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The Best References for MBA

MBA Notes - Definition and Meaning of Marketing

What is marketing? Define and explain marketing on the basis of different approaches.

Definition and Meaning of Marketing

According to American Marketing Association (1948) - "Marketing is the performance of
business activities directed toward, and incident to, the flow of goods and services from producer
to consumer or user."

AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods
and services from producer to consumer or user."

Consumer's Approach of Marketing

According to Star et al. (1977) - "Marketing is that process through which a business enterprise,
institution, or organisation 1. selects target customers or constituents, 2. assesses the needs or
wants of such target customers, and 3. manages its resources to satisfy those customer needs or
wants."

The above definition is based on the consumer's approach of marketing. According to this
approach marketing consists of four general activities:-

Identifying and selecting the type of  customer, understanding their needs and desires;

Designing product or services that suits the customers' desires;

Persuading customers to buy at the firm's offerings; and

Storing, moving, and displaying goods after they leave the production site.

Societal Approach of Marketing

According to Mazur (1947) - "Marketing is the delivery of a standard of living to society."

This definition is based on the societal approach of marketing. According to Cunningham and
Cunningham (1981) societal marketing performs three essential functions:-

Knowing and understanding the consumer's changing needs and wants;

Efficiently and effectively managing the supply and demand of products and services; and

Efficient provision of distribution and payment processing systems.

Managerial or Systems Approach

According to Eldridge (1970) - "Marketing is the combination of activities designed to produce

profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a
selected segment of the market."

A Broader Approach of Marketing

According to Kotler (2000) - "A societal process by which individuals and groups obtain what
they need and want through creating, offering, and freely exchanging products and services of
value with others."

According to AMA (2004) - "Marketing is an organisational function and set of processes for

creating, communicating and delivering value to customers and for managing relationships in a
way that benefits both the organisation and the stakeholder."

Question - What is marketing process? Explain the steps in marketing process.

Answer

Meaning of Marketing Process

The Marketing Process of a company typically involves identifying the viable and potential
marketing opportunities in the environment, developing strategies to effective utilise the
opportunities, evolving suitable marketing strategies, and supervising the implementation of
these marketing efforts.

Marketing process involves ways that value can be created for the customers to satisfy their
needs. Marketing process is a continual series of actions and reactions between the customers
and the organisations which are making attempt to create value for and satisfy needs of
customers. In marketing process the situation is analysed to identify opportunities, the strategy is
formulated for a value proposition, tactical decisions are taken, plan is implemented, and results
are monitored.

Steps in Marketing Process

Following are the steps involved in the Marketing Process :-

Situation Analysis

Marketing Strategy

Marketing Mix Decision

Implementation and Control

1. Situation Analysis

Analysis of situation in which the organisation finds itself serves as the basis for identifying
opportunities to satisfy unfulfilled customer needs. Situational and environmental analysis is
done to identify the marketing opportunities, to understand firms own capabilities, and to
understand the environment in which the firm is operating.

2. Marketing Strategy

After identifying the marketing opportunities a strategic plan is developed to pursue the
identified opportunities.

3. Marketing Mix Decisions

At this step detailed tactical decisions are made for the controllable parameters of the marketing
mix. It includes - product development decisions, product pricing decisions, product distribution
decisions, and product promotional decisions.

4. Implementation and Control

Finally, the marketing plan is implemented and the results of marketing efforts are monitored to
adjust the marketing mix according to the market changes

Question - What do you mean by marketing and marketing environment?

Definition of Marketing

According to American Marketing Association (2004) - "Marketing is an organizational function

and set of processes for creating, communicating and delivering value to customers and for
anaging relationships in a way that benefits both the organization and the stakeholder."

According to Kotler (2000) - "A societal process by which individuals and groups obtain what
they need and want through creating, offering, and freely exchanging products and services of
value with others."

Marketing Environment

The term Marketing Environment refers to the forces and factors that affects the organization
ability to built and maintain good relationship with its customers. Marketing environment
surrounds the organization and it impacts upon the organization. Marketers have to interact with
internal and external people at micro and macro level and builds internal and external
relationships. The key elements of marketing environment are as follows :-
Internal Environment,

Micro Environment, and 

Macro Environment.

Internal Environment

Internal factors like men, machine, money, material, etc., on which marketing decision depends
consists internal marketing environment. The internal environment refers to the forces that are
within the organization and affects its ability to serve its customers. It includes marketing
managers, sales representatives, marketing budget, marketing plans, procedures, inventory,
logistics, and anything within organization which affects marketing decisions, and its
relationship with its customers.

Micro Environment

Individuals and organizations that are close to the marketing organization and directly impacts its
ability to serve its customers, makes Marketing Micro Environment. The micro environment
refers to the forces that are close to the marketing organization and directly impact the customer
experience. It includes the organization itself, its suppliers, marketing intermediaries, customers,
markets or segments, competitors, and publics. Happenings in micro environment is relatively
controllable for the marketing organization.

Macro Environment

Macro environment refers to all forces that are part of  the larger society and affects the  micro
environment. It includes demography, economy, politics, culture, technology, and natural forces.
Macro environment is less controllable.

Question - Define the term Green Marketing; and explain why green marketing is important?

Answer

Definition and Meaning of Green Marketing

Definition according to American Marketing Association - "Green marketing is the marketing of

products that are presumed to be environmentally safe."

According to Polonsky 1994 b, 2 - "Green or Environmental Marketing consists of all activities

designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such
that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the
natural environment.

Green Marketing incorporates broad range of activities including product modification, changes
to the production process, packaging changes, and modifying advertising. Green
marketing focuses on satisfaction of customer needs and wants with no or minimum harm to the
natural environment.

Why Green Marketing is Important ?

It is well known that increasing production and business activities are polluting the natural
environment. Damages to people, crops, and wildlife is reported in different parts of the world.
As resources are limited and human wants are unlimited, it is necessary for marketers to use
resources efficiently, so that organizational objectives are achieved without waste of resources.
So green marketing is inevitable. There is growing interest among people around the world
regarding protection of natural environment. People are getting more concerned for environment
and changing their behaviour for the protection of environment. As a result of this, the term
"Green Marketing" has emerged. Hence, marketers are feeling their responsibility towards
environment and giving importance to green marketing.

Not only marketers but consumers are also concerned about the environment, and consumers are
also changing their behaviour pattern. Now, individual as well as industrial consumers are
becoming more concerned about environment-friendly products

 
Marketing Notes - Marketing Planning

Question - What do you mean by marketing planning?

Answer

Definition of Marketing Planning

"Marketing Planning is the process of developing marketing plan incorporating overall

marketing objectives, strategies, and programs of actions designed to achieve these objectives."

Marketing Planning involves setting objectives and targets, and communicating these targets to
people responsible to achieve them. It also involves careful examination of all strategic issues,
including the business environment, the market itself, the corporate mission statement,
competitors, and organisational capabilities.

"Marketing Plan is a comprehensive blue print which outlines an organisation's overall

marketing efforts."

Marketing Plan is a written document that describes an organisation's advertising and marketing
efforts for a coming period of time. It includes description of target markets, marketing situation,
organisation position, competition, and description of marketing mix the organisation intend to
use to reach their marketing goals

Question - Define the term 'marketing planning'. Outline the steps involved in marketing
planning process.

Answer

Marketing is a process of developing and implementing plans to identify and satisfy customer
needs and wants with the objective of customer satisfaction and profits making. The main
elements of marketing planning are - market research to identify and anticipate customer needs
and wants; and planning of appropriate marketing mix to meet market requirements/demands.

Definition of Marketing Planning

"Marketing Planning is the process of developing marketing plan incorporating overall

marketing objectives, strategies, and programs of actions designed to achieve these objectives."

Marketing Planning involves setting objectives and targets, and communicating these targets to
people responsible to achieve them. It also involves careful examination of all strategic issues,
including the business environment, the market itself, the corporate mission statement,
competitors, and organisational capabilities.
Marketing Planning Process

Marketing planning process is a series of stages that are usually followed in a sequence.
Organisations can adapt their marketing plan to suit the circumstances and their requirements.
Marketing planning process involves both the development of objectives and specifications for
how to achieve the objectives. Following are the steps involved in a marketing plan.

1) Mission
Mission is the reason for which an organisation exists. Mission statement is a straightforward
statement that shows why an organisation is in business, provides basic guidelines for further
planning, and establishes broad parameters for the future. Many of the useful mission statements
motivates staff and customers.

2) Corporate Objectives
Objectives are the set of goals to be achieved within a specified period of time. Corporate
objectives are most important goals the organisation as a whole wishes to achieve within a
specified period of time, say one or five years.

All the departments of an organisation including marketing department works in harmony to

achieve the corporate objectives of the organisation. Marketing department must appreciate the
corporate objectives and ensure its actions and decisions support the overall objectives of the
organisation.

Mission statement and corporate objectives are determined by the top level management
(including Board of Directors) of the organisation. The rest of the steps of marketing planning
process are performed by marketing department. All the actions and decisions of the marketing
department must be directed to achieve organisation mission and its corporate objectives.

3) Marketing Audit
Marketing audit helps in analysing and evaluating the marketing strategies, activities, problems,
goals, and results. Marketing audit is done to check all the aspects of business directly related to
marketing department. It is done not only at the beginning of the marketing planning process but,
also at a series of points during the implementation of plan. The marketing audit clarifies
opportunities and threats, so that required alterations can be done to the plan if necessary.

4) SWOT Analysis
The information gathered through the marketing audit process is used in development of SWOT
Analysis. It is a look at organisation's marketing efforts, and its strengths, weaknesses,
opportunities, and threats related to marketing functions.

Strengths and Weaknesses are factors inside the organisation that can be controlled by the
organisation. USP of a product can be the example of strength, whereas lack of innovation can be
the example of weakness.

Opportunities and Threats are factors outside the organisation which are beyond the direct
control of an organisation. Festive season can be an example of opportunity to make maximum
sales, whereas increasing FDI in a nation can be the example of threat to domestic players of that
nation.

5) Marketing Assumptions
A good marketing plan is based on deep customer understanding and knowledge, but it is not
possible to know everything about the customer, so lot of different things are assumed about
customer.
For example :-

Target Buyer Assumptions - assumptions about who the target buyers are.

Messaging/Offering Assumptions - assumptions about what customers think are the most
important features of product to be offered. 

6) Marketing Objectives and Strategies

After identification of opportunities and challenges, the next step is to develop marketing
objectives that indicate the end state to achieve. Marketing objective reflects what an
organisation can accomplish through marketing in the coming years.

Objective identify the end point to achieve. Marketing strategies are formed to achieve the
marketing objectives. Marketing strategies are formed to determine how to achieve those end
points. Strategies are broad statements of activities to be performed to achieve those end points. 

7) Forecast the Expected Results

Marketing managers have to forecast the expected results. They have to project the future
numbers, characteristics, and trends in the target market. Without proper forecasting, the
marketing plan could have unrealistic goals or fall short on what is promised to deliver.
Forecasting Customer Response - Marketing managers have to forecast the response that the
average customers will have to marketing efforts. Without some idea how the marketing will be
received, managers can't accurately plan the promotions. 

Forecasting Marketing cost - To make the marketing plan stronger, accurate forecast of
marketing cost is required to be done.

Forecasting the Market - To accurately forecast the market, marketing managers have to gain an
intimate understanding of customers, their buying behaviour, and tendencies.

Forecasting the Competition - Forecast of competition like - what they market, how they market,
what incentives they use in their marketing can help to counter what they are doing.

8) Create Alternative Plan

A alternate marketing plan is created and kept ready to be implement at the place of primary
marketing plan if the whole or some part of the primary marketing plan is dropped.

9) Marketing Budget

The marketing budget is the process of documenting the expected costs of the proposed
marketing plan. One common method to allocate marketing budgeting is based on a percentage
of revenue. Other methods are - comparative, all you can afford, and task method.

10) Implementation and Evaluation

At this stage the marketing team is ready to actually start putting their plans into action. This
may involve spending money on advertising, launching new products, interacting with potential
new customers, opening new retail outlets etc.

The marketing planning process is required to be evaluated and updated regular. Regular
evaluation of marketing efforts helps in achieving marketing goals

Question - What do you mean by marketing control? Explain steps in the process of marketing
control.
Answer

Introduction to Marketing Control

It is true to say that planning gives direction to an organisation, planning enable an organisation
to achieve its objectives, but without control measures planning is of no mean, it's just an empty
exercise without control. 

Business organisations do marketing planning to incorporate overall marketing objectives,

strategies, and programs of actions designed to achieve marketing objectives. Marketing
Planning involves setting objectives and targets, and communicating these targets to people
responsible to achieve them.

After an organisation develops and implements the marketing plan, next task is to control the
marketing performance. Marketing plans and strategies are required to be monitored, evaluated,
and adapted to meet the changing market environment, market needs, and market opportunities.
The process by which an organisation adapts its marketing plans and strategies to reach its
marketing objectives is called marketing control.

Definition of Marketing Control

Marketing Control can be defined as "the process of measuring and evaluating the results of
marketing strategies and plans, and taking corrective action to ensure that marketing objectives
are achieved."

Marketing Control can also be defined as "the set of practises and procedures employed by firms
to monitor and regulate their marketing activities in achieving their marketing objectives."

Meaning of Marketing Control

Developing and implementing marketing plan is not enough to reach marketing objectives;
marketing plans and strategies are required to be monitored, evaluated, and adapted to meet the
changing market environment, needs, and opportunities. Marketing control ensures performance
improvement by minimising gap between desired results and actual results. If the actual results
are found deviated from the expected results, plans and strategies are adapted to bring
the results back to the desired level.
Marketing Control Process
Marketing control is a four step process :-

Define Marketing Objectives

Set Performance Standards

Compare Results Against Standards

Corrections and Alterations

Resources are scarce and costly so it is important to control marketing plans. Controlling
marketing plan is not an one time activity, it is a series of actions, and it is required to be done
regularly. Marketing control process starts with the review of the marketing objectives. 

After defining/redefining marketing objectives, performance standards are set. Performance

standards provide benchmarks to enable managers and employees to decide how they are
progressing towards achieving objectives.

Actual results are compared against standards. If the actual results are in direction to the
expected results, their is no problem in marketing plan and its execution.

If actual results are deviated from the expected results, their is requirement to correct and alter
marketing plan to bring the results back to the desired level

Question - What do you mean by product development? Explain product development process.

Answer

Introduction to Product Development

In this fast-changing world we are experiencing change in our daily life and at marketplace
too. Customer needs, wants, and expectations are changing more rapidly. Customers are
increasingly demanding advance features, appealing designs, better quality, and reliability in
products. To meet the changing demands of customer, business organisations are investing
heavily in research and development (R&D). Business organisations are updating existing
products and developing new products to satisfy changing customer needs, wants, and
expectations.
The development of competitive new products is a prerequisite for every business organisation to
be successful. Samsung has outperformed Nokia in the global mobile-phone market and become
the global leader. Samsung updates its existing mobile phones and brings new mobile phones
more frequently at competitive low price with advance features, appealing designs, better quality
and reliability. Nokia failed to satisfy changing customer needs, wants, and expectations, and lost
its market position.

Definition of Product Development

In general, the Product Development can be defined as "creating, innovating, or developing
entirely a new product , or presenting an existing product with enhanced utility, improved
features, more appealing design, better quality  and reliability to satisfy the requirements of its
end-users."

Meaning of Product Development

Product means a good, service, idea or object created as a result of a process and offered to serve
a need or satisfy a want. Development means the act or process of growing, progressing, or
developing.

Product Development  is a process of improving the existing product or to introduce a new

product in the market. It is also referred as New Product Development. The functions of product
development are as follows :-

Creation of an entirely new product or upgrading an existing product,

Innovation of a new or an existing product to deliver better and enhanced services,

Enhancing the utility and improving the features of an existing product,

Continuous improvement of a product to satisfy rapidly changing customer needs and wants.

Product Development Process

Product development process is a crucial process for the success and survival of any business.
Today, businesses are operating in a highly dynamic and competitive environment. Business
organisations have to continuously update their products to conform to current trends. The
product development process starts from idea generation and ends with product development and
commercialisation. Following are the steps in the process of product development.

Idea Generation - The first step of product development is Idea Generation that is identification
of new products required to be developed considering consumer needs and demands. Idea
generation is done through research of market sources like consumer liking, disliking, and
competitor policies. Various methods are available for idea generation like - Brain Storming,
Delphi Method, or Focus Group. 

Idea Screening - The second step in the process of product development is Idea Screening that is
selecting the best idea among the ideas generated at the first step. As the resources are limited, so
all the ideas are not converted to products. Most promising idea is kept for the next stage.

Concept Development - At this step the selected idea is moved into development process. For the
selected idea different product concepts are developed. Out of several product concepts the most
suitable concept is selected and introduced to a focus group of customers to understand their
reaction.  For example - in auto expos different concept cars are presented, these models are not
the actual product, they are just to describe the concept say electric, hybrid, sport, fuel efficient,
environment friendly, etc.

Market Strategy Development - At this step the market strategies are developed to evaluate
market size, product demand, growth potential, and profit estimation for initial years. Further it
includes launch of product, selection of distribution channel, budgetary requirements, etc.

Business Analysis - At this step business analysis for the new product is done. Business analysis
includes - estimation of sales, frequency of purchases, nature of business, production and
distribution related costs and expenses, and estimation of profit.

Product Development - At this step the concept moves to production of finalised product.
Decisions are taken from operational point of view whether the product is technically and
commercially feasible to produce. Here the research and development department develop a
physical product. 

Test Marketing - Now the product is ready to be launched in market with brand name,
packaging, and pricing. Initially the product is launched in a test market. Before full scale
launching the product is exposed to a carefully chosen sample of the population, called test
market. If the product is found acceptable in test market the product is ready to be launched in
target market.

Commertialisation - Here the product is launched across target market with a proper market
strategy and plan. This is called commercialisation phase of product development.

AP
Product Mix

Question - What is product mix? Explain product mix decisions.

Answer

Meaning of Product Mix

Product mix or product assortment refers to the number of product lines that an organisation
offers to its customers. Product line is a group of related products manufactured or marketed by a
single company. Such products function in similar manner, sold to the same customer group,
sold through the same type of outlets, and fall within a same price range .

Product mix consists of various product lines that an organisation offers,  an organisation may
have just one product line in its product mix and it may also have multiple product lines. These
product lines may be fairly similar or totally different, for example - Dish washing detergent
liquid and Powder are two similar product lines, both are used for cleaning and based on same
technology; whereas Deodorants and Laundry are totally different product lines.

An organisation's product mix has following four dimensions :-

Width,

Length,

Depth, and

Consistency.
Width

The width of an organisation's product mix pertains to the number of product lines that the
organisation is offering. For example, Hindustan Uni Lever offers wide width of its home care,
personal care and beverage products. Width of HUL product mix includes Personal wash,
Laundry, Skin care, Hair care, Oral care, Deodorants, Tea, and Coffee.

Length

The length of an organisation's product mix pertains to the total number of products or items in
the product mix. As in the given diagram of Hindustan Uni Lever product mix, there are 23
products, hence, the length of product mix is 23. 

Depth

The depth of an organisation's product mix pertains to the total number of variants of each
product offered in the line. Variants includes size, colour, flavors, and other distinguishing
characteristics. For example, Close-up, brand of HUL is available in three formations and in
three sizes. Hence, the depth of Close-up brand is 3*3 = 9.

Consistency
The consistency of an organisation's product mix refers to how closely related the various
product lines are in use, production, distribution, or in any other manner.
Product Mix Decision

Product mix decision refers to the decisions regarding adding a new or eliminating any existing
product from the product mix, adding a new product line, lengthening any existing line, or
bringing new variants of a brand to expand the business and to increase the profitability.

Product Line Decision - Product line managers takes product line decisions considering the sales
and profit of each items in the line and comparing their product line with the competitors'
product lines in the same markets. Marketing managers have to decide the optimal length of the
product line by adding new items or dropping existing items from the line.

Line Stretching Decision - Line stretching means lengthening a product line beyond its current
range. An organisation can stretch its product line downward, upward, or both way.

Downward Stretching means adding low-end items in the product line, for example in Indian car
market, watching the success of Maruti-Suzuki in small car segment, Toyota and Honda also
entered the segment.

Upward Stretching means adding high-end items in the product line, for example Maruti-Suzuki

initially entered small car segment, but later entered higher end segment.

Two-way Stretching means stretching the line in both directions if an organisation is in the

middle range of the market.

Line Filling Decision - It means adding more items within the present range of the product line.
Line filling can be done to reach for incremental profits, or to utilise excess capacit
Marketing Notes - Branding Packaging and Labelling

Question - What is branding, packaging, and labelling in marketing?

Answer

Definition of Branding

According to American Marketing Association -  Brand is “A name, term, design, symbol, or

any other feature that identifies one seller’s good or service as distinct from those of other
sellers. The legal term for brand is trademark. A brand may identify one item, a family of items,
or all items of that seller. If used for the firm as a whole, the preferred term is trade name.”

According to Philip Kotler - “Brand is a name, term, sign, symbol, 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”

Branding is “a seller’s promise to deliver a specific set of features, benefits and services
consistent to the buyers.”

Meaning of Branding
Branding is a process of creating a unique name and image for a product in the mind of
consumer, mainly through advertising campaigns. A brand is a name, term, symbol, design or
combination of these elements, used to identify a product, a family of products, or all products of
an organisation.

Branding is an important component of product planning process and an important and powerful
tool for marketing and selling products.

Elements of Branding

Brand includes various elements like - brand names, trade names, brand marks, trade marks, and
trade characters. The combination of these elements form a firm's corporate symbol or name.

Brand Name - It is also called Product Brand. It can be a word, a group of words, letters, or
numbers to represent a product or service. For example - Pepsi, iPhone 5, and etc. 
Trade Name - It is also called Corporate Brand. It identifies and promotes a company or a
division of  a particular corporation. For example - Dell, Nike, Google, and etc.

Brand Mark - It is a unique symbol, colouring, lettering, or other design element. It is visually
recognisable, not  necessary to be pronounced. For example - Apple's apple, or Coca-cola's
cursive typeface.

Trade Mark - It is a word, name, symbol, or combination of these elements. Trade mark is
legally protected by government. For example - NBC colourful peacock, or McDonald's golden
arches. No other organisation can use these symbols.

Trade Characters - Animal, people, animated characters, objects, and the like that are used to
advertise a product or service, that come to be associated with that product or service. For
example - Keebler Elves for Keebler cookies 

Branding Strategies
There are various branding strategies on which marketing organisations rely to meet sales and
marketing objectives. Some of these strategies are as following :-

Brand Extension - According to this strategy, an existing brand name is used to promote a new or
an improved product in an organisation's product line. Marketing organisations uses this strategy
to minimise the cost of launching a new product and the risk of failure of new product. There is
risk of brand diluting if a product line is over extended.

Brand Licensing - According to this strategy, some organisations allow other organisations to use
their brand name, trade name, or trade character. Such authorisation is a legal licensing
agreement for which the licensing organisation receives royalty in return for the authorisation.
Organisations follow this strategy to increase revenue sources, enhance organisation image, and
sell more of their core products. 

Mixed Branding - This strategy is used by some manufacturers and retailers to sell products. A
manufacturer of a national brand can make a product for sale under another company's brand.
Like this a business can maintain brand loyalty through its national brand and increase its
product mix through private brands. It can increase its profits by selling private brands without
affecting the reputation and sales of its national brand.

Co-Branding - According to this strategy one or more brands are combined in the manufacture of
a product or in the delivery of a service to capitalise on other companies' products and services to
reach new customers and increase sales for both companies' brands

MBA Notes - Right Pricing and Managing Price Changes

Question - "Setting the right price of goods and services is an important part of effective
marketing." Explain the right pricing strategy? Also explain how to manage price changes?

Answer

Introduction

It is true to say that - "Setting the right price of goods and services is an important part of
effective marketing." Pricing the products properly is crucial for the success of any business.
According to Charles Toftoy, associate professor of management science at George Washington
University, "Pricing is probably the toughest thing there is to do." 

Out of four P's of marketing, Pricing is the only element of marketing mix that generates
revenue; remaining elements - product, place, and promotion are cost to the business.

Right Pricing

There are many factors that affect profitability of a business, pricing is one of them. Setting the
right price is an important part of effective marketing and crucial step toward achieving that
profit. Setting the right price not only maximise profit, but also help in maintaining a good
relationship with customers. Right pricing help businesses avoid the serious financial problems
that may occur if the prices are too high or too low.
"Setting the price for a product at which both the customer and the business are happy (i.e.
customer is willing to pay, and business is able to cover cost and make maximum profit) is
called right pricing."

How to Set Right Price for Products or Services

Research help in setting right pricing. Research of following three key areas is required to set
right pricing :-

Research of existing cost,

Research of competitors' pricing, and

Research of target market

Research of Existing Cost

The research of existing cost is done to identify the actual costs, to take into account any hidden
and infrequent costs such as superannuation, insurance, licensing, adviser fees, or any
professional development, training or networking cost, and to reduce cost in some areas.

It may be difficult to reduce cost in some areas like rent and wages, but some costs can be
reduced like purchasing cost if the stock is purchased in bulk taking into consideration the cash
flow, storage, and product delivery.

Research of Competitors' Pricing

Research of competitors' pricing is necessary to know the pricing strategies of competitors to
rightly set the price of products or services. If the price is much higher than the competitors'
price, the pricing is out of the market. If the price is much lower than the competitors' price, there
is the risk of underselling the product or service. Both problems can be avoided by doing the
research of competitors' pricing before setting the prices of products or services.

Research of Target Market

It is necessary to know how much the target market is willing to pay for the product or service
that is offered. If customers believe that the price of offered product or service is too high they
will probably buy from the competitor. If they believe the price is too low they may question the
quality of offered product or service and buy elsewhere. Target market research help in
understanding the target market and setting the right prices
Question - Explain the role of advertising in marketing communications. Also describe the steps
in the process of advertising.

Answer 

The finest products, the most attractive price tags, and the best marketing channels are of no
mean if the target customers don't know the product; and the chances of product success is low.
Effective marketing communication is crucial for the success of a product or a business. In
marketing communications advertising plays an important role.

Role of Advertising in Marketing Communication

Marketing communications are the means by which organisations attempt to inform, persuade,
and remind consumers about products, services, or brands. Marketing communications inform
and make consumers aware about the availability of the product or service, about its usage, price
and special offers. Marketing Communications attempt to persuade potential consumers to
purchase and try the product. Marketing communications can also be used to reinforce
experiences, or to remind consumers about their needs and their past experiences related to the
product with a view to convince them for repurchases. Marketing communication also
differentiate products in markets where there is little to separate competing products and brands.

Advertising is a paid form of a non-personal message communicated through the various media
by industry, business firms, nonprofit organisations, or individuals. Advertising is persuasive and
informational and is designed to influence the purchasing behavior and/or thought patterns of the
audience.

The advertising message has to reach a billion people, speaking different languages, practicing
many religions. Advertisers can reach their audiences through television, radio, cinema, print
medium, outdoor advertising, sales promotion and the Internet. Hence, advertising is a form of
mass communication.

Process of Advertising

Following are the steps that are required to be followed for development and execution of
advertising :-

Briefing - Advertising process starts with briefing - a document confirming understanding

between client and advertising agency on - what product to advertise, objective of advertising,
time-frame of ad campaign, strategies to reach the audience, and total estimated cost.

Market Research - After briefing market research will done. Research include - comparison of
advertiser's product or service with competitor's product or service, consumers' perception of
their brand in comparison to their competitors, study of competitors' advertising, and response of
consumers to competitors' advertising.
Identify Target Audience - Next step is to identify target audience. Using the market research,
the advertising agency will identify the target audience.

Media Selection - Using the research, the advertising agency or the media agency will select the
media that should be used to reach the target audience in the most cost effective way.

Ad Designing & Ad Creation - At this step the creative people of advertising agency will convert
the advertising communication into words and pictures. The copywriter will write the copy of
advertising and the art director will visually implement the copywriter's [Link] advertising
agency may get the filming or taping done by outside production companies.

Decide Place & Time - This step is to decide where and when the advertisement will be shown.
Traffic department within the advertising agency will ensure that the commercials are ready on
time and all required legal approvals have been granted. 

Execution - Finally the advertisement will be executed.

Performance Check - Once the advertisement is executed, the media agency will check its
performance.

Following the above steps the client or marketer can effectively communicate its marketing
messages with its target audience.