Sales & Marketing : Introduction to marketing

Specialization: Sales & Marketing
Chapter one
Introduction to marketing
Marketing concepts
5 Marketing Concepts Explained with Examples
The marketing concept is the strategy that firms implement to satisfy customers needs, increase sales,
maximize profit and beat the competition. There are five marketing concepts that organizations adopt and
execute. Marketing is a department of management that tries to design strategies that will build profitable
relationships with target consumers. But what philosophy is the best for a company in setting marketing
strategies? There are five alternative concepts under which organizations design and carry out their
marketing strategies.
5 Marketing Concepts
1- Production Concept,
2- Product Concept,
3- Selling Concept,
4- Marketing Concept,
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5- Societal Marketing Concept.
These concepts are described below;
Production Concept
The idea of production concept – “Consumers will favor products that are available and highly
affordable”. This concept is one of the oldest Marketing management orientations that guide sellers.
Companies adopting this orientation run a major risk of focusing too narrowly on their own operations
and losing sight of the real objective.
Most times; the production concept can lead to marketing myopia. Management focuses on improving
production and distribution efficiency.
Although; in some situations; the production concept is still a useful philosophy.
Product Concept
The product concept holds that the consumers will favor products that offer the most in quality,
performance and innovative features.
Here; under this concept,
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Marketing strategies are focused on making continuous product improvements.
Product quality and improvement are important parts of marketing strategies, sometimes the only part.
Targeting only on the company’s products could also lead to marketing myopia.
Selling Concept
The selling concept holds the idea- “consumers will not buy enough of the firm’s products unless it
undertakes a large-scale selling and promotion effort”.
Here the management focuses on creating sales transactions rather than on building long-term, profitable
customer relationships.
Marketing Concept
The marketing concept holds- “achieving organizational goals depends on knowing the needs and wants
of target markets and delivering the desired satisfactions better than competitors do”.
Here marketing management takes a “customer first” approach.
Under the marketing concept, customer focus and value are the routes to achieve sales and profits. The
marketing concept is a customer-centered “sense and responds” philosophy. The job is not to find the
right customers for your product but to find the right products for your customers. The marketing concept
and the selling concepts are two extreme concepts and totally different from each other.
Difference between Selling Concept and Marketing Concept
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No. The Selling Concept The Marketing Concept
1 undertakes a large-scale selling and
promotion effort
undertakes activities such as; market
research,
2 The Selling Concept is suitable with
unsought goods—those that buyers do not
normally think of buying, such as insurance
or blood donations.
The Marketing Concept is suitable for
almost any type of product and market.
3 Focus of the selling concept starts at the
production level.
Focus of the marketing concept starts at
understanding the market.
4 Any company following selling concept
undertakes a high-risk
Companies that are following the
marketing concept requires to bare less
risk and uncertainty.
5 The Selling Concept assumes –“customers
who are coaxed into buying the product
will like it. Or, if they don’t like it, they will
possibly forget their disappointment and
buy it again later.”
Instead of making an assumption, The
marketing concept finds out what really
the consumer requires and acts
accordingly to them.
6 The Selling Concept makes poor
assumptions.
Marketing concept works on facts
gathered by its “market and customer
first” approach.
Societal Marketing Concept
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Societal marketing concept questions whether the pure marketing concept overlooks possible conflicts
between consumer short-run wants and consumer long-run welfare.
The societal marketing concept holds “marketing strategy should deliver value to customers in a way that
maintains or improves both the consumer’s and society’s well-being”.
It calls for sustainable marketing, socially and environmentally responsible marketing that meets the
present needs of consumers and businesses while also preserving or enhancing the ability of future
generations to meet their needs.
The Societal Marketing Concept puts the Human welfare on top before profits and satisfying the wants.
The global warming panic button is pushed and a revelation is required in the way we use our resources.
So companies are slowly either fully or partially trying to implement the societal marketing concept.
Marketing Definition, Functions, Importance, Process
Marketing; a tricky topic to define and frame in. the Marketing studies or field has rapidly moved and
reached a very high level but still defining is into some fixed variables is just impossible.
Marketing is the part of the management process which responsible for identifying, anticipating and
satisfying customer requirements profitably.
Let’s try to understand the definition of marketing and also get a sense of its importance, reach, and
radius in business, corporations, organizations and in your life.
The AMA (American Marketing Association) is a prestigious and influential organization not just in the
USA but also in the international arena. The definition of marketing in 1964 was-
The process of planning and executing the conception, pricing, promotion, and distribution of
goods, services, and ideas to create exchanges that satisfy individual and organizational objectives.
It was until AMA approved and punished another on 2004;
Marketing is an organizational function and a set of processes for creating, communicating, and
delivering value to customers and for managing customer relationships in ways that benefit the
organization and its stakeholders.
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In October 2007, they published a new one;
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering,
and exchanging offerings that have value for customers, clients, partners, and society at large.
In the first definition of AMA “create exchanges that satisfy individual and organizational objectives”
indicates that marketing is there for creating exchanges for the involved parties to serve their purpose.
They totally forgot about me and you; the customer’s benefit or value. They also somehow put a
boundary to the marketing functions; “process of planning and executing the conception, pricing,
promotion, and distribution of goods, services, and ideas”.
In the second definition; they include us-the customers’ value but “in ways that benefit the organization
and its stakeholders”. Here they showed the Extend of the marketing activities; “function and a set of
processes for creating, communicating, and delivering value”.
The third definition of marketing by AMA is to me the most precise one or the closet on. Well, they put
values of customers and society at equals to the organization’s objectives. Also, they put it in front and
regarded it is as the main force behind the marketing activates. See the third change come very quick.
And it is rightly so. Businesses have found out that it is customers who are the only reason for the
success, not the large capital or the product/service they produce. For some of them, it had to be found in
a hard way.
We can say that marketing is all about delivering customer value and the businesses should be too.
Businesses in trying to get customers attention and marketing include all those activates.
And at the end, we are defining marketing like this- Every action of an organization; either orbits
around, depends on, forced by the activates that marketing makes to communicate with customers for
indicating product’s or service’s value to them.
Marketing Functions The universal functions of marketing are buying, selling, transporting, sorting,
standardization and grading, financing, risk taking and market information.
The Selling The selling function involves promoting the product. It includes the use of personal selling,
advertising, and other mass selling methods.
The Transportation The transporting function. means the movement of goods from one place to another.
The Sorting The sorting function means involves holding goods until customers need.
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The Standardization and Grading The standardization and grading involve sorting products according
to size and quality. This makes buying and selling easier because it reduces the need for inspection and
sampling.
Financing Financing provides the necessary cash and credit to produce, transport, store, promote, sell and
buy products.
Risk Taking It involves bearing the uncertainties that are part of the marketing process. A firm can never
be sure that customers will want to buy its products can also be damaged, stolen or outdated.
Who Performs Marketing Functions?
Marketing functions are all part of the marketing process and must be done by someone.
None of them eliminated. In a planned economy, some of the functions may be performed by government
agencies. Others may be left to individual producers and consumers. In marketing directed economy,
marketing functions are performed by producers, consumers and a variety of marketing specialists.
Importance of Marketing. Why Marketing is Important?
Effective Marketing is difficult because producers and consumers are separated in several ways. The
exchange between producers and consumers is hampered by spatial separation of ownership exchange of
further complicated by discrepancies of quality and discrepancies of assortment between producers and
Consumers. Marketing facilitates production and consumption in different ways. The goals of marketing
are depicted below:
Spatial Separation Producers and consumers are separated geographically. Producers tend to cluster
together by industry. In a few concentrated locations, while consumers are located in many scattered
locations. Marketing needed to overcome the spatial separation.
Separation in Time Consumers may not want to consume goods at the time they are produced and time
may be required to transport goods from producer to’ customer.
To overcome the separation in time marketing aids closely.
Separation of Information Producers do not know who needs, what, when, where and at what price
consumers don’t know what is available from whom, where, when and at what price. The marketing
system is necessary to overcome that type of separation of information.
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Separation in Values Producers value goods and services in terms of cost and competitive prices.
Consumers value goods and services in terms of utility and ability to pay. To overcome the separation in
values marketing facilitate?-.
Separation of Ownership Producers hold title to goods and services which they themselves do not want
to consume. Consumers want to consume, goods and services which they do not own. The marketing
function is necessary to overcome the separation of ownership.
Discrepancies of Quantity Producers prefer to produce and sell in large quantities. Consumer ’ prefer to
buy and consume h small quantities. Marketing needed to overcome discripancies of quantity.
Discrepancies of Assortment Producers specialize in producing a narrow assortment of goods and ‘
services. Consumers need a broad assortment. The goal of marketing function is also to overcome the
discrepancies of assortment.
The goals of marketing from the social foundation according to Philip Kotler and Gar/ Armstrong
are; Maximize Consumption. Maximize Consumer Satisfaction. Maximize Choice. Maximize Quality
Living.
Role of Marketing in Economic Development
Main purpose of markets and middlemen is to make exchange easier and allow greater time for
production, consumption and other activities including recreation. Effective marketing system is
necessary for economic development. Improved marketing may be the key to growth in less-developed
nations. Without an effective marketing system, the less developed nations may not be able to escape the
“vicious circle of poverty”. Many people in these nations can’t leave their subsistence way of life to
produce for the market because there are no buyers for what they produce. And there are no buyers
because everyone else is producing for their own needs. As a result, distribution systems and middlemen
do not develop. Breaking this vicious circle of poverty may require major changes in the in-efficient
marketing systems that are typical in less- developed nations. Without an effective marketing system,
people can’t leave their subsistence way of life. Marketing means delivering the goods and services that
customers want and need. It means getting products to them at the right time, in the right place and at a
price they’re willing to pay. So, effective marketing is needed to link producers and consumers.
Steps in Marketing Process Marketing as the process by which companies create value for customers
and building strong customer relationships in order to capture value from customers in return.
5 step process of the marketing framework wherein value is created for customers and marketers
capture value from customers in return.
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Step 1: Understanding The Marketplace And Customer Needs And Wants
It is important to understand customer needs, wants and demands in order to build want- satisfying market
offerings and building value-laden customer relationships. This increases long-term customer equity for
the firm.
Needs – States of felt deprivation: They include the physical need for basic necessities like food, clothing,
shelter, warmth, safety and individual needs for knowledge and self-expression. These need§_cannot be
created by the marketers as they are a basic part of human markup.
Wants – The forms human needs take as shaped by culture and individual personality.
Wants are shaped by one’s society and are described in terms of objects that will satisfy needs.
Step 2: Designing A Customer-Driven Marketing Strategy
Focus areas for designing a marketing strategy:
Selecting customers to serve -defining the target market
Deciding how to serve customers in the best way – choosing a value proposition
Selecting customers to serve: The company first decides whom it will serve and divides the market into
segments of the customer. Then it goes after specific sections of the market or its target market.
They target customers based on their level, timing, and nature of demand.
Choosing a value proposition They decide how it will serve their customer that is how it will
differentiate and position itself in the market. A brand’s value proposition is the set of values and benefits
that it promises to deliver its customer. Companies need to design strong value propositions to give them
the greatest advantage in their target markets.
5 alternative concepts for designing a customer-driven marketing strategy, are;
Production concept: Consumers will favor products that are available and highly affordable. Management
should focus on improving production and distribution efficiency.
Product concept: Consumers will favor products that offer most in quality, performance and innovative
features. Focus on making continuous product improvements.
Selling concept: Consumers will not buy enough of the firm’s products unless it undertakes a large-scale
selling and promotion effort. It is typically practiced with unsought goods that the company needs to sell
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and generally results in aggressive selling practices. The company sells what it makes rather than what the
market wants.
Marketing concept: Organizational goals are achieved by knowing the needs and wants of the target
markets and delivering the desired satisfactions better than competitors do.
Societal concept: Marketing strategy should deliver value to customers in such a way that improves both
customers as wells as society’s well being and long-run interests.
Step 3: Constructing an integrated marketing plan that delivers superior value
The company’s marketing strategy outlines which customers the company will serve and how it will
create value for these customers. Then the marketer develops integrated marketing plans that will actually
the intended value to target customers.
It consists of the firms marketing mix (4Ps), the set of marketing tools the firm uses to implement its
marketing strategy. The marketing program builds customer relationships by transforming the marketing
strategy into action. For this, it needs to blend all of these marketing tools into a comprehensive integrated
marketing program that communicates and delivers the expected value to the customers.
Step 4: Build Profitable Relationships
Customer relationship management is the overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction.
The aim of customer relationship management is to produce high customer equity, the total combined
customer lifetime values of all of the company’s customers.
The key to building lasting relationships is the creation of superior customer value and satisfaction.
Companies today not only want to acquire profitable relationships but also to build relationships that will
increase their share of customer -the portion of the customers purchasing that a company gets in its
product categories.
5: Capturing Value From Customers
The ultimate aim of customer relationship management is to produce high Customer equity – total
combined lifetime values of all of the company’s current and potential customers. More loyal the
company’s profitable customers, higher are the customer equity. Customer equity may even be a better
way to measure the company’s performance than market share or current sales.
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Marketers cannot create customer value and build customer relationships by themselves. They need to
work closely with other company departments and with partners outside the firm. In addition to being
good at customer relationship management, they also need to be good at partner relationship
management.
Marketing strategy:
What Is A Marketing Strategy? A marketing strategy is all of a company’s marketing goals and
objectives combined into a single comprehensive plan. Business executives draw a successful marketing
strategy from market research. They also focus on the right product mix so that they can get the most
profit. Put simply; a marketing strategy is a strategy designed to promote a good or service and make a
profit. In this context, the word ‘good‘ means the same as ‘product.’ A good marketing strategy helps
companies identify their best customers. It also helps them understand consumers’ needs. With a good
strategy, it is possible to implement the most effective marketing methods.
Definition of marketing strategy: “An organization’s strategy that combines all of its marketing goals
into one comprehensive plan.” “A good marketing strategy should be drawn from market research and
focus on the right product mix in order to achieve the maximum profit potential and sustain the business.”
Creating a marketing strategy :
STP in marketing stands for Segmentation, Targeting, and Positioning.
 Segmentation
In marketing we want to identify potential customers and convince them to buy. We also are interested in
convincing past customers to be repeat customers. We do this by providing products and services they
need and want. It’s all about making the right people aware of our value proposition. Everyone is unique
but we also tend to have interests in common with others. We want to identify those commonalities in the
most refined and granular ways possible. These are called niches. We use segmentation to identify niches
with specific needs and desires that we can articulate clearly. In mature markets we use segmentation to
find new customers. Segmentation allows us to focus our messaging and deliver it more effectively.
Marketing messages should be designed to address and inform each segment of the benefits and features
that are most relevant to that segment. This is a different approach from mass marketing where one size
fits all for all customer types. This approach is more efficient and affective, as it delivers the right mix to
the right group of people, rather than a spray-and-pray shotgun approach.
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Markets can be sliced and diced based on any variable, as long as it’s clearly definable and measurable.
Here are some examples:
Demographics This is the most well known way of classifying people into groups. It can be done by:
geography, age, gender, income, education, ethnicity, marital status, profession or occupation.
Demographics explain ‘who’ your buyer is.
Psychographics Psychographics delve into ‘why’ your customer makes a purchase. This is a way of
classifying behavior based on personality and emotional traits linked to purchasing decisions.
Psychographics include: attitudes, lifestyle, hobbies, personality and leadership traits and attitudes toward
risk. Gather data to help form psychographic profiles for your typical customers through interviews,
surveys, questionnaires, customer data and feedback. This is the kind of information that Facebook
gathers based on “likes”. Create archetypes of your customer segments based on their psychographic
profile. You can purchase and access massive troves of data on the interests and attitudes of potential
customers from Internet, web and mobile sources. We will explore this more when we discuss analytics
tools and sources later in the book.
Lifestyle Lifestyle refers to non-work time endeavors like hobbies, recreational activities, entertainment,
vacations, and other. Keywords and search terms used in such tools as Google Adwords can help you
locate and address potential customers by their lifestyle interests and preferences. More on this later when
we get into digital marketing. An effective way to research these behavioral niches is Reddit, where like-
minded people create subReddits about a given interest or hobby. The information that gets shared can be
very valuable in understanding customer segments.
Belief and Values This refers to Religious, political, nationalistic and cultural beliefs and values. Social
media platforms like Facebook are Twitter good sources.
Life Stages People change and prefer different activities and have different interests based on their age. A
twenty something falls into different categories than a 60 year old. Life Stages is the benchmarking of
people’s lives at different chronological stages. Check out the book “Passages” for a great primer on this
approach.
Geography This is where you locate people by country, region, area, zip codes, metropolitan or rural
location, climate or mountains etc.
Language With translation tools freely available like Google and Bing we can think about targeting
language groups relatively easily.
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Behavior Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and
social factors on the economic decisions of individuals. In segmenting it refers to how a customer relates
to the nature of the purchase, brand loyalty, usage level, benefits sought, distribution channels used, and
the reaction to marketing messages. Amazon has mastered accumulating this data to create profiles of
purchasers.
Usage level Usage is an interesting variable. Many companies recognize that they have “power users”
that are responsible for an outsize portion of sales. Coca Cola for example has a club for their power users
because they estimate that 20 percent of their customers are responsible for 80 percent of their sales.
Identity and cultivate your power users.
 Targeting
The list below relates to various criteria for evaluating the potential commercial viability of each segment.
Size The market must be large enough to justify segmenting. Market potential size has expanded as Long
Tail markets have emerged. Long tail refers to markets that can be reached via the Web where there is no
concentration geographically but there is enthusiastic interest diffused across the globe. Add up all those
loners and they can represent significant markets. The more idiosyncratic your offering the more you will
be marketing across geographic zones.
Difference Segments need to be distinct and identifiable. Measurable differences must exist between
segments. Measuring tools and techniques have proliferated with digital marketing. Google Analytics is a
major tool.
Money It has to be worth it economically. The anticipated incremental profits must exceed the additional
marketing costs. The cost of acquisition of a customer (CAC) must be less than their lifetime value of
purchases (LTV). CAC<LTV
Accessibility The potential customers in each segment must have the ability to receive your marketing
messages and distribution networks must be able to reach them. Accessibility has increased dramatically
with the advent of web and mobile messaging, digital downloads, SaaS models, and overnight shipping.
Different segments respond to different benefits so focus on communicating the different benefits.
 Positioning
Positioning maps the variables discussed in the Segmenting and Targeting steps and defines the space
where your offering resides relative to competitors in the view of your customers. Thoughtful positioning
is critical in staking out a competitive advantage in the market. Positioning is a component of Branding,
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which we will discuss next. Customer perceptions and feedback influence a brand’s positioning in the
market.
Three types of positioning impact a brand and its competitive advantage:
· Functional, · Symbolic, · Experiential
Functional Positioning Functional Positioning has to do with feature sets and user experience. It is
focused on the aspects of the value proposition that speak to meeting and fulfilling customers’ needs and
desires.
Symbolic Positioning Luxury and prestige brands operate in this realm. These are the aspirational
elements of your offering; the characteristics of the brand that fulfill customers’ self-esteem.
Experiential positioning Experiential positioning focuses on the elements of a brand that address
emotional connection with customers.
These three elements combine to position the brand. Positioning is a conceptual tool to help tailor your
value proposition and communicate it to customers. You want to highlight your advantages relative to
competitors and communicate this distinction in a compelling way to customers.
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Chapter two
Marketing Mix ( 7Ps)
Marketing Mix: 4Ps with 4Cs (Explained)
The marketing mix is a blend of marketing variables that determine the level of marketing efforts on the
target market. Marketing mix is the mixture of controllable marketing variables that the firm uses to
influence and pursue the sought level of sales in the target market. It is the tools use to influence or
persuade the wants, needs, and demands of the customer for PSI (product, service, or information). In
simple terms; marketing mix is the tool that is used to influence the target market and its demand for
product, service, or information. Usually; marketing mix describes the combination of the 4 inputs which
constitute the core of a company’s marketing system: the product, the price structure the promotional
activities, and the distribution system.
Marketing Mix: Product. Price. Place. Promotion. People. Process. Physical Evidence.
What these Marketing Mix Ps indicates? Let’s Explain;
4p’s and 7p’s of the marketing mix are;
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Product
The product is something like good, service, information etc. that satisfies the wants of a company’s
target market. Products must follow a logical product lifecycle and it is very important for marketers or
producers to understand and plan for the stages of the product lifecycle and their core challenges. Product
must answer some questions, for example, what problem the product will solve, is the consumer or
customer needs the product, and/or what will be the components of the product?
Definition: A product is the item offered for sale. A product can be a service or an item. It can be
physical or in virtual or cyber form. Every product is made at a cost and each is sold at a price. The price
that can be charged depends on the market, the quality, the marketing and the segment that is targeted.
Each product has a useful life after which it needs replacement, and a life cycle after which it has to be re-
invented. In FMCG parlance, a brand can be revamped, re-launched or extended to make it more relevant
to the segment and times, often keeping the product almost the same.
Description: A product needs to be relevant: the users must have an immediate use for it. A product
needs to be functionally able to do what it is supposed to, and do it with a good quality. A product needs
to be communicated: Users and potential users must know why they need to use it, what benefits they can
derive from it, and what it does difference it does to their lives. Advertising and 'brand building' best do
this. A product needs a name: a name that people remember and relate to. A product with a name
becomes a brand. It helps it stand out from the clutter of products and names.
A product should be adaptable: with trends, time and change in segments, the product should lend itself to
adaptation to make it more relevant and maintain its revenue stream.
Price
Price means the number of dollar customers or consumers must pay to obtain/use the product. It is the
amount paid by the customer by to a business. For example, a bottle of Wine that may cost $100. Prices
set by the business depends on the business policy those it may be adjusted through discounts,
allowances, and/or credit terms.
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Pricing strategy: Definition of 'Pricing Strategies'
Definition: Price is the value that is put to a product or service and is the result of a complex set of
calculations, research and understanding and risk taking ability. A pricing strategy takes into account
segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst
others. It is targeted at the defined customers and against competitors.
Description: There are several pricing strategies:
Premium pricing: high price is used as a defining criterion. Such pricing strategies work in segments and
industries where a strong competitive advantage exists for the company.
Penetration pricing: price is set artificially low to gain market share quickly. This is done when a new
product is being launched. It is understood that prices will be raised once the promotion period is over and
market share objectives are achieved. Economy pricing: no-frills price. Margins are wafer thin;
overheads like marketing and advertising costs are very low. Targets the mass market and high market
share.
Skimming strategy: high price is charged for a product till such time as competitors allow after which
prices can be dropped. The idea is to recover maximum money before the product or segment attracts
more competitors who will lower profits for all concerned.
These are the four basic strategies, variations of which are used in the industry.
Place (Distribution):
Place (or its more common name "distribution") is about how a business gets its products to the
customers. It is one thing having a great product, sold at an attractive price. But what if: Customers
are not near a retailer that is selling the product? A competing product is stocked by a much wider range
of outlets? A competitor is winning because it has a team of trained distributors or sales agents who are
out there meeting customers and closing the sale? Distribution matters for a business of any size – it is a
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crucial part of the marketing mix. The objective of distribution is clear. It is to: To make products
available in the right place at the right time in the right quantities
Distribution is achieved by using one or more distribution channels, including:
Retailers, Distributors / Sales Agents, Direct (e.g. via e-commerce), Wholesalers
A distribution channel can be defined as:
"all the organisations through which a product must pass between its point of production and
consumption"
Looking at that definition, you can see that a product might pass through several stages before it finally
reaches the consumer. The organisations involved in each stage of distribution are commonly referred to
as "intermediaries".
Why does a business give the job of selling its products to intermediaries? After all, using an intermediary
means giving up some control over how products are sold and who they are sold to. An intermediary will
also want to make a profit by getting involved.
The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the
contacts, experience and scale of operation which means that greater sales can be achieved than if the
producing business tried to run a sales operation itself. The main function of a distribution channel is to
provide a link between production and consumption. Organisations that form any particular distribution
channel perform many key functions: Place indicates the company activities that ensure a product or
service available to target consumers. It includes all activities like distribution channels, logistics,
transportation, and locations offered by the company. A company may have many stores offering its
products across the United States, but there may still locations where customers or consumer will not
access that company’s products. This is a great loss for the company. So that it must ensure that products
are available to target customers or consumers.
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What is the nature and function of distribution (place)?
Distribution is efficiently managing the acquisition of raw materials by the factory and the movement of
products from the producer or manufacturer to business-to-business (B2B) users and consumers. It
includes many facets, such as location, hours, website presence, logistics, atmospherics, inventory
management, supply-chain management, and others. Logistics activities are usually the responsibility of
the marketing department and are part of the large series of activities included in the supply chain. A
supply chain is the system through which an organization acquires raw material, produces products, and
delivers the products and services to its customers. (Figure) illustrates a typical supply chain. Supply
chain management helps increase the efficiency of logistics service by minimizing inventory and moving
goods efficiently from producers to the ultimate users.
On their way from producers to end users and consumers, products pass through a series of marketing
entities known as a distribution channel. We will look first at the entities that make up a distribution
channel and then examine the functions that channels serve.
Marketing Intermediaries in the Distribution Channel
A distribution channel is made up of marketing intermediaries, or organizations that assist in moving
goods and services from producers to end users and consumers. Marketing intermediaries are in the
middle of the distribution process, between the producer and the end user. The following marketing
intermediaries most often appear in the distribution channel:
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Agents and brokers: Agents are sales representatives of manufacturers and wholesalers, and brokers are
entities that bring buyers and sellers together. Both agents and brokers are usually hired on commission
basis by either a buyer or a seller. Agents and brokers are go-betweens whose job is to make deals. They
do not own or take possession of goods.
Industrial distributors: Industrial distributors are independent wholesalers that buy related product lines
from many manufacturers and sell them to industrial users. They often have a sales force to call on
purchasing agents, make deliveries, extend credit, and provide information. Industrial distributors are
used in such industries as aircraft manufacturing, mining, and petroleum.
Wholesalers: Wholesalers are firms that sell finished goods to retailers, manufacturers, and institutions
(such as schools and hospitals). Historically, their function has been to buy from manufacturers and sell to
retailers.
Retailers: Retailers are firms that sell goods to consumers and to industrial users for their own
consumption.
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At the end of the distribution channel are final consumers and industrial users. Industrial users are firms
that buy products for internal use or for producing other products or services. They include
manufacturers, utilities, airlines, railroads, and service institutions such as hotels, hospitals, and schools.
(Figure) shows various ways marketing intermediaries can be linked. For instance, a manufacturer may
sell to a wholesaler that sells to a retailer that in turn sells to a customer. In any of these distribution
systems, goods and services are physically transferred from one organization to the next. As each takes
possession of the products, it may take legal ownership of them. As the exhibit indicates, distribution
channels can handle either consumer products or industrial products.
Channels of Distribution for B2B and Consumer Products
Nontraditional Channels: Often nontraditional channel arrangements help differentiate a firm’s product
from the competition. For example, manufacturers may decide to use nontraditional channels such as the
internet, mail-order channels, or infomercials to sell products instead of going through traditional retailer
channels. Although nontraditional channels may limit a brand’s coverage, they can give a producer
serving a niche market a way to gain market access and customer attention without having to establish
channel intermediaries. Nontraditional channels can also provide another avenue of sales for larger firms.
For example, a London publisher sells short stories through vending machines in the London
Underground. Instead of the traditional book format, the stories are printed like folded maps, making
them an easy-to-read alternative for commuters.
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Kiosks, long a popular method for ordering and registering for wedding gifts, dispersing cash through
ATMs, and facilitating airline check-in, are finding new uses. Ethan Allen furniture stores use kiosks as a
product locator tool for consumers and salespeople. Kiosks on the campuses of Cheney University allow
students to register for classes, see their class schedule and grades, check account balances, and even print
transcripts. The general public, when it has access to the kiosks, can use them to gather information about
the university. Small and medium-sized New Orleans food and beverage companies and restaurants
banded together to promote their goods and establishments over the internet on a specific website at
http://www.nolacuisine.com. They also have found that they can successfully sell their offerings through
the websites of the profiled restaurants and food outlets, such as Cochon Butcher
(https://cochonbutcher.com). With technology rapidly evolving, downloading first-run movies to mobile
devices may not be far off. The changing world of technology opens many doors for new, nontraditional
distribution channels.
The Functions of Distribution Channels: Why do distribution channels exist? Why can’t every firm sell
its products directly to the end user or consumer? Why are go-betweens needed? Channels serve a
number of functions.
Channels Reduce the Number of Transactions: Channels make distribution simpler by reducing the
number of transactions required to get a product from the manufacturer to the consumer. For example, if
there are four students in a course and a professor requires five textbooks (each from a different
publisher), a total of 20 transactions would be necessary to accomplish the sale of the books. If the
bookstore serves as a go-between, the number of transactions is reduced to nine. Each publisher sells to
one bookstore rather than to four students. Each student buys from one bookstore instead of from five
publishers (see (Figure)). How Distribution Channels Reduce the Number of Transactions
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Dealing with channel intermediaries frees producers from many of the details of distribution activity.
Producers are traditionally not as efficient or as enthusiastic about selling products directly to end users as
channel members are. First, producers may wish to focus on production. They may feel that they cannot
both produce and distribute in a competitive way. On the other hand, manufacturers are eager to deal
directly with giant retailers, such as Walmart, which offer huge sales opportunities to producers.
Channels Ease the Flow of Goods Channels make distribution easier in several ways. The first is by
sorting, which consists of the following:
Sorting out: Breaking many different items into separate stocks that are similar. Eggs, for instance, are
sorted by grade and size. Another example would be different lines of women’s dresses—designer,
moderate, and economy lines.
Accumulating: Bringing similar stocks together into a larger quantity. Twelve large Grade A eggs could
be placed in some cartons and 12 medium Grade B eggs in other cartons. Another example would be to
merge several lines of women’s dresses from different designers together.
Allocating: Breaking similar products into smaller and smaller lots. (Allocating at the wholesale level is
called breaking bulk.) For instance, a tank-car load of milk could be broken down into gallon jugs. The
process of allocating generally is done when the goods are dispersed by region and as ownership of the
goods changes. Without the sorting, accumulating, and allocating processes, modern society would not
exist. Instead, there would be home-based industries providing custom or semicustom products to local
markets. In short, society would return to a much lower level of consumption.
A second way channels ease the flow of goods is by locating buyers for merchandise. A wholesaler must
find the right retailers to sell a profitable volume of merchandise. A sporting-goods wholesaler, for
instance, must find the retailers who are most likely to reach sporting-goods consumers. Retailers have to
understand the buying habits of consumers and put stores where consumers want and expect to find the
merchandise. Every member of a distribution channel must locate buyers for the products it is trying to
sell. Channel members also store merchandise so that goods are available when consumers want to buy
them. The high cost of retail space often means many goods are stored by the wholesaler or manufacturer.
Promotion: Promotion refers to the activities that communicate the merits of the product to target
customers and influence to buy it. One of the major factors of promotion for products or services is
advertising.
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Promotional mix – What are the different types of promotions?
In the process of creating the marketing plan, managers usually use the 4p’s model (which can also be
found as the 5p’s model). The 4P’s model includes price, place, product and promotion (later on the
model developed in order to also include people). So you have set the price, you have the product and the
place where you want to sell it, but what about promotion? How an organization chooses to promote their
products and services can have a direct and substantial impact on sales. There is much thought and
consideration that needs to go into how dollars spent on advertising and promotions will convert into
revenue for the company. Therefore, once you have reached this step in your business plan you have to
start building your promotional mix. 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. A promotional mix
is defined as being successful if you manage to deliver a clear, compelling message based on the fact that
you chose the most appropriate promotion method.
The promotional mix generally involves 5 components such as
Personal selling, Advertising, Direct marketing, Sales promotions, Public relations
1) Personal selling : It is a part of the promotional mix which involves a one to one communication
between buyers and customers (either potential or already customers). As it is a one-to-one
communication, it generates direct contact with prospects and customers. Even though it is considered to
be one of the most expensive forms of promotion, it is also considered to be the most successful as a
seller-buyer relationship can be created and developed.
2) Advertising: One of the key factors in the promotional mix, which contributes to brand building and
also how the market perceives the company, is advertising. It is always a big part of the promotional mix
because of the far and wide reach of advertising and the message that you can send to your existing and
potential customers. Good advertising can build a solid brand for the company. On the other hand, bad
advertising with a wrong message, can cause the brand or product to fail.
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Advertising Campaign – Meaning & Planning: Advertisements have their ways to make us buy the
advertised products, don’t they? But imagine the impact that a whole series of advertisements, all sharing
the same message or supporting the same cause could have on the consumers.
Wouldn’t that heighten your interest in the product or service that is being offered?
What Is An Advertising Campaign? An advertising campaign is essentially just a series of similar
advertisements by a company or a business that share the same core message, while also convincing
consumers to purchase their products. Each advertisement may have a different theme, but eventually,
they all support the same cause.
To create an advertising campaign it’s important to keep in mind the target audience and to understand
how you can strike a chord with them to get them interested in your products or services.
How Can An Advertising Campaign Help Your Business?
It is always better to have a well-planned strategy to promote your brand, product or services, right?
Advertising campaigns do that for you. Whether you offer a product or a service, choose to promote your
brand online or offline—advertising campaigns help by guiding you through the process. They also help
you gauge where your business stands in the market, by comparing your advertising campaigns with your
competition, thereby also helping you assess the strengths and weaknesses in your products.
Advertising Campaign Planning
1. Analyse the situation– Gather information about your market so that your team and you have a
general understanding about the marketing environment. This also provides your team to assess
the strengths and weaknesses of your product, while also giving you an idea about your
competition in the market, and their previous advertising campaigns.
2. Have an objective – Generating awareness for a new project, changing the existing image of your
brand to increase anticipation from the consumers, conducting a trial and targeting the weaknesses
of your competitors—all these are examples of activities that give your advertising campaign a
positive boost.
3. Target consumers– When you classify your market in terms of consumers, instead of doing so in
terms of products, your advertising campaigns have a much better impact on the target audience.
Research and survey on the subconscious purchase behaviour of consumers can also help you to
understand your consumers better.
4. Make a statement– Words matter as much as the concept of your advertising campaign. In fact, it
is probably the most important step in planning your campaign. It is also the most challenging step
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as it requires condensing the entire concept of the advertising campaign into a single sentence.
(‘Think small’- Volkswagen, ‘I’m lovin’ it’– McDonald’s etc)
5. Have a media strategy– There are times when mass-media is effective enough to get your
advertising campaign trending among the consumers. But, in the day and age of social media, it is
always better to have brand and campaign promotions across several social media platforms.
6. Set a budget– Everything, starting from media, paperwork, promotions, productions etc should be
taken into consideration before you can set a budget for your advertising campaign.
7. Take an inventory– Making a note of the resources that are available with your company that can
be used during the production of your advertising campaign. Talents and skills of staff members
can also be noted down as they can also help assist the production of your campaign.
8. Stick to a theme– It is important to have a theme to your advertising campaign. Is the
advertisement going to be nostalgic or emotional? All the advertisements in your advertising
campaign should essentially stick to a core theme to maintain the integrity of the campaign, as
well as to reinforce the message that you wish to send across to your consumers.
What Makes An Advertising Campaign Effective
Apart from the structure and planning, there are various other factors that can help you create an
advertising campaign. Because there is so much more to things than just being technical, right?
1. Create a personal connect– Address the issues that you want to focus on using your advertising
campaign. Showing people that you care often makes them more interested in the campaigns.
2. Keep it simple– Encompassing a very major issue through an advertising campaign while also
trying to push your products to your consumers can be hard. But minimalism and simplicity are
key aspects when it comes to advertising campaigns.
3. Be honest– With any advertising campaign, honesty and transparency are very important to
consumers. Over-selling a product and claiming it to be something it is not decreases credibility,
while honesty can attract more consumers to your campaign.
4. Repetition can be effective– While continuous repetition of the same message will cause your
consumers to lose interest in your advertising campaign, creatively repeating the message to get
your point across, like for instance, two advertisements sending across the same message as a part
of the same advertising campaign makes consumers show interest in your product.
5. Identify the purpose of the campaign– What is your campaign about? Is it creating awareness?
Is the campaign bringing a new product into the market, or is it bringing in a new use for an
existing product? By identifying the purpose of your advertising campaign, you can connect better
with your consumers.
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6. Choose the right time for launching the campaign– Most advertising campaigns are carefully
rolled out during a peak season. If a festive season is nearby, consumers will look for new and
more attractive products in the market. At such a time, launching a new advertising campaign
captures the attention of your consumers, making your campaign a success.
Three Main Advertising Objectives
Advertising includes messages that your company pays for, delivers through a mass medium and
uses to persuade consumers. The three general ad objectives are to inform, to persuade and to remind
customers. Within these broad goals, companies normally have more specific, quantified objectives, as
well.
Inform: An informative ad is used to introduce a brand new company, product or service to the
marketing. Before you can convince customers that you have the best option, they have to know what
your product does on a basic level. Additionally, companies with complex solutions might benefit from
informing customers of how their products work and how the products help the customers. Informative
ads normally have more copy centered on explaining features of the solution and benefits to the customer.
Persuade: Persuading customers is a prominent ad objective of companies in competitive markets. Once
customers have a basic understanding of your industry and product offerings, you must show them why
your brand is elite. Companies use a variety of approaches, including emphasis on product quality,
service, unique features, environmental friendliness, the cool factor, cutting-edge technology and low
costs. Emotional appeals are common in persuasive ads because you want to tug at the heart strings of
customers by building up their experience.
Remind: Reminder ads simply reinforce your brand message to a well-established marketplace. The
general idea is to maintain top of mind awareness and protect against competitors coming along and
stealing your customers. Charmin, for instance, comes up with creative ways to emphasize the softness
and durability of its toilet paper, even though most consumers know about the brand and its quality. This
keeps the brand and its central message in the forefront of the customers' minds.
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Specific Goals Companies also use a variety of more specific goals. Increasing brand awareness,
developing more favorable customer attitudes, overcoming negative publicity, driving revenue, expanding
the customer base and increasing sales volume are common examples. For effective goal-setting,
marketers should set quantified, measurable criteria. For instance, don't just say your goal is to increase
brand awareness. State that your goal is to increase brand awareness by 25 percent in your primary target
market within six months. Follow up with awareness studies to see if you met the objective.
3) Direct marketing While advertising targets a mass-audience, direct marketing targets prospects and
customers. Social media marketing, Email marketing, Internet marketing are all types of direct marketing
used by companies. They have become important in the promotional mix lately because people are using
internet far more than they used to a decade back. Company’s employ direct marketing in order to engage
in one-way communication with its customers, about product announcements, special promotions, order
confirmations as well as customer inquiries.
4) Sales promotions Sales promotions are one of the most common types of promotion used by
companies. Their main purpose is to stimulate purchasing and sales. While it has the potential of
increasing sales, it is also beneficial for informing prospects about new products on the market or just to
recapture old or lost customers. Such examples include: coupons, product samples, etc.
5) Public relations Lastly, public relations enable an organization to influence a target audience and
through this, create a favorable and positive image for the company. The company tries to connect with
the audience by sharing information with them about the company and about the product. If anything goes
wrong on the information front, the public relations department has to step forward and rebuild the public
image.
While establishing your own promotional mix, you need to consider and decide upon several
factors:
Determine which is your target market – in terms of which customers’ needs you are going to fulfill
through your products while understanding the attitudes and behaviors of your targeted customers
Determine your objective – more precisely, what are you expecting to get one your promotion mix is
implemented. Design your message in terms of content and format.
Select your promotional channels. Determine your budget. Determine your promotional mix.
Measure the results of the implemented program and make the necessary adjustments if needed.
In order to succeed with your promotional mix, it would be a good idea to take a look at what your
competitors are doing. This does not imply that you copy them as it will not help you at all since each
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company has its own identity. Monitoring their ads, promotions and special events might provide you
with a guide of how to promote yourself and differentiate yourself through the promotional mix.
PUSH AND PULL MARKETING STRATEGIES
Marketing is defined as the activity of creating, communicating, delivering and exchanging offers of a
business that are value for the customers, clients, partners and society at large. ie., Marketing is the action
of promoting one’s business in certain ways. The main marketing strategies are divided into two – Push
and Pull Marketing. Push and Pull marketing are the two main promotional strategies which are applied to
reach the product to the target market.
In Push strategy, marketer has to push the company’s product onto the customers by somehow making
them aware of it for sake of purchase. In this, a business attempts to get their promotional message to the
customers even if they are not interested to buy. Thus this type of marketing brings the product directly to
the customers via different channels to make sure that the customer is fully aware of the product at the
time they buy it. Push marketing is also known as Direct Response Marketing or General Advertising.
But in Pull strategy, the main idea is to make the customers come to you. It is a type of marketing
strategy to attract customers to a certain brand through Search Engine Optimization (SEO) and other
methods. Today customers are very active online by searching their needs and reading the reviews. The
Pull marketing strategy helps a businessman to draw a researcher by providing answers to their questions.
Push and Pull Marketing Strategies are differing in the following:
Strategy Push marketing strategy applies the cultivating marketing methods of placing one’s business
offering in front of the target market. Some of the examples are Paid advertising in printed form, Ads in
TV and Radio, Direct Mails to the customers etc.
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In Pull Marketing strategy, the marketer enables researchers to find your products easily by developing
product awareness, brand visibility and lead generations with the use of unique content.
Channels In Push Marketing strategy, the main channels used for the promotion are offline channels like
direct mail postcard, printed Ads, Radio, TV etc. The main goal of this strategy is to drive customers to a
particular location to inbound their phone numbers. Apart from these the traditional marketing such as E-
mail marketing can also be used.
In Pull Marketing Strategy, the key to the audience is the ‘online content’, to take them to a distinct
landing page in order to fill up a form or make a call to a number mentioned in that page.
Working Push marketing strategy works wonderfully if you do it accurately. If you call each and every
customer, then they will feel special and will interest in your product.
In Pull marketing strategy, when the customer approaches you on their own, that will be the great award
for the marketer, however it takes a lot of hard work and time.
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Though Pull and Pull marketing strategies are different, they have their unique part in the promotion of a
business. ie., Push and Pull marketing strategies are the two non-avoidable strategies for a successful
business.
What are the 3P's of Marketing Mix
People Indicates the employees representing the company. They interact with clients or customers for
various purpose.
Process The process is the procedures, mechanisms, and flow of activities by which the service is
delivered to the clients/ customers.
Physical Evidence Physical evidence refers to the area or space where the company representatives will
interact with the customer. It works as a tool for reassuring our customers.
4C’s of Marketing Mix – Modification of 4P’s
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So what are the 4C’s of the marketing mix;
Customer. Cost. Convenience. Communication.
Customer Customer or Consumer is the king in the competitive world. In the competitive environment,
the product will not create its own demand if it isn’t wanted by the consumer. First, you must need to
study the consumer needs and demands and then develop the product as it satisfies the needs, wants and
demands of desired customer or consumer. demand.
Cost Price is only a subset of the total cost incurred to satisfy the want or need of customer or consumer.
Cost is the most important element of marketing mix which affects the decision of the customers. The
marketers must need to give special attention to the cost of a product or services.
Convenience Convenience is the most important tools for more sales. The convenience of purchase
products helps most of customers or consumers to choose that product. Take an example heavy
machineries products like fridge and air cooler. If the companies sell these products and do not give you
delivery and installation service. You may not buy the product as you won’t be ready to pick up the
machine and install it yourself. You will be looking for your own convenience product.
Communication A marketer should consider the communication instead of promotion. Promotion is
manipulative, it starts from the seller while Communication requires a give and take between the buyer
and seller.
How 4P’s and 4C’s of Marketing Mix fit?
So when the company thinks about its product, its need to consider what solutions it is providing for their
customer. When the company thinks about the price of PSI, it should consider what cost, the customer is
willing to pay to get their PSI.
As the company reviews the place of PSI, it could evaluate how convenient it is for their customer to find,
buy, and actually get in their hands. As the company plan, the promotions consider the type of
communication their customers prefer and through which channels they will be more receptive.
what is nonprofit marketing?
The nonprofit marketing title refers to any advertising that markets a socially-oriented offer. So-called
nonprofit organizations (NPO’s) are not economically oriented and are therefore not concerned with
profits or other economic goals, but rather with creating social and societal projects. The focus is on
collecting donations for social purposes, such as animal and environmental protection, extra-curricular
read-only support, or housing for homeless people. But that’s not all.
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Even if the methods and instruments of NPO marketing are similar to those of profit companies, NPO’s
sometimes have quite different tasks and objectives. Social marketing is therefore much more than the
sending of e-mails and newsletters, or the distribution of flyers in pedestrian zones, or even the provision
of account data for donations.
A nonprofit marketing scheme for a social project requires a holistic public relations inquiry that
addresses the needs of the target groups and encourages them to help.
What are Nonprofit-Organizations (NPOs)? Nonprofit organizations (NPO’S) or associations can be
divided into economic, socio-cultural, political, and social NPO’S. They receive financial support either
through state funds, donations, and/or membership fees. However, the profit achieved is not distributed to
the members of the organizations, but invested in the organization or the project.
NPO’s are mainly dependent on volunteer helpers. Depending on the size and the orientation of the
organization, full-time staff may also be employed. In addition to their large number of voluntary
employees, global NPO’s, such as Amnesty International and Greenpeace, also employ permanent staff to
cope with daily administrative work.
Goals, challenges, and difficulties of NPO’s Whether in environmental protection, development aid, or
human rights: Nonprofit organizations always pursue the goal of leading a social project to success.
However, the way to this is posing different challenges to NPOs than to other profit-oriented companies.
As a rule, NPO marketing has fewer human and financial resources available. Since the campaign does
not give any, or only minimal profit (for example, through the sale of own products), NPOs are usually
dependent on self-financing or donations. However, the competitive pressure on the donation market is
enormous.
Another issue: the ever-emerging negative headlines surrounding the misuse of donation funds. These
diminish the credibility of NPO marketing initiatives and frighten potential donors. NPO’s therefore have
to do a lot of work, and also show the highest level of professionalism in order to permanently foster
sponsors and supporters for their projects.
Creating a nonprofit marketing concept In order for your project to be a success, you need to have a
good marketing concept. Since nonprofit organizations must hold their own in the market, their marketing
tools are not significantly different from those of a profit-oriented company. In essence, both have the
same goal: the project is to ‘sell’ well and appeal to a broad target group. The big difference, however, is
that NPOs are focused on the realization of their charitable project, rather than the numbers. However,
depending on the size of the project, they need a certain amount of capital and personnel, and above all,
many dedicated members.
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Nonprofit marketing is based on so-called fundraising because of its limited financial and human
resources. Through ‘procurement marketing’, NPOs try to address a broad target group and increase their
active participation. The more people volunteer for the project and pay membership fees, the more
successfully it can be implemented. In order to create incentives for social engagement, NPOs also use
other marketing tools in addition to standard marketing measures.
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Chapter three
Marketing Environment
On the other hand entry of many competitors poses threat to the organization as some of their customers
may shift to a new seller. By conducting a regular and systematic environmental analysis, the company
can revise and adapt marketing strategies to cope with the new challenges and opportunities in the
marketplace.
The marketing environment is the combination of microenvironment and macro environment.
According to Philip Kotler, “A company’s marketing environment consists of the internal factors &
forces, which affect the company’s ability to develop & maintain successful transactions & relationships
with the company’s target customers”. According to Pride &Ferrell, “The marketing environment consists
of external forces that directly or indirectly influence an organizations acquisition of inputs and
generation of outputs”. To sum up, the marketing environment is a set of diverse, dynamic and
uncontrollable forces that impinge on an organization’s marketing operations and opportunities.
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Macro Environment of Marketing Macro environment factors which consist of external forces. These
external factors influence the company marketing strategy in a great length.
The external environment factors are uncontrollable and the company finds it hard to tackle with the
external factors.
The macro- environment consists of demographic factors, economic factors, natural forces, technology
factors, political factors, and cultural factors.
In the following ways, they affect business strategy.
Demographic Environment Demography is the study of human populations in terms of size, destiny,
location, age, gender, race, occupation, and other statistics. This is the very important factors that help the
marketer to divide the population into different market segments and target markets.
Demographic data also helps in preparing geographical marketing plans, age, and sex wise plans.
Economic Environment Economic Environment is those macro factors that affect the consumer buying
power and spending patterns. It includes the level of income, policies, and nature of an economy,
economic resources, trade cycles, distribution of income and wealth. When the income of a family or
country (per capote income) changes it also change the buying behavior and spending pattern of the
family or country.
Natural Environment Natural environment involves the natural resources that are needed as inputs by
marketers or they are affected by marketing activities. So marketers should be aware of several trends in
the natural environment.
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Technological Environment Technological forces are perhaps the most dramatic forces which are
changing rapidly. These macro-environmental forces create a new product, new markets and marketing
opportunities for marketers.
Political Environment It includes government actions, government legislation, public policies, and act
which affect the operations of a company or business. These forces may affect an organization on a local,
regional, national or international level. So marketers and business management pay close attention to the
political forces to judge how government actions which will affect their company.
Cultural Environment Cultural factors in heritage, living styles, religion etc. also affects a company
marketing strategy. Social responsibility also becomes the part of marketing and slowly emerged in
marketing literature. Socially responsible marketing is that business firms should take the lead in
eliminating socially harmful products.
Micro Marketing environment
The micro-environment refers to the forces that are close to the company and affect its ability to serve its
customers. It influences the organization directly. It includes the company itself, its suppliers, marketing
intermediaries, customer markets, competitors, and the public.
The microenvironment consists of five components.
The first is the organization’s internal environment—its several departments and management levels—
as it affects marketing management’s decision making.
The second component includes the marketing channel firms that cooperate to create value: the suppliers
and marketing intermediaries (middlemen, physical distribution firms, marketing-service agencies,
financial intermediaries).
The third component consists of the five types of markets in which the organization can sell: the
consumer, producer, reseller, government, and international markets.
The fourth component consists of the competitors facing the organization.
The fifth component consists of all the public’s that have an actual or potential interest in or impact on the
organization’s ability to achieve its objectives: financial, media, government, citizen action, and local,
general, and internal publics.
The macro-environment consists of demographic factors, economic factors, natural forces, technology
factors, political factors, and cultural factors. The components of Macro- Environment is as follows:
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Demographic Environment Demography is the study of human populations in terms of size, destiny,
location, age, gender, race, occupation, and other statistics. This is the very important factors that help the
marketer to divide the population into different market segments and target markets.
Demographic data also helps in preparing geographical marketing plans, age, and sex wise plans.
Economic Environment Economic Environment is those macro factors that affect the consumer buying
power and spending patterns. It includes the level of income, policies, and nature of an economy,
economic resources, trade cycles, distribution of income and wealth.
When the income of a family or country (per capote income) changes it also change the buying behavior
and spending pattern of the family or country.
Natural Environment Natural environment involves the natural resources that are needed as inputs by
marketers or they are affected by marketing activities. So marketers should be aware of several trends in
the natural environment.
Technological Environment Technological forces are perhaps the most dramatic forces which are
changing rapidly. These macro-environmental forces create a new product, new markets and marketing
opportunities for marketers.
Political Environment It includes government actions, government legislation, public policies, and act
which affect the operations of a company or business. These forces may affect an organization on a local,
regional, national or international level.
So marketers and business management pay close attention to the political forces to judge how
government actions which will affect their company.
Cultural Environment Cultural factors in heritage, living styles, religion etc. also affects a company
marketing strategy. Social responsibility also becomes the part of marketing and slowly emerged in
marketing literature. Socially responsible marketing is that business firms should take the lead in
eliminating socially harmful products.
How environmental factors affecting consumer decision process?
Economic factors Economic factors play an important role in consumer buying behavior decision. It also
directly affects the purchasing power of consumers. If consumers’ purchasing power is weak, they cannot
make the decision to buy goods or services even if they like very much. But, if they have purchasing
power, they can take prompt decision to buy goods or services they like. Income level, the income of their
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family members, liquid asset, spending attitude, credit facility etc. are the economic factors to determine
consumers’ buying decision.
Technological factors Technological forces are perhaps the most dramatic forces which are changing
customer habit by introducing a new product for the customer.
Cultural factors Culture is crucial when it comes to understanding the needs and behaviors of an
individual. Throughout his existence, an individual will be influenced by his family, his
friends, his cultural environment or society that will “teach” him values, preferences as well as common
behaviors to their own culture and buying behavior.
Demographic factors Demography is the study of human populations in terms of size, destiny, location,
age, gender, race, occupation, and other statistics. This is very important because these factors directly
influence consumer decision making.
Differences between Macro and Micro Environment of Marketing
Micro and macro refer to economic environments within which marketing takes place.
Though not exactly opposites, broad differences exist between macro marketing and micromarketing.
The differences between macro environments and micro-environments may be relevant to identify
in the following table:
Point of difference Macro environment Micro environment
Meaning External environment of an
organization.
Inter environments of an
organization.
Nature Very complex. Less complex to perceive.
Task of the marketer Marketer interacts with , the
elements prevailing outside
the organization.
Marketer interacts with other
functional areas of the
organization.
Extent of control Factors remain beyond the
control of marketers.
Factors may be controlled to a
large extent by marketer.
Impact Creates a huge impact on
shaping marketing decisions.
Remains comparatively
independent is shaping
marketing decisions.
Function Factors may create an
opportunity or pose threat to
the marketing activities of an
organization.
Factors reveal the capabilities
of an organization to exploit
the opportunities or to
combat the threat through its
marketing activities.
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Chapter Four
Consumer Behaviour
Consumer Behaviour: Meaning/Definition and Nature of Consumer Behaviour
Meaning and Definition: Consumer behaviour is the study of how individual customers, groups or
organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It
refers to the actions of the consumers in the marketplace and the underlying motives for those actions.
Marketers expect that by understanding what causes the consumers to buy particular goods and services,
they will be able to determine—which products are needed in the marketplace, which are obsolete, and
how best to present the goods to the consumers. The study of consumer behaviour assumes that the
consumers are actors in the marketplace. The perspective of role theory assumes that consumers play
various roles in the marketplace. Starting from the information provider, from the user to the payer and to
the disposer, consumers play these roles in the decision process. The roles also vary in different
consumption situations; for example, a mother plays the role of an influencer in a child’s purchase
process, whereas she plays the role of a disposer for the products consumed by the family.
Nature of Consumer Behaviour:
1. Influenced by various factors: The various factors that influence the consumer behaviour are as
follows:
a. Marketing factors such as product design, price, promotion, packaging, positioning and dis-
tribution.
b. Personal factors such as age, gender, education and income level.
c. Psychological factors such as buying motives, perception of the product and attitudes towards the
product.
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d. Situational factors such as physical surroundings at the time of purchase, social surroundings and
time factor.
e. Social factors such as social status, reference groups and family.
f. Cultural factors, such as religion, social class—caste and sub-castes.
2. Undergoes a constant change: Consumer behaviour is not static. It undergoes a change over a period
of time depending on the nature of products. For example, kids prefer colourful and fancy footwear, but
as they grow up as teenagers and young adults, they prefer trendy footwear, and as middle-aged and
senior citizens they prefer more sober footwear. The change in buying behaviour may take place due to
several other factors such as increase in income level, education level and marketing factors.
3. Varies from consumer to consumer: All consumers do not behave in the same manner. Different
consumers behave differently. The differences in consumer behaviour are due to individual factors such
as the nature of the consumers, lifestyle and culture. For example, some consumers are technoholics.
They go on a shopping and spend beyond their means. They borrow money from friends, relatives, banks,
and at times even adopt unethical means to spend on shopping of advance technologies. But there are
other consumers who, despite having surplus money, do not go even for the regular purchases and avoid
use and purchase of advance technologies.
4. Varies from region to region and country to county: The consumer behaviour varies across states,
regions and countries. For example, the behaviour of the urban consumers is different from that of the
rural consumers. A good number of rural consumers are conservative in their buying behaviours. The rich
rural consumers may think twice to spend on luxuries despite having sufficient funds, whereas the urban
consumers may even take bank loans to buy luxury items such as cars and household appliances. The
consumer behaviour may also varies across the states, regions and countries. It may differ depending on
the upbringing, lifestyles and level of development.
5. Information on consumer behaviour is important to the marketers:
Marketers need to have a good knowledge of the consumer behaviour. They need to study the various
factors that influence the consumer behaviour of their target customers.
The knowledge of consumer behaviour enables them to take appropriate marketing decisions in respect of
the following factors: a. Product design/model, b. Pricing of the product, c. Promotion of the
product, d. Packaging, e. Positioning, f. Place of distribution
6. Leads to purchase decision: A positive consumer behaviour leads to a purchase decision. A consumer
may take the decision of buying a product on the basis of different buying motives. The purchase decision
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leads to higher demand, and the sales of the marketers increase. Therefore, marketers need to influence
consumer behaviour to increase their purchases.
7. Varies from product to product: Consumer behaviour is different for different products. There are
some consumers who may buy more quantity of certain items and very low or no quantity of other items.
For example, teenagers may spend heavily on products such as cell phones and branded wears for snob
appeal, but may not spend on general and academic reading. A middle- aged person may spend less on
clothing, but may invest money in savings, insurance schemes, pension schemes, and so on.
8. Improves standard of living: The buying behaviour of the consumers may lead to higher standard of
living. The more a person buys the goods and services, the higher is the standard of living. But if a person
spends less on goods and services, despite having a good income, they deprives themselves of higher
standard of living.
9. Reflects status: The consumer behaviour is not only influenced by the status of a consumer, but it also
reflects it. The consumers who own luxury cars, watches and other items are considered belonging to a
higher status. The luxury items also give a sense of pride to the owners.
5 Core Customer and Marketplace Concepts For understanding the customer, marketplace, and their
behavior; five core concepts customer and marketplace that needed to be mastered. All marketing efforts
are made for attracting customer, serving superior value and capturing return value for the customer in a
superior routine than the competitors in the marketplace who are in competition with the same motive.
So, understanding the customer, the marketplace, and their behavior is essential for any marketing
decision and action. Marketing pundits and gurus have examined the customer, the marketplace and the
way it behaves are situations. They have identified and acknowledged that there are five core concepts of
customer and marketplace that needed to be mastered;
Needs, wants, and demands; Market offerings (products, services, and experiences);
Value and satisfaction; Exchanges and relationships; and Markets.
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Needs, Wants, and Demands The most basic concept of fundamental marketing is that of human needs,
wants, and demands. Human needs are states of felt deprivation. Marketers did not create these needs;
they are a primary part of the human makeup.
Basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and
individual needs for knowledge and self-expression; are needs of human. Wants are needs shaped by
culture and individual personality. Every human being requires food but what form they take food is
different due to cultural and social attributes of an individual. One person may like a burger or hot-dog
another might like french fries or rich. Individuals’ cultural and social features shape the wants. With
buying power, wants become demands. Needs and wants to drive people to demand products and
services.
Market Offerings Consumers’ needs and wants are satisfied through market offerings.
Market offerings are some combination, mixture, or blend of physical products, services, information,
ideas, or experiences offered to a market to satisfy a need or a want.
Examples of market offerings are everywhere. From coke’s “open happiness” adverts’ to a simple banner
in a webpage; market offerings are finding you no matter where you go online or offline. For any sellers
putting the best blend of offers in a market, the offering is the challenge. Many of them make the mistake
named “marketing myopia” – paying more attention to the specific products they offer than to the benefits
and experiences produced by these products. Here they are so hooked with their products that they focus
only on existing wants and lose sight of customer needs. They forget that a product is only a tool to solve
a consumer problem. “market offerings”- that gets results for the sellers puts the customers’ need, wants,
and demands first.
Value and Satisfaction
Consumers usually face a wide-ranging array of products and services in forms of “market offerings” that
might satisfy a certain need. How do they choose among these many market offerings? A customer
always forms expectations about the value and satisfaction that various market offerings will deliver and
buy them for that reason. Customer value and customer satisfaction are key building blocks for
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developing and managing customer relationships. Marketers must be careful to set the right level of
expectations. Overcooked it or under-cooked market offerings will not help the marketer’s capture value
in return of customer satisfaction. Satisfied customers will buy again and tell others about their good
experiences, on the other hand, dissatisfied customers will eventually switch to competitors and surely
disparage the product to others.
Exchanges and Relationships Marketing occurs when people decide to satisfy their needs and wants
through exchange relationships. The exchange is the act of obtaining the desired object from someone by
offering something in return. Marketer tries to bring about a response to some market offering. By this;
marketers try to build and maintain profitable exchange relationships with target audiences interested in
an exchange.
Markets The concepts of exchange and relationships lead to the concept of the market.
A market is the set of actual and potential buyers of a product or service. Marketing efforts are undertaken
for controlling markets to bring about profitable customer relationships. For creating these relationships
marketers must search for buyers and their needs, design good market offerings, set prices for them,
promote them, and store and deliver them. Activities such as consumer research, product development,
communication, distribution, pricing, and service are must in order to stay ahead of the competitors in the
market.
Importance of consumer behaviour:
1) production policies: The study of consumer behaviour effects production policies of enterprise.
Consumer behaviour discovers the habits, tastes and preferences of consumers and such discovery
enables and enterprise to plan and develop its products according to these specifications. It is necessary
for an enterprise to be in continuous touch with the changes in consumer behaviour so that necessary
changes in products may be made.
2) Price policies: The buyer behaviour is equally important in having price policies. The buyers of some
products purchase only because particular articles are cheaper than the competitive articles available in
the market.
3) Decision regarding channels of distribution: The goods, which are sold and solely on the basis of
low price mast and economical distribution channels. In case of those articles, which week T.V. sets,
refrigerators etc. Must have different channels of distribution. Thus, decisions regarding channels of
distribution are taken on the basis of consumer behaviour.
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4) Decision regarding sales promotion: Study of consumer behaviour is also vital in making decisions
regarding sales promotion. It enables the producer to know what motive prompt consumer to make
purchase and the same are utilised in promotional campaigns to awaken desire to purchase.
5) Exploiting marketing opportunities: Study of consumer behaviour helps the marketers to understand
the consumers needs, aspirations, expectations, problems etc. This knowledge will be useful to the
marketers in exploiting marketing opportunities and meeting the challenges of the market.
6) Consumer do not always act or react predictably: The consumers of the past used to react to price
levels as if price and quality had positive relation. Today, week value for money, lesser price but with
superior features. The consumers response indicates that the shift had occurred.
7) Highly diversified consumer preferences: This shift has occurred due to availability of more choice
now. Thus study of consumer behaviour is important to understand the changes.
8) Rapid introduction of new products: Rapid introduction of new product with technological
advancement has made the job of studying consumer behaviour more imperative. For example, the
information Technologies are changing very fast in personal computer industry.
9) Implementing the "Marketing concept": This calls for studying the consumer behaviour, all
customers need have to be given priority. Thus identification of target market before production becomes
essential to deliver the desired customer satisfaction and delight.
Consumer decision making process:
Consumer Behaviour – Stages in the Buying Process
1. Need recognition- How many times have you have heard about a movie and had no interest in it—
until you saw the preview? Afterward, you felt like had to see it. Do you think it’s a coincidence that
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Gatorade and other beverage makers locate their machines in gymnasiums so you see them after a long,
tiring workout?
2. Search for information- Maybe you have owned several shirts and know what you like and don’t like
about them. Or, there might be a particular brand that you’ve purchased in the past that you liked and
want to purchase in the future. This is a great position for the company that owns the brand to be in—
something firms strive for. Internet shopping sites such as Amazon.com have become a common source
of information about products. Amazon.com also offers product reviews written by consumers. People
prefer “independent” sources such as this when they are looking for product information.
3. Evaluation- Obviously, there are hundreds of different shirts available to choose from. It is not
possible for you to examine all of them. Consequently, you develop what is called evaluative criteria to
help you narrow down your choices.
Evaluative criteria are certain characteristics that are important to you such as the price of the shirt, the
size, and colour. Some of these characteristics are more important than others. For example, the size of
the size and the price might be more important to you than the colour—unless, say, the colour is hot pink
and you hate pink.
4. Choice and Purchase- Stage 4 is the point at which you decide what shirt to purchase. However, in
addition to the shirts, you are probably also making other decisions at this stage, including where and how
to purchase the shirts and on what terms. Maybe the shirt was cheaper at one store than another, but the
salesperson there was rude. Or maybe you decide to order online because you’re too busy to go to the
mall.
5. Post purchase Evaluation- At this point in the process you decide whether the shirt you purchased is
everything it was cracked up to be. Hopefully it is. If it’s not, you’re likely to suffer what’s called
‘buyer’s remorse’. You want to feel good about your purchase, but you don’t. You begin to wonder
whether you should have waited to get a better price, purchased something else, or gathered more
information first. Consumers commonly feel this way, which is a problem for sellers. If you don’t feel
good about what you’ve purchased from them, you might return the item and never purchase anything
from them again. Or, worse yet, you might tell everyone you know how bad the product was. All
marketing decisions are based on assumptions and knowledge of consumer behaviour. Researching
consumer behaviour is a complex process, but understanding consumer behaviour is critical to marketers.
If you need any assistance with researching consumer behaviour, get in touch with Research Services
now.
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Factors Influencing Consumer Behavior
The marketers try to understand the actions of the consumers in the marketplace and the underlying
motives for such actions. These motives are the factors that influence the consumer behavior. These are:
Psychological Factors: The human psychology plays a crucial role in designing the consumer’s
preferences and likes or dislikes for a particular product and services. Some of the important
psychological factors are:
 Motivation
 Perception
 Learning
 Attitudes and Beliefs
Social Factors: The human beings live in a complex social environment wherein they are surrounded by
several people who have different buying behaviors. Since the man is a social animal who likes to be
acceptable by all tries to imitate the behaviors that are socially acceptable. Hence, the social factors
influence the buying behavior of an individual to a great extent. Some of the social factors are:
 Family
 Reference Groups
 Roles and status
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Cultural Factors: It is believed that an individual learns the set of values, perceptions, behaviors, and
preferences at a very early stage of his childhood from the people especially, the family and the other key
institutions which were around during his developmental stage. Thus, the behavioral patterns are
developed from the culture where he or she is brought up. Several cultural factors are:
 Culture
 Subculture
 Social Class
Personal Factors: There are several factors personal to the individuals that influence their buying
decisions. Some of them are:
 Age
 Income
 Occupation
 Lifestyle
Economic Factors: The last but not the least is the economic factors which have a significant influence
on the buying decision of an individual. These are:
 Personal Income
 Family Income
 Income Expectations
 Consumer Credit
 Liquid Assets of the Consumer
 Savings
These are some of the underlying factors that influence the consumer behavior, and the marketer must
keep these in mind, so that appropriate strategic marketing decision is made.
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Chapter Five
New Product Development
THE NEW PRODUCT DEVELOPMENT PROCESS (NPD) In order to stay successful in the face of
maturing products, companies have to obtain new ones by a carefully executed new product development
process. But they face a problem: although they must develop new products, the odds weigh heavily
against success. Of thousands of products entering the process, only a handful reach the market.
Therefore, it is of crucial importance to understand consumers, markets, and competitors in order to
develop products that deliver superior value to customers. In other words, there is no way around a
systematic, customer-driven new product development process for finding and growing new products. We
will go into the eight major steps in the new product development process.
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1- Idea generation – The New Product Development Process
The new product development process starts with idea generation. Idea generation refers to the systematic
search for new-product ideas. Typically, a company generates hundreds of ideas, maybe even thousands,
to find a handful of good ones in the end. Two sources of new ideas can be identified:
Internal idea sources: the company finds new ideas internally. That means R&D, but also contributions
from employees.
External idea sources: the company finds new ideas externally. This refers to all kinds of external
sources, e.g. distributors and suppliers, but also competitors. The most important external source are
customers, because the new product development process should focus on creating customer value.
2- Idea screening – The New Product Development Process
The next step in the new product development process is idea screening. Idea screening means nothing
else than filtering the ideas to pick out good ones. In other words, all ideas generated are screened to spot
good ones and drop poor ones as soon as possible. While the purpose of idea generation was to create a
large number of ideas, the purpose of the succeeding stages is to reduce that number. The reason is that
product development costs rise greatly in later stages. Therefore, the company would like to go ahead
only with those product ideas that will turn into profitable products. Dropping the poor ideas as soon as
possible is, consequently, of crucial importance.
3- Concept development and Testing – The New Product Development Process
To go on in the new product development process, attractive ideas must be developed into a product
concept. A product concept is a detailed version of the new-product idea stated in meaningful consumer
terms. You should distinguish
A product idea à an idea for a possible product
A product concept à a detailed version of the idea stated in meaningful consumer terms
A product image à the way consumers perceive an actual or potential product.
Let’s investigate the two parts of this stage in more detail.
- Concept development Imagine a car manufacturer that has developed an all-electric car. The idea has
passed the idea screening and must now be developed into a concept. The marketer’s task is to develop
this new product into alternative product concepts. Then, the company can find out how attractive each
concept is to customers and choose the best one.
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- Concept testing New product concepts, such as those given above, need to be tested with groups of
target consumers. The concepts can be presented to consumers either symbolically or physically. The
question is always: does the particular concept have strong consumer appeal? For some concept tests, a
word or picture description might be sufficient. However, to increase the reliability of the test, a more
concrete and physical presentation of the product concept may be needed. After exposing the concept to
the group of target consumers, they will be asked to answer questions in order to find out the consumer
appeal and customer value of each concept.
4- Marketing strategy development – The New Product Development Process
The next step in the new product development process is the marketing strategy development. When a
promising concept has been developed and tested, it is time to design an initial marketing strategy for the
new product based on the product concept for introducing this new product to the market.
The marketing strategy statement consists of three parts and should be formulated carefully:
 A description of the target market, the planned value proposition, and the sales, market share and
profit goals for the first few years
 An outline of the product’s planned price, distribution and marketing budget for the first year
 The planned long-term sales, profit goals and the marketing mix strategy.
5- Business analysis – The New Product Development Process
Once decided upon a product concept and marketing strategy, management can evaluate the business
attractiveness of the proposed new product. The fifth step in the new product development process
involves a review of the sales, costs and profit projections for the new product to find out whether these
factors satisfy the company’s objectives. If they do, the product can be moved on to the product
development stage.
In order to estimate sales, the company could look at the sales history of similar products and conduct
market surveys. Then, it should be able to estimate minimum and maximum sales to assess the range of
risk. When the sales forecast is prepared, the firm can estimate the expected costs and profits for a
product, including marketing, R&D, operations etc. All the sales and costs figures together can eventually
be used to analyse the new product’s financial attractiveness.
6- Product development – The New Product Development Process
The new product development process goes on with the actual product development. Up to this point, for
many new product concepts, there may exist only a word description, a drawing or perhaps a rough
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prototype. But if the product concept passes the business test, it must be developed into a physical product
to ensure that the product idea can be turned into a workable market offering. The problem is, though, that
at this stage, R&D and engineering costs cause a huge jump in investment.
The R&D department will develop and test one or more physical versions of the product concept.
Developing a successful prototype, however, can take days, weeks, months or even years, depending on
the product and prototype methods.
Also, products often undergo tests to make sure they perform safely and effectively. This can be done by
the firm itself or outsourced.
In many cases, marketers involve actual customers in product testing. Consumers can evaluate prototypes
and work with pre-release products. Their experiences may be very useful in the product development
stage.
7- Test marketing – The New Product Development Process
The last stage before commercialisation in the new product development process is test marketing. In this
stage of the new product development process, the product and its proposed marketing programme are
tested in realistic market settings. Therefore, test marketing gives the marketer experience with marketing
the product before going to the great expense of full introduction. In fact, it allows the company to test the
product and its entire marketing programme, including targeting and positioning strategy, advertising,
distributions, packaging etc. before the full investment is made.
The amount of test marketing necessary varies with each new product. Especially when introducing a new
product requiring a large investment, when the risks are high, or when the firm is not sure of the product
or its marketing programme, a lot of test marketing may be carried out.
8- Commercialisation
Test marketing has given management the information needed to make the final decision: launch or do
not launch the new product. The final stage in the new product development process is commercialisation.
Commercialisation means nothing else than introducing a new product into the market. At this point, the
highest costs are incurred: the company may need to build or rent a manufacturing facility. Large amounts
may be spent on advertising, sales promotion and other marketing efforts in the first year.
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Some factors should be considered before the product is commercialized:
Introduction timing. For instance, if the economy is down, it might be wise to wait until the following
year to launch the product. However, if competitors are ready to introduce their own products, the
company should push to introduce the new product sooner.
Introduction place. Where to launch the new product? Should it be launched in a single location, a region,
the national market, or the international market? Normally, companies don’t have the confidence, capital
and capacity to launch new products into full national or international distribution from the start. Instead,
they usually develop a planned market rollout over time. In all of these steps of the new product
development process, the most important focus is on creating superior customer value. Only then, the
product can become a success in the market. Only very few products actually get the chance to become a
success. The risks and costs are simply too high to allow every product to pass every stage of the new
product development process.
Product Life Cycle
Definition: The Product Life Cycle means the sequence of stages that every product progresses through
until it reaches the stage where it is finally abandoned or discontinued from the market.
In other words, the life of a product is finite and advances through several stages i.e. from the introduction
to growth, maturity and decline which are associated with the changes in the marketing situations and
hence the marketing strategies and the marketing mix also get affected.
1- Introduction Stage: This is the stage when the product is very new to the market, and the firm
tries to create product awareness and develops a market for the product. This stage requires
greater investment as the product branding, and quality levels are established, and the property
rights such as patents and trademarks are obtained. The firm can either keep the price of the
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product low to penetrate into the market and increase its market share or price the product on the
high side to recover the development cost. The blend of advertising and personal selling is likely
to be more effective at the introduction stage since the product is new and the customers will make
purchases only if they have sufficient information about the product. Until the consumers show
the acceptance for the product, the firm distributes its product through a selective distribution
channel.
2- Growth Stage: This stage is characterized by increased sales and profits. As the production
increases the firm achieve the economies of scales and hence the overall profits of the firm
increases. Here, the firm tries to develop the brand preference and increase the market share. This
is the time when other similar kinds of goods enter the market and thus, the firm tries to maintain
its quality and introduce add-on features and support services to keep up with the market share.
Here the competition is not so stiff and, therefore, the firm keeps a moderate price of its product
and enjoys the increasing demand. More distribution channels are added to the network as more
and more customers are to be reached. Since the customer base is widespread, the broader
promotional tool is required and hence the advertising is likely to be more effective.
3- Maturity: This stage is characterized by slow growth and intense competition. There are several
firms that offer similar kinds of products and therefore, the new product model or its variants are
introduced to differentiate it from that of the competitor’s product. Here, the distribution becomes
more intense, and the channel partners are often given the incentives to gain more preference over
the competitor’s products. The sales promotion and personal selling play a vital role at this stage.
The short-term incentives are given to the public in the form of gifts, vouchers, discounts, rebates
with the intent to boost temporary sales.
4- Decline: Finally, the product reaches the stage where the profits touch the lowest point,
competition becomes severe and customers start using other better alternatives. Here the
management has to take one of the following crucial decisions: Maintain the product by adding
new features or discovering its new usages. Harvest the product by reducing the cost of production
and selling to the niche market segment. Abandon the product i.e. discontinue or withdraw the
product from the market or liquidating inventory to another firm that is ready to continue with the
product. Thus, these are the stages which every product passes through, and the company should
plan its marketing strategy keeping in mind the life stage of a product in which it falls.
Product life cycle strategies
The product life cycle contains four distinct stages: introduction, growth, maturity and decline. Each stage
is associated with changes in the product's marketing position. You can use various marketing strategies
in each stage to try to prolong the life cycle of your products.
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Product introduction strategies
Marketing strategies used in introduction stages include:
rapid skimming - launching the product at a high price and high promotional level
slow skimming - launching the product at a high price and low promotional level
rapid penetration - launching the product at a low price with significant promotion
slow penetration - launching the product at a low price and minimal promotion
During the introduction stage, you should aim to: establish a clear brand identity
connect with the right partners to promote your product set up consumer tests, or provide samples or trials
to key target markets price the product or service as high as you believe you can sell it, and to reflect the
quality level you are providing
You could also try to limit the product or service to a specific type of consumer - being selective can
boost demand. Read more about the introduction stage of a product life cycle.
Product growth strategies
Marketing strategies used in the growth stage mainly aim to increase profits. Some of the common
strategies to try are:
improving product quality
adding new product features or support services to grow your market share
enter new markets segments
keep pricing as high as is reasonable to keep demand and profits high
increase distribution channels to cope with growing demand
shifting marketing messages from product awareness to product preference
skimming product prices if your profits are too low.
Growth stage is when you should see rapidly rising sales, profits and your market share. Your strategies
should seek to maximise these opportunities.
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Product maturity strategies
When your sales peak, your product will enter the maturity stage. This often means that your market will
be saturated and you may find that you need to change your marketing tactics to prolong the life cycle of
your product. Common strategies that can help during this stage fall under one of two categories:
market modification - this includes entering new market segments, redefining target markets, winning
over competitor’s customers, converting non-users
product modification - for example, adjusting or improving your product’s features, quality, pricing and
differentiating it from other products in the marking
Product decline strategies During the end stages of your product, you will see declining sales and
profits. This can be caused by changes in consumer preferences, technological advances and alternatives
on the market. At this stage, you will have to decide what strategies to take. If you want to save money,
you can:
reduce your promotional expenditure on the products
reduce the number of distribution outlets that sell them
implement price cuts to get the customers to buy the product
fin another use for the product
maintain the product and wait for competitors to withdraw from the market first
harvest the product or service before discontinuing it
Another option is for your business to discontinue the product from your offering. You may choose to:
sell the brand to another business, significantly reduce the price to get rid of all the inventory. Many
businesses find that the best strategy is to modify their product in the maturity stage to avoid entering the
decline stage. Find out more about product life cycle - decline stage.
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THE BCG MATRIX EXPLAINED – HOW DOES THE BCG MATRIX WORK?
The BCG matrix, also known as the Boston growth-share matrix, is a tool to assess a company’s current
product portfolio. Based on this assessment, the Boston matrix helps in the long-term strategic planning
of the company’s portfolio, as it indicates where to invest, to discontinue or develop products. As the
name suggests, the BCG matrix has been developed by the Boston Consulting Group, and it has become a
very popular tool to assess a company’s portfolio and derive strategic investment decisions. But how does
the BCG matrix work?
How does the BCG matrix work? The BCG matrix assesses the company’s product portfolio by placing
each product, division or SBU (strategic business unit) on a 2×2 grid. How does the BCG matrix work in
detail? The placement of products on the grid is done by investigating two dimensions, which are the axes
of the grid: the product life cycle and the experience curve. Since both criteria are rather hard to quantify,
proxy values are used to illustrate these two dimensions. The product life cycle is reflected by market
growth, and the experience curve is mirrored by the relative market share. These two values have to be
identified for each product/division/SBU to place them on the grid. Based on the position of each
product/division/SBU on the BCG matrix, investment or disinvestment decisions can be taken. The
graphic below shows the BCG matrix.
The dimensions/axes of the BCG Matrix How does the BCG matrix work? To understand this, you first
need to understand what the BCG matrix actually shows. The two axes have been introduced before. On
the vertical axis, the market growth rate provides a measure of the market’s attractiveness. On the
horizontal axis, relative market share serves as a measure of the company’s strength in the market. By
dividing the BCG matrix into four fields, four types of SBU can be distinguished. These are explained in
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detail below. If you want or have to conduct a portfolio analysis using the BCG matrix, you need to know
where to get these two numbers for each SBU. The market growth rate can easily be researched: usually,
you will find plenty of data for almost every industry and market online. The relative market share is
computed by dividing the company’s market share by the market share of the strongest competitor in that
market: Relative market share = Company’s market share ÷ largest competitor’s market share.
How to use the BCG Matrix: Now that we have plotted the different products, divisions or SBUs on the
BCG matrix, we need to know what to do next. So how does the BCG matrix work and help to derive
strategic decisions? To arrive at these decisions, we need to understand the four types of SBU that are
distinguished by the Boston growth-share matrix.
Question Marks Question marks are low-share business units in high-growth markets. They require cash
to hold their share, let alone increase it. The company needs to think hard about question marks – which
ones should be built into stars, and which ones should be phased out? Question marks have the
following characteristics:
Low relative market share in a relatively young but promising market (growing)
Potential of becoming stars if the market share can be increased
If necessary market share is not reached, question marks are likely to turn into dogs as soon as the market
gets more mature
Careful analysis is needed to determine whether to invest or not.
Stars Stars are high-growth, high-share businesses or products. They often need heavy investment to
finance their rapid growth. Eventually, their growth will slow down, and they will turn into cash cows.
Stars have the following characteristics:
High market share in a promising market
To turn a star into a future cash cow, heavy investment is needed to fight competition and expand market
share.
Cash Cows Cash cows are low-growth, high-share businesses or products. These established and
successful SBUs need less investment to maintain their market share. As a result, they produce cash that
the company uses to pay its bills and to support other SBUs that need investment. As we have learned,
question marks and stars require heavy investment, which usually comes from the profitable cash cows.
Cash cows have the following characteristics:
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High market share in a slowly growing or mature market
Create the highest cash flow
No further investment should be undertaken due to limited or non-existent growth potential
The company should try to “milk” the cash cows as long as possible.
(Poor) Dogs Dogs are low-growth, low-share businesses and products. They may generate enough cash
to maintain themselves, but do not promise to be large sources of cash flow. Dogs have the following
characteristics: Low relative market share in a slowly growing or declining market Products do mostly not
generate large profit and may usually just break even. The company should divest dogs, as these products
have a negative effect on the overall profitability of the company. Instead of carrying dogs along, the
company should better focus on products or SBUs with greater potential.
The ideal circle of the BCG matrix The ideal situation as suggested by the BCG matrix is the following:
The company invests in promising Question marks to turn them into Stars. By further investing, Stars are
turned into Cash cows. The company harvests all the cash until the Cash cows eventually turn into dogs.
At that point, the company divests the product or SBU and focuses on more profitable opportunities. The
table below summarizes the characteristics of the four types of SBUs in the BCG matrix and shows the
strategic implications for the company’s long-term planning.
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Ansoff matrix: Ansoff's Matrix is a marketing planning model that helps a business determine
its product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it
markets new or existing products in new or existing markets. The output from the Ansoff product/market
matrix is a series of suggested growth strategies which set the direction for the business strategy. These
are described below:
Market penetration Market penetration is the name given to a growth strategy where the business
focuses on selling existing products into existing markets. Market penetration seeks to achieve four main
objectives:
 Maintain or increase the market share of current products – this can be achieved by a
combination of competitive pricing strategies, advertising, sales promotion and perhaps more
resources dedicated to personal selling
 Secure dominance of growth markets
 Restructure a mature market by driving out competitors; this would require a much more
aggressive promotional campaign, supported by a pricing strategy designed to make the market
unattractive for competitors
 Increase usage by existing customers – for example by introducing loyalty schemes
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A market penetration marketing strategy is very much about “business as usual”. The business is focusing
on markets and products it knows well. It is likely to have good information on competitors and on
customer needs. It is unlikely, therefore, that this strategy will require much investment in new market
research.
Market development Market development is the name given to a growth strategy where the business
seeks to sell its existing products into new markets. There are many possible ways of approaching this
strategy, including:
 New geographical markets; for example exporting the product to a new country
 New product dimensions or packaging.
 New distribution channels (e.g. moving from selling via retail to selling using e-commerce and
mail order)
 Different pricing policies to attract different customers or create new market segments
 Market development is a more risky strategy than market penetration because of the targeting of
new markets.
Product development Product development is the name given to a growth strategy where a business
aims to introduce new products into existing markets. This strategy may require the development of new
competencies and requires the business to develop modified products which can appeal to existing
markets.
A strategy of product development is particularly suitable for a business where the product needs to be
differentiated in order to remain competitive. A successful product development strategy places the
marketing emphasis on:
 Research & development and innovation
 Detailed insights into customer needs (and how they change)
 Being first to market
Diversification Diversification is the name given to the growth strategy where a business markets new
products in new markets. This is an inherently more risk strategy because the business is moving into
markets in which it has little or no experience. For a business to adopt a diversification strategy, therefore,
it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the
risks. However, for the right balance between risk and reward, a marketing strategy of diversification can
be highly rewarding.
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Porter's Five Forces
The tool was created by Harvard Business School professor Michael Porter, to analyze an industry's
attractiveness and likely profitability. Since its publication in 1979, it has become one of the most popular
and highly regarded business strategy tools.
Porter recognized that organizations likely keep a close watch on their rivals, but he encouraged them to
look beyond the actions of their competitors and examine what other factors could impact the business
environment. He identified five forces that make up the competitive environment, and which can erode
your profitability. These are:
1. Competitive Rivalry. This looks at the number and strength of your competitors. How many
rivals do you have? Who are they, and how does the quality of their products and services
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compare with yours? Where rivalry is intense, companies can attract customers with aggressive
price cuts and high-impact marketing campaigns. Also, in markets with lots of rivals, your
suppliers and buyers can go elsewhere if they feel that they're not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then
you'll likely have tremendous strength and healthy profits.
2. Supplier Power. This is determined by how easy it is for your suppliers to increase their prices.
How many potential suppliers do you have? How unique is the product or service that they
provide, and how expensive would it be to switch from one supplier to another? The more you
have to choose from, the easier it will be to switch to a cheaper alternative. But the fewer suppliers
there are, and the more you need their help, the stronger their position and their ability to charge
you more. That can impact your profit.
3. Buyer Power. Here, you ask yourself how easy it is for buyers to drive your prices down. How
many buyers are there, and how big are their orders? How much would it cost them to switch from
your products and services to those of a rival? Are your buyers strong enough to dictate terms to
you? When you deal with only a few savvy customers, they have more power, but your power
increases if you have many customers.
4. Threat of Substitution. This refers to the likelihood of your customers finding a different way of
doing what you do. For example, if you supply a unique software product that automates an
important process, people may substitute it by doing the process manually or by outsourcing it. A
substitution that is easy and cheap to make can weaken your position and threaten your
profitability.
5. Threat of New Entry. Your position can be affected by people's ability to enter your market. So,
think about how easily this could be done. How easy is it to get a foothold in your industry or
market? How much would it cost, and how tightly is your sector regulated? If it takes little money
and effort to enter your market and compete effectively, or if you have little protection for your
key technologies, then rivals can quickly enter your market and weaken your position. If you have
strong and durable barriers to entry, then you can preserve a favorable position and take fair
advantage of it.
Innovation strategies:
innovation: the introduction of something new, or a new idea, method, or device : NOVELTY
What is the difference between innovation and invention? The words innovation and invention
overlap semantically but are really quite distinct.
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Invention can refer to a type of musical composition, a falsehood, a discovery, or any product of the
imagination. The sense of invention most likely to be confused with innovation is “a device, contrivance,
or process originated after study and experiment,” usually something which has not previously been in
existence. Innovation, for its part, can refer to something new or to a change made to an existing product,
idea, or field. One might say that the first telephone was an invention, the first cellular telephone either an
invention or an innovation, and the first smartphone an innovation.
What is Innovation Strategy? Innovation is about creating new value people are willing to use and pay
for, whereas strategy is the plan for harnessing for example marketing, operations, finance and R&D to
support achieving the competitive goal.
To clarify, innovation strategy isn’t about innovation tactics, such as setting up an idea challenge, but
more about mapping organization’s mission, vision and value proposition for defined customer markets.
It sets boundaries to your innovation performance expectations by simplifying and structuring your
innovation work to achieve the best possible outcome.
Types of innovation strategies
Proactive Companies with proactive innovation strategies tend to have strong research orientation and
first-mover advantage, and be a technology market leader. They access knowledge from a broad range of
sources and take big bets/high risks. Examples include: Dupont, Apple and Singapore Airlines.
The types of technological innovation used in a proactive innovation strategy are:
radical - breakthroughs that change the nature of products and services
incremental - the constant technological or process changes that lead to improved performance of
products and services.
Active Active innovation strategies involve defending existing technologies and markets while being
prepared to respond quickly once markets and technologies are proven. Companies using this approach
also have broad sources of knowledge and medium-to-low risk exposure; they tend to hedge their bets.
Examples include Microsoft, Dell and British Airways. These companies use mainly incremental
innovation with in-house applied research and development.
Reactive The reactive innovation strategy is used by companies:
which are followers, have a focus on operations, take a wait-and-see approach, look for low-risk
opportunities. They copy proven innovation and use entirely incremental innovators. An example is
Ryanair, a budget airline which has successfully copied the no-frills service model of Southwest Airlines.
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Passive Companies with passive innovation strategies wait until their customers demand a change in their
products or services. Examples include automotive supply companies as they wait for their customers to
demand changes to specification before implementing these.
Chapter sex
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Marketing Research & Marketing planning
 Marketing Research
Definition: The Marketing Research is the systematic collection, analysis, and interpretation of
data pertaining to the marketing conditions.
The basic reason for carrying out the marketing research is to find out the change in the consumer
behavior due to the change in the elements of the marketing mix (product, price, place, promotion). The
marketers need to know about the changing trends in the market viz. Changes in the customer’s tastes and
preferences, the new products launched in the market, prices of the competitor’s product, the close
substitutes of the product, etc.
Marketing Research Process To begin with the marketing research, following steps has to be followed:
1- Define the Problem-The foremost decision that every firm has to undertake is to find out the
problem for which the research is to be conducted. The problem must be defined adequately
because if it is too vague, then it may result in the wastage of scarce resources and if it is too
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narrow, then the exact conclusion cannot be drawn. In order to define the problem appropriately,
each firm must have a clear answer to the questions viz. What is to be researched (content and the
scope)? And Why the research is to be done (decisions that are to be made)?
2- Develop the Research Plan– This step involves gathering the information relevant to the research
objective. It includes:
Data Sources: The researcher can collect the data pertaining to the research problem from either the
primary source or the secondary source or both the sources of information. The primary source is the
first-hand data that does not exist in any books or research reports whereas the secondary data is the
second-hand data which is available in the books, journals, reports, etc.
Research Approaches: The Secondary data are readily available in books, journals, magazines, reports,
online, etc. But the primary data have to be collected and to do so, the following research can be
conducted:
Observational Research: The researcher can collect the information by just observing the happenings in
the market and sometimes having a friendly conversation with the customers to know about their
purchase experiences.
Ethnographic Research: It is one of the forms of an observation research where the researcher studies an
individual in the real life situation and not under any market setup or a lab. The purpose of this research is
to know the way people live (their lifestyles), What they do to earn their livelihood, how they consume
goods and services, what they need in their personal and professional lives etc.
Focus Group Research: It is a form of group discussion wherein six to ten people gather and discuss the
common topic given by the moderator. A moderator is a person who conducts the group discussion and is
skilled in group dynamics. He also keeps the discussion focused on the topic so that relevant information
can be obtained from the group members.
Survey Research: These are the descriptive research generally conducted to know the about the
customer’s knowledge about the product, their preferences, and satisfaction level. The best way to
conduct surveys is through the Questionnaires.
Behavioral Data: The customer’s actual purchases at the store reflects its behavior and the choice of
products. Thus observing what customers are buying gives more accurate information about the customer
rather than the planned answers given by them in the surveys.
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Experimental research: This is done to find out the cause and effect relationships. This research is
undertaken to study the effects of change in the customer’s behavior due to the change in the product’s
attributes.
Sampling plan: Once the research approach is decided, the researcher has to design a sampling plan and
have to decide on the following:
The sampling Unit i.e. whom, shall we survey?
The sample size, i.e., How many units in the population shall be surveyed?
The sampling procedure, i.e. How the respondents shall be chosen?
Contact Methods: The researcher has to choose the medium through which the respondents can be
contacted. The respondents can be reached via emails, telephone, in person or online.
3- Collect the Information: This is one of the most expensive methods of marketing research. At
this stage, the researcher has to adopt the methods to collect the information, he may find it
difficult to gather the correct information because of the respondent’s biasedness, unwillingness to
give answers or not at home.
4- Analyze the Information: Once the information is collected the next step is to organize it in such
a way that some analysis can be obtained. The researchers apply several statistical techniques to
perform the analysis, such as they compute averages and measures of dispersion. Also, some
advanced decision models are used to analyze the data.
5- Present the Findings: Finally, all the findings and the research are shown to the top management
level viz. Managing director, CEO, or board of directors to make the marketing decisions in line
with the research.
6- Make the Decision: This is the last step of the marketing research, once the findings are presented
to the top level management it is up to them either to rely on the findings and take decisions or
discard the findings as unsuitable.
Thus, marketing research is done to gather all the relevant information about the market and design the
marketing strategies accordingly.
Types of Data: Primary and Secondary data
There are many ways of classifying data.
A common classification is based upon who collected the data.
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Primary data: Data collected by the investigator himself/ herself for a specific purpose.
Secondary data: Data collected by someone else for some other purpose (but being utilized by the
investigator for another purpose).
Some Advantages of using Primary data:
 The investigator collects data specific to the problem under study.
 There is no doubt about the quality of the data collected (for the investigator).
 If required, it may be possible to obtain additional data during the study period.
Some Disadvantages of using Primary data (for reluctant/ uninterested investigators):
1. The investigator has to contend with all the hassles of data collection-
 deciding why, what, how, when to collect
 getting the data collected (personally or through others)
 getting funding and dealing with funding agencies
 ethical considerations (consent, permissions, etc.)
2. Ensuring the data collected is of a high standard-
 all desired data is obtained accurately, and in the format it is required in
 there is no fake/ cooked up data
 unnecessary/ useless data has not been included
3. Cost of obtaining the data is often the major expense in studies
Some Advantages of using Secondary data:
 The data’s already there- no hassles of data collection
 It is less expensive
 The investigator is not personally responsible for the quality of data (“I didn’t do it”)
Some disadvantages of using Secondary data:
 The investigator cannot decide what is collected (if specific data about something is required, for
instance).
 One can only hope that the data is of good quality
 Obtaining additional data (or even clarification) about something is not possible (most often
 Marketing planning
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What is a Marketing Plan?
Second only to creating a stellar product or service, marketing is a crucial part of home business success.
Without marketing, people can't learn about your business to buy from you. Without customers or clients,
you don't have a business.
A marketing plan is a business document outlining your marketing strategy and tactics. It's often focused
on a specific period of time (i.e. over the next 12 months) and covers a variety of marketing-related
details, such as costs, goals, and action steps.
But like your business plan, a marketing plan is not a static document. It needs to change and evolve as
your business grows, and as new and changing marketing trends develop. Especially in today's changing
world, you need to keep up-to-date on the best ways to reach and engage your market.
Purpose of a Marketing Plan
Many business owners create a marketing plan and then set it aside. However, your marketing plan is a
road map providing you with direction toward reaching your business objectives. It needs to be referred to
and assessed for results frequently.
While some small business owners include their marketing plan as part of their overall business plan,
because marketing is crucial to success, having a comprehensive, detailed marketing plan on its own is
recommended. If you don't want to make a mini-plan as part of your business plan, you can attach your
full marketing plan to the business plan as an appendix to the business plan.
Benefits to a Marketing Plan
The importance of a detailed marketing plan can't be overstated. A marketing plan:
Gives clarity about who your market is. It's easier to find clients and customers if you know who they are.
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Helps you craft marketing messages that will generate results. Marketing is about knowing what your
product or service can do to help a target market. Your marketing messages need to speak directly your
market. Provides focus and direction. Your choices for marketing are vast including email, social media,
advertising, guest blogging, direct mail, publicity, and on and on. With so many marketing choices, you
need a plan for determining the best course of action for your business.
How to Create Your Marketing Plan
A typical small business marketing plan covers many elements including a description of competitors,
demand for the product or service you offer, and strengths and weaknesses from a market standpoint of
both the business and its competitors. A marketing plan is a tool you need to use daily to help you reach
your market and your profit goals. As you make your marketing plan, focus on what you need to
understand and reach your market. The basics include:
1. Details about your business' current situation. What is your product or service? What's working and
what challenges are you currently having in generating new clients and customers? What issues might
you encounter over the next year, such as a move (when you can't work) or new laws that might impact
how you do business?
2. Who is your target market? Who is the most likely buyer of what you're offering? The answer should
never be "everyone" even if everyone could benefit from your product or service. To help you define your
market, determine how your product or service helps people and then figure out the people who need that
solution. You might have several groups within your target market, often referred to as market
segmentation (specializing in specific niche markets or groups). For example, if your business helps
people with weight loss, your target markets could be moms wanting to lose baby weight and baby
boomers wanting to improve their health. Knowing your market and its needs helps you to create market-
specific messages and place them where they'll be seen for greater effectiveness. For example, a mom is
more likely to respond to your weight loss ad if it's in a mom-oriented spot (mom blog) and speaks
directly to her (Lose Your Baby Weight!).
3. What are your goals for the time period of the plan? Be specific in your goals, such as increase
email list by x amount over the next year or find x number of new clients. It's important that you're able to
measure the effectiveness of your marketing plan by having a quantifiable goal. Depending on your
business, measuring marketing effectiveness can be hard. For example, if you have items for sale on
Amazon, it can be hard to know if your social media or your email marketing is generating more sales.
But you can measure how many people are responding (click) from those options.
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4. What marketing tactics will you use to reach your market and goals? Let your target market be
your guide in deciding what marketing strategies you'll use. Where does your market hangout? How can
you entice them to check out your business? For example, if your market spends a lot of time on
Facebook, you might consider having a Facebook fan page or group, or perhaps investing in Facebook
advertising. If you're a service business catering to other businesses, you might want to write an article for
a newsletter or magazine that targets that same business industry.
5. How much will it cost? This is where you make a budget for your marketing plan. There are many
free marketing strategies, although they require time, which is a type of expense. Will you do home
parties or one-on-one consulting, and if so, what will be the cost of travel, mailing of invites, purchasing
support materials, etc? Will you pay for advertising or for a mailing list service? Of all the places to spend
money in your home business, marketing is the priority, as long as you're spending wisely and getting a
return on your investment.
6. How will you execute your marketing plan? Planning is fairly easy. Carrying out a plan is more of a
challenge. How will you fit in your marketing strategies into your regular business activities? If you're
doing social media, will you be using a social media management tool or hire a social media manager?
Will you write a blog or create content to share on other websites, such as article marketing? If so, how
often will you post or deliver content? You need to do something every day to get your business in front
of your market. You're more likely to do it if you have a plan and fit the plan into your daily schedule.
Keep Your Marketing Plan up to Date
Like a business plan, a marketing plan is a living, breathing document. Analyzing your results and
tweaking or changing your marketing strategies is an important task in keeping your marketing plan up to
date and having it fulfill its purpose in helping reach your business goals. Many factors can impact your
marketing results and choices including market conditions, demand for your product or service, pricing
issues, and new marketing methods (i.e. a new social media platform). It's important you stay aware of all
of this and adjust your marketing plan accordingly. Studying your data, such as website analytics, sales
numbers, and the trends will give you clues as to what's working and what isn't.
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Marketing planning process
Marketing planning process is basically a set of steps that provide guideline about how to market and sell
your product in the market within a specific period of time. It involves which promotional strategies to be
adopted to make your product best seller in the future. Marketing planning process consist of the tactics
and marketing techniques that you have to assume for achieving your marketing goals within the required
time period. It is the requirement of every business to make it successful. Marketing planning process
basically involves the selection of the target market and then developing a plan that how you have to
market your product in that specific target market to penetrate. It is the intense need of every business to
make a good market plan for the success of its Product Life Cycle. Marketing planning process
incorporate the stages in which a company plan and discuss different question for the success of its
product like: Determines its current position, Determine the place where it want to see itself by making
analysis and using different marketing mix
The way and the roadmap by following which can gain its position
From different alternatives screening and choosing that which is the best strategy to adopt
This process also allows you to maintain yourself at the time peak in the market.
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Need of Marketing Planning Process
The marketing planning process is intended to decide where you want to see your business in future. It
decides how you want to target your consumer and its segmentation. It involves the rational and absolute
thinking about the marketing strategies of your business. Making proper documentation of your strategies
is an integral part of planning process. It is the need of the time to properly plan your marketing activities
and implement it in the right direction for the survival of your product in the market. In today’s market of
intense competition, without proper extended and solid planning process you can’t take success in the
market. Marketing planning process makes it essential for the managers to contribute some of their time
towards thinking about the company’s resources and the opportunities that may gain by utilizing those
resources in an effective way. In today’s era of rapid digital marketing, it is necessary to focus on proper
marketing planning process to cover the maximum of the market. By applying a proper plan, we can
avoid the risk of failure of product and can satisfy and fulfill the needs of the target consumers easily.
You can upgrade your sales volume and growth by choosing right marketing plan for your business. This
planning process involves the specifications that how marketing objectives are to be attained. The
marketing planning process structure discussed above can further be elaborated.
Marketing Planning Process Steps : The steps of marketing planning process we are going to discuss
almost remains the same for each kind of business with a little amendments according to the scenario,
1. The first step involves develop the action plan
Make vision and set your goals, According to mission statement, Company objectives
Before moving towards the other steps of planning strategy and implementing it, the first and for most
need to make your product successful, is to make a keen observation of the company’s objective. So the
most prior stage of marketing planning process is to set your goals that where you want to reach. You
should know your ultimate destination, your company’s vision for your product that who you are and
where you expect to reach. In the first step of planning process you should carefully understand the
company’s mission.
2. Analyze your present situation by analyzing and auditing market
SWOT Analysis
The second step of marketing planning process includes the overview and examination of your present
condition. It is a part of strategic and long term planning process to see your current position, your
resources and view the market in which you are moving. Layout your resources, evaluate them along with
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evaluating other external and internal factors. Determine the environmental risks and favors attach with
the launching of your product. Audit the market, target it and make their segments with the help of your
resources to better penetrate your product. Do SWOT Analysis of your business in which there are
different internal and external factors considered. This is the best approach for viewing and analyzing
your current situation. Make an inner look of your strengths and weaknesses and the other aspects
affecting them. Make an inside view of your company that whether you understand your consumer’s
need, know whom you are targeting, make the market research to know about your competitors and to
know about the fact that what consumer needs are fulfilled and what are the depreciation in them and how
these needs changes with the passage of time.
What is SWOT Analysis and How to do it?
SWOT analysis is a strategic planning tool employed to analyze the strengths, weaknesses, opportunities
& threats included in any business venture, project or even in any particular situation. Actually, SWOT
analysis first time used by Albert Humphrey, who performed a research project in 1970 at Stanford
University. SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is a special game
changer technique that lets one to plan ahead for his business by keeping the strengths, weaknesses,
opportunities and threats of the particular field in mind.
In the Marketing planning process while analyzing your present situation you have to consider few
external factors that have a direct link with the internal contingencies and the performance of the
company. These external components that directly influence the internal components and the position of
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the business, which are the political scenario, legal aspects, and the competition of market in which you
are moving, the culture, economy and the other demographics.
How to do SWOT Analysis
How to do SWOT analysis by yourself? This is question that probably asked by the people, especially the
business students. Here first step is to identify the objective or end state result. All the participants of the
process should approve the objective. Also the first step should be performed with great care because all
the resultant activities are based on the identified objective and if the elected objective is incorrect, then it
would seriously affect the organization in the shape of wastage of resources.
When the objectives are selected than the discovery & listing of SWOT”s is made precisely which are as
follow.
Strengths are those features of the organization that support in the accomplishment of the objective.
Weaknesses are those features of the organization that limit the accomplishment of the objective.
Opportunities are the features of the external environment of the organization that support the
accomplishment of the objective.
Threats are the features of the external environment of the organization that limit the accomplishment of
the objective. Also the SWOT”s should be effectively pointed out so that the resultant steps are properly
performed.
Elements of SWOT Analysis : Basically, this technique takes a four-sided approach while focusing on
just one thing – the goal. On the surface, this technique deals with four basic factors about an
organization, but their effects are deeply rooted and related to the gains and losses.
Internal Factors
Strengths : The strong points of the business strategy of any business are directly linked to the resources
and experience level available to it. Greater the number and power of resources, greater are the chances to
do some business (and yeah, to earn a lot of bucks too)! Resources include financial resources (sources of
incomes), physical resources (importance of location, natural factors) and human resources (employees).
Weaknesses: Weaknesses are those negative factors which will hinder the progress being made by your
organization. Just like strengths, these are also internal factors and are under your control. Be careful!
Once your competitors know your weaknesses, then there is a huge possibility that they will try to use
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your weaknesses as their strengths. Following elements are included in the category of strengths &
weaknesses.
Intellectual, financial, location resources, Customer Services, Competitive Advantages, Efficiency,
Price, Management, Infrastructure, Quality, Staff
Transportation & delivery time, Hours of operations & distribution channels
Product line & multiple services, diversified fields, Sales promotion techniques & after sale services
etc.
External Factors
Opportunities: These are the events and situations that your organization can take advantage of like the
trends, economic factors, etc. These are the positive externalities and are out of your control. Therefore,
once an opportunity shows itself up, then don’t turn your back on it.
Threats: Another external factor, a negative one, which if not handled correctly is capable of making
your business bite the dust, is the threat to your business and marketing strategy. Threats can cause total
failure of your planning’s and therefore, are extremely necessary to be avoided or at least be minimized
by some procedures. Following elements can be regarded as the opportunities & threats to the
organization.
Actions of competitors, Interest rates, Increasing market saturation, Economic conditions, Changes
in laws & regulations
When to Use SWOT Analysis: SWOT provides a potential strategic point to an organization and acts as
a precursor to the goals. It becomes the part of planning, just right from start and moves on the side by
side with logic and ends with the execution of the plan. You might have a business, and it might be up
and running, but without any precursor to any company actions, it will not stand long enough. It comes in
the play when either you are planning your business, just, right from the start or setting new initiatives,
making decisions, creating new policies and any other perspective that can lead your business.
3. Developing Marketing Strategy
Marketing mix
Creating marketing strategy and objectives
Communication means & vehicles
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Analyze alternative methods and procedures for marketing available
This stage of Marketing Planning process involves making of marketing objectives and marketing
strategies to accomplish the overall company’s objective. This step includes analyzing all the marketing
tactics available for the best promotion of the product.
This phase will help you to make selection of different marketing strategies and will help you to identify
what tactics you can apply to approach your target market. This part of planning will guide you towards
the market segment you opt to reach, will also direct you that how you have to reach your desired
segment by opting the right communication mode and how you want to position your product. So by
properly incorporating the marketing efforts of all the prominent marketers like Kotler (focusing
marketing mix) Porter (five forces model) and Ansoff (matrix worksheet for reducing the risk of failure)
you can make a single marketing report in which you can analyze that how you have to market your
product and which vehicle to use for its promotion. How you can nourish you target customers?
Using the components of the marketing mix is the inclusive part of the formulation of the marketing
strategy to gain the successful competitive advantage. Depending on the core competencies of the firm
you decide whether you want to get the first mover advantage or have to adopt some other strategy and
how to direct your marketing efforts to approach your target consumers.
4. Employing, Executing and Evaluating the Planning Process
Make budget, Allocate resources & implement, Monitoring & Overview
This is the milestone of any planning process because it includes the operational level activities. In this
stage you have to allocate your resources, make budget for the implementation of the above discussed
strategies and make the action plans. You have to consistently monitor and overview you marketing plan
based upon the customer’s opinion and feedback. So make regular review of your promotional plan.
For Example
Macdonald is the best example of generating the right marketing planning process for its product which
helps business to be on the prosperous track. So the marketing planning process is the key towards the
accomplishment of the other policies and procedures of your business and should be considered of utmost
importance.
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Chapter seven
International marketing &
Digital marketing
 International marketing:
International Marketing
Definition: The International Marketing is the application of marketing principles to satisfy the varied
needs and wants of different people residing across the national borders.
Simply, the International Marketing is to undertake the marketing activities in more than one nation. It is
often called as Global Marketing, i.e. designing the marketing mix (viz. Product, price, place, promotion)
worldwide and customizing it according to the preferences of different nation people.
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The foremost decision that any company has to make is whether to go international or not, the company
may not want to globalize because of its huge market share in the domestic market and do not want to
learn the new laws and rules of the international market.
But however, there are following reasons that attract the organization to be global:
Increased Economies of Scale
High-profit opportunities in the international market than the domestic market
Huge Market Share
Elongated life of the product
Untapped International Market
How to Enter the International Market?
There are following ways through which companies can globalize:
 Exports: The easiest way to enter the market is through exports that can be indirect or direct. In
Indirect Exports, the trading companies are involved that facilitates the buying and selling of
goods and services abroad, on the behalf of the companies.
Whereas in Direct exports, the company itself manages to sell the goods and services abroad, by
opting one of the following ways:
By setting Domestic based Export Department, working as an independent entity
Through Overseas sales branch, that carries out the promotional activities and facilitates sales and
distribution.
The sales representatives traveling abroad
The distributors or agents in abroad working exclusively on the behalf of the company
 Global web Strategy: Nowadays, companies need not go to the international trade shows to show
their products, they can very well create the awareness among the customers worldwide through
an electronic media i.e. internet.Through the company website, customers can read the detailed
information, generally written in different languages, about the product and can order online.
 Licensing and Franchising: One of the ways to globalize is through licensing, wherein the
domestic company issues the license to the foreign company to use the manufacturing process
trademark, patent, name of the domestic company while facilitating the sales. In licensing, the
domestic company has a less control over the licensee.
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But, in the case of franchising, the domestic company enjoys the higher control as it allows the
franchise to function on its behalf, and in line with the terms and conditions of the domestic
company. MC Donalds, Dominos are the examples of franchising.
 Joint Ventures: The companies can go international by joining hands with other country based
companies with the intention to monetize their existing relationships with the local customers.In
India, TATA AIG, HDFC standard life insurance, TATA Sky are the examples of joint ventures.
 Direct Investment: Ultimately, the firms can establish their own business facilities or own a part
of the local company to facilitate the sale of goods and services.
The companies go international with the objective to have an increased sales along with the huge
market share. But certain things such as political, social, technological, cultural situations should be
kept in mind while designing the marketing principles since these are different for the different
nations.
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International Marketing Benefits And Reasons: Why Go Global?
There are a number or reasons why businesses decide to trade internationally including:
 Competition within the national market is becoming too intense
 Sales and profit are declining in national markets. International expansion (market development)
is suggested as an option to plug falling sales under Ansoff's Matrix.
 International markets offer the opportunity to increase the product life cycle for products with a
life cycle coming to an end in national markets.
 Overseas markets contain similar market segments as national markets.
 Easy international travel and technology are turning national brands into international brands and
facilitating the move into international markets. Consumers and buyers in other countries may
already have become familiar with the brand during trips abroad and through the internet
 The business is doing well in national markets and the firm have decided to become a global
player.
Digital marketing: One of the newfangled buzzwords that business owners are using to sound
smart these days. Or is there really something to it?
With companies going the digital route and focusing on creating a strong online presence, we understand
why you might also be thinking of joining the party. Do you want to start promoting your business
online? Not sure what digital marketing means? If that’s the case, cheer up! In this guide, you’re going to
find all the digital marketing basics you need to know about creating successful online marketing
campaigns for your business.
Definition: In simplest terms, digital marketing means marketing your products and services using the
internet and digital media as the medium.
Digital marketing is sort of an umbrella term that includes all the modern marketing strategies. We are
talking about marketing tactics that involve reaching out to the target customers through online marketing
(Internet, mobile phones,) and social media marketing (Facebook, Instagram, Twitter, and such.)
As you can imagine, this is a vast field and can be quite overwhelming if you’re new to the realm of
online marketing. In our comprehensive guide to digital marketing basics, we are going to reveal:
Why your business needs digital marketing
The components of a successful digital marketing strategy
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This guide will equip you with all the digital marketing basics knowledge you’ll ever need to create a
successful online marketing plan for your business.
Alright, so make yourself a cup of coffee and let’s begin!
Why does your business need digital marketing?
If you are hesitating to invest in digital marketing, here are a few points to convince you of the
significance of having an online marketing plan for your business.
Competition is using it: Did you know that 77.6% of small business owners use social media in their
marketing strategy? From solo entrepreneurs and freelancers to companies, everyone is using digital
marketing to establish a brand presence today. This is probably because digital marketing basics are fairly
easy to grasp. If you don’t adapt to the changing times, you stand to lose potential customers.
Cast a wider net: Digital marketing allows you to catch the attention of your prospective customers
through a variety of ways. For example, Search Engine Optimization (SEO), which we are going to
discuss later in this guide, helps you attract customers in an organic (unpaid) way.
On the other hand, Pay Per Click (PPC) marketing uses paid ads to draw the audience in. By using
different approaches you can reach a wider audience which can have a major impact on your brand
recognition.
Track your performance easily: Thanks to the easily available analytics tools online, you can track how
your marketing campaigns are performing in real time.
And it’s so unlike the traditional forms of marketing, where you had to wait for weeks to determine
what’s working and what’s not!
With digital marketing, you can observe which aspects of your marketing strategy need tweaking, and
make changes accordingly. This gives you enormous control over your marketing campaigns and your
budget.
Target your audience effectively: Can you imagine targeting an audience based on gender, language,
and location through traditional means of marketing?
That’s one of the things we love about digital marketing; you can choose who visits your website and
who sees your ads. The targeting tools and parameters available today are incredible in helping you target
the audience you want. They are easy to use even if you only have a little knowledge of digital marketing
basics.
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And these are just some of the several advantages of digital marketing for your business. Once you know
how to handle your marketing campaigns successfully, you can
a) get much ahead of your competition
b) increase your sales.
If you’re still curious, you can learn more about the importance of digital marketing for your business
here. Now that you know why you need to know the digital marketing basics, let’s see what makes for an
effective digital strategy.
What are the digital marketing basics of a successful strategy? Before you decide to invest your time
and resources in strategizing, it is important that you understand the digital marketing basics regarding the
various platforms. An effective marketing strategy can incorporate a variety of components like:
 Website design
 Search engine optimization
 Social media advertising
 Social media management
 Pay-Per-Click advertising
 Email marketing
 Content marketing
Engaging with each (or any!) component in the right way WILL grow your brand’s presence online in a
powerful way.
Website Design: Understand this: your website is the face of your business. Its structure, color, design,
and even writing (content) impact the way your audience perceives your brand. That’s why we always
stress that your site should reflect your brand style and personality in addition to the general theme of
your business. Consider your website an important extension of your business.
Here are some important tips you can follow to make sure your website helps you build brand
authority:
Invest in a responsive website: It goes without saying that your website should look beautiful and
organized. Also, your site should have a responsive design with an updated CMS (content management
system) – don’t worry; your web developer will know what that means.
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The key is to have the right mix of design and functionality. An incredibly pretty website that takes over
10 seconds to load is not a sign of a great website – neither is a website that looks so cheap and
haphazardly put-together that visitor starts to question your brand credibility.
Is design really that important?
According to research, 48% of online visitors decide the credibility of a business on the basis of its site
design, and 94% people reject a site on the sole basis of its design.
Just look at the site design of Arngren.net. It’s a mess.
We can’t decide which is more catastrophic – the design or the layout. How much success do you think
they have in catching the attention of their target customers? Everything is so cluttered, you can hardly
comprehend what the website is about!
Optimize your website: We are talking about Search Engine Optimization (SEO) here. We will go over
it in more detail later in this post, but the key point from digital marketing basics you need to understand
is SEO helps your business appear in the search engine results.
From your website’s design to the keywords you choose, SEO covers everything.
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Create an easy-to-navigate website structure: A website should be structured in a way that the inbound
users can explore easily. Every web page should be tagged and labeled so the users can find what they
need.
On the most basic level, your website should have pages/sections such as:
 Home page
 About the product/services page
 List of services
 About us/ Meet the team page
 Blog
 Contact information
Monitor your website regularly: If you think website design is a one-time process, think again. With
search engines changing their algorithms frequently and design trends upgrading constantly, you need to
keep your website up-to-date in order for it to keep functioning great.
You can read more about the characteristics of a good website design here.
Search Engine Optimization (SEO)
So you have created a masterpiece of a website. You have made sure it is optimized for mobile phone
users as well. You paid special attention to the responsiveness of the design if you do say so yourself.
Now all that’s left is for your target audience to find you.
That’s what search engine optimization does.
According to Hubspot, 81% of shoppers conduct online research before making big purchases.
When your potential customer is looking for a product or service online, she is most likely to Google it
first. In order to be found among millions of search engine results, your website must be optimized for the
search engines (Google, Yahoo, Bing, etc.)
Let’s see what optimizing your website means.
Search engine optimization is the process of improving the visibility of a website on organic (unpaid)
search engine result pages (SERPs).
SEO makes sure that your website appears within the top results whenever someone enters your targeted
keyword(s) in the search bar.
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This image perfectly illustrates the major elements of a successful SEO strategy.
How does SEO work?
Find the right keywords: Research your industry and find the keywords that identify your business. The
keywords you target determine how Google (and other search engines) rank your website and how much
traffic you bring in.
Use those keywords in your website’s URL: One of the best ways to optimize your website is to
incorporate keywords in your site URL.
Search engines go through each line of text in your website to understand what it’s about. From your
website URL to the content on your web pages, everything is analyzed and indexed by the search engines.
Use keywords in Title tags, Meta descriptions, and Heading tags: Title tags are the name of a web page.
When you open an internet browser, the text you see right on top of the dialog box is the Title tag. These
are the links that show up in search engines. It’s the hyperlink that people click on.
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In order to increase the relevancy of your website (SEO-wise), incorporate your main keywords in the
Title tags.
If you want a perfect preview so the title doesn’t get cut off in the search results, keep these tags less than
65-70 characters. Also, avoid using stop words like a, the, and, if, then, an, to, etc. in the Title tags.
Meta descriptions are the 2-3 line descriptions under the titles you see when you Google something. It is a
short description of a business/brand which makes it easier for the potential customers to swiftly skim
through all the search results.
You are allowed a maximum of 155 characters to describe your web page, and it is recommended to use
at least one keyword for that particular page.
Heading tags are the HTML tags (H1, H2, H3, H4, H5, and H6) that are used to structure the content of
website page. In addition to using keywords in your Title tags and Meta descriptions, also make sure to
use your most important keywords in your Heading tags.
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These are probably the most meticulous details we will share with you in our digital marketing basics
guide, but they are essential to effective on-page SEO.
Include keywords in your website content and blog posts: As we said earlier, search engines use
keywords to identify the relevance of a web page. Use your important keywords and their combinations in
every piece of content you publish on your website.
But beware of keyword stuffing because a) it looks spammy, and b) Google WILL find you and penalize
your website.
If you want to know more about optimizing your website, we suggest you read this simplified organic
SEO guide to achieve page one rankings.
Social Media Advertising
Social media advertising means using social media platforms to promote and sell your products/services.
If you want to master the digital marketing basics, starting with social media marketing is a great idea.
One of the major advantages of advertising on social channels like Facebook, Twitter, Instagram,
Pinterest, LinkedIn, etc. is that you can choose your target audience.
According to Hubspot, 92% of business owners and marketers say that social media is crucial to their
business.
In fact, that same report says that more than half of people who’ve been using social media advertising for
at least two years reported it helped them increase sales.
So what social media platforms should you use for your business?
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Here are some of the most popular platforms at a glance:
Facebook: A Facebook Page for your brand makes you more discoverable, and is a great way to connect
with potential customers. Facebook Ads have proven to be highly successful in gaining more exposure for
a business. Instagram: Instagram is the best way to express your business visually. The platform offers
several tools to help you engage with your audience. With 500 million monthly active users, Instagram is
growing extremely fast. Twitter: Twitter for businesses reaches straight out to people who are looking for
new products and special deals. According to a report from Twitter and Research Now, 93% of people
who follow small and medium-sized businesses on Twitter plan to purchase from them, while 69% have
already bought something from the companies they follow.
Pinterest: With 100 million monthly active users, Pinterest is the most popular platform people go to
discover new ideas. The visual content you create and share on your Pinboards can be used to catch the
attention of your audience and encourage them to try your products. LinkedIn: LinkedIn is an essential
network for building your brand and creating strong business connections online. You can use it to share
content, keep up-to-date with trends, and connect with key influencers in your industry.
Social Media Management Social media management allows you to manage all of your social profiles
(Facebook, Instagram, Twitter, etc.) together on a single platform. Social media management also helps
you handle your inbound and outbound online interactions in a better way. In simplest terms, it
streamlines how you participate in conversations that are happening across different platforms – blogs,
social networks (like Facebook), and even public and private online communities.
Email Marketing Before you ask, yes, it still works.
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In fact, 82% of B2B and B2C businesses use email marketing today. Why? Because:
For every $1 spent, email marketing generates $38 on an average, and
Over 34% of people worldwide use email
That’s why email marketing has become a lot more competitive now; it is one of the most effective
channels in our guide to digital marketing basics.
The key is to make your emails stand out, which is easier said than done. Before you create an email
campaign, you need to understand the psychology of your potential customers. Bombarding them with
emails to promote your product will only harm your brand image. According to a 2016 study by Hubspot,
78% of people unsubscribed from emails because a brand was sending “too many emails.”
This comprehensive post will help you learn more about the importance of email marketing for your
business.
Pay Per Click Advertising PPC is a form of advertising that is used to bring visitors to your website by
using search ads for which you only pay for when someone clicks through. In addition to Google
AdWords, Facebook Advertising is also a popular PPC platform. Here are two really interesting facts for
you to think over:
64.6% of people click on Google ads when they are looking to purchase something online
Among the companies that use PPC advertising, 84% use Facebook as a platform, 41% use Google and
18% use LinkedIn
Why is PPC so popular with advertisers? Because it helps them attract quality traffic.
By placing ads that only display when specific search phrases are used or on websites that have a specific
kind of audience base, you can target well-matched audience to your business. This ensures that your
website attracts visitors that are more likely to convert into buyers. If that’s not enough, consider this: you
only pay for clicks and you can monitor the performance of your ads in real time. Benefits like these are
why PPC advertising has proven to be highly successful for small businesses.
Content Marketing When it comes to the digital marketing basics, one component that has been the talk
of the town is content marketing. According to The Content Marketing Institute, it is a marketing
approach focused on creating and sharing valuable and relevant content on a consistent basis to entice and
retain a clearly-defined audience, and eventually, to drive customers to take a profitable action. This is the
most accurate definition out there. Let’s simplify it a bit.
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Content marketing is a digital marketing strategy which focuses on creating strong relationships with your
audience by giving them high-quality, relevant content.
So when customers make a decision to buy something, they are already loyal to you.
This content can be blog posts, articles, email newsletters, white papers, case studies, research
papers/reports, infographics, videos, webinars, e-magazines, e-books, and much, much more.
Why has content marketing become so important?
Because brands are trying to answer the million dollar question: when customers go online to research a
product/service before making the final buying decision (and 81% of them do), who’d they find – you or
your competitors?
The one thing you need to understand about digital marketing basics is this: being visible is everything.
More and more people are going online to research and buy products and services, and if you want to
catch their attention, you need to be found first.
That’s where content marketing comes in. It’s all about creating highly valuable pieces of content for
different parts of the purchasing cycle – from the research phase down to after-sales. The purpose of
content marketing for a business is to educate potential customers, establish authority, and build loyalty.
The point is to win their hearts with your highly-useful and helpful content. That way when they are
finally ready to buy, they are more likely to choose you over your competition.
Why do you think we’ve taken the time to write all these comprehensive articles! We think that the more
you know about LYFE Marketing and our take on digital marketing basics, the more likely you are to
choose us to help you with your business.
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E-Business vs E-Commerce, Know The Differences
Online shopping has gained fame in these last few years. Now, if you want to buy something, you do not
need to walk all the way to the store. With just a smartphone and internet connection, you can buy
anything you want, from any place in this world. This can be achieved thanks to two popular network
which known as E-Commerce and E-Business.
Most people think those two terms have a similar meaning. In fact, both of them aren’t similar, but
closely related to each other.
What is E-Commerce?
E-Commerce, or the short for “Electronic Commerce” is the process of selling and buying which done via
the web or the internet. Unlike the physical store, in E-Commerce, there is no need for the buyer and the
seller to meet with each other in order to do the whole selling and buying process.
There are several types of E-Commerce:
1. Business to Business (B2B) Business to business E-Commerce is including all kind of electronic
transactions of services or products that happened between two businesses or companies.
2. Business to Consumer (B2C) Business to Consumer is the establishment of the electronic business
relationship between the seller to final customers. This is probably the most common form of E-
Commerce. This kind of E-Commerce type usually more dynamic and easier to do. Due to the
development of the internet and website, B2C has developed greatly too, and now you can easily find
various kind of online store on the internet. They sell all kind of products, such as books, electronics,
clothes, to digital products like music, movies, or e-books. People like online shopping more than
traditional one due to its simplicity and the price tends to be cheaper too (without including the shipping
cost).
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3. Consumer to Consumer (C2C) This kind of E-Commerce includes all electronic transactions of
products or services between the customer and another customer. Usually, this can happen with the third
party helps, for example, eBay as a marketplace for online action.
4. Consumer to Business (C2B) Consumer to business is a kind of business model where the final users
or the customers create a product or service that a company uses to complete their business process or
gain competitive advantage. For example, sites where freelance designers offer their service for logo
creation, and any company is free to use their service if they need it.
5. Business to Administration (B2A) Business to Administration or B2A covers any kind of transactions
that carry out between business and government with the internet as their medium. It includes a large
variety of services, such as social security, fiscal, legal documents, employments, etc.
6. Consumer to Administration (C2A) Consumer to Administration includes all kind of transactions
that happen between the consumer with the government.
Examples: · Education · Taxes · Social security · Health
What is E-Business?
E-Business or Electronic Business refers to the use of internet, extranet, web, and intranet to conduct
businesses. E-Business is quite similar to E-Commerce, but it is more than just a simple act of buying and
selling products and services online.
E-Business includes a wider kind of business processes, such as electronic ordering processing, supply
chain management, customer relationship management, etc. So basically, E-Commerce is a part of E-
Business.
There are two E-Business types:
1. Pure play: This refers to a company that focuses on one particular kind of product or service, instead
of various kinds at once.
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2. Brick and click: This term is suitable for a company that runs their business in both online and offline
way. That is mean, while they have a website and offer their products or services online, at the same time
they also have a physical store and sell their products or services there.
The Differences Between E-Commerce and E-Business
· Buying and selling things via the internet is known as E-Commerce. On the other hand, E-Business isn’t
limited to just buying and selling activities. All the business activities that conducted via the internet will
be considered as E-Businesses. For example, the information and computing technologies used to
enhance one’s business.
 E-Commerce is a main part of E-Business
 Some people agreed that when business is completely carried through an electronic medium, then it
can be referenced as E-Business. There is no need for an E-Business to has a physical presence in the
market. If a company owns an office, and along with physical presence carries out their business
activities via the internet, then it can be referred as E-Commerce.
 E-Commerce includes any kind of business transaction which related to money, but E-Business
includes monetary and allied activities.
 E-Commerce needs the internet to be able to connect with the rest of the world. E-Business can use
more than that. Other than the internet, it also can take advantages of intranet and extranet to be able
to connect with the parties.
The Advantages of E-Commerce & E-Business
E-Commerce and E-Business have really changed the way of shopping. As customers, you probably have
tasted some of their benefits, but what you can get from them as a business owner?
· Reduce money and time spent for your business Having a physical store means that there would be
several kinds of costs that you need to pay, like rent, electricity, telephone bill, etc. By taking your
business online, you can reduce or even eliminate those costs. Turn your business into E-Business also
can help make the tasks simpler. For example, sending bulk promotional E-mail via online surely much
easier rather than print 100 brochures and sending them via post, right?
· Flexible business hours The Internet is available for 24 hours. An E-Business can literally make money
even when you are fast asleep.
· Remove location restriction The internet is not only able to spans all time zones, but it also can reach
across the world. With a physical store, customers will be limited on how close the store from their home,
and also your hours of operation.
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Prepared By : Dr. Samar Sabra

Specialization: Sales & Marketing
Not to mention, with the hype of m-commerce, now your store is accessible from smartphone and other
mobile devices. That is mean, your customers can do business with you on the go.
· Easily track your business growth In E-Business, there are several tools that you can use to track your
business development and learns more about your customers. Do you want to know which product is the
best seller for the past three months? How about the amount of returning customers?
Unless you do an extra record-keeping task, it will be hard to track those data in brick and mortar store.
· Reach your customer faster The sooner you can reach your customers when they need you, the better.
With E-mail and chat features, it will be easier for your E-Business to fulfill that need.
When it comes to E-Commerce and E-Business, both you as the business owner and the customers can
reap all the benefits.
E-Commerce is a major part of E-Business. It also can be said that E-Commerce is E-Business, but
E-Business isn’t necessarily E-Commerce.
Types of e-Commerce
Now there are actually many types of e-Businesses. It all depends on who the final consumer is. Some of
the types of e-commerce are as follows :
Business-to-Business (B2B) Transactions that take place between two organizations come under
Business to business. Producers and traditional commerce wholesalers typically operate with this type of
electronic commerce. Also. it greatly improves the efficiency of companies.
Business-to-Consumer (B2C) When a consumer buys products from a seller then it is business to
consumer transaction. People shopping from Flipkart, Amazon, etc is an example of business to consumer
transaction. In such a transaction the final consumer himself is directly buying from the seller.
Consumer-to-Consumer (C2C) A consumer selling product or service to another consumer is a
consumer to consumer transaction. For example, people put up ads on OLX of the products that they want
to sell. C2C type of transactions generally occurs for second-hand products. The website is only the
facilitator not the provider of the goods or the service.
Consumer-to-Business (C2B) In C2B there is a complete reversal of the traditional sense of exchanging
goods. This type of e-commerce is very common in crowdsourcing based projects. A large number of
individuals make their services or products available for purchase for companies seeking precisely these
types of services or products.
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Specialization: Sales & Marketing
Consumer-to-Administration (C2A) The Consumer-to-Administration model encompasses all
electronic transactions conducted between individuals and public administration. Some examples of
applications include: Education – disseminating information, distance learning, etc., Social Security –
through the distribution of information, making payments, etc., Taxes – filing tax returns, payments, etc.,
Health – appointments, information about illnesses, payment of health services, etc.
Business-to-Administration (B2A)
This part of e-commerce encompasses all transactions conducted online by companies and public
administration or the government and its varies agencies. Also, these types of services have increased
considerably in recent years with investments made in e-government.
Solved Examples For You
Q. If a person posts an advertisement to sell his product on OLX website, it is an example of
_______.
a. B to C
b. B to B
c. C to C
d. C to B
Sol. The correct answer is option ”C”. There are many sites offering free classifieds, auctions, and forums
where individuals can buy and sell. e Bay’s auction service is a great example of where person-to-person
transactions take place.
Q. Which of the following are an example of B to C?
a. Online shopping websites
b. Heavy key industries
c. Purchase by a wholesaler from a manufacturer
d. None of the above
Sol. The correct answer is option ”A”. The two or more entities that interact in this type of transactions
involve a business and a consumer. The business offers a set of merchandise at given prices, discounts
and shipping and delivery options. Hence the correct answer is online shopping websites.
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Prepared By : Dr. Samar Sabra