5Marketing Basics

PRINCIPLES OF MARKETING
Unit - V
Recommended Text Book: Philip Kotler, Gary Armstrong, Ahmed Tolba, &
Anwar Habib “Principles of Marketing” (2011), Arab World Edition, Pearson
Prentice Hall, 8e ISBN 978-1-4082-5568-1 and E-TEXT BOOK (Kotler &
Armstrong)
For BSBA/BBA/MBA Students; Notes prepared
only for general studies purpose & reference
By Dr. Sandeep S. Solanki
(Ph.D., MBA, M.Com)
Jodhpur, Rajasthan, India
All notes from recommended Arab World Edition book of Philip Kotler 1

UNIT – V
(Distribution Management, Promotional Mix & Sustainable Marketing)
TOPICs:
1. Marketing Channels
2. Functions Of Channels
3. Channel Design Decisions
4. Promotional Mix
5. Integrated Marketing Communications
6. Global Marketing
7. Implementing & Controlling Marketing Activities – Sustainable Marketing
8. Social Responsibility And Ethics
9. Introduction to Digital Marketing
All notes from recommended Arab World Edition book of Philip Kotler
2

UNIT – V
MARKETING CHANNELS:
Meaning: Marketing channel are also said as distribution channels. Marketing channel is a set of
interdependent organizations that help make a product or service available for use or consumption
by the consumer or business user. In other words, distribution of goods is carried out from point of
production (manufacturer) to point of consumption (consumers) through some intermediaries such as
distributors, dealers, wholesalers, supermarkets, hypermarket and/or retailers – all act as marketing
channel members or marketing intermediaries. Producers or manufacturer of goods use intermediaries
because they create greater efficiency in making good available to target markets, as shown below:
All notes from recommended Arab World Edition book of Philip Kotler
3

UNIT – V
FUNCTIONS OF MARKETING CHANNELS:
In making products and services available to consumers, channel members ad value by bridging the
major time, place, and possession gaps that separate goods and services from those who would use
them. Members of the marketing channels perform following key functions:
1) Information: Gathering and distributing marketing research and intelligence information about the
marketing environment needed for planning and helping the exchange.
2) Promotion: Developing and spreading persuasive communications about an offer.
3) Contact: Finding and communicating with prospective buyers.
4) Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as
manufacturing, grading, assembling, and packaging.
5) Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or
possession can be transferred.
6) Physical distribution: Transporting and storing goods.
7) Financing: Acquiring and using funds to cover the costs of the channel work.
8) Risk taking: Assuming the risks of carrying out the channel work.

UNIT – V
CHANNEL DESIGN DECISIONS: Companies can design their distribution channels to make
products and services available to customers in different ways. Each layer of marketing intermediaries
that performs some work in bringing the product and its ownership closer to the final buyer is channel
level. The number of intermediaries indicates the length of the channel. Following figure shows the
direct and indirect levels of channels for consumers. When the producer is selling directly to the
consumer, say through factory outlet or its own website, then it is called as direct channel of
distribution. All others levels are indirect channels such as through retailers and wholesalers.

UNIT – V
CHANNEL DESIGN DECISIONS: But the companies must also determine the number of channel
members to use at each level. And this depends on the nature of the product or service the company or
manufacturer produces. Three strategies are available: intensive distribution, exclusive distribution
and selective distribution.
a) Intensive Distribution: Producers of convenience products and common raw materials typically
seek intensive distribution – a strategy in which they stock their products in as many outlets as
possible. These products must be available where and when consumers want them, generally daily
consumption items. For example, toothpaste, confectionaries, beverages, food etc.
b) Exclusive Distribution: By contrast, some producers purposely limit the number of intermediaries
handling their products. The extreme form of this practice, is exclusive distribution, in which the
producer gives only a limited number of dealers the exclusive right to distribute its products in their
territories. For example, Rolex watches, GAP apparels, Nike shoes etc.
c) Selective Distribution: Between intensive and exclusive distribution lies selective distribution – the
use of more than one, but fewer than all, of the intermediaries who are willing to carry a company’s
products. For example, television (Sony), furniture (IKEA) and home appliances (GE).

UNIT – V
PROMOTION M IX or MARKETING COMMUNICATIONS MIX:
The ‘Promotion Mix’ consists of the specific blend of promotion tools that the company uses to
persuasively communicate customer value and build customer relationships. These promotion mix
tools are:
1. ADVERTISING; 2. PERSONAL SELLING; 3. SALES PROMOTION
4. PUBLIC RELATIONS; 5. DIRECT MARKETIING; 6. ONLINE MARKETING
1. ADVERTISING: Advertising is defined as ‘any paid form of nonpersonal presentation and
promotion of ideas, goods, and services by an identified sponsor’. The primary purpose of advertising
is to inform, persuade, or remind about the sponsored product or service. Medium of advertising can
be television, radio, internet, newspaper, magazines, direct mail and/or billboards. For example, a TV
advertising of Coca-Cola highlights Coke as essential ingredient with the meal among Arab families,
especially during holy month of Ramadan.
2. PERSONAL SELLING: Personal selling is the personal presentation by the firm’s sales force for
the purpose of making sales and building customer relationships. Marketing executive of the
companies identify potential customers, approach them and demonstrate their product, handle queries
and close the deal with customers. Listening to the customer is crucial. For example, Salesforce
attending customers in a big mall or a car showroom.

UNIT – V
3. SALES PROMOTION: Sales promotion is defined as ‘short-term
incentives to encourage the purchase or sale of a product or service’.
Sales promotion is mostly used together with advertising, and personal
selling and direct marketing to boost sales. Consumer sales promotion
include – free samples, discounts, coupons, refunds, premiums, event
sponsorships and sweepstakes. Advertising say ‘buy our product’, sales
Promotion says ‘buy it now’. For example, Carrefour in UAE in 2018.
4. PUBLIC RELATIONS (PR): PR is all about building good relations with the company’s various
publics by obtaining favorable publicity, building up a good corporate image, and handling or heading
off unfavorable rumors, stories, and events. Major PR activities include, press conferences for a
product launch, speeches of the directors to the shareholders of the company, making news about
donations to non-profit organizations, grand openings of buildings, etc.
5. DIRECT MARKETIING: is defined as ‘connecting directly with carefully targeted individual
consumers to both obtain an immediate response and cultivate lasting customer relationship.’ Direct
marketers communicate directly with customers, often one-to-one interactive basis, usually to seek
immediate and measurable consumer response. The major forms of direct marketing include:

UNIT – V
personal selling, direct-mail marketing, catalog marketing, telephone or mobile marketing, direct-
response television marketing, kiosk marketing, new digital direct-marketing technologies, and online
marketing. For example, Dell interacts with its customers by telephone or its website and get orders.
6. ONLINE MARKETING: is one of the forms of direct marketing. Online or Internet marketing is
company’s efforts to market products and services and build customer relationships over the internet.
Online marketing is the fastest-growing form of direct marketing. Online marketing requires creating
company website, using e-mail database and online social network marketing. Digital marketing is an
advanced form of direct marketing. For example, Souq.com, Amazon.sa and Nefsak.com etc.
INTEGRATED MARKETING COMMUNICATIONS (IMC):
Definition: IMC is all about carefully integrating and coordinating the company’s many
communications channels to deliver a clear, consistent, and compelling message about the
organization and its brands.
Need of IMC: IMC calls for recognizing all touch points where the customer may encounter the
company and its brands. Each brand contact will deliver consistent and positive message to the
potential customers. Consumers today are bombarded by commercial messages from a broad range of

UNIT – V
sources, which may result in creating a conflicting and/or confusing image of the brand in his mind.
IMC ties together all of the company’s messages and help avoid creating blurred consumer
perceptions. The company’s television and print advertisements have the same message, look, and feel
as its e-mail and personal selling communications. And its PR materials project he same image as its
website or social network presence. For IMC to achieve better consistency and greater sales impact, all
the promotion mix tools are designed carefully in a coordinated manner. (as shown in the following
figure):

UNIT – V
GLOBAL MARKETING:
Q. What do you mean by a ‘global firm’?
Ans. A global firm is that gains marketing, production, R&D, and financial advantages by operating in
more than one country, and that are not available domestically. It develops transnational brands.
Example(1), OTIS Elevator Co., based in USA, get its elevators’ door system from France, small
geared parts from Spain, electronics from Germany, and special motor drives from Japan. Example(2)
it is not a surprise that a Saudi businessman wearing Italian shoes, drive a German car, meet an English
friend at a Japanese restaurant and watch the BBC on television later at home.
Importance of firms ‘going global’:
 For U.S. companies, 70% of total world market for goods and services is outside the country. For
example, Coca-Cola earns 75% of operating income and two-thirds of profit outside of North
America
 For Japanese companies, 90% of world market is outside the country
 94% of market potential is outside of Germany for its companies
Global Marketing – a short note: Global marketing requires customization of marketing mix tools
according to the country-specific consumer needs. It calls for strategic coordination of product, price,
distribution and promotional tools to satisfy target consumer needs and preferences in a particular
11

UNIT – V
nation. In this process, the global firms need to decide upon whether to adapt or standardize the
whole marketing program; because of different marketing environment and different people in various
countries, same marketing strategies and programs will not necessarily work. On the one hand, some
global marketers believe that technology is making the world a smaller place and that consumer needs
around the world are becoming more similar. This paves the way for “global brands” and standardized
global marketing. Global branding and standardization, in turn, result in greater brand power and
reduced costs from economies of scale. On the other hand, despite global convergence, consumers in
different countries still have widely varied cultural backgrounds and that they still differ significantly
in their needs, wants & preferences of the product, spending power, and shopping patterns. Therefore,
marketers must adapt their products, prices, channels and promotions to fit consumer desires in each
country. However, designing marketing program is a matter of degree of standardization a company
wants to attain according to country specific marketing environment. Therefore, a global company
should seek for a balance between standardization and adaptation. In essence, standardization versus
adaptation is the extent to which each marketing mix element can be executed in the same or different
ways in various country markets.
Q. How global firms can modify their overall marketing strategy and programs?

UNIT – V
Ans. It depends on country-specific marketing environment, however, following three alternatives are
available with marketers of global firms:
 Concentration of marketing activities is the extent to which marketing mix activities are
performed in one or a few country locations.
 Coordination of marketing activities refers to the extent to which marketing mix activities are
planned and executed interdependently around the globe.
 Integration of competitive moves is the extent to which a firm’s competitive marketing tactics are
interdependent in different parts of the world.
Next, we must understand that how adaptation or standardization can be managed in the context
of all four P’s i.e. product, price, place and promotion.
A. PRODUCT ADAPTATION: is possible in three ways: a) straight product extension; b) product
adaptation; and c) product invention.
a) Straight Product Extension: means marketing a product in a foreign market without any change.
Taking the product as is and find customers for it. For example, Apple iPad, Gillette razor and Black &
Decker tools.
b) Product Adaptation: involves changing the product to meet local conditions or wants. For

UNIT – V
example, Nokia mobile company from Finland developed a build-in voice recognition for Asia and
dust-proof keypads for India.
c) Product Invention: The product may be created entirely ‘new’ by the company or it may be
reintroduced in a new form, by the company for a specific country market. For example, the ‘U’ model
series of PC by Sony for its Japanese customers, having touch screen that can be used while standing
or on the move.
B. PROMOTION MIX ADAPTATION: Companies can either
adopt the same communication strategy they use in the home
market or change it for each local market. Marketers of global
firms must consider few factors such as language, religious
preferences, color liking, nomenclature meanings, media regulations
to be adapted in its overall communication strategy as per country
specific target market. Therefore, communication or promotion mix
should be partially or fully modified. For example, Coca-Cola sells
its low-calorie beverage as Diet Coke in North America, the UK and
in Middle East but as Coke Light elsewhere.

UNIT – V
C. PRICING: There are two ways of pricing in international market – uniform pricing and standard
mark-up pricing. When a company set its price on a uniform basis all over the world, then it is said as
uniform pricing, for example, selling Black & Decker tools at same price in US as well as in Middle
East. But uniform pricing strategy ignores differences in the actual cost from country to country.
Another pricing strategy is standard mark-up price i.e., adding standard profit margin to the actual cost
everywhere. But again, it might be too much costly for some countries and may result in out of market.
Therefore, to overcome such problem the company can offer simplified versions of their product in
some countries which are less affluent. For example, P&G sells everything from shampoo to
toothpaste in less costly formulations and smaller packages at more affordable prices in emerging
markets like India.
D. ADAPTING DISTRIBUTION CHANNELS: There are two channel points in international
distribution network – one is between nations i.e., national borders and the other within nations i.e.,
moving products from market entry points to final consumers. Channels of distribution within
countries vary greatly from nation to nation, depending on their geographical surface. For example, in
rural China, an army of more than 10,000 Coca-Cola sales representatives make regular visits to small
retailers, often on foot or bicycle. To reach the most isolated spots, the company even relies on
delivery donkeys. All notes from recommended Arab World Edition book of Philip Kotler 15

UNIT – V
EXAMPLE:
Marketing Mix Standardization Localization
Product Big Mac McAloo Tikka potato burger (India)
Promotion Brand Name
Advertising Slogan
‘I’m Lovin It’
Slang ’Macca’s (Australia)
MakDo (Philippines)
McJoy magazine, “Hawaii Surfing
Hula” promotion (Japan)
Place Free-Standing Home delivery (India)
Swiss rail system dining cars
Price Big Mac is $3.10 in
U.S. and Turkey
$5.21 (Switzerland)
$1.31(China)
McDonald’s Global Marketing

UNIT – V
SUSTAINABLE MARKETING: Sustainable marketing is all about implementing marketing
activities in controlled manner.
Q. What do you mean by a ‘sustainable company’?
Ans. Sustainable companies are those that create value for customers through socially,
environmentally, and ethically responsible actions.
Q. What is the concept ‘sustainable marketing’?
Ans. Sustainable marketing calls for meeting the present needs of consumers and businesses while also
preserving or enhancing the ability of future generations to meet their needs. Sustainable marketing
considers both – societal marketing and strategic planning concept. Societal marketing considers the
future welfare of consumers and strategic planning of the company considers future company needs.
Therefore, sustainable marketing concept incorporates both – meeting immediate & future needs of the
customers and company both as well as taking socially and environmentally responsible actions. For
example, McDonald’s has responded with a more sustainable ‘Plan to Win’ strategy. In this strategy,
McDonald’s diversified into salads, fruits, grilled chicken, low-fat milk, and other healthy fare. Also,
McDonald’s phased out traditional artery-clogged trans fats without compromising the taste of its
French fries, while using a healthier cooking oil. The ‘Plan to Win’ strategy also addressed environ-

UNIT – V
-mental issues. McDonald’s used environmentally sustainable packaging to be reused and recycled.
McDonald’s developed an environmental scorecard that rates its suppliers’ performance in areas such
as water use, energy use and solid waste management. Since announcing its ‘Plan to Win’ strategy,
McDonald’s sales increased by 57% and profits have nearly tripled.
Q. What consumer actions can promote sustainable marketing?
Ans. 1) Consumerism movements can help promote sustainable marketing. Consumerism is defined
as, ‘an organized movement of citizens and government agencies to improve the rights and power of
buyers in relation to sellers.’ This calls for more consumer rights such as a) right to expect product to
be safe, b) right to expect product to perform as claimed, c) right to be well informed about ingredients
of the product, d) right to be protected against questionable product and marketing practices, e) right to
influence product and marketing practices in ways that will improve ‘quality of life’ and f) most
importantly right to consume in a way that will preserve the world for future generations. And 2)
Environmentalism: Consumers and general public can also act as environmentalists.
Environmentalism is defined as ‘an organized movement of concerned citizens, businesses, and
government agencies to protect and improve people’s current and future living environment.’ This
concept includes quality life for both consumers as well as of the environment for long-run interests.

UNIT – V
Pollution prevention and control requires cleaning up waste after it has been created or eliminating
waste before it is created. In this direction many companies emphasize ‘green marketing programs.’
Green marketing programs involve designing and developing ecologically safer products, recyclable,
and biodegradable packaging, better pollution controls, and more energy-efficient operations. For
example, UAE planned a 6 kilometer-square econ-city for ‘greening move’ called Masdar (in Arabic).
The eco-city is designed to enable and encourage walking and cycling, a car-free zone, promoting zero
waste. Electricity to be generated by solar panels.
Q. How companies (business actions) can promote sustainable marketing?
Ans. Good ethics is a cornerstone of sustainable marketing. Companies need to develop corporate
marketing ethics policies, as guided by AMA (American Marketing Association) as follows:
1) Honesty – to be truthful and forthright in our dealings with customer sand stakeholders.
2) Responsibility – to accept the consequences of our marketing decisions and strategies.
3) Fairness – to try to balance justly the needs of the buyer with the interests of the seller.
4) Respect – to acknowledge the basic human dignity of all stakeholders.
5) Openness – to create transparency in our marketing operations.
6) Citizenship – to fulfill the economic, legal, philanthropic and societal responsibilities that serve
stakeholders in a strategic manner.

UNIT – V
INTRODUCTION TO DIGITAL MARKETING:

TRADITIONAL MARKETING DIGITAL MARKETING (DM)
Communication is uni-directional. Means, a business
communicates about its products or services with one
group of people.
Communication is bi-directional. The customer also can ask
queries or make suggestions about the business products or
services.
Medium is generally phone calls, letters and Emails. Medium of communication is mostly through social media,
websites, chat and Email.
Campaigning takes more time for designing, preparing
and launching.
There is always a fast way to develop an online campaign and
carry out changes along its development. With digital tools,
campaigning is easier.
It is carried out for a specific audience throughout from
generating campaign ideas up to selling a product or a
service
The content is available for general public. It is then made to reach
the specific audience by employing search engine techniques.
It is conventional way of marketing; best for reaching
local audience.
It is best for reaching global audience.
It is difficult to measure effectiveness of a campaign. It is easier to measure the effectiveness of a campaign through
analytics.
Difference between Traditional Marketing and Digital Marketing
HERE ENDS UNIT-V and the Syllabus

5Marketing Basics

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