Karnataka 2nd PUC Business Studies Notes Chapter 11 Marketing
→ Market: Market is place where buyers and sellers meet to effect purchase and sales
→ Definition of Market: Market is an area or atmosphere for a potential exchange. Marketing: It is human activity directed at satisfying the needs and wants through exchange process.
→ Definition of Marketing: Marketing is that phases of business activity through which human wants are satisfied by the exchange of goods and services.
→ Functions of marketing:
- Gathering and analyzing market information
- Market planning
- Product designing & Development
- Standardization and grading
- Packing & labeling
- Customer Support Service
- Channelizing distribution
→ Element of Marketing Mix: Product, Price, Promotion, Physical distribution
→ Product: A product is bundle of utilities consisting of various product features and accompanying services.
→ Element of product Mix:
- Packing & packaging,
- Label & labeling,
- After Sales Services/Customer service
→ Price: Price is a value of product expressed in terms of money
→ Factors affecting pricing decisions: The factors affecting pricing decisions can be classified into two categories as under:
→ Internal Factors: These are controllable factors which exist within the company’s environment. They are Business Objectives, Cost of the product, & Quality of the product.
→ Business Objectives: The pricing decision should always be in accordance with the business objectives like growth an expansion and customer satisfaction.
→ Cost of the product: This is the most important factor that determines the pricing decision. The price = Cost + profit. Thus the price for the product or service should cover the entire cost to the manufacturer as well as reasonable profits.
→ Quality of the product: High quality products give rise to higher cost and demands for higher price. But low quality products give rise to low cost and reduces the price.
→ External Factors: These are the uncontrollable factors which exist outside the company’s environment. They are Elasticity of demand, Pricing policy of competitors etc.
→ Elasticity of demand: A product that has inelastic demand, higher price may be fixed for that product. But if the demand for the product is elastic the price of the product must be kept flexible.
→ Pricing policy of competitors: The number of competitors and pricing strategies also will have a bearing on the pricing decisions of a concern.
→ Distribution Channels: A lengthy distribution channel demands for higher price. On the other hand a shorter distribution channel reduces the price of the product.
→ Place: It stands for making arrangement for the smooth flow of goods and services from producer to consumers.
→ Channels of distribution
- Direct selling
- indirect selling
→ Promotion: it is the process of marketing communication involving information, persuasion and influence.
→ Elements of promotion:
- Personal selling or Sales promotion
→ Any paid from of non personal presentation & promotion of ideas, goods or services by an identified sponsor.
→ Objectives of Advertising:
- To create demand
- To extend market
- To retain demand
- To assist salesman
- To overcome competition
- To warn public about imitation
- To educate customers
- To create reputation
→ Functions / advantages of Advertising:
- Steady demand: Advertising helps to maintain steady and regular demand for the product or service of a concern.
- Increase in Sales: Constant advertising helps to increase the sales volume for both producers and traders.
- Economies of production: Advertising leads to creation of more demand which in turn leads to large scale production and thereby reducing cost per unit of the product or service.
- Convenience: Advertising helps the consumers in making their purchases more convenient and comfortable, as their time and efforts are reduced in shopping.
- Education of consumers: Advertising educates the consumers by giving them details about the new products that can satisfy their needs.
- Better Standard of Living: Advertising helps the people to improve their living standards by persuading them to purchase newer and better quality products.
- Employment: Advertising creates more employment opportunities directly in the advertising industry as well as indirectly in other industries.
→ Disadvantages of Advertising:
- Less effective: It is less effective medium of promotion as there is no face to face interaction between the seller and customer.
- Lack of feedback: It is difficult to ascertain the effectiveness of advertising, as there is no immediate feedback from the customers to the producer or seller.
- Rigid: Advertisement copy once prepared cannot be changed easily to suit each individual. It gives only a general appeal.
- Confusion among customers: Too many advertisements on a similar type of products, making similar claims may result in confusion among customers in choosing the right product.
- Additional cost: Advertising expenses are included in the total cost of the product which increases the cost of the product that is recovered from the customers.
- Misleading: Customers are cheated by misleading advertisements. Claims made in advertisements seem to be untrue when product is purchased and put to use practically.
→ Advertisement copy: The advertising message is known as advertisement copy. Advertisement copy is taken as the life or the physical form to the idea of advertisement.
A good advertisement copy must possess the following characteristics:
→ Attention Value: Every advertisement copy should be designed with a high degree of attraction of the viewers. Use of catchy slogans, colorful picture, design borders etc in the ad copy will attract the attention of the viewers, towards product or service.
→ Memorizing value: The advertisement copy should be such that it should last for long in the minds of people. For example the advertisement for. “Washing powder Nirma” is remembered even today.
→ Suggestive value: The ad copy should highlight the need and necessity of the product/ service. For example, “Boost is the secret of my energy.” Suggests that boost is a healthy drink and gives good energy throughout the day.
→ Educational value: The ad copy should educate the customers by giving useful information about the usage of the product. For eg. advertisement for “Iodex” in TV gives the various purpose for which it can be used and how to use it.
→ Sentimental Value: Human behavior is affected by sentiments! Hence the ad copy should be prepared in such a way that it does not cause any damage to their sentiments.
→ Simplicity: The ad copy should be simple to understand and convincing to the people. Vague and confusing texts in advertisements should be avoided.
→ Publicity: publicity is used to promote different brands, product, persons, places, ideas & activities.
→ Salesmanship: It is the ability to persuade the people to buy or services at a profit to the seller & benefit to the buyer.
Qualities of salesmanship:
→ Good personality: Good personality of the salesman attracts the consumer & helps to create favorable impression in the minds of the customer.
→ Good health: He should have sound health. The good health increases the efficiency of a salesman.
→ Enthusiasm: He should have enthusiasm or interest in the work, otherwise he cannot discharge his duties successfully.
→ Sound education: he should have good knowledge of different languages so that he can talk to the customer in their languages.
→ Intelligence: he should have a strong memory power to understand & remember the nature of different types of customers.
→ Activeness: he should be active. He should not hesitate to work hard.
→ Training: A salesman should have proper training in salesmanship.
→ Courtesy: he should be counteous in his behavior. He should not lose his temper while dealing with the customer.
→ Honesty: he should be honest, sincere & co-opertive. he should be dependable. He should not make false representations.
→ Loyalty: he should be loyal to his employer. He should not damage the reputation of his employer.
→ Sales promotion: it refers to all those activities designed to boost the sales of a product or service.
→ Objectives of sales promotion: To introduce new product or service, To attract new customers, To induce existing customers to buy more, To help the firm to remain competitive, To increase sales in off-seasons, To create goodwill
→ Methods of sales promotion: Rebate, Discount, Refund, Product Combination, Quantity gift, Instant draw & Assigned gift, Lucky draw, Usable benefits, Full finance, Samples, Contest, Sweepstakes & Games.