MARKETING MANAGEMENT

UNIT-3

Marketing Mix

Marketing mix refers to the set of actions & tactics used by the company to
promote their brand or product in the market. There are 4P’s in marketing
mix – Product, Price, Place, Promotion.

(1)Product: - It refers to the item which is actually being sold in the

market to the customer. It should deliver the satisfactory performance
otherwise other elements of marketing mix would be of no use. The
product can be intangible or tangible as it can be in the form of services or goods.

(2)Price: - It refers to the value which is being kept for the product in
order to sell it in the market. It depends on cost of production, cost of
supply, ability of customer to pay etc.

(3)Place: - It refers to the point of sale from where a customer can

purchase the product. Every marketer tries to keep a product at such
locations which are near to the customer point of purchase.
 (4)Promotion: - It refers to all the activities done by the marketer in
order to inform about the product or services to the customer. A
marketer can use various methods like advertising, incentives, word of
mouth, publicity etc.

Product

Philip Kotler defines product ‘as anything that can be offered to a market for
attention, acquisition, use of consumption that might satisfy a want or need.
It includes physical object, services, persons, places, organizations and
ideas.

Product Mix

A product mix (also called product assortment) is the set of all product lines
and items that a particular seller offers to sale.

A company’s product mix can be described as having a certain width, length,

depth and consistency.

 The width of the product mix refers to how many product lines the
company carries.

 The length of product mix refers to the total number of items in its
product mix.

 The depth of product mix refers to how many product variants are
offered of each product item in the line.

 The consistency of the product mix refers to how closely relate the
various product lines are in end use, product requirements,
distribution channels or some other way.
 NEW PRODUCT DEVELOPMENT

According to Stanton, new products are those which are really innovative and truly unique
replacements for existing products that are significantly different from the existing goods and
includes initiative products that are new to a company but not new to the market. If the buyers
perceive that a given item is significantly different from competitive goods being replaced with
some new features, like appearance or performance, then it is a new product.
For Kotler, new products mean original products, improved products, modified products and new
brands which are developed by the firm through its own research and development efforts and
includes those products which the consumers sees as new.

NEED FOR NEW PRODUCT DEVELOPMENT

The following are the strategic reasons for launching new products:
 New products meet the changes in consumer demands.
 New products are the source of competitive advantage.
 They provide long-term financial return on investment.
 They utilise the existing production and operation resources to an optimum level.
 They capitalise on research and development.
 They provide opportunities for reinforcing or changing strategic direction.
 They leverage marketing/brand equity.
 They enhance corporate image.
 They affect human resources.
 They meet environmental threats.
1. GENERATION OF IDEAS

The new product development process starts with the search for ideas.
An idea is the highest form of abstraction of a new product. It is usually represented as a
descriptive statement, written or verbalized. Generally, the more the number of ideas, the better
option with the marketer.
The objective of this stage is to obtain (a) ideas for new products, (b) new attributes for the
existing products, and (c) new uses of the existing products.
The various sources of new product idea are internal sources, customers, competitors,
distributors etc.

2. IDEA SCREENING

The purpose of idea generation is to create a large number of ideas. The purpose of screening is
to reduce that number. The first idea-reducing stage is idea screening. The purpose of screening
is to spot good ideas and drop poor ones as soon as possible.
In this stage managers use their knowledge and experience to weed out the poor ideas and will
eliminate those ideas which are inconsistent with the firm’s product policies and objectives,
existing skills and resources and so on.
In the same way, ideas which are incompatible with the firm’s existing markets and customers
are likely to be screened out.

3. CONCEPT DEVELOPMENT AND TESTING

An attribute idea must be developed into a product concept. A product concept is distinguished
from a product idea and product image. While a product idea is a possible product that the
company might offer to the market, its elaborated version expressed in meaningful customer
terms is a product concept. Product image is the particular picture of an actual or potential
product perceived by the consumers.
At this stage, it is important to define the boundaries of the concept rather than the details. The
target market, customers, their applications, major technical requirement etc. have to be defined
and issues like these are addressed in a concept level business plan. The new product concept,
more specific in description than an idea, should include the customer, the major consumer
benefits and features defining the new product. Once the concept is developed these are need to
be tested with consumers either symbolically or physically.
After being exposed to concept consumer are asked to respond to it by answering a set of
questions designed to help the company decide which concept has the strongest appeal.
4. MARKETING STRATEGY DEVELOPMENT

After developing and testing the new product concept, a new product manager should proceed to
develop a marketing strategy plan for introducing the product into the market.
The marketing strategy statement consists of three parts:
 The first part describes the size, structure and behaviour of the target market, the planned
product positioning and the sales, market share and profit goals sought in the first three
years.
 The second part outlines the product’s planned price, distribution strategy and marketing
budget for the first year.
 The third part describes the planned long-run sales and profit goalsand marketing-mix
strategy over time.

6. PRODUCT DEVELOPMENT

Product development is done after forecasted sales and budgeted costs promise a satisfactory
return on investment and after the company is satisfied that it can gain access to the target
market.
Usually this phase is the longest in the whole process, and it is vitally important that, throughout
development, the innovator should continue critically to observe events and changes in the
proposed target markets. In addition to updating the product concept to reflect changes in the
market, the development phase should also provide for testing the product under real usage
condition to ensure that it will deliver the promised satisfactions.
First R&D will develop prototypes that will satisfy and excite the customers and that can be
produced quickly at budget costs. When prototypes are ready it should be tested. Functional test
are conducted under laboratory or field conditions to ascertain whether product will perform
safely and effectively.

7. TEST MARKETING

After developing a prototype, they must be put through vigorous functional and consumer tests.
The functional tests are conducted in order to make sure that the product performs safely and
effectively and they are conducted under laboratory and field conditions. Consumer testing is
done in a variety of ways. They may be done by bringing consumers into laboratory or they may
be given samples to use in their homes.
After passing of the functional test the next step is test marketing in this step the product is being
exposed to more realistic marketing mix. Hence at sometimes company may decide to do away
with this stage and proceed to next one.

8. COMMERCIALIZATION

Commercialization can be considered as a final phase in the new product development when the
product is launched into the market place, thus initiating its life cycle. Supplies can be made
available to the distribution channel, intensive selling must take place to ensure widespread
availability at the point of sale or to canvass orders from prospective buyers. Maintenance and
servicing facilities will be necessary and a large promotional investment will be needed to create
awareness of the new product’s existence.

LEVELS OF PRODUCT
1. Core Benefit

The first and the basic level is the core product/benefit the customers look at. It is the basic good
or service purchased, aside from its packaging or accompanying services. We buy a product first
because of its core or fundamental benefit – the problem it solves or the need it satisfies.

From a bar soap, for example, the core benefit we look at is: it cleans our skin. While the
purchaser of a cosmetic item buys beauty, the purchaser of a lottery ticket buys hope, and so on.
A core product’s benefits range from tangible to intangible.

2. Generic Product or Basic Product

The benefits that customers look at must be turned into a basic product by the marketer. A
calculator, for example, includes plastic, metal, electronic circuits, and a liquid display crystal.

The most fundamental level is the basic product, which seeks an answer to the question: What is
the buyer really buying? The basic product forms the nucleus of the total product. It constitutes
the problem-solving features or basic benefits that consumers seek when they acquire a product.

3. Expected Product

The next level is the expected level. It includes a set of attributes and conditions that the buyer
expects which marketer should provide for purchase to take place. In the case of a calculator, the
buyers expect it to be handy, easy to operate, and so on.

4. Augmented Product
The Fourth Level of a Product is the Augmented Level or the augmented product. The
augmented product is what the customer is really buying. It is a good, service, or an idea
enhanced by its accompanying benefits.

It is a combination of what the seller intends, and the buyer perceives. An augmented product
gives customers more than they expect. People do not buy products; they buy the expectations of
benefits. The marketing view demands the active recognition of this and acts accordingly.

5. Potential Product

The last level of a product is the potential product. It encompasses all the augmentations and
transformations that the product might ultimately undergo in the future’.

Augmentation, you know, is concerned with what the product includes in the present term, where
the potential product is concerned with what may be added to the product in the future to make it
more desirable. The potential product is aimed at not only satisfying the customers but present
the product that delights and surprises the customers.

PRODUCT LIFE CYCLE

1. Introduction Stage :- This is the first stage in product life cycle. Before a new product is
introduced in the market place, it should be created first. The processes involve in this
stage include generation of idea, designing of the new product, engineering of its details,
and the whole manufacturing process. This is also the phase where the product is named
and given a complete brand identity that will differentiate it from the others, particularly
 the competitors. Once all the tasks necessary to develop the product is complete, market
promotion will follow and the product will be introduced to the consumers. Product
development is a continuous process that is essential in maintaining the products quality
and value to consumers. This means that companies need to continuously develop or
innovate their products to out ride new and existing competitors.

2. Growth Stage: - This is a period where rapid sales and revenue growth is realised.
However, growth can only be achieved when more and more consumers will recognize
the value and benefits of a certain product. In most cases, growth takes several years to
happen, and in some instances, the product just eventually died without achieving any
rise in demand at all. Hence, it is important that while the product is still in the
development and introduction stages, a sound marketing plan should be put in place and a
market and primary demand should be established.

3. Maturity Stage: - In the maturity stage, the product reaches its full market potential and
business becomes more profitable. During the early part of this stage, one of the most
likely market scenarios that every business should prepare for is fierce competition. As
business move to snatch competitors customers, marketing pressures will become
relatively high. This will be characterized by extensive promotions and competitive
advertising, which are aimed at persuading customer to switch and encouraging
distributors to continue sell the product. In the middle and late phases of the maturity
stage, the rate of growth will start to slow down and new competitors will attempt to take
control of the market. In most cases, many businesses falls and lose money in these
stages as they focus more on increasing advertising spending in hope of maintaining their
grip of the market.
4. Decline Stage:- The decline stage is the final course of the product life cycle. This
unwanted phase will take place if companies have failed to revitalize and extend the life
cycle of their products during the maturity stages early part. Once already in this phase, it
is very likely that the product may never again recover or experience any growth,
eventually dying down and be forgotten.

BRANDING

Branding means giving a name to the product by which it could become known and familiar
among the public. When a brand name is registered and legalized, it becomes a Trade mark. All
trademarks are brands but all brands are not trade marks. Brand, brand name, brand mark, trade
mark, copy right are collectively known as the language of branding.

Some key definitions of branding are:

Brand: Brand is a name, term, sign, symbol or design or a combination of them, which is
intended to identify the goods or services of one seller or group of sellers and to differentiate
them from those of competitors. Thus a brand identifies the maker or seller of a product.

Brand Name: It is that part which can be vocalized - the utter able. Example: Videocon, Dalda.

Brand Mark: It is that part of a brand which can be recognized such as a symbol, design or
distinctive coloring or lettering. Example: ‘Butterfly’ of Co-optex, ‘Maharaja’ of Air India or
‘Red color inverted triangle’ for Family Planning.

Trade Name / Mark: It is brand name or symbol that is given ‘legal protection’ because it is
capable of exclusive appropriation by the seller.

Brand Image: The term brand image signifies the reputation and the symbolic meaning attached
to a brand. Image is an abstract concept incorporating the influences of past promotion,
reputation and peer evaluation of that brand.

PACKAGING

Packaging is the process of designing and producing an attractive packet, wrapper, cover in
which product is going to be sold in the market to the customer. It includes all the activities
involved in covering a product.
A good packaging not only draws attention of the consumers but also makes the product ready
for transport and also prevents it from damage or pilferage.

OBJECTIVE OF PACKAGING

1. It can be used for the identification of the brand.

2. It helps the marketer to communicate about the product in detail.
3. It helps for the safe transportation of the product to the point of purchase.
4. It can act as a self- service i.e. product can be used without any help.

LAYERS OF PACKAGING

There are 3 layers of packaging:

1. Primary Packaging: It is the immediate packing of the product.in which it is being

packed for better shelf life. Ex: Glass bottle of cough syrup

2. Secondary Packaging: It is the outer covering which is to provide protection to the

product. Ex: Cardboard box to keep the glass bottle of cough syrup.
 3. Transportation Packaging: it is also called as final packaging of the product which is
used for the proper storage and transportation of the product from the producer to the
market. Ex: cartons in which cough syrup is being transported.

DIFFERENCE BETWEEN BRANDING & PACKAGING

BRANDING PACKAGING

1. It is a strategy in which a marketer uses 1. It involves the designing and creating a

name, mark or symbol of a brand to cover for the product to make it ready
make it identifiable to the consumer. for sale or transport.
2. It focuses on identification & 2. It focuses on promoting the product and
differentiation of the product from other also protection of it during transit.
competitor’s product.
3. It is all about color, symbol, and slogan 3. It is all about design, fonts and logo of
of the product. the product.

4. It is helpful in retaining & increasing 4. It is helpful in drawing customer attention

consumer loyalty as well as introducing with its attractive design.
new product in market.

Basis of
Brand Trademark
Comparison

It is a name given by the owner, or It is a name, sign or symbol that is registered

Definition
manufacturer under the law.

Nature All brands are not trademark All trademarks are brand

It is for the identification of the

It is issued to prohibit duplication of the
Objective products and the company in the
product.
market

This can be used by other This is only used by the owner or manufacturer
Used by
manufacturers and sellers who has a registered trademark under law.

Punishment If someone copies a brand name, no If a trademark is duplicated then legal action
applicable legal action can be taken against him. can be taken against him.

DISTRIBUTION
Distribution means to spread the product throughout the marketplace such that a large number of
people can buy it. Distribution can make or break a company. A good distribution system simply
means the company has greater chance of selling its products more than its competitors.

According to American Marketing Association “A channel of distribution or marketing

channel is the structure of intra-company organization units and extra company agents and
dealers, wholesale and retail – through which a commodity, product or service is marketed”.

It involves the following things:-

1. It helps to take the goods to various geographical areas.

2. A good distribution system helps the goods to reach at right time, at right place and right
quantity.
3. It also helps in taking care of wear and tear of the product during transport.
4. It helps a marketer to know which areas are best where product can be placed.

IMPORTANCE OF DISTRIBUTION CHANNEL

 1. Timely Delivery of Products: This is one of the important functions of
distribution channels. Distribution channel helps in the delivery of products to customers
on the right time. If products are not available at the right time to customers, it may
disappoint him. It has removed all distance barriers for businesses while performing their
operations. Distribution channels have made it possible for businesses to serve customers
even at far distant places.
2. Maintain Stock of Products: Distribution channel has an efficient role in maintaining
sufficient stocks of goods. It helps in maintaining the supply of goods as per the demands
in the economy. Distribution channels performs functions of storing the products in
warehouses & supplying them according to demand in the market. It avoids all cases of
shortage of supply of goods in market.
3. Provides Market Information: Distribution channel is served as the medium through
which business acquire all required information from the market. It takes all information
like demand, price & nature of competition in the market from its different intermediaries
involved in its distribution channel. Also, customers provide information & various
suggestions to producers through these channels. It helps in formulating strategies
according to that.
4. Promotion of Goods: Distribution channels helps in marketing & promotion of products.
There are several middlemen’s who are involved in the distribution system of businesses.
These intermediaries inform the customers about the product. They introduce them with
new products & explain them to its specifications. Customers are induced & motivated to
buy these products by intermediaries. Hence, the distribution channel has an efficient role
in promotion & marketing of goods.
5. Provide Finance: Business gets financial assistance from the distribution channel.
Intermediaries involved in distribution channel buys goods in bulk from producers. These
intermediaries give payment to producers while purchasing. Then these middlemen sell
these goods to customers in quantities demanded by them. They even provide credit
facilities to the customers. However, producers get timely payment & are saved from
blocking of their funds through credit selling.
6. Generates Employment: Distribution channel generates employment in the economy.
There are huge numbers of peoples who are involved in the distribution system of
businesses. These people are wholesaler, retailers & different agents. All these people
earn their livelihood through working in these distribution channels. Therefore,
distribution channels are creating employment opportunities for peoples.
7. Distribution of Risk: Risk is something which is associated with each & every business.
Distribution channels save the producers from the risk of delivering products to
customers safely & timely. It becomes the duty of intermediaries that are involved in the
channel to deliver it to customers timely. Producers focus only on their production
activities & don’t need to consider issues about delivering products.

Types of Distribution Channels in marketing management

1. Direct channel or Zero level channel.
2. Indirect channel.
 1. Direct Channel
It is the simplest type of distribution channel. Direct channel is one of the oldest forms of
distribution channel used by businesses to sell their products. It is also termed as Zero-level
channel because there are intermediaries involved in this type of channel. A producer directly
delivers its products to their customers with using any middlemen.
The most important advantage of this channel is that it cuts all profit margins of the
intermediaries. Businesses are able to deliver at lower rate to their customers. It also reduces the
time involved in delivering process as product directly flows between manufacturers &
customers. This channel is basically used by businesses to sell perishable or expensive goods.

2. Indirect Channel
Indirect channel is those in which manufacturers do not directly sell to customers. There are
various middlemen & intermediaries involved in the distribution channel. Intermediaries work
for their commission. They purchase products in bulk from manufacturers & supplies them to
final customers as per their demand.
This type of channel saves manufacturers from risk of delivering products. They sell all their
products to intermediaries & receive payment in cash. There are 3 types of indirect channel: one
level, two-level & three-level channel.

1. One level channel: - It is a distribution channel where there is one intermediary involved
in between manufacturer & customers. This intermediary is termed as retailer.
Manufacturers instead of selling their products directly to customers sell them to retailers.
These retailers then sell them to customers as per their requirements. Retailers set their
profit margin over the price they pay to manufacturers. This channel is used for consumer
goods like clothes, furniture, watches, mobiles etc.

2. Two-level channel: - Two-level distribution channel is one in which there are 2

intermediaries involved in distribution network of business. These intermediaries are
wholesalers & retailers. Producer’s sells goods in large quantities to wholesalers;
wholesalers sell them in small quantities to the retailers. Retailers finally deliver the
goods to customers in quantities demanded by them. They both charge their commission
for supplying the goods from producers to customers. This channel is more convenient in
case of durable & inexpensive products.
3. Three-level channel:- Three-level distribution channel is longest form of distribution
channel. Here there are 3 intermediaries involved: Agents, Wholesalers & Retailers.
Agents are the person who represents the producer & company. In place of
manufacturers, the agents deal with intermediaries. These agents do not have ownership
of goods but they work on remuneration basis for companies. In this channel, agents sell
goods to wholesalers on behalf of the company. Wholesalers then sell these goods to
retailers & retailers sell these to final customers. This channel is used when demand for
the product is very high & customers are scattered largely all over the country.