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Module 1: Marketing Management –Core Concepts, scope and importance of marketing
management Evolution of modern marketing concepts; objectives of marketing; marketing
mix; Marketing Strategy Formulations – Key Drivers Of Marketing Strategies - Strategies
For Consumer Marketing –– Services Marketing – Competitor Analysis - Analysis of
Consumer Markets –Strategic marketing planning.
Module 1: MARKETING MANAGEMENT
Introduction:
Far-reaching changes have been taking place in the Indian economy during the recent
past, consequent to the opening up of our economy through globalization and liberalization
policies. The floodgates have been thrown open to allow international competition for
manufactured goods as well as services, making it a question of survival of the fittest in any
industry.
In the present highly competitive economy, which can be called a buyer’s market, it is the
customer who wields full power. He can make or wreck a company. No wonder that the
collective battle cry from sales and marketing people, retailers, wholesalers and advertising
wizards alike is now ‘Serve the Customer’, or ‘Delight the Customer’. The customer who was
considered the ‘King’ is now treated almost like ‘God’, emulating the highly successful
marketing people of Japan. When consumer expectations become higher and higher, superior
market driven strategies or customer driven strategies and their execution in the market are
important. Companies have to be fully customer oriented to succeed in the present competitive
scenario, and should ‘think customer’, ‘live for customer’, ‘smell customer’, and ‘build customer
relations’.
CONCEPT OF MARKETING
Marketing is an inescapable phenomenon in the present-day world. Everyday, we are
exhibited to marketing of goods, services, and ideas. For example, when a salesperson sells T.V.,
a doctor treats a patient or a state government asks people to get their vehicles checked for
pollution, each is marketing something to the targets. Marketing is all about recognizing and
meeting human and social needs. Marketing holds that an organization should anticipate the
needs and wants of customers and try to satisfy them more effectively than its competitors and
by doing this it will be able to achieve its organizational objectives and goals more efficiently. In
simple words, marketing is “meeting needs profitably”.
Marketing emphasizes on the needs of the customers before putting the ideas into concrete
products. With the customer's wants and needs engulfed into the design and production of the
product, sales and the goal of earning profit is likely to be accomplished.
What is marketing?
As per AMA, “Marketing is the process of planning and executing the conception, pricing,
promotion and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational goals”.
For marketing to be constructive an organization needs to have proper management of marketing
activities i.e. marketing management.
Marketing has been also been defined in the following manner:

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• According to the American Marketing Association (AMA), “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.”
• In the words of Peter Drucker, “The aim of marketing is to know and understand the customer
so well that the product or service fits him and sells itself.”
• Philip Kotler has defined marketing as, “Marketing Management is the analysis, planning,
implementation and control of programs designed to bring about desired exchanges with target
audiences for the purpose of personal and of mutual gain. It relies heavily on the adoption and
coordination of product, price, promotion, and place for achieving responses.”
• What is Marketing Management?
It dictates the direction of purposeful activities that would lead to attainment of marketing goals.
It is required to build up a suitable marketing-mix to accomplish the objectives of the business. It
is accountable for planning, organizing, directing and controlling the marketing activities.
Through efficacious employment of market and marketing research an organization should be
able to recognize the needs and wants of the customer and try to deliver benefits that will
intensify or add to the customer’s lifestyle, while at the same time ensuring that the satisfaction
of these needs concludes in a healthy turnover for the organization. For example, when Sony
launched its Play Station 3 game system and when Apple launched iPhone 5, these
manufacturers were flooded with orders because they had crafted the right product, based on
doing careful marketing homework.
CORE CONCEPTS OF MARKETING
Marketing Management is a social and managerial process by which individuals or firms
obtain what they need or want through creating, offering, exchanging products of value with
each others.
Needs- Needs are the most basic concept underlying marketing. Need arises when a person feels
deprived of some basic satisfaction. Marketers do no create these needs. They exist automatically
in every individual. Humans possess many elaborated needs which include:
1. Basic physical needs: It includes need for food, shelter, clothing and safety.
2. Social needs: It includes the need for belongingness and affection.
3. Individual needs: It includes the need for knowledge and self-expression.
Wants- Wants are felt for specific products to satisfy human needs. Human needs are few, but
their wants are unlimited. These wants are continually shaped by one’s social, cultural and
individual personality. Marketers can influence the wants by offering various products,
informing the customers about the products and using marketing strategies to persuade them to
buy the product.
Demands- Wants that are supported by purchasing power i.e. ability and willingness to buy is
referred to as demand. Companies should emphasis on calculating how many people would
actually be willing and able to buy the company’s products rather than measuring how many
people want their products.

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Products- A product is defined as anything that can be offered to satisfy human need or want.
The scope of product is not limited to physical objects only. It also includes services, experiences,
persons, events, places, properties, organizations, information, ideas etc. Products are vehicles
for delivering satisfaction to customers. In other words, a product is a solution that marketers
offer to its target market.
Value- Value is a customer’s estimate of the product’s capacity to satisfy a set of goals. It is the
difference between what a customer spends to obtain the product and the worth that he gets from
using it. It is the value which guides the customers to choose among different products that can
satisfy a given need. Value is a combination of quality, service and price and is known as
“Customer Value Triad”. Value increases with quality and service and decreases with price.
Satisfaction- It depends upon a product’s performance as perceived by the buyer in delivering
value relative to their expectation.
• If performance matches buyer’s expectation then he feels satisfied.
• If it falls short of expectations then the customer is dissatisfied.
• And if it exceeds expectations then the buyer is delighted.
Exchange- It is defined as an act of obtaining a desired product from someone by offering
something in return. It is the process of creating value because it leaves both the parties better
off.There are 5 conditions which must be satisfied for exchange to take place. They are as
follows:
1. The foremost condition is that there must be at least 2 parties
2. Each party must possess something of value that can be exchanged with another party.
3. Each party must have the ability to communicate and delivery.
4. Acceptance or rejection of the exchange offer lies at the discretion of each party.
5. Each party is in opinion that it is appropriate or desirable to deal with the other party.
Transaction- It is defined as a trade of values between two or more parties. It is considered as
marketing’s unit of measurement. It engulfs at least two things of value, agreed upon conditions,
a time of agreement and ace of agreement.
NATURE, SCOPE AND IMPORTANCE OF MARKETING MANAGEMENT
Nature of marketing: Marketing is a never ending task. Marketing concerns itself with a
arranging all the resources ina way that meets the needs of the customers. The following points
will bring forth the nature of marketing.
1. Marketing is customer oriented: Marketing begins and ends with the customer. Marketing
concerns itself not only with the satisfaction of the customer but also objects to delight him/her.
All the organizational activities must be targeted and focused towards the customer. Customers
must be allowed to decree product specifications and standards regarding quality. And for this,
customer’s needs must be examined continuously.
2. Marketing is the delivery of value: When a customer is satisfied from a particular product
based on its overall performance, then the satisfaction that he has received is known as customer
value. Customers consider the product’s value and price before making a decision and make a
trade-off between cost and benefit of the product. They will choose a product that gives them
more value per rupee. According to De Rose, “Value is the satisfaction of customer requirement

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sat the lowest possible cost of acquisition, ownership and use”. Thus, the organization must aim
to deliver greater customer value than that of their competitors.
3. Marketing is network of relationships: The focal point of all marketing activities is the
customer. The term relationships marketing came into lightin1990’s. According to Philip Kotler,
“Relationship Marketing is the practice of building long-term satisfying relations with key
parties like customers, suppliers and distributors in order to retain their long term preference and
business.” So the marketers should aim at maintaining long term relationships by delivering high
quality products, better services and fair prices than their competitors.
4. Marketing is business: All activities start from marketing i.e. through knowing customer’s
needs and wants and ends on the customer i.e. providing after sales service and knowing
customer dissonance. The entire business revolves around marketing.
According to Peter F. Drucker “Marketing is so basic that it cannot be considered as a
separate function. It is the whole business seen from the point of view of its final result, that is,
from the customer’s point of view. Business success is not determined by the producer but by the
customer.”
5. Marketing is dynamic: The word dynamic means ever changing. The needs and wants of the
customer are changing constantly. Since the goal of marketing is to meet customer’s needs and
wants by furnishing them with the products they want to buy, therefore, marketing must also
change constantly to meet those needs and wants.
SCOPE OF MARKETING
In today’s world marketing has become almost indispensable for the success of an
organization. Therefore, it is of utmost importance to study the scope of marketing. The
spectrum of marketing covers the following:
1. Marketing Research: Market Research is a tool used for decision making about the
marketing mix’s elements. Research has to be carried out in order to identify the customer’s
needs, their tastes and preferences, their interests, economic position, their paying capacity and
effectiveness of certain advertisements. For this purpose, data is collected, tabulated, codified,
analyzed, and presented through knowledgeable techniques crafted to reveal what customers will
buy, why they will buy it, and how much they will pay for it. Market research aims at adapting
products to the desires of buyers. Often questionnaire is used to obtain feedback from the
customers. Marketing managers must play an active role in the research process if the input is to
be useful to them.
2. Pricing: Pricing is extremely important since it directly affects an organization’s sales and
profits. While deciding the price of the product a number of factors have to be kept in mind like
the cost of production, paying capacity of the customer, industry demand, competitor’s prices
and the target profit margin. Price knits together the elements of the marketing mix and pays for
their respective contributions. Therefore, the marketing manager must analyze and reconcile the
various elements of those variables which influence price, and must then decide on an optimal
price policy. A good pricing policy is a significant factor to attract the customers.
3. Advertising and Sales Promotion: In this era of tough competition, the sales promotion and
advertisements have become almost an inbuilt part of the marketing. It helps to make

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thecustomer aware about the product, makes him curious about the product and thus promotes
sales. There are ample sources of sales promotion and advertisements taking the decision about
which source to be selected is also an imperative part in the sphere of marketing management.
Through advertising marketers are able to position their products in the minds of the customer
using various media like newspapers, magazines, television, radio, hoardings, window display
and internet etc. Marketing managers must blend the methods of 1) face-to-face personal selling,
2) mass selling to large numbers of customers through advertising and 3) sales promotion, to
inform the target market about the "right" product.
4. Channels of Distribution: Bringing together the buyer and seller and facilitating their
exchange is the essence of marketing. Distribution channels are an integral part of a complex
system that has evolved from cultural and social patterns in order to facilitate exchange
transactions. Marketers must decide what methods are best for distributing their particular
products. There are various media of distribution like the retailers, the wholesalers, department
stores, chain stores, super markets etc. Marketers may choose to sell directly to the customers, to
the customers through sales agents, to jobbers, directly to retailers, or to retailers through sales
representatives. They must also determine as to how much long shall be its channel of
distribution. A number of factors have to be borne in mind while selecting the medium of
distribution like perish ability, price of the product, size and weight, after sales service etc.
5. Financing: It is difficult to perform various marketing activities without the availability of
adequate and cheap finance. It has been rightly remarked “Money or Credit is the lubricant that
facilitates the operation of the marketing machine as modern marketing requires vast resources.”
The term financing includes decisions like budgeting for marketing activities, obtaining the
necessary funds needed for operations and providing financial assistance to customers so they
can purchase the business products and services. In the era of global competition, financing of
customer purchasing has become an important part of marketing. Marketers have to offer
different finance schemes to their customers to increase the volume of sales. There are various
sources of marketing finance like commercial banks, cooperative credit society, government
agencies etc. The modern business is constructed on the foundation of trade credit.
6. After-Sales Service: The furnishing of after sales service is very critical for the satisfaction of
the customers. The free repairs, the return or exchange of the product during the guarantee period
if the product proves defective or worthless, etc. are included in after sales service. Marketers
must aim at maintaining cordial relationships with customers, and must attend their queries and
solve their problems.
IMPORTANCE OF MARKETING
Marketing has become a very significant aspect in business since a firm’s financial
success largely depends on marketing. Most facets of business depend on successful marketing.
Therefore, no firm today can afford to ignore the significance of marketing. And it is not
surprising that companies now have CMOs, that is, Chief Marketing Officer along with
CEOs(Chief Executive Officer) and CFOs (Chief Financial Officer). Marketers have now come
to appreciate the importance of their prudent marketing efforts and have understood that the
success of a product will depend on how well the product is introduced and promoted into the
market. The umbrella term ‘Marketing’ covers advertising, promotion, public relations, and sales.

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A firm might be offering the best products or services in an industry but without marketing it
would be impossible for the firm to inform its potential customers about the product. If no one
knows about a company’s product, there will be no demand, company will make no sales and
hence there will be no profits. This highlights the significance of marketing i.e. to create
awareness about the products and makes loyal customers and retains them. Marketing enables
the customers to know what marketers are offering to them and at the same time it enables the
marketers to convince their customers to buy their offerings. Successful marketing strategies
help in not only understanding the customer and his needs but also in the following ways:
1. It promotes awareness among the public – Marketing enables the customers to become
aware about the various products that are available in the market. A firm’s product must be
known to the potential buyers for it to succeed. If there were no marketing or advertising, the
customers would not know about the products. A company must capitalize on marketing
activities so as not to miss the opportunity of being discovered. Attempts should be made to
reach as many customers as possible and tell them what the company has to offer with the help
of effective marketing strategies.
2. It helps in boosting sales- Once the prospects become aware about the company’s products or
services it boosts up the chances that customers will make a purchase. New customers also start
to spread the word, informing their friends and family about the company’s product and
consequently company’s sales starts to increase rapidly. No matter what a company is selling, it
will generate sales once the people come to know about it through TV advertisements,
commercials, newspaper advertisements, etc. The more the people see and hear about a new
product, the more inclined they will be to buy it.
3. It builds company reputation – Marketing helps to build brand name recognition or product
recall and hence enables the customers to relate the brand name with the images, logos and
captions that they see or hear in advertisements. When the company is able to satisfy the
expectation of its customers, its reputation stand on a concrete ground. And once a company
succeeds in establishing its name, its business will grow and expand and more and more
customers will start purchasing its products and services.
4. It helps in fostering healthy competition – Marketing promotes a climate of healthy
competition in the marketplace. It helps to position the company as being superior to its rivals so
that the customers will prefer its products rather than buying from other firms that sell similar
products and services. Competition drives the firms to invest in research and development in
order to produce better quality and innovative products and services. Thus marketing also helps
to foster innovation. To sum up, an attempt should be made to develop integrated marketing in
the firm to serve the customers better.
3. Evolution of modern marketing concepts;
Traditionally, the objective of marketing was to make the goods available at places where
they were needed. The emphasis then shifted from exchange to satisfaction of human wants. The
scope of marketing was enlarged due to technological progress and multiplication of human
needs and wants. In this process traditional ideas on marketing were replaced by modern
concepts. Each stage in the evolution of marketing have been explained in this module.
Production Orientation:

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It was held true in the 1950s when capitalism had created a growing number of affluent and
middle class people. During this stage, organizations believed that consumers are in favor of
those products that are available widely and are not much costly. They focused on production
efficiency by having a favorable input-output ratio that could be achieved through economies of
scale which are the cost advantages that an organization obtains due to expansion and mass
distribution.
The production orientation was based on Say’s Law which states that the “production of
commodities creates, and is the one and universal cause which creates, a market for the
commodities produced".
The main attributes of this orientation are: It is company focused Lays stress on mass
production and mass distribution Objective is to attain economies of scale Based on the concept
“Supply creates its own demand “Ignores the needs and wants of consumers.
Product Orientation:
The organizations employing product orientation are chiefly concerned with quality of products.
They assume that consumers prefer high quality products. Emphasis is laid on making superior
products and then improving them overtime. The organization stresses on R&D, innovation and
performance of the product. Continuous evolution during the life cycles of the product to
maintain the attention of the potential customers is the main focus of such organizations.
Consciousness to what customers really need and want.
The main attributes of this orientation are
• It is product focused
• Assumes that consumers are interested in product quality.
• Based on the belief that consumers choose amongst different products on the basis of
best quality for the price paid.
Selling orientation:
The organizations that employ sales orientation focus on the selling and promotion of a
specified product. The selling orientation holds that if customers are not oriented properly, they
will not buy enough of an organizations product. Thus, it becomes important for organizations to
undertake an aggressive selling and promotion effort. It can be elaborated in the words of Sergio
Zyman, the former VP of marketing who said that “the purpose of marketing is to sell more stuff
to more people more often for more money in order to make more profits.”
This orientation is practiced most aggressively by organizations that have overcapacity or
deal in unsought goods i.e. goods that consumers do not think of buying such as encyclopedias
and insurance policies. The aim of these organizations is to sell what they have made rather than
make what the target market wants.
The main features of this orientation are
• It is company focused
• Lays prominence on sales volume
• Based on the belief that if customers are left alone they do not buy enough of
organizations product.
• Lays stress on aggressive selling tactics
• Used when organizations have over capacity or sell unsought goods.
Marketing Orientation:

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It is a consumer centered orientation that is based on the “sense-and-respond” philosophy.
The aim of organization following this orientation is to find right products for their customers
rather than right customers for their products. It is a coordinated campaign between a company
and its customers wherein the company tailors the product to meet the needs of the customers.
The organizations believe that organizational goals can be achieved by being more efficacious
than the rivals in consolidating and coordinating their marketing activities in ascertaining and
satisfying the needs and wants of the target market.
The main attributes of this orientation are
• It is consumer oriented
• Prominence is on attracting and maintaining customers by offering them those products
that satisfy their need and meet wants.
• Integrate all marketing activities in identifying and satisfying the needs of the consumers.
• Prominence is on selling satisfaction and not merely selling goods.
Holistic Marketing Orientation:
The organizations following holistic marketing orientation look at marketing as a complex
activity and recognize that “everything matters” in marketing and that a broad consolidated
perspective is essential in developing, designing and implementing marketing programs and
activities.
There are following components that characterize holistic marketing orientation
1. Relationship marketing: the goal of relationship marketing is to build mutually satisfying
long term rapport with key stakeholders to earn and perpetuate business. The key stakeholders
comprises of customers, employees, marketing partners such as suppliers, distributors, dealers
etc. and members of the financial community such as shareholders, analysts, investors etc. In
order to create sound rapport with each of the stakeholders businesses need to understand their
needs, goals and desires as well as their resources and capabilities.
2. Internal marketing: is a process within an organization wherein the functional process abeam,
motivates and empowers employees at all the levels of management to provide a satisfying
customer experience. It is a process of ensuring that everyone in the organization adopts relevant
marketing principles.
3. Integrated marketing: is an approach of brand communications where different elements of
the marketing mix work together to provide seamless experience to the customers. The brand
communication is presented with similar tone and style so as to reinforce the brand’s core
message.
4. Socially responsive marketing: it states that the effect of marketing extends beyond the
organization and the customers to the society as a whole. Organization should take the present as
well as the long term best interest of the society in consideration while formulating their
marketing strategy. The organizations job is to ascertain the needs, wants and interests of target
market and furnish the intended satisfaction more efficaciously and efficiently than the rivals in a
way that consumers as well as society’s long term well-being is enhanced. Firms such as
Hewlett-Packard, McDonald’s and Body Shop are using this concept to distinguish themselves
from rivals, build consumer preferences and profit gains.
The main characteristics of holistic marketing are:
• In marketing everything matters
• Lays importance on long term mutually satisfying rapport with all the stakeholders

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• Employees at all levels in the organizations should aim to satisfy the customers
• All the marketing mix elements should reinforce the brands core message
• Due consideration should be given to society’s long term interest.
In today’s marketplace organizations can be successful only when they understand their
customers’ requirements best and make sure that their expectations are met. This approach of
doing business is known as marketing orientation. It is a business philosophy in which the
business revolves around the customers. Emphasis is laid on determining the requirement of the
potential customers and supplying them those goods that can meet their requirements. Creation
of customers and satisfying their wants is considered to be the justification of business. The
organizations create a product as per the needs of the customers rather than according to the
availability of machinery and material and technical know-how. In short, customer is the fulcrum
around which the business moves.
The companies following marketing orientation invest time in researching the current trends
in a given marketplace. The product strategy is then developed to cater to the wants and needs of
the target audience. The organization then advertises the product as an item that consumers want
rather than convincing them that the product is something that they should want.
OBJECTIVES OF MARKETING;
The major objectives of marketing are as follows:
1. To satisfy the customers: The marketing manager must scientifically study the demands of
customers before offering them any goods or services. Selling the goods or services is not that
important, as the satisfaction of the customer’s needs. Modern marketing thus always begins and
ends with the needs of customers.
2. To increase profits for the growth of the business: The marketing department is the only
department which generates revenue for the business. Sufficient profits must be earned as a
result of sale of want-satisfying products. If the firm is not earning profits, it will not be able to
survive in the market. Moreover, profits are also needed for the growth and diversification of the
firm.
3. To generate customer base for the business: The Marketing manager must attract more and
more customers to buy the firm’s products and services. This will also result into increased sales.
4. To determine marketing-mix that will satisfy the needs of the customers. Product, pricing,
promotion and physical distribution should be so planned as to meet the requirements of different
kinds of customers.
5. To increase the quality of life of people: Marketing Management attempts to increase the
quality of life of the people by providing them better products at reasonable prices. It facilitates
production and distribution of a wide variety of goods and services for use by the customer.
6. To create good image: To build up the public image of firm over a period is another objective
of marketing. The marketing department provides quality products to customers at reasonable
prices and thus creates its impact on the customers. The marketing manager attempts to increase
the goodwill of its business by initiating image building activities. If a firm enjoys goodwill in a
market, it will increase the morale of its sales-force. They will show greater loyalty and will
develop a sense of service to the customers. This will further enhance the reputation of the
business.

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Goals/Objectives of Marketing:
• Creation of utility
• Place utility: Movement of goods from the centers of production to the centers of
consumption creates place utility.
• Time utility: By making goods and services available to the customers at the time of the
in need, marketing creates time utility.
• Possession utility: By facilitating the transfer of ownership from producers to consumers,
marketing creates possession utility
• Cost reduction
• Price stability
• Maximize consumption
• Maximize consumer satisfaction
• Maximize choice for
• Maximize life quality
MARKETING MIX;
The term marketing mix first came into existence in the year 1964 when Neil H. Borden
published his article “The concept of Marketing mix”. According to him marketing mix
comprised of- product, planning, pricing, branding, distribution channels, personal selling,
advertising, promotion, packaging, display, servicing, physical handling, fact finding and
analysis. However, later E. Jerome McCarthy grouped these ingredients into four broad
categories namely Product, Price, Place and Promotion that today are popularly known as 4 P’s
of Marketing.
Concept of Marketing Mix
The main objective of marketing is to identify the needs of the consumers and provide
them with the goods and services that can satisfy their need most effectively. For this purpose the
business organizations need to manufacture products as per the requirements of the consumers,
make these products available at a price that the consumers are willing to pay, make these
products available to the consumers at the outlets convenient to them and inform the consumers
about the products and their characteristics through various media channels that are available to
the consumers. The business organizations, thus, need to concentrate on four major decisions
namely product, price, place and promotion to achieve their marketing objectives. These four
elements together constitute the marketing mix and are popularly known as 4 P’s of marketing.
All these elements are inter related to one another as decisions related to one element affect
decisions made in other areas.
Philip Kotler has defined marketing mix as “a set of controllable variables that the firm
can use to influence the buyer’s response”.
Functions Of Marketing:
Clark and Clark have classified the marketing functions into the following three divisions:
I. Functions of Exchange
II. Functions of Physical Supply
III. Facilitating Functions
I. Functions of Exchange

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Buying function: This function involves the study of the markets by the marketers, identifying
the demand for their products (planning), so that the suppliers maybe identified (contractual
function) and required quality and quantity of raw materials and semi-finished goods maybe
acquired for further processing (negotiation and contractual function).
Assembling function: It involves the collecting of semi-finished / finished products from
various sources and them together to central location, either for further processing or resale. This
may be done by the producers or the intermediaries.
Selling function: This includes the function of product planning, function of demand creation for
products, the contractual and negotiator function of agreeing upon the terms and conditions by
both, the buyers and the sellers and the final agreement of sale, including the transfer of
ownership and title of goods.
II. Functions of Physical Distribution
• Transportation: Transportation enables the flow of goods from places of production to
places of consumption. It helps in creating, place and time utility, also adding value to the
product. It facilitates large-scale production and selling. It involves the selection of modes of
transport depending on costs, speeds and risk involved
• Storage and Warehousing: Storage refers to the holding and preserving of goods between
the time of production and time of sale. This may also happen at stopovers during
transportation. It enables and ensures the availability of products when demanded by the
consumers, even during off seasons. Storage protects the goods from deterioration and to
carry forward surplus stocks for future consumption, also regulating the flow of goods to
different markets.
• Inventory management: Inventory management involves the management of inventories
from the point of raw materials being purchased to the point of the finished goods being
transported to warehouses. This enables continuity of supply of materials to the production
process and subsequently on time fulfillment of customer demand.
• Material handing: The materials and the semi converted products, held in inventories are to
be handled efficiently when moved to the next area of requirement so as minimize breakage,
spoilage, pilferage etc.
III. Functions of facilities
Financing; The availability of finance in the form of capital or debt is essential for the smooth
running of business firm. This function enables the movement of funds to enable the required
purchases, processing and selling functions to happen seamlessly.
Risk bearing & Insurance: The risks of natural disaster, thefts, changes in the conditions of
demand and supply are all to be considered by marketers as being a part of business. Some of
these risks are wholly or partially insured against, whereas the rest are borne by the marketers.
Standardization: Establishing a standard for goods produced, sorting of goods into different
grades and ensuring quality is maintained by regular control measures are all involved in the
function of standardization.
Market information: It involves the gathering of information about the dynamic target markets,
changing customer needs, competition analysis, the interpretation and communication of the
same to the marketers / relevant decision makers.
Advertising, sales promotion: They are the tools adopted by marketers to make the target
customers aware of a product, induce trial and persuade for regular consumption. Advertising is

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impersonal and long term whereas sales promotion is a short term and more direct approach to
promote immediate sales.
After sales service: Involves the service provided to customers after the sale is affected. It has a
direct impact on customer satisfaction and can be the deciding factor when a customer seeks to
repurchase or upgrade to a more advanced version of the product.
Components of Marketing Mix:
Marketing mix consists of four interrelated components namely product, price, place and
promotion which together represent the business organizations total marketing program. E. J.
McCarthy has called these four marketing variables as the “four P’s” of the marketing mix.
Product Mix
A product is a bundle of utilities or a cluster of tangible and intangible attributes that provide
physical and psychological satisfaction to the buyer. Product mix also known as product
assortment is concerned with the planning, development and manufacturing of the right type of
products and services that can satisfy the wants of the consumers and enable the firm to achieve
high profits. It includes decisions about the product line (number of related products the business
organization offers), product width (number of product lines that the organization offers),
product length (total number of products in a business organization’s product mix), product
depth (variations in each product in terms of size, flavor or other distinguishing characteristics)
and product consistency (how closely related in terms of production, distribution and use the
products lines are).
Price Mix
Price is the exchange value of goods and services in terms of money. It refers to the amount of
money that is being charged by the seller for the product it offers from the buyer. Pricing of the
product is of utmost importance for the success of the business. The price should be high enough
to cover the cost of producing and distributing it but low enough to be in the reach of the targeted
consumers. Price mix consists of decisions with regard to the unit price of products, the amount
of discounts to be allowed and rebates to be given, the credit policy of the business organization,
the profit margin the business organizations seeks to earn, the pricing policies and terms of
delivery.
Place Mix

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Place mix consists of those activities that need to be performed to transfer ownership of goods to
the customers. It also entails activities that are to be performed to make goods available at the
right time and the right place. The business organization needs to take decisions about the
distribution channel to be employed, the outlets at which the products would be available, the
place at which the products should be displayed, the physical distribution system to be employed
for handling and transporting the product to the trade channels.
Promotion Mix
Promotion is concerned with informing and persuading the customers about the business
organizations products. It is a medium through which businesses can communicate with their
customers about how their product is superior in comparison to other competing brands.
Promotion mix consists of five distinct elements namely advertising, public relations, personal
selling, sales promotion and direct marketing. Under promotion mix, business organizations need
to take decisions regarding the which advertising media to use, the advertising theme to be
employed, the amount of advertising budget, conducting sales contests, deciding the role
salesmen will play in creating awareness about the product.
Extended Marketing Mix
Traditionally the marketing mix consisted of only 4 P’s. Increasing dominance of service
sector in the economic activity of the country along with increasing focus in marketing about
customer orientation has led to the emergence of additional 3P’s namely- People, Process and
Physical Evidence. These extended elements of the marketing mix are particularly relevant to the
service mix.
1 People
In the marketing of services, people constitute an important ingredient. Every employee working
in the business organization is a sales person of the business organization’s services. The
judgment of the consumers about service provision and delivery are based on the performance of
the people representing the business organization. People form an essential part of the service
mix as it is one of the few elements of the service that customers can see and interact with.
Thus, it is imperative for business organizations to hire, train and retain the best possible people
to gain competitive advantage.
2 Physical Evidence
Physical Evidence refers to the space by which a customer is surrounded when he consumes the
service. The physical environment is a package of ambient conditions (includes the temperature,
color scheme used, smell, music and noise); spatial layout (the way in which the machinery is set
up and the furniture lay out) and functionality (how well suited the environment is to accomplish

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the needs); and Corporate branding (the signs, symbols and artifacts that represent the image and
identity of the business organization). This element helps the business organization differentiate
itself from its competitors. It also enables the business organization to charge a premium price
for the services provided along with establishing positive experience for the consumers.
3 Process
In the marketing mix, process refers to the system used to deliver the service to the consumers. It
includes the procedures adopted and the routines and mechanisms used within the business
organizations. For e.g. credit card companies send out new credit cards to their customers once
the old ones expire. This is possible only if they have an efficient process in place that keeps
track of expiry dates and renewals. This helps in fostering confidence and loyalty amongst the
consumers. It is essential for a business organizations long term success that all services are
underpinned by well defined and efficient processes so that consistent service can be provided.
Process is that element of the marketing mix through which everybody knows what to do and
how to do so that high quality service can be provided to the consumers.
C’s of Marketing Mix
The “4 C’s” of marketing mix modifies the traditional marketing thinking into customer centric
way. In this approach, instead of considering each aspect of marketing from the perspective of
business, customer perspective is used.
1. Customer Solution:
A product is what the business organization offers to its consumers. In order to succeed the
business organization needs to find out what customers want. Focusing on providing customer
solution enables business organizations in creating and bringing those products and services to
the market that have superior value in the eyes of the consumers. The customer is concerned only
with the solution that a business organization offers. Customer solution is how one can define
marketing mix “products”. It is the solution that a business organization can provide that defines
its success in the marketplace.
2 Customer Cost
The customer centric marketing mix thinks of the traditional marketing mix “price” as the
customer cost. The focus shifts from what the organization charges to what the customer pays.
The business organizations motive should not be to maximize their profit but to maximize
customer value. Thus, the organization needs to think how they can provide more value to the
customer for the same cost rather than thinking how to make profit from a product.
3 Conveniences

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The traditional marketing mix element place is replaced by convenience in the consumer centric
marketing mix. With the growth of internet and hybrid models of purchasing the relevance of
place has decreased. Convenience refers to the ease with which a consumer can find information
about a product and buy it. It is imperative for businesses to understand how their consumers
prefer to buy- from a catalogue, over the phone, on the internet, by physically visiting the store
etc. This understanding enables businesses in providing an optimum overall experience to the
consumers.
4 Communications
The consumer centric marketing mix replaces the traditional element of marketing mix
promotion with communication. Customers no longer believe everything that business
organizations say at face value through their advertisements press releases etc. Consumers, today,
want to be engaged and have meaningful conversations with the businesses organizations. It is
necessary for organizations to strive for two way communication ad build relationships with
customers.
STRATEGIC MARKETING PLANNING- CONCEPT
Strategic marketing planning is a process undertaken by a business organization to create
and implement effective marketing strategies by taking into consideration a number of aspects of
the organizations marketing and promotion. Strategic marketing planning is concerned with
analyzing the internal and external environment of the organization, identifying and evaluating
the marketing opportunities, researching and identifying the target markets, developing the
strategies for the business organization’s success, implementing the strategies and measuring and
evaluating the results of the marketing efforts. It's important for a strategic marketing planning
process to look at the business organization from the point of view of the customers by asking
questions that have a long time horizon, such as:
Meaning of Strategic Marketing Planning
A strategic marketing plan is a blue print that elaborates a systematic; inter connected,
logical step by step processes for achieving marketing goals. It analyses internal and external
environment, markets, competitors, mentions the essential resource allocations, schedules,
budgets and tasks and embeds the control and other activities needed in relation with attaining
marketing goals in an efficient and effective manner.
It lays down what should be done in present to attain marketing goals ahead. It is the marketers’
road map for intended destination. It's significant for a strategic marketing planning process to
focus at the company from the customer's point of view by asking questions that have a long
time horizon, such as:
• What needs or problems cause customers to consider buying from us?
• What improvements in the customer's personal or business life can we enable or improve?
• Which customer market segments are attracted to our company or products?
• Which customer motivations or values lead people to decide to purchase our products?
• What changes or trends in our customer base are affecting their general interest or
attraction to products like ours?
Developing a Strategic Marketing Plan
The strategic marketing plan process typically has three stages:

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1. Market Segmentation- the business organization segments the market on the basis of the
following criteria
• Geographic
• Demographic
• Psychographic
• Behavior
2. Profile the market segments- once the market has been segmented the business organization
needs to analyze the segments on the basis of
• Revenue potential
• Market share potential
• Profitability potential
3. Develop a market segment marketing strategy- the business organization after analyzing
each segment needs to decide which of the following approaches it can adopt as per the resources
they have
• Market leader or product line extension
• Mass marketing or targeted marketing
• Direct or indirect sales
MARKETING STRATEGY FORMULATIONS.
Developing the Strategic Marketing Plan
The strategic marketing plan process typically has six stages:
1. Environmental Analysis (SWOT)
2. Identifying customer
3. Competitor/Value Creation Analysis
4. Marketing Mix –The 4 Ps
5. Financial Analysis and Budget
6. Implementation and Control Plan
1 Environmental Analysis – An analysis of both internal and external environment is the initial
step to strategic marketing planning. Internal environment refers to the environment that lies
within the scope of an organization. It includes machinery, manpower, policies, culture, and
structure in an organization. External environment refers to the environment outside the
organization. It includes political, social, economic, technological environment. For example,
these days both male and female are employed. As a result, a females are no longer considered to
only look after the house and males to look after earning a livelihood for the family. Both
husband and wife reach home after 8-10 hours of work there is no time left for cooking. Thus
new concepts like ITC’s Ready to eat food, home delivery services, hotel chains have got
increased acceptability. As both husband wife work throughout the week, they like to enjoy
weekends and hence places like Jurassic Park, Walls of Wonder have costly tickets on weekends.
Internal environment analysis leads to strengths and weaknesses of an organization while
external environment leads to opportunities and threats. Like DIGs pose as opportunities for
ready to eat products.

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2 Identifying Customer: It’s significant to first comprehend the difference between customer
and consumer. A customer is a firm or person who buys a product while a consumer is a firm or
person that eventually uses the product. For example, a person buying a McDonalds’ Burger for
his child, the person is a customer and the child, a consumer. Developing a strategic marketing
plan is not possible without knowing who your customers are. Thus, in this stage we identify our
customers like Mercedes sells its cars to the elite class as it is a luxury brand, I Phone also sells
its phone to the rich. If Mercedes without identifying its customer base starts promotion of its
cars to the lower income group, it will be a sure shot failure. Hence, this stage concentrates on
market segmentation. Market segmentation is a process in which market can be classified into
various categories/ classes which have same needs and desires. Segmentation can be done on the
following basis:
It is important to understand your customers by knowing their need and desires.
In general there are three strategies for selecting the target markets:
• Undifferentiated Targeting: This approach views the market as one group with no
individual segments, therefore employing a single marketing strategy. This strategy may be
fruitful for a business or product with little competition where you may not require to customize
strategies for different preferences.
• Concentrated Targeting: This approach lays prominence on selecting a particular
market niche on which marketing efforts are directed. The firm emphasis on a single segment so
you can concentrate on comprehending the needs and wants of that particular market intimately.
Small firms often derive benefit from this strategy as it emphasized on one segment enables
them to compete efficaciously against larger firms.
• Multi-Segment Targeting: This approach is employed if there is a need to focus on two
or more well defined market segments and want to frame different strategies for them. It offers
various advantages but can be expensive as it engulfs greater input from management, increased
market research and increased promotional efforts.

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Before selecting a specific targeting strategy, there is a need to perform a cost benefit
analysis between all available strategies and determine which suits your goals best.
Positioning: Positioning is developing a product and brand image in the minds of consumers. It
also engulfs enhancing a customer's perception about the experience they will have if they
choose to purchase the product or service. The business can positively influence the perceptions
of its chosen customer base through strategic promotional activities and by carefully defining
your business' marketing mix.
Effective positioning involves a good comprehension of rival products and the benefits
that are sought by the target market. It also requires identifying a differential advantage with
which it will deliver the required benefits to the market effectively against the competition.
Business should aim to define themselves in the eyes of customers with regards to the
competition.
Marketing Mix – The 4 PsThe 4 P stands for Product, Price, Place and Promotion.
Product: In marketing, a product is anything that can be offered to a market that might satisfy a
want or need.
Product Mix (Product Portfolio or Product Assortment)
The Product mix is the total variety of products a firm sells. Some firms will sell just one product,
while others will sell a large number of different products. For example Samsung's product mix
engulfs mobile phones, net books, tablets, televisions, fridges, microwaves, printers and memory
cards. Firms should opt their product mix wisely as they will require to generate a profit from
each of the products in the product mix.
Competitor/Value Creation Analysis
A company should always analyze how it stands in comparison to its competitors. Thus targeting
and positioning are two important components of competitor analysis.
Targeting
After segmenting the market based on the different groups and classes, there is a need to choose
the targets. Single strategy will not be applicable to all consumer groups, so being able to
develop specific strategies for your target markets is very significant. In general there are three
strategies for selecting the target markets:
• Undifferentiated Targeting: This approach views the market as one group with no
individual segments, therefore employing a single marketing strategy. This strategy may be
fruitful for a business or product with little competition where you may not require to
customize strategies for different preferences.
• Concentrated Targeting: This approach lays prominence on selecting a particular market
niche on which marketing efforts are directed. The firm emphasis on a single segment so you
can concentrate on comprehending the needs and wants of that particular market intimately.
Small firms often derive benefit from this strategy as it emphasized on one segment enables
them to compete efficaciously against larger firms.
• Multi-Segment Targeting: This approach is employed if there is a need to focus on two or
more well defined market segments and want to frame different strategies for them. It offers
various advantages but can be expensive as it engulfs greater input from management,
increased market research and increased promotional efforts.

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Before selecting a specific targeting strategy, there is a need to perform a cost benefit
analysis between all available strategies and determine which suits your goals best.
Positioning :Positioning is developing a product and brand image in the minds of consumers. It
also engulfs enhancing a customer's perception about the experience they will have if they
choose to purchase the product or service. The business can positively influence the perceptions
of its chosen customer base through strategic promotional activities and by carefully defining
your business' marketing mix.
Effective positioning involves a good comprehension of rival products and the benefits
that are sought by the target market. It also requires to identify a differential advantage with
which it will deliver the required benefits to the market effectively against the competition.
Business should aim to define themselves in the eyes of customers with regards to the
competition.
Marketing Mix – The 4 Ps
The 4 P stands for Product, Price, Place and Promotion.
Product: In marketing, a product is anything that can be offered to a market that might satisfy a
want or need.
Product Mix (Product Portfolio or Product Assortment)
The Product mix is the total variety of products a firm sells. Some firms will sell just one product,
while others will sell a large number of different products. For example Samsung's product mix
engulfs mobile phones, net books, tablets, televisions, fridges, microwaves, printers and memory
cards. Firms should opt their product mix wisely as they will require generating a profit from
each of the products in the product mix.
Product Line
Product line refers to number of products grouped together based on similar characteristics such
as product price, product quality, who the product is aimed at (target group), and product
specification/features. For example Samsung's mobile phones are classified into product lines
based on the attributes such as touch screens, slider/folders, QWERTY keyboards and bar
phones. Product lines help firms manage their products effectively as product strategy can be
crafted around product lines.
Product Line Length
The product line length shows the number of different products in a product line. A long product
line comprise of large number differentiated products in it whereas in a short product line has a
small number of products. The product manager's job is to work out how many products to
include in the product line. With the inclusion of many products in a product line, there is a
possibility that will begin to compete with each other, increase costs unnecessarily and might
create confusion among the buyers. Shorter product lines will limit customer choice and send
customers to competitors with a greater selection of products.
Pricing is the process of determining what a company will receive in exchange for its product or
service. Pricing factors include manufacturing cost, market place, competition, market condition,
brand, and quality of product. Pricing involves asking many questions
These include the following:

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• How much to charge for a product o service? This question is a typical starting point for
discussions about pricing. However, -How much do customers value the products,
services, and other intangibles that the vendor provides. What are the pricing objectives?
• Do we use profit maximization pricing?
• How to set the price? (Fixed pricing, cost-plus pricing, demand-based or value-based
pricing, rate of return pricing, or
• Should there be a single price or multiple pricing?
• Should prices change in various geographical areas, referred to as zone pricing?
• Should there be quantity discounts?
• What prices are competitors charging?
• Do you use a price skimming strategy or penetration pricing strategy?
• What image do you want the price to convey?
• Do you use psychological pricing?
• How flexible can we be in pricing? The more competitive the industry, the less flexibility
we have.
• The price floor is determined by production factors like costs (often only variable costs
are taken into account), economies degree of operating leverage
• The price ceiling is determined by demand factors like price elasticity and price points
• Are there transfer pricing considerations?
Place
This means distribution network. The distribution network can be indirect where we use
intermediaries like wholesalers and retails are used or direct where the product is directly
distributed to the customer.
Three distribution strategies are:
1. Intensive Distribution : A marketing strategy under which a company sells through as many
outlets as possible, so that the consumers encounter the product virtually everywhere they go:
supermarkets, drug stores, gas stations, and the like. Soft drinks are generally made available
through intensive distribution.
2. Exclusive Distribution: engulfs limiting distribution through a selective outlet. The product
that are sold through this kind of distribution are usually highly priced, and requires the
intermediary to place much detail in its sell. Selling cars through exclusive dealers is an example
of exclusive distribution.
3. Selective Distribution: it lies between intensive distribution and exclusive distribution, and in
which only a few retail outlets cover a specific geographical area. Considered more suitable for
high-end items such as 'designer' or prestige goods.
Promotion
It is significant to promote the products so that customers are made aware about it and influenced
to purchase the same.

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Advertising is a non-personal way of promoting products, while personal selling is a
personal way of promoting the product like Sales promotion includes short term techniques to
increase the sale of products like free sachets of coffee with newspapers. Public relations refer to
events sponsored to promote company’s product like a concert etc. or a news article or social
marketing.
5 Financial Analysis and Budget: Keeping in mind all the above factors a financial analysis can
be done to formulate a budget.
6 Implementation and Control Plan: This is the final stage where we implement whatever we
have planned. It’s important to keep an eye on how it is going in order to control any issue which
might later create a big problem.
Advantages of Developing a Strategic Marketing Plan
The top-down process of developing a strategic marketing plan helps ensure that all tactical
marketing programs support the company's goals and objectives, as well as convey a consistent
message to customers.
This approach enhances the company’s efficiency in all areas, which helps generate
revenue and capture market share, and minimizes expenses -- all of which lead to higher
profitability.
Strategic marketing plan is an integrated process of achieving marketing goals with the
help of a plan which focuses on six steps. These steps are environmental analysis, identifying
customers, competitor analysis, value creation, the 4 Ps, financial analysis and budget and lastly
implementation and control plan.
KEY DRIVERS OF MARKETING STRATEGIES
“Marketing Strategy is the basic approach that the business unit will use to attain goals and
which comprises of elaborate decisions (strategies)on largest markets, market positioning, and
mix and marketing expenditure allocation. Moreover the marketer should take care of the other
two strategic aspects, expected environment and competitive conditions while determining the
marketing strategy.”- Prof. Philip Kotler.
Elements of marketing Strategy
• Marketing Mix
• Resources of the firm
• Gaining competitive consciousness and scoring over competition

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Marketing Strategy Formulation
• Segmenting the Market
• Selecting the Target market
• Positioning the offer
• Assembling the Marketing Mix
Key Drivers of marketing Strategies
1. Competition
2. Political Trends
3. Technological Advancements
4. Economic Growth and Stability
5. Legal and Regulatory Issues
6. Socio-Cultural Trends
Substitutability
• It is important to know the extent to which one type of input can be substituted for
another type in as much as the nature of marketing objectives such as that of returning a
certain level of profit presents a decision maker from making unlimited use of all inputs.
• Delivery in productivity levels of various marketing inputs
Elasticity of marketing inputs
Different marketing inputs are elastic and they influence the demand of the product. Eg. A
manufacturer determines different prices for wholesalers, retailers and consumers are different in
almost in a the markets
Essentials of marketing strategies
• Consistent
• Workable
• Suitable
• Non Risky
• Resource based
• Time horizon
Industrial and Consumer Marketing
Industrial Marketing:
• B2B marketing is referred as Industrial marketing or Business marketing.
• Business marketing may be defined as the marketing of products, services, and solutions
to organizations such as big enterprises, govt. departments and institutions.
Characteristics of Industrial Marketing
• 1. Demand Characteristics
• 2. Market Characteristics
• 3. Product Characteristics
• 4. Price Characteristics
• 5. Place or Distribution characteristics
• 6. Promotion Characteristics
• 7. Behavior Characteristics

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Strategies for industrial marketing:
1. Product
2. Place (channel strategy)
x. Industrial distributors
x. Sales agents
x. Manufacturer’s branch Office
3. Price
4. Promotion
• Personal selling
• Business and Industrial advertising
• - Trade shows
• - Target Market
STRATEGIES FOR CONSUMER MARKETING
It means targeting the individual consumer’s demand. The decision to purchase is not necessarily
made by one person alone but can be affected by family members or other stake holders that are
important for the consumer.
Characteristics of Consumer Marketing
• It requires less capitals and window dressing to attract customers
• Retail marketers sell goods directly
• Key aspect of retail marketing is an attitude of mind.
• Consumer marketing decisions are driven by what the shoppers need and want
• Consumer marketing is a philosophy and is all about satisfying the customers.
• The essence of consumer marketing is developing products and services that satisfy
specific needs of customers
• Marketers take the customers’ needs in to consideration in entire consumer marketing
operation
• Consumer marketing is stimulating, quick paced, and influential
Strategies for consumer Marketing
• Marketing Product or Service
• Identifying Appropriate Pricing
• Create Place Strategy
• Develop promotion Strategy
• Extraordinary Unit Selling Price
• Scarcity and Undercover marketing
• Relationship marketing
SERVICES MARKETING:
– A service is an act or performance offered by one party to another. They are economic
activities that create value and provide benefits for customers at specific times and places as a
result of bringing desired change.
Characteristics of services
Service is an act or performance offered by one party to another. They are economic
activities that create value and provide benefits for customers at specific times and places as a

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result of bringing about a desired change in or on behalf of the recipient of the service. The term
service is not limited to personal services like medical services, beauty parlors, legal services, etc.
According to the marketing experts and management thinkers the concept of services is a wider
one. The term services are defined in a number of ways but not a single one is universally
accepted. The distinct characteristics of services are mentioned below.
Intangibility: Services are intangible we cannot touch them are not physical objects. According
to Carman and Uhl, a consumer feels that he has the right and opportunity to see, touch, hear,
smell or taste the goods before they buy them. This is not applicable to services. The buyer does
not have any opportunity to touch smell, and taste the services. While selling or promoting a
service one has to concentrate on the satisfaction and benefit a consumer can derive having spent
on these services. For e.g. an airline sells a flight ticket from A destination to B destination. Here
it is the matter‟ of consumer‟ s perception of services than smelling it or tasting it.
Perish ability: Services too, are perishable like labor; Service has a high degree of perish ability.
Here the element of time assumes a significant position. If we do not use it today, it labor if ever.
If labor stops working, it is a complete waste. It cannot be stored. Utilized or unutilized services
are an economic waste. An unoccupied building, an unemployed person, credit unutilized, etc.
are economic waste. Services have a high level of perish ability
Inseparability: Services are generally created or supplied simultaneously. They are inseparable.
For an e.g., the entertainment industry, health experts and other professionals create and offer
their service at the same given time. Services and their providers are associated closely and thus,
not separable. Donald Cowellstates „Goods are produced, sold and then consumed whereas the
services are sold and then produced and consumed‟ . Therefore inseparability is an important
characteristic of services which proves challenging to service management industry.
Heterogeneity: This character of services makes it difficult to set a standard for any service. The
quality of services cannot be standardized. The price paid for a service may either be too high or
too low as is seen in the case of the entertainment industry and sports. The same type of services
cannot be sold to all the consumers even if they pay the same price. Consumers rate these
services in different ways. This is due to the difference in perception of individuals at the level of
providers and users. Heterogeneity makes it difficult to establish standards for the output of
service firm.
Ownership: In the sale of goods, after the completion of process, the goods are transferred in the
name of the buyer and he becomes the owner of the goods. But in the case of services, we do not
find this. The users have only an access to services. They cannot own the service. For e.g. a
consumer can use personal care services or medical services or can use hotel room or swimming
pool, however the ownership remains with the providers.
According to Philip Kotler, “A service is an activity or benefit that one party can offer to
another that is essentially intangible and does not result in the ownership of anything. “From this
it is clear that the ownership is not affected in the process of selling the services.
Simultaneity: Services cannot move through channels of distribution and cannot be delivered to
the potential customers and user. Thus, either users are brought to the services or providers go to
the user. It is right to say that services have limited geographical area. According to Carman,

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“Producers of services generally have a small size area of operations than do the producers of
items largely because the producer must to get the services or vice- versa.”When the producers
approach the buyer time is taken away from the production of services and the cost of those
services is increased. On the other hand it cost time and money for the buyers to come to
producers directly. Here the economics of time and travel provide incentives to locate more
service centers closer, to prospective customer, resulting in emergence of smaller service centers
for e.g. aero plane cannot be brought to customer, etc.
Quality Measurement: A service sector requires another tool for measurement. We can measure
it in terms of service level. It is very difficult to rate or quantify total purchase. E.g. we can
quantify the food served in a hotel but the way waiter serves the customer or the behavior of the
staff cannot be ignored while rating the total process. Hence we can determine the level of
satisfaction at which users are satisfied. Thus the firm sells good atmosphere convenience of
customers, consistent quality of services, etc.
Nature, characteristics And Classification of services
According to American Marketing Association, “Services are the activities, benefits or
satisfactions which are offered for sale or are provided in connection with the sale of goods.” A
service is an act or a performance offered by one party to another whose production may or may
not be attached to the physical product. Services, which are economic activities, are solutions to
customer problems or needs. They are typically aimed at improving, upholding or sustaining the
lifestyle of the customer. Also includes social efforts by the government to fight the evils present
in the society. For e.g. : services offered by banks, insurance companies etc.
Certain characteristics distinguish goods from services. They are:
Intangibility
Inseparability
Inconsistency
Perish ability
1. Intangibility: The primary characteristic that distinguishes services from goods is
intangibility. Intangibility refers to the characteristics of not being capable of assessment by
customer‟ s sense of taste, touch, sight, smell or hearing. Services such as banking insurance and
education cannot be physically possessed like tangible goods. Intangible services are more
difficult for consumer to evaluate than tangible goods. For example it is more difficult to
evaluate the services provided by a physician than to evaluate an automobile. (Tangible goods)
2. Inseparability: Another characteristic of service is the inseparability or indivisible nature of
production and consumption of services. Services like education are generally produced and
consumed at the same time. Due to this nature, the service provider plays a very important role in
delivery of services. For example a dentist is the actual service provider and must be physically
present along with the consumer when the service is produced and consumed. In many cases the
service provider is the part of service. In fact, services are marked by two kinds of inseparability:
i) Inseparability of production and consumption
ii) Inseparability of the services from the person who possesses the skill and performs the
services. Service is produced and consumed simultaneously. This is not so with physical
Products (goods). Moreover consumer also plays an active role in the production and delivery of
services.

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3. Inconsistency: It refers to the variation in performance of services. People perform most
services and people are not always consistent in their performance. Performance may vary from
one individual or service to another within the same organization or in the service one individual
provides from day to day and from customer to customer. Thus services are much more difficult
to standardize than tangible goods. For example, an airline may not give the same quality of
service on each trip; all repair jobs which a mechanic does may be consistent.
4. Inventory-Less or Perish ability: Perish ability is the characteristic where the service
capacity unused in one time period cannot be stored for use in the future. Services are highly
perishable. They cannot be stored; there are no inventories in the case of a service. For example,
in an airline industry the morning flight cannot be stored for the evening.
5. Cannot be Produced in Anticipation of Demand: Goods can be produced in anticipation of
demand. For instance, cars, computers, CDs, etc., can be produced in advance and stored till they
are demanded in the market. However, services cannot be produced in anticipation of demand.
For instance, one cannot produce and stock hairstyles, airline travelling, etc.
6. Cannot be Returned to Seller Once Used: A defective computer can be returned back to the
seller, but a defective hairstyle or poor quality of teaching/counseling cannot be returned back to
the service provider. Because of this reason, consumer of services do prefer to take services of
highly skilled specialists, may be even quite a distance away.
7. Time Utility is Crucial: In services, time factor is crucial. A tangible item such as car can be
stocked for several days or even months before it is sold to the buyer. However, in the case of
services, a service provider who sits idle waiting for customers to turn loses that time forever.
This is why some service providers like doctors insist on prior appointments by their clients.
8. No Ownership Transfer: Services may not result in transfer of ownership rights from the
service provider to the customer. However, in case of marketing of goods, the ownership transfer
takes place once the sale contract takes place.
9. Direct Channel: Generally, services are provided directly to the customers. Rarely
middlemen may be present in case of services marketing. For instance, if a client needs bank
services or hotel services he may directly go to the service provider. Even where indirect
channels are used, such as in the case of insurance services, travel and tours. the channel of
distribution will be restricted to one or two intermediaries. A common approach for distribution
of some services to a broad market is through franchising like McDonalds Fast Food Chain. The
franchiser provides to the franchisee the rights of operating the business under the franchiser‟ s
trade name for a consideration of royalty or franchising fees. 10. Need for Personal Interaction :
In services marketing there is a need for personal interaction between the service provider and
the customer. Therefore, service providers can customize the services as per the needs of
individual customers. For instance, there is a need for personal interaction between a doctor and
a patient and therefore the doctor will treat individual patients differently.
Various ways by which service can be classified?
Services are neither a homogeneous group, nor different in-between according to industry
classification. Services can be segmented into clusters that share certain marketing-relevant
characteristics.

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Classifications.
Import from tangible products domain:
- Copeland‟ s convenience, shopping, specialty goods. (Retail service institutions can also use
this approach; e.g., from financial services providers to restaurants).
- Durability. (For services: durability of benefits is relevant to repurchase frequency).
- Consumer/industrial. (Different evaluation of competing alternatives, purchasing procedures
and usage behavior is also transferable to services).
Operations approach to classification: every service is different (insisting that airlines‟
marketing has nothing to do with banks, insurance, motels, etc.).However, marketing views
demonstrate a lot of similarities in sharply different services; valid classification highlights
implications for managers – concepts and strategies can be shared between industries.
Classification will have managerial value if it offers strategic insight – i.e. implications
for managers. This includes both the core and supplementary services.
Service sector growth in India
The services sector, with around 52 per cent contribution to the Gross Domestic Product (GDP)
in 2014-15, has made speedy steps in the past period and a half to emerge as the largest and one
of the fastest-growing sectors of the economy. The services sector is not only the dominating
sector in India’s GDP, but has also gained substantial foreign investment flows, contributed
significantly to exports as well as provided large-scale employment. India’s services sector
covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and
communication, financing, insurance, real estate, business services, community, social and
personal services, and services associated with construction.
Market Size- The services sector contributed US$ 783 billion to the 2014-15 GDP (at
constant prices). Out of overall services sector, the sub-sector comprising financial services, real
estate and professional services which contributed US$ 305.8 billion or 20.5 per cent to the GDP.
The third-largest sub-segment comprising trade, repair services, hotels and restaurants
contributed nearly 12.5 per cent to the GDP.
Major Service sectors in India:
1. Tourism and travel service sector
a) Hotel services
b) Hospitality Service Sector
2. Insurance service sector
3. Education Services
4. Media services
5. Telecommunication services
6. Financial Services
COMPETITOR ANALYSIS –
In today’s increasingly competitive market, it is no longer enough to understand
customers for affirm to succeed. Firms must pay close attention to their competition. They need
to constantly compare their products, prices, channels and promotional efforts with their close
competitors, to identify areas of competitive advantage and disadvantage.
Firms must be forward looking and identify both their current and potential competitors,
gather information, and operate a market information system to monitor competitor’s moves and

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market trends. Ignoring or underestimating the threat posed by potential competitors and
focusing only on current competitors is often referred to as “Competitor Myopia”. This term was
coined by Theodore Levitt to describe situations in which firms fail to recognize the full scope of
their businesses. Competitor Myopia can drive firms out of business
To design successful competitive strategies, firms need to conduct Competitor Analysis
on an ongoing basis.
Competitor Analysis Defined
Competitor analysis provides both an offensive and a defensive strategic context for
identifying opportunities and threats. The offensive strategy context allows firms to more quickly
exploit opportunities and capitalize on strengths. Conversely, the defensive strategy context
allows them to more effectively counter the threat posed by rival firms seeking to exploit the
firm’s own weaknesses.
Through competitor analysis, firms identify who their key competitors are, develop a
profile for each of them, identify their objectives and strategies, assess their strengths and
weaknesses, gauge the threat they pose, and anticipate their reaction to competitive moves. Firms
that develop systematic and advanced competitor profiling have a significant competitive
advantage.
Identifying Current and Potential Competitors: To identify their current and potential
competitors, firms have to use both an industry approach as well as a market approach. The
industry approach will yield insights on the structure of the industry and the products offered by
all market participants. The market approach on the other hand, focuses on the customer need
and the firms attempting to satisfy those needs, which will provide the firm with a wider view of
current and potential competitors. Sources of potential competitors include (but are not limited to)
firms which compete in a related product, use related technologies, already target the same
market even if with unrelated products, operate in other geographical areas with similar products
and, last but not least, new start-up organized by former company employees and/or managers of
existing firms. Firms focusing on the same target market with the same strategy constitute a
strategic group and are the closest competitors to firms intending to enter such a group
Competitive Advantage
In order to create competitive advantage and succeed, a company should perform a better
job than the competitors, of satisfying target consumers. All the marketing strategies must be
geared to the needs of the consumers as well as the strategies of the competitor’s in the market.
A thorough competitor analysis will have to be done first, before designing the
competitive marketing strategies for a company. Regular comparison and evaluation of the value
and satisfaction delivered by the company to the customers through its products, prices, channels
and promotion against those of the competitors with similar products should be made.
A company’s industry position will dictate the competitive marketing strategy to be
adopted by it. Market leader strategies are followed by companies which have market dominance
like IBM, Coca-Cola, Microsoft, etc. Market challengers are companies that keep on attacking
the dominant companies to get a better slice of the market share. Example:-Pepsi, P & G (Ariel)
are challenging Coca-Cola and HLL (Surf) respectively. Market followers are not aggressive, but
want a sustainable, stable market share and profits. They follow the product offers, pricing and
marketing programmes of the leaders and challengers. Smaller firms and even bigger firms
without market dominance often adopt market niche strategies. They concentrate on small gaps

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or niches in the market, which are normally neglected by big players. They avoid direct fight or
challenge with big competitors.
Designing Competitive Strategies The roles played by firms in an industry can be usefully
classified into: market leader, market challenger, market follower or market nicher. A firm can
gain further insights about its competitors and design more effective competitive strategies by
identifying its role and that of its competitors.
1 Market Leader: It is common in many industries to have one firm with a dominant market
share. This firm is the market leader in terms of: prices, new product introductions, distribution
coverage, and promotional spending. Competitors typically challenge, imitate or avoid the leader.
Examples of market leaders include: Procter & Gamble, Coca Cola and Mc Donald’s. Leaders
want to continue being the number one firm in their industry. Their typical approach is to attempt
to expand total market, protect their current market share, or grow their market share.
• Expanding total market: Market leaders normally gain the most when the total market
expands. The key strategies used to expand the market include attracting new users,
identifying new uses for their product and/or inducing current customers to use more of their
product
• To attract new users a firm can focus on consumers who are unaware of the product or who
are resisting buying it because of the price or lack of certain features. Example: Johnson &
Johnson was able to expand the market of its baby shampoo by inducing its use by other
members of the family, through advertising.
• • To identify new uses a firm uses its R&D capabilities, new technologies or feedback from
consumers who use the product in different ways. Example: DuPont’s nylon was first used in
parachutes, then as a fiber to make women’s stockings, later as a major component or apparel
and more recently in the fabrication of tires and other items in the automotive industry.
• • To induce current customers to use more of its product, a firm develops strategies to
convince its customers to use the product in other occasions and in greater amounts each time.
Example: In its Head & Shoulders shampoo ads, Procter & Gamble indicates its users that
the shampoo effectiveness is higher if applied twice per shampoo occasion.
2 Defending Market Share To defend its market share, the best strategy for a leader is to
continuously innovate its products, its customer service, its distribution system and its cost
structure (e.g. Coke vs. Pepsi, Gillete vs. Bic, McDonalds vs. Burger King, GM vs. Ford).
3 Expanding Market Share In many cases one market share point is worth many millions
of dollars, so leaders can significantly improve their profitability by increasing their market share.
However, the impact of a higher market share on profitability depends on the strategies used to
obtain the additional market share because the added cost of achieving a higher market share
may exceed the added revenue. Additionally, some market leaders have to be cautious about
provoking antitrust actions, of investing more money than the higher market share is worth or of
pursuing the wrong marketing strategies.
2 Market Challenger Firms that trail the market leader can be either a market challenger or a
market follower. A market challenger aggressively tries to expand its market share by attacking
the leader, other similar firms, or smaller competitors. However, before embarking on an attack,
market challengers need to define their objective and whom they will attack. Attacking the

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market leader is risky but the pay off could be excellent if the leader is not doing a good job of
serving its target market. Alternatively, challengers may choose to attack underperforming firms
of similar size which are not satisfying their customers appropriately, or to grow their market
share by attacking/acquiring smaller firms (e.g. firms operating in local and regional markets.)
The most common attack strategies used by market challengers include: frontal attack, flank
attack, encirclement “blitz”, bypass, and guerrilla warfare.
• In a frontal attack the challenger matches the competitor’s marketing mix (product, price,
promotion and distribution). In general, the firm with the bigger resources wins.
• In a flank attack a market challenger focuses on identifying any market gaps generated by
either an underperforming opponent or by shifting market trends. Once identified, the challenger
rushes in to fill the gaps and develops a set of strong market segments. Flank attacks have a
higher potential of success than frontal attacks and are particularly attractive to challengers with
fewer resources.
• An encirclement “blitz” attack involves attacking the opponent in several different fronts at the
same time with the objective of taking away a big part of the opponent’s territory. This type of
attack makes sense when the challenger has significant resources and believes the strategy will
break the opponent’s will.
• A bypass attack involves bypassing the opponent and attacking easier markets to broaden the
challenger’s own base. Strategies include: diversifying into unrelated products, diversifying into
new geographical areas and supplanting existing products through the use of new technologies.
• Guerrilla warfare attack implies waging small intermittent attacks to harass and demoralize the
competitor and secure strong footholds. This type of attack is normally used by small firms
against a larger one. However, this strategy needs to be backed by a stronger attack if the
challenger is to beat the opponent.
Challengers typically use a variety of strategies to launch their attacks, including: price
discounts (selling a product similar to the leader’s product but at a lower price), cheaper goods
(offering a product of average or lower quality at a much lower price), prestige goods (offering a
product of higher quality than the leader’s and charging a higher price), product proliferation
(offering a larger product variety than the leader), product innovation (offering a product with an
improvement over the leader’s), improved services (offering new or better service), distribution
innovation (developing a new distribution channel), lower manufacturing costs (through lower
labor costs, more efficient technologies, etc), and intensive promotion (through higher
expenditures in advertising and promotion). To be successful at increasing their market share,
challengers typically have to use a combination of these strategies.
3 Market Follower A market follower is a firm that decides not to attack the market leader or its
competitors, usually out of fear that it stands to lose more than it might gain. Many firms prefer
to be a follower than a challenger. Such behavior is very common in industries in which there is
very little opportunity for product differentiation, service quality is often very much the same,
price sensitivity is high and market shares are very stable. Under these circumstances, most firms
present the customer with the same or very similar products, usually by copying the leader. To
survive, a market follower must know how to hold on to its current customers and how to win

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new ones. Market followers are often broadly classified into counterfeiters, cloners, imitators or
adapters.
• Counterfeiters duplicate the leader’s product and package and sell it in the black market.
• Cloners imitate the leader’s products, distribution, advertising, etc.
• Imitators copy some things from the leader but maintain some differentiation in packaging,
advertising, pricing etc.
• Adapters either adapt or improve the leader’s products and generally sell them in different
markets. Being a market follower is usually not a rewarding strategy to pursue!
4 Market Nicher Instead of being a market follower in a large market some firms choose to be
the leaders in a small market, or market “niche” that doesn’t attract the attention of the larger
firms. The key to being a successful market nicher is specialization, which can be focused on: the
end-user (specializes in serving one type of final customer), the customer size (concentrates in
selling to small, medium or large customers), specific customers (limits its offer to one or a few
major customers), a geographic area (sells only in a certain place, region, area), a product or
product line (produces or carries only one product or product line), the quality-price ratio
(operates at the low or at the high quality end of the market), the service (offers services not
available from other firms), the channel (serves only one channel of distribution), etc.
Market nichers can get to know their customers well enough to meet their needs much
better than competitors while making a high profit margin. However, to increase their survival
prospects, market nichers need to be strong in two or more market niches.
ANALYSIS OF CONSUMER MARKETS:
Marketing practices are linked with satisfaction of targeted customers and to fulfill their
emerging needs and wants in efficient way as compared to business rivals. Marketers are
involved in analyzing rising customer trends that suggest new marketing opportunities. It is
imperative to adopt a holistic marketing orientation in order to understand customers and the
bases for their choices. A consumer market is a marketplace that comprises of household
consumers who buy goods for individual or family utilization. It is dissimilar than a business
market, in which businesses trade goods and services to other companies. The consumer market
pertains to buyers who buy goods and services for consumption rather than resale. It is asserted
that all customers do not have similar choices, preferences and buying habits because of different
characteristics that can differentiate certain consumers from others. These particular consumer
characteristics consist of various demographic, psychographic, behaviouralistic and geographic
traits. Marketers usually characterize these consumer characteristics through market
segmentation, the process of separating and recognizing prime customer factions.
Demographic Characteristics of consumer markets are based on demographics such as
dissimilarities in gender, age, ethnic background, income, occupation, education, household size,
religion, generation, nationality and social class. Companies often categorize these demographic
characteristics through market research surveys. From survey results, companies used to discover
which demographic groups comprise the majority of their customer base. Companies can then
focus their advertising towards these demographic groups.

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Psychographic Characteristics: In consumer market, Psychographic characteristics can also be
found that include interests, activities, opinions, values and attitudes. Consumer activities can
include partaking in martial arts or basket weaving. Opinions and attitudes can be both precise
and general. A company may better recognize consumer opinions and attitudes after conducting
a focus group, and can use that information to modify advertising or marketing campaigns.
Consumer values can affect to how a group of individuals feels about some social issues, which
can be of interest to non-profits or charitable organizations.
Behavioralistic Characteristics can also be gained through marketing research. Behavioralistic
characteristics of consumer markets include product usage rates, brand loyalty, user status or
how long they have been a customer, and even benefits that consumers seek. Company
marketing departments usually try to differentiate between heavy, medium and light users, whom
they can then target with advertising. Marketers interested to know which customers are brand
loyalists, as those consumers usually only buy the company's brand.
Geographic Characteristics: Consumer markets also have diverse geographic characteristics.
These geographic characteristics are often based on market size, region, population density and
even climate. It is well established in marketing studies that Consumer behaviour is the study of
how individuals, groups and organizations select but use and dispose goods services, ideas or
experiences to gratify their requirements. A marketer must be fully knowledgeable of both theory
and reality of consumer behavior. Consumers make many buying decisions each day. Majority of
companies investigate consumer buying decisions to explore the needs of consumers and their
buying pattern such as where they buy, how and how much they buy, when they buy and why
they buy. A consumer buyer's behaviour is affected by cultural, social and personal factors.
Factors Affecting Consumer Behavior: Cultural factors put forth great influence on consumer
behavior. The marketers must understand the role played by the buyer's culture, sub culture and
social class.
Culture is a set of basic regulators, perception, wants and behaviors learned by numerous
societies from family and other important institutions. Every group or/society has different
culture and cultural influences on buyer behavior may differ greatly from country to country.
Sub culture is a group of people who share some common values based on their life experiences
and situations. Sub culture includes nationalities, religions, geographic region. Many sub cultures
constitute important market segments and marketers often propose products and marketing
programs customized to their needs such as Hispanic consumer African/American, Asian
American Nature consumer.
Social Class is comparatively permanent and ordered divisions in a society whose members
share same values, interests and behaviour. Consumer behaviour is also affected by social factors
such as the consumer's small groups, family and social roles and status. Personal characteristics
impact a buyer's decisions such as the buyer's age and life cycle stage, occupation, monetary
situation, life style and individuality. A person's buying choices are also influenced by major
psychological factors such as motivation, perception, learning and beliefs and attitude.