CHAPTER 11 MARKETING MANAGEMENT Introduction : Marketing management is an important functional area of business.- It is the process of planning, organising, directing and controlling the activities related to marketing of goods and services to satisfy customers needs & achieve organisational goals. Market : In the traditional sense, the market means a place where buyers & sellers gather to enter into transaction involving the exchange of goods &services. But in modern sense, market refers to meeting of buyers and sellers at a place, by telephone or by internet etc. Marketing : Marketing is a social process whereby people exchange goods & services for money or for something of value to them. Any thing that is of value to the other can be marketed eg. 1, Physical Products- _ T.V. Mobile phone etc. 2. Services - Insurance, education etc. 3. Person - Selection for different posts. 4. Place - Agra Taj Mahal , etc. Features of Marketing :- 1. Need and want : Satisfaction of the needs and wants of individuals and organisations. 2. Creating a market offering : Complete offer for a product of service. 3. Customer value : greatest benefit or value for the money. 4, Exchange mechanism : Exchange of products / services for money / value. MARKETING MANAGEMENT PHILOSOPHIES 1. Production Concept: - Some companies believe that it is easy to sell the products when products are inexpensive and are easily available. So the firms following production concept focus on lowering the cost of production by means of mass production and distribution but the drawback of this concept is that customers don’t always buy products which are inexpensive and available. Main Focus: Large-scale production to decrease the cost. 2. Product concept:- Product concept stresses on quality of production rather than quantity of production. Product improvement is considered the key to success under it. Main Focus: Good quality, added features in product. 3. Selling Concept:- Selling concept believes that in order to make a customer buy a Product he or she need to be convinced and customers can be convinced by undertaking some aggressive selling and promotional efforts. Main Focus: To sell whatever is produced by using intensive promotional technique.4. Marketing Concept: - Marketing concept concentrates on the need of the customers. The concept says that product should be designed and produced keeping in mind the need of the customer and try to satisfy the need better than the competitor’s product. Main Focus: Customer satisfaction. 5. Societal Marketing concept: - Marketing concept is satisfying the needs of customers in the best possible manner but then also it has attracted criticism from people who are concerned about society and environment. They argue that companies should not blindly follow the goal of customer satisfaction. Main Focus: Customer satisfaction with in ethical and ecological boundaries of our society. Comparison between various marketing philosopies FUNCTIONS OF MARKETING: 1) Gathering and Analyzing Market Information: One of the important functions of a marketer is to gather and analyze market information to identify the needs of the customers. For example: Rapid growth in several areas such as the use of the internet, the market of cell phones, etc. 2) Marketing Planning Marketing helps to develop appropriate marketing plans to achieve the marketing objectives of the organization. For example: A marketer of LED televisions, having 10% of the current market share, aims at enhancing his/her market share to 20% in the next 2 years. 3) Product Design and Development Marketing activity relates to designing and developing the product in such a way that it attracts the target customer. For example: When a person plans to buy any product, saya car, he not only sees its features like price, mileage, etc. but also the design aspect like its shape, style, etc. 4) Standardization and Grading Standardization refers to producing goods of pre-determined specifications, which helps in achieving uniformity and consistency in the output. Grading is the process of classification of products into different groups, based do their important characteristics such as quality, size, etc. 5) Packaging and Labelling Packaging refers to designing and developing the package for the products. Labelling refers to designing and developing the labe! to be put on the package. The label may vary from a simple tag to complex graphics. 6) Branding The process of giving a name or a sign or a symbol, etc., to a product is called branding. Various items related to branding are brand, brand name, brand mark, trademark. 7) Pricing of Products The price of a product refers to the amount of money customers have to pay to obtain a product. It affects the success or failure of a product in the market. 8) Promotion It involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. The four important methods of promotion include advertising, personal selling, sales promotion, and public relations. 9) Physical Distribution It is an important function in the marketing of goods and services. Under this decision regarding channels of distribution, marketing intermediaries (like wholesalers, and retailers) are to be used. 10) Transportation It involves the physical movement of goods from one place to the other. 11) Storage or Warehousing Usually, there is a time gap between the production and procurement of goods and their sale or use. Therefore, to maintain a smooth flow of products in the market, there is a need for proper storage of the products, 12) Customer Support Services The function of marketing relates to developing customer services such as after-sale services, handling customer complaints, maintenance services, etc. MARKETING MIX The marketing mix refers to the ingredients or the tools or variables that the marketer mixes in order to interact with a particular market. It can be classified into four types: 1.Product 2. Price 3. Place 4.PromotionMarketing M Price Place Promotion fm #£€ Cs 1, PRODUCT PRODUCT MIX: The product mix refers to important decisions related to product. It includes product quality, design, and development, packaging, labelling, branding, etc. For example, Hindustan Liver is dealing with soaps, detergents, tea, toothpaste, etc. I BRANDING: Branding is identified as a process of giving meaning to a specific organization, company, product, or service by creating and designing an impact in the minds of the consu: Brand: A brand is a name, term, sign, symbol, design or some combination of them used to identify the products, E.g., Ariel, Surf excel, Parker, etc. Brand Name: The part of the brand which can be spoken. E.g. Asian Paints, Maggie Brand Mark: It appears in the form of symbol, design. E.g., Gattu of Asian paints, Symbol of LIC, Blue and red ball of Pepsi, Tick sign of Nike. ‘Trade Mark: A brand or part of a brand that is given legal protection is called trade mark, II PACKAGING: Act of designing and producing the container or wrapper of a product. Good packaging often helps in selling the product so it is called a silent salesman. Levels of Packaging: 1. Primary Package: It refers to the product’s immediate container of product till it is used. For example, tube of paste, match box. 2. Secondary Packaging: These are additional packing which give more protection. For example, card board box used to keep tooth paste, shaving cream etc. 3. Transportation Packaging: These are packaging used for storing or transporting the goods. For example, corrugated boxes used to transport tooth paste, etc. I LABELLING Labelling is the process of designing label and putting it on the package to provide information regarding the product, its content, method of use etc. Label performs following functions: (a) It helps in describing the product and specify its contents. (b) It helps in identify the product among all products. (c) Ithelps in grading the product. (@) It helps in promoting sales(8) It helps in providing information required by law/legal requirement. 2. PRICE PRICE MIX: Price mix refers to important decisions related to fixing of price of a commodity, FACTORS AFFECTING PRICE DETERMINATION: 1. Product cost: This includes the cost of producing, distributing and selling the product. The price of the product must be able to cover the total cost of the product. Total cost means Fixed cost and Variable cost. 2. The utility and demand: The utility provided by the product and intensity of demand sets the upper limit of price, which a buyer would be prepared to pay. 3. Extent of competition in the market: When competition is more, then the price is fixed keeping in mind the price of competitors’ products. 4. Government and legal regulations: To protect the interest of general public, the government has all the right to control the prices of various products especially in case of food items, drugs, LPG etc. 5. Pricing objectives: If the objective of company is profit maximization, then generally high price is fixed. If the objective of company is sales maximization, it will prefer low price to increase sale and capture big market share. 6. Marketing methods used: Price fixation is also affected by the various techniques of marketing methods e.g., distribution system, quality of advertising, the type of packaging etc. 3.PHYSICAL DISTRIBUTION (PLACE It is a process by which the goods are transferred from the place of production to place of consumption. There are two important decisions relation to this aspect. (D Channels of Distribution (ID Physical Distribution (@ Channels of distribution Channels of distribution are firms and individuals who help in transferring goods from place of manufacturing to place of consumption. Types of channels: DIRECT CHANNEL (Zero level channel): It means making goods available to consumers directly by the manufacturers e.g., selling through own retail outlets, door to door selling, mail order selling, internet selling. INDIRECT CHANNEL: One level channel: (Manufacturer-Retailer-Customer) Two level channels: (Manufacturer-wholesaler-Retailer-customer) Three level channels: (Manufacturer-A gent-wholesaler-Retailer-customer)‘TYPES OF CHANNELS: (Direct Channel (zero level Manufacturer} > [ Customer] Indirect Channet (One level Channet & (Te tenet Channet Manufacturer} >[ Wholesaler }—>[ Retailer Customer] (Ww) Three tevet Channet Manufacturer}—> [Agent > [Wholesaler}|—> [Retailer }_» [Customer (Il) PHYSICAL DISTRIBUTION: The physical handling and movement of goods from place of production to the place of distribution. Components of Physical distribution: 1. Order Processing: Order processing means the time and steps involved between taking order from customer and delivery of goods as per order. 2. Transportation: Transportation is the means of carrying goods from the place of production to the point of sale. 3. Warehousing: Warehousing refers to the act of storing and assorting the products in order to create time utility. 4. Inventory Control: The inventory needs to be maintained so that the goods can be supplied whenever demanded. PROMOTION I ADVERTISING: Advertising can be defined as the paid form of non-personal presentation and promotion of idea, goods or services by an identified sponsor. Features of Advertising: 1. Paid Form: The sponsor has to pay for advertising, he has to bear a cost to communicate with customers.2. Impersonality: There is no face-to-face contact between customers and advertiser. 3. Identified sponsor: Advertising is given by an identified company or firm or individual. Il PERSONAL SELLING: Personal selling involves face to face interaction between seller and buyer for the purpose of sale. Ill SALES PROMOTION: Sales promotion refers to short term use of incentives or other promotional activities that stimulate the customer to buy the product. E.g., discounts, rebate, refunds, quantity gifts, lucky draw, product combination, usable benefit, 0% finance etc. IV PUBLIC RELATIONS: Public relations involve a variety of programs designed to promote or protect a company’s image and its individual products in the eyes of the public. MULTIPLE CHOICE QUESTIONS (MCQs) QI Which of these is true about marketing? (a)Marketing is used to promote the product and services (b)Marketing is concerned about the sales only (c)Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (@Marketing considers only the needs of the organization and not the society Q2 According to the modern marketing concept, which of the following statements is true? (a) It refers to the group of people who do not have the ability but willingness to buy a particular product. (b) It refers to only the set of people who have the purchasing power to buy a particular product. (c) It refers to the set of actual and potential buyers for a product. (d) It refers only to the people who show interest in a particular product. Q3 In order to get feedback about its recently launched immunity boosting ayurvedic medicine, Atulya limited conducted an online survey using a questionnaire, to gather customer views and opinions. Identify the marketing function being used by Atulya Limited: (@) Standardisation (b) Product Designing (c) Customer Support Service (d) Gathering and analyzing market information Q4 Which of the following statements does not reflect a condition to be satisfied for an exchange to take place?Qs Q6 Qi Qs Q9 (a) Involvement of at least two parties- the buyer and the seller- is mandatory. (b) Each party should be capable of offering something of value to the other. (c) Exchange can take place if the buyers and sellers are not able to communicate with each other. (d) Each party should have freedom to accept or reject other party’s offer Sujhav Limited is a company dealing in various types of fire extinguishers. Considering the fact that people generally don’t buy fire extinguishers, the company undertakes aggressive sales promotion efforts in order to create and maintain demand for the product. Identify the type of marketing philosophy being described in the given case, (a) Product concept _(b) Selling concept (c) Marketing concept —_(d) Societal marketing concept Pragati Limited has chalked out an action plan in order to increase its market share in the international market by 20% in the next one year. The action plan contains the details about how the production levels will be increased, promotional activities will be carried out and so on. Identify the type of marketing function being described in the given lines. (a) Gathering and analysing market information (b) Marketing planning (c) Product designing and development (@) Packaging and labelling Statement I: For products requiring long term storage like agricultural products, the warehouses are located near to the market. Statement II: Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high. Choose the correct option from the following: a) Statement I is true and IT is false b) Statement II is true and I is false c) Both the statements are true d) Both the statements are false Agile Limited has launched a new range of air conditioners in order to add value to the usability of the product. The new range of air conditioners have an inbuilt air purifier and are available in attractive colours. Identify the type of marketing philosophy being described in the above lines. (a) Product concept (b) Production concept (c) Marketing concept (d) Societal marketing concept Guneet went to a shop and expressed her desire to buy a copper water bottle only of Prestige company. Identify the component related to branding being described in the above case. (a) Trademark (b) Generic name = (c) Brand name = (d) Brand mark 190 ZIET,MYSORE preerrcer eryQuo Qu Qi2 Qi3 Qu Qs Ql6 Nuthan, a school bag manufacturer decided to improve the product for profit maximization and thus added a water bottle holder to the existing design. Identify the marketing management philosophy adopted by Nuthan. (a) Product concept (b) Production concept. (©) Selling concept (d) Marketing concept Ria refused to buy an insulated lunch box for Rs.1200 as she felt that the real worth of the product was much less than its monetary value. Identify the factor related to pricing decision being described in the given case. (a) Cost of the product (b) The utility and demand (c) Government and legal regulations —_(d) Pricing objectives In order to improve upon its competitive edge, Khushboo Limited has change the packaging of its hair care products. They are now available in a consumer-friendly design, which has a nozzle attached to the lid so that at the time of usage, the consumer doesn’t need to open the cap of the bottle. Name the marketing function being explained in the given lines. (a) Product designing and development (b) Customer support services (c) Promotion (@) Physical distribution Gabbar is a wholesaler of food grains. He categorises his stock into different groups on the basis of their quality and also fixes up the prices accordingly. Identify the type of marketing function being mentioned in the given line. (a) Physical distribution (b) Transportation (c) Warehousing (@) Standardisation and grading Drishti Limited is a chain of trusted optical centres for prescription & fashion eyewear. It caters to affluent people with a range of premium sunglasses for men, women and kids. In order to raise the level of buyers’ satisfaction, the company has decided to create a special section in each of its outlets for handling customer complaints and adjustment requirements. Identify the type of marketing function described in the given lines. (a) Product designing and development (b) Customer support services (©) Promotion (d) Physical distribution While reading the label of a pack of aluminium foil, Reshma discovered that the product was manufactured at Hyderabad but was available for sale in many states across the country. Identify the function of marketing which has made this possible. (a) Physical distribution (b) Standardisation and grading (c) Transportation (d) Warehousing Keeping in view the recent trends of sales regression, Sona Limited has decided to offer a flat 15% discount on all its products. Identify the related function of marketing being described in the given lines. (a) Packaging and labelling (b) Branding 191 ZIET,MYSORE preerrcer ery