Mba final notes marketing

 Marketing Decision
 Marketing Strategies
 Consumer Market
 Business Market
 Global Market
 Non Profit Organization & Govt. Markets
 Environment
12/31/2015 NAVNEET RAWAT

 Marketing Mix
 Right Product
 Right Price
 Right Place
 Right Promotion

 Consumer & Customer
 Consumer Need/Want/Demand
 Customer LifeTimeValue
 Customer Experience Management

 Production Concept
 Product Concept
 Selling Concept
 Marketing Concept
 Societal Concept

 Continuous Research
 Target Market
 Consumer Needs
 Integrated Marketing
 Consumer Satisfaction

 Customer in Focus
 Core Competency

 What is Marketing: According to Philip
Kotler, “The term Marketing is defined as a
social and managerial process by which
individuals and groups obtain what they need
and want through creating, offering and
exchanging products of value with others” is
known as Marketing.

 Marketing is a Business Activity and this
activity includes transfer of Ownership &
Physical Distribution of Commodities &
Service from Producer to Consumer.

 Marketing is the activity, set of institutions,
and processes for creating, communicating,
delivering, and exchanging offerings that
have value for customers, clients, partners,
and society at large.

 Marketing Management is a Business activity
to maximize the profit & to implementation
of Marketing Mix i.e. 4P’s to the selected
segment or market.

 "Management is a multi-purpose organ that
manages business and manages managers
and manages workers and work."

 "Management is the art of getting things
done through people."

 "To manage is to forecast and to plan, to
organise, to command, to co-ordinate and to
control."

 "Management is the art of getting things
done through and with people in formally
organised groups.

 Management is Six Ms i.e. Men and Women,
Money, Machines, Materials, Methods and
Markets.

 Marketing + Management
 Marketing is a Managerial Function.
 Marketing is a system of Interacting Business
Activities.
 Marketing is an Economic Function.
 Marketing is a Social Process.
 Marketing is a Legal Process.
 Marketing Management is a Business Process.
 Marketing Management is Both Science and Art.

 Continuous Research.
 Study of Consumer Want and Need.
 Study of Consumer Behaviour.
 Product Concept.
 Production Concept.
 Pricing Concept.
 Place Concept.
 Promotion Concept.
 Consumer Satisfaction.

 Situation Analysis
 Marketing Strategy
 Marketing Mix
 Implementation
 Control

The current Millennium has unfold new
business rules. The market place is not, what
it used to be. It is changing radically as a
result of major societal forces.

 Customers are increasingly demanding.
 Customers need, want & expectation
changing more rapidly.
 Customer want essentially the same thing.
 New Product and Services are coming more
quickly than in past.
 Competition for Sales is intense.
 Competition is now global.
 Internet & e-commerce.

 Marketing Environment Fit.
 SustainableCompetitiveAdvantage.
 Customer LifeTime Association.
 Customer Experience Management.
 RapidTechnological Changes.
 Heterogeneous & Fragmented Market.
 Market Research
 Marketing Information System

 Introduction
 Details of Marketing plan
1. Title page
2. Chapter Executive Summary
3. Current Situation Evaluation
4. Marketing Strategy Plan
5. Implementation
6. Marketing Information System
7. Financial Summary

"Marketing Competitiveness is the ability of a
business to improve continuously marketing
process capabilities and deliver better value to
customers than competitors."

 Customer values - Customer values should be viewed not only in terms
of product characteristics, but also in terms of processes which deliver
the product. Both the product and process concept have to be right to
achieve customer satisfaction.
 Identify and Promote USP - Unique Selling Proposition is something
that sets a product apart from its competitors in the eyes of existing
customers as well as new customers. Marketers are required to identify
USP of their product and effectively communicate it with the target
audience.
 Cost efficient operations - Business is required to be organised and
operated efficiently, so that the cost of production and distribution be
minimised.
 Customer delight - Business organisations must provide proper
customer services to delight its customers.

 Perfect Competition
 Imperfect Competition
 Monopoly
 Oligopoly
 Monopolistic

 Introduction
 Marketing Strategy Planned or Unplanned
 Market Dominance Strategy
 Innovation Strategy
 Integration Strategies
 Aggression Strategies
 Cost Leadership Strategies

CASE + DISCUSSION
Case is a description of a real life business
problem that a businessman has faced at
some point of time and as such needed his
attention, analysis and decision.
Discussion means resource pooling of
analytical minds, cerebral insight and
experience to arrive at better solutions
through creative thinking.

STEP 1 : Identify the key problem areas.
STEP 2 : Generate alternative courses of action.
STEP 3 : Evaluate each course of action.
STEP 4 : Make suitable assumption.
STEP 5 :Taking decisions either as stand alone
or a combination of alternatives debated in
Step 3.
STEP 6 : Decision taken short term and Long
term.

 Both the brothers discussed their views like
good professionals. They decided to refer the
proposed strategy changes to Dr. Phadke, who
had retired many years ago. Dr. Phadke was well
loved and respected by all the employees of the
company. He resisted being drawn into the
arguments of the two Ambadis. He finally
accepted to give his advice. Caste yourself in the
role of Phadke and pronounce the changes
needed in the marketing strategy practiced by
Bhai Ambadi during his lifetime of achievement.

 The Objective (Problem)
 To determine changes needed in the
marketing strategy of Reliable Electricals for
two brothers (i.e. Mr. Appu & Mr. Jaykumar)

1. Bhai Ambadi built Reliable Electricals from scratch using
quality, complete product range, advertising, wider
coverage, & letting the price be governed by
specifications.
2. Bhai Ambadi is no more. Competitive environment calls
for competitive prices & larger volumes.
3. One view is to reduce advertising and sales promotion to
cut prices.
4. The other view is to reduce prices by planning adequate
quality for ‘throw way’ and continuous improving
technologies.
5. Shift emphasis of advertising to competitive prices and
contemporary technology products.
6. Many more……

 Alternatives could be created by considering
one change at a time and evaluating its
merits and demerits.There can, thus, be the
following solutions.

 Change in Marketing Strategy is also required
due to the Indian economy being Liberalized
& opened to Global Competition.

 Marketing Strategies for Mr.Appu.
1. Advertising is an important facet of marketing in a
competitive environment. Retaining advertising will keep
the customers informed about the USPs of the product
of Reliable Electricals.
2. Reliable Electricals has been Pricing its products as per
the specifications. Making Prices competitive, by altering
the specification, should be communicated to the
customers.
3. The company has adopted the policy of reaching out to
more customers. This will not be possible without
advertising.
4. Cost reduction due to reduced advertising is not
possible. Its better we go by ‘Cost Leadership Strategies’.

 Marketing Strategies for Mr. Jaykumar.
1. Market Liberalized & open to Global players. Changed
environment cannot be tackled by old strategies.
Technology changes and competition would call for the
products of Reliable Electricals.
2. The products must exploit the latest technologies.
3. The products be designed for a pre-planned life and be
adequate quality.
4. We have to adopt Innovation Strategies & role of
Pioneers.
5. Keeping in mind technology can become an expensive
proposition.
6. Right amount of quality will help reduce the price &
make the products competitive in the market.

 Greater volumes should bring additional
profits due to economies of scale. These
should be invested for technology updation.
 Advertising and sales promotion is necessary.
The customer must be informed about the
use of latest technology and price
competitiveness of the product.

Why
Information
Is
Needed
Marketing
Environment
Strategic
Planning
Customer
Needs
Competition

To understand the proper role of information
systems one must examine what managers
do and what information they need for
decision making. We must also understand
how decisions are made and what kinds of
decision problems can be supported by
formal information systems. One can then
determine whether information systems will
be valuable tools and how they should be
designed.

 An understanding of the different roles managers play
and how marketing information systems can support
them in these roles·
 An appreciation of the different types and levels of
marketing decision making.
 A knowledge of the major components of a marketing
information system.
 An ability to clearly distinguish between marketing
research and marketing intelligence, and internal
record.
 An understanding of the nature of analytical models &
expert panel within marketing information system.

 MKIS is a planned system of collecting,
processing, storing, and disseminating data
in the form of information needed to carry
out the function of management.
 According to Philip Kotler “a marketing
information system consist of People,
Equipment, and Procedure to gather, sort,
analyze, evaluate, and distribute.”

 "the process or set of processes that links the
consumers, customers, and end users to the marketer
through information — information used to identify
and define marketing opportunities and problems;
generate, refine, and evaluate marketing actions;
monitor marketing performance; and improve
understanding of marketing as a process. Marketing
research specifies the information required to address
these issues, designs the method for collecting
information, manages and implements the data
collection process, analyzes the results, and
communicates the findings and their implications."

 Philip Kotler “ MR is the systematic design,
collection, Analysis & Reporting of data &
finding relevant to a specific marketing
situation facing the company.”
 AMA “ MR the systematic gathering,
recording, & analyzing of all data about
problem relating to the marketing of goods &
services.”

 Marketing research is often partitioned into
two sets of categorical pairs, either by target
market:
1. Consumer marketing research, and
2. Business-to-business (B2B) marketing
research.
 Or, alternatively, by methodological
approach:
1. Qualitative marketing research, and
2. Quantitative marketing research.

 Organizations engage in marketing research for two reasons:
(1) to identify and (2) solve marketing problems. This distinction
serves as a basis for classifying marketing research into
problem identification research and problem solving research.
 Problem identification research is undertaken to help identify
problems which are, perhaps, not apparent on the surface and
yet exist or are likely to arise in the future like company image,
market characteristics, sales analysis, short-range forecasting,
long range forecasting, and business trends research. Research
of this type provides information about the marketing
environment and helps diagnose a problem.
 The findings of problem solving research are used in making
decisions which will solve specific marketing problems.

Marketing research Approaches
By marketing
department itself
Fieldwork by
an agency
Full services of
marketing research
agency is used
By marketing
Research department

Types of marketing research
Ad-hoc research
Continuous research interview
Consumer panels Retail audits
Television
view ship panel

 An ad-hoc research focuses on specific marketing
problem and collects data at one point in time
from one sample of respondents. e.g :- a co.
wants to find impact of latest advertising
campaign on its sales.2 types
1. Custom designed studies are based on specific
needs of the client.The questionnaire is designed
specifically for finding a solution to the client’s
problem.

2.Omnibus surveys : provide those seeking information about
markets and opinions with a means to get quick, relatively
low cost answers to their questions without financing and
organising a full market or opinion research survey
themselves. The research company conducts a number of
interviews with the target group on a regular basis: these
interviews combine a number of standard questions which
are always asked - generally including demographic
information (age, sex, occupation) or eg company
classification information for a business survey - with
questions effectively sponsored by clients. The answers to
these questions are analyzed shortly afterwards, cross-
referenced with some or all of the classification data, and
delivered to the client either as tables or in a report.

In this method same respondents are interviewed
repeatedly.
1. Consumer panels:- these are formed by
recruiting large number of households which
provide information about their purchases
overtime. By using same households and
tracking the same variables over period of time
measures of brand loyalty and switching can be
determined.

Study of a selected sample of retail outlets,
provided as subscription-based service by market
research firms. Retail-audit service providers gather
information on a brand's sales volume, sales trends,
stock levels, effectiveness of in-store display and
promotion efforts, and other associated aspects.

 The audience size of program is measured
minute by minute. Commercial breaks can be
allocated rating points according to the
proportion of target audience watching the
program.

 Initial contact
 Research brief
 Research proposal
 Types of research methods
 Main data collection stage
 Survey methods
 Questionnaire design
 Pilot stage
 Data analysis & interpretation
 Report writing & presentation

1. Initial contact: there is a realization that’s a marketing
problem require information to help find its solution.
The marketing department may contact the internal
marketing research staff or an outside agency.
Assuming that the research requires the assistance
of a marketing research agency , meeting is
arranged to discuss the nature of the problem and the
client ‘s research needs . if the client and its market are
new to the agency some exploratory research like a
search on the internet , is conducted prior meeting .

2.Research brief: At the meeting the client explains the
marketing problems and the research objectives. the
marketing problem may be to attract new
customer to product and the research objectives would be
to identify customer who can use the product and to identify
the future of the product that appeal to them most
Prerequisites for commissioning a good research : terms like
market , market share , competitors should be
clearly defined for the purpose of the research .
some research in the MR agency may be specialist in
particular data gathering.

3. Research proposal:- The research proposal
defines what the marketing research agency
promises to do for its client and how much it will
cost. It should be written to avoid
misunderstanding. It should demonstrate an
understanding of client’s marketing and research
problem. The agency should state very clearly
what it is going to do and why, who is going to
do it and when.

Exploratory
Research
Descriptive
Research
experimental
Research
•Test hypotheses about cause-
and-effect relationships.
•Gathers preliminary information
that will help define the problem
and suggest hypotheses.
•Describes things as consumers’
attitudes and demographics
or market potential for a product.

 Sampling process:- The sampling process aims at
deciding who and how many people should be
interviewed. First, the universe i.e. the group
which forms the subject of study has to be
clearly defined.
 Sample size:- this involves arriving at number of
respondents who must be surveyed to yield a
representative sample of all demographic
subgroups of respondents who are being
studied.

 Sample selection:- After selecting the sample size it
must be determined as to how the sample would be
selected for response. The sample can be selected by
using either the probability methods or by using the
nonprobability methods.

Survey method involves selecting how to interview
the respondents who have been selected.
 Face to face interviews
 Telephone interviews
 Mail surveys

A primary responsibilities of a marketing researcher
is to design the data collection instrument or
questionnaire in a manner so that it is easily
understood by the respondent and administered to
them.
Design stage:-
Start from easy and then proceed to complex
Close ended and open ended questions
Easy language
Avoid calculations

Once preliminary questionnaire has been
designed it should be tested. If pilot proves
satisfactory the final questionnaire to be
choose. If there are some drawbacks then it
can be ratified and second pilot survey can be
conducted.

Before analysis and interpretation the data has to
be prepared first. The raw data that has been
collected must be edited. Preliminary checks
must be conducted to improve the quality of
data collected.

The results of research have to be presented in
form of report or presentation. The key elements
in research project are:-
 Title page
 List of contents
 Preface
 Executive summary
 Conclusions
 Appendices

 Consumer Buying Behavior is the decision process
and acts of people involved in buying and using
products. Consumer Buying Behaviour refers to the
buying behaviour of the ultimate consumer —
those who purchase products for personal use and
not for business purposes.

Problem
recognition
Information
search
Evaluation of
alternatives
Purchase
decision
Postpurchase
behavior

1. Need Recognition
When a person has an unsatisfied need, the buying process begins to satisfy the
needs. The need may be activated by internal or external factors. The intensity of
the want will indicate the speed with which a person will move to fulfill the want.
On the basis of need and its urgency, forms the order of priority. Marketers
should provide required information of selling points.
2. Information Search
Identified needs can be satisfied only when desired product is known and also
easily available. Different products are available in the market, but consumer
must know which product or brand gives him maximum satisfaction. And the
person has to search out for relevant information of the product, brand or
location. Consumers can use many sources e.g., neighbors, friends and family.
Marketers also provide relevant information through advertisements, retailers,
dealers, packaging and sales promotion, and window displaying. Mass media like
news papers, radio, and television provide information. Now a days internet has
become an important and reliable source of information. Marketers are expected
to provide latest, reliable and adequate information.

3. Evaluation of Alternatives
This is a critical stage in the process of buying. Following are
important elements in the process of alternatives evaluation
a. A product is viewed as a bundle of attributes. These attributes or
features are used for evaluating products or brands. For example,
in washing machine consumer considers price, capacity,
technology, quality, model and size.
b. Factors like company, brand image, country, distribution network
and after-sales service also become critical in evaluation.
c. Marketers should understand the importance of these factors to
consumers of these factor to consumers while manufacturing
and marketing their products.

4. Purchase Decision
Outcome of the evaluation develops likes and dislikes about alternative
products or brands in consumers. This attitude towards the brand influences
a decision as to buy or not to buy. Thus the prospective buyer heads towards
final selection. In addition to all the above factors, situational factors like
finance options, dealer terms, falling prices etc., are also considered.
5. Post- Purchase Behaviour
This behaviour of consumer is more important as for as marketer is
concerned. Consumer gets brand preference only when that brand lives up to
his expectation. This brand preference naturally repeats sales of marketer. A
satisfied buyer is a silent advertisement. But, if the used brand does not yield
desired satisfaction, negative feeling will occur and that will lead to the
formation of negative attitude towards brand. This phenomenon is called
cognitive dissonance. Marketers try to use this phenomenon to attract user
of other brands to their brands. Different promotional-mix elements can help
marketers to retain his customers as well as to attract new customers.

Postpurchase Behavior
Can minimize through:
Effective Communication
Follow-up
Guarantees
Warranties
Underpromise & overdeliver
Cognitive Dissonance
?Did I make a good decision?
Did I buy the right product?
Did I get a good value?

 Initiator: the person who first suggests or thinks of the idea of
buying a particular product or service.
 Influencer: a person whose views or advice carry weight in making
the final buying decision
 Decider: the person who ultimately makes the final buying
decision or any part of it
 Buyer: the person who makes the actual purchase
 User: the person who consumes the product or service

 Choice criteria are the various features and
benefits a customer uses when evaluating
products.
 Technical criteria related to performance of
product and include reliability, durability, comfort
and convenience.
 Economic criteria concern cost aspects.
 Social criteria concern social norms.
 Personal criteria concern with individual
psychology.

 Extended Problem Solving (EPS) - High degree if
complexity
 Often occurs with expensive items or can be fuelled by
doubts and fears.
 All 7 consumer decision making stages are often used
(need recognition, search for information, pre-purchase
evaluation of alternatives, purchase, consumption, post-
consumption evaluation and divestment).
 Dissatisfaction often leads to negative word of mouth
 A longer time is taken to decide.
The Buying Situation

 Limited Problem Solving (LPS)
Low degree of complexity
 Consumers don't have time, motivation or
resources to engage in EPS.
 Little search and evaluation before purchase.
 Consumers always look for familiarity and
low prices.

 Lowest degree of complexity .
 Same brand and same product, unless 'out-of-
stock‘.
 Inertia to change.
 Brand is trusted.

 Internal factors:
Perception, learning, motivation, belief and
attitude, personality, lifestyle, life cycle.
 External factors:-
Culture, social class, reference groups.

 Unlike motivation that requires a reaction to a stimulus, perception relates to
the meaning that is assigned to that stimulus. As marketers we are interested
in how buyers perceive and react to products in relation to such matters as
quality, aesthetics, price and image, since products not only exist in practical
terms, but also how they are perceived by consumers in relation to need
satisfaction. This perception by the buyer is affected by the nature of the
product itself, by the circumstances of the individual buyer, and by the buyer’s
innate situation in terms of how ready they are to make the purchase in terms
of needing it at a particular point in time. It is, or course, necessary that the
product or service (i.e. the stimulus) receives the attention of the potential
buyer. Buyers have numerous stimuli competing for their attention, so
marketers must make their stimuli as interesting and attractive as possible
because potential buyers only act on information that is retained, and this is
the foundation of how the product or service is communicated together with
the choice of media.

 Experience precedes learning and this can alter
perceptions and attitudes. It also intensifies a shift in
behaviour, so when a buyer perceives that certain
products are more favourable than others within his or
her reference group, repeat purchases are made to
promote this acceptability. Every time a satisfactory
purchase is made, the consumer becomes less likely to
depart from this purchasing behaviour The result is
brand loyalty, and the ultimate success of marketing is
in terms of customers making repeat purchases or
becoming ‘brand loyal’.

Hierarchy of needs (from A.H.Maslow)
 Physiological needs - hunger, thirst and shelter
 Safety needs - protection and security
 Social needs - recognition and belonging
 Respect and self-esteem
 Self actualisation
Most purchasing decisions are a composite of such motives, quite
often a deciding factor might be price which is of course more of
an economic restriction than a motive. It can, therefore, be seen
that a number of motives might be at play when making a
purchasing decision - some motives stronger than others - and
the final decision might be a compromise solution.

In marketing terms, the sum total of our attitudes can be regarded
as a set of cognitions that a potential buyer has in relation to a
potential purchase or a purchasing environment. This is why certain
stores or companies go out of their way to engender favourable
attitudes and it is why manufacturers seek to induce loyalty
towards their particular brand or product. Once this attitude has
been established in the mind of the consumer, it might be difficult
to alter. Even a minor dissatisfaction can cause a fundamental shift
in disposition. This process can work for and against a manufacturer
or retail establishment, an a method of attempting to change
attitude is through promotional appeals and through a programme
of public relations.

 Personality and Self concept :This means how we think other
people see us, and how we see ourselves. As individuals we might
wish to create a picture of ourselves that is acceptable to our
reference group. This is communicated to the outside world by our
individual behaviour. Marketers are interested in this behaviour as it
relates to our purchase and consumption of goods. Personality is
the principal component of the self concept. It has a strong effect
upon buyer behaviour. Many purchase decisions are likely to reflect
personality, and marketers must consider personality when making
marketing appeals. Psychological theory suggests that we are born
with instinctive desires which cannot be satisfied in a socially
acceptable manner and are thus repressed. The task of marketing in
this context is to appeal to inner needs, whilst, at the same time,
providing products which enable them to be satisfied in a socially
acceptable way.

 Lifestyle:- lifestyle is the pattern of living as
expressed in person’s activities, interests and
opinions. Lifestyle have been found to correlate
with purchasing behaviour. Company can choose
advertising which is in line with the values and
beliefs of this group.
 Life cycle:- Disposable income, purchase and
purchase requirements may vary according to life
cycle stages.

 Culture:- culture refers to traditions, values and
basic attitudes of whole society within which an
individual lives.cultural norms are learnt by an
individual from childhood.culture teaches an
individual the acceptable norms of behaviour
and tells him rights or wrongs.cultural influences
can be seen in food habits and dressing style of
people.

 Social class:-social class refers to hierarchical
arrangement of society into various divisions, each
of which signifies social status or standing. Income
differences contribute to differences in social
status.
 Reference groups:- Family, close friends, school
mates, neighbourhood etc. all influence buying
behaviour of individual.

 Some of the key arguments for customer loyalty include
 Reduced Customer Acquisition costs – Since it costs R to acquire new
customers, any customer you hold on to saved you R.
 The Loyalty Effect: Longer a customer stays longer they keep paying you.
 Price Tolerance: Loyal customers keep buying from you because they are
delighted by your product and are less sensitive to prices. Some even claim that
loyal customers do not even bother to use coupons and promotions, thereby
saving you money.
 Decreasing Cost to Serve: The more you understand your customer’s usage
behavior and needs fewer the mistakes in servicing them and hence lower the
cost to serve them.
 Bump From Word of Mouth: Loyal customers are also your best marketers, they
are happy to write online reviews and promote your products to all their friends
and web communities. This means they generate additional incremental
revenue.

 Loyal customers may be in actual more expensive to
serve. They often try to get premium service and price
discounts.
 Long-term customers consistently pay less than newer
customers do. They believe that they deserve lower prices
because co. profit from their buying consistently from
them.
 Customers that know they are loyal are able to use this
knowledge to demand special arrangements, deliveries
outside of normal opening hours, discounts, better
quality, the right to choose first, etc.

 The majority of companies must - in order to create the
loyalty - spend lots of time and money on maintaining
and expanding loyalty. And it is costly to have loyalty
programs, special arrangements, publishing newspapers
and folders, arranging special previews, etc.

 A customer portfolio comprises the various groups that make up the customer
base of a business. For example, Coca-Cola's customer portfolio consists of
restaurants, grocery stores, amusement parks and sports arenas.
 Customers vary in their value to co. some are consistent big buyers while some
are small buyers. Customers can also be classified on the basis of probability of
future spending.The less of probability of his spending larger would be risk to co.
 The existing portfolio of customers of co. would have combination of revenue
and risk.
 Before co. target right type of customer, it has to gather sufficient information
about him to classify his revenue potential and risk.

A co. should be able to connect emotionally with
its customers. Following 3 practices will help
companies in making their customers more loyal.
 It is important to show that the co. cares about
customers who have been with co. for long time.
 It is important to treat customers with dignity .
 It is important to trust on customers.

 Customer Relationship Management (CRM) is a
widely implemented strategy for managing a
company’s interactions with customers, clients
and sales prospects. It involves using technology
to organize, automate, and synchronize business
processes—principally sales activities, but also
those for marketing, customer service, and
technical support. The overall goals are to find,
attract, and win new clients, nurture and retain
those.

 CRM (customer relationship management) is an
information industry term for methodologies, software,
and usually Internet capabilities that help an enterprise
manage customer relationships in an organized way. For
example, an enterprise might build a database about its
customers that described relationships in sufficient detail
so that management, salespeople, people providing
service, and perhaps the customer directly could access
information, match customer needs with product plans
and offerings, remind customers of service requirements,
know what other products a customer had purchased,
and so forth.

 CRM consists of:
 Helping an enterprise to enable its marketing departments to identify and
target their best customers, manage marketing campaigns and generate
quality leads for the sales team.
 Assisting the organization to improve telesales, account, and sales
management by optimizing information shared by multiple employees, and
streamlining existing processes (for example, taking orders using mobile
devices)
 Allowing the formation of individualized relationships with customers, with the
aim of improving customer satisfaction and maximizing profits; identifying the
most profitable customers and providing them the highest level of service.
 Providing employees with the information and processes necessary to know
their customers, understand and identify customer needs and effectively build
relationships between the company, its customer base, and distribution
partners.

 One-to-one marketing (sometimes expressed as 1:1
marketing) is a customer relationship management (CRM)
strategy emphasizing personalized interactions with
customers. The personalization of interactions is thought
to foster greater customer loyalty and better return on
marketing investment. The concept of one-to-one
marketing as a CRM approach was advanced by Don
Peppers and Martha Rogers in their 1994 book, The One to
One Future.

 One-to-one marketing refers to marketing strategies
applied directly to a specific consumer. Having a
knowledge of the consumer's preferences enables
suggesting specific products and promotions to each
consumer. One-to-one marketing is based in four main
steps in order to fulfill its goals: identify, differentiate,
interact and customize.
 Identify: In this stage the major concern is to get to know
the customers of a company, to collect reliable data about
their preferences and how their needs can best be
satisfied.

 Differentiate: To get to distinguish the customers in terms of their
lifetime value to the company, to know them by their priorities in terms of
their needs and segment them into more restricted groups.
 Interact: In this phase it is needed to know by which communication
channel and by what means contact with the client is best made. It is
necessary to get the customer's attention by engaging with him in ways
that are known as being the ones that he enjoys the most.
 Customize: It is needed to personalize the product or service to the
customer individually.The knowledge that a company has about a
customer needs to be put into practice and the information held has to be
taken into account in order to be able to give the client exactly what he
wants.
 Examples of companies that have made use of these techniques in order
to persuade their clients.
 Dell Computers;
 Smart Cars;

 DemographicVariables
 OperatingVariables
 Purchasing Approach
 Situational Factors
 Personal Characteristics

 Straight Rebuy
 Modified Rebuy
 NewTask Purchase

 Market is
People or Organization with
Needs orWant with
Ability orWillingness with
 Segmentation is
It is a process of dividing total market into group of
consumer who have relatively similar product
needs.

Market Segment
Within a Market a
•Segment is a Sub-Group of
•People Or Organizations
•Sharing one or More Characteristics
•That Cause them to have Similar Needs

 There are several important reasons why businesses should
attempt to segment their markets carefully. These are summarized
below better matching of customer needs.
 Customer needs differ.
 Enhanced profits for business.
 Customers have different disposable income.
 Better opportunities for growth.
 Market segmentation can build sales.
 Retain more customers.
 Target marketing communications.
 Gain share of the market segment

Geographic
Demographic
Age, gender, family size and
life cycle, or income
Psychographic
Social class, lifestyle,
or personality
Behavioral
Occasions, benefits, uses,
or responses
Nations, states,
regions or cities

 The process of evaluating each market
segment’s attractiveness and selecting one or
more segments to enter.
 Identifying those particular groups of customers
which your product/service is capable of meeting
their requirements (needs) most.
 Each of these groups constitute a market
segment.
 Selecting one or more segments to enter.
 Establishing and communicating the product’s
key distinctive benefits in that market.

 Segment size
 Growth
 Segment attractiveness
 Company objectives and resources
 Competitors
 Buying power
 Supplier power

 Single segment concentration
 Selective specialization
 Product specialization
 Market specialization
 Full Market coverage -
undifferentiated marketing
differentiated marketing

Market
segmentation
1. Identify bases for
segmenting the
market.
2. Develop segment
profiles
Target marketing
3. Develop measure of
segment
attractiveness
4. Select target
segments.
Market positioning
5. Develop
positioning
(differentiation) for
target segments.
6. Develop a
marketing mix for
each segment.

 The way that product is defined by consumers
on important attributes - the place the product
occupies in consumer’s minds relative to
competing products .
 Positioning is the art of designing the
company’s offering and image to occupy a
distinctive place in the mind of the target
market.

 Attribute
 Benefit
 Use or application
 User
 Competitor
 Product category
 Price/quality

 Marketing mix: the set of controllable tactical
marketing tools: product, price, place and
promotion that the firm blends to produce the
response it wants in the target market.

 Once a marketer has defined the target
market and the type of competition, it’s
imperative for the marketer to define the
basis of this positioning. This can be done by
the defining the Points of Parity and Points
of Difference.

 Points of Parity (POP) are usually the
attributes or functionalities or benefits or any
other marketing mix elements that are not
unique to the brand and might be shared by
some or all the competitors, as they mostly
include the basic necessities for a brand to be
considered in a particular category.

 i)Category Points of Parity: These represent the necessary elements that
a brand should possess for a consumer to consider it in a particular
category. In other words, these elements ensure that a consumer
considers your brand too while considering your competitors.
 ii)Competitive Points of Parity: Once your brand provides the basic
elements required by the category, the next step is to add elements which
would negate the competitors’ points of difference. It gives a brand a good
competitive positioning if it can provide similar or better elements as
compared to its competitor’ POD.
 Once a brand has established its Points of Parity, to be considered in a
specific category and negated its competitors’ advantage, the next step is
to develop and highlight its own advantage in the category.

 Points of Difference (POD) are usually the attributes or
functionalities or benefits or any other marketing mix elements
that a consumer strongly associates with a brand, which he/she
feels is not offered by and of the competitors. To define in
short, Points-of-difference are relatively distinct aspects of a
brand, as compared to its competitors.
 Unique Selling Proposition (USP)Basically Unique Selling
Proposition is the distinctive unique product benefit, not
offered by any competitor. Hence, Unique Selling Proposition
and Points of Difference invariably talk about the same
thing. Quite often you’ll notice these two terms being
interchangeably used.

 Points of Parity is what gives a brand a
competitive positioning in a category, while
it’s the Points of Difference which gives a
brand a competitive advantage over the
competitors in that category.

 The process involved in creating a unique
name and image for a product in the
consumers' mind, mainly through advertising
campaigns with a consistent theme.
Branding aims to establish a significant and
differentiated presence in the market that
attracts and retains loyal customers.

 “The value of a brand. From a consumer
perspective, brand equity is based on consumer
attitudes about positive brand attributes and
favourable consequences of brand use.”
AmericanMarketingAssociation
 Branding expert David Aaker defined brand
equity back in 1991 as:
“A set of assets and liabilities linked to a brand, its
name and symbol, that adds to or subtracts from
the value provided by a product or service to a firm
and/or to that firm’s customers.” – David Aaker

 Both of the above definitions are excellent, but if
you put them together, you get an even better
definition of brand equity.
 “The tangible and intangible value that a brand
provides positively or negatively to an
organization, its products, its services, and its
bottom-line derived from consumer knowledge,
perceptions, and experiences with the brand.” —
Susan Gunelius

Brand Loyalty is typically the result of brand equity, and with
brand loyalty comes increased market share. In fact, there are 5
stages of brand experience that lead to positive brand equity:
 Brand awareness: Consumers are aware of the brand.
 Brand recognition: Consumers recognize the brand and know
what it offers versus competitors.
 Brand trial: Consumers have tried the brand.
 Brand preference: Consumers like the brand and become repeat
purchasers. They begin to develop emotional connections to the
brand.
 Brand loyalty: Consumers demand the brand and will travel
distances to find it. As loyalty increases so do emotional
connections until there is no adequate substitute for the brand in
the consumer’s mind.

 Brand extension or brand stretching is a
marketing strategy in which a firm marketing a
product with a well-developed image uses the
same brand name in a different product
category.The new product is called a spin-off.
 Brand Extension can leverage a brand name into
other product categories, but success is a
function of transferability of the associations,
the complementarity of the new product, the
similarity of the users of the new product, and
the transferability of the brand symbol.

 Product is most important element in
marketing mix. People generally buy product
because they feel product are capable of
serving their needs.

130
Consumer
Products
Industrial
Products
PRODUCTS
Services

 Business product
 Consumer product
 Technology products
 Commodity Products
 Customized products

132
Product Item
Product Line
Product Mix
A specific version of a product
that can be designated as a
distinct offering among an organization’s products.
A group of closely-related
product items.
All products that an
organization sells.

133
Width – how many product lines a company has
Length – how many products are there in a product line
Depth – how many variants of each product exist within a
product line
Consistency – how closely related the product lines are in end
use

 Product mix is the sum total of all products that a
company offers. For example, a pet food
manufacturer may offer several varieties of dog
and cat food. These multiple products may serve
different customers, dog and cat owners, but the
products are all part of the company's product mix.
Products within a product mix can either be similar
or variegated. There are also following dimensions
to product mix: width, length.

 Width
 The width of product mix includes all the product lines
that a company sells. For example, if a vitamin company
sells various vitamins, diet products and sports drinks, its
product width is three
 Length
 The length of a company's product mix pertains to the
total number of products the company sells, For example,
a small consumer products company may have three
product lines: snacks, cereal and canned meats. This
consumer products company may sell five snack items,
four cereals and three varieties of canned meats.
Therefore, the company's product mix length is 12

 Depth:-A company's product mix depth pertains
to the total number of variations for each product.
.Product variation can include flavor, fragrance,
size and any other salient attribute. For example, if
a small pastry manufacturer sells three flavors of
pastries and two sizes of each flavor, the product
depth is six.

Product management is an organizational
lifecycle function within a company dealing
with the planning, forecasting, and
production, or marketing of
a product or products at all stages of
the product life cycle.

 Testing
 Identifying new product candidates
 Gathering the voice of customers
 Defining product requirements
 Determining business-case and feasibility
 Scoping and defining new products at high level
 Evangelizing new products within the company
 Building product roadmaps, particularly technology
roadmaps
 Developing all products on schedule, working to a critical
path
 Ensuring products are within optimal price margins and up to
specifications
 Ensuring products are manufacturable, and optimizing cost
of components and procedures.

 Product Life Cycle considerations
 Product differentiation
 Product naming and branding
 Product positioning and outbound messaging
 Promoting the product externally with press,
customers and partners
 Conducting customer feedback and enabling
(pre-production, beta software)
 Launching new products to market
 Monitoring the competition

 Many refer to inbound (product development) and
outbound (product marketing) functions.
 Inbound product management (aka inbound marketing) is
the "radar" of the organization and involves absorbing
information like customer research, competitive
intelligence, industry analysis, trends, economic signals and
competitive activity as well as documenting requirements
and setting product strategy.
 In comparison, outbound activities are focused on
distributing or pushing messages, training sales people, go
to market strategies and communicating messages
through channels like advertising, PR and events.

 Product concept is the understanding of the
dynamics of the product in order to showcase the best
qualities and maximum features of the product.
Marketers spend a lot of time and research in order to
target their attended audience. Marketers will look
into a product concept before marketing a product
towards their customers.
 While the "product concept" is based upon the idea
that customers prefer products that have the most
quality, performance, and features, some customers
prefer a product that is simpler and easier to use.

 Stage Gate process is a systematic way of
generating, then pruning, a large number of
ideas into a small number of products the firm
successfully launches.
 A gate after each stage where the firm must
make a go/no – go decision.
 Type I error- Investing in a project that
ultimately fails; these error occur when such a
project is allowed to move from one stage to the
next.
 Type II error- Rejecting a project that would have
succeeded.

Price is the assigned numerical monetary value
that one puts on the utility that one receives for
goods and services. Price in our society is
generally a monetary expression and is the value
assigned to a bundle of form, time, place and
possession utility. The price set serves as the
basis of exchange and is thus an index of value
for goods and services. price of new product is
critical and new product must be priced
according to what the market will bear.

 The whole pricing package that we have to device so as to
keep working towards profitability and corporate gains.
 We must consider:
1. The Company Objective (Financial, Marketing & Strategy
Objective of the company).
2. Price Elasticity (Economic Concept).
3. Maximizing Long term & Short term profit.
4. To increase SalesVolume & Market share.
5. Market Stability.
6. Maintain Price Leadership.
7. Avoid Government Intervention/ Investigation.
8. Obtain & maintain the loyalty in network marketing.
9. Social Ethical or Ideological Objectives.
10. Competitive Advantage

 A brand should not be underpriced in relation
to its quality and reputation. At the same
time a brand should not be over-priced which
is too high for the consumer. Product
differential can be set to charge extra price.
 Brand image is relevant in pricing. It enables a
company to introduce product at premium
price though they are only slightly better
than existing products.

Correct and incorrect price has direct bearing on
success or failure of the product. Mostly consider
cost-plus price which recovers all costs and puts
a mark up. Competitive pricing is the other most
widely practiced method of setting the prices.
Pricing is the strategic process of applying value
to purchase and sales order. Marketing
management must address all queries related to
pricing. Now a days Value base pricing is in
demand.

 The relative value of an offer determines
what the market cab bear. More than this
people won’t pay.
 Value Pricing is also called value-in use
pricing. Here a price is assigned to a product
based upon its value to the consumer in use
of the product.

 Creating Value: The firm creates value in its
offer primarily through non-price elements in
the marketing mix
 Measuring Value: Measuring the value
customers perceive in firm and competitor
offers is critical. Approach are: Direct Value
Assessment & Rupeemetric Method.
 PerceivedValue

 Cost plus pricing is a pricing methodology used
by most firms. Despite its popularity, it is the
wrong way to set prices. Cost plus pricing
simply by identifying product costs, then
adding a pre-determined profit margin (mark-
up).
 Advantage of Cost-plus pricing are:
1. Profitability
2. Simplicity
3. Birth Control
4. Death Control

 The firm should always consider competitor
price. Basing the firm’s price on competitor
prices is legal and ensure price parity, but
focusing too heavily on competitor pricing
strategies has distinct disadvantage.
 Maintain Price Leadership
 Discourage New entrants
 SustainableCompetitiveAdvantage.

 Skimming and Penetration Pricing
 Price Discrimination andVariable Pricing.
 Dynamic Pricing
 Fixed Pricing or Flat Rate Pricing
 Customer Driven Pricing
 Auction Pricing
 Psychological Pricing
 Complementary Product Pricing
 Gray Market Pricing
 Pay-what-you want Pricing
 Topsy-Turvy Pricing
 Government Pricing
 Tactical Pricing
 Discounting Pricing

OPTION COMPARED PREFERRED OPTION EXTRA PRICE FOR
PREFERRED OPTION
A AND B B 600
A AND C C 780
A AND D A 300
B AND C C 180
B AND D B 480
C AND D C 720

Responses for four products: A,B,C, & D
 We calculate the Customer’s relative Value for these
options as follows:
 The extra price is positive for the preferred option,
negative for the non-preferred option.
 Each option has three comparisons. Sum these extra
prices for each option.
 Divide the sums of extra prices by three to calculate
the average extra price.
 Using the least valued as a base, find the difference
between the base and the average extra price for each
option. This figure is what the customer would pay
over the base.

BENEFIT
REQUIRED
RELATIVE
IMPORTAN
CE
WEIGHTIN
G
SUPLIER A
PRICE=5,000
RATING TOTAL
SUPLIERB
PRICE=45,00
RATING TOTAL
SUPLIERC
PRICE=3,000
RATING TOTAL
CHAIR DESIGN 20 5 100 7 140 6 120
COMFORT 30 6 180 8 240 4 120
FABRIC QUALITY 15 10 150 9 135 8 120
FABRIC DESIGN 15 5 75 7 105 4 60
EASEOF
PURCHASE
20 8 160 10 200 8 160
GRANDTOTAL 100 665 820 580

 A,B, & C represent three different suppliers of easy chairs. The
results and interpretation are:
 Perceived Value: supplier B at Rs 820 offers the greatest perceived
value, followed by A-665 and C-580.
 Price: supplier A has the highest price – Rs. 5,000; followed by B-
Rs, 4,500 and C-Rs. 3,000.
 Supplier C has the lowest perceived value and the lowest price, but
A and B are misordered. Supplier B has the greatest perceived
value -820 versus 665 for supplier A. But supplier A’s price is higher
– Rs 5,000 versus Rs 4,500. since supplier B provides greater value
for a lower price, it should be gaining market share.

 Costs are important for setting prices. After
all, costs represent one-half of the profit
equation: profit=sales revenues-costs. Cost
plus pricing is a pricing methodology used by
many firms. Despite its popularity, it is the
wrong way to set prices. Cost plus pricing
proceeds simply by identifying product costs,
then adding a pre-determined profit
margin(mark up).

S. NO. Costs Price
1. Variable Costs Rs. 4,00,000
2. Total Fixed Costs Rs. 3,00,000
3. Total Costs Rs. 7,00,000
4. Standard mark-up: 15% of costs Rs. 1,05,000
5. Price Rs. 8,05,000

Pr ice (a) Estimated
Unit Sales
Volume (b)
Sales Revenue
(c=a x b)
Estimated
Cost (d)
Profits
(e= c - d)
480 650 2,88,000
600 500 270,000
720 400 246,000
840 300 222,000

 Profitability:
 All sales seem profitable as price must, by
definition, be above cost.
 Simplicity:
 If the firm knows its costs, pricing is simple.
Anyone can do the math.
 Defensibility:
 Legally acceptable and often required for
government and other cost-plus contracts.

 Many communication tools and techniques are
available for the firm.These are:
 Personal Communication- face to face personal
selling, telemarketing.
 Mass Communication- traditional advertising,
direct marketing, packaging, publicity and public
relation, sales promotion.
 Digital Communication- Online advertisement,
website, blogs, mobile marketing, social
marketing, facebook, twitter.
 Word-of-Mouth Communication- Satisfy or
Dissatisfy customer.

Context Analysis (Desire, CommunicationTargets/Objectives)
Promotional Goals (Corporate Goals, Marketing Goals, Common goals)
Promotional Strategy (Push or Pull Strategy)
Coordinated Communication (Integrated or Interlinked)
Implementation (Action Center)
Control & Evaluation

 This brings about synergy and better use of
communication funds. Balancing the ‘push’ and
‘pull’ strategies. Improves the company’s ability
to reach the right consumer at the right place at
the right time with the right message.
 ADVERTISING
 SALES PROMOTION
 PERSONAL SELLING
 PUBLIC RELATION
 PUBLICITY
 PROPAGANDA

 Any paid form of non-personal presentation
and promotion of ideas, goods, or services
 Advertising tools
 Print (newspapers, magazines)
 TV
 Radio
 Outdoor
 Online

Element Question Link to Market & Communication
Strategies
Target Audience Whom ? Customers in target segments.
Advertising Objectives What? Operational Objectives.
Messaging What Content? Value proposition
Execution How? Effective way to target customers.
Media Selection Where and When? Select Media to reach in time.
Advertising Budget How Much? Entire communication budget.
Evaluation Test and Measure? Variety of measurement methods.

Print -
Newspaper
Flexibility; timeliness; good local market
coverage; broad acceptability; believability
Short life; poor production
quality
Television Good mass-market coverage; low cost per
exposure; combines sight, sound, and
motion; appealing to the senses
High absolute cost; high
clutter; less audience
selectivity
Radio Good local acceptance; high geographic
and demographic selectivity; low cost
Audio only; low attention
(“half heard”); fragmented
audiences
Print -
Magazine
High geographic and demographic
selectivity; credibility and prestige; quality
production; long life; good pass-along
high cost; no guarantee of
position
Outdoor Flexibility; high repeat exposure; low cost;
low message competition; good positional
selectivity
Little audience selectivity;
creative limitations
Online High selectivity; low cost; immediacy;
interactive capabilities
Small, demographically
skewed audience; low impact;
audience controls exposure
Medium Advantages Limitations

 SP is a complex blend of communications
techniques providing extra customer value,
typically for trial to stimulate immediate sale.
 Consumer promotion
 Trade promotion
 Retail promotion

 Short-term incentives to encourage the purchase or sale
of a product or service.
 Sample: a small amount of a product offered to customers
for trial. (perfumes)
 Coupon: certificate that gives buyers a saving when they
purchase a specified product
 Price off (cents-off deal): reduced price that is marked by
the producer directly on the label or package.
 Premiums: prizes, gifts consumers receive when
purchasing products. (shampoo with shower gel).
 Discount: a straight reduction in price on purchases during
a stated period of time
 Allowances: promotional money paid by manufacturers to
retailers in return for an agreement to feature the
manufacturer's products in some way .

 Personal presentation by the firm’s sales
force for the purpose of making sales and
building customer relationships.
 Personal selling tools
 Personal presentation
 Trade shows
 Telecommunication

 Building good relations with the company’s various publics
by obtaining favorable publicity, building up a good
“corporate image”, and handling or heading off unfavorable
rumors, stories, and events
 It is unpaid advertising
 PR tools
 Press releases
 Sponsorships (Mc Donald’s and the hospital 53753)
 Special events (Vodafone and the charity complex)

CHANNEL MANAGEMENT AND DISTRIBUTION

 Distribution System identifies and describes
intermediaries that facilitate supplier goods
and services reaching consumers and/or
other end-user customers. A Distribution
Channel or network comprises a subset of
these entities; the functions they perform
and their inter relationships are continually in
flux.

Resource
(Location)
Iron, Ore,
Coal,
Limestone
(Australia)
Steel
Processing
Equipments
(Germany)
Capital
(Korea)
C
O
N
C
E
N
T
R
A
TION
Producer
(Location) Steel Manufacturer Company (India, Delhi)
Product Prefabricated Steel Beams (Uttarakhand)
D
I
S
P
E
R
SION
Customer
(Location)
India , Argentina, Germany, Australia, Korea

 This is a set of interdependent organizations
involved in the process of making a product or
service available for use or consumption.
 The distribution channel moves goods and services
from producers to consumers. It overcomes the
major time, place, and possession gaps that
separate goods and services from those who would
use them. Members of the marketing channel
perform many key functions. Some help to
complete transactions:

 Information: gathering and distributing marketing research and intelligence
information about factors and forces in the marketing environment needed for
planning and aiding exchange.
 Promotion: developing and spreading persuasive communications about an
offer.
 Contact: finding and communicating with prospective buyers.
 Matching: shaping and fitting the offer to the buyer's needs, including activities
such as manufacturing, grading, assembling, and packaging.
 Negotiation: reaching an agreement on price and other terms of the offer so
that ownership or possession can be transferred.

 Selection of Channel :
The selection of distribution is affected by many of factors,
which play significant role while choosing the channel for
distribution. It may include the buying pattern of consumer, type
of the product is perishable, or auto mobile, weight and bulk and
it also depends on the company's resources. the main affecting
factors are following :-
 Marketing Factors
 Product Factors
 Producer Factors
 Competitive Factors
 Distributors Intensity

 Exclusive distribution
Severely limited number of resellers in a particular
geographic area .
 Selective distribution
Moderate number of resellers.
 Intensive distribution
large number of resellers.

 Exclusive distribution is distribution of a product through one
wholesaler or retailer in a specific geographical area. The automobile
industry provides a good example of exclusive distribution. Though
marketers may sacrifice some market coverage with exclusive
distribution, they often develop and maintain an image of quality and
prestige for the product. In addition, exclusive distribution limits
marketing costs since the firm deals with a smaller number of accounts.
In exclusive distribution, producers and retailers cooperate closely in
decisions concerning advertising and promotion, inventory carried by the
retailers, and prices. Exclusive distribution is typically used with products
that are high priced, that have considerable service requirements, and
when there are a limited number of buyers in any single geographic area.
Exclusive distribution allows wholesalers and retailers to recoup the costs
associated with long selling processes for each customer and, in some
cases, extensive after-sale service. Specialty goods are usually good
candidates for this kind of distribution intensity.

 Selective distribution is distribution of a product through only a limited
number of channels.This arrangement helps to control price cutting. By
limiting the number of retailers, marketers can reduce total marketing
costs while establishing strong working relationships within the channel.
Moreover, selected retailers often agree to comply with the company’s
rules for advertising, pricing, and displaying its products.Where service is
important, the manufacturer usually provides training and assistance to
dealers it chooses. Cooperative advertising can also be utilized for mutual
benefit. Selective distribution strategies are suitable for shopping
products such as clothing, furniture, household appliances, computers,
and electronic equipment for which consumers are willing to spend time
visiting different retail outlets to compare product alternatives. Producers
can choose only those wholesalers and retailers that have a good credit
rating, provide good market coverage, serve customers well, and
cooperate effectively.

 An Intensive Distribution strategy seeks to
distribute a product through all available channels
in an area. It provides maximum coverage of
market by using all available outlets. Usually, an
intensive distribution strategy suits items with
wide appeal across broad groups of consumers,
such as convenience goods.

 A conventional distribution channel is a channel consisting of one or
more independent producers, wholesalers, and retailers, each a
separate business seeking to maximize its own profits even at the
expense of profits for the system as a whole. In this case,
intermediaries operate independently or enter into some form of
arrangements with suppliers and other intermediaries. Moreover, a
conventional channel network tends to be fragmented because
manufacturers, wholesalers and retailers bargain aggressively with
each other over the prices and others. weakness of a conventional
distribution system is that each and every member tries to reap a lot of
profits in order to pursue their own corporate objectives. This may
cause drawbacks for the system as each independent firm shows little
concern for overall channel performance.

Describes the degree to which the three types of
marketing channels (Distribution, Communication and
Service) work together to achieve optimum results for
the company and provide a seamless experience for the
customer or user. An example of channel integration is
allowing a customer who places an order online to pick it
up at a retail location---resulting in increased
convenience and reduced shipping costs for the
customer, and reduced inventory costs for the company
at the retail location.

 Vertical Distribution System(VDS) is one in
which the main members of a distribution
channel- producers, wholesalers, and Retailers
work together as a modified group in order to
meet consumer need.
 Horizontal Distribution System (HDS) is merger
of different channel on the same level in order
to pursue marketing opportunity. By working
together, channel can combine their capabilities
or marketing resources to accomplish more than
any one channel could alone.

 Once the company has reviewed its channel
alternatives and decided on the best channel
design, it must implement and manage the chosen
channel. Channel management calls for selecting
and motivating individual channel members and
evaluating their performance over time.

 Producers vary in their ability to attract qualified
marketing intermediaries. Some producers have no
trouble signing up channel members. For example,
whenToyota first introduced its Lexus line in the
United States, it had no trouble attracting new
dealers.When selecting intermediaries, the company
should determine what characteristics distinguish the
better ones. It will want to evaluate each channel
member's years in business, other lines carried,
growth and profit record, cooperativeness, and
reputation.

 Once selected, channel members must be motivated
continuously to do their best.The company must sell not only
through the intermediaries but to them. Most companies see their
intermediaries as first-line customers. Some use the carrot-and-
stick approach: At times they offer positive motivators such as
higher margins, special deals, premiums, cooperative advertising
allowances, display allowances, and sales contests. At other times
they use negative motivators, such as threatening to reduce
margins, to slow down delivery, or to end the relationship
altogether. A producer using this approach usually has not done a
good job of studying the needs, problems, strengths, and
weaknesses of its distributors.

Training provides necessary knowledge about
manufacturer and its products and helps to
build spirit of partnership and commitments .

 The producer must regularly check the channel
member's performance against standards such as sales
quotas, average inventory levels, customer delivery
time, treatment of damaged and lost goods, cooperation
in company promotion and training programs, and
services to the customer.The company should recognize
and reward intermediaries who are performing well.
Those who are performing poorly should be assisted or,
as a last resort, replaced. A company may periodically
"requalify" its intermediaries and prune the weaker ones.

 Because distribution channel members have
multiple organizational relationships, the
potential for conflict is high.
 OperationalConflict.
 Strategic Conflict
1. Downstream Conflict
2. Upstream Conflict

 Because distribution channel members have multiple
organizational relationship, the potential for conflict is
high.
 Operational Conflict- occurs daily due to late shipments,
invoice errors, unfulfilled promises, unacceptable product
quality, supplier attempts to load channels by forcing
unwanted inventory or intermediaries, and price and
margin disagreements.
 Strategic Conflict- is more serious and may lead to
significant change in channel relationships. Sometimes
strategic conflict develops slowly; other times from
upstream supplier. Sometimes strategic conflict develops
slowly; other times, specific actions precipitate strategic
conflict.

 Developing a Partnership Approach:-There should be
frequent interaction to develop mutual understanding
and cooperation. Manufacturers can provide training,
financial help and promotional support.
 Legal Issues in Distribution:- The legality of various
distribution practices varies by industry and legal
jurisdiction. What is illegal in India may be normal
business practice elsewhere.
 Training & Motivation in conflict handling:- Staff who
handle disputes need to be trained in negotiation and
communication skills.

 Market portioning:- To reduce conflict arising from multiple
distribution channels, manufacturers can partition markets
on mutually acceptable basis such as customer size or type.
 Improved performance:- When manufacturer and channel
members improve their performance in respective areas the
source of conflict disappears.
 Price Discrimination:- The competition Commission of India
(CCI), established under the competition Act (2002) prohibit
suppliers from collusion, and setting different prices for
different buyers where this would reduce competition.
 Selecting andTerminating Distribution.
 State and Local Laws.
 Tying Agreement.

 Physical distribution is the group of activities associated with
the supply of finished product from the production line to the
consumers. The physical distribution considers many sales
distribution channels, such as wholesale and retail, and includes
critical decision areas like customer service, inventory, materials,
packaging, order processing, and transportation and logistics.
You often will hear these processes be referred to as
distribution, which is used to describe the marketing and
movement of products.
 Accounting for nearly half of the entire marketing budget of
products, the physical distribution process typically garnishes a
lot of attention from business managers and owners. As a result,
these activities are often the focus of process improvement and
cost saving initiatives in many companies.

 The key functions within the physical
distribution system are:
 Customer service
 Order processing
 Inventory control
 Transportation and logistics
 Packaging and materials

 The customer service function is a strategically designed standard for consumer satisfaction that the
business intends to provide to its customers. As an example, a customer satisfaction approach for the
handbag business mentioned above may be that 75% of all custom handbags are delivered to the customer
within 72 hours of ordering. An additional approach might include that 95% of custom handbags be delivered
to the customer within 96 hours of purchase. Once these customer service standards are set, the physical
distribution system is then designed to attain these goals.
 Order processing is designed to take the customer orders and execute the specifics the customer has
purchased. The business is concerned with this function because it directly relates to how the customer is
serviced and attaining the customer service goals. If the order processing system is efficient, then the
business can avoid other costs in other functions, such as transportation or inventory control. For example, if
the handbag business has an error in the processing of a customer order, the business has to turn to premium
transportation modes, such as next day air or overnight, to meet the customer service standard set out,
which will increase the transportation cost.
 Inventory control is a major role player in the distribution system of a business. Costs include investment
into current inventory, loss of demand for products, and depreciation. There are different types of inventory
control systems that can be implemented, such as first in-first out (or FIFO) and flow through, which are
methods for businesses to handle products.
 First in-first out, or FIFO, is a method in which the new products coming into the warehouse replace existing
products of the same SKU so that merchandise is cycled and does not expire or become old as more recent
production is available. Flow through, on the other hand, is product that does not get processed in the
warehouse. It is off loaded from an inbound trailer, pushed across the warehouse and onto outbound trailers
for departure without being stored in the warehouse.

 Logistics management is that part of supply
chain management that plans, implements, and
controls the efficient, effective forward and reverse
flow and storage of goods, services and related
information between the point of origin and the point
of consumption in order to meet customers'
requirements.“
 The logistics management process begins with raw
material accumulation to the final stage of delivering
goods to the destination.
 By adhering to customer needs and industry
standards, logistics management facilitates process
strategy, planning and implementation.

 Logistics Management involves numerous
elements, including:
 Selecting appropriate vendors with the ability
to provide transportation facilities.
 Choosing the most effective routes for
transportation.
 Discovering the most competent delivery
method.
 Using software and IT resources to
proficiently handle related processes.

 Inventory control can be a major component of a small business physical
distribution system. Costs include funds invested in inventory, depreciation,
and possible obsolescence of the goods. Experts agree that small business
inventory costs have dropped dramatically due to deregulation of the
transportation industry.
 Inventory control analysts have developed a number of techniques which can
help small businesses control inventory effectively. The most basic is the
Economic Order Quantity (EOQ) model. This involves a trade-off between the
two fundamental components of an inventory control cost: inventory-carrying
cost (which increases with the addition of more inventory), and order-
processing cost (which decreases as the quantity ordered increases). These
two cost items are traded off in determining the optimal warehouse inventory
quantity to maintain for each product. The EOQ point is the one at which total
cost is minimized. By maintaining product inventories as close to the EOQ
point as possible, small business owners can minimize their inventory costs.

 Small business owners who require warehousing facilities must decide
whether to maintain their own strategically located depot(s), or resort
to holding their goods in public warehouses. And those entrepreneurs
who go with non-public warehousing must further decide between
storage or distribution facilities. A storage warehouse holds products
for moderate to long-term periods in an attempt to balance supply and
demand for producers and purchasers.They are most often used by
small businesses whose products' supply and demand are seasonal. On
the other hand, a distribution warehouse assembles and redistributes
products quickly, keeping them on the move as much as possible. Many
distribution warehouses physically store goods for fewer than 24 hours
before shipping them on to customers.

Company can use any one or combination of means of transporting which
include rail, road, air, water transport, pipelines etc.
 Using Voyager Transportation and Logistics management solutions you
can systematically balance supply chain logistics management and
strategies with customer required policies. Carrier effectiveness and
improved inventory management capabilities will enable you to increase
perfect orders.
 Together, Logility's transportation and logistics management optimization
solutions enable you to:
 Increase perfect orders.
 Raise inventory accuracy up to 99.8%.
 Increase picking and shipping accuracy up to 99.99%.
 Reduce transportation costs up to 30% for inbound, outbound and inter-
facility moves.
 Realize up to 80% increases in transportation operational efficiencies
 Improve customer service.
 Increase profitability.

 It is moving of products inside the manufacturer’s
plant, warehouses and transport depots. One
important innovation is known as unitizing/unit
handling—combining as many packages as
possible into one load, preferably on a pallet.
A second innovation is containerization—the
combining of several unitized loads into one box.

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