Marketing Management In Small Scale Industries (SSI)

Submitted by: Sanjana 1234110127 Kirthi 1234110128 Ameer 1234110130 Mourya 1234110132 Parimal Manoj 1234110133 Santosh 1234110134

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Marketing is very essential through strenuous, in developing countries like India. The importance of Small Scale Industries (SSIs) is such that their development is concomitant with the balanced growth of Indian economy. Small, Medium or Large scale industries prospects depend upon how well they market their products in the dynamic competitive markets. So with the importance of marketing management in small scale industries increasing and sell the products effectively in the markets. In other words, effective marketing of small scale industrial products would ensure higher level of income, consumption, and employment which increases the standard of living of the people. Marketing is demanding greater attention not only from planners and economists. It also covers the socio-economic conditions, marketing strategies of SSIs and identifies the marketing problems of SSIs. The objective of all business enterprises is to satisfy the needs and wants of the society. Marketing is, therefore, a basic function of all business firms. Marketing may be narrowly defined as a process by which goods and services are exchanged and values determined in terms of money prices. That means marketing includes all those activities carried on to transfer the goods from the manufacturers or producers to the consumers. The marketing concept holds that the key to achieving organizational goals consists in determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors. Under marketing concept, the emphasis is on selling satisfaction and not merely on the selling a product. The objective of marketing is not the maximization of profitable sales volume, but profits through the satisfaction of customers. The consumer is the pivot point and all marketing activities operate around this central point. It is, therefore, essential that the entrepreneurs identify the customers, establish a rapport with them, identify their needs and deliver the goods and services that would meet their requirements. The components of marketing concept are as under: a. Satisfaction of Customers: In the modern era, the customer is the focus of the organization. The organization should aim at producing those goods and services, which will lead to satisfaction of customers. b. Integrated marketing: The functions of production, finance and marketing should be integrated to satisfy the needs and expectations of customers. c. Profitable sales volume: Marketing is successful only when it is capable of maximizing profitable sales and achieves long-run customer satisfaction. MARKETING VERSUS SELLING The basic difference between marketing and selling lies in the attitude towards business. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the companys existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective2. It starts with a well-defined market, focuses on customer needs, coordinates all the activities that will affect customers, and produces profits through creating customer satisfaction.

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Starting point Selling Concept Factory Marketing Concept Market

Focus Products

Means Selling and Promoting

Ends Profits through sales volume

Customer Needs

Coordinated Marketing

Profits through customer satisfaction

Marketing vs. Selling Marketing Selling Focuses on Customers needs Focuses on sellers needs Customer enjoys supreme importance Product enjoys supreme importance Converting customers needs into product Converting product into cash Profits through customer satisfaction Profits through sales volume Emphasis is given on product planning Emphasis is placed on sale of products already produced Integrated approach to marketing is Fragmented approach to selling is practiced practiced The principle of caveat vendor (let the The principle of caveat emptor (let the seller beware) is followed buyer beware) is followed

Importance of Marketing in Small Business Since marketing is consumer oriented, it has a positive impact on the business firms. It enables the entrepreneurs to improve the quality of their goods and services. Marketing helps in improving the standard of living of the people by offering a wide variety of goods and services with freedom of choice, and by treating the customer as the most important person. Marketing generates employment both in production and in distribution areas. Since a business firm generates revenue and earns profits by carrying out marketing functions, it will engage in exploiting more and more economic resources of the country to earn more profits. A large scale business can have its own formal marketing network, media campaigns, and sales force, but a small unit may have to depend totally on personal efforts and resources, making it informal and flexible. Marketing makes or breaks a small enterprise. An enterprise grows, stagnates, or perishes with the success or failure, as the case may be, of marketing. Nirma is an appropriate example of the success of small scale enterprise.

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Salient features of Marketing I. II. III. IV. V. VI. It is a creative function. It promotes business and employment. It co-ordinates finance, production and distribution, and determines and directs the scale and value of the total efforts. There is an emphasis on what the customer or borrower wants. There is an emphasis on the social goods, on increasing employment, by giving the customer or consumer the change to decide. It is a process of exchange between seller and buyer. It may be a commodity or service.

The Principal Marketing Functions Specific Function Marketing Information and Research Activities Involved Economic, business, trade, industry, consumer, user, product, sales and advertising research and analysis. Information handling and data processing, Marketing operation research and Competitive intelligence. Determining and developing the companys product mix. Matching the products specifications, packaging, pricing, performance and servicing to customer needs through product and services improvements and new product development. Field Selling, Selection of distribution Channels, Warehousing, Transport, Sales Analysis, Sales reporting, Sales forecasting, Sales budget and quotas, merchandising and Sales communications. Advertising to the customer or user in all media (press, television, cinema, radio, outdoor posters, etc.)

Product Planning

Sales and distribution

Advertising and Promotions

Market Research (MR) The success of any business venture lies in the existence of markets. Unless the entrepreneur identifies the existing needs or potential needs of the market he cannot translate these needs into products or services that would be acceptable by the market. In the past, the intuitive ability of the entrepreneur was a good enough method for understanding the needs of the consumer, but in todays changing times with cut-throat competition, globalization, changing preferences of consumers, customer diversity and internationalization, a thorough market research has become the precursor to introduction of any product or services in the market. Marketing research is the process of collecting information on any facts relevant to market. Market research is a systematic collection of information, its analysis and interpretation to strategise some relevant business decision like whether one should enter new markets, whether one should charge premium prices, what kind of discounts would be more attractive to the customer etc.

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Steps involved in conducting the market research are: a) Formulating Objective: The research should spend enough time in assessing the need for research and hence decide on the extent of descriptiveness of the research. Research objectives should be clearly defined. The objective should be able to have linkage with the existing problem or explore opportunities available in the market. The research objective should be concise and provide a clear direction to the research. b) Research Design: the next step is the research design, which is like a blueprint of the entire market research. There are three types of research designs: (i) Exploratory Research Design: Exploratory research is a form of research conducted for a problem that has not been clearly defined. Exploratory research helps determine the best research design, data collection method and selection of subjects. It should draw definitive conclusions only with extreme caution. Given its fundamental nature, exploratory research often concludes that a perceived problem does not actually exist. (ii) Descriptive Research Design: it is based on primary data collection. It collects first-hand information about the focus group: age, education, income. Ex: To study and analyse the consumption pattern of the middle class in the metropolitan cities in India. (iii) A Casual Research: The objective of casual research is to study the cause and effect relationship between two or more variables. Ex: To study the effect of decrease in price of Pepsi on its sale during summer. (c) Data Collection and Tabulation: the data collection can be both primary data and secondary data. The decisions that are to be taken for data collection include: (i) Type of data collection: primary or secondary (ii) Method of data collection (iii)Type of sampling techniques used. Segmentation Any business venture has limited resources and hence it cannot satisfy the needs and wants of all the customers. It is for this reason that segments are drawn. Segmentation is the process of dividing the market or customers into similar characteristics or behaviour. There are number if variables in which markets can be segmented: 1. Demographic Segmentation: When the target market is divided on the basis of population it is called as demographic segmentation. This can be further divided into following segments: (a) Age: The needs and wants of people change with the age and hence the entrepreneur needs to identify the segment to which his products belong. The product or services are designed to satisfy the needs and wants of a particular age group like health drink for growing children, diapers for infants and babies, fashion accessories for teenagers, etc. (b) Income Segmentation: When the population is divided on the basis of income it is called income segmentation. For example, economy class is for commoners whereas business class or executive class is for high income group. The premium
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price charged by the branded product is positioned for high-end group whereas the low prices of the Big Bazaar Mega Malls are meant to target the burgeoning middle class in the country. (c) Gender Segmentation: When the population is divided on the basis of gender it is called as gender segmentation. This is done because of choices and preferences vary between male and females on products like cosmetics, magazines and clothes. (d) Educational Qualification: When segmentation is done on the basis of education, For example, laptops or computers would be demanded by computer literate individuals and CAD/CAM would be desired/ required by individuals with engineering backgrounds only. 2. Psychographic Segmentation: Segmentation that is based on lifestyle or personality of individual is called psychographic segmentation. (a) Lifestyle Segmentation: Segmentation drawn on the basis of interest, urgency or day to day activities, beliefs, opinions and attitude. For example, working women having young kids, upon coming back after a hectic day, would like to dial-andorder services from Dominos, where as people who avoid pork would prefer to buy from shop that keeps pork and chicken in separate refrigerators. (b) Personality: the customers associate personality with products. Like Five Star is associated with ambition, Santro is associated with tall boy cars. 3. Geographic Segmentation: When the segmentation is drawn on the basis of geographical region it is called geographic segmentation. It can be northern, southern, western, eastern, city or metro, urban or rural. For example: Lifeboy is more common in rural areas than in urban areas, whereas Dove and liquid soaps are more common in the urban areas. 4. Behavioural Segmentation: When the segmentation is drawn on the basis of behavioural attitude of consumer it is called behavioural segmentation. The behaviour or attitude varies on occasion, usage rate, benefits, loyalty status, buyers readiness, user status. Market Targeting is the process of evaluating various segments and identifying the number and type of segments that the business venture would target. The process of market targeting includes the following steps: 1. Market Evaluation: It is a process of evaluating or assessing all the segments. This assessment is done on the following criteria: (i) Assessment of the size of each segment: the size of the segment would determine its attractiveness to the entrepreneur. The bigger the better. (ii) Assessment of segment growth: The market may not exist but the latent demand does, so it can lead to the growth or development of the product. Again the same rule- the bigger the better. (iii) Companies strengths and weakness to suffice the needs of the segment: If a market segment is very large say in Maharashtra but the manufacturing is taking place in UP and the transportation cost is eating up the margin. It is then better to shift to a smaller market like Uttaranchal. So the rule is not always the bigger the better, but the more profitable the better.
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(iv)

Potential opportunities and threats from the competitors, substitutes, buyers, suppliers, government: this would also affect the target. The rule is the lesser the threat and more the opportunity, the better would be the attractiveness. The best strategy is to club the strengths of all to draw on overall target market for the product.

2. Target Market Selection: After the target market evaluation is complete the company has to decide which segments and how many segments it would target. It would depend on several factors like economies of scale, profitability, growth, size, lesser risk of loss, entrepreneurial competency. There are five patterns available for selecting the target market: (a) Single Segment Concentration: If the company decides to concentrate on a single segment only. Like Junior Horlicks is targeted for kids. (b) Selective Specialization: Selecting a number of segments that are attractive. Archies target youth, middle age and elderly people. (c) Product Specialization: The product that the company makes can be sold to several segments. Like computers can be sold to household, PSU, hospitals, educational institutes, etc. (d) Market Specialisation: When the organization satisfies many needs of a particular group. Like Big Bazaar sells products ranging from vegetables, grocery, furniture, etc to middle class. (e) Full market leverage: When the business tries to satisfy all customers with the entire product needs. The business might satisfy all the needs of a builder, from CAD/CAM software, to expert skills of architects, to supplying building materials, etc. Market Positioning: After segmentation of the population, selecting the attractive target markets is the next in positioning the product or service. Market positioning can be defined as the act of projecting the companys product or service in such a way that it appears attractive to them. It is an image making exercise which helps the company to portray to the targeted segment in such a way that it appears attractive to the customers. The end result of market positioning should yield a successful creation of value proposition- a logical reason for why should the target markets buy the products from them. For example, Sony which charges approximately 20% premium on its products, projects value proposition of quality to its product. The following variables should b assured for positioning the product or service: 1. 2. 3. 4. 5. 6. What image the company wants to project The pricing strategy The packaging of the product How competitors project themselves The type of product Product Lifecycle

DEVELOPING MARKETING MIX STRATEGIES Marketing Mix is one of the most fundamental concepts in marketing management. For attracting consumers and for sales promotion, every manufacturer has to concentrate on four basic elements/components. These are: product, pricing, distributive channels (place) and sales promotion techniques. A fair combination of these marketing elements is called
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Marketing Mix. It is the blending of four inputs (4 Ps) which form the core of marketing system. This marketing mix is marketing manager's tool for achieving marketing objectives/targets. He has to use the four elements of marketing mix in a rational manner to achieve his marketing objectives in terms of volume of sales and consumer support. Meaning of the term 'marketing mix' is made clear with reference to the following points: 1. Marketing mix is the combination of four basic elements/ingredients under one head. Product itself is the most important element of marketing mix. Price, place and promotion are the other supporting elements. Marketing mix indicates an appropriate combination of four Ps for achieving marketing objectives. 2. James Culliton, the American marketing expert, coined the expression Marketing Mix and described the marketing manager as 'mixer of ingredients" as he has to establish fair balance among the four elements of marketing mix in order to achieve marketing targets. He is also a 'decider', 'artist' of marketing mix formula. 3. The four components of marketing mix are also called "marketing mix variables" or "controllable variables" as they emanate from within the enterprise and the marketing manager can use them freely as per his desire or need of the situation. 4. The elements of marketing mix constitute the core of marketing system of a firm. It is a profitable formula for successful marketing operations. Features of Marketing Mix 1. Combination of four marketing variables: Marketing mix is a combination/integration of four basic marketing variables namely, product, price, promotion and place. These variables are interdependent. 2. Useful for achieving marketing targets: Marketing mix aims at achieving marketing targets in terms of sales, profit and consumer satisfaction. It is rightly said that marketing mix is the marketing manager's instrument for attainment of marketing objectives/targets. 3. Flexible and dynamic concept: Marketing mix is not a rigid combination of four variables. It is in fact a flexible combination of variables. It is necessary to adjust the variables in the mix from time to time as per the changes in the marketing environment. It is the continuous monitoring of the marketing mix which facilitates appropriate changes in the mix. 4. Periodical adjacent of variables necessary: Marketing mix variables are interrelated and need suitable adjustments from time to time. Updating of marketing mix is essential for making it a powerful tool for achieving marketing targets. Updating is also essential due to environmental changes taking place within the firm. 5. Marketing manager acts as a mixer of ingredients: A marketing manager has to function as a mixer of marketing ingredients and has to achieve desired results through skilful combination of four Ps. He needs maturity, imagination and intelligence for appropriate blending of the variables. 6. Customer is the focus point: The main focus of marketing mix is the customer. His satisfaction and support are important. Variables of marketing mix are for giving more satisfaction and pleasure to consumers.
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7. Variables are interrelated: Marketing mix variables are interrelated. Decisions in one area affect action in the other areas. An integrated approach is needed while making changes in the marketing mix variables. 8. Consumer-oriented activity: Marketing mix is a consumer-oriented activity as its purpose is to give satisfaction and pleasure to consumers. Here, the needs and expectations of consumers are given special attention and 4 Ps are adjusted accordingly. 9. Four Ps of sellers correspond to four Cs of customers: Four Ps in the marketing mix represent the sellers' view of the marketing tools available for influencing buyers. Each tool is designed to deliver a customer benefit.

Elements of Marketing Mix

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1. Product: Product is the article which a manufacturer desires to sell in the open market. It is the first element in the marketing mix. The product mix includes the following variables. 01. Product line and range, 02. Style, shape, design, colour, quality and other physical features of a product, 03. Packaging and labelling of a product, 04. Branding and trade mark given to the product, 05. Product innovation, and 06. Product servicing Managing product component involves product planning and development. Here, the decisions are required to be taken regarding product range, branding, packaging, labelling and other features of the product. The product manufactured for market should be as per the needs and expectations of consumers. Product is the most powerful competing instrument in the hands of the marketing manager. It is the heart of whole marketing mix. If the product is not sound /attractive to the customers, no amount of sales promotion, appropriate channel selection or price reduction will help to achieve the marketing target. Hence, durability, quality, uses, etc. of the product are important from the marketing point of view. Various Aspects of Product Decisions in Marketing: In the marketing process, various decisions regarding the product are required to be taken. Marketing will be easy and quick if the decisions taken on various aspects of a product are appropriate. AU such decisions need to be taken by the marketing division of the Organisation. Such decisions should be based on current marketing environment, nature of market competition, consumer expectations, information available through marketing research and so on. Cooperation of other departments is also necessary in marketing decision-making. Production or product is rightly treated as the heart of the marketing mix. Customers purchase a product because of its attributes, features and benefits. These are the selling points of a product. They should be adjusted to the buying motives of consumers. A consumer/customer considers the total package of benefits available from the product and takes a decision to purchase the product. This suggests that various decisions regarding the product to be marketed need to be taken correctly. As a result, the product offered in the market will be a quality product. In addition, it will be utility oriented, attractive, convenient, property designed and branded. Even attractive packaging decision facilitates sales promotion. The following aspects of a product need careful attention in marketing decision-making. 01. Product line and range, 02. Style, shape, design, colour, quality and other physical features of a product, 03. Packaging and labelling of a product, 04. Branding and trade mark given to a product. 05. Product servicing and channel of distribution. 06. Product pricing. 07. Guarantees and warranties of the product. 08. Product innovation. 09. Special features of the product from the marketing point of view

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Decisions on these aspects of a product are important as marketing is directly related to these aspects. Sales promotion measures will be useful but their role will be supplementary/ supportive. Such measures may not be effective if the product to be marketed is not of standard quality or if the brand or package is not attractive or if the product is not as per the requirements/expectations of consumers. This suggests that decisions relating to product are important /crucial in the marketing of a product. 2. Distribution channel (Place): Physical distribution is the delivery of goods at the right time and at the right place to consumers. Physical distribution of product is possible through channels of distribution which are many and varied in character. Physical distribution (place mix) includes the following variables: 01. Types of intermediaries available for distribution, 02. Distribution marketing channels available for distribution, and 03. Transportation, warehousing and inventory control for making the product available to consumers easily and economically. For large-scale distribution, the services of wholesalers, retailers and other marketing intermediaries are required. A marketing manager has to select a channel which is convenient, economical and suitable for the distribution of a specific product. For instance, large numbers of outlets are required for the distribution of products of mass consumption such as soaps and oils. On the other hand, for the marketing of speciality products like refrigerators and TV sets, selective distribution through authorized dealers is quite convenient. 3. Promotion: Promotion is the persuasive communication about the product offered by the manufacturer to the prospect. Promotion mix includes the following variables: 01. Advertising and publicity of the product, 02. Personal selling techniques used, 03. Sales promotion measures introduced at different levels, 04. Public relations techniques used for keeping cordial relations with dealers and consumers, 05. Display of goods for sales promotion. Promotional activities are necessary for large scale marketing and also for facing market competition effectively. Such activities are varied in nature and are useful for establishing reasonably good rapport with the consumers. Advertising gives information and guidance to consumers. Brand names are made popular through advertising. Along with advertising, personal selling is also useful for motivating the customers to buy a specific product. In addition to advertising and personal selling, a manufacturer has to use other sales promotion techniques at the consumer level and at the dealer level. The techniques at consumer level include displays, exhibitions, discount coupons, small gifts and free samples, attractive container and consumer contests. Consumer psychology is favourable for extensive use of such sales promotion techniques. After-sales services are also useful for promoting sales of durable goods.

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4. Price: Price is one more critical component of marketing mix. It is the valuation of the product mentioned by the seller on the product. Price mix includes the following variables: 01. Pricing policies, 02. Discounts and other concessions offered for capturing market, 03. Terms of credit sale, 04. Terms of delivery, and 05. Pricing strategy selected and used. Pricing has an important bearing on the competitive position of a product. The marketing manager may use pricing as a tool for achieving the targeted market share or sales volume. Pricing can also be used for capturing market and also for facing market competition effectively. Pricing decisions and policies have direct influence on the sales volume and profits of the firm. Market price of a product also needs periodical review and adjustments. The price charged should be high enough to give adequate profit to the company but low enough to motivate consumers to purchase product. It should also be suitable to face market competition effectively. Distribution Channel is the process through which the product is physically delivered to the customer. Most companies need intermediaries or middlemen to deliver the goods to the final customers and these intermediaries are called distribution channel. The intermediaries can be divided into the following types: (a) Merchants: They buy or take delivery of physical goods and resell like retailers, distributors. (b) Agents: They act as manufacturers representative and sell goods on their behalf and do not take little goods, Example: sales agent. (c) Facilitator: They assist in the distribution of the product but neither takes little of goods nor negotiable sale. Example: transporters, warehouses. Functions of distribution channel: They stimulate customers to purchase the product They gather information about customers (their existing and potential needs, competitors) Negotiate with customers on price Monitor transfer of goods to the customers Arrange for storage of goods Risk their finances by operating as a channel Place orders with the manufacturer or supplier Implementing, Monitoring and Review The strategies formed are finally implemented and regular monitoring and evaluation is required, so that the strategies yielding positive results are further strengthened and strategies not giving good results are diluted. It is also important to periodically review the marketing strategies considering the dynamic nature of external environment and hence the vulnerability of the internal environment.

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Some of the factors which contribute to the marketing problems of the small scale industry in recent days are: Increasing competition from within the small scale sector as well as from large industries with established brand names and marketing setup Consumer awareness, even in rural and semi urban areas, for quality goods The need to set up distribution networks for reaching out widely dispersed markets Inability of the SSI units to exploit the export markets Marketing Problems Faced S. No. 1 2 3 4 5 6 7 8 9 Marketing Problems Low Quality Price Fixation Improper Positioning Improper Segmentation High Cost of Marketing Personnel Sales Promotion Distribution Channels Non Availability of Packing Material Competitors Percentage 71.05% 60.03% 42.11% 50% 55.26% 60.53% 73.68% 65.79% 89.47%

(SOURCE: Asian Journal of Marketing & Management Research Vol.1 Issue 1, September 2012)

71.05 percent of the sample units have faced heavy problems regarding the quality of their products. 60.53 per cent of the units have faced moderately the problems of fixing he price for their product 42.11 per cent of the sample units have faced heavily the problems regarding the untimely introduction of their products into the markets. 50 per cent of the sample units have faced moderately the problems of improper segmentation. 55.26 per cent of sample units have faced heavily the problems of high cost of marketing personnel. 73.68 per cent of the sample units have heavily experienced the problems of distribution of their products. 60.53 per cent of the sample units have faced heavily problems in sales promotion. 89.47 per cent of the sample units have faced heavily problems with their competitors. 65.79 per cent of the sample units in the district have experienced moderately the problems grouped as other. A very high percentage (89.47) of the sample units faced heavily the problems created by their competitors. Other problems like lack of awareness of product design, packaging, branding, Indian Standard Institution (ISI) mark, and non availability of packaging materials etc., were faced moderately by 65.79 percent of the small units.

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