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A.I.T.S.

- - - - Rajkot

Chapter 9 : Introduction to MARKETING MANAGEMENT


Subject : EEM

Prepared By : Pooja P. Chavda

What is Marketing?
-

Marketing is about identifying and meeting human and social needs. One of the shortest
definitions of marketing is: Meeting needs profitably

The American Marketing Association formal definition:


Marketing is an organizational function and a set of processes for creating, communicating, and delivering
value to customers and for managing customer relationships in ways that benefits the organization and its
stakeholders.
Managers som times think of marketing as The Art of Selling Products, but selling is not the most
important part of marketing!
Philip Kotler, said that Marketing is a Social & Managerial Process by which individuals & groups
obtain(achieve) what they need and want through creating, offering and exchanging products of value with
others

Peter Drucker, says the aim of marketing is make selling superfluous. The aim of marketing is to know and
understand the customer so well that the product or service fits him and sells itself. Ideally, marketing
should result in a customer who is ready to buy.
The scope of Marketing :
To be a marketer, you need to understand what marketing is, how it works, what is marketed, and who
does the marketing.

What is Marketed??
1. Goods: Physical goods, each year Indian companies market cars, trucks, television-sets, machine tools,
machines, industrial chemicals, watches, cosmetics, etc.
2. Services: Service include the work of airlines, hotels, car rental firms, barbers, and beauticians,
maintenance and repair people, and accountants, bankers, lawyers, engineers, doctors, software
programmers, and management consultants.
3. Events: Marketers promote time-based events, such as major trade shows, artistic performances, and
company anniversaries. Global sporting events such as the Olympics and the World Cup.
4. Experiences: An amusement park or a water park represents experiential marketing: a theme restaurant
that creates the ambience of a village in Rajasthan or Gujarat.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

5. Persons: Celebrity marketing is a major business. Artists, Musicians, CEOs, Physicians, High profile
Lawyers and financiers, etc. Amitabh Bachchan, Sachin Tendulkar, ShahRukh Khan, Aishwarya Rai, and
Sourav Ganguly are big brands.
6. Places: In the software industry, Bangalore is positioned as the Silicon Vally of India. In the tourism
industry, Kerala is marketed as Gods own country. The government of India is marketing India as a
tourist destination through the Incredible India advertisement campaign.
7. Properties: Properties are intangible rights of ownership of either real estate or stocks and bonds.
Properties are bought and sold, and these exchanges require marketing.
8. Organizations: Organizations actively work to build a strong, favorable, and unique image in the minds of
their target publics. E.g. HUL, P&G, Dabar, etc.
9. Information: information is essential what books, schools, and universities produce, market, and
distribute at a price to parents, students, and communities. The production, packaging and distribution of
information are some of our societys major industries.
10. Ideas: every market offering includes a basic idea. In the factory, we make cosmetics; in the store we sell
hope. creating awareness about AIDS, encouraging family planning, and discouraging smoking, which fall
in the realm of social marketing.

4 Ps of Marketing or Marketing Mix

1. Product
The terms Product refers to tangible, physical products as well as services.
Product can be divided in Core products, Expected product and Augmented product.
A product decision will have to satisfy the following questions:
1. What does the customer want from the product/services?
2. What features does it have to meet these needs?
3. How and where will the customer use it?
4. What does it look like? How will customers experience it?
5. What size, color, and so on, should it be?
6. What name should be given to the product?

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

7.
8.
1.

2.

a)
b)
c)
d)
e)
f)
g)
3.

4.

5.

6.
7.

How is it branded?
How is it differentiated against the competitors?
Product Mix:
When a company enters a market, it generally offers one or two product. As is grows bigger, it expands its
product offering.
The total number of products and services offered by a company is called its product mix
The product mix is characterized by the terms like product line width, product line length, and product line
depth.
New Product Decisions:
Following are the steps involved in a new product development.
Idea Generation: ideas can come from Customers, Employees, Dealers, advertising agencies etc.
Idea Screening
Concept Testing and Analysis
Product Development
Product Use Testing
Test Marketing
Commercialization
Packaging:
Protection
Easy Identification
Convenience
Promotion
Innovation
Product Quality:
Conformance Quality
Durability
Reliability
Reparability
Style & Design
Branding:
Individual Branding
Blanket Family Branding
Separate Family Branding
Company & Individual Name combined Branding
Labeling
Guarantee/Warranty

2. Price

1.
2.
3.
4.

Price is an important element of the marketing mix. It is the monetary value that the customer gives the
company in exchange to a product or service.
What is the value of the product or service as perceived by the buyer?
Is the customer price sensitive?
What discounts should be offered to trade customers, or to other specific segments of your market?
How will the price set by the company against that of the competitors?

1. Pricing Methods:
Based on the various factors, companies choose a pricing method which are discussed below.
a. Mark-Up Pricing:
Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

The final price is arrived by including the production cost, including both cost of goods and fixed costs and
a certain profit margin is added over it.
b. Target Return Pricing:
The main motive is to achieve a target return-on-investment (ROI).
c.
Going Rate Pricing:
The product is priced according to the price that competitors have adopted. Generally it is done in
comparison with the market leader.
d. Differentiated Pricing:
The product and services are priced differentially based on the demand, place and paying capacity. E.g.
Grocery shop, Shopping mall, Tour service in season and non-seasonal.
2. Pricing Policy:
a. Market Skimming:
Price skimming means using a high introductory price to skim the cream of the demand.
This is done mainly when something new is introduced in the market. It can be a unique design or a
breakthrough technology.
b. Market Penetration:
Penetration pricing means using lower initial price to capture a large share of market.
This type of policy is adopted when a new company launches a product in a crowded market.
c. Psychological Pricing:
Customer relate the price of a product with its quality. If the price is high, they perceive the quality of the
product to be good.
Luxury product marketers keep their price higher than the available alternatives.
In psychological pricing, the ending digit 9 helps in pricing a commodity.
d. Transfer Pricing:
This type of pricing policy is adopted by multi-national companies. Transfer pricing is used by one division
of an organization to sell products to the other division of same organization in a different country.
3. Discounts:
Discounts are also a type of price adjustment which is done both for the channel members and the
customers.
This can be due to various reasons such as higher production, less demand, high competition etc.
Types of discounts that companies offer:
a. Quantity Discount
b. Seasonal Discount
c. Promotional Discount
d. Cash Discount

3. Place

Place refers to having the right product, in the right location, at the right time to be purchased by customers
with as much ease as possible.
It means the way in which an organization will distribute the product or service they are offering to the end
user.
The product placement is done through a distribution channel with the help of number of intermediaries.
Theses intermediaries can be Wholesalers, Retailers, Agents and Brokers.
Distributing goods to all parts of the country is a tedious and costly task and so even the bigger companies
take the help of intermediaries to distribute their goods.
1. Channel Strategies:
Depending on the type of product being distributed, there are three common distribution strategies. They
are:
Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

a. Intensive Distribution:
This type of distribution is used commonly to distribute low priced impulse purchase product e.g.
chocolates, soft drinks.
b. Exclusive Distribution:
This type of distribution involves limiting distribution to a single outlet. The product is usually highly
priced, and requires the intermediary to place much detail in its selling.
An example of exclusive distribution is the sale of Maruti Cars through single dealership.
c. Selective Distribution:
In selective distribution, a small number of retail outlets are chosen to distribute the product.
Selective distribution is common with products such as computers, televisions household appliances,
where consumers are willing to shop around and where manufacturers want a large geographical spread.
2. Channel Levels:
Based on the types of product, companies use a number of intermediaries to place its products and reach as
many customers as possible.
a. Zero Level Channel
b. One Level Channel
c. Two Level Channel
d. Three Level Channel

3.

a.

Channel Dynamics:
The channel members should put in integrated efforts for the proper working of a distribution channel
Horizontal Marketing System:
Horizontal marketing system shares the marketing resources among two or more related business at the
same level of operations.
b. Vertical Marketing System:
In this type of marketing system, the producers, wholesalers and retailers perform the marketing activities
together and a coordinated effort is put for this.
c. Multichannel Marketing System:
A single company or firm uses two or more marketing channels to reach one or more target segment.
4. Physical Distribution:
Physical Distribution of goods is an important elements in the Place of the marketing mix.
Physical distribution means the physical handling and movement of goods from place of production to the
place of consumption

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

5. Channel Conflict:
Since a number of intermediaries are present in a distribution channel, conflict between them is bound to
occur.
This is mostly because of differing goals and objectives of all channel members.

4. Promotion

1.

To attain the sales goals, it is important that the customers are made aware about the product.
The four major types of promotion that marketers use:
Advertising:
This form of promotion involves non-personal, paid promotions using mass media outlets to deliver the
marketers message.
Advertising generally means one-way communication with little feedback opportunity for the customer
experiencing the advertisement.
Following are various types of media used for advertising:
Television, Newspapers, Magazines, Pamphlets, Hoardings, Direct Mail, Newsletters, Radio, Brochures.
2. Sales Promotion:
Sales promotion involves the use of special short term techniques, often in the form of incentives, to
encourage customers respond or undertake some activity.
There are three basic categories of sales promotion: Consumer, Trade, & Business.
For Consumers: Free samples, Coupons, Rebates & Refund, Price Packs, Premiums, Patronage rewards,
Point-of-purchase coupons, Contests, Sweepstakes & Games.
For Trade Promotion: Discounts & allowances directed at wholesalers and retailers, Free Goods, Push
Money, Novelties.
For Business Promotion: Trade fairs are organized.
3. Public Relations:
The opinion of the public is very important for the growth of any company.
Here public means the customers, shareholders, suppliers, trade groups etc.
4. Personal Selling:
This form of promotion involves personal contact between company personnel and those who have a role
in purchase decisions.
This occurs face-to-face or via telephone, online interaction via video conferencing or text chat.

-- 6 CONCEPTS IN MARKETING With industrial revolution, marketing has evolved in different phases. Different phases have given rise to different
marketing concepts
1. The Production Concept
2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept
6. Holistic Marketing Concept
1 Production Concept
The idea that consumers will favour those products which are available & highly affordable and
organization focus on improving Production and Distribution efficiency.
For eg. Computer maker Lenovo dominates Chinese PC Market through Lower Labour Cost, Mass
distribution

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

This concept believes that production of goods is the most important part of marketing activity.
According to this concept consumers will buy goods which are easily and cheaply available.
Companies that run on this concept focus more on the production process to produce goods efficiently.
These companies do not even give much importance to features or services.

2 Product Concept
The idea that consumers will favour products which offers the most Quality, Performance, Features and the
organization should force its Energy to making continuous product development.
For eg. Manufacturers of Mousetraps in Old days now with better solution with Chemical spray because
Attention is necessary.
This concept lays emphasis on the quality of product and the services provided to the customers.
They work ruthlessly to bring about innovation which can provide superior quality and services to the
customers.
It is important to understand that the markets today are shifting from being product-centric to customercentric.
This concept soon be realize that a product cannot just be sold based on its quality and other factors.
Market communication is also very important for the success of a product
3 Selling Concept
The idea that consumers will not buy enough of the firms products unless it undertakes a large scale
selling and promotion effort. For eg. Product benefits Insurance, Blood donation etc.
Marketers began to realize that just producing goods of superior quality does not help in capturing market
base or gaining profits.
It was more important to sell the product rather than manufacturing it or packing features in it.

Selling is more important for the product for which the demand is low or it has declined over a period of
time.
In sales concept companies produce goods which they want and not those which the customer want, such
companies have to face the problem of overcapacity.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

4 Marketing Concept
Marketing Management philosophy that holds that achieving organizational goals depends on knowing the
Needs and Wants of Target Market and Delivering the desired satisfactions better than Competitors do.
The problem in selling concept became the basis of marketing concept.
The marketing concept taught companies to recognize the needs and preferences of the customer and
design the product accordingly.
Selling was required because the companies made products that they found suited for the markets.
Selling means finding customers for the products that companys produce. Marketing aims at finding the
right products for the customers.
The attainment of company goal by meeting and exceeding customer needs better than the competitors.
Marketing concept is based on three factors:
1. Customer Orientation:
The corporate objective should be defined with the motive of providing customer satisfaction.
2. Integrated Effort:
In providing customer satisfaction, the entire staff team, team management committed towards the goal of
providing customer satisfaction.
3. Goal Achievement:
The employees and the top management should have firm belief that goals and objectives can be met
through customer satisfaction.

Difference between Selling and Marketing

1.
2.
3.
4.
5.

Selling

Marketing

Selling is done with the intention of


benefiting the seller.
Selling is the process of fulfilling a
need.
It focuses on short term goals of the
company.
Selling means finding customers for
the products that companies produce.
Selling is just a part of marketing and
so it is a much narrow term than
marketing.

Marketing is done keeping in interest of the buyers.


Marketing is the process of establishing the needs.
It focuses on fulfilling the long term objectives of
the company.
Marketing aims at finding the right products for
the customers.
Marketing includes selling & it makes it easier. It
also includes planning, pricing, packaging,
advertising.

5- Societal Marketing Concept


The idea that companys marketing decisions should consider Consumers Wants, the Companys
Requirements , Consumers Long-Rrun Interests and Societys Long- Run Interests.
For eg. Short-run as Wants and Long-run as Welfare like Johnson & Johnson company having Honesty,
Integrity and company prefer People before Profits, so the benefits to both Consumers + Company
Companies began to realize the importance of including the benefits of society in its marketing efforts.
The offerings of a company to its customers have a direct bearing on the society as a whole. So apart from
finding what the customer wants it is also important to know the implication of such a product.
To be in the race for a longer run and be profitable as well, the companies are aware of their corporate
social responsibility. In this regard the companies are especially concerned about the environment from
where they use resources. E.g. Pepsi Co. India believes in Performance with Purpose here the area may
focuses on Replenishing Water, Partnership with Farmers, Waste to Wealth, Healthy Kids.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

6 Holistic Marketing
Philip Kotler and Kevin Keller defined Holistic Marketing as:
The Development, Design and Implementation of marketing programs, processes and activities .
Everything Matter in Marketing

1.

2.

Integrated Marketing:
In this, marketing efforts should be fully integrated to communicate with the customers.
All the 4 Ps of marketing i.e. Product, Price, Place and Promotion must be take care of.
Internal Marketing:
The participation of employees at all levels in a company is ensured.
For a marketing communication program to be successful, it is imperative that the junior employees and
the middle and senior management should work in proper coordination.
Internal marketing involves the process of Hiring, Training, and Motivating the marketing staff so that they
provide excellent services to the customers.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

3. Performance Marketing:
The marketers are held accountable for the financial, social, legal, ecological efforts of a marketing
campaign.
The marketers are asked to justify the financial gains that a campaign has achieved.
The societal marketing concept that we have already discussed comes into picture.
4. Relationship Marketing:
The long term profitability and customer loyalty was the main focus.
This was built through catering to the needs and wants of the customer for a long period.
Customer relationship management is the most important area in marketing. It is achieved by integration
of all the areas of service such as marketing, sales and customer service.
Relationship marketing can be defined as the process of creating, developing, maintaining and enhancing
relationship with customers and other stakeholders of the company.

** Market Segmentation **

Starting point of Market Segmentation is Mass Marketing.

Market Segmentation:

Dividing a market into distinct(separate) groups of Buyes who have different needs, Characteristics and
who might require separate products or marketing programs
Market segmentation is the process of Dividing the market on the basis of tastes and preferences along
with the paying capacity of the customers.
It can also be defined as the identification of individuals or organizations with similar characteristics that
have similar implication for the determination of marketing strategy.

Market Segment : A group of Consumers who respond in a similar way to a given set of Marketing Efforts.

Modern days of companies are trying to position their products according to the specific preferences of the
customers. For eg. Car segment available in High and Low price segment.
For eg. Coca cola company following Mass marketing concept and having large number of Buyers of the
same products. The company creates awareness through variety of Promotional strategy so that it covers
Largest Potential market + Lowest costs of the Products + Lower prices compare with Higher Profit
Margins but Companies are now a days turning to Micro Marketing Concept
For eg. HUL launched soaps like Lux, which costs around Rs. 13 targeting the mass base of customers and
has also launched Dove, which cost around Rs. 27, targeting the upper middle class and high class segment.
Need of Market Segmentation
Over a period of time, customers have become very particular about the needs and preferences. A
generalized product cannot satisfy customers from all segments.
So market segmentation helps to categorize the market base on the needs, preferences and paying capacity
of customers and design the product which is customized as per the need of that segment.
Smaller companies do not possess the required resources to cater to the mass market.
Market segmentation is used to categorize the market and then position the product in a particular
segment only.
Importance of Market Segmentation
1. It helps in better understanding of the customers needs and wants.
2. It catalyzes innovation by identifying the needs of a particular product.
3. If a product meets and exceeds a customers expectations by adding superior value, the customer normally
is willing to pay a higher price.
4. It leads to two-way communication among the potential buyers and the organization.
5. It helps the marketers to distinguish one customer group from the other.
6. It helps in maintaining good relationship with the customers.
Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

7. It helps in retaining the existing customers and attracting new ones.


8. It helps in reducing cost / expenses on various marketing activities and increases market share.
9. Improves service delivery standards.

Bases for Market Segmentation of Consumer Products

1.
2.
3.
4.

Before segmenting the markets, the companies need to take care of certain things and have a clear
understanding of some basic questions related to segmentation.
Does the segmentation strategy help the company profit in short and long term by increasing sales and
market share?
Is the size of the segment being targeted ideal?
What is the level of competition in the segment that the company intends to enter?
How many segments of the markets does the company intend to enter?

1. Demographic Segmentation

In demographic segmentation, the consumer market is segmented based on variables such as gender, age,
occupation, income, social class, family size, and nationality.
Taste and preferences of a particular demographic group believed to be similar and so the positioning of
the product is done accordingly.
Here we will be discussing the variables used to segment the market.
Gender: some products are segmented according to the gender. There are brands which have products
exclusively for male or female customers.
Age & Life Cycle Stage: tastes and preferences keep on changing with age and life cycle-stage. Toys,
Games, etc.
Income and Social Class: tastes and preferences change with social class as well. E.g. Cars, Bikes, Cloths,
Shoes
Generation: with succeeding generations, the buying pattern of customers changes. The new generation is
tech-savvy and analyzes a product based on the features and then makes a decision to buy the product.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

2. Geographic Segmentation

Dividing the market according to geographical areas such as countries, states, cities, regions and zones is
called as geographic segmentation.
A thorough knowledge of the demography and taste and preferences of that region helps the marketer to
develop products that are best suited for that place.
Rural and urban markets differ on a number of important parameters such as literacy level, income,
spending power and availability of infrastructure such as roads, electricity, telephone services as well as
social and cultural acceptance of people that affect market potential and buying patterns and habits.
3. E.g. Times of India in Rajkot gives Rajkot Plus to add the local taste with the news that is nationally and
internationally circulated.

3. Psychographic Segmentation :
- Demographic segmentation identifies the group of people who will be inclined to buy a Mercedes car. But
the reason why that group likes to buy Mercedes is made clear by Psychographic Segmentation.
- Here we will discuss the Psychographic variables that affect the buying behavior of a group of people.
1. Life style: lifestyle is a very important parameter which affects the buying behavior of individuals. Based
on the work one does, the need also changes. The mall and multiplex culture has emerged in the urban
areas because people there are interested to spend some quality time even during shopping as Sports,
Outdoor or cultural trends.
2. Values: Marketers use beliefs and values to determine the buying behavior of a group of people. Values
mold the buying decision in the long run and if the values are taken care of, the customer may turn to be
loyal customer and be profitable for the company.
E.g. McDonalds introduce Mc Aloo Tikki in India & then Non-vegetarian burgers.
3. Personality: The personality traits such as ambitious, sportsmanship, aggression form an important
buying motivator. So when companies design or communicate about a product, they keep in mind the
personality trait of the target group.
E.g. Sporty person attracted to sports bike, Axe, Wild stone, etc.

4. Behavioral Factors Segmentation

This kind of segmentation is done for existing customers and is done on the basis of the usage of the
product.
This kind of segmentation can be done only for the existing customers as their buying pattern has to be
observed before making the segmentation.
This kind of segmentation is done mainly for product driven organization.
1. Benefits: Consumer market is segmented based on the benefits that the customers seek from a product. A
company can place different products based on benefits sought by the customers like quality, speed, services
etc. for E.g. Liril soap for freshness, Cinthol soap for anti body, Dettol soap for germs free
2. Occasions: Markers can also be classified based on the occasions on which the product is used. Different
products are best suited for different occasions like regular or special occasions.
E.g. Archies & Hallmark cards for Valentine day, Mothers day, New Year, Birthday etc.
3. Usage Rate: Products are used by users with varying frequency of usage with the measurement light,
medium and heavy. Those who use the product rarely, intermittently or regularly. Marketers target the
customers with heavy usage of product.
4. Attitude: of the customers is also important factor in behavioral segmentation of the consumer market.
Customers are classified as positive, negative, enthusiastic, indifferent and hostile according to the attitude
of the customers.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

5. Loyalty of the Customers: The customers can be classified based on their loyalty with the company.
Loyalty of the customers can be classified into four types.
a. Strong Loyalists: E.g. users of Mercedes will never be attracted to any other brand.
b. Shifting Loyalty: E.g. user may use Colgate, Close-Up or Pepsodent.
c. Switchers: Users keep changing brand based on availability, discounts and added features of the product.

Bases for Market Segmentation of Industrial Products

Few approaches have been advocated on industrial market segmentation.


Some of the variables based on which industrial goods market can be segmented are:
Demographics, Operating variables, Situational factors, Purchasing approaches and Personal
characteristics.
Here we will be discussing the variable one by one.

1. Demographic
Demographics are used to segment both the consumers and industrial goods.
But the demographic variables are used to segment the consumers and industrial markets are different.
The variables used to segment industrial markets based on demographics are companys size, industry and
customers location.
Company Size: The size of the product selling company is an important factor while segmenting industrial
markets.
If the company is small and its manufacturing capacity is less, then it will not take orders from huge firms
as the order size will be large and the company may not be able to supply the order on time.
Industry: The working of different industries is different. So an in depth knowledge of the industries gives
the marketer a basis to segment the market. An industry may have so many sub industries in it.
Customer Location: The proximity of the customer location is yet another variable for the market
segmentation of the industrial products. The vendors of TATA are mostly located in the surrounding area of
the manufacturing plant of the company.
2.Operating Variables:
Company Technology, Product and brand-use status Customer Capabilities
3. Purchasing Approaches:
Organizations purchasing Function
Power Structure

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

Relationship among buyers and sellers


General Purchasing policies of Companies
4.Situational Factors:
Urgency of Order , Product Application , Size of Order

---- Product Life Cycle ---The classic product life cycle has four stages : Introduction, Growth, Maturity and Decline..

1. Introduction Stage : When the Product is introduced sales will be low until customers become
aware of the product and its benefits.
- Some firms may announce their product before it is introduced, but such announcements also alert
competitors and remove the element of surprise.
- Advertising costs typically are high during this stage in order to rapidly increase customer awareness of
the product and to target the early adopters.
- During the introductory stage the firm is likely to target the early adopters. During this stage the firm is
likely to incur additional costs associated with the initial distribution of the product. These higher costs
coupled with a low sales volume usually make introduction stage a period of negative profits.
- During this stage the primary goal is to establish a market and build primary demand for the Product
class.
The marketing mix are..
Product : one or few products, relatively undifferentiated
Price : Generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the
product and the firm seeks to recover development costs quickly. In some cases a penetration pricing strategy
is used and introductory prices are set low to gain market share.
Place :It is selective and developed as the firm commences implementation of the distribution plan.
Promotion : it is aimed at Building brand awareness. Samples or trial incentives may be directed toward
early adopters. The introductory promotion also is intended to convince potential resellers to carry the
product.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

2. Growth Stage : This is a period of rapid revenue growth. Sales increase as more customers become
aware of the product and its benefits and additional market segments are targeted.
- Once the product has been proven a success and customers begin asking for it, sales increases further as
more retailers become interested in carrying it.
- The marketing term may expand the distribution at this point. When competitors enter the market, often
during the later part of the growth stage, the may be price competition and increased promotional costs in
order to convince consumers that the firms product is better than that of the competitors.
- During the Growth stage , the goal is to gain consumer preference and increase sales.
The marketing mix may be :
Product : New product features and packaging options; improvement of product quality.
Price : Maintained at a high level if demand is high, or reduced to capture additional customers.
Place : it becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the
product.
Promotion : increased advertising to build brand preferences.
3. Maturity Stage : The Maturity stage is the most Profitable. While sales continue to increase into this
stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be
reduced. Competition may result in decreased market share and prices.
- The competing products may be very similar at this point , increasing the difficulty of differentiating the
product. The firm places effort into encouraging competitors customers to switch, increasing usage per
customer and converting non-users into customers.
- Sales promotions may be offered to encourage retailers to give the product more shelf space over
competing products.
- During the Maturity stage, the primary goal is to maintain market share and extend the Product
Life Cycle.
The Marketing Mix decisions..
Product : Modifications are made and features are added in order to differentiated the product from
competing products that may have been introduced.
Price : possible price reductions in response to competition while avoiding a price war.
Place :New distribution channels and incentives to resellers in order to avoid losing shelf space.
Promotion : Emphasis on differentiation and building of Brand Loyalty. Incentives to get Competitors
Customers to switch.
4. Decline Stage : Eventually sales begin to decline as the market becomes saturated, the product
becomes technologically obsolete, or customer tastes change. If the product has developed brand
loyalty, the profitability may be maintained longer. Unit costs may increase with the declining
production volumes and eventually no more profit can be made.
- During the decline phase, the firm generally has three options :
1. Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product.
2. Reducing marketing support and costing along until no more profit can be made.
3. Discontinue the product when no more profit can be made or there is successor product.
The marketing mix are:
Product : the number of products in the product line may be reduced and surviving products to make them
look new again.
Price : prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for
continued products serving a niche market.
Place : it becomes more selective because channels that are no longer profitable.
Promotion : Expenditures are lower and aimed at reinforcing the brand image for continued products.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

--- Demand Forecasting --- Demands are wants for specific products through which ability and willingness to purchase the same

products which offers satisfaction.


For eg. Many people want Mercedes cars but only few people are able +willing to buy that.
- Market Demand :
It is the total volume that would be bought by a defined customer group in a defined customer group in a
defined geographical area in a defined time period in a defined Marketing Environment under a
Marketing Program.
Market demand is not a fixed number, but rather a function of the stated conditions. For this reason, we
can call it the Market Demand Function.
-Company Demand :
It is the companys estimated share of market demand at alternative levels of company marketing effort
in a given time period. it depends on how the company s products, services, prices and communications
are perceived relative to the competitors. If other things are equal, the company s market share will
depend on the relative scale and effectiveness of its Market Expenditures.
-Demand Forecasting : It is the activity of estimating the quantity of a product or service that consumers
will purchase. A demand forecast is the prediction of what will happen to your companys existing
product sales. Through Multi-Functional approach which helps the Inputs from sales & marketing,
finance and production should be considered.

1)
2)
3)
4)
5)
6)
7)

1)
2)

3)
4)
5)

6)

Importance of Demand Forecasting:


Planning and Scheduling Production
Budgeting of costs and sales revenue
Making Policies for Long-term Investment
Controlling Inventories
Achieving Targets of the Company
Planning for Finance
Planning for Labour
Criteria/Features for Good Forecasting Method :
Accuracy : it requires maximum accuracy because various important plans are prepared on the
basis of forecast. Wrong forecasts may create trouble in Business and result into heavy losses.
Simplicity : selected method must be as simple as possible because if it is difficult who is
engaged in forecasting will not do his job properly and there is always mistake in solution for
future.
Availability : the objects and scope of forecasting should be as such as the relevant information
are collected immediately with reasonable accuracy.
Stability: The stable figure helps to forecast the idea about the future changes are expected to be
minimal and are reliable(trustworthy) for planning.
Economy : Here the Forecast is directly related with growth of GDP(gross domestic product)
because costs must be weight against the importance of the forecast to the operations of the
Business.
Utility : The forecasting Techniques must be easily understandable and reliable to the
management.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

--- Demand Forecasting Approaches ---

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

1. SURVEY OF BUYERS INTENTION

It is also known as Consumer Market Survey


It is the most basic and least sophisticated (difficult)method of all the Forecasting
Method..
Customers are asked about their Purchasing Plans & their Projected Buying Behavior..
Customers are directly contacted to find out their Intentions & Intentions are recorded
through Personal Interviews, Mails, Post/courier Services, Telephone, and Questionnaires..
Here, Large number of Respondents are needed to achieve results.

Merits
Simple to understand and Easy to
implement.
This method is most popular among all
methods.
A direct communication with the
customers is possible.
The method is Effective for Short-Run
estimates.

Demerits
For Long-Run sales this method is not
Suitable because customers have
Changing nature..
Household consumers can be identified
through this method but it is
impractible & costly..
Basic limitation is measurement of the
variables is under management
control..

2.

SALES FORCE OPINION


The method is also known as Sales Force Composite Method.
Sales force are allocated according to any area, territory to collecting data.
Sales people is asked to project their sales because he is the closest to the marketplace so he
also know what the customer wants means Estimation.
Sales are the Lifeblood of the Company and Sales people are Lifeline.
Sales force surveys gather information related with Sales Force Collective Knowledge which
Experiences about customers & support information, tools, training and other resources your
sales people need to Boost Sales.
Merits
The sales force is aware of the ground
realities of the area in which they
operate.
It is In-house method so the cost of this
forecast is less.
It is actively involved in the forecasting
their morale increases which helps to
improve performance and achieving
of Targets.

Demerits
Many time some people underestimate
how much they spend and
overestimate how much they sell, it
may prove harmful to the company as
the production process will be based
on the forecast given by the sales
people.
This method is not consider while
changing scenario or the effect of the
competitors product on the demand.
The method has no Scientific
backing(support).

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

3. EXPERT OPINION METHOD


It is more focused approach to Demand Forecasting .
A Panel of Experts are identified where an expert could be a Decision Maker eg. An Ordinary
Employee or an Industry Expert
It is Systematic, Interactive method which depends on a Panel of Experts.
The Principal is that Forecasts from a structured group of Experts are more accurate than
unstructured group of Individuals.

Merits
1. This technique can be used in a wide
range of Environment for eg.
Government Planning, Business &
Industry prediction
2. Expenses : It saves corporations money
in Travel expenses, there is no need to
gather Participants from far areas,
generate ideas from the People Best
Expertise
3. Information : It is compiled on the
basis of Pooled(collective) Opinion
rather than Field work, so Information
is obtained Quickly

4.

Demerits
1. The Method is Somewhat Time
Consuming..
2. This technique can be difficult for
researchers to design an effective study..
3. There is possibility of Biased(unclear)
Judgment because to get immediate
benefits that may not give thoughtful
consideration

MARKET TEST METHOD


To test Multiple Marketing scenario and select the most promising for expansion.
First testing is always necessary for introducing a new product or service..
Marketers < their time & money are extremely valuable to them, they cant waste them by
investing them in producing product that fails in the marketplace..
The same way it also likely to earn to sales and profits that marketers desire..
Develop a prototype, model or description of the product or service that you can show to
others..
Determine the price the you can sell the product for in the current marketplace.
Go to a Potential(possible) customer with your sample and ask if he would buy it..
Merits
Very easy and less costly..
Modification in the product based on
the Market test Feedback..
When there is a new product
development this method is useful
while discussing about its Marketing
Plans..

Demerits
Sample market testing is done for limited
area, so sample test may not represent
the Opinion for Whole Population
Process is very Lengthy

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

Time Series Analysis there are 4 Methods .


Time Series Forecasting Method

1.

2.

Nave Approach

Moving Average (MA)

Description
--- The method assumes that demand in the next period is
the same as demand in most recent period but demad
pattern may not always be that stable.
--- Eg. If July sales were 50 units then August sales will be
also 50 units but not more than one month/day/year
It is a series of Arithmetic means and it is used if little/no
trend is present in the data.
Simple Moving Average
--- the method uses average demand for a fixed sequence of
period and is good for stable demand with no behavioral
patterns

Weighted Moving Average :


--- The method used to reflect fluctuations more closely by
assigning weights to the most recent data means the older
data is usually less important.

Note : W = Weights are lie between 0 and 1 for a total of 1.0


The Method that reacts more strongly to recent changes in
demand by assigning a smoothing constant to the most
recent data more strongly,

3.

4.

Exponential Smoothing

Time Series Decomposition

Where, Ft+1= Forecast for the next period


Dt= actual demand in the present period
Ft= previously determined forecast for the present period
a= weighting factor as the smoothing constant
This method adjusts the Seasonality by multiplying the
normal forecast by a seasonal factor.

Prepared By : Pooja P. Chavda

A.I.T.S. - - - - Rajkot

Merits
1.

As it uses secondary data, so cost of data


collection is not there.

Demerits
Past may not be future same like, demand is not a
function of time but a function of price, income,
population, etc.

2. Statistical Demand Analysis.. (Causal Model)

SDA uses a Mathematical Technique known as the Regression Analysis (weakening, failure) which
relates a dependent variable to an Independent variable(eg. Price, Advertisement)(change of graph in
increase/decrease order)
This Method s are based on a known relationship between the factor to be forecast and other External
Internal Factors ..
Mathematical equation relates a dependent
variable to one or more independent
1. Regression
variables that are believed to
influence(control) the dependent variable

System of Interdependent regression


equations that describes some sector of
Economic Activity..

Describes the Flows from one sector of the


Economy to another, so predicts the Inputs
required to produce outputs in another..

It is among the more complex technique..


Method tend to work best for Revenues
that are heavily on economic factors like.
Business License fees, Income tax, Retail
sales
Thus external data representing relevant
economic performance indicators are used
to predict level of revenue expected

2. Econometric Models

3. Input Out Model

4. Simulation Modeling
(Recreation or Reproduction)

Merits
1. It is more reliable because the
correlation is established between
Variables and demand.

Demerits
2. It is difficult to define all variables which
affect the demand.

::: Important Questions for GTU Exam :::


1.
2.
3.
4.
5.
6.

Explain the Marketing Mix with 4Ps of Marketing.


Explain the concept of Product Life Cycle with four stages Diagram.
Differentiate : Marketing v/s Selling
Discuss : Marketing concepts in brief(All 6 concepts).
Explain Market segmentation with their Bases in Consumer Markets and Industrial Markets.
Demand forecasting? Explain various Qualitative and Quantitative Forecasting Methods.

Prepared By : Pooja P. Chavda

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