Marketing
Notes:
Introduction:
In today’s world of marketing, everywhere you
go you are being marketed to in one form or another. Marketing is with you each
second of your walking life. From morning to night you are exposed to thousands
of marketing messages everyday. Marketing is something that affects you even
though you may not necessarily be conscious of it.
After reading this you’ll understand – what
exactly the marketing is, different definitions of marketing, and what are the
different approaches of marketing.
Market Definition :
In marketing, the term market refers
to the group of consumers or organizations that is interested in the product,
has the resources to purchase the product, and is permitted by law and other
regulations to acquire the product. The market definition begins with the total
population and progressively narrows as shown in the following diagram.
Beginning with the total population, various
terms are used to describe the market based on the level of narrowing:
Total population
- Potential
market – those in the total
population who have interest in acquiring the product.
- Available
market – those in the potential
market who have enough money to buy the product.
- Qualified
available market – those in the available
market who legally are permitted to buy the product.
- Target
market – the segment of the
qualified available market that the firm has decided to serve (the served
market).
- Penetrated
market – those in the target
market who have purchased the product.
In the above listing, “product” refers to both
physical products and services.
The size of the market is not necessarily
fixed. For example, the size of the available market for a product can be
increased by decreasing the product’s price, and the size of the qualified
available market can be increased through changes in legislation that result in
fewer restrictions on who can buy the product.
Defining the market is the first step in
analyzing it. Since the market is likely to be composed of consumers whose
needs differ, market segmentation is useful in order to better understand those
needs and to select the groups within the market that the firm will serve.
Marketing Definition :
Marketing is nothing but to Tell about
your product and to Sell it. The technical definition is Marketing is the
process of planning and executing the concepts, pricing, promotion and
distribution of ideas/goods/services to
satisfy individual’s/organizational.
Marketing is a social
and managerial process through which needs and wants of individual/organisation
are satisfied by the exchange of goods and services.
NEED: Need can be defined as something that is necessary for
survival.
Ex: Drinking water when thirsty is a need.
Ex: Drinking water when thirsty is a need.
WANT: It can be called as different ways of satisfying need.
Ex: Drinking coca-cola(or frooti) when thirsty(options avail.)
Ex: Drinking coca-cola(or frooti) when thirsty(options avail.)
Selling works on PUSH strategy,whereas
marketing works on PULL strategy.
Selling is always a subset of
marketing,marketing is a superset.Sales related with short term relations and
marketing focuses on long term relations.
Purpose of selling is to make profit immediately.(Ex:
general stores)
Purpose of marketing is to make customer satisfaction and to
maintain long term relations.(Ex:DELL service)
There are Several types of
marketing are there, some
of them are :
The Bench Marketing is nothing but the comparison of the
business processes with competitors and improving prevailing ones.
The Drip Marketing is nothing but sending promotional items
to Clients.
The Viral Marketing is nothing but, Marketing by the
word of the mouth, having a high pass-rate from
person to. The best example for this is Creating a ‘buzz’ in the industry.
person to. The best example for this is Creating a ‘buzz’ in the industry.
The Guerilla Marketing is an Unconventional marketing
intended to get maximum results from minimal resources.
(just remember Maximum results from Minimum resources)
(just remember Maximum results from Minimum resources)
Social Media Marketing
:
Marketing using online communities, social
networks, blog marketing etc is called the social media marketing.
Direct Marketing :
If the company directly reaches to the customers
on a personal basis (ex : phone calls, private mailings, etc) rather than
traditional channel of advertising (like TV, Newspapers, etc) then that
type of marketing is called the Direct Marketing.
Types : There are number of types in direct marketing, Some of them are……
Types : There are number of types in direct marketing, Some of them are……
Direct Mail Marketing
:
Advertising material sent directly to home and business addresses (This is the most common form of direct marketing)
Advertising material sent directly to home and business addresses (This is the most common form of direct marketing)
Telemarketing : It is the second most common form of
direct marketing, in which marketers contact
consumers by phone.
consumers by phone.
Email Marketing: This type of marketing targets customers
through their email accounts (you might
have observed them in your e mails too)
have observed them in your e mails too)
Indirect Marketing :
Distributing a particular product through
a channel that includes one or more resellers is called Indirect Markeging
(simply we can say that telling about our product indirectly)
Difference between
Direct and Indirect Marketings :
In Direct marketing you advertise your own
products or services. But in Indirect marketing you advertise somebody
else’s Product.
Ex : Example of direct marketing is
Shivani Sharma… As she markets her blog on her own. Example of Indirect
marketing is Katrina Kaif, as she markets LUX but she doesn’t own
that company
Internet Marketing
Marketing of products or services over
the Internet is called Internet Marketing. It is also know as
i-marketing, web-marketing, online-marketing, Search Engine Marketing
(SEM) and e-Marketing.
Digital Marketing
The marketing which uses digital
advertising is called digital marketing. Television, Radio,
Internet, mobile etc.
Customer: A customer is the recipient of
good/service/idea obtained from a seller.
Consumer: The one who consumed or utilises good/product is called as
consumer. A customer may or may not be a consumer.
Ex: A father purchases a 5star for his son, here father is the customer and son is the consumer.
Ex: A father purchases a 5star for his son, here father is the customer and son is the consumer.
Types of consumer
goods:
Consumer goods (such as bread, milk,paper,
sugar) that are bought often and consumed routinely.
Impulse: Purchased suddenly on
stimuli(Ex:chocolates kept at billing counter).
Shopping goods: Goods which are occasionally
purchased,cost is moderate. People invest time and efforts.Brand may be
considered.
Ex:Textiles,watches,costumes.
Ex:Textiles,watches,costumes.
Special goods: Goods which are purchased very rarely as they
are very expensive.one or two outlets are available.people are extremely brand
conscious.
Ex: Jewellery,paintings,BMW cars.
Ex: Jewellery,paintings,BMW cars.
Unsought goods: Even though customers are not
interested,he/she forced to buy because of some obligations.
Ex: Insurance policies,ice box for the dead.
Ex: Insurance policies,ice box for the dead.
Niche market: Market which focuses on particular
segment and creating distinct image.
Ex: nano car.
Ex: nano car.
Customised product: Customer requirements are taken into
account.
Augmented product: Improvement made by the manufacturer
voluntarily.
Potential product: Which may introduce in the future
depending on technological and economic resources of the firm.
Unique selling
proposition(USP): A quality
feature design which is available only in one product which is not in other
products.
Ex: bajaj pulsar,yamaha fz.
Ex: bajaj pulsar,yamaha fz.
Product Life Cycle
Concept
We have a life cycle, we are born, we grow, we
mature, and finally we pass away. Similarly, products also have life cycle,
from their introduction to decline they progresses through a sequence of
stages. The major stages of the product life cycle are – introduction, growth,
maturity, and decline. Product life cycle describes transition of a product
from its development to decline.
Product life cycle can be defined as “the
change in sales volume of a specific product offered by an organisation, over
the expected life of the product.”
Stages of the Product Life Cycle
The four major stages of the product life
cycle are as follows :-
1.
Introduction,
2.
Growth,
3.
Maturity, and
4.
Decline.
Introduction Stage
At this stage the product is new to the market and few potential customers are aware with the existence of product. The price is generally high. The sales of the product is low or may be restricted to early adopters.
At this stage the product is new to the market and few potential customers are aware with the existence of product. The price is generally high. The sales of the product is low or may be restricted to early adopters.
Growth Stage
At this stage the product is becoming more widely known and acceptable in the market. Marketing is done to strengthen brand and develop an image for the product. Prices may start to fall as competitors enters the market. With the increase in sales, profit may start to be earned, but advertising cost remains high.
At this stage the product is becoming more widely known and acceptable in the market. Marketing is done to strengthen brand and develop an image for the product. Prices may start to fall as competitors enters the market. With the increase in sales, profit may start to be earned, but advertising cost remains high.
Maturity Stage
At this stage the product is competing with alternatives. Sales and profits are at their peak. Product range may be extended, by adding both withe and depth. With the increases in competition the price reaches to its lowest point.Advertising is done to reinforce the product image in the consumer’s minds to increase repeat purchases.
At this stage the product is competing with alternatives. Sales and profits are at their peak. Product range may be extended, by adding both withe and depth. With the increases in competition the price reaches to its lowest point.Advertising is done to reinforce the product image in the consumer’s minds to increase repeat purchases.
Decline Stage
At this stage sales start to fall fast as a result product range is reduced. The product faces reduced competition as many players have left the market and it is expected that no new competitor will enter the market. Advertising cost is also reduced.
At this stage sales start to fall fast as a result product range is reduced. The product faces reduced competition as many players have left the market and it is expected that no new competitor will enter the market. Advertising cost is also reduced.
STAGE SALES PROFIT
Types of Pricing:
Price is the monetary value given by the customer for the exchange of goods and services.
Price is the monetary value given by the customer for the exchange of goods and services.
Follow leader: Adjust the prices according to the dominant
player in the market.
Ex: apple (smart phones).
Ex: apple (smart phones).
Cost plus: Keeping price just above the cost price to recover the
operational expenditure.
Ex: R.K.(ramakrishna) MATH spoken english book for 25/- only
Ex: R.K.(ramakrishna) MATH spoken english book for 25/- only
Penetration: Keeping prices low initially when a product is
released for the first time.
Ex: sakshi paper for only 2/- with full color pages instead of 3/-
Ex: sakshi paper for only 2/- with full color pages instead of 3/-
Predatory: keeping the prices low to kill competitors and
later increasing it after the competitors left the market.
Ex: Stores like Walmart will effect the kirana stores in the same way.
Ex: Stores like Walmart will effect the kirana stores in the same way.
Skimming: opposite of predatory,keeping prices very high initially
when there is no competition and later decreasing it to match the competition.
Ex: Iphone.
Ex: Iphone.
Psychological pricing: Offering different ranges of prices to
give psychological comfort to the buyer.
Ex: 499,299,599/- customer thinks that it is only in 400’s,200’s & 500’s range.
Ex: 499,299,599/- customer thinks that it is only in 400’s,200’s & 500’s range.
Deceptive pricing: Promotion tactics disguise customer from
knowing the actual price.
Ex: Koti market(Hyderabad) goods,initially,seller will tell the price of a luggage bag as 500/-later on bargaining he will give it to 100/-
Ex: Koti market(Hyderabad) goods,initially,seller will tell the price of a luggage bag as 500/-later on bargaining he will give it to 100/-
Promotion: Purpose is to create awareness about a product
in the market.
Advertisements: Paid form of impersonal communications.
Advertisements: Paid form of impersonal communications.
Publicity: Ads, hoardings, pamphlets.
Direct selling: DSA approaches buyer personally at their
doorsteps to know the consumer behaviour.(very effective but expensive too).
Aggressive marketing: Style of promoting a product which is
very forceful or energetic due to increase in the competition.
Co-branding: Promotion of two related products through common brand.
Ex: Nike and Apple brought fitness and music together by developing a wireless music kit along with the shoes.
Ex: Nike and Apple brought fitness and music together by developing a wireless music kit along with the shoes.
Place: Product should be made available at a convenient location
to the customers.
Length of the channel: no. of intermediaries between actual
producer and the final consumer.
Push: Forced to buy the goods by keeping offers like buy 1 get
2.
Pull: Pleasure to buy the goods like android mobiles. Cold call:
Persuading or motivating a customer to buy immediately who is in dilemma.
Customisation: Modifying basic products as suitable to
the customers.
Standardisation: Offering same product of same quality
globally.
Consumer black box: What goes on in the minds of the customer
actually at the time of buying a product.
Societal marketing: Marketing for a social
cause(CSR-corporate social responsibility)
Ethical marketing: Explaining positives and negatives in a
realistic manner about a product for the benefit of the customers.
Purpose of marketing research is to identify
need and want of the customer through primary and secondary data.
Primary data is collected through
survey,secondary data is collected through official record.
Best approach for exploratory research is
observation.
Best approach for casual research is
experimental.
Best approach for descriptive research is
survey.
Meaning of Product Mix
Product mix or product assortment refers to the number of product
lines that an organisation offers to its customers. Product line is
a group of related products manufactured or marketed by a single company. Such
products function in similar manner, sold to the same customer group, sold
through the same type of outlets, and fall within a same price range .
Product mix consists of various product lines
that an organisation offers, an organisation may have just one product
line in its product mix and it may also have multiple product lines. These
product lines may be fairly similar or totally different, for example – Dish
washing detergent liquid and Powder are two similar
product lines, both are used for cleaning and based on same technology;
whereas Deodorantsand Laundry are totally
different product lines.
An organisation’s product mix has following
four dimensions :-
1.
Width,
2.
Length,
3.
Depth, and
4.
Consistency.
Product width: No. of categories in a product mix.
Ex: hair care,skin care etc.
Ex: hair care,skin care etc.
Product depth: No. of alternatives in each category.
Ex: soap category:lux,cinthol,pears,lifebuoy.
Ex: soap category:lux,cinthol,pears,lifebuoy.
Marketing Mix :
Marketing mix is a tool in the hand of
marketer, which is a mixture of several ideas and plans, to promote a
particular product. Different models of marketing mix:
Four P model–
This is also known as producer oriented model. It was proposed by EJ McCarthy in 1960.
Four P model–
This is also known as producer oriented model. It was proposed by EJ McCarthy in 1960.
Elements:
(a) Product – The thing which is offered
(b) Price – High/low, stable/fluctuating
(c) Promotion – Brand recognition and positioning
(d) Place – Convenient for consumers
(a) Product – The thing which is offered
(b) Price – High/low, stable/fluctuating
(c) Promotion – Brand recognition and positioning
(d) Place – Convenient for consumers
Seven P model
It was proposed by Booms and Bitner in 1981.
It was proposed by Booms and Bitner in 1981.
Elements:
(a) Physical evidence – Interior
(b) People – Human resources
(a) Physical evidence – Interior
(b) People – Human resources
(c) Process – Quality
Four C model
It is a consumer oriented model. It was proposed by Lauterborn in 1993.
Four C model
It is a consumer oriented model. It was proposed by Lauterborn in 1993.
Elements:
(a) Product – Consumer
(b) Price – Cost
(c) Promotion – Communication
(d) Place – Convenience/channel for consumers
(a) Product – Consumer
(b) Price – Cost
(c) Promotion – Communication
(d) Place – Convenience/channel for consumers
Seven C model Elements:
(a) Consumers
(b) Cost
(c) Communication
(d) Convenience/channel
(e) Corporation
(f) Commodity
(g) Circumstances
(a) Consumers
(b) Cost
(c) Communication
(d) Convenience/channel
(e) Corporation
(f) Commodity
(g) Circumstances
Some
Basic Banking Terms :
1) RBI – The Reserve Bank of India is the apex bank of the country,
which was constituted under the RBI Act, 1934 to regulate the other banks,
issue of bank notes and maintenance of reserves with a view to securing the
monetary stability in India.2) Demand Deposit – A Demand deposit is
the one which can be withdrawn at any time, without any notice or penalty; e.g.
money deposited in a checking account or savings account in a bank.
3) Time Deposit – Time deposit is a money deposit at a
banking institution that cannot be withdrawn for a certain “term” or period of
time. When the term is over it can be withdrawn or it can be held for another
term.
4) Fixed Deposits – FDs are the deposits that are
repayable on fixed maturity date along with the principal and agreed interest
rate for the period. Banks pay higher interest rates on FDs than the savings
bank account.
5) Recurring Deposits – These are also called cumulative deposits and in recurring deposit accounts, a certain amounts of savings are required to be compulsorily deposited at specific intervals for a specified period.
5) Recurring Deposits – These are also called cumulative deposits and in recurring deposit accounts, a certain amounts of savings are required to be compulsorily deposited at specific intervals for a specified period.
6) Savings Account – Savings account is an account generally
maintained by retail customers that deposit money (i.e. their savings) and can
withdraw them whenever they need. Funds in these accounts are subjected to low
rates of interest.
7) Current Accounts – These accounts are maintained by the
corporate clients that may be operated any number of times in a day. There is a
maintenance charge for the current accounts for which the holders enjoy
facilities of easy handling, overdraft facility etc.
8) FCNR Accounts – Foreign Currency Non-Resident accounts are the ones that are maintained by the NRIs in foreign currencies like USD, DM, and GBP etc. The account is a term deposit with interest rates linked to the international rates of interest of the respective currencies.
8) FCNR Accounts – Foreign Currency Non-Resident accounts are the ones that are maintained by the NRIs in foreign currencies like USD, DM, and GBP etc. The account is a term deposit with interest rates linked to the international rates of interest of the respective currencies.
9) NRE Accounts – Non-Resident External accounts are the
ones in which NRIs remit money in any permitted foreign currency and the
remittance is converted to Indian rupees for credit to NRE accounts. The
accounts can be in the form of current, saving, FDs, recurring deposits. The
interest rates and other terms of these accounts are as per the RBI directives.
10) Cheque Book – A small, bound booklet of cheques. A
cheque is a piece of paper produced by your bank with your account number,
sort-code and cheque number printed on it. The account number distinguishes
your account from other accounts; the sort-code is your bank’s special code
which distinguishes it from any other bank.
11) Cheque Clearing – This is the process of getting the
money from the cheque-writer’s account into the cheque receiver’s account.
12) Clearing Bank – This is a bank that can clear funds
between banks. For general purposes, this is any institution which we know of
as a bank or as a provider of banking services.
13) Bounced Cheque – when the bank has not enough funds in the
relevant account or the account holder requests that the cheque is bounced
(under exceptional circumstances) then the bank will return the cheque to the
account holder.
14) Credit Rating – This is the rating which an individual (or
company) gets from the credit industry. This is obtained by the individual’s
credit history, the details of which are available from specialist
organisations like CRISIL in India.
15) Credit-Worthiness – This is the judgement of an
organization which is assessing whether or not to take a particular individual
on as a customer. An individual might be considered credit-worthy by one
organisation but not by another. Much depends on whether an organization is
involved with high risk customers or not.
16) Interest – The amount paid or charged on money over time. If you
borrow money interest will be charged on the loan. If you invest money,
interest will be paid (where appropriate to the investment).
17) Overdraft – This is when a person has a minus figure
in their account. It can be authorized (agreed to in advance or retrospect) or
unauthorized (where the bank has not agreed to the overdraft either because the
account holder represents too great a risk to lend to in this way or because
the account holder has not asked for an overdraft facility).
18) Payee – The person who receives a payment. This often applies to
cheques. If you receive a cheque you are the payee and the person or company
who wrote the cheque is the payer.
19) Payer – The person who makes a payment. This often applies to
cheques. If you write a cheque you are the payer and the recipient of the
cheque is the payee.
20) Security for Loans – Where large loans are required the
lending institution often needs to have a guarantee that the loan will be paid
back. This takes the form of a large item of capital outlay (typically a house)
which is owned or partly owned and the amount owned is at least equivalent to
the loan required.
21) Internet Banking – Online banking (or Internet banking)
allows customers to conduct financial transactions on a secure website operated
by the bank.
22) Credit Card – A credit card is one of the systems of
payments named after the small plastic card issued to users of the system. It
is a card entitling its holder to buy goods and services based on the holder’s
promise to pay for these goods and services.
23) Debit Card – Debit card allows for direct withdrawal
of funds from customers bank accounts. The spending limit is determined by the
available balance in the account.
24) Loan – A loan is a type of debt. In a loan, the borrower
initially receives or borrows an amount of money, called the principal, from
the lender, and is obligated to pay back or repay an equal amount of money to
the lender at a later time. There are different kinds of loan such as the house
loan, auto loan etc.
25) Bank Rate – This is the rate at which central bank (RBI)
lends money to other banks or financial institutions. If the bank rate goes up,
long-term interest rates also tend to move up, and vice-versa.
26) CRR – Cash reserve Ratio (CRR) is the amount of funds that the
banks have to keep with RBI. If RBI decides to increase the percent of this,
the available amount with the banks comes down. RBI is using this method
(increase of CRR rate), to drain out the excessive money from the banks.
27) SLR – SLR stands for Statutory Liquidity Ratio. This term is
used by bankers and indicates the minimum percentage of deposits that the bank
has to maintain in form of gold, cash or other approved securities. Thus, we
can say that it is ratio of cash and some other approved to liabilities
(deposits). It regulates the credit growth in India.
28) ATM – An automated teller machine (ATM) is a computerised
telecommunications device that provides the clients with access to financial
transactions in a public space without the need for a cashier, human clerk or
bank teller. On most modern ATMs, the customer is identified by inserting a
plastic ATM card with a magnetic stripe or a plastic smart card with a chip,
that contains a unique card number and some security information such as an
expiration date or CVV. Authentication is provided by the customer entering a
personal identification number (PIN)
29) REPO RATE: – Under repo transaction the borrower
places with the lender certain acceptable securities against funds received and
agree to reverse this transaction on a predetermined future date at agreed
interest cost. Repo rate is also called (repurchase agreement or repurchase
option).
30) REVERSE REPO RATE: is the interest rate earned by the bank
for lending money tothe RBI in exchange of govt. securities or “lender buys
securities with agreement to sell them back at a predetermined rate”.
31) CASH RESERVE RATIO: specifies the percentage of their total
deposits the commercial bank must keep with central bank or RBI. Higher the CRR
lower will be the capacity of bank to create credit.
32) SLR: known as Statutorily Liquidity Ratio. Each
bank is required statutorily maintain a prescribed minimum proportion of its
demand and time liabilities in the form of designated liquid asset.
OR
“Every bank has to maintain a percentage of its demand and time liabilities by way of cash, gold etc”.
OR
“Every bank has to maintain a percentage of its demand and time liabilities by way of cash, gold etc”.
33) BANK RATE: is the rate of interest which is charged
by RBI on its advances to commercial banks. When reserve bank desires to
restrict expansion of credit it raises the bank rate there by making the credit
costlier to commercial bank.
34) OVERDRAFT: It is the loan facility on customer
current account at a bank permitting him to overdraw up to a certain agreed
limit for a agreed period ,interest is payable only on the amount of loan taken
up.
35) PRIME LENDING RATE: It is the rate at which commercial banks
give loan to its prime customers.
36) IFSC: IFSC stands for Indian Financial System Code.
It is an alpha-numeric code that uniquely identifies a bank-branch
participating in the NEFT system.
ii. This is an 11 digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero) and the last 6 characters representing the bank branch.
iii. IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.
ii. This is an 11 digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero) and the last 6 characters representing the bank branch.
iii. IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches.
For ex: SBIN0015986 :
(a) First 4 character SBIN – refers to State Bank of India.
(b) 0 is a control number.
(c) Last six characters (015986) represents the SBI branch name.
(a) First 4 character SBIN – refers to State Bank of India.
(b) 0 is a control number.
(c) Last six characters (015986) represents the SBI branch name.
37) MICR : MICR stands for Magnetic Ink Character Recognition. MICR
Code is a 9 numeric digit code which uniquely identifies a bank branch
participating in the ECS Credit scheme. MICR code consists of 9 digits e.g
400229128
i. First 3 digits represent the city (400)
ii. Next 3 digits represent the bank (229)
iii. Last 3 digits represent the branch (128)
i. First 3 digits represent the city (400)
ii. Next 3 digits represent the bank (229)
iii. Last 3 digits represent the branch (128)
The MICR Code allotted to a bank branch is
printed on the MICR band of cheque leaves issued by bank branches.
38) Cheque Truncation:
i. Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch.
ii. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.
iii. Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefiting the system as a whole.
i. Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to the drawee bank branch.
ii. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.
iii. Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefiting the system as a whole.
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