AMM LECTURE NOTES.pdf

H- AIRLINE MARKETING MANAGEMENT –
FULL LECTURE NOTES
UNIT 1
Introduction to Airline Management:
Marketing Philosophies
Marketing is referred to as the process of creating,
communicating and delivering products for the
customers in order to satisfy their needs and wants.
The purpose of a marketing philosophy is to identify
those needs and fulfil them.
Every company follows different marketing
philosophies as per their requirement. But in general,
there exist five marketing philosophies or concepts
and a company should follow the right philosophy,
as per their requirements and customer needs.
The five marketing philosophies are:
1.Production Concept
2.Product Concept
3.Selling Concept
4.Marketing Concept
5.Social Marketing Concept (Societal Marketing
Concept)

Production Concept: Production concept is based
on the idea that customers will prefer products that
are affordable and are produced in bulk. In this
marketing concept, the aim of organisations is to
produce in bulk, increasing production efficiency,
reducing costs and distribution performed on a large
scale.
The idea of consumer demand for affordable
products comes from the Say’s law that states that
“supply will create its own demand”.
By increasing the production of the products, the
companies utilise the advantage of economies of
scale. The reduced cost price makes the product
appear inexpensive to the customer which generates
more sales.
Lower price may be able to generate more
customers, but with the decline in quality the sales
volume will decrease. This theory holds good when
demand is more than the supply, but a customer will
not always be looking for cheaper products, there
will be many factors that will impact the customer
purchase decision.

Product Concept: This is another marketing
philosophy that is concerned with quality of the
product rather than the quantity of the product. The
consumers are always looking out for quality
products and are not worried about price and the
availability of the product.
Companies following this approach will be creating
high quality products that will satisfy the
requirements of such customers, but it will be
expensive in the process.
Since the focus of the companies is on producing
quality products, they lose out on customers that
seek inexpensive products or are influenced by
availability and usability of the product.
Selling Concept: This is the third philosophy and it
is based on actual selling of the product. In the
earlier two philosophies or concepts the emphasis
was on production whereas selling concept is more
focused on making sales for every product, which is
irrespective of quality of the product or the needs of
the customer.
Companies following this approach have a short life
span and thus have very less repeat customers.

Marketing Concept: The selling concept is not for
a long duration. The market is customer centric,
therefore any product that should be able to fulfill
the customer needs. Marketing concept is based on
the assumption that a consumer will purchase
products.
Companies conduct research in order to identify
customer needs and create a product that meets those
needs in a better way than their competitors. It
results in businesses developing relationships with
customers that leads to profit generation in the long
run.
Societal Marketing Concept: This is the fifth
marketing concept that is mainly concerned with
meeting the needs of customers as well as working
towards protecting the environment, its natural
resources and overall well being of the society.
This marketing philosophy believes that business is
a part of the society and therefore businesses should
give it back to society in the form of social services
like poverty eradication, promoting literacy, etc.

CORE MARKETING CONCEPTS
What is Marketing Concept?
Marketing concept is a set of strategies that the firms
adopt where they analyse the needs of their
customers and implement strategies to fulfil those
needs which will result in an increase in sales, profit
maximisation and also beat the existing competition.
The marketing concept has been widely used by
companies all over the world in the present age, but
the situation was not the same earlier. As per this
concept, it is said that for an organisation to satisfy
the objectives of the organisation, the needs and
wants of the customer should be satisfied. This
theory was first mentioned in Adam Smith’s book
“The Wealth of Nations” in 1776 but came into
widespread use only 200 years later.
Therefore, marketing can be said as a process of
acquiring customers and maintaining relations with
them and at the same time matching needs and wants
with the services or product offered by the
organisation, which ensures that the organisation
will become profitable.

What are Needs, Wants and Demand
Marketing concept focuses on the needs, wants and
demands of customers. Let us understand them in
brief.
1. Needs:
Needs are basic requirements that enable a healthy
and active life. If needs are not fulfilled, it will result
in the dysfunction of the system, which can result in
disability or death. It can be objective as well as
physical as in need of food, water and shelter.
2. Wants:
Wants are something that is desired by the person.
These are not required for day to day functioning.
Wants are not necessary for basic survival and are
mostly moulded by cultural influence.
3. Demands:
When the needs and wants are supported by an
ability to pay, it becomes a demand.
Types of Marketing Concept
Five types of marketing concepts are as follows:

1. Production Concept
2. Product Concept
3. Selling concept
4. Marketing concept
5. Societal marketing concept
Production Concept
This concept was based on the assumption that
customers are primarily interested in products which
are accessible and affordable. This concept was
introduced at a time when business was focused
mainly on production. It says that a business will be
able to lower costs by producing more quantity or
mass production of goods.
Solely focusing on producing goods may lead to the
firm deviating from its objective.
Product Concept
The product concept is based on the assumption that
customers will be more inclined towards products
that are offering more quality, innovative features
and top-level performance.

In this type of marketing concept, a business focuses
on creating high-quality products and refining it
every time in order to develop a better and improved
product.
Selling Concept
While the previous two concepts focused on
production, the selling concept is focused on selling.
It believes that customers will be buying products
only when the product is aggressively marketed by
the company. It does not focus on building
relationships with customers, and ensuring customer
satisfaction is also not deemed necessary.
Marketing Concept
A marketing concept places the centre of focus on
the customer. All the activities that are undertaken
by an organisation are done keeping the customer in
mind. The organisations are more concerned about
creating value propositions for the customers, which
will differentiate them from the competition.
Societal Marketing Concept
This is the fifth and most advanced form of the
marketing concept. Here the focus is on needs and

wants of the customer as well as ensuring the safety
of the customer and society first. It believes in
giving back to society and making the world a better
place for all human beings.
3. CUSTOMER VALUE AND SATISFACTION
Customer value is defined as the trade-off
between the advantages received and the price
paid to get those benefits. Several essential
aspects, such as adherence to product standards,
pricing, brand, product alternatives, customer
experiences, and customer relationships, all
contribute to the overall worth of a customer.
Organizations should look at customer value
metrics because doing so will help them make a
product with more essential benefits than their

competitors at a price that people are willing to
pay.
Customer satisfaction is defined as the degree to
which consumers are satisfied with the value that
a product has provided. Customer satisfaction is
measured after a product has been bought. It is
incredibly subjective and difficult to quantify.
Consumer satisfaction is a phenomenon that
occurs after a product has been purchased since a
customer can only assess its effect after having
used it. Previously acquired knowledge,
recommendations from friends, a seller's
assurances, and information about rivals may
influence a customer's anticipation of the product
or service. Customers' value and customer
satisfaction are distinct in several respects, as
follows:
Customer value is assessed from the perspective
of the customers. Customer comparison is a
thinking process in which consumers compare
the value obtained from a product with that given
by a rival product to identify the impacts that
deliver more significant benefits at a lower cost.
On the other hand, the term "customer

satisfaction" is a dynamic notion that refers to
consumers' emotions. To figure out how happy
we are with a purchase, we need to use the
product or service in question.
Creating customer value is a strategy metric that
influences product compositions, pricing
strategies, distribution techniques (including
channel partners), communication platforms, and
business processes. On the other hand, customer
satisfaction provides a method of determining
how consumers react to these metrics. This term
refers to the best way to track how well a
business follows up with a customer after buying
something from them.
When customers value a product or service, the
difference between their real expectations of
benefits and the total cost of obtaining those
benefits is customer value. While customer
service refers to the difference between what a
customer receives and what the customer
expects, customer satisfaction refers to the
difference between what a customer gets and
what the consumer expects.

Consumer value creation is a proactive process
since it occurs before the customer has had the
opportunity to experience the product, i.e., the
customer's pre-purchase evaluation. On the other
hand, customer satisfaction is a reactive process
that measures the gap between what customers
anticipate from a product or service and what
they get when they use that product or service.
When you remove all the expenses from the
advantages, you get the customer value,
expressed in monetary terms. The degree to
which customers are satisfied is assessed
qualitatively since separating actual performance
from anticipated performance is more subjective.
It is an emotional experience that is difficult to
measure.
4. MARKETING MIX
What is Marketing Mix?
Marketing Mix is a set of marketing tool or tactics,
used to promote a product or services in the market

and sell it. It is about positioning a product and
deciding it to sell in the right place, at the right price
and right time. The product will then be sold,
according to marketing and promotional strategy.
The components of the marketing mix consist of 4Ps
Product, Price, Place, and Promotion. In the business
sector, the marketing managers plan a marketing
strategy taking into consideration all the 4Ps.
However, nowadays, the marketing mix increasingly
includes several other Ps for vital development.
What is 4 P of Marketing
Product in Marketing Mix:

A product is a commodity, produced or built to
satisfy the need of an individual or a group. The
product can be intangible or tangible as it can be in
the form of services or goods. It is important to do
extensive research before developing a product as it
has a fluctuating life cycle, from the growth phase to
the maturity phase to the sales decline phase.
A product has a certain life cycle that includes the
growth phase, the maturity phase, and the sales
decline phase. It is important for marketers to
reinvent their products to stimulate more demand
once it reaches the sales decline phase. It should
create an impact in the mind of the customers, which
is exclusive and different from the competitor’s
product. There is an old saying stating for marketers,
“what can I do to offer a better product to this group
of people than my competitors”. This strategy also
helps the company to build brand value.
Price in Marketing Mix:
Price is a very important component of the
marketing mix definition. The price of the product is
basically the amount that a customer pays for to
enjoy it. Price is the most critical element of a
marketing plan because it dictates a company’s

survival and profit. Adjusting the price of the
product, even a little bit has a big impact on the
entire marketing strategy as well as greatly affecting
the sales and demand of the product in the market.
Things to keep on mind while determining the cost
of the product are, the competitor’s price, list price,
customer location, discount, terms of sale, etc.,
Place in Marketing Mix:
Placement or distribution is a very important part of
the marketing mix strategy. We should position and
distribute our product in a place that is easily
accessible to potential buyers/customers.
Promotion in Marketing Mix:
It is a marketing communication process that helps
the company to publicize the product and its features
to the public. It is the most expensive and essential
components of the marketing mix, that helps to grab
the attention of the customers and influence them to
buy the product. Most of the marketers use
promotion tactics to promote their product and reach
out to the public or the target audience. The
promotion might include direct marketing,
advertising, personal branding, sales promotion, etc.

What is 7 P of Marketing:
The 7Ps model is a marketing model that modifies
the 4Ps model. As Marketing mix 4P is becoming an
old trend, and nowadays, marketing business needs
deep understanding of the rise in new technology
and concept. So, 3 more new P’s were added in the
old 4Ps model to give a deep understanding of the
concept of the marketing mix.
People in Marketing Mix:
The company’s employees are important in
marketing because they are the ones who deliver the
service to clients. It is important to hire and train the
right people to deliver superior service to the clients,
whether they run a support desk, customer service,
copywriters, programmers…etc. It is very important
to find people who genuinely believe in the products
or services that the particular business creates, as
there is a huge chance of giving their best
performance. Adding to it, the organisation should
accept the honest feedback from the employees
about the business and should input their own
thoughts and passions which can scale and grow the
business.
Process in Marketing Mix:

We should always make sure that the business
process is well structured and verified regularly to
avoid mistakes and minimize costs. To maximise the
profit, Its important to tighten up the enhancement
process.
Physical Evidence in Marketing Mix:
In the service industries, there should be physical
evidence that the service was delivered. A concept
of this is branding. For example, when you think of
“fast food”, you think of KFC. When you think of
sports, the names Nike and Adidas come to mind.
Marketing Mix Example:
This article will go through a marketing mix
example of a popular cereals company. At first, the
company targeted older individuals who need to
keep their diet under control, this product was
introduced. However, after intense research, they
later discovered that even young people need to have
a healthy diet. So, this led to the development of a
cereals product catered to young people. In
accordance with all the elements of the marketing
mix strategy, the company identified the product,
priced it correctly, did tremendous promotions and
availed it to the customers. This marketing mix

example belongs to Honeycomb, one of the most
renowned companies in the cereal niche. Following
these rules clearly has managed to make the
company untouchable by all the other competitors in
the market.
This makes Honeycomb, the giant we know and love
today to eat as morning breakfast!
Marketing Mix Product
All products can be broadly classified into 3 main
categories. These are :
1.Tangible products: These are items with an
actual physical presence such as a car, an
electronic device, and an item of clothing or a
consumer good.
2.Intangible products: These are items that have
no physical presence but can be felt indirectly.
An insurance policy is an example of this.
Online items such as software, applications or
even music and video files are also intangible
products.
3.Services: Services are also intangible products
but they are the result of an economic activity
that does not result in ownership. It is a process
that creates benefits for customers. Services

depend highly on who is performing them and
remain difficult to reproduce exactly.
Importance of Marketing Mix
The marketing mix is a remarkable tool for creating
the right marketing strategy and its implementation
through effective tactics. The assessment of the roles
of your product, promotion, price, and place plays a
vital part in your overall marketing approach.
Whereas the marketing mix strategy goes hand in
hand with positioning, targeting, and segmentation.
And at last, all the elements, included in the
marketing mix and the extended marketing mix,
have an interaction with one another.

UNIT 2
Factors influencing consumer buying behaviour
is influenced by many different factors. A marketer
should try to understand the factors that influence
consumer behavior. Here are 5 major factors that
influence consumer behavior:
1. Psychological Factors
Human psychology is a major determinant of
consumer behavior. These factors are difficult to
measure but are powerful enough to influence a
buying decision.
Some of the important psychological factors are:
i. Motivation
When a person is motivated enough, it influences the
buying behavior of the person. A person has many

needs such as social needs, basic needs, security
needs, esteem needs, and self-actualization needs.
Out of all these needs, the basic needs and security
needs take a position above all other needs. Hence
basic needs and security needs have the power to
motivate a consumer to buy products and services.
ii. Perception
Consumer perception is a major factor that
influences consumer behavior. Customer perception
is a process where a customer collects information
about a product and interprets the information to
make a meaningful image of a particular product.
When a customer sees advertisements, promotions,
customer reviews, social media feedback, etc.
relating to a product, they develop an impression
about the product. Hence consumer perception
becomes a great influence on the buying decision of
consumers.
iii. Learning
When a person buys a product, he/she gets to learn
something more about the product. Learning comes
over a period of time through experience. A
consumer’s learning depends on skills and
knowledge. While skill can be gained through

practice, knowledge can be acquired only through
experience.
Learning can be either conditional or cognitive. In
conditional learning the consumer is exposed to a
situation repeatedly, thereby making a consumer to
develop a response towards it.
Whereas in cognitive learning, the consumer will
apply his knowledge and skills to find satisfaction
and a solution from the product that he buys.
iv. Attitudes and Beliefs
Consumers have certain attitudes and beliefs which
influence the buying decisions of a consumer. Based
on this attitude, the consumer behaves in a particular
way towards a product. This attitude plays a
significant role in defining the brand image of a
product. Hence, marketers try hard to understand the
attitude of a consumer to design their marketing
campaigns.
2. Social Factors
Humans are social beings and they live around many
people who influence their buying behavior.
Humans try to imitate other humans and also wish to
be socially accepted in the society. Hence their
buying behavior is influenced by other people

around them. These factors are considered as social
factors. Some of the social factors are:
i. Family
Family plays a significant role in shaping the buying
behavior of a person. A person develops preferences
from his childhood by watching family buy products
and continues to buy the same products even when
they grow up.
ii. Reference Groups
A reference group is a group of people with whom a
person associates himself. Generally, all the people
in the reference group have common buying
behavior and influence each other.
iii. Roles and status
A person is influenced by the role that he holds in
the society. If a person is in a high position, his
buying behavior will be influenced largely by his
status. A person who is a Chief Executive Officer in
a company will buy according to his status while a
staff or an employee of the same company will have
different buying pattern.
3. Cultural factors
A group of people is associated with a set of values
and ideologies that belong to a particular
community. When a person comes from a particular

community, his/her behavior is highly influenced by
the culture relating to that particular community.
Some of the cultural factors are:
i. Culture
Cultural Factors have a strong influence on
consumer buying behavior. Cultural Factors include
the basic values, needs, wants, preferences,
perceptions, and behaviors that are observed and
learned by a consumer from their near family
members and other important people around them.
ii. Subculture
Within a cultural group, there exists many
subcultures. These subcultural groups share the same
set of beliefs and values. Subcultures can consist of
people from different religion, caste, geographies
and nationalities. These subcultures by itself form a
customer segment.
iii. Social Class
Each and every society across the globe has the form
of social class. The social class is not just
determined by the income, but also other factors
such as the occupation, family background,
education and residence location. Social class is
important to predict the consumer behavior.

4. Personal Factors
Factors that are personal to the consumers influence
their buying behavior. These personal factors differ
from person to person, thereby producing different
perceptions and consumer behavior.
Some of the personal factors are:
i. Age
Age is a major factor that influences buying
behavior. The buying choices of youth differ from
that of middle-aged people. Elderly people have a
totally different buying behavior. Teenagers will be
more interested in buying colorful clothes and
beauty products. Middle-aged are focused on house,
property and vehicle for the family.
ii. Income
Income has the ability to influence the buying
behavior of a person. Higher income gives higher
purchasing power to consumers. When a consumer
has higher disposable income, it gives more
opportunity for the consumer to spend on luxurious
products. Whereas low-income or middle-income
group consumers spend most of their income on
basic needs such as groceries and clothes.

iii. Occupation
Occupation of a consumer influences the buying
behavior. A person tends to buy things that are
appropriate to this/her profession. For example, a
doctor would buy clothes according to this
profession while a professor will have different
buying pattern.
iv. Lifestyle
Lifestyle is an attitude, and a way in which an
individual stay in the society. The buying behavior is
highly influenced by the lifestyle of a consumer. For
example when a consumer leads a healthy lifestyle,
then the products he buys will relate to healthy
alternatives to junk food.
5. Economic Factors
The consumer buying habits and decisions greatly
depend on the economic situation of a country or a
market. When a nation is prosperous, the economy is
strong, which leads to the greater money supply in
the market and higher purchasing power for
consumers. When consumers experience a positive
economic environment, they are more confident to
spend on buying products.

Whereas, a weak economy reflects a struggling
market that is impacted by unemployment and lower
purchasing power.
Economic factors bear a significant influence on the
buying decision of a consumer. Some of the
important economic factors are:
i. Personal Income
When a person has a higher disposable income, the
purchasing power increases simultaneously.
Disposable income refers to the money that is left
after spending towards the basic needs of a person.
When there is an increase in disposable income, it
leads to higher expenditure on various items. But
when the disposable income reduces, parallelly the
spending on multiple items also reduced.
ii. Family Income
Family income is the total income from all the
members of a family. When more people are earning
in the family, there is more income available for
shopping basic needs and luxuries. Higher family
income influences the people in the family to buy
more. When there is a surplus income available for
the family, the tendency is to buy more luxury items
which otherwise a person might not have been able
to buy.

iii. Consumer Credit
When a consumer is offered easy credit to purchase
goods, it promotes higher spending. Sellers are
making it easy for the consumers to avail credit in
the form of credit cards, easy installments, bank
loans, hire purchase, and many such other credit
options. When there is higher credit available to
consumers, the purchase of comfort and luxury items
increases.
iv. Liquid Assets
Consumers who have liquid assets tend to spend
more on comfort and luxuries. Liquid assets are
those assets, which can be converted into cash very
easily. Cash in hand, bank savings and securities are
some examples of liquid assets. When a consumer
has higher liquid assets, it gives him more
confidence to buy luxury goods.
v. Savings
A consumer is highly influenced by the amount of
savings he/she wishes to set aside from his income.
If a consumer decided to save more, then his
expenditure on buying reduces. Whereas if a
consumer is interested in saving more, then most of
his income will go towards buying products.
KEY PSYCHOLOGICAL PROCESS

 Motivation: The level of motivation
influences the buying behavior of the
consumers. It is very well explained by
Maslow through his need hierarchy theory
comprising of basic needs, security needs,
social needs, esteem needs and self-
actualization needs. Usually, the basic
needs and the security needs are more
pressing needs than the other and hence,
these needs become a motive that directs
the consumer behavior to seek satisfaction.
 Perception: The consumer perception
towards a particular product and the brand
also influences his buying decision. The
perception is the process through which the
individual selects, organize and interpret the
information to draw a meaningful
conclusion. Such as, Apple iPhone is
perceived as a premium brand and
consumers are motivated to buy it to get
associated with the elite class of the society.
The marketers lay emphasis on managing
the perceptual processes, Viz. Selective
Attention, Selective Distortion, and
Selective Retention. In selective attention,

the marketer tries to gain the attention of the
customer towards his offerings. Different
people have different perceptions about the
same product depending on their individual
beliefs and attitudes which give rise to
selective distortion. Thus, the marketer
should try to understand the attitudes and
beliefs of individuals and design the
marketing campaigns to retain the
consumers.
 Learning: The individual’s learning
depends on the skills, knowledge and
intention. The skills are developed through
practice while the knowledge and intention
are acquired with the experience. There
could be a conditional learning or a
cognitive learning.
In the conditional learning, the consumer
derives learning from being conditioned to
particular stimuli, i.e. when he is exposed to
the similar situation, again and again, he
develops a particular response towards it.
While in the cognitive learning the individual
applies all his knowledge, skill, attitudes,

values and beliefs to find the solution of a
problem and derive satisfaction out of it.
 Attitudes and Beliefs: The individuals
have certain beliefs and attitudes towards
products on which their purchase decisions
rests. These attitudes and beliefs are the
tendency to respond to a given product in a
particular way, and these make up the
brand image that influences the consumer
buying behavior. Thus, the marketers try to
understand the attitudes and beliefs of the
individuals and modify these through
several marketing campaigns.
Thus, these are some of the psychological
factors that the marketer must take into the
consideration before undertaking the strategic
marketing decision.
Consumer and business buying decision process
The consumer decision process also called the
buyer decision process, helps markets identify
how consumers complete the journey from
knowing about a product to making the

purchase decision. Understanding the buyer
buying process is essential for marketing and
sales. The consumer or buyer decision process
will enable them to set a marketing plan that
convinces them to purchase the product or
service for fulfilling the buyer’s or consumer’s
problem.
The consumer decision process is composed
of problem recognition, search, evaluation,
and purchase decision. Post-purchase
behavior is the result of satisfaction or
dissatisfaction that the consumption
provides. The buying process starts when the
customer identifies a need or problem or
when a need arises. It can be activated
through internal or external stimuli.

Consumers go through 5 stages in deciding to
purchase any goods or services.
5 Stages of the consumer decision process
(buyer decision process) are;
1.Problem Recognition or Need Recognition.
2.Information Search.
3.Evaluation of Alternatives.
4.Purchase Decision.
5.Post-Purchase Evaluation.
The first step of the buyer decision process is
the need recognition stage. Here the consumer
recognizes a need or problem and feels a
difference between the actual state and some
desired state. They try to find goods to satisfy
such needs.
This leads to the second stage of searching for
information about the product. The consumer

tries the find out as much as possible about the
product’s available brands.
At the Third stage, is consumer uses the
information to evaluate alternative brands.
After that, the buyer makes the purchase
decision at the fourth stage by selecting the
most suitable product.
The fifth stage is the post-purchase evaluation,
and it is the most important one. Depending on
the level of satisfaction or dissatisfaction, the
consumer will become a loyal customer or
actively avoid the brand and tells others to do so
via online reviews and word of mouth.
Situations Leading to Problem Recognition
There could be many situations that may lead a
consumer to recognize a problem to exist.

Major situations leading to problem recognition
are;
 Insufficient Stock of Goods
 Dissatisfaction or Discontentment with the
Stock
 Changes in the Environmental
Characteristics
 Changes in the Financial Status
 Promotional Activities
 Consumer’s Previous Decisions
 Individual Development
 Efforts of Consumer Groups and
Governmental Agencies
 Availability of Products
PESTLE ANALYSIS

What is a PESTLE Analysis?
PESTLE analysis is a framework that can be used as
a tool used to help identify the external factors that
may affect a business or organisation and commonly
presented as a six pillar structure.
These factors are:
 Political factors including tax policy,
employment laws and environmental
regulations.
 Economic factors that affect spending power,
such as interest rates, inflation and exchange
rates.
 Social factors include health consciousness,
population growth rate and age distribution.
 Technological factors include the emergence of
new technologies, R&D activity and automation.
 Legal factors include consumer laws, anti-
discrimination laws and employment laws.
 Environmental factors include weather
conditions and climate change.
PESTLE ANALYSIS

PESTEL analysis is a framework or tool used
by marketers to analyze and monitor the macro-
environmental (external marketing environment)
factors that have an impact on an organization,
company, or industry. It examines the Political,
Economic, Social, Technological,
Environmental, and Legal factors in the external
environment. A PESTEL analysis is used to
identify threats and weaknesses which are
used in a SWOT analysis.
Political factors include government policies,
leadership, and change; foreign trade policies;
internal political issues and trends; tax policy;
regulation and de-regulation trends.
Economic factors include current and projected
economic growth; inflation and interest rates;
job growth and unemployment; labor costs;
impact of globalization; disposable income of
consumers and businesses; likely changes in
the economic environment.
Social factors include demographics (age,
gender, race, family size); consumer attitudes,
opinions, and buying patterns; population
growth rate and employment patterns; socio-

cultural changes; ethnic and religious trends;
living standards.
Technological factors affect marketing in (1)
new ways of producing goods and services; (2)
new ways of distributing goods and services;
(3) new ways of communicating with target
markets.
Environmental factors are important due to the
increasing scarcity of raw materials; pollution
targets; doing business as an ethical and
sustainable company; carbon footprint targets.
Legal factors include health and safety; equal
opportunities; advertising standards; consumer
rights and laws; product labeling and product
safety.
SWOT ANALYSIS

UNIT 3
Product Levels, product hierarchy, product Life
Cycle, Product Life Cycles in Aviation Industry.
PRODUCT LEVELS
What is a Product?
For Kotler, the definition of a product goes way
beyond being a physical object or a service. He
defines a product as anything that can meet a need or
a want. This means that even a retail store or a
customer service representative is considered a
product.
The model considers that products are a means to an
end to meet the various needs of customers. The
model is based on there being three ways in which
customers attach value to a product:
 Customer Need: the lack of a basic
requirement.
 Customer Want: a specific requirement for a
product or service to meet a need.

 Customer Demand: a set of wants plus the
desire and ability to pay to have them satisfied.
Customers will choose a product based on their
perceived value of it. The customer is satisfied if the
product’s actual value meets or exceeds their
expectations. If the product’s actual value falls below
their expectations they will be dissatisfied.
What are the Five Product Levels?
The Five Product Levels are given in the diagram
below:
1. Core Benefit
The core benefit is the fundamental need or wants
that the customer satisfies when they buy the
product.
For example, the core benefit of a hotel is to provide
somewhere to rest or sleep when away from home.

2. Generic Product
The generic product is a basic version of the product
made up of only those features necessary for it to
function.
In our hotel example, this could mean a bed, towels,
a bathroom, a mirror, and a wardrobe.
4.EXPECTED PRODUCT
The expected product is the set of features that the
customers expect when they buy the product.
In our hotel example, this would include 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.
In our hotel example, this could be the inclusion of a
concierge service or a free map of the town in every
room.

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 our hotel, this could mean a different gift placed
in the room each time a customer stays. For
example, it could be some chocolates on one
occasion, and some luxury water on another. By
continuing to augment its product in this way the
hotel will continue to delight and surprise the
customer.
Five Product Levels Example: Coca-Cola
It can be easy to see how the Five Product Levels
apply to the hotel industry, but what about a
company like Coca-Cola?
Let’s examine what each level might be for this
company:

1. Core Benefit
The core benefit of Coca-Cola is to quench a thirst.
2. Generic Product
The generic product is a burnt vanilla smelling,
black, carbonated, and sweetened fizzy drink.
3. Expected Product
The expected product is that the customer’s Coca-
Cola is cold. If this isn’t the case then expectations
won’t be met and the drink will not taste its best in
the mind of the customer.
4. Augmented Product
Coca-Cola’s augmented product is that it offers
Diet-Coke. How does Coca-Cola exceed customer
expectations with this product? By offering all the
great taste of Coca-Cola, but with zero calories.
5. Potential Product
One way in which Coca-Cola delights customers is
by 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.
Managing Product Portfolio
What is a Product Portfolio?
The term“product portfolio” refers to the collection
of all the products that a company deals in. A
product portfolio may be broken down into different
product categories, different product lines, or simply
individual products. If an organization offers a wide

range of products to various target markets, then it is
very important that it analyzes its product portfolio
so that it can achieve the organizational goal of
increased sales and profits through higher market
share and enhanced brand value.
Product Portfolio Classification
One of the most popularly used classifications
of the product portfolio is the BCG growth-
market share matrix that was developed by
Boston Consulting Group’sthen CEO and
Founder Mr. Bruce Doolin Henderson in the
1970s. There BCG matrix consists of two axes
–the X-axis that represents the relative market

share and the Y-axis that represents the
expected market growth rate.
Based on the two axes, the entire matrix is divided
into four quadrants, where each quadrant represents
a particular stage of the product in its life cycle. The

four different quadrants are – Cash cows, Stars,
Question marks, and Dogs.
 Cash Cows: This quadrant represents those
products that enjoy a high market share in a
slowly growing market. The products in this
category can generate maximum revenue
because of their high market share in a market
that is not growing. As such, the Cash cow
products require the least amount of investment
while it has the potential to give higher returns,
which helps in enhancing the overall
profitability of the company.

 Stars: This quadrant represents those products
that have a low market share in a high growth
rate market. As such, an organization faces steep
competition for the products in this segment and
thus it can’t afford to be complacent even when
it is among one of the top few. However, if the
organization can plan properly, then the Star
products can potentially become the Cash cows
in the longer term.
 Question Marks: This quadrant represents
those products that may have a high market
share in a market that is growing fast. However,
it is not sure whether the market for the product

will go up or down in the future. In case the
product loses customer attention, it won’t be
able to gain market share and the growth rate
will fall and the product will eventually become
a Dog. On the other hand, if the product is able
to grab more customer interest to gain a higher
market share, then it can potentially become a
Cash cow. This uncertainty results in the
dilemma of whether to invest more money into it
or not as an organization is not sure if the
investment will give adequate returns or end up
becoming a complete waste of money.

 Dogs: This quadrant represents products that
have a low market share in a slowly growing
market. Hence, these products neither require
higher investments nor generate high returns.
Consequently, these products have an adverse
impact on the overall profitability and thus it is
advisable not to invest any more in products
from this segment. However, sometimes
companies decide to revamp these products to
make them saleable again and in this way, they
also increase their market share.

Product Portfolio Analysis
The process of product portfolio analysis help
organizations to focus on products that operate in a
fast moving market faster, while at the same time
reduce investments in failing products. An
organization analyzes the entire product offering to
have a broad idea of how each product is performing
in the markets. Based on the analysis, a clearly
defined matrix can be constructed that provides
useful insight into the current market position, which
is then used to build future strategies.
For instance, for Apple Inc., the iPhone is the most
profitable segment and it mostly drives the top-line

of the company. Hence, the iPhone segment can be
categorized as the Star product of the company. On
the other hand, the MacBook and the iPad can be
categorized as Cash cows.
How to Manage a Product Portfolio?
Product portfolio management is a very important
part of any business strategy as it helps in achieving
the overall objectives of the organization by
planning future tactics for different product lines.
Some of the strategies for the above-mentioned
product categories are discussed below:
 Cash Cows: For this segment, companies just
intend to retain their market share as the market

isn’t growing much. They introduce customer
loyalty programs and other similar promotions
to ensure high customer retention.
 Stars: For this segment, companies undertake
various sales promotion and advertising
strategies in order to beat the high competition
and increase market share. Basically, the
investments are primarily focused on marketing
activities.
 Question Marks: For this segment, the best
strategy is to acquire new customers so that the
question marks can be converted to the stars or
the cash cows. Also, it is important to monitor

the market to understand consumer psychology,
which can be used for enhancing the market
share for the products in this category.
 Dogs: For this segment, the companies may
need to take the hard decision of divestment.
Otherwise, they can also revamp the products in
this category through rebranding, innovation,
etc. Nevertheless, it is very difficult to convert
the Dogs into the Stars or the Cash cows.
SERVICE MARKETING

What is Service Marketing?
Service marketing is simply the process of
promoting and selling a service or an intangible
good to a specific group of people. It is a new way
of marketing that has become very popular and helps
companies all over the world promote their services.
It looks at how a certain kind of service is advertised
in the market. Though service marketing is a unique
idea, it needs a way to represent goods that can’t be
seen (services).
Service marketing is different from product
marketing, which involves promoting a product that
can be seen. Instead, service marketing involves
promoting a service that can’t be seen but is still
sold to customers. Services are just things that are
given to customers as a commodity. Customers can
choose from a wide range of services.
Eventually, the global sphere has become a service
hub that offers many services to customers all over
the world.

Services Marketing Examples
Healthcare industry
Doctors, nurses, surgeons, and other people who
work in hospitals are great examples they sell their
health services by seeing and taking care of their
patients.
Hospitality industry
The hospitality industry is made up of places like
hotels and restaurants that serve food, rent rooms,
give massages, and do other things for their
customers.
Professionals services
Accountants, lawyers, teachers, writers, masons,
carpenters, chefs, electricians, and plumbers are all
examples of service-based jobs. Depending on the
job, they may offer more than one service to their
clients.
Importance of Service Marketing
Because services can’t be seen or touched,
marketing them is a difficult but very important job.
let’s understand why.

1. A key differentiator:
As products become more similar, the services that
go along with them are becoming a key
differentiator in the minds of consumers. For
example, Pizza Hut and Domino’s both serve pizza,
but they are different from each other more because
of the quality of their service than because of the
pizza itself. So, marketers can use the services they
offer to set themselves apart from the competition
and draw in customers.
2. Importance of relationships:
Relationships are a key part of marketing services,
so it’s important to keep them in good shape. Since
the product can’t be seen or touched, a lot of the
customer’s decision to buy will depend on how
much he trusts the seller. So, it’s important to listen
to what the customer wants, meet those needs with
the right service, and build a long-term relationship
that will lead to repeat sales and good word of
mouth.
3. Customer retention:
In today’s highly competitive market, where many
companies compete for a small number of
customers, keeping customers is even more

important than getting new ones. Since services are
usually made and used at the same time, the
customer is actually involved in the process by
taking his needs and feedback into account. So, they
give customers more options for customization
based on their needs, making them happier and more
likely to stick with the company.
Types of Service Marketing
In general, there are three kinds of service marketing
one should learn about them to better understand the
idea as a whole.
1. External Service Marketing
The first type of service marketing is called
“external service marketing.” This is when a
company promotes its services to customers in a
setting outside of the company.
This type suggests that services be advertised using
tried-and-true methods like price, product, and
purchasers.
External service marketing is all about promoting
services in the outside world (between the company
and its customers) so that they are availed of and
used well.

2. Internal Service Marketing
Second, there is internal service marketing. It is used
to promote service within the company (company
employees).
This means that the service is promoted internally so
that employees know where it is and can spread the
word better.
Since employees are an important part of the
marketing chain, internal service marketing pays
more attention to them than to customers.
It is very important for a company’s employees to
know a lot about the service so that they can spread
the word and help the company promote the service
on a large scale.
3. Interactive Service Marketing
Maybe technical service is also a very important part
that needs the third type of service marketing, which
is called “Interactive Service Marketing.” Service
promotion happens between the employees and the
customers in this case (employees-customers).

Interactive marketing is a type in which the
employees talk to customers to promote the services
of their company, as the name suggests.
For example, the hotel chain Taj Hotels wants to
advertise its services to the right people. Here is a
short list of the different kinds of service marketing
it will use to reach its goal.
 Firstly, the company will make ads that show
what services the chain of hotels has to offer its
customers (External).
 Then, the company will promote its services
within itself to make sure that its employees are
well-informed about what it has to offer so that
they can help promote and sell the services
(Internal).
 Lastly, the company’s employees will talk to
customers when they use the service.
 This means that the employees will have to
serve the customers in a variety of
administrative and quality ways (Interactive).
Service Marketing Mix
The service marketing mix is also called an extended
marketing mix, and it is an important part of the

design of a service blueprint. The 7 Ps make up this
marketing mix. Let’s talk about them in more detail.
1. Product
The product-service marketing mix is not something
that can be seen or touched. Service products can’t
be measured in the same way that soap or detergent
can’t be. A good example would be the tourism
or education industries. Service products are also
different, change over time, and can’t be owned.
So, care needs to go into making the service product.
Blueprinting is usually used to define the service
product. For example, before starting a restaurant
business, a blueprint will be made. This service
blueprint shows exactly how the product (in this
case, the restaurant) will be.
2. Place
In the case of services, the place will decide where
the service product will be. The best places to put
gas stations are on highways or in cities. A place
with little traffic is not a good place to start a gas
station. In the same way, a software company will
do better in an area with a lot of other businesses
than in a town or the middle of nowhere.

3. Promotion
Promotions have become an important part of the
service marketing mix. Services are easy to copy, so
the brand is usually what makes one service different
from another. A lot of banks and phone companies
work hard to get their names out there.
What is that? Because there is usually a lot of
competition in the service industry, you need
promotions to stay in business. So, advertising and
promotions help banks, IT companies, and dotcoms
stand out from the rest.
4. Price
Putting a price on a service is a lot harder than
putting a price on a product. If you run a restaurant,
you could only charge people for the food you serve.
But then, who will pay for the nice atmosphere
you’ve made for your customers? Who will pay for
the music group you have?
So, these things have to be taken into account when
pricing. When pricing a service, labour, materials,
and overhead costs are usually taken into account.
When you add a profit markup, you get the final
price for your service.

5. People
One part of the service marketing mix is the people.
People define a service. If you run an IT business,
your software engineers are what make you who you
are. If you own a restaurant, your chef and service
staff defines you. Additionally, if you work in
banking, your employees and how they treat
customers show what kind of banker you are. In
service marketing, it’s the people who can make or
break a business.
So, many companies today are putting extra effort
into training their staff in people skills and customer
service with the goal of making customers happy. In
fact, many companies have to go through
accreditation to prove that their employees are the
best. In the case of services, this is a USP for sure.
6. Process
The service process is how a service is given to the
end customer. Let’s look at two great companies as
an example: McDonald’s and FedEx. Both
companies do well because they offer fast service,
which they can do because they trust their processes.

On top of that, these services are in such high
demand that they have to deliver at their best
without sacrificing quality. So, a service
company’s process for delivering its product is very
important. It is also a key part of the service
blueprint, which is what the company uses to figure
out how the service product will get to the end
customer before it starts the service.
7. Physical evidence
A very important part of the service marketing mix
is the last one. As we already said, services are not
physical things. But to give the customer a better
experience, tangible things are also sent along with
the service. Take a restaurant with just chairs and
tables and good food as an example. Or, take a
restaurant with good lighting, nice music, and
comfortable seating that also serves good food.
Which one do you like better? The one with a nice
feel to it. That is physical evidence. In service
marketing, physical evidence is often used as a way
to stand out.
Conclusion
To sum up, service marketing is a way for a
company to promote its services that are intangible,

can’t be split up, and have a limited shelf life. In
light of the growing global service sector, it is done
in a number of different ways.
It is also very different from product marketing, and
there are many things to keep in mind. In recent
years, service marketing has become much more
important as more and more services, like education,
banking, hospitality, etc., become popular goods.
New Product offerings, New product
launching
Market Offerings Definition
Individuals within a market have different
wants and needs. As a result, businesses in the
market offer various products and services. The
ultimate aim of businesses is to fulfill all the
varying wants and needs of the population.
The products, services, or experiences offered
to the customers in a market to meet their
needs are known as market offerings.

The main components of a market offering
include the product, service, and
price. Businesses in a market offer different
products and services, but market offerings
include the value businesses provide the entire
market. As people have different expectations
and priorities, companies might have to offer a
range of experiences and services to satisfy
customers.
Purpose of Market Offerings
Market offerings develop an interest among
customers toward a business's products and
services.
Businesses in the market adapt their products
or services such that it fills the customer's
needs gap. More people are drawn toward a
brand when it sells products that resolve
customers' problems or make their lives easier.
The brand that can do this the best and exceed
a customer's expectation will stand out in the
customers' minds.

Providing better target offerings and standing
out in the market will eventually lead to more
loyal customers and a broader customer base.
People expect businesses to add value to their
lives in various ways, precisely the purpose of
market offerings - satisfying customer needs.
New product launching
How to structure your product launch marketing
plan
You may know the Smart Insights RACE
Planning framework which covers five parts
which are essential outcomes of a marketing or
digital marketing plan:
1. Plan
2. Reach
3. InterAct
4. Convert

5. Engage
The RACE Framework gives marketers and
managers quick access to practical, actionable
data about their customers' experiences of your
product. That's why we recommend using
RACE to plan your product launch campaign.

How do you create a marketing plan for a product
launch?
Our internationally acclaimed RACE Framework
breaks down your product launch campaign
plan across 5 simple steps to help you:
1. Plan your launch
Research, benchmark, and set objectives
against your planned, focused investment
in branded content to promote your
product
2. Reach your market
Implement paid, owned, and earned media
campaigns to attract your target audiences
to discover your product
3. Influence interaction
Influence your key buyer personas'
customer journeys. Use content to
entertain, inspire, educate, and convince
them of your product.
4. Convert more customers
Achieve your commercial goals by winning
more online and offline sales.

5. Encourage post-purchase
engagement
Turn casual customers into loyal
advocates and increase your customer
base's lifetime value.
Plan for the worst
With so many variables, it would be foolish to
suggest you can always be fully prepared for
anything. However, by reviewing the risks and
defining steps to mitigate them you will be able
to remain in control of each stage of your
launch, even if the unexpected happens, you’ll
be ready to respond to it coolly, rather than
react on the spur-of-the-moment.
Define your product vision and how to reach it
Depending on your intended market, you will
need to develop a clear all-encompassing
vision. Each aspect of your product launch
vision is supported by a substantiating
statement.

New product launch marketing plan examples
It can be difficult to start from scratch. Included
below are some consumer and business
product launch examples:
Example – consumer product launch objective
To become the bestselling maze-building
gaming app.
Every maze is based on highly accurate maps
of some of the world’s most popular actual
mazes.
Example – consumer product launch plan
 Develop brand awareness.
 Design a social media strategy.
 Create a viral marketing campaign.
 Agree budgets, targeting appropriate
audience, testing and metrics.

Example – B2B product launch objective
To become the most trusted online small
business accounts software platform you can
buy.
Our software package has been developed in
partnership with each of USA’s top three small
business accountancy practices.
Example – business product launch plan
 Build a personalized email strategy.
 Implement online PR campaign.
 Create online small business advice
platform.
 Agree budgets, targeting appropriate
audiences, testing and metrics.
Having crafted these statements, it's time to
consider ‘how to get there’ strategies.
How do you create a marketing plan for a product
launch?
You are intimately familiar with every aspect of
your new product. However, the same cannot

be said for your prospective markets and
audience.
Initially the most important of these markets are
‘early adopters’, particularly where you are
launching into a relatively new product
category.
During the first phase of your planning, beyond
simply considering what your product is, think
about how and where it fits on the ‘radar’ of
your early adopter marketplace. This is
crucial. Not only does it help ensure the
features and benefits of your product are
understood, but importantly, it sends out a
signal that helps early adopters distinguish your
offering against competitors who may produce
a similar product.
From the outset, your phased campaigns need
to incorporate distinctive messages which help
early adopters justify making a purchase -
whilst at the same time empowering them to tell
others just how brilliant your product is, and
why they are proud to boast of being amongst
the first to own it.

Creating a product launch marketing plan timeline
Draw up a timeline covering the build-up,
launch, and post-launch, mapping each stage
against benefit messages aimed at specific
markets, along with benchmarks against which
you can explain any value propositions against
competitors. Keep in mind that your online
(consumers) first concern will always be
whether your marketing helps them make
informed decisions and choices.
When developing your timeline, consider how
you can work with potential influencers early
on. Online, this has far-reaching implications
that extend to how and where you promote your
product. For example, which influencer blogs
should you have in your sights? How about
podcasts and trusted journalist reviews?
Using tracking KPIs to review audience engagement
It will help to define launch performance
indicators for an agile launch. When launching
a new product, as with any campaign, you will
want to define success criteria, but it’s
particularly important for a new product launch

campaign since uncertainty means you will
need to adjust your approach.
Key performance indicators include:
 Video downloads.
 Infographic downloads.
 Brochure downloads.
 Click Through Rates
 Volume-based KPIs
 Total revenue from customers acquired
through online marketing.
 Cost Per Lead.
 Customer value.
Break down your KPIs by channel to measure
and compare your results. Metrics here could
include:
 Social media traffic and conversion rates.
 Email traffic - including benchmarking
segmented lists.
 Organic traffic, bounce rates, pages per
session.

 Landing page conversion rates, desktop
and mobile.
Finally, don't forget that building the option to
update or upgrade a product over time can
enhance your income revenue stream.
Engagement is a key feature of successful
RACE product launch marketing plans, don't
undo all your hard work by failing to keep
customers engaged post-purchase.
Brand elements
Branding, in the most basic sense, is words and
images, but it also extends much further than
that. It’s how you greet customers, the napkins on
the table, the style of your social media updates.
It’s everything—tangible and intangible—that
goes into the experience your customers have
when they come into contact with your business.
We break down your brand into the following six
elements:
 Brand voice
 Brand identity
 Brand promise
 Brand values

 Brand targeting
 Brand positioning
Let’s dive into each one of these at a time.
Six Elements of a Brand
Brand Voice
Brand voice is the consistent personality and
emotion that you infuse into your company’s
communications. It helps to humanize your
brand, showcase your values, and distinguish
yourself from competitors. Your voice is your
brand’s steady personality that your customers
know and love.
Brand Identity
Brand identity refers to aspects of your company
that are recognizable in the eyes of consumers.
Brand identity includes your company’s color
palette, logo, and fonts/lettering, as well as how
you visually present yourself on social media and
through the company website. Brand identity
also refers to your company’s physical
presentation, including how you design your
packaging and other tangible aspects of your
brand.

Brand Promise
Your brand promise is all about how you
articulate the unique value that your business
provides customers with. This includes your
company’s vision and mission statements as well
as your brand principles and value proposition. A
brand promise sets customer expectations and
holds your company accountable to meeting
them. The more aligned your company’s actions
are with your brand promise, the more trust and
loyalty you will cultivate.
Brand values are the guiding principles and
beliefs that your company stands for. By
articulating your values and aligning your brand
with something bigger and more meaningful than
yourself, your customers will see that your brand
is relatable and real—and that this truth extends
far beyond just your product and service
offerings. Don’t know where to start when it
comes to identifying your brand values? This
HubSpot resource on core company values is a
great starting point.

Brand Targeting
Brand targeting means determining what
segment of the market you want to reach. This
includes segmenting your target market by
identifying the characteristics of your target
customer. This can be broken down into several
components, including age, geographic location,
and income level, as well as behavioral and
personality traits (e.g. reason for buying the
product, purchasing habits, etc)..
Brand Positioning
Finally, brand positioning refers to where your
brand stands in the market in the eyes of
consumers, including how your brand differs
from industry competition. Positioning takes
targeting a step further, and involves strategizing
your marketing efforts to ensure that your tactics
are the most effective in reaching the targeted
market segment. In addition to solidifying your
marketing mix, brand positioning also means
cultivating a brand voice that will resonate
uniquely in a busy marketplace.
If you’re thinking that you haven’t yet defined
your brand, guess what? Your brand is still being

defined in the absence of a strategy. Whether it is
the manner in which you engage with consumers,
the beliefs your company holds, or simply the
logo that dons your packaging, you develop your
brand each and every day, with every
business interaction you have. Every step that
you take to define these six elements of your
brand will increase your consistency and trust
with customers.
Are you ready to define your brand and develop a
strategy that works?
Elevating your brand elevates your bottom
line. Reach out for a no-cost, no-obligation call to
explore a flexible marketing partnership.
BRAND EQUITY
What Is Brand Equity?
Brand equity refers to a value premium that a
company generates from a product with a
recognizable name when compared to a
generic equivalent. Companies can create
brand equity for their products by making them

memorable, easily recognizable, and superior
in quality and reliability. Mass marketing
campaigns also help to create brand equity.
When a company has positive brand equity,
customers willingly pay a high price for its
products, even though they could get the same
thing from a competitor for less. Customers, in
effect, pay a price premium to do business with
a firm they know and admire. Because the
company with brand equity does not incur a
higher expense than its competitors to produce
the product and bring it to market, the
difference in price goes to their margin. The
firm's brand equity enables it to make a bigger
profit on each sale.
KEY TAKEAWAYS
 Brand equity refers to the value a company
gains from its name recognition when
compared to a generic equivalent.
 Brand equity has three basic components:
consumer perception, negative or positive
effects, and the resulting value.

 Brand equity has a direct impact on sales
volume and a company's profitability
because consumers gravitate toward
products and services with great
reputations.
 Often, companies in the same industry or
sector compete on brand equity.
Brand Equity
Elements and Importance of Brand Equity
Brand equity has a few basic components:
consumer perception, negative or positive
effects, and the resulting value. Foremost,
consumer perception, which includes both
knowledge and experience with a brand and its
products, builds brand equity. The perception
that a consumer segment holds about
a brand directly results in either positive or
negative effects. If the brand equity is positive,
the organization, its products, and its financials
can benefit. If the brand equity is negative, the
opposite is true.
Finally, these effects can turn into either
tangible or intangible value. If the effect is
positive, tangible value is realized as increases

in revenue or profits. Intangible value is
realized in marketing as awareness or goodwill.
If the effects are negative, the tangible or
intangible value is also negative. For example,
if consumers are willing to pay more for a
generic product than for a branded one, the
brand is said to have negative brand equity.
This might happen if a company has a
major product recall or causes a widely
publicized environmental disaster.
Brand equity is an extension of brand
recognition, but more so than recognition,
brand equity is the added value in a particular
name.
Effect on Profit Margins
When customers attach a level of quality or
prestige to a brand, they perceive that brand's
products as being worth more than products
made by competitors, so they are willing to pay
more. In effect, the market bears higher prices
for brands that have high levels of brand equity.
The cost of manufacturing a golf shirt and
bringing it to market is not higher, at least to a

significant degree, for Lacoste than it is for a
less reputable brand.
However, because its customers are willing to
pay more, it can charge a higher price for that
shirt, with the difference going to profit. Positive
brand equity increases profit margin per
customer because it allows a company to
charge more for a product than competitors,
even though it was obtained at the same price.
Brand equity has a direct effect on
sales volume because consumers gravitate
toward products with great reputations. For
example, when Apple releases a new product,
customers line up around the block to buy it
even though it is usually priced higher than
similar products from competitors. One of the
primary reasons why Apple's products sell in
such large numbers is that the company has
amassed a staggering amount of positive brand
equity. Because a certain percentage of a
company's costs to sell products are fixed,
higher sales volumes translate to greater profit
margins.

Customer retention is the third area in which
brand equity affects profit margins. Returning to
the Apple example, most of the company's
customers do not own only one Apple product,
they own several. Plus, they eagerly anticipate
the next one's release. Apple's customer base
is fiercely loyal, sometimes bordering on
evangelical. Apple enjoys high customer
retention, another result of its brand equity.
Retaining existing customers increases profit
margins by lowering the amount a business has
to spend on marketing to achieve the same
sales volume. It costs less to retain an existing
customer than to acquire a new one.
The concept of brand equity was first
introduced in the 1980s by David Aaker, a
marketing professor at the University of
California, Berkeley.
Real-World Examples of Brand Equity
A general example of a situation where brand
equity is important is when a company wants to
expand its product line. If the brand's equity is
positive, the company can increase the
likelihood that customers might buy its new

product by associating the new product with an
existing, successful brand. For example, if
Campbell's releases a new soup, the company
is likely to keep it under the same brand name
rather than inventing a new brand.
The positive associations that customers
already have with Campbell's make the new
product more enticing than if the soup has an
unfamiliar brand name. Below are some other
examples of brand equity.
Tylenol
Manufactured since 1955 by McNeil (now a
subsidiary of Johnson & Johnson), Tylenol is a
first-line treatment for mild to moderate
pain.1 EquiTrend studies show that consumers
trust Tylenol over generic brands.2 Tylenol has
been able to grow its market with the creations
of Tylenol Extra Strength, Tylenol Cold & Flu,
Children's Tylenol, and Tylenol Sinus
Congestion & Pain.
Kirkland Signature
Started in 1995, the Kirkland Signature brand
by Costco has maintained positive growth,

representing a growing portion of the
company's overall sales.3 Signature
encompasses hundreds of items, including
clothing, coffee, laundry detergent, food, and
beverages. Costco even provides members
with exclusive access to cheaper gasoline at its
private gas stations. Adding to Kirkland's
popularity is the fact that its products cost less
than other name brands.
Starbucks
Rated the sixth-most-admired company in the
world by Fortune magazine in
2020, Starbucks is held in high regard for its
pledge to social responsibility.4 With more than
31,000 stores around the globe in 2019,
Starbucks remains the largest roaster and
retailer of Arabica coffee beans and specialty
coffees.5
Coca-Cola
With a profit margins between 25-30%, Coca-
Cola is often rated the most valuable soda
brand in the world.6 However, the brand itself
represents more than just the products—it's
symbolic of positive experiences, a proud

history, even the U.S. itself. Also recognized for
its unique marketing campaigns, the Coca-
Cola corporation has made a global impact on
its consumer engagement.
Porsche
Porsche, a brand with strong equity in the
automobile sector, retains its image and
reliability through the use of high-quality,
unique materials. Viewed as a luxury brand,
Porsche provides owners of its vehicles not
only with a product but an experience. In
comparison to other vehicle brands in its class,
Porsche was the top luxury brand in 2020,
according to U.S. News & World Report.7
Tracking a Company's Success With Brand
Equity
Brand equity is a major indicator of company
strength and performance, specifically in the
public markets. Often, companies in the same
industry or sector compete on brand equity. For
example, two top companies—Home Depot
and Lowe's Home Improvement—consistently
rank as the top two hardware and home store
brands in the Harris Poll EquiTrend's brands of

the year list. The 2020 survey found that
Lowe's was the top hardware company in terms
of brand equity and Home Depot came in
second. However, in 2019, the roles were
reversed, with Home Depot beating out Lowe's
for the top spot.8
A large component of brand equity in the
hardware environment is consumer perception
of the strength of a company's
e-commerce business. Both Lowe's and Home
Depot are industry leaders in this category. It
was also found that, besides e-commerce, both
companies have high familiarity among
consumers, allowing them to further penetrate
the industry and increase their brand equity.
Why Is Brand Equity Important?
Brand equity is important for a number of
reasons. One reason is increased customer
loyalty. A strong brand equity can lead to
increased customer loyalty, as consumers are
more likely to choose a brand they know and
trust. This can lead to repeat purchases and a
more stable customer base. Another reason is

higher perceived value. Brands with strong
equity are often able to command higher prices
for their products or services, as consumers
perceive them as having greater value. A
strong brand can also give a company a
competitive advantage in the market, as
consumers are more likely to choose a familiar
brand over a lesser-known one. This can help
the company gain a greater market share, as
consumers are more likely to choose a trusted
brand over competitors. Additionally, brands
with strong equity often have a positive
reputation and are able to provide high-quality
products or services, which can lead to greater
customer satisfaction.
What Are the Elements of Brand Equity?
The elements of brand equity include:
1. Brand awareness: This refers to the
extent to which consumers are familiar with
and recognize a brand.
2. Brand loyalty: This refers to the degree
to which consumers consistently choose a
specific brand over others.

3. Brand image: This refers to the
perception that consumers have of a brand
and its associated attributes, such as
quality, reliability, and uniqueness.
4. Brand associations: This refers to the
emotional or psychological associations that
consumers have with a brand, such as
feelings of trust, reliability, or nostalgia.
5. Brand value: This refers to the
perceived benefits and overall value that
consumers attribute to a brand, which can
influence their purchasing decisions.
What Factors Affect Brand Equity?
There are several factors that can affect brand
equity. One factor is the quality of products or
services. Consumers are more likely to have a
positive perception of a brand if they
consistently provide high-quality products or
services. Marketing and branding efforts are
also important. Consistent and effective
marketing and branding efforts can help build
and maintain a positive brand image. Customer
experiences also play a role in brand equity.

Positive customer experiences can lead to
increased loyalty and positive brand
associations. The brand's reputation is also
important, as consumers are more likely to
choose a brand they perceive as trustworthy
and reliable. Competition can also impact a
brand's equity, as consumers may have
multiple options to choose from. Finally,
changes in consumer preferences or trends
can affect a brand's equity, as consumers may
shift towards different brands or products.
The Bottom Line
Brand equity refers to the value that a specific
brand adds to a product or service. It is the
positive perception or emotional attachment
that consumers have towards a brand, which
can influence their purchasing decisions and
overall loyalty to the brand. It is created through
consistent marketing efforts, positive customer
experiences, and the overall reputation of the
brand. Companies with strong brand equity
often have a competitive advantage in the
market and can command higher prices for
their products or services.

MARKET LEADER
In an organization, leaders have an essential
role to play in directing the company. Likewise,
market leadership is crucial because it affects
the direction and intensity of competition in the
market. Market leaders are considered the
dominant power and determine the price,
strategy, and intensity of promotion. They also
usually become benchmarks for competitors in
developing strategies.
Characteristics of market leaders
The three characteristics of a market leader
are:
First, it has the largest market share. You
calculate market share by dividing the company
size by the market size. You can measure the
number of customers, sales volume, or sales
value to calculate it. Long story short, market
leaders have the largest number of customers
or sales relative to competitors in the industry.
Market share is the most effective way to
measure the success of a company compared

to competitors. When a company has the
largest market share, we assume it has a more
effective strategy. If market share increases
over time, it shows you the company’s product
marketing is more successful than competitors.
Second, it should have a competitive
advantage. Porter gives us insight into the
sources of competitive advantage. He said it
could come from cost leadership and
differentiation.
Under cost leadership, the market leader is
likely to have a lower cost structure than the
industry average. Therefore, companies should
make more profit than their competitors.
The largest market share indicates the
company can sell products at high volumes.
That allows it to achieve higher economies of
scale and lower unit costs. The company may
charge the price at the average industry level.
Or, the company may lower it slightly below
average to attract more demand.

CHALLENGER
A market challenger is a firm that has a market
share below that of the market leader, but
enough of a presence that it can exert
upward pressure in its effort to gain more
control. Market challengers are able to jockey
for industry leadership in several ways:
Challenging the market leader on price
FOLLOWER
A market follower is a company that follows
what the leader in its sector does. A market
follower does not like taking risks, i.e., it is the
opposite of a maverick. Instead, it waits and
observes what its competitors do, especially the
market leader. It then only adopts the leader’s
successful strategies.
A market follower may be second to the market
leader in a particular industry. It does not want
to lose its share by disrupting the status quo.

This type of company never challenges the
leader. However, it can usually maintain market
share with significantly lower investment costs
than the market leader.
The follower’s investment is lower because the
market leader paid for most of the groundwork.
It does not challenge the leader for one or a
combination of reasons. Perhaps it believes
that in a confrontation, the leader would win
because it has more resources.
NICHE STRATEGIES
Niche marketing is a highly targeted form of
advertisement. With niche
marketing, businesses promote their
products and services to a small, specific
and well-defined audience. Many
organizations adopt this strategy to support an
underserved population and reap the rewards of
brand loyalty.

What is a Niche Marketing Strategy?
Designed to attract a specific subset of customers, a
niche marketing strategy considers the narrow
category into which your business falls. It focuses on
a small group of buyers, instead of the broader
market. A niche strategy helps you stand out from
the competition, attract the people who can't resist
buying, and boost profitability.
Developing a Niche Marketing Strategy
1. Know your competition.
Developing a niche marketing strategy is
impossible without scoping out your
competition.
That's because it's crucial to understand your
unique selling proposition — what you do that
makes customers choose your company over
another.
Maybe you design ceramic dishware that can't
be found anywhere else, or maybe you've
developed a tool that makes it easier for
marketers to send emails.

Whatever is it, find your specialty and craft a
story around it.
2. Narrow down your niche market.
Airbnb co-founder Brian Chesky is famous for
saying, "Build something 100 people love, not
something 1 million people kind of like."
Put simply, it's better to reach a small group of
people who sing praises about your company,
rather than a large group who thinks it's just
okay.
You can do this by honing in on the right niche
market for your business. While this takes time
and thought, it's worth the effort to find loyal
customers who will gladly choose you over
competitors.
For instance, Thirdlove is the first underwear
company to offer bras in half-size cups.
Through its inclusive sizing options and
emphasis on body diversity, they've built a loyal
community of over 327,000 Instagram
followers.

3. Go where your buyers are.
If your ideal customer spends all of their time
scrolling on Facebook, it wouldn't make sense
to develop a niche marketing strategy around
email campaigns.
This is where the value of market research comes
in.
You already know who your buyers are, but
research helps you go deeper to find out where
they shop, how they find products, and what
influences their purchase decisions.
Once you have that information, you'll get the
most return for your marketing dollars.
4. Listen to the word on the street.
Everyone has problems that need solutions.
If you listen to people's thoughts about a certain
product or service, you can find opportunities to
fill in the gaps.
David Barnett did just that when he engineered
a solution for constantly tangled headphones.
What started out as two buttons glued to the

back of a phone case quickly turned
into Popsockets, a company that brought in $169
million in revenue just seven years after its
founding.
5. Create a unique brand.
Once you've defined your unique selling point,
outlined your buyer persona, found out where to
reach them, and listened to their problems — all
that's left is to build a brand identity.
A well-defined brand will help you develop a
niche marketing strategy that's authentic to
you and attracts ideal customers.
For instance, Etsy's position as the marketplace
for independent artists has attracted more
than 138 million buyers.
In a 2020 TV commercial, the brand touched on
the pandemic and used emotional marketing
tactics to encourage support for small
businesses that sell through the platform.

MARKETING COMMUNICATION
Marketing Communication (MarCom) – Meaning,
Objectives & Types
Buyers will not attract to your products and service
until you make them advocate and aware. For this
reason, you need to communicate the feature,
attributes and benefits of your offerings with them.
Nowadays, offline and online communication
strategies enable marketers to wider their product
reach and customer base.
What is Marketing Communication? (MarCom)
Marketing communication (MarCom) is the process
of combining different marketing messages and
media in order to communicate with the market. If
the promotional campaign is good, then it creates a
good response in the audience. However, marketing
communication often deals with the problems of the
target audience like immediate awareness, image,
and preferences.

When we talk about marketing communication, then
it has some limitations. Like it doesn’t create short-
term results from the targeted customers, and the
high cost.
Marketing communication is a mix of advertising,
public relations, mass media, social media, branding,
packaging and other print material that can help you
to convey your message with the market.
Most marketers have been using marketing
communication in recent years. It’s to establish a
relationship with customers in various stages like
post utilization, selling, and pre-selling. Since there
are different types of customers, therefore, marketers
develop various communication programs to target
different segments of the market.
Objectives of Marketing Communication
The marketing communication has got three main
objectives, and they’re as follows;

To Communicate
The primary objective of marketing communication
is to share ideas, thoughts, and views with the target
audience. Companies do it through public relations,
sales promotion, personal selling, and advertising.
However, the goal of effective communication is to
get things done.
While developing the marketing messages, make
sure that it’s truthful, accurate, and useful to all the
parties. It’s because of the persistence of the market
communication, it should maintain integrity.
To Compete
The second objective of marketing communication is
to compete in the market, and it offers many
marketing opportunities. It’s possible that the
competitors are offering the same product at a
similar price, and in the same store. However,
marketing communication allows you to
differentiate your product/service in order to appeal
to the target customer, and it helps to develop brand
loyalty. If a company is not following the MC

strategy, then it would appear unattractive to the
customers.
To Convince
Convincing the customers is also the main objective
of marketing communication. If you convince them
well, then it would lead them to take the desired
action whatever you want. Therefore, marketers
should communicate in a convincing manner.
Sometimes, you have to reconvince the same
customers, because a customer won’t buy your
product/service over and over again.
Element of Marketing Communication Process
It’s important to be familiar with the process of
marketing communication in order to be effective in
the communication. Some of the main elements of
the MC process are as follows;
 Sender. It’s the person that is conveying the
information or message to the party or group
of people.
 Encoding. It’s the process of converting
your ideas/thoughts/emotions into
meaningful symbols like gestures, body
language, signs, or words.

 Message. It’s a combination of signs and
symbols that senders are imparting.
 Media. The media is the channel that the
sender is using to transmit the message to the
receiver.
 Decoding. Decoding is the process of
converting signs and symbols into
meaningful thoughts or messages.
 Receiver. Receive is the person that the
sender has sent the message to and the person
who received the message.
 Response. It’s the reaction that the receiver
shows before sending the message.
 Feedback. It’s the feedback that the receiver
of the message sends back to the sender.
 Noise. It’s the unwanted distortion that
occurs during the communication process,
and it causes the receiver to comprehend the
wrong meaning of the message.
Communication would be effective if the encoded
and the decoded messages are the same. Most
importantly, the signs and symbols that the sender is
sending should be understandable to the receiver.

Types of Marketing Communication
Some of the main types of marketing
communication mix are as follows;
Advertising
Advertising is a very powerful and effective type of
marketing communication. It allows you to reach a
wide target audience in terms of message delivery
and frequently. However, it’s a very costly type of
marketing strategy, and you should try to make the
most of it. There are various types of media tools to
reach different types of audiences.
You should allocate a specific budget for
advertising, whether it’s for advertisement or Ad
creation. If you’re creating an ad by yourself
requires you to have the team or the skill/expertise,
then it would be very cost-efficient. It’s important to
keep in mind that Ads companies charge a plethora
of money to create an ad.
Public Relations
Public relations also fall under the category of
marketing communication and it helps you to spread
brand awareness in a subtle way. That’s how it’s

different from advertisement. However, the
advertising method follows the subjective, self-
serving, and aggressive approach, whereas the public
relations follow the objective and softer approach. In
terms of cost, it offers free communication.
Sales Promotion
Sales promotion is a very famous type of
communication where you offer discounts, and it
compels customers to make an instant purchase
decision. It helps businesses to increase the sale.
You might be wondering how to make use of the
sale promotion in order to increase the sale.
Many marketers use sales promotions techniques
like coupons and discounts to attract the attention of
customers. It allows you to reach more people
because of its popularity. However, they use devices
like Cetera, window signs, overhead signs, and shelf
talkers.
Personal Selling
Personal selling is the direct and face-to-face type
of marketing communication. Connecting via online
channels like telephone, internet, or emails are also
falls under the category of personal selling. The
personal selling technique allows you to receive

direct feedback from customers, with customer
feedback you don’t whether your marketing strategy
is working or not.
Mass Media
Mass media comprises electronic and print media,
and it allows you to reach a mass audience at a
specific price. If your business or company has
media marketing, then you should use this
communication channel. However, it’s a traditional
one-way marketing communication method, where
you only send marketing messages without getting
any feedback. Sometimes, you don’t know whether
the right audience has received the message or not.
Social Media
Social media is the most recent form of marketing
communication through various social media
platforms like Facebook, Google, Instagram,
Twitter, etc. It allows you to approach the mass
target customers directly without any boundary
restrictions across the world. However, social media
is the modern form of mass media that allows you to
have two communications and receive feedback
from customers.

Tips of Effective Marketing Communications
Some of the important tips that you should keep in
mind in order to have effective marketing
communication are as follows;
Persuasive Message
The needs want, expectations, and requirements of
various customers are different, and that’s why you
should target different customers based on their
needs, instead of treating everyone with the same
offer
Design
Various media channels like brochures, digital
media, TV, social media, newspaper, and magazines
have different designs and settings. Therefore, you
should develop different designs and messages for
different channels.
Feedback
You should reach out to your target audience and
ask them for their feedback, and it would help you to
rectify your marketing message.

ADVERTISING
Advertising is a marketing tactic involving
paying for space to promote a product,
service, or cause. The actual promotional
messages are called advertisements, or ads for
short. The goal of advertising is to reach people
most likely to be willing to pay for a company's
products or services and entice them to buy
Marketing and Advertising
Advertising is one aspect of marketing. While
marketing is the overall approach to speaking to
customers about your brand, advertising is usually a
paid form of messaging designed to lead to sales.
Advertising can be short-term for a special
promotion or ongoing, but usually requires a
financial investment. If you know advertising could
help your business but you aren’t sure where to start,
explore the marketing tips below to see which
options fit your needs and budget.

Sales promotion definition
A sales promotion is a marketing strategy in
which a business uses a temporary campaign or
offer to increase interest or demand in its
product or service.
There are many reasons why a business may
choose to use a sales promotion (or ‘promo’),
but the primary reason is to boost sales. Sales
boosts may be needed to reach a quota as a
deadline approaches, or to raise awareness of a
new product.
Let’s take a closer look at different types of
sales promotions, as well as the pros and cons
of using any type of promotion.
Types of sales promotion
There are 12 main types of sales promotions.
Not all of them are suited for every business,
product, or service, but each one offers unique
ways of boosting sales and connecting with
customers through different methods of sales
psychology. Each is also an interesting take

on spin selling and offers a look into sales
methodology comparison.
1. Competitions and challenges:
Competitions or challenges usually
take place on social media, and serve
to increase customer engagement as
fans try to win a discounted or free
product. They usually also result in a
large amount of free publicity if the
competition or challenge involves
sharing the brand on a customer’s
personal social media account.
2. Product bundles: Product bundles offer a
collection of products for an overall discounted
rate, as opposed to buying the products
individually. Product bundles give customers a
reason to buy a larger variety of products,
which makes it more likely they will find a
product they like and want to buy again.
3. Flash sales: Flash sales are extremely short
sales that offer extreme discounts for a limited
amount of time. These sales work through

creating a sense of urgency and need around
your sale.
4. Free trials: Free trials or demos are one of
the most common sales promotions and one of
the most promising strategies to grow a
customer base. Businesses can offer either a
limited time with the product or a limited
quantity of the product to a first-time buyer at
no charge to see if they like it.
5. Free shipping and/or transfers: Free
shipping promotions attempt to curb the 70%
of customers who abandon their carts when
they see the shipping costs. The small loss in
shipping fees is usually made up for in happy
customer purchases.
6. Free products: Free product promotions
work by offering a small free product with the
purchase of a larger, mainstream product. This
boosts mainstream sales without costing the
company too much inventory or revenue.
7. Early-bird or first-purchaser
specials: These specials offer discounts to

first-time purchasers as a way of welcoming
them as customers. Customers are more likely
to buy at a discount and because the discount
only works once, the company doesn’t lose a
great deal of revenue.
8. BOGO specials: BOGO, or “buy one, get
one free” promotions are primarily used to
spread product awareness. Customers can give
their extra product to a friend or family member
and build a customer base through word of
mouth.
9. Coupons and vouchers: Coupons and
vouchers reward current customers for their
brand loyalty and encourage future purchases.
This is especially effective in companies who
use punch cards which incentivize customers to
make multiple purchases to earn a free
product.
10. Upsell specials: Upsell promotions are
not as common as the others, but they can still
be extremely effective. Upsells give first-time
customers a less expensive version of a product
to try, and then over time, the sales
department works to convince them to

purchase the more expensive and more
effective option.
11. Subscriptions: Subscriptions are not
always considered sales promotion, since they
tend to be long-term purchases, but having
different amounts of a product available at a
different price point is a sales promotion tactic.
With a subscription, a customer pays a larger
fee upfront for a large amount of product that
eventually comes out to less than what they
would pay for buying smaller amounts of
product individually.
12. Donations: Donations are an excellent
way for a company to build credibility and
goodwill within the customer base. Most
donations work when the company contributes
a portion of each sale during a given period to
a charitable cause.
Pros of sales promotions
There are many benefits to running a sales
promotion in the short term:

1. Creating new leads: Sales promotions
increase customer acquisition by offering
them discounts, free products, free trials,
and more. Many potential buyers are willing
to try something for a lesser price, and if
they like the product they become part of
your company’s loyal base.
2. Introducing a new product: Even
extremely successful companies need a little
help launching a new product. New
customers may need incentives to buy, and
long-term customers may be committed to
their usual products. Providing a discount or
promotion on a new product is a great way
to create product awareness without doing
a sales presentation.
3. Selling out overstock: No one wants
to be in this position, but overstocking
happens. When it does, a sales promotion
can be a useful tool to get rid of inventory
while attracting new customers who may
not have the overstocked product yet. It’s
worth noting that there is a line in terms of

selling overstock and it’s easy to step over
into unethical selling.
4. Rewarding current customers: Sales
success doesn’t stop at the first purchase.
Nurturing customers over time is essential
to keeping brand credibility and loyalty high.
Sales promotions are an easy way to
provide loyal customers with a discount,
voucher, or free product that will continue
to keep them engaged with your brand.
5. Increasing last-minute
revenue: Many companies use sales
promotions towards the end of a month or
quarter to meet revenue or inventory goals.
While not a bad strategy, it’s best to use
this one sparingly so that customers don’t
get into the habit of waiting for an expected
sale.
Personal selling

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