The document discusses the history and development of the marketing mix concept. It notes that the term was first coined in 1948 by Neil Borden in an article describing marketing managers as "mixers of ingredients". In 1960, Jerome McCarthy further developed Borden's theory by identifying the four main elements of the marketing mix as the 4 P's: Product, Price, Place, and Promotion. The marketing mix refers to the set of controllable variables that a company uses to influence consumer demand.
2. Dr. Parveen NagpalMarketing Mix
The term ‘marketing mix’ first appeared in the article entitled ‘The
Concept of Marketing Mix’ (1948) written by theorist Neil Borden,
a professor of marketing and advertising at Harvard Business
School.
He claimed that he was inspired by the research of James W.
Culliton who described the role of marketing managers as ‘mixers
of ingredients’.
In 1960, Professor Jerome McCarthy (born in 1928) developed
Borden’s theory and kept four main points, namely the 4 P’s
(Product, Price, Place and Promotion) in his book Basic Marketing:
A Managerial Approach.
3. Dr. Parveen NagpalMarketing Mix
Marketing Mix basically is combination of various elements, which
in their totality, constitute marketing system of firm.
According to Philip Kotler “Marketing Mix is the set of controllable
variables that the firm can use to influence the buyer’s response”.
The constituents of marketing mix are said as marketing mix
elements. Elements are also referred as decision variables.
Marketing mix consists of mainly four elements, referred to as “4
Ps”
Each element is also referred as mix, for example, product mix,
price mix, promotion mix, and place mix.
Each mix contains a set of decisions.
5. Dr. Parveen NagpalMarketing Mix - PRODUCT
In marketing, a product is anything that can be offered to a market
that might satisfy a want or need.
Product can be described as a bundle of benefits which a marketer
offers to the consumer for a price.
According to William J. Stanton “Product is a set of tangible and
intangible attributes including packaging, colour, price,
manufacturer’s prestige, retailer’s prestige and manufacturer’s
and retailer’s services which buyer may accept as offering
satisfaction of wants and services”.
According to Alderson, W., “Product is a bundle of utilities
consisting of various product features and accompanying services”
6. Dr. Parveen NagpalMarketing Mix - PRODUCT
Managing the product includes product planning, product
development, product design, product mix, product innovation,
standardization and branding.
9. Dr. Parveen NagpalLevels of a Product
1. Core Benefits: What does the product mean to the customer?
For example, a car offers generic benefits of convenience in
traveling. The core benefit is the fundamental need or wants
that the customer satisfies when he buys the product. For
example, the core benefit of a hotel is to provide somewhere
to rest or sleep when away from home.
2. Basic/ Generic Product: The generic product is a basic version
of the product made up of only those features necessary for it
to function. For example, in a hotel, this could mean a bed,
towels, a bathroom, a mirror, and a wardrobe.
10. Dr. Parveen NagpalLevels of a Product
3. Expected Product: The expected product is the set of features
that the customers expect when they buy the product. For
example, clean sheets, some clean towels, Wi-fi, and a clean
bathroom.
4. Augmented Product: The augmented product refers to any
product variations, extra features, or services that help
differentiate the product from its competitors. The marketer
on his own augments the product, by adding an extra facility
or an extra feature to the product. For example, a free map of
the town in every room
11. Dr. Parveen NagpalLevels of a Product
5. Potential Product: The potential product includes all
augmentations and transformations the product might
undergo in the future. In simple language, this means that to
continue to surprise and delight customers the product must
be augmented. In the example of a hotel, this could mean a
different gift placed in the room each time a customer stays. It
could be some chocolates on one occasion.
12. Dr. Parveen NagpalLevels of a Product
Example – Coca – Cola
1. Core Benefit - Quench thirst.
2. Generic Product - Burnt vanilla smelling, black, carbonated,
and sweetened fizzy drink.
3. Expected Product – Cold drink with taste.
4. Augmented Product - Diet-Coke with zero calories.
5. Potential Product - Running competitions. The prizes in these
competitions are often things that, “money can’t buy”, such as
celebrity experiences. To continue to delight customers over
time the competition prizes change frequently.
13. Dr. Parveen NagpalProduct Life Cycle
The life cycle of a product is associated with marketing and
management decisions within businesses, and all products go
through five primary stages:
1. Development
2. Introduction
3. Growth
4. Maturity
5. Decline
Each stage has its costs, opportunities, and risks, and individual
products differ in how long they remain at any of the life cycle
stages.
15. Dr. Parveen NagpalProduct Life Cycle
Development Stage
The product development stage is often referred to as “the valley
of death.”
At this stage, costs are accumulating with no corresponding
revenue.
Some products require many years and large capital investment to
develop and then test their effectiveness.
Since risk is high, outside funding sources are limited.
While existing companies often fund R & D from revenue
generated by current products, in startup businesses, this stage is
generally funded by the entrepreneur from their own personal
resources.
16. Dr. Parveen NagpalProduct Life Cycle
Introduction Stage
The product introduction stage is also called “market pioneering
stage”
This stage requires huge investment
The sales revenue may begin to grow along with the market
demand but the rate of growth is slow
Profits may not be available due to low sales volume
supplemented by heavy production and distribution costs
Advertisement expenditure is also heavy
The product quality is very important to induce trial
17. Dr. Parveen NagpalProduct Life Cycle
Product Introduction Strategies
Marketing strategies used in introduction stages include:
Rapid Skimming - launching the product at a high price and high
promotional level
Slow Skimming - launching the product at a high price and low
promotional level
Rapid Penetration - launching the product at a low price with
significant promotion
Slow Penetration - launching the product at a low price and
minimal promotion
18. Dr. Parveen NagpalProduct Life Cycle
During the introduction stage, the firm aims to:
• Establish a clear brand identity
• Connect with the right partners to promote the products
• Set up consumer tests, or provide samples or trials to key
target markets
• Price the product or service as high as it believes it can sell it,
and to reflect the quality level it is providing
• Being selective (target a set of consumers) to boost demand.
19. Dr. Parveen NagpalProduct Life Cycle
Growth Stage
In this stage, product is accepted by the consumers
The market demand increases and the size of market grows
Sales increase and so do the profits
Firm may adopt various sales promotional techniques at consumer
level, dealer level and sales force level
Advertisement is done on a large scale
Prices have to be fixed keeping in mind the competitors pricing
20. Dr. Parveen NagpalProduct Life Cycle
Product Growth Strategies
Marketing strategies used in the growth stage mainly aim to
increase profits.
21. Dr. Parveen NagpalProduct Life Cycle
Some of the common strategies to try are:
• Improving product quality
• Adding new product features or support services to grow
market share
• Enter new markets segments
• Keep pricing as high as is reasonable to keep demand and
profits high
• Increase distribution channels to cope with growing demand
• Shift the marketing messages from product awareness to
product preference
• Skimming product prices if the profits are too low.
22. Dr. Parveen NagpalProduct Life Cycle
Maturity Stage
In this stage, sales turnover reach the highest level
Demand reaches saturation point
There is intense competition and lot of pressure on pricing
Profit margin may reduce
Additional expenditure may be incurred for product modification
and improvement
Generally the demand at this stage is stable
Special sales promotional measures may be adopted to stimulate
demand
Reminder advertisement may be done at this stage
23. Dr. Parveen NagpalProduct Life Cycle
Product Maturity Strategies
When the firms sales are at its peak, its product/ service enters
the maturity stage.
The market is saturated, firms may have to find that they need to
change the marketing tactics to prolong the life cycle of products.
Common strategies that can help during this stage are:
Market Modification - Entering new market segments, redefining
target markets, winning over competitor’s customers, converting
non-users
Product Modification - Adjusting or improving the product’s
features, quality, pricing and differentiating it from other products
in the market.
24. Dr. Parveen NagpalProduct Life Cycle
Decline Stage
During this stage, the sales gradually come down. This happens
generally because of competitors products being introduced in the
market or change in technology etc.
The product no longer gets support in the market
The firm has to further drop the prices
Expenditure on advertisement is almost negligible
Consumers feel that the existing product is not as per their wants
25. Dr. Parveen NagpalProduct Life Cycle
Product Decline Strategies
During this stage, sales and profits decline due to changes in
consumer preferences, technological advances and alternatives on
the market.
The strategies that can be adopted are:
Reduce promotional expenditure on the products
Reduce the number of distribution outlets that sell them
Implement price cuts to get the customers to buy the product
find another use for the product
maintain the product and wait for competitors to withdraw from
the market first harvest the product or service before
discontinuing it.
26. Dr. Parveen NagpalProduct Life Cycle
Another option is for the firm to discontinue the product from
offering is either:
sell the brand to another business
significantly reduce the price to get rid of all the inventory.
29. Dr. Parveen NagpalProduct Mix
Width: Number of different product lines carried by the company.
Length: Total number of items in the product mix of the company.
Depth: Assortment of size, color and models offered in each item
of a product line.
Consistency: It refers to the relationship of various product line
either in their end use, production requirement, distribution
channel or other way.
31. Dr. Parveen NagpalPackaging
Packaging is the science, art, and technology of enclosing or
protecting products for distribution, storage, sale, and use.
Packaging also refers to the process of design, evaluation, and
production of packages.
It can be described as a coordinated system of preparing goods for
transport, warehousing, logistics, sale, and end use.
Packaging can also differentiate one brand of product from
another brand.
Because the product packaging can contain company names, logos
and the color scheme of the company, it helps consumers to
identify the product as it sits among the competitor's products on
store shelves.
32. Dr. Parveen NagpalPurpose of Packaging
Physical Distribution - The objects enclosed in the package may
require protection from, among other things, mechanical shock,
vibration temperature etc.
Barrier Protection – Barrier from oxygen, water vapor, dust, etc., is
required for products.
Containment – Small objects are grouped together in one package
for reasons of efficiency.
Information Transmission – Packages and labels communicate
how to use, transport, recycle, or dispose of the package or
product.
Marketing – The packaging and labels can be used by marketers to
encourage potential buyers to purchase the product.
33. Dr. Parveen NagpalPurpose of Packaging
Security –Packages can be made with improved tamper resistance
to deter tampering
Convenience – Packages can have features that add convenience
in distribution, handling, stacking, display, sale, opening, reclosing,
use, dispensing, reuse, recycling, and ease of disposal.
Portion control – Single serving or single dosage packaging has a
precise amount of contents to control usage.
Facilitates Purchase Decision - Packaging may also contain
ingredients and nutritional information about the product
Differentiation – A key role of packaging is differentiation
34. Dr. Parveen NagpalTypes of Packaging
Primary packaging is the material that first envelops the product
and holds it. This usually is the smallest unit of distribution or use
and is the package which is in direct contact with the contents.
Secondary packaging is outside the primary packaging, perhaps
used to group primary packages together.
Tertiary packaging is used for bulk handling, warehouse storage
and transport shipping.
35. Dr. Parveen NagpalPackaging as a Marketing Tool (Silent Salesman)
Effective packaging can actually help a company attract consumers
to their product.
It can be the tool that sets apart their product in a vast sea of
options that the consumer has at their disposal.
A good packaging can actually add to the perceived value of a
product.
Packaging is an integral marketing strategy to glamorize a product
in order to attract the consumer’s attention.
Product packaging works as a silent salesman because consumers
often make a psychological connection with it.
36. Dr. Parveen NagpalPackaging as a Marketing Tool (Silent Salesman)
Packaging may appeal to consumers if it represents something
that’s important to them or symbolizes someone they aspire to
be.
Shoppers who have environmental concerns may choose a
product packaged in recycled materials
37. Dr. Parveen NagpalLabelling
Labelling is the display of label in a product.
A label contains information about a product on its container,
packaging, or the product itself.
Labelling is any written, electronic, or graphic communications on
the packaging or on a separate but associated label.
It also has warnings in it.
For e.g. in some products, it is written that the products contain
traces of nuts and should not be consumed by a person who is
allergic to nuts.
Labeling is also an important part of the brand of the product and
the company.
38. Dr. Parveen NagpalImportance of Labelling
Labelling is essential as it helps to identify the product and also
grab the attention of a customer
It can be combined with packaging and can be used by marketers
to encourage potential buyers to purchase the product.
Labels communicate how to use, transport, recycle or dispose of
the package or product.
Labelling is also used to exaggerate the product.
This kind of labeling helps a viewer to differentiate the product
from the rest in the shelves of the market.
39. Dr. Parveen NagpalImportance of Labelling
A person can find out about the ingredients of a product. This
helps to spread awareness among the customers about the item
they are consuming and labeling also helps to mention
ingredients.
Labeling should show the correct information about the product,
especially in case of pharmaceuticals.
Labeling should also contain information relating to whether the
product has harmful chemicals, especially if it is a product that is
meant for children.
40. Dr. Parveen NagpalProduct Guarantee and Warranty
A warranty is a promise by a manufacturer that a certain product
is free from defects and that it will perform optimally as required.
Warranty is thus a commitment from a manufacturer to its
customers that if the product breaks or if there is any problem in
the product, the manufacturer will provide free repair for the
product.
But the manufacturer does not commit replacement. He commits
only repair.
Warranty is generally given for products which are known to have
frequent breakdowns and are mechanical in nature - Example
washing machines
41. Dr. Parveen NagpalProduct Guarantee and Warranty
A guarantee, though similar to a warranty, is an assurance by the
manufacturer that a certain product is of high quality and will
withstand the test of time.
Guarantees are given for products which are sturdy and robust
and are unlikely to break down easily.
Although guarantees are also given for mechanical product, the
mechanical product should be high value or highly engineered.
Example: Heavy engineering products.
Both warranties and guarantees are used to give customers
assurance that they are purchasing quality products that are free
from defects.
42. Dr. Parveen NagpalProduct Guarantee and Warranty
It can also be used to enhance a brand's reputation or serve as a
competitive differentiator for the consumer.
43. Dr. Parveen NagpalProduct Guarantee and Warranty
Example, When Amazon Kindle was launched, it was a completely
new concept in the market and there was a 1 year guarantee on
the product. Kindle was known to have a soft screen and its screen
breaking was a problem. However, Kindle knew what percentage
of their customers will suffer from this problem. Due to the
guarantee in place, many customers got direct replacement of
their Amazon Kindle therefore motivating more people to adopt
Kindle faster.
Mont Blanc has lifetime guarantee of their product. It is so
confident about its product, that if anything happens to the
product which is not resolved by the company, they offer free
replacement to the end customer
44. Dr. Parveen NagpalPricing
Price is the one element of the marketing mix that produces
revenue; the other elements produce costs.
Price is the easiest element of the marketing program to adjust;
product features, channels, and communications may take more
time.
Price also communicates to the market the company’s intended
value positioning of its product or brand.
A well-designed and marketed product can command a price
premium and reap big profits.
However, companies have had to carefully review their pricing
strategies as it is a critical decision influencing purchases.
45. Dr. Parveen NagpalPricing
Holistic marketers must take into account many factors in making
pricing decisions - the company, the customers, the competition,
and the marketing environment.
Pricing decisions must be consistent with the firm’s marketing
strategy and its target markets and brand positionings.
47. Dr. Parveen NagpalProcedure for Setting Prices
Setting Price
Objectives
Determining
Demand
Estimating Costs
Analyzing Competitors
Costs, Price and Offers
Selecting the Pricing
Strategy
Selecting the Final
Price
48. Dr. Parveen NagpalProcedure for Setting Prices
Step 1: Setting Objectives
Objectives can be:
• Survival
• Maximize the current profits
• Maximize the market share
• Maximum Market Skimming, where prices start high and slowly
drop over time. E.g. Sony
• Product-Quality Leadership (affordable luxuries)
49. Dr. Parveen NagpalProcedure for Setting Prices
Step 2: Determining Demand
Each price will lead to a different level of demand and have a
different impact on a company’s marketing objectives.
There is normally inverse relationship between price and demand,
higher the price, lower the demand and vice-versa.
For prestige goods, the demand curve sometimes slopes upward.
Eg. A perfume company raised its price and sold more units.
Some consumers take the higher price to signify a better product.
However, if the price is too high, demand may fall.
50. Dr. Parveen NagpalProcedure for Setting Prices
Step 3: Estimating Costs
Cost covers the cost of producing, distributing, and selling the
product, including a fair return for the companys effort and risk.
A company’s costs take two forms, fixed and variable.
Fixed costs (overhead) - do not vary with production level or sales
revenue. E.g. bills each month for rent, heat, interest, salaries etc.
regardless of output.
Variable costs - vary directly with the level of production. These
costs tend to be constant per unit produced, but are called
variable because their total varies with the number of units
produced.
51. Dr. Parveen NagpalPricing Policies and Strategies
Step 4: Analyzing Competitors’ Costs, Prices and Offers
Within the range of possible prices determined by market demand
and company costs, the firm must take competitors’ costs, prices,
and possible price reactions into account.
If the firm’s offer contains features not offered by the nearest
competitor, it should evaluate their worth to the customer and
add that value to the competitor’s price.
If the competitor’s offer contains some features not offered by
the firm, the firm should subtract their value from its own price.
Now the firm can decide whether it can charge more, the same, or
less than the competitor.
52. Dr. Parveen NagpalPricing Policies and Strategies
The introduction or change of any price can provoke a response
from customers, competitors, distributors, suppliers, and even
government.
Competitors are most likely to react when the number of firms is
few, the product is homogeneous, and buyers are highly informed.
Competitor reactions can be a special problem when these firms
have a strong value proposition.
53. Dr. Parveen NagpalPricing Policies and Strategies
Step 5: Selecting a Pricing Method
Considering the customers’ demand schedule, the cost function,
and competitors’ prices, the company selects any of the following
price.
i. Markup Pricing - The most elementary pricing method is to
add a standard markup to the product’s cost. Construction
companies submit job bids by estimating the total project
cost and adding a standard markup for profit.
ii. Target-return Pricing - The firm determines the price that
yields its target rate of return on investment. It is used by
Public utilities, which need to make a fair return on
investment..
54. Dr. Parveen NagpalPricing Policies and Strategies
iii. Perceived-value Pricing: Perceived value is made up of inputs,
such as the buyer’s image of the product performance, the
channel deliverables, the warranty quality, customer support,
and softer attributes such as the supplier’s reputation,
trustworthiness, and esteem. Companies must deliver the
value promised by their value proposition, and the customer
must perceive this value. Firms use the other marketing
program elements, such as advertising, sales force, and the
Internet, to communicate and enhance perceived value in
buyers’ minds.
55. Dr. Parveen NagpalPricing Policies and Strategies
iv. Value Pricing: Companies win loyal customers by charging a
fairly low price for a high-quality offering. Value pricing is thus
not a matter of simply setting lower prices; it is a matter of
reengineering the company’s operations to become a low-
cost producer without sacrificing quality, to attract a large
number of value-conscious customers.
An important type of value pricing is everyday low pricing (EDLP).
Constant prices eliminate week-to-week price uncertainty and the
“high-low” pricing of promotion-oriented competitors.
56. Dr. Parveen NagpalPricing Policies and Strategies
v. Going-rate Pricing: Here, the firm bases its price largely on
competitors’ prices.
In oligopolistic industries that sell a commodity such as steel,
paper, or fertilizer, all firms normally charge the same price.
Smaller firms “follow the leader,” changing their prices when the
market leader’s prices change rather than when their own
demand or costs change.
vi. Auction-type Pricing: It is more popular, especially with
electronic marketplaces selling everything from dogs to used
cars as firms dispose of excess inventories or used goods.
57. Dr. Parveen NagpalPromotional Pricing
• Loss-leader pricing: Supermarkets and department stores often
drop the price on well known brands to stimulate additional
store traffic. This pays if the revenue on the additional sales
compensates for the lower margins on the loss-leader items.
Manufacturers of loss-leader brands typically object because
this practice can dilute the brand image and bring complaints
from retailers who charge the list price.
58. Dr. Parveen NagpalPromotional Pricing
• Special Event Pricing: Sellers establish special prices in certain
seasons to draw in more customers.
• Special Customer Pricing: Sellers offer special prices exclusively
to certain customers.
• Cash Rebates: Auto companies and other consumer-goods
companies offer cash rebates to encourage purchase of the
manufacturers’ products within a specified time period.
Rebates can help clear inventories without cutting the stated
list price.
59. Dr. Parveen NagpalPromotional Pricing
• Low-interest Financing: Instead of cutting its price, the
company can offer customers low interest financing. E.g.
Automakers
• Longer Payment Terms: Sellers, especially mortgage banks and
auto companies, stretch loans over longer periods and thus
lower the monthly payments. Consumers often worry less
about the cost (the interest rate) of a loan, and more about
whether they can afford the monthly payment.
• Warranties and Service Contracts: Companies can promote
sales by adding a free or low-cost warranty or service contract.
60. Dr. Parveen NagpalPromotional Pricing
• Psychological Discounting: This strategy sets an artificially high
price and then offers the product at substantial savings; for
example, “Was Rs. 1000, now Rs. 750.”
61. Dr. Parveen NagpalDifferentiated Pricing
Companies often adjust their basic price to accommodate
differences in customers, products, locations, and so on.
Price discrimination occurs when a company sells a product or
service at two or more prices that do not reflect a proportional
difference in costs.
In first-degree price discrimination, the seller charges a separate
price to each customer depending on the intensity of his or her
demand.
In second-degree price discrimination, the seller charges less to
buyers of larger volumes.
62. Dr. Parveen NagpalDifferentiated Pricing
In third-degree price discrimination, the seller charges different
amounts to different classes of buyers, as in the following cases:
• Customer-segment Pricing: Different customer groups pay
different prices for the same product or service. For example,
museums often charge a lower admission fee to students and
senior citizens.
• Product-form Pricing: Different versions of the product are
priced differently, but not proportionately to their costs
• Image Pricing: Some companies price the same product at two
different levels based on image differences.
63. Dr. Parveen NagpalDifferentiated Pricing
• Channel Pricing: Soft drink company like Coca-Cola carry a
different price depending on whether the consumer purchases
it in a fine restaurant, a fast-food restaurant, or a vending
machine.
• Location Pricing: The same product is priced differently at
different locations even though the cost of offering it at each
location is the same. A theater varies its seat prices according
to audience preferences for different locations.
• Time Pricing: Prices are varied by season, day, or hour. Public
utilities vary energy rates to commercial users by time of day
and weekend versus weekday. Eg. “early bird” customers.
64. Dr. Parveen NagpalPlace (Distribution) Mix
Place(Distribution) is one of the important elements in the
marketing mix.
It basically concerns with physical distribution and channel of
distribution.
This is the last element of marketing mix but very important
as marketing goals can be achieved only if the products
reach the hand of consumers conveniently.
65. Dr. Parveen NagpalDistribution Channels
According to Mossmam & Norton “Distribution is the operation
which creates time, place & form utility through the movement of
goods and persons from one place to another”.
The major purpose of marketing is to satisfy human needs by
delivering products of various types to buyers when and where
they want them and at a reasonable cost.
Distribution is a critical component of supply chain strategy which
leads to customer satisfaction and competitive advantage.
The “when and where” is the function of Distribution
66. Dr. Parveen NagpalDistribution Channels
The key role that distribution plays is satisfying a firm’s customer
and achieving profit for the firm.
From a distribution perspective, customer satisfaction involves
maximizing time and place utility to:
• Organization’s suppliers
• Intermediate customers
• Final customers
The role of distribution is through channels or intermediaries who
make possible the delivery of a product to final consumers
whenever and wherever they want.
67. Dr. Parveen NagpalNature and Importance of Distribution Channels
Supply of Information
Product Promotion
Financing Operations
Maintaining Price Stability
Feedback
Negotiation
Risk Sharing
69. Dr. Parveen NagpalTypes of Distribution Middlemen
(source: https://medium.com/@jpcueva/distribution-channels-dc07d3848e8c)
70. Dr. Parveen NagpalFunctions of Distribution Middlemen
Supply of Information
Product Promotion
Financing of Operations
Maintaining Price Stability
Title of Goods
Creation of Place, Time and Form Utilities
Holding Stock
71. Dr. Parveen NagpalChannel Conflict
Channels are managed by individual businessmen who are
motivated by personal goals
Each channel member is interested to increase sales and make
profits.
When one channel members actions prevent another channel
from achieving its goals, channel conflicts occur.
Channel conflict is a situation in which channel partners have to
compete against one another or the vendor's internal sales
department.
Channel conflict can cost a company and its partners losses as
partners try to undercut one another.
72. Dr. Parveen NagpalChannel Conflict
Channel conflict causes unnecessary hurdles, problems in sales
and reducing efficiencies of the channel partners.
To prevent channel conflict, partners sometimes enact
agreements such as deal registration between manufacturer and
the channel partner
73. Dr. Parveen NagpalTypes of Channel Conflict
1. Vertical Channel Conflict: Relates to different levels within the
same channel. E.g. Conflict between Manufacturer and
Distributor
2. Horizontal Channel Conflict: Takes place on same level of
distribution. E.g. One dealer may overlap and interfere with
sales territory assigned to the other dealer and adopt price
cutting.
3. Multi Channel Conflict: When the manufacturer uses two or
more different channels to sell the product to the same target
market. E.g. A manufacturer may sell his product through an
agent and also online at the same time
74. Dr. Parveen NagpalReasons of Channel Conflict
Role Ambiguity
Goal Incompatibility
Mismatch of Market Perception
Bias or Target fixing
Competitor Inducement
Demand for Higher Commission
Stocking of Competitive Brands
75. Dr. Parveen NagpalResolution of Channel Conflicts
Channel conflicts should be avoided to maximize profits and
achieve overall goals and objectives.
Conflicts can take different forms such as hostility, incompatibility,
disagreement etc.
Thus every effort should be taken to resolve conflict by
• Effective communication
• Understanding the nature and intensity of the conflict
• Finding out the source of conflict
• Arbitration
• Formation of Dealer Councils
• Mediation etc.
77. Dr. Parveen NagpalRetailing
Retailer may be defined as a dealer or trader who sells goods/
services in small quantities to consumers for personal or family
use.
According to Philip Kotler “Retailing includes all the activities
involved in selling goods or services directly to final consumers for
personal, non business use”
Retailing is a set of business activities that adds value to the
products and services.
Retailing may be understood as the final step in distribution of
merchandise, for consumption by the end consumers
78. Dr. Parveen NagpalRetailing
Any organization selling to final consumer is retailing, whether
they are:
A Manufacturer, A Wholesaler or A Retailer
It does not matter how they sell or serve by -
Person
Mail
Telephone
Vending Machine or
Internet
Social Media
Or
Where these are sold - A store, street or consumers house.
79. Dr. Parveen NagpalFunctions of Retailing
o Providing Assortments
o Breaking Bulk
o Holding Inventory
o Providing Goods at Convenient Locations and Timings
o Providing Services
o Feedback
o Increasing the Value of Products and Services
80. Dr. Parveen NagpalWholesaling
A wholesaler is an intermediary in the distribution channel who
buys in bulk and sells to resellers rather than to consumers.
“The wholesaler, or the wholesale trader, is a trader, who
purchases goods in large quantities from manufacturers and
resells to retailers in small quantities.” – S E Thomas
“Wholesaling is concerned with the activities of those persons or
establishments that sell to retailers and other merchants, and/or
industrial, institutional, and commercial users, but that do not sell
in large amounts to final consumers.” – US Bureau of Census
81. Dr. Parveen NagpalFunctions of Wholesaling
o Assembling Goods
o Distribution of Goods
o Provides a Trained Sales force
o Marketing and Research
o Reduces Physical Distribution Cost
o Warehousing and Delivery facilities
o Credit Facilities
o Advertisement
o Finance – make advance payment and place the order
o Undertake Risks
82. Dr. Parveen NagpalPromotion Mix
Marketing communication is also called as market promotion.
Marketing communication refers to the method of communicating
massages to the market with the motto of selling firms products.
A good marketing communication requires several elements
which include, Personal Selling, Public Relation, Publicity, Trade
fair and Exhibition, Advertising, Internet Promotion (E-Marketing),
Sales Promotion, Audio and Visual, Direct Marketing, Brands etc.
The main aim of any marketing communication is to obtain and
retain customers.
83. Dr. Parveen NagpalPromotion Mix
The other important objectives are:
• To Inform
• To Persuade
• To Remind
The UK chartered institute of marketing defines the promotional
mix (marketing communication) as “the set of tools that a
business can use to communicate effectively the benefits of its
products or services to its customers.”
84. Dr. Parveen NagpalPromotion Decision: Communication Process
(Source: http://www.gb3group.com/promotional-communication-process.php)
85. Dr. Parveen NagpalPromotion Decision: Communication Process
• Transmitter: is the company that want to send a message to
the target market so that it receives a favorable answer
• Message Encoding: The intended meaning of the message, the
idea the transmitter wants to deliver in encoded in symbols,
text, images, sounds so that it's easily received by the
customer.
• The message – is transmitted through a communication
channel to the receiver and has a certain transmitted meaning.
• Message Decoding – The message received can be different
from the original emitted meaning due to the channel noise.
86. Dr. Parveen NagpalPromotion Decision: Communication Process
• The understood meaning – results from decoding the received
message according to the interpretation the receiver gives to
the symbols the transmitter used to encode the message.
• Receiver – is that part of the target market where the message
is focused. It can be a person, a group or an organization.
• Feedback – is the answering reaction of the receiver that can
be a positive, negative or indifferent.
88. Dr. Parveen NagpalDesigning Promotion Campaign
Set objectives
Set budget
Use an agency
Message selection
Media choice
Campaign scheduling
Campaign evaluation
Organization &
control of campaign
Campaign design
89. Dr. Parveen NagpalBrand
The American Marketing Association defines a brand as “a name,
term, sign, symbol, or design, or a combination of them, intended
to identify the goods or services of one seller or group of sellers
and to differentiate them from those of competitors.”
A brand is thus a product or service whose dimensions
differentiate it in some way from other products or services
designed to satisfy the same need. These differences may be
functional, rational, or tangible—related to product performance
of the brand. They may also be more symbolic, emotional, or
intangible—related to what the brand represents or means in a
more abstract sense.
90. Dr. Parveen NagpalRole of Brands
Brands identify the source or maker of a product and allow
consumers—either individuals or organizations—to assign
responsibility for its performance to a particular manufacturer or
distributor.
Consumers may evaluate the identical product differently
depending on how it is branded. They learn about brands through
past experiences with the product and its marketing program,
finding out which brands satisfy their needs and which do not.
As consumers’ lives become more complicated, rushed, and time-
starved, a brand’s ability to simplify decision making and reduce
risk becomes invaluable.
91. Dr. Parveen NagpalRole of Brands
Brands also perform valuable functions for firms
• They simplify product handling or tracing.
• Help to organize inventory and accounting records.
• Offers the firm legal protection for unique features or aspects
of the product. The brand name can be protected through
registered trademarks; manufacturing processes can be
protected through patents; and packaging can be protected
through copyrights and proprietary designs. These intellectual
property rights ensure that the firm can safely invest in the
brand and reap the benefits of a valuable asset.
92. Dr. Parveen NagpalRole of Brands
• A credible brand signals a certain level of quality so that
satisfied buyers can easily choose the product again.
• Brand loyalty provides predictability and security of demand for
the firm, and it creates barriers to entry that make it difficult
for other firms to enter the market.
• Branding can be a powerful means to secure a competitive
advantage.
93. Dr. Parveen NagpalScope of Branding
Branding is all about creating differences between products.
Marketers need to teach consumers “who” the product is—by
giving it a name and other brand elements to identify it—as well
as what the product does and why consumers should care.
Branding creates mental structures that help consumers organize
their knowledge about products and services in a way that clarifies
their decision making and, in the process, provides value to the
firm.
For branding strategies to be successful and brand value to be
created, consumers must be convinced there are meaningful
differences among brands in the product or service category.
94. Dr. Parveen NagpalScope of Branding
Brand differences often relate to attributes or benefits of the
product itself.
Marketers can apply branding to physical good, a service, a store,
a person, a place, an organization or an idea (E.g. abortion rights)
95. Dr. Parveen NagpalBranding Strategy
A firm’s branding strategy—often called the brand
architecture—reflects the number and nature of both
common and distinctive brand elements. Deciding how to
brand new products is especially
critical. A firm has three main choices:
1. It can develop new brand elements for the new product.
2. It can apply some of its existing brand elements.
3. It can use a combination of new and existing brand
elements.
96. Dr. Parveen NagpalBranding Strategy
When a firm uses an established brand to introduce a new
product, the product is called a brand extension.
When marketers combine a new brand with an existing
brand, the brand extension can also be called a sub-brand.
The existing brand that gives birth to a brand extension or
sub-brand is the parent brand.
If the parent brand is already associated with multiple
products through brand extensions, it can also be called a
master brand or family brand.
97. Dr. Parveen NagpalBranding Strategy
Brand extensions fall into two general categories:
In a line extension, the parent brand covers a new product
within a product category it currently serves, such as with
new flavors, forms, colors, ingredients, and package sizes.
In a category extension, marketers use the parent brand to
enter a different product category.
A brand line consists of all products—original as well as line
and category extensions—sold under a particular brand.
A brand mix (or brand assortment) is the set of all brand
lines that a particular seller makes.
98. Dr. Parveen NagpalBranding Strategy
Many companies are introducing branded variants, which
are specific brand lines supplied to specific retailers or
distribution channels.
They result from the pressure retailers put on manufacturers
to provide distinctive offerings.
99. Dr. Parveen NagpalBrand Portfolio
A brand can only be stretched so far, and all the segments
the firm would like to target may not view the same brand
equally favorably.
Marketers often need multiple brands in order to pursue
these multiple segments.
Some other reasons for introducing multiple brands in a
category include:
• Increasing shelf presence and retailer dependence in the
store
• Attracting consumers seeking variety who may otherwise
have switched to another brand.
100. Dr. Parveen NagpalBrand Portfolio
• Increasing internal competition within the firm
• Yielding economies of scale in advertising, sales,
merchandising, and physical distribution
The brand portfolio is the set of all brands and brand lines a
particular firm offers for sale in a particular category or
market segment.
101. Dr. Parveen NagpalBrand Dynamics Pyramid
(Source: BrandDynamics™ Pyramid. Reprinted with permission of Millward Brown)
102. Dr. Parveen NagpalBrand Equity
Brand equity is the added value endowed on products and
services.
It may be reflected in the way consumers think, feel, and act with
respect to the brand, as well as in the prices, market share, and
profitability the brand commands.
Marketers and researchers use various perspectives to study
brand equity.
Customer-based approaches view it from the perspective of the
consumer—either an individual or an organization—and recognize
that the power of a brand lies in what customers have seen, read,
heard, learned, thought, and felt about the brand over time
103. Dr. Parveen NagpalBrand Equity
Customer-based brand equity is the differential effect brand
knowledge has on consumer response to the marketing of that
brand.
A brand has positive customer-based brand equity when
consumers react more favorably to a product and the way it is
marketed when the brand is identified, than when it is not
identified.
A brand has negative customer-based brand equity if consumers
react less favorably to marketing activity for the brand under the
same circumstances.
104. Dr. Parveen NagpalBrand Equity
There are three key ingredients of customer-based brand equity:
1. Brand equity arises from differences in consumer response. If
no differences occur, the brand name product is essentially a
commodity, and competition will probably be based on price.
2. Differences in response are a result of consumers’ brand
knowledge, all the thoughts, feelings, images, experiences,
and beliefs associated with the brand. Brands must create
strong, favorable, and unique brand associations with
customers.
3. Brand equity is reflected in perceptions, preferences, and
behavior related to all aspects of the marketing of a brand.
Stronger brands lead to greater revenue
105. Dr. Parveen NagpalBrand Equity
Brand salience is how often and how easily customers think of the
brand under various purchase or consumption situations.
• Brand performance is how well the product or service meets
customers’ functional needs.
• Brand imagery describes the extrinsic properties of the product
or service, including the ways in which the brand attempts to
meet customers’ psychological or social needs.
• Brand judgments focus on customers’ own personal opinions
and evaluations.
• Brand feelings are customers’ emotional responses and
reactions with respect to the brand.
106. Dr. Parveen NagpalBrand Equity
• Brand resonance describes the relationship customers have
with the brand and the extent to which they feel they are “in
sync” with it.
107. Dr. Parveen NagpalBuilding Brand Equity
Marketers build brand equity by creating the right brand
knowledge structures with the right consumers.
From a marketing management perspective, however, there are
three main sets of brand equity driver:
1. The initial choices for the brand elements or identities making
up the brand (brand names, URLs, logos, symbols, characters,
spokespeople, slogans, jingles, packages, and signage)—
Microsoft chose the name Bing for its new search engine
because it felt it is also short, appealing, memorable, active,
and effective multiculturally.
108. Dr. Parveen NagpalBuilding Brand Equity
2. The product and service and all accompanying marketing
activities and supporting marketing programs have a strong
lifestyle appeal to women, men, and kids. It is positioned well
in the minds of the customers.
3. Other associations indirectly transferred to the brand by
linking it to some other entity (a person, place, or thing).
109. Dr. Parveen NagpalMeasuring Brand Equity
The brand value chain, a structured approach to assessing the
sources and outcomes of brand equity and the way marketing
activities create brand value is based on several premises:
1. Brand value creation begins when the firm targets actual or
potential customers by investing in a marketing program to
develop the brand, including product research, development,
and design; trade or intermediary support; and marketing
communications.
2. It is assumed that customers’ mind-sets, buying behavior, and
response to price will change as a result of the marketing
program; the question is how.
110. Dr. Parveen NagpalMeasuring Brand Equity
3. The investment community will consider market performance,
replacement cost, and purchase price in acquisitions (among
other factors) to assess shareholder value in general and the
value of a brand in particular.
111. Dr. Parveen NagpalMeasuring Brand Equity
(Brand Value Chain. Kevin Lane Keller, Strategic Brand Management, 3rd ed.)
112. Dr. Parveen NagpalMeasuring Brand Equity
The model assumes that three multipliers moderate the transfer
between the marketing program and the subsequent three value
stages:
• The program multiplier determines the marketing program’s
ability to affect the customer mind-set and is a function of the
quality of the program investment.
• The customer multiplier determines the extent to which value
created in the minds of customers affects market performance.
This result depends on competitive superiority (how effective
the quantity and quality of the marketing investment of other
competing brands are), channel and other intermediary
113. Dr. Parveen NagpalMeasuring Brand Equity
support (how much brand reinforcement and selling effort various
marketing partners are putting forth), and customer size and
profile (how many and what types of customers, profitable or not,
are attracted to the brand).
• The market multiplier determines the extent to which the value
shown by the market performance of a brand is manifested in
shareholder value. It depends, in part, on the actions of
financial analysts and investor
114. Dr. Parveen NagpalMeasuring Brand Equity
The two general approaches are complementary, and marketers
can employ both. For brand equity to perform a useful strategic
function and guide marketing decisions, marketers need to fully
understand
(1) the sources of brand equity and how they affect outcomes of
interest, and
(2) how these sources and outcomes change over time. Brand
audits are important for the former; brand tracking for latter.
A brand audit is a consumer-focused series of procedures to
assess the health of the brand, uncover its sources of brand
equity, and suggest ways to improve and leverage its equity.
115. Dr. Parveen NagpalMeasuring Brand Equity
Marketers should conduct a brand audit when setting up
marketing plans and when considering shifts in strategic direction.
Conducting brand audits on a regular basis, such as annually,
allows marketers to keep their fingers on the pulse of their brands
so they can manage them more proactively and responsively.
Brand-tracking studies collect quantitative data from consumers
over time to provide consistent, baseline information about how
brands and marketing programs are performing.
Tracking studies help us understand where, how much, and in
what ways brand value is being created, to facilitate day-to-day
decision making.
116. Dr. Parveen NagpalReferences
1. Kotler Philip, Keller Kevin, Marketing Management. 15e,
Pearson.
2. Nag, Sales And Distribution Management, Mc Graw Hill, 2013
Edition
3. Krishna K. Havaldar, Vasant M. Cavale, Sales And Distribution
Management – Text & Cases, Mc Graw Hill Education, 2nd
Edition, 2011
4. Kotler & Armstrong, Principles Of Marketing – South Asian
Perspective, Pearson Education, 13th Edition
5. Nagpal, Sharma, Kukreja - Sales And Distribution
Management, TYBMS, Sheth Publishers.