MM Bba Notes
MM Bba Notes
MM Bba Notes
4. Marketing concept
This concept is all about learning as much as you can about your
customers, and only then creating a product that you know they need.
Out of all the marketing philosophies, this one is probably used the
most in marketing nowadays.
This is probably because it is hard to sell anything nowadays without
knowing your target audience really well and appealing to them. Hence why
this marketing philosophy places a lot of importance on the customer and
their wants and needs.
Unlike the selling marketing concept, which doesn’t care about the needs of
the customer and the market, the marketing concept is all about that.
Arch Wilkinson Shaw, a famous American entrepreneur, said that the goal
of this marketing philosophy is to satisfy needs rather than to sell goods.
By being the first to come up with a product can give the company a huge
head start and enable them to establish themselves as the giant in that
market.
But this is not enough; they also need to constantly work on their products
and to keep learning about the ever-changing needs of their customers if
they don’t want their competitors to beat them.
The Body Shop promotes cruelty free cosmetics and advocates for the ban of animal testing
Throughout the years, we’ve seen an emergence of companies that market
their products as vegan and cruelty-free, as well as more and more
businesses addressing the importance of recycling and lowering the use of
plastic.
Conclusion
There are 5 philosophies or concepts in marketing: the production
concept, the product concept, the selling concept, the marketing concept,
and the societal marketing concept. Each with its characteristics and
uses.
The production concept is all about the mass production of products with
the goal of making them inexpensive and available to the consumers, while
the product philosophy focuses on the quality of the products.
The selling concept deals with the selling of dead stock, which presents the
products the company didn’t succeed in selling.
The marketing concept places the focus on the customer and their needs
and wants, while the societal marketing concept does the same while
speaking up about important issues, like pollution and animal testing.
As mentioned, they’re all used for different purposes and by different
businesses: the production philosophy is used when companies try to
expand, the product concept has found its use in the technology market,
the selling philosophy is used when there’s a lot of unsold products, and
the marketing and societal marketing concepts are used most frequently,
by all sorts of businesses and brands.
What is customer value?
The given action is traditionally a purchase, but could be a sign-up, a vote or a visit,
while the cost refers to anything a customer must forfeit in order to receive the
desired benefit, such as money, data, time, knowledge.
And this leads to the fundamental point: The results of your efforts to create value
are measured in the customers’ perception of that value.
They target customers based on their level, timing, and nature of demand.
Companies need to design strong value propositions to give them the greatest
advantage in their target markets.
1. Production concept: Consumers will favor products that are available and
highly affordable. Management should focus on improving production and
distribution efficiency.
2. Product concept: Consumers will favor products that offer the most quality,
performance, and innovative features. Focus on making continuous product
improvements.
3. Selling concept: Consumers will not buy enough of the firm’s products unless
it undertakes a large-scale selling and promotion effort. It is typically practiced
with unsought goods that the company needs to sell and generally results in
aggressive selling practices. The company sells what it makes rather than what
the market wants.
4. Marketing concept: Organizational goals are achieved by knowing the target
markets’ needs and wants and delivering the desired satisfactions better than
competitors do.
5. Societal concept: Marketing strategy should deliver value to customers in such
a way that improves both customers as wells as society’s well being and long-
run interests.
Step 3: Constructing an integrated marketing plan that delivers
superior value
The company’s marketing strategy outlines which customers the company will
serve and how it will create value. Then the marketer develops integrated
marketing plans that will the intended value to target customers.
It consists of the firm’s marketing mix (4Ps), the set of marketing tools the
firm uses to implement its marketing strategy.
For this, it needs to blend all of these marketing tools into a comprehensive,
integrated marketing program that communicates and delivers the customers’
expected value.
The more loyal to the company’s profitable customers, the higher are the
customer equity. Customer equity may even be a better way to measure its
performance than market share or current sales.
Marketers cannot create customer value and build customer relationships by
themselves. They need to work closely with other company departments and
with partners outside the firm.
For the implementation of the marketing plan, the firm needs to build a
marketing organization.
2. Psychographics
This refers to 'personality and emotions' based on behaviour,
linked to purchase choices, including attitudes, lifestyle,
hobbies, risk aversion, personality and leadership traits.
magazines read and TV. While demographics explain 'who'
your buyer is, psychographics inform you 'why' your
customer buys.
There are a few different ways you can gather data to help
form psychographic profiles for your typical customers.
6. Geography
Drill down by Country, region, area, metropolitan or rural
location, population density or even climate.
7. Behaviour
Refers to the nature of the purchase, brand loyalty, usage
level, benefits sought, distribution channels used, reaction
to marketing factors.
8. Benefit
Benefit is the use and satisfaction gained by the consumer.
Product positioning
Positioning maps are the last element of the STP process.
For this to work, you need two variables to illustrate the
market overview.
Third, he must perform several operative and technical functions as selecting, training,
directing, motivating, and evaluating his department’s personnel for better performance by
each of them.
When the plan is implemented, management must make sure that everything is going fine. He
can ensure this by receiving feedback and taking corrective action if necessary, i.e.,
controlling.
Positioning is the concept of associating and developing a mental
the mind already knows one of the things, it can more easily
that delivers aesthetic high-tech products that are very cool? That’s
Positioning Examples
Let’s get another example: Volvo automobiles. What position does
effective PR.
Let’s take another brand: Listerine. What you think? In the realm of
These kinds of positions develop over a long period of time and this
Why not proactively develop your own position and image? What
your audience?
Remember the Cola commercials? Remember 7-Up’s campaign —
that out. And work to establish a very simple, concise image. The
Once established promote that position. Take a zone and get that
message out broadly and prior to any direct marketing. Get your
idea firmly implanted into the minds of your audience. Try to use
releases, social media, blogs, etc. and get that message out.
Now you can move in with your direct marketing message since you
Improving market position implies undertaking actions against competitors in the industry.
Thus, the concept of competitive strategy (as opposed to cooperative strategy) has a
competitor-orientation. The competitive strategy includes those approaches that prescribe
various ways to build sustainable competitive advantage.
Management’s action plan is the focus of the competitive strategy. management adopts an
action-plan to compete successfully with the competitors in the market. It also aims at
providing superior value to customers.
The objective of competitive strategy is to win the customers’ hearts through satisfying their
needs and finally to attain competitive advantage as well as out-compete the competitors (or
rival companies.).
In addition to these, there are also other strategies that a company can employ when deemed
necessary, such as strategic alliance, collaborative partnerships, merger, acquisition, vertical
integration, outsourcing strategies, etc.
i. barriers to imitation,
ii. the capability of competitors and
iii. the general dynamism of an industry’s environment.
‘Barriers to imitation’ create obstacles for the competitors to copy a company’s distinctive
competencies easily. Competitors will always try to imitate a company’s resources and
capabilities.
Evidence indicates that capabilities are more difficult to imitate than resources.
Of the resources, tangible resources (e.g., plant and machinery equipment, buildings) are
easier to imitate than intangible resources (e.g., patents, goodwill, brand names, technological
know-how, marketing techniques).
There is, thus, a need to build up distinctive competence based on unique capabilities rather
than on tangible resources. This would help the company enjoy the distinctive competence
for a longer period.
If the competitors are strongly committed to doing business in a particular way, they will not
suddenly imitate a company’s innovation.
The third factor of sustainability of distinctive competency – that is, industry dynamism – is
also an important determinant of competitive advantages.
For example, the software industry, electronics industry, and PC industry are highly dynamic
because of the high rate of innovation. In such industries, competitive advantages are short-
lived.
Managers can build sustainable competitive advantage by adopting the following measures.
a. efficiency,
b. quality,
c. innovation, and
d. customer responsiveness.
Because of its focus on these building blocks, Apple Computer Company enjoyed sustained
competitive advantage over a long period from 1987 to 1993.
These are called ‘generic’ because any organization can adopt them irrespective of its
products (or industry in which it operates its business).
Superior efficiency enables a company to lower its costs; superior quality allows it both to
lower costs and charges a higher price; superior customer responsiveness allows it to charge a
higher price, and superior innovation can lead to higher prices or lower unit costs.
Together these four building blocks help a company create more value than the competitors.
When distinctive competencies are developed, they help in improving performance in all the
areas of four building blocks.
Distinctive competencies should be developed in all required areas – never in some areas at
the cost of other important areas. Companies need to be balanced in their pursuit of
distinctive competencies.
Learning organizations can keep themselves at the top of all competitors because they are
always in search of knowledge.
In the process of seeking and disseminating knowledge, they learn from prior mistakes and
improve their work-processes over time.
Instituting continuous improvement mechanism
Continuous improvement of the quality of both products and services (in fact, of everything
that a company does) in sine qua non for sustaining competitive advantage over a longer
period.
Some organizations have been successful in their endeavor to improve quality through
instituting total quality management (TQM) programs and business process reengineering.
Thus, they can build and maintain resources and capabilities – that are essential to achieve
excellence in efficiency, quality, innovation, and customer responsiveness.
They need to overcome the resistance to change so that they can maintain a competitive
advantage.
Companies can overcome the barriers to change through providing effective leadership,
necessary changes in organization structure, creating appropriate control systems and
involving employees in decision making.
Distinctive competencies refer to those strengths of the organization that allow it to attain a
competitive advantage in the market.
These strengths are unique for the organization and they help it achieve superior efficiency,
quality, innovation, and customer responsiveness.
It can be argued that PepsiCo has distinctive competencies in the case of manufacturing
bottled drinking water – Aquafina.
Distinctive competencies have helped PepsiCo achieve lower costs and make product
differentiation better than its competitors.
Thus, distinctive competencies have helped attain distinctive advantages through the
achievement of superior efficiency and quality.
However, the resources of the organization must be unique (i.e., no other companies have
these resources) to be regarded as distinctive competencies. The resources comprise physical,
human, financial, informational, and technological resources.
An organization’s capabilities are the skills necessary to exploit the resources for productive
use. Capabilities are intangible.
It may be noted that an organization may not need unique resources to establish a distinctive
competence as long as no other competitors possess such resources. An organization can
create distinctive competencies only when it simultaneously has unique resources and can use
those resources effectively.
As Hill and Jones have remarked, the business strategy consists of plans of action that
strategic managers adopt to use a company’s resources and distinctive competencies to gain a
competitive advantage over its rivals in a market.
In doing business, companies confront a lot of strategic issues. Management has to address all
these issues effectively to survive in the marketplace.
Business strategy deals with these issues, in addition to ‘how to compete.’ The competitive
strategy, on the other hand, deals with “management’s action plan for competing successfully
and providing superior value to customers.”
What is it?
No matter how well costs are driven or held down, no product can be profitable
unless it sells. Therefore all products must satisfy customer needs and wants. As all
customers are different and seek different benefits from products, businesses would
ideally tailor their products to satisfy each customer's wants and needs. However,
for many businesses this is not achievable, so they need a way of classifying
products in a structure aligned to customer segments, as defined by their needs and
wants. The more flexibility a business has to configure products to different
customer segments at minimal cost, the more segments they can target with the
core product. Which is why it is vital to develop new products with flexibility as a key
feature. Philip Kotler, an economist, devised a model that recognises customers
have five levels of need, ranging from functional or core needs to emotional needs.
The model also recognises that products are merely a means to satisfy customers'
varying needs or wants. He distinguished three drivers of how customers attach
value to a product:
1. Core benefit:
The fundamental need or want that consumers satisfy by consuming the product
or service. For example, the need to process digital images.
2. Generic product:
A version of the product containing only those attributes or characteristics
absolutely necessary for it to function. For example, the need to process digital
images could be satisfied by a generic, low-end, personal computer using free
image processing software or a processing laboratory.
3. Expected product:
The set of attributes or characteristics that buyers normally expect and agree to
when they purchase a product. For example, the computer is specified to deliver
fast image processing and has a high-resolution, accurate colour screen.
4. Augmented product:
The inclusion of additional features, benefits, attributes or related services that
serve to differentiate the product from its competitors. For example, the
computer comes pre-loaded with a high-end image processing software for no
extra cost or at a deeply discounted, incremental cost.
5. Potential product:
This includes all the augmentations and transformations a product might undergo
in the future. To ensure future customer loyalty, a business must aim to surprise
and delight customers in the future by continuing to augment products. For
example, the customer receives ongoing image processing software upgrades
with new and useful features.
Grouping products into product families that align with customer segments helps
modelling and planning sales, as well as production and new product planning.
Analyse and segment customers by their needs customer segments into existing
Align products into families that align to Avoid too many customer
segments, leading to overly
customer segments. complex product and cost/price
Optimise product hierarchies along component structures.
rapid skimming - launching the product at a high price and high promotional level
slow skimming - launching the product at a high price and low promotional level
rapid penetration - launching the product at a low price with significant promotion
slow penetration - launching the product at a low price and minimal promotion
During the introduction stage, you should aim to:
market modification - this includes entering new market segments, redefining target
markets, winning over competitor's customers, converting non-users
product modification - for example, adjusting or improving your product's features,
quality, pricing and differentiating it from other products in the marking
Read more about the growth and maturity stage of a product life cycle.
Packaging
• Packaging is the science, art and technology of enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to the process of designing,
evaluating, and producing packages. Packaging can be described as a coordinated
system of preparing goods for transport, warehousing, logistics, sale, and end use.
Packaging contains, protects, preserves, transports, informs, and sells. In many
countries it is fully integrated into government, business, institutional, industrial, and
personal use.
• Package labeling or labelling is any written, electronic, or graphic
communication on the package or on a separate but associated label.
Physical protection – The objects enclosed in the package may require protection from,
among other things, mechanical shock, vibration, electrostatic discharge,
compression, temperature, etc.
Barrier protection – A barrier to oxygen, water vapor, dust, etc., is often
required. Permeation is a critical factor in design. Some packages
contain desiccants or oxygen absorbers to help extend shelf life. Modified atmospheres or
controlled atmospheres are also maintained in some food packages. Keeping the contents
clean, fresh, sterile and safe for the duration of the intended shelf life is a primary function. A
barrier is also implemented in cases where segregation of two materials prior to end use is
required, as in the case of special paints, glues, medical fluids, etc.
Containment or agglomeration – Small objects are typically grouped together in one
package for reasons of storage and selling efficiency. For example, a single box of 1000
marbles requires less physical handling than 1000 single marbles. Liquids, powders,
and granular materials need containment.
Information transmission – Packages and labels communicate how to use,
transport, recycle, or dispose of the package or product.
With pharmaceuticals, food, medical, and chemicalproducts, some types of information
are required by government legislation. Some packages and labels also are used for track
and trace purposes. Most items include their serial and lot numbers on the packaging, and in
the case of food products, medicine, and some chemicals the packaging often contains
an expiry/best-before date, usually in a shorthand form. Packages may indicate their
construction material with a symbol.
Marketing – Packaging and labels can be used by marketers to encourage potential buyers
to purchase a product. Package graphic design and physical design have been important
and constantly evolving phenomena for several decades. Marketing
communications and graphic design are applied to the surface of the package and often to
the point of sale display. Most packaging is designed to reflect the brand's message and
identity on the one hand while highlighting the respective product concept on the other hand.
Permanent, tamper evident voiding label with a dual number tab to help keep packaging secure with the
additional benefit of being able to track and trace parcels and packages
A single-serving shampoo packet
Security – Packaging can play an important role in reducing the security risks of shipment.
Packages can be made with improved tamper resistance to deter manipulation and they can
also have tamper-evident features indicating that tampering has taken place. Packages can
be engineered to help reduce the risks of package pilferage or the theft and resale of
products: Some package constructions are more resistant to pilferage than other types, and
some have pilfer-indicating seals. Counterfeit consumer goods, unauthorized sales
(diversion), material substitution and tampering can all be minimized or prevented with such
anti-counterfeiting technologies. Packages may include authentication seals and use security
printing to help indicate that the package and contents are not counterfeit. Packages also
can include anti-theft devices such as dye-packs, RFID tags, or electronic article
surveillance tags that can be activated or detected by devices at exit points and require
specialized tools to deactivate. Using packaging in this way is a means of retail loss
prevention.
Convenience – Packages can have features that add convenience in distribution, handling,
stacking, display, sale, opening, reclosing, using, dispensing, reusing, recycling, and ease
of disposal
Portion control – Single serving or single dosage packaging has a precise amount of
contents to control usage. Bulk commodities (such as salt) can be divided into packages that
are a more suitable size for individual households. It also aids the control of inventory: selling
sealed one-liter bottles of milk, rather than having people bring their own bottles to fill
themselves.
Branding/Positioning – Packaging and labels are increasingly used to go beyond
marketing to brand positioning, with the materials used and design chosen key to the
storytelling element of brand development. Due to the increasingly fragmented media
landscape in the digital age this aspect of packaging is of growing importance.
Packaging types
Various types of household packaging for foods
Packaging may be of several different types. For example, a transport package or distribution
package can be the shipping container used to ship, store, and handle the product or inner
packages. Some identify a consumer package as one which is directed toward a consumer or
household.
Packaging may be described in relation to the type of product being packaged: medical
device packaging, bulk chemical packaging, over-the-counter drugpackaging,
retail food packaging, military materiel packaging, pharmaceutical packaging, etc.
It is sometimes convenient to categorize packages by layer or function: primary, secondary, etc.
Primary packaging is the material that first envelops the product and holds it. This usually is
the smallest unit of distribution or use and is the package which is in direct contact with the
contents.
Secondary packaging is outside the primary packaging, and may be used to prevent
pilferage or to group primary packages together.
Tertiary or transit packaging is used for bulk handling, warehouse storage
and transport shipping. The most common form is a palletized unit load that packs tightly
into containers.
These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink
wrap can be primary packaging when applied directly to the product, secondary packaging when
used to combine smaller packages, or tertiary packaging when used to facilitate some types of
distribution, such as to affix a number of cartons on a pallet.
Packaging can also have categories based on the package form. For example, thermoform
packaging and flexible packaging describe broad usage areas
Internal idea sources: the company finds new ideas internally. That means R&D, but also
contributions from employees.
External idea sources: the company finds new ideas externally. This refers to all kinds of external
sources, e.g. distributors and suppliers, but also competitors. The most important external source
are customers, because the new product development process should focus on creating
customer value.
2. Idea screening – The New Product Development Process
The next step in the new product development process is idea screening. Idea screening means
nothing else than filtering the ideas to pick out good ones. In other words, all ideas generated are
screened to spot good ones and drop poor ones as soon as possible. While the purpose of idea
generation was to create a large number of ideas, the purpose of the succeeding stages is to
reduce that number. The reason is that product development costs rise greatly in later stages.
Therefore, the company would like to go ahead only with those product ideas that will turn into
profitable products. Dropping the poor ideas as soon as possible is, consequently, of crucial
importance.
Concept development
Imagine a car manufacturer that has developed an all-electric car. The idea has passed the idea
screening and must now be developed into a concept. The marketer’s task is to develop this new
product into alternative product concepts. Then, the company can find out how attractive each
concept is to customers and choose the best one. Possible product concepts for this electric car
could be:
Concept 1: an affordably priced mid-size car designed as a second family car to be used around
town for visiting friends and doing shopping.
Concept 2: a mid-priced sporty compact car appealing to young singles and couples.
Concept 3: a high-end midsize utility vehicle appealing to those who like the space SUVs provide
but also want an economical car.
As you can see, these concepts need to be quite precise in order to be meaningful. In the next
sub-stage, each concept is tested.
Concept testing
New product concepts, such as those given above, need to be tested with groups of target
consumers. The concepts can be presented to consumers either symbolically or physically. The
question is always: does the particular concept have strong consumer appeal? For some concept
tests, a word or picture description might be sufficient. However, to increase the reliability of the
test, a more concrete and physical presentation of the product concept may be needed. After
exposing the concept to the group of target consumers, they will be asked to answer questions in
order to find out the consumer appeal and customer value of each concept.
The marketing strategy statement consists of three parts and should be formulated carefully:
A description of the target market, the planned value proposition, and the sales, market share
and profit goals for the first few years
An outline of the product’s planned price, distribution and marketing budget for the first year
The planned long-term sales, profit goals and the marketing mix strategy.
5. Business analysis – The New Product Development
Process
Once decided upon a product concept and marketing strategy, management can evaluate the
business attractiveness of the proposed new product. The fifth step in the new product
development process involves a review of the sales, costs and profit projections for the new
product to find out whether these factors satisfy the company’s objectives. If they do, the product
can be moved on to the product development stage.
In order to estimate sales, the company could look at the sales history of similar products and
conduct market surveys. Then, it should be able to estimate minimum and maximum sales to
assess the range of risk. When the sales forecast is prepared, the firm can estimate the expected
costs and profits for a product, including marketing, R&D, operations etc. All the sales and costs
figures together can eventually be used to analyse the new product’s financial attractiveness.
The R&D department will develop and test one or more physical versions of the product concept.
Developing a successful prototype, however, can take days, weeks, months or even years,
depending on the product and prototype methods.
Also, products often undergo tests to make sure they perform safely and effectively. This can be
done by the firm itself or outsourced.
In many cases, marketers involve actual customers in product testing. Consumers can evaluate
prototypes and work with pre-release products. Their experiences may be very useful in the
product development stage.
The amount of test marketing necessary varies with each new product. Especially when
introducing a new product requiring a large investment, when the risks are high, or when the firm
is not sure of the product or its marketing programme, a lot of test marketing may be carried out.
8. Commercialisation
Test marketing has given management the information needed to make the final decision: launch
or do not launch the new product. The final stage in the new product development process is
commercialisation. Commercialisation means nothing else than introducing a new product into
the market. At this point, the highest costs are incurred: the company may need to build or rent a
manufacturing facility. Large amounts may be spent on advertising, sales promotion and other
marketing efforts in the first year.
Introduction timing. For instance, if the economy is down, it might be wise to wait until the
following year to launch the product. However, if competitors are ready to introduce their own
products, the company should push to introduce the new product sooner.
Introduction place. Where to launch the new product? Should it be launched in a single location,
a region, the national market, or the international market? Normally, companies don’t have the
confidence, capital and capacity to launch new products into full national or international
distribution from the start. Instead, they usually develop a planned market rollout over time.
Company sets its pricing policies and strategies in a way that sales
revenue ultimately yields average return on total investment. For
example, company decides to earn 20% return on total investment
of 3 crore rupees. It must set price of product in a way that it can
earn 60 lakh rupees.
2. Sales-related Objectives:
The main sales-related objectives of pricing may include:
i. Sales Growth:
Company’s objective is to increase sales volume. It sets its price in
such a way that more and more sales can be achieved. It is assumed
that sales growth has direct positive impact on the profits. So,
pricing decisions are taken in way that sales volume can be raised.
Setting price, altering in price, and modifying pricing policies are
targeted to improve sales.
3. Competition-related Objectives:
Competition is a powerful factor affecting marketing performance.
Every company tries to react to the competitors by appropriate
business strategies.
4. Customer-related Objectives:
Customers are in center of every marketing decision.
5. Other Objectives:
Over and above the objectives discussed so far, there are certain
objectives that company wants to achieve by pricing.
To Remain Competitive
Companies use temporary sales promotion techniques to compete
with competitor’s short term marketing strategies.
Pull Strategy – The pull strategy attempts to get the customers to ‘pull’ the products
from the company. It involves making use of marketing communication and
initiatives like seasonal discounts, financial schemes, etc.
Push Strategy – The push strategy attempts to push the product away from the
company to the customers. It involves convincing the intermediary channels to push
the product from the distribution channels to the final consumers using promotional
and personal selling efforts. This strategy involves making use of tactics developed
especially for resellers, merchants, dealers, distributors, and agents.
Hybrid Strategy – A hybrid sales promotion strategy makes use of both the pull and
push strategy to sell the product with the least resistance possible. It involves
attracting the customers using special coupons and also providing incentives to the
merchants to sell the brand’s products.
Free Samples: Distributing free samples increases brand awareness and triggers
the psychology of ownership where the person chooses the promoted product if he
liked the sample.
Free Gifts – Offering free gifts attract customers as they get more while paying for
less.
Discounts/Discount Coupons – Discount coupons are a great method of increasing
sales for the short term. People go for discount coupons as they let them buy the
products they couldn’t afford otherwise.
Exchange Schemes – Exchange schemes attract many customers as they get some
value even for their old product.
Finance Schemes – Finance schemes like no-cost EMI, low-interest EMI, etc. makes
it easier for customers to purchase expensive products.
Shipping Schemes – Sometimes huge shipping costs discourage the customers from
buying products. Such short term shipping schemes remove friction.
Bundle Discounts – These deals are a great way to reduce unsold inventory. It
includes selling bundled products at a price lesser than when those number of
products are bought separately.
Bulk Purchase Deals – This is a great sales promotion tactic to reduce unsold
inventory. It includes providing discount to customers who buy in bulk.
Trade Sales Promotion
When the promotion activities are strategized keeping in mind the dealers, distributors, or
agents, it is called trade sales promotion. In this type of sales promotion, offers are provided
within the trade channels with an aim to woo retailers, wholesalers, agents, or distributors.
This is done to get more shelf space as compared to competitors, motivate the dealers to sell
more of the brand’s products and to increase the sales indirectly.
Referral Bonuses
Referral marketing is a great sales promotion strategy where the company pushes its own
customers to bring in new customers. This is done by providing them with special discounts,
offers, cashback, or actual monetary benefits.
PUBLICITY
In marketing, publicity is the public visibility or awareness for
any product, service or organization (company, charity, etc.). It may also refer to the
movement of information from its source to the general public, often (but not always) via
the media. The subjects of publicity include people of public interest, goods and services,
organizations, and works of art or entertainment.
A publicist is someone that carries out publicity, while public relations (PR) is the strategic
management function that helps an organization establish and maintain communication with
the public. This can be done internally, without the use of popular media.
Types of Publicity
Your business can pursue several types of publicity, including:
For example, subscribers to teen magazines might be presented with Facebook ads
for acne medication which, based on their age, they are likely to need. Or members
of the United States Equestrian Federation might all receive an email promotion
offering special pricing on horse gear. Current residents of Wilmington, Delaware
might receive a flyer announcing the arrival of Wegmans supermarket to their area.
Conversely, people in Wilmington, Ohio would not.
Brochures
Catalogs
Fliers
Newsletters
Post cards
Coupons
Emails
Targeted online display ads
Phone calls
Text messages
The Goal
While some marketing techniques aim to increase awareness or to educate markets
about a company’s products or services, direct marketing’s sole goal is to persuade
the recipient to take action. While getting a sale is the ultimate goal, some
customers will not be ready to buy on-the-spot. But they might:
Visit a website
Call for more information
Return a postcard requesting a quote
Enter their name and email address
Make a purchase
You can make the message personal, making the recipient feel it is meant just for
them
It is more cost-effective to market to buyers who have been identified as likely to
buy
For that reason it also has a higher return on investment, since the likelihood of
making a sale to a targeted customer list is higher to begin with.
It is measurable. Direct marketing uses a number of built-in ways to track the
success of each campaign, allowing you to improve with each mail or email
cycle.
Integrated Marketing Communications (IMC) is a strategic, collaborative, and promotional
marketing function where a targeted audience receives consistent and persuasive brand
messaging through various marketing channels in an integrated way to move buyer's through
the decision making process. At the most basic level, integrated marketing communications
helps to ensure that marketers are using all of the available channels to them to amplify a
marketing campaign and/or brand messaging to reach their target audience, or buyer persona.
To help you develop your integrated marketing communications strategy, consider using
these four steps to create and implement a cohesive and integrated marketing strategy and
jumpstart your success.
Analyze: To help make your marketing communication strategy comprehensive and results-
driven, continue to monitor the needs of your prospects, focusing on the capabilities of your
product or service that solve their problem, and generating audience excitement. You can do
this through monitoring engagement with your campaigns, email open rates and click rates,
social interactions, requests to speak with sales, and ultimately the closed deals. Here is a
helpful blog article about inbound marketing analytics to get you started.
Stay on Top of Trends: Always stay ahead of the curve to find new ways to make your
marketing communication strategy different from your competitors, so your communication
efforts contribute to the value of your brand. There are constantly new tools and tactics
introduced to the marketing industry. Make sure you know what may add value to your
integrated marketing communications strategy so you can test new tools and strategies that
may align with your target audience.
Distribution channels are part of the downstream process, answering the question "How do
we get our product to the consumer?" This is in contrast to the upstream process, also known
as the supply chain, which answers the question "Who are our suppliers?"
A distribution channel, also known as placement, is part of a company's marketing strategy,
which also includes the product, promotion, and price.
Goods and services sometimes make their way to consumers through multiple channels—a
combination of short and long. Increasing the number of ways a consumer is able to find a
good can increase sales. But it can also create a complex system that sometimes
makes distribution management difficult. Longer distribution channels can also mean less
profit each intermediary charges a manufacturer for its service.
Generally, if there are more intermediaries involved in the distribution channel, the price for a
good may increase. Conversely, a direct or short channel may mean lower costs for
consumers because they are buying directly from the manufacturer.
Volume 75%
1:39
Distribution Channel
Types of Distribution Channels
While a distribution channel may seem endless at times, there are three main types
of channels, all of which include the combination of a producer, wholesaler, retailer,
and end consumer.
The first channel is the longest because it includes all four: producer, wholesaler,
retailer, and consumer. The wine and adult beverage industry is a perfect example of
this long distribution channel. In this industry—thanks to laws born out of prohibition
—a winery cannot sell directly to a retailer. It operates in the three-tier system,
meaning the law requires the winery to first sell its product to a wholesaler who then
sells to a retailer. The retailer then sells the product to the end consumer.
The second channel cuts out the wholesaler—where the producer sells directly to a
retailer who sells the product to the end consumer. This means the second channel
contains only one intermediary. Dell, for example, is large enough to sell its products
directly to reputable retailers such as Best Buy.
The third and final channel is a direct-to-consumer model where the producer sells
its product directly to the end consumer. Amazon, which uses its own platform to sell
Kindles to its customers, is an example of a direct model. This is the shortest
distribution channel possible, cutting out both the wholesaler and the retailer.
KEY TAKEAWAYS
The method of distribution should add value to the consumer. Do consumers want to
speak to a salesperson? Will they want to handle the product before they make a
purchase? Or do they want to purchase it online with no hassles? Answering these
questions can help companies determine which channel they choose.
Secondly, the company should consider how quickly it wants its product(s) to reach
the buyer. Certain products are best served by a direct distribution channel such as
meat or produce, while others may benefit from an indirect channel.
One-level channel
Three-level channel
Market characteristics
Product characteristics
Competitor characteristics
Company characteristics
DESIGNING THE MARKETING CHANNEL Chapter Objectives
Channel design refers to those decisions involving the development of new marketing
channels where none had existed before or to the modification of existing channels. Channel
design is a seven-step process of which six steps are covered in this chapter and the seventh
or final step is covered in Chapter 7.
Learning objectives
1. 1) Understand the definition of channel design and the key distinguishing points
associated with it.
2. 2) Realize that channel design is a complex process.
3. 3) Know the sequence of the channel design paradigm and understand the
4. 4) Recognize a variety of situations that might call for a channel design decision.
5. 5) Be familiar with the concept of distribution objectives and the need for
of each dimension.
8. 8) Delineate and define the six basic categories of variables affecting channel
structure.
10. 10) Recognize the limitations of the channel manager’s ability to choose an optimal
11. 11) Be familiar with the major approaches for choosing a channel structure.
12. 12) Have an appreciation for the value of judgmental-heuristic approaches for
Chapter Topics
6-1
Chapter Outline
Channel design: Those decisions involving the development of new marketing channels
where none had existed before, or the modification of existing channels.
Channel design is presented as a decision faced by the marketer, and it includes either setting
up channels from scratch or modifying existing channels. This is sometimes referred to as
reengineering the channel and in practice is more common than setting up channels from
scratch.
The term design implies that the marketer is consciously and actively allocating the
distribution tasks to develop an efficient channel, and the term selection means the actual
selection of channel members.
Finally, channel design has a strategic connotation, as it will be used as a strategic tool for
gaining a differential advantage.
The channel design decision can be broken down into seven phases or steps. These are:
6-2
Many situations can indicate the need for a channel design decision. Among them are:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
In order to set distribution objectives that are well coordinated with other marketing and firm
objectives and strategies, the channel manager needs to perform three tasks:
1. Become familiar with the objectives and strategies in the other marketing mix areas
and any other relevant objectives and strategies of the firm.
2. Set distribution objectives and state them explicitly.
3. Check to see if the distribution objectives set are congruent with marketing and
Distribution objectives are essentially statements describing the part that distribution in
expected to play in achieving the firm’s overall marketing objectives.
A congruency check verifies that the distribution objectives do not conflict with the other
areas of the marketing mix.
6-3
Marketing Channels 7e
The job of the channel manager in outlining distribution functions or tasks is a much more
specific and situationally dependent one. The kinds of tasks required to meet specific
distribution objectives must be precisely stated.
The channel manager should consider alternative ways of allocating distribution objectives to
achieve their distribution tasks. Often, the channel manager will choose more than one
channel structure in order to reach the target markets effectively and efficiently.
Whether single – or multiple – channel structures are chosen, the allocation alternatives
(possible channel structures) should be evaluated in terms of the following three dimensions:
(1) number of levels in the channel, (2) intensity at the various levels, (3) type of
intermediaries at each level.
1) Number of Levels
The number of levels in a channel can range from two levels – which is the most direct – up
to five levels and occasionally even higher.
Intensity refers to the number of intermediaries at each level of the marketing channel.
Intensive: sometimes called saturation means that as many outlets as possible are
used
Selective: means that not all possible intermediaries are used, but rather those
included in the channel have been carefully chosen.
Exclusive: a way of referring to a very highly selective pattern of distribution.
3) Types of Intermediaries
The third dimension of channel structure deals with the particular types of
intermediaries to be used (if any) at the various levels of the channel.
The channel manager should not overlook new types of intermediaries that are
emerging such as Internet companies.
6-4
Given that the channel manager should consider all three structural dimensions (level,
intensity, and type of intermediaries) in developing channel structures, there are, in theory, a
high number of possibilities.
Fortunately, in practice, the number of feasible alternatives for each dimension is often
limited due to industry or the number of current channel members.
Having laid out alternative channel structures, the channel manager should then evaluate a
number of variables to determine how they are likely to influence various channel structures.
1. Market variables
2. Product variables
3. Company variables
4. Intermediary variables
5. Environmental variables
6. Behavioral variables
1) Market Variables
Market variables are the most fundamental variables to consider when designing a marketing
channel.
Four basic subcategories of market variables are particularly important in influencing channel
structure. They are (A) market geography, (B) market size, (C) market density, and (D)
market behavior.
A) Market Geography
Market geography refers to the geographical size of the markets and their physical location
and distance from the producer and manufacturer.
A popular heuristic (rule of thumb) for relating market geography to channel design is: “The
greater the distance between the manufacturer and its markets, the higher the probability that
the use of intermediaries will be less expensive than direct distribution.”
B) Market Size
The number of customers making up a market (consumer or industrial) determines the market
size.
6-5
Marketing Channels 7e
From a channel design standpoint, the larger the number of individual customers, the larger
the market size.
C) Market Density
The number of buying units per unit of land area determines the density of the market. In
general, the less dense the market, the more difficult and expensive is distribution.
D) Market Behavior
2) Product Variables
Product variables such as bulk and weight, perishability, unit value, degree of standardization
(custom-made versus standardized), technical versus nontechnical, and newness affect
alternative channel structures.
Heavy and bulky products have very high handling and shipping costs relative to their value.
Therefore, a producer should attempt to minimize these costs by shipping only in large lots to
the fewest possible points.
Consequently, the channel structure should be as short as possible usually from producer to
user.
B) Perishability
Products subject to rapid physical deterioration and those of rapid fashion obsolescence
require rapid movement from production to consumption.
6-6
C) Unit Value
The lower the unit value of the product, the longer the channel should be. This is because low
unit value leaves a small margin for distribution costs.
When the unit value is high relative to its size and weight, direct distribution is feasible
because the handling and transportation costs are low relative to the product’s value.
D) Degree of Standardization
In the industrial market, a highly technical product will generally be distributed through a
direct channel. This is because the manufacturer may need sales and service people capable
of communicating the product’s technical features to the user.
In the consumer market, relatively technical products are usually distributed through short
channels for the same reasons.
F) Newness
New products, both industrial and consumer, require extensive and aggressive promotion in
the introductory stage to build demand. Usually, the longer the channel of distribution the
more difficult it is to achieve this kind of promotional effort from all channel members.
3) Company Variables
The most important company variables affecting channel design are (A) size, (B) financial
capacity, (C) managerial expertise, and (D) objectives and strategies.
A) Size
In general, the range of options for different channel structures is a positive function of a
firm’s size. Larger firms have more options available to them than smaller firms do.
B) Financial Capacity
Generally, the greater the capital available to a company, the lower its dependence on
intermediaries.
6-7
Marketing Channels 7e
C) Managerial Expertise
For firms lacking in the managerial skills necessary to perform distribution tasks, channel
design must of necessity include the services of intermediaries who have this expertise. Over
time, as the firm’s management gains experience, it may be feasible to change the structure to
reduce the amount of reliance on intermediaries.
The firm’s marketing and general objectives and strategies, such as the desire to exercise a
high degree of control over the product, may limit the use of intermediaries.
Strategies emphasizing aggressive promotion and rapid reaction to changing markets will
constrain the types of channel structures available to those firms employing such strategies.
4) Intermediary Variables
The key intermediary variables related to channel structure are (A) availability, (B) costs, and
(C) the services offered.
A) Availability
The availability (number of and competencies of) adequate intermediaries will influence
channel structure.
B) Cost
C) Services
This involves evaluating the services offered by particular intermediaries to see which ones
can perform them most effectively at the lowest cost.
5) Environmental Variables
Economic, sociocultural, competitive, technological, and legal environmental forces can have
a significant impact on channel structure.
6) Behavioral Variables
The channel manager should review the behavioral variables discussed in Chapter 4.
Moreover, by keeping in mind the power bases available, the channel manager ensures a
realistic basis for influencing the channel members.
6-8
In theory, the channel manager should choose an optimal structure that would offer the
desired level of effectiveness in performing the distribution tasks at the lowest possible cost.
In reality, choosing an optimal structure is not possible.
Why? First, as we pointed out in the section on Phase 4, management is not capable of
knowing all of the possible alternatives available to them.
Second, even it were possible to specify all possible channel structures, precise methods do
not exist for calculating the exact payoffs associated with each alternative.
Some pioneering attempts at developing methods that are more exacting do appear in
literature and we will discuss these in brief.
First laid out in the 1950s by Aspinwall, the main emphasis for choosing a channel structure
should be based upon product variables. Each product characteristic is identified with a
particular color on the spectrum. These variables are:
1. Replacement rate
2. Gross margin
3. Adjustment
4. Time of consumption
5. Searching time
The major problem with this method is that it puts too much emphasis on product
characteristics as the determinant of channel structure.
B) Financial Approach
Lambert offers another approach, which argues that the most important variables for
choosing a channel structure are financial. Basically, this decision involves comparing
estimated earnings on capital resulting from alternative channel structures in light of the cost
of capital to determine the most profitable channel.
The major problem with Lambert’s approach lies in the difficulty of making it operational in
a channel decision-making context.
Based on the work of Williamson, TCA addresses the choice of marketing channel structure
only in the most general case situation of choosing between the manufacturer performing all
of the distribution tasks itself through vertical integration versus using independent
intermediaries to perform some or most of the distribution tasks. It is based upon
opportunistic behaviors of channel members.
The main focus of TCA is on the cost of conducting the transactions necessary for a firm to
accomplish its distribution tasks.
In order for transactions to take place, transaction-specific assets are needed. These are the set
of unique assets, both tangible and intangible, required to perform the distribution tasks.
Third, no real distinction is made between long-term and short-term issues in channel
structure relationships.
Finally, TCA is one-dimensional, overly simplistic and neglects other relevant variables in
channel choice.
It would certainly be desirable if the channel manager could take all possible channel
structures, along with all the relevant variables, and “plug” these into a set of equations,
which would then yield the optimal channel structure.
The work of Balderston and Hoggatt, Artle and Berglund, Alderson and Green, Baligh,
Rangan, Moorthy, Menezes, Maier, and Atwong and Rosenbloom have pioneered some
quantitative work in this area.
E) Judgmental-Heuristic Approaches
These approaches rely heavily on managerial judgment and heuristics for decisions. Some
attempt to formalize the decision-making process whereas others attempt to incorporate cost
and revenue data.
This approach forces management to structure and quantify its judgments in choosing a
channel alternative and consists of four basic steps:
1. The decision factors must be stated explicitly.
2. Weights are assigned to each of the decision factors to reflect relative importance
alternative by multiplying the factor weight (A) by the factor score (B).
Regardless of how elaborate or detailed the analysis, the basic theme of this approach stresses
managerial judgment and estimations about what the costs and revenues of various channel
structure alternatives are likely to be.
This is not to say that the so-called judgmental-heuristic approaches are totally subjective.
Coupled with good empirical data, highly satisfactory (though not optimal) channel choice
decisions may be made using these approaches.
The goods are produced at one place but the customers are scattered over a wide geographical
area. Thus, it is very difficult for a producer to distribute his products all over the country.
Therefore, he takes the help of some intermediaries to distribute his goods. For example,
Maruti cars are manufactured at Gurgaon but are available all over the country with the help
of intermediaries.
Channel of distribution refers to those people, institutions or merchants who help in the
distribution of goods and services. Philips Kotler defines channel of distribution as “a set of
independent organisations involved in the process of making a product or service available
for use or consumption”.
Channels of distribution bring economy of effort. They help to cover a vast geographical area
and also bring efficiency in distribution including transportation and warehousing. Retailers,
Wholesalers are the common channels of distribution.
Channels of distribution provide convenience to customer, who can get various items at one
store. If there were no channels of distribution, customer would have faced a lot of
difficulties.
Consider following two diagrams:
A Customer wants to purchase toothpaste, salt and wheat.
3. Allocation:
It involves packing of the sorted goods into small marketable lots like 1Kg, 500 gms, 250
gms etc.
4. Assorting:
Middlemen obtain a variety of goods from different manufacturers and provide them to the
customers in the combination desired by them. For example, rice from Dehradun & Punjab.
5. Product Promotion:
Sales promotional activities are mostly performed by the producer but sometimes middlemen
also participate in these activities like special displays, discounts etc.
6. Negotiation:
Middlemen negotiate the price, quality, guarantee and other related matters about a product
with the producer as well as customer.
7. Risk Taking:
Middlemen have to bear the risk of distribution like risk from damage or spoilage of goods
etc. when the goods are transported from one place to another or when they are stored in the
god-owns.
(e) Telemarketing
2. Indirect Channels:
When a manufacturer or a producer employs one or more middlemen to distribute goods, it is
known as indirect channel.
2. Company Characteristics:
Following are the main Company Characteristics offering choice of channel of
distribution:
(a) Financial Strength:
The companies having huge funds at their disposal go for direct distribution. Those without
such funds go for indirect channels.
(b) Control:
Short channels are used if management wants greater control on the channel members
otherwise a company can go in for longer channels.
3. Competitive Factors:
Policies and channels selected by the competitors also affect the choice of channels. A
company has to decide whether to adopt the same channel as that of its competitor or choose
another one. For example, if Nokia has selected a particular channel say Big Bazaars for sale
of their hand sets, other firms like Samsung and LG have also selected similar channels.
4. Market Factors:
Following are the important market factors affecting choice of channel of distribution:
(a) Size of Market:
If the number of customers is small like in case of industrial goods, short channels are
preferred while if the number of customers is high as in case of convenience goods, long
channels are used.
5. Environmental Factor:
Economic factors such as economic conditions and legal regulations also play a vital role in
selecting channels of distribution. For example, in a depressed economy, generally shorter
channels are selected for distribution.
Distribution channel strategy and features of effective channel design
The channel design decision can be broken down into seven phases or steps. These are:
Many situations can indicate the need for a channel design decision. Among them are:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
In order to set distribution objectives that are well coordinated with other marketing and firm
objectives and strategies, the channel manager needs to perform three tasks:
1. Become familiar with the objectives and strategies in the other marketing mix areas
and any other relevant objectives and strategies of the firm.
2. Set distribution objectives and state them explicitly.
3. Check to see if the distribution objectives set are congruent with marketing and
Whoever is responsible for setting distribution objectives should also make an effort to learn
which existing objectives and strategies in the firm may impinge of the distribution
objectives. In practice, often the same individual(s) who set(s) objectives for other
components of the marketing mix will do so for distribution.
Distribution objectives are essentially statements describing the part that distribution in
expected to play in achieving the firm’s overall marketing objectives.
A congruency check verifies that the distribution objectives do not conflict with the other
areas of the marketing mix.
The job of the channel manager in outlining distribution functions or tasks is a much more
specific and situationally dependent one. The kinds of tasks required to meet specific
distribution objectives must be precisely stated.
The channel manager should consider alternative ways of allocating distribution objectives to
achieve their distribution tasks. Often, the channel manager will choose more than one
channel structure in order to reach the target markets effectively and efficiently.
Whether single – or multiple – channel structures are chosen, the allocation alternatives
(possible channel structures) should be evaluated in terms of the following three dimensions:
(1) number of levels in the channel, (2) intensity at the various levels, (3) type of
intermediaries at each level.
1) Number of Levels
The number of levels in a channel can range from two levels – which is the most direct – up
to five levels and occasionally even higher.
Intensity refers to the number of intermediaries at each level of the marketing channel.
Intensive: sometimes called saturation means that as many outlets as possible are
used
Selective: means that not all possible intermediaries are used, but rather those
included in the channel have been carefully chosen.
Exclusive: a way of referring to a very highly selective pattern of distribution.
The intensity of distribution dimension is a very important aspect of channel structure
because it is often a key factor in the firm’s basic marketing strategy and will reflect
the firm’s overall corporate objectives and strategies.
3) Types of Intermediaries
The third dimension of channel structure deals with the particular types of
intermediaries to be used (if any) at the various levels of the channel.
The channel manager should not overlook new types of intermediaries that are
emerging such as Internet companies.
Given that the channel manager should consider all three structural dimensions (level,
intensity, and type of intermediaries) in developing channel structures, there are, in theory, a
high number of possibilities.
Fortunately, in practice, the number of feasible alternatives for each dimension is often
limited due to industry or the number of current channel members.
Having laid out alternative channel structures, the channel manager should then evaluate a
number of variables to determine how they are likely to influence various channel structures.
1. Market variables
2. Product variables
3. Company variables
4. Intermediary variables
5. Environmental variables
6. Behavioral variables
1) Market Variables
Market variables are the most fundamental variables to consider when designing a marketing
channel.
Four basic subcategories of market variables are particularly important in influencing channel
structure. They are (A) market geography, (B) market size, (C) market density, and (D)
market behavior.
A) Market Geography
Market geography refers to the geographical size of the markets and their physical location
and distance from the producer and manufacturer.
A popular heuristic (rule of thumb) for relating market geography to channel design is: “The
greater the distance between the manufacturer and its markets, the higher the probability that
the use of intermediaries will be less expensive than direct distribution.”
B) Market Size
The number of customers making up a market (consumer or industrial) determines the market
size.
From a channel design standpoint, the larger the number of individual customers, the larger
the market size.
C) Market Density
The number of buying units per unit of land area determines the density of the market. In
general, the less dense the market, the more difficult and expensive is distribution.
D) Market Behavior
Each of these patterns of buying behavior may have a significant effect on channel structure.
2) Product Variables
Product variables such as bulk and weight, perishability, unit value, degree of standardization
(custom-made versus standardized), technical versus nontechnical, and newness affect
alternative channel structures.
Heavy and bulky products have very high handling and shipping costs relative to their value.
Therefore, a producer should attempt to minimize these costs by shipping only in large lots to
the fewest possible points.
Consequently, the channel structure should be as short as possible usually from producer to
user.
B) Perishability
Products subject to rapid physical deterioration and those of rapid fashion obsolescence
require rapid movement from production to consumption.
C) Unit Value
The lower the unit value of the product, the longer the channel should be. This is because low
unit value leaves a small margin for distribution costs.
When the unit value is high relative to its size and weight, direct distribution is feasible
because the handling and transportation costs are low relative to the product’s value.
D) Degree of Standardization
In the industrial market, a highly technical product will generally be distributed through a
direct channel. This is because the manufacturer may need sales and service people capable
of communicating the product’s technical features to the user.
In the consumer market, relatively technical products are usually distributed through short
channels for the same reasons.
F) Newness
New products, both industrial and consumer, require extensive and aggressive promotion in
the introductory stage to build demand. Usually, the longer the channel of distribution the
more difficult it is to achieve this kind of promotional effort from all channel members.
3) Company Variables
The most important company variables affecting channel design are (A) size, (B) financial
capacity, (C) managerial expertise, and (D) objectives and strategies.
A) Size
In general, the range of options for different channel structures is a positive function of a
firm’s size. Larger firms have more options available to them than smaller firms do.
B) Financial Capacity
Generally, the greater the capital available to a company, the lower its dependence on
intermediaries.
C) Managerial Expertise
For firms lacking in the managerial skills necessary to perform distribution tasks, channel
design must of necessity include the services of intermediaries who have this expertise. Over
time, as the firm’s management gains experience, it may be feasible to change the structure to
reduce the amount of reliance on intermediaries.
The firm’s marketing and general objectives and strategies, such as the desire to exercise a
high degree of control over the product, may limit the use of intermediaries.
Strategies emphasizing aggressive promotion and rapid reaction to changing markets will
constrain the types of channel structures available to those firms employing such strategies.
4) Intermediary Variables
The key intermediary variables related to channel structure are (A) availability, (B) costs, and
(C) the services offered.
A) Availability
The availability (number of and competencies of) adequate intermediaries will influence
channel structure.
B) Cost
C) Services
This involves evaluating the services offered by particular intermediaries to see which ones
can perform them most effectively at the lowest cost.
5) Environmental Variables
Economic, sociocultural, competitive, technological, and legal environmental forces can have
a significant impact on channel structure.
6) Behavioral Variables
The channel manager should review the behavioral variables discussed in Chapter 4.
Moreover, by keeping in mind the power bases available, the channel manager ensures a
realistic basis for influencing the channel members.
In theory, the channel manager should choose an optimal structure that would offer the
desired level of effectiveness in performing the distribution tasks at the lowest possible cost.
In reality, choosing an optimal structure is not possible.
Why? First, as we pointed out in the section on Phase 4, management is not capable of
knowing all of the possible alternatives available to them.
Second, even it were possible to specify all possible channel structures, precise methods do
not exist for calculating the exact payoffs associated with each alternative.
Some pioneering attempts at developing methods that are more exacting do appear in
literature and we will discuss these in brief.
First laid out in the 1950s by Aspinwall, the main emphasis for choosing a channel structure
should be based upon product variables. Each product characteristic is identified with a
particular color on the spectrum. These variables are:
1. Replacement rate
2. Gross margin
3. Adjustment
4. Time of consumption
5. Searching time
The major problem with this method is that it puts too much emphasis on product
characteristics as the determinant of channel structure.
B) Financial Approach
Lambert offers another approach, which argues that the most important variables for
choosing a channel structure are financial. Basically, this decision involves comparing
estimated earnings on capital resulting from alternative channel structures in light of the cost
of capital to determine the most profitable channel.
Based on the work of Williamson, TCA addresses the choice of marketing channel structure
only in the most general case situation of choosing between the manufacturer performing all
of the distribution tasks itself through vertical integration versus using independent
intermediaries to perform some or most of the distribution tasks. It is based upon
opportunistic behaviors of channel members.
The main focus of TCA is on the cost of conducting the transactions necessary for a firm to
accomplish its distribution tasks.
In order for transactions to take place, transaction-specific assets are needed. These are the set
of unique assets, both tangible and intangible, required to perform the distribution tasks.
First, it deals only with the most general channel structure dichotomy of vertical integration
versus use of independent channel members.
Third, no real distinction is made between long-term and short-term issues in channel
structure relationships.
Finally, TCA is one-dimensional, overly simplistic and neglects other relevant variables in
channel choice.
It would certainly be desirable if the channel manager could take all possible channel
structures, along with all the relevant variables, and “plug” these into a set of equations,
which would then yield the optimal channel structure.
The work of Balderston and Hoggatt, Artle and Berglund, Alderson and Green, Baligh,
Rangan, Moorthy, Menezes, Maier, and Atwong and Rosenbloom have pioneered some
quantitative work in this area.
E) Judgmental-Heuristic Approaches
These approaches rely heavily on managerial judgment and heuristics for decisions. Some
attempt to formalize the decision-making process whereas others attempt to incorporate cost
and revenue data.
This approach forces management to structure and quantify its judgments in choosing a
channel alternative and consists of four basic steps:
alternative by multiplying the factor weight (A) by the factor score (B).
Regardless of how elaborate or detailed the analysis, the basic theme of this approach stresses
managerial judgment and estimations about what the costs and revenues of various channel
structure alternatives are likely to be.
This is not to say that the so-called judgmental-heuristic approaches are totally subjective.
Coupled with good empirical data, highly satisfactory (though not optimal) channel choice
decisions may be made using these approaches.
Channel conflict occurs when manufacturers (brands) disintermediate their channel partners,
such as distributors, retailers, dealers, and sales representatives, by selling their products
directly to consumers through general marketing methods and/or over the Internet.
conflict management
Subordinate Goals: The channel partners must decide a single goal in terms of either
increased market share, survival, profit maximization, high quality, customer
satisfaction, etc. with the intention to avoid conflicts.
Exchanging employees: one of the best ways to escape channel conflict is to swap
employees between different levels i.e. two or more persons can shift to a dealer level
from the manufacturer level and from wholesale level to the retailer level on a
temporary basis. By doing so, everyone understands the role and operations of each
other thereby reducing the role ambiguities.
Trade associations: Another way to overcome the channel conflict is to form the
association between the channel partners. This can be done through joint membership
among the intermediaries. Every channel partner works as one entity and works
unanimously.
Co-optation: Under this, any leader or an expert in another organization is included in
the advisory committee, board of directors, or grievance redressal committees to
reduce the conflicts through their expert opinions.
Diplomacy, Mediation and Arbitration: when the conflict becomes critical then
partners have to resort to one of these methods. In Diplomacy, the partners in the
conflict send one person from each side to resolve the conflict.In Mediation, the third
person is involved who tries to resolve the conflict through his skills of conciliation.In
Arbitration, when both the parties agree to present their arguments to the arbitrator
and agree to his decision.
Legal resource: When the conflict becomes crucial and cannot be resolved through
any above mentioned ways, the channel partners may decide to file a lawsuit.
Thus, it is a fundamental responsibility of every organization to maintain harmonious
relations with its channel partners as the conflict between these may result in huge losses for
each involved in the channel including the manufacturing company.
Motivating and Evaluating Channel Members Identifying, reaching and motivating key
influencers may be the difference between effective and ineffective channels strategies. The
importance of influencers in the purchase decision process arises from positive impact
▪ they have when they support a company’s products or services. A key influencer is
defined as:
▪ “Any party(ies) which exerts significant influence over the purchase decision”
▪ Key influencers may be directly involved in the purchasing decision or indirectly
influence the decision. Key influencers should be included in marketing channels
strategies.
▪ It is important to note that key influencers are not always members of a company’s
distribution channels. Their influence over a purchase is the reason they are important.
Key influencers can impact the purchase decision of channel members when
considering a purchase from a supplier and can also influence end customers when
considering which channel member to buy from and the brand selected.
▪
Industry
Key Influencers Include:
Computers Consultants
The examples above illustrate the influencer may be overt as in the building products industry
or more subtle as in consumer services and entertainment industries.
To more clearly identify key influencers and determine the best strategy to reach them it is
necessary to:
Why Are Key Influencers Important? Companies often don’t recognise influencers’
importance or are unable to determine how to effectively reach them. The risks of neglecting
influencers are expensive and the rewards from reaching them are significant.
More lead referrals, new and repeat Potential loss of customers to suppliers who
customers successfully reach key influencers
Improved sales and market share Stagnant or declining sales and market share
Greater market power and channel member Alienation of key influencers and reduced
loyalty loyalty
Problems and ObstaclesA company may face several issues when trying to reach its key
influencers:
▪ The cost and logistics of dealing with all the industry’s key influencers
▪ Key influencers don’t want to be too closely associated with a single supplier
▪ A company is unable to differentiate itself as the best choice for key influencers
By positively motivating key influencers companies will resolve many of the issues outlined
above and ensure influencers’ commitment to their products or services. Tools which will
help suppliers reach key influencers include:
Training
▪ Exclusive deals
▪ Sponsorships
▪ Recognition
▪ Regular communication
▪ Some key influencers require independence from suppliers but will respond to service
and support motivators who meet their own business and professional needs. An
example of this is in the computer industry where consultants are a key influencer.
The consultant will identify the needs of a client and specify the system/s capable of
fulfilling those needs. As consultants their reputations are at stake when preparing
specifications and therefore need to have confidence in the products and suppliers
they are recommending. The motivators in this case are excellent communication,
technical information and training.
▪ Other Key Influencers do not require the same degree of independence from
suppliers. e.g. building products. Effective motivators may include exclusive deals,
advertising support and product and technical information.
▪ Three important steps are involved to include key influencers in a company’s channel
strategy. These steps are:
▪
Rural Marketing
Definition: The Rural Marketing refers to the activities undertaken by the marketers to
encourage the people, living in rural areas to convert their purchasing power into an effective
demand for the goods and services and making these available in the rural areas, with the
intention to improve their standard of living and achieving the company’s objective, as a
whole.
The Rural Marketing is a two-way process, i.e.,
Urban to Rural: FMCG Goods, Agricultural fertilizers, automobiles, etc. are offered by the
urban market to the rural market.
Rural to Urban: The agricultural supplies viz. Fruits, vegetables, flowers, milk, etc. is
offered from the rural market to the urban market.
The marketers are following the strategy to “Go Rural” because of the following attractions
in the rural market:
1. Large Population: Still, the majority of the population in India resides in Villages and
therefore, the marketers find more potential in the rural areas and direct their efforts to
penetrate the rural market.
2. Increased Income: The income and the purchasing power of the rural people have increased.
With the use of modern agricultural equipment and technology, the farmers can produce more
and can get better returns for their agricultural produce.The increased income motivates a
farmer to improve his livelihood by purchasing a good quality product and thus, the marketer
gets an opportunity to enter into the rural market.
3. Competition in Urban Market: There is a lot of competition in the Urban market, where
people are well aware of the goods and services and have created a brand loyalty.Therefore,
the marketers move to the rural market to escape the intense completion and generate
revenues from the untapped areas.
4. Improved Infrastructure facilities: Today, many villages are well connected with the roads
and transportation facilities that enables the marketer to access the rural market and promote
his goods and services.With the growth in telecom services, the rural people can be reached
easily via mobile phones.
5. Saturated Urban Market: Also, the marketers may move to the rural markets, when the
urban market has reached the saturation point, the i.e. market is well stuffed with the
products, and the consumers are not likely to make a frequent purchase due to the varied
options available in the market.
6. Support of Financial Institutions: Several Co-operative banks and public sector banks offer
the loan facility to the rural people at low-interest rates. With the loan, the purchasing power
of an individual increases, thus resulting in a better standard of living.
7. New Employment Opportunities: The Government is running several employment
opportunity programmes, with the intention to engage people in other activities apart from the
agriculture occupation.The Integrated Rural Development Programme (IRDP), Jawahar
Rozgar Yojana (JRY), Training Rural Youth for self-Employment are the certain
programmes, designed to increase the livelihood of rural people.
Due to so much potential in the rural areas, the companies are focussing more on the needs
and desires of people living in here and are taking every possible step to stimulate people to
buy products and services and improve their livelihood.
Affordability
In rural areas, the income of the people is meagre. This is the reason for which the consumers
are unable to spend on luxury goods. Moreover, they are mostly concerned about buying the
necessary products.
Keeping in mind the low affordability of rural consumers, marketers must plan for small
packaging of the products at an economical price to capture the attention of price-
sensitive consumers.
Availability
The regular supply of the products in the remote areas is another challenging task. We know
that rural consumers are usually daily wage earners who spend on the necessities every day.
But, many times, the product is not readily available in the rural markets, due to which such
consumer may shift to another substitute product.
Acceptability
The product should be designed in a user-friendly manner such that it satisfies all the needs of
a consumer by deriving them some value. If the rural consumers are willing to put in extra
money for buying the product, it shows their acceptability towards the brand.
Awareness
A rural consumer has low accessibility to the media, such as television and smartphones.
Moreover, they have a very different perspective from that of an urban consumer.
Therefore, marketers need to focus on that medium of communication and entertainment
which are commonly available in rural areas. This will help them to create brand awareness
and grab the attention of these potential rural consumers towards their product.
Rural Marketing Strategies
When we talk about 4 P’s of marketing mix of a product, the first thing that strikes us is the
combination of product, price, place and promotion. This is what we will be discussing under
rural marketing strategies.
Let us now discuss these four components of the marketing mix concerning the product being
introduced in the rural market:
Product Strategies
The company first needs to analyze the requirements and demand of the rural consumers.
Since whatever products are being sold in the urban areas may not be acceptable in the
villages also.
Following are some of the factors which are taken into consideration while framing the
product strategies:
Product Launch: The rural consumers earn a lump sum amount two times a year
according to the crop cycle. Therefore the product must be launched only in these
harvesting seasons, i.e., rabi and kharif.
New Product Design: The product design for an urban market may not perform well
in the rural market too. Thus, the company must plan for a robust model of the
product (especially of durable goods) while launching it for rural consumers.
Brand Name: Brands are gaining significance in the rural markets as the people are
becoming aware and informed. However, in these markets, brands are recognized by
the simplicity of their name, visual logos, taste and colour of the products.
Small Unit Low Price Packaging: Considering the daily wage earners who have less
disposable income; the product should be packed in small units with a minimal price
to serve the requirements of the rural consumers.
Pricing Strategies
In rural markets, consumers are less brand conscious and more responsive to the price of the
products. The company’s pricing decision is dependant upon the consumers’ occupation and
income pattern.
Let us now understand the various strategies followed by marketers while planning for the
product pricing in rural markets:
Differential Pricing: The pricing strategy for the rural markets should be different from that
in urban markets. The product should be priced slightly cheaper to grab the attention of rural
consumers.
Psychological Pricing: The psychological pricing is a tactic used to make the deal appealing
to the consumers. A product is priced at odd amounts like ₹9, ₹59, ₹99, etc. which seems
less than ₹10, ₹60 and ₹100 respectively. It is a fruitful strategy in rural marketing.
Create Value for Money: The rural consumers are more concerned about the durability of
the products, i.e., the value it generates to the customer. They tend to pay a slightly higher
amount for a better product with additional features.
Pricing on Special Events: In the rural areas, occasions and festival are highly valued and
celebrated. Therefore, companies make use of these special events to attract rural consumers
by giving them various offers and discounts.
Simple Packing: Rural consumers have a basic living standard. They don’t like to spend
much on the products which have fancy packaging; instead, they look for the utility of the
product. So it would be a waste of time and money if the brand spends on sophisticated
product packaging.
Low Price Points: A consumer belonging to the rural area have limited resources out of
which he or she needs to buy various daily utility products. Therefore, a product must be
priced quite low to make it affordable for such consumers.
Schemes for Retailers: Rural retailers are the most significant medium of sales in the
village. The companies must come up with cash discounts, gift schemes, offers and quantity
discounts to build the loyalty of such retailers towards the brand and increase product sales.
Bundle Pricing: A bundle is a mix of different products in a single pack available to the
consumer for a reasonable price. The marketers must plan for a product bundle pricing to
make the offer appealing to the consumers and survive in the competitive rural market.
Distribution Strategies
To create a regular demand for the product, the marketer must ensure the uninterrupted
supply of the goods in the rural markets. The product availability can be achieved by
implementing the following strategies:
Local Markets: In rural areas, local markets exist in the form of fares, farmers’
market, Sunday market and feeder market. Here, rural people gather to buy goods and
communicate with each other.
Company Depots: The company owns warehouses and depots in some major rural
areas to make the goods readily available to the native consumers and that of nearby
cities.
Public Distribution System: The government runs fair price shops in the villages to
sell the daily utility and durable products at a nominal price. In India, one such PDS is
the ration shops.
Retailers: The most straightforward way a rural consumer can acquire a product is
through a retail shop located in the village. Therefore, companies must plan their
supply chain management in such a way that the goods are regularly made available
to these retailers.
Redistribution Stockists and Clearing Agents: The redistribution stockists and the
clearing agents are the intermediaries between the companies and rural consumers.
They supply goods to the retailers from where it reaches the consumers.
Delivery Vans, Traders, Sales Person, NGO: The company must run its van for
delivering goods in the remote areas where there is lack of proper transportation
facility.
Promotion Strategies
Promotion is the stage where the product is introduced in the market. In rural markets, the
promotion mix should be planned in such a way that rural consumers can easily understand
the product features.
Following promotional strategies are used by the marketers:
Mass Media: The villages have limited means of entertainment which include tv,
radio, press and cinema. The companies advertise their products through these
popular mass media.
Personalised Media: It can be seen as hiring a salesperson for performing door to
door sales and collecting information and queries related to the product and the brand.
Local Media: As we have already discussed in the distribution strategy, local media
includes audiovisual vans, animal parades, fares, folk programmes, etc. Displaying
advertisements, video clippings, short films, posters and paintings at these places is
also useful promotional activity.
Hiring Models and Actors for Promotion: Rural people are fascinated by the
television actors and models and consider them as their role models. Therefore the
marketers must engage famous faces in their tv commercials to promote the brand.
Advertise Through Paintings: The rural consumers are attracted towards the bright
colours and the pictorial representation of the products; hence, wall paintings are a
good idea in the rural markets.
Other Marketing Strategies to Conquer Rural Markets
The rural markets function diversely from the urban markets. Therefore, marketers need
to customize a whole set of different strategies to penetrate the rural market.
Being updated with the traditions and values of the rural consumers and planning the
marketing strategies accordingly, like a promotion campaign targeting a festival is another
suitable option.
Rural marketing should not be used as a means of demoting under-performing managers.
Instead, an enthusiastic person belonging to the rural background having the willingness to
work in villages must be appointed.
The marketers can introduce new business models and programmes with a social concern
like promoting education or empowering women for overall growth.
To understand the market in a better way, the company can hire a rural marketing specialist
agency which has prior knowledge and experience in the field and is well-versed with the
regional language.
To estimate the feasibility of expenditure in rural marketing, the organization should
determine its per capita sales in advance. The company must time the marketing cycle of
products by the sowing, growing and harvesting seasons of the crops.
Rural consumers are slowly upgrading to technology with the help of smartphones and
computers. The companies must make use of simple and easy to access technological
means to create awareness about the products in rural areas.
As a means of digital marketing in the villages, marketers can opt for mobile messaging,
internet ads, applications and interactive voice response to promote their products.
The companies must invest in rural marketing with a long-term perspectiveand should have
the patience to achieve the desired results.
To develop a sharp brand image and loyalty in a rural market, the best way is the word of
mouth publicity by the locals.
Digital marketing encompasses all marketing efforts that use an electronic device or the
internet. Businesses leverage digital channels such as search engines, social media, email, and
their websites to connect with current and prospective customers.
Digital marketing
Digital marketing is defined by the use of numerous digital tactics and channels to connect
with customers where they spend much of their time: online. From the website itself to a
business’s online branding assets — digital advertising, email marketing, online brochures,
and beyond — there’s a spectrum of tactics that fall under the umbrella of “digital
marketing.”
The best digital marketers have a clear picture of how each digital marketing campaign
supports their overarching goals. And depending on the goals of their marketing strategy,
marketers can support a larger campaign through the free and paid channels at their disposal.
A content marketer, for example, can create a series of blog posts that serve to generate leads
from a new ebook the business recently created. The company’s social media marketer might
then help promote these blog posts through paid and organic posts on the business’s social
media accounts. Perhaps the email marketer creates an email campaign to send those who
download the ebook more information on the company.
Now imagine when a nation’s government is promoting the digital interaction, what do you
think will be the Digital Marketing scope in that nation.
The Digital Marketing industry is at its peak at the moment due to many reasons, take a
look at some of them:
Hasn’t the internet driven all of us crazy? well, it sure has. There was a time when a new
serial on the TV used to be the hot topic whereas today, the online posts or a new music video
on YouTube grabs our attention. What is this? this is a shift in the choice and preferences.
Digital media is gaining mass attention because of the fresh air it has got with itself. It’s like
living in a new era. We are experiencing a revolution, while we are shifting from the
traditional to the Digital media.
It is flexible
Since the entire work is to be done on the internet, there is no restriction of the place. It
doesn’t matter if you are at the office or at home. All you need is a device that is connected to
the internet and you are sorted. Yes, it is actually that easy. Do you want to check your bank
balance? do it on your smart phone. Want to book movie tickets? pick up your smartphone
and book! This is the digital age, everything is available at your fingertips.
It is easy
Accessing the digital media is no rocket science. It is a piece of cake. The newest of users
also take a maximum of few days to learn how to operate the digital media. This is purely
because it is designed in such a user-friendly manner that its primary objective is to ease the
operations for human beings, the reason why our mobile phones are now called smartphones.
Eco- friendly
Being responsible citizens of the world it is important that we operate through mediums that
do not harm our atmosphere cause being ignorant to the atmosphere will only have an
adverse effect on us. The digital media additionally cuts down on paper usage. We operate
the digital media over the internet and thus can save ourselves a lot of hustle in terms of hard
work, long process of work and all the other drawbacks of using the traditional medias.
Fastest Reach
Previously radio was considered to have the fastest reach because of the live communication
feature. Radio is still the medium with the widest reach but the new media is gradually
overshadowing the most popular medias like a newspaper, television, etc.
Today, you post anything online and it gets trending within a few hours. This is because the
number of users of the digital media are touching heights with each passing day.
Influential
The man kind is used to being influenced by whatever is trending the most. The virtual media
has not fallen short of influencing the masses of its own new style. The social media
occupying the most space has infused itself so well in the lives of the users that it is like the
early morning newspaper that is a must. Only this newspaper is carried forward all day long
(pun intended).
Job Opportunities
The massive user engagement calls for more and more job opportunities. The employment
sector has seen a major share of jobs generated by the Digital Marketing Industry. The
statistics show that the total number of job opportunities in the Digital Marketing industry to
cross 8 lakh job in 2017. The career scope in Digital Marketing seems attractive to masses
and that is the reason why many professionals are learning this course to enter the industry.
High engagement
It is true that the traditional media are being completely overshadowed by the internet- led
Digital Marketing due to high engagement factors. The brands and companies have begun to
give extra emphasis to the ad campaigns run on the internet over television ads. The
revolution is here!
Digital Marketing ad campaigns ask for a very little amount of investments as compared to
television and print ads. The high ROI is attractive enough to draw the attention of the
marketers and advertisers.
An advertiser running a social media campaign can easily measure the performance of the
campaign in real time without waiting for long intervals. The leads generated and online
purchases are a direct measure of the performance of the campaign.
The campaign is run over the internet and the performance is measured in real time what can
be better than this for a business?
There must be many more reason to the list of why Digital Marketing industry is at its peak
but we will move further from here to briefly discuss the scope of Digital Marketing jobs in
India.
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Internet Vs. Traditional Marketing Communications
To clarify the terms, the use of print ads on newspapers and magazines is a simple example
of traditional marketing. Other examples include flyers that are put in mailboxes, commercials
both on TV and radio and billboards. On the other hand, when a business invests on building a
website, advertising the brand name through different social media such as Facebook, Twitter
and YouTube, this kind strategy is called digital marketing.
The materials can be kept. The audience can have a hard copy of materials of which they can
read or browse through over and over again.
It’s easy to understand. It can be easily understood by most people because they are already
exposed to this kind of strategy.
Neuroscience seems to support the benefits of hard copy marketing. A study sponsored
by Canada Post and performed by Canadian neuro-marketing firm TrueImpact compared the
effects of paper marketing (direct mail pieces, in this case) with digital media (email and display
ads).
The technologies used in this study were eye-tracking and high resolution EEG brain wave
measurement. The three key metrics evaluated in the study were cognitive load (ease of
understanding), motivation (persuasiveness), and attention (how long subjects looked at the
content).
Direct mail was easier to process mentally and tested better for brand recall. According to the
report,
Direct mail requires 21% less cognitive effort to process than digital media (5.15 vs. 6.37),
suggesting that it is both easier to understand and more memorable. Post-exposure memory
tests validated what the cognitive load test revealed about direct mail’s memory encoding
capabilities. When asked to cite the brand (company name) of an advertisement they had just
seen, recall was 70% higher among participants who were exposed to a direct mail piece (75%)
than a digital ad (44%).
Print or radio advertisements can be very costly. Printing materials can be expensive and
you need to hire people to distribute these.
Results on this marketing strategy cannot easily be measured. Was the campaign
successful?
Benefits of Digital Marketing
You can target a local audience, but also an international one. Further, you can tailor a
campaign to specific audience demographics, such as gender, location, age and interests. This
means your campaign will be more effective.
Your audience can choose how they want to receive your content. While one person likes to
read a blog post, another person likes to watch a YouTube video. Traditional marketing doesn’t
give the audience a choice. Most people hate receiving sales flyers in their mailbox or phone
calls at inconvenient times on stuff that they have little interest in. Online people get the choice
to opt in or out of communications and often it is relevant because they were the ones searching
for it in the first place. Don’t underestimate the power of market segmentation and tailored
marketing.
Interaction with your audience is possible with the use of social media networks. In fact,
interaction is encouraged. Traditional marketing methods don’t allow for audience interaction.
You can encourage your prospects, clients and followers to take action, visit your website, read
about your products and services, rate them, buy them and provide feedback which is visible to
your market.
Digital marketing is cost-efficient. Though some invest on paid ads online; however, the cost
is still cheaper compared to traditional marketing.
Data and results are easily recorded. With Google Analytics and the insights tools offered by
most social media channels, you can check on your campaigns at any time. Unlike traditional
marketing methods, you can see in real time what is or is not working for your business online
and you can adapt very quickly to improve your results.
Level playing field: Any business can compete with any competitor regardless of size with a
solid digital marketing strategy. Traditionally a smaller retailer would struggle to match the
finesse of the fixtures and fittings of its larger competitors. Online, a crisp well thought out site
with a smooth customer journey and fantastic service is king – not size.
Real time results: you don’t have to wait weeks for a boost to your business like you would have
to waiting for a fax or form to be returned. You can see the numbers of visitors to your site and
its subscribers increase, peak trading times, conversion rates and much more at the touch of a
button.
Brand Development: A well maintained website with quality content targeting the needs and
adding value to your target audience can provide significant value and lead generation
opportunities. The same can be said for utilising social media channels and personalised email
marketing.
Viral: how often do your sales flyers get passed around instantly by your customers and
prospects? Online, using social media share buttons on your website, email and social media
channels enables your message to be shared incredibly quickly. If you consider the average
Facebook user has 190 friends of which an average of 12% see their liked posts – your one
message has actually been seen by 15 new prospects. Now imagine a number of them also like
and share your message and their friends do the same? That’s why high-quality content is so
important.
A 2009 study conducted by Bangor University and branding agency Millward Brown also used
fMRI to study the different effects of paper and digital media.
Physical material is more “real” to the brain. It has a meaning, and a place. It is better connected
to memory because it engages with its spatial memory networks.
Physical material involves more emotional processing, which is important for memory and brand
associations.
Physical materials produced more brain responses connected with internal feelings, suggesting
greater “internalization” of the ads.
Product: A producer should offer ecological products which not only must not
contaminate the environment but should protect it and even liquidate existing
environmental damages.
Price: Prices for such products may be a little higher than conventional alternatives. But
target groups like for example LOHAS are willing to pay extra for green products.
Place: A distribution logistics is of crucial importance; main focus is on ecological
packaging. Marketing local and seasonal products e.g. vegetables from regional farms is
more easy to be marketed “green” than products imported.
Promotion: A communication with the market should put stress on environmental
aspects, for example that the company possesses a CP certificate or is ISO 14000
certified. This may be publicized to improve a firm's image. Furthermore, the fact that a
company spends expenditures on environmental protection should be advertised. Third,
sponsoring the natural environment is also very important. And last but not least,
ecological products will probably require special sales promotions.
Social marketing
Social marketing is the use of commercial marketing principles and techniques to improve
the welfare of people and the physical, social and economic environment in which they live.
It is a carefully planned, long-term approach to changing human behavior.
Social marketing has the primary goal of achieving "common good".
Traditional commercial marketing aims are primarily financial, though they can have positive
social effects as well. In the context of public health, social marketing would promote general
health, raise awareness and induce changes in behaviour.
Marketing analytics is the practice of managing and studying metrics data in order to
determine the ROI of marketing efforts like calls-to-action (CTAs), blog posts, channel
performance, and thought leadership pieces, and to identify opportunities for improvement.
By tracking and reporting on business performance data, diagnostic metrics, and leading
indicator metrics, marketers will be able to provide answers to the analytics questions that are
most vital to their stakeholders.
Regardless of business size, marketing analytics can provide invaluable data that can help
drive growth. Enterprise marketers at first may find the process too complicated, while small
and mid-sized business (SMB) marketers assume a company of their size won’t benefit from
implementing metrics, but neither perception is true. As long as marketing analytics is
carefully curated and properly implemented, the data collected can help a business of any size
grow.
With proper marketing metrics and analytics in place, marketers can better understand big-
picture marketing trends, determine which programs worked and why, monitor trends over
time, thoroughly understand the ROI of each program, and forecast future results. With 78%
of B2B marketing executives currently measuring the impact of their marketing programs on
revenue, it’s clear that more businesses are getting on board with marketing analytics, even if
they were a bit hesitant before.
“Too often marketers talk about activities instead of outcomes—for example, how many
campaigns they ran, how many trade shows they participated in, how many new names they
added to the lead database. These are metrics that reinforce the perception that marketing is a
cost center, not a revenue driver.”
Problem: I feel like I’m reporting for reporting’s sake. As a default, marketers
often put primary metrics such as lead source tracking and cost-per-lead in place, but
there is no holistic understanding of how marketing activities impact key bottom-line
metrics. Make sure to set up analytics to support the goals that your stakeholders most
care about, so you aren’t compiling data without a plan in place.
Problem: I don’t know how to unify my data. Get your data out of silos and
spreadsheets. When you automatically connect and unify your data, you can spend
more time acting on insights you’ve worked hard to collect and less time on tedious
reporting tasks.
Problem: I don’t know how to show the impact on revenue and profit. Many
marketers think of marketing ROI as reporting on the outcome of their programs—
often in the form of a set of reports they have to deliver monthly. However, the most
successful companies recognize that reporting for reporting’s sake is less important
than using those reports to make decisions that boost sales.
Problem: My metrics don’t tie to actions that drive outcomes. Don’t just report on
a single campaign. The incremental contribution of individual marketing programs
and the ability to show how your marketing campaigns influence sales at every stage
of the customer journey will help build credibility and show long-term program
success.
Problem: I struggle with forecasting. When marketing takes responsibility for the
early stages of the revenue cycle and understands how to model these stages, they
have better visibility into future revenue. Marketing analytics allows the ability to
forecast how many new leads, opportunities, and customers marketing will yield in
future periods because it tracks where prospects are in each revenue cycle stage—and
how likely they are to move through each stage over time.
Marketing analytics, a multifaceted practice used to drive ROI and improve future efforts,
consists of:
Time series analytics: Unless an operational system stores historical data, a marketer
cannot measure or understand marketing trends. Many marketing and sales solutions
are operational and do not store historical information, requiring marketers who want
to analyze their metrics for prior time periods to manually take data snapshots from
their Excel spreadsheets. However, time series analytics gives marketers a full picture
of their performance trends over time because the engine can analyze beyond point-
in-time insight.
Advanced attribution capacity: With marketing data in one place, marketers can
understand what moves the needle and maximize return on marketing investment, but
only if they have technology that facilitates attribution reporting. Many solutions only
offer basic attribution capacity— most commonly, first or last touch attribution or
multi-touch attribution limited by the type of channel or time horizon. This limits your
ability to grow into the most illuminating attribution models down the line. Be sure to
understand the attribution limitations of any technology you’re considering before you
buy.
Powerful and easy insights: Very few of the marketers who want and need to
consume analytics data are business analysts. For such an audience, user-friendly
dashboards are required, so marketers can explore data trends and gain insight into
their programs without wasting time acquiring the expertise needed to maneuver the
technology, build custom reports, and so forth. Just make sure your marketing
automation solution offers tools that are both and powerful and simple to use!
Ad-hoc reporting and dashboards: On the other hand, marketing analytics experts
will need the ability to delve deeply into the data and customize their ad-hoc reports.
In this case, table-like reports and charts are most effective and allow analysts to
“follow the scent” of particular insights as far as they need to go.