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essentials of marketing

Essentials of Marketing
Manmohan Joshi

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Manmohan Joshi

Essentials of Marketing

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Essentials of Marketing
© 2012 Manmohan Joshi & Ventus Publishing ApS
ISBN 978-87-403-0206-6

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Essentials of Marketing

Contents

Contents
1

Market and Marketing

8

1.1

Meaning of market

8

1.2Marketing

8

1.3

Objectives of Marketing

8

1.4

Importance of Marketing to the Society

9

1.5Merchandising

9


1.6Selling

9

1.7

Distribution

10

1.8Goods

10

360°
thinking

1.9Services
1.10

Modern Marketing

1.11

Features of Modern Marketing

2

Marketing System

2.1

Definition

2.2

Marketing Process

360°
thinking

.

.

12
12
12
14
14
14

360°
thinking

.

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Disc


Essentials of Marketing

Contents

3

Marketing Functions

16

3.1

Classification:

16

4

Pricing

19

4.1

What is Price?

19

4.2

Pricing Objectives

20

4.3

Procedure for Price Determination

21

4.4

Price Leader

23

4.5

One price or Variable Price

24

4.6

Resale Price Maintenance

24

5

Branding and Packaging

25

5.1Branding

25

5.2Packaging

27

6

The Promotional Programme

29

6.1

Forms of Promotion

29

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Essentials of Marketing

Contents

7

Sales Promotion

31

7.1

Importance of Sales Promotion

31

7.2

Objectives of Sales Promotion

31

7.3

Kinds of Sales Promotion

32

8

Advertising

38

8.1

What is Advertising?

38

8.2

Objectives of Advertising

38

8.3

Functions of Advertising

39

8.4

Advantages of Advertising

39

8.5

Advertising Media

41

9

Personal Selling

44

9.1

Objectives of Personal Selling:

44

9.2

Duties of a Salesperson:

44

9.3

Qualities of a successful Salesperson:

45

9.4

Sales Personality

45

9.5

Features of Personal Selling

46

9.6

Process of Personal Selling

46

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Essentials of Marketing

Contents

10

Sales Forecast

48

10.1

Factors affecting a Sales Forecasting

48

10.2

Methods of Sales Forecasting

49

10.3

Categories of Sales Forecast

51

11

Marketing of Consumer Goods

52

11.1

52

11.2

Characteristics of Consumer Goods:

53

11.3

Classification of Consumer Goods

54

11.4

Channels of Distribution:

57

12

Marketing of Industrial Goods

58

12.1

Classification of Industrial Goods:

58

References

64



65

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Essentials of Marketing

Market and Marketing

1 Market and Marketing
1.1

Meaning of market
The common usage of market means a place where goods are bought or sold. A market need not
necessarily mean a place of exchange. The word market is commonly used and may even mean
or aim in any of the following:
• Market may mean a place where buying and selling take place;
• Buyers and sellers come together for transaction;
• An organization through which exchange of goods takes place;
• The act of buying and selling of goods (to satisfy human wants);
• An area of operation of commercial demand for commodities.

1.2Marketing
Marketing is a human activity to satisfy needs and wants, through an exchange process. A demand
is a want for which the consumer is prepared to pay a price. A want is anything or service the
consumer desires or seeks. Wants become demands when backed by purchasing power. A need
is anything the consumer feels to keep himself alive and healthy. A transaction consists of a value
between two parties. The aim of marketing is to make sales in order to earn reasonable profit for
the producer.
Marketing is the creation and the delivery of a standards of living; it is finding out what customers
want, then planning and developing a product or service that will satisfy those wants; and then
determining the best way to price, promote and distribute that product or service. The purpose
of business is to create a customer by which stress is laid on two aspects: (a) identification of
consumer needs, and (b) organizing the business to meet these needs. The modern concept focuses
on the consumers and their satisfaction. The approach of modern marketing is consumer-oriented
instead of solely product-oriented.

1.3

Objectives of Marketing
In the modern business world the objective of marketing is more than making profit. The following
are the aims of marketing:
• Intelligent application of modern marketing policies;
• To develop policies and their implementation for a good result;
• To suggest solutions by studying the problems relating to marketing;
• To find sources for further information concerning the market problems;
• To strengthen existing marketing function;
• To take suitable actions as required.

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Essentials of Marketing

1.4

Market and Marketing

Importance of Marketing to the Society
In today’s society marketing plays a major role.
• It is a connecting link between the consumer and the producer. Marketing process
brings new items to retail shops, from where the consumers can buy them.
• It helps in increasing the living standard of people. Because of large scale production,
prices of goods come down. Thus reduction in price will result in a higher standard of
living.
• It helps to increase the nation’s income. Efficient system of marketing reduces the cost
to the minimum, this in turn lowers the prices and the consumer’s purchasing power
increases. This will increase the national income.
• It increases employment opportunities. For continuous production continuous
marketing is needed. Thus increased activity provides more job opportunities to many
people.
• It helps in selling surplus goods to other countries where there is demand for such
goods.

1.5Merchandising
Merchandising is only product planning. It aims at the internal planning relating to products or
services for marketing at the right time, at the right price and in proper colour, quality and sizes.

1.6Selling
Selling is the need of the sellers. It is the internal aim of business. Thus it is only a part of marketing
study. Marketing is much wider than selling and much more dynamic. Selling revolves around the
needs and interests of the seller; marketing revolves around the needs and interests of the buyer.
Selling seeks profits by ‘pushing’ the products on the buyers. Marketing too seeks profits, but not
through ‘pushing’ of the products but by meeting the needs of the customers and by creating
value satisfaction for them. A truly marketing-minded company tries to create value-satisfying
goods and services which the consumers want to buy. What it offers for sale is determined not
by the seller but by the buyer. Selling is certainly a part of marketing. That is the last function in
the process of marketing.

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Essentials of Marketing

Market and Marketing

The following table gives the difference between selling and marketing:
Selling

Marketing

1. Emphasizes product.

1. Emphasizes on consumer’s wants.

2. Sales are the primary motive.

2. Satisfaction of the customer is primary.

3. First production, then

3. First customer’s need is known and then

selling takes place at a profit

production takes place; then the product is

without knowing customer’s

sold at a profit.

needs.
4. External-market orientation.
4. Internal company
orientation.
5. Company’s need is the

5. Buyer’s need is the motive.
6. Consumer determines price; price determines
cost.

motive.
6. Cost determines price.

7. Marketing views the customer as the very
purpose of the business.

7. ‘Selling’ views the customer

8. It is a function that converts the consumer
needs into products.

as the last link in the
business.
8. It is an activity that converts
the goods into cash.

1.7Distribution
It means the physical transfer of goods. It is one of the processes of marketing. It covers the
methods to get the products to the market. It is concerned with physical movement of goods
from producer to wholesaler, from wholesaler to the retailer, and from retailer to the consumers.

1.8Goods
Goods may also be called as product.
They are:

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Essentials of Marketing

Market and Marketing

1.8.1
Consumer goods: These types of goods are purchased by ultimate users or consumers for
their personal use. For example, food, biscuits, toys, clothes, cars, refrigerators, electronics etc
are purchased by consumers to satisfy their non-business wants. These goods may be further
classified as:
• Consumer goods: Consumers and purchasers get commodities such as bread, soap,
sugar, petrol, cold drinks, and stationery items etc at minimum effort and cost. The
purchase of such goods cannot be postponed because they are daily necessities of life.
• Shopping goods: Before making final selection, the consumers make an enquiry as to
the products’ comparative prices, durability, style etc from different shops. Goods like
jewelry, furniture, ready-made garments etc are more costly than convenience goods.
Their need is also less when compared to the convenience goods.
• Specialty goods: Certain products pose special attraction to the consumers. These
types of goods are of high value and are manufactured by reputed companies. For
example, cars, refrigerators, fancy goods, televisions, fans, scooters, photographic
equipment, stereo equipment etc.
1.8.2
Industrial goods: Goods which are used for production or used in producing other products
are industrial goods. These types of goods are generally sold to manufacturers who in turn use
them to make their own products. The industrial goods can be further classified as:
• Raw materials: Raw materials are the basic materials entering physically into the final
products, for example, building stones, raw cotton, raw jute etc.
• Fabricated materials: Materials of this category will enter physically into the final
products, but some type of processing is already undergone, for example, bricks,
copper sheets, leather, yarn etc. As the processing is incomplete, further processing is
required.
• Component parts: Such types of parts have already undergone some processing and
more or less the parts can be called as final products. It means that the assembly of
several component parts makes the final products. The components are visible in the
final products, such as batteries, tyres, speedometer, spark plugs etc.
• Installation: Machines, buildings, equipments etc do not enter into final products
and are durable for a long period. They are essential for production, for example,
gas, power installation etc. They need heavy expenses for installation and sometimes
decide the nature, scope and efficiency of an organization.

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Essentials of Marketing

Market and Marketing

• Accessories: They are light machines or tools which are used for the operation of a
business. They are not used for manufacturing a product, for example, hand-tools,
cash register in retail shop, typewriters, calculators, computers, accounting machines
etc.

1.9Services
Services are tangible activities which are offered for sale as such or in connection with sale of
goods, for example, consultation, banking etc.
Services may be of two types:
• Personal: They comprise education, communication, medical, legal services etc.
• Business: They comprise advising, mercantile credits, collection agencies etc.

1.10

Modern Marketing
Modern marketing covers all business activities in order to know all aspects of demand, product
planning, distribution and facilitating the entire marketing process. Modern marketing gives
importance to a well-coordinated marketing programme. It aims to attract the customers.

1.11

Features of Modern Marketing

1.11.1
Consumer orientation: Modern marketing recognizes that the consumer is supreme. The
managerial attention is focused on the market and the consumer. Management is now concerned
with consumer satisfaction and not profit or sales volume alone. Consumer has become the centre
of all business decisions. Having satisfied customers is the main aim of modern marketing. It is
now believed that profit can be earned only by serving the consumer’s needs.
1.11.2
Modern marketing begins with the customers: Producers in earlier times had little care for the
consumers. Now, production is carried on in large quantity. The manufacturer produces more
than what the people need. The marketer aims to develop the market; the market becomes seller’s
market. Similar marketers appear in the market and there arises competition. The consumer,
who comes in the last stage, accepts the goods; there is no alternative. But the situation has
changed. Market has developed from national to international. Competition is the order of the
day. Businessmen have started realizing that earning profit is possible only through the consumer’s
satisfaction. To satisfy a consumer, his needs are to be known. For this purpose, it has become
necessary to know what the consumer needs. This is possible only when information is collected
from the consumers. Through market research information about current consumer needs can
be known. Therefore, we can say that the task of marketing starts with the consumer and ends
with the consumer. Instead of trying to market what is easiest for us to make, we must find out
much more about what the consumer is willing to buy.
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Essentials of Marketing

Market and Marketing

1.11.3
Modern marketing begins before production: Earlier there was less competition and as such
sales were easily made. But now this stage has changed. The consumer looks for the usefulness
and acceptability of a product. As such it has become necessary to find out the needs and desires
of consumers through market research. The information from the market or the consumer will
decide the future of the product. Thus, product planning and development is undertaken before
the actual production takes place. the pricing, distribution etc are secondary.
1.11.4
Modern marketing is a guiding element: At present competition has increased tremendously
because many manufacturers produce similar goods in large quantities. The ability of the marketer
depends on the ability to find a consumer and to satisfy him. People may choose one among the
many similar products. They decide what product to purchase and what product not to purchase.
Businessmen need to keep this in mind.

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Essentials of Marketing

Marketing System

2 Marketing System
2.1Definition
Meaning: The marketing system means an exchange between two parties i.e. business activity. As an
example for the marketing system, we take a remote village, which consists of a small market, a few
traders and donkeys, camels or bullock-carts for transportation. This is a marketing system which
existed earlier in villages. But gradually changes took place and the marketing task became more
complex. The manufacturers and the end users have no direct contact. The new concept of marketing
– consumer-oriented marketing – took shape. All these cause the appearance of middlemen. Thus the
modern marketing system involves large scale production, tough competition, complex channels of
distribution, communication etc.
Hence the meaning of marketing system involves:
• Business institutions engaged in marketing functions;
• The marketing environment;
• Customers served by business organizations;
• The marketing tasks performed by the system.
Briefly, we can say that:
• Producers, manufacturers etc perform one or more marketing functions. They are
primarily engaged in production. They produce raw materials, semi-finished goods or
services (such as banks), and are the first marketing institutions.
• Middlemen – such as retailers, transporters etc – add time, place, form and
possession utility to the market. All these facilitate the flow of goods from the
producer to the market.
• The ultimate consumers are those who consume the products or services.
• Industrial users are those that use the goods or services in the course of business so as
to produce goods for ultimate consumers – consumer goods or industrial goods.
• The marketing system must aim at distribution, passing information about the
product to the market through advertising, personal selling, display etc.

2.2

Marketing Process
Marketing is a process by means of which goods and services are exchanged. The goal of marketing
is to move the products from the producer to the consumer. The flow of goods from the place of
its origin to the place of distribution involves a number of activities, which is not a simple task.
These activities of transfer are functions which are known as marketing process.

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Essentials of Marketing

Marketing System

The marketing process involves three major activities:
2.2.1 Collection: This is the first process of marketing. It aims at the collection of products at a central
place. It is because of:
• Small lot output: Agricultural produce, eggs, vegetables, dairy products such as milk,
butter etc are collected at a central place from a large number of farmers. These are
marketed in natural form. To make other marketing services such as grading and
standardization, for the benefit of consumers, all products – rice, wheat, cotton, tea
etc – are brought to a central place.
• Assembly of parts: Some types of manufactured products need assembly work,
for example, spare parts of products. These parts are manufactured by different
companies and at different places. To make the final products, collection is necessary.
• Regular supply: To ensure the continuous supply of products to the consumers,
collection at a single point is necessary. Generally these jobs are undertaken by
wholesalers, exporters, importers, agents etc.
2.2.2
Distribution: The goods or products, assembled at a certain place, have to be distributed to the
consumers.
• Some of the products are distributed to manufacturers and the remaining goods are
distributed to the final consumers through a chain of wholesalers, retailers, agents etc.
• Distribution is necessary because the buyers are not located near the manufacturer.
• The purpose of production aims at finding consumers at profitable and acceptable
price. For this, a good system of distribution is necessary.
2.2.3
Equalization: Between the two activities i.e. collection and distribution, there is the equalization
process.
• Demand and supply of goods should be balanced through storage and transportation.
• Supply should meet the demand in needed quantity and quality at the required time
and place.
• Equalization aims at regular supply of goods which are produced in a particular
season, but consumed throughout the year e.g. rice, wheat, fruit, vegetables.
Similarly, some type of goods have only seasonal demand, but production takes place
continuously, for example, rain-coats, umbrellas, sweaters, woolen socks etc. This
equalization ensures regular supply.
• Transport brings equalization of supply, place-wise.
• Warehousing enables equalization of supply, time-wise.

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Essentials of Marketing

Marketing Functions

3 Marketing Functions
Marketing involves certain activities to make the goods to start journey from the place of production
to the place of consumption. The act, operation and service which are concerned with the marketing
activities are called marketing functions. The marketing functions link the producer and the
ultimate consumer. The functions of marketing involve a number of operations to be performed
side by side. Take for example wheat; it travels from the land (farmer) to the final consumer
through the functions of collection or buying, storing, grading, packing, transporting etc. Thus it
involves several functions including risk-bearing and market information.

3.1Classification:
The marketing functions are classified as under:
3.1.1

Exchange functions: Exchange brings about changes in the ownership of products.
• Buying: It is the first step of marketing functions. It is carried out by all marketers –
manufacturers, wholesalers, retailers etc. Buying and selling both happen at the same
time. For example, if I buy a thing, then there should be someone to sell the thing.
That is, without selling, there is no buying. Buying may be done either directly or
through middlemen.

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Essentials of Marketing

Marketing Functions

• Assembling: Assembling is concerned with the collection of goods of the same type
from different sources at a place for further movement. Generally, goods are bought
from several sellers. When they are to be bought from different small producers,
they are to be assembled together at a central place. The main aim of assembling is to
bring the products to a central place in order to distribute them either for production
or consumption purposes. The job of assembling is carried out by middlemen,
manufacturers etc.
• Selling: Selling and buying happen together. In business, the selling function is
very important. The main aim of marketing is to sell the products at a profit. Sales
are concerned with the activities which change the desire into demand. In the
modern world, the process of selling is an important function because of large scale
production, tough competition etc.
3.1.2
Physical functions: The next function of the marketing process is the physical supply. Physical
transfer of goods from the manufacturer to the consumer takes place by means of storage and
transportation
• Storage: Products are kept safe from the time of production to the time of
consumption. Production may be during a particular season, but demand is regular.
In the same way, production may be regular, but demand may be only seasonal. In
both the cases, products have to be stored. Storage function is necessary in collection
as well as distribution. The function is done by manufacturers, wholesalers, and
professional warehouse keepers. Marketers can easily balance the supply with demand
through warehousing and transportation.
• Transportation: Since markets are geographically separated from the production
place, transportation is essential. When the distance between the production place
and the consumption place increases, the importance of transport increases. The
goods from a place where they are not needed are transferred to the place where they
are needed.
3.1.3
Facilitating functions: These functions are supporting activities. But these activities contribute
in carrying out other functions.

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Essentials of Marketing

Marketing Functions

• Financing: Finance is needed for production as well as for marketing. Generally, there
is a gap of period between the purchase of raw materials and the production of raw
materials and the production of finished goods. It means that the manufacturer who
invests in raw materials has to wait till the consumers pay for the finished goods. This
waiting period is undertaken by financial institutions by granting loans. At every stage
of buying or selling, the question of payment of price arises. The bankers – who are
dealers in money – provide money on credit to the business. There are various kinds
of finance needed – short term, medium term, long term etc. The sources of finance
are commercial banks, finance companies etc.
• Risk-bearing: In business there are several risks – damage to goods, physical loss,
changes in the value of goods, bad management, credit losses etc. The losses may also
be on account of fire, flood, bad debts etc. In all such cases business organizations
try to reduce the possibility of risks. Some risks are insurable while others are not.
For example, loss on account of fire, accident etc can be insured with insurance
companies. But the loss on account of fall in demand, prices, competition etc cannot
be insured. Marketing plans have to keep in mind such situations.
• Standardization: Standard is used in providing certain basic qualities to the goods
for their use. Standard is a specification. It is a ‘grade’ or ‘category.’ Standards are fixed
on physical characteristics of products. The standardized products possess uniform
characteristics, for example, shape, weight, size etc. After standardization several
products are graded. For example, grading of fruit and other agricultural products etc
is done according to their size, colour, juice content, taste etc. Standardization and
grading are closely related activities. Both are important and widen the markets. It is
also useful for sales by description.
• Market information: The success of marketing depends on correct and timely
decisions. These decisions are based on market information. Modern marketing
must have information of size, location, characteristics of market. The customer’s
wants, habits, purchasing power etc are to be considered. The strength or weakness
of competitors, supply and demand is also to be taken into account. Marketing
information includes all facts, estimates, opinions and other information used in
making decisions, which affect the marketing of products and services.
• Promotion: Promotion is a wide term including advertising, personal selling, sales
promotions etc. Marketing communications are essential for both sellers and buyers.
Promotional programmes are needed for consumer goods and industrial goods.
Effective promotion will increase the market share of manufacturers.

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Essentials of Marketing

Pricing

4Pricing
Price is the main factor which affects the sales organization. A good price policy is of great
importance to the producers, wholesalers, retailers and the consumers. If the prices are too high,
only a few buyers purchase and if the prices are low, several buyers purchase. Thus market may be
reduced or increased. Therefore, a sound pricing policy must be adopted to have maximum sales.
Prices play an important role in the economy. The time within which the product is sold varies.
The goods, which are of perishable nature and have frequent changes of style, may not be stocked
for a long time. In the case of durable goods, they can be stocked for a longer time, in the hope
of getting favourable price. Holding the stock depends upon the financial resources of the farmer,
middlemen, wholesaler etc, and the perishable nature of goods.

4.1

What is Price?
Price may be defined as the exchange of goods or services in terms of money. Without price there
is no marketing in the society.
What you pay is the price for what you get.

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Essentials of Marketing

Pricing
When you pay fee to school or college.
When you engage a labour on wages.
When you pay rent on your house.

You pay a

When you pay salary to a salesperson.

WZ/

When you pay charges on your trip.
When you pay interest on loans.
When you pay for your food, clothing etc.

4.1.1

Importance of Price
The market price of a product influences wages, rent, interest and profits. The price is a matter of
great importance to the buyer and the seller. Exchange of the goods or services takes place only
when the prices are agreed upon by the seller and the buyer. Price can decide the success or failure
of a business organization. The marketing demand for a product or service to a large extent depends
upon the price of the product. Price will affect the competitive position and share of the market.

4.2

Pricing Objectives
To perform the marketing job efficiently, the management has to set goals first. Before determining
the price itself, the management must decide the objectives of pricing. The main goals in pricing
may be classified as follows:

4.2.1
Pricing for target return: Business needs capital for various types of activities. When a
businessman invests capital in a business, he calculates the probable return on his investment.
A certain rate of return on investment is aimed. Then the price is fixed accordingly. The target of a
business organization is fixed in terms of investment. For example, a company may set a target of
10% or 15% return on investment. This target may be for a long term or short term. Wholesalers
and retailers may follow the short term, usually a year. They charge a certain percentage over and
above the price at which they purchased, which is enough to meet operational costs and some
profit. This target may be revised from time to time. The objective of pricing is also known as
pricing for profit.

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Essentials of Marketing

Pricing

4.2.2
Market share: The target share of the market and the expected sales are the most important
consideration in pricing the products. Sometimes a company may lower the prices, in comparison
to the competitors’ products, with the intention to increase its market share. By reducing the price
customers get the benefit. The management can compare the present market share with the past
market share and can know well whether the market share is going up or coming down. When
the price is lowered, the profit may come down but the sales will increase as more customers
may buy the product. This way the company will also not lose but rather gain ultimately.
4.2.3
To meet or prevent competition: The pricing objective may be to meet or prevent competition.
While fixing the price, the price of similar products, produced by the same company, will have
to be considered. At the time of introduction of new products to the market, a low price is likely
to attract customers, and can establish a good market share. The low price policy discourages
the competitors.
4.2.4
Profit maximization: Business is run with an idea of earning profit at the maximum. The aim
should be to maximize profits on total output, rather than on every item.
4.2.5
Stabilize price: It is long term objective and aims at preventing frequent changes in price. It also
prevents price war among the competitors. When the price changes often, customers start losing
confidence in the product. The prices are determined in such a way that they do not fall below
a particular level and also do not go up beyond a certain level. The aim is to live and let live.
The companies remain satisfied with small profits during periods of short supply of products.
4.2.6
Customers’ ability to pay: The prices that are charged quite often differ from person to person,
according to his ability to pay. For example, several doctors charge fees for their services according
to the paying ability of the patient.

4.3

Procedure for Price Determination
Every business organization follows its own policy in determining the prices of its products.
However, the following steps may generally be followed:

4.3.1
Determining demand for the product: The marketer has to make an estimate for his product.
Each price that the company might charge will lead to a different level of demand. There is a
relation between the price charged and the resulting demand i.e. normally higher the price,
lower the demand. First it is to be determined whether there is a price which the market expects,
and second, to estimate the sales volume at different prices. Comparison of the prices of rival
products is a good guide in pricing products. In certain cases, the marketer conducts regular
survey of buyers, retailers, and wholesalers etc to determine the expected price.

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Essentials of Marketing

Pricing

4.3.2
Predict and analyze the competitive reaction: The competitors can influence the price. To
predict the reactions of the competitors, it is necessary to collect information about their product,
cost, market share etc.
4.3.3
Establish expected market share: A marketer must decide the share of the market at the expected
price. Low priced products may get larger share of the market, and a high priced product may get
a small share of the market. Share of the market is also decided by such factors such as present
production capacity, cost of plant extension etc.
4.3.4
Select pricing strategy: One strategy is to charge high initial price of the product, at the time
of introduction of the product in the market. Manufacturers aim at profit maximization in the
shortest period, when market conditions are also favourable. The price is brought down when
competitors enter the market. The other strategy is to keep a low introductory price to get a
large market share. Here the aim is to catch the major portion of the market.

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Essentials of Marketing

Pricing

4.3.5
Consider company’s marketing policies: For durable products – such as car, radio, clothes
etc – prices need not be reduced. But when the fashion changes, the marketer may compel
the wholesalers to sell out the stocks before they go out of fashion. Systems of distribution of
products also influence a manufacturer’s price. A company may sell directly to wholesalers and
retailers without any middlemen. Thus it can offer lower price as the likely cost on account of
middlemen comes down.
4.3.6
Setting the price: After studying and analyzing the above factors different companies may decide
the prices of their products. They may also revise their prices from time to time keeping in mind
the demand and market share for their products.

4.4

Price Leader
All the marketers should decide, whether as a result of policy, they will initiate or follow price
changes. The company initiating price changes is called price leader and those following it, price
followers.
Factors affecting price
Price moves up: reasons

Price moves down: reasons

1. There is more demand but less

1. There is more supply but less
demand.

supply.
2. There are weak competitors.

2. There are strong competitors.

3. Sellers hold up goods for higher

3. Sellers push out goods.

price.
4. Wages are stable and productivity
rises.

4. There is increase in wages but not in
productivity.

5. Factors of production are used
efficiently.

5. Factors of production are used
inefficiently.

6. Buyers are not eager to buy.
6. Buyers are eager to buy.
7. Goods are perishable by nature.
7. Goods are non-perishable by nature.

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Essentials of Marketing

4.5

Pricing

One price or Variable Price
Generally marketers prefer to sell at one price basis i.e. offering all similar buyers the same price.
This is a fair trade practice, and there is no bargaining. Under variable price, the seller sells similar
quantities at different prices. Under this policy the price is usually set as a result of bargaining.

4.6

Resale Price Maintenance
Resale price is a price at which a retailer sells the products to his buyers. Resale price maintenance
is a policy where manufacturers want to control the prices at which retailers will resell the
manufacturers’ product. Manufacturers adopt this as marketing policy, identify their product by
brand, patent, trade mark etc, and place restrictions and control on the price at which the product
will be sold by the retailers. The price will be fixed, printed on the product, and the product will
be sold at not more than the maximum price printed. The manufacturer must see that the price
is maintained till his products reach the ultimate consumer. This policy prevents unhealthy price
competition and bargaining.

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Essentials of Marketing

Branding and Packaging

5 Branding and Packaging
5.1Branding
When a manufacturer wants to introduce a new product to the market, he wants to identify his
product with an attractive name – Brand name. The buyers identify the product and differentiate
it from those of competitors. Now, almost all products are branded and packaged attractively. The
basic purpose of branding is to fix the identity of the producer of a given product.
5.1.1

What is a Brand?
• Brand: A brand is a name, term, sign, symbol or design or a combination of them by
which the buyers can identify the goods or services of one seller or group of sellers
and differentiate them from those of competitors.
• Brand name: That part of a brand which can be spoken, for example, Sony TV,
Toyota car, Nike shoes etc.
• Brand mark: That part of a brand which can be recognized but cannot be spoken,
such as a symbol, design, colouring or lettering.

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