Principles of Marketing

Neeru Kapoor
Associate Professor
Department of Commerce
Delhi College of Arts and Commerce
University of Delhi

Delhi-110092
2014
PRINCIPLES OF MARKETING
Neeru Kapoor

© 2014 by PHI Learning Private Limited, Delhi. All rights reserved. No part of this book may be reproduced in
any form, by mimeograph or any other means, without permission in writing from the publisher.

ISBN-978-81-203-4889-9

The export rights of this book are vested solely with the publisher.

Published by Asoke K. Ghosh, PHI Learning Private Limited, Rimjhim House, 111, Patparganj Industrial
Estate, Delhi-110092 and Printed by Raj Press, New Delhi-110012.
 Contents

Preface  xvii
Acknowledgements  xix

1 MARKETING—AN INTRODUCTION 1–29

1.1 DEFINITION OF MARKETING   2
1.2 CORE CONCEPTS IN MARKETING   3
1.2.1 The Concept of Need, Want and Demand   3
1.2.2 The Concept of Product   4
1.2.3 Value and Satisfaction   4
1.2.4 Exchange and Transaction   4
1.2.5 The Concept of a Market   5
1.2.6 The Concept of a Marketer   6
1.3 CHARACTERISTICS OF MARKETING   6
1.3.1 Economic Activity   6
1.3.2 Consumer Oriented Philosophy   6
1.3.3 Integrated Approach   6
1.3.4 Focuses on Target Market   7
1.3.5 Dynamic and Competitive   7
1.3.6 Aggressive Promotional Efforts   7
1.3.7 Social and Managerial Process   7
1.3.8 Involves Special Skills and Abilities   7
1.3.9 Improving Standard of Living of Society   7
1.3.10 Relationship Building   7
1.3.11 Universally Applicable Activity   7
1.3.12 Ensuring Profit with Customer Satisfaction   7
1.4 MARKETING CONCEPTS OR EVOLUTION STAGES OF MARKETING   8
1.4.1 Stage I: The Production Concept/the Production Stage/or the Production
Orientation  9
1.4.2 Stage II: The Product Concept/the Product Stage/the Product Orientation   9
1.4.3 Stage III: The Selling Concept/the Selling Stage/the Selling Orientation   10

iii
iv l Contents

1.4.4 Stage IV: The Marketing Concept/the Marketing Stage/the Marketing

Orientation  11
1.4.5 Stage V: The Societal Marketing Concept/the Societal Marketing Stage/the Societal
Marketing Orientation   12
1.5 DIFFERENCE BETWEEN SELLING, MARKETING AND SOCIETAL
MARKETING  14
1.6 PRESENT DAY IMPORTANCE OF MARKETING   16
1.6.1 From the Point of View of a Business Enterprise/Manufacturer   16
1.6.2 From the Customer’s Point of View   17
1.6.3 From Society’s Point of View   17
1.7 LIMITATIONS OF MARKETING   18
1.7.1 Social Effects of Marketing   19
1.7.2 Economic Effects of Marketing   19
1.7.3 Ethical Effects of Marketing   20
1.8 THE CONCEPT OF MARKETING MIX   20
1.8.1 Product Mix   22
1.8.2 Price Mix   22
1.8.3 Promotion Mix   23
1.8.4 Distribution Mix   23
1.9 NEW CONCEPTS IN MARKETING   25
LET US SUM UP   27
QUESTIONS TO CHECK YOUR PROGRESS   28
Short Answer Questions   28
Long Answer Questions   28

2 MARKETING ENVIRONMENT 30–42

2.1 MICRO ENVIRONMENT VARIABLES   31
2.1.1 Suppliers  31
2.1.2 Market Intermediaries   32
2.1.3 Customers  32
2.1.4 Competitors  32
2.1.5 Public  32
2.2 MACRO-ENVIRONMENTAL VARIABLES   33
2.3 IDENTIFYING AND RESPONDING TO THE MAJOR
MACRO-ENVIRONMENTAL FORCES  33
2.3.1 Demographic Environment   34
2.3.2 Economic Environment   36
2.3.3 Natural Environment   37
2.3.4 Technological Environment   37
2.3.5 Political and Legal Environment   38
2.3.6 Socio-Cultural Environment   38
2.4 ENVIRONMENTAL SCANNING AND ANALYSIS   39
2.4.1 Reasons for Conducting Environmental Scanning and Analysis   40
LET US SUM UP   40
QUESTIONS TO CHECK YOUR PROGRESS   41
Short Answer Questions   41
Long Answer Questions   41
 Contents l v

3 MARKETING INFORMATION SYSTEMS AND

MARKETING RESEARCH 43–57
3.1 REASONS FOR MANAGING INFORMATION   44
3.2 INTERNAL REPORTING SYSTEMS   45
3.2.1 The Order-to-Payment Cycle   45
3.2.2 Sales Information Systems   45
3.3 MARKETING INTELLIGENCE SYSTEM   46
3.3.1 Train and Motivate Sales Force   46
3.3.2 Motivate Dealers and Distributors   47
3.3.3 Gather Knowledge about Competitor’s Moves   47
3.3.4 Collect Customer’s Feedback   47
3.3.5 Purchase Information   47
3.3.6 Establish a Marketing Information Centre   47
3.4 MARKETING MODELS   47
3.5 MARKETING RESEARCH SYSTEM   48
3.5.1 Designing the Market Research Brief or Design   48
3.5.2 Suppliers of Marketing Research   49
3.5.3 The Marketing Research Process   49
3.5.4 Barriers to Effective Marketing Research   55
LET US SUM UP   56
QUESTIONS TO CHECK YOUR PROGRESS   57
Short Answer Questions   57
Long Answer Questions   57

4 CONSUMER BUYING BEHAVIOUR 58–82

4.1 WHY SHOULD MARKETERS STUDY CONSUMER BUYING
BEHAVIOUR  59
4.1.1 Clear Cut Identification of Consumer Needs and Wants   60
4.1.2 Understanding Consumers’ Perceptions   60
4.1.3 Knowing Consumers’ Buying Motives   60
4.1.4 Shopping and Buying Pattern   60
4.1.5 Intensive Competition   60
4.1.6 Awareness and Consciousness amongst the Customers   61
4.1.7 Differences in Purchasing Power   61
4.1.8 Willingness to Spend   61
4.2 A MODEL OF CONSUMER BUYING BEHAVIOUR   61
4.3 MAJOR FACTORS INFLUENCING BUYING BEHAVIOUR   62
4.3.1 Cultural Factors   62
4.3.2 Social Factors   64
4.3.3 Personal Factors   65
4.3.4 Psychological Factors   67
4.4 CONCEPT OF BUYING MOTIVES   69
4.4.1 Variations in Buying Motives   69
4.4.2 Knowledge of Buying Motives   70
4.4.3 Kinds of Buying Motives   70
vi l Contents

4.4.4 Various Types of Buying Roles   74

4.4.5 The Buying Decision Process   74
4.4.6 Types of Consumer Buying Behaviour   77
LET US SUM UP   80
QUESTIONS TO CHECK YOUR PROGRESS   81
Short Answer Questions   81
Long Answer Questions   81

5 MARKET SEGMENTATION 83–100

5.1 CHARACTERISTICS OF MARKET SEGMENTATION   84
5.2 STEPS IN TARGET MARKETING   84
5.3 LEVELS OF MARKET SEGMENTATION   85
5.3.1 Level I—Market Segment   86
5.3.2 Level II—Niche Marketing   86
5.3.3 Level III—Local Marketing   86
5.3.4 Level IV—Individual Marketing   86
5.4 PATTERNS OF MARKET SEGMENTATION   87
5.4.1 Homogenous Preference   87
5.4.2 Diffused Preference   87
5.4.3 Clustered Preference   87
5.5 MARKET SEGMENTATION PROCEDURE   88
5.5.1 Step One—Survey Stage   88
5.5.2 Step Two—Analysis Stage   88
5.5.3 Step Three—Profiling Stage   88
5.6 BASES FOR SEGMENTING CONSUMER MARKETS   88
5.6.1 Geographic Segmentation Variables   89
5.6.2 Demographic Segmentation Variables   90
5.6.3 Psychographic Segmentation   91
5.6.4 Behavioural Segmentation   91
5.6.5 Multi Attribute Segmentation (Geo-Clustering)   93
5.7 ESSENTIALS FOR EFFECTIVE SEGMENTATION   93
5.8 MARKET TARGETING   93
5.9 PATTERN FOR MARKET TARGETING   94
5.9.1 Single Segment Concentration   94
5.9.2 Selective Specialisation   94
5.9.3 Product Specialisation   94
5.9.4 Market Specialisation   94
5.9.5 Full Market Coverage   94
5.10 PRODUCT POSITIONING   95
5.11 DIFFERENT POSITIONING STRATEGIES   95
5.11.1 Attribute Positioning   96
5.11.2 Benefit Positioning   96
5.11.3 Use or Application Positioning   96
5.11.4 User Positioning   96
5.11.5 Competitor Positioning   96
 Contents l vii

5.11.6 Product Leader Positioning   96

5.11.7 Quality or Price Positioning   96
LET US SUM UP   98
QUESTIONS TO CHECK YOUR PROGRESS   99
Short Answer Questions   99
Long Answer Questions   99

6 PRODUCT DECISIONS 101–130

6.1 COMPOSITION OF A PRODUCT   102
6.1.1 Core Product   102
6.1.2 Basic Product   103
6.1.3 Expected Product   103
6.1.4 Augmented Product   103
6.1.5 Potential Product   103
6.2 PRODUCT CLASSIFICATION   104
6.2.1 Tangibility and Durability   104
6.2.2 Consumer Goods Classification   105
6.2.3 Industrial Goods Classification   107
6.3 NEW PRODUCT DEVELOPMENT PROCESS   109
6.3.1 Idea Generation Stage   109
6.3.2 Idea Screening Stage   110
6.3.3 Concept Development and Testing Stage   110
6.3.4 Business Analysis Stage   110
6.3.5 Product and Marketing Mix Development Stage   110
6.3.6 Market Testing Stage   111
6.3.7 Commercialisation Stage   111
6.4 PRODUCT LIFE CYCLE   111
6.4.1 Theory of Diffusion and Adaptation   112
6.4.2 The Product Life Cycle Stages   113
6.4.3 Summary of the Product Life Cycle   118
6.5 PRODUCT MIX AND PRODUCT LINE   119
6.5.1 Product Mix   119
6.5.2 Product Line   119
6.5.3 Width of Product Mix   119
6.5.4 Length of Product Line   120
6.5.5 Depth of a Product Line   120
6.5.6 Constant Appraisal of Each Product/Brand in the Line   120
6.6 PACKAGING  121
6.6.1 Importance/Functions of Packaging   121
6.6.2 Requisites of a Good Package   123
6.7 BRANDING  123
6.7.1 Features of Branding   124
6.7.2 Characteristics of a Good Brand   125
6.7.3 Functions of Branding   125
6.7.4 Brand Equity   126
viii l Contents

6.7.5 High Brand Equity Provides a Number of Competitive Advantages   126

6.7.6 Brand-Strategy Decisions   127
6.8 LABELING  127
LET US SUM UP   127
QUESTIONS TO CHECK YOUR PROGRESS   128
Short Answer Questions   128
Long Answer Questions   129

7 PRICING DECISIONS 131–148

7.1 FACTORS AFFECTING THE PRICE   133
7.1.1 Selecting the Pricing Objectives   134
7.1.2 Determining the Demand of Goods   136
7.1.3 Estimating the Costs of the Product   136
7.1.4 Analysing Competitor’s Costs, Prices and Offers   137
7.1.5 Other Environmental Factors   138
7.2 SELECTING A PRICING METHOD   138
7.2.1 Cost-Based Pricing Methods   139
7.2.2 Market-Based Pricing Method   140
7.3 SELECTING THE FINAL PRICING METHOD   143
7.4 DEVELOPING A PRICING STRUCTURE   144
7.5 GEOGRAPHICAL PRICING POLICIES   144
7.6 PRICE DISCOUNTS AND ALLOWANCES   145
LET US SUM UP   146
QUESTIONS TO CHECK YOUR PROGRESS   147
Short Answer Questions   147
Long Answer Questions   148

8 PROMOTION STRATEGY 149–167

8.1 NEED/FUNCTION/IMPORTANCE OF PROMOTION   150
8.1.1 Increasing Distance between the Place of Production and Place of
Consumption  150
8.1.2 Promotion Affects the Demand and Demand Elasticity of the Product   151
8.1.3 Persuasion Function   151
8.1.4 Reminder Function   151
8.1.5 During the Period of Product Shortages as Well   151
8.1.6 Improve the Overall Standard of Living of People   151
8.1.7 To Overcome the Problem of Economic Recession   151
8.2 PROMOTIONAL TOOLS   151
8.2.1 Advertising  152
8.2.2 Personal Selling   153
8.2.3 Sales Promotion   154
8.2.4 Public Relations and Publicity   154
8.2.5 Direct Marketing   156
 Contents l ix

8.3 DETERMINING THE PROMOTION MIX   157

8.3.1 Factors Affecting Promotional Mix   157
8.4 INTEGRATED MARKETING PROMOTION   161
8.4.1 Reasons for Growing Importance of Integrated Marketing Promotion   162
LET US SUM UP   164
QUESTIONS TO CHECK YOUR PROGRESS   165
Short Answer Questions   165
Long Answer Questions   166

9 CHANNELS OF DISTRIBUTION 168–189

9.1 CHANNEL LEVELS   169
9.1.1 A Zero-Level Channel   169
9.1.2 A One-Level Channel   169
9.1.3 A Two-Level Channel   169
9.1.4 A Three-Level or Multilevel Channel   170
9.2 IMPORTANCE OF MIDDLEMAN   170
9.3 FUNCTIONS OF CHANNELS OF DISTRIBUTION   171
9.3.1 Research  171
9.3.2 Promotion  171
9.3.3 Negotiation  171
9.3.4 Contact  171
9.3.5 Financing  172
9.3.6 Risk-Taking  172
9.3.7 Transportation  172
9.3.8 Warehousing  172
9.4 FACTORS AFFECTING THE CHOICE OF DISTRIBUTION CHANNELS   173
9.4.1 Market Considerations   173
9.4.2 Product Considerations   174
9.4.3 Middlemen Considerations   175
9.4.4 Company Considerations   175
9.5 INTENSITY OF MARKET COVERAGE   176
9.5.1 Exclusive Distribution   176
9.5.2 Selective Distribution   176
9.5.3 Intensive Distribution   177
9.6 CHANNEL MANAGEMENT DECISIONS   177
9.6.1 Selecting the Channel Members   177
9.6.2 Motivating Channel Members   178
9.6.3 Evaluating and Modifying Channel Arrangements   179
9.7 TYPES OF MIDDLEMEN   179
9.7.1 Agent Middlemen   179
9.7.2 Merchant Middlemen   180
9.8 CHANNEL DYNAMICS   182
9.8.1 Vertical Marketing System (VMS)   182
9.8.2 Horizontal Marketing System (HMS)   182
9.8.3 Multichannel Marketing System (MMS)   183
 Principles Of Marketing

25%
OFF

Publisher : PHI Learning ISBN : 978812034 8899 Author : Neeru Kapoor

Type the URL : [Link]

Get this eBook