ST.

JOSEPHS COLLEGE OF ENGINEERING

MBA

MARKETING MANAGEMENT

SUBJECT CODE: MB1205

II SEMESTER

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UNIT I

INTRODUCTION

Consider a typical day in one’s life. We start our day with consumption of different sorts of products from
the moment we wake up in the morning to the time we go to bed. Most of the times we start our day by
taking a bath with the soap and the shampoo that we use. The breakfast we take might be a bread, butter,
milk, tea or juice. The cloth we drape in. We may be using public and private transport for commuting to
go to schools or workplace. The use of gadgets throughout the day, the television shows we watch for
entertainment, the books and newspaper or information material we read, the bed mattress we sleep on
and the list of products we use are endless. The entire day we consume different sorts of products. Have
we ever thought of where do these products come from? Who does manufacture them? How does the
product reach us and how have we come to know about the product?

Classes involved in the complete process of consumption as:

1. Manufacturer is someone who makes products in a factory; anything from a needle to a plane.

2. Marketer is someone who performs various activities to facilitate exchange of goods and services
between the producers or manufacturers and users (consumer) of the product.

3. End user is a person who ultimately uses or intends to use the product also known as consumer.

Firms undertake various activities to stimulate the demand of their products and earn profit by meeting
customers’ needs and wants. These firms perform various activities by the marketers to facilitate exchange
of goods and services between the producer and consumer called marketing activities.

The term marketing has been described by different people in different ways. For some it is a fun activity
of ‘shopping’, for some it is shopping along with entertainment. There are others who question, does
marketing mean selling? Some of us believe marketing starts after selling; they believe ‘selling’ is merely
where a salesman is required to sell. However, selling is a part of marketing, selling includes selling of
goods, services and ideas.

Marketing is a broader term and selling is one of the functions of marketing. Some people question does
marketing mean advertising? Marketing undoubtedly includes advertising; the main role of advertising
is to ‘communicate’. But marketing is much bigger than advertising. Does marketing mean distribution?
The answer is same as in the above two cases thus the product that reaches us is another function of the
marketer i.e. distribution function, but marketing is much bigger than this too. Some even believe that
marketing is a post-production activity. Marketing involves various activities that take place even before
the products are produced.

1.1 DEFINING OF MARKETING

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of
ideas, goods, and services to create exchanges that satisfy individuals and organizational objectives.

“Marketing is the economic process by which goods and services are exchanged between the maker and
the user, and their values determined in terms of money prices.”

“Marketing is a total system of interacting business activities designed to plan, promote and distributes
need-satisfying products and services to existing and potential customers.”

As per Philip Kotler, the marketing guru, marketing is a social and managerial process by which
individuals and groups obtain what they need and want through creating and exchanging products
and value with others.

American Marketing Association [AMA] defined as "the activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large."

Marketing Management:

Marketing management is defined as “the analysis, planning, implementation and control of programmes
designed to create build and purpose of achieving organizational objectives”.

Marketing management is ‘the art and science of choosing target markets and getting, keeping, and
growing customers through creating, delivering, and communicating superior customer value’.

Institute of Marketing Management, England, has defined Marketing Management as “Marketing

Management is the creative management function which promotes trade and employment by assessing
consumer needs and initiating research and development to meet them. Its co-ordinates the resourcesof
production and distribution of goods and services, determines and directs the total efforts required to sell
profitably to ultimate user.

Marketing Management is the process of management of marketing programs for accomplishing

organizational goals and objectives.

Marketing Management Involves:

 Setting of marketing goals and objectives,

 Developing the marketing plan,
 Organizing the marketing function,
 Putting the marketing plan into action and
 Controlling the marketing programme.
Marketing Management is both a science as well as an art. Those responsible for marketing should have
good understanding of the various concepts and practices in marketing, communication, and analytical
skills and ability to maintain effective relationship with customers, which will enable them to plan and
execute marketing plans.

1.1.1 Nature of Marketing:

Marketing is Customer-focused. Marketing intends to satisfy and delight the customer. The activities of
marketing must be directed and focused at e customer. Marketers can remain in customer mind if they are
provided value n quality, price, and benefits. Thus, marketers must allow customers to dictate product
specifications and quality standards.

Marketing must Deliver Value. Marketers have to track customer needs and competitors. The corporate
planning, processes, and people must be re-configured around the customer.

Marketing is Business. When customer is the focus of all activities marketer has not to search customers
to seek response to his products. customer group is decided for whom the product is prepared and
presented.

Marketing is surrounded by Customer Needs. Marketing starts with e identification of customer needs
and requirements. These are turned into probable features that might satisfy the basic needs. The portable
form of product is made out and presented before the customer for approval. The customer suggests
changes or improvements in the portable product and the nal product is brought before the customer.
1.1.2 Scope of Marketing

Goods: Physical goods constitute the bulk of most countries’ production and marketing effort. In
developing nations, goods—particularly food, commodities, clothing, and housing—are the mainstay of
the economy.

Services: Services include airlines, hotels, and maintenance and repair people, as well as professionals
such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable mix of
goods and services.

GOODS

SERVICES

IDEAS

INFORMA EXPERIENCE
TION

Scope
EVENTS
PLACES

PERSONS
PROPERTIES

ORGANISAZ
TION
Events: Marketers promote time-based events, such as the Olympics, trade shows, sports events, and
artistic performances.

Persons: Celebrity marketing has become a major business. Artists, musicians, CEOs, physicians, high-
profile lawyers and financiers, and other professionals draw help from celebrity marketers.

Properties. Properties are intangible rights of ownership of either real property (real estate) or financial
property (stocks and bonds). Properties are bought and sold, and this occasions a marketing effort by real
estate agents (for real estate) and investment companies and banks (for securities).

Organizations: Organizations actively work to build a strong, favorable image in the mind of their publics.
Philips, the Dutch electronics company, advertises with the tag line, “Let’s Make Things Better.”
Universities, museums, and performing arts organizations boost their public images to compete more
successfully for audiences and funds.

Information: The production, packaging, and distribution of information is one of society’s major
industries.6 Among the marketers of information are schools and universities; publishers of encyclopedias,
nonfiction books, and specialized magazines; makers of CDs; and Internet Web sites.

Ideas: Every market offering has a basic idea at its core. In essence, products and services are platforms
for delivering some idea or benefit to satisfy a core need.

1.1.3 FUNCTIONS OF MARKETING:

I Functions of exchange

Buying function- A manufacturer is required to buy raw materials for production purposes. Similarly, a
wholesaler has to buy goods from manufacturer for purposes of sales to retailers. A retailer has to sell the
goods to consumers. Thus functions of buying have to be performed at various levels.
Assembling function- Assembling is different and separate from buying. Buying involves transfer of
ownership of the goods from seller to the buyer: Whereas in assembling, goods are purchased from various
sources and assembled at one place to suit the requirements of the buyer.

Selling function- Selling involves transfer of ownership from seller to the buyer. Seller functions are vital
to the success of any firm. Its importance has been continuously increasing in all organization due to the
emergence of severe competition. Producing goods is easy but it is very difficult to sell them.

II Functions of physical Distribution

Transportation- It includes decision to be taken on mode of transport, service selection, freight

consolidation, carrier routing, vehicle scheduling, processing claims, etc

Inventory Management

Short-term sales forecasting

Product mix stocking points

Number, size and location of stocking points

Just in Time (JIT) or push or pull strategies

Warehousing

It includes the following functions:

Space determination

Stock layout and design

Stock placements

Material handling- (act of loading and unloading and moving goods within e.g. a factory especially using
mechanical devices ). It includes the following functions:

Equipment selection

Equipment replacement

Order picking procedure

Stock Storage and retrieval

III Functions of Facilities

Financing- The importance of extending liberal credit facilities as a selling tool cannot be underestimated.
This would necessarily involve higher working capital requirements. Hence arrangement of finance has
become an increasingly important function. Therefore, a marketer can plan for various kinds of function:
Short-term finance, medium-term finance and Long- term Finance. There are various sources of finance,
for example: banks, Credit societies, Co- operative Banks

Risk-taking- There are innumerable risks which a marketing enterprise has to bear in the process of
marketing of goods and services. Risks are due to unforeseen circumstances. Risks can be insured also.
for example: Risk due to fire and accidents may be covered by insurance. But the risks due to increased
competition, technological risks and business cycle risks cannot be insured

Standardization- Buyers and sellers always prefer to have standardized goods and services. This will
relieve buyers from examining the product and wasting time. That is why Standardization has now been
accepted as convenient and ethical basis of marketing.

After-sales service- The importance of after-sales service facilities as a marketing tool cannot be ignored.
Hence arrangement of after-sales service has become an increasingly important function. Therefore, a
marketer has to plan for after-sales service. For example, repairs, replacements, maintenance etc

1.1.4 Importance of marketing

Towards Society:

Standard of Living: Marketing is the creation and delivery of standard of living to the society by making
available the uninterrupted supply of goods and services to consumers at a reasonable price. Society
comprises of three classes of people i.e. rich, middle and poor. Everything which is used by these different
classes of people is supplied by marketing.

Creates Employment: Marketing is complex mechanism involving many people in one form or the other.
The major marketing functions are buying, selling, financing, transport, warehousing, risk bearing etc. In
each such function different activities are performed by a large number of individuals and bodies. Thus,
marketing gives employment to many people.

Helpful in Development of an Economy: Marketing is the key to sets the economy revolving. The
marketing organization, more scientifically organized, makes the economy strong and stable, the lesser the
stress on the marketing function, the weaker will be the economy.
Towards Company:

Helps in Transfer, Exchange and Movement of goods: Marketing makes goods and services available
to customers through various intermediaries like wholesalers and retailers etc. Marketing is helpful to both
producers and consumers.

Source of Income and Revenue: Marketing generates revenue by providing many opportunities in the
process of buying and selling the goods, by creating time, place and possession utilities. This income and
profit are reinvested in the concern, thereby earning more profits in future.

Source of new ideas: The concept of marketing is a dynamic concept. It has changed altogether with the
passage of time. Such changes have far reaching effects on production and distribution. With the rapid
change in tastes and preference of people, marketing.

1.1.5 Differences between selling and marketing:

SELLING MARKETING

Selling starts with seller Marketing starts with buyer

Selling based on existing activities Selling refers Marketing based on all activities
goods and services What is offered? is enough
Marketing refers customer satisfaction
Packing is enough for product protection Cost What should be offered? will think
determines price Packing is for convenient to customers
Consumer determines price
Customer is last
Customer is first
1.2 CORE CONCEPTS IN MARKETING

Marketing Management is a social and managerial process by which individuals or firms obtain what
they need or want through creating, offering, exchanging products of value with each other. the total
marketing can be fulfilled the core concepts of business.

[Link]/ want/ demand: Need: It is state of deprivation of some basic satisfaction. eg.- food, clothing,
safety, shelter. Want: Desire for specific satisfier of need. eg.- Indians needs food – wants paneer tikka
/ tandoori chicken. Americans needs food- wants hamburger / French fries. Demand: Want for a specific
product backed up by ability and willingness to buy. eg.- Need – transportation. Want – Car (say,
Mercedes)……but able to buy only Maruti. Therefore, Demand is for Maruti.

[Link]- goods/ services/ place: Product is anything that can satisfy need / [Link] components are
Physical Good., Service,[Link]. Fast food- burger / pizza. Physical Good – material eaten. Service –purchase
of raw material/ cooking, Idea – speed of computer / processing power.

[Link]/ cost/ satisfaction: Decision for purchase made based on value / cost satisfaction delivered by
product / offering..Product fulfills / satisfies Need / Want. Value is products capacity to satisfy needs / wants
as per consumer’s perception or estimation. Each product would have a cost / price elements attached

Satisfaction – Estimated in terms of time lead & travel comfort.

VALUE– Products capacity to satisfy.

COST– Price of each products.

[Link]/ Transaction: Exchange: – The act / process of obtaining a desired product from someone by
offering something in return. For exchange potential to exist, the following conditions must be fulfilled.
There must be at least two parties. Each party has something of value for other party. Each party is
capable of communication & delivery. Each party is free to accept / reject the exchange offer. Each party
believes it is appropriate to deal with the other party.

Transaction: – Event that happens at the end of an exchange. Exchange is a process towards an agreement.
When agreement is reached, we say a transaction has taken place.

Barter transaction. Monetary Tran action. At least two things of value. Condition agreed upon. Time of
agreement. Place of agreement. May have legal system for compliance.

[Link]/ Networking: Relationship marketing:- It’s a pattern of building long term satisfying
relationship with customers, suppliers, distributors in order to retain their long term performances and
business. Achieved through promise and delivery of ,high quality, good service, fair pricing, over a period
of time.

Marketing Network: It is made up of the company and its customers, employees, suppliers, distributors,
advertisement agencies, retailers, research & development with whom it has built mutually profitable
business relationship. Competition is between whole network for market share and NOT between
companiesalone.

[Link]: A market consists of all potential customers sharing particular need / want who may be willing
and able to engage in exchange to satisfy need / want. Market Size = fn (Number of people who have
need / want; have resources that interest others, willing or able to offer these resources in exchange for
what they want.

[Link]/ prospects: Working with markets to actualize potential exchanges for the purpose of
satisfying needs and wants. One party seeks the exchange more actively, called as “ Marketer”, and the
other party is called “Prospect”. Prospect is someone whom marketer identifies as potentially willing and
able to engage in exchange. Marketer may be seller or buyer. Most of time, marketer is seller. A marketer
is a company serving a market in the face of competition. Marketing Management takes place when at
least one party to a potential exchange thinks about the means of achieving desired responses from other
parties.

II. MAIN CONCEPTS OF MARKETING

Studies reveal that different organizations have different perception of marketing and these different
perceptions have led to theformation of different concept of marketing studies also reveal that at least
five distinct concept of marketing have guided and still guiding business firms.
Production Concept: Those companies who believe in this philosophy think that if the goods / services
are cheap and they can be made available at many places, there cannot be any problem regarding sale.
Keeping in mind the same philosophy these companies put in all their marketing efforts in reducing
the cost of production and strengthening their distribution system. In order to reduce the cost of
production and to bring it down to the minimum level, these companies indulge in large scale production.

Product Concept: Those companies who believe in this philosophy are of the opinion that if the quality
of goods or services is of good standard, the customers can be easily attracted. The basis of this thinking
is that the customers get attracted towards the products of good quality. On the basis of this philosophy
or idea these companies direct their marketing efforts to increasing the quality of their product.

Selling Concept: Those companies who believe in this concept think that leaving alone the customers
will not help. Instead there is a need to attract the customers towards them. They think that goods are
not bought but they have to be sold.

Marketing Concept: Those companies who believe in this concept are of the opinion that success can be
achieved only through consumer satisfaction. The basis of this thinking is that only those goods /
service should be made available which the consumers want or desire and not the things which you
can do.

Societal Marketing Concept: This concept stresses not only the customer satisfaction but also gives
importance to Consumer Welfare / Societal Welfare. This concept is almost a step further than the
marketing concept. Under this concept, it is believed that mere satisfaction of the consumers would not
help and the welfare of the whole society has to be kept in mind.

1.3 EVOLUTION OF MARKETING

The evolution of marketing is composed of a series of responses to major external challenges. Pre industrial
marketing, based around craft production and personal relationships with local customers, was challenged
by the urbanization and mechanization of the industrial revolution. The industrial era created expanding
markets which required an emphasis on production, logistics and selling to get the goods to the customer.
In the late 1950s, the challenge of increasingly saturated and competitive markets led to the birth of an
explicit marketing philosophy.

Marketing is a relatively latest discipline having emerged in the early 1900s. Prior to this time most issues
that are now commonly associated with marketing were either assumed to fall within basic concepts of
economics (e.g., price setting was viewed as a simple supply/demand issue), advertising (well developed
by 1900), or in most cases were simply not yet explored (e.g., customer purchase behavior, importance of
distribution partners). Lead by marketing scholars from several major universities, the development of
marketing was in large part motivated by the need to dissect in greater detail relationships and behaviors
that existed between sellers and buyers. In particular, the study of marketing lead sellers to recognize that
adopting certain strategies and tactics could significantly benefit the seller/buyer relationship. In the old
days of marketing (before the 1950s) this often meant identifying strategies and tactics for simply selling
more products and services with little regard for what customers really wanted. Often this lead companies
to embrace a “sell-as-much-as-we-can” philosophy with little concern for building relationships for the
long term.

But starting in the 1950s, companies began to see that old ways of selling were wearing thin with
customers. As competition grew stiffer across most industries, organizations looked to the buyer side of
the transaction for ways to improve. What they found was an emerging philosophy suggesting that the key
factor in successful marketing is to understanding the needs of customers. This now famous “marketing
concept” suggests marketing decisions should flow from first knowing the customer and what they want.
Only then should an organization initiate the process of developing and marketing products and services.
The marketing concept continues to be at the root of most marketing efforts, though the concept does have
its own problems (e.g., doesn’t help much with marketing new technologies) a discussion of which is
beyond the scope of this tutorial. But overall marketers have learned they can no longer limit their
marketing effort to just getting customers to purchase more. They must have an in-depth understanding
of who their customers are and what they want.

1.4 MARKETING PLANNING PROCESS

The Marketing Planning process outlines the plan of a company as to how they will make their product
successful. Marketing planning process was introduced as “to provide the companies with strategies as to
where they want to see their business in future“. It gives you an overview of the target market and market
segmentation. The most important part of this process is to maintain proper documentation of strategies.

The planning process of Marketing makes it important for the management to invest some of their time in
attaining the opportunities for the firm by utilizing the resources in a productive way. Currently, the trend
of digital marketing is at a pace so it is important to emphasize the proper planning of marketing in order
to cover the major market. But implementing a proper plan, the risk of failure can also be avoided and the
target market can easily be satisfied.

Steps for Market Planning Process:

The steps of the planning process are usually similar for every business with minor changes according to
the conditions:

1. Developing the action plan

Setting up the goals and vision

Setting up the mission statement

Objectives of the firm

The first and foremost step towards making a product successful is to make a careful observation of the
objective of the firm. Hence the first stage of the planning process of marketing is to set the goal which
you like to accomplish. One should be aware of your final goal, the vision of the company regarding the
product depicts what the company is for and where they want to reach.

2. Monitor your current position

Through marketing audit and monitoring

SWOT analysis

The second step entails the observation of the current situation. This is a subset of long term and strategic
planning processes in order to observe the current situation, the resources company holds depict the
direction in which the company is moving.

Draw the layout of the resources; assess the in addition to assessing the internal and external factors.
Identify the risk and favors associate with introducing the product. Review the market, target the
appropriate one and divide it into different segments through resources so that you can penetrate the
product in the market more clearly.

Conduct a SWOT analysis of the business which involves different internal and external facets involved.
Through this, you can analyze and improve the current situation. Design the inner view of the firm which
will define that you understand the need of your customer; you know whom you are targeting.

Perform market research to understand your competitor and understand the fact that which needs of the
consumer are necessary to be fulfilled, what depreciation is connected to it and how much needs will
change with the passage of time.

While implementing the planning process you have to observe the current situation in order to consider
certain external facets that are directly linked to the internal possibilities and performance of the firm. Such
external facets are directly connected to the internal facets and the level of the business which are legal
aspects, political scenario and competition in the market while we are moving, economy, culture and
various demographics.

3. Developing a strategy for Marketing

Marketing Mix

Designing objectives and strategy for marketing

Vehicles and sources of communication

Observe the alternative strategies and processes for marketing available

This involves making the marketing strategies and objectives in order to gain the overall objective of the
firm. This involves observing the marketing tactics which fit the best for the promotion of the business.
This step will be useful in making the selection of various strategies that will be helpful in approaching the
target market.
This will help you in guiding you towards the segment of the market which you have selected to reach.
This will also guide you to how you will reach the desired market by selecting the most appropriate type
of communication means and way of positioning your product.

Hence through properly involving the marketing efforts of all the known marketers such as Kotler, Porter,
Ansoff one can design a single market report in which they have monitored how they will introduce the
product and the vehicle they will be utilizing.

With the help of the components of the marketing mix, one can design the marketing strategy in order to
gain a successful competitive advantage. Relying on the core competencies of the company one decides
their needs to be the first-mover advantage or incorporate any strategy and how you will implement your
marketing efforts in order to target the desired customer.

4. Employing, executing and evaluating the planning process

Make the budget

Define the resources and implement

Analyzing and overviewing

This is the milestone of every planning process which involves the operational level activities. In this, you
will allocate the resources, design the budget for implementation of the discussed processes and design
some action plans. One has to monitor the process consistently and observe the plan based on the opinion
and feedback of the customer. Hence make a regular review of the promotional plan.

1.5 SCANNING BUSINESS ENVIRONMENT

The marketing environment surrounds and impacts upon the organization. The key perspectives on
the marketing environment, namely the 'macro-environment,' the 'micro- environment', the 'internal
environment' and the 'external environment'.
1. INTERNAL ENVIRONMENT:

Refers to factors existing within a marketing firm. It can alter or modify factors as its personnel, physical
facilities, organization and marketing function (marketing mix) to suit the environment.

Internal factors that influence the marketing function.

Top Management: The organizational structure, Board of Director, professionalization of

[Link]. Factors like the amount of support the top management enjoys from different levels of
their implementation.
Finance and Accounting: Accounting refers to measure of revenue and costs to help the marketing and
to know how well it is achieving its objectives. Finance refers to funding and using funds to carry out the
marketing plan. Financial factors are financial polices, financial position and capital structure.

Research and Development : Designing the product safe and attractive. They are technological
capabilities, determine a company ability to innovate and compete.

Manufacturing : Responsible for producing the desired quality and quantity of products. Factors which
influence the competitiveness of a firm are production capacity technology and efficiency of the productive
apparatus, distribution logistics etc.,

Purchasing : Procurement of goods and services from some external agencies. It is the strategic activity
of the business.

Company Image and Brand Equity : Image of the company refers in raising finance, forming joint
ventures or other alliances soliciting marketing intermediaries, entering purchase or sales contract,
launching new products etc.

In organization, the marketing resources like organization for marketing, quality of marketing, brand equity
and distribution network have direct bearing on marketing efficiency. They are important for new product
introduction and brand extension, etc..
2. EXTERNAL ENVIRONMENT:

External factors are beyond the control of a firm; its success depends to a large extent on its adaptability
to the environment. External marketing environment consists of : a) Macro environment, and b) Micro
environment

a) MICRO ENVIRONMENT:
Environmental factors that are in its proximity. The factors influence the company’s non-capacity to
produce and serve the market. The factors are :

• Suppliers: suppliers to a firm can also alter its competitive position and marketing capabilities.
These are raw material suppliers, energy suppliers, suppliers of labour and capital. Relationship
between suppliers and the firm epitomizes a power equation between them.

• Market Intermediaries : Every producer has to have a number of intermediaries for promoting,
selling and distributing the goods and service to ultimate consumers. Intermediaries are middleman
(wholesalers, retailers, agent’s etc. ), distributing agency market service agencies and financial
institutions. Customers : classified as :

• Ultimate customers: customers may be individual and householders.

• Industrial customers: customers are organization which buy goods and services for producing
other goods and services for the purpose of other earning profits or fulfilling other objectives.

• Resellers: Intermediaries who purchase goods with a view to resell them at a profit. (wholesalers,
retailers, distributors), etc.

• Government and other non-profit customers: purchase goods and services to those for whom
they are produced, for their consumption in most of the cases.

• International customers: Individual and organizations of other countries who buy goods and
services either for consumption or for industrial use. Such buyers may be consumers, producers,
resellers, and governments.

• Competitors: who sell the goods and services of the same and similar description, in the same
market. Apart from competition on price, there are like product differentiation. This will bring
confidence and better results.

• Public: Duty of the company to satisfy the people at large along with its competitors and the
consumers. It is necessary for future growth. The action of the company do influence the other
groups forming the general public for the company..
b) MACRO ENVIRONMENT:

Factors act external to the company and are quite uncontrollable. These factors do not affect the marketing
ability of the concern directly but indirectly the influence marketing decisions of the company. Factors that
affect the company’s marketing decisions :

• Demographic Forces: Marketer monitor the population because people forms markets. Marketers
are keenly interested in the size and growth rate of population in different cities, regions, and
nations ; age distribution and ethnic mix ; educational levels; households patterns; and regional
characteristics and movements.

• Economic Factors: Economic environment consists of macro-level factors related to means of

production and distribution that have an impact on the business of an organization.

• Physical Forces: Components of physical forces are earth’s natural renewal and non-renewal
resources. Natural renewal forces are forest, food products from agriculture or sea etc. Non-
renewal natural resources are finite such as oil, coal, minerals, etc. Both of these components quite
often change the level and type of resources available to a marketer for his production.

• Technological Factors: Technological environment consists of factors related to knowledge

applied, and the materials and machines used in the production of goods and services that have an
impact on the business of an organization.

• Political and Legal Forces: Developments in political and legal field greatly affect the marketing
decisions. sound marketing decision cannot be taken without taking into account, the government
agencies, political party in power and in opposition their ideologies, pressure groups, and laws of
the land. Laws affect production capacity, capability, product design, pricing and promotion.
Government in almost all the country intervenes in marketing process irrespective of their political
ideologies.

• Social and Cultural Forces: Concept has crept into marketing literature as an alternative to the
marketing concept. The social forces attempt to make the marketing socially responsible. It means
that the business firms should take a lead in eliminating socially harmful products and produce only
what is beneficial to the society. These are numbers of pressure groups in the society who impose
restrictions on the marketing process.
1.5.1 VALUE CHAIN

Companies are in constant competition to keep their current customers and win new ones. That’s
why every organization needs to find ways to offer consumers more value. To grow despite the
competition, businesses like yours need to perform value marketing, showing customers the
benefits they’ll receive from your product.
But how do you identify that value? That’s where value chain analysis comes in. Keep reading to
learn what value chains are, how to analyze your value chain, and how to use your value chain in
marketing.
A value chain is the collection of steps a company takes to convert products from concepts to
market-ready solutions. The company’s goal is to find processes that set it apart from competitors.
The company implements these processes to build value and sell its solutions and services for a
profit. Each step of the value chain is supposed to build more value for the company than it costs
to perform. That gap is where profit is found.
Every company has a value chain. Only some have taken the time to actually study these chains,
however. The purpose of studying a value chain is to help a company make money by identifying
strengths and weaknesses in its current business models. As a result, it can become more efficient
by reducing unnecessary costs and producing more value. Essentially, studying your value chain
can help make your company more profitable by increasing income and reducing expenses.
1.1. Components of a Value Chain
While every company’s individual value chain will look different, they all can be broken down
into primary and secondary activities. Each step of an individual value chain falls under one or
more of these activities. Understanding how these activities are linked can help you examine your
company’s actual sources of value.
1.2. Primary Activities
Value chains have five primary activities. These are the main activities that capture value —
without them, a company can’t actually make a profit. These five activities are:
1. Inbound logistics: This is the management and acquisition of a company’s raw
materials, including supplier relationship management.
2. Operations: This is the process of converting raw materials into a completed product or
service.
3. Outbound logistics: This is the distribution of a product or service to customers, such as
shipping physical products or providing services at a physical location.
4. Marketing and sales: This includes targeting customers to build demand and make sales
through value selling.
5. Service: This encompasses things that generally enhance the consumer experience, such
as offering repairs, refunds, and customer service.
These five activities as a whole are intended to create value for the company that’s greater than the
cost of performing them. As a result, they lead to profit for the business. For example, operations
convert raw materials into the products customers want to buy, raising their value. Meanwhile,
marketing and sales can convince more customers to buy products at higher price points, increasing
the value of each sale.
1.3. Secondary Activities
After the primary activities, companies consider secondary activities in their value chain. These
four activities include:
1. Procurement: This is the acquisition of resources for the business, including negotiating
with vendors. It’s deeply connected to inbound logistics.
2. Human resources: This includes hiring and developing employees to fulfill business
needs. Human resource management underpins all other activities.
3. Infrastructure: Infrastructure includes all the systems and structures the company needs
to function, from physical property to accounting and legal operations.
4. Technological development: This includes the design and development of techniques,
processes, and tools to improve the business. It’s heavily connected to all the primary activities for
companies that are working to improve.

These four activities are intended to support the primary activities of a company. They don’t
generate value on their own, but they multiply the value companies receive from primary activities.
For instance, excellent procurement can decrease the cost of operations. Similarly, infrastructure
can improve inbound and outbound logistics, leading to a higher profit margin overall.
1.4. Benefits of Value Chains
Value chains already exist — you don’t need to implement a value chain because it’s already
present. However, you can manage and study your value chain. Take control and see many
different benefits, including:
 Improved product planning and development: Provide a clear view of your
company’s competitive advantages.
 More effective guided proposals: Provide information about your actual costs.
 Standardized processes: Use the most efficient methods to streamline systems and
operations.
 Reduced costs across the value chain: Identify unnecessary expenses.
 Improved profitability: Capture more value at each step.
1.5.2 CORE COMPETENCIES

A resource is an asset, process, skill, or knowledge controlled by the corporation” (Wheelen &
Hunger, 2008,).

It (resource) is a strength if it provides the firm with a competitive advantage.

It becomes a weakness if the firm does not possess the resource that other competitors do
possess, or is necessary for survival in the industry

Capabilities: refer to an organisation`s ability to exploit its resources through organizational

processes & routines to turn inputs into outputs.

Competency: is cross functional integration & coordination of capabilities e.g. a competency in

NPD in a division may be as a result of integrating HR, marketing, R&D & production capabilities
in that division.

Core Competence: Collection of capabilities that cross divisional boundaries and is something
the corporation does exceedingly well.

Distinctive Competencies: core competencies that are unique and superior to those of
competition.

E.g. 3M is known for their distinctive competence in innovation.

Competitive advantage is a firm’s ability to outperform its competitors (earn higher profits).

The source of competitive advantage is value creation for customers.

Sustained competitive advantage comes from maintaining higher profits than competitors over
long periods of time.
 1.5. 3. PESTEL ANALYSIS

PESTEL analysis or more recently named PESTELE is a framework or tool used by marketers to
analyse and monitor the macro-environmental (external marketing environment) factors that have
an impact on an organisation. The result of which is used to identify threats and weaknesses which
are used in a SWOT analysis.
PESTEL stands for:

 P – Political
 E – Economic
 S – Social
 T – Technological
 E – Environmental
 L – Legal
 E - E thical (NEW)

All the external environmental factors (PESTEL factors)

Political Factors:
These are all about how and to what degree a government intervenes in the economy. This can
include – government policy, political stability or instability in overseas markets, foreign trade
policy, tax policy, labour law, environmental law, trade restrictions and so on.

It is clear from the list above that political factors often have an impact on organisations and how
they do business. Organisations need to be able to respond to the current and anticipated future
legislation, and adjust their marketing policy accordingly.

Economic Factors
 Economic factors have a significant impact on how an organisation does business and also how profitable they
are. Factors include – economic growth, interest rates, exchange rates, inflation, disposable income of
consumers and businesses and so on.

These factors can be further broken down into macro-economical and micro-economical factors. Macro-
economical factors deal with the management of demand in any given economy. Governments use interest rate
control, taxation policy and government expenditure as their main mechanisms they use for this.

Micro-economic factors are all about the way people spend their incomes. This has a large impact on B2C
organisations in particular.

Social Factors
Also known as socio-cultural factors, are the areas that involve the shared belief and attitudes of the population.
These factors include – population growth, age distribution, health consciousness, career attitudes and so on.
These factors are of particular interest as they have a direct effect on how marketers understand customers and
what drives them.

Technological Factors
We all know how fast the technological landscape changes and how this impacts the way we market our
products. Technological factors affect marketing and the management thereof in three distinct ways:

 New ways of producing goods and services

 New ways of distributing goods and services
 New ways of communicating with target markets
Environmental Factors
These factors have only really come to the forefront in the last fifteen years or so. They have become important
due to the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable
company, carbon footprint targets set by governments (this is a good example where one factor could be classed
as political and environmental at the same time). These are just some of the issues marketers are facing within
this factor. More and more consumers are demanding that the products they buy are sourced ethically, and if
possible from a sustainable source.

Legal Factors
Legal factors include - health and safety, equal opportunities, advertising standards, consumer rights and laws,
product labelling and product safety. It is clear that companies need to know what is and what is not legal in
order to trade successfully. If an organisation trades globally this becomes a very tricky area to get right as each
country has its own set of rules and regulations.
Ethical Factors
The most recent addition to PESTEL is the extra E - making it PESTELE or STEEPLE. This stands for ethical,
and includes ethical principles and moral or ethical problems that can arise in a business. It considers things
such as fair trade, slavery acts and child labour, as well as corporate social responsibility (CSR), where a
business contributes to local or societal goals such as volunteering or taking part in philanthropic, activist, or
charitable activities.

Big brands often take part in CSR - examples include:

 Innocent's 'big knit' campaign creating hats for their drinks to raise money for Age UK
 McDonalds' youth programme to provide pre-employment training and development
 Barclay's Digital Eagles programme which provides training on coding and
information on digital skills for staying safe online & improving confidence

1.5.4 SWOT ANALYSIS

A key component to marketing and strategic planning is conducting a SWOT analysis. SWOT is the acronym
for analyzing Strengths, Weaknesses, Opportunities, and Threats, and is an effective tool for developing an
overall marketing strategy, or for planning individual campaigns.
The SWOT analysis looks both inward (strengths and weaknesses) and outward (opportunities and threats) to
develop strategy and make the best use of resources. Strengths and weaknesses are elements the organization
has control over, while opportunities and threats are elements the organization does not have control over, but
would be wise to anticipate.

 Strengths: What is going or went well? What gives us an advantage in the marketplace or over our
competitors? What do our current resources excel at? Was the return on investment a gain?
 Weaknesses: What did not go well? What gives us a disadvantage in the marketplace or among our
competitors? What are the weaknesses among our current resources? Was the return on investment a loss?
 Opportunities: What is going on outside of the organization that we can capitalize on?
 Threats: What are things going on outside of the organization that can negatively impact our business?

Imagine you are building a marketing campaign for a local, independent bakery/coffee shop, with the goal of
increasing breakfast traffic and competing against nearby national chain restaurants.

SWOT Analysis May Look Something Like This:

 Strengths: Talented bakers with innovative creations using local ingredients; location within
walking distance of several large office buildings; long history in the community.
 Weaknesses: Small advertising budget; limited resources.
 Opportunities: Fall and holidays coming soon; popularity of locally-sourced and sustainable
ingredients.
  Threats: Within walking distance of two or more national chains; increasing prices of ingredients.

Developing Strategies from the SWOT Analysis

Combine the results of the SWOT analysis to create strategies for your campaigns.

 Opportunities/Strengths: Strategies that use strengths to take advantage of the identified opportunities.
Example: Increase advertising of catering services to local businesses for upcoming holidays. Combines
location (strength) with opportunity (upcoming holidays).
 Opportunities/Weaknesses: Utilize external opportunities to overcome real or perceived weaknesses.
Example: Seek low- or no-cost advertising opportunities (social media, free samples at nearby office buildings)
to promote breakfast options and catering services. Combines opportunities (holidays, ingredients) and
weaknesses (small advertising budget).
 Threats/Strengths: Use strengths to prevent damage from threats. Example: Utilize social media
outlets to emphasize ingredients and that the business is a tradition in the community. Location and using local
resources are strengths, creating a comparison to the nearby national chains (threats).
 Threats/Weaknesses: Identify measures to improve weaknesses and thereby avoid threats. Example:
Participate in and maintain visibility within the community via local fairs and festivals, farmers’ markets, and
volunteer opportunities. These opportunities can be low-cost yet create a strong local following, thereby
averting the threat created by national chains. Combines
weaknesses (small advertising budget) and threats (losing market share to local chains).

The Impact
Sometimes developing a marketing campaign can feel like a shot in the dark. Or we develop campaigns based
upon what is popular or the new buzzword. Using a SWOT analysis to develop marketing strategy assists in
making educated decisions and developing more targeted campaigns.

1.6 MARKETING INTERFACE WITH OTHER FUNCTIONAL AREAS

Marketing’s Relationship with other Functions within an organization the marketing function within any organization
does not exist in isolation. Therefore, it’s important to see how marketing connects with and permeates other functions
within the organization….

 Marketing interacts with research and development, production/operations/logistics, human resources,

IT andcustomer service.

Research and Development:

 R&D the engine within an organization which generatesnew ideas, innovations and creative new products and
services. For example, cellphone/mobile phone manufacturers are in an industry that is ever changing and
developing, and in order to survive manufacturers need to continually research and develop new software and
hardware to compete in a very busy marketplace.
  Think about cell phones that were around three or four years ago which arenow completely obsolete. The
research and development process delivers new products and is continually innovating. Innovative products
and services usuallyresult from a conscious and purposeful search for innovation opportunities whichare found
only within a few situations.
 Peter Drucker (1999) Research and development should be driven by the marketing concept. The needs of
consumers or potential consumers should be central to any new research and development in order to deliver
products that satisfy customer needs (or service of course).
 The practical research and development is undertaken in central research facilities belonging to companies,
universities and sometimes to countries. Marketers would liaise with researchers and engineers in order to make
sure that customer needs are represented. Manufacturing processes themselves could also be researched and
developed based upon some aspects of the marketing mix.
 For example, logistics (place/distribution/channel) could be researched in order to deliver products more
efficiently and effectively to customers.
Production/Operations/Logistics:
As with research and development, the operations, production and logistics functions within business need to
workin cooperation with the marketing department. Operations include many other activities such as warehousing,
packaging and distribution.

To an extent, operations also include production and manufacturing, as well as logistics. Production is where goods
and services are generated and made. For example, an aircraft is manufactured in a factory which is in effect how
it is produced i.e. production. Logistics is concerned with getting the product from production or warehousing, to retail
or the consumer in the most effective and efficient way.
Today logistics would include warehousing, trains, planes and lorries as well as technology used for real-time
tracking. Obviously, marketers need to sell products and services that are currently in stock or can be made within a
reasonable time limit. An unworkable scenario for a business is where marketersare attempting to increase sales of a
product whereby the product cannot be supplied. Perhaps there is a warehouse full of other products that our marketing
campaign is ignoring.

Human Resource Management (HRM):

HRM is the function within your organization which overlooks recruitment and selection, training, and the professional
development of employees. Other related functional responsibilities include well-being, employee motivation, health and
safety, performance management, and of course the function holds knowledge regarding the legal aspects of human
resources.
So, when you become a marketing manager you would use the HR department to help you recruit a marketing assistant
for example. They would help you withscoping out the job, a person profile, a job description, and advertising the job.
HR would help you to score and assess application forms, and will organise the interviews. They may offer to assist at
interview and will support you as you make your job offer.

You may also use HR to organise an induction for your new employee. Of course, there is the other side of the coin,
where HR sometimes has to get toughwith underperforming employees. These are the operational roles of HR. Your
human resources Department also have a strategic role., human resources see people as a valuable asset to the
organization. They assist with a global approach to managing people and help to develop a workplace culture and
environment which focuses on mission and values.

They also have an important communications role, and this is one aspect of their function which is most closely related
to marketing. For example, the HR department may run a staff development programme which needs a newsletter ora
presence on your intranet. This is part of your internal marketing effort.

IT (Websites, Intranets and Extranets):

As marketers we are concerned with how technology is used to treat information i.e. how we get information, how we
process it, how we store the information, and then how we disseminate it again by voice, image or graphics. Obviously,
this is a huge field but for our part we need to recognise the importance of websites, intranets and extranets to the
marketer.

1.7 MARKETING INGLOBAL ENVIRONMENT

Global marketing as marketing on a worldwide scale reconciling or taking commercial advantage of global operational
differences, similarities and opportunities in order to meet global objectives.

Worldwide competition:

One of the product categories in which global competition has been easy to track in [Link] automotive sales. The
increasing intensity of competition in global markets is a challenge facing companies at all stages of involvement in
international markets. As markets open up, and become more integrated, the pace of change accelerates, technology
shrinks distances between markets and reduces the scale advantages of large firms, new sources of competition emerge,
and competitive pressures mount at all levels of the organization.

Also, the threat of competition from companies in countries such as India, China, Malaysia, and Brazil are on the rise, as
their own domestic markets are openingup to foreign competition, stimulating greater awareness of international market
opportunities and of the need to be internationally competitive. Companies which previously focused on protected
domestic markets are entering into markets in other countries, creating new sources of competition, often targeted to
price- sensitive market segments.

Not only is competition intensifying for all firms regardless of their degreeof global market involvement, but the
basis for competition is changing. Competition continues to be market-based and ultimately relies on delivering superior
value to consumers. However, success in global markets depends on knowledge accumulation and deployment.

Elements of the global marketing mix

The Four P’s‖ of marketing: product, price, placement, and promotion are all affected as a company moves through the
five evolutionary phases to become a global company. Ultimately, at the global marketing level, a company trying to
speak with one voice is faced with many challenges when creating a worldwide marketing plan.

Unless a company holds the same position against its competition in all markets(market leader,
low cost, etc.) it is impossible to launch identical marketing plansworldwide.
Product- A global company is one that can create a single product and only have to tweakelements for different
markets. For example, Coca-Cola uses two formulas (onewith sugar, one with corn syrup) for all markets. The product
packaging in everycountry incorporates the contour bottle design and the dynamic ribbon in some way, shapes, or
form. However, the bottle or can also include the country’s native language and is the same size as other beverage
bottles or cans in that same country.
Price- Price will always vary from market to market. Price is affected by many variables:cost of product development
(produced locally or imported), cost of ingredients, cost of delivery (transportation, tariffs, etc.), and much more.
Additionally, the product’s position in relation to the competition influences the ultimate profit margin. Whether this
product is considered the high-end, expensive choice, the economical, low-cost choice, or something in-between helps
determine the pricepoint.

Placement- How the product is distributed is also a country-by-country decision influenced by how the competition is
being offered to the target market. Using Coca-Cola as an example again, not all cultures use vending machines. In the
United States, beverages are sold by the pallet via warehouse stores. In India, this is not an option. Placement decisions
must also consider the product’s position in the market place. For example, a high-end product would not want to be
distributedvia a ―dollar store‖ in the United States. Conversely, a product promoted as the low-cost option in France
would find limited success in a pricey boutique.

Promotion- After product research, development and creation, promotion (specifically advertising) is generally the
largest line item in a global company’s marketing budget. At this stage of a company’s development, integrated
marketing is the goal. The global corporation seeks to reduce costs, minimize redundancies in personnel and work,
maximize speed of implementation, and to speak with one voice. If the goal of a global company is to send the same
message worldwide, then delivering that message in a relevant, engaging, and cost-effective way is the challenge.

Effective global advertising techniques do exist. The key is testing advertising ideas using a marketing research system
proven to provide results that can be compared across countries. The ability to identify which elements or moments ofan
ad are contributing to that success is how economies of scale are maximized. Market research measures such as Flow of
Attention, Flow of Emotion and branding moments provide insights into what is working in an ad in any countrybecause
the measures are based on visual, not verbal, elements of the ad.

1. 8 INTERNATIONAL MARKETING

Global marketing is not a revolutionary shift, it is an evolutionary process. Whilethe following does not apply to all
companies, it does apply to most companies that begin as domestic-only companies.
Domestic marketing
A marketing restricted to the political boundaries of a country, is called “DomesticMarketing”. A company marketing only
within its national boundaries only has to consider domestic competition. Even if that competition includes companies
from foreign markets, it still only has to focus on the competition that exists in its home market. Products and services
are developed for customers in the home market without thought of how the product or service could be used in other
markets. All marketing decisions are made at headquarters.

The biggest obstacle these marketers face is being blindsided by emerging globalmarketers. Because domestic marketers
do not generally focus on the changes inthe global marketplace, they may not be aware of a potential competitor who is
a market leader on three continents until they simultaneously open 20 stores in theNorth eastern U.S. These marketers
can be considered ethnocentric as they are most concerned with how they are perceived in their home country.
Exporting goods to other countries.

International marketing
If the exporting departments are becoming successful but the costs of doing business from headquarters plus time
differences, language barriers, and culturalignorance are hindering the company’s competitiveness in the foreign market,
then offices could be built in the foreign countries. Sometimes companies buy firms in the foreign countries to take
advantage of relationships, storefronts, factories, and personnel already in place. These offices still report to headquarters
in the home market but most of the marketing mix decisions are made in the individual countries since that staff is the
most knowledgeable about the target markets. Local product development is based on the needs of local customers.
These marketers are considered polycentric because they acknowledge that eachmarket/country has different needs.

Nature of Global Marketing:

• Denotes the use of advertising and marketing on a global basis.

• Marketing is at the threshold of a new and exciting era: e-business, e-commerce
and e- marketing

• Business has two basic functions: marketing and innovation (Drucker)

• New era of competition, demanding customers

• More stakeholders (customers, employees, media).

• Companies need new set of guidelines, values and insight

• Marketing is a Strategic Business Concept

• Marketing is too important to be left to the Marketing Department. (David
Packard)

• Formulated, integrated, long-term

• Hold to the responsibilities of customers, employees, investors

 • Advantages, especially if the companies emphasize selection, availability, quality,
reliability and lower prices.

• Economies of scale.
• Lower marketing and advertising costs in planning and control. Lower advertising
production costs.

• Exploiting your best ideas on a worldwide basis.

Entry in Global Market- Companies that market internationally can organize in three ways.

• 1. Those just going global may start by establishing an export department with a sales manager and a few
assistants (and limited marketing services).
• 2. As they go after global business more aggressively, they can create an international division with
functional specialists (including marketing) and operating units structured geographically, according to product,
or as international subsidiaries.
• [Link], companies that become truly global organizations have top corporate management and staff plan
worldwide operations, marketing policies, financial flows, and logistical systems.
Global operating units report directly to top management, not to the head of an international division.

Global Industry
• A Global Industry is an industry in which the strategic positions of competitors in major geographic or
national markets are fundamentally affected by their overall global positions.

• A Global firm is a firm that operates in more than one country and captures R&D, production, logistical,
marketing and financial advantages in its costs and reputation that are not available to purely domestic
competitors

Enter to Global market

• Indirect Export
 • Occasional exporting is a passive level of involvement in which the company exports from time to time, either
on its own initiative or in response to unsolicited orders from abroad.
• Active exporting takes place when the company makes a commitment to expand its exports to a particular
market

• Indirect Marketing –they work through independent intermediaries to export their product. (domestic-based
merchant, agent, cooperative organization, export management company).

Direct Export
• Ways to handle direct exporting are:

• Domestic-based export department or division. (operate as profit centre).

• Overseas sales branch or subsidiary (handles sales distribution, warehousing, promotion, display centre,
customer-service centre).

• Traveling export sales representatives (company send home-based sales representatives abroad to find business).
• Foreign-based distributors or agents. (hire/give exclusive rights to represent the manufacturer in that country or
limited rights).

• Joint Venture & Direct Investment:

• Joint Ventures-- Join with local investors to create venture. Coca-Cola and Nestle joined forces in “ready to
drink” coffee and tea.

• P&G with rival, Fater, in Italy and Great Britain.

• Whirlpool formed venture with Dutch electronic group Philip’s on white-goods business to leapfrog into
European market.

• Direct Investment--Ultimate form is direct ownership of foreign-based assembly or manufacturing facilities.

• Can buy part or full interest in a local company.

1.9 RURAL MARKETING

Indian market for the consumer products is made up of two distinct parts, one isurban and other is rural market. It has been a
matter of great enquiry both for themarketing academics and practitioners whether there is a need for developing separate
strategy for rural markets.

“Rural marketing is a two-way process which encompasses the discharge of business activities that direct the flow of
goods from urban to rural areas (manufactured goods) and rural to urban (agriculture products) as also within the rural
areas.

Rural marketing is a process of developing, pricing, promoting, and distributing rural specific goods and services
leading to desired exchange with rural customers to satisfy their needs and wants, and also to achieve organizational
objectives.
In the place of 4Ps some marketer adopts 4As in rural marketing. The diagram given below is about the four A’s of
rural marketing that are very essential for successful implications of rural marketing mix.

AVAILABILI
TY

4
AWARENESS AFFORDABILIT
A’s Y

ACClEPTABILITY

• By and large, Indian market scenario shows that marketers have rarely come out with separate marketing strategy
for rural markets overtly, however, marketers did develop separate marketing mix for rural markets covertly.
Whenever it is rural marketing for their brands, marketer tended to price their products low, keeping the products
quality at an average level, cutting costs on the extra frills added to the product.

• The essence of the present thesis lies in opening up a debate as to the need for a separate marketing strategy in
the context of unique features of the rural market compared to urban market. In what follows, we present a frame
or an outline ofmarketing strategy for rural marketing.

• The vastness of the rural market poses both a challenge and an opportunity to the marketers. The desire to
improve the living standards is felt as keenly in the rural areas as in the urban areas. Rural incomes are rising
and the poverty ratio is falling.

• The marketing strategy to tap this vast market potential must take into account the special characteristics of the
rural areas, attitudes and socio- psychological characteristics of the rural population.

• In fact, improving the marketing channels and distribution outlets and communication facilities can themselves
being about a transformation of the rural areas.
• The design and development of a marketing strategy essentially has to flow froma thorough understanding of the
consumer, in this context it is the rural consumer. Therefore, at the first instance, the rural consumer has to be
understood and nextthe differences between the rural and urban consumer. The rural consumer in majority of the
cases is illiterate, a low-income consumer, more price sensitive, more of social interaction within his group,
psychologically emotional, guided by opinion leaders, having lower aspirational levels, and having imitational
 characteristics. This fact matrix leads a greater challenge to deal with the rural consumer.
•
• 1.10. PROSPECTS AND CHALLENGES
• Prospects:
• [Link] and scattered market: According to 2001 census rural population is 72% of total population and it is scattered
over a wide range of geographical area.
• 2. Diverse socio-economic background: This is different in different parts of the country and brings diversity in rural
markets.
• 3. Changing demand pattern: Demand pattern of rural customer is fast changing due to increasing in income and
credit facilities offered by banks like ‘kisan credit card’.
• 4. Major income comes from agriculture: About 60% of the rural income is from agriculture and hence the demand
for consumer goods is high during harvesting season.
• 5. Saving habits: Rural consumer is now having saving habits due to the efforts of co-operative and commercial
banks.
• 6. Traditional outlook: Rural customer values old customs and traditions.
• 7. Low standard of living: Rural consumer have low standard of living because of low literacy, low per capita income
and social backwardness.
• 8. Poor infrastructure facilities: Facilities like roads, warehouses, communication system, etc. are inadequate in rural
areas. Hence physical distribution becomes costly.
• 9. Media reach: The reach of pint media is 10% followed by TV 31%, radio 31% and cinema 33%.
• 10. Communication: As per Indian Express report about 6 lakhs villages are without telephone facilities.
• 11. Electrification: About 88% of villages have been electrified and rest will soon get electricity
•
• Challenges
Rural marketing term is an emerging concept in the modern era but we face various challenges when we do
marketing inrural areas like in rural areas
1) Communication : communication is the main problem because people in rural areas are introvert and shy
nature.
2) Lack of participation : they don’t disclosed their problems and also not participating in various
programmes implemented by the government from time to time.
3) Lack of knowledge : they don’t use the new technology like mobile, internet, online banking and digital
mode oftransactions.
4) Transportation : Transportation is also a main challenge because people are scattered in rural areas. they
are not connected with each other by proper roads.
5) Hesitation in using new products : they hesitate in using new products and mainly large sizes,costly
products because they prefer small size and low price product weather it is not a qualitative product.
6) Convincing : rural people are not get easily convincing by proper advertisement, different media, new
sample products they are less convincing in nature.
7) Traditional belief and outlook : rural people are stick to their traditions, customs, beliefs they don’t
want to change their attitude towards new products.

8) Lack of availability of technology : even we are living in the 21 st century but then too there is lack of
availability of recent modes of technology.

******END OF UNIT I******

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