Summary and Notes of Ch 11 Marketing| Class 12th Business Studies
Market- Market refers to the place where buyers and sellers gather to enter into transactions involving the exchange of goods and services.
Marketing- Marketing has been referred to as performance of business activities that direct the flow of goods and services from producers to consumers.
Following important features of marketing
• Needs and Wants: The process of marketing helps individuals and groups in obtaining what they need and want.
• Creating a Market Offering: creating offers like size, quality, taste available at a given outlet or location.
• Customer Value: The process of marketing facilitates exchange of product and service between buyers and sellers.
• Exchange Mechanism: The process of marketing involves exchange of products and services for money or something.
Following conditions are satisfied for exchange:
• Involvement of two parties.
• Each party should be capable of offering something of value to the other.
• Each party is free to either accept or reject the offer of other party.
• The parties should be willing to enter into transaction with each other.
• Each party should have the ability to communicate and deliver the product or service.
What can be marketed?
• Physical products, services, ideas, persons place, Experience, Properties, Events, information, organisations.
• Marketing Management
It refers to planning, organising, directing and control of the activities which facilitate exchange of goods and services between producers and consumers or users of products and services.
Difference between selling and marketing
• Physical products, services, ideas, persons place, Experience, Properties, Events, information, organisations.
• Marketing Management
It refers to planning, organising, directing and control of the activities which facilitate exchange of goods and services between producers and consumers or users of products and services.
Difference between selling and marketing
Basis
|
Selling
|
Marketing
|
| Starting point | The selling starts after production has taken place. | It starts before goods are produced. |
| Means | It is achieved through advertisement personal selling and sales promotion. | Various marketing activities. |
| Means | It is achieved through advertisement personal selling and sales promotion. | Various marketing activities. |
| Main focus | Attracting consumers. | Consumer satisfaction. |
| Ends/profit maximisation | Profit maximisation is achieved through volume of sales. | Profit maximisation is achieved through customer satisfaction. |
Function of marketing
The following activities are undertaken in respect of the exchange of the goods and services.
• Gathering and Analysing Market Information- It is an important function of marketing. Through it easily identifies the needs of customers and also takes various decisions related to outside marketing, like latest trend, strengths and weaknesses of the organisation.
• Marketing planning- To develop an appropriate marketing plans, so that the marketing objectives of the organisation can be achieved.
• Product Designing and Development- Product designing plays an important role in product selling. The company whose product is better and attractively designed sells more than the product of those companies whose design happens to be weak and unattractive.
• Standardisation and Grading- Standardisation refers to determine of standard regarding size, quality, design, colour, weight and raw material to be used. Grading is the process of classification of products into different groups on the basis of quality, size, design etc.
• Packaging and labelling- Packaging refers to designing and developing the package for the products. Labelling refers to designing and developing the label to be put on the package.
• Branding - Branding is very important decision of marketing because brand gives a product differentiation.
• Customer Support Services-It refers to service which is given to the customers such as sales services, handling customer complaints and adjustments. All these services aim at providing maximum satisfaction to the customers.
• Transportation- It means physical movement of goods and services from one place to another place.
• Storage or warehousing- In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. Further, there is a need for storage of adequate stock of goods to protect against unavoidable delays in delivery or to meet ‘out contingencies in the demand. Wholesalers and retailers are playing an important role.
Marketing mix
Marketing mix refers to the sum total of policies formulated with a view of successfully completing the different marketing activities. The main objective of this policy may be to attract all types of customers.
Elements of Marketing Mix
• Product – It refers to all decisions relating to the product(branding, packaging, labelling, colour)
• Price-Price mix refers to all those decisions which are related to price fixation of product.
• Place –It refers to activities that make firm’s products available to the targets customers.
• Promotion –It refers to combination of promotional tools used by the business to inform and get settled customers about the products.
Product – Anything that can be value to the buyer can be termed as a product.
Shopping Efforts Involved
The consumer products are classified into three categories:
• Convenience Products-Those products which are purchased frequently, immediately and with least time and efforts are referred to as convenience goods example- cigarettes, ice-creams, medicines, newspaper, stationary items.
• Shopping products-It is those products which buyers devote considerable time, to compare the quality, price, style, suitability, etc.., at several stores before making final purchase.
• Speciality Products-It is a high level product which has brand loyalty of the highest order, with a significant number of buyers.
B. Durability of products
On the basis of durability consumer products have been classified into three categories:
• Non-durable Products: The consumer products which are normally consumed in one or few uses are called non- durable products example-toothpaste, detergents, bathing soap, kitchen products, stationary products etc.
• Durable Products: The consumer products which are generally used for a longer period, command a higher per unit margin, required greater personal-selling efforts, guarantees etc. Example-radio, bicycle, sewing machine.
• Services: It is intangible in form and gives a customer benefits or satisfaction, which are offered for sale. Examples: dry cleaning, watch repairs, hair cutting, postal- services.
• Industrial Products: Industrial products are used as a raw material for producing other products in industry. The market for industrial products consists of manufacturers, transport agencies, banks and insurance companies, mining companies and public utilities.
Classification of Industrial Products
• Materials and Parts: It includes all those goods which are completely entered in manufacturer’s products. Such goods are of two types:
• Raw material, manufactured material and parts.
• Capital Items: These are such goods that are used in the production of finished goods. These include:
(a) Installations like elevators, mainframe computers
(b) equipment like Hand Tools, Personal Computer, Fax Machine, etc.
• Branding: The process of giving a name or a sign or a symbol etc., to a product is called branding.
The various terms relating to branding are as follows:
• Brand: Brand is used to identify the products and differentiate them from those of the competitors. A brand is a name, term, sign, symbol, design.
• Brand Name: The name of product which can be spoken is called a brand name. Example- Asian Paints, Safola, Maggie.
• Brand Mark: That part of a brand which can be recognised but which is not utter able is called brand mark.
• Trade Mark: A Trade Mark is a part of a brand which gives legal protection of brand name; brand mark etc. so, no other firm could use it. Trade mark provides several advantages to the sellers as well as the consumers.
Advantages to the Marketers
• Branding helps in product differentiation from other competitors.
• Branding helps in advertisement of product and help in display of programmes.
• Branding enables firms to charge different price for its products than that charged by its competitors.
• Branding helps in introduction of new products in the same name.
Advantages to Customers
• Branding helps the customers in identifying the products easily and they satisfied with a particular brand of a product.
• The quality of branded product undoubtedly is better.
• Branding gives a status symbol because of their quality.
Characteristics of a Good Brand Name
• The good brand name should be simple and short, easily pronounceable, suggestive, distinctive.
• The good brand name should be capable of being registered and protected legally.
Packaging: It refers to the groups of those activities which are related to the designing and production of containers.
Levels of Packaging
There are generally three levels of Packaging:
• Primary Package: Primary package is very close to the product. It keeps till the consumer is ready to use and also keeps throughout the entire life of the product.
• Secondary Packaging: Secondary Packaging refers to additional layers of protection that are kept till the product is ready to use.
• Transportation Packaging: Transportation Packaging refers to that packaging which is necessary to use for transportation, identification and storage.
Importance of Packaging
• When customers purchased packed products. They feel safe and hygienic because the chances of adulteration in such packed goods are minimised.
• Self service outlets are very popular, particularly in major cities and towns.
• With the help of Packaging many products are kept for several days.
• Packaging creates product differentiation.
Functions of packaging
• Packaging helps in identification of product.
• Packaging protects the product from spoilage, breakage, leakage.
• The size and shape of the package should be such that it should be convenient to open, handle and use for the consumers.
• Packaging is also used for promotion purpose.
Labelling: It is a process in which companies prepare a label.
Function of labelling
• It provides complete information related to the product like weight, price and ingredients of product.
• It makes easier to identify a particular product among many with the help of labelling.
• It helps in grading of the products.
• It helps in promotion of products.
• It provides information related to the products required by law.
Pricing
The value which is paid for some product or services is known as pricing.
Factors Affecting Price Determination
• Product Cost: Cost of production is the main component of price. This includes the cost of producing, distributing and selling the product. There are broadly three types of costs:
→ Fixed costs- Fixed costs are those costs which do not vary with the level of activity of a firm. Example, Rent of building, salary of a sales manager.
→ Variable costs: Variable Costs are those cost which vary in direct proportion with the level of activity.
→ Semi-Variables costs: Those costs which vary with the level of activity but not in direct proportion.
• The Utility and Demand: If demand of a product is relatively more than supply than the higher price should be fixed.
• Extent of Competition in the Market: The price will tend to reach the upper limit in case there is lesser degree of competition while under conditions of free competition, the price will tend to be set at the lowest level.
• Government and Legal Regulations: Some product’s price will be fixed by government because of unfair practices in the field of price fixing.
• Marketing Method Used: Price Fixation process is also affected by other elements of marketing such as distribution system, quality of salesman employed Salesmen promotion.
Physical Distribution
It is concerned with making the goods and services available at the right place and right time so people easily purchase.
Channels of Distribution
Channel of Distribution refers to that path through which the products reach the consumers with the help of intermediaries. The channels bring economy of effort. It includes mainly Agents, wholesalers and retailers.
Functions of Distribution Channels
• Sorting: Middlemen supplies of goods from variety of sources, which is often not of the same nature, quality, size etc.
• Accumulation: This function involves accumulation of goods into larger homogeneous stocks, which help in maintaining continuous flow of supply.
• Allocation: Allocation involves breaking homogenous stock into smaller, marketable lots.
• Assorting: Middleman build assortment of products for resale.
• Product Promotion: Sales promotion and advertising are main idea for product promotion.
• Negotiation: Both parties can negotiate with each other related to price, quality, guarantee and other related matters.
Types of Channels
Direct Channel or zero level channels
It is the shortest mode of distribution in which goods are directly available by the manufactures to customers, without involving any intermediaries.
Indirect Channels
When a manufacturer gets the help of one or more middlemen to move goods from the production place to the place of consumption, this distribution network is called indirect channels.
This may take any of the following forms:
• Manufacturer-Retailer Consumer( one Level channel)
• Manufacturer-Wholesaler-Retailer Consumer( Two level Channel)
• Manufacturer- Agent- wholesaler-Retailer-Consumer(Three Level Channel)
Factors Determining Choice of Channels
The choice of channels depends on various factors:
• Product Related Factors: The choice also depends on whether the product is perishable in nature or non- perishable.
• Company Characteristics: The choice of channel also depends on the financial conditions of the company.
• Competitive Factors: The choice of channel also depends on the channels which are elected by competitors in the same industry.
• Market Factors: The choice of channel also depends on the size of market, geographical concentration of potential buyers and quantity purchased like when a number of buyers are small then a company adopt short channel of distribution.
• Environmental Factors: Other important factors affecting the choice of channels of distribution include environmental factor such as economic conditions and legal constraints. Depressed economy marketers use shorter channels to distribute their goods.
Physical Distribution
The physical handling and movement of goods from place of production to the place of distribution is known as physical distribution. Physical distribution covers all those activities which are related to movement of goods from manufacturers to the customers.
Components of Physical Distribution
• Order Processing: It is a first step of physical Distribution. Order processing means the process which is followed to fulfil the material order of the customer.
• Transportation: Transportation is the means of carrying goods and raw materials from production place to sale point.
• Warehousing: warehousing is the place where company stores goods.
• Inventory Control: It means the stock of raw material, semi-finished goods and finished goods held in anticipation of sales or use.
Advertising
It is that art by means of which people are informed about a particular idea/service/product so as to induce them to buy that product or services or ideas.
The features of advertising:
• Paid form: It is a paid form of communication means sponsor has to bear the cost of communicating with the prospectus.
• Impersonality: It means there is no a personal communication and relation between prospect and the advertiser. Advertising creates a monologue and not a dialogue.
• Identified Sponsor: It means advertising is taken by some identified individual or company.
Merits of advertising
• Advertising is a medium through which a large number of people can be reached over a vast geographical area.
• Advertising enhance customer satisfaction and confidence about the quality and quantity.
• It a forceful medium of communication with a special effect of even simple product.
• It is a very economical mode of communication in which when it spread over the numerous number of people, as a result more people know about the product.
Limitations of advertising
• It is less forceful than the personal selling as there is no compulsion on the prospectus to pay attention to the message.
• The evaluation of the effectiveness of advertising message is very difficult as there is no immediate and accurate feedback mechanism of the message that is delivered.
• Advertising is less flexible as comparison to the personal sales because customers take message according to the own use.
• When the advertising message is expanded more and more it is difficult to make advertising message heard by target which is set by organisation.
Objections to advertising
• An organisation has to spend large amount on advertising, it increases the cost of the products.
• Advertising undermines social values and promotes materialism, It breed discontentment among people as they come to know about new products and feel dissatisfied with their present state of affairs. This criticism is not entirely time. Advertisement in fact helps buyer by informing them about the new products which may be improvement over the existing products
• Another criticism against advertisement is that so many products are being advertised which makes similar claims that the buyer gets confused as to which one is true and which one should be relied upon.
• Advertisement encourages a sale of inferior product even consumer pays a handsome amount of inferior products.
• Some advertisements are bad in taste they show something which is not acceptable like women dancing, man without shirt.
Personal Selling
It involves personal presentation of message in the form of conversation with one or more prospective customers for the purpose of making sales.
Features of personal selling
• Personal form: Under personal selling, seller directs face-to-face contact between the buyers for making a sale.
• Development of Relationship: Personal selling results in the development of personal relationship between the sales person and possible buyer.
Merits of Personal Selling
• Flexibility: There is lot of flexibility in personal selling because the sales presentation can be adjusted to fit the specific needs of the individual customers.
• Direct Feedback: When seller direct face to face presentation in front of consumer it is possible to take a direct feedback from customers.
• Minimum Wastage: The wastage of efforts in personal selling can be minimised as company can decide the target customers before making any contact with them.
Role of Personal Selling
Personal selling plays a very important role in the marketing of goods and services. It is important for businessmen, customers and society.
Important to Businessmen
• Effective Promotional Tool: Personal selling is very effective promotional tool, which helps in influencing the prospectus about the merits of a product.
• Flexible Tool: Personal Selling helps business persons in adopting their offer in varying purchase situations.
• Minimises Wastage of Efforts: When company compared with other promotional tools, the possibility of wastage of efforts in personal selling is minimum. It helps the business persons in bringing economy in their efforts.
• Consumer Attention: With the help of personal selling a seller easily detect the loss of consumer attention and interest in a personal selling situation. This may help the business person in successfully completing the sale.
• Lasting Relationship: Personal selling helps to develop lasting relationship between the sales persons and the customers, which is very important for achieving the objectives of business.
• Personal Rapport: Development of personal rapport with customers increases the competitive strength of a business organisation.
• Role in Introduction Stage: It plays very important role in the introduction stage of a new product.
Importance to Customers
• Help in identifying Needs: Personal selling helps the customers in identifying their needs and wants.
• Latest Market Information: Customers get latest market information about product like price, their use, product availability and storage, new product introduction; with help them in taking the purchase decisions in a better way.
• Expert Advice: With the help of personal selling customers get expert advice and guidance in purchasing various goods and services, which help them in making better purchase.
• Motivate Customers: Personal selling motivate customers to purchase new products.
Importance to society
• Converts Latest Demand: With the help of personal selling economic activity in the society is fostered, leading to more jobs, more incomes and more products and services.
• Employment Opportunities: Personal selling helps to create more opportunities to the unemployed youth.
• Career opportunities: Personal selling provides greater carrier opportunity, job satisfaction as well as security, respect, variety, interest and independence to young men and women.
• Product Standardisation: Personal selling creates product standardisation and uniformity in consumption pattern in a diverse society.
Sales Promotion
It is short-term incentives which are designed to encourage the buyers to make immediate purchase of a product or service. Sales promotion activities include offering cash discounts, sales contest and free gift offers etc.
Merits of Sales Promotion
• Sales promotion activities attract attention of the people because of the use of incentives.
• At the time of the launching a new product, sales promotion tools can be very effective.
• It is designed to supplement the personal selling and advertisement efforts used by a firm.
Limitations of Sales Promotion
• Sales promotion tools may affect the image of a product than buyers start feeling dissatisfied with product’s quality and price.
• If a firm have full faith on sales promotion, it may give sometimes bad impression that it is unable to manage its sales target by firms.
Commonly used sales Promotion Activities
Some common used sales Promotion Activities are Rebate, Discount, Refunds, Product Combinations, Quantity Gift, Instant Draws and Assigned Gift, Lucky Draw, Usable Benefit, Full finance@ 0%, Sampling, Contests.
Publicity
• It is a non-personal form of communication.
• It is a non- paid form of communication. It does not involve any direct expenditure by the marketing firm.
• It generally takes place when favourable news is presented in the mass media about a product or service.
Public Relations
• The main affairs of Public Relations are managing public opinion of an organisation.
• Their task is to disseminate information and build goodwill about the business.
• They also advise top management to adopt certain programmes which will add to their public image and ensure that negative publicity does not take place at all.