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Advertising is an impersonal, paid form of communication used by the marketers for the promotion of goods and services. On the other hand, personal selling involves direct communication of the seller with the potential customers. That is, it involves direct face to face communication of the sellers with the customers for the purpose of sale of the product. The following points highlight the difference between advertising and personal selling.

Shopping products purchased are the following.

(i) Clothes

(ii) Jewellery

(iii) Television

(iv) Shoes

(v) Home furniture

Expenditure on advertising is often considered as a social waste. Advertising is criticised on the grounds that it unnecessarily adds to the cost of the company, weakens social values and aggravates, builds up consumer needs and desires for multiple products. However, proponents of advertising argue that advertisement through greater sales brings down the cost and aids the process of growth.

The following points help in judging whether advertising can be considered as a waste:

(a) Higher Cost: Advertisement expenses add to the cost of the company. The companies in turn, pass this increased cost to the consumers in the form of higher prices. However, the supporters of advertisement argue that advertisement in fact brings down the per unit cost of production. This is because through advertisement greater number of customers can be attracted towards the product which in turn implies an increase in the demand for the product. In response to the increased demand, the manufacturers increase production. With increased production the per unit cost of production comes down. Thus, it can be said, that even though advertisement expenses add to the cost, this increase in cost can be compensated through fall in the per unit cost due to increased demand and production.

(b) Weakens Social Values: One of the major criticisms to advertising is that it weakens social values and instead promotes materialism in the society. Advertisement attracts customers towards new products and induces them to purchase it. With increased knowledge about the availability of new products, the customers feel dissatisfied about what they currently have. In the process, often they end up buying what they don’t even require. However, such a process of discontentment and purchase of new products is never ending and materialism increases.

On the other hand, it is argued that advertisements just inform the buyers about the availability of various products and the final decision to purchase the product rests with the consumer. Advertisement increases the knowledge of the customers and keeps them informed.

(c) Creates Confusion: It is argued that a large number of advertisements on similar products confuse the customers. For example, advertisements of different hair oil claim for healthy and long hair by the use of their product. With numerous advertisements the consumer gets confused as to the product of which of the brand should be purchased.

On the contrary, supporters of advertisement do not agree with this criticism and argue that advertisement provided a choice to the consumers. The consumers can make a rational choice for themselves after analysing various factors such as price, style, quality, etc.

(d) Promotes Inferior Goods: It is argued that products of both superior quality as well as inferior quality are advertised. Through advertisement, demand for inferior goods can also be induced. However, such a claim is only partially true. This is because quality is a relative concept. What is inferior to one consumer can be superior to another. Advertisements promote all kinds of products and the consumer purchases them if it suits their requirements.

(e) Objectionable Advertisements: It is said that often advertisement undermine social values and are in bad taste. Sometimes the language, images and the content of the advertisement may not appeal to the society at large. For example, women in men cantered products (such as, shaving creams, deodorants, etc.) are often criticised.

As against this, it is argued that good or bad taste is a subjective phenomenon and varies from person to person. What may be acceptable by one may be offensive for other.

Thus, it can be said that expenditure on advertisement though draws criticism, but the objections are not entirely true. While on one hand, they can be misused and have their own cons but on the other hand one cannot deny the benefits derived from advertisement.

b. Transaction

b. Idea generation

The mental act, condition or habit of placing trust or condence in another shows Belief options.

Culture is NOT the stage that customers go through in the process of adopting a new product.

One of the important decisions of marketing involves the choice regarding which channel of distribution to opt for. The following factors determine the choice of channels.

(i) Product Type: The choice of channel of distribution is based on the type of the product that is produced. It is important to check whether the product is perishable or non-perishable, whether it is an industrial or a consumer product, whether its unit value is high or low and also, the degree of complexity of the product. For instance, if a good is perishable then short channels should be used rather than the long ones. Similarly, if a product has a low unit value then longer channel are preferred. In a similar manner, consumer products are distributed through long channels while industrial products are distributed through short channels.

(ii) Characteristics of the Company: The two important characteristics of a company that affect the choice of channel are its financial strength and the degree of control that the company wishes to hold on the intermediaries. Shorter channels require greater funds than longer channels and also offer greater control over the members of the channel (intermediaries). Thus, companies that are financially strong or wish to command greater control over the channel of distribution opt for shorter channels of distribution.

(iii) Competitive Factors: The degree of competition and the channels opted by other competitors affect the choice of distribution channel. Depending on its policies a company can adopt a similar channel as adopted by its competitors or opt for a different channel. For example, if competitors of a company opt for sale through retail store, it may also do the same or it can opt a different channel such as direct selling.

(iv) Environmental Factors: Environmental factors such as economic constraints and legal policies play an important role in the choice of channel of distribution. For example, requirement of complex legal formalities at each step of distribution induces the companies to opt for shorter channels.

(v) Market Factors: Various other factors such as size of the market, geographical concentration of buyers, quantity demanded, etc. also affect the choice between the channels. For instance, if potential buyers are concentrated in a small geographical area then, shorter channels are used. As against this, if the buyers are dispersed in a larger area then longer channels of distribution may be used.

Price refers to the money paid by the customers to obtain a product and this price affects its demand. Thereby, pricing plays an important role in the marketing of goods. The price charged by a firm for its product affects it revenue and profits as well. In addition to this, pricing also acts as a competitive tool. Firms producing similar substitutable products compete with each other on the basis of price. Thus, the firms must pay due emphasis on proper pricing of their products. The marketers must analyse properly the various factors that determine the price and decide a suitable price for the product.

The following are the factors that affect the determination of the price of a product or a service.

(a) Cost of Product: Cost of the product plays an important role in determining the price. It comprises of cost involved in production, distribution and sale of the product. Cost of product can be classified into three broad categories, namely, fixed cost, variable cost and semi variable cost. Fixed cost refers to those cost that do not vary with the level of output produced. For example, for the production of a good, a firm incurs cost on the purchase of machinery, land, etc. Such costs are fixed cost. On the other hand, variable cost refers to those costs that vary in direct proportion with the volume of production. That is, as the level of output increases, the variable cost also increases. For example, the cost incurred on labour, raw material, etc. are variable cost. Semi variable cost refers to those costs that vary with the level of output but not in direct proportion. For example, commission paid to intermediaries for the sale of good is a semi-variable cost.

Generally, the firms decide the price of a product such that they are able to cover all their cost. In addition, they also aim at earning some profit over and above the cost incurred by them. Thus, the firms decide upon the price keeping in consideration the cost as well as the profit factor.

(b) Demand for the Product: While determining the price, a firm must also consider the demand for its product. Herein, the elasticity of demand plays an important role. Elasticity of demand refers to the proportionate change in demand due to a given proportionate change in price. If due to small proportionate a change in price, the demand changes by a larger proportion, the demand is said to be elastic. That is, demand is said to be elastic, if a small rise (or, fall) in price leads to a relatively large fall (or, rise) in price. In this case, the firm cannot charge a higher price as it would lead to a large fall in the demand. On the other hand, demand is said to be inelastic, if a change in price does not affect the demand much. In this case, the firm has the privilege of charging a higher price, as even at a higher price, the demand would not fall much. Thus, price for goods having elastic demand is generally lower than price for goods having inelastic demand.

(c) Degree of Competition in the Market: Generally, higher the competition in the market, the lower is the price that a firm can charge for its product. This is because in case of high competition, if a firm attempts to charge a high price, it would lose its customers to the competitors. On the other hand, if a firm faces very little competition for its product then it has the freedom of charging a higher price.

(d) Government Regulations: At times to protect the interest of public at large, the government intervenes in the determination of price. For example, in case of essential commodities, the government can declare a maximum price that can be charged.

(e) Objectives of Pricing: Every firm has various pricing objectives which it considers while deciding a price. The following are some of the objectives of pricing:

i. Profit Maximisation: Every firm aims at profit maximisation. However, if the firm aims at maximising profits only in the short run, then it may decide to charge a higher price and increase its revenue. On the other hand, if the firm aims to maximise profit in the long run, it would charge a lower price so as to acquire a greater share of the market and benefit from larger sales.

ii. Acquiring Market Share: If a firm desires to capture a greater market share, it would charge a lower price so as to attract a greater number of customers towards its product.

iii. Surviving Competition: In face of high competition, a firm would keep the price for its product lower. This is because if it charges a higher price, it would lose its customers to the competitors.

iv. Focus on Quality: If the firm emphasis on enhancing the quality of the product, it charges a higher price to cover the additional cost incurred.

(f) Method of Marketing: Methods of marketing used by the firm such as distribution, advertisement, customer services, branding, etc. also affect the determination of prices. For example, if the firm uses intense advertising for the promotion of the product, then it would charge a higher price.

Channels of distribution refer to the individuals, institutions, agents who facilitate the process of distribution. As the potential consumers of a product are spread over a larger geographical area, it becomes difficult for the producers or the manufacturers to directly contact the customers for the sale of their products. Here, channels of distribution play an important role. They facilitate the transfer of goods from the place of production to the place where they are consumed. For example, for a manufacturer of sugar in Punjab, it would be difficult to contact the customers in other parts of the country. To ease the process, it would sell its product to whole sellers who in turn would sell it to the retailers. The retailers then finally sell the product to the customers. In addition, channels of distribution also reduce the efforts of the consumers by offering various goods and services at a convenient single location. For example, at a retail store a customer can get a wide variety of goods.

Thus, channels of distribution refer to the set of individuals, agents and institution that facilitate the exchange or transfer of goods and services from the producer to the consumer.

The following are the functions of channels of distribution.

(a) Arrangement: An intermediary receives the supply of goods from various sources. However, the goods received differ in terms of size, quality and features. The intermediary arranges or sorts these goods into homogeneous groups based on their characteristics.

(b) Collection: A middle man accumulates and maintains large stock of the goods so as to ensure a continuous and smooth flow of supply.

(c) Allocation and Packing: A middle man breaks the whole lot of goods into small, marketable units. It repacks the goods into convenient packets.

(d) Building Variety: An intermediary acquires various goods from different sources and assembles them at a single place. Thus, it maintains a variety of goods. For example, a grocer maintains a wide variety of products for sale.

(e) Promotion of Product: They assist in the promotion activities undertaken by the manufacturers. For example, the manufacturers use advertising for the promotion of their product. The intermediaries can aid this process by putting banners and displays.

(f) Mediation: On one hand, the middle men interact with the producers and on the other hand, with the customers. Thus, they form a link between the producers and the customers. They negotiate on matters related to price, quality, etc. and work towards satisfying the needs of both the parties.

(g) Bearing Risk: Intermediaries acquire goods from the producers and keep them in their possession till the final sale. In the process they bear the risk of fluctuations in demand, price, spoilage, etc. For example, suppose a retailer acquires large quantities of sugar. However, after a period of time, the price of sugar rises which reduces its demand. Thereby, the retailer may lose out as the stock remains unsold.

Once the good are produced, packaged, promoted, branded and priced they must be made available to the consumers. That is, they must be moved from the place where they are produced to the place where they would be consumed. This physical movement of products from the place of production to the place of consumption is known as physical distribution of products. It involves the following four major activities.

(a) Processing of Order: Processing of order and delivery of goods is the most important component of buyer-seller relationship. Processing of order comprises of a number of a steps such as placement of order, transmission of the order by the intermediaries to the manufacturer, maintenance of inventory as per the requirement, delivery of goods, etc. All such processes take time. Physical distribution system should be such that it should ensure speedy and proper order processing. Generally, there exists a direct relationship between speed and accuracy of order processing and customer satisfaction. Fast and accurate order processing provides a consumer greater satisfaction. Thus, a proper system of order processing is of vital importance.

(b) Transportation of Products: Transportation of products refers to the physical movement of goods from the place where they are manufactured to the place where they are consumed. The potential consumers of a product are spread across a large geographical area. To make the goods physically available to them, they must be transported from the place of production to the place of consumption. Unless the products are physically transported and made available at the place of consumption, sale cannot take place.

(c) Warehousing: Generally, there is a time lag between the act of production and the act of sale or consumption. This implies that the goods must be properly stored and assorted before the actual sale takes place. This process of storing and assorting the products is known as warehousing. Proper warehousing ensures efficiency in delivery and sale of products which in turn results in greater customer satisfaction. For example, through warehousing a company can maintain stock of products and ensure timely delivery of goods as and when required. However, maintaining warehouses involves its own cost. Thus, a company must weigh the relative benefits and costs associated with warehousing and maintain a balance between the two as per the requirement.

(d) Maintenance of Inventory: Inventory implies maintaining a stock of products. The firms maintain inventory so as to ensure timely supply of products. Inventory shares a direct relation with customer service. Maintenance of higher inventory helps a firm in ensuring timely delivery of goods to the customers and thereby, improve customer service. However, maintenance of inventory involves a cost as a huge amount of capital remains tied up in the stock unless it is sold. Thus, the firms must strike a balance between customer service and cost. A firms’ decision to maintain inventory is based on several factors such as how well the distribution system responds to the orders and the deliveries, cost involved in holding the inventory, firms’ objectives, etc. An appropriate inventory must be decided by the firm keeping in consideration the various costs and benefits involved.

Physical distribution refers to movement of products from the place of production to the place of consumption. The following are the components of physical distribution.

(i) Processing of Order: Processing of order comprises of a number of steps such as placement of order, transmission of the order by the intermediaries to the manufacturer, maintenance of inventory as per the requirement, delivery of goods, etc. As all such processes take time, a physical distribution system should be such that it should ensure speedy and proper order processing. Generally, there exists a direct relationship between speed and accuracy of order processing and customer satisfaction. Fast and accurate order processing results in greater consumer satisfaction.

(ii) Transportation of Products: Transportation of products refers to the physical movement of goods from the place where they are manufactured to the place where they are consumed. To make the goods physically available to the consumers they must be transported from the place of production to the place of consumption.

(iii) Warehousing: Warehousing refers to the process of storing the produced goods before the final act of sale. If a company has a larger number of warehouses, it will be able to readily provide the goods on time at different locations. However, maintaining warehouses involves its own cost. Thus, a company must weigh the relative benefits and costs associated with warehousing and maintain a balance between the two as per the requirement.

(iv) Maintenance of Inventory: The firms maintain inventory so as to ensure timely supply of products. Similar to warehousing, maintenance of inventory also shares a positive relation with customer service. However, maintenance of inventory involves a cost as a huge amount of capital remains tied up in the stock unless it is sold. Thus, the firms must strike a balance between customer service and cost.

Advertising is a technique used for promotion of a product. Through advertising the companies attract customers towards their product and induce them to purchase it. Some of the common modes of advertising are newspapers, magazines, television, etc. The following are the important features of advertising.

(i) Cost Involved: Advertising involves a cost. It is a paid form of promotion. The costs involved in advertising are to be borne by the sponsors.

(ii) Impersonal Mode: Advertising is an impersonal mode of communication. That is, there is no face-to-face interaction between the customer and the advertiser. Thus, it lacks a personal touch and creates a monologue.

(iii) Specific Sponsor: There are always some identified individuals or sponsors who undertake the responsibility of designing it and bearing the cost involved.

Sales promotion refers to the incentives that are offered to the buyers so as to encourage them to purchase the product. It included activities such as offering discounts, gifts, free samples, etc. Such activities supplement other promotional activities undertaken by the company such as advertising and direct selling. They increasingly attract the customers and induce them to immediately purchase the product. Such activities are especially useful at the time of launch of a new product. They bring an initial boost to sales. For example, discounts are given in the form of offering the product at a lower price than the listed price. Free gifts are offered in the form of quantity gifts (such as 20% extra or buy 2, get 1 free). Free samples are provided in the form of small packets when launching a new brand. Such incentives are opted by the companies to attract more customers and boost its sales.

Industrial products refer to those products that are used as inputs for the production of other goods. Such goods are not meant for final consumption rather they are used as raw material and inputs by the manufacturers for the production of consumer goods. For example, machines, tools etc. are industrial products. As against this, consumer products refer to those products that are used by the ultimate customers for their personal consumption purposes. For example, toothpaste, edible oil, furniture, etc. are consumer goods. The following points highlight the difference between industrial products and consumer products.

When a customer decides to buy a product, his/her main focus lies on the utility which he/she receives while consuming it. A customer seeks different types of satisfaction from the product. Benefits derived from a product can be of three types- functional benefits, psychological benefits and social benefits. For instance, when a consumer purchases a car, it provides him functional utility as a means of transport. Besides, he also receives a psychological benefit in the form of pride and self-esteem that he has bought a car. Along with it comes the social benefit in the form of acceptance by the peers. Thus, a product is said to be a bundle of utilities and a buyer while buying a product values all such kinds of utilities.

In the marketing process, labelling plays an important role in packaging of the product. Labelling basically provides the information about the product in the form of a tag (in cases of local unbranded products such as rice, wheat, etc.) or graphics (such as a lady applying cream on face for a face-cream).

There are various functions performed by labelling which are as follows:

(i) Description of Use and Contents: The main function performed by labelling is to provide the description about the product regarding its use, application, cautions, content, etc. For example, on the bottle of a shampoo, the contents are written, along with the cautions such as keep away from children below the age of 10. Similarly, on food products such as maggie cuppa mania, a picture of noodles is there describing its appearance. Along with this, the ingredients and procedure of making it is also stated.

(ii) Identification and Differentiation: A label helps in easy identification of the product. It helps the consumers to differentiate their favourable products from other products. For example, in a potato chip product, a man eating potato chips is imprinted for identification. A label also provides other valuable information such as name or address of the manufacturer, net weight, maximum retail price, batch number, etc.

(iii) Standardising and Grading: A label also helps in setting grades for a product. This helps the marketers to classify the product in different categories based on certain specific quality or features. For example, a brand of face-cream comes in different categories such as oily skin, dry skin and normal skin.

(iv) Promotes the Production: An attractive label helps the marketers in promoting the product as well. It helps in attracting more customers towards the product. For example, for maggie noodles, the label says ”Taste bhi, Health bhi”. Herein, label plays an important role in highlighting the product and promoting its sale.

(v) Information Required for Law: Label also provides and mentions the information which are required to be mentioned as per the law. For example, on a packet of tobacco it is written ‘chewing tobacco is injurious to health’.

a) customer satisfaction

b) Develop sales tactics.

b.    Decline.

b. Market segmentation, target marketing and market positioning

The ultimate way to test a new consumer product is to put it into full-blown Test markets.

d. Simulated test marketing

A Product concept is an elaborated version of the idea expressed in consumer terms.

b. Large number; reduce

c. Product-development costs rise greatly in later stages and the company only wants those products that can succeed.

Product concept is a detailed version of the idea stated in meaningful consumer terms. 

Gradation means classification of standardized product into certain well dened classes or groups.

Executives, manufacturing employees, and salespeople are all examples of internal sources for new-product ideas.

b. Consumer Behavior

a. Marketing strategy development

b. marketing strategy development

d. Idea screening 

b. Personal selling

A Product concept s a detailed version of the idea stated in meaningful Consumer terms.

d. Telemarketing

c. Product advertising

A consumer contest is an example of Sales promotion.

a. Advertising

3. Physical Evidence

The term Marketing Myopia was written by Theodore Levitt.

a. Convenience goods

c. Integrated marketing

People dened as the employees that execute the service chiey concerns the manner and skill in which they do so.

b. Long-term; customers and suppliers

Newsletters, catalogs, and invitations to organisation-sponsored events are most closely associated with the marketing mix activity of  Promotion.

a. Public relations

c. New products