SEMESTER III

CORE-VIII: MARKETING MANAGEMENT

7.SYLLABUS

UNIT I

Fundamentals of marketing - Role of Marketing - Relationship of Marketing with other functional areas -
concept of marketing mix-Marketing approaches - Various Environmental factors affecting the
marketing functions.

UNIT II
Buyer Behavior - Consumer goods and Industrial goods - Buying motives - Factors influencing
buyer Behaviour Market segmentation - Need and basis of Segmentation -Targeting - positioning.

UNIT III
The Product - Characteristics - benefits - classifications - consumer goods - industrial goods - New
Product Development process - Product Life Cycle - Branding -Packaging.

UNIT IV
Physical Distribution: Importance - Various kinds of marketing channels - distribution problems. Sales
management: Motivation, Compensation and Control of salesmen.

UNIT V
A brief overview of: Advertising - Publicity - Public Relations - personal Selling –Direct selling and Sales
promotion.
 UNIT I

Fundamentals of marketing - Role of Marketing - Relationship of Marketing with other functional areas -
concept of marketing mix-Marketing approaches - Various Environmental factors affecting the
marketing functions.

Marketing Management
Marketing management is the administration of marketing functions.
It is considered as the process of organizing, directing as well as controlling the activities associated with
marketing goods and services in order to meet the needs of customers and achieve organizational goals.
“Marketing management is defined as the art and science of selecting target markets and acquiring, retaining,
and growing customers by creating, delivering, and communicating superior customer service.”

Philip Kotler
The Process of Management of Marketing Involves:
a. Identifying a target market
b. Creating demand by producing products that meet the needs and interests of customers.
c. Create, develop, and communicate superior customer values: To provide superior value products/services
to prospective customers, and to communicate these values to other potential buyers in order to persuade
them to purchase the product/service.

Marketing and Selling

Marketing: It refers to a broad range of activities, of which selling is only one component. Before making a
sale, a marketer must plan the type, design, and price of the product, as well as select the distribution
channels and the appropriate promotional mix for the target market.
Selling: refers to the sale of a product or service through advertising, promotion, and salesmanship. The
product's title is transferred from seller to buyer. The primary goal of selling is to turn a product into cash.
Difference Between Marketing and Selling

Marketing Selling

Emphasis is on customer Emphasis is on Needs and wants the product

Marketers identify the Needs and wants of A product organization makes the customer and delivers product
to satisfy Customer. and when figures out how to sell it.

Profit oriented through Customer satisfaction. profit oriented through sales Volume.

Long term planning short term Planning

Create from time Possession and Place utility only possession utility

It is a system of Integrated and the Inter related it is the part of marketing process
Function

Focus is needs On consumer focus is needs on seller

Marketing Concepts/Philosophies
1. Production Concept:
Because the number of producers was limited in the early days of the industrial revolution, industrialists
assumed that consumers were only interested in easily and widely available goods at an affordable price.

2. Product Concept:
 As time passed, supply improved, and customers began to prefer products that were superior in
performance, quality, and features.
 As a result, product improvement has become the key to a company's profit maximization.

3. Selling Concept:
 Increased production scale resulted in increased competition among sellers. Because there were so
many companies selling similar products, product quality and availability were insufficient to ensure
survival.
 Consumers will not buy products unless the company engages in aggressive sales and promotional
activities.
4. Marketing Concept :

 Marketing begins with determining what consumers want in order to satisfy consumers and profit.
 Customer satisfaction is a prerequisite for achieving the firm's goals and objectives.

5. Social Marketing Concept:

 Customer satisfaction is supplemented by social welfare in this concept.

 A company that adopts the societal concept must balance the company's profits, consumer
satisfaction, and societal interests.

Functions of Marketing
1. Selling:
It is core of marketing. It is concerned with the prospective buyers to actually complete the purchase of an
article. It involves transfer of ownership of goods to the buyer. Selling plays an important part in realizing the
ultimate aim of earring profit. Selling is enhanced by means of personal selling, advertising, publicity and sales
promotion
2. Buying and Assembling:
It involves what to buy, of what quality, how much from whom, when and at what price. People in business buy
to increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price.
3. Transportation:
Transportation is the physical means by which goods are moved from the places where they are
produced to those places where they are needed for consumption. It creates place, utility.
Transportation is essential from the procurement of raw material to the delivery of finished products to
the customer’s places. Marketing relies mainly on railroads, trucks, waterways, pipelines and air
 transport.
4. Storage
It involves holding of goods in proper (i.e., usable or saleable) condition from the time they are
produced until they are needed by customers (in case of finished products) or by the production
department (in case of raw materials and stores); storing protects the goods from deterioration and
helps in carrying over surplus for future consumption or use in production. Storing assumes
importance when production is regional or consumption may be regional. Retail firms are called
“stores”.
5. Standardization and Grading:
The other activities that facilitate marketing are standardization and grading. Standardization means
establishment of certain standards or specifications for products based on intrinsic physical qualities of
any commodity. This may involve quantity (weight or size) or it may involve quality (colour, shape,
appearance, material, taste, sweetness etc.) Government may also set some standards, for example, in
case of agricultural products. A standard conveys a uniformity of the products
6. Financing:
It involves the use of capital to meet financial requirements of agencies dealing with various activities
of marketing. The services to provide the credit and money needed, the costs of getting merchandise
into the hands of the final user is commonly referred to as finance function in marketing.
In other words; various kinds of finances are short-term finance, medium-term finance, and long-term
finance.
7. Risk Taking:
Risk means loss due to some unforeseen circumstances in future. Risk bearing in marketing refers to
the financial risk interest in the ownership of goods held for an anticipated demand including the
possible losses due to a fall in prices and the losses from spoilage, depreciation, obsolescence, fire and
floods or any other loss that may occur with the passage of time. They may also be due to decay,
deterioration and accidents, or due to fluctuation in the prices caused by changes in their supply and
demand. The various risks are usually termed as place, risk, time risk and physical risk.
8. Market Information:
The importance of this facilitating function of marketing has been recognized only recently. The only
sound foundation on which marketing decisions may be based is correct and timely market
information. Right facts and information reduce the aforesaid risks and thereby result in cost
reduction. Modern marketing requires a lot of information adequately, accurately and speedily.
Marketing information makes a seller know when to sell, at what price to sell, who are the
competitors. Marketing information and its proper analysis has led to marketing research which has
now become an independent branch of marketing.
Marketing Mix
 A large number of factors influence marketing decisions; these are classified as ‘uncontrollable
factors' and ‘controllable factors.'
 Controllable factors are those that can be influenced at the firm level.
 Environmental variables are factors that influence a decision but are not controllable at the firm level.
 In order to be successful, a company must make sound decisions after analyzing controllable factors
and keeping environmental factors in mind.
 Marketing Mix refers to the set of marketing tools that a company employs to achieve its marketing
objectives in the target market.
 The success of a market offer is determined by how well these ingredients are combined to provide
superior value to customers while also meeting sales and profit goals.
Elements of Marketing Mix
The marketing mix consists of four main elements
A. Product
B. Price
C. Place/Physical Distribution
D. Promotion
 UNIT II
Buyer Behavior - Consumer goods and Industrial goods - Buying motives - Factors influencing
buyer Behaviour Market segmentation - Need and basis of Segmentation -Targeting - positioning.

Meaning of Buyer Behaviour:

The manner in which the buyer will react to the marketers strategy is what is known as buyer
behavior. For example, if the marketer offers discount during off-season, it must induce the buyurs to buy.
The success of the marketer, therefore, lies in his ability to draw the attention of the buyur towards his
products.

Knowledge of Buyer Behaviour

1. BB is not static nature. It may change any time

2. It enables the marketer to introduce the right product at the right time in the market.
3. The buyer can be satisfied only by offering product that fulfil their desires.
4. The sales promotional activities of a business are also undertaken in tune with the behavior of the
buyers.

FACTORS AFFECTING CONSUMER BEHAVIOUR

The marketers try to understand the actions of the consumers in the marketplace and the underlying
motives for such actions. These motives are the factors that influence the consumer behavior. These
are:

The marketers try to understand the actions of the consumers in the marketplace and the underlying
motives for such actions. These motives are the factors that influence the consumer behavior. These
are:
Psychological Factors: The human psychology plays a crucial role in designing the consumer’s
preferences and likes or dislikes for a particular product and services. Some of the important
psychological factors are:

• Motivation
• Perception
• Learning
• Attitudes and Beliefs

Social Factors: The human beings live in a complex social environment wherein they are
surrounded by several people who have different buying behaviors. Since the man is a social animal
who likes to be acceptable by all tries to imitate the behaviors that are socially acceptable. Hence, the
social factors influence the buying behavior of an individual to a great extent. Some of the social
factors are:

• Family
• Reference Groups
• Roles and status

Cultural Factors: It is believed that an individual learns the set of values, perceptions, behaviors,
and preferences at a very early stage of his childhood from the people especially, the family and the
other key institutions which were around during his developmental stage. Thus, the behavioral
patterns are developed from the culture where he or she is brought up. Several cultural factors are:

• Culture
• Subculture
• Social Class

Personal Factors: There are several factors personal to the individuals that influence their buying
decisions. Some of them are:

• Age
• Income
• Occupation
• Lifestyle

Economic Factors: The last but not the least is the economic factors which have a significant
influence on the buying decision of an individual. These are:

• Personal Income
• Family Income
• Income Expectations
• Consumer Credit
 • Liquid Assets of the Consumer
• Savings

These are some of the underlying factors that influence the consumer behavior, and the marketer
must keep these in mind, so that appropriate strategic marketing decision is made.

TARGET MARKETING

A target market is a group of customers within a business's serviceable available market that the
business has decided to aim its marketing efforts towards. Target markets consist of consumers who
exhibit similar characteristics (such as age, location, income, and lifestyle) and are considered most
likely to buy a business's product or service.

SELECTING TARGET MARKET

1. Analyze the features of your products and services. Determine the benefits that your
customers get from your products and how your products fill the needs of those customers. Make a
list of those features and needs to make the analysis easier.

2. Look at the types of customers who are likely to purchase your products and use your
services. Consider things such as age, gender, income level, marital status, occupation, educational
level, gender and ethnic background. Identify which customer categories have the greatest need for
your products.

3. Consider the personal characteristics of your potential customers and determine how the
customer’s lifestyle affects a need for your products. Think about the customer’s interests, values and
personality traits. Consider how and when your customer will use your services, as well as the
features that appeal to the customer.

4. Look at your competition’s target market. Analyze the needs that your competition fills for
their target market. Identify the areas of the market that have been overlooked by the competition.
Seek to fill the void within the market, rather than targeting the same market as your competition.

5. Take a look at your current customer base, if your business is already operating. Identify the
products or services that interest your current customers and determine what benefits these customers
get from those services.

6. Compile all of your research findings. Use your findings to determine which types of
customers have the most need for your services. Keep the market well-balanced so that your target
market is not too big or too small.
POSITIONING

Positioning refers to the place that a brand occupies in the mind of the customer and how it is
distinguished from products from competitors. In order to position products or brands, companies
may emphasize the distinguishing features of their brand (what it is, what it does and how, etc.) or
they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-
level or high-
end, etc.) through the marketing mix. .

Positioning is part of the broader marketing strategy which includes three basic decision levels,
namely segmentation, targeting and positioning, sometimes known as the S-T-P approach:

The STP approach highlights the three areas of decision-making

Segmentation: refers to the process of dividing a broad consumer or business market,

normally consisting of existing and potential customers, into sub-groups of consumers
(known as segments)

Targeting: refers to the selection of segment or segments that will become the focus of
special attention (known as target markets).

Positioning: refers to an overall strategy that "aims to make a brand occupy a distinct
position, relative to competing brands, in the mind of the customer".

POSITIONING STRATEGY

A clear understanding of the market includes target demographics, strength of the competitors'
products, how you give value, and your own strengths and weaknesses. After you have a thorough
understanding of the landscape of your market, you can decide which positioning strategy will be the
most successful for your products.

1. Target Demographics

A product cannot be all things to all people. Products are designed to appeal to a specific
demographic group. Several characteristics of a demographic are age, gender, education, and
language and income level.
 A strategy that does a good job of targeting a market segment delivers more
value to the consumer, establishes a stronger position against competitors, has
more compelling communications and has a higher probability of keeping its
customers.

2. Low-Price Strategy

Pricing is a major consideration for most consumers. If a company can convince

consumers that they are receiving more value for their money, they will buy the
product.

A lower price strategy may require compromises in product quality or to reduce

the range of offerings. For example, a car manufacturer might offer a lower price
in exchange for a smaller engine and fabric upholstery instead of leather.

3. High-Price Strategy

Consumers perceive products with higher prices as having superior quality and
are worth the price. However, to create this perception in the mind of the
consumer, the company must focus its advertising on how its features and
benefits are superior to those of its competitors.

4. Distribution

Companies can create the perception of better value by restricting the distribution
of their products. Golf equipment manufacturers have certain clubs and balls that
are only available in pro shops and are sold at higher prices The golfer believes
that the products must be of higher quality because they're not available in Target
or Walmart.

5. Competitive Comparisons

The objective of competitive comparisons is to reposition a competitor's products

in the minds of consumers. This strategy is helpful when a market has two strong competitors. One
company focuses its advertising on showing how its products differ from its competition.
Unit III

The Product - Characteristics - benefits - classifications - consumer goods -

industrial goods - New Product Development process - Product Life Cycle -
Branding -Packaging.

What is a product?

According to Philip Kotler, who is an economist and a marketing guru, a product is

more than a tangible „thing‟. A product meets the needs of a consumer and in
addition to a tangible value this product also has an abstract value.

For this reason Philip Kotler states that there are five product levels that can be
identified and developed. In order to shape this abstract value, Philip Kotler uses five
product levels in which a product is located or seen from the perception of the
consumer. These 5 Product Levels indicate the value that consumers attach to a
product. The customer will only be satisfied when the specified value is identical or
higher than the expected value.

Five Product Levels

1. Core Product: This is the basic product and the focus is on the purpose for
which the product is intended. For example, a warm coat will protect you from the
cold and the rain. The more important benefits the product provides, the more that
customers need the product. A key element is the uniqueness of the core product.
 This will benefit the product positioning within a market and effect the possible
competition.

2. Generic Product: This represents all the qualities of the product. For a warm
coat this is about fit, material, rain repellent ability, high-quality fasteners, etc.

3. Expected Product: This is about all aspects the consumer expects to get when
they purchase a product. That coat should be really warm and protect from the
weather and the wind and be comfortable when riding a bicycle.

4. Augmented Product: The Augmented Product refers to all additional factors

which sets the product apart from that of the competition. And this particularly
involves brand identity and image. Is that warm coat in style, its colour trendy and
made by a well-known fashion brand? But also factors like service, warranty and
good value for money play a major role in this. The goal is to deliver something that
is beyond an expected product.

5. Potential Product: This is about augmentations and transformations that the

product may undergo in the future. For example, a warm coat that is made of a fabric
that is as thin as paper and therefore light as a feather that allows rain to automatically
slide down.

Product
A product, in the eyes of the customer, is a collection of utilities that is purchased because of
its ability to meet a specific need.
Classification of Products
Products can be classified into two categories:
(i) Consumers ‘products,
(ii) Industrial products.
A. Shopping Efforts Involved
On the basis of the buyers' time and effort.
1. Convenience Products: Convenience goods are consumer products that are frequently
purchased for immediate use. Medicines, newspapers, stationery, toothpaste, and so on.
2. Shopping Products: Shopping products are those in which buyers spend a significant
amount of time comparing the quality, price, style, suitability, and so on at various stores
before making a final purchase. For example, electronic goods, automobiles, and so on.
3. Specialty Products: Specialty products are goods that have unique characteristics that
compel customers to go out of their way to purchase them. For example, art, antiques, and so
on.
B. Durability of Products
1. Non-durable Products: These are consumer goods that are consumed in a short period of
time. For example, milk, soap, stationery, and so on.
2. Durable Products: Tangible items that can withstand repeated use, such as a refrigerator,
radio, bicycle, and so on.
3. Services: Intangible services are those activities, benefits, or satisfactions that are sold,
such as dry cleaning, watch repairs, hair cutting, postal services, doctor services, and so on.
Industrial Products
Industrial products are those that are used as inputs in the manufacturing process.

Characteristics
 Number of Buyers
  Channel Levels
 Geographic Concentration
 Derived Demand
 Role of Technical Considerations
 Reciprocal Buying
 Leasing Out
Classification
 Materials and Parts: items that are completely incorporated into the manufacturer's
products.
 Capital Items: the manufacture of finished goods, such as installations and
equipment.
 Supplies and Business Services: short-term goods and services that aid in the
development or management of the final product. Repairs and maintenance, for
example.

Stages in New Product Development:-

(1) Idea generation:-
 Competitors- introduce a new product.
 Customers- give suggestions or express
 Company- sales force and members of distribution channels who are
constantly in touch with the market.
 Research and development section- who may see new product opportunities in
scientific and technological developments.
 Company executives- who are concerned about their business and keep
thinking about better and new products.
(2) Screening:-
 It is highly unlikely that all new product ideas that have been generated will be
promising and worth pursuing. Besides, a company cannot afford to pursue
too many new product ideas simultaneously. The purpose of screening is to
evaluate and select the most promising idea of all the new product ideas.
(3) Concept Development and Evaluation:-
 Target consumer- specific needs of the consumers it aims to satisfy.
 Form or the manner in which the need is to be satisfied (e.g., liquid,
tablet, powder and cream).
 The primary benefit it offers to consumers.
 The price (both monetary and non-monetary) that a consumer has to
pay to receive these benefits.
(4) Business analysis:-
 The critical elements of this appraisal are estimating future sales, cost, profits
and the extent of investment required. Evaluate the project using different sets
 of assumptions about sales, costs and profits. This step is a combination of
economic and marketing feasibility.
(5) Product Development and Evaluation:-
 Once the product concept has passed the business analysis stage, work can
begin to physically develop the product. This is a long drawn and costly
process, necessitating a close co-ordination between marketing and research
departments.
(6) Development and Evaluation of marketing mix:-
 Marketing mix such as packing, brand name, final price, channel and
promotional strategies have to be planned.
(7) Test marketing:-
 Test marketing provides an opportunity to test the acceptability of the product
and the mix with minimum resource commitment and minimise the risk of
failure in the large market place. Lessons learnt at this stage can be
instrumental in avoiding costly mistakes.
(8) Commercialisation of the product:-
 A product reaches the commercialisation stage when it is launched in regional
or national markets. Lessons learnt from test marketing must be implemented
to modify and improve the product and the mix. Commercialisation may be
either phased (introduced only in selected markets) or the product may be
introduced in all markets.

Product Life Cycle (PLC):-

The following table shows the Product Life Cycle and its different stages and the
various characteristics which they reflect in the varying stages:
PLC Elements Introduction Growth Maturity Decline
Characteristics
1. Sales Low Fast Slow Declining
2. Profits Negligible Peak Declining Low
3. Cash Inflow Negative Moderate High Low
4. Competitors Few Growing Many Declining
5. Customers Innovative Mass market Mass market Leggards

Branding:
Branding is the process of creating a corporate brand identity for consumers and imprinting
that brand identity on their minds, which necessitates brand positioning and brand
management.
Amazon's Jeff
Bezos
The process of developing a product's distinct identity. It is the process of identifying a
product by using a name, term, symbol, or design alone or in some combination.
Brand: A name, term, sign, design, or some combination of the above used to identify and
differentiate the seller's products from those of competitors.
Advantages to the Marketers
  Enables Product Differentiation Through Marking: It aids in distinguishing its
product from that of its competitors.
 Aids in the development of advertising and display programs
 Differential Pricing: It allows a company to charge different prices for different
products.
 Ease of New Product Introduction
Advantages to the Customers
 Aids in Product Identification: Assists customers in identifying products.

 Ensures Quality: Ensures product quality

 Status Symbol: Brands become status symbols due to their quality As an example,
consider Benz automobiles.
Characteristics of Good Brand Name
 Short, simple to say, spell, recognize, and remember

 Suggest the product's advantages and characteristics.

 Different from other products
 Adaptable to packing or labeling requirements, as well as different advertising media
and languages.
 Versatile enough to accommodate new products;
 Legally registered and protected

Packaging
Packaging: The act of designing and developing a product's container or wrapper. Because
good packaging often aids in the sale of a product, it is referred to as a silent salesman.
Levels of Packaging
1. Primary Package: This is the product's immediate container/covering, such as toffee in a
wrapper, a match box, a soap wrapper, and so on.
2. Secondary Package: It's all about additional layers of protection that are kept until the
product is ready for use, such as a red cardboard box for Colgate toothpaste.
3. Transportation Package: refers to additional packaging components required for storage,
identification, and transportation, such as putting a package of toffees into cardboard boxes
for storage at a manufacturer's warehouse and transportation.
Functions of Packaging
 Product Identification: Packaging aids in product identification.

 Product Protection: The primary function of the packaging is to protect the product.
 Facilitating Product Usage: It makes transportation, stocking, and consumption
easier.
 Product Promotion: Packaging makes sales promotion easier.
  Rising Health and Sanitation Standards: It is believed that there is minimal
adulteration in packaged goods.
 Self-Service Outlets: Good and appealing packaging can help to promote a product.
 Opportunities for Innovation: Packaging innovation has increased the shelf life of
products.
For example, tetra packs for milk.
 Product Differentiation: The color, size, material, and other characteristics of
packaging influence customers' perceptions of the product's quality.

Labelling
Labeling is the process of affixing identification marks to a package. Labels are information
carriers that provide information such as the name of the product, the name of the
manufacturer, the contents of the product, the expiry and manufacturing date, general
information for use, weight, and so on.
Labels Perform Following Functions:
1. Identify the product: It assists customers in identifying the product among the various
types of products available. For example, the purple color of a Cadbury chocolate label easily
distinguishes it from other chocolates.
2. Describe and specify the product's contents: The manufacturer provides all information
regarding the product's contents, etc.
3. Product grading: With the help of labels, products can be classified into different
categories based on quality, nature, and so on, for example: Brooke Bond Red Label, Brooke
Bond Yellow Label, Brooke Bond Green Label, and so on.
4. Aids in product promotion: Attractive and colorful labels excite customers and entice
them to purchase the products. For example, 40 percent extra free, as stated on detergent, buy
two get one free, and so on.
5. Providing legal information: There is a legal requirement to print the batch number,
maximum retail price, weight/volume on all products, and a statutory warning on the packet
of cigarettes, “Smoking is harmful to one's health”: In the event of a hazard on/poisonous
material, appropriate safety warnings should be posted.

Pricing
Meaning of Price:
It is considered as the sum of the values that customers exchange in exchange for the benefit
of owning or using the product. Price can thus be defined as the sum of money paid by a
buyer (or received by a seller) in exchange for the purchase of a product or service.
Factors Determining Price Determination:
1. Pricing Objectives
 The marketing firm's goal is to maximize profits. Pricing objectives can be
determined in both the short and long run. If the company wants to maximize profits
in the short run, it will charge the highest price for its products. However, in order to
maximize its total profit in the long run, it would choose a lower per unit price in
order to capture a larger share of the market and earn higher profits through increased
sales.
2. Product Cost:
  Price should cover all costs and aim to earn a reasonable profit above and beyond the
cost.
 It takes into account the costs of manufacturing, distribution, and sale of the product.
 Costs establish the floor price, or the lowest price at which the product can be sold.
 The price should rise. Total costs (Fixed costs/overheads + Variable costs + Semi-
variable costs) in the long run, but in certain circumstances (introduction of a new
product or entry into a new market), the product price may not cover all costs for a
short period of time.
3. Utility and Demand:
 The utility provided by the product, as well as the demand for the product, determine
the maximum price that a buyer will be willing to pay for that particular product.
 Buyers would be willing to pay until the utility of the demand exceeded or equaled
the utility derived from it.
 According to the law of demand, consumers buy more at a lower price.
 Demand elasticity is the responsiveness of demand to changes in product prices. If a
small change in price leads to a larger change in quantity demanded, demand is
elastic. Firms can set higher prices if demand is inelastic.
4. Extent of Competition in Market:
Before setting prices, competitors' prices and anticipated actions must be considered.
5. Government Policies:
In the public interest, the government can intervene to regulate product prices.
6. Marketing Methods Used:
Other marketing elements such as distribution system, sales promotion efforts, packaging
type, product differentiation, credit facility, and so on all have an impact on the price fixing
process.
 UNIT IV
Physical Distribution: Importance - Various kinds of marketing channels - distribution
problems. Sales management: Motivation, Compensation and Control of salesmen.

Physical Distribution
 A series of decisions must be made in order to make the product available for
purchase and consumption by customers.
 The marketer must ensure that the product is available in sufficient quantities, at the
appropriate time, and in the appropriate location.
 A channel of distribution is a group of companies and individuals who take title, or
assist in the transfer of title, to specific goods or services as they move from producers
to consumers.
 Choosing an appropriate channel of distribution is a critical marketing decision that
affects an organization's performance. It is a strategic decision whether the firm will
use direct marketing channels or long channels involving a number of intermediaries.
1. Order Processing: Provide accurate and timely order processing, without which orders
would arrive late or in the wrong quantity. As a result, customers will be dissatisfied, with the
risk of losing business and goodwill.
2. Transportation: It transports goods from manufacturers to consumers, making the product
available at the point of sale.
3. Inventory control: Choosing the level of inventory is an important inventory decision.
Additional demand can be met in less time, and inventory requirements will be minimal.
4. Warehousing: The act of storing and sorting products in order to create time utility in
them is referred to as warehousing. It is required to bridge the gap between the time the
product is manufactured and the time it is distributed for consumption.
Components of Physical Distribution:
Functions of Distribution Channels
1. Sorting: Middlemen obtain supplies of goods from a variety of sources, which are not
always of the same quality.
2. Accumulation: the accumulation of goods into larger homogeneous stocks that aid in the
maintenance of a continuous flow of supply.
3. Allocation entails dividing homogeneous stock into smaller, more marketable lots.
4. Assorting: the collection of products for resale.
5. Product Promotion: Middlemen take part in activities such as demonstrations, special
displays, and so on.
6. Bargaining: Manufacturers, intermediaries, and customers bargain over price, quality, and
other issues.
7. Risk Taking: Merchant middlemen take title to the goods, assuming risks such as price
and demand fluctuations, spoilage, destruction, and so on.
Channels of Distribution
  Consists of a network of firms, individuals, merchants, and functionaries who assist in
the transfer of title to a product from the producer to the end consumer.
 Intermediaries help to cover a large geographical area and increase distribution
efficiency, including transportation, storage, and negotiation. They also provide
customers with convenience by having a variety of items available in one location, as
well as serving as an authentic source of market information because they are in direct
contact with the customer.

Types of Channels:
Direct Channel ( Zero Level)
The manufacturer and the customer establish a direct relationship. Manufacturer-Customer.
For example, mail order, internet, and door-to-door sales.
Indirect Channel
The distribution network is referred to as indirect when a producer uses one or more
intermediaries to move goods from the point of production to the point of sale.
1. Manufacturer-Retailer-Customer (One Level Channel)
Between the manufacturers and the customers, one intermediary, namely retailers, is used.
Typically used for high-end items such as watches, appliances, automobiles (Maruti Udyog),
and so on.
2. Manufacturer-wholesaler-Retailer-customer (Two Level Channel):
This channel is primarily used for consumer goods distribution. Typically used for consumer
goods such as soaps, salt, and so on.
3. Manufacturer → Agent → Wholesaler → Retailer → Customer (Three Level
Channel):
Manufacturers use their own selling agents or brokers in this case, who connect them with
wholesalers, then retailers, and finally consumers.
Factors Determining Choice of Channels of Distribution
The selection of an appropriate channel of distribution is a critical marketing decision.
1. Product Related Factors: The nature of the product, whether it is industrial or consumer
goods, perishable or nonperishable, etc., determines the distribution channels used.
2. Company Characteristics: The company's financial strength and the level of control it
wishes to exert over other channel members. Short channels are used to exert more control
over intermediaries and vice versa.
3. Competitive Factors: Companies may copy the channels used by their competitors.
4. Market Factors: The size of the market as well as the geographical concentration of
potential buyers influence channel selection.
5. Environmental Factors: Legal constraints and a country's economic situation. In a down
economy, marketers use shorter distribution channels.

Promotion
 Promotion is the use of communication with the dual goal of informing potential
customers about a product or a service as well as persuading them to purchase it.
 Promotion is a critical component of the marketing mix in which marketers use
various communication tools to encourage the exchange of goods and services in the
market.
  It is a set of promotional tools/techniques used by a company to entice and persuade
customers to buy its products.
Promotion Mix
A promotion mix is considered as a combination of promotional tools used by a company to
achieve its communication goals.
Promotion mix tools:
(i) Advertising,
(ii) Personal Selling,
(iii) Sales Promotion,
(iv) Publicity.

UNIT V
A brief overview of: Advertising - Publicity - Public Relations - personal Selling –
Direct selling and Sales promotion.

Promotion
 Promotion is the use of communication with the dual goal of informing potential
customers about a product or a service as well as persuading them to purchase it.
 Promotion is a critical component of the marketing mix in which marketers use
various communication tools to encourage the exchange of goods and services in the
market.
 It is a set of promotional tools/techniques used by a company to entice and persuade
customers to buy its products.
Promotion Mix
A promotion mix is considered as a combination of promotional tools used by a company to
achieve its communication goals.
Promotion mix tools:
(i) Advertising,
(ii) Personal Selling,
(iii) Sales Promotion,
(iv) Publicity.

1. Advertising
Advertising, as defined by a specific sponsor, is a paid form of nonpersonal presentation and
promotion of goods, services, or ideas.
The most widely used promotional tool. It is a cold, impersonal form of communication that
is paid for by marketers (sponsors) to promote their products and services. Newspapers,
magazines, television, and radio are all common mediums.
Features
 Paid Form: The sponsor must bear the cost of communicating with customers.

 Lack of Personalization: There is no direct face-to-face contact between the prospect

and the advertiser.
  Identified Sponsor: Advertising is done by a specific person or company.
Merits
 Mass Reach: a large number of people can be reached across a large geographical
area.
 Increasing customer satisfaction and trust.
 Expressiveness: It is a powerful medium of communication.
 Economy: Because of its wide reach, is a very cost-effective mode of
communication.
Limitations
 Less Forceful: There is no pressure on the prospects to listen to the message.

 Feedback Deficit:
 Inflexibility: It is less flexible because the message is standardised and not tailored to
the individual.
 Low Efficacy: It is difficult to get advertising messages heard by the intended
prospects.
Objections to Advertising
Some critics argue that advertising is a social waste because it raises costs, multiplies people's
needs, and undermines social values.
1. Adds to Cost: Unnecessary advertising raises the cost of the product, which is then passed
on to the buyer in the form of high prices.
2. Undermines Social Values: It undermines social values while encouraging materialism.
3. Confuses the Buyers: A similar product of the same nature/quality confuses the buyer.
4. Encourages Sale of Inferior Products: It makes no distinction between superior and
inferior goods.
5. Some Advertisements are in Bad Taste: These depict something that some people do not
agree with.

2. Personal Selling
Personal selling entails personally contacting prospective buyers of a product, i.e. engaging in
a face-to-face interaction between seller as well as the buyer for the purpose of sale.
Features of the Personal Selling
1. Under personal selling, personal contact is established.
2. Establishing relationships with prospective customers, which are critical in closing sales.
3. Oral communication
4. Quick response to queries.
Merits of Personal Selling
1. Flexibility
2. Direct Feedback
3. Minimum wastage

Role of Personal Selling

Importance to Business Organisation
(i) Effective Promotional Tool
(ii) Versatile Tool
(iii) Reduces Effort Wastage
(iv) Consumer Attention
(v) Long-Term Relationship
(vi) Personal Relationship
(vii) Role in the Introduction Stage
(viii) Customer Relationship
Importance to Customers
(i)Assist in the Identification of Needs
(ii) Up-to-date market information
(iii) Expert advice
(iv) Customers are enticed
Importance to Society
(i)Converts the most recent demand
(ii) Employment Possibilities
(iii) Job Opportunities
(iv) Salesperson Mobility
(v) Standardization of Products

3. Sales Promotion
Short-term incentives or other promotional activities that aim to pique a customer's interest in
purchasing a product are referred to as sales promotion.
Merits of Sales Promotion
 Attention Value: Using incentives, attract people's attention.

 Useful in New Product Launch: Sales promotion tools persuade people to abandon
their usual purchasing habits and try new products.
 Synergy in Total Promotional Efforts: Sales promotion activities contribute to the
overall effectiveness of a company's promotional efforts.
Limitations of Sales Promotion
 Reflects Crisis: A company that frequently relies on sales promotion activities may
give the impression that it is unable to manage its sales and that its products are
unpopular.
 Damages Product Image: Customers may believe that the products are of poor
quality or are overpriced.
Commonly Used Sales Promotion Activities
 Product Combination: Including another product as a free gift with the purchase of
one.
 Rebate: Providing products at reduced prices.
 Instant draws and assigned gifts: Scratch a card and instantly win a prize with the
purchase of a TV, Tea, or Refrigerator, for example.
  Lucky Draw: a lucky draw coupon for free gasoline when a certain amount is
purchased, and so on.
 Useful Benefit: 'Purchase goods worth Rs 3000 and get a holiday package worth Rs
3000 free,' and so on.
 Full finance at 0%: Many marketers of consumer durables such as electronics,
automobiles, and so on offer simple financing schemes such as "24 easy instalments"
and so on.
 Contests: Holding competitive events that require the use of skills or luck, etc.
 Quantity Gift: Providing an extra quantity of the product, for example, "Buy three,
get one free."
 Refunds: Refunding a portion of the price paid by the customer upon presentation of
proof of purchase.
 Discount: Selling products at a lower price than the list price.
 Sampling: Provide free product samples to potential customers. Typically used at the
time of a product's introduction.

4. Publicity
Publicity occurs when favorable news about a product or service is broadcast in the mass
media. For example, if a manufacturer makes a breakthrough in the development of a car
engine and this news is covered by television, radio, or newspapers as a news item.
Features of Publicity are:
I. Publicity is a form of communication that is not compensated.
II. There is no identified sponsor

5. Public Relations
Public relations encompasses a wide range of tactics and is typically concerned with
providing information to independent media outlets in the hope of obtaining favorable
coverage. It also includes a mix of promoting specific products, services, and events as well
as promoting an organization's overall brand, which is an ongoing tactic.
Role of Public Relations:
1. Press Relations: A press release is an announcement of an event, performance, or other
newsworthy item issued to the press by an organization's public relations professional. It is
written in the form of a positive story with an appealing heading in order for the media to
quickly grasp and spread the message.
2. Product promotion: The company tries to draw attention to new products by organizing
sporting and cultural events such as news conferences, seminars, and exhibitions, among
other things.
3. Corporate Communication: The image of the organization is promoted through
newsletters, annual reports, brochures, and other means.
4. Lobbying: The organization maintains cordial relations with government officials and
ministers in charge of corporate affairs, industry, and finance in regard to business and
economic policies.
5. Counseling: The public relations department advises management on general issues
affecting the public and the company's position.
Maintaining Good Public Relations also Helps in Achieving the Following Marketing
Objectives:
(a) Building awareness
(b) Building credibility
(c) Stimulates sales force
(d) Lowers promotion costs

Difference Between Advertising and Personal Selling

Advertising
 An impersonal mode of communication

 The transmission of standardised messages

 An inflexible mode of communication
 Broad reach
 Low cost per person reached
 Cover the market in a short period of time.
 Makes use of mass media
 Lacks direct feedback
 Effective in generating and maintaining interest
 Consumers are the primary target market
Personal Selling
 Personal form of communication

 Non-standardised messages
 Flexibility
 Limited reach
 High cost per person
 Extensive efforts to cover the entire market
 Makes use of sales personnel.
 Immediate and direct feedback
 Plays an important role in the awareness stage
 The Target market is comprised of industrial buyers