation’s macro environment consists of external forces and is termed as marketing environment. Marketing managers must understand this macro environment to formulate smart strategies for the future. Marketers can collect and evaluate information through environmental scanning to track trends, opportunities and anticipate threats.

 

3. Understanding the External Environment

 

Macro Environment provides resources and opportunities to the organisation. It also influences its survival and growth by putting limits and constraints on it. A business organisation must continuously adapt to the opportunities and uncertainties presented by changes in external forces. It will help firm to obtain and retain competitive advantage. Many successful business houses have ceased to exist as they failed to anticipate changes and to adapt their business models to new realities of the market.

 

A firm is influenced by changes in its external environment but every change is not of equal significance. In macro environment, Philip Kotler has identified three types of changes: fads, trends and mega trends. Fads are unpredictable and represent short term commercial success. These short lived changes have no social or economic relevance. Organisations need to be very prudent while making investments in such opportunities.

 

Trends reveal the shape of future and are more predictable. Firms must recognize these trends and evaluate their impact on their businesses as these changes are more durable. However, indepth market research will help in determining the commercial potential of each trend as all trends may not represent business opportunities.

 

Mega trends are slow to form, but once in place, their influence lasts for a longer time. Socio-economic, technological and political changes may reveal mega trends. Globalisation is one such mega trend of last several years which is helping in exploiting regional differences in needs of customers and product capabilities. Marketers must anticipate how these mega trends will unfold and assess their impact on business.

 

4. Components of External or Marketing Environment

 

External forces in organisation’s surroundings have the potential to influence organisation’s strategies. However, the impact of these factors will vary greatly from industry to industry. The major constituents of marketing environment are discussed below:

 

4.1 Demography

 

Demography means study of population. Its deals with quantitative elements such as income, education, age, sex, occupation, urban and rural population etc. Scientific study of human population and its distribution structure offers consumer profile to the marketers which is very necessary in market segmentation and determination of target markets.

 

4.1.1. Population age mix

 

A change in age mix of population has many consequential effects for organisations. Demand for products and services changes with change in age mix. Growing population indicates flourishing markets particularly for baby products. If a baby boom is anticipated, market will offer tremendous potential for baby products. But when there is decline in birth rate and death rate, many companies specialized in baby products will have to adjust their marketing plans accordingly. For instance, many developed countries like United States, Japan are witnessing an increase in the average age of population due to sharp decline in birth rate and improvement in health care. These countries are now seen as ageing countries. Many firms in these countries that traditionally targeted their products towards youth are now developing product lines that appeal to an older market. Health care industry is projected as a growth segment of developed countries simply because of population demographics.

 

4.1.2.Education Levels

 

Increase in education levels help people to find better jobs and earn higher incomes. Increasing proportion of educated people in population mix creates demand for goods and services for better standard of living of a large segment of the population. This offers great opportunities to the organisations. Rising educational levels have made people more knowledgeable and aware of products and services. Now marketers have to adjust their marketing programmes for the target markets accordingly.

 

Quantitative aspect of consumer demand as provided by demography and qualitative aspect of consumer demand like attitudes, perception, personality as provided by behavioural analysis enable marketing managers to understand the bases of market segmentation and to determine consumer reaction to advertising campaign or reaction to new product.

 

4.2 Economic Environment

 

Nature and health of the economic system of a country hasimpact on the organisations with varying degree. Interest rates, money supply, state of business cycle, price level, distribution of income within population, savings, consumer credit and monetary and fiscal policies constitute economic environment. Marketing plans and programmes are influenced by these factors.

 

4.2.1. Business Cycle

 

High economic growth assures increasing levels of employment and income which leads to marketing boom in many industries. Recession or depression limits the purchase of durable or luxury goods due to shrinking consumer spending. Lower profits, increased borrowings and decreased productivity for adversely affected firms lead to their exit from market. In recovery periods, marketers have to be very conscious while framing their marketing plans.

 

4.2.2. Income Growth and Distribution

 

Unequal distribution of income divides the people into wealthy, poor and middle class group. Many developing countries have more number of citizens in extremely wealthy or poor group. Growing number of wealthy and middle class consumer group makes for attractive markets. India has become an attractive market for many multinationals today because of growing number of middle class consumers. In many countries, markets are not growing and marketers do not find any opportunity in such countries due to saturation of markets and shifting of job to lower cost economies.

 

4.2.3 Inflation

 

Market for consumer durables is adversely affected by inflationary trends. Consumer buying habits are radically changed due to inflation which affects their purchasing power. Many purchases are either postponed or eliminated. Increasing petrol prices created a trend for small cars and public transport.

 

4.2.4. Savings and Credit availability

 

Attractive interest rates on deposits lead to more savings and curtail consumer spending. Liberal credit by banks at affordable rates increases purchasing power of customers and expansion rate of organisations. This provides for tremendous growth of market for consumer durables. The availability of credit at cheaper rates has fueled the demand for automobiles, housing and other durables in India over the past decade.

 

Economic forces can have positive or negative effects on the promotional efforts of firms. Product planning, price fixing and promotion policies of a business unit should be framed on the basis of important economic indexes.

 

4.3 Social and Cultural Environment

 

Social and cultural factors usually influence the business enterprise in the long run. These factors include values, life styles, attitudes, norms and customs that characterize the society in which the organisation operates.

 

Culture and lifestyle differ between geographical areas and among ethnic groups. Beliefs, morality, superstition and motivation differ substantially between different countries or within a country. Regions or countries vary in their ethic characteristics. The US is considered a multicultural society having people from all nations. India is another example where there are different subcultures and languages. Each subculture has its distinct attitude and life style. Marketers should formulate their strategies by keeping in mind cultural diversities and social values and norms.

 

Marketing executives should focus on various aspects of social environment i.e. (i) changes in life style and social values (emphasis on quality goods, changing role of women, increasing preference for recreational activities) (ii) concern for social issues (socially responsible marketing policies, safety of products, pollution control) (iii) growing consumerism (customer-oriented marketing). Social environment has emphasisedsocial responsibility of business. Societal marketing concept demands not only consumer welfare but also citizen welfare. Marketers have to assure quality of life to people i.e. environment free from pollution.

 

4.4 Technological Factors

 

Technology is the way things are done and techniques or materials are used to achieve business objectives. It is a driving force behind various new product innovations and emergence as well as development of many markets. Every new technology is to be viewed as a force for ‘Creative Destruction’. If the organisations fail to embrace new technologies, they will see decline in their businesses.

 

Phenomenal development in technology has created tremendous impact on life-styles of society, buying patterns, consumption and economic welfare. The availability of frozen foods has made the life of working couples easy and smooth. Developments in the field of microcomputers have expanded the customer base and created plethora of opportunities for firms to engage in business via internet. Continuous developments in technology provide scope for better products at affordable prices. Samsung and Nokia have become successful in providing cell phones to common man at affordable prices just because of better technological innovations.

 

Technological changes pose threats or offer numerous opportunities to the firms. Digital watches and cell phones have killed the market prospects of traditional watches. Television has adverse effect on radio and cinema industries. Computers have expanded the organisation’s base in international markets. Electronic industry is exploiting new marketing opportunities. Use of Robots in production processes, considered hazardous for people or are of repetitive nature, make production easier and larger.

 

Developments in technology have innumerable impacts on all marketing activities:

 

  (i) E-marketing, new tools of advertising and selling

 (ii) Modifying existing outlets

(iii) Use of new materials and designs for packaging

(iv) Effective data collection and analysis techniques for facilitating marketing research

 (v) Sophisticated procedures and computerized models for better marketing decision making.

 

Technological forces lead to changes in life styles and buying patterns of consumers. Marketing executives must relate changing values, life-style patterns and changing technology to market opportunities for profitable sales in particular market segments and firm’s sustainability.

 

4.5. Political and Legal forces

 

Marketing systems are influenced by monetary and fiscal policies, custom duties, import-export policies, political interests etc. Philosophy of the political parties in power determines the risk of doing business and affects business practices. A pro-business attitude of the government enables firms to enter into new arrangements. Political stability creates market attractiveness.

 

Legislations controlling and protecting physical environment, marketing competition and consumer interests cannot be ignored by organisations. Anti pollution laws, laws to control marketing like forward markets of commodities and securities and Consumer Protection Act influence marketing plans and policies. Business enterprises cannot indulge in unfair trade practices, like price discriminations, false advertising, deceptive sales promotion tools. Marketers have to be more sensitive towards consumer interests. A small issue of consumer, if left unattended, can snowball into a major controversy and put the company’s reputation at stake.

 

4.6 Ecology (Nature)

 

Ecology is the science that deals with living things and their environment. Protecting environment is everybody’s responsibility to provide a safe and happy place for others to live.

 

Industrial and technological revolutions have brought innumerable benefits for mankind but led to deterioration of the natural resources. Environmental quality, social wellbeing and human health are interconnected and should not be sacrificed as result of developmental activities. Environmental protection is necessary to assure a healthy, peaceful and productive life in harmony with nature. Only then sustainable development can be achieved.

 

Natural resources should be preserved as far as possible. Scarcity of natural resources points out the need for replenishing the renewable resources such as timber or finding alternative ways in case of non renewable resources such as oil, coal, iron ore. Depletion of fossil fuels is posing a serious threat to automobile industry. Major Auto giants such as Honda, Ford have developed hydrogen fuel cars to combat scarcity of natural resources. Solar energy and wind farming are attracting major investments in global markets as prices of oil and hydro electric power are rising sharply.

 

Any industrial activity damages the natural environment by contaminating ground water with hazardous waste or polluting air by harmful gases. Governments in many countries are now playing an active role in controlling pollution by enforcing laws to treat effluents before disposal or to adopt recyclable packaging. Germany has banned the import of products that are not packed in recyclable package. The Kyoto protocol is forcing business enterprises to invest in cleaner sources of energy. Consumers are also becoming conscious of deteriorating natural resources and are willing to pay higher prices for ‘green’ products.

 

The marketing system of an organisation has now to satisfy not only consumer wants but also societal wants of clean environment which may be adversely affected by its activities. Economical and efficient use of energy and natural resources must be reflected in every marketing strategy and programme.

 

4.7 Competition

 

Competitors significantly affect the company’s choice of marketing strategies regarding selection of target markets, marketing channels, suppliers and marketing mix. Marketing strategy is framed to outmanoeuvre the opponent and assuring survival in competitive environment. The aggressive marketing manager knows that his marketing mix. i.e. combination of product, place, price, promotion will invite tough competition. He must anticipate the competitors’ moves and be prepared to deal with them. Competitive conditions within an industry are ever changing and keep the marketing managers engrossed. Stiff competition can be seen among telecom companies. They offer huge discounts on call rates or better plans from time to time to attract and retain users.

 

4.8 Customer Demand

 

According to P. F. Drucker, there is only one valid purpose of business and i.e. to create a customer. Under market oriented marketing philosophy, customer needs and desires act as the centre of whole marketing universe. Today’s marketing begins and ends with the customers. Firstly customers (markets) are identified and then marketing programmes for target markets in the form of appropriate marketing mix are developed. Goods and services are offered to secure continuous customer satisfaction. Firms should focus on making customer happy. Satisfied and delighted customers become unpaid salesmen of the firms and motivate others to buy goods and services of such firm to satisfy their needs and wants. In today’s scenario, marketing strategies,polices and programmes should respond to customer needs and desires in all respects.

 

 

TYPES OF MARKETING ENVIRONMENT

• Macro environment are the factors that affect all the firms in an industry AND External environment are the factors that operate outside the organization.
• Micro environment are the factors that affect one firm only AND Internal environment are the factors that operate within the organization.

    3.1 Macro & External environment

 

This environment explains how changes in this environment affect marketing decisions. External Environment which affects the company broadly affected by Macro environment. This environment is considered to be afar from the control of the organization.

 

•  Cultural environment

•  Natural environment

•  Political environment

•  Economical environment

•  Social environment

•  Technological environment

•  Ecological / Eco-Friendly environment

•  Legal environment

•  Glocal environment, in addition to above environments,

 

As now by the emergence of internet accessibility, the Globe has become like a village, hence two more factors / environment are equally affecting marketing environment.

•  Globalization

•  Localization

Clubbed together they are as Glocal. (Global  + Local)

 

Largely now Macro and External Environment clubs CN_PESTEL_G

 

3.2 Micro & Internal environment

 

This environment describes the environmental forces that affect the company’s skill to serve its customers. Internal Environment of the company broadly affected by Micro environment. It is area inside the company which affects the planning strategy of the company for it marketing mix or product / service promotion. The company focus is on “thinking about customer as a king”. Providing customer satisfaction at its best possible is core discussion and effect by this environment. This environment is considered to be under partial control of the organization.

 

The main actors in this environment which affect changing marketing environment are:

•  Suppliers

•  Marketing intermediaries

1.      Resellers

2.    Physical distribution firms

3.    Marketing services agencies

4.    Financial intermediaries

   •  Publics

1.      Financial Publics

2.    Media Publics

3.    Government Publics

4.    Citizen-action Publics

5.    Local Publics

6.    General Publics

7.     Internal Publics

•  Competitors

•  Customers

 

4. UNDERSTANDING CHANGING MARKETING ENVIRONMENT

 

The changes in marketing environment Forces Company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. The companies CEOs or business entrepreneurs are bound to work under the threat of these changing marketing environments as it affects the organization.

 

5. ELEMENTS OF MACRO AND MICRO ENVIRONMENT AFFECTING CHANGING MARKETING ENVIRONMENT

 

5.1 MACRO & EXTERNAL ENVIRONMENT

 

The CN_PESTEL_G are considered to be the most dominating factors in considering changes of marketing environment plans by the companies. Lets discuss the each factors involved in it.

 

5.1.1 Cultural environment

 

Marketing mission has to consider this factor while planning for product launch or promotion. Culture is from what and where the people upbringing has been done. It projects the behaviour, attitude, perception and customs under which the customer has been present. This refers to the differences in customs, beliefs and behaviours between peoples. It is the shared set of beliefs and behaviours prevalent within the society in which the company operates. These include purchasing behaviour, gift-giving behaviour, gender roles, age, location, language, religious beliefs, history, religion, customary ways of working and the like. When it changes it affects the changing marketing environment.

 

For Example: In India many people do not consume meat and alcohol in Navratries. Hence, the traders in this business have to close or compromise their business for nine days, once in six months. This is where culture hits the marketing decisions of the businessmen involved in the sale of meat and alcohol. On the other hand in the same India, there is massive sale of utensils, apparels and e-appliances on Diwali and Dushera as Festive season sale. Here, the marketers have full opportunities to encash the demand and convert customers towards themselves.

 

No society exists without human being and no culture is developed without society. Therefore, cultural environment is also studied with social environment. As both are intact together and affect each other because they both are directly influenced by the public so one can also study them together in marketing environment as socio-cultural environment. The changing marketing environment is depended on changes in socio-cultural environment also.

 

Socio-Cultural environment is a set of beliefs, customs, practices and behavior that exists within a population. International companies often include an examination of the socio-cultural environment prior to entering their target markets. This revolves around basic four elements:

1.      Demographic: this refers to the structure of the universe or the population like age, gender, income, cast, creed and the like.

2.    Culture: it refers the differences in behaviour, attitude, perception and customs between peoples.

3.    Social ethics and responsibilities: it is part from the culture, ethical beliefs about how or in which way the people respond to the marketing initiatives regarding product or services.

4.    Consumerism: refers to the power of consumers forced to be followed by companies.

 

 

5.1.2 Natural environment

 

Natural Environment consists of natural resources which are required as inputs by marketers or which are affected through marketing activities. The natural environment covers all living and non-living things occurring naturally on Mother Earth. It is an environment that covers the communication of all living species. Changes in climate, weather, and natural resources that affect human survival and economic activity are to be studied under this for changing marketing environment. Marketing of natural products, fuel efficient automobiles, solar energy vehicles etc are the examples on which the companies are working as changing marketing demand, to penetrate the customers mind.

 

The promotion mix based on nature is developed to demonstrate the product and motivate consumers to have satisfaction on the level that they are not harming the nature while consuming the product. Brands named behind nature or geographical names like Himalaya brand of Mineral Water, Natural Fresh for juices, Mango Fruity soft drink, Pudin Hara medicine etc are the examples of marketing of products in the name of nature giving the impact created by natural environment.

 

Changes in this environment hits changing marketing environment. The companies are threatened by the natural climatic environment especially where there are prior declared danger zones. These may be earthquake / seismic zones, sunaami prone areas, volcanic trauma etc. the business companies have to get the insurance done for their offices and employees for these natural hazards and this burden ultimately lies on the pricing policy of the company, which in turn affects the consumers pocket.

 

Tourism marketing precisely depends upon the nature oriented travel. Tourists are more motivated by the advertisements related to nature and want to feel it by spotting those areas. Marketers create illusion to cash these places by massive promotion mix. Now-a-days online promotion for nature is very much popular. Thus this environment also affect in marketing division.

 

Factors that impact Natural environment

 

The main constraints for the marketers are to explore and rectify the problems related to the natural environment. The main factors which affect this environment are:

1.      Environmental sustainability

2.    Increased Government Involvement

3.    Increased Pollution

4.    Less awareness for alternative resources

5.    Limited Natural Resources

6.    Raw Material shortage

    Marketers have to plan accordingly keeping in view all the above constrains. For example, plastic is banned in Himachal Pradesh. Now if the companies who are packaging in plastics have to market in Himachal Pradesh they have to repackage the products in paper packaging. Likewise, the coal diggings are also licensed in Jharkhand and are sold in coal blocks. Many scams have been done in the name of this limited natural resource. The coal helps in electricity production and steel making which is marketed by the companies in various forms.

 

Under this environment the key concerns are: Geological activities, Water on Earth, Atmosphere, Climate, Weather, Life, Ecosystems, Wilderness.

 

5.1.3 Political environment

 

Country is governed by the political system which prevails as per constitution or governance. India being the democratic country is fully depended on this political environment. No business in Bharat is thought or perceived without politics. Rather now-a-days even politics has become business. The changes in political business are argued to be the prominent factor affecting changes in marketing environment. Hence, marketers have to look this environment on very crucial angle. Their decision making capacity is very much affected due to this environment.

 

Change in governance changes the whole marketing scenario of the country. The impact of this environment is so high that the countries economical, social and legal aspects of changing marketing environment are bound to change. The marketers are so much depended on this factors that sometimes they even go for bribing the government in form of donation in party funds to make the policies in their favor so that they can do the business easily.

 

Political environment or factors are the areas which include laws related to labor, environmental issues, trade restrictions, tariffs, tax policy and political stability. Political factors also include goods and services which the government aims to provide (merit goods) and those that the government does not want to provide (demerit goods). The governments also have a high impact on the health, education, and infrastructure of a nation.

 

The major factors which are looked by the marketers in this macro environment which impact on changing marketing environment are:

1.      Corruption prevailing and its level

2.    Government stability

3.    Government stand on Environmental and Consumer-protection legislation

4.    International Reputation and FDI policies

5.    Levels of Corruption in bureaucracy and its control

6.    Media’s Freedom

7.     Other factors directly or indirectly controlled by politicians and politics.

8.    Regulations by regulatory bodies and de-regulation trends

9.    Social and employment legislations

10. Tax policy

11.   Trade and tariff policy and controls

12.  Type of Government (Central / State)

    5.1.4 Economical environment

 

A change in economy affects the decision made by changing marketing environment. Economy of any country is the true mirror of its growth and hindrances. The economic factors which effect this environment are value of currency, inflation, cost of living, interest rates and so forth gives the impact of the changing marketing environment prevailing in the country. These factors greatly affect how businesses operate and make decisions.

 

In India where the consumption is more as per compared to income, the distribution of product and services is a challenge for the marketers. Economic factors include inflation rate, interest rates, exchange rates and the economic growth. For example, interest rates affect a firm’s cost of capital and would therefore to what extent a business grows and expands. Value of currency can affect the costs of export and import and exchange rates can re-define the tariff policies.

 

The economic environment broadly consists of:

1.      Competition

2.    Current and projected economic growth

3.    Impact of globalization

4.    Inflation and interest rates

5.    Infrastructure

6.    Labour costs

7.     Levels of disposable income and income distribution

8.    Likely impact of technological or other changes on the economy

9.    Per Capita Income

10. Stage of a business cycle

11.   Unemployment and supply of labour

12.  Other changes related to the economy

    5.1.5 Social environment

 

Society resembles the trends and culture prevailing in the location or place where it exists. This environment is crucial due to the reason that the consumers are directly related to the society. The society affects and influences the consumer to make purchase decision. Consumers are governed by the motivational factors of the society.

 

In India on the occasion of Holy almost all apparels companies give massive discount to motivate the customers for garment purchase as it is societal tradition that new clothes are wore after playing holy.

 

The local haats or melas are the best example of social environment which force marketers to think on the promotion of their products and services. These can be also studied as socio-cultural environment as discussed previously in cultural environment.

 

The issues related to social environment which effects changing marketing environment are:

1.      Education, occupations, earning capacity, living standards

2.    Cultural aspects, population growth rate, health consciousness

3.    Demographic age, gender, race, family size & geographic distribution

4.    Ethical issues, diversity, immigration/emigration, ethnic/religious factors

5.    Organizational culture, attitudes to work, management style, staff attitudes

6.    Media views, law changes affecting social factors, trends, advertisements, publicity

 

  

5.1.6 Technological environment

 

Technological environment is basically related to innovations and invention. How the companies are improvising their product or services comes under this environment which impacts changing marketing environment. It includes technological aspects like automation, technology incentives and initiatives and R&D activity and the rate of technological change. These activities create a type of monopoly market for the companies working on it. It gives competitive edge or advantage from the other company trading in the field.

 

For example Apple is the best leader in iPads, iPhone and iPod market. Its innovation and inventions are such that no company can touch or reach to customer’s expectation as Apple does.

 

This way technological environment can determine barriers to entry, minimum efficient production level and influence the outsourcing decisions. Furthermore, technological shifts would affect costs, quality and lead to innovation.

 

Major issues pertaining to these environments which impinge changing marketing environment are:

1.      Competing technological developments

2.    Information technology, internet, global and local communications

3.    Inventions and Innovations

4.    Maturity of technology

5.    R&D activities

6.    Rates of obsolescence

7.     Technology access, replacement technology/solutions, intellectual property issues, advances in manufacturing

8.    Technology rules, legislation, licensing and patents

9.    Transportation, energy uses, alternative sources for fuels, associated or dependent technologies,

10. Waste management or removal or recycling

    5.1.7 Ecological / Eco-Friendly environment

 

Ecological or Eco-friendly environmental aspects are those which directly hamper the environmental issues. We have seen various types of environment affecting changing marketing environment by Natural Environment such as weather, climate and climate change, which may affect industries such as coal, steel, tourism, farming, insurance, automobiles, electronics and so forth.

 

Furthermore, changing marketing environment has prominent effect from growing awareness of the potential impacts of climate change affecting how companies operate, the products they offer, both creating new markets and diminishing or destroying existing ones. The concept of Green marketing has emerged to follow up this environment. The companies are making super normal profit on the name of going Green.

 

For example previously Electronics Companies were not rating their products as per electricity consumption. Now they give “Stars” in terms of consumption of electricity. Like if 5 Stars are there on any electrical appliance predicting less electricity consumption and so forth. Almost all companies dealing in F&B (Food & Beverages) are packaging the juices in tetra packs of paper instead of bottles. The shampoos are packed in recyclable plastics.

 

 

Many laws by the government in India have been imposed on the companies to make the environment clean and products be eco-friendly. Like government has banned plastics, passed pollution act, forest Act and the like for preserving the mother earth.

 

The issues where the marketers are concerned under this environment which impact on changing marketing environment are:

1.      Ecological and environmental issues,

2.    Environmental regulations

3.    Customer values

4.    Market values

5.    Stakeholder or investor values

6.    Other issues pertaining to green or eco-friendly products

    5.1.8 Legal environment

 

Law of any country governs the customer, market and above all what and where to be marketed. Legal environment is essential to be known by the marketers as it permits or limits the changing marketing environment regarding product or services. It includes all acts and laws governing the company, consumer and customer which are revised time to time. For example:

1.      Antitrust law

2.    Companies Act

3.    Compensation Act

4.    Consumer Forum

5.    Consumer law

6.    Cyber Law

7.     Discrimination law

8.    Employment law

9.    Factories Act

10. Health and safety law

11.   Insurance Act

12.  Trade Union Act

13.  Other laws, rules, regulations and acts related to it.

     These factors can affect how a company operates, its costs, and the demand for its products. The current key concerns under this changing marketing environment are:

1.      Compensation rules etc.

2.    Competitive regulations

3.    Consumer protection

4.    Current home market legislation

5.    Employment law

6.    Environmental regulations

7.     Future legislation

8.    Industry-specific regulations

9.    International legislation

10. Regulatory bodies and processes

    5.1.9 Glocal environment

 

By the emergence of internet accessibility and that too at very low cost today the online shopping trend is creeping up. This is the best example of changing marketing environment. This environment basically holds two factors – Global plus Local – Glocal. In this the local made products are sold or marketed globally. For example: Handicrafts of Rajasthan are sold through websites in global market. The Kangra Paining, Kulu Shawls, Banarasi Sarees, Amul Milk and the like are demanded and marketed worldwide. Hence these two factors or environment are equally affecting marketing environment.

• Globalization
• Localization

   Clubbed together they are as Glocalisation (Globalization + Localisation) affecting changing marketing environment.

 

The Globe has become a village and the market has taken a new shape of MELA. The Malls are new conversion of older concept: the melas, where people used to gather and shop in one defined place. Almost everything was present in these melas for the customers to purchase. Now the transformation of these melas is present in new form of Malls. The Mall culture has given the same feel as of melas. Consumer is free to do window shopping and free to purchase at their disposal. In extension to it now the market place has been converted into market space i.e. from real world to virtual world, from physical market to virtual market.

 

5.2 MICRO & INTERNAL ENVIRONMENT

 

This environment describes the environmental forces that affect the company’s skill to serve its customers. Internal Environment of the company is broadly affected by Micro environment. It is the area inside the company which affects the planning strategy of the company for it marketing mix or product or service promotion.

 

The changing marketing environment from micro environment comprises those elements of the environment that impinge on the firm and usually its industry, but do not affect all firms in all industries. The company focus is on “thinking about customer as a king”. Providing customer satisfaction at its best possible is core discussion and is affected by this environment. This environment is considered to be

 

under partial control of the organization. The factors involved in it are competitors, customers, distribution channels, suppliers, and the general public.

  

5.2.1 The Company

 

The company is the main element in micro environment as it is the key ruler of the entire changing marketing environment. The stakeholders are connected to it and all the profits and losses regarding it affect the stakeholders, thus affecting the company. It involves:

 

1. Staff relationship

2. Brand Image

3. Goodwill

4. The Market where it operates

a. Perfect Competition

b. Monopoly

c. Oligopoly

d. Monopolistic Competition

5. Integration or diversification

 

5.2.2 Suppliers

 

They are the firms and individuals who are the resource providers for the company. Whatever the company requires like raw material, travel support, promotion mix, employees, labour, stationary, financial assistance & support is provided by these supplier.

 

But the big threat of this environment is that the suppliers have bargaining powers. Thus they hit the changing marketing environment a lot. They control the company by creating or maintaining syndicate or by industry control. The main factors in bargaining power of suppliers are:

1.      Concentration among suppliers

2.    The degree to which suppliers’ products can substitute for each other

3.    Vertical integration

4.    Switching costs

5.    The importance of the buyer to the seller.

This is why this environment has internal affect and has to be controlled.

 

5.2.3 Marketing intermediaries

 

Under this environment those firms which help the companies to promote, sell, deliver and distribute its good to final purchasers, are involved. Changing marketing environment has its own limitations regarding decision making forced by this environment. They help the companies to forward the product manufactured by the companies to the ultimate customers. The companies must build healthy relationship with these intermediaries such that the company and the intermediaries benefit in the long run.

 

 

1. Resellers 

These are the agencies or individuals those who purchase the product from the company and with nominal margin forward it to ultimate consumers. The marketing environment from this factor is affected due to companies pricing policies, the brand image and demand and supply factor. They are those who hold the product and sale it to customers. Broadly they are termed as wholesalers and retailers. Now-a-days since Mall Culture is developing in almost all cities, hence the wholesalers and small retailers are at threat.

 

 2. Physical distribution firms

 They are those who stock or move companies product from one place to another. They are transporters and warehouses. The costs incurred by them are ultimately levied on the customer. This again effects on the prices of the product which has to be controlled time and again.

 

3. Marketing services agencies

 These are the facilitators in promoting the brand or product or services of the company. They are:

• Advertising agencies
• Consultants
• Marketing Research firms
• Media people
• Web site developers and managers

    4. Financial intermediaries

 These intermediaries help in managing monetary transactions, taxation and business risk. They help in finance transaction and insure against risks. They are:

• Banks
• Credit Companies
• Charted Accountants & Firms
• Internet Banking Facilitators
• Insurance Companies
• Mobile baking Facilitators
• Others related to facilitate it

    5.2.4 Publics

 

They are those groups that have an actual or potential interest in or impact on an organization’s achieve its objectives and goals. They dictate or facilitate the organization to follow it vision, mission objective and goals which impacts changing marketing environment.

• Citizen-action Publics
• Financial Publics
• General Publics
• Government Publics
• Internal Publics
• Local Publics
• Media Publics

    5.2.5 Competitors

 

The companies dealing in the same industry with same or resembled product or services are termed to be competitors of any company. The big threat to the operating company is that the customer may switch to other company’s product which gives the same or relative satisfaction offered by the product of operating company.

 

For example: Pepsi & Coke are rivals for each other in Beverages segment. They keep on launching and promoting their brands to pull the customers on their product consumption.

 

In this, changing marketing environment is always monitored. It is done by conducting competitor’s analysis which is a great challenge. It is done to monitor its competitor offers to create strategic advantage. The level of competition among the competitors may be segregated and studied as:

• Firms offering anything to the same target market
• Firms offering products which do a similar job
• Firms offering virtually identical products

Competitor analysis basically covers:

1.      Image or Brand or Reputation

2.    Infrastructure

3.    Likely Plans

4.    Market Share

5.    Marketing Mix

6.    SWOT

     Changing marketing environment may also be observed by competitor analysis carried out by using Porter’s Five Forces Model (Porter 1990). This model offers a way of assessing the likely strength of competition in any given market.

 

The Porter’s five forces are as follows:

1.      Bargaining power of suppliers. If suppliers have strong bargaining power, the competitive pressure will be greater.

2.    Bargaining power of customers. Customers with strong bargaining power will be more demanding and can set one supplier against another. This will make the competition tough.

3.    Threat of new entrants. If it is easy for new companies to set up in the same business, the competition will be strong. If it is difficult for new firms to enter the market, the existing firms can become smug.

4.    Threat of substitute products and services. If close substitutes are readily available, the competition will be stronger. For example McDonalds is selling burger at the price which normally a consumer can get any thelas (local vendor) food.

5.    Rivalry among current competitors. Some industries firms have “We Live You Live” approach, which reduces competition. This is particularly in the case of oligopolistic markets, and in markets that are well-established. This is in new or rapidly-growing markets where such rivalry will tend to be stronger and therefore the competition will be tougher.

     For example: Online shopping websites like flipcart.com, olx.in and snapdeal.com keep on promoting their promos on TV to make the consumer aware and purchase or shop through their sites.

 

5.2.6 Customers

 

The customers are the actual buyers of the products and services. They are the real decision maker to purchase or not to purchase. The changing marketing environment is totally focused by this environment. If customer will not purchase, the consumer will not consume. The company has to study the customer market as each customer market has its own characteristics.

 

The group of customers or individuals, the nature of them, the different segments of the market made up of people with slightly different needs, will all affect the company’s changing marketing environment.

    Broadly customer market is differentiated as:

 

1. Business Market 

Purchases products and services for manufacturing purpose or further processing or re-use or refine to make new product or services and sell it further. It broadly covers those sub segments from where the small companies buy from big companies or visa-versa for production or manufacturing purpose.

 

2. Consumer Market

Any goods or services purchased by individual for consumption for household or official activities positioned under this segment. It is more for personal consumption than to be public oriented. The products or services sold or marketed under this category are focused for personal consumption.

 

3. Government Market

 

The firms or agencies which sell or market to or for government are considered under this category. Those agencies which buy products and services in order to produce public services or transfer them to those that need them are the market of this segment.

 

4. International Market

Purchasers of all categories in foreign market underlie in this category. The market based on foreign country. These are the buyers from all the countries.

 

5. Reseller Market 

They are the buyers who buy to resell the product based on margin. Already discussed in marketing intermediaries

 

The above discussions have cleared the concept of changing marketing environment. Thus, in marketing environment macro and micro environment are equally important to study changing marketing environment. They guide the forces for decision making by the companies and to decide on strategic level how they can penetrate the market by controlling or overcoming these environments.

 

 

6. GIST / SUMMARY OF MODULE:

 

Business today is not mere transaction of monetary benefits from one person to another. Neither is it indicator of the growth of prosperity nor wealth. It is fully complex strategically defined and well organised plan which works under various dependent and independent variables popularly termed as business environment. It is fully dependent on the environment where it is conducted, organised, developed and flourished. As the environment is changing, it is giving full impact on changing marketing environment. Today it is the requirement to understand Changing Marketing environment.

 

This is giving impact on changes and thus affecting the marketing environment. To study this we have to study changing marketing environment. Hence, all the businesses are depended on the changes in the business environment leading towards customer’s satisfaction. And the customer’s satisfaction comes from observing changing marketing environment. This is done by exploring the players or stakeholders operating in this environment which has its own dynamics in changing environment of marketing.

 

6.1 Definition

 

Marketing environment is the environment which clubs the entire (Macro) environments where business operates in which firms with their capacity (Micro environments) influence their customers by their projection (Marketing Mix) to be best from their competitors.

 

6.2 Types of Marketing Environment:

• Macro environment are the factors that affect all the firms in an industry AND External environment are the factors that operate outside the organization.
• Micro environment are the factors that affect one firm only AND Internal environment are the factors that operate within the organization.

    6.3 Macro & External environment

 

This environment explains how changes in this environment affect marketing decisions. External Environment which affects the company broadly affected by Macro environment. This environment is considered to be afar from the control of the organization.

• Cultural environment
• Natural environment
• Political environment
• Economical environment
• Social environment
• Technological environment
• Ecological / Eco-Friendly environment
• Legal environment
• Glocal  environment

    Largely now Macro and External Environment clubs CN_PESTEL_G 6.4 Micro & Internal environment

 

This environment describes the environmental forces that affect the company’s skill to serve its customers. Internal Environment of the company broadly affected by Micro environment. It is area inside the company which affects the planning strategy of the company for it marketing mix or product / service promotion. The company focus is on “thinking about customer as aking”. Providing customer satisfaction at its best possible is core discussion and effect by this environment. This environment is considered to be under partial control of the organization.

 

The main actors in this environment are:

• Suppliers

    The main factors in bargaining power of suppliers are:

1.      Concentration among suppliers

2.    The degree to which suppliers’ products can substitute for each other

3.    Vertical integration

4.    Switching costs

5.    The importance of the buyer to the seller.

• Marketing intermediaries

1.      Resellers

2.    Physical distribution firms

3.    Marketing services agencies

4.    Financial intermediaries

• Publics

1.      Financial Publics

2.    Media Publics

3.    Government Publics

4.    Citizen-action Publics

5.    Local Publics

6.    General Publics

7.     Internal Publics

• Competitors

Competitor analysis basically covers:

1.      Infrastructure

2.    SWOT

3.    Likely Plans

4.    Image or Brand or Reputation

5.    Marketing Mix

6.    Market Share

• Customers

Customer Market

1.      Business Market

2.    Consumer Market

3.    Government Market

4.    International Market

5.    Reseller Market

Factors affecting Marketing Decisions

 

 Marketing decisions

Marketing manager is responsible for effectively performing various marketing activities. However, the major task of marketing manager is to identify the target market and develop a marketing mix for the target market. Once, target market is decided, he has to take decisions regarding product, price, distribution and promotion. He has to evolve marketing mix in relation to the existing internal and external environment. Decisions regarding the marketing mix will affect the survival and growth of the firm. So these decisions should be taken after a thorough study of the environment and considering positive and negative impact of various factors prevailing in the environment. Marketing decisions should be modified according to changing environment so as to ensure firm’s long term survival and success.

 

4. Factors affecting marketing decisions

The discussion regarding various factors impinging on marketing decisions has been carried out in two stages. In first stage, the macro and micro environment has been taken into consideration and effect on marketing decisions has been discussed. These factors affect firm’s decisions regarding market segmentation, target market and marketing mix. In the second stage, the external and internal factors affecting specific marketing decisions i.e product, price, distribution and promotion have been discussed.

 

4.1 Factors of marketing environment affecting marketing decisions in general

There are various external factors which affect marketing decisions. These are described below:

• Demographic factors

    Demand for products and services changes with change in age mix. Growing population reflects flourishing markets particularly for baby products. If a baby boom is anticipated, market will offer tremendous potential for baby products. But when there is decline in birth rate and death rate, many firms specialized in baby products will have to adjust their marketing plans and take decisions accordingly

 

Increase in educational levels make people more knowledgeable and aware of products and services. Therefore, marketers have to take marketing decisions for the target markets accordingly.

• Economic factors

   Nature and health of the economy has impact on marketing decisions. High economic growth results in increased levels of employment and income which cause marketing boom in many industries. Recession or depression limits the purchase of durable or luxury goods due to reduction in consumer spending. Consumer buying habits are drastically changed due to inflation as their purchasing power is affected. Many purchases are either postponed or eliminated. Attractive interest rates on deposits lead to more savings and reduce consumer spending. Liberal credit by banks at affordable rates increases purchasing power of customers and expansion rate of organisations. This provides for tremendous growth of market for consumer durables. Thus, product planning, price fixing and promotion decisions should be based on important economic indexes.

• Social and Cultural factors

   Social and cultural factors influence the marketing decisions. These factors include values, life styles, attitudes, norms and customs that characterize the society in which the organisation operates. Marketing executives, while taking decision, should focus on various aspects of social environment i.e. (i) changes in life style and social values (emphasis on quality goods, increasing preference for recreational activities) (ii) concern for social issues (socially responsible marketing policies, safety of products, pollution control) (iii) growing consumerism (customer-oriented marketing). Societal marketing concept demands not only consumer welfare but also citizen welfare. Marketers have to assure quality of life to people i.e. environment free from pollution.

• Political and Legal factors

  Marketing decisions are influenced by custom duties, import-export policies, political interests etc. Philosophy of the political parties in power affects business practices. A pro-business attitude of the government enables firms to enter into new arrangements or expand market base. Legislations controlling and protecting physical environment, marketing competition and consumer interests cannot be ignored by marketers. Anti pollution laws, laws to control marketing and Consumer Protection Act influence marketing decisions. Organisations cannot indulge in unfair trade practices, like price discriminations, false advertising, deceptive sales promotion tools. Marketers have to be more sensitive towards consumer interests otherwise reputation of their organisation will be at stake.

• Technological factors

    Technological forces lead to changes in life styles and buying patterns of consumers. Marketing executives have to take decisions by relating changing values, life-style patterns and changing technology to market opportunities for profitable sales in particular market segments and firm’s sustainability.

• Ecological factors

    The marketing system of an organisation has now to satisfy not only consumer wants but also societal wants of clean environment which may be adversely affected by its activities. Economical and efficient use of energy and natural resources must be reflected in marketing decisions.

• Competition

  Competitors significantly affect the firm’s marketing decisions regarding selection of target markets, marketing channels, suppliers and marketing mix. Marketing decisions are taken to outmanoeuvre the opponent and assuring survival in competitive environment. Marketers must anticipate the competitors’ moves and be prepared to deal with them.

• Customer Demand

     Today’s marketing begins and ends with the customers. Firstly customers (markets) are identified and then marketing programmes for target markets in the form of appropriate marketing mix are developed. Marketers should focus on making customer happy. In today’s scenario, marketing decisions should respond to customer needs and desires in all respects.

 

4.2 Factors of environment affecting specific marketing decisions

Various factors that affect product, price, distribution and promotion decisions are described as below:

 

4.2.1 Product : Product is one of the important components of marketing mix. It is the starting point of all marketing operations. Marketing managers are required to take crucial decisions regarding the product of the company so that it will be accepted by the target market.

 

Product decisions extend to decisions regarding product design, product line, branding, packaging, labeling and after sales services. Product design decision is influenced by production capacity, available capital, use, external appearance required and service requirements.

 

Depending upon the market demand, a firm can go for simplification or diversification. For successful diversification strategy, a firm must carry out self appraisal i.e. determining its strengths and weaknesses in terms of personnel, production, markets, policies, costs and profits. The availability of required manpower, funds, production capacities, market demand and competition will affect the diversification decisions of the firm. A firm cannot go for diversification when it has insufficient funds or cost involved in new project is more than the likely revenue to be earned. Government regulations are to be followed while labelling the product. Decision regarding after sales services, warranties or guarantees will be influenced by the demand of customers, cost involved and services provided by competitors. If there is huge demand for after sales services, a firm can capture more market by offering after sales services. It can also offer long warranty period to increase sales.

 

Product packaging decisions will be affected by requirements of consumers and retailers. Consumers’ considerations may be like ease of storage or possibility of re-use whereas retailers’ consideration can be ease of handling, ease of promotion, ease of price marking etc. Packaging decisions are also affected by nature of product, advertising value, legal requirements, protection requirements of product and cost involved. Sometimes a costly package is opted when a firm wants to have better protection of its product.

 

Branding decisions should be taken carefully. Brand name should be easy to spell. It should not infringe any other manufacturer’s right to use such brand name.

 

Apart from the above mentioned variables, marketing decisions are also influenced by firm’s societal objectives like optimum use of society’s scarce resources; better quality of life; long term satisfaction to the consumers; safety to users; complete fulfilment of government regulations regarding composition; and eco- friendly concern.

 

4.2.2 Price Decisions

 

Pricing decision is important as price of the product affects producers, sellers and consumers. However, this decision is influenced by various internal and external factors which have been described as follows :

 

I. Internal factors: Internal factors affecting pricing decisions include cost of production, pricing objectives, product life cycle, marketing mix, pricing policies and product differentiation. A brief explanation of these factors is given as follows:

• Pricing Objectives : Every pricing decision is influenced by pricing objectives of the company which may be price stability, sales maximization, profit maximization, meeting competition or earning a target rate of return. Prices should be fixed in such a way that pricing objectives are achieved as far as possible.
• Cost of Production : Cost is an important consideration while fixing the price of product. Both cost and price have a close relationship. Many companies use cost plus method. While some companies use demand or competition based method for price fixation. Whatever may be the method of pricing, the aim should be to cover the cost of production and make some surplus. Therefore, product cost should be given due consideration at the time of determining its price.
• Product life cycle: Every product passes through different stages i.e. introduction, growth, maturity and decline. Each stage of product life cycle has a great influence on pricing decisions. Prices should be consciously decided during each stage to achieve marketing objectives.
• Marketing Mix : Pricing decisions are affected by other elements of marketing mix. For effective results, price decisions should be coordinated with product, place and promotion decisions. For example, a firm wishing to increase price may add new features to the product or increase promotional expenditure.
• Pricing Policies : Pricing decisions are required to be taken as per the pricing policies of the organization.
• Product differentiation: A firm can set higher price for its unique product, better quality or attractive package. Customers are willing to pay more price for highly differentiated product.

    II. External Factors : These are the factors which are beyond the control of company but have significant influence on its pricing decisions. Some of the important external factors are described below :

• Competition : Competition affects the pricing decisions of management. Prices are fixed high, low or same as that of competitors’ price depending upon the nature and intensity of competition.
• Economic conditions : Inflationary or deflationary conditions prevailing in the economy affect the pricing decisions. During inflation, high prices are fixed to meet the rising costs.
• Government regulations: Government regulations influence the pricing decisions of a firm. The firm has to set prices within the framework of government regulations. In case prices are fixed by government, it has no choice than to accept it. The Government has framed laws to restrict monopoly and unnecessary price hikes. Thus a firm cannot fix higher prices at its own.
• Distribution Channel : The use of intermediaries (wholesalers, retailers, distributor, sole agent) for distribution of goods is an important factor that influences pricing decisions. Longer the channel of distribution (distributor, wholesaler, retailer), higher will be the price and vice-versa. But it does not mean that shorter distribution channel should be used so as to fix low price of product. Rather a sound channel management is required.
• Image of the company : Market image of an organisation or company in terms of reliability, quality, durability, after sale services, product mix and technology affects its pricing decisions. An organisation enjoying better image among customers can fix higher price.
• Consumer behaviour : Buying pattern of consumer has impact on pricing decision of an organisation. If consumers buy the product frequently, lower price may be fixed. It will result in more sales and high overall profit.
• Suppliers : The price of product is directly affected by suppliers of raw materials or various fabricated parts. If suppliers raise the price, the manufacturers are forced to raise the price of final product.
• Elasticity of demand : Price elasticity of demand has considerable influence on pricing decision. If the demand of product is elastic, then a firm has to fix lower price. On the contrary, if demand is inelastic, higher price may be fixed.

    Further, it is important to mention here that the decisions regarding pricing method, pricing policies and strategies will be greatly affected by the pricing objectives of the company/firm. The decision regarding terms of delivery i.e., quantity, time, place and conditions of delivery will depend upon the intention of parties but subject to the provisions of prevailing Act. Credit terms are also required to be determined by keeping in mind the nature of product, cost involved, credit facilities provided by bank and competitors’ terms. Further, decisions regarding resale price maintenance will be taken by considering prevailing trade customs and trends of industry.

 

4.2.3 Distribution Decisions

 

Distribution means using external and/or internal sources for effective movement of goods and services and performing various activities. Distribution functions can be categorized as demand-oriented functions and supply oriented functions. Demand-oriented functions refer to operations of distribution channels such as distributors, wholesalers or retailers whereas supply-oriented functions refer to physical product movement with a view to ensure quick, economic and safe transfer of goods to buyers. Supply-oriented functions constitute the physical distribution system of the organisation and it includes order processing, maintaining inventory, packaging, product handling, transportation and warehousing.

 

(A) Factors affecting physical distribution system

 

Physical distribution system varies from firm to firm or within the firm from time to time. There are numerous factors which influence this system. Some of them are described briefly as under:

• Liquidity Position : Physical distribution is affected by firm’s liquidity position. A firm which is facing cash crunch will opt for holding low level of inventory and faster transportation. Shortage of funds may also necessitate firm to opt for centralized dispatching. Such firms may also opt for less sophisticated material handling system.
• Size of market : Market size influences physical distribution system. Distribution facilities tend to be focused in markets with high consumer density. Similarly distribution facilities are dispersed when there is large but scattered market.
• Product : The choice of physical distribution is also governed by product. Highly perishable goods require to be dispatched quickly to the markets but it may involve high transportation cost. There are lot of transportation and handling concerns of perishable and fragile products. Further, product cost may influence inventory decisions. Low inventory is usually preferred for high value products. However large inventory can be kept for goods of small value. Product line also influences inventory decisions. Wide range of products is difficult to handle in warehouse.
• Distribution Channels : Physical distribution decisions are influenced by distribution channels used by the organisation. Direct selling will lead to larger inventory, small order handling and decentralized warehousing. However, an organisation will have distribution cost economies when it uses services of wholesalers. It can avail advantages of bulk deliveries, low inventory and less warehousing cost.
• Availability of facilities: Facilities also govern the decision regarding physical distribution system. Sometimes handling equipment, mode of transport and space of warehouse are not available in desired shape, at desired time and in desired size. The company may have to compromise on these facilities.

    (B) Factors affecting distribution channel selection

 

The physical movement of goods and services is facilitated by middlemen i.e. distributors, selling agents, wholesalers and retailers. They are called as channels of distribution. The decision regarding the selection of channel will depend on various factors which are described as follows:

• Product

   Product features like type, value and usage play a significant role in designing and selecting a channel. Custom made products require direct distribution to industrial user or consumer. Perishable goods require special handling and storage. A shorter and controlled channel can be used for distribution of such goods. Durable and standardized goods will require longer channel. Bulky products will tend to benefit from shorter channel. Expensive products need specialized channel system with showroom and financial strength.

• Market

    For consumer market, longer distribution channel will be preferred whereas in business market a shorter channel will be desirable. If the market size is small, direct selling will tend to benefit. However, large market may require longer distribution channel.

 

The geographically concentrated markets may be approached through direct selling. Widely scattered markets will need longer distribution channel.

• Middlemen

  Financial strength, infrastructural facilities, image and services of intermediaries are important considerations to make a right decision for distribution channel.

• Competitors

   Channel design strategies are influenced by the preferences of competitor for distribution system. A company may adopt the similar channels or avoid the channels dominated by rivals and make use of exclusive distribution system.

• Marketing Environment

    The prevailing environment may influence the preference for distribution channel. A company will prefer shorter and cheaper channel during recession. However, a long channel may be used during boom period. Technical innovations also affect the pattern of channels. For instance, the cold storage facilities have made possible the distribution of dairy products or other perishable goods at distant places and enabled the companies to use middlemen.

 

4.2.4 Promotion Decisions

Promotion is a process of marketing communication which attempts to inform, persuade and remind its target markets, through personal and impersonal means, about company and its brand. Promotion mix consists of a group of communication tools which marketing executives use to communicate with their target audience. Advertising, sales promotion, personal selling, public relations are important elements of promotion mix. Choosing a right advertising media (like television, radio, print, outdoor) is a difficult task. Media selection decisions are influenced by (i) communication requirements (ii) advertising budget (iii) nature of the product (iv) extent of competition (v) geographical area coverage requirements (vi) literacy level of target group (vii) cost of media and services provided.

 

The marketer tries to create a most favourable blend of all promotion elements to influence buyer’s behaviour and his process of decision making. Therefore, he takes decision regarding promotion mix.

 

Factors affecting promotion mix

 

There are various promotion tools available. A company/firm should take decision to use an appropriate tool by considering following factors:

• Nature of Product: Personal selling is best suited to sell industrial products. Industrial goods can be promoted through sales engineer or journals. Specialty products should be promoted through selective media like journals, personal selling. Convenience products are mass selling consumer goods that can be promoted through radio, newspaper or television.
• Target Market : Sex, age and background of target market will determine the use of promotion tool. Toys or cosmetics can be promoted through television. A convenience product targeted at rural market would require the use of customer education. In such markets, advertising supported by personal selling will help in boosting the sales.
• Stages in Product Life Cycle : Promotional strategy will be influenced by product’s stage in life cycle. During the introductory stage, there is need to create awareness and knowledge about product. Product displays and publicity supported by advertising can be relied upon to promote such product. The purpose of promotion will be different when product reaches growth stage. Public relations and sales promotion can be used along with advertising. For product at maturity stage, firms can focus on consumer sales promotion and trade promotion only. In declining stage, only sales promotion techniques can be resorted to.
• Availability of Funds : The new entrants may lack funds to use advertising, personal selling, or sales promotion tools. They can go for publicity to create awareness among customers. If established firms do not face any financial crunch they can adopt any promotion tool.
• Type of buying decisions: Promotional tool is determined by the type of buying decisions. Complex decisions require assurance and conviction. Personal selling is best suited in such cases. Simple routine nature buying decisions require reminder communication to maintain brand recall. Consumer sales promotions should be used to keep customer interested in brand.
• Push and Pull Strategy : Push strategy aims at assisting dealers in increasing sales whereas the purpose of pull strategy is to encourage customers or end users. A company that wants to use pull strategy should use advertising or sales promotion. But a company which is opting push strategy must go for personal selling. However, a company can use a combination of different promotion tools when push and pull strategy is followed by it.

5.   Summary

    Marketing manager has to take decisions regarding target market and marketing mix. There are various factors present in micro and macro environment that affect marketing decisions such as demographic factors, economic factors, social factors, political and legal factors, technological factors, competition and customer demand. These factors affect manager’s decisions regarding market segmentation, target market and marketing mix. There are various external and internal factors which affect specific marketing decision i.e. product, price, distribution and promotion. Product design decision is influenced by production capacity, available capital, use, external appearance required and service requirements. The availability of required manpower, funds, production capacities, market demand and competition affect the diversification decisions of the firm. Decision regarding after sales services or guarantees are influenced by the demand of customers, cost involved and services provided by competitors. Packaging decisions are affected by nature of product, advertising value, legal requirements, protection requirements of product and cost involved.

 

Pricing decisions are affected by various factors like pricing objectives, cost of production, product life cycle, marketing mix, product differentiation, competition, economic conditions, government regulations, distribution channel etc. There are numerous factors which influence the physical distribution system such as liquidity position of company, size of market, product, distribution channels and availability of facilities. Distribution channel decisions are affected by product, market, middlemen, competitors and marketing environment. However, promotion decisions are influenced by nature of product, stages of product life cycle, age and background of target market, type of buying decisions and availability of funds. The marketers should give due consideration to each factor, study pros and cons associated with each factor and then take rational marketing decisions.