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MARKETING RESEARCH AND MARKETING�MANAGEMENT�(20CB406)

Department: CSBS�Batch/Year: II YEAR / IV SEM�Created by:Dr.S.D. Uma Mageswari�Date: 07.03.2022�

• TEXT BOOKS:
• Marketing Management (Analysis, Planning, Implementation & Control) – Philip Kotler
• Fundamentals of Marketing – William J. Stanton & Others
• Marketing Management – V.S. Ramaswamy and S. Namakumari
• Marketing Research – Rajendra Nargundkar
• Market Research – G.C. Beri
• Market Research, Concepts, & Cases – Cooper Schindler
•  
• REFERENCES:
• Marketing Management – Rajan Saxena
• Marketing Management – S.A. Sherlekar
• Service Marketing – S.M. Zha
• Journals – The IUP Journal of Marketing Management, Harvard Business Review
• Research for Marketing Decisions by Paul Green, Donald, Tull
• Business Statistics, A First Course, David M Levine at al, Pearson Publication

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UNIT III

Pricing, Promotion and Distribution Strategy: Policies & Practices – Pricing Methods & Price determination Policies.

Marketing Communication – The promotion mix, Advertising & Publicity, 5 M’s of Advertising Management.

Marketing Channels, Retailing.

UNIT III

Pricing, Promotion and Distribution Strategy: Policies & Practices - Pricing Methods & Price determination Policies.

Marketing Communication - The promotion mix, Advertising & Publicity, 5 M's of Advertising Management.

Marketing Channels, Retailing, Marketing Communication, Advertising

III.1 PRICING STRATEGIES:

DEFINITION:

Pricing is a process to determine what manufactures receive in exchange of the product. The management of the company considers many factors before they price a product, such as, the ability of a consumer to pay for the products, the conditions of the market, action of the competitor, the production and the raw material cost, the cost of manufacturing, and the profit margins.

3.1 Pricing Objectives:

• Survival

• Maximize current profits

• Increase market share

• "Skim" the market

• Seek "product-quality leadership"

Survival: Companies facing new and intense competition, over capacity, or changing consumer behavior may pursue a survival strategy. Survival is a short run objective but in the long run, the company must adapt and find ways to add value.

Maximize current profits: Maximizing current profit is a common company objective. To do so, costs and consumer demand have to be estimated for different prices. The price point that generates the highest profit is then chosen.

Increase market share: A company may pursue an objective of increasing or maximizing market share. Many companies set a low initial price to achieve market penetration. This strategy can be advantageous in industries with consumers that are

price sensitive, sales and production costs fall with production experience, and where a low price discourages the entry of possible competitors.

Skim the market: "Skimming" means setting high prices initially to target those that are willing to pay the high price, and then gradually lowering the price to attract the more price sensitive customers.

Product-quality leadership: Companies that produce high quality products relative to the competition, position themselves as the product-quality leader. They charge more, but convince the customer that it's worth it because of the superior product experience, reliability, or other quality related benefits.

3.2 Process of Setting Prices

The main aim of marketing strategy of an organization is to attain marketing objectives and satisfy the targeted market. The marketing decisions affect the prices of products to a great extent.

The marketers follow various steps to set prices as given below:

Setting Price Objectives

Estimating the Product Demand

Analyzing the

Competitor's Prices

■ -

Selecting the Pricing Method

Figure-3: Process of Setting Prices

Selecting the Phong Policy

1. Setting price objectives:

Refers to set the goals of the pricing policy. An organization can have multiple pricing objectives, such as:

a. Survival

b. Quality of a Product

2. Estimating the product demand:Helps in knowing the factors that affect the demand of a product. Some of the important factors can be the prices of products, environmental factors, and income and expectations of customers. There are three things that are studied by the marketers for estimating the demand. They are:

a. Price Sensitivity: Affects the demand of a product. If the price of the product rises then the demand falls and vice versa.

b. Demand Curve: Implies a statistical tool that shows a relationship between the demand and price of a product. It helps in knowing the demand and price fluctuations of the product.

c. Price Elasticity of Demand:Refers to a percentage change in the demanded quantity of the product with respect to the percentage change in the price of the product. If the demand of a product changes with the change in price then the demand is said to be elastic. On the other hand, if the demand of a product does not change with the change in price then the demand is said to be inelastic.

3. Analyzing the competitor's prices:Influences the decisions of setting the prices of products. The pricing strategies of competitors affect the demand of the product and lead to a loss of market share. Thus, the marketers should be careful about the future competition.

The three ways by which an organization reacts to price changes:

a. Maintaining the status quo and not reacting to any price change

b. Setting the prices equal to the organization's prices

c. Setting the prices less than the organization's prices

The process of analyzing the prices of competitors is difficult. Therefore, the organizations depend on the publicly available data or public statements to know the price strategies of competitors.

4. Selecting the pricing method:

Involves the selection of a technique for setting the price. There are various types of pricing methods used by organizations.

5. Selecting the pricing policy:

Involves a strategy or practice used by an organization to achieve its pricing objectives.

3.3 Pricing Methods:

Companies usually set prices based on the three sets of factors i.e. costs, the value of the product as perceived by the buyer (demand) and competition. The approaches to pricing based on the above

three factors, are referred to as (a) cost based pricing, (b) buyer based pricing, and (c) competition based pricing. Some of the methods are:

Method 1: Cost based Pricing:

Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.

a) Full cost pricing:

(i) Cost Plus:

Here price is so determined as to cover full cost of a product viz. fixed cost plus variable cost + a profit margin.

This is a very simple method. The total manufacturing cost is calculated and the required profit is added in terms of a certain amount or percentage. This becomes the selling price.

(ii) Marginal Cost Pricing:

Also called Direct cost/Differential cost pricing. Marginal cost pricing is the practice of setting the price of a product at or slightly above the variable cost to produce it. This approach typically relates to short-term price setting situations. This situation usually either when a company has a small amount of remaining unused production capacity available that it wishes to use, or it is unable to sell at a higher price.

(iii) Target Pricing:

b) Here prices are so fixed as to give desired return on investment say 10% on capital invested.

Method 2. Competition Based Pricing Methods:

Under this classification, the prevailing competition is the basis of pricing. These methods are very suitable when the competition is very tough and there is very little product differentiation.

(i) Going Rate Pricing - Firm fixes price on the basis of prevailing price or market price or price charged by price leader. Applicable where similar products are already sold in market.

(ii) Customary Price - Prices of certain goods are fixed by custom e.g. electric fans. Rule is going along with old prices to avoid price war (even if costs have gone up).

(iii) Sealed Bid Pricing - Here firms quote prices in sealed cover while bidding for jobs/contracts/tenders.

(iv) Loss Leaders - Fixing prices at very low levels for certain items to attract customer ever if it means some loss.

Methods 3: Customary pricing is a pricing method where the price of a good or service is based on consumers' collective perception of its value. It's typically used for a product or service that has a consistent market history being sold around a specific price point — one that ultimately dictates how much it should cost.

3.4 New Product pricing strategies:

3.4.1 Price-Skimming

• The first new product pricing strategies is called price-skimming. It is also referred to as market-skimming pricing.

• Price-skimming (or market-skimming) sets a high price for a new product to skim maximum revenues layer by layer from those segments willing to pay the high price. This means that the company lowers the price stepwise to skim maximum profit from each segment.

• As a result of this new product pricing strategy, the company makes fewer but more profitable sales.

Example : Apple.

When it introduced the first iPhone, its initial price was rather high for a phone. The phones were, consequently, only purchased by customers who really wanted the new gadget and could afford to pay a high price for it. After this segment had been skimmed for six months, Apple dropped the price considerably to attract new buyers. Within a year, prices were dropped again. This way, the company skimmed off the maximum amount of revenue from the various segments of the market.

New Product Pricing - Price-Skimming vs. Market-Penetration Pricing

3.4.2 Market-Penetration Pricing

• The opposite new product pricing strategy of price skimming is market-penetration pricing.

• market-penetration pricing refers to setting a low price for a new product to penetrate the market quickly and deeply.

• Thereby, a large number of buyers and a large market share are won, but at the expense of profitability.

• The high sales volume leads to falling costs, which allows companies to cut their prices even further.

Example: Ikea.

By introducing products at very low prices, a large number of buyers is attracted, making Ikea the biggest furniture retailer worldwide. Although the low prices make each sale less profitable, the high volume results in lower costs and allows Ikea to maintain a healthy profit margin.

3.5 Pricing Adjustment Strategies in Marketing

• Price is a strong element of marketing strategy_of any company.

• To customers the price is a major indicator of good quality product and also important factor in making decision about its purchase.

• Price strategy is therefore, most vital and critical area of marketing strategy. Many Companies usually adjust their basic prices keeping in view various customer differences and market changing situations. If a company adopt effective pricing strategies, company become able to secure better market shares.

There are six price adjustment strategies in marketing.

Discount and Allowance Pricing:

• Most companies adjust their basic price for rewarding their customers, such as early payment of bills by customers, bulk purchases, and off-season buying etc. Such price adjustments called discounts and allowances pricing strategies.

• Discount is a straight reduction in price by company on purchase while allowance is promotional money paid by company to retailer in respect of an agreement to feature the company's product in some way.

Segmented Pricing

• In segmented pricing strategy, the company sells a product or service at two or more prices, and difference in prices not based on cost.

• Variation of theater or cinema seat prices is also an example of segmented pricing. Companies also charge different prices in different region for same products.

Psychological Pricing

• Psychological pricing strategy approach considers the psychology of different customers in respect of their products.

• Many customers use price to judge the quality of the product and services.

For example a person wants to purchase perfume, he asks the price from shopkeeper and he told different prices of two bottles as 1000 for one and 400 for other. Now customer will be willing to pay 1000 because this higher price indicates something special.

Promotional pricing

• Promotional pricing strategy promote or introduce a particular product or service.

• This is the temporary price companies charged for their products or services and this price may be below then list price and sometimes even below then incurred cost.

• Some supermarkets and departmental stores offers lower prices to attract customers.

Geographical Pricing

• companies price its products or service for different customers on the base of geographical location in different parts of the country or world.

• This is actually relates to buying power of customers.

• Companies charge high prices in elite class areas and low prices in backward areas.

International Pricing

• International pricing strategy depends on many factors of a specific country like economic conditions, laws and regulations of that country, competitive situations in that country, and development of the wholesaling and retailing system in a particular country.

3.6 Factors influencing pricing

The pricing decisions for a product are affected by internal and external factors.

A. Internal Factors:

1. Cost:while fixing the prices, the firm must be able to recover both the variable and fixed costs.

2. The predetermined objectives:While fixing the prices of the product, the marketer should consider the objectives of the firm. For instance, if the objective of a firm is to increase return on investment, then it may charge a higher price, and if the objective is to capture a large market share, then it may charge a lower price.

3. Image of the firm:The price of the product may also be determined on the basis of the image of the firm in the market. For instance, HUL and Procter & Gamble can demand a higher price for their brands, as they enjoy goodwill in the market.

4. Product life cycle:The stage at which the product is in its product life cycle also affects its price. For instance, during the introductory stage the firm may charge lower price to attract the customers, and during the growth stage, a firm may increase the price.

5. Credit period offered:The pricing of the product is also affected by the credit period offered by the company. Longer the credit period, higher may be the price, and shorter the credit period, lower may be the price of the product.

6. Promotional activity:The promotional activity undertaken by the firm also determines the price. If the firm incurs heavy advertising and sales promotion costs, then the pricing of the product shall be kept high in order to recover the cost.

B. External Factors:

1. Competition:While fixing the price of the product, the firm needs to study the degree of competition in the market. If there is high competition, the prices may be kept low to effectively face the competition, and if competition is low, the prices may be kept high.

2. Consumers:The marketer should consider various consumer factors while fixing the prices. The consumer factors that must be considered includes the price sensitivity of the buyer, purchasing power, and so on.

3. Government control:Government rules and regulation must be considered while fixing the prices. In certain products, government may announce administered prices, and therefore the marketer has to consider such regulation while fixing the prices.

4. Economic conditions:

The marketer may also have to consider the economic condition prevailing in the market while fixing the prices. At the time of recession, the consumer may have less money to spend, so the marketer may reduce the prices in order to influence the buying decision of the consumers.

5. Channel intermediaries:The marketer must consider a number of channel intermediaries and their expectations. The longer the chain of intermediaries, the higher would be the prices of the goods.

III. 2 Marketing communication:

• A process by which product information is transmitted to the target audience is called marketing communication.

PRODUCT

INFORMATION

TARGET AUDIENCE

3.7 Objectives of Marketing Communications

In a market full of competitors, companies leverage different unique techniques and tactics to reach their audiences. They combine marketing channels and tools to convey the necessary message and make sure that prospects understand it. These communications include advertising, PR, sponsorships, promotion, social media, etc. They help fulfill different objectives, to name a few:

• communicate the main message and idea to the target audience;

• introduce a product to leads;

• initiate brand switching;

• allow a brand to compete within the market;

• improve your product and brand awareness;

• influence buying decisions;

• encourage customers to purchase a product;

establish a positive brand image;

attain brand recognition, trust, and transparency.

3.8 Promotion Mix

A promotional mix is a combination of marketing methods including advertising, sales, public relations and direct marketing to achieve a specific marketing goal. The basic purpose of the promotional mix is first of all to create brand awareness but the most essential is to produce organizational goals and profits.

The main promotional tools or activities which make up promotion mix are personal selling, advertising, publicity and sales promotion. These are also known as elements of promotion mix.

Philip Kotler opines, "A company's total marketing communication mix also called promotion mix consists of specific blends of advertising, personal selling, sales

promotion, public relations and direct marketing tools that the company use to

pursue its advertising and marketing objectives."

PROMOTIONAL MIX

Selling

Public

relations

-The promotion mix (Marketing communications): is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.

The promotion mix consists of:

A) Advertising: is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

Advertising reaches masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat a message many times.

Ex: Broadcast, Print, Internet, Outdoor.

B) Sales Promotion: is the short term incentive to encourage the purchase or sale of a product or a service.

Sales Promotion includes coupons, contests, cents-off deals, and premiums that attract consumer attention and offer strong incentives to purchase, and can be used to dramatize product offers and to boost sagging sales Ex: Discounts, Coupons, Displays, Demonstrations.

C) Personal Selling: personal presentation by the firm's sales force for the purpose of making sales and building customer relationships.

Personal Selling is the most effective method at certain stages of the buying process, particularly in building buyer's preferences, convictions, actions and developing customer relationships.

Ex: Sales presentations, Trade shows.

D) Public Relations: involves building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading unfavorable rumors, stories or events.

Public Relations is a very believable form of promotion that includes news stories, features, sponsorships and events.

Ex: Press releases, Sponsorships, Special events, Web pages.

E) Direct Marketing: is to make direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships, through the use of direct mail, E-mail, Telephone, direct response TV and the Internet to communicate directly with specific consumers.

Direct Marketing is a non-public, immediate, customized and interactive promotional tool that includes direct mail, catalogs, telemarketing and online marketing.

EX: Catalog, Telemarketing, Kiosks.

Marketing communication goes beyond theses specific promotion tools. The product's design, price, shape and color of its package, and the stores that set it all communicate something to the buyer. Consequently, the entire marketing mix,

(Price, Product, Place and Promotion), must be coordinated for greatest communication impact.

3.8 Integrated Marketing Communications

-The new Marketing Communications Landscape:

■ Consumers are better informed and are changing.

■ More communication

■ Market strategies are changing

■ Less mass marketing

■ Changing communications technology -A view or the communication process:

■ Sender: the party sending a message to another party.

■ Encoding: the process of putting thought into a symbolic form

■ Message: the set of symbols that the sender actually transmits.

■ Decoding: the process by which the receiver assigns meaning to the symbols encoded by the sender.

■ Receiver: the party receiving a message sent by the other party.

■ Response: the reactions of the receiver after receiving the message.

■ Feedback: The part of the receiver response communicated back to the sender.

■ Noise: the unplanned static or distortion during the communications process, which

results in the receivers getting a different message than the one the sender sent.

Integrated marketing communication: is the integration by the company of its communication channels to deliver a clear, consistent and compelling message about the organization and its brands.

3.9 Steps in Developing Effective marketing communication Process

A) Identify the Target Market:

A marketing communicator starts with a clear target audience in mind. The users might be current users or potential buyers, those who make the buying decisions or influents them.

The target audience will heavily affect the communicator's decisions on what will be said, how it will be said, when it will be said, where it will be said, who will say it.

B) Determining the Communication Objectives:

Marketers seek a purchase response that results from a consumer decisionmaking process that includes the stages of buyer readiness. However, communicators need to know where the target audience now stands and to what stage it needs to be moved. The target audience may be in any of the six buyer-readiness stages.

-Six Buyer-readiness stages: Awareness, Knowledge, Liking, Preference, Conviction, Purchase.

C) Designing a Message:

Having defined the desired audience response, the communicator to develop an effective message.

(Aida Model) The message should get: Attention, Hold interest, Arouse desire and Obtain action.

- When putting the message together, the marketing communicator must decide what to say (message content) and how to say it (message structure and format).

AIDA Model Hierarchy

The AIDA Model, stands for Attention, Interest, Desire, and Action model, is an advertising effect model that identifies the stages that an individual goes through during the process of purchasing a product or service.

The steps involved in an AIDA model are:

• Attention: The first step in marketing or advertising is to consider how to attract the attention of consumers.

• Interest: Once the consumer is aware that the product or service exists, the business must work on increasing the potential customer's interest level.

For example, Disney boosts interest in upcoming tours by announcing stars who will be performing on the tours.

• Desire: After the consumer is interested in the product or service, then the goal is to make consumers desire it, moving their mindset from "I like it" to "I want it."

For example, if the Disney stars for the upcoming tour communicate to the target audience about how great the show is going to be, the audience is more likely to want to go.

• Action: The ultimate goal is to drive the receiver of the marketing campaign to initiate action and purchase the product or service.

-Message Content: is and appeal or theme that will produce the desired response. Rational appeal: relates to the audience self-interest and it show that the product will produce the desired benefits.

Emotional appeal: attempt to stir up either negative or positive emotions that can motivate purchase.

Moral appeal: are directed to the audience sense to what is right and proper.

-They are often used to urge people to support social causes such as saving the environment.

-Message Format: a marketer needs a strong format of the message.

Ex: Galaxy used eye-catching forms and pictures in order to gain attention.

D) Choosing media:

I) Personal communication channels: two or more people communicate directly with each other by:

Face to face, Phone, Mail, Email, Internet chat.

-Personal communication is effective because it allows personal addressing and feedback.

lOMoARcPSD|14007170

-Word of mouth influence: is a personal communication about a product between target buyer and neighbors, families, friends and associates.

-Opinion Leaders: are people within a reference group who, because of their special skills,

knowledge, personality, or other traits; exerts social influence on others.

-Buzz Marketing: involves cultivating opinion leaders and getting them to spread information about a product or a service to others in their community.

II) Non-Personal communication: is media that carries message without personal contact or feedback, including major media and event that affect the buyer directly.

-It includes major media, atmosphere and events.

1) Major media:

■ Print (newspapers, magazines, direct mail)

■ Broadcast media (Radio, T.V.)

■ Display (Billboards, signs, posters)

■ Online media (E-mail, company websites, online social and sharing networks)

2) Atmospheres: are designed environments that create or reinforce the buyer's leanings toward buying a product.

3) Events: are staged occurrences that communicate messages to target audience. Ex: Press conference, Grand openings, Exhibits and Public tours.

-Non personal media affects the buyer directly.

-In addition, using mass media affects buyers indirectly by causing more personal communication.

E) Selecting the Message source:

-In either personal or non-personal communication, the message's impact on the target audience is affected by how the audience views the communicator. -Celebrities:

1- Athletes: ex (Nadal for Nike tennis shoes)

2- Entertainers: ex (Mona Zaki Ads with Pantene)

-Professionals

Health care providers: ex (Dentists in toothpastes ads)

F) Collecting Feedback:

-Involves the communicator understanding the effect on the target audience by measuring behavior resulting.

- The communicator asks the target audience members whether they remember the message or no.

-Feedback on market communications may suggest changes in the promotion program or in the product itself.

3.10 Setting the Total Promotion Budget and Mix

A) Affordable method: is to set the promotional budget at the level management thinks the company can afford.

-Small companies often use this method because they think that they set the budget at a level the company cannot spend more on advertising.

-Disadvantage: ignores the effects of promotion on sales.

B) Percentage of sales method: is to set the promotional budget at a certain percentage of current or forecasted sales or unit sales price.

-Advantage: easy to use and helps management think about the relationship between promotion, selling price and profit per unit.

-Disadvantage: wrongly views sales as the cause rather than the result of promotion.

C) Competitive-parity method: is to set the budget to match the competitor outlays.

Advantage: 1- Represents industry standards.

2- Avoid promotion wars.

D) Objective-and-task method: is to set the budget based on what the firm wants to accomplish with promotions

-It includes:

■ Defining promotion objectives

■ Determining tasks to achieve the objectives

■ Estimating costs

3.10 ADVERTISING

Advertising is a paid marketing activity. In which creative techniques are used to grab the attention of the target audience to deliver the intended message. Advertisement is circulated through various media platforms to make it reach the target audience.

3.10.1 Features of advertising

1) Paid Activity: Advertising requires finances from creating an innovative ad to getting slots on various media platforms to circulate it.

2) One-way communication:Advertisements are one-way communication because in advertisements, companies do the talking part, and they talk about their products and their benefits. They can represent their product in any way they want. There is no way that response or feedback of people can be obtained.

3) Involves Creativity: It is important that an advertisement should be creative; otherwise, it would fail to bring the attention of the desired audience, and the whole idea of advertisement and investment on it will waste. Therefore, an advertisement should be created creatively and innovatively so that it can deliver the message efficiently.

4) Promotional Tools: Promotional tools are used intentionally to make people aware of the existence as well as its uses. It is done purposefully as a part of the promotion mix strategy.

5) Impersonal in nature: Advertising is impersonal in nature. The purpose of advertising is to reach a target audience with the help of standard media such as newspapers, television, radio, magazines, etc.

3.10.2 Types of advertising

1) Print advertising: Print advertising is referred to advertising in written form such as newspapers, magazines, journals, pamphlets, and brochures are considered as the main print advertising medium.

2) Digital advertising: Digital advertising is a modern platform for advertising. Digital advertising has become popular in past few decades and most people now a day prefers to advertise of various digital platforms like Facebook, Instagram, Twitter, Email platforms like Gmail and Yahoo,Yahoo, Google, etc. Digital advertising is the best way to reach a huge audience, irrespective of their geographical location.

3) Product or Brand integration: It is a new method of advertising products. Products are promoted on a television show, or YouTube videos by either the people being used in the show or they praise the product and tell about its features, benefits, etc.

4) Outdoor advertising: In this type of advertising, products are promoted on roadside flags, banners, wraps, and hoardings, etc.

5) Broadcast advertising: Broadcast advertising is usually done on television or radio platform. A video or audio commercials are broadcasted on television and radio repetitively.

3.10.2 Objectives of advertising

The one and only focus of companies are to grab the attention of their target audience through the advertising. In addition to this, followings are the objectives ofobjectives of advertising.

1. Advertising serves the purpose of promoting the product by telling them about the features of the product.

2. Advertising plays an important role to convince customers to buy the product.

3. Advertising creates a positive, strong, and confident image of the brand in front of customers.

Advantages of advertising

1. Advertising assists customers to make the decision to choose from various similar products available in the market. They come to know about the various features of products offered by the company to learn about their various usages.

2. Customers come to know about the good quality of products as usually big established brands can only afford to advertise on expensive platforms.

3. The vast audience can be attracted to buy the new product by using innovative techniques of advertising.

4. Advertising helps in building the image of the brand in the market.

5. It helps product differentiation as it focuses on the features of the products which are different from other similar products.

6. Advertising helps the company to reach a huge target audience irrespective of their geographical location.

7. It boosts the sales volume by encouraging more and more customers to buy the product.

8. Advertising is an effective way to convert potential customers into buyers.

Disadvantages of advertising

1. Advertising is very expensive. It requires a lot of expenses to promote products on different platforms. Hence, small businesses with low budgets find it difficult to promote their products through advertising.

2. Customers get confused from choosing between different similar products.

3. Most of the times, companies mislead their audience by providing them false information about the product.

4. There are no product selection criteria for the quality of the product when it comes to advertising. By spending money, even inferior products presented in such a way that they fool the audience.

5. It does not ensure your customer's retention as its only purpose is to get the attention of customers.

3.11 PUBLICITY

Publicity is an unpaid promotion with the help of third parties such as media which shows the complete information about the product or brand by creating news or buzz.

3.11.1 Features of Publicity

1) Non-paid activity: Publicity is free of cost promotional activity, where the company pays nothing or a very little amount of money to spread information about the product using the third party such as media.

2) Belongs to Public Relations: Publicity is sub-part of public relations as it involves efforts for maintaining and establishing strong business relationships.

3) Controlled by the third party: The information spread about the product is not in the hand of the company. It is controlled by the third party such as media such as the media house or publishers.

4) Media Oriented: The news in independently created by news media and publishing house.

5) Involves low cost: There is a very low cost involved in making arrangements for publicity events.

3.11.2 Types of Publicity

1) Press Conferences: This is one of the oldest methods of publicity where a person from the company talks about the product of the company in the media, which later is published on the various media platforms.

2) Visits: Sometimes media or press itself visits business outlets to get information about new and innovative products to make their audience aware of it.

3) Press Releases: A short story is created by public relation professional to publish it on the media platforms.

4) Informal discussions: This method involves oral publicity or word of mouth to promote the product of a company. A third party uses the product and shares their personal experience with the product, whether it is a positive or a negative experience.

This method is very popular these days. Many companies reach Instagram or YouTube influencers to talk about their products on their social media handles.

5) Presentations: The new product or the company is introduced to the public by presentation, lecture, demonstration, speech about the features of the product.

3.11.3 Objectives of Publicity

Publicity provides long-term benefits to the company. Followings are the different objectives of publicity.

1. General Public trust and relied upon publicity more than advertising. Therefore, publicity creates goodwill of the company.

2. It creates news or buzz around the city to grab the attention of people.

3. The consumers usually believe that information provided through publicity is more genuine, reliable, and have more credibility.

4. It accelerates product sales by instantly creating getting public attention.

Advantages of Publicity

1. Publicity is cost-efficient activity as it is almost a free practice.

2. Publicity is easily trusted by customers.

3. Publicity provides detailed information about the brand and products to customers.

4. As information is published in the form of news, it is viewed by a huge audience.

5. It is the fastest mean of promotion, as it also involves a huge number of genuine audiences.

6. The company can become popular over-night by going viral.

7. Publicity helps in building strong public relations.

Disadvantages of Publicity

1. The publicity can either be positive as well as negative because publicity also talks about the negative features of the product. Hence, it can ruin the image of the brand of the company.

2. The sales volume can also decrease drastically because of negative publicity.

3. Loyal customers can lose trust in the company because of bad publicity.

4. There are chances that the company might lose its business partners and associates because of the bad reputation created by bad publicity.

3.12 MARKETING CHANNELS

Distribution channels are also known as marketing channels or marketing distribution channels. Channels of distribution indicate routes or pathways through which goods and services flow, or move from producers to consumers.

Distribution channel is defined as the set of interdependent marketing institutions participating in the marketing activities involved in the movement or the flow of goods or services from the primary producer to the ultimate consumer.

In other words, A distribution channel is the network of individuals and organizations involved in getting a product or service from the producer to the customer.

Distribution channel can be as short as a direct transaction from the vendor to the consumer, or may include several interconnected intermediaries along the way such as the followings -

1. Wholesalers

2. Distributors

3. Agents and

4. Retailers

3.12.1 Functions of Channels of Distributions

1. Receiving Fast and Accurate Feedback of Information:

In order to maintain and provide an efficient distribution system and service, a good and regular, relevant information is necessary. It which includes inventory levels, sales trends, damage reports, service levels, cost monitoring etc.

2. Making the Product Readily Available to the Market Consumers:

To ensuring the product is represented in the right type of outlet or retail store is an important objectives of channels of distribution. Having identified the correct

marketplace for the goods, the company must make certain that the appropriate physical distribution channel is selected to achieve this objective.

3. Achieving a given Level of Service:

Once again, from both the supplier's and the customer's viewpoints, a specified level of service should be established, measured, and maintained. The customer normally sees this as crucial and relative performance in achieving service level requirements is often used to compare suppliers and may be the basis for subsequent buying decisions.

4. Enhancing the Prospect of Sales being Made:

The most appropriate factors for each product or type of retail store will be reflected in the choice of channel. The general aims are to get good positions and displays in the store; and to gain the active support of the retail salesperson, if required. The product should be "visible, accessible, and attractively displayed'.

5. Minimising Logistics and Total Costs:

Costs are very crucially significant as they are reflected in the final price of the product. The selected channel will reflect a certain cost and this cost must be assessed in relation to the type of product offered and the level of service required.

6. Achieving Co-Operation with Regard to any Relevant Distribution Factors:

These factors can either be from the supplier's or the receiver's point of view and include minimum order sizes, unit load types, product handling characteristics, materials handling aids, delivery access (e.g., vehicle size), and delivery time constraints, etc.

3.12.2 Types of Marketing Channels

Marketing channels are classified as follows:

• Direct Channels

• Indirect Channels

• Single Marketing Channels

Multiple Marketing Channels

Vertical Marketing Systems

Direct Channel:

• A direct distribution channel allows consumers to buy and receive goods directly from the manufacturer.

• Direct distribution is a direct-to-consumer approach where the manufacturer controls all aspects of distribution.

• Direct distribution gives companies more control over the whole process.

Indirect Channel:

• An indirect channel moves products from the manufacturer through various intermediaries for delivery to the consumer.

• Indirect distribution involves third parties, like warehouses, wholesalers, and retailers.

• Indirect distribution may allow companies to focus on their core business while outsourcing distribution to an expert

key differences between direct and indirect distribution channels

key differences between direct and indirect distribution channels

Single marketing channel

This is the use of one channel to market a company's products and services. As such the brand's communication is centered on the chosen channel. This could be an online channel, traditional retail, face to face selling or catalogue.

Advantages :

It is cost-efficient as brands only utilize one marketing channel

• It helps build a loyal customer base

• It is simple to operate in terms of tracking inventory, customercustomer service and shipping inventory.

Disadvantages:

It may not be as speedy in response as needed

It is difficult to keep up with technological development while using one channel, hence the marketing efforts do not reach the optimum customer base

The brand loses its prospective customers who use alternative marketing channels

•

Multiple marketing channel

This is the use of more than one channel for brands marketing and communication. This method accommodates where, how and when consumers make purchases, and focuses on ensuring the products or services are available when needed. It hence makes it easy for consumers to shop. The multi-channel marketing strategy also enhances a firms' ability to reach current customers and also reach a wider number of prospective consumers.

Advantages:

• The presence of the brand to its consumers on different channels boosts chances of sales

• Due to the exposure to new markets, it is easy to reach new customers

• A brand can focus on target selling, considering some products sell better on different targeted marketplaces

• The brand reduces the chances of fake products in the market as its products are readily available

Disadvantages:

• It is expensive to operate as many resources are required

• Inventory level complications may arise as a result of many sales. While this should essentially not be a problem to the brand, consumers may shift to another product in instances where a product is sold out

• Managing customer service could be problematic for a brand. Using a good system improves customer service services

Multi-channel marketing needs good organizational skills, discipline, infrastructure and resources. Brands should also ensure consistency with the availability, product details and pricing across the different channels.

Vertical Marketing System

A vertical marketing system is the type of cooperation between the members of a distribution channel. It includes a producer, a wholesaler, and a retailer collaborating to deliver necessary products to their customers and aims at achieving better efficiency and economies of scale.

Types of vertical marketing system

The system can be divided into three main types. Let's review each of them in detail and with examples.

• Corporate. This type involves a single company that has ownership over all stages of the supply chain. Although there's only one business that controls all the production and distribution processes, each organization inside this channel continues to manage the project. One of the examples is Amway. It's an American marketing company that manufactures beauty, home care, and health products. The brand belongs to a corporate vertical marketing system because it sells products only through its authorized stores. Hence, the company plays the role of a producer and distributor of its goods.

• Contractual. In this system, every member of the distribution channel performs as an independent entity. They integrate their pursuits to achieve higher efficiency and obtain value for all companies involved in the process. Firms sign contracts with large distributors to sell their goods and stay competitive. Working with a franchise is an example of a contractual type. To open one of such stores or cafes, individuals purchase a license. However, they have to follow the standards, practices, and guidelines of a franchisor. The famous examples of franchises are Pizza Hut, Dominos, and McDonald's.

• Administered. The activities of companies involved in the production and distribution channel are affected by the size and power of one of them, although there's no contract. Simply put, a large company that has the most influence dominates the activities of others. For example, Procter & Gamble. This consumer goods corporation commands a high level of cooperation.

ADVERTISING

Advertising is a paid marketing activity. In which creative techniques are used to grab the attention of the target audience to deliver the intended message. Advertisement is circulated through various media platforms to make it reach the target audience.

Features of advertising

1) Paid Activity: Advertising requires finances from creating an innovative ad to getting slots on various media platforms to circulate it.

2) One-way communication:Advertisements are one-way communication because in advertisements, companies do the talking part, and they talk about their products and their benefits. They can represent their product in any way they want. There is no way that response or feedback of people can be obtained.

3) Involves Creativity: It is important that an advertisement should be creative; otherwise, it would fail to bring the attention of the desired audience, and the whole idea of advertisement and investment on it will waste. Therefore, an advertisement should be created creatively and innovatively so that it can deliver the message efficiently.

4) Promotional Tools: Promotional tools are used intentionally to make people aware of the existence as well as its uses. It is done purposefully as a part of the promotion mix strategy.

5) Impersonal in nature: Advertising is impersonal in nature. The purpose of advertising is to reach a target audience with the help of standard media such as newspapers, television, radio, magazines, etc.

Types of advertising

1) Print advertising: Print advertising is referred to advertising in written form such as newspapers, magazines, journals, pamphlets, and brochures are considered as the main print advertising medium.

2) Digital advertising: Digital advertising is a modern platform for advertising. Digital advertising has become popular in past few decades and most people now a day prefers to advertise of various digital platforms like Facebook, Instagram, Twitter, Email platforms like Gmail and Yahoo,Yahoo, Google, etc. Digital advertising is the best way to reach a huge audience, irrespective of their geographical location.

3) Product or Brand integration: It is a new method of advertising products. Products are promoted on a television show, or YouTube videos by either the people being used in the show or they praise the product and tell about its features, benefits, etc.

4) Outdoor advertising: In this type of advertising, products are promoted on roadside flags, banners, wraps, and hoardings, etc.

5) Broadcast advertising: Broadcast advertising is usually done on television or radio platform. A video or audio commercials are broadcasted on television and radio repetitively.

Objectives of advertising

The one and only focus of companies are to grab the attention of their target audience through the advertising. In addition to this, followings are the objectives ofobjectives of advertising.

1. Advertising serves the purpose of promoting the product by telling them about the features of the product.

2. Advertising plays an important role to convince customers to buy the product.

3. Advertising creates a positive, strong, and confident image of the brand in front of customers.

Advantages of advertising

1. Advertising assists customers to make the decision to choose from various similar products available in the market. They come to know about the various features of products offered by the company to learn about their various usages.

2. Customers come to know about the good quality of products as usually big established brands can only afford to advertise on expensive platforms.

3. The vast audience can be attracted to buy the new product by using innovative techniques of advertising.

4. Advertising helps in building the image of the brand in the market.

5. It helps product differentiation as it focuses on the features of the products which are different from other similar products.

6. Advertising helps the company to reach a huge target audience irrespective of their geographical location.

7. It boosts the sales volume by encouraging more and more customers to buy the product.

8. Advertising is an effective way to convert potential customers into buyers.

Disadvantages of advertising

1. Advertising is very expensive. It requires a lot of expenses to promote products on different platforms. Hence, small businesses with low budgets find it difficult to promote their products through advertising.

2. Customers get confused from choosing between different similar products.

3. Most of the times, companies mislead their audience by providing them false information about the product.

4. There are no product selection criteria for the quality of the product when it comes to advertising. By spending money, even inferior products presented in such a way that they fool the audience.

5. It does not ensure your customer's retention as its only purpose is to get the attention of customers.

PUBLICITY

Publicity is an unpaid promotion with the help of thirds parties such as media which shows the complete information about the product or brand by creating news or buzz.

Features of Publicity

1) Non-paid activity: Publicity is free of cost promotional activity, where the company pays nothing or a very little amount of money to spread information about the product using the third party such as media.

2) Belongs to Public Relations: Publicity is sub-part of public relations as it involves efforts for maintaining and establishing strong business relationships.

3) Controlled by the third party: The information spread about the product is not in the hand of the company. It is controlled by the third party such as media such as the media house or publishers.

4) Media Oriented: The news in independently created by news media and publishing house.

5) Involves low cost: There is a very low cost involved in making arrangements for publicity events.

Types of Publicity

1) Press Conferences: This is one of the oldest methods of publicity where a person from the company talks about the product of the company in the media, which later is published on the various media platforms.

2) Visits: Sometimes media or press itself visits business outlets to get information about new and innovative products to make their audience aware of it.

3) Press Releases: A short story is created by public relation professional to publish it on the media platforms.

4) Informal discussions: This method involves oral publicity or word of mouth to promote the product of a company. A third party uses the product and shares their personal experience with the product, whether it is a positive or a negative experience.

This method is very popular these days. Many companies reach Instagram or YouTube influencers to talk about their products on their social media handles.

5) Presentations: The new product or the company is introduced to the public by presentation, lecture, demonstration, speech about the features of the product.

Objectives of Publicity

Publicity provides long-term benefits to the company. Followings are the different objectives of publicity.

1. General Public trust and relied upon publicity more than advertising. Therefore, publicity creates goodwill of the company.

2. It creates news or buzz around the city to grab the attention of people.

3. The consumers usually believe that information provided through publicity is more genuine, reliable, and have more credibility.

4. It accelerates product sales by instantly creating getting public attention.

Advantages of Publicity

1. Publicity is cost-efficient activity as it is almost a free practice.

2. Publicity is easily trusted by customers.

3. Publicity provides detailed information about the brand and products to customers.

4. As information is published in the form of news, it is viewed by a huge audience.

5. It is the fastest mean of promotion, as it also involves a huge number of genuine audiences.

6. The company can become popular over-night by going viral.

7. Publicity helps in building strong public relations.

Disadvantages of Publicity

1. The publicity can either be positive as well as negative because publicity also talks about the negative features of the product. Hence, it can ruin the image of the brand of the company.

2. The sales volume can also decrease drastically because of negative publicity.

3. Loyal customers can lose trust in the company because of bad publicity.

4. There are chances that the company might lose its business partners and associates because of the bad reputation created by bad publicity.

5 Ms of Advertising

The five Ms of advertising provide a framework to create an advertising platform. They

are:

• Mission: what are the objectives of the advertising campaign?

• Money: how much budget they required to achieve the objectives?

• Message: what message and message strategy will be followed?

• Media: what type of media vehicle/s will be used to deliver the message?

• Measurement: how should be the results of the advertising campaign or programme will be evaluated?

1) Mission

Advertising Objectives can be classified as to whether their aim is:

• To inform: This aim of Advertising is generally true during the pioneering stage of a product category, where the objective is building a primary demand. This may include

■ Telling the market about a new product

■ Suggesting new uses for a product

■ Informing the market for a price change

■ Informing how the product works

■ Describing available services

■ Correcting false impressions

■ Reducing buyers' fears

■ Building a company image

• To persuade: Most advertisements are made with the aim of persuasion. Such advertisements aim at building a selective brand.

• To remind: Such advertisements are highly effective in the maturity stage of the product. The aim is to keep the consumer thinking about the product.

2) Money

This M deals with deciding on the Advertising Budget. The advertising budget can be

allocated based on:

• Departments or product groups

• The calendar

• Media used

• Specific geographic market areas

There are five specific factors to be considered when setting the Advertising budget.

• Stage in PLC: New products typically receive large advertising budgets to build awareness and to gain consumer trial. Established brands are usually supported with lower advertising budgets as a ratio to sales.

• Market Share and Consumer base: high-market-share brands usually require less advertising expenditure as a percentage of sales to maintain their share. To build share by increasing market size requires larger advertising expenditures. Additionally, on a cost - per - impressions basis, it is less expensive to reach consumers of a widely used brand them to reach consumers of low-share brands.

• Competition and clutter: In a market with a large number of competitors and high advertising spending, a brand must advertise more heavily to be heard above the noise in the market. Even simple clutter from advertisements not directly competitive to the brand creates the need for heavier advertising.

• Advertising frequency: the number of repetitions needed to put across the brand's message to consumers has an important impact on the advertising budget.

• Product substitutability: brands in the commodity class (example cigarettes, beer, soft drinks) require heavy advertising to establish a different image. Advertising is also important when a brand can offer unique physical benefits or features.

3)Message

Message generation can be done in the following ways:

• Inductive: By talking to consumers, dealers, experts and competitors. Consumers are a major source of good ideas. Their feeling about the product, its strengths, and weaknesses gives enough information that could aid the Message generation process.

• Deductive: John C. Maloney proposed a framework for generating Advertising Messages. According to him, a buyer expects four types of rewards from a product: o Rational

o Sensory o Social

o Ego Satisfaction.

Buyers might visualize these rewards from:

• Results-of-use Experience

• Product-in-use Experience

• Incidental-to-use Experience

The Matrix formed by the intersection of these four types of rewards and the three types of experiences is given below.

​

The next 'M' to be considered while making an Advertisement Program is the Media through which the advertising message is communicated for the prospects.

Following are the steps which generally considered at the time of deciding and choosing the advertising media or the media vehicle to transfer the advertising message.

• Step V: Deciding on the geographical allocation of the media vehicle

• Step IV: Deciding on the timing of the media vehicle.

• Step III: Selecting specific media vehicle within consideration of all supporting factors.

• Step II: Choosing measure media vehicles among available media

• Step I: Deciding on the reach, frequency and impact of the media

4)Measurement

The evaluation of the effectiveness of the advertising campaign or advertising programme is very important as it always helps in preventing the further wastage of money and help in making necessary correction that are significant and vital for the further advertising programme.

Researching the effectiveness of the advertisement is the most used method of evaluating the effectiveness of the Advertisement Program. Research can be in the form of:

• Communication-Effect Research

• Sales-Effect Research

There are two ways of measuring advertising effectives. They are:

Pre-testing: It is the assessment of an advertisement for its effectiveness before it is actually used. It is done through,

a) Concept testing: how well the concept of the advertisement is. This is being done by taking an expert opinion on the concept of the ad.

b) Test commercials: test trial of the advertisement to the sample of people

Media

c)Finished testing

Post-testing: It is the assessment of an advertisement's effectiveness after it has been used. It is done in two ways:

a) Unaided recall: a research technique that asks how much of an ad a person remembers during a specific period of time

b) Aided recall: a research technique that uses clues to prompt answers from people about ads they might have seen.