Market in traditional sense – The word market is derived from a Latin word, “Marcatus”,
which means a place of business, in
other words, it is a location where buyers and sellers of goods assembles to
facilitate exchange, market thus refers to a place.
There term market used in various contexts is given below:
1. Product market (Pepper market, Vegetable market,
share market etc.)
2. Geographical market – (Local market, national
market, international market)
3. Based on types of buyers (Consumer market and
industrial market)
4. Based on quantity of goods (Wholesale and Retail
market)
Market in modern sense - the term market has a wider meaning; it refers
to the aggregate potential demand
for a product or service. For example, we say the market for car is booming, we
are referring to the enhanced collective demand for cars.
Marketing – Marketing can be defined as an exchange transaction in between buyer and seller. All activities connected with transfer of goods and services from the producer to the consumer come within the purview of marketing. They include production, transportation, storage, advertising etc. Though selling and sales promotion are integral part of marketing, they are not everything, therefore marketing is a broader term and is concerned with the identification of needs and wants of consumers and finding out ways and means for satisfying them.
“Marketing is the performance of business activities that direct the flow of goods and services through producers to consumers or users.” – American Marketing Association
According to Philip Kotler – “Marketing is a social process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others.”
The above definition gives the following features of marketing:-
1. Needs and Wants – Marketing process helps the people in getting what they want. The focus of marketing is on the
satisfaction of their needs and wants. A marketer’s job is to identify the
needs of consumers and develop products or services accordingly.
2. Creating a market offering – Market offering means a complete offer of a
product or service. While offering
products to customers, it should include the features like size, quality,
taste, price, availability etc.
3. Customer value – Consumer buys a product based on its value to satisfy their need. So the marketer should always add value
to his products, so that the customer prefers it.
4.
Exchange Mechanism – It refers to a process through
which two or more parties come together
to obtain the desired product or service from someone, in return making a
payment to the other. Essential conditions in exchange mechanism are as
follows:
a. Two parties – buyer and seller.
b. Offering something – Seller offer a product and
the buyer, money.
c. Ability to communicate –
Each party should communicate and deliver the product or service.
d. Freedom – Each party has the freedom to accept
or reject the offer.
e. Voluntary – Acceptance or rejection of the offer
must not be on compulsion.
What can be marketed? Usually products are
marketed, in marketing literature, anything that can be value to the buyer may be termed as product. It may be
tangible or intangible products. It also includes person, place, event,
experience, organization etc.
What
can be marketed?
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Products
|
Mobile Phones, clothes, TV etc.
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Services
|
Insurance, Health care, Service of doctors,
CAs, Online trading etc.
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Ideas
|
Blood donation by Red Cross, Polio vaccination
etc.
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Persons
|
Political parties for election of candidates.
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Place
|
Tourist centres, Pilgrim places etc. (God’s own country by Kerala Tourism)
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Experience
|
Lunch with a celebrity, mountaineering etc.
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Events
|
Sports events, Fashion show, Horse race, Film
festival etc.
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Information
|
Marketing information,
Technology information etc. e.g., T V Channel
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rating
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Organizations
|
Companies communicate
with people. E.g., Philips says “Let’s make things
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Marketer or Seller – Marketer refers to any
person, who takes a lead role in the process of exchange, normally it is the seller.
Consumer seeks
satisfaction by consuming products and services, whereas the marketer or seller
provides the satisfaction by offering products and services to satisfy the
consumer’s needs. HMT, Hindustan Lever Ltd., Hospitals, KTDC, Travel agencies,
software developers etc. are sellers or marketers. They are also creating new
needs in the minds of consumers like use of washing machine, vacuum cleaners,
cooking range, mobile phone etc. Some of these products become the ‘part and
parcel’ of our life, but many of them were unknown to the older generations.
Marketing Management – Marketing management is the
functional area of management concerned
with planning, organizing, directing and controlling the activities related to
marketing of goods and services to satisfy customer’s wants.
Process
of marketing management
1. Choosing a target market – If a business enterprise is
producing medical equipment, the target
groups will be doctors and hospitals. For a text book publisher the target
market is a group of teachers and schools, colleges and universities.
2.
Create demand for the
product – Here
the marketing management should try to increase the demand for their products by ensuring the customer
satisfaction, so that more customers will be attracted.
3. Create superior values – In order to attract more
customers, the marketing management can
add more superior values to the product or service. E.g., free insurance and
maintenance on purchase of a vehicle.
Marketing
and Selling
Differences between marketing and selling
Marketing
|
Selling
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1.
|
Marketing focuses on customer’s needs of
|
1.
|
Selling focuses on seller’s needs
|
want satisfying goods.
|
converting his goods into cash.
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2.
|
Marketing begins before production
|
2.
|
Selling takes place after production.
|
3.
|
Emphasis
given on product planning and
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3.
|
Emphasis on sale of goods
already
|
produced.
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development.
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4.
|
Customer oriented – he is the king.
|
4.
|
Product oriented.
|
5.
|
Aims at profits through consumer
|
5.
|
Aims at profits through sales volume.
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satisfaction.
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6.
|
The principle of caveat vendor (let the
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6.
|
The principle of caveat emptor (let the
|
seller beware) is followed.
|
buyer beware) is followed.
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7.
|
Integrated approach (Macro)– marketing
|
7.
|
Fragmented approach (Micro) – attempt is
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research, product planning, advertisement
|
made to sell whatever is produced.
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etc.
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8.
|
Long term perspective as it lays emphasis
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8.
|
Short -term perspective as it emphasizes
|
on growth and stability of business.
|
profit maximization.
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Marketing
concepts (Marketing management philosophies)
Philosophies
|
Production
|
Product
|
Selling
|
Marketing
|
Social
|
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Basis
|
concept
|
concept
|
concept
|
concept
|
concept
|
|
Starting point
|
Factory
|
Factory
|
Factory
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Market
|
Market,
|
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Society
|
||||||
Customer
|
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Focus
|
Quantity
|
Quality
|
Existing
|
Customer
|
needs and
|
|
product
|
needs
|
welfare of
|
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society
|
||||||
Integrated
|
||||||
Availability of
|
Product
|
Selling and
|
marketing
|
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improvement
|
(Selling of
|
Integrated
|
||||
Means
|
products and
|
promotional
|
||||
through better
|
satisfaction
|
marketing
|
||||
affordable prices
|
measurers
|
|||||
quality
|
rather selling a
|
|||||
product)
|
||||||
Profit through
|
||||||
Profit through
|
Profit through
|
Profit through
|
Profit through
|
customer
|
||
Ends
|
volume of
|
customer
|
satisfaction and
|
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quality products
|
sales volume
|
|||||
production
|
satisfaction
|
welfare of
|
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society
|
||||||
Functions
of marketing
2. Marketing plan – A proper marketing plan
should be developed to achieve the marketing objectives of the firm. E.g., to increase the market share of a
product in next one year by 20%.
3. Product designing and
development – The
product should be developed and designed
to meet the customer needs. Marketing department should always be on the
look out to make necessary changes in the product such as packing, price, size,
colour, shape and design.
4. Standardization and grading
– Standardization
refers to producing goods in predetermined
standards such as quality, price, packaging etc. which ensures uniformity and
consistency. So that buyers need not inspect, test and evaluate such goods in
their future purchases.
Grading is the process of
classifying products into different classes on the basis of quality, size,
weight etc. It is needed in agricultural products. This helps in realizing
higher price for better quality.
5. Packaging
and Labeling – Package
is a container or a wrapper or a box in which a product is enclosed. It is done for protecting the goods from
damage in transit and storage, now a days it is also used to establish the
brand. Labelling refers to designing and developing the label to be put on the
package to give the specifications of the product in the package.
6.
Branding – It is the process of giving a name or symbol to a product for
identifying and differentiating it
from the products of competitors. E.g., BMW, TATA, JIO, Pears, Coco-cola etc.
7. Customer support service – These are after sales
services, handling customer complaints,
maintenance services, technical services and customer information. All these
will provide maximum satisfaction to the customers.
8.
Pricing – Price of a product means
the amount of money that have to pay to obtain a product. A sound pricing policy is an important factor for selling
the products to customers. The pricing policy of a firm should attract all
types of customers.
9. Promotion – It means informing the
customers about the firm’s products and persuading them to buy these products. Promotion techniques include
advertising, personal selling, sales promotion and publicity.
10.
Physical distribution – It involves planning,
implementing and controlling the flow of
materials and finished goods from the origin to the point of use to meet the
customer requirement at a profit. A suitable distribution channel must be
selected by the marketing management in this regard.
11.
Transportation - It is an integral part of
marketing as it helps in making available the product at the terminal point of consumption.
12.
Storage or warehousing – Goods are produced in
anticipation of future demand. They have
to be stored properly in warehouses to protect them from damages.
Factors affecting marketing decisions
i) Controllable factors – They are internal factors
which can be controlled by the firm. They
are of four groups – Product, Price, Place or distribution and Promotion. They
are commonly known as for Ps of marketing.
ii) Non-controllable factors – They are external factors such as consumer behavior, traders’ behavior, competitors’ behavior and government’s behavior.Marketing mix
Elements of marketing mix
1.
Product – Product me ans goods or services or anything of value which is
offered
for sale in the market. It
is the
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Pro
duct
|
|||||||
most important component of marketing
|
||||||||
mix, which involves
planning, developing
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||||||||
and producing the right type of goods and
|
Elements of
|
|||||||
services needed by the
consumer.
|
Promotion
|
Price
|
||||||
2. Price – The price of a product should be
|
marketing
|
|||||||
mix
|
||||||||
fixed
that the firm
is able to
sell it
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||||||||
profitably.
It may consider credit policies,
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discount
system, terms of
delivery,
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payment, retails price, cost of production,
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Place
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competition, government regulations etc.
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3.
Place – It refers to marketing efforts
undertaken to make
the product available at the right time in the right place. There are
products which are produced at one part of the country and it is consumed in
different places during different seasons.
In Kerala
textile items are largely sold during Onam season, so that most of the
producers will come to this place and ensure the supply of their product here
and in Deepavali season they will move towards some other States. It involves
two major functions, 1) Physical distribution and 2) Channels of distribution.
4.
Promotion – Promotion means all those
activities undertaken by a sales manager to inform the consumers about the product(s) of the company and persuade
them to buy. He has to make the consumers know where, when and how the products
are available. There are four elements which constitute promotion mix. They are
advertising, personal selling, publicity and sales promotion.
PRODUCT
Consumer Products – Products which are purchased by the ultimate consumers for personal or family use, but not for resale. E.g.,
soap, toothpaste, calculator, furniture, shoes etc. These consumer products
are again classified on the basis of shopping efforts involved and
durability.
A. Shopping efforts
involved
1. Convenience products – They are the consumer products that people
usually purchase frequently, and
with least purchasing efforts. E.g., soap, toothpaste, bread, magazines,
biscuits etc. Its features are:
a. Purchased with least efforts and time
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b. Generally essential
products.
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c. Purchase unit is small and low price.
d. Standardized price and most of them are branded
items.
e. Heavy competition on such products, hence heavy
advertisement is needed.
f. Sales promotion techniques and short term
incentives are needed.
2.
Shopping products - These are the products
purchased by the consumers by spending considerable
time in comparison of features like price, quality, size, style etc. e.g., home
appliances, clothes, jewellery, furniture, TV, Computer, Washing machine etc.
Its features are:
a. Durable in nature.
b. Price and profit per unit is comparatively high.
c. Since the unit price is high, consumer take much
efforts before purchasing decision.
d. Buying of these products is
generally pre-planned but no impulse buying (without a plan).
e. Generally handled by retailers.
3. Speciality Products – These products have unique characteristics and
brand loyalty of the highest order
for which consumers willing to make special purchasing effort. E.g., paintings,
artwork, antiques, idols etc. Its features are:
a. Demand for such products is
inelastic, even if the price increases, demand does not decrease.
b. Demand for such products is limited as there
will be small number of buyers.
c. These products are costly.
d. They are available only in specific places, so
the buyers have to take extra effort.
B.
Durability basis
1.
Durable goods – These are tangible consumer
products which have long period of life.
E.g., TV, Car, Refrigerator, Mobile phones etc. Its features are:
a. It remains in use for a long period.
b. High cost and high profit margin.
c. High selling effort is needed.
d. Guarantees and after sales service provided.
2. Non-durable goods – These are consumer goods which are normally consumed once or for a few uses. E.g., soft drinks,
soap, toothpaste, detergents, stationery items etc. Its features are:
a. Low price and low profit margin.
b. Available in all areas.
c. Heavy advertisement.
3. Services – It refers to those activities, benefits or satisfactions, which are
offered for sale and are intangible
in nature. E.g., services offered by a doctor, lawyer, hair cutting, dry
cleaning, tailoring, repair work etc. Their features are:
a. Intangible in nature.
b. Inseparable from its source (cannot separate
service from the service provider)
c. Services cannot be stored.
Industrial Products
These products are used as inputs in making
other products. E.g., engines, lubricants, machines, raw materials etc. Its
features are:
a. Number
of buyers will be limited when
compared to consumer goods.
b. Distribution
channel will be short (direct
selling or one level channel)
c. Industries are located in certain regions, for
example, demand for power loom comes from Mumbai, Bangalore etc. where textiles
industries are concentrated in India.
d. Derived demand - The demand for industrial products is derived from the demand for consumer products. E.g., demand for
leather is derived from the demand for shoes etc.
e. Role of technical consideration – It is significant in industrial products,
because of it complex nature.
f. Reciprocal buying – It means mutual buying, for example; TATA Motors buys tyres from MRF, which in turn buys trucks
from TATA.
g. Leasing out – Instead of outright purchase of heavy machineries, it may procure on lease basis.
Classification of
industrial products
1.
Materials and parts – These products are used for
manufacture of useful finished goods. It
may include:
Raw materials such as farm products like cotton,
sugarcane etc. and natural products like crude oil, iron ore etc.
Manufactured materials – These are partly
processed goods which are used in making finished
goods. They are of two types – component
materials like iron, yarn, cement etc. and component parts like tyres, battery motors etc.
2.
Capital items – Installations like elevators, main frame
computers etc. and equipments like tools, machinery
etc.
3.
Supplies and business
services – short
lasting goods for producing finished goods. E.g., repair items like
nails, paints etc. and operating
supplies like lubricants, cotton waste etc.
Branding
It refers to the process of
giving a name or sign or a symbol to a product for identifying and
distinguishing it from competitors. E.g., Titan, Audi, Bata, Lifebouy, Pears
etc.
Terms related to branding:
a. Generic name – It means the name of whole class of a product. E.g., soap, book, pen, camera, paracetamol etc.
b.
Brand – It is a name, term, symbol
or design to identify the goods or services. E.g., Pears, Classmate, Reynolds, Canon etc.
c.
Brand name – It is a part of the brand
consisting of a word, letter or group of these that can be pronounced. E.g., Lux, Reynolds etc.
d.
Brand mark – It is a part of brand that
appears as a symbol, design, picture etc. which cannot be pronounced. E.g., symbol of LIC, emblem of SBI etc.
Trade mark – It is a legal version of a brand. It is a brand name or brand mark registered with legal authorities. Once it is registered it is legally protected and others cannot use this as a duplicate.
Advantages of branding
To
Marketers
|
To
Customers
|
a. Helps to make an identity
|
Helps in identifying the product
|
b. Helps in
advertising and display
|
Ensures quality and
confidence in the mind of
|
programs
|
customers
|
c. Enables the firm to charge higher price
|
Status symbol
|
than the competitors
|
|
d. Easy to introduce new product
|
Helps to increase the level of satisfaction
|
Characteristics
of a good brand name
1.
Short and simple – brand name should be short,
easy to pronounce and to remember. E.g.,
Hero, Maruthi, VIP, Vim etc.
2.
Suggests the benefit of product and its quality. E.g., Rasika, Boost, Fair N
Lovely.
3.
Distinctive – It should be unique such as Liril, Sero, Titan etc.
4.
Adaptable – Brand name must be suitable
for packing and labeling and to suit different advertisement media and different languages.
5.
Versatile – Better it is multi-purpose to adopt new products. E.g., Acer, V-guard
etc.
6.
Legal protection – the brand should be capable of being registered.
7.
Staying power – the name chosen as brand
name should not get outdated. (“3G Mobiles”
is an outdated brand.
Packaging
It refers to the designing
and producing the container or wrapper of a product. It has an important role
in the marketing success or failure of a product.
Levels
of packaging
1.
Primary packaging – The immediate container of
a product is called primary packet. e.g.,
the plastic cover of a shirt, tube for shaving cream, tooth paste and a
bottle for horlicks.
2.
Secondary packaging – It gives an additional protection for the product.
E.g., the card board box for a tooth
paste tube.
3.
Transportation packing – It is a further packaging
of products for storage and transportation.
E.g., a toothpaste manufacturer may send the goods to the retailers in a large
box containing 100 pieces.
Importance
of Packaging
1.
Rising standards of health
and sanitation – More people prefer to buy packed goods as the chances of adulteration are minimum.
2.
It is suitable for self service outlets.
3.
Innovational opportunities –
New ideas
can be implemented in packaging which will
increase the scope of marketing the products. E.g., soft drinks, mango
juices etc. in specially designed packages (foils).
4.
Product differentiation – The colour, size, material
etc. of the packages will help to identify
the product and its quality up to a certain extent. E.g., Body spray, Shampoo
etc.
Functions of packaging
1.
Product identification – Packaging helps the
customers to identify the product easily.
E.g., Toothpaste, Soap etc.
2.
Product protection – It helps the product from
breakage, leakage, contamination, evaporation,
pilferage (theft) etc.
3.
Facilitating the use of the
product – The
size and shape of the product should be in such a way to use the product conveniently. E.g., Hand wash, Tooth
paste, Powder tin etc.
4.
Product promotion – Beautiful packages attracts
consumers, and it serves as a promotional
tool for the product as it is a silent sales man.
Labelling
Labelling
refers to the designing and developing the label to be put on the package. It
may be attached to the product and carries information about the product and
the producer in the form of a tag, sticker etc.
Functions of Labelling
1.
Describe the product and
specify its contents and it may give its usage, precautions to be taken etc.
2.
Identification of product or brand
3.
It also gives information about
the name and address of manufacturer, net weight, MRP etc.
4.
Grading of products such as Green label for 1st quality,
Yellow for 2nd quality
and Red for 3rd quality.
5.
Helps in promotion of
products - a
well designed label will catch the attention of consumers. “Free Tooth Brush inside”, “Save Rs.10/-“, “Free Mobile
Recharge Rs.50/-” etc.
6.
Providing information
required by law, e.g., statutory warning on the package of cigarette, “Smoking is injurious to health” etc.
PRICE
Pricing – Price of a product is the amount of money paid by the buyer (or received
by the seller) in consideration of
purchase of a product or service. Pricing is the function of determining
product value in terms of money before it is offered to consumers for sale. A
good pricing policy enables a firm to achieve maximum sales revenue.
Factors affecting price
determination
1.
Product cost – It includes cost of
production, selling and distribution expenses. While fixing prices for the products or service, a margin of profit over
the cost should be considered. The cost of a product consists the following:
a.
Fixed cost – do not vary with the volume
of production. E.g., Rent, salary, insurance etc.
b.
Variable cost – Cost which vary based on
the volume of production. E.g., raw material
cost, labour cost, power etc.
c.
Semi-variable cost – Cost which vary with the
level of production, but not in direct proportion.
E.g., Commission to a salesman beyond a particular level.
3.
Extent of competition – If there is no competition
in the market, a firm can fix the price for
its product by its own, and they are the price makers. If the
competition is very high in the market, the price should be fixed by
considering the price of competitors, and they became the price takers.
4.
Government and legal
regulations – The
prices of certain products are regulated by
government. E.g., cement, sugar, etc.
5.
Pricing objectives – If the firm wants to
maximize profit in short run, it would charge high price and if it wants to capture maximum market share for its
products, it would charge only a low price. Some pricing objectives are:
a.
To
Obtaining market share leadership
b.
To
Survive in a competitive market
c.
To Attaining product quality leadership
(high prices may be charged for maintaining high quality)
6.
Marketing methods used – Price fixation is also
affected by various elements like distribution
system, advertising, sales promotion, type of packaging, credit facilities,
after sales services, guarantee etc.
PLACE (PHYSICAL
DISTRIBUTION)
In order to ensure availability of products at
the right Place, two factors require
consideration; they are Channel of distribution and Physical distribution.
A.
Channels of distribution
The path taken by the goods in their movement
from the producer to the consumer is referred to as the channel of
distribution.
Producer
|
Wholesaler
|
Retailer
|
Consumer
|
Functions of distribution
channels / middlemen
1.
Sorting – sorting goods procured from
various sources on the basis of size and quality. E.g., apples, pepper, cardamom, coffee etc.
2.
Accumulation of goods – they are collecting a large
quantity of stock in order to ensure continuous
flow of supply.
3.
Allocation – breaking the bulk into smaller
lots for distribution. E.g., a large box of pens divided into small packets containing 10 units.
4.
Assorting – It means stocking various
related products by the middlemen, to meet the customer requirements fully; (Assorted = Mixed). E.g., a cricketer’s
requirement of bat, ball, gloves, helmet, shoes, dress etc. can be fulfilled by
a single sports goods dealer.
5.
Product promotion – Middlemen also undertakes
certain promotional activities like demonstrations,
special displays, contests etc. to push up sales.
Types of channels
1. Direct
channel (Zero level) – In this case, no
intermediary is involved. It implied direct selling of goods to the
customer. Mail order business, internet selling, door to door selling or
through own retail network etc. are the examples.
2. Indirect channels – The
manufacturer seeks the help of one or more
intermediary to move the goods from the place of production to the place of
consumption is called indirect network.
a. One level – Here only one intermediary is in the distribution channel, the retailer.E.g., Maruthi Udyog Ltd. sells their cars through their approved retailers
Producer Retailer Customer
b. Two level channel – Here one more middlemen, the wholesaler joins the channel along with the retailer (2 middlemen).
This channel is suitable to the products with widely scattered markets. E.g.,
soap, cloth, tooth paste etc.
Producer
|
Wholesaler
|
Retailer
|
Customer
|
c. Three level channel – In this channel the producer by an arrangement
hands over the entire output to his
selling agent in order to relieve from the problems of distribution.
Producer
|
Agent
|
Wholesaler
|
Retailer
|
Customer
|
Factors determining choice
of channels
1.
Product related factors
a.
Industrial goods – Highly expensive and with a
few buyers, hence direct channel is preferred.
b.
Consumer goods – Less expensive and
frequently bought, hence long network is
good.
c.
Perishable goods – Short channel is more suitable
d.
Durable goods – Long channel is good.
e.
Unit value of product – Cheaper goods are usually traded through long
channels.
2.
Company characteristics – if the company is having
sufficient funds, it can go for direct selling
or through short channels. Likewise, if they want to maintain a control over
the channel members, short channels are better.
3.
Competitive factors – If a competitor has
selected a particular channel and they are
successful, sometimes we may also follows it, whereas some other companies
may avoid such channels.
4.
Market factors –
a.
Size of market – Where number of buyers is
small, short channel is required and for
large number of customers, longer channel would give better result.
b.
Geographical concentration –
Small
channel is better if the buyers are only in a particular area and if they are scattered over a large area, long
channel is better.
c.
Size of order – If the size of order and
its value is high, shorter channel is good and in case of consumer goods long channel is better.
5.
Environmental factors – Economic condition, legal
constraints etc. are considered here. For
example, in case of depression period, shorter channel is preferred.
B. Physical
movement / physical distribution
Physical distribution involves the handling and
movement of goods from production centre to the place of consumption.
Components of Physical
Distribution
1. Order processing – It begins with the receipt of an order from the customer, It involves
the preparation of invoice,
instructions to the warehouse keeper for dispatch, granting of credit
facilities, sending bills etc. Quick processing helps to retain the customers
for ever.
2. Transportation – It is the means of carrying goods and raw materials from the point of production to the point of sale. It is
important because unless there is not proper movement (transportation), the
sale cannot be completed.
3. Warehousing – It is inevitable factor in the movement of goods, it involves the
decisions regarding type of
warehouse, i.e., own warehouse or rented warehouse, location of warehouse, cost
of warehousing etc.
4. Inventory control – In order to ensure prompt supply of goods a proper inventory level must be maintained. It must not be too
high or too low. High level of inventory results in blocking of capital and
high management cost. Low level may lead to stock out situations. Major factors
determining inventory levels are:
a. Level of customer service – Higher the level of customer service, greater
will be the need of inventories.
b. Accuracy of sales forecast – If the sales forecast is more accurate, the need
for inventory can be minimized.
c. Time required to meet additional demand – If it is taking much time
to meet additional or unexpected
demand, the need for inventory level will be high.
PROMOTION
All activities connected with informing and
persuading the customers are collectively known as promotion mix. It includes
Advertising, Personal selling, Sales promotion and Publicity..
1.
Advertising - Advertising is any paid
form of non-personal presentation and promotion of ideas, goods or service of an identified sponsor. The message
which is presented or disseminated is known as advertisement.
Features of advertising
a.
Paid form – The sponsor or marketer bears the cost of communication.
b.
Impersonality – No face to face contact between seller and
buyer, but through a media.
c.
Identified sponsor – Advertisement is done by a sponsor.
Merits of advertising
a.
Mass reach – It reaches a large number
of population with the help of news papers,
television etc.
b.
Enhancing customer
satisfaction – They feel more comfortable and assured about quality.
c.
Expressiveness – Messages can be expressed
in a very attractive manner with the help of modern technology.
d.
Economy – It is in the sense that, it
can reach millions of people. As a result the per unit cost becomes low.
Limitations of advertising
a.
Less forceful – Since it is impersonal, the
prospects (public) may not give attention to the message.
b.
No feedback – There is no immediate and accurate feedback.
c.
Inflexibility – The message is always
standardized and not customized according the needs of different customer groups or occasions.
d.
Low effectiveness – A large number of
advertisement is shown by the media, hence it may not be seen or heard by the target group.
Objections to advertising
(Criticisms)
a.
Adds to cost – It is a fact that while
fixing price for a product by the manufacturer, they will consider the advertisement expense too, it will increase the
price.
b.
Undermines social values – It is another criticism
against advertisement that it demoralizes
the social values.
e.
Some advertisements are in
bad taste for
instance, women running after a man because
he is using a perfume, tooth paste etc.
2.
Personal Selling - It implies a face-to-face
contact or conversation between seller and
buyer by which the consumers will be motivated to purchase the products.
Features
of personal selling
a.
Personal form – face to face contact.
b.
Development of relationship
– Salesman
develops a personal relationship with the
customers.
Merits
of Personal selling
a.
Flexibility – The presentation of product can be adjusted to suit the prospective
buyer.
b.
Direct feedback – Face to face communication
facilitates the salesman to adapt the presentation
according to the needs of customers.
c.
Minimum wastage – This strategy can be
adopted only to the targeted customers, hence the company can minimize the wastes of efforts compared to
advertisement.
Role /
Importance of personal selling
To Businessmen
a. Effective promotional tool –
It helps to explain the merits of a product thereby increasing sales.
b. Flexible method – It is
more flexible than advertising and sales promotion, as it is adaptable in
accordance with the customer tastes.
c. Minimum wastage of effort – Less wastages of
effort compared to advertisement etc.
d. Consumer attention is more.
e. Lasting relationship – among the sales persons
and the customers.
f. Personal rapport – Personal
relationship with customers increases the strength of business.
g. Role in introduction of a
new product – It helps in persuading the customers to buy new products.
h. Link with customers –
through persuasive role, service role and informative role by a sales person.
To
Customers
a. Help in identifying needs –
It helps in identifying the needs of customers and to satisfy them.
b. Latest market information –
may be given to the customers such as price changes, availability of product,
etc.
c. Expert advice – Proper guidance help customers
in making better purchase.
d. Induces customers – to purchase new products.
To
Society
a. Converts latest demand into
effective demand – as a result the economic activity in the society is
accelerated to more jobs, more income etc.
b. Employment opportunities – It offers more
employment opportunities especially for youth.
c. Mobility of sales people – promotes travel and
tourism in the country.
Product
standardization and uniformity in consumption pattern in diverse society is
possible.
Differences
between Advertising and Personal Selling
Advertising
|
Personal
Selling
|
|
1.
|
Impersonal communication
|
Personal form of communication
|
2.
|
Standardised message is transmitted
|
Based on customers needs
|
3.
|
Not flexible
|
Highly flexible
|
4.
|
Reaches a large number of people
|
Limited number of people only
|
5.
|
Cost per person in low
|
It is very high
|
6.
|
It can cover the market in a short time
|
Take a lot of time
|
7.
|
Media is used such as TV, Radio etc.
|
Use of sales persons
|
8.
|
No direct feedback
|
Direct and immediate feedback is possible
|
9.
|
Useful in consumer goods
having a large
|
Useful in
industrial products having
only a
|
number of consumers
|
limited number of customers
|
|
Sales Promotion – It refers to short-term activities, which are aimed at promoting sales
such as rebates, discounts, free
gifts, contests, refunds, premium etc.
Sales promotion tools are designed to promote
customers, middlemen and sales persons.
a. Customers
– Free samples,
discounts, contests, gifts, lucky draws, etc.
b. Middlemen
– Cooperative
advertising, dealer discounts, incentives, contests etc.
c. Salespersons
– Bonus, salesmen
contests, special offers, etc.
Advantages
of sales promotion
a. It catches the buyers’ attention.
b. Useful
in new product launch.
c. Synergy in total promotional efforts – Sales promotion supplement
the personal selling and advertising
efforts. Hence it gives synergy (overall effectiveness) of promotional efforts
of the firm.
Limitations
of sales promotion
a. It is a reflection of crisis – Frequent sales promotion activities may give an
impression that the firm is not in a
position to manage its sales.
b. Spoils the product image – Consumers may feel that incentives are offered
to sell sub-standard product.
Commonly
used sales promotion techniques
1.
Rebates – It is a deduction on the
price to make it attractive to the buyers to buy on special occasions.
2.
Discount – Certain percentage of price
is reduced as discount from the price of the product to attract the customers.
3. Refunds – Seller offers to refund
a part of price on next purchase on production of packets or wrappers etc.
4. Product combinations – It is a free offer of an
article along with a product to make buyers
attractive to buy more or for repeated buying (Free Pen drive with a
digital camera).
5. Quantity gift – It may be an extra quantity
of the same product at the same price either inside or outside the packet.
6. Instant draws and gifts – Scratch card and gifts to the customers on
purchase.
7. Lucky draw – A coupon is given to the
customers, which is to be deposited in a box at the business premises by filling the name and phone number. The winner
is selected by lucky draw later.
8. Usable benefit – E.g., Purchase goods worth
Rs. 5000 and get a holiday package of Rs.
2000 free.
9. Full finance @ 0% - No need to pay any amount
or full amount at the time of purchase but
in easy installment without interest.
10. Sampling – It refers to offering a
free sample of a product to the customers on the purchase of some other products or journals.
11. Contests – Customers can participate
in some competitive event and winners are given awards.
Publicity – It is similar to advertising with the difference that it is a non paid form of communication. It refers to favourable news about an organization and its products or service appearing in mass media.
Features of publicity
a.
Unpaid form – It does not involve any direct expenditure.
b.
No identified sponsor – It has no sponsor at all but message goes as a
news item.
Advantages
a.
Credibility – Usually it is more credible than the advertisement message.
b.
Wide reach – It can reach even those who
have no chance for attending paid communication.
Limitations
a.
No control – It cannot be controlled by the firm.
b.
Only news value items – A firm cannot make use of publicity to promote all
its products.
Public Relations
Public relation can be
defined as publicity through media which is very important in present day
business. It is ranked second after personal selling in promotional mix. Since
they can be used very effectively to reach the most influential people, this is
considered as an effective tool for promotion.
Public relations tools: News, Speeches, Events, Written materials,
Public service activities etc. Role of
Public Relations
1.
Press relations – Information about the
organization or products needs to be presented in a positive manner in the press. Eg; Launching a new car.
Product publicity – A
company can invite attention of the public on their products by sponsoring sports and cultural events,
exhibitions etc.
3.
Corporate communication – It may be in the form of
newsletters, annual reports, brochures,
audio-visual materials etc. among the public and the employees of the
organisation.
4.
Lobbying – It means influencing the
government officials, ministers etc. in a positive manner to formulate suitable industrial, telecom, taxation
policies etc.
5.
Counselling - The public relations
department advises the management of the company to interfere into general issues which affect the public. Eg:
Contributions for flood victims.
Marketing Objectives of
Public Relations
a. Building awareness – Public relations department
can place stories about the product in the
media, which will help to create an excitement among the targeted customers.
Eg: News reports, Interviews etc. about a film.
b.
Credibility – If news about a product comes in the media, it always gets credibility.
c.
Stimulates sales force – As the product is
publicized through the media, it is very easy to convince the customers.
Reduces the promotion cost – Maintaining good public relations results in less advertisement and sales effort.
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