Module 3

MARKETING MIX DECISION

Marketing mix
The marketing mix, which is the means by which an organisation reaches its target market is made up
of product, pricing, distribution, promotion and people decisions.

PRODUCT DECISION
Product: Everything the purchaser gets in exchange for his money
According to Jobber (2004), ― A product is anything that has the ability to satisfy a consumer need.
In the words of Dibb et al A product is anything, favourable and unfavourable that is received in
exchange.
CLASSIFICATION OF PRODUCTS:
A. Classification on the basis of durability or tangibility

I Non-durable goods – these goods are consumed fast and purchased frequently. In other words,
they cannot be used for long. Eg: soap,salt

II II. Durable goods- These goods can be used for a long time. In other words, they can be used
again and again. Hence they are not purchased frequently. Eg: furniture, refrigerator

III III. Services- these are activities, benefit or satisfaction offered for sale. Eg:’ haircut, repairs,
train journey etc..
B. Classification on the basis of consumption
On the basis of consumption goods can be classified into two: consumer goods and industrial
goods

Consumer goods
Consumer goods are those which are purchased for final consumption. Eg: rice, milk, tooth paste etc.

Consumer goods divided into four classes.

i) Convenience Product:-Consumer product that the customer usually buys frequently, immediately,
and with a minimum of comparison and buying effort consumer products can be divided further into
staples, impulse products, and emergency products.
ii) Shopping Product:-Consumer good that the consumer, in the process of selection and purchase,
characteristically compares as such bases as suitability, quality, price, and style. Example: Furniture,
clothing, used cars, major appliances and hotel and motel services.
iii) Specialty Products:-Consumer product with unique characteristics or brand identification for
which a significant group of buyers is willing to make a special purchase effort. e.g. Specific brands and
types of cars, high-priced photographic equipment, designer clothes etc.
iv) Unsought Products:-Unsought products are consumer products that the consumer either does not
knows about or knows about but does not normally think of buying. Most major new inventions are
unsought until the consumer become aware of them through advertising. E.g. Life Insurance and blood
donations to the Red Cross.

Also we have FMCG goods (Fast moving consumer goods), these are non-durable goods that are
frequently purchased. FMCGs may be defined as products that have a quick turnover, and relatively low
cost. FMCGs are also called as Consumer Packaged Goods (CPGs)
Eg: FMCG companies are HUL, P&G, Nestle, ITC etc.. it aslo divided as
➢Staple goods-these are purchased on regular basis. Toothpaste and soaps, detergents etc.

➢Impulse goods- these are purchased without any planning or thought. These are purchased on
sight. Eg: chocolate, soft drinks, chewing gum

➢Emergency goods- These are purchased immediately to fill an urgent need. Eg: medicine,
umbrella etc..

Industrial goods
These goods are meant for use in the production of other goods or for some business or institutional
purpose
1. Production facilities and equipment,
2. Raw materials
3. Capital equipment
4. Production supplies and management materials.
5. Accessory parts
6. Industrial or professional services
7. Component parts
Difference between consumer goods and industrial goods
 PRODUCT LINE
Product lining is the offering for sale several related products. Unlike product bundling, where
several products are combined into one, lining involves offering several related products individually.
PRODUCT SIMPLIFCATION
Product Simplification means limiting the number of products a dealer deals.
PRODUCT DIVERSIFICATION
Product diversification means adding a new product or products to the existing product.
PRODUCT DIFFERENTIATION
Product differentiation involves developing and promoting an awareness in the minds of customers
that the company’s products differ from the products of competitors.
PRODUCT MIX
A product mix is the total list of products which a firm offers to its buyers. It also called product
portfolio or product range or product assortment.
The number of different product lines sold by a company is referred to as width of product mix. The
total number of products sold in all lines is referred to as length of product mix.
THE PRODUCT LIFE CYCLE
Products often go through a life cycle. Initially, a product is introduced. Since the product is not well
known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually
limited. Eventually, however, many products reach a growth phase—sales increase dramatically. More
firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity
stage where little growth will be seen.

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Product Introduction/ Development Stage
This is the first stage in product life cycle. Before a new product is introduced in the market place, it
should be created first. The processes involve in this stage include generation of idea, designing of the
new product, engineering of its details, and the whole manufacturing process. This is also the phase
where the product is named and given a complete brand identity that will differentiate it from the others,
particularly the competitors. Once all the tasks necessary to develop the product is complete, market
promotion will follow and the product will be introduced to the consumers. Product development is a
continuous process that is essential in maintaining the product’s quality and value to consumers. This
means that companies need to continuously develop or innovate their products to out ride new and
existing competitors.
Product Growth Stage -This is a period where rapid sales and revenue growth is realised. However,
growth can only be achieved when more and more consumers will recognize the value and benefits of a
certain product. In most cases, growth takes several years to happen, and in some instances, the product
just eventually died without achieving any rise in demand at all. Hence, it is important that while the
product is still in the development and introduction stages, a sound marketing plan should be put in
place and a market and primary demand should be established.
Product Maturity and Saturation Stage -In the maturity stage, the product reaches its full market
potential and business becomes more profitable. During the early part of this stage, one of the most
likely market scenarios that every business should prepare for is fierce competition. As business move to
snatch competitor’s customers, marketing pressures will become relatively high. This will be
characterised by extensive promotions and competitive advertising, which are aimed at persuading
customer to switch and encouraging distributors to continue sell the product. In the middle and late
phases of the maturity stage, the rate of growth will start to slow down and new competitors will attempt
to take control of the market. In most cases, many businesses falls and lose money in these stages as
they focus more on increasing advertising spending in hope of maintaining their grip of the market.
Product Decline Stage The decline stage is the final course of the product life cycle. This unwanted
phase will take place if companies have failed to revitalize and extend the life cycle of their products
during the maturity stage’s early part. Once already in this phase, it is very likely that the product may
never again recover or experience any growth, eventually dying down and be forgotten.
Assumption:
According to Kotler, there is certain assumption behind the concept of product life cycle.
They are:
• • The product have limited life
• Sales of product pass through distinct stages, each posing different challenges to the seller
• • Product rise and fall at different stages
• • Products require different strategies in each stage of life cycle

PRICING DECISION
Price is the amount of money or goods for which a thing is bought or sold. Price is the amount paid
by the buyer to the seller for a product.
TYPES OF PRICING POLICIES
There are many ways to price a product.
1. Cost Plus Pricing- cost plus a percentage of profit
2. Target Pricing- cost plus a pre-determined target rate of return
3. Marginal Cost Pricing- fixed plus variable costs
4. Break-Even Pricing- at break-even point i.e., where total sales=total cost (no profit, no loss point)

SKIMMING PRICING:
● This is done with the basis idea of gaining a premium from those buyers who always ready
to pay a much higher price than others.
 ● It refers to the high initial price charged when a new product is introduced in the
market
PENETRATION PRICING:
The price charged for products and services is set artificially low in order to gain market
share.
DETERMINATS OF PRICE (FACTORS INFLUENCING PRICING)

Internal factors
1. Costs: price must cover the cost of production
2. Objectives: maximisation of sales, targeted rate of return, stability in pricing, increase market
share etc are the important objectives
3. Organisational factors: it is the internal arrangement or mechanism for decision
4. Marketing mix
5. Product differentiation
6. Product life cycle

External factors

1. Demand
2. Competition
3. Distribution channel
4. General economic conditions (inflation, deflation, trade cycle etc)
Important pricing strategies

Psychological Pricing: This approach leverages customers’ emotional responses. For instance,
pricing an item at $9.99 instead of $10 creates a perception of greater value, as customers often
associate lower rounded numbers with discounts or bargains.

Geographical Pricing: Prices vary based on the location of customers. This strategy considers
factors like shipping costs, local demand, or regional economic conditions. Geographic pricing is
especially common for international markets.

Base Point Pricing: Here, a base price is set at a specific location, with additional charges applied
based on the distance to the buyer’s location. This is used to cover transportation costs more accurately.

Zone Pricing: In zone pricing, the selling area is divided into zones, with each zone having a specific
price. This is similar to geographical pricing but is often used domestically, especially in shipping or
delivery services.

Dual Pricing: Companies set different prices for the same product in two different markets or for
two types of customers, such as retail versus wholesale buyers.

Administered Pricing: Prices are set by the seller rather than by supply and demand. This approach
is common in markets with little competition or when regulations allow price setting
 Mark-Up Pricing: This is a cost-based pricing method where a standard markup is added to the cost
of producing the product, ensuring profitability.

Price Bundling: Multiple products are sold together at a combined, often discounted, price. This
strategy increases perceived value and encourages customers to purchase more items together.

VALUE PROPOSITION

A value proposition is a clear, concise statement that explains how a product or service solves
customers' problems or improves their situation, what benefits they can expect, and why they should
choose it over competitors. It highlights the unique value the business brings to its customers, serving as
a central promise that guides marketing and customer engagement.

Importance of a Value Proposition

A well-defined value proposition is crucial because it:

● Differentiates the brand from competitors by highlighting what makes it unique.

● Attracts and Retains Customers by directly addressing their needs and preferences.
● Guides Product and Marketing Decisions, ensuring consistency in messaging and aligning
offerings with customer expectations.
● Builds Brand Loyalty, as customers understand the value they’re getting, fostering trust and
long-term relationships.

PROMOTION DECISION

In the words of Masson and Ruth, ‖Promotion consists of those activities that are designed to bring a
company‘s goods or services to the favourable attention of customers.
Promotion is communication between seller and buyer.

PROMOTION MIX
Promotion mix is the combination of components or elements of promotion. Firms select a mix of
promotional tools to effectively communicate with their target customer group. The different elements
of this group are:
1. Advertising
2. Personal selling
3. Sales Promotion
4. Public relations
5. Direct Marketing
6. Internet and online marketing
7. Publicity
FACTORS TO BE CONSIDERED WHILE SELECTING A PROMOTION MIX:
1. Nature of the Product: - The product may be consumer product or industrial product, convenient
goods or specialty goods, simple or technical goods etc. In each case, the promotion mix element may
vary.
 2. Nature of the market: Promotion mix depends upon the nature of market. For industrial markets,
advertising plays an informative role, for consumer markets, advertising plays an informative as well as
a persuasive role.
3. Overall marketing strategy: - It means, whether the firm wishes to “push” the product or create
“pull” for the product. Depending upon the strategy, the elements of promotion mix will vary.
4. Buyer readiness stage: - The choice of different elements of promotion mix is depend on the
buyer’s readiness and awareness of the brand.
5. Product life cycle stages: - Different elements of promotion mix were used in different stages of
product life cycle.
6. Market size: -In narrow market, direct marketing is more effective. For a market having large
number of buyers the promotion tool is mainly advertising.
7. Cost of Promotion elements: - The cost of different tools is very important while selecting the
Promotion mix.
8. Availability of fund
9. Price strategy
FUNDAMENTALS OF MARKETING COMMUNICATION MIX

American Marketing Association defined it as, ―Any paid form of non –personal presentation of
ideas, goods, or services by an identified sponsor.‖
Features of Advertising:
1. It is a mass communication medium.
2. It is a salesmanship in print.
3. It is a paid form of communication by an identified sponsor.
4. It is a non- personal communication.
5. It helps to stimulate sales.
6. It may be written or spoken.

ROLE/ ADVANTAGES /IMPORTANCE OF ADVERTISING:-

1. Manufactures and Advertising (Advantages to Manufactures): a. it maintains the existing
market and explores the new.
b. It increases the demand for the product
c. It helps to build up or increase goodwill of the company.
d. It controls product price.
e. It helps to introduce a new product into the market.

2. Middlemen and Advertising(Advantages to Middlemen): a. It guarantees quick sales

b. It acts as a salesman.
 c. It increases the prestige of the dealers.
d. It makes retail price maintenance possible.
e. It enables the dealers have a product information.

3. Sales-force and Advertising (Advantages to salesmen) a. It creates a colourful background

for a salesmen to begin his work.
b. It reduces his burden of job.
c. It helps to develop self-confidence and initiative among the salesmen.

4. Consumers and Advertising (Advantages to consumers): a. It ensures better quality product

at reasonable price.
b. It provides product related information to the customers and thereby makes the purchasing
an easy task.
c. It helps the consumers to save time by providing information related to the availability of
product.
d. Helps the consumers in intelligent buying.

5. Society and Advertising(Advantages to society): a. It helps to uplifts t he living standards

b. It helps to generate gainful employment opportunities.
c. It provides new horizons of knowledge.
d. It up-holds the culture of a nation.

Advertising Media
1. Press Advertising
➢Newspaper
➢Magazines and Journals
2. Radio Advertisement
3. Television Advertising
4. Film Advertising
5. Direct Mail Advertising
6. Outdoor advertisement
7. Point of Purchase Display(PoP Ad)
➢Window Display
➢Counter display
➢Show room
8. Specialty Ad
9. Internet Ad (online ad)
SALES PROMOTION
According to American Marketing Association, those marketing activities other than personal selling,
advertising and publicity that stimulate consumer purchasing and dealer effectiveness such as display,
shows and exhibitions, demonstrations and various non- recurrent selling effort in the ordinary routine

It is the tools and technique to promote sales

Nature of Sales Promotion

1. Short run impact:Sales promotion is short term in nature. When the sales promotion activities are
withdrawn, the benefits disappear.

2. Diversity:Salés promotion tools are varied and diverse in their forms and features,

e.g., discount, sample, premium etc.

3. Incentive:It provides some inducement and concession. This gives immediate and direct benefits to
consumers. In the same time, it helps to increase sales.

4. Strong appeal:It catches attention and gives information which direct the people to the product or service

ROLE/ADVANTAGES OF SALES PROMOTION

1. Manufacturers and sales promotion:
(i) It helps to retains the existing customers
(ii) It helps to create new customers.
(iii) It promote sales
(iv) It helps to enhance the goodwill of the firm
(v) It helps to slashes down the cost
(vi) It helps to face the competition.

2. Middle men and sales promotion:

(i) It reduces strain of the middlemen to a greater extend.
(ii) It helps to increase the sales of middlemen
(iii) It builds and enhance the goodwill of the shop
(iv) It gives some personal benefits to the middle men.

3. Consumers and sales promotion:

(i) It helps to improve the standard of living of people by making available goods and services at least cost.
(ii) It gives knowledge of new products available in the market.
(iii) It gives both cash and non-cash incentives.
(iv) It helps to get more credit facility and special concession because of his brand and store loyalty.

Limitations of Sales Promotion

1. Sales promotion is only a short term activity. It has only short term effects. Like a flash light, it flashes
and disappear.
2. Sales promotion alone cannot produce desired results. It needs the support of advertising and
personal selling
3. Too many sales promotions may adversely affect the brand image. It may signal product weakness to
consumers.
4. The discounts are not real, because price of the product has already been raised
5. Wholesalers and retailers do not always deliver their promises when given incentives..
 6. Difference between Advertisement and Sales Promotion
Advertising Sales promotion

● Aims at attracting the ultimate customer ● Aims at attracting not only consumers but also
● Attempts to create brand image. middlemen and sales employees.
● Appeals are emotional. ● Attempts to get quick sale or induce trial.
● Effective in the long run ● Appeals are rational
● Indirect approach. ● Effective in the short run.
● Part of sales promotion. ● Direct approach.
● It uses pull strategy. ● Includes advertising.
● It uses push strategy.

Kinds of Sales Promotion

1. Consumer promotion: This is the sales promotion aimed at consumers. In this type of sales promotion,
various techniques are used to induce customers to buy products and to buy more quantity.

2. Trade promotion: This is the sales promotion aimed at distributors or traders. In this type, various sales
promotion techniques or schemes are devised to motivate the wholesalers and retailers to promote products
and to stock the company's products. The objective is to secure the wholehearted co-operation of the traders.

3. Sales force promotion: Company's salesmen are playing a key role in selling the products. They should be
motivated to perform well. For motivating the sales people, some schemes or techniques are used. This type
of sales promotion is called sales force promotion.

SALES PROMOTION SCHEMES

A. Consumer Promotion Schemes

These include techniques or schemes to induce the consumers to buy more. These are aimed to educate or
inform the consumers and also to stimulate them. The following are the various sales promotion schemes used
at the consumer's level:

1. Samples: Samples are small quantities of the product which are offered to the customers to trial the
product. These are generally distributed free by the marketers. This helps the consumers to verify the real
quality of the product.

2. Coupons: Coupon are certificates offering a stated amount of reduction on the purchase of a specific
product. In most of the cases, these coupons are put inside the package. They may also be marked or printed
in the advertisement. The consumer will receive a price reduction on the stated value of the coupon at the
time of purchase. The method induces customers to buy a particular brand from a particular shop

3. Rebates: Rebate provides a price reduction after the purchase and not at the retail shop. The consumer
sends a specified proof of purchase (bill) to the manufacturer who refunds part of the purchase price by mail.
It is a good method for creating new customers and for strengthening brand loyalty

4. Money refund offers: If the buyer is not satisfied with the product, a part or whole of the buyer's money will
be refunded within stated period. This offer is usually stated on the package.
5. Price off: This is also called cents-off deals or price off offer. In this method the customer is offered a
reduction from the printed price of product (i.e. discount). This method stimulates sales during an off-season.
For example, fans are sold at a reduction rate in rainy season.

6. Premium plan: Premium or gifts are goods offered at a lower price or free as an incentive to purchase a
particular product. It is offered for consumer goods like soap, paste, brush, washing powder etc. For instance,
when a customer buys two soaps, a soap box is given free along with the soap. The soap box is premium. Thus,
premium is an extra inventive for the buyers. McDonald's gives away 1.5 billion toys throughout the world
each year.

7. Buy-back allowance: This is an allowance following a previous trade deal. The allowance is in the form of a
certain amount of money for new purchases based on the quantity of previous purchase. It generally
strengthens the buyer's motivation to co-operate on the first trade deal.

8. Free trials: This consists of inviting buyers to try the product without cost, hoping that the buyer will buy the
product.

9. Prizes: Prizes are the offers of the chance to win cash, trips or goods as a result of purchasing something.
This may take the form of contest, sweepstakes and games

10. Demonstrations: In order to promote new brand, demonstrations are arranged in stores, at fairs and
exhibitions or even on a door to door basis. These are mainly employed for household appliances. For
example, demonstrations are employed in the case of pressure cooker (Hawkins), Vacuum cleaners etc.

11. Consumer contests: Various competitions such as walk and win, singing contests, essay or quiz
competitions are organised among the consumers. The winners are given prizes. The prizes may be gold or
silver jewellery, cars, two wheelers, colour, televisions, computers, music systems, free air tickets, stay in five
star hotels, and holiday in health resorts, and anything else depending on the imagination of the marketers.

12. Sweepstakes: The customers are given coupons bearing numbers when they make purchases within a
specified period and winners are decided through drawing by lots. Companies announce fabulous prizes for
winners

13. Exhibitions and Trade Fairs: Exhibitions and trade fairs are conducted to promote sales and popularise the
products. An exhibition stand or stall is a form of showroom. But it is very distinctive form of show room. It
provides a temporary market place at which buyers and sellers meet. There are various types of exhibitions -
International trade fairs, national and local fairs and exhibitions.

14. Buy one, get one free: This is one of the popular sales promotion activities. An alternative to this approach
is the buy two, get the third item free.

15. Point of Purchase Display (POP Displays): To draw the attention of customers who visit the shop,
marketers use point of purchase displays. These include practical demonstration of use of product and displays
arranged in stores. POP display also include window displays, counter displays, floor and wal racks to hold the
merchandise, streamers, and posters. POP displays give a temptation to the visiting customers to buy the
product or at least create an awareness in the minds of the shoppers, about the product

B. Trade Promotion Schemes

Success in sales depends on the whole- hearted co-operation of middlemen. For securing the co-operation of
wholesalers, retailers and distributors, manufacturers use a number of techniques or schemes. These
techniques or schemes increase the interest and enthusiasm of dealers. Following are the techniques or
schemes at dealer level
1. Price deals: Under this, special discounts are offered over and above the regular discounts.

2. Free goods: Manufacturers give away attractive and useful articles as presents to the

Dealers when they buy a certain quantity. These gifts can be transistor, radio sets, clocks, chairs, tables, cash
boxes, dress materials etc. Some manufacturers offer free holiday family tours to dealers who place more
orders. Rally Fan Company arranges for free holiday tours to those who sells the maximum fans in a year.

3. Advertising materials: The manufacturers distribute some advertising materials such as store signs, shelf
signs, boards etc. for display purpose.

4. Trade Allowance: is perhaps the most common trade promotion. This includes a discount, or deal offered to
retailers or wholesalers to encourage them to stock, promote or display the manufacturer's products. The
various types of trade allowances are (a) buying allowance, (b) promotional allowance, and (c) slotting
allowance:

5. Speciality advertising: It consists of gifts given to dealers or to their sales force to push the manufacturer's
products. The gifts consists of low items bearing company s name such as pens, diaries, pencils, calendars,
purses, memo pads etc.

6. Dealer Contests: This is a sales incentive competition organised among dealers or salesmen. This is in the
form of window display, sales contests (large sales volume) store display etc. Prizes are given to winners. This
induces the sales person or dealers to devote greater efforts to increase sales.

7. Sales training programmes: Many products sold at the retail level require knowledgeable sales people. They
must provide consumers with information about the features and benefits of various brands and models. So
manufacturers provide sales training assistance to retail sales people. Manufacturers may conduct classes or
training sessions that retail personnel can attend to increase their knowledge of a product or a product line.

8. Trade shows: Another dealer promotion technique is the trade show. This is a forum where manufacturers
can display their products to current as well as prospective buyers. In many industries, trade shows are a major
opportunity to display one's product lines and interact with customers. Trade shows are particularly valuable
for introducing new products, because resellers are often looking for new merchandise to stock.

9. Co-operative advertising: This is another trade-oriented promotion technique. In this technique the cost of
advertising is shared by more than one party.

C. Sales Force Promotion

These include the techniques or schemes which induce and motivate the sales persons. The aim of these
techniques or schemes is to make the salesmen's efforts more effective. The various schemes of sales force
promotion are discussed as follows:

1. Bonus to sales force: Those salesmen who achieve targeted sales or more wil be paid an extra incentive in
the form of bonus. This helps both the firm and the salesmen. The firm gets increased sales resulting in more
profits. Salesmen get more earnings.

2. Sales force contests: Sales contests are announced to encourage the salesmen to double or multiply their
selling efforts and interest over a specified time. Prizes are given to the sales man who achieves the maximum
sales in the contest. This encourages the salesmen to sell more

3. Sales meetings, conventions and conferences: Sales meetings, conventions and conferences are conducted
with a view to educate, train, inspire and reward the salesmen. New selling techniques are described to the
salesmen and discussed in the conference.
4. Character merchandising: This technique involves using characters on merchandise to enhance sale. The
most popular form of character merchandising is on items like Mugs, T-shirts etc. Walt Disney has used this to
get maximum benefit. In India, FMCG companies are widely implementing this strategy

Public Relation

Edward Louis Bernays is considered to be the founder father of modern public relations. According to him,
"public relations are an attempt by information, persuasion and adjustment to engineer public support for an
activity, cause, movement or institution" it is a set of communication efforts used to create and maintain
favourable relationships between and organisation and its publics

Importance/ Advantages of Public Relation

1. It has a strong impact on public awareness at a lower cost than advertising.

2. It helps in creating a good and favourable image of the company or its products in its publics.
3. It helps in the introduction of new products.
4. It helps to strengthen the employee morale.
5. It is more credible than advertising.
6. It provides employment to people.
7. It helps in keeping good and healthy relation.
8. It has the ability to reach specific groups.
9. It gives competitive edge to the company over its competitors
Major use public Relation (Public Relation Mix)

1. News and press release:

2. Speeches
3. Special events
4. Written materials
5. Audio - visual materials
6. Contribution to social service activities
7. Exclusive stories:
8. Social networking
Publicity

Publicity is a non-personal communication about an organisation or its products that is transmitted through a
mass medium in the form of news but is not paid for by the organisation,

Publicity refers to communication about an organisation, its products or policies through the media not paid
for by the organisation.

David Yale defined publicity as, "supplying information that is factual, interesting and news worthy to media
not controlled by you”.

Tools of Publicity

● News release:
● Feature article:
● Captioned photograph:
 ● Editorial film or tape:
● News conference:

Difference between Publicity and Advertising

Advertising Publicity

● it is informative and persuasive. ● It is only informative.

● It is a paid form of communication. ● It is a non-paid form of communication
● Needs identified sponsors. ● No need for any identified sponsor.
● Full control over message. ● No control over message.
● Less credible ● More credible.

Difference between Publicity and Public Relation

PERSONAL SELLING
According to American Marketing Association, Personal selling is the oral presentation in a conversation
with one or more prospective purchasers for the purpose of making sales; it is the ability to persuade the
people to buy goods and services at a profit to the seller and benefit to the buyer.
In the words of Garfield Blakde, ‖Salesmanship consists of winning the buyers confidence for the seller‘s
house and goods, thereby winning the regular and permanent customer.

FEATURES OF PERSONAL SELLING

1. It is one of the important tools for increasing sales.
2. It is a two way communication between salesmen and the prospect.
3. It is a persuading process to buy the goods and services.
4. The objective of personal selling is to protect the interest of both seller and buyer.
 5. The essence of personal selling is interpretation of product and service features in terms of
benefit and advantages.

PROCESS OF PERSONAL SELLING

1. Prospecting: It is the work of collecting the names and addresses of persons who are likely to buy the
firm‘s product of services. While collecting the details, ‗suspects ‘must be separated from ‗prospects ‘to
avoid waste of time.

2. Pre approach: Pre approach is to get more detailed facts about a specific individual to have effective
sales appeal on him or her. It is closer look of prospects like habits, financial status, social esteem, family
background, material status, tastes and preferences etc.

3. Approach: Approach means the meeting of the prospect in person by the salesmen. It is a face to face
contact with the prospect to understand him better.

4. Presentation and demonstration: A good sales presentation is one that not only gives all the benefits
that the prospect gets but also proves to the latter that he or she will better off after the product is bought
and used. An effective sales presentation demands the sales person use skills like presentation and
explanation.

5. Managing objections: This is the most important stage of personal selling. For every action of salesman
there is prospect‘s pro action or reaction, ie, approval or disapproval. An efficient sales man has the ability
to identify the reasons for raising objections by the prospects and the ways to overcome these objections.

6. Sale: If all the above stages have been concluded successfully, then the next stage is ultimate sale of the
product

MERITS OF PERSONAL SELLING

1. Flexibility and adaptability
2. Minimum waste
3. Acts as feedback
4. Creates lasting impression

LIMITATIONS OF PERSONAL SELLING:

1. It is expensive
2. Difficulty of getting right kind of salesman
3. More administrative problems

DISTRIBUTION

Distribution refers to bringing the product to the market and giving it to the final consumer.

The term distribution includes all movements of the product. According to Mossman and Norton, "Distribution
is the operation which creates time, place and form utility through the movement of goods and persons from
one place to another".
Components of Distribution System

Distribution system has two components or sub-divisions - (1) Physical distribution, and (2) Channel of
distribution.

Physical Distribution

Physical distribution is a broad range of activities concerned with efficient movement of finished goods from
the end of the production line to the consumer. In the words of AMA, "Physical distribution is moving of
finished products from one end of a production line to consumers"

Physical Distribution Activities

1. Order processing
2. Inventory management
3. Material handling
4. Storage and warehousing
5. Packaging
6. Transportation
Order Processing: Order Processing is an important function of physical [Link] is the receipt and
transmission of sales order information. Efficient order processing facilitates product flow. There are three
main tasks in order processing. They are order entry, order handling, and order delivery.

Inventory Management: This involves developing and maintaining adequate product items that meet
customers' needs. When very few products are held in inventory, it will result in stock out or shortage of
products. This causes lower sales, loss of customers, brand switching etc. When too many products are carried,
costs will increase due to over investment in inventory,

Material Handling: Material handling (also known as physical handling of products) is important for efficient
warehousing and transportation. The company has to decide the methods for handling goods in factory,
warehouse, and transport terminals.

Storage and Warehousing: Warehousing refers to storage of products until they are needed by channel
members. Thus it creates time utility.

Packaging: Packaging means placing products in containers or covering them with wrappers for protection and
convenience

Transportation: Transportation helps an organisation to exploit market opportunities. Transportation means

movement of goods and persons from one place to another

Channel of Distribution or Marketing Channels (or Distribution Channels)

The word 'Channel' is derived from the French word 'Canal'. Canal means an artificial path- way used for
transport and irrigation. In the field of marketing, channel of distribution means the path or network or the
pipeline through which the products are made available to the consumers, thus providing time and place
utility.

In the words of Kotler, “Channel is a set of independent organizations involved in the process of making a
product or service available for use of consumption"
Difference between Physical Distribution and Channel of Distribution

Physical distribution is a broader concept. It includes channel of distribution. Physical distribution is concerned
with transportation, storage, warehousing, packing etc. It is a technical function in the sense that it ensures
availability of product at the right place, at the right time and in the right quantity. Channel of distribution
refers to the process or intermediaries through which goods move from the producer to the ultimate
consumer. It is the path or route through which goods flow to the consumers. Channel of distribution is only a
part of physical distributions

Middlemen in Distribution (Types of Channels of Distribution)

In today's. Economy, most producers do not sell their products directly to the final consumers. In many cases
they will leave the task of distribution in the hands of some specialised persons. These specialised persons
working between the producers and consumers and help in the distribution of products are called middlemen.
They act as intermediaries between the producer and consumer.

Types of Middlemen

1. Agent Middlemen: Agent Middlemen are those channel members who never take title to goods. They
usually do not take possession of goods. They merely assist manufacturers, merchant middleman, and
consumers in carrying out transactions of sale and purchase. They only bring buyers and sellers together in
order to facilitate exchange.

2. Merchant Middlemen: Merchant Middlemen are those who take title to goods with a view to selling them
at profit. They help in the distribution of goods by acting as intermediaries between manufacturers and
consumers. Wholesalers and retailers are the important merchant middlemen.

3. Facilitators: Facilitators are those who assist in the performance of distribution but neither take title to
goods nor undertake purchases or sales, e.g., transportation companies, independent warehouse, banks,
advertising agencies etc.

Wholesalers

Wholesaler is the first intermediary in the channel of distribution. He is a trader who deals in large quantity. He
purchases the goods from manufacturer in bulk quantity and sells it to retailers in small quantity. Thus he
stands in between the manufacturer and the retailer. He generally deals in one or a few classes of goods.

Jobbers

Jobber is a special type of wholesaler. He is one who operates on a smal scale and sells only to retailers or
institutions. For example, rack jobbers are small independent wholesalers who operate from a truck, supplying
convenience stores with snack foods, and drinks on a regular basis

Retailers

The word 'Retail' is derived from the French word with the prefix re and the verb tailer meaning to cut again.
Dictionaries define retailing as "the sale of goods in small quantities to ultimate consumers". A wholesaler buys
goods in large quantity and cuts the bulk into small lots and sells the lots to retailers. The retailer cuts them
again into small quantities and sells them to ultimate consumers. Thus, the retailer works in between
wholesaler and consumer