MARKETING

Chapter 10
 Market in Traditional Sense

The word market is derived from a

Latin word, “Marcatus”

It means a place of business, It is a

location where buyers and sellers of
goods assembles to facilitate
exchange, market thus refers to a
place.
 Market Used in Various Contexts (Traditional)
1. Product Market
(Pepper market, Vegetable market, share market etc.)
2. Geographical Market
(Local market, National market, International market)
3. Based on Types of Buyers
(Consumer Market and Industrial Market)
4. Based on Quantity of Goods
(Wholesale Market and Retail Market)
 Market in Modern Sense

The term market has a wider

meaning - it refers to the aggregate
potential demand for a product or
service.

Eg: The market for car is booming

means the increased collective demand
for cars.
Marketing
 Marketing means all activities connected with
transfer of goods and services from the producer to
the consumer.

 Marketing is a broader term concerned with the

identification of needs and wants of consumers and
finding out ways and means for satisfying them.
Features of Marketing
1. Needs and wants
The focus of marketing is on the satisfaction of their
needs and wants. A marketer’s job is to identify the needs
of consumers and develop products or services
accordingly.
2. Creating a market offering
Market offering means a complete offer of a product or
service. While offering products to customers, it should
include the features like size, quality, taste, price, etc.
3. Customer value
Consumer buys a product based on its value to satisfy
their need. So the marketer should always add value
to his products, so that the customer prefers it.
4. Exchange Mechanism
It refers to a process through which 2 or more parties come
together to obtain the desired product or service from
someone, in return making a payment to the other.
 Essential conditions in exchange mechanism :
a. Two parties – buyer and seller.
b. Offering something – Seller offer a product and the
buyer, money.
c. Ability to communicate – Each party should
communicate and deliver the product or service.
d. Freedom – Each party has the freedom to accept or
reject the offer.
e. Voluntary – Acceptance or rejection of the offer must
not be on compulsion.
 WHAT CAN BE MARKETED ?
Products Mobile Phones, clothes, TV etc.
Services Insurance, Health care, Service of doctors, CAs, Online trading etc.
Ideas Blood donation by Red Cross, Polio vaccination etc.
Persons Political parties for election of candidates.
Place Tourist centres, Pilgrim places etc. (God’s own country by Kerala Tourism)
Experience Lunch with a celebrity, mountaineering etc.
Events Sports events, Fashion show, Horse race, Film festival etc.
Information Marketing information, Technology information etc. e.g., T V Channel
rating
Organisations Companies communicate with people. E.g., Philips says “Let’s make things
better”
 Marketing Management :
Marketing management is the
functional area of management
concerned with planning,
organising, directing and
controlling the activities
related to marketing of goods
and services to satisfy
customer’s wants.
PROCESS OF MARKETING MANAGEMENT
1. Choosing a target market :
If a business enterprise is producing medical equipment, the target
groups will be doctors and hospitals. For a text book publisher the
target market is a group of teachers and schools, colleges and
universities.
2. Create demand for the product :
Here the marketing management should try to increase the
demand for their products by ensuring the customer satisfaction,
so that more customers will be attracted.
3. Create superior values :
In order to attract more customers, the marketing management
can add more superior values to the product or service.
E.g., free insurance and maintenance on purchase of a vehicle.
 Differences between Selling and Marketing
SELLING MARKETING
1. It is a part of marketing by which the 1. It is a wider term consisting of identification of
transfer of ownership of goods from seller to customer needs and developing products to satisfy
the buyer their needs
2. Transfer of title of goods

3. More emphasis on profit maximization 3. Making profit through customer satisfaction

through maximum sales
4. Selling takes place after production of 4. Marketing begins before production
goods
5. Give emphasis on bending the customer in 5. Develop the product based on customer needs
accordance with the product
6. It involves promotion and persuasion 6. It has an integrated approach including
product, price, physical distribution and
promotion
 MARKETING CONCEPTS
(MARKETING MANAGEMENT PHILOSOPHIES)
1. Production Concept
It is based on the assumption that customers are interested in
accessible and affordable products. Here, the business focused
mainly on production by lowering the cost, increasing quantity
of goods produced to earn profit.
2. Product Concept
The customers are more interested in products that are offering
more quality, innovative features and top-level performance.
Here the business focuses on making profits through high-
quality products and always refining product quality.
3. Selling Concept
The selling concept believes that customers will be buying
products only when the product is aggressively marketed by the
company. It focuses on selling and promotional measures and
earning profits by increasing the sales volume
4. Marketing Concept
A marketing concept places main focus on the customer. All
the activities that are undertaken by an organisation are done
keeping the customer in mind. Profit through customer
satisfaction
5. Societal Marketing Concept
It is an extension of marketing which involves the satisfaction
of customer needs and wants by considering the welfare of the
society. It should pay attention to the social, ethical,
environmental aspects etc.
1. Gathering and analyzing market information
It helps to identify the needs of customers for taking vital
decisions. It is highly useful for analyzing opportunities, threats,
strength and weakness of the firm.
2. Marketing plan
A proper marketing plan should be developed to
achieve the marketing objectives of the firm. E.g.,
to increase the market share of a product in next
one year by 20%.
3. Product designing and development
The product should be developed and designed to meet the
customer needs. Marketing department should always make
necessary changes in the product such as packing, price, size,
colour, shape and design.
4. Standardization and Grading
Standardization refers to producing goods in
predetermined standards such as quality, price,
packaging etc. it ensures uniformity and consistency.
Grading is the process of classifying products into
different classes on the basis of quality, size, weight etc.
It is especially used in agricultural products and helps
in realising higher price for better quality.
5. Packaging and Labelling

Package is a container or a wrapper or a box in which

a product is enclosed. It is done for protecting the
goods from damage in transit and storage and is also
used to establish the brand.

Labelling refers to the application of identification

marks on the package. The label contains information
about the product and the manufacturer.
6. Branding
It is the process of giving a name or symbol to a
product for identifying and differentiating it from the
products of competitors. E.g., BMW, TATA, JIO, Pears,
Coco-cola etc.
7. Customer support service
These are after sales services, handling customer complaints,
maintenance services, technical services and customer
information. It provides maximum satisfaction to the
customers.
8. Pricing
Price of a product means the amount of money that have
to pay to obtain a product. The pricing policy of a firm
attracts all types of customers.
9. Promotion
It means informing the customers about the firm’s products and
persuading them to buy these products. Promotion techniques
include Advertising, Personal selling, Sales promotion and
Publicity.
10. Physical distribution
Marketing management must select an appropriate
distribution channel to ensure smooth flow of materials
and finished goods from the point of origin to the
consumers.
11. Transportation

It is an integral part of marketing as it

helps in reaching the product into the
hands of consumers.
12. Storage or warehousing
Goods are produced in anticipation of future demand.
They have to be stored properly in warehouses to
protect them from damages.
 Factors affecting marketing decisions
i) Controllable factors – They are internal factors which can be
controlled by the firm. They are of 4 groups – Product, Price,
Place or distribution and Promotion. They are commonly
known as four Ps of marketing.
ii) Non-controllable factors – They are external factors such as
consumer behavior, traders’ behavior, competitors’
behavior and government’s behavior.
 Marketing Mix
• It is the combination of four
inputs which constitute the core
of the company’s marketing
system - Product, Price Promotion
and Place

4 ‘Ps’ of marketing mix

• Product, Price Promotion and
Place (Physical distribution).
Elements of marketing mix
1. Product –
Product means goods or services or anything of value
which is offered for sale in the market. It involves
planning, developing and producing the right type of
goods and services needed by the consumer.
2. Price –
Price of a product means the amount of money that have to pay
to obtain a product. It should be fixed in such a way that the
firm is able to sell product profitably. It consider credit policies,
discount system, cost of production, competition etc.
3. Place –
Products produced at one part of the country are consumed in
different places in different seasons. So marketing efforts are needed
to make the product available at the right time in the right place.
It involves two major functions, 1) Physical distribution and 2)
Channels of distribution
4. Promotion –
Promotion means all those activities undertaken by a
sales manager to inform the consumers about the
product(s) of the company and persuade them to buy.
4 elements which constitute promotion mix.
• Advertising,
• Personal Selling
• Publicity
• Sales promotion
 PRODUCT
Consumer Products –
Products which are purchased by
the ultimate consumers for personal
or family use, but it is not meant for
resale. E.g., soap, toothpaste,
calculator, furniture, shoes etc.
These consumer products are again
classified on the basis of shopping
efforts involved and durability.
A. Shopping efforts involved
1. Convenience products – They are the consumer products that
people usually purchase frequently, and with least purchasing
efforts. E.g., soap, toothpaste, bread, magazines, biscuits etc. Its

Features
a. Purchased with least efforts and time
b. Generally essential products.
c. Purchase unit is small and low price.
d. Standardized price and most of them are branded items.
e. Heavy competition heavy advertisement involved
f. Sales promotion techniques and short term incentives are needed.
2. Shopping products - These are the products purchased by the
consumers by spending considerable time in comparison of
features like price, quality, size, style etc. e.g., clothes, jewellery,
furniture, TV, Computer, Washing machine etc.

Features
a. Durable in nature.
b. Price and profit per unit is comparatively high.
c. Unit price is high so consumer take efforts before purchasing
decision.
d. Buying of these products is generally pre-planned
e. Generally handled by retailers.
3. Specialty Products – These products have unique
characteristics and brand loyalty of the highest order for
which consumers willing to make special purchasing
effort. E.g., paintings, artwork, antiques, idols etc.
Features
a. Demand for such products is inelastic, even if the price
increases, demand does not decrease.
b. Demand for such products is limited
c. These products are costly.
d. They are available only in specific places, so the buyers
have to take extra effort.
B. Durability basis
1. Durable goods – These are tangible consumer
products which have long period of life. E.g., TV,
Car, Refrigerator, Mobile phones etc.

Features
a. It remains in use for a long period.
b. High cost and high profit margin.
c. High selling effort is needed.
d. Guarantees and after sales service provided.
2. Non-durable goods –
These are consumer goods which are normally
consumed once or for a few uses. E.g., soft drinks,
soap, toothpaste, detergents, stationery items etc.

Features
a. Low price and low profit margin.
b. Available in all areas.
c. Heavy advertisement.
3. Services –
It refers to those activities, benefits or satisfactions,
which are offered for sale and are intangible in nature.
E.g., services offered by a doctor, lawyer, etc.
Features
a. Intangible in nature.
b. Inseparable from its source
c. Services cannot be stored.
d. Highly variable based on the persons providing
them.
Industrial Products
These products are used as inputs in making other
products. E.g., engines, lubricants, machines, raw
materials etc.
Features
a. Number of buyers will be limited as compared to
consumer goods.
b. Distribution channel will be short (direct selling or
one level channel)
c. Industries are located in certain regions only, Eg:
demand for powerloom comes from Mumbai,
Bangalore etc. where textiles industries are
concentrated in India.
d. Derived demand - The demand for industrial
products is derived from the demand for consumer
products. E.g., demand for leather is derived from the
demand for shoes etc.

e. Role of technical consideration – technical

consideration is significant in industrial products,
because of it’s complex nature.
f. Reciprocal buying – It means mutual buying, for Eg;
TATA Motors buys tyres from MRF, MRF in turn buys
trucks from TATA.

g. Leasing out – Instead of outright purchase of heavy

machineries, it may procure on lease basis.
 Classification of industrial products
1. Materials and parts – These products are used for
manufacture of useful finished goods.
a. Raw materials such as farm products like cotton,
sugarcane etc. and natural products like crude oil,
iron ore etc.
b. Manufactured materials – These are partly processed
goods which are used in making finished goods. They
are of 2 types – component materials like iron, yarn,
cement etc. and component parts like tyres, battery
motors etc.
2. Capital items – Installations like elevators, main
frame computers etc. and equipments like tools,
machinery etc.

3. Supplies and business services – short lasting goods

for producing finished goods.
E.g., repair items like nails, paints etc. and operating
supplies like lubricants, cotton waste etc.
 Branding
It refers to the process of
giving a name or sign or a
symbol to a product for
identifying and distinguishing
it from competitors. E.g., Titan,
Audi, Bata, Lifebouy, Pears etc.
 Terms related to branding
a. Generic Name – It means the name of whole class of a
product. E.g., soap, book, pen, camera, paracetamol
etc.
b. Brand – It is a name, term, symbol or design to
identify the goods or services. E.g., Pears, Classmate,
Reynolds, Canon etc.
c. Brand Name – It is a part of the brand consisting of a
word, letter or group of these that can be pronounced.
E.g., Lux, Reynolds etc
d. Brand Mark – It is a part of brand that
appears as a symbol, design, picture etc.
which cannot be pronounced. E.g., symbol
of LIC, emblem of SBI etc.
e. Trade Mark – When a brand name is
registered, it becomes a trademark. A
trademark is a brand name or brand mark
that is registered with the legal authorities.
Once registered, it is legally protected and
cannot be used in duplicate by others.
 Advantages of Branding
To Marketers To Customers
1 Helps to make an identity Helps in identifying the product
2 Helps in advertising and display Ensures quality and confidence in the
programs mind of customers
3 Enables the firm to charge higher Status symbol
price than the competitors
4 Easy to introduce new product Helps to increase the level of
satisfaction
 Characteristics of a good brand name

1. Short and simple – brand name should be short, easy

to pronounce and to remember. E.g., Hero, Maruti,
VIP, Vim etc.

2. Suggests the benefit of product and its quality. E.g.,

Rasika, Boost, Fair N Lovely.

3. Distinctive – It should be unique such as Liril, Sero,

Titan etc.
4. Adaptable – Brand name must be suitable for
packing and labeling and to suit different
advertisement media and different languages.
5. Versatile – Better it is multi-purpose to adopt new
products. E.g., Acer, V-guard etc.
6. Legal protection – the brand should be capable of
being registered.
7. Staying power – the name chosen as brand name
should not get outdated. (“3G Mobiles” is an
outdated brand).
Packaging
It refers to the designing and producing the container
or wrapper of a product. Packaging contains, protects,
preserves, transports, informs, and sells products
 Levels of Packaging
1. Primary packaging – The immediate container of a product is
called primary packet. e.g., the plastic cover of a shirt, tube for
tooth paste, a bottle for Horlicks etc.

2. Secondary packaging – It gives an additional protection for the

product. E.g., the card board box for a tooth paste tube.

3. Transportation packing – It is a further packaging of products

for storage and transportation. E.g., a toothpaste manufacturer may
send the goods to the retailers in a large box containing 100 pieces.
Importance of Packaging

1.Rising standards of health and sanitation

2. It is suitable for self service outlets
3. Increase innovation opportunity
4. Create product differentiation
 Functions of Packaging

1. Product identification – Packaging helps the

customers to identify the product easily. E.g.,
Toothpaste, Soap etc.

2. Product protection – It helps the product from

breakage, leakage, contamination, evaporation,
pilferage (theft) etc.
3. Facilitating the use of the product – The size and
shape of the product should be in such a way to use
the product conveniently. E.g., Hand wash, Tooth
paste, Powder tin etc.

4. Product promotion – Beautiful packages attracts

consumers, and it serves as a promotional tool for
the product as it is a silent salesman.
 Labelling
Labelling refers to the designing and developing the
label to be put on the package. It may be attached to the
product and carries information about the product and
the producer in the form of a tag, sticker etc.
 Functions of Labelling

1. Describe the product and specify its contents and it

may give its usage, precautions to be taken etc.

2. Identification of product or brand

3. It also gives information about the name and address

of manufacturer, net weight, MRP etc.
4. Grading of products such as Green label for 1st quality,
Yellow for 2nd quality and Red for 3rd quality.
5. Helps in promotion of products - a well designed label
will catch the attention of consumers. “Free Tooth
Brush inside”, “Save Rs.10/-“, “Free Mobile Recharge
Rs.50/-” etc.
6. Providing information required by law, e.g., statutory
warning on the package of cigarette, “Smoking is
injurious to health” etc.
PRICE

Price of a product is the money paid by the buyer in

consideration of purchase of a product or service.

Pricing is the function of determining product value in

terms of money before it is offered to consumers for
sale.
A good pricing policy enables a firm to achieve
maximum sales revenue.
 Factors affecting price determination
1. Product cost – It includes cost of production,
selling and distribution expenses. While fixing
prices for the products or service, a margin of
profit over the cost should be considered.
 Cost of a product includes:
a. Fixed cost – do not vary with the volume of
production. E.g., Rent, salary, insurance etc.
b. Variable cost – Cost which vary based on the volume
of production. E.g., raw material cost, labour cost,
power etc.
c. Semi-variable cost – Cost which vary with the level
of production, but not in direct proportion. E.g.,
Commission to a salesman beyond a particular level.
2. Utility and demand – Pricing is affected by the
elasticity of demand. In case of inelastic demand a
firm can fix a higher price and vice versa.

3. Extent of competition – If there is no competition in

the market, a firm can fix the price by themselves
(price makers). If the competition is very high in
the market, the price should be fixed by considering
competitors price (price takers).
4. Government and legal regulations – The prices of
certain products are regulated by government. E.g.,
cement, sugar, etc.
5. Pricing objectives – If the firm wants to maximize
profit in short run, it would charge high price and if
it wants to capture maximum market share for its
products, it would charge only a low price.

Some pricing objectives are:

a. To Obtaining market share leadership
b. To Survive in a competitive market
c. To Attaining product quality leadership (high prices may
be charged for maintaining high quality)
6. Marketing methods used – Price fixation is also
affected by various elements like distribution
system, advertising, sales promotion, type of
packaging, credit facilities, after sales services,
guarantee etc.
 PLACE (PHYSICAL DISTRIBUTION)

In order to ensure availability of products at the right

Place, two factors require consideration; they are
Channel of distribution and Physical distribution.
A. Channels of distribution

The path taken by the goods in their movement from

the producer to the consumer is referred to as the
channel of distribution.
 Functions of distribution channels / middlemen

1. Sorting – sorting goods procured from various sources

on the basis of size and quality. E.g., apples, pepper,
cardamom, coffee etc.
2. Accumulation of goods – they are collecting a large
quantity of stock in order to ensure continuous flow of
supply.

3. Allocation – breaking the bulk into smaller lots for

distribution. E.g., a large box of pens divided into small
packets containing 10 units.
4. Assorting – It means stocking various related products by
the middlemen, to meet the customer requirements fully;
(Assorted = Mixed). E.g., a cricketer’s requirement of bat, ball,
gloves, helmet, shoes, dress etc. can be fulfilled by a single sports
goods dealer.
5. Product promotion – Middlemen also undertakes
certain promotional activities like demonstrations,
special displays, contests etc. to push up sales.

6. Risk taking – Middlemen takes the risk on account

of price and demand fluctuations, spoilage, damage
etc.
1. Direct channel (Zero level) –
Simplest and shortest distribution channel with no intermediary
involved. It implied direct selling of goods to the customer. Mail
order business, internet selling, door to door selling, selling
through own retail network etc. are examples.

PRODUCER CUSTOMER
2. Indirect channels – The manufacturer seeks the help
of one or more intermediary to move the goods from the
place of production to the place of consumption is called
indirect network.
a. One level – Here only one intermediary is in the
distribution channel, the retailer.
E.g., Maruti Udyog Ltd. sells their cars through their
approved retailers

PRODUCER RETAILER CUSTOMER

b. Two level channel – Here one more middlemen, the
wholesaler joins the channel along with the retailer (2
middlemen). This channel is suitable to the products with
widely scattered markets. E.g., soap, cloth, tooth paste etc.

PRODUCER WHOLESALER RETAILER CUSTOMER

c. Three level channel – In this channel the producer hands
over the entire output to his selling agent in order to relieve from
the problems of distribution. The goods move from manufacturer
to the agent, then to wholesalers, then retailers and finally reaches
the consumers

PRODUCER AGENT WHOLESALER RETAILER CUSTOMER

 Factors determining choice of channels
1. Product related factors
a. Industrial goods – Highly expensive and with a few buyers,
hence direct channel is preferred.
b. Consumer goods – Less expensive and frequently bought,
hence long network is good.
c. Perishable goods – Short channel is more suitable
d. Durable goods – Long channel is good.
e. Unit value of product – Cheaper goods are usually traded
through long channels.
f. Complex products – requiring technical details such as
industrial or engineering products may prefer short channels.
2. Company characteristics – if the company is having
sufficient funds, it can go for direct selling or
through short channels. Likewise, if they want to
maintain a control over the channel members, short
channels are better.

3. Competitive factors – If a competitor has selected a

particular channel and they are successful,
sometimes we may also follow it, whereas some
other companies may avoid such channels.
4. Market factors –
a. Size of market – Where number of buyers is small, short
channel is required and for large number of customers, longer
channel would give better result.

b. Geographical concentration – Small channel is better if the

buyers are only in a particular area and if they are scattered
over a large area, long channel is better.

c. Size of order – If the size of order and its value is high, shorter
channel is good and in case of consumer goods long channel
is better.
5. Environmental factors – Economic condition, legal
constraints etc. are considered here.
For example, in case of depression period, shorter
channel is preferred.
B. Physical movement / physical distribution
Physical distribution involves the handling and movement of
goods from production centre to the place of consumption. It
includes all the activities required to get the products to the
customer.
 Components of Physical Distribution
1. Order processing – It begins with the receipt of an
order from the customer, preparation of invoice,
instructions to the warehouse keeper for dispatch,
granting of credit facilities, sending bills etc. Quick
processing helps to retain the customers for ever.
2. Transportation – It is the means of carrying goods and raw
materials from the point of production to the point of sale. It is
important because unless there is no proper movement
(transportation), the sale cannot be completed.

3. Warehousing – It is inevitable factor in the movement of

goods, it involves the decisions regarding type of warehouse,
(i.e., own warehouse or rented warehouse), location of
warehouse, cost of warehousing etc.
4. Inventory control – In order to ensure prompt supply of
goods a proper inventory level must be maintained. It must not be
too high or too low. High level of inventory results in blocking of
capital and high management cost. Low level may lead to stock out
situations.
Factors determining inventory levels are:
a. Level of customer service – Higher the level of customer
service, greater will be the need of inventories.
b. Accuracy of sales forecast – If the sales forecast is more
accurate, the need for inventory can be minimized.
c. Time required to meet additional demand – If it is taking
much time to meet additional or unexpected demand, the need
for inventory level will be high.
d. Cost of inventory – It includes holding cost / carrying cost
such as warehousing cost, blocked up capital cost etc. If the cost
of inventory is high, less inventory is maintained.
 PROMOTION
All activities connected with informing and persuading the
customers are collectively known as promotion mix. It includes
Advertising, Personal selling, Sales promotion and Publicity..
 1. Advertising
Advertising is any paid form of non-personal presentation and
promotion of ideas, goods or service of an identified sponsor.
The message which is presented or disseminated is known as
advertisement.
Features of advertising
a. Paid form – The sponsor or marketer bears the cost of
communication.
b. Impersonality – No face to face contact between seller and
buyer, but through a media.
c. Identified sponsor – Advertisement is done by a sponsor.
 Merits of Advertising
a. Mass reach – It reaches a large number of population with the
help of news papers,
television etc.
b. Enhancing customer satisfaction – They feel more comfortable
and assured about quality.
c. Expressiveness – Messages can be expressed in a very attractive
manner with the help of modern technology.
d. Economy – It is in the sense that, it can reach millions of people.
As a result the per unit cost becomes low.
 Limitations of Advertising
a. Less forceful – Since it is impersonal, the prospects (public)
may not give attention to the message.
b. No feedback – There is no immediate and accurate feedback.
c. Inflexibility – The message is always standardized and not
customized according the needs of different customer groups or
occasions.
d. Low effectiveness – A large number of advertisement is shown
by the media, hence it may not be seen or heard by the target
group.
 Objections to advertising (Criticisms)
a. Adds to cost – It is a fact that while fixing price for a product by
the manufacturer, they will consider the advertisement expense too,
it will increase the price.
b. Undermines social values – It is another criticism against
advertisement that it demoralizes the social values.
c. Confuses the buyers – Advertisement of similar items of different
firms with claiming superiority of their products will make
confusion among the consumers.
d. Encourages the sale of inferior products with the help of faulty
advertisement.
e. Some advertisements are in bad taste for instance, women
running after a man because he is using a perfume, tooth paste etc.
 2. Personal Selling
It implies a face-to-face contact or conversation between seller
and buyer by which the consumers will be motivated to purchase
the products.

Features of personal selling:

a. Personal form – face to face contact.
b. Development of relationship – Salesman develops a personal
relationship with the customers.
 Merits of Personal Selling
a. Flexibility – The presentation of product can be adjusted to
suit the prospective buyer.
b. Direct feedback – Face to face communication facilitates the
salesman to adapt the presentation according to the needs of
customers.
c. Minimum wastage – This strategy can be adopted only to the
targeted customers, hence the company can minimize the
wastes of efforts compared to advertisement.
 Advertising Personal Selling
1 Impersonal communication Personal form of communication
2 Standardised message is transmitted Based on customers needs
3 Not flexible Highly flexible
4 Reaches a large number of people Limited number of people only
5 Cost per person is low It is very high
6 Cover the market in a short time Take a lot of time
7 Media is used such as TV, Radio etc. Use of sales persons
8 No direct feedback Direct and immediate feedback is
possible
9 Useful in consumer goods having a Useful in industrial products having
large number of consumers only a limited number of customers
 Sales Promotion
It refers to short-term activities, which are aimed at promoting
sales such as rebates, discounts, free gifts, contests, refunds,
premium etc.
Sales promotion tools are designed to promote customers,
middlemen and sales persons.
a. Customers – Free samples, discounts, contests, gifts, lucky
draws, etc.
b. Middlemen – Cooperative advertising, dealer discounts,
incentives, contests etc.
c. Salespersons – Bonus, salesmen contests, special offers, etc.
 Advantages of sales promotion

a. It catches the buyers’ attention.

b. Useful in new product launch.

c. Synergy in total promotional efforts – Sales promotion

supplement the personal selling and advertising efforts.
Hence it gives synergy (overall effectiveness) of promotional
efforts of the firm.
 Limitations of sales promotion

a. It is a reflection of crisis – Frequent sales promotion

activities may give an impression that the firm is not in a
position to manage its sales.

b. Spoils the product image – Consumers may feel that

incentives are offered to sell substandard product.
 Commonly used sales promotion techniques
1. Rebates – It is a deduction on the price to make it attractive
to the buyers to buy on special occasions.

2. Discount – Certain percentage of price is reduced as

discount from the price of the product to attract the
customers.

3. Refunds – Seller offers to refund a part of price on next

purchase on production of packets or wrappers etc.
4. Product combinations – It is a free offer of an article along
with a product to make buyers attractive to buy more or for
repeated buying (Free Pen drive with a digital camera).
5. Quantity gift – It may be an extra quantity of the same product
at the same price either inside or outside the packet.
6. Instant draws and gifts – Scratch card and gifts to the
customers on purchase.
7. Lucky draw – A coupon is given to the customers, which is to
be deposited in a box at the business premises by filling the
name and phone number. The winner is selected by lucky
draw later.
8. Usable benefit – E.g., Purchase goods worth Rs. 5000 and get a
holiday package of Rs. 2000 free.

9. Full finance @ 0% - No need to pay any amount or full amount

at the time of purchase but in easy installment without interest.

10. Sampling – It refers to offering a free sample of a product to

the customers on the purchase of some other products or
journals.

11. Contests – Customers can participate in some competitive

event and winners are given awards.
 Publicity
It is similar to advertising with the difference that it is a non paid
form of communication. It refers to favourable news about an
organization and its products or service appearing in mass
media.

Features of publicity
a. Unpaid form – It does not involve any direct expenditure.

b. No identified sponsor – It has no sponsor at all but message

goes as a news item.
 Advantages
a. Credibility – Usually it is more credible than the
advertisement message.
b. Wide reach – It can reach even those who have no chance
for attending paid communication.
Limitations
a. No control – It cannot be controlled by the firm.
b. Only news value items – A firm cannot make use of publicity
to promote all its products.
 Public Relations
Public relation can be defined as publicity through media. It is
ranked second after personal selling in promotional mix. Since
they can be used very effectively to reach the most influential
people, and is an effective tool for promotion.

Public relations tools:

News, Speeches, Events, Written materials, Public service
activities etc.
 Role of Public Relations
1.Press relations – Information about the organization or
products needs to be presented in a positive manner in the
press. Eg; Launching a new car.
2. Product publicity – A company can invite attention of the
public on their products by sponsoring sports and cultural
events, exhibitions etc.
3. Corporate communication – It may be in the form of
newsletters, annual reports, brochures, audio-visual materials
etc. among the public and the employees of the organization.
4. Lobbying – It means influencing the government officials,
ministers etc. in a positive manner to formulate suitable
industrial, telecom, taxation policies etc.

5. Counselling - The public relations department advises the

management of the company to interfere into general issues
which affect the public. Eg: Contributions for flood victims.
 Marketing Objectives of Public Relations
a. Building awareness – Public relations department can place
stories about the product in the media, which will help to create
an excitement among the targeted customers. Eg: News reports,
Interviews etc. about a film.
b. Credibility – If news about a product comes in the media, it
always gets credibility.
c. Stimulates sales force – As the product is publicized through the
media, it is very easy to convince the customers.
d. Reduces the promotion cost – Maintaining good public
relations results in less advertisement and sales effort.