Chapter 5

Managing Marketing Mix Elements

Product strategy is a critical element of marketing and business strategy, since it is through the sale of products
and services that companies survive and grow. On the other hand, pricing is an important function of marketing.
Pricing involves harvesting a profit potential. If effective product development, promotion, and distribution
sow the seeds of business success, effective pricing is the harvest.
What is a Product?
A Product is anything that can be offered to a market to satisfy a want or need. Products that are marketed
include physical goods, services, persons, organizations, and ideas.
Five Levels of a product
Core Benefit: The most fundamental level is the core benefit, the fundamental service or benefit that the
customer is really buying. A hotel guest is buying “rest and sleep”. The purchaser of a drill machine is buying
“holes”. Marketers must see themselves as benefit providers.
Basic product: The marketer has to turn the core benefit into a basic product. Thus a hotel room includes a bed,
bathroom, towels, desk, dresser, and closet.
Expected product: At the third level, the market prepares an expected product, a set of attributes and
conditions that buyers’ normally expect and agree to when they purchase this product. For example, hotel guests
expect a clean bed, fresh towels, working lamps, and a relative degree of quietness.
Augmented product: At the fourth level, the marketer prepares an augmented product that meets the
customers’ desires beyond their expectations. A hotel can augment its product by including a television set,
fresh flowers, rapid check-in, express checkout, fine dining and room service, and so on.
The new competition is not between what companies produce in their factories, but between what they add to
their factory output in the form of packaging, services, advertising, customer advice, financing, delivery
arrangements, warehousing, and other things that people value.
Potential Product: At the fifth level stands the potential product, which encompasses all the augmentations and
transformations that the product might ultimately undergo in the future. While the augmented product describes
what is included in the product today, the potential product points to its possible evolution. Here is where
companies search aggressively for new ways to satisfy customers and distinguish their offer.
Some of the most successful companies add benefits to their offering that not only satisfy customers but also
surprise and delight them. Delighting is a matter of exceeding the normal expectations and desires with
unanticipated benefits. Thus the hotel guest finds candy on the pillow, or a bowl of fruit, or a video recorder
with optional videotapes.

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 Potential Product
Augmented Product

Expected Product
Basic Product

Core
Benefi
t

Fig. 5.1 Five product levels

Activity
In which product level, do you think that the jeans you are wearing fit?

Product Classifications
Marketers have traditionally classified products on the basis of varying product characteristics durability,
tangibility, and use (Consumer or industrial). Each product type has an appropriate marketing-mix strategy.
Durability and Tangibility: Products can be classified into three groups, according to their durability and
tangibility:
Nondurable goods: Nondurable goods are tangible goods that normally are consumed in one or few uses.
Examples are cooking oil, soap, and salt. Since these goods are consumed quickly and purchased frequently, the
appropriate strategy is to make them available in many locations, charge only a small markup, and advertise
heavily to induce trial and build preference.
Durable goods: Durable goods are tangible goods that normally survive many uses. Examples include
refrigerators, telephone, and clothing. Durable products normally require more personal selling and service,
command a higher margin, and require more seller guarantees.
Services: Services are intangible, inseparable, variable, and perishable. As a result, they normally require more
quality control, supplier credibility, and adaptability. Examples include haircuts and repairs.
Based on the users of products can be classified in to consumer goods and industrial goods.
Consumer-Goods Classification

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Consumers buy a vast array of goods. These goods can be classified on the basis of consumer shopping habits.
We can distinguish among convenience, shopping, specialty, and unsought goods.
Convenience goods conveniences goods are goods that the customer usually purchases frequently, immediately,
and with a minimum of effort. Examples include tobacco products, soaps, and newspapers. Convenience goods
can be further divided into staples, impulse goods, and emergency goods.
Staples: are goods that consumers purchase on a regular basis. For example one buyer might routinely purchase
bread, soap, and pastes.
Impulse: goods are purchased on impulse, without any planning or search effort. These goods are usually
displayed widely. Examples are chewing gums, lottery, and magazines. They are widely distributed and
displayed because shoppers may not have thought of buying them until they spot them.
Emergency goods-are purchased when a need is urgent-umbrellas during a rainstorm and candles during
blackouts. Manufacturers of emergency goods will place them in many outlets so as to capture the sale when the
customer needs them.
Shopping goods: are goods that the customer, in the process of selection and purchase, characteristically
compares on such bases as suitability, quality, price, and style. Examples include furniture, clothing, and major
appliances. Shopping goods can be divided into homogeneous goods and heterogeneous. The buyer sees
homogeneous shopping goods as similar in quality but different enough in price to justify shopping
comparisons. But in shopping for clothing, furniture, and other heterogeneous shopping goods, product features
are often more important to the consumer than the price. The seller of heterogeneous shopping goods must
therefore carry a wide assortment to satisfy individual tastes and must have well- trained salespeople to provide
information and advice to customers.
Specialty goods: are goods with unique characteristics and/or brand identification for which a significant group
of buyers is habitually willing to make a special purchasing effort. Examples include specific brands and types
of fancy goods, cars, stereo components, photographic equipment, and men’s suits. Specialty goods do not
involve the buyer in making comparisons; buyers invest time only to reach dealers carrying the wanted
products.
Unsought goods: are goods that the consumer does not know about or knows about but does not normally think
of buying. New products, such as smoke detectors and food processors, are unsought goods until the consumer
is made aware of them through advertising. The classic examples of known but unsought goods are life
insurance, and encyclopedias. Unsought goods require substantial marketing effort in the form of advertising
and personal selling.
Industrial-Goods Classification

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Organizations buy a vast variety of goods and services. Industrial goods can be classified in terms of how they
enter the production process and their relative costliness. We can distinguish three groups of industrial goods:
materials and parts, capital items, and supplies and business services.
Materials and parts: are goods that enter the manufacturer’s product completely. They are of two classes
namely; raw materials and manufactured materials and parts. Raw materials fall into two major classes: farm
products e.g., wheat, cotton, livestock, fruits, and vegetables and natural products e.g., fish, lumber, crude
petroleum, iron ore. Each is marketed somewhat differently. Farm products are supplied by many producers,
who turn them over to marketing intermediaries, who provide assembly, grading, storage, transportation, and
selling services. Natural products are highly limited in supply. They usually have great bulk and low unit value
and require substantial transportation to move them from producer to user. Natural products have fewer and
larger producers, who often market them directly to industrial users. Price and delivery reliability are the major
factors influencing the selection of suppliers.
Manufactured materials and parts are divided into two categories: component materials (e.g., iron, yarn,
cement, wires) and component parts (e.g., small motors, tyre, and castings).
Component materials are usually fabricated further-for example, pig iron is made into steel, and yarn is woven
into cloth. The standardized nature of component materials usually means that price and supplier reliability are
most important purchase factors. Component parts enter the finished product completely with no further change
in form, as when small motors are put into vacuum cleaners, and tires are put on automobiles. Most
manufactured materials and parts are sold directly to industrial users. Price and services are the major marketing
considerations, and brand and advertising tend to be less important.
Capital items: are long-lasting goods that facilitate developing and/or managing the finished product. They
include two groups: installations and equipment.
Installations consist of buildings e.g., factories and offices and equipments include, generators, drill presses,
mainframe computers, elevators etc. Installations are major purchases. They are usually bought directly from
the producer, with the typical sale preceded by a long negotiation period. The producers use a top notch sales
force; which often includes technical personnel. The producers have to be willing to design to specification and
to supply post sale services. Advertising is used but is much less important than personal selling. The producers
use a top notch sales force, which often includes technical personnel. The producers have to be willing to design
to specification and to supply post sale services. Advertising is used but is much less important than personal
selling. Quality, features, price, and service are major considerations in vendor selection.
Supplies and business services: are short-lasting goods and services that facilitate developing and/or managing
the finished product.

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Supplies are of two kinds: operating supplies (e.g., lubricants, writing paper, pencils) and maintenance and
repair items (paint, nails, brooms). They are usually purchased with a minimum effort on a straight re-buy basis.
They are normally marketed through intermediaries because of their low unit value and the great number and
geographical dispersion of customers. Price and service are important considerations, since suppliers are quite
standardized, and brand preference is not high.
Business services include maintenance and repair services (e.g., car repair, computer repair) and business
advisory services (e.g. legal, management consulting, and advertising). Maintenance and repair services are
usually supplied under contract. Business advisory services are usually purchased in new task-buying situations,
and the industrial buyer will choose the supplier on the basis of the supplier’s reputation and people.
Product Mix and Product Line
The product mix is the composite of products offered for sale by the firm; product line refers to group of
products that are closely related, either because they satisfy a class of need, are used together, are sold to the
same customer groups, are marketed through the same types of outlets, or fall within given prices ranges.
An integral component of product line planning revolves around the question of how many product variants
should be included in the line. Manufacturing costs are usually minimized through large-volume production
runs, and distribution costs tend to be lower if only one product is sold, stocked, and serviced.
All too often, organizations pursue product line additions with little regards for consequences. However, in
reaching a decision on product line additions, organizations need to evaluate whether (1) total profits will
decrease and/or (2) the quality/value associated with current products will suffer. If the answer to either of the
above is yes, then the organization should not proceed with the addition. Closely related to product line
additions are issues associated with branding.
Activity

Why do you think a given producer needs to supply a variety of products in the market?
7.1.4 Brand Decisions

Branding
Branding is a major issue in product strategy. Developing a branded product requires a great deal of long-term
investment spending, especially for advertising, promotion, and packaging. Many brand oriented companies
subcontract manufacturing to other companies.
What is a Brand?
Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect, and
enhance brands. The American Marketing association defines a brand as follows”

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A Brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from those of competitors.
In essence, a brand identifies the seller. It can be a name, trademark, logo, or other symbol. Under trademark
law, the seller is granted exclusive rights to the use of the brand name in perpetuity. Thus brands differ from
other assets such as patents and copyrights, which have expiration dates. Brand is perhaps the single most
important element on the package, serving as a unique identifier. A good brand name can evoke feeling of trust,
confidence, security, strength, and many other desirable characteristics. Many companies make use of branding
strategies in carrying out market and product development strategies.
Brand equity: Brand equity can be viewed as the set of assets linked to the brand that adds value. The value of
these assets is dependent upon the results of the market place’s relationship with a brand. Brand equity is
determined by the consumers and is the culmination of the consumer’s assessment of the product, the company
that manufactures and markets the product, and all other variables the impact on the product between
manufacturing and consumer consumption. A brand name needs to be carefully managed so that its brand
equity doesn’t depreciate. This requires maintaining or improving over time brand awareness, brand quality and
functionality, positive brand associations, and so on. These tasks require continuous Research & Development
(R&D) investment, skillful advertising, and excellent trade and consumer services.
Packaging and Labeling Decisions
Many physical products going to the market have to be packaged and labeled. Packaging can play a minor role
or a major role with the offered products. Many marketers have called packaging a fifth P, along with price,
product, place, and promotion.
Packaging
Packaging includes the activities of designing and producing the container or wrapper for a product. The
package might include up to three level of material. Thus, old spice after-shave Lotion is in a bottle (primary
package) that is in a cardboard box (secondary package) that is in a corrugated boxing (shipping package)
containing six-dozen boxes of old spice.
In recent times, packaging has become a potent marketing tool. Well-designed packages can create convenience
value for the consumer and promotional value for the producer. Various factors have contributed to packaging
growing use as a marketing tool.
Self-service: An increasing number of products are sold on a self-service basis in supermarkets. The package
must perform many of the sales tasks. It must attract attention, describe the product’s features, create consumer
confidence, and make a favorable overall impression.

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Prestige: Rising consumer affluence means consumers are willing to pay a little more for the conveniences,
appearance, and prestige of better packages.
Brand image: Companies are recognizing the power of well-designed packages to contribute to instant
recognition of the company or brand.
Developing an effective package for a new product requires several decisions. The first task is to establish the
packaging concept.
Once the packaging concept has been determined, decisions must be made on additional packaging elements –
size, shape, materials, color, text, and so on. The packaging elements must also be harmonized with decisions
on pricing, advertising, and other marketing elements.
After the packaging is designed, it must be tested, Engineering tests are conducted to ensure that the package
stands up under normal conditions; visual tests, to ensure that the script is legible and the colors harmonious;
dealer tests, to ensure that dealers find the packages attractive and easy to handle; and consumer tests, to ensure
favorable consumer response. Companies must pay attention, however, to the growing environmental and safety
concerns about packaging.
Labeling
Labeling is subset of packaging, sellers must label their products. The label may be a simple tag attached to the
product or an elaborately designed graphic that is part of the package. The label might carry only the brand
name or a great deal of information. Even if the seller prefers a simple label, the law may require additional
information.
Labels perform several functions. First, the label identifies the product or brand. The label might also grade the
product. The label might describe the product: who made it, where it was made, when it was made, what it
contains, how it is to be used, and how to use it safely. Finally, the label might promote the product through its
attractive graphics. Legal considerations also need to be made in developing packaging and labeling.
Product Life Cycle
A firm’s product strategy must take into account the fact that products have a life cycle. Figure 5.2 illustrates
this life-cycle concept. Products are introduced, grow, mature, and decline. This cycle varies according to
product, technology, and market. Marketing executives need to aware of the life-cycle concept because it can be
a valuable aid in developing marketing strategies.

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 New Product Featured –
Modify the product

New Uses – benefit of

introducing the new
product
Sales

New markets try to look

for new market segment

New Product

New Uses
New Markets sales
volume
O
Time
Introduction Growth Maturation Decline
stage stage stage stage

Fig. 5.2 The product life cycle

During the introduction phase of the cycle, there are usually high production and marketing costs, and, since
sales are only beginning to materialize, profits are low or nonexistent.
Profits increase and are positively correlated with sales during the growth stage as the market begins trying and
adopting the product.
As the product matures, profits for the initiating firm do not keep pace with sales because of competition. Here
the seller may be forced to “remarket” the product, which may involve making price concessions, increasing
product quality, or expanding outlays on advertising and sales promotion just to maintain market share.
At some time sales may decline, and the seller must decide whether to (1) drop the product; (2) alter the
product; (3) seek new uses for the product; (4) seek new markets; or (5) continue with more of the same.

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 Life-cycle stage
Strategy Dimension Introduction Growth Maturity Decline

Basic objectives Establish a market for Build sale and Defend brand’s share Limit costs or seem
product type; market share; of market; seek ways to revive sales
persuade early develop preference growth by luring and profits
adopters to buy for brand customers from
competitors
Provide high quality, Provided high Improve quality add Continue providing
select a good brand; quality; add features to high quality to
Product get patent and/or services to enhance distinguish brand maintain brand’s
trade-mark protection value from competitors reputation; seek ways
to make the product
new again
often high to recover Somewhat high Low-reflecting heavy Low to sell off
development costs; because of heavy competition remaining inventory
Pricing sometimes low to demand or high to serve a
build demand rapidly niche market
Limited number of Greater number of Greater number of Limited number of
Channels channels channels to meet channels and more channels
demand incentives to resellers

Aimed at early Aimed at wider Messages focus on Minimal, to keep

Communication adopters; messages audience; different tailing costs down
designed to educate messages focus on brand from its
about product type, brand benefit; for compactor’s; heavy
incentives such as consumer use of incentives
samples and coupons products, emphasis such as coupons to
to induce trial on advertising induce buyers to
Marketing Strategy Implication of the Product Life Cycle switch brands

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The usefulness of the product life-cycle concept is primarily that it forces management to take a long-range
view of marketing planning. In doing so, it should become clear that shifts in phases of the life cycle correspond
to changes in the market situation, competition, and demand.
Pricing Decision
Meaning of Price
Price is the exchange value for a product or service in terms of money that differs for the wholesalers, retailers
and consumers, which is fixed by top managers or divisional mangers or by separate committees in various
organizations. In the narrowest sense, price is the amount of money charged for a product or service. Broadly
stating, price is the sum of all values that consumers exchange for the benefits of having or using the product or
service. Price is the only element in marketing mix that produces revenue, all other elements represent costs.
Price is also one of the most flexible elements of the marketing mix. Unlike product features and channel
commitments, prices can be changed quickly. At the same time, pricing and price competition is the number one
problem facing many marketing executives.
Pricing Objectives
Price is the value placed on what is exchanged. Before determining the price itself, the organization must
establish a pricing objective compatible with the goals for the organization and its marketing program.
Pricing objectives includes:
Profit – Oriented
- To achieve a target return of profit from the sales made.
- To maximize profit from the market.
Sales Oriented
- To increase sales volume.
- To maintain or increase market share in the target market
Status quo Oriented
- To stabilize prices for the product.
- To meet competitors effectively in the market.
Factors Influencing Price Determination
Pricing an established product usually is less difficult than pricing a new product, however, because the exact
price or a narrow range of prices may be dictated by the market. Other factors, besides objectives, that influence
price determination are discussed below.
Estimated Demand

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In pricing a company must estimate the total demand for the product. This is easier to do for an established
product than for a new one. The steps in estimating demand are
o Determine whether there is a price the market expects and
o Estimate what the sales volume might be at different prices
The expected price of a product at which customers consciously or unconsciously value it – what they think
product is worth. Expected price usually is expressed as a range rather than as a specific amount.
Competitive Reactions
Competition greatly influences pricing decision. A new product is distinctive only until competition arrives,
which is inevitable. The threat of potential competition is greatest when the field is easy to enter and profit
prospects are encouraging. In the case of similar and substitute products, a competitor may adjust its prices. In
turn, other firms have to decide what price adjustments, are necessary to retain their customers.
Company policy: The policy of the company decides what type of pricing method to be selected? What price to
be awarded and what market to be served in what price?
Channel length: Distribution channel and types of middlemen selected will influence a producer’s pricing. A
firm selling both through wholesalers and directly to retailers often sets a different factory price for these two
classes of customers. The price to wholesalers is lower because they perform services that the product would
have to perform-such as providing storage, granting credit to retailers, and selling to small retailers.
Promotion: The extent to which product is promoted by the producer or middlemen and the methods used
added considerations in pricing. If major promotional responsibility is placed on retailers, they ordinarily will
be charged a lower price for a product than if the producer advertises it heavily.
General approach to Pricing
Most companies establish their prices using one of the following methods;
1. Prices are based on total cost plus a desired profit,
2. Prices are based on analysis and consideration of both market demand supply,
3. Prices are based on competitive market condition, and
4. Perceived value (value based) pricing.
The firm has to consider many factors in setting the pricing for their product and services. The policy of pricing
will be usually derived by the following six step procedure;
Step – 1: Selecting the pricing objective: The Company must first decide where it wants to position its market
offering. The clearer a firm’ objectives, the easier it is to set price.

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Step – 2: Determining demand: Each price will lead to a different level of demand and therefore have a different
impact on a company’s marketing objective. The relationship between alternative prices and the resulting
current demand is captured by the company through and research analysis activities.
Step – 3: Estimating Cost: Costs set the floor for the price the company can charge for its product. The company
wants to charge a price that covers its cost of production, distributing, and selling the product, including a fair
return for its effort and risk.
Step – 4: Competitor analysis: Within the range of possible prices determine by market demand and company
costs, the firm must take competitor’s costs, prices and offers. The firm should first consider the nearest
competitor price to prefer its pricing choice.
Step – 5: Selecting a pricing method: The companies’ select a pricing method according to the needs of the
market they are in, by considering the competitors, customers and the cost associated with any of the preferred
activities.
Step – 6: Selecting the final price: Pricing methods narrow the range from which the company must select its
final price. In selecting that price, the company must consider additional factors, including the impact of other
marketing activities, company pricing policies, gain-and-risk sharing pricing, and the impact of price on other
parties.
Placing the product
The Place in the marketing mix refers to the channels of distribution used for the physical distribution of goods
and services. It can be described as “a set of interdependent organizations involved in the process of making a
product or service available for consumption”.
Importance of Channels:
 The channels chosen affect all other marketing decisions.
 Pricing is determined by channels length and type.
 Product image is fixed by channels in the minds of customers.
 Advertising decisions depend on how much training and motivation dealers need.
 They aid in market communication.
 Channels assists in storage and finance function to the manufacturers.
Channel decision
The most basic decision on the channel is whether to handle the distribution by the company itself, or to use
middlemen completely or partially by the middlemen and partially by the company. Many firms prefer a short
channel or no channels in order to have full control on the products or situations. So the producers are left with
a choice of selecting the suitable channel length as per the market need. Trying to achieve the desired degree of

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market exposure can lead to complex channels of distribution. Firms may need different channels to reach
various segments.

Factors influencing channel decision:

The decision on channels is affected by so many factors as discussed below;
Market variables:
Market geography: refers geographic size of markets and their physical location and distance from producer.
Market density: if there are 100 customers are available in 200 square kilometers it is denser than the market
containing the same number of customers in an area of 500 square kilometers. The less dense the market, the
more likely intermediaries will be used.
Market size: refers to the number of customers making up the market. They could be household or industrial
customers. When the market size is large, the use of intermediaries is more likely to be needed. If not reverse is
applicable.
Order size: refers to the amount of quantity purchased by the customers. If the size of purchase by the
customers is large, direct distribution is economical.
Product variables:
Product size: means that the products which are larger in size and heavy in weight will need only a shorter
channel, usually directly supplied by the suppliers to the users.
Perishable nature: refers to the products which are perishable within a short period of time. If the products are
perishable the channel structure should be shorter to avoid rapid delivery form producer to consumers.
Unit value: refers to the price per unit of the product. The lower the unit value of the product, the longer the
channel should be, because the low cost value leaves a small profit margin for distribution costs.
Technical nature of the product: Since the manufacturers are expected to provide information about the
product’s technical features, advice and after sales service, a highly technical product will be distributed
directly.
Company variables:
Financial capacity: in order to sell directly to consumer or industrial users a company needs its own sales force
and support services like retail stores, warehousing and order processing capability. So if the company has
enough capital it may not depend on intermediaries to distribute its products.
Managerial expertise: if the company management lacks managerial skills necessary to perform distribution
tasks then the dependency on intermediaries is high.

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Objective and strategies: refers to objectives of the organization related to the distribution channel. If the
company has a strong desire to control the channel it may use direct or short channel.
Intermediary variables:
Availability: refers to the availability of intermediaries in the markets. The lack of appropriate intermediaries
may lead the company to use direct channel distribution.
Cost: refers to the expenses incurred by using the intermediaries. If the cost of using intermediaries is too high
as compared to the service performed the channel structures likely to minimize the use of intermediaries.
Promotion
Promotion is the function of informing, persuading and influencing the consumer’s purchase decision. It
comprises of different blend of tools which is called promotional mix. The promotional mix consists of
advertising, sales promotion, publicity and personal selling.
Purpose of promotion
The promotional activities of a firm use various strategies in its selected market to achieve the following
objectives;
 To provide information to the customers about the company and the product.
 To increase the demand in market.
 To differentiate the product from others.
 To maintain the positive sales trend.
 To build up good image of the company.
 Face and handle the competition.
 To help sales people in facilitating sales.
Promotional mix elements:
The fourth ‘p’ in the marketing mix is promotion which means to promote the product to the customers as per
their need and level of understanding. Promotional mix elements refer to the combination and types of personal
and non-personal form of communication. The elements of promotional mix for marketing are;
Advertising
Advertising is any paid form of non personal communication, presentation and promotion of ideas, goods, or
services by an identified sponsor. Advertising is done for different purposes like the informative advertisements
aims to create brand awareness and knowledge of new products or new features of existing products, persuasive
advertising aims to create liking, preference and purchase of a product or service, whereas reminder advertising
aims to stimulate repeated purchase of products and services by the customers available in the market.

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The process of advertising involves different process as per the market type and the product. The most common
steps involved n advertising are: making advertisement mission, allocation advertisement budget, media
selection, Message to be communicated, and finally involves measuring effectiveness of the advertisement.
Sales promotion
Sales promotion, a key ingredient in promotional mix consists of a collection of incentive tools, mostly short
term, designed to stimulate quicker or greater purchase of particular products or services by consumers. It
includes discounts, offers, prize coupon, free trails, warranties point-of-purchase displays and demonstrations.

Public relations
Public relations involve a variety of programs designed to promote or protect a company’s image or its
individual products. It aims at exterminating negative events to the general public. Public relation is quite
known as publicity. There are several types of public relation mechanism with the most common functions like;
Press release – is presenting new and information about the organization in the most effective way.
Product publicity – involves sponsoring efforts to publicize specific products.
Corporate communication – refers to promoting the organization through internal and external communications.
Lobbying – is to deal with legal issues of the company to safeguard its image in the public.
Conferences – a meeting called to announce major events, commitment, contribution and consideration of the
company to public.
Personal Selling
Personal selling is a face-to-face interaction with one or more prospective purchasers for the purpose of making
presentations, answering questions and processing orders. It is a two way communication process to influence
the purchase behavior of the customers. So it involves meeting, convincing persuading various kinds of people.
The process of effective personal selling is listed below;
Presale preparation – involves gathering information about current customers, potential customers and product
characteristics.
Prospecting – the process of identifying potential customers.
Qualifying – the process of identifying the ability of pay by the customers.
Approaching – the initial contact with new customer which needs polite self introduction.
Presentation and demonstration – it is the process of explaining the product, its features and its uses to the
customers. AIDA formula of gaining attention, holding interest, arousing desire and obtaining action can be
used at this stage.

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Handling objections – to handle objections posed by the customers the sales person maintains a positive
approach and turns the objection into a reason for buying.
Closing the sales – after the presentation the sales person attempts to close the sales by recapitulating the points
of agreement, ask for order, indicate what the buyer lose if the purchase is not made now.
Following up – it includes activities like fast processing of customers order, on time delivery and also after sale
service if needed.

Unit Summary
 A product is anything that can be offered to a market to satisfy a want or need. There are five levels of a
product: core benefit, basic product, expected product, augmented product and potential product.
 Products can be classified based on:
o Durability and tangibility as non durable goods, durable goods, and services.
o Based on the users of the product as consumer goods and industrial goods.
 Product mix in the composite of product offered for sale by the firm and product line refers to groups or
products that are closely related, either because they satisfy a class of need, are used together, are sold to
the same customer, etc.
 A brand is a name, term, sign, symbol, or design or a combination of them, intended to identify the
goods or services of one seller or a groups of sellers.
 Packaging includes the activities of designing and producing container or wrapper for a product.
Labeling attaching a simple tag to the product or an elaborately designing graphics that is part of the
passage.
 Product life cycle involves fours stages: introduction, growth, maturity and decline stage.
 Price is the only element that produces revenue; the other three Ps produce costs. The term price coined
for the amount of money charged for a product or service, or the sum of values that consumers exchange
for the benefits of having or using the product or service.
 Pricing decisions are subjected to a complex array of environmental and competitive forces. A company
sets not a single price, but a pricing structure that covers different items in its line. There are several
pricing strategies are available
- Geographic pricing where the company decides on how to price to distant customers.
- Price discounts and allowances which has an effect of reducing prices to reward customers.

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 - Promotional pricing such as low interest rate financing, special event pricing, cash-rebates,
warranties and service contracts and psychological discounting.
- Discriminatory /segment pricing in which the company sells a product at different prices to
different market segments. And,
- Product-mix pricing, this includes product line pricing, optional pricing captive pricing, by
product pricing, and product bundle pricing.
 The distribution of the products can be done with intermediaries or directly by the company itself. The
choices are based on market conditions, customer location, financial ability, company policy etc.
 Promotion for any product is very important in the functions of marketing.
 The various ways to be promoted for a product is advertising, sales promotion, publicity and personal
selling.

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