Amity Center for elearning

F-2,Block, Amity Campus

Sec-125, Nodia (UP)

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PROGRAM:

SEMESTER-ISubject Name : Fundamentals of Marketing Management

Study COUNTRY : Sudan LC

Permanent Enrollment Number (PEN) : MFC001652014-2016014

Roll Number : AMF106 (T)

Student Name : SOMAIA TAMBAL YOUSIF ELMALIK

INSTRUCTIONS

a) Students are required to submit all three assignment sets.ASSIGNMENTDETAILSMARKS

Assignment AFive Subjective Questions10

Assignment BThree Subjective Questions + Case Study10

Assignment C45 Objective Questions10

b) Total weightage given to these assignments is 30%. OR 30 Marksc) All assignments are to be completed as typed in word/pdf.d) All questions are required to be attempted.e) All the three assignments are to be completed by due dates (specified from time to time) and need to be submitted for evaluation by Amity University.f) The evaluated assignment marks will be made available within six weeks. Thereafter, these will be destroyed at the end of each semester.

g) The students have to attach a scan signature in the form.Signature:

Date

:_______30 January 2015________________________

( ) Tick mark in front of the assignments submittedAssignment AAssignment BAssignment C

Fundamentals of Marketing Management ASSIGNMENT A

1. The length of the product life cycle is governed by the rate of technological change, the rate of market acceptance and the case of competitive entry Discuss.The Life cycle of a product has many points of similarity with the human Life cycle. The product is born, grown bustly, attains dynamic maturity, and then enters in declining years. Arch Patton

PRODUCT LIFE CYCLE: Product Life Cycle model is a useful technique for appraisal of product performance in terms of its sales-cost-profit. The concept of PLC was popularized by Prof. Theodore Levitt. This model attempts to analyze cyclical changes in sales and profits throughout sales history of a product. It is a product aging process. PLC means four phases of life cycle of a product. Just as an individual has infancy, youth, adulthood, and old age; a product in normal course, has four stages of life history viz. introduction, growth, maturity and decline.MEANING OF PLC: The product life-cycle is a conceptual representation. The concept of product life cycle highlights that sooner or later all products die and that if management wishes to sustain its revenues, it must replace the declining products with the new ones. Product life cycle indicates that products move through the cycle of (i) introduction (ii) Growth (iii) Maturity (iv) Decline. Sales and profit rise till the growth stage. However in maturity stage sales rise but profits fall. The product Life cycle model is one of the most encountered concepts in marketing management. Prof. Levitt popularized the concept and Prof. C.R. wassen, B. Carty, M. Chevalier, D.J. Luck, D.T. Kollat, J. F. Robson-furthered the original concept.FEATURES OF PRODUCT LIFE CYCLE: The important features of product life cycle are as under:-(1) Product life cycle is compared with human life cycle. It has four stages: introduction, growth, maturity, decline as human life cycle has: childhood, adolescence, youth and old age.

(2) Product move through the cycle. It starts with introduction and ends with decline.

(3) Sales volume and units profits rise correspondingly till the growth stage. In maturity stage, sales rise but profits fall.

(4) It is not necessary that all products in the market follow through four stages. It is possible that a product might cross only the first stage.

(5) There is no definite line of demarcation between one and the subsequent stage.

(6) The length of each stage varies from product to product depending on the nature of product, competition, changes in technology etc.

(7) A marketer adopts different marketing strategies in different stages. For example more advertising is done in introduction stage and Product modification is done in maturity stage.

(8) The marketing mix also changes form stage to stage.STAGES OF PRODUCT LIFE CYCLE:1. Introduction stage :

The first stage of a product life-cycle is the introduction stage. Under this stage prices are relatively high and competition is very less. The sale grows at lower rate because consumers are unaware about the product. Heavy promotional expenditures are made by marketer. Following are the main characteristics of this stage:

1. The price of products is high because of low production and technological problem.

2. The sales grow at lower rate because consumers are unaware and production capacity of the firm is low.

3. There are heavy promotional expenses there are more chances of product failure in introduction stage.

4. Profits are low due to fewer sales, high distribution cost.

5. High cost of production, promotion and distribution.

6. Existing consumers may be hesitant to try new product.

7. A marketer introduces limited products that are narrow product line in introduction stage.

8. Market is not aware of the availability of new product.

9. Initial low demand keeps production below break-even point.

10. Difficulties and delays in adjusting production schedules.Marketing Strategies: A marketer should adopt the following strategies:1. More advertising and publicity of the product.

2. Introductory offers should be given with attractive gifts.

3. More importance should be given to quality of a product.

4. Skimming the cream policy in high-tech products or market penetration policy in customer goods like soap etc. may be adopted.

5. Selective distribution policy and various attractive schemes should be offered to dealers.

6. More suggestions should be invited from consumers so that product deficiencies could be ironed out.

7. Product must be provided for trail basis.

8. Potential and present consumers must be informed.

Growth stage: This is the second stage of product life cycle. As the product grows in popularity, it moves into the second stage i.e. growth stage. In this stage competitors enter the market and the company may have to resort to product improvement and innovation. It may enter new market segment and try new distribution channels. The prices may remain static or fall slightly for meeting competition. Advertising is geared to create brand image. The following are the main features of this stage:1. The sale grows at faster rate because of streamlined production facilities. The sales are increased at an increasing rate.

2. The advertising expenditures are high as it moves towards brand identification.

3. Profits rise sharply because of high sale and prices. Consumers are aware about the product.

4. There is greater incentive for the new companies to enter the market. Competitors have the advantage of entering the market because research and development have already been completed.

5. Wide distribution network is adopted by a marketer because there is a demand from the every corner of market.

6. Product modifications, improvements are made because every marketer wants to win competition and reduce price.

7. Price of product is stable or slightly reduced due to large scale economies, product modification and competition.

Marketing Strategies: The following strategies are adopted by a marketer:1. New varieties of product are introduced to satisfy the different consumers.

2. More importance to product quality.

3. Special offers, concessions, allowances to dealers are given.

4. More efforts to create brand image and brand loyalty.

5. Improvement in product.

6. More retail outlets are built to satisfy the need of consumer.

7. Reduce the price to attract more consumers.

8. Expanded product line.

9. Heavy advertising expenses to stimulate sales.

10. Customer satisfaction is the main motto of marketer.Maturity stage: This is the third stage of product life cycle. As the competition becomes keen and market gets saturated with product brands, the maturity stage sets in. in this phase of PLC, the sales increase at a decreasing rate. The firm has to combat competition by cutting prices, increasing promotional efforts and modifying products, markets and marketing mix. Consequently profit will fall. Product differentiation, identification of new segments and product improvement are emphasized during this stage. The important features of this stage are as under:-1. The sales grow at falling rates because there is little growth in the market.

2. Prices tend to fall and selling efforts becomes aggressive.

3. Profits are squeezed because customer is attracted towards substitutes and competitive products.

4. Promotional Exps. Are made in normal ratio to sales. Advertising Exps. Are made to differentiate manufacturers product form others.

5. Weak competitors leave the market because large and strong competitors adopt various strategies to be remained in the market.

6. Prices charged by the producers are quite lower and uniform. The strength and vitality of higher prices fade.

7. Profit margins are decrease because sales are also decreased.Marketing Strategies:The following marketing strategies are adopted under maturity stage:1. Develop new market: The Company may search for new market segment or consumers. For instance, Sunsilk shampoo was made available in small packets for a price of Rs. 2 only so that low income group consumers may be attracted.

2. Emphasis on new uses of the same product: For example, nylon originally used for making parachute and ropes was later developed as a fabric and now used in tires.

3. Increase in frequency or volume of product use: This may be done by offering quantity discounts, premiums, trade deals, discount coupons, contests and other sales promotional tools.

4. Quality improvement: R & D efforts are made to increase product performance, durability, reliability, speed etc. new models of colour television sets are brought up with multichannel. Crown TV has come up with TV model with built-in satellite receiver.

5. Product feature modification: The features of the product may be altered to increase its safety, convenience and usefulness. For example, the design of cars or scooters is modified often. Dry cell torch is filled with automatic chargers. Kinetic Honda has auto starter. Khaitan fan claims to have double ball bearings.

6. Product-style innovation: Product may be presented in new colour flavours, ingredients and packages. Rasna was made in varied flavors. Refrigerators are brought out in different attractive colors. Surf was sold in reusable containers. Modification in style makes the product more attractive.

7. Price slashing: If market is price-sensitive, a reduction in price may help to improve sales-tempo. Publishers bring out cheaper paperback editions to push up sales. Festival or Off-season low pricing is resorted to by retail organizations or dealers for augmenting sales.

8. Customer service: The firm offers special customer services like consumer finance, credit facilities, delivery and transportation, prior and after sales services, maintenance, and warranty to consumers. To boost sales, Kelvinator offered 7 year warranty and gained in volumes of sales.

Decline stage:In this final stage of PLC sales will drop down heavily and product or brand will go out of market. The price will fall, profits will decline. Eventually the product line incurs loss. Decline may occur due to technological changes, shifts in consumers tastes, introduction of new sophisticated products, sever competition etc. Weak products affect company reputation in market which may harm other products also. It may create imbalanced product-mix. The important features of this stage are as under:1. There is rapid fall in sales because new products are available in market. People are interested in buying new things.

2. There is fall in prices because of reduced sales. Every manufacturer wants to clear the stock at the earliest.

3. No promotional expenses are made because consumers are not interested in buying the product and they are aware of other better products.

4. Distribution network is reduced to the minimum with thorough rationalization. This is an advantage as product is known for good many years.

Marketing Strategies:

The following marketing strategies adopted under decline stage.

1. A marketer may think of keeping the weak product, if there is possibility of repositioning.

2. Marketer may reduce expenditure on promotion, advertising, R & D of weak products.

3. No extra expenditure of efforts is made to revitalize a declining product.

4. Weak product may be discontinued and spare capacity of the firm may be used for some other profitable product.

5. No additional feature may be added to the product.

6. Economy packs may be introduced to revive the market.

7. Moreover re-usable packages may be introduced. Attractive packaging should be made.

8. Change in marketing mix and marketing program.

9. Reduce the price to attach consumers. Different schemes should be offered.

10. Credit facility, easy installment facility may be offered.

COMPARATIVE STUDY OF STAGES IN PLC:Comparative study of stages in PLC:Reference PointIntroductionGrowthMaturityDecline

1. Sales Low but risingFast risingSlow downFall

2. ProfitsNil/ Negative MaximumFallingLow

3. Cash flowsNegativeModerateHighLow

4. Consumer attitude Hesitant/trying resistingFavorableLoyalNot favorable

5. CompetitionLowGrowingSevereReducing

6. PriceHighLowMinimumMinimum

7. ProductBasicImprovedDifferentiatedUnchanged

8. Marketing strategyExpansionPenetrationDefensiveProductivity oriented

9. AdvertisingAwarenessBrand preferenceBrand LoyaltyClearance

10. Distribution NetworkPatchyIntensiveIntensiveselective

PRODUCT LIFE CYCLE EXCEPTIONAL CASES:According to Philip Kotler a product has a life cycle is to assert four things :

1. Products have limited life.

2. Products sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller.

3. Profits rise and fall at different stages of the product life cycle.

4. Products require different marketing, financial, manufacturing, purchasing and human resource strategies in each stage of their life cycle.

Most product life cycle curves are portrayed as bell shaped as drawn above. Not all products exhibit a bell-shaped PLC.

PRODUCT DIFFERENTIATION:Product differentiation is a positioning that some firms rise to distinguish their products from those of competitors. Distinction can be either real or perceived~ the main product differentiators are features, performance, style, conformance, durability, reliability, reparability design, etc.

1.Features: Most products can be offered with verifying features. Features are characteristics that supplement the product's basic function. The company can create extra/ additional versions by adding extra features, e.g. Maruti 800 is having three different versions with different/extra features.

2.Performance Quality: Performance quality refers to the level at which the products primary characteristics operate. Performance level maybe: low average, high superior. The manufacturer must design a performance level appropriate to the target market and competitors performance levels.

3.Conformance Quality: It is degree to which all the produced units are identical and, meet the promised target specification. One of the major reasons for the high quality, reputation enjoyed by Japanese manufacturers is that their products have high conformance quality.

Stages in New Product Development Process:

Guided by a company's new-product strategy, a new product best development through a series of eight stages:

1.New Product Strategy2.Idea Generation

3.Screening

4.Concept development testing

5.Business Analysis

6.New .Product. Development

7.Testing

8.Commercialization

1.New Product Strategy:

A new product strategy links the new product development process with the objectives of the marketing department and the business unit and the corporation. A new product strategy must be compatible with these objectives, and. in turn; all three objectives must be consistent with one another. New product strategy is a subset or part of the organizations overran marketing strategy. This strategy provides general guidelines because it specifies the roles the new product must play and also describes the characteristics of products the organization wants to offers and the markets it wants to sense.2.Idea Generation:

New product ideas come from many sources. The most important are:

(a) Customers: The market concepts suggest the customer wants& needs are the logical place to start the search for new-product idea through Surveys, projective tests, focused groups discussion, suggestion & complaints letters from customers.

(b) Employees: Marketing personnel - advertising and marketing research employees as well as sales people- often create, new ideas because they analyze and are involve In the market place; Firms should encourage their employees to submit new product ideas and reward them if their ideas are adopted.

(c) Distributors:-A well-trained sales force routinely asks distributors about needs that are not being met because they are closer to end Users. Distributors are often more aware of customer needs than manufacturers are.

(d) Competitors: - Company can also find good ideas by examining their competitors, products and services. They can find out what customers like and dislike in their competitors new product. They can buy their competitor's products, take them apart and build better ones.

(e) R&D:-It is carried out in distinct ways as basic research - aimed at discovering new technologies, applied research- finding useful applications of new technology; product development converting applications into marketable products; product modification-making functional changes in existing products.

(f) Consultants: - To examine a business and recommend product ideas, consultants are available. They determine whether a company has a balanced portfolio of products and if not, what new product ideas are needed to offset the imbalance.

TECHNIQUES FOR GENERATING NEW PRODUCT IDEAS:Creativity is the well spring of product ideas. A variety of approaches and techniques have been developed to stimulate creative thinking.

(1)Brain Storming - the technique for generating; new-products ideas in which group members propose without criticism, ways to vary a product or solve a problem. The sheer quantity of ideas is what matters.

(2) Focus groups - The objective of focus group interviews is to assess group interaction when members are exposed to an idea or a concept. Sometimes focus exposed to an idea or a concept. Sometimes focus groups generate excellent new product ideas.

(3) Idea Screening - It is the stage in the product development process that eliminates ideas inconsistent; with the organizations new product strategy, or obviously inappropriate for some other reasons. Most new product ideas are rejected at the screening stage. In screening ideas company must avoid two types of errors - A Drop-error, occurs when the company dismisses an otherwise good ideas, A Go-error occurs when the company permits a poor idea to move into development and Commercialization stages.

(4)Concept Development and Testing - Attractive ideas must be refined into testable product concepts, we can distinguish among.

Product Idea- a possible product that a company might offer to a market product concept an elaborated version of the idea expressed in meaningful consumer terms

Product image- the particular picture that consumer acquire of an actual/potential product. Actually consumers do not purchase ideas but buy product concepts. Any product ideas can be turned into several product concepts

Idea-adding ingredients to a product, say milk to increasing us nutritional value of taste.

Concept:-

1.An instant breakfast drink for adults

2.A tasty snack drinks for children.

3.A healthy supplement for older people.

Concept Testing - concept testing calls for testing products concepts with an appropriate group of target consumer, then were getting those consumers reactions. A word and / or picture description can suffice. It is considered fairly good predictor to early trail and repeat purchases for the line extension. There have also been relatively precise predictors of success of new product.

(5)Business Analysis: After management develops the product concept it can evaluate the proposal business attractiveness, where preliminary demand, cost, sales and profitability estimates are made. For the first time, costs and revenues are estimates and compared. The newness of the product, the size of market, and the nature of the competition all affect the accuracy of revenue projection. Forecasting market share for a new entry is a bigger challenge. Analyzing overall economic trends and their impact on estimated sales are especially important" in product categories that are sensitive to business cycle fluctuation. Commonly asked questions in this connection are:

What is the likely demand for the product?

Would current customers benefit from the product?

Would it enhance the image of our overall products?

How might competitors respond? .

6.New Product Development

If the result of the business analysis are favorable than the prototype (or trial model) of the product is developed. The technical feasibility of manufacturing the product at an acceptable cost is thoroughly examined. This stage can last a long time and thus be every expensive.

Laboratory and use tests are often conducted on prototype models. Labs: Tests subject production to much serve treatment then is expected by end users. User safety is an important aspect of lab testing. Use tests including human & pet food products, household cleaning products, etc.

7.Testing

After products and marketing programs have been development. They are usually tested in the market place. Test-marketing is the limited introduction of a product and marketing program to determine line the reactions of potential customers in a market situation. Test marketing allows management to evaluate alternative strategies and to assess how well the various aspects of the marketing mix fit together. Cities chosen as test sites should reflect market conditions in me new

Products projected market area. Researcher should find locations where the demographics and purchasing habits mirror the overall market. But test marketing is relatively too expensive. . .

Stimulated Marketing Test:

Alternatives to test markets and it is even cheaper also Simulated market test is presentation of advertising and other promotional materials for several products, including a test product, to members of the product's target market. These people are then taken to shop at a mock or real store where their purchases are recorded. Shopper behavior - including repeat purchasing, is monitored to assess the products likely ... performance under the market, conditions.

9. Commercialization The final stage in the new product development process it commercialization. In this stage full scale product and marketing programs are planned and, finally, implemented. Up to this point in development, management has virtually complete control over the product. Once the product is born and enters its life cycle; however the external competitive environment becomes a major determinant of its destiny. 2. The marketing concept is a customer orientation backed by integrated marketing aimed at generating customer satisfaction as the key to satisfying organizational goals. Comment.STANDARD DEFINITIONS: According to Prof. Philip Kotler, Marketing concept is a customer orientation backed by integrated marketing aimed at generating customer satisfaction, as the key to satisfying organizational goals.THE MARKETING CONCEPT: A correct understanding of marketing concept is fundamental to the study of modern marketing and marketing management. In any walk of life, thinking precedes doing; the way of thinking that determines the very course of action. A concept is a philosophy, an attitude a course of thinking, an idea or a notion relating to any aspect of divine and human creations.1. Production Orientation Concept: Till 1930, therePrevailed a strong feeling that whenever a firm has a good product, it results in automatic consumer response and that needed little or no promotional efforts. That is, if the product is really good and the price is reasonable, there is no need for special marketing efforts. The assumptions of this concept are.

(i) Anything that can be produced can is sold.(ii) The most important task of management is to keep the cost of production town.

(iii) A firm should produce only certain basic products. This concept can be illustrated as under: - Under this concept, production is the starting point. The product acceptability occurs after the product is produced.

2. Sales Orientation Philosophy: The failures of the

Production orientation philosophy of 1930s paved the way for change in the outlook that was possible during 1940s. This reshaped philosophy was sales orientation that holds good to a certain extent even today. It states that mere making available the best product is not enough; it is futile unless the firm resorts to aggressive salesmanship. Effective sales-promotion, advertising and public-relations are of top importance. High pressure salesmanship and heavy doses of advertising are a must to move the products of the firm. The essence of sales-orientation philosophy is Goods are not bought but sold. The maker of product must say that his product is best and he fails if he keeps mum. The assumptions of this philosophy are.

(i) Producing the best possible product. (ii) Finding the buyer for the product. (iii) The managements main task is to convince the buyer through high pressure tactics, if necessary. It can be illustrated as under: The philosophy has been prevailing since 1940. It is more prevalent in selling all kinds of insurance policies, consumer non-durables and consumer durable products, particularly the status symbols.

3. Customer orientation Philosophy: This philosophy

was brought into play during 1950s and points out the fundamental task of business undertaking is to study and understand the needs, wants, desires and values of potential consumers and produce the goods in the light of customer rather than the product. The enterprise is to commence with the consumer and end with requisite product. It emphasizes the role of marketing research well before the product is made available in the market place. The assumptions are: 1. The firm should produce only that first product as desired by the consumer. 2. The management is to integrate all its activities in order to develop programs to satisfy the consumer wants. 3. The Management is to be guided by long range profit goals rather than quick sales. It can be illustrated as under:-

This means a radical change in the philosophy. The meanest two basics changes namely:

(i) Move from production to market orientation. (ii) Gradual shift from age old Caveat emptor to Caveat vendor. Since 1950, this philosophy is in vogue and will continue so long as consumer is the kind of the market.

4. Social Orientation Philosophy: There has been a

Further refinement in the marketing concept particularly during 1970s and 1980s. Accordingly the new concept goes beyond understanding the consumer needs and matching the products accordingly. This philosophy cares for not only consumer satisfaction but for consumer welfare or social welfare. Such social welfare speaks of pollution-free environment and quality of human life. Thus, a firm manufacturing a pack of cigarettes for consumer must not only produce the best cigarettes but pollution free cigarettes ; an automobile not only fuel efficient but less pollutant one. In the other words; the firm to discharge its social responsibilities. Thus, social welfare becomes the added dimensions. The assumptions of social orientation philosophy are:(i) The firm is to produce only those products as are wanted by consumers.

(ii) The firm is to be guided by long-term profile goals rather than quick sales. (iii) The firm should discharge its social responsibilities. (iv) The management is to integrate the firms resource and activities do develop

Program to meet these individual consumer and social needs. The concept can be illustrated as under. This social oriented philosophy is the latest and is considered as an integrated concept. This philosophy, as it covers earlier long standing concepts, is bounded to rule the marketing world for pretty long time. However, we are to wait and see as to what changes are likely in the coming years and decades that will shape the new marketing concept.MARKETING MIX: Marketing mix is the blend or compound of all the marketing efforts going round the four ingredients namely, product, price, place and promotion. These ingredients are interrelated and all revolve round potential consumer satisfaction as the focal point. It is the complex of mixes relating to inputs and resources utilized in marketing programs to attain the business objectives such as profit return on capital employed Market share and so on.

According to N.H.Border," Marketing mix covers two things, first a list of important elements that make up this marketing programs and list of forces having bearing on market operations."

THE ELEMENTS OF MARKETING MIX: Marketing mix is made up THE PRODUCT MIX: Product is the sum total of physical and psychological satisfaction it provides to the buyer. A product is sum total of its parts like materials used in its construction and its ability to perform, its packaging, its brand and intangibles associated with it- all speaks about its personality or image. The product mix is the composite of products offered for sale by firm, over period of time. It includes various variables as:-1. Product line and Product range: Product line is a group of closely related products which are able to satisfy a class of needs, to be used together, to be sold at the same consumer groups, to be modified through the same distribution channels or fall within given price range. It speaks of the width of the product. Product range, on the other hand, speaks of the depth of specialization in terms of verities based on consumer pockets and functional requirements.

2 .Product Design: The marketing decision starts with designing the product in such a way which is required by the target consumers. Product design is an important factor in the sale of many products. In this the manufacturer decides about the form, the color and the line of all the products being planned.

3. Product package: Package is the container or wrapper used to house the product. Packaging is the general group of activities in designing the container or wrapper of the product. A good package protects the product, provides convenience to the consumer, increases economy and communicates. Attractive packages have a communication value.

4. Product Quality: Establishment and control of quality standard is a basic step in merchandising. Generally, specific grades or standards of quality are established for the products either by the agreement among producer and by law. Product quality depends on proper design, engineering, and choice of materials, manufacturing processes and packaging.

5. Product Labeling: A product label may be either descriptive, informative, grade designating or a combination of these. Labels are fixed to products to identify them and to describe their ingredients, quantity, quality and other characteristics. In very country, labeling is mandatory in case of food, drug and cosmetics products so that manufacturer is to give details of his name, place and date of manufacturing, expiry date, and composition and so on.

6. Product Branding: A brand is a symbol, a mark, a name, a communication which brings identity of a given product. A brand is a particular image, a quality, a value and personality. A good brand name is one which is easy to remember, pronounce, and describe the product.

7. After Sale Services: With the increase in the use of machinery, appliances and equipments, there is need for after sale services. After sale services as the name suggests, are the services provided by the producer after sale of the product in order to provide maximum satisfaction to the consumers.THE PRICE MIX: Price is the value of product expressed in terms of money. It is the price of the product that ensures a decent return on investment, guarantees stable economic structure, creates, maintains and extends market and market share. The various price mix variables are:-1. The pricing policies and strategies:- These are the guidelines and the frames within which management administers prices so as to match them to the market needs. These policies can be broadly identified as policies involving price variations, leadership variations, and psyche of the consumer.

2. The Terms of Credit:- Without the ability of offer some form of deferred payment or installment buying, many of the producers sold by the business houses would never actives the size of the market needed to get production economies of scale. Credit, by expanding the market, can make new firms of production economical worthwhile. The modern business is built upon the credit.

3. Terms of delivery:- Delivery of goods to the dealers, middlemen and customer is of vital importance. Clear cut policies are to be spelled out regarding the terms of delivery as to the quantity, time and place of delivery and the conditions of valid delivery.

4. Margin: It is the difference between final price paid by the consumer and the cost incurred in making the product available to the consumers. This includes margin of wholesaler, retailer and producer. It has been observed that articles particularly, consumers durables and non-durables need lower margin because of low consumption. On the other hand, the industrial products requiring after sale services and maintenance will need high margin.

5. Resale Price Maintenance: It is the practice whereby the manufacturers or distributors or importers recommended the price or profit margin at which product will be sold. It is a policy of establishing a minimum resale price below which a wholesaler or retailer may not sell the products of the manufacturer.

THE PROMOTION MIX: Promotion mix is the communication mix which deals with the personal and impersonal persuasive communication about the product or service of the manufacturer. Though companies communicate with their present and potential customer in a variety of ways, the two most common categories namely, personal and impersonal. It includes:1. Personal Selling: Personal selling is face to face conversation between potential customer and the companys salesman so as to convince the person to buy the product or service being dealt by him.

2. Advertising: Advertising is non-personal presentation of ideas, goods and services by an identified sponsor. It aims at providing information to various potential customers in order to convince them to purchase the product of their company. Various Medias are used to convey the information such as TV, radio, film etc.

3. Sales Promotion: It implies special offers. It deals with offering of short term incentives such as coupons, premium, and contest for consumers, buying allowance etc. sales promotion is the achievement of short term marketing objectives by schematic means.

4. Public Relations: Public relations involve the installation and maintenance of mutual understanding between a firm and all who are likely to come in contact with it. These sections of society are customers, shareholders, administrative staff and general public. It attempts to increase the image and personality of the organization.

THE PLACE MIX: It stands for matching arrangement for smooth flow of goods and services from producer to consumer. It is concerned with the creation of time, place and possession utilities. It contains:-1. Transportation: Transportation is the process of making the goods and services available to the consumer. It aims at providing the goods to the consumers at right time and right place. It aims at selection of the most efficient, economical, dependable and rapid mode of transport for the firms product.

2. Warehousing: It creates time utility by adjusting supply and demand, preserving or conditioning the product and obtaining more favorable demand and market price. It aims at storing goods up to the time actual demand arises so that goods can be made available to the consumers in time.

3. Inventory Levels: It involves determining the volume of merchandising the manufacturer experts to sell in a given period of time. Sufficient inventory must be in hand of different sizes, color, models and varieties to make the goods available to the ultimate consumers within time.

4. Channels of Distribution: It is related to the determination of the number of middlemen to be used and legal implications involved in their relationship. It denotes various intermediaries between producer and consumer. It includes wholesalers, agent, retailer etc.

So, above is combination of various marketing elements used for the promotion of the companys product and service.

E.Role of marketing in the Economic Development:

1. Importance of marketing in the Economic Development: Philip Kotler has summarized the importance of marketing in the economic development in four stages:

i. Pre-industrial stage: In this stage most of the people are

Engaged in hunting, herding, farming and handicrafts. Most of the human efforts are devoted to meeting the basic needs for good, clothing and shelter.

ii. Early industrial stage: During this stage producers attempt to

Increase their productivity by increasing the amount of physical capital available and by improving work processes through product standardization. Importance of marketing increases because marketing includes branding storage, transportation, standardization and grading etc.

iii. Industrial stage: During this stage producers have achieved

a high level of output. The main problem in this stage is to generate sufficient demand, employment and income. The role of marketing increase during this stage of economic development. Some new marketing function such as: product planning, product design, product packaging, promotion, customer service, sales analysis and marketing research, etch has been given much importance.

iv. Post-industrial stage: in this economic development, the living

Pattern of the society took a rapid change. With the increase in per-capita income the purchasing power of general public increases. Now people are less interested in quality of their goods and more interested in the quality of their lives. Marketing in this stage not only concerned with consumer satisfaction, but also concerned with consumer welfare.

2. Importance of marketing in Developed Economy: - In developed economics the volume of production in generally more than the demand. It is because of latest technology and developed infrastructure of production. Many developed of the world like USA, Japan, France, Australia, England, Germany, etc. are developed because marketing in developed form there.

3. Importance of Marketing in Underdeveloped Economy: Marketing has a special significance in underdeveloped economies. A rapid development of the economy is possible only by adopting the modern methods of marketing. Infect, marketing in underdeveloped economics is still line its infancy. Industrialization and organization go hand in hand with application of modern refinements in the field of marketing. Marketing is the most important multiplier and an effective engine of development. It mobilizes latest economic energy and thus, is the creator of business activities.

4. Importance of marketing in a developing country: The importance of marketing in developing countries has been well indicated by Prof. Peter. F. Drucker, according to him marketing plays a critical role in respect of development of developing countries, in the following manners:-

(i) Development of marketing leads to the integration of various

Economic sectors of the nations such as agriculture and industry.

(ii) It makes possible the fullest utilization of existing assets and production capacities.

(iii) It mobilizes unknown and untapped economic energy.

(iv) It contributes to the development of entrepreneur and managerial class of people.Implementing the marketing concept: Marketing concept means satisfaction of consumer. The consumers would buy only those products which satisfied their needs and wants. Thus, analysis of consumers becomes essential to deliver the desired customer satisfaction. The principal task of marketing management is to fulfill the aspirations of the consumers. It is thus imperative to understand what the consumers want; how they make the various choice decisions; or what are their sources of information and influence process etc. As such, marketing research is the function which provides the necessary information about the consumer to the marketer. In the process, an organization can identify new opportunities in the market; evaluate and monitor marketing actions; and in general, evolve better marketing pregame to serve the interests of the consumer. Thus marketing research acts as the link between the consumer and the marketer.MARKETING RESEARCH - MEANING AND IMPORTANCE Operationally speaking, marketing research is defined as the objective and formal process of collecting information; analyzing the results and communicating the findings and their implications in terms of marketing actions. However, some further comments about this definition are essential. Marketing research is a systematic collection and analysis of information that is ultimately used in evolving some marketing decisions. All stages of a research study must be carried out in a logical manner. For instance, one should, start with a concise statement of the issues to be investigated; indicate the information required to study those select problems; define the methods to be adopted to collect those data; specify the relevant technique to be employed for analyzing the data; and finally state the research findings and their specific implications for marketing decisions making.

Note that this definition indicates that marketing research should be conducted for specific issues. Secondly, it must ensure objectivity in every step. Finally, study findings must help the manager in the decision making. In other words, marketing research must not be mere collection of statistical information; one must justify the choice of methodology of data collection and analysis. And, the researcher must not be too much pre-occupied with techniques, but instead convey the meaning of the results in the marketing language even when some advanced or sophisticated tool is being used. Likewise, marketing manager(s) should also provide a clear, detailed scenario of the problems faced by the company before the marketing researchers (s). They must allow adequate time and budget for conducting the study. They must not use marketing research as a fire fighting device or to justify some preconceived action(s).

Marketing research is the function that likes the consumer with the organization through information. It involves systematic and objective search for and analysis of information that can be used for evolving some marketing decisions. Any research study must clearly state the issues being investigated. It must apply systematic and formal procedure in collection and analysis of information. It must communicate the study findings in a manner which could help in arriving at some marketing decisions.

A research study 'will fail to serve its purpose if marketing researcher merely collates some statistical facts or is pre-occupied with techniques or uses data of questionable validity or communicates the findings in too much vague or technical language. Likewise, a research study will suffer if the marketing manager does not offer full perspective of the research problem; or allows inadequate time; or uses research as a fire-fighting device or does not really appreciate the value of research. Problem must be clearly defined and reasons for undertaking the research from the point of view of marketing decision making should be explicitly justified. In order to carry out effective research program:

SCOPE OF THE MARKETING RESEARCH FUNCTION: Another way of looking at the function of marketing research is to look at the particular decision area where research results are used.

1) Sales Analysis: Much research is done in the following areas which are broadly referred as sales analysis, measurement of market potential/demand projection, determination of market characteristics, market share estimation, studies of business trends. In fact, some of the more detailed studies to be carried out under the broad ambit of sales analysis could be as follows, The types of consumers that constitute the potential market The size and location of the market; The growth and. concentration of the market over certain period of time, The competitive picture for the product; The major strategies of leading competitors with respect to price, offerings distribution etc. The purchase habits of key market segments; what is the pattern of pre-purchase deliberations made by the consumers'? Who are involved in the decision making? What are the roles of different members in the decision making? How does the product fit into the consumer's life styles? (Operation if it is an industrial product); Do consumers prefer to buy some particular brands'? (I.e. assess the degree of brand loyalty). The above list is not exhaustive. Here research is basically done with a view to know consumers' motivation, attitude, cognition and perceptions etc. Thus information well be collected in a manner so that they have some implications for various marketing decisions.

II) Sales Methods and Policies: Marketing research studies are also conducted with a view to evaluate the effectiveness of present distribution system. Such studies are used in establishing or revising sales territories.. They are also helpful in establishment of sales quotas, design of territory boundary, compensation to sales force, physical distribution and distribution cost analysis etc. Marketing research is also done to assess the effectiveness of different promotional activities such as premiums, deals, coupons, sampling etc.

III) Product Management: Every marketer tries to formally or informally utilize information to manage the existing and new products. It examines market feedback about competitive product offerings. Also, some companies make use of marketing research to form market segments through choice of alternative bases. Companies also carry out different research studies to assess consumer feedback to new products and their likely potential. Of late, in India many consumer products have been launched after making rigorous amount of research. Moreover, researches have enabled to diagnose how consumers perceive various brands of a product. Such studies have enabled the companies to position their brands.

Marketing research studies have been conducted to monitor the performance of the test brand (in terms of trial and repeat purchase) launched in select shops in the market. Studies are popularly known as simulated test marketing (STM) models. Pricing studies, packaging research, design or physical characteristics, have also been sometimes conducted.

IV) Advertising Research: Media research: Three National Readership Surveys (NRS) have so far been conducted in India. These studies have basically estimated the readership of leading newspapers. The last NRS has also assessed qualitatively, readers feedback on the editorial content. Moreover, some marketing research have evaluated the relative effectiveness of different media in specific product fields, and in context of achieving specific tasks such as creating brand awareness or a particular product benefit.

Copy research: Advertising agencies have been regularly engaged in this activity where they test out alternative copy designs by obtaining the feedback from to consumers. Studies of advertisement effectiveness - Advertising agencies regularly make use of marketing research studies to assess and monitor effectiveness of different advertising campaigns.

V) Corporate Research: Large scale corporate image studies among different target publics - They involve an assessment of knowledge about company activities, association of company with sponsored activities and company perceptions on specific dimensions. These types of corporate image studies are done periodically to monitor any change in image over time among different publics.

Social values research: Knowledge, attitude and practices on family planning, anti-dowry, smoking, drinking etc.

Political studies: In recent times marketing studies have been conducted to ascertain the public opinion about the election results.

Customer service studies: Many banks and large industrial houses have resorted to marketing research to know the consumers' changing need for service and possible grievances about existing operations.

VI) Syndicated Research: Several research agencies collect and tabulate marketing information on a continuing basis. Reports are sent periodically (Weekly, monthly or quarterly) to clients who are paid subscribers. Such services are found especially useful in t 'lie spheres of movement of consumer goods through retail outlets (ORG Retail Audit), incidence of disease and use of branded drugs (MARL- prescription audit), Television Program viewing (the Television Rating Points), Newspaper & Magazine readership (NRS - discussed earlier under media research), assessment of market potential of a city with population one lakh and above (Thompson Indices), study of nation's attitudes and psychographics (PSNAP and IMRB's life style research on the cigarette market). CONSUMER BEHAVIOUR: The most important thing is to forecast where customers are moving and to be in front of them. Phillip Kotler.Consumer or buyer is the central figure of all marketing activities.

MEANING: Consumer behavior is the pattern of response of buyers to marketing offer of a firm. It refers to the process as to how, consumers make their purchase decisions. It is concerned with what, why, how, much, when and from whom buyers make their purchases of goods and services. It is defined as all the psychological, social and physical behavior of potential customers as they become aware of, evaluate, purchase, consume and tell others about the products or services. Thus consumer behavior is concerned with. (1) forces inflicting consumers actions and reactions and (2) his purchase decisions process.CONSUMER BEHAVIOUR: Consumer behavior is the study of (i) what consumer buy? (ii) Who buys? (iii) When consumers buy? (iv) How consumers buy? (v) Where consumers buy?

It is the behavior that consumer adopt in searching for purchasing, using, evaluating and disposing of products, services and ideas.

The concept of consumer behavior can be presented in terms of marketing stimuli, process and behavior response as under:-

Stimuli

Process

Response

(Problem Solving)

(Behavioural outcome)

Feedback

The consumer behavior is a process of a buyers actions and reaction towards marketing stimuli offered by a firm.

IMPORTANCE OF STUDY OF CONSUMER BEHAVIOURThere is an old saying Goods well brought are half sold. To succeed in business one has to buy or produce what is wanted by consumers.

1. Effective Production Policies: Consumer preferences and tastes

Are changing. The study of consumer behavior helps to know the factors which affect the preferences of consumer. Thus the study of consumer behavior helps in formulation of production policies.

2. Effective Price Policies: Pricing decisions are affected with Consumer behavior. There are various types of consumers such as emotional rational etc. Their nature affects the price of a product.

3. Policies related to channels of Distribution: Distribution channel Affects the cost of product. Therefore, it should be different for different nature for products. The low price products and services must have cheap and economical distribution channels.

4. Determining Sales Promotion policies: Promotion is important For the successful entry of a product in the market. Sales promotion is an important technique of promotion. It helps producers to know about the motives that influence the consumers. They create desire to purchase among customers. These decisions are totally based on the nature of prospects and consumers.

5. Due to Market Differences: Due to several differences in the modern, no uniform marketing program and policies can satisfy the needs of consumers. Thus consumer behavior and buying motives are different in each market. Therefore efficient marketing strategies cannot be formulated and implemented without the study of Consumer behavior.6. Due to Cut-throat Competition: Today market is flooded withmore and more products; customer expects that the organizations should provide quality products at a reasonable price. A good marketer studies the needs of customer and then tries to satisfy them. This is the only way to win competition in the market.7. New Products with technological advancement: Every day you Open your eyes with a new product. Rapid technological advancement compels the marketer to study consumer behavior.8. Implementing the marketing concept: Marketing concept means The satisfaction of consumers. The consumers would buy only those products which satisfied their needs and wants. Thus, analysis of consumers become essential to deliver the desired customer satisfaction.9. Effective Market Segmentation: Market segmentation means dividing the market into different parts according to some homogeneous features of consumers. Market segmentation helps a marketer to satisfy the special needs of customers. Thus the study of consumer behavior is essential.10. Providing variety of Products: Consumers dislike using identical Products and prefer different products to satisfy their special needs and life cycle. To provide them variety of products, their behavior should be analyzed.11. Change in human behavior and preferences: Consumer Preferences are changing. They dont act or react as the theory would suggest. Todays consumer wants quality, value for money, less price but good quality. It is possible through the knowledge of consumer behavior.FACTORS AFFECTING CONSUMER BEHAVIOUR

INDIVIDUAL DETERMINANTS: Consider the case of two sisters brought up in one family environment with exactly the same educational background living in one house and yet exhibiting very different tastes and purchase decisions. While one is regular consumer of Dettol Soap, India Today and buy's ready-made garments the other sister uses only Lux International, reads Stardust and buys hi-fashion clothes from boutiques. What is it that accounts for the vast differences of consumer behavior in the situation of these two sisters? The answer to this can be found in the factors defined in the middle circle of Figure 1.1 i.e., personal motivation and involvement, attitudes, self-concept and personality, learning, memory and information processing.

Motivation and Involvement: All of us are consumers, within a given society all of us have the same alternatives to choose from and yet no two consumers may exhibit identical consumer behavior. The reason for this is that each one of us is a unique individual with a unique set of needs, desires and motivation. Motivation is that internal force which arouses or activates some need and provides direction of behavior towards fulfillment of the need. A motivation maybe physiological in nature directed towards fulfillment of biological needs such as hunger and thirst other motivations are psychological in nature focusing on the satisfaction of psychological desires such as the desire for seeking status, job satisfaction, or achievement. Everyone has both physiological and psychological motivations, but we each fulfill them in different ways. One consumer satisfies his thirst by drinking water, the second quenches it by having a Thumps Up, the third drinks Bisleri Mineral Water while a fourth prefers soda. For one consumer, buying a Delux Maruti car is a way of seeking status, another satisfies his want for status by becoming a member of the best club in town, while for a third having a credit card is a status symbol. The reason why we adopt different methods of satisfaction of our motivations is because of the differing level of personal involvement in various activities. Involvement refers to the personal relevance or importance of a product or service that a consumer perceives in a given situation. For a professional photographer the choice of a camera is a consumer behavior situation of involvement because the camera is his most important professional tool. The photographer would be motivated to buy the best possible camera, irrespective of the price tag. For another consumer, a camera is just a means of recording important family events and just about any camera which is convenient to handle would fill the need. High involvement leads to a highly motivated state of mind as in case of the professional photographer. High involvement and high motivation lead to a consumer behavior process which is distinctly different from that of a low involvement and low motivation. APPLICATIONS OF CONSUMER BEHAVIOUR IN MARKETING: Marketing is defined as "human activity directed at satisfying needs and wants through exchange processes". Thus the beginning of marketing lies in identifying unsatisfied human needs and wants and understanding the ensuing activity which people engage in to fulfill these. And that, as we have described, is the realm of consumer behavior. Consumer behaviour and marketing go hand-in-hand. Trying to do the latter without an understanding of the former in akin to firing a shot in the dark. Consumer behaviour has a number of applications in the area of marketing as described in the following paragraphs.

1. Analyzing Market Opportunity: Study of consumer behaviour helps in identifying needs and wants which are unfulfilled. This is done by examining trends in income, consumers lifestyles and emerging influences. The trend towards increasing number of working wives. and greater emphasis on leisure and convenience have signaled the emerging needs for household gadgets such as vacuum cleaner, washing machine and mixer grinder. Tortoise Mosquito repellant coils and Good Knight electrical repellants were marketed in response to a genuinely felt need of the people. Its rapidly rising sales graph is an indication of how well the product has satisfied the consumer's need.

2. Selecting the Target Market: The study of the consumer trends would reveal distinct groups of consumers with very distinct needs and wants. Knowing who these groups are, how they behave, how they decide to buy enables the marketer to market products/services especially suited to their needs. All this is made possible only by studying in depth the consumer and his purchase behavior. A study of potential consumers for shampoo revealed that there was a class of consumers who would like to use shampoo only on special occasions and who otherwise use soap to wash their hair. Further, this consumer class would not afford to spend more than three or four rupees on shampoo. Having identified this target market, companies with leading brands launched their shampoos in small sachets containing enough quantity for one wash and priced just at two or three rupees.

3. Determining the Product Mix: Having identified the unfulfilled need slot and having modified the product to suit differing consumer tastes, the marketer now has to get down to the brass tacks of marketing. He has to determine the right mix of product, price promotion and advertising. Again consumer behavior is extremely useful as it helps find answers to many perplexing questions.

Product: The marketer has the product that will satisfy hitherto unfulfilled consumer need, but he must decide the size, shape and attributes of the product. He must figure out whether it is better to have one single product or a number of models to choose from. Does the product require any special kind of packaging? Does it need any guarantee or after sales service? What associated products and services can be offered alongside?

Maggi Noodles were first launched in the most common flavours such as masala and capsicum. Having succeeded with these, other flavours such as garlic and Smbhar were launched with the objective of appealing to specific regional tastes. However, these flavours did not succeed. Recently, exotic flavor such as prawns has been launched. All these are attempts to modify the product by adding special features, attributes which might enhance the product appeal to the consumers.

The study of consumer behavior also guides the marketer in making decisions regarding packaging. Pan Parag was first introduced in tins. But study of consumer behavior revealed that people wanted smaller packing which they could conveniently carry on their person and in response to this the individual pouches were introduced. Further study of consumers revealed a problem with, these pouches. Once opened and kept in the purse or pocket, the pan masala would spill out of the pouch into the purse or pocket. To overcome this problem, Pan Parag has now launched a pouch with a zip. You eat as much as you want, zip up the packet and put it in your pocket without fear of spillage and wastage.

The study of consumer needs revealed the need for a water storage facility. In the kitchen and bathroom but which didn't occupy floor space. In response to this need, Sintex added the overhead indoor loft tank to their existing range of outdoor. Roof top water storage tanks.

Price: What price should the marketer Charge for the product? Should it be the same as that of the competing product or lower or higher? Should the price be marked on the product or left to the discretion of the retailer to charge what he can from the customer? Should any price discounts be offered? What is the customer perception of a lower or higher price? Would a lower price stimulate sales? Or is a lower price associated with poor quality?

These are the kinds of questions facing a marketer when taking a decision regarding pricing. The marketer has to determine the price level which makes the image of the product and which also maximises the sales revenue. For doing so he must understand the way his product is perceived by consumers, the criticality of the price as a purchase decision variable and how an increase or decrease in price would affect the sales. It is only through continuous study of consumer behaviour in actual buying situations that the marketer can hope to find answers to these issues.

Distribution: Having determined the product size, shape, packaging and price, the next decision the marketer has to make is regarding the distribution channel. What. type of retail outlets should sell the products? Should it be sold through all the retail outlets or only through a selected few? Should it be sold through existing outlets which also sell competing brands or should new outlets selling exclusively your brand of product be created? How critical is the location of the retail outlets from the consumers' viewpoint? Does the consumer look for the nearest convenient location or is he willing to travel some distance for buying the product?

The answers to all these questions can only be found when the marketer has a good understanding of the consumers' needs which are being fulfilled by his product and the manner in which consumers arrive at the dicision to buy. A few years ago, Eureka Forbes introduced a vacuum cleaner in the Indian market. It was not only launch of a new brand, but rather a launch of a new product concept. No retail outlets were selling vacuum cleaners very few consumers knew much about the product and fewer still were willing to buy it. Under these circumstances, the company decided to sell the product only through personal selling with the salesman calling on the consumer at his home. Here the salesman had enough time to explain, demonstrate and convince the'prospective customer about the utility of the vacuum cleaner. In a retail outlet situation, all this would just not have been possible. The retailer has neither the time nor the detailed knowledge required to sell such a new product concept. This distribution strategy of Eureka Forbes, based on a very fine understanding of the consumer behaviour, has yielded good sales results. The product concept is well accepted in the urban markets and today the vacuum cleaner, in addition to personal selling is also sold through some selected retail outlets.

Promotion: The marketer here is concerned with finding the most effective

methods of promotion which will make the product stand out amongst the clutter of so many other brands: and products, which will help increase the sales objective and yet be within the budget. This is possible only when the marketer knows who his target consumers are, where are they located, what media do they have access to, what is their preferred media and what role does advertising play in influencing the purchase decision?

Today, TV is the most powerful advertising medium in the country. And many brands spend the greater part of their promotion and advertising budget on TV. Brands regularly advertised on TV soon become well recognized names. But as a marketer you have to question the suitability of any specific medium in case of your specific product and budget. Suppose your product is sold in only a few geographical markets you may decide to avoid TV altogether and concentrate on point of purchase promotion and local advertising through local newspaper, hoardings and wall paintings.

In so many cases of industrial product media advertising is very negligible, instead, brochures or leaflets containing detailed product specification and information are directly mailed to the actual consumer, and sometimes followed up by a salesman making a call to clinch the deal. This is primarily because buyer behaviour and informational needs of industrial buyers are very different from that of consumer buying. You will study organisational buying behaviour in detail in Unit 3 of this block. But you can make these decisions only when you know your consumer and understand his behaviour.

4. Use in Non-profit and Social Marketing: The knowledge of consumer behaviour is also useful in the marketing of non-profit or social or governmental services of institution such as hospitals, voluntary agencies, law enforcement and tax collection agencies.

The income tax authorities have always been perceived in negative manner by the common man who fears them and views them in a suspicious light. To overcome this poor image, advertisements on TV and in newspapers and magazines are regularly released, wherein a friendly, helpful image is sought to be projected. Moreover, there is greater dissemination of information regarding the rights and responsibilities of the taxpayer. Similarly, Delhi Police is trying to overcome the problem of poor image by projecting itself as always alert and available for help through regular newspaper advertisements.

3. What are major reasons for market segmentation and what are its advantages?

MEANING: Market Segment is a meaningful buyer group similar wants. It is the portion of the market designed on the basis of same features of people it covers. Thus, market segment includes buyer group with similar wants, purchasing power, geographic location or buying habits.Market Segmentation is the process of dividing a potential market into distinct sub-markets of buyers with homogeneous needs and characteristics. It is the process of dividing the market in order to conquer them. It is identify the groups of buyers on the basis of difference in their desires and requirements.

The strategy of market segmentation involves the development of two or more different marketing programs for a given product or a service with each marketing programs aimed at a different grouping of individuals.

There are three assumptions of market segmentation process. These are:(a) Markets are heterogeneous.

(b) Different market segments respond differently.

(c) Market segmentation is consistent with the marketing concept.DEFINITIONS: Some important definitions of market segmentation are as follows:1. Market segmentation is the sub-dividing of a Market into homogeneous subsets of customers where any subset may conceivably be selected on a market target to be reached with a distinct marketing mix. Philip Kotler.2. Market segmentation consists of taking the total Heterogeneous market for a product and dividing it into several submarkets or segments, each of which tends to be homogeneous in all significant aspects. William J. Stanton.Analysis:Thus market segmentation is a process of dividing marketing into some parts on certain basis. Market segmentation is based on the nation that markets are heterogeneous and not homogeneous in themselves. In spite of heterogeneity, the buyers of products can be divided into homogeneous groups.

OBJECTIVES OF MARKET SEGMENATION:The objectives of market segmentation are as under:-

1. To formulate marketing programs for each consumer group according to their nature.

2. To know the needs, buying habits, necessities and priorities of buyers.

3. To achieve market targets.

4. To make the marketing policies and strategies customer oriented.

5. To expand market and satisfy the consumers.

6. To develop new products according to consumers needs.

REASONS FOR THE DEVELOPMENT OF MARKET SEGMENTATION:1. Technological Process: With a rapid change in technology, the manufacturing units are producing products at the lower costs. Technology has made possible, the production of goods as per the requirement of different market segments.

2. Adoption of Cost reducing Techniques: Nowadays, the marketers are adopting cost reducing techniques. These techniques help the marketer to produce more. This will help in matching the demand with supply in the market segment.

3. Implementation of Marketing Programs: The marketers design marketing programs and marketing mix to achieve success in the market. By market segmentation these policies can be formulated according to the needs of consumers.

4. New Product Development: Every marketer wants to introduce new products. He takes the help to market research. Market research provides the information regarding needs, desire, and choice of consumers. By market segmentation correct information can be collected because consumers come to close with marketers. Product innovations are also possible.

5. Increase in Competition: There is cut-throat competition in the market. Every manufacturer wants to attract more number of buyers. The marketers are adopting modern concept of marketing that is consumer oriented, therefore it is needed to listed consumers. Market segmentation helps in this process because it provides a definite consumer group and a definite product.

REQUIREMENTS/CRITERIA FOR EFFECTIVE SEGMENTATION:To be effective, segmentation of market must exhibit some characteristics that are as follows:-

2. Identifiable :

The consumers of the market segment should be identified. It helps to make marketing programs effective. This difference can be found on the basis of some characteristics. Consumers of the same group are homogeneous.

3. Measurable :

The size, profile of the segment must be measurable. There are various bases for segmenting the market such as Demographic, psychographic. Demographic factors are measurable and psychographic factors are non-measurable.

4. Obtainable :

Every market segment should be obtainable in terms of data. Information is required for effective market segmentation. The information obtained should be in the nature of convenient measuring the constitution of market segments.

IMPORTANCE OF MARKET SEGMENTATION:Today it is not possible to serve entire market with a single brand and the market segmentation becomes inevitable for marketing strategy. A marketer receives the following advantages of the market segmentation:-

1. To know marketing opportunities:By segmenting the market, a marketer is able to create new markets for their products. Moreover information can also be obtained through Market segmentation. A marketer can make necessary changes in his marketing programs for increasing sale.

2. To prepare effective marketing programme:

The success of marketing programme depends upon its adoptability by consumers. By dividing the entire market into general segments, a marketer can make his programme according to the requirements of consumers. Different programmes should be framed for different segments.3. To win competition:Market segmentation is helpful in knowing the strengths, weaknesses, opportunities and threats of a firm. Therefore a marketer can frame a proper marketing mix. As several marketing policies can be made and exercised to sustain in the competitive2. Mass Marketing.

3. Product Variety Marketing.

4. Target Marketing5. Micro Marketing.

6. Customized Marketing.

7. Personalized Marketing.1. Mass Marketing:

Mass marketing means providing the same product and applying the same marketing mix to all consumers assuming that there is no difference among consumers in terms of their needs. A marketer affect standardized products to all.

Features:-

(i) The whole market is considers as one segment.

(ii) Same product for all customers.

(iii) Common marketing programme to appeal all buyers.

(iv) Undifferentiated marketing strategy.

(v) Large scale production.2. Product-Variety Marketing:

Under this marketing, a marketer provides different designs, color, and shapes in his product according to the needs and wants of consumers of different segments. Different strategies are adopted to satisfy the consumers.

Features:-

(i) Mass marketing with product varieties.

(ii) Adoption of product differentiation approach.

(iii) No proper segmentation.

(ii) Products are modified according to the need of customers.

(iii) Maruti 800, Zen, Suzuki, etc. are the different models produced by Maruti Udyog Ltd. To satisfy various needs of customers.3. Target Marketing:

Under this marketing, different segments are to be formulated. Target market means a group of potential buyers of a product, service or idea. Modern Marketing concept is based on target marketing.

Features:-

(i) Total market is divided into different segments.

(ii) Different products for different segments.

(iii) Product positioning is also under the scope to target marketing.4. Micro Marketing :

Under this marketing target market is further bifurcated and customers needs are satisfied on local bases. This marketing is adopted to satisfy the needs of customers at a specified place.

BASIS FOR MARKET SEGMENTATION: Market can be divided on several bases. For successful implementation of marketing strategy, it is important to locate proper base for segmenting the market. Prof. Cundiff and still have divided the product market in two segments on the basis of purchase of product: (a) Consumer market, (b) Industrial market.Consumer Market Different Basis

The consumer market can be segmented on the following basis: I. Geographic Segmentation

II. Demographic Segmentation

III. Psychographic Segmentation

IV. Behavioural Segmentation

V. Multiple Segmentation

I. Geographic Segmentation: Geographic segmentation means Dividing the market into different geographical units. That is the customers are classified on the basis of geographical areas where they reside. National market, State market, local market and urban-rural market, denote territorial coverage of market. Market sepgmentation can also be made on the criteria of climatic conditions of customers areas e.g. Hot, Cold, rainy regions. Marketers may choose to restrict their operations to a specific area, say a city, a district or state. The following are the basis of geographical segmentation.Region

:North, East, West, South, Central.

City Size

:Metropolitans, Small cities, towns

Density of area :Urban, Semi-urban, and RuralClimate

:Hot, Cold, Humid, Rainy.

II. Demographic Segmentation: Market segments are defined accordingTo demographic such as age, sex, income, family life cycle, occupation, religion etc. Demographic factors are most popular factors to segment the market. These variables are easy to measure. The following are the basis of demographic segmentation:

Age

:0-5, 6-12, 13-19, 20-34, 35-49, 50-64, 65 above

Sex

: Male, Female

Marital Status : Married/unmarried

Income

:High income, Middle income, Lower income

Family size :One, Two or three, four, five and above

Family life cycle :Professional, business, clerical

Education :Primary, Secondary, Senior Secondary, College, University

Religion

:Hindu, Muslim, Christian, Sikh

Nationality :Indians, Chinese, Americans

III. Psychographic Segmentation:

Psychographic considerations for market segmentations are based on social class, life-style, and personality of customers. Following are the basis of psychographic segmentation:-

Life Style :Conservative, Liberal, Adventuresome

Culture

:Hindu, Muslim, Chinese, Continental

Social class :Lower-lower, Middle-middle, Lower-upper, Middle-lower, Middle-middle, Middle-upper, Upper-lower, Upper-middle, Upper-upper.

Personality :Extroverts, Introverts, aggressive

IV. Behavioural Segmentation: Behavioral pattern of customers can also be the basis for market segmentation. The consumers are segmented on the basis of their behaviour. This segmentation is based on the consumer response. Following are the examples of this segmentation:-

Needs-Motivation:Safety, Security, Affection

Perception :Low Risk, Moderate Risk, High Risk

Attitude

:Positive, Negative

Occasions :Regular, Special

Readiness stage :Unaware, aware, and informedBenefits

: Cost, quality, repairs, durability

Awareness :Ignorant, aware, informed, and interestedUsage rate :Habituated, Strong loyalty, moderately attached

V. Multiple Segmentation :

The target market segment can be defined on more than one of the basis stated above. Normally customers are classified in terms of their age, sex, income and education. For example, a fashion garment manufacturer may target at young, college going, and upper middle class, male or female population for his fashionable dresses.

INDUSTRIAL MARKET DIFFERENT BASIS

Business markets can be segmented with variables such as geography, benefits, usage rate etc. Moreover it can be segmented with demographic variables, operating variables and personal characteristics of the buyers. Philip Kotler quoted some variables for segmenting the business market. Some of them are as under:Demographic-

(i) Company size

(ii) Location

Operating -

(i) Technology

(ii) User or non-user status

Situational -

(i) Urgency

(ii) Size of order

Personal characteristics - (i) Loyalty

(ii) Attitude towards risk.

Thus many bases are used for segmenting the industrial market. Some basis is as under:-

(i) Kind of business: - A separate segment is being formulated for each type of business. For example, clothe industry can be segmented as weaving, printing, dying, finishing, embroidery.

(ii) Size of users: The market can be divided as large, medium, small buyers. A marketer always tries to influence large buyers by offering them less price and discounts.

(iii) Purchasing Procedure: Industrial buyers purchase in centralize or decentralize manner. They consider lot of factors while purchasing, for example low price. Better quality, convenience, less wastage and Spoilage, easy availability.

(iv) Geographical location Basis: Industrial market can be segmented on geographical basis.

MARKET SEGEMNTATION AND ADOPTED MARKETING STRATEGIES OR ALTERNATIVE MARKETING STRATEGIES TOWARDS MARKET SEGMENTS:Every market can be segmented as the buyers are never all alike. Therefore a firm has to shape its policies according to these differences. To a marketer, alternative market strategies are available. He can adopt anyone according to the requirement. Let us study the alternative strategies.

1. Undifferentiated Marketing Strategy:

This strategy lays emphasis on one product and formulates only one marketing programme. It focuses on what is common in the needs of people. It tries to attract large number of buyers with its product and marketing programme. Firm does not segment its market under this strategy. The company focuses on the center of the target market to get maximum advantage. This strategy is helpful in reducing cost. It relies heavily on product differentiation to protect itself from competition, mass advertising etc. The best example can be of cigarettes, wrapped in a white paper and Coca-Cola Company sells coke, Lima, Thumps up and does not distinguish the target audience.

Undifferential marketing one target market

Features:(i) One target market.

(ii) Preference to common needs of customers.

(iii) One marketing mix for the target market.

(iv) One marketing programme to attract large number of buyers.

(v) A narrow product line.

Merits:(i) Large scale production.

(ii) Cost economies.

(iii) Maximum Profits.

(iv) Common advertising Programme.

(v) Reduced Market research expenses.

(vi) Increase in goodwill of the firm.

Demerits:(i) Ignores various needs of consumers.

(ii) Profits in the short run only.

(iii) Product oriented strategy.2. Differentiated Marketing Strategy:-

Under this strategy, a firm operates in different segments of the market. A marketer designs separate products and marketing programmes for each. Market research is conducted to know the consumers needs. Different products are offered to increase the sale. This strategy is also helpful in expanding the market. Differentiated Marketing Strategy different consumers different segments it provides product variety to consumers.

Features:-

(i) Various market segments.

(ii) Different marketing programmes.

(iii) A different marketing mix for each segment.

(iv) Large product line

(v) Variety of products.

Merits:-

(i) Customer oriented.

(ii) Increased Sale.

(iii) Products according to the needs of the segment.

(iv) More suitable for common usage products.

Demerits:-

(i) Difficult to implement due to restricted firms resources.

(ii) Increased product cost, advertising cost, and administrative cost.

(iii) Increased Research and development expenditure.Concentrated Marketing Strategy: Under this strategy the marketer focuses on certain areas of market. It follows one product-one segment strategy. This strategy the small companies to establish in the market. According to Philip Kotler, Instead of going after a small share of a large market, the firm goes after a large of one or a few sub-markets. But another way instead of spreading itself this in many parts of the market, it concentrates its forces to gain a good market position in a few areas. This strategy is useful when firms resources are limited. It focuses to gain good market position. For example Philip Kotler has specialized in Marketing.

Features:-

(i) Customer oriented.

(ii) One product one segment.

(iii) Attract large number of buyers.

(iv) One marketing mix for one segment.

Advantages:-

(i) Specialized organizations to satisfy the needs of segments.

(ii) Strong market position of a firm.

(iii) Increase in goodwill.

(iv) Deep knowledge of the segments needs.

(v) Decreased costs.

(vi) More suitable in different needs satisfying products.

(vii) Optimum use of resources.

Demerits:-

(i) Risky strategy.

(ii) Restricts the growth opportunities.

(iii) Increase in Competition.

(iv) It neglects other segments that are otherwise profitable.

SELECTION OF A SUITABLE MARKETING STRATEGY: After discussing the implications of the three marketing strategies, the next step is to select an ideal segmentation strategy. While selecting s strategy, the following points should be considered (given by Professor R Willam Kotraba). 1.Company resources: A company selects the strategy according to its financial resources. Firms with limited financial resources will go for concentrated marketing. On the other hand strong financial position permits the firms to adopt either differentiated or undifferentiated marketing.

2.Product Homogeneity: Some products are homogeneous. All consumers have same perception of these products. For example salt, fruits etc. A marketer can adopt undifferentiated marketing strategy for such products. On the other hand, some products are heterogeneous. For example automobiles, TV, cameras etc. a marketer can adopt differentiated marketing strategy for such products.

3.Product Life Cycle Stage: Product Life Cycle generally has four stages. Introduction, growth, maturity and decline. When a product is in introduction stage, the firm wants to create primary demand; therefore undifferentiated strategy is more suitable strategy. As the product moves towards the other stages, the firm tries to increase sale, at the stage of maturity, the firm should adopt differentiated marketing strategy.

4.Market Homogeneity: Market homogeneity means the degree to which the consumers are alike in their preferences, tastes, desires etc. in such case, undifferentiated marketing is suitable. On the other hand, differentiated or concentrated marketing is more suitable in heterogeneous markets.

5.Competitors Marketing Strategy: A marketer should consider competitors marketing strategy while adopting strategy for his segments. When competitors are active, differentiated marketing is more suitable. On the other hand, when the competitors are adopting undifferentiated marketing strategies, a firm can gain by adopting undifferentiated marketing.

6.Government Policy: Government Policy has the impact on the selection of marketing strategy. Government frames the policies to protect the interests of the masses. A marketer has to follows the guidelines given by the Government. Finally, it is clear that no particular strategy is superior to others. The selection of ideal strategy totally depends upon some factors. In a changed environment. The marketing strategy has been changed.

PRODUCT DIFFERENTIATION AND MARKET SEGMENTATION:Product differentiation means to adjust demand to the supply conditions. To win the competition in market, a market follows two steps:

(i) Reduction in price.

(ii) Product differentiation strategy.

In product differentiation strategy, the marketer modifies his product in terms of packaging, size, colour, design etc. A marketer convinces his customers that his product in different or better than the one available in the