National Institute of

Business Management
Master of Business
Administration (MBA)
Marketing Management

CONTENTS
Chapter

Title

Page No.

MARKETING-ORIGINS AND DEVELOPMENT

II

THE MARKETING ENVIRONMENT

19

III

INTEGRATED MARKETING

29

IV

MARKETING STRATEGY

33

MARKETING PLANNING

40

VI

SERVICE MARKETING

47

VII

MARKETING ORGANIZATION

52

VIII

CONSUMER BEHAVIOUR

59

IX

PRODUCT MANAGEMENT

66

PRICING IN MARKETING

78

XI

ADVERTISEMENT

86

XII

PERSONNEL MANAGEMENT IN MARKETING

96

XIII

MARKETING RESEARCH

109

CHAPTER - I

MARKETING-ORIGINS AND DEVELOPMENT

OBJECTIVES
The term marketing has been defined by various authorities differently. Objective of this chapter is
to acquaint the reader with various definitions with expanded meaning and the difference between Marketing
and Selling.
INTRODUCTION
The marketing way of management is not a particularly complex or original notion; indeed, the
saying the customer is always right is as old us business itself. Marketing is really a business orientation
based on this principle, which has grown and developed into a management discipline over the years.
Marketing is not narrowly confined to a particular office or department: it is an attitude of mind, an approach
to business problems that should be adapted by the whole organization, from the chairman and chief executive
down to the lowest levels.
Marketing is based on the concept that the customer is the most important person to the company.
In order to prosper or even survive, every company must work hard to retain its existing markets and
continually strive to secure new and profitable customers. The marketing concept puts the emphasis on
customers and the identification and satisfaction of customer requirements. Such an orientation to business
consequently results in the customer becoming the focus of the companys activities, and most successful
companies in the world owe their prosperity to the adoption and application of this marketing concept.
Although the concept of marketing is relatively straightforward, the term marketing often means
different things to different people. This confusion is not restricted to the ordinary person in the street. There
are still many business people who have not fully grasped the importance to he marketing concept. The
objective of this chapter is to explain clearly what the marketing concept is all about and to compare and
contrast it with less sophisticated approaches to business which, even today, are still practiced by many
business firms. Of course, like most things to do with organizations, situations develop and change. This is
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as true for marketing as for any other area of business and indeed it might be argued that in fact the marketing
function is subject to even more forces for change than other functional areas of the business. This chapter
therefore is also concerned to took at recent trends in both the concept and application of marketing in the
modern business.
A DEFINITION OF MARKETING
As far back as 1775, Adam Smith, the father of modern economics, wrote the following passage
in his famous work, The Wealth of Nations:
Consumption is the sole end and purpose of all production and the interests of the producer ought
to be attended to, only so far as it may be necessary for promoting that of the consumer.
In the above statement Adam Smith has given the essence of what modern marketing is all about.
The very word is consumer, as it is the identification and satisfaction of a consumers requirements, which
forms the basis of modern marketing.
Because marketing in such a wide-ranging topic, different people often look on the subject from
different viewpoints or give the subject a particular emphasis. To some extent such different viewpoints result
from the academic background or the area of employment of the person giving the definition.
The following list is a sample of the wide range of definitions given for the subject:
Marketing is a social process by which individuals and groups obtain what they need and want
through creating and exchanging products and value with others.
Marketing consist of individual and organizational activities that facilitate and expedite satisfying
exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing
of goods, services and ideas.
Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and organizational
objectives.
Marketing is selling goods that dont come back to people who do.
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Marketing involves the integrated analysis, planning and control of the marketing mix variables
(product, price, promotion and distribution) to create exchanges and satisfy both individuals and
organizational objectives.
Marketing is the identification, establishment, maintenance and enhancement of the relationships
with customers and other stakeholders, at a profit, so that the objectives of the parties are met.
Marketing is the management process which identifies, and supplies customer requirements
efficiently and profitably.
MARKETING AS A FUNCTIONAL AREA OF MANAGEMENT
One of the main sources of confusion for someone approaching the subject for the first time is
the fact that marketing is a complex phenomenon that combines both the philosophy of business and its
practice. Hence marketing consists of two interrelated phenomena:
1. A basic concept that focuses on customers.
2. A set of management techniques.
Many organizations have a marketing department made up of both marketing generalists, e.g.
the sales manager or marketing research manager. Such a marketing department will obviously be based
in a physical location within the organization in the same way as, say, personal or purchasing. The people
involved with the day-to-day running of the marketing department will have at their disposal a range of
management techniques often referred to as marketing spectrum or mix. These techniques cover such
areas as sales and sales management, advertising and promotion, pricing, packaging. Product development,
marketing research, planning, distribution and after-sales services. Many of the functions of marketing
offer separate career opportunities and are often undertaken by specialists, with the marketing manager
responsible for coordinating all the separate but interrelated activities.
Looked at from this point of view, marketing is indeed a functional area of management which
is usually within the firm and which uses a number of highly developed techniques in order to achieve
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specific objectives. As a function, an important part of marketings role is to identify correctly both the
current and future needs and wants of specifically defined target markets. This information is then acted
upon by the whole organization in bringing into existence the products and/or services necessary to satisfy
customer requirements. It is the marketing function that forms the interface with the firms existing and
potential customers. Marketing provides entrepreneurship by identifying customer requirements, and
through marketing the rest of the firm is able to mobilize resources to capitalize on them.
In fact, the process of marketing management is no different from any other functional area of
management in that it essentially comprises of four key tasks.
Analysis
The starting point of marketing decisions is analysis. Customers, competitors, trends and changes
in the environment, and internal strengths and weakness must each be fully understood by the marker
before effective marketing plans can be established. Analysis, in turn, requires information using systematic
marketing research and marketing information systems.
Planning
The second task of the manager is the planning process. The marketing manager must plan both
long-term marketing direction for the organization (strategic planning), including, for example, the selection
of target markets, and the marketing programs and tactics that will be used to support these strategic
plans.
Implementation
Both strategic and tactical plans must, of course, be acted upon if they are to have any effect.
The implementation tasks of marketing management involve such activities as staffing, allocating task and
responsibilities, budgeting, and securing any financial and other resources needed to translate plans into
action.

Control
The fourth and sometimes neglected, task of the manager is measuring and evaluating progress
against objectives and targets established in plans. Control of marketing plans can be problematical, with
difficulties associated with both measuring marketing performance and pinpointing cause and effect. For
example, market share-a frequently used measure of marketing performances and hence a basis for marketing
control-needs very careful analysis and interpretation if it is to provide a useful basis for marketing and
controlling the effectiveness of marketing strategies and plans. Both qualitative and quantitative techniques
of control should be used by the marketing manager and include budgetary control, control of marketing
mix effectiveness and, from time to time, a full marketing audit. In fact, the control task of marketing
management, in turn, forms parts of the analysis function discussed earlier, thereby completing the essentially
circular nature of these for interrelated tasks.
Although it can be seen that marketing has a very important functional role within the organization,
the influence of marketing should not be restricted to the marketing department. A marketing business has
implications for the way people throughout the organization respond to the indicatives that are forthcoming
from marketing.
MARKETING AS AN OVERALL BUSINESS PHILOSOPHY
Many successful companies see marketing as the keystone of their business. Such firms do not
see marketing simply as yet another functional area of management but more as overall business philosophy,
a way of thinking about business, and a way of working which runs through every aspect of the firms activities.
Hence, marketing is viewed not as a separate function, but rather as a profit-oriented approach to business
that permeates not just the marketing department but the entire business. Looked at from this point of view,
marketing is seen as an attitude to mind or an approach to business rather than a specific discipline.
The holistic view of the role of marketing within the firm has been expressed by a leading authority
on management thinking, Peter F. Drucker, who stated:
Marketing is not only much broader than selling, it is not a specialized activity at all. It encompasses
the entire business. It is the whole business seen from the point of view of its end result, that is,
9

from the customers point of view, concern and responsibility for marketing must therefore permeate
all areas of the enterprise.
This marketing-oriented business philosophy is referred to as the marketing concept. It is a
philosophy that puts the customer at the very center of the firms corporate purpose. Marketing cannot
exist in a vacuum. To be really effective it must permeate the whole company. What is needed is an integrated
approach, not just the creation of a marketing department. It is the companys whole approach to business
problems that is the key issue. It is the adoption of a business philosophy that puts customer satisfaction at
the center of management thinking throughout the organization that distinguishes a marketing-oriented firm
from other less enlightened companies. Such an approach to business propels the marketing-oriented company
into new activities and new opportunities and away from the narrow preoccupation with selling existing
products to existing customers. Marketing cannot begin to be effective within a company unless it has the
firm support of general management and penetrates every area of an organization.
MEANING OF MARKETING
To the common man, marketing may mean selling. It may also mean advertising to some and
promotion to some others. But marketing is much more than selling or advertising or promotion, although
these form part of the marketing function.
From the definitions by different authorities, it is clear that the meaning of marketing is as wide as
to include all business activities starting from producer to consumer in the pursuit of creating and supplying
goods and services. To the producer, the existence of unsatisfied need is the starting point to produce the
product or provide the service.
Human needs are innumerable and some are ever changing. All types of human needs may be
classified under three groups, physiological, psychological and social. The Physiological needs include food,
clothing, shelter, books, TV, car etc. Psychological needs include job satisfaction, self-esteem etc. Social
needs may include need of love, affection and belonging from others.
Based on the above definitions, there is a process oriented definition for marketing, as the process

10

of ascertaining consumer needs, converting them into product or services, and then moving the product or
service to the final consumer or user to satisfy certain needs and wants of specific consumer segment or
segments with emphasis on profitability, ensuring the optimum use of the resources available to the
organization.
DIFFERENCE BETWEEN MARKETING AND SELLING
Marketing is the universal set of which selling is a subset. i.e. marketing is whole and selling is a
part of that whole. Marketing encompasses many functions and has a number of major activities, of which
selling is one. For a sale to be made successfully, it is necessary that the product to be of right type, right
quality, in right quantity, right price, at right place and in right time. The salesman is concerned with these.
Marketing exists in the midst of the society. Social behaviour is always changing so also the
marketing environment. When marketing environment changes, marketing function has to adjust itself to cope
up with the changes. These changes in marketing are achieved by changing the different constituent activities
of marketing function. Of all the marketing activities, four activities are identified as fundamental or basic.
These four basic functions are the 4 Ps of the marketing which are:
(1) Product (2) Price (3) Promotion and (4) Place (or physical distribution).
Products mean goods or services offered by the organization.
Price means the money value of a product that a buyer/consumer has to pay.
Promotion is the activity of selling and advertising. Thus, selling is an activity of promotion, which
again is an activity of selling.
Place means the place at which the product is to be sold to the customer. Thus, place includes the
channels of distribution.
Marketing and market management are wider functions comprising many sub functions; and selling
and sales management are narrow functions which are sub functions of marketing and marketing management.
THE PRODUCTION-, SALES-AND MARKETING-ORIENTED FIRM
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Many organizations pass through several stages of business orientation before fully adopting the
marketing concept. Broadly speaking, even today there are three types of companies:
1. Production-oriented
2. Sales-oriented
3. Marketing-oriented
Most marketing-oriented companies have evolved over the years, passing through the first two
stages before reaching the third. Let us look at these various stages in a little more detail.
Production orientation
In the nineteenth century and early part of the twentieth century the fundamental role of business
was seen as production. Manufacturers were in a suppliers market and were faced with a virtually insatiable
demand for goods and services. Firms concentrated on production and productive efficiency in order to
bring down costs. Product decisions were taken first and foremost with production implications in mind.
Firms tended to manufacture and offer products that they were good at producing, with customers
requirements and satisfactions of secondary importance. Firms tended to be production-oriented, and the
production man was the most important persons in the organization, as it was thought that he held the key
to the firms prosperity. This production mentality was a workable philosophy as long as a sellers market
existed.
In a production-oriented company senior personnel such as the chairman and managing director
are likely to have production backgrounds. Such companies are likely to have a small sales department
which handles traditional marketing functions such as advertising. The greatest importance is placed on
production. Under the production concept the salespersons task is a relatively minor one; he or she has to
sell what the firm has produced.
Sales orientation
The world economic recession of the early twentieth century destroyed the minds of business people.
Many firms failed and fortunes were lost. Unemployment was high and effective demand slumped. Production
capacity was under utilized and there were many unsold goods. Gradually business people began to realize
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that it was not enough simply to produce goods as efficiently as possible. For profits to materialize, such
goods had to be sold.
The guiding business philosophy of many firms switched from production to sale orientation. The
salespersons and the sales manager now became the most important people in the organization. The firm
could manufacture the goods, but theses goods still had to be sold. The sales concept stated that effective
demand could be created by sales techniques, and it was thought that the sales department held the key to
the firms future prosperity and survival.
Even today many people think of marketing as being synonymous with selling and promotion. Hooley
et al found that nearly 10 percent of the organizations in their sample still viewed marketing primary functions
as being sales and promotional support. For perhaps obvious reasons they described these types of
companies as being sales supporters with regard to their view of the nature and practice of marketing. In
fact, selling is only one of the several functions for which the marketing department is responsible.
This is not to say that selling is of no importance: rather that, if the firms have applied the concept
and techniques of marketing, i.e. identified consumer needs, produced appropriate products, priced, packaged,
promoted and distributed the product correctly, then consumers should want to buy the product rather than
the firms having to rely on intense selling. At the extreme, Peter Ducker, one of the worlds most respected
management theorists, has stated:
There will always, one can assume, be need for some selling. But the aim of marketing is to make
selling superfluous. The aim of marketing is to know and understand the customer so well that the product
or services fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All
that should be needed then is to make the product
or service available.
Managing Director
In a sales-oriented firm its whole business philosophy is centered around sales. Often these firms
believe that with some young, highly motivated salesman, hungry for success and with a well worked out
incentive scheme, they can sell anything.
Production
Director

Financial
Director

Sales
Director

Figure 1 The organization of a sales-oriented firm

13

Sales volume is the most important criterion, and planning horizons tend to be relatively short term. The
actual customer, and how customers might perceive the value or utility of the goods being sold, is of
secondary importance. Philip Kotler. defines this selling concept as one which holds that:
Consumers, if left alone, will ordinarily not buy enough of the organizations products. The
organization must therefore undertake an aggressive selling and promotion efforts.
From the above definition, the implicit premises of the selling concept are as follows:
1. Consumers can always be induced to buy more through various sales techniques.
2. Consumers tend to resist purchasing and it is the salespersons job to overcome this.
3. The firms key task is to organize an effective sales force.
In a sales-oriented company the sales function is given equal seniority with finance and production.
A sales approach to business is all very well to those companies that are here today and gone
tomorrow, but not to forms that want to remain in business and build their business on the basis of trust,
respect and genuine customer satisfaction. A good high-power salesperson can sell virtually anything to
anyone- once! For repeat business over the long term, however, the typical selling mentality of many firms
is not enough: a more customer- or market-oriented approach is necessary for long-term success.
Marketing orientation
The marketing concept is sometimes referred to as a marketing or customer orientation. Simply
stated, the marketing concept suggests that in order for a firm to survive in the long term and make a profit
it must ascertain the genuine needs and wants to specially defined target markets and then produce goods
and services that satisfy customer requirements.
Under the marketing concept, it is the customer who takes the central place on the business stage.
It is the satisfaction of customers that is seen as the key to prosperity, growth and survival. A marketingoriented firm produces goods and services that customers want to buy rather than on the firm selling the
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goods.
The management of a sales-oriented company tends to be short-run-oriented and pre-occupied
with achieving current sales. In such a company customer considerations are often limited to the sales
department. To progress from this position to a marketing orientation, the firm must be able to cultivate a
company-wide approach to customer requirements. Marketing cannot begin to be effective within a
company unless it has the full support of general management and penetrates every area of an organization,
from the lowest to the highest levels.
Levitt has drawn a sharp contrast between the selling and the marketing concept.
Selling focuses on the needs of the seller; marketing on the needs of the buyer. Seller is preoccupied
with the sellers need to convert his product into cash; marketing with the idea of satisfying the needs of
the customer by means of the product and the whole cluster things associated with creating delivering and
finally consuming it.
The main problem facing the sales-oriented firm in progressing to a marketing orientation is the
management of organizational change. Marketing will set the strategies and plans in consultation with the
departments concerned, but these departments will retain the authority to execute the agreed programme in
the way they think best. The human implications of this organizational change should not be underrated,
bearing in mind that it will involve a reallocation of power within the company. Functions previously carried
out by other departments will become the responsibility of marketing, and every part of the firm will have to
conform to a plan drawn up by marketing in consultation with other departments.
DEVELOPMENTS IN THE CONCEPT AND PRACTICE OF MARKETING
Like most areas of management and business, both the marketing concept itself and, as a result,
the practice of marketing management have continued to evolve and develop and no doubt will continue to
do so in the future. It is impossible to trace all of these developments and changes in this chapter, but among
some of the more important are the following.

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Internal Marketing
Conventionally, of course, the role of marketing in the organization has been looked at as being
one of focusing externally on the needs of the customer. A recognition of the need for a company-wide
marketing orientation and for the development of aspects such as Gummessons part-time marketers has
led to the recognition that marketers and the marketing function also need to look inwards to the staff in
other functions of the organization and the need to market a customer orientation to these other function.
This is now often referred to as internal marketing. Although there are several perspectives as to the
meaning and application of internal marketing, the following definition from Ballantyre et al reflects what
many would consider to be the essence of internal marketing.
Internal marketing is any form of marketing in an organization which focus staff attention on the
internal activities that need to be changed in order to enhance external marketplace performance.
Overall, internal marketing is aimed at increasing customer awareness throughout the entire
organization, together with the motivation of all employees to pay their part in achieving customer satisfaction.
Relationship Marketing
Perhaps one of the most significant developments in recent years has been the growth of the nation
of relationship. It is increasingly argued that the traditional concept of marketing do not adequately reflect
the recognition of the long-term value of a customer. The argument is that many of the traditional definitions
of marketing, although stressing the importance of customer needs and satisfaction, are essentially concerned
with maximizing the profitability of each transaction. Kotler argues that the effective relationship marketer
must supply good consistent quality backed up by good consistent service and fair prices. The aim is to
develop and maintain strong economic, technical and social ties with valued customers.
Communications and information technology (IT)
As in many other areas of our daily lives, marketing too, has been not only affected but some
would argue, fundamentally changed through developments in technology and particularly developments which
are related to and/or stem from communications and information technology. In particular, the ubiquitous

16

computer continues to change the face of marketing practice. It is impossible to go into detail here but examples
of areas of marketing affected by developments of communication and IT range from techniques of marketing
research and data collection which are increasingly computer based, through to developments which stem
from database marketing such as the growth in direct marketing techniques. Perhaps one of the most significant
developments which has already affected marketing but which will grow in importance in the future is the
growth of the use of the Internet.
Ecological/environmental and consumer welfare issues
Recent years have witnessed an increased interest in protecting the environment, together with a
recognition of the complex and potentially fragile nature of the ecological system of our planet. Coupled
with these developments has been an increased emphasis in protecting consumers against marketing
malpractice and dangerous or unhealthy products, Effective and aware marketers have responded to these
developments by, for example, producing recyclable products and packaging, reducing the pollution that
the use of their product causes, and even protecting consumers against their own worst excesses by stopping
the selling of certain products.
Not-for-profit and non-business marketing
A second important development in marketing practice has been the increasing use of marketing
tools and techniques in not-for-profit and non-business organizations traditionally, marketing was conceived
as a means of generating as sustaining profits, however, many organizations have objectives other than profits,
and many are not business organizations in the conventional sense.
Service marketing
Unlike not-for-profit and non-business marketing, many providers of services have long recognized
the value and importance of marketing and of being marketing-oriented. As mentioned earlier, the marketing
concept applies just as much to service products as to physical products; however, probably because of

17

the growth in importance of services in the economics of many development countries, more and more attention
has focused on the special issues and problems of applying marketing in this area. The characteristics of
services compared with tangible physical products gives rise to additional consideration in their marketing.
Global marketing
Business and trade, and hence marketing, have become more and more global in nature in recent
years. As with services, the application of marketing-in this case by companies trading across international
frontiers-is not new, but again, the growth in activity in this area, and particularly the spread of the global
marketing organization, has focused more and more attention on this aspect of marketing.
SUMMARY
The definition of marketing with its meaning is given in the initial part of the chapter. It also explains
the position of Marketing as functional area of management as an overall business philosophy with points of
differences between Marketing and Selling. Production Sales and Marketing Oriented Firm and their
different facets and discussed in detail.
QUESTIONS
1) Explain marketing as a functional area of management.

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2) Establish marketing as an overall philosophy.

3) What are Production Oriented and Sales Oriented and Marketing Oriented firms?
4) Enumerate the modern developments in the concept and practice of marketing.

CHAPTER- II

THE MARKETING ENVIRONMENT

OBJECTIVES
The chapters objective is to familiarize the reader with the different Marketing Environments and
the role of culture and sub culture.
INTRODUCTION
Rather than establishing what the organization can produce and then going out and selling it, the
marketing-oriented firm first finds out the genuine needs and wants of consumers and then attempts to produce
products and services that satisfy these requirements. In a wider sense, the marketing concept is more an
attitude of mind or a customer-oriented business philosophy, rather than merely a functional area of
management.
Although a clear understanding of consumers requirements is of paramount importance in putting
such a business philosophy into practice, there are also other factors to consider. The marketing firm operates
within a complex, dynamic, external macro-environment. It is the task of the marketing oriented firm to
link the resources of the organization to the requirements of consumers within the framework of opportunities
and threats presented by this macro-environment. Hence, the marketing firm not only has to put consumers
requirements at the top of its list of priorities, but it also needs continually to adjust to environmental factors.
Kotler defines the general marketing environment as follows: a companys marketing environment
consists of the actors and forces that affect the companys ability to develop and maintain successful
transactions with its target customers.
Such a definition includes all environmental forces outside of the firms marketing management
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function. This would also include inter-departmental influences.

Russ and Kirkpatrick call the interaction between the marketing department and other functional
areas of management the intra-firm environment. It is important, in order to understand the influences of
external environment forces, to appreciate that, although the marketing function is the channel through which
the firm adapts to change in external conditions, marketings ability to carry out this role is also influenced
by internal factors.
The general marketing environment, therefore, consists of all the factors and forces influencing the
marketing function. This includes both internal and external forces. Internal forces, i.e., the intra firm
environment, are largely within the control of the firm. It is the generally uncontrollable forces outside the
firm in the macro-environment that pose the most important sources of opportunities and threats to the
company.
Kotler reserves the term macro-environment to denote other external forces such as demographic,
economic, political, technological, and socio-cultural forces. The term macro-environment denotes all these
forces and agencies external to the marketing firm. Some of these outside factors and forces will be somewhat
closer to the firm than others, for example immediate suppliers and competitors.
THE MACRO-ENVIRONMENT
The only real certain thing in this world is change. Sometimes change occurs so slowly that it is
virtually imperceptible. We are often unaware that change is occurring until it is too late to do anything about
it. At other times change is so rapid that, even though it is obvious, we find it difficult to react quickly enough.
Although none of us possess the power to foresee the future, we can be sure that it will be different from
today, and that change is a fact of life. We have little power to stop it, and the sensible course of action is
to welcome change and attempt to adapt to it.
In order for a firm to be able to adapt successfully to changing circumstances, management needs
to have an understanding and appreciation of the factors and forces influencing such changes, Ideally, a firm

20

should be in a position to adapt to changes as they are occurring, or even in advance. Firms should attempt
to capitalize upon change rather than merely reacting to it. By identifying environmental trends soon enough,
management should be able, at least in part, to anticipate where such trends are leading and what future
conditions are likely to result from such changes.
Unless firms are able to identify and react to changes quickly enough, they are likely to be dictated
to by circumstances beyond their control. Instead of being part of the changes occurring, and leading the
market, they will, of necessity, be forced into being market followers. Instead of adapting to change and
even going some way towards influencing events, events will instead influence them, perhaps in an
unfavourable way.
In terms of its speed of response, and its ability to react to changing conditions, we can generally
classify three types of firm:
1. Firms that identify and understand the forces and conditions bringing about changes. Such firms
adapt and move in line with such changes. To a certain extent, such a firm may itself play a part in
influencing events.
2. Firms that fail to adapt to changes early enough to become part of that change. Such firms have
little opportunity to influence events, but are usually forced to react to changes eventually, out of
the necessity to survive.
3. Firms that fail to realize change has occurred, or refuse to adapt to changing circumstances. Such
firms are unlikely to survive in the long term or, if they do, are unlikely to prosper.
The competitive environment
There are very few firms that are fortunate enough to have no competitors. Except in the case of
the centrally planned economies, of which, of course, there are fewer and fewer as they increasingly turn
towards free-market mechanisms. On the other hand, there are very few markets which possess all the
characteristics of what the economist calls a perfectly competitive market structure where no company
has any differential advantage and where all products are homogenous and companies therefore must accept
the market price. Rather, most markets fall somewhere in between these two extremes but are characterized
21

by intense competition. In some markets the market structure is dominated by three or four very large
companies with a number of medium and smaller sized companies all vying for position. In such competitive
market structures, in an attempt to reduce price competition and to secure a competitive advantage, companies
will seek to make their products and services stand out in some way from their competitors. This attempt
to differentiate product/services from those of competitors is a key feature therefore of modern marketing.
Differentiation can be achieved in many ways, but essentially the extent to which differentiation is successful
or otherwise is the responsibility of the marketing function. So, for example, the marketer will seek to gain
a competitive edge through, say, branding, or perhaps packaging. Innovative distribution, or excellent
customer service can also be used to differentiate the companys offering from those of competitors. Clearly,
marketing decision therefore must reflect and indeed be based upon an analysis of the competitive environment.
In fact, the competitive element of a companys environment is probably one of the most important elements
in the development of marketing strategies and plans, and therefore in affecting the extent of a companys
success, or otherwise, in the market place. Traditionally, economists have distinguished between market
structures with different degrees of competition. As already mentioned, at one extreme we have the
monopolistic market structure where there is only one supplier and hence little or no competition. We have
also suggested that this type of market structure is increasingly rare apart from the centrally planned economies
or where fore some other reason an industry is state run or protected. Also, as already mentioned, as the
other extreme is the perfectly competitive market structure where products are undifferentiated between
competitors. In the real world though the economists oligopolistic (a market structure with a few relatively
large companies) or monopolistic competition (a market structure with many competitors and hence where
product differentiation of some kind is crucial) are more realistic.
Supplier environment
Suppliers are other business firms and individuals who provide the resources needed by the
marketing firm to produce goods and/or services. Nearly every firm, whether engaged in manufacturing,
wholesaling or retailing., is likely to have suppliers. Large firms such as Marks and Spencer or the Ford
Motor Company are likely to have numerous suppliers. For example, Ford must obtain glass windscreens,

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headlamp units, brake pads, tyres, steel sheet, fabric for interior upholstery and a number of other materials
in order to produce cars. While some of these product constituents will come from major manufacturers
such as British Steel, Pilkingtons Glass, Lucas and Dunlop, other components, ranging from industrial
fasteners to engine gaskets, will often be supplied by a large number of smaller, less well known companies.
As you will appreciate, Ford depends on possibly hundreds of suppliers for its manufacturing
capability and commercial prosperity. In the same way, hundreds of firms depend on Ford for orders. The
firms that supply Ford with finished components are also likely to be supplied with raw materials or semiprocessed goods by a host of other suppliers.
Purchasing is regarded as a very important management function in many organizations. The reason
for this is that firms must be able to purchase product and services at an acceptable price and quality. The
firm must also ensure that its suppliers are capable of offering an acceptable level of service on such matters
as delivery, reliability, stock availability, servicing arrangements and credit facilities.
The buyer-supplier relationship is one of economic interdependence. Both parties rely on each
other for their commercial well being. Changes in the terms of the relationship are usually based on negotiation
rather than on ad hoc unilateral decisions. Such relationships are usually long term, with each party realizing
its dependence on the other. Both parties are seeking security and long-term stability from their commercial
relationship. This is not to say that factors in the supplier environment do not change. Suppliers may be
forced to raise their prices and may also be affected by industrial disputes which, in turn, will affect delivery
of materials to the buying firm. Some suppliers may find themselves in financial difficulty and be forced into
liquidation. In an attempt to limit the effect of such factors, many buying firms use a multiple sourcing
purchasing policy. This avoids over-dependency on any one supplier and reduce the vulnerability of the
buying firms.
The distributive environment
Many firms, particularly in industrial markets where products are often buyer-specified market and
deliver their products direct to the final customer. Other firms use some form of intermediate distribution
system. The distribution system is then made up of one or more middlemen who can be individuals or
23

other organizations. They range from agents, distributors, factors and whole salers to retailers.
Because of the seeming permanence of the distributive environment at any point in time, many
firms make the mistake of thinking it is static. In fact, distribution channels change and evolve just like any
other facet of business life. As Davidson explains:
Distribution channels resemble the hour hand of a watch. They are always moving, but each
individual movement is so small as to be invisible in isolation. The cumulative movement over a number of
years can, however, be massive.
Because distribution channels change relatively slow, it is easy for manufacturers to respond too
slowly to their evolution. Existing channels may be declining in their popularity of efficiency, while new potential
channels of distribution may be developing, unnoticed by the marketing firm.
The role of culture
A societys culture is completely learned way of life which is handed down from generation to
generation. Cultural influences give each society its own peculiar attributes. Although the norms and values
within a society are the result of many years of cultural conditioning, they are not static. It is cultural changes,
and the resulting revised norms and values within a society, that is of particular interest to the marketing
firm. Nowhere is the aspect more poignant than when the company is marketing internationally.
The English anthropologist, E.B. Taylor, 10 defined culture as:
that complex whole which includes knowledge, belief, art, morals, law, custom, and any other
capabilities and habits acquired by man as a member of society.
Taylors definition is an accepted classic in defining some of the major facets of culture, and in
emphasizing that culture is very much a learned phenomenon. British culture has historically been largely
materialistic, derived as it is from the Protestant work ethic of self-help, hard work, thrift and the accumulation
of wealth. Arguably, other Western cultures such as the United States, Germany and Japan are even more
materialistically oriented. This factor is often thought to be one of the reasons for these countries superior
economic performance. Cultural values do, however, change over time, and a number of Western core
values are currently undergoing major changes. Some of the changing cultural values are particularly prevalent
among the young include:
- A questioning of materialism and its values.

24

- A decline in respect for authority and the law.

- A belief in the rightness of militancy and conformation.
- A desire for innovation and change.
- A shift towards informality
Sub-cultural influences
Within each culture are numerous sub-groups with their own distinguishing modes of behaviour.
In the United States black Americans represent the largest racial/ethnic sub-culture. In the UK it is the Asian
community. American marketing firms realize that it is impossible to treat such a large group of consumers
as a homogeneous mass, a number studies though indicate that their consumption habits are significantly
different from those of the remainder of Americans. As a result, American firms are now designing products
and advertising campaigns aimed specifically at this large minority markets. This has now also happened in
the UK.
Indeed, although the UK is more culturally homogeneous than the USA, firms can no longer ignore
the cultural differences of the ethnic population. Ethnic heterogeneity is slowly being recognized by more
enlightened firms as potential source of marketing opportunities. Cannon highlights a number if interesting
examples of marketing opportunities and problems related to sub-cultures.
-

Products may need to meet special religious needs (e.g. kosher foods).

Marketing intermediaries may be different (e.g. the importance of small, Asian-run, shops)

Consumer tastes may differ (e.g. Cadbury Typhoos poundo Yam, aimed mainly at consumers of
Caribbean origin)

Language can be a problem in marketing communications (e.g. in the UK, 77 per cent of Pakistaniorigin women and 43 percent of Pakistani-origin men cannot speak working English).
The culturally aware marketing firm will recognize that sub-cultures represent distinct market segments

and will seek to increase their awareness of the needs, attitudes and motivations of sub-groups.
Political environment
25

To an increasing extent, the operation of business firms is influenced by the political framework
and processes in our society. Marketing management must be alert to changes in the political attitudes or
climate, which depend on the policies of the government of the day. The political environment cannot be
examined in a vacuum. Political philosophies on their own are nothing without action. The outcome of political
decisions can be seen in the legislation and economic policies of government. In this sense, you will appreciate
that, although for clarity of exposition we are examining the various macro-environmental forces in isolation,
in reality they are very much interrelated. Many of the legal, economic and social developments in our society
and other countries are nothing more than the result of political decision put into action. For example, in the
1980s the Conservative Party favored a monetarist approach to the management of the UK economy. It
attached great importance to the control of money supply and hence government public expenditure. The
general philosophy of the Conservatives was one of self-help and free enterprise, preferring to see business
in the hands of private share holders rather than being owned by the state. Its main concern was with the
reduction of the level of inflation which seen as being vital to long-term economic growth and stability.
Expenditure on services such as education and social services was generally reduced as a percentage of
total expenditure doing the Conservatives 18 years in office. Business, entrepreneurship, private ownership
and profit were seen as being a good thing, vital to the countrys future prosperity.
Economic environment
Marketing management must understand the effects of the mainly economic variables that are likely
to affect their business operations. We see in the mass media that inflation is rising or falling, that exchange
rates are affecting the value of the currency or influencing the level of interest rates. We hear discussions on
the level of unemployment, industrial output, or the current state of the balance of payments. Such economic
factors are of concern to marketing firms because they influence costs, prices and demand.
Although world economic forces are of paramount importance to marketing firms, particularly those
involved with either importing or exporting, domestic economic forces usually have the most immediate impact.
The level of domestic unemployment affects the demand for many consumer products, especially those
classed as luxury goods. This in turn affects the demand for many industrial products, particularly
manufacturing plant such as machine tools. The rate of inflation and the cost of borrowing capital affect the
26

potential returns from new investment and inhibit the adoption of new technologies. Governments of every
persuasion attempt to encourage economic growth through various policy measures. Tax concessions,
government grants, employment subsides and capital depreciation allowances are some of the measures
that have been used.
The marketing firm needs to monitor continually the economic environment at both the domestic
and international level. The ebb and flow of economic forces and the policies that governments use to
attempt to manage their economics could have a significant impact on a firms business operations. As with
all other environmental factors, economic factors can be viewed as a source of both opportunities and threats
to the marketing firm. By carefully monitoring and understanding the economic environment, a firm
management should be in a better position to capitalize upon the opportunities and to do something about
reducing the threats.
Technological environment
Technology is a major environmental influence upon the marketing firm. It affects not only the firms
operations and product, but also consumers life styles and consumption patterns. Management must be
aware of the impact of technological changes. As Wilson explains in relation to electronics:
The development of the microprocessor and its large production has revolutionized information
collection, processing and dissemination which in turn is affecting the whole spectrum of marketing activity.
The impact of new information technology has been particularly marked in the marketing research
area. For example, it is now possible to design and administer questionnaires via computer terminals. In the
past this method has been used on a limited basis, but is being more and more frequently used. Computer
assisted telephone interviewing (CATI) has revolutionized the speed with which surveys can be completed.
Responses are fed immediately into a computer and a report hard copy can be available immediately after
the final interview is completed As Thomas explains:
On-line interviewing is now in widespread use in the larger data gathering market research firms.
Interviews, using telephones, work from a questionnaire which is displayed on a VDU and responses are
keyed straight into the computer.

27

Sales forecasting has always been, and always will be, an important marketing activity. Until recently,
the majority of firms tended to use subjective or judgmental sales forecasting methods. The development of
computers and available software programs has brought the use of sophisticated forecasting techniques within
the reach of all companies. Technology also affects the way in which goods are distributed and promoted.
Containerized freight and automated warehousing have increased the efficiency with which products can be
distributed. Sales representatives can now use audio-visual equipment for presentations and demonstrations.
Technology is also affecting marketing at the retail level. Electronic point-of scale (EPOS) data capture is
now used by the major retailers. The laser check out automatically records consumer purchases and is
used to analyse sales and to control and re-order stock. Operation of the laser checkout system depends
on the electronic reading of codes. Many fast-moving-consumer-goods (FMCG) manufacturers have
responded to these developments by incorporating bar codes on their product labels.
Technology has influenced the development of products themselves. Genetic engineering aerosol
cans, digital television, compact disc players-video recorders, word processors and instant cameras have
all come into widespread use over the past few decades. While older industries are in decline, whole new
industries sometimes referred to as the sunrise industries, have developed and grown to take their place.
These new industries have capitalized on developments in the technological environment (e.g. information
technology, biotechnology and aerospace)
SUMMARY
The Marketing Environment has been explained thoroughly emphasizing on the macro, competitive,
supporter, distributive, political economic and technological environments.
QUESTIONS

28

1) What is the meaning and relevance of Marketing Environment?

2) Explain what is Macro Environment.
3) What is Supplier and Distributing Environments?
4) Enumerate the role of culture and sub culture in Marketing.

CHAPTER - III

INTEGRATED MARKETING
OBJECTIVES
Integrated marketing underscores the need of imbibing a sense of dynamism in the planning and
control system of marketing in any business organisation. With the changes in the external environments, the
marketing strategy of an organisation needs to be reviewed and, at times, calls for certain amendments.
Since any change in strategic direction would percolate to the frontline tactical level, it is imperative that
they synchronize and resonate.
Objective of this chapter is to make the reader aware about integrated marketing concept, various
elements of marketing mix and optimum marketing mix.
INTEGRATED MARKETING - CONCEPT
In integrated marketing, all departments of a company work together to serve the customers
interests. It occurs in two levels. First, the various marketing functions sales force, advertising, customer
service, product management and marketing research must work together. Second, all the departments must
be involved in marketing and they also, must be customer oriented.
To integrate the marketing functions, the company should integrate all the functions of internal
marketing as well as external marketing. Internal marketing includes training and motivating able employees
to serve the customers well. Internal marketing precedes external marketing.
MARKETING MIX VARIOUS ELEMENTS

29

Marketing mix is a set of tools used by marketers to produce desired response from their target
markets. McCarthy classified these tools into four broad groups products, price, promotion and place.
These are called the Four Ps of marketing and each element has further variables as shown below
Figure 1.
Marketing Mix
Sales promotion

Product variety

List price

Quality

Discounts

Advertising

Coverage

Design

Allowances

Sales force

Assortments

Features

Payment period

Public relations

Locations

Credit
Priceterms

Direct marketing
Promotion

Inventory
Place

Brand name
Product
Packaging

Channels

Transport

Sizes
Services
Warranties

Figure 1. Marketing Mix

Product (services): The product is the foundation or basis of the marketing mix and is considered
as the starting point for marketing strategy. Companies concentrating only on existing products run
the risk of becoming outmoded and newer products and services are essential for survival
Price: It is a very potent element of marketing mix because of its impact on the customer and the
economy. The price is a major indication of the quality and is a major factor in the decision making
process. For the company, price is the sole means for recouping costs and making profit.
Promotion: Promotion of the product is essential for increasing the target markets awareness about
it. The effects of promotional expenditure are difficult to measure because it does not produce
immediately tangible results. Promotion covers the following three basic activities: advertising, personal

30

selling and specialized sales promotion techniques.

Place: This involves the movement of the products from the seller to the buyer. Place (commonly
referred to as distribution) is distributed into two categories distribution channel and physical
distribution management.
Marketing mix decisions are made for influencing both trade channels and final channels. For this,
the company prepares an offering mix and a promotion mix.
The offering mix comprises of :

Products

Services

Price

The promotion mix comprises of :

Sales promotion

Advertising

Sales force

Public relation

Direct mail, telemarketing and Internet

The promotion mix components use various distribution channels and reach the target customers.

The firm can change its price, sales force size, and advertising expenditure in the short run but can develop
new products and modify its distribution channels only in the long run.
OPTIMUM MARKETING MIX
Optimizing marketing mix means division of the marketing budget optimally over the elements of
the marketing mix. The components of the marketing mix substitute one another partially and increased sales
can be achieved by substituting one element of the marketing mix for the other. There exist two main elements
31

of the marketing mix which determine the marketing budget sales promotion and advertisements. The
money invested should be divided among the various marketing tools such that it results in an optimum
allocation of a given marketing budget over each element of marketing. Such an allocation is termed to be a
sales maximizing or profit maximizing mix.
In devising the optimum marketing mix, it is important to know how various marketing mix variables
interact to impact sales/profits. The marketers should not just take the price and the product for granted,
rather, they should consider the effect of non-marketing variables that will enable the firm to reduce costs
and produce high quality products. One example of non-marketing variable that affects the marketing mix is
productivity. This in turn is affected by investment decisions and personnel policies. Similarly, the product
quality will be affected by both personnel policies and R & D policies.
SUMMARY
The concept of integrated Marketing with the explanation of the various levels is given. The various
elements of marketing mix are also given in detail and the winding up is done with optimum marketing mix.

32

QUESTIONS
1) What is the concept of Integrated Marketing?
2) Explain the various elements of Marketing Mix.
3) What is Optimum Marketing Mix?

CHAPTER - IV

MARKETING STRATEGY
OBJECTIVES
Marketing strategy means long-term marketing decisions to direct a proper marketing mix towards
target groups of customers or market segment.
Objective of this chapter is to make the reader aware about the model of marketing, market
segmentation, product planning, pricing, promotion strategy and distribution planning & strategy.
MODEL OF MARKETING
The use of marketing models has been a fairly recent development in the study of consumer
behaviour. They help in organizing and integrating the various components of information that are known
about consumer behaviour. They also help in research works to make a deeper study of consumer behaviour.
One commonly used marketing model is discussed below.
The Howard - Sheth model
Howard and Sheth have provided one of the most comprehensive models of consumer behaviour.
This model uses the concept of stimulus-response with the following four major components:
l

Input variables: These are those that come from the environment. They are the following three typessignificance stimuli, symbolic stimuli and social stimuli.

Output variables: These are those that come from the buyers and consist of attention,
comprehension, attitude, intention and purchase behaviour.
33

Hypothetical constructs: These are variables which can be divided into two major groups- perceptual
constructs and learning constructs.

Exogenous variables: These are external variables that influence buyer decision. These variables are
external to the buyer and are not sharply defined as other aspects of model.

MARKET SEGMENTATION
Market segmentation is defined as the process of breaking down the total market for a product
or service into distinct subgroups or segments such that each segment represents a distinct target market
with a distinct marketing mix. The main intention of this is to select those groups of customers that the
company is best able to serve at minimized competition.
Market segmentation is the first step involved in target marketing. This is followed by market
targeting and product positioning. The stages involved are discussed in detail below.
Stage one: Market segmentation. The entire market is divided into distinct groups of buyers
depending on the response expected to different products/services and the marketing mixes offered. The
firm first determines the most appropriate basis for segmentation, identifies the important characteristics of
each market segment, and develops criteria for evaluating their commercial attractiveness and viability.
Stage two: Market targeting: This is the process by which one of the previously identified market
segments is evaluated and selected. (Note that market targeting is different from target marketing).
Stage three: Product positioning: This process involves the fitting of a product or service and the
marketing mix elements within a particular market segment. This is essential in a market with many
competing products.
Since a market comprises of many identifiable groups with similar wants, purchasing power,
geographical location, buying attitudes, or buying habits segment marketing is beneficial over mass marketing.
This is because the company can create a more fine-tuned product or service offering and price it
appropriately for the target audience. This also helps in choosing the distribution and communication channels.

34

Market segmentation is obtained in the following steps:

1. Survey stage
2. Analysis stage
3. Profiling stage
Marketing segmentation is of the following types:
1. Geographic segmentation
2. Demographic segmentation
3. Psychographic segmentation
4. Behavioural segmentation
5. Multi-attribute segmentation
PRODUCT PLANNING
Each product level (product line or brand) must develop a marketing plan for achieving its goals.
In fact, the products marketing plan is one of the most important outputs of the marketing process and has
to contain the following:

Executive summary and table of contents: This brief summary of the plans main goals and
recommendations permits senior management to grasp the plans major thrusts.

Current marketing situation: This presents relevant background data on sales, costs, profits, the
market, competitors, distribution, and the macro environment.

Opportunity and issue analysis: This process is carried out by the Product Manager to identify
the major SWOT (Strengths, Weakness, Opportunities, Threats) facing the product line.

Marketing strategy: The Product Manager arrives at a marketing strategy after discussions with
the purchasing and the manufacturing people to confirm that they are able to buy enough material
and produce enough units to meet the target sales volume levels.

Action programs: It focuses to specify the broad marketing programs for achieving the business

35

objectives and involves answering the following questions: What should be done? When should it
be done? Who should do it? How much will it cost?

Projected profit and loss statement: After the action plan is decided, a supporting budget is
made which shows the forecasted sales volume in units and average price and costs involved in
production, physical marketing and distribution.

Controls: This deals with monitoring the marketing plan by spelling-out goals and budgets for each
month or quarter and periodically reviewing the results.

PRICING
Pricing is essential for the company to cover the costs of separate elements of its various activities.
Pricing plays the following important roles:

pricing covers costs included in research and development, raw materials, labour and administrative
costs.

pricing pays for the marketing costs involved in promoting, selling and distributing the product.

pricing generates residual profits to fulfill company objectives.

Since pricing is one of the most flexible elements of the marketing mix, it can be readily changed

to meet the market conditions as and when required.

The pricing decisions are strategic issues and should have the following attributes:
1. It should be made in the context of overall marketing objectives and strategies.
2. It should be related to and be consistent with other elements of the marketing mix.
3. It should neither become an overriding competitive factor, nor a routine work of the accounting
department.
The following are the considerations to be made in marketing pricing decisions:
1

Costs The three measures of the cost structure are: the ratio of fixed to variable costs, the

36

relationship between costs and volume, and the cost of the firm relative to its expenses.
2

Demand The following two inter related criteria are considered: the quantity demanded at any
given price and effect of changes in price on sales volume.

Company and marketing objectives/resources This comprises of selection of market targets, brand
image, pricing policy etc.

Social / legal aspects The legal and social aspects should be considered as additional inputs in the
pricing decision.

PROMOTION STRATEGY
Promotion includes all those activities the company undertakes to communicate and promote its
products to the target market. It has to set up communication programs consisting of advertising, sales
promotion, public relations, and direct and on-line marketing. The promotional tools are discussed in detail
below.

Advertisements: They are used for building a long-term image for the product and can effectively
reach geographically dispersed buyers. The main forms of advertising are- Newspaper ads., TV
ads., Banners, Hoardings etc. and now-a-days even web pages.

Personal selling: It is the most effective tool of the buying process because of the following qualities
personal confrontation, immediate response.

Sales promotion: They are used to draw a stronger and quicker buyer response and use coupons,
contests, premiums etc.

Public relations and publicity: This has the ability to catch the buyer off guard.

Direct marketing: They include the relatively newer concepts like telemarketing, Internet marketing
etc.
The factors that set the promotion mix are:

The type of product market: Depending upon the type of market -Consumer market or business
market the mix is determined. While consumer market products require more sales promotion,
37

business market product relies on personal selling.

The strategy used - Push or pull strategy: Push strategy involves the manufacturer using sales force
and trade promotion and pull strategy uses advertisements and consumer promotion.

Buyer-readiness.

Product-life-cycle stage: - For example, in the introduction stage advertising has the highest cost
effectiveness where as at a decline stage sales promotion should be given more priority.

Company market rank: - Market leaders derive more benefit from advertisements where as smaller
competitors require more sales promotions.

DISTRIBUTION PLANNING AND STRATEGY

An efficient distribution plan comprises of well programmed, professionally managed, vertical
marketing system that meets the needs of both manufacturer and distributors. The manufacturer establishes
a department within the company called distributor-relations planning, to identify distributors needs and to
build up merchandising programs to enhance the efficiency of each distributor. This department, along with
the distributors, plans the following:
1. Merchandising goals
2. Inventory levels
3. Space and visual merchandising plans
4. Sales training requirements
5. Promotion plans
The distribution strategy aims at making the following conversions:

The distributors ideology that they make money mainly on the buying side to an ideology that they
can make more money by concentrating on the selling side.

The manufacturers ideology that distributors and dealers are customers to an ideology that they
are all working partners.
38

It is required to periodically evaluate distributors performance against standards of sales-quota,

average inventory levels, customer delivery time etc. and to counsel, retrain, motivate or terminate under
performers.
The distribution channel arrangements should be periodically reviewed and modified appropriately.
This mainly depends up on the following stages in the product life cycle:

Introductory stage: This should use specialist channels that spot trends and attract early adopters.

Rapid growth stage: This stage should use higher-volume channels.

Maturity stage: At this stage, the company should move their product into lower-cost channels.

Decline stage: This stage requires massive discounts and very low cost channels.

SUMMARY
Model of marketing, market segmentation with its steps and types, product planning and pricing
are explained in detail. Promotion strategy, distribution planning and strategy are dealt with briefly.
QUESTIONS

39

1) What is Howard Sheth model in Marketing?

2) What is Marketing Segmentation? Give its steps and types.
3) What is Product Planning?
4) What is the importance of Pricing in a company?
5) Write about Distribution Planning and Strategy.

CHAPTER - V

MARKETING PLANNING
OBJECTIVES
Strategic planning signifies long-term decisions affecting the movement of an organisation. Marketing
planning involves market oriented strategic planning as well as short term planning.
Objective of this chapter is to make the reader aware about the various marketing procedures
that happen at various product levels, elements of marketing planning and marketing mix and marketing
planning.
INTRODUCTION TO MARKETING PLANNING
Market-oriented strategic planning is the managerial process of developing and maintaining a feasible
balance between the organizations objectives, skills, and resources and its changing market opportunities.
Strategic planning aims at shaping the companys business and products to yield target profit and growth.
The Marketing Manager plays a vital role in strategic planning process. He defines the business
mission, analyses the environmental, competitive, and business situation, and finally develops objectives, goals
and strategies.
The planning procedures that happen at various levels are as below:
1. Corporate strategic planning: These are plans made by the corporate head quarters to guide the
entire enterprise.
2. Division planning: It covers the making of decisions on the amount of resources to be allocated
40

to each division.
3. Business unit strategic plan: Each business unit devises a strategic plan to carry that business
unit into a profitable venture.
Planning
4. Product marketing plan: Each product line or brand within a business unit develops a
marketing
plan for
achieving its objectives in the market.
Corporate
planning

Implementing

The strategic-planning, implementation, and control process can be summarised as follows:

Division planning

Figure 1. Planning Process

Business planning

Organizing

Implementing

Product planning

Controlling

Measuring results

Diagnosing results

Taking corrective
action

41

The above mentioned planning steps are discussed in detail.

Corporate and division strategic planning :

The corporate establishes the framework within which divisions and business units prepare their

plans. This is done by defining the mission, policy, strategy and goals of the company. The corporate head
quarters undertakes four planning activities:
1. Defining the corporate mission: Every company has a mission or purpose and a well-worked-out
mission statement, encourages and motivates the employees with a shared sense of purpose, direction
and opportunity.
2. Establishing strategic business units (SBUs): The company has to establish strategic business units
on the basis of the following three dimensions: customer groups, customer needs and technology.
3. Assigning resources to each SBUs: The senior management studies the companys portfolio and
classifies its business by profit potential. After the companys strategic business units are identified,
appropriate funding is assigned to each unit.
4. Planning new businesses and downsizing older business: New businesses can be of the following
types intensive growth opportunities (to achieve further growth within the company), integrative
growth opportunities (to build or acquire businesses related to the companys current business) or
diversification growth opportunities (adding new businesses that is totally unrelated to the companys
current business).

Business strategic planning : This occurs in the following steps:

The unit defines its specific mission; it performs overall evaluation of companys strengths,

weaknesses, opportunities, and threats (SWOT analysis); it develops specific goals based on the SWOT

42

analysis; it develops a strategy to achieve the goal; it develops detailed supporting programs to help in the
strategy; it implements the clear strategy and well-planned supporting programs and finally, it keeps a track
of the new developments and results and controls the strategy accordingly.

Product marketing planning: Each product level (product line, brand) must develop a marketing
plan for achieving its goals. A marketing oriented company attaches great significance to gathering
information on which plans are based. Their activities center around customer needs and satisfaction.
The Marketing Manager deals with the following questions:

Who are our customers?

What do they buy?

How do they consider value?

When do they buy?

ELEMENTS OF MARKETING PLANNING

The planning role of the marketing management comprises the determination of marketing objectives
together with a choice of strategies and tactics to achieve these objectives and a time scale for their
implementation and achievement. For obtaining this, the marketing plan must comprise of the following:

Executive summary and table of contents: The marketing plan should comprise of a brief summary
of the plans main goals and recommendations. This should be followed by a table of contents.

Current marketing situation: This should contain relevant background data on sales, costs, profits,
market, competitors, distribution, and the macro environment.

Opportunity and issue analysis: This requires the Product Manager to identify the major
opportunities/ threats, strengths/weakness, and issues facing the product line.

Objectives: After the Product Manager has summarized the issues the financial plan and the
marketing objective are set.

Marketing strategy: The Product Manager outlines the broad marketing programs to accomplish
the plans objectives. In determining the strategy, the Product Manager talks with the purchasing

43

and manufacturing people to determine whether they will be capable of meeting the target volume
levels set.

Action programs: It devises special marketing programs to achieve the business objectives. It must
be dealing with the following questions: What should be done? Who should do it? How much will it
cost?

Projected profit-and-loss statement: This is essential to forecast the plans expected financial
outcomes. On the revenue side, this budget shows the forecasted sales volume in units and average
prices. On the expenses side, it shows the cost of production, physical distribution and marketing.
The difference between revenues and sales is the projected profit.

Controls: The final section of the marketing plan outlines the controls for monitoring the plan. This
deals with reviewing the results of goals and budgets set for each month or quarter. Some control
sections include contingency plans which outline the steps the management takes to respond to specific
adverse developments like strikes etc.

MARKETING MIX AND MARKETING PLANNING

All the elements of marketing mix (the 4Ps) are arrived upon and implemented in the broad
framework of a marketing plan. The marketing plan, like any other planning process, is an interactive process
and is done on a continual basis of constant monitoring, redefinition, adaptation, and re-evaluation of objectives
and strategies.
The concept of the Product Life Cycle (PLC) is briefly introduced to understand how the
components of the marketing mix change during different phases of the life cycle of the product. The PLC
of a product involves with the stages corresponding to the life phases of infancy, growth, maturity and decline.
The belief is that sales are low during the introductory stage, rapidly rising during the growth stage, reach
the peak during maturity stage and start declining during the final stage. Different products will take different
spans of time to pass through the cycle of introduction, growth, maturity and decline. The marketer should
seek and identify the stage in the life cycle from the conditions in the market. For this, it is recommended to
44

try and foresee the next stage and work back to establish the current stage.

Table 1. Elements of Marketing Mix

Promotion
Distribution
Stage in PLC
Product
Pricing
The table below describes different elements of marketing mix for coping with the different PLC
stages.
(1)Introduction

Resolve
product
deficiencies

Highest

2) Growth

Focus on
product quality,
variation of
product
introduction,
Product
adjustments for
further brand
differentiation

High

Create awareness of
products potential,
stimulate primary demand

Selective advertising of the

brand. Heavy advertising to

Selective
distribution

Extended
coverage

create image

(3) Maturity

Simplify
product-line.

Moderate

(4) Decline

Seek new
product
users.

Low

Build and maintain

image. Facilitate sales
promotion

Primary demand may be

created again

Role of Advertising in the Marketing Mix

45

Seek close dealer

relationships

Selective

Since there exists only few firms which directly compete with each other in the same market, each
of them desires to increase their share by increasing demand through advertising rather than reducing prices.
This approach is preferred because the firm can achieve a competitive edge in advertising because it has a
very wide reach and establishes an image that cannot be obtained otherwise.
Role of Price in Marketing Mix
Pricing decision is carefully coordinated with decisions on product, promotion and distribution on
the basis of the target market strategy. This is so because the chosen target market gives overall direction
in determining marketing mix. Competitors are more likely to react to a lowering of price than to an increase
in advertising expenditure because such a lowering is highly visible and is often associated with the onset of
cut throat competition.
SUMMARY
The chapter introduces the reader to Marketing Planning in a detailed manner. It also gives elements
of marketing planning and emphasises on Marketing Mix and Marketing Planning.
QUESTIONS
1) What is the procedure in Marketing Planning?

46

2) What are the elements of Marketing Planning?

3) Write briefly on Marketing Mix in Marketing Planning?

CHAPTER - VI

SERVICE MARKETING
OBJECTIVES
Marketing is not limited to tangible products alone. Intangible services also require marketing.
Objective of this chapter is to make the reader aware about the concept and importance of service
marketing today, its unique characteristics and 4 Ps in service marketing.
CONCEPT AND IMPORTANCE OF SERVICE MARKETING TODAY
Until recently, the service firms lagged behind manufacturing firms in marketing. Even today, many
small services firms (like barber shops, workshops) do not use formal management or marketing technique.
Professional service providers like doctors, lawyers also considered it unprofessional to market their services.
However, with the increase in competition they are also realizing the need of marketing.
As many companies are experiencing a shrinkage in their profits, they are charging fees for services
which they used to offer freely or are increasing the prices of the services. The common ways in which
manufacturers are marketing their services are:
1. Repackaging their product into a system solution such that rather than just selling the products the
company can include them into the services they offer.
2. Packaging internal services into salable external services: This is offered in the form of training
programs.
3. Servicing other companies from the companys physical facilities: Companies which manage a physical
facility can sell its services to other companies.
4. Offering to manage other companies physical facilities or business process.
5. Selling financial services: The companies which manufacture equipments and appliances have
47

discovered that they can also profit from financing customers purchase. For e.g. General Electric
has come up with GE Capital which provides services ranging from credit cards to insurances.
6. Moving into distribution services: Manufacturers have started entering directly into the market by
operating their own retail outlets.
7. Using the internet to create new service offerings: Many manufacturers are offering an array of services
to the customers, some of which are for free. Even if services are for free, they reap revenue from
advertising and service partners.
The service marketing should project the following qualities of the firm providing service:
1. Reliability: The ability of the firm to provide the promised service dependably and accurately.
2. Responsiveness: The willingness to help the customer and provide prompt service.
3. Assurance: The knowledge and courtesy of employees and their ability to convey trust and confidence.
4. Empathy: Providing care and individual attention to customers.
5. Tangibles: Appearances like physical facilities, equipment, personnel and communication material.
UNIQUE CHARACTERISTICS OF SERVICE MARKETING
The 4 Ps of marketing approach are not sufficient in service business. Service marketing has the
following unique requirements:- people, physical evidence and process.

People: Since most services are provided by people, the selection, training and motivation of
employees can make a huge difference in customer satisfaction. The people employed must show
competence, caring attitude, responsiveness, initiative, and good will.

Physical Evidence: Companies need to demonstrate their service quality through physical evidence
and presentation. A hotel should develop and project an observable style of dealing with customers
to perform its functions neatly and swiftly.

Process: The service company can choose from the various processes to deliver its services like
cafeteria-style, fast-food, buffet and candle light services.
48

Services have the following characteristics that greatly affect the design of mark
1. Intangibility: Unlike physical products, they cannot be seen, tasted, felt, heard, or smelled before
purchasing. To reduce uncertainty, customer always looks for signs or evidences of service quality
and draws inferences about the quality of the product from the place, people, equipment,
communication material, symbols, and price. Therefore, the service provider has the task of managing
evidence .The following guidelines can prove vital:
a. Place: The setting must imply quick and quality service. The exterior and interior should have
clean lines and the layout of the desks and traffic flow should be carefully designed.
b. People: Personnel should be busy and there must be sufficient manpower to manage the
workload.
c. Equipment: They should be clean, properly positioned and must have a state of the art look.
d. Communication material: The texts and photos should suggest efficiency and speed.
2. Inseparability: The provider-client interaction is a special feature of service marketing as both affect
the outcome. In the case of entertainment and professional services, the clients have very strong
provider preferences thus, the client is also a part of the service.
3. Variability: The variability arises due to the fact that services are dependent on who provides them,
when and where. The three steps to be taken for quality control in this case are: investing in good
hiring and training procedures; standardising the service-performance process throughout the
organization; and by monitoring customer satisfaction through suggestion and complaint systems,
customer surveys and comparisons.
4. Perishability: This problem arises for services with fluctuating demands. The designing for service
marketing programs should involve techniques like differential pricing, assigning part time employees,
etc.
PRODUCTS IN SERVICE MARKETING
There exists varying goods-to-service mix in the products available in the market. The service
49

component can be a minor or a major part of the total offering and based on that we have:
1. Pure tangible goods: Those products, which are not accompanied by any service, like soap, paste
etc.
2. Tangible goods accompanied by services: These are more sophisticated in nature and require
occasional service. E.g. cars, computers etc.
3. Hybrid: They comprise of equal parts of services and goods. For e.g.: restaurants
4. Pure services: They do not contain any goods. E.g. baby sitting, legal advice.
Since a wide variety of goods-to-service mixes exist, it is difficult to generalize services. Few
possible generalizations are as follows:
Equipment or people based: Services like automated car wash, vending machines etc. are equipment
based where as services like cleaning, accounting services etc. are people based. People based services
differ on the basis of whether they are provided by unskilled, skilled or professional workers.
Client presence based: Some services like medical treatment, haircutting etc., requires the client presence
whereas some services like car wash, repair of household equipments etc. do not require client presence.
In the case of services, which involve clients presence, the service provider should consider their needs
like providing magazines while waiting for service etc.
Personal need or business need based: Depending upon the type of customers personal or
organizational, the service provider charges for the services. For e.g.. The charges for a medical check up
would be different for private patients and prepaid company health plan.
Objective (profit or non-profit) based: For e.g. The marketing programs of a charity hospital would differ
from that of a private hospital.
Ownership based: Depending upon whether the organization is private or public owned, different marketing
programs are adopted.
QUALITY OF SERVICE MARKETING
For the success of a service firm, it has to deliver consistently higher-quality service than its
50

competitors and exceed customers expectations. These expectations are formed by their previous
experiences, advertisements etc. and after receiving the service, the customer compares the delivered service
with expected service.
The service marketing department has to focus on reducing the following gaps that exist in the
service business:
1. Gap between consumer expectation and management perception: Some- times the management fails
to perceive clearly what the customer wants.
2. Gap between management perception and service-quality specification: Even after perceiving the
customers wants clearly, sometimes, the management fails to set a specified performance standard.
3. Gap between service quality specification and service quality delivery: The personnel might be poorly
trained, or incapable or unwilling to meet the standard.
4. Gap between service delivery and external communication: Sometimes, the external communications
like statements made by company representatives, ads. etc., can be misleading.
5. Gap between perceived service and expected service: This gap occurs when the consumer
misinterprets the service quality. For e.g. The physician may keep visiting the patient to show care,
but the patient may interpret that something is seriously wrong.
SUMMARY
The chapter deals with the concept and importance of service marketing today and the unique
characteristic of Service Marketing. This chapter also deals with products in Service Marketing and quality
of Service Marketing.
QUESTIONS
1) Which are the common ways in which manufacturers are marketing their Services?
2) What are the unique characteristics of Service Marketing?

51

3) What is quality of Service Marketing?

CHAPTER - VII

MARKETING ORGANIZATION
OBJECTIVES
A business organization must have a separate marketing department to focus on customer needs
and expectations.
Objective of this chapter is to make the reader aware about the meaning of marketing organization,
basic principles of organization design, techniques and methods for designing organization structure, functional
organization in marketing and strategy for building a company wide marketing orientation.
MARKETING ORGANIZATION- MEANING
The recent years have seen the growth of marketing from simple sales department to a complex
group of activities. The main contributing factors for this growth are the concepts of Re-engineering,
Globalizing, Outsourcing etc. All these require a change in the administration of marketing departments.
Marketing organization deals with strategic and tactical organization, implementation, evaluation and control
of the marketing activities.
BASIC PRINCIPLES OF ORGANIZATION DESIGN
Traditionally, marketers played the role of middlemen, involved in realizing the customer needs
and transmitting the voice of the customer to various functional areas in the organization. Today, marketing
has evolved into full-fledged departments with functions depending upon the nature of the company. Marketing
departments are of the following designs:
1. Simple sales department: Small companies with a Sales Vice-President who manages the sales
force and also performs some selling, have a simple sales department configuration.
2. Sales departments with Ancillary marketing functions: Larger companies require to conduct
marketing research to learn about customer needs and market potential. It also has to advertise its

52

products and services. An Advertising Manager may be hired to handle these activities.
3. Separate Marketing Department: As the company grows further, it makes additional investments
in marketing research, new product development, advertising and sales promotion. The CEO
recognizes the advantages of establishing a separate marketing department headed by a Marketing
Vice President or Executive Vice-President. This recognizes sales and marketing as separate functions
that work closely together.
4. Modern Marketing Department: The modern marketing department has a Marketing and Sales
Executive Vice-President with managers of all marketing functions (including sales management)
reporting to them. This is to reduce friction between sales and marketing departments as all the
conflicts are settled between the Executive Vice-Presidents.
5. Effective marketing company: For a company to do marketing effectively, all the departments of
the company should take up responsibilities of marketing. Only when all the employees realize that
their jobs are created by customers, the company becomes an effective marketer.
6. Process and outcome based company: Many companies are shifting their structure from
departmental organization to process and outcome based organization. This ensures that the marketing
and sales people are consequently spending more time within a team as process team members.
This team is also responsible for training its marketing personnel, assigning them to new teams, and
evaluating their overall performance.
Though all the departments of the company are expected to interact harmoniously to pursue the
firms overall objectives, there usually exists deep rivalries and distrust amongst them. This conflict starts
from differences in opinion as to what is in the companys best interest.
The ideal organization functions such that all departments need to think customer and work
together to satisfy customer needs and expectations. The following are the tasks to be performed by the
Marketing Vice President in this regard:
1. To co-ordinate the companys internal activities.

53

2. To co-ordinate marketing with finance, operations, and other functions serving the customer.
Each department of the company has certain specific roles to perform to integrate its activities on
a customer satisfaction basis:
1. R & D: This department comprises of technical staff who pride themselves with scientific development
concepts. They generally view marketing activities as gimmick-oriented. This attitude has to be
discouraged and a balanced co-ordination between the R&D and marketing has to be established.
2. Engineering: This department is responsible for finding practical ways to design new products and
production process. This department views marketers as people focused only on attractive features
of the product and not on functional efficiency. This can be avoided by having people from engineering
background in the marketing field.
3. Manufacturing: Manufacturing people deal with smooth running of factory to produce the right
products in the right quantities at right time for right costs. They view marketers as people having
very little knowledge about factorys policies and problems. Marketers complain about insufficient
capacity, delays in production, poor quality control etc. about the manufacturing department. These
problems are settled by developing a balanced orientation in which both departments of marketing
and manufacture work jointly in determining what companys best interest is. This includes conducting
joint seminars, joint committees and liaison personnel, personnel exchange programs etc.
4. Finance and Accounting: This department sees marketing people as deficient in providing sales
report in time. They also dislike marketing people making special deals because these require special
accounting works. Marketers consider accounting people as people knowing the costs of everything
and value of nothing. A balanced approach is necessary to deal with the differences.
TECHNIQUES AND METHODS FOR DESIGNING ORGANIZATION STRUCTURE
The modern marketing department can be of the following structures based on function, geographic
area, products or customer markets.
Functional organization
54

It is the most common form of marketing organization structure and consists of functional specialists
reporting to a marketing Vice-President, who coordinates their activities.
Geographic Organization
This kind of organization structure is followed by companies selling in a national market. The
functions like sales force and marketing are organized along geographic lines. Geographic organization is of
the following structure.
National Sales Manager
Regional Sales Managers
Zonal Sales Managers
District Sales Managers
Sales People
Product- or Brand management Organization
This kind of organization is seen in companies dealing with a wide variety of products (or brands).
In this kind of structure, a Product Manager supervises product category managers, who in turn supervises
specific product and brand managers. The following are the main functions performed by product and brand
managers:

Developing a long range and competitive strategy for the product.

Preparation of annual marketing plans and sales forecast.

Dealing with advertising and merchandising agencies.

Encouraging the sales force and the distributors.

Performing regular studies on products performance, customer and changing dealer attitudes, and

55

new problems and opportunities.

Figure 1. The interactions of the Product Manager

R&D

Purchasing

Advertising
Agencies

Media

Product
Manager

Packaging

Market
Research

Publicity
Sales
Force

Market-Management Organization
This kind of organization is common in companies which sell their products to a diverse set of
markets. When customer falls into different user groups with distinct buying preferences and practices, a
market management organization is desirable. In this kind of organization, the following structure is preferred.
Figure 2. Market - Management Organization Structure
Market Manager

Market Development
Managers

Market
Specialists

Industry
Specialists

Many companies have recognized the significance of having a market centered organization and

56

are finding a substantial positive effect of market orientation on both commodity and non commodity business.
Corporate Divisional Organization
This kind of organization structure is very popular with companies that grow very rapidly. They
often convert their larger product or market groups into separate divisions. The divisions have their own
departments and services. The potential contribution of a corporate marketing staff varies in different stages
of the companys evolution. At the beginning stages companies have weak marketing skills and require a
corporate staff to guide them but in the later stages corporate marketing has much less to offer.
FUNCTIONAL ORGANIZATION IN MARKETING
This is the most common kind of marketing organization that is prevalent in the markets today. In
this system, the functional specialists report to a Marketing Vice President, who in turn coordinates the
activities of the functional specialists. The following structure is followed by a functional organization:
Figure 3. Structure of a Functional Organization

Marketing Vice President

Marketing
New products
Administration
Manager

Advertising &
Sales Promotion
Manager

Sales
Manager

Marketimg
Reaserch
Manager

A smooth working relationship is expected within the Marketing Department to improve the critical
interfaces among field sales, customer service, and product management groups.
Administrative simplicity is the main advantage of functional organization. However, this form of
organization loses effectiveness as products and markets increase. The following disadvantages exist in
functional organization:
57

1. It leads to inadequate planning for specific products and markets and products that are not favoured
by anyone get neglected.
2. There exists competition amongst various functional groups for budget and status. The Vice President
has to keep a check of all the claims of the competing functional specialists and faces a difficult coordination problem.
STRATEGIES FOR BUILDING A COMPANYWIDE MARKETING ORIENTATION
Many companies are realizing the importance of reorganizing themselves into true market-driven
companies. The following reforms by the CEO would be in the right direction:
1. The senior management team should be convinced to be customer focused.
2. A senior marketing officer and a marketing task force should be appointed.
3. Get outside guidance and consultation in relevant fields.
4. Make necessary changes in the companys reward measurement system.
5. Hire strong marketing talent.
6. Develop strong in-house marketing training programs.
7. Install a modern marketing planning system.
8. Establish an annual marketing recognition program.
9. Consider re-organizing from a product-centered to a market-centered company.
10. Shift from a department-focus to a process-outcome focus.
SUMMARY
The chapter deals with the meaning, basic principles of organization design and also explains in
detail techniques and methods for designing organization structure. It explains briefly functional organization
in marketing and strategies for building a company vide marketing organization.
QUESTIONS
1. What are the basic principles of organization design?
2. What are the techniques and methods for designing organization structure?
3. What is functional organization in marketing?
58

CHAPTER - VIII

CONSUMER BEHAVIOUR
OBJECTIVES
One of the most difficult tasks of marketing management is how to predict the consumer behaviour.
The objective of this chapter is to make the reader aware about consumer behaviour and marketing,
types of consumers, consumer behaviour model and the various parameters affecting this.
CONSUMER BEHAVIOUR AND MARKETING
The consumer is continually exposed to new experiences and different influences and as the
circumstances change, new needs and wants are invoked in the customers. It is the essence of marketing
centres to identify and satisfy these needs and wants. They also need to recognize what influences these
needs and how consumers go about satisfying them.
Consumer behaviour can be formally defined as the acts of individuals directly involved in obtaining
and using economic goods and services, including the decision processes that precede and determine these
acts.
The consumer behaviour is very complex and for the marketing to be successful, it is not sufficient
just to recognize what customers require. It is equally important to recognize why it is required. Some of
the questions that relate to consumer buyer behaviour are:
-

Who constitutes the market?

What does the market buy?

When does the market buy?

Who participates in the buying?

How does the market buy?

Where does the market buy?

59

THE CONSUMER DECISION PROCESS

Marketers have to clearly identify the process by which the consumer makes the decision.
Specifically, the marketer has to identify who makes the buying decision, the types of buying decisions, and
the steps in the buying process.

The roles people might play in making the buying decision are listed below:

Initiator: A person who makes the first suggestion about the idea of buying the product or service

Influencer: A person whose view or advice influences the decision

Decider: The person who makes the actual decision

Buyer: The person who makes the actual purchase

User: The person who actually uses the product or service

The consumer passes through five stages, which are depicted below:
Fugure 1. Consumer Decision Process

Problem
recognition

Information
search

Evaluation of
alternatives

Purchase
decision

Post purchase
behaviour
60

The stages in consumer decision process are described in detail below.

1. Problem recognition: The process starts when the buyer recognizes a problem or need which can
be triggered by internal or external stimuli. By gathering information from various sources the marketer
tries to determine the circumstances that trigger a particular need.
2. Information search: The customer whose interests have been aroused will be inclined to search for
more information. This is done from the following three groups:

Personal sources: family, friends, neighbours etc.

Commercial sources: advertising, sales persons, dealers, packaging, displays

Public sources: mass media, consumer-rating organizations

3. Evaluation of alternatives: The evaluation process is influenced by the factors :

Satisfaction of need

Benefits offered by the product/service

The consumer develops a set of brand beliefs which in turn develops the brand image.

4. Purchase decision: Depending upon the preferences formed in the evaluation stage the consumer
generates a purchase intention. Two factors which can affect the customer at this stage are: attitude
of other people and unanticipated situational factors. The final purchase decision would comprise
of a brand decision, vendor decision, timing decision, payment-method decision etc.
5. Post purchase decision: The marketers job does not end with product sales and must monitor post
purchase satisfaction, post purchase actions and post purchase product uses.
TYPES OF CONSUMERS
All consumers can be classified into the following two types personal and organizational. When a
person is buying a product for his own or for family use, he represents a personal consumer. All individuals
thus fall in the category of personal user. All business firms, government agencies and bodies, non-business
organizations such as hospitals, temples, trusts etc. are all organizational consumers.
The consumer is the key word and it is the identification and satisfaction of consumers requirements
that form the basis of the modern marketing concept. It is important to recognize the types of customers to
study consumer behaviour. The consumers are classified on the following basis.
1. Social classes: Social stratification is prevalent in all human societies. Social classes are relatively
61

homogenous divisions in a society, which are hierarchically ordered, and whose members share
similar values, interests and behavior. Social stratification as defined by social scientists in US has
come up with the following major social classes: Upper Uppers, Lower Uppers, Upper Middle,
Middle, Working Class, Upper Lowers and Lower Lowers.
2. Age groups: People of varying groups buy different goods and services. Thus, based on the age
groups we get the following stratification: Bachelors, newly married, full nest I, full nest II and full
nest III based on age of children, empty nest I and II, solitary survivor.
3. Occupation and economic circumstances: This also produces a wide range of customer types
based on their purchasing capacities.
4. Life style: People of different lifestyles produce a variation within people of the same sub culture,
social class, or occupation.
THE CONSUMER BEHAVIOUR MODEL
The starting point for understanding the buyer behaviour is the stimulus response. The marketing
stimuli are received by the potential consumer along with other stimuli already existing in the environment.
These stimuli can be social, economic, cultural, technological and political in nature. After receiving the stimuli
the consumer goes through an elaborate process of decision making in terms of receiving, retaining, interpreting
and evaluating the stimuli. The buyer characteristics constitute a simple model of consumer behaviour as
shown below.
Figure 2. Consumer Behaviour Model
Consumer behaviour model

Input
Other
Stimuli

Marketing
Stimuli
Product
Price
Promotion

Economic
Technological
Political

Distribution
channel

Social

Process
Buyer
Characteristics
Psychological
Personal and

Buyer Decision

Output
Buyer
Action

Process

Product choice
Brand choice
Dealer choice

Cultural
characteristics

62

Purchase
timing
Purchase
amount

VARIOUS PARAMETERS AFFECTING CONSUMER BEHAVIOUR

Consumer behaviour is affected by a wide variety of variables like cultural, social, personal, and
psychological. The combination of these various factors produce a different impact on each individual.

Cultural

Culture
Sub-culture
Social class

Personal

Social

Age and life

cycle stage
Occupation
Income
Personality

BUYER

Reference groups
Family
Roles and

statuses

Psychological

Motivation
Perception
Learning
Beliefs and
attitudes

Figure 3. Consumer Behaviour Variables

Culture is the most fundamental determinant of a persons wants and behaviour which has been
obtained by the person as a set of values, perceptions, and preferences from family and other key
institutions.

Subculture provides more specific identification and socialization within the culture and includes
religions, racial groups and geographic regions. Subcultures make up important market segments.

Social class has a hierarchical order with members of a class sharing similar views, interests, and
behaviour.
63

Reference groups consist of all groups having a direct or indirect influence on the persons attitude
or behaviour. Reference groups expose an individual to new behaviour and lifestyles. They influence
the persons attitudes and self-concept.

Family is the most important consumer-buying organization and the members of the family constitute
the most influential primary reference group.

Roles and statuses-Activities which a person has to perform determine his role and the role of a
person carries a status.

Age and stage in life cycle Consumption of goods and services is based on the family life cycle
as well as the psychological life cycle.

Occupation influences the persons consumption pattern by controlling his purchase power.

Life style is the individuals pattern of living in the world as expressed in activities, interests, and
opinions.

Personality and self concept is described in terms of traits like self confidence, dominance,
autonomy, defensiveness, sociability, and adaptability.

Motivation is needed to sufficiently drive the person to act. They can be of two types biogenic
arising from tensions of hunger, thirst, discomfort etc. and psychogenic arising from feelings like
need for recognition, esteem or belonging.

Perception is the process by which an individual makes a selection, organizes, and interprets
information to obtain a meaningful picture of the world.

Learning changes an individuals behaviour arising from experience.

Beliefs and attitudes are acquired through doing and learning and these in turn influence the buying
behaviour.

IMPORTANCE OF CONSUMER BEHAVIOUR FOR MARKETERS

Consumer behaviour helps the Marketing Manager to understand the purchase behaviour and
64

preferences of different customers. In marketing terminology, specific types or group of consumers who
buy different products (or variation of the same basic product) represent different market segments.
For successful marketing to different segments, the Marketing Managers need to know about
appropriate marketing strategies which can be decided only when all factors affecting consumer behaviour
are recognized.
To survive in the ever changing market scenario, the firm has to be aware of the latest consumer
trends and tastes. Consumer behaviour gives clues and guidelines to marketers on new technological frontiers
which they should explore.
Since the consumer behaviour can be influenced to some extent by specific elements of the marketing
strategy, the marketer must give significance to recognize those influencing factors. Once they are identified,
a marketer can study and even manipulate these factors. Thus, the importance of consumer behaviour is
that the behaviour of a person can be understood and influenced to ensure a positive purchase decision.
SUMMARY
The chapter gives the intricacies of consumer behaviour and marketing with details about consumer
decision processing. Types of consumers based on social classes, age groups, occupation and life style are
also explained. The various parameters affecting consumer behaviour is also dealt with briefly with importance
of consumer behaviour for marketers.
QUESTIONS
1) What is consumer decision process?
2) What are the types of consumers?
3) What are the various parameters affecting consumer behaviour?
4) What is the importance of consumer behaviour for marketers?

65

CHAPTER - IX

PRODUCT MANAGEMENT
OBJECTIVES
Product management is a vital function because every product has a limited life span and needs
improvement or replacement after some time. Also the customers needs, fashion and preferences undergo
changes requiring adjustment in products. New technologies also create opportunities for the design and
development of better products.
Objective of this chapter is to make the reader aware about the concept of product, product type,
product line decisions, product diversifications, product life cycle, new product development, branding
decisions and functions, and packaging decisions and functions.
PRODUCT CONCEPT
A product is an entity/article obtained by the transformation of raw material with the aid of man/
machine power and is marketed/sold by the producer i.e. a product is a marketable item. It is the needsatisfying offer of a firm including tangible objects and intangible services. It is a bundle of utilities consisting
of various product features and accompanying services.
A product can be described in two different ways:
(i) Physical description: may be in the form of a set of components of a product such as CPU, hard
disk, monitor, key board etc. of a personal computer.
(ii) Functional description: in terms of the needs or wants it satisfies. For example, file transfer,
sending e-mails using a personal computer with Internet connection.
Neither the physical description nor the functional description conveys full meaning of a product
and as such usually a product is described by both, i.e. by its physical aspects and by its functional aspects.
Tangible products have physical forms which are usually referred to as goods. A deed performed
by one party for another is also a kind of product which is an intangible product and more popularly referred
to as services.
66

PRODUCT TYPE
Based on durability, products can be classified into three types:

Durable goods

Non-durable goods, and

Services.

(a) Durable goods: These can be used for long periods. Examples are: machine tools, refrigerators,
computers, clothing etc.
(b) Non-durable goods: These are usually used for relatively shorter periods. Examples are: soap,
salt, fruits, vegetables etc.
(c) Services: These are activities, benefits, or satisfactions that are offered for sales. Services are
intangibles, inseparables, variables and perishables.
Based on the type of consumer, products can be classified into two types:

Consumer Products, and

Industrial Products

1. Consumer Products: Products which can be used without any commercial processing are
usually referred to as consumer products. These are products used by ultimate consumers and
households. Consumer products are further classified into six types:
(i) Convenience goods: These are goods that the consumer usually purchases frequently,
immediately and with the minimum effort in buying. Examples are : soaps, salt, newspapers,
toothpastes, toiletries etc.
(ii) Shopping goods: These are goods that the consumer usually purchases after going around shops
and comparing the different alternatives offered by different producers and retailers. Comparison
of alternatives is based on suitability, quality, price, etc. Examples are: clothing, furniture, major
appliances, refrigerators etc.
(iii) Durables or Durable goods: As discussed above in the classification based on durability.
(iv) Non-durables or Non-durable goods: As discussed above in the classification based on
durability.
67

(v) Specialty goods: These are goods that the consumer wants and willing to make a special effort
to find. It is the customers willingness to search that makes it a specialty product. The customers
are willing to travel for purchasing a specialty good. Examples are: specific brands and types of
fancy goods, cars etc.
(vi) Unsought goods: These are goods with which potential customers are not yet familiar. New
products like food processors and smoke detectors are unsought goods until consumer is made
aware of them through advertising.
2

Industrial Products: Products which are usually used for the production of other goods or for
rendering service are referred to as industrial products. These are products used by manufacturers
for producing other products and/or rendering services. Industrial products are many and include:
(i) Machinery: like lathes, milling machine, road roller etc.
(ii) Components: like spare parts of machinery, monitor of a computer etc.
(iii) Raw materials: like cotton, clay, wood, iron billets etc.
(iv) Supplies: like lubricant, continuous-stationery for computer printing etc.
(v) Services: like maintenance and repairs.

PRODUCT LINE DECISIONS

Product line and product mix
A product line means a group of closely related products. Examples are Usha lines of fans, Kalinga
lines of steel tubes and pipes, detergents of Hindustan Lever etc. Products in a line function in a similar
manner and are marketed through the same types of outlets, or fall within a given price range.
A product line, i.e. a class of similar or related products, must be distinguished from a product
mix. A product mix is the entire range of variety of products offered by an organisation for sale. A product
mix may consist of related or allied products or entirely unrelated and different assortment of products. For
example, detergents, vanaspathi and toiletry constitute the product mix of Hindustan Lever Limited, while
detergent is a product line.
Product line decisions
In product line decisions, objectives involved are higher market share for the product line and

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growth in volume of sales resulting in more profit, price remaining more or less stable. Even if prices are
decreased a high growth in the volume of sales may result in more profit. One of the product line decisions
to be made is about deletion of unprofitable or marginal products. A multi-product organisation cannot expect
all its products to earn the same profit. Some products may fetch high profit volume while others yield low
profit volumes. In such cases the product line decision to be taken is about the development of an optimum
product line within the framework of the objectives of an organisation. Depending upon the capacity of an
organisation in terms of availability of production facilities, finance etc, and the profitability of the items in
the product line, product line decisions are to be made as to how long or short the line should be. Often a
line of product is meant to meet various segments of customers.
PRODUCT DIVERSIFICATION
Product diversification means that the manufacturer offers more than one product. It involves adding
new products or lines to products in order to have a balanced or optimum product range. For this, the
organisation must have a planned diversification of products rather than an ad hoc diversification. A more
balanced product line will help not only to improve profitability but also to have customer satisfaction.
Reasons for product diversification
Business organisations usually diversify their product lines due to various reasons, some of which
are as follows:
1) To reduce risks of product obsolescence and other product related risks.
2) To meet consistent market demand for variety.
3) To exploit new markets.
4) To utilize un-utilized or under-utilized capacity.
5) To spread overheads and fixed costs.
6) To increase sales turnover and profits.
7) To minimize seasonal fluctuations in demand.
8) To make use of the technological know-how.
Advantages of product diversification
The following are some of the major advantages of product diversification.

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1)

It helps in having a balanced/optimum line of products.

2)

It helps in having optimum use of complementary process.

3)

It helps in minimizing the risk of a change in demand.

4)

Addition of new lines of products and new varieties result in increased sales.

5)

It helps in having optimum use of complementary processes.

6)

It helps to avoid or to reduce or to recycle waste in all forms resulting in increased

productivity.
Types of product diversification
Apart from ad hoc and planned product diversification, it can be categorized into two more types.
viz. Related diversification and Unrelated diversification.
1) Related diversification: It means adding new products of the same line for the following reasons:
(i) for making an effective utilization of the existing selling and distribution facilities.
(ii) for full utilization of unutilized or underutilized production capacity.
(iii) for meeting varied customer needs.
(iv) for taking advantage of its existing reputation in a particular type of product.
(v) for having increased sales volume of existing products.
2) Unrelated diversification: It means adding new products which are not related to the existing
line. This may be done for various reasons. But cost of unrelated product diversification is usually
heavy.
PRODUCT LIFE CYCLE
A product life cycle has the following four stages:
i)

Introduction stage

ii) Growth stage

iii) Maturity stage and
iv) Decline stage.

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The following figure below shows the product life cycle of a typical industry product and the four
stages in terms of sales revenue obtained in each of the stages. It is a time-sales revenue curve of a product
in its lifetime.
Figure 1. Stages of product Life Cycle
(i) Introduction Stage: This stage starts with the launching of a new product. During this first stage,
the product is introduced in the market. This is a very difficult stage and many products like infants
do not survive this stage. If the product is well designed, the sales may pick up. Generally, sales
are low and costs of production and advertising expenditure are high. As a result, profits are very
low and there may even be a loss.

Sales revenue curve

Introduction stage

Maturity stage

Growth stage

Decline stage

SALE

TIME

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(ii) Growth stage: In case the product launched is successful, sales rise at a rapid rate and reach growth
stage. At this stage, profit will increase and advertising expenditure decreases. This is the period of
general acceptability, breakthrough and rapid growth. As the volume of production increases, unit
cost of production (i.e. cost per unit of product) decreases.
(iii) Maturity stage: This is the stage when product becomes well established. High sales and profits
attract competition. To meet competitive pressure high promotion expenditure has to be incurred.
At this point it is difficult to push sales further up. On the other hand, this is the appropriate stage to
initiate cost reduction, value analysis and value engineering for making improvements in the product
or to develop a new product.
(iv) Decline stage: In this final stage, the original product starts dying and disappearing from the market.
Introduction of better substitute and/or changes in customer tastes renders the original product to
start disappearing from the market. Sale and profits decline very rapidly.
NEW PRODUCT DEVELOPMENT
Before a product is introduced in the market by way of product launching, a prospective new
product will undergo many evolutionary stages such as new idea generation, screening of the ideas, economic
analysis, product development, process development, design and testing, test production, test marketing,
market development and commercialization. However, these stages can be generalized into the following
six stages:
1. Generation of new product ideas
2. Screening of ideas
3. Concept testing
4. Product design and evaluation
5. Product testing or test marketing and
6. Product launching.

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1) Generation of new product ideas: New product development starts with the generation and
formulation of ideas or concepts for possible new products. Source of new product ideas are
salespersons, middlemen, R&D departments, trade and technical journals, consumers, trade
associations, government agencies, research laboratories and the executives of the organisation.
2) Screening of ideas: At this stage, preliminary evaluation of new product ideas is done to prune
down the number. Screening is usually done based on following criteria:
i)

Profitability requirements over a period of time.

ii) Good market potential (market size)

iii) Availability of production facility
iv) Use of existing distribution network
v) Availability of raw materials
vi) Annual value of production.
3) Concept testing: Concept tests may be made to answer the following questions:
a) Is the new product idea technically and economically feasible?
b) Is there an adequate market demand?
c) Whether any machinery is involved or not? If yes, is machinery available
indigenously?
d) Whether production facilities other than machinery available are adequate?
e) How much will it cost to produce and sell?
f) Others such as beak-even point, margin of safety etc.
4) Product design and evaluation: During this stage, technical specification of the product including
tolerance limits (i.e. permissible limits of variation) will be settled. Prototypes will be made and tested
under laboratory or field condition to ensure technical specifications.

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5) Product testing or test marketing: A sample quantity of product is then tested in a selected market
(representative market) to find out the reactions or responses of consumers. Product may be tested
for :
i)

satisfactory performance,

ii) customer acceptance,

iii) economical production,
iv) adequate distribution,
v) adequate servicing arrangements wherever required and
vi) effective packaging and branding
6) Product launching: This is the final stage of commercialization in which the product is actually
introduced in the market on a full scale. During this stage, pricing, channels and promotional methods
are finalized.
BRANDING DECISIONS AND FUNCTIONS
Brand, Brand name, Brand mark and Trade mark
Brand: Brand is defined as a word, mark, symbol, device or a combination thereof, used to identify
some product or service. It means that the function of a brand is to identify a product or service. The
identification need not follow a specific means.
Brand name: According to the American Management Association Brand name is a part of a brand
consisting of a word, letter, group of words or letters comprising a name which is intended to identify the
goods or services of a seller or group of sellers and to differentiate them from those of competitors.
Brand mark and Trademark
A brand mark is a symbol used for the purpose of identification. It is not a name. It is only a means of
identification. So it can be a mark, a design, a logo-type, a picture etc.

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A Trademark is the legalized version of a brand. Thus, trademark is a legal concept though brand and
trademark are quite often used synonymously. Brand comes under the purview of industrial property rights
and as such, it can be registered and protected from being used by others. In India a brand can be registered
under The Trade and Merchandise Marks Act, 1958. An application in this regard is to be submitted to
the Controller General of Patents, Designs and Trades Marks appointed under sub-section (1) of section 4
of the above Act.
Branding decisions: To decide about an appropriate brand, several decisions as listed below are to be
taken. There is no necessity that these decisions are to be taken simultaneously. The decisions are to be
taken as answers to the following questions with regard to brand selection and its use.
(i) Why the product needs branding?
(ii) Who should sponsor the brand?
(iii) What quality should be built into the brand?
(iv) What should be the policy for branding as to each product be individually branded or to family
branded?
(v) Whether two or more brands be developed in the same product line/category?
(vi) Whether the established brand be given a new meaning (repositioning)?
Family branding vis--vis individual branding
Individual branding

Family branding
1) It covers more than one product.

1) It covers only one product.

2) Cost of product launching and

2) Cost of product launching and

promotional expenditure is high.

promotional expenditure is considerably

less.

3) If the products are of highly uneven

3) The brand does not derive any

quality it may not be advantageous.

4) It does not give a specific identity to a

benefit from the firms reputation.

4) The strength of individual branding

particular product.

gives specific identity to the product

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Branding function
Function of brand is to give an identity. The Process of taking decisions with regard to branding
constitutes a branding function. It is a set of decisions as explained above. These decisions are influenced
by various factors such as the nature of the product, the type of outlets for the product etc.
PACKAGING DECISIONS AND FUNCTIONS
Packaging has been variously defined as follows:
Packaging is the art, science and technology of preparing goods or products for transport and sale. Packaging
is the means of ensuring safe delivery of the product to the ultimate consumer in sound condition at minimum
overall cost.
A package is a complex part of the product. A package most clearly bridges the traditional realms
of production and marketing.
Packaging is an important activity of a sales promotion department because an attractive package
catches fast the attention of consumers and speaks itself to them.
Thus packaging is done for the following purposes:

To protect the product during transportation and handling.

To protect the product from becoming spoiled/evaporated etc.

To make the product easy to handle.

To help sales promotion.

To help safe storage.

Decision to be taken with respect to packing materials and packing

Products exist in all the three states, i.e. solid, liquid and gas. Also product may be corrosive,
volatile, explosive, inflammable etc. Depending upon the above properties of the product, the material for
packing may be selected. The important packing materials used are:

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Material type

Materials

Packaged in

1. Metals

- aluminum, tinplate and steel.

Metal cans

2. Plastics

- PVC, LDPE, HDPE etc.

Plastic bags

3. Wood

- wood of different kinds.

Wooden crates

4. Paper

- paper, board ,corrugated board etc.

Paper cartons

5. Glass

- clear glass, tinted glass etc.

Glass bottles

Functions of packaging
Functions of packaging are classified into five basic categories as:1. Protection from breakage/damage, melting/freezing, pilferage etc.
2. Appeal by way of attracting attention; building confidence; look clean and hygienic; easy to handle,
carry, store and use; reflecting good value etc.
3. Cost effective. It means various elemental costs must be effective. Such elemental cost of packaging
includes package cost, handling and storage cost, filling cost, transportation cost, cost of breakage/
spoilage, insurance cost etc.
4. Convenience: Package must be convenient to stock, to display, to dispose off etc.
5. Performance: Package must perform the task for which it is provided.
SUMMARY
This chapter explains the product concept and product type. It explains further product line decision
and product diversification. Product life cycle is another area which has been given good attention. The
area on the development of a new product is dealt with in detail. Branding decision and functions with
packaging decision and functions are explained towards the end of the chapter.
QUESTIONS
1) What are the different Product Types?
2) What is product line decision?
3) How will you develop a new product?
4) What is the importance of packaging decision and functions?
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CHAPTER X

PRICING IN MARKETING
OBJECTIVES
One of the most important decisions faced by an organization is product pricing. The way in which
organizations price their products is the key to success or failure.
Objective of this chapter is to make the reader aware about the importance of pricing; pricing
decisions and determinants of pricing; various pricing methods with particular stress on cost plus pricing,
marginal cost pricing, going rate pricing and customary pricing; and pricing and effectiveness on consumer
psychology and other areas of marketing.
IMPORTANCE OF PRICING
Pricing is an essential part of any business strategy. It is of great importance to the producer,
wholesaler, retailer and the consumer. For an organization, price creates the revenue to support existing
and future opportunities. Sometimes, survival of an organization may depend upon product pricing policies.
But pricing a product or service correctly is one of the most difficult tasks. Setting a price too high can
reduce an organizations market share, while setting a price too low can reduce profit. It must also be borne
in mind that the customer does not make a choice in vacuum. Pricing has an influence on the product image.
Another factor is that pricing under severe competition is much more difficult and no one is immune to
competition. According to Porter, competition in an industry is determined by its basic underlying economic
structures, viz., (1) Rivalry among the existing firms (2) Bargaining power of buyers (3) Bargaining power
of suppliers (4) Thrust of new entrants and (5) Thrust of substitute product/service. Interaction between
these economic forces makes the conventional pricing a difficult task. In a competitive market, importance
of pricing cannot but be overemphasized.
PRICING DECISIONS AND DETERMINATION OF PRICING
Pricing decisions are influenced by numerous factors. Of the numerous factors affecting pricing
decisions, Cost, Demand and Competition are the major ones, which are discussed as hereunder:
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1) Product cost: Product cost is the total expenditure incurred in terms of money by the producer of
the product which includes expenditure towards procurement of materials, employment of workers,
using machinery including power, communication/distribution channels, expenditure incurred on sales
force etc. Product price is the price at which a product is being sold. Product price in fact is the
cost to the buyer/consumer. Product price may be more or less than the product cost. Usually,
product price will be more than the product cost and occasionally it will be less than the product
cost. If the selling price is more, then there will be profit, which is equal to the difference between
price and cost. On the other hand, if the selling price is less, then there will be loss. Thus, usually,
cost of a product is a major determinant of the price. But sometimes it may be the other way, i.e.
price may become major determinant of cost. In this case, a producer will take the stable market
price as the price from which he will deduct his expected profit to arrive at the cost of product.
Such a cost is known as target cost and the method is known as target costing.
2) Demand for the product: Higher the price, lower the demand, and vice versa, other things
remaining the same is the popular law of demand. Thus, demand for the product influences the
price and vice versa. However, it is to be noted that there are certain essential goods for which
demand is usually constant and will not be affected by price changes. Such essential goods are
termed as inelastic goods, others being termed as elastic goods. The law of demand is concerned
with direction of change in demand, while law of elasticity of demand (elasticity due to elastic and
inelastic goods) is concerned with the extent of change in demand.
3) Competition: When there is competition, neither an individual nor an organization can really influence
price. Under severe competition, price will follow the direction of the resultant of the forces of
competition. Other end of the marketing environment is that of monopolistic condition, which is
indicative of absence of any significant competition. In conditions of monopoly, a monopolist may
fix prices according to his discretion, and of course within the four walls of national statutory laws
and regulations. But, usually, market will neither have a perfect competition nor have a monopoly.
Thus, price fixing is influenced by the degree of competition existing in the market for the product.
There may be yet another situation known as monopolistic competition. In this situation, there are
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many sellers of a particular product, but the product of each seller is in some way differentiated in
the minds of buyers/consumers from the product of every other seller. Under such a condition of
monopolistic competition, each individual seller can influence the price of his product brand.
Pricing policy
As discussed above, product cost, demand for the product and competition are the three major
factors affecting pricing decision. When data about these factors are collected, before fixing up the product
price by adopting an appropriate pricing method, the existing pricing policy must be reviewed and updated
taking into consideration, the changed business environment, if any.
The existing pricing policy is to be periodically reviewed and updated in relation to other policies
like selling methods, advertising policy and production policy and programme. For example, it may be
necessary to reduce the product price to enable fuller utilization of plant capacity, more quickly. One of the
reasons for not utilizing the installed capacity fully may be the existing imbalance in the installed production
facilities. Such an imbalance may be due to the reason that the capacity of different equipment of a plant
does not match. In such cases, the following alternatives are available to the manufacturing organisation to
rectify the imbalance in the existing production facilities:

To sub-contract part production which is restricting the production.

To install balancing equipments with higher output potential.

To introduce shift working.

If there is consistent imbalance in the production facilities, entire plant can be replaced by installing
new automatic plant.

Idle equipment may be sold so that entire attention can be diverted to fully utilized equipments.
In all such cases, production will increase and the increased volume of production may be sold by

a suitable reduction in product price. There can be many such cases of changing business environment which
may affect short-term and long-term objectives. The following table gives some marketing objectives and
their pricing implications:

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Table 1. Marketing Objectives and Pricing

Marketing
Area

Marketing
Objective

Pricing Implication

Product

Improved quality
acceptance

Higher cost necessitating price increase or

resulting in lower profit.

Advertising
and
promotion

Stronger support

Increased advertising and publicity budget

resulting in lower profit or price increase.

Distribution

Additional selling points

Possibly higher distribution costs.

Consumers

Greater acceptance

Increased advertisement and publicity effort,

possibly higher distribution cost resulting in less
profit or higher price.

PRICING METHODS
There are several methods available for product pricing. As discussed above, cost, demand and
competition are the three major determinants of pricing. Depending upon the degree of each of these three
major determinants the organization is ready to fix the price for the product. For pricing, the organization
will have cost statements, demand schedules and competitors prices. Of the several methods available,
usual methods of pricing followed by the majority of organizations are (1) Cost plus pricing (2) Marginal
cost pricing (3) Going rate pricing (4) Customary Pricing and (5) Target pricing or pricing for a rate of
return. Of these methods, going rate pricing and customary pricing are competition-oriented methods because
prices here are fixed on the basis of prices charged by competitors. Other three methods are cost-oriented
methods because prices here are fixed on the basis of costs. There are several kinds of costs like historic
cost, standard costs, marginal cost, target cost, activity base cost.
Target pricing will be discussed here and other methods in the succeeding paragraphs. In the target
pricing, price is continuously adjusted for the changing costs. For this, there are three popular policies:
(1) Revise price to maintain a constant percentage mark-up over costs.
(2) Revise price to maintain profits as a constant percentage of total sales.
(3) Revise price to maintain a constant return on invested capital.

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Cost-plus pricing
Under this method, Price = Total cost + Profit,
i.e.,

Price = Material cost + Labour cost + Overhead + Profit.

In this method of pricing, full cost plus a predetermined percentage will be fixed to be the price.
Hence, cost plus pricing is also known as full cost pricing. Since a standard markup (profit) is added to the
cost to arrive at the price, the method is also known as mark-up pricing method.
This method is popular due to the following reasons:
(1) Full cost is usually historical or actual cost and price fixation is justifiable on this count.
(2) Where determination of full cost is rather difficult, there, standard cost could be used in place of
historic cost. Standard cost is a predetermined cost which is calculated from managements standards
of efficient operation and the relevant necessary expenditure.
(3) Predicting about the shape of demand curve is difficult and therefore response to a price change
also cannot be easily predicted. Hence, full- cost pricing is a safer method.
(4) Overhead cost usually involves huge proportion of fixed cost. An organization will usually prefer to
recover this cost as a part of cost considered for price fixation, rather than recovering on a longterm basis.
(5) This method enjoys the competitive stability since it has the approval of most of the members of the
industry.
Marginal cost pricing
In cost plus pricing, price is fixed based on total cost of product. But this total cost of the product
has two components, viz. a variable cost component and a fixed cost component. Under marginal cost
pricing, fixed cost component of the total cost is excluded and prices determined on the variable cost
component only. This variable cost component is usually known as marginal cost, or incremental cost. The
assumption in the marginal cost pricing is that fixed costs remain unchanged by increasing output by one

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more unit, the marginal cost of a product will consist of variable costs only. Thus, for price fixing, instead of
cost marginal cost will be considered. Similarly instead of profit, contribution will be considered.
Contribution will be fixed in such a way that it fully covers the fixed cost as well as the desired profit. Under
marginal cost pricing, price will be fixed as follows:
Price = Total marginal cost + Contribution
i.e.,

Price = Material cost + Labour cost + Variable Overhead + Contribution

Note: Usually, material cost and labour cost will be variable costs and if there are fixed components,
the same will be included in the fixed overhead.
Marginal cost pricing is also popular because of the following reasons:
(1) Unlike fixed costs, variable costs are controllable in the short-run and as

such, prices fixed

based on marginal costs are never rendered uncompetitive because of higher fixed overhead element.
(2) Cost-volume-profit analysis and break-even analysis based on marginal costing method will enable
the management to fix prices quickly to suit the changing need of the market.
(3) This method is more suitable for pricing over the life-cycle of a product, which requires short-run
marginal cost and separable fixed cost data relevant to each particular stage of the cycle, not longrun full cost data.
(4) In multi-product, multi-process and multi-market concerns, marginal cost pricing is more efficient
than cost plus pricing.
Going rate pricing
Going-rate pricing is a method of competition-oriented product pricing method. Here, price of a
product is fixed on the basis of competitors prices. While fixing price in relation to the prices of competitors,
depending upon the pricing objectives of an organization, factors such as the structure of the industry, level
of the present capacity utilization in the organization, selling and administration cost of the organization vis-vis that of competitors, customers perception of the products of the organization compared to those of
competitors etc. are to be considered carefully. When market leaders change their prices others usually
follow the leader rather than their own cost or demand for the product changes.
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When costs are difficult to measure and in the absence of any costing system in the organization
or when competitive response is uncertain going-rate pricing is usually adopted by organizations.
Customary pricing
Sometimes, price of a product may remain stable and become more or less fixed without any
deliberate action by sellers. When such a price remains for a considerable period of time, it will be referred
to as the customary price of the product. However, when there is a change in quality or in quantity of the
product, there may be a consequential significant change in the cost of the product, necessitating the revision
of the price. A customary price may remain even when the product model is changed.
PRICING AND EFFECTIVENESS ON CONSUMER PSYCHOLOGY AND OTHER AREAS
OF MARKETING
Usually, when the price changes, customers react. But customer reaction will vary from customer
to customer. There may be a price-quality factor influencing customer reaction. If quality increases
disproportionately more than that of price there is a value increase and hence price increase will not have
any ill effect on consumers. By Value Analysis (VA) and Value Engineering (VE), cost and therefore price
can be reduced. Similarly, with slight cost increase, product quality can be increased disproportionately
more by VA and VE. Thus, a producer has considerable flexibility in pricing the product, provided he can
create a psychological image of quality based on increasing intrinsic quality by VA and VE or even by business
process re-engineering.
Some categories of customers may perceive that price is an indication of quality; the following are
some of them.
a) Customers trying to achieve social status,
b) Occasional customers who is not knowledgeable in a product area such as a personal computer,
c) The customer, who is impressed by the importance of quality, but has some difficulty in identifying
it.

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Case study:
Balsara, manufacturers of Odonil and Promise realized that pricing a product too low could
affect its sales by creating a credibility problem. Consequently, they began to price their products with higher
unit margins, to make higher advertising outlays to emphasize product attributes rather than the price and
provide attractive margins to dealers to push up their products.
From experience and research studies, certain consumer behaviour characteristics are established
as below:
1) Consumers usually perceive that prices are quantitative and precise whereas product image, product
quality, customer service, promotion and similar factors are qualitative and ambiguous. Consumer
is more sensitive in a price rise than in a quality improvement. It is easier to predict what consumers
would do if prices rose by 3 % than if the quality is improved by 3%.
2) Price constitutes a stumbling block to demand when it is too low just as much as when it is too
high. Above a particular price level, the product is regarded as too expensive and, below a certain
another price level , as constituting a risk of not giving adequate value. If the price level is too low,
consumers will tend to think that a product is of substandard quality.
3) Consumers perceive price as a determinant of quality. To a consumer, price is a reasonable indicator
of quality. To him, costlier a product- better the quality, or costlier a product, higher the prestige.
SUMMARY
The chapter deals with the importance of pricing and moves on to pricing decisions and
determination of pricing. Pricing policy and pricing methods are explained in detail and also pricing and
effectiveness on consumer psychology and other areas of marketing.
QUESTIONS
1) What is pricing decisions and determination of pricing?
2) Explain pricing policy.
3) Which are the major pricing methods?
4) What are the effects of pricing on consumers?

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CHAPTER - XI

ADVERTISEMENT
OBJECTIVES
Market environment is ever changing and so the market function has to change in tandem and as
such, promotion function linked with the marketing function must also change. Promotion function is usually
a mix of functions with same objectives and known as promotion mix. One of the major components of
promotion mix is advertisement.
Objective of this chapter is to make the reader aware about the meaning of advertisement, its
difference with publicity, role of advertisement and types, development of advertisement copy, selection
of media, measurement of advertisement effectiveness and publicity and its uses.
MEANING OF ADVERTISEMENT AND ITS DIFFERENCE WITH PUBLICITY
Promotion means marketing communication aimed at persuading consumers to respond positively.
The role of promotion is to encourage an exchange through linking communications with product adoption
process of the buyer. Thus, the goals of promotion function are motivating the adoption of the promoted
product and effecting the desired change in the consumer behaviour. There are several methods of promotion
of which four are important, viz: Advertising, Personal Selling, Sales Promotion and Publicity. The committee
on Definitions of the American Marketing Association defined these components of which the definitions of
Advertising and Publicity are extracted as follows:
Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or
services, by an independent sponsor. It includes the use of such media as magazines, newspapers, outdoor
posters, direct mail novelties, radio, television, bus posters, catalogues, directories, programs, and circulars.
It is the main form of mass selling, though publicity is also a form of mass selling. The purpose of
advertising is to acquaint prospective customers with the product and its strength so that they will have
more favourable disposition when they come face to face with the product in buying situations.

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Publicity: Non-personal stimulation of demand for a product, service, or business unit by

generating commercially significant news about it in published media or obtaining favourable presentation of
it on radio, television or stage. Unlike advertising, this form of promotion is not paid for by the sponsor.
When an organization has a new message, publicity may be more effective than advertising, though
in general advertisement is more effective. Sometimes, publicity may have an adverse effect also.
The difference between advertisement and publicity are:
(1) Advertising is any paid form of communication, whereas publicity is any non-paid form of
communication.
(2) Advertising is any product related message, whereas publicity is any public welfare related message.
(3) Advertising is less credible, while publicity is more credible.
(4) Advertising is more subjective, whereas publicity is more objective.
(5) Advertising has maximum control over message, whereas publicity has little control over the message.
An advertisement message can be reproduced, but a publicity message is usually not reproduced.
(6) Advertisement is not an editorial comment of ideas, product etc; but publicity can be an editorial
comment of ideas, product etc.
ROLE OF ADVERTISEMENT AND TYPES
Advertising tries to inform, influence, persuade, entertain, remind, reassure and add value to the
advertised product /service. According to Paul E.J.Gerhald, advertising moves through the following stages
before accomplishing its purpose.

It is planned and brought into existence.

It is reproduced and delivered and exposed to people.

It is received and assimilated.

It affects ideas, intentions and attitudes:

It affects buying and buying process.

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It responds to time (situation and repeated exposure).

It affects trade efforts and supply.

It affects product consumption.

It changes sales and profits.

It changes the market (size, quality mix, intensity of competition, trade relations, consumerism etc.).

Role of advertisement
There are two view-points about the role of advertising as shown in the following table: One view
point considers advertising as an information disseminating utility function and the other considers advertising
as a source of market power.
Table 1. Role of Advertising Two Views
Advertising- Market power
Advertising affects consumer
preferences and tastes, changes
product
attributes
and
differentiate the product from
competitive offerings

Advertising

AdvertisingInformation
Advertising informs consumers
about product attributes and does
not change the way they value
those attributes

Consumer becomes brand loyal

and less price sensitive, and
perceive fewer substitutes for
advertised brands.

Consumer
Buying
Behaviour

Consumers become more price

sensitive and buy value. Only the
relationship between price and quality
affects elasticity for a given
product.

Potential entrants must

overcome established brand
loyalty and spend relatively
more on advertising.

Barriers to
Entry

Advertising makes entry possible for

new brands because it can
communicate product attributes to
consumers.

Firms are insulated from market

competition and potential rivals.
Concentration increases, leaving
firms with more discretionary
power.

Industry
Structure
and
Market
Power

Consumers can compare competitive

offerings easily and competitive rivalry is
increased. Efficient firms remain, and as
the inefficient leave, new entrants appear,
the effect on concentration is ambiguous.

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Firms can change prices and are not

as likely to compete on quality or
price. Innovation may be reduced.

High prices and excessive profits

secure to advertisers and give them
even more incentive to advertise
their products. Output is restricted
compared to conditions of perfect
competitions.

Market
Conduct

More informed consumers put

pressure on firms to lower prices and
improvement of quality innovation is
facilitated via new entrants.

Industry prices are decreased. The

effect on profits due to increased
Market
performance competition and increased efficiency is
ambiguous.

Types of advertisement
Advertisement efforts can be grouped into various types based on the nature of task involved,
type of product presented or the focus of activity transacted etc. Various types of advertisement are briefly
explained below:
Consumer advertisement: such as advertisement for footwear, cosmetics, edible oils, textiles, TVs, Personal
computers etc.
Industrial advertisement: such as advertisement for machines, machine tools, transformers, road rollers
etc.
Product advertising: such as advertisement for the promotion of the product of an organization.
Brand advertising: advertisement for selective brand of a product.
Direct advertising: advertisement with an object for effecting immediate sale of the product advertised.
Indirect advertising: such as advertisement for creating interest in customers, announcing the launching of
a new product etc.
Manufacturer advertising: the advertisements sponsored and paid for by the producers of the product.
Retail advertising: advertisement by a retailer solely for the purpose of attracting customers to his shop.
Co-operative advertising: advertisement made by combined forum of producers, wholesalers/retailers on
cost sharing basis.

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DEVELOPMENT OF ADVERTISEMENT COPY

An advertisement copy is the communicative portion of the advertisement. It must be designed for
(a) size and shape, (b) headline, (c) illustration, (d) body copy, (e) colour and (f) composition as explained
below:
(a) Size and shape: In a print advertisement, usually, the size is determined by the provision available
in the advertising budget. Within the size selected, shape can be in any desirable form. It can be
square, rectangular with longer side placed vertically etc. Lines can be horizontal, vertical or even
diagonal.
(b) Headline: The purpose of headline is to draw the readers eyes to the advertisement. In designing
the headline, an attempt should be made to induce an element of curiosity and also to make the
headline memorable.
(c) Illustration: An advertisement may or may not contain an illustration. According to some, a headline
alone will be able to draw the readers eyes to the advertisement; but some others feel that illustration
does this in a better way. According to C. A. Kirkpatrick headline plus illustration assumes almost
the complete attention of initial readership.
(d) Body copy: What is to be told must be told in as few words as possible, but in an efficient manner
using simple language/small words, small sentences and small paragraphs. What is told must be true,
admitting if there is a weakness with suitable counterbalancing.
(e) Colour: Colour or colour combination must be designed keeping in mind that it invokes varying
response at different levels.
(f) Composition: Composition means the manner of arrangement of headline, illustration, the body
content, the symbol and nature of the company. Rules of composition are usually followed in making
the layout as effective as desired.
A bad advertisement copy is a bad investment and therefore care should be taken so that an
advertisement copy must never be bad. In a good advertisement copy there will be a judicious mix of size
and shape, layout, headline, illustration, and motivating appeals.

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SELECTION OF MEDIA
Media selection is as important as the development of advertisement copy. It includes decision
regarding as to which media should be used and when and how the advertisement is to be placed in the
media so selected.
Certain data are required in order to select an appropriate media for the advertisement. Some of
these data are generated internally in the organization and certain others are generated externally to the
organization. Data regarding advertising objectives, budget provision made for advertisement, copy strategy,
product attributes etc. are data generated internally in the organization. Externally generated data are mainly
with respect to media characteristics such as reach, suitability to the product, media availability, credibility,
cost of media, competitors media types etc.
Various advertising media are available such as News papers, Magazines, Radio, Television, Direct
mail including E-mail, Posters, Point of sales etc. From the available media, suitable ones are short listed
first for evaluation and final selection.
Evaluation of media to be selected for advertisement may be done based on certain evaluation
criteria such as Reach, Frequency, Gross rating point, comparative cost etc.

Reach means the actual numbers of the audience covered, i.e. the actual numbers of households or
individuals reached by a given medium over a period of time. With respect to newspapers and magazines,
this is called readership. Readership is estimated by ascertaining the total circulation of a newspaper/
magazine and multiplying the same with the average number of readers per copy. National readership
surveys conducted by various agencies can be utilized for this purpose.

Frequency means the average number of times different target audience are reached by a medium
in a given period of time.

Gross Rating Point It is a combined rating measure based on reach and frequency for a given
medium. As an illustration, consider a medium whose reach is 41 percent of people and are reached
six times in a week by a given medium, then the Gross Rating Point for that medium is 41x6= 246.

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Comparative Cost Media costs are worked out and compared for the selection. Unit of cost
depends upon the type of media as below:

(a) In the case of a newspaper, it is known as Milline Rate which is arrived as Milline Rate = (Line
rate x 1,000,000)/ Circulation
(b) In the case of magazine, the unit rate is known as Cost per thousand which is arrived as
Cost per thousand = (Rate per page x 1,000) / Circulation.
(c) In the case of Radio and TV commercials, the unit rate is known as
Cost per thousand listeners or viewers per commercial minute.
Final selection of a specific media is to be done on the basis of advertising goals of the organization,
the costs involved and the comparative costs. The services of advertising agencies can also be considered.
Selection of an Advertising Agency
Media selection task for the advertisement could be entrusted to an advertising agency, instead of
selecting directly by the manufacturing organisation.
An advertising agency is a group of specialists who develop, prepare and place advertising in
advertising media for sellers, seeking to find customers for their products and/ or services. An advertising
agency provides the following expert services and counsel to producers of goods:

Media buying,

Media planning,

Marketing research,

Copywriting,

Personnel placement advertising,

Sales promotion and merchandising,

Public relations, and

Advertising research.
A decision with regard to the necessity of an advertising agency can be taken easily. But it is

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relatively a tough task to decide about how to use effectively an advertising agency, if selected. In order
that an advertising agency can effectively provide its services to an organisation, the client organisation will
have to entrust a lot of information so that the agency will have a complete understanding of the clients
business, its marketing objectives and the product-market situation. This familiarization process by the
advertising agency with that of the client and clients product must be complete and effective as far as possible
and practicable. For this, it is advisable that a marketing executive of the client organisation must be entrusted
with the task of providing necessary data and information to the advertising agency.
MEASUREMENT OF ADVERTISEMENT EFFECTIVENESS
Advertising effectiveness is usually measured in terms of (1) Communication effectiveness of the
advertising campaign, and (2) Sales-effect of advertising efforts.
Measuring communication effectiveness
Communication effectiveness of the advertising campaign is usually measured by measuring the
effectiveness before and after its release. There are three major methods for the measurement of pre-testing
of advertisements, Viz., (1) Direct rating method, (2) Portfolio Test method and (3) Laboratory tests. Posttesting of advertisement is done by conducting the Recognition Test and Recall Test with the target
audience.
Pre-testing of advertisement:(1) Direct rating method: Consumers are asked to rate or rank alternative advertisement in terms of
specific elements such as its attractiveness, slogan and illustration used in the advertisement copy
etc.
(2) Portfolio Test method: A set of advertisements are supplied to select consumers and then checking
the extent of recall of both the overall advertisement and its content.
(3) Laboratory tests: to measure physiological reactions such as heartbeat on seeing the advertisement.

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Post-testing of advertisement:
(a) Recognition Tests aim at measuring the degree of memorability of an advertisement. Usually, the
tests are categorized into three (1) noted- percent of readers who has seen the advertisement (2)
associated- percent of readers who has seen and read part of the advertisement, and (3) read mostpercent of readers who had read more than 50% of the advertisement reading matter.
(b) Recall Tests aim at measuring the extent of recall of what had been seen or read in the
advertisement.
Measuring sales effect
Sale is the resultant effect of all element of marketing mix and as such, measurement of effectiveness
of advertisement on sales can only be approximate. There are several methods like finding increase in sale
after an advertisement campaign.
PUBLICITY AND ITS USES
Publicity is a non-personal and unpaid stimulation of demand for a product as explained above.
Publicity emanates from a neutral and impartial source such as editorial of a newspaper.
Uses of publicity
Publicity helps in accelerating dissemination of information regarding:

Community development programmes,

Contributions made to the promotion of sports, culture, and technology,

Customer service arrangements including product replacement policies,

Dealer training and promotion activities,

Employees welfare policies,

Issue of public interest and welfare from time to time,

Membership of top and senior employees in governmental and international bodies,

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New products,

New R&D (both basic and applied research) findings,

Promotion of company trade mark and slogans,

Successful bids or contracts won,

Warranty term.

SUMMARY
After going through this chapter the reader will be familiarized with the meaning of advertisement
and publicity; role and types of advertisement; information needed for judicious selection of media, appraisal
of advertisement: effectiveness and the uses of publicity, which are explained in detail.
QUESTIONS
1) What is the meaning of and its difference of advertisement with publicity?
2) Enumerate the role of advertisement and the different types.
3) How will you develop an advertisement copy?
4) How will you select the appropriate media for advertisement?

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CHAPTER - XII

PERSONNEL MANAGEMENT IN MARKETING

OBJECTIVES
The most important resource of any business is human being. Management of this resource is the
responsibility of the personnel management.
Objective of this chapter is to make the reader aware about the importance and concept of
personnel management, recruitment, selection, training and development, motivation and controlling of sales
forces.
IMPORTANCE AND CONCEPT OF PERSONNEL MANAGEMENT
We have already seen that man is behind each and every activity of a business concern. Human
resource must be utilized in the most effective manner to the best advantage of employer and the employee.
Hence the importance of personnel management.
Importance of Personnel Management
Personnel Management (PM) was sometimes looked upon as personnel administration. But it is
much more than that. PM functions include Labour Welfare, Industrial Relations, Human Resource
Management (HRM) and Human Resource Development (HRD) as well.
Now, PM is an important profession and the National Institute of Personnel Management (NIPM)
is the only all-India organization of professional managers handling PM including industrial relations, labour
welfare, HRD, training of personnel etc.
The persons in the personnel department with their specialized human relations skill and a broad
knowledge and understanding of the marketing concepts are well equipped to participate in finalizing a
common approach for implementing the changes recommended by persons in marketing department. For
this purpose, some organizations, ensure the involvement of both the managements from the initiation of a
project specially in joint discussion with the employees concerned.
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Suffice it to say that personnel management is so important that a marketing manager must be
familiar with the fundamentals of PM, especially that of human relations.
Concept of Personnel Management
Personnel Management means the management of personnel in an organization. It is concerned
with planning, organizing, directing, motivating, coordinating and controlling of employees in an organization.
The concept of PM includes the individual employee development, desirable working relationship with fellow
employees and with employers and effective moulding of human resources. PM is, thus, concerned with all
of the human relationships among employees of an organization as people. The characteristics of personnel
management can be summarized as follows:

It is inherent in all kinds of organizations.

It covers all levels of personnel in an organization.

It is of continuous nature.

It is concerned with employees of an organization.

Employees of an organization are helped to derive the greatest satisfaction from their work.

It tries to motivate employees in an organization so as to get the willing co-operation of them for
the attainment of the organizational goals.

Functions of PM: Forecasting of manpower requirements, recruitment, selection, induction and training,
transfer and promotion, job analysis, job description, job specification, job evaluation, manpower development
and career planning, motivating, recreation, communication, employee counselling, safety and welfare,
protection and security, collective bargaining, employee discipline, performance evaluation, etc. are the major
functions of personnel management.
RECRUITMENT
Recruitment may be described as the process of identifying the prospective employees and getting
them to apply for a particular job or jobs in an organization. By this process, an organization will have an
inventory of eligible persons from amongst whom selection of the most appropriate person can be made.
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As it involves inviting people to apply, it is a positive action.

The process of recruitment
The first step in recruitment is fixing the job specification.
Job specification is a written statement of the minimum personal qualities required for the
successful performance of the job under consideration. It specifies the qualification required for the person
who is doing the job. It helps the management to find the right man for the right job. It can be used for
training process and also for promotion of employees.
Second step is to identify and select the source of the prospective personnel.
Sources of prospective personnel are many and can be categorized into two, viz., Internal source
and External source.
Internal source includes employees already working with the organization in some other capacity,
and ex-employees who left the organization for a short or a specified period etc.
External source includes the unemployed, the retired experienced persons, college students etc.
Third step is to select a suitable method of recruitment.
Recruitment methods are many and can be classified under three groups, viz. (1) Direct
recruitment methods (2) Indirect recruitment methods and (3) Third party recruitment methods.
(1) Direct recruitment methods: - They include recruitment through schools, colleges, universities
and other educational and professional institutions, from waiting lists, manned exhibits etc.
(2) Indirect recruitment methods: - They include recruitment by means of advertisement in
newspapers, on the radio, in trade and professional magazines, internet web sites etc.
(3) Third party recruitment methods:- They include recruitment through various agencies such as
friends and relatives of present employees, public and private employment agencies, trade unions,
seminars, temporary help agencies etc.
SELECTION
Selection of personnel for an organization is a process of examining the applicants with regard to

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their suitability for the job(s) in question, and choosing the most appropriate candidate(s), and rejecting the
others. As it involves rejection of persons who had applied for a job, it is a negative action.
The process of selection
The process of selection may involve many stages depending upon the organizational needs.
However, the selection process can be broadly grouped as below.
1) Initial screening or preliminary interview and application scrutiny: In this screening process,
the applicants will be given necessary information about the job, and also necessary information is
obtained from them. If found suitable for the consideration, an application form is given to the applicant
to fill in and submit. Details elicited through the application form must be helpful in screening and
assessing purposes.
The various questions enlisted in the application forms may be weighted and scored according to
their predictive value. Such scores are then matched against the scores of present company employees
with good tenure and performance records. With this it is often possible to reject candidates, if they are
found lacking in educational standards, experience or some other essential requirements.
2) Conducting selection tests: Tests are conducted as a means of scaling applicants in terms of their
innate abilities such as behaviour, performance or attitude. All types of selection tests can be classified
into five categories:
(a) Achievement or Performance Tests : to measure the depth of knowledge of the applicant
about the particular job and the degree of proficiency in doing that job.
(b) Aptitude or Potential Ability Tests : to measure the latent ability of the applicant to learn a new
job or skill.
(c) Intelligence Tests: to get an idea about the mental quickness, alertness, comprehension and
reasoning power of an applicant.
(d) Personality Tests: to get an idea about the value system, emotional reactions, maturity and the
characteristic mood of an applicant.
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(e) Interest Tests : to get an idea about applicants interest and to identify the nature and kind of
job that will satisfy him.
3) Conducting interviews: Interviews are conducted for knowing about each other; by the employee
and employer. An interview is a purposeful conversation between one person on one side and another
person or persons on the other side. The threefold purpose of an employment interview are (a)
obtaining information about the employee, (b) giving information about the organization, specific job
and personnel policies and (c) motivating the applicant to work for the organization.
There are different types of interviews : Formal interview; Informal interview; Planned interview;
Patterned, Guided or Directed interview; Un-patterned, Unguided or Non-directed interview;
Depth interview, Stress interview; Panel interview; Group interview etc.
4) Conducting physical examination: Physical examinations are conducted for the purpose of getting
an indication regarding the physical fitness of the applicant for the job. It is usually conducted by
the physician or medical officer approved for that purpose.
5) Checking references: Usually an applicant is asked to give two or more names and addresses
of persons who know him well. The organization will check these references by approaching the
referees by mail or telephone and request them to furnish their frank opinions.
6) Final decision : Final decision of the selection will depend upon the number of persons required
for the job and the number of final eligible persons. If the number of eligible persons are more
than that required, then the applicants with highest scores are finally selected.
TRAINING AND DEVELOPMENT
Training and development of personnel are necessary for any organization. They are required for
improving the quality of work of employees of an organization. They are required for all levels of personnel.
In practice though training is generally imparted to all, development is usually limited to managerial cadre in
many organizations.

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Training
Training is a process of imparting information and development of new skills. The process of training
involves systematic procedure of imparting knowledge and skills required for a specified job. It is essentially
required for new recruits and inexperienced employees. Detailed instructions and training must be given to
new recruits before they take up the jobs. The main objective of training is to prepare employees to do
efficiently their own jobs or to do another job equally well. Training is a short-term process though it is an
ever-continuing process.
Training requirements and level of the employee to be trained vary from organization to organization.
Various methods of training are available and adoption of any one or combination of two or more of them
depends upon the needs of a particular organization. Class of employees and method of training suggested
are indicated as below:
Class of employees

Suggested training method

(i) Unskilled workers

Training on the job by immediate superior.

(ii) Semi-skilled workers

Training either in the section or department of the

worker or in segregated training place.

(iii) Skilled workers

Training through apprenticeship in training centers or

in the organization itself.

(iv) Salesmen

They are to be particularly trained for in the art of

salesmanship, planning their work, in handling
customers and in facing challenges of market place.

(v) Supervisory staff

Any method which will help them to improve their

performance and tune them to assume greater
responsibilities at higher levels than that of present.

Development
Development is a process of imparting information and development of new skills. The process of
development involves systematic and organized procedure by which conceptual and theoretical knowledge
are obtained by managerial personnel. It emphasizes philosophical and educational concepts rather than

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technical knowledge and skill. The main objective of development is to impart broader education and to
have long-term development. Thus it is an ever-continuing long-term educational process.
Development requirements and level of the employee to be developed vary from organization to
organization. Various methods of development are available and adoption of any one or combination of
two or more of them depends upon the needs of a particular organization. Some of the techniques of
management development are as follows:
(i) Position rotation: In order to broaden a persons background in the business he will be rotated
from one position to another.
(ii) Under-study : A person is kept as understudy to learn the ways of his superior under whom he is
at study.
(iii) Special assignments: As a flexible learning device, a special assignment may be given.
(iv) Committee assignments: To impart general background, committee assignment may be given on
regular basis.
(v) Selective readings: Trade journals, business magazines etc. are read regularly as a part of executive
development.
(vi) Role-playing: In this, an artificial conflict is created and persons are given strategic positions to
play.
(vii) Sensitive training: In order to develop executives awareness and sensitivity to behaviour patterns
of other people and of oneself, sensitive training is imparted.
(viii) Simulation: A hypothetical firms environment may be simulated and executives will be required
to take decisions.
(ix) Special meetings: Special meetings of one or two days duration will be arranged on various fields
such as marketing for the company executives.

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There are other management development techniques such as planned progression, coachingcounselling, temporary promotions, syndicate, case discussion, incident process, business games, transactional
analysis etc.
MOTIVATING
Different people are motivated by different means or inducements or incentives. Incentive may be
in the form of money or recognition. By motivation an individual is inspired to intensify his willingness to use
his capabilities and potentialities for achieving organizational goals in which the person works.

True motivation is internal.

One of the internal needs of a person is desire for recognition- a feeling of importance.

Money is an effective motivator only in terms of how much it means to the individual and his ability
to convert it into marks of status and prestige.

Group cohesiveness. The desire to feel one with the group is a powerful influence in motivation.

Responsibility and authority in relation to ones job.

A.H. Maslow has classified the needs of employees into five categories as below:

1. Physiological Needs :Food, clothing, shelter are primary needs which are ordinarily satisfied.
2. Safety needs: Protection from threat, danger and deprivation etc.
3. Social needs: Need to feel that everyone belongs to a relationship, to feel as being accepted as
part of the society.
4. Ego needs : Needs which satisfy the enhancing of self-image, self-esteem, self-respect and
achievement. Salespersons in general has high level of ego needs.
5. Self-actualization needs. These are the desires of self-development, self-fulfillment and self-growth.
There are various motivational techniques such as good working conditions, fair wages, various
types of incentives, clarity of job, sales targets or quotas, sales contest, reward and recognition, freedom to
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work, leadership style in the manager, sale conventions and conferences etc .
Positive and negative motivation
What has been discussed above is all about positive motivation, which means motivation that adds
to an individuals existing level of satisfaction. A positive motivation can better be exemplified by higher
wages, promotion etc.
Negative motivation means motivation that threatens an individuals existing level of satisfaction. A
negative motivation can better be exemplified by way of losing present overtime incentives, losing the present
job etc.
CONTROLLING OF SALE FORCE
Any control function involves the following four stages:

Laying down standards/rules / budgets/targets.

Measurement of actual performance.

Comparison of actual with standards and finding variances, if any.

Taking corrective actions, including revision of standards.

Setting performance standards

First step towards controlling the sales force of an organization is laying down standards/rules/
budgets/targets. Depending upon the market situation vis--vis its competitors, an organization may select a
combination of various quantitative standards towards the attainment of its marketing goal. The various
quantitative standards are :

Sales quotas: which are sales targets assigned to a specific salesman.

Sales expense ratio: which is the ratio of selling expenses to sales volume.

Net profit ratio: which is the ratio of net profit to sales volume.

Sales coverage effectiveness index: which is the ratio of the number of customers to the total
prospects (number) in the assigned territory.
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Call frequency ratio: which is the ratio of the number of sales calls on a particular class of prospects
to the total number of prospects in that class.

Calls per day: which is the number of customers or prospects to be called per day.

Average cost per call: which is the ratio of total target cost to the corresponding target calls.

Sales reports
Second step towards controlling the sales force of an organization is the measurement of actual
performance of sale force. This is usually done by means of sales reports or by means of field visits by field
sales managers. Depending upon the performance standards set, a sales report may consist of the following:general progress report, statement of sales (cash and credit sales), expenditure statement, salesmans work
plan for the next period, etc.
Comparing performance with norms
Third step towards controlling the sales force of an organization is the comparison of actual with
standards and finding variances, if any. When comparing actuals with standards, variances are worked out.
There will usually be two kinds of variances, favourable and unfavourable. For the unfavourable variances
causes are to analyse and classified into controllable and uncontrollable. The detailed variance analysis report
shall then be sent to the management who will take appropriate action based on the principles of Management
By Exception (MBE).
Action based on exception
Fourth and final step in controlling the sales force of an organization is taking corrective actions,
including revision of standards. For a favourable variation, incentives will be given based on the marketing
policy of the organization in the form of cash incentives including awards etc. For an unfavourable variance,
the reasons for both controllable and uncontrollable will be considered. Based on the controllable variance,
corrective action will be taken. Based on the controllable and uncontrollable variances together, desirability
of revising the standard may also be considered.
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MODERN CONCEPTS IN PERSONNEL MANAGEMENT AND APPLICATION IN

MARKETING
Modern concept in Personnel Management includes Human Resource Development including
developing performance standards, Appraising Performance, Planning individual development programme
etc.
For the growth of an organization and its development, effective utilization of available human
resources and optimum productivity, man power planning and career planning are essential.
Application in marketing
Human resource development is one of the functions of marketing management. This includes
recruiting, training, placement, motivation, control, performance appraisal, career planning etc. of marketing
personnel. All these must be based on the marketing objectives and policies of the organization. The size of
the marketing force cannot be optimal because of the changing environment such as changes in opportunity,
competition and other factors. To meet the challenging needs of the changed environments, it may sometimes
become necessary to enlarge and enrich the jobs of marketing personnel. This will motivate them to meet
the challenging needs.
Enlargement of a job means adding other tasks to it which, according to many employees, will
make it as a meaningful module in the changed environment. Job enrichment is the process of redesigning a
job in order to enlarge its scope and to give the employee more variety to do. Its purpose is to improve job
satisfaction, motivation, and morale.
Some of the organizations started practicing Total Quality Management (TQM). The goal of TQM
are Quality, Cost and Delivery besides Morale and Safety. By continuous up-gradation of the quality of
operation, maintenance, design, production, marketing and all other functions, the organization will gain
customer confidence and in the long run, sales and profit will increase. Through the improvement in quality,
cost will reduce in the long run, though cost may go up temporarily. Through the improvement of system
reliability, which will result from quality up-gradation of the various functions, we can meet the delivery
requirement, both in quantity and time schedule.
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Performance appraisal
Performance appraisal is the process of measuring and evaluating an individual employees behaviour
and accomplishments for a fixed period of time. It is a systematic method of obtaining and analyzing information
about a person that is required:

for the efficient management of business organization,

by the manager to help him to improve the job holders performance and plan his career,

by the job holder to assist him to evaluate his own performance and develop himself.
In order to achieve the above, with respect to a salesman, the evaluation programme must involve:

1. A study of the salesman himself his skills, habits, aptitudes and attitudes.
2. A study of his selling record his efforts and accomplishments.
3. An analysis of the direction, the development function is to take.
Career planning
Career planning means planning the career of employees of an organization in terms of their
capacities and within the context of organizational needs. It is an essential aspect of managing employees of
an organization to obtain optimal results. Career plans will benefit both, the employer and employee, by
promoting their growth and development and harmonizing their interest.
Successful career planning involves the following career development activities :
1. Assisting employees in assessing their own internal career needs.
2. Developing and publishing available career opportunities in the organization.
3. Aligning employee needs and abilities with career opportunities.
The following activities are done in the process of career planning.
1. An inventory of the personnel of the organization is to be prepared.
2. Career paths for various categories of employees are decided.
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3. Employees with necessary potential for career planning are to be identified.

4. For different steps of the career paths, suitable plans for training and development of persons are
to be formulated and implemented.
5. While taking employees up the career path, their age factor also has to be considered.
6. Career planning is a continuous activity and as such, it is to be reviewed periodically.
SUMMARY
The chapter deals in detail with the importance and concept of personnel management. The details
of recruitment and selection are also given at length. Training and development is another area which is
represented in this chapter with all its different methods. Motivation for achieving organizational goals and
controlling of sales force with various quantitative standards are also explained. Modern concepts in personnel
management and application in marketing are done towards the end of the chapter.
QUESTIONS
1) What is the importance and concept of personnel management?
2) Explain the various aspects of recruitment.
3) What is selection and explain its process?
4) Explain Training and Development.
5) What is Motivation? Explain.
6) What are the steps usually taken to control a Sales Force?

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CHAPTER - XIII

MARKETING RESEARCH
OBJECTIVES
In any field, research is of two kinds: basic research and applied research. Objective of this chapter
is to make the reader aware of the meaning of marketing research, purpose of marketing research, scope
of marketing research and its procedure, a sample research plan, tools for data collection, analysis of data
and inferences and application of marketing research.
MEANING OF MARKETING RESEARCH
The main aim of any research would be to find the answers in such a way that they will be reliable
and unbiased. Thus, Marketing research performs the function of obtaining information that will assist marketers
in making marketing decisions. The American Marketing Association (AMA) defines marketing research
as the systematic gathering, recording and analyzing of data relating to the marketing of goods and services.
Commercially, marketing research is used by marketing management in planning the entire marketing strategy
of the enterprise. There are two sources of marketing research data: primary data (collection of new data)
and secondary data (previously collected data). The main steps involved in marketing research are as follows:
Step 1: Problem definition: This step involves preliminary statement of research objectives. This
involves obtaining answers for the questions: What information is required? Why the information is
required? Where should the information come from?
Step 2: Developing the research plan: This involves developing the most efficient plan for gathering the
needed information. The Marketing Manager needs to know the cost of the research plan before
approving it. Developing the research plan involves decisions on the following aspects: data sources,
research approaches, research instruments, sampling plan and contact methods. Data sources include
collection of comprehensive data about individual customers, prospects, or suspects. Research
approaches can be of the following types- observation, focus groups, surveys, behavioural data,
and experiments. Research instruments include questionnaires and mechanical instruments like eye
camera to study the change in pupil size, to measure interest. Sampling plan decides the sampling
unit (who should be surveyed) sample size (how many people should be surveyed) and the sampling
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procedure (how should the respondents be chosen?). Contact methods decide how the person should
be contacted mail, telephone, personal or on-line.
Step 3:Collection of information: This is the most expensive phase of marketing research and is prone
to various kinds of errors. The problems caused can be like: - respondent not available, respondent
not co-operative, respondent is not honest in answering the questions. However, data collection
methods are improving day by day due to the computerization of all the related activities.
Step 4:Analysis of the information: This step involves in analyzing the collected data to make the necessary
inferences. The researcher tabulates the data and performs statistical analysis to make decisions.
Step 5:Presenting the findings: The inferences obtained are presented to the relevant parties for making
major marketing decisions. These findings could suffer from a variety of errors, and management
may decide to study further.
PURPOSE OF MARKETING RESEARCH
Companies conduct their own marketing research or hire other companies to do it for them. The
quality of marketing research is determined by the scientific method, creativity, multiple research methods,
accurate model building, cost benefit analysis, and ethical focus. Marketing research contributes in decisions
involving organizations marketing mix. It provides information about its markets, competitors and changes
and developments in the external environment to aid the marketing decisions, whether they are operational,
tactical or strategic. Marketing research provides the following essential data to identify market opportunities.
After the research is complete, the company must measure and forecast the size, growth and profit potential
of each market opportunity. For this, the following need to be clearly recognized:
1. Market demand: Marketing Managers are responsible for preparing sales forecast. These are based
on estimates of demand. Market demand is the total volume that would be bought by a defined
customer group in a defined area in a defined time period.
2. Company demand: It is the companys estimated share of the market demand at alternative levels
of company marketing effort in a given time period.
3. Marketing potential: It is the maximum amount of sales that might be available to all the firms in
an industry during a given period under a given level of industrys marketing effort and given
environmental conditions.

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SCOPE OF MARKETING RESEARCH AND ITS SCIENTIFIC PROCEDURE

Marketing research has many specialized areas which are used to obtain information about markets,
competitors and changes and developments in the external environment to aid marketing decisions. These
are:
1. Product research: This is concerned with all aspects of design, development and testing of new
products, as well as the improvement and modification of existing products.
2. Communications research: This helps the marketer to take decisions regarding the marketing
communications mix. The result of the research helps in planning a better and more effective
communication mix. The research activities include pre and post testing of advertising, media planning
research, readership surveys, testing alternative selling techniques, exhibition and sponsorship
evaluation.
3. Pricing research: These researches help in establishing a more market oriented pricing strategy
and a market segment in relation to price.
The marketing research methodology must be scientific and standardized to obtain maximum
effectiveness. Some of the characteristics of a good marketing research are:
1. It must use the principles of scientific method- careful observation, formulation of hypotheses,
prediction and testing.
2. Marketing research should develop innovative ways to solve a problem. It should adopt multiple
methods rather than focusing on any single method.
3. Good marketing researchers attach significance to the cost of information in relation to its value.
Costs are easier to determine when compared to the value.
4. Healthy skepticism: Good market researchers view the assumptions made by the manager with
healthy skepticism. They are well aware of the marketing myths
5. Ethical marketing: Good marketing research benefits both the sponsoring company and its customers.
The misuse of marketing research can harm or annoy customers.
RESEARCH PLANNING A SAMPLE
Research planning is the second step in marketing research procedure and follows the problem
definition step. It deals with the development of the most efficient plan for gathering the needed information.
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The designing of research plan deals with decisions on the data sources, research approaches, research
instruments, sampling plan, and contact methods.

Data sources include collection of comprehensive data about individual customers, prospects, or
suspects. Data sources can be of the following types: primary data- gathered for a specific purpose
or research and secondary data- previously collected data being reused.

Research approaches can be of the following types- observation, focus groups, surveys,
behavioural data, and experiments. Fresh data is obtained by observing the relevant actors and
settings. Focus-group research involves a gathering of six to ten people who are invited to spend
sometime with a skilled moderator to discuss a product. Surveys are more suited for descriptive
researches to learn peoples knowledge, beliefs, preferences and satisfaction

Research instruments include questionnaires and mechanical instruments. The questionnaire is

prepared carefully by the professional marketing researcher who selects the questions and wordings
carefully, like eye camera to study the change in pupil size, to measure interest.

Sampling plan decides the sampling unit (who should be surveyed) sample size (how many people
should be surveyed) and the sampling procedure (how should the respondents be chosen?).

Contact methods decide how the person should be contacted mail, telephone, personal or online.

Sample researching plan: American Airlines was trying to improve the services to its passengers by offering
in-flight phone services. The company asked its Marketing Research Department to find out how air travelers
would respond to this new service.
Data sources: Primary data is collected from the fieldwork. Secondary data source includes internal sources
like profit/loss statements, balance sheets, sales figures, sales call reports, invoices, inventory records and
previous reports. Government publications include statistical abstract of the United States, Marketing
Information Guide, Government publications like census of manufacturers, census of population, vital
statistics report etc. and commercial data from research houses selling data.
Research approaches: Observational research is carried out by researchers by mingling with travelers
and agencies and even in competitors flight services to find out how travelers view different services. It
also analyses ticket purchase records for obtaining behavioural data.

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Research instruments used: Some of the questions of the questionnaire are: multiple choice questions
like : With whom are you traveling on this flight? -No one, spouse, spouse and children, business associates,
others and rating scale question like : If an in flight service is introduced how would you react? definitely
buy, probably buy, probably not but, definitely not buy, not sure.
Sampling plan: sampling units like business travelers and vacation travelers are recognized and methods
of probability sampling are used.
TOOLS DATA COLLECTION
Data collection is the most expensive step in Marketing research and is very much prone to errors.
However, data collection methods are improving day by day due to computerization of all the related activities.
Some of the common techniques/tools used in data collection are listed below:
1. Experimentation: This is used to test/assess the effect of some elements in the marketing mix.
Two main types of experiments are field experiments and lab experiments.
2. Observation: Selective method to describe people or physical phenomenon. There exists no
interview or response bias. This can be of the following types people observing people, mechanical
devices observing people (eye camera, tape recorders), physical phenomena observed by people
and physical phenomena observed by mechanical devices.
3. Questionnaires: This is one of the most common methods of data collection. It can be conducted
by mail, telephone or personal interview. It should use simple, direct, unbiased wording and should
be pre-tested with a sample of respondents.
4. Surveys: Surveys can be of the following types postal surveys, telephone surveys, personal
interviews etc. Postal surveys are low cost but there is no control over the person actually filling in
the questionnaire. This is useful when time is short but has the disadvantage that questions which
require some time to answer wont be effective. Personal interviews require some preparation in
the form of pilot visits to test out the questionnaire.
5. Motivational research techniques: It is used for discovering the underlying motives, desires and
emotions of consumers that influence their behaviour. Techniques used are depth interviewing,
group interviewing, and projective techniques.

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ANALYSIS OF DATA AND INFERENCES

After data collection process is complete, the researcher has to extract findings and inferences.
For this, the researcher tabulates the data and performs frequency distribution calculations and measures
mean dispersions etc. He may also use statistical techniques and decision models to obtain additional
inferences. Some of the tools used by the researcher are:
A. Statistical tools
1. Multiple regression: For finding best fitting equations of a dependant variable which varies with
changing values in a number of independent variables. The inference obtained can estimate how
unit sales are influenced by changes in the level of company advertising expenditures, sales force
size and price.
2. Cluster analysis: A statistical technique used for separating objects into a specified number of
mutually exclusive groups. For eg: This can be used to classify a set of cities into a definite number
of groups.
3. Factor analysis: It is used for determining a few underlying factors of a larger set of interrelated
variables.
B. Models
1. Markov-process model: This model shows the probability of moving from a current state to any
future state.
2. Queuing model: This model shows the waiting times and the queue lengths that can be expected
in any system given the arrival and service times and the number of service channels. This can be
used to determine the waiting times involved in queues given the number of service channels and
service speeds.
3. Sales response model: This is a set of models to estimate functional relationships between one or
more marketing variables.
APPLICATIONS OF MARKETING RESEARCH
The main areas of applications of marketing research are sales and market analysis, product research,
advertising, business economics and corporate research, and corporate responsibility.

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1. Sales and Market Analysis

This is conducted for:
a) determination of market potential
b) determination of market share
c) sales forecasting
d) design of market segmentation studies
e) test market
f)

distribution channel

g) determination of market characteristicsh

h) determination of competitive information
2. Product Research
This is used for making the following inferences:
a) evaluation of new product ideas
b) testing of a new product acceptance
c) testing package design
d) testing product positioning.
3. Business Economics and Corporate Research
The following research works are carried out for:
a) study of business trends
b) pricing studies
c) diversification studies
d) product-mix studies
e) plant and warehouse location studies.

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4. Advertising Research
The following are obtained from advertisement research:
a) audience measurement
b) determining the most cost effective media plan
c) determining advertising effectiveness.
5. Consumer Behaviour Research
The following inferences are derived from customer behaviour researches:
a) the target customer
b) location of the target customer
c) motivation of the customer to buy a brand
d) the buying behaviour pattern
e) post purchase satisfaction levels.
SUMMARY
The meaning its purposes, and scope of marketing research are given in the initial part of the chapter.
A sample of research planning is explained in detail with all its steps, involving tools for data collection,
analyses of data and inferences. The chapter ends with the different applications of marketing research.
QUESTIONS
1. What is the meaning of marketing research? Explain its different steps.
2. What is the scope of marketing research what is its scientific procedure?
3. Which are the major tools of data collection?
4. What are the applications of marketing research?

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MODEL QUESTION PAPER

National Institute of Business Management
Chennai - 020
FIRST SEMESTER EMBA/ MBA
Subject : Marketing Management
Time : 3 hours

Marks : 100

Section A
I

Answer all questions. Each question carries 2 marks :1.

Give two relevant definitions of Marketing.

2.

Which are the four basic functions of Marketing?

3.

What is Integrated Marketing?

4.

What are the objectives of Marketing Strategy?

5.

What is Marketing Planning?

5x2=10 marks

Section B
II

Answer all questions. Each question carries 6 marks :1.

What are the Planning Procedures that happen at various levels?

2.

What are the elements of Marketing Planning?

3.
4.
5.

What is Marketing Mix and Marketing Planning?

What is the role of Advertising in Marketing Mix?
What are the unique characteristics of Service Marketing?
5x6=30 marks

Section C
III Answer any three questions. Each question carries 20 marks :1.

Explain products in Service Marketing.

2.
3.
4.
5.

Explain what is Market Segmentation.

What is pricing? Illustrate with example.
Which are the basic principles of Organization Design?
Which are the various parameters affecting Consumer Behaviour?
3x20=60 marks