Lipton (57-63)

Marketing
Management
Basics
Name Roll No.
Tanushree Mishra 57
Tanya Bhambri 58
Tushar Tiwari 59
Vaishnavi Mehta 60
Yash Maske 61
Yadnesh Patil 62
Ambarish Joshi 63
1
Index
Sr Topic Slide no.
no.
1 Defining Marketing 4-6
2 Marketing philosophies 7 - 16
3 Needs, Wants & Demand 17 - 23
4 Environmental Scanning 24 - 42
5 SWOT Analysis 43 - 51
6 Porter's Five Forces 52 - 59
9 Market Research 60 - 87
10 Consumer Behavior 88 - 112
11 STDP 113 - 152
12 Marketing Mix 153 - 163
13 Demand forecasting 164 - 167
14 Product mix 168 - 179
15 New product Development 180 - 189
16 Product life Cycle 190 - 202

2
Index
Sr Topic Slide no
no.
17 BCG 203 - 208
18 GE Matrix 209 - 211
19 Branding 212 - 236
20 Pricing 237 - 284
21 Distibution 285 - 300
22 IMC 301 - 311
23 Lipton 312 - 348
3 3
What Is Marketing?
Marketing is about identifying and meeting human and social needs. One of the shortest good
definitions of marketing is “meeting needs profitably”.
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering,
and exchanging offerings that have value for customers, clients, partners, and society at large.
Marketing Management is the art and science of choosing target markets and getting, keeping, and
growing customers through creating, delivering, and communicating superior customer value.
In essence, marketing is about creating awareness, generating interest, and persuading people to
take specific actions related to a product, service, idea, or entity.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong Ch. 1 Page-4 4
What Is Marketed?
➢Almost anything can be marketed, depending on the goals and target audience of a business or
organization. Common things that are marketed include:
• Goods - Physical goods like smartphones, clothing, food, and electronics.
• Services - Intangible offerings such as consulting, healthcare, education, and insurance.
• Events - Conferences, festivals, and sports events are marketed to attract customers.
• Experiences - Service that emphasizes the unique and memorable experiences it offers to consumers.
For ex. The space 220 restaurant in Epcot at Disney world offers customer to experience outer space
dinning.
5
Source: Principles of Marketing by Philip Kotler & Gary Armstrong page no 27-28
• People - Celebrities, influencers, and public figures are often marketed for endorsements and
partnerships.
• Places - This includes marketing cities, regions, and countries as tourist destinations. The goal is to attract
visitors and promote the unique features, attractions, and experiences a place has to offer.
• Properties - Real estate marketing focuses on promoting properties for sale or rent. It involves showcasing
the features, location, and benefits of residential or commercial properties to potential buyers or renters.
• Organizations - Businesses, nonprofits, and government entities engage in marketing to promote their
brand, products, services, or missions.
• Information - Marketing information involves the promotion of data, reports, research findings, and other
information products.
• Ideas - Idea marketing can encompass various campaigns, such as public service announcements,
advocacy for social or environmental causes, and political campaigns.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong page no 27-28
Marketing Philosophies
Marketing philosophies in different economies
Source – Class notes

Marketing philosophies
➢There are five alternative concepts under which organization design & carry out their marketing strategies :
1) Barter System(Exchange System)
2) The Production Concept
3) The Product Concept
4) The Selling Concept
5) The Marketing Concept
6) Societal Marketing Concept
Source - Principles of marketing management 17th Edition – Philip Kotler page no 10

to 12
The Exchange Concept
➢ Unless there is actual or potential exchange, there is no marketing.
➢ People can acquire what they need or want by pursuing socially acceptable behaviours or the
behaviours not approved by the society.
➢ Two socially acceptable approaches of acquiring things include self-producing or exchanging what a
person needs or wants.
➢ The third method, begging is viewed in some societies as a somewhat less than dignified way of
acquiring things.
➢The fourth approach may include behaviours such as shoplifting, burglary, or using potentially
threatening force, etc., to acquire things, and these means are totally unacceptable by all civilized
societies and punishable by law.
Marketing Management by S.H.kazmi Page no. 8

➢ The highly regarded way to acquire what a person needs or wants is the concept of exchange in
marketing context.
➢ Both parties in an exchange offer something of value, and freely acceptable to each other
Marketing Management by S.H.kazmi page no 8

Production Concept
➢The idea that consumers will favor products that are available and highly affordable therefore the
organization should focus on improving production and distribution efficiency.
➢Companies adopting this concept run a major risk of focusing too narrowly on their own operations and
losing sight of the real objective-satisfying customer needs and building customer relationship.
Product Concept
➢The product concept holds that consumer will favor products that offer the most in quality, performance,
and features therefore the organization should devote its energy to making continuous product
improvements.
Source - Principles of marketing management 17th Edition – Philip Kotler page no 9 to 11

Marketing Concept
➢ The marketing concept holds that the key to achieving organizational goals is being more effective than
competitors in creating, delivering, and communicating superior customer value to your target markets.
➢ Under the marketing concept, customer focus and value are the paths to sales and profits. Instead of a
product-centered “make and sell” philosophy, the marketing concept is a customer-centered “sense and
respond” philosophy.
➢ The task is not to find the right customers for your product but to find the right products for your customers.
The
marketing
concept
➢ The marketing concept takes an outside-in view that focuses on satisfying customer needs as a
path to profits.
Selling Concept
➢ The selling principle, which many businesses follow, contends that unless a company makes a significant
investment in selling and promoting its products, consumers won't buy enough of them.
➢ However, aggressive selling has significant dangers. Instead of cultivating long-lasting, profitable client
connections, it places more emphasis on generating sales transactions.
➢ The selling concept takes an inside-out view that focuses on existing products and heavy selling. The
aim is to sell what the company makes rather than making what the customer wants.

Difference between Selling concept & Marketing concept
Selling concept Marketing concept

Product centric Customer centric
Costs decide the price Customer decides the price
Supply driven Demand driven
Structured selling pitch Customized selling pitch
Seller gives what he has Seller provides with what the customer wants
Talk the seller language Talk the customer language
Customer is the last link in the process Customer is the very essence of the business
Source – class notes

Societal marketing concept
➢ The concept that a business's marketing Decisions should take into account what consumers desire, what
the organization needs, long-term interests of consumers, and the long-term interests of society.
➢ It calls for sustainable marketing, socially and environ mentally responsible marketing that meets the
present needs of consumers and businesses while also preserving or enhancing the ability of future
generations to meet their needs.

Needs, Wants, and Demands
Needs
➢Needs: Needs are the basic, essential requirements that individuals have, such as
food, shelter, clothing, and safety. In marketing, identifying and meeting these
needs is often the starting point. For example, a grocery store markets itself by
highlighting its fresh produce and essential household items, addressing
customers basic needs.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong ch 1 Page-6

Maslow’s Theory
➢ He stated that human needs are arranged in a hierarchy from most to least pressing
from physiological needs to safety needs, social needs, esteem needs, and self-actualization
needs.
➢ For example, a starving man (need 1) will not take an interest in the latest happenings in the art
world (need 5), nor in the way he is viewed by others (need 3 or 4), nor even in whether he is
breathing clean air (need 2), but when he has enough food and water, the next most important
need will become salient.
Marketing management by kotler page no 187-191

• Maslow’s Hierarchy of Needs
Marketing management by kotler page no 187-191

Types of Needs
1. Stated needs - These are the needs that customers openly articulate or describe when discussing
their wants and expectations. For ex. The customer wants an inexpensive car.
2. Real needs – Refer to the genuine, underlying needs and wants of customers, which may not always
be explicitly stated or even fully understood by the customers themselves. For ex. The customer wants
a car whose operating cost, not initial price, is low.
3. Unstated needs - The desires, preferences, or requirements that customers have but have not
been explicitly expressed or articulated. For ex. The customer expects good service from the dealer .
Source: Marketing Management by Philip kotler 15 edition 31 page no. 31

4. Delight needs - Refer to the desires and expectations of customers that go beyond their basic or
functional needs. For ex. The customer would like the dealer to include an onboard GPS system.
5.Secret needs - Refers to the unspoken or often unrecognized desires and

requirements customers that may not be immediately apparent. For ex. The customer wants
friends to see him or her as a savvy consumer
Source: Marketing Management by Philip kotler 15 edition 31 page no. 31

➢Wants - Wants go beyond basic needs and represent specific desires or preferences. They are often
shaped by culture, lifestyle, and individual tastes. Effective marketing aims to create and satisfy wants.
For instance, a luxury car brand markets its vehicles not as basic transportation but as a symbol of
prestige and lifestyle.
➢Demands - Customer demands in marketing are the specific needs and desires that customers have
when it comes to products or services. Meeting these demands is essential for a successful marketing
strategy.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong

Environmental Scanning
Marketing management Rajan Saxena Pg No. 24-25
MACRO FACTORS
➢PESTLE analysis, also known as
PESTLE is a strategic tool used by
businesses and organizations to
assess and understand the external
macro-environmental factors that
can impact their operations and
decision-making. The acronym
PESTLE stands for Political, Economic,
Social, Technological, legal &
environment factors.
Marketing management Rajan Saxena Pg No. 24-25

Political Factors
• Political factors consists of:
Form of government adopted(Communist, Democratic, single party, etc.)
Political stability(How frequently do governments change in a country, Longer tenure ensures
greater stability)
Ideologies of the government( Progressive or Regressive)
Social and Religious organisations
Nature of strength of religious, cultural and social organisations
Media, Peer Pressure and lobbies
Government rules and regulations in the trading countries
• Political envirornment comprises of laws, government agencies and pressure groups that influence
or limit various organisations and individuals in a given society.
Ramaswamy V.S, Namakumari S. Pg No. 30

Other economic factors :
• How many households are there?
• How many people are there in upper income limit, lower income limit, above upper income limit and
below lower income limit?
• Which is the target income group?
Purchasing power of an individual depends upon :

• Disposable income
• Price level
• Credit Availability
• Savings
Ramaswamy V.S, Namakumari S. Pg 29

Economic Factors
Macroeconomic factors that plays a pivotal role : • Rate of growth in the economy
• GDP • Rate of growth in each sector of the economy
• Country’s per capita income example agriculture, service, automobile, exports,
• Foreign exchange rate imports, infrastructure, exports, imports
• Custom duty rates • Income
• Current market prices • Prices of the goods
• Consumer price index • Behaviour of capital markets
• Wholesale price index • Tax Rates
• Monetary policy • Exchange Rate
• Unemployment Rate • Foreign Exchange Reserves
• Fiscal policy • Energy(Cost, Availability)
• Foreign Direct Investment • Labour(Cost, skill availability)
• Inflation and core inflation
• Purchasing Power Parity Class notes
Social Factors
Social factors involve:
• Culture
Combined result of factors like religion, language, education and upbringing. Cultural shifts carry with
them marketing opportunities as well as threats.
• Social Class
Social class is determined by income, occupation, location of residence.
• Changing position of women
In the growing middleclass segment, the role of a woman is transformed into an educated employed member.
Other Social Factors

• religious composition • cultural diversity • Size of the population
• literacy levels, • language barrier • Growth rate, age, distribution
• composition of workforce, • zonal difference
• household patterns, • literacy rate
• regional differences, • gender ratio
• population shifts • Consumer psychology Ramaswamy V.S, Namakumari S. Pg No. 28-29
Technological Factors
• The architectural framework of a country depends on technological factors.
i. The advent of 5G
ii. Augmented Reality & Virtual Reality,
iii. Big data & analytics,
iv. Consumer privacy,
v. Robotic Process Automation(RBA)
vi. automation in manufacturing & artificial Intelligence.
• Factors considered for technological environment are:
i. Pull of technological change
ii. Opportunities arising out of technological innovation
iii. Risk and uncertainty of technological development
iv. Role of R&D
Marketing management by Rajan Saxena Pg 26-28

Legal Factors
• Legal factors are generally classified into Judiciary and Regulatory norms. Firms prefer to operate in a
country where there is sound legal system. Indian Contract Act, 1872, The Sale of Goods Act, Consumer
Protection Act, 1986, Partnership Act, 1932, IT Act 2000 safeguarding the business activities in India.
• The Monopolies and Restrictive Trade Practices (MRTP) Act, Intellectual Property Right, the new
Labour reforms, Foreign Exchange Management Act, 1999 considerable affect the business choices.
• Ease of doing business, government legal support to startups has boosted startup culture.
• RBI, IRDAI, TRAI plays an essential role in determining the successful establishment and operation of
any business.
Regulatory Bodies
Judicial bodies
SEBI – Securities and Exchange Board of India
Supreme Court,
TRAI – Telecom regulatory authority of India
High Court,
District & Subordinate Courts
Marketing management by Rajan Saxena Pg 26-28

Environmental Factors
▪ Ministry of Environment, Forest and Climate Change
Businesses have to consider the business decision within the ambit of the laws pertaining to environment.
▪ Natural Resources
Raw material availability in a country. Shortage of raw materials, especially due to increased pollution.
▪ Ecology
Concerns about environmental poluutution, protection of wildlife and ocean wealth and related laws.
▪ Climate
Climatic conditions , climate-dependent raw material, production locations.
Companies have started to recognise the role of ESG practices into their business. In May 2021, the Securities
and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Report (BRSR),
new reporting requirements relating to environmental, social and corporate governance (ESG).
Ramaswamy V.S, Namakumari S. Pg No. 30

• Circular Economy
Image source: https://education.nationalgeographic.org/resource/sustainable-development-goals/
• Profits
Strategic planning initiatives and key business

decisions are generally carefully designed to maximize
profits while reducing costs and mitigating risk.
• People
Traditionally, businesses strived to generate value for

those who own shares of the company. As firms have
increasingly embraced sustainability, they’ve shifted
their focus toward creating value for all stakeholders
impacted by business decisions, including customers,
employees, and community members.
• Planet
Making a positive impact on the planet.
https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line
37
https://www.mckinsey.com/
Micro Environment
Micro Environment
• The microenvironment, in contrast to the macro environment, refers to the specific, immediate
factors and forces that operate close to an organization and have a direct impact on its day-to-day
operations, strategies, and decision-making.
• Managing the microenvironment is vital for businesses to adapt to changing conditions, identify
opportunities, and mitigate threats effectively. It involves conducting market research, competitor
analysis, and maintaining positive relationships with stakeholders to ensure that the organization
remains competitive and aligned with its strategic objectives.
Marketing management by Rajan Saxena

Key components of Micro environmental
• Consumer
According to Peter Drucker, the aim of business is to create and retain the customer. Hence consumer
occupies the central position in the marketing environment. Marketer has to anticipate what
constitutes the consumer value system, who are the consumers, what are their buying behaviours.
• Competitors
Competitors shape business. A study of competitive scenario is essential for the marketer, majorly
threats from competition. Who are the competitors, what are their present business strategies and
business objectives.
• Employees
Understanding its own strengths and capabilities, understanding the business in depth should be the
primary goal.
• Market
The market is to be studied in terms of actual and potential size, its growth prospect and also its
attractiveness. The marketer should apply the trends and the development and the key factors, i.e.
cost structure of the market structure of the market, price sensitivity of the market, technological
structure of the market, the existing distribution system of the market.
• Suppliers
Suppliers affect the cost structure of the industry, which shapes competition in the industry.
Organizations must take a major decision on outsourcing or in house production depending on this
supplier environment.

• Intermediaries
Intermediaries exert a considerable influence in the marketing environment. They can also be considered as
the major determining force in the business. In many cases the consumers are not aware of the
manufacturer and buy the product from the renowned intermediaries.
• Public
Public constitute a major force and their opinion, beliefs, and attitudes have to be studied to design a
proper marketing strategy to meet the needs of the desired consumers.

SWOT
SWOT Analysis
Strengths Weaknesses
• Company culture • Lack of financial resources
• Skilled staff • Weak brand image
• Strong Legal team • High-cost structure
• Expert Distribution • Lack of efficient suppliers
Threats Opportunities
• Economic downturns • Market trends
• Changing consumer • Emerging customer needs
preferences • Changes in regulations or
• Legal changes new market segments
• Technological disruptions
Source: S Namakumari and notes pg 162

SWOT ANALYSIS
• For the generation of strategic alternatives or choices, it is necessary to analyze the firms internal
strengths and weaknesses and its external opportunities and threats.
• The identification and analysis of strengths, weaknesses, opportunities and threats is normally
referred to as SWOT analysis.
• While strength and weaknesses are internal to any business, threats and opportunities exists in
its external environment.
• The major purpose of Swot analysis is to enable the management to create a firm specific
business model that will best align, fit, or match an organizational resources and capabilities to
the demands of the environment in which it operates.
Source: ICAI Module

Internal Environment (Strengths and Weaknesses):
• Strengths relate to competitive advantages or distinctive competencies that give the company an edge in
meeting the customer needs. Any strength is only meaningful to the extent that it gives an to a company in
meeting customer needs more effectively and completely. For instance, a company marketing a high quality
product and having a highly trained and capable sales force (strength) may be of little use customers are
interested in low price and not in a high quality, expensive product.
• Weaknesses refer to any type of limitations that a business unit may experience in any area internal to a
business unit, such as production, design, R&D, finance, human resource, marketing and sales, skills, etc.
Besides the obvious, Weaknesses should also be assessed from a consumer perspective. Certain
weaknesses can only be perceived by the consumer. For example: How ‘BAD’ logos hurt brands like
American express and British Airways.
SOURCE: Marketing Management: Texts and Cases- S.H.H. Kazmi Pg. No. 40,41
External Environment (Opportunity and Threat) Analysis
• A business unit must monitor key macroenvironment forces and significant microenvironment factors that affect its
ability to earn profits. It should set up a marketing intelligence system to track trends and important developments
and any related opportunities and threats. Good marketing is the art of finding, developing, and profiting from these
opportunities.
• A marketing opportunity is an area of buyer need and interest that a company has a high probability of profitably
satisfying. There are three main sources of market opportunities. The first is to offer something that is in short
supply.
• This requires little marketing talent, as the need is fairly obvious. The second is to supply an existing product or
service in a new or superior way. How? The problem detection method asks consumers for their suggestions, the
ideal method has them imagine an ideal version of the product or service, and the consumption chain method asks
them to chart their steps in acquiring, using, and disposing of a product. This last method can often lead to a totally
new product or service, which is the third main source of market opportunities.
SOURCE: Marketing Management 15th Edition by Philip Kotler pg 72, 73

SWOT ANALYSIS
Marketers need to be good at spotting opportunities. Consider the following:
• A company may benefit from converging industry trends and introduce hybrid products or services new to
the market.
• A company may make a buying process more convenient or efficient.
• A company can meet the need for more information and advice.
• A company can customize a product or service.
• A company can introduce a new capability.
• A company may be able to deliver a product or service faster.
• A company may be able to offer a product at a much lower price.

SWOT ANALYSIS
• An environmental threat is a challenge posed by an unfavorable trend or development that, in the absence
of defensive marketing action, would lead to lower sales or profit. These could include things like increased
competition, economic downturn or regulatory changes. Also includes adverse change in foreign exchange
rates.
• After doing the SWOT analysis we can plot all these pointers that we have analyzed into the
TOWS matrix which is a strategy formulation tool that helps us in maximizing our
strengths, minimizing weaknesses, Exploiting Opportunities and avoiding threats.

TOWS MATRIX
Here is how the TOWS Matrix looks Internal Strengths Weaknesses
• We’ll plot all the information 1. 1.
External 2. 2.
received from the SWOT analysis 3. 3.
in their respective boxes Opportunities
1.
• After that each matrix will give us 2.
3.
specific strategies that can be
Threats
followed 1.
2.
• Ex: SO strategies, WO strategies,
3.
ST strategies and WT strategies
Maximum Strengths Weakness
Minimum
Opportunities Max-Max Min-Max
Threats Max-Min Min-Min

Porters Five
Forces Model
Porters Five Forces Model
Porter’s Five Force Model
• According to Michael Porter the business while analysing the environment should be more
concerned with the intensity of the competition is determined by various potential entrants,
supplier, industry competitors, rivalry amongst existing firms, buyers, substitute, etc.
• The collective and interactive, “ strengths of these factors determine the ultimate profit potential”
in the industry, where profit potential is measured in terms of long run return on invested capital.
• Strategies can identify opportunities and threats in each of these competitive forces and rate their
strength as high or medium or low force. No force is regarded as an opportunity. However the
business firms in the long run can change the threats into opportunities or neutral forces through
their strategies. But they have to craft their strategies in the short run within the limitations of
these forces.
Source: S. H. H. Kazmi and Rajan Saxena

Rivalry Against Present Competitors
High Competitive Rivalry:
• Many Competitors of Similar Size
• Slow Industry Growth
• High Exit Barriers
Medium Competitive Rivalry:

• Stable Industry Structure
• Differentiated Products or Services
• Moderate Industry Growth
Low Competitive Rivalry:

• Limited Competition due to Oligopoly or Monopoly
• Few Competitors with Niche
• Collaborative Market Structure
Source: Kotler & Keller Marketing Management 15edition Page No 285

Threat of New Entrants
New entrants can become a source of competition particularly when they are bigger. Michal Porter is of the
opinion that the degree of attractiveness of an industry varies according to its entry and exit barriers.
High: Industries that have low barriers to entry, often face a high threat of new entrants. These industries
typically have low capital requirements and few regulatory barriers, making it easier for new companies to
enter the market and compete.
Medium: Sectors like fast food or software might have moderate barriers to entry. While there may be some
brand loyalty or economies of scale involved, new entrants can still penetrate the market with substantial
effort.
Low: Industries with high barriers to entry, such as the airline or automobile manufacturing industry, involve
significant capital requirements, strict regulations, patents, or unique technology. This creates a substantial
deterrent for new entrants.
Bargaining Power of Supplier
High Bargaining Power of Suppliers:
• When an industry relies on a limited number of suppliers that offer unique or highly differentiated products,
the bargaining power of suppliers is high. For example, in the semiconductor industry.
• Industries where there are few suppliers but many buyers may grant significant leverage to the suppliers. For
instance, in the diamond industry.
• When switching suppliers is costly or disruptive, it can increase the supplier's bargaining power
Medium Bargaining Power of Suppliers:
• A balanced supplier-company relationship occurs when there are multiple suppliers offering similar products
or services. The balance allows for relatively fair negotiations.
• Industries, where the cost of inputs from suppliers forms a significant portion of the total cost structure but
doesn’t heavily impact the differentiation or quality of the final product, might have moderate supplier
bargaining power.
Low Bargaining Power of Suppliers:
• Industries where the products or services are commoditized, and there are numerous suppliers offering similar
products, tend to have low supplier power.
• In industries where there is an abundance of suppliers and low barriers to entry, such as the clothing or basic
household goods industry, suppliers have little power as companies have multiple options to choose from.
• In industries where switching suppliers is easy and inexpensive, supplier power tends to be low

Bargaining Power of Buyers
High Bargaining Power Of Buyers :
In industries like retail or consumer goods, where there are many alternatives available to buyers, the
bargaining power tends to be high. Buyers can easily switch between products or suppliers, exerting
pressure to lower prices.
Medium Bargaining Power Of Buyers :
In industries like telecommunications or some parts of the software industry, there might be a moderate
level of buyer power. Buyers have options, but the switching costs or product differentiation might mitigate
their power to some extent
Low Bargaining Power Of Buyers :
In industries where there are few buyers but significant volume, like the defense or specialized machinery
sectors, the buyers have little power as the products are highly differentiated or the costs of switching are
prohibitively high.
Threat of Substitute Product
High:
Industries where there are many alternatives or substitutes available, such as the transportation industry
(substituting between car, bus, train, or airplane), face a high threat of substitutes. This situation can limit
price increases and profit potential.
Medium:
Sectors like pharmaceuticals or entertainment might have moderate substitution threats. There are some
substitutes available, but the specific features or brand loyalty might mitigate the immediate impact on market
share.
Low:
In industries like utilities or some specialized manufacturing sectors where there are limited alternatives or
substitutes available, the threat of substitutes is low, allowing companies more control over pricing and
reducing the pressure for innovation.
Marketing
Research
Marketing research
➢Marketing research is the function that links the consumer, customer, and public to the marketer through
information—information used to identify and define marketing opportunities and problems; generate,
refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of
marketing as a process.
➢Marketing research specifies the information required to address these issues, designs the method for
collecting information, manages and implements the data collection process, analyzes the results, and
communicates the findings and their implications.
➢For example, marketing research gives marketers insights into customer motivations, purchase behavior,
and satisfaction. It can help them to assess market potential and market share or measure the
effectiveness of pricing, product, distribution, and promotion activities.
Source - Marketing management by Philp Kotler 15edition page no 121 to 136

Marketing Research Steps in marketing research
1) Define the problem & research objectives :-
➢ Defining the problem and research objectives is often the hardest step in the research
process. The manager may know that something is wrong, without knowing the specific
causes.
➢ After the problem has been defined carefully, the manager and the researcher must set
the research objectives. A marketing research project might have one of three types of
objectives.
• Exploratory research
➢ The objective of exploratory research is to gather preliminary information that will
help define the problem and suggest hypotheses.
• Descriptive Research
➢ The objective of descriptive research is to describe things, such as the market
potential for a product or the demographics and attitudes of consumers who buy the
product.

• Causal research
The objective of causal research is to test hypotheses about cause-and-effect relationships.
2) Developing a research plan
➢Once the research problem and objectives have been defined, researchers must determine the exact
information needed, develop a plan for gathering it efficiently, and present the plan to management.
➢The research plan outlines sources of existing data and spells out the specific research approaches,
contact methods, sampling plans, and instruments that re searchers will use to gather new data.
Research objectives must be translated into specific information needs.
➢The research plan should be presented in a written proposal. A written proposal is especially important
when the research project is large and complex or when an outside firm carries it out.

3) Collect the information
• After developing research plan, researchers should start looking for data for the research. Sources
of data The researcher can gather secondary data, primary data, or both.
• Secondary data
➢ Secondary data consist of information that already exists somewhere, having been collected
for another purpose.
➢ For example - Government publications, websites, books, journal articles, internal records etc.
• Primary data
➢ Primary data consist of information collected for the specific purpose at hand.
➢ For example - Surveys, observations, experiments, questionnaire, personal interview, etc.
➢ primary data collection calls for a number of decisions on research approaches, contact methods, the
sampling plan, and research instruments
➢ Marketers collect primary data in five main ways: through observation, focus groups, surveys, behavioral
data, and experiments
• Observation
➢ Observational Research Researchers can gather fresh data by observing unobtrusively as customers shop or
consume products. Sometimes they equip consumers with pagers and instruct them to write down or text
what they’re doing whenever prompted, or they hold informal interview sessions at a café or bar.
• Experiment
➢ The most scientifically valid research is experimental research, designed to capture cause-and-effect
relationships by eliminating competing explanations of the findings. If the experiment is well designed and
executed, research and marketing managers can have confidence in the conclusions.

• Survey
➢Survey research, the most widely used method for primary data collection, is the approach best suited for
gathering descriptive information. A company that wants to know about people’s knowledge, attitudes,
preferences, or buying behavior can often find out by asking them directly.
➢The major advantage of survey research is its flexibility; it can be used to obtain many different kinds of
information in many different situations. Surveys addressing almost any marketing question or decision can
be conducted by phone or mail, in person, or on the Web.
• Behavioral
➢ Behavioral research is the study and understanding of individual and group behaviour via
measurement and interpretation.
➢ Customers leave traces of their purchasing behavior in store scanning data, catalog purchases, and
customer databases. Marketers can learn much by analyzing these data. Actual purchases reflect
consumers’ preferences and often are more reliable than statements they offer to market researchers.

• Focus Research
➢ A focus group is a research technique that assembles a small group of people to respond to questions in a
controlled environment. The questions are intended to shed light on an interesting topic, and the group is
selected based on predetermined demographic characteristics. The interviewer “focuses” the group
discussion on important issue
Research Instruments
➢ Marketing researchers have a choice of two main research instruments in collecting primary
data: questionnaires, and technological devices.
➢ Questionnaires A questionnaire consists of a set of questions presented to respondents. Because of

its flexibility, it is by far the most common instrument used to collect primary data. The form, wording,
and sequence of the questions can all influence the responses, so testing and de-bugging are necessary

• Closed end questions
Closed-end questions specify all the possible answers, and the responses are easier to interpret and tabulate.
➢Dichotomous - A question with two possible answers
➢Multiple choice - A question with three or more answers
➢Likert scale - A statement with which the respondent shows the amount of agreement/ disagreement
➢Semantic differential - A scale connecting two bipolar words. The respondent selects the point that
represents his or her opinion.
➢Importance scale - A scale that rates the importance of some attribute.
➢Rating scale - A scale that rates some attribute from “poor” to “excellent”.
➢Intention-to-buy scale - A scale that describes the respondent’s intention to buy.

• Open ended Questions
➢Open-end questions allow respondents to answer in their own words. They are especially useful in
exploratory research, where the researcher is looking for insight into how people think rather than
measuring how many think a certain way.
➢Completely unstructured - A question that respondents can answer in an almost unlimited number of ways
➢Word association - Words are presented, one at a time, and respondents mention the first word that comes
to mind
➢Sentence completion - An incomplete sentence is presented and respondents complete the sentence.
➢Story completion - An incomplete story is presented, and respondents are asked to complete it.
➢Picture - A picture of two characters is presented, with one making a statement. Respondents are asked to
identify with the other and fill in the empty balloon.
Marketing management by Philp Kotler 15edition page no 121 to 136

Questionnaire Do & don'ts
1. Ensure that questions are without bias :- Don’t lead the respondent into an answer.
2. Make the questions as simple as possible :- Questions that include multiple ideas or two questions in one will confuse respondents
3. Make the questions specific :- Sometimes it’s advisable to add memory cues. For example, be specific with time periods.
4. Avoid jargon or shorthand :- Avoid trade jargon, acronyms, and initials not in everyday use.
5. Avoid ambiguous words :- Words such as usually or frequently have no specific meaning.
6. Avoid questions with a negative in them:- It is better to say, “Do you ever…?” than “Do you never…?”
7. Avoid hypothetical questions :- It’s difficult to answer questions about imaginary situations. Answers aren’t necessarily reliable.
8. Allow for the answer “other” in fixed-response questions :- Precoded answers should always allow for a response other than those
listed
9. Ensure that fixed responses do not overlap :- Categories used in fixed-response questions should be distinct and not overlap.
10. Desensitize questions by using response bands :- To ask people their age or ask companies about employee turnover rates, offer a
range of response bands instead of precise numbers.
Marketing management by Philip Kotler – 15thedition page no 121 to 136
2) Technological devices
➢Technological Devices Galvanometers can measure the interest or emotions aroused by exposure to a
specific ad or picture. The tachistoscope flashes an ad to a subject with an exposure interval that may range
from less than one hundredth of a second to several seconds.
➢After each exposure, the respondent describes everything he or she recalls. Many advances in visual
technology techniques studying the eyes and face have benefited marketing researchers and managers alike.
➢Technology now let's marketers use skin sensors, brain wave scanners, and full-body scanners to get
consumer responses. For example, biometric-tracking wrist sensors can measure electrodermal activity, or
skin conductance, to note changes in sweat levels, body temperature and movement.

Contact Methods
• Mail
Mail questionnaires can be used to collect large amounts of information at a low cost per respondent.
Respondents may give more honest answers to more personal questions on a mail questionnaire than to an
unknown interviewer in person or over the phone. Also, no interviewer is involved to bias respondents’
answers.
• Telephone interviewing
It is one of the best methods for gathering information quickly, and it provides greater flexibility than mail
questionnaires. Interviewers can explain difficult questions and, depending on the answers they receive, skip
some questions or probe on others. Response rates tend to be higher than with mail questionnaires, and
interviewers can ask to speak to respondents with the desired characteristics or even by name.

• Personal interviewing
➢ Personal interviewing is the most versatile method. The interviewer can ask more questions and record
additional observations about the respondent, such as dress and body language. Personal interviewing is
also the most expensive method, is subject to interviewer bias, and requires more planning and
supervision.
➢ In arranged interviews, marketers contact respondents for an appointment and often offer a small
payment or incentive. In intercept interviews, researchers stop people at a shopping mall or busy street
corner and request an interview on the spot. Intercept interviews must be quick, and they run the risk of
including nonprobability samples.

Sampling plan
➢A sample is a segment of the population selected for marketing research to represent the population
as a whole.
➢Ideally, the sample should be representative so that the researcher can make accurate estimates of
the thoughts and behaviors of the larger population.
➢After choosing the research approach and instruments, the marketing researcher must design a
sampling plan. This calls for three decisions:
➢Sampling unit: Whom should we survey?
➢Sample size: How many people should we survey?
➢Sampling Procedure: how should we choose the respodents?

Determine the sample size
➢ Sample size refers to the number of elements to be included in the study.
➢ Qualitative factors that should be considered in determining the sample size include :-
1) The importance of decision
2) The nature of the research
3) The number of variables
4) Sample size used in similar studies
5) Sample size used in similar studies
6) Incidence rate
7) Completion rates
8) Resource constraints
Source - Marketing Research by Naresh k Malhotra

➢In general, for more important decision, more information is necessary, and the information should be
obtained more precisely. This calls for larger samples, but as the sample size increases, each unit of
information is obtained at greater cost.
➢The nature of research also has an impact on the sample size. For exploratory research design, such
as those qualitative research, the sample size is typically small. for conclusive research, such
as descriptive surveys, larger samples are required.
➢If data are being collected on a large number of variables, larger samples are required. The cumulative
effects of sampling error across variables are reduced in a large sample.
➢Sample size decision should be guided by a consideration of the resource constraints. In any marketing
research project, money and time are limited. Other constraints include the availability of
qualified personnel for data collection.

➢ Sample size is influenced by the average size
of samples in similar studies. The table gives
an idea of sample size used in different
marketing research studies. These samples
sizes have been determined based on
experience and can serve as rough guidelines,
particularly when nonprobability sampling
techniques are used.

Source - Marketing Research by Naresh k Malhotra page no 334
Sampling Procedure
➢After sampling plan, the researchers should select the sampling procedure for the research. There are
two types of sampling procedure:-
1) Probability Sampling
➢Using probability samples, each population member has a known chance of being included in the sample,
and researchers can calculate confidence limits for sampling error.
Simple random sample
➢ Every member of the population has a known and equal chance of selection.
Stratified random sample
➢ The population is divided into mutually exclusive groups (such as age groups), and random samples are
drawn from each group.
Source - Marketing management by Philp Kotler 15edition

Cluster (area) sample -
➢The population is divided into mutually exclusive groups (such as blocks), and the
researcher draws a sample of the groups to interview.
Systematic sample
➢ In this the sample is chosen by selecting a random starting point and then
picking every ith element in succession from the sampling frame.
Marketing management by Philp Kotler 15edition

2) Non probabilistic sampling
➢ Non-probability sampling is defined as a sampling technique in which the researcher selects samples based on the
subjective judgment of the researcher rather than random selection
Types of non-probabilistic sampling
➢ Convenience sample - The researcher selects the easiest population members from which to obtain information
➢ Judgment sample - The researcher uses his or her judgment to select population members who are good prospects
for accurate information.
➢ Quota sample - The researcher finds and interviews a prescribed number of people in each of several categories.
➢ Snowball sample - in snowball sampling an initial group of respondents is selected, usually at random .after being
interviewed, these respondents are asked to identify others who belong to the target population of interest.
Subsequent respondents are selected based on the referrals. This process may be carried out in waves by obtaining
referrals thus leading to snowballing effect.
Marketing management by Philp Kotler 15edition

Errors
Source - Marketing Research sixth edition by Naresh k Malhotra

Potential sources of error
Total error
➢The total error is the variation between the true mean value in the population of the variable of interest and
the observed mean value obtained in the marketing research project.
➢For example, the average annual income of the target population is Rs 75000 as determined from
the latest census records, but the marketing research project estimates it as Rs 65000 based on a sample
survey. Total error is composed of random sampling error & non sampling error
1) Random sampling error – the error due to the particular sample selected being an imperfect
representation of the population of interest. It may be the variation between the true mean value for the
sample and the true mean value of the population.
2) Non sampling error – non sampling error are errors that can be attributed to sources other than sampling
and they can be random or non-random

4) Analyze the Information
➢ The next-to-last step in the process is to extract findings by tabulating the data and developing summary
measures. The researchers now compute averages and measures of dispersion for the major variables and
apply some advanced statistical techniques and decision models in the hope of discovering additional findings.
They may test different hypotheses and theories, applying sensitivity analysis to test assumptions and the
strength of the conclusions.
Hypotheses testing
➢ A hypothesis is an unproven statement or proposition about a factor or phenomenon that is of interest to the
researcher. It may ,for example be a tentative statement about relationships between two or more variables as
stipulated by the theoretical framework or the analytical model.
➢Null hypotheses - A null hypothesis a statement of the status quo, one of no difference or no effect. If the null
hypothesis is not rejected, no changes will be made.
Source - Marketing management by Philp Kotler 15edition 121 to 136 & Marketing Research by Naresh Malhotra 443
➢Alternate hypothesis - An alternate hypothesis is one in which some difference or effect is expected,.
Accepting the alternative will lead to changes in opinions or actions. thus alternative hypotheses hypothesis is
the opposite of the null hypotheses.
Variables
Marketing research by Naresh Malhotra

Statistical tools :-
➢ANOVA
In ANOVA the dependent variable is metric and the independent variables are all categories, or
combinations of categorical and metric variables.
One-way Anova involves a single independent categorical variable. Interest lies in testing the null
hypothesis that the category means are equal in the population. The total variation in the dependent
variable is decomposed into two components, variation related to the independent variable and variation
related to error.
The variation is measured in terms of the sum of squares corrected for the mean(SS). The mean square is
obtained by dividing the SS by the corresponding degrees of freedom(df). The null hypothesis of equal
means is tested by an F statistic, which is the ratio of the mean square related to the independent variables
to the mean square related to error.
Marketing research by Naresh Malhotra page no 507
5) Present the Findings
➢As the last step, the researcher presents the findings. Researchers are increasingly asked to play
a proactive, consulting role in translating data and information into insights and recommendations
for management.
6) Make the decision
➢The last step is to make decision on basis of the findings.
Marketing Management by Philip kotler 15edition page no 121 to 136

Consumer
Behaviour
Consumer Behaviour
• Consumer behaviour is the study of how individuals, groups, and organizations select, buy, use, and dispose
of goods, services, ideas, or experiences to satisfy their needs and wants.
• Marketers must have a thorough understanding of how consumers think, feel, and act and offer clear value
to each and every target consumer. Often, consumers themselves don’t know exactly what influences their
purchases
• The central question for marketers is how consumers respond to various marketing efforts the company
might use.
• The starting point to understand how consumers respond to various marketing efforts the company might
use is the stimulus-response model of buyer behavior shown in the figure in the next slide.
Source : Principle of Marketing by Kotler ( 14 edition ) page no. 134

Black Box Model
Source : Marketing management by kotler (15 E) page no. 187

• The figure shows that marketing and other stimuli enter the consumer’s “black box” and produce certain
responses. Marketers must figure out what is in the buyer’s black box.
• Marketing stimuli consist of the four Ps: product, price, place, and promotion. (Refer marketing mix)
• Other stimuli include major forces and events in the buyer’s environment: economic, technological,
political, and cultural. (Refer PESTLE)
• All these inputs enter the buyer’s black box, where they are turned into a set of buyer responses: the
buyer’s brand and company relationship behavior and what he or she buys, when, where, and how often.
• Marketers want to understand how the stimuli are changed into responses inside the consumer’s black
box, which has two parts
1. Buyer’s characteristics influence how he or she perceives and reacts to the stimuli.
2. Buyer’s decision process affects his or her behavior
Characteristics Affecting Consumer Behavior
1.Cultural Factor
• The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and
other important institutions.
• Marketers are always trying to spot cultural shifts so as to discover new products that might be wanted.
• Each culture contains smaller subcultures, or groups of people with shared value systems based on
common life experiences and situations.
• Subcultures include nationalities, religions, racial groups, and geographic regions.
• Social classes are society’s relatively permanent and ordered divisions whose members share similar
values, interests, and behaviors.
• Social class is not determined by a single factor, such as income, but is measured as a combination of
occupation, income, education, wealth, and other variables.
2. Social Factor
A consumer’s behavior also is influenced by social factors, such as the consumer’s small groups, family, and
social roles and status.
• Reference Groups : Reference groups serve as direct (face-to-face) or indirect points of comparison or
reference in forming a person’s attitudes or behavior. People often are influenced by reference groups to
which they do not belong.
• Family : The family is the most important consumer buying organization in society, and it has been
researched extensively. From parents a person acquires an orientation toward religion, politics,
and economics and a sense of personal ambition, self-worth, and love and this influence the buying
behavior of a person.
• Role and Status : A role consists of the activities people are expected to perform according to the people
around them. Each role carries a status reflecting the general esteem given to it by society. People usually
choose products appropriate to their roles and status.
Source : Marketing management by kotler (15 E) page no. 181-183
3. Personal Factors
A buyer’s decisions also are influenced by personal characteristics such as the buyer’s age and life-
cycle stage, occupation, economic situation, lifestyle, and personality and self-concept.
• Age and Life-Cycle Stage : People change the goods and services they buy over their lifetimes. Tastes
in food, clothes, furniture, and recreation are often age related. Consumption is also shaped by the
family life cycle and the number, age, and gender of people in the household at any point in time.
• Occupation : Marketers try to identify the occupational groups that have above-average interest in
their products and services and even tailor products for certain occupational groups. Computer
software companies, for example, design different products for brand managers, engineers, lawyers,
and physicians.
• Economic Situation : A person’s economic situation will affect his or her store and product choices.
Marketers watch trends in personal income, savings, and interest rates.
Source : Principle of Marketing by Kotler ( 14 edition ) page no. 144-147
• Personality and Self Concept : A set of distinguishing human psychological traits that lead to
relatively consistent and enduring responses to environmental stimuli including buying behavior. Brands
also have personalities, and consumers are likely to choose brands whose personalities match their own.
• Lifestyles and Values : A lifestyle is a person’s pattern of living in the world as expressed in
activities, interests, and opinions. Consumers don’t just buy products; they buy the values and lifestyles
those products represent. A computer manufacturer might find that most computer buyers are
achievement-oriented and then aim the brand more clearly at the achiever lifestyle.

4. Psychological Factors
• Marketing and environmental stimuli enter the consumer’s consciousness, and a set of psychological
processes combine with certain consumer characteristics to result in decision processes and purchase
decisions.
• The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival
of the outside marketing stimuli and the ultimate purchase decisions.
• Four key psychological processes— that fundamentally influence consumer responses

• Motivation
• Perception
• Learning
• Beliefs and Attitudes
Source : Marketing management by kotler (15 E) page no. 187 - 191

• Motivation
➢ A need becomes a motive when it is aroused to a sufficient level of intensity.
➢ A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction.
➢ Three of the best-known theories of human motivation—those of Sigmund Freud, Abraham Maslow, and
Frederick Herzberg—carry quite different implications for consumer analysis and marketing strategy.
Freud’s Theory
➢ Sigmund Freud assumed that people are largely unconscious about the real psychological forces shaping
their behavior.
➢ He saw the person as growing up and repressing many urges. These urges are never eliminated or under
perfect control; they emerge in dreams, in slips of the tongue, in neurotic and obsessive behavior, or,
ultimately, in psychoses.

➢ Freud’s theory suggests that a person’s buying decisions are affected by subconscious motives
that even the buyer may not fully understand.
Maslow’s Theory
➢ He stated that human needs are arranged in a hierarchy from most to least pressing—from
physiological needs to safety needs, social needs, esteem needs, and self-actualization needs.
➢ For example, a starving man (need 1) will not take an interest in the latest happenings in the art world
(need 5), nor in the way he is viewed by others (need 3 or 4), nor even in whether he is breathing clean
air (need 2), but when he has enough food and water, the next most important need will become
salient.

• Maslow’s Hierarchy of Needs

Herzberg’s Theory
➢ Frederick Herzberg developed a two-factor theory that distinguishes dissatisfiers (factors that cause
dissatisfaction) from satisfiers (factors that cause satisfaction).
➢ The absence of dissatisfiers is not enough to motivate a purchase; satisfiers must be present.
➢ For example, a computer that does not come with a warranty is a dissatisfier. Yet the presence of a product
warranty does not act as a satisfier or motivator of a purchase because it is not a source of intrinsic
satisfaction. Ease of use is a satisfier.
➢ Sellers should do their best to avoid dissatisfiers.
➢ Seller should identify the major satisfiers or motivators of purchase in the market and then supply them.

• Perception
➢ A motivated person is ready to act. How the person acts is influenced by his or her own perception of
the situation.
➢ All of us learn by the flow of information through our five senses: sight, hearing, smell, touch, and taste.
However, each of us receives, organizes, and interprets this sensory information in an individual way.
➢ Perception is the process by which people select, organize, and interpret information to form a
meaningful picture of the world.
➢ People can form different perceptions of the same stimulus because of three perceptual processes:
selective attention, selective distortion, and selective retention.

Selective Attention
The tendency for people to screen out most of the information to which they are exposed
Selective Distortion
The tendency of people to interpret information in a way that will support what they already believe
Selective Retention
Selective retention means that consumers are likely to remember good points made about a brand
they favor and forget good points made about competing brand

• Learning
➢ When people act, they learn. Learning describes changes in an individual’s behavior arising from
experience.
➢ Learning theorists say that most human behavior is learned. Learning occurs through the interplay of
drives, stimuli, cues, responses, and reinforcement.
➢ The practical significance of learning theory for marketers is that they can build up demand for a product
by associating it with strong drives, using motivating cues, and providing positive reinforcement.

• Beliefs and Attitudes
➢ A belief is a descriptive thought that a person has about something. Beliefs may be based on real
knowledge, opinion, or faith and may or may not carry an emotional charge.
➢ Attitude describes a person’s relatively consistent evaluations, feelings, and tendencies toward an
object or idea.
➢ Attitudes are difficult to change. Thus, a company should usually try to fit its products into existing
attitudes rather than attempt to change attitudes.
Principle of marketing by Kotler 15 E page no 187-191

Factors Influencing Consumer Behavior

Types of Buying Decision Behavior
• Buying behavior differs greatly for a tube of toothpaste, an iPhone, financial services, and a new car.
More complex decisions usually involve more buying participants and more buyer deliberation.
• Below figure shows the types of consumer buying behavior based on the degree of buyer involvement
and the degree of differences among brands.

• Complex Buying Behavior
This behavior is seen when consumers are highly involved in a purchase and perceive significant differences
among brands. They may be highly involved when the product is expensive, risky, purchased infrequently, and
highly self-expressive. They first develop belief about the product, then attitude and then make a thoughtful
purchase choice.
• Dissonance-Reducing Buying Behavior

when consumers are highly involved with an expensive, infrequent, or risky purchase but see little difference
among brands. In this case, because perceived brand differences are not large, buyers may shop around to learn
what is available but buy relatively quickly.

• Habitual Buying Behavior
This occurs under conditions of low-consumer involvement and little significant brand difference.
• Variety-Seeking Buying Behavior
This behavior is seen in situations characterized by low consumer involvement but significant perceived
brand differences. In such cases, consumers often do a lot of brand switching.

The Buyer Decision Process
• This process tells us how consumers make buying decisions.
• Below figure shows that the buyer decision process consists of five stages: need recognition, information
search, evaluation of alternatives, purchase decision, and postpurchase behavior.

• Need Recognition
➢ The buying process starts with need recognition—the buyer recognizes a problem or need.
➢ At this stage, the marketer should research consumers to find out what kinds of needs or problems
arise, what brought them about, and how they led the consumer to this particular product.
• Information Search
➢ An interested consumer may or may not search for more information. If the consumer’s drive is
strong and a satisfying product is near at hand, he or she is likely to buy it then. If not, the
consumer may store the need in memory or undertake an information search related to the need.
➢ A company must design its marketing mix to make prospects aware of and knowledgeable about
its brand. It should carefully identify consumers’ sources of information and the importance of
each source.

• Evaluation of Alternatives
➢ The stage of the buyer decision process in which the consumer uses information to evaluate
alternative brands in the choice set.
➢ The consumer arrives at attitudes toward different brands through some evaluation procedure.
➢ Marketers should study buyers to find out how they actually evaluate brand alternatives. If
marketers know what evaluative processes go on, they can take steps to influence the buyer’s
decision.
• Purchase Decision
➢ In the evaluation stage, the consumer ranks brands and forms purchase intention. Generally, the
consumer’s purchase decision will be to buy the most preferred brand.

• Post purchase Decision
➢ The stage of the buyer decision process in which consumers take further action after purchase based on
their satisfaction or dissatisfaction with a purchase.
➢ If the product falls short of expectations, the consumer is disappointed; if it meets expectations, the
consumer is satisfied; if it exceeds expectations, the consumer is delighted. The larger the gap between
expectations and performance, the greater the consumer’s dissatisfaction. This suggests that sellers
should promise only what their brands can deliver so that buyers are satisfied.

Pillars of Marketing
- STDP
It consists of four major steps in designing a customer value–driven marketing strategy.
➢ Market segmentation involves dividing a market into distinct groups of buyers who have different
needs, characteristics, or behaviors and who might require separate marketing strategies or mixes.
➢ Market targeting (or targeting) consists of evaluating each market segment’s attractiveness and
selecting one or more market segments to enter.
➢ Differentiation involves actually differentiating the firm’s market offering to create superior customer
value.
➢ Positioning consists of arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers.
Source : Kotler & Keller, 2016, p. 268

1. Market segmentation
Definition : A market segment consists of a group of customers who share a similar set of needs
Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors
and who might require separate marketing strategies or mixes.
Four important segmentations are segmenting consumer markets, segmenting business markets,
segmenting international markets, and the requirements for effective segmentation.
Source : Kotler & Keller, 2016, p. 268

Effective Segmentation Criteria
Not all segmentation schemes are useful. To be useful, market segments must rate favorably on five key criteria:
• Measurable. The size, purchasing power, and characteristics of the segments can be measured.
• Substantial. The segments are large and profitable enough to serve. A segment should be the largest possible
homogeneous group worth going after with a tailored marketing program. It would not pay, for example, for an
automobile manufacturer to develop cars for people who are less than four feet tall.
• Accessible. The segments can be effectively reached and served.
• Differentiable. The segments are conceptually distinguishable and respond differently to different marketing-
mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do
not constitute separate segments.
• Actionable. Effective programs can be formulated for attracting and serving the segments.
Source : Marketing Management by Philip Kotler, pg 231
A. Segmenting Consumer Markets
• There is no single way to segment a market. A marketer has to try different segmentation
variables, alone and in combination, to find the best way to view market structure.
• Variables that might be used in segmenting consumer markets are geographic, demographic,
psychographic, and behavioral variables
Source : Principles of management, 17th Edition, pg 213

Geographic segmentation
• It calls for dividing the market into different geographical units, such as nations, regions, states,
counties, cities, or even neighborhoods.
• A company may decide to operate in one or a few geographical areas or operate in all areas but
pay attention to geographical differences in needs and wants.
• Moreover, many companies today are localizing their products, services, advertising, promotion,
and sales efforts to fit the needs of individual regions, cities, and other localities

Demographic Segmentation
• Demographic segmentation divides the market into segments based on variables such as age, life-cycle
stage, gender, income, occupation, education, religion, ethnicity, and generation.
• Demographic factors are the most popular bases for segmenting customer groups.
• One reason is that consumer needs, wants, and usage rates often vary closely with demographic variables
and are easier to measure than most other types of variables.
• Even when marketers first define segments using other bases, such as benefits sought or behavior, they
must know a segment’s demographic characteristics to assess the size of the target market and reach it
efficiently

Gender segmentation
• It has long been used in marketing clothing, cosmetics, toiletries, toys, and magazines.
• For example, P&G was among the first to use gender segmentation with Secret, a deodorant brand
specially formulated for a woman’s chemistry, packaged and advertised to reinforce the female image.
• More recently, the men’s personal care industry has exploded, and many cosmetics brands that previously
catered mostly to women from L’Oréal, Nivea, and Sephora to Unilever’s Dove brand now successfully
market men’s lines.
• For exam Dove’s Men+Care line calls itself “The authority on man maintenance.” The brand provides a full
line of body washes (“skin care built in”), body bars (“fight skin dryness”), antiperspirants (“tough on sweat,
not on skin”), face care (“take better care of your face”), and hair care (“3X stronger hair”).

Age and life-cycle segmentation :
Consumer needs and wants change with age. It offers different products or using different marketing
approaches for different age and life-cycle groups.
For example : Kraft’s Oscar Mayer brand markets
• It markets Lunchables, convenient prepackaged lunches for children.
• Introduced Lunchables Uploaded, a version designed to meet the tastes and sensibilities of teenagers.
• Most recently, the brand launched an adult version, but with the more adult-friendly name P3 (Portable
Protein Pack).
• Now, consumers of all ages can enjoy one of America’s favorite noontime meals
Income segmentation
Dividing a market into different income segments.
➢ The marketers of products and services such as automobiles, clothing, cosmetics, financial services,
and travel have long used income segmentation.
➢ Many companies target affluent consumers with luxury goods and convenience services. Other
marketers use high-touch marketing programs to court the well-to-do.
➢ The fashion-savvy, well-connected personal consultant gets to know and helps to shape each client’s
personal sense of style, then guides him or her “through the maze of fashion must-haves.” The
personal stylist puts the customer first. For example, if Saks doesn’t carry one of those must-haves that
the client covets, the personal stylist will find it elsewhere at no added charge.
Source : Principes of management, 17th Edition, pg 216

Psychographic Segmentation
It divides buyers into different segments based on lifestyle or personality characteristics.
• People in the same demographic group can have very different psychographic characteristics. The products people buy
reflect their lifestyles. As a result, marketers often segment their markets by consumer lifestyles and base their marketing
strategies on lifestyle appeals.
• Gazelle also produces e-bikes for daily use, but the Gazelle Ultimate e-bike belongs to a top-flight range: made from
lightweight high-end carbon or aluminum parts and frames, it is meant to combine sportiness and speed with great
comfort.
• Marketers also use personality variables to segment markets.

Behavioral Segmentation
➢It divides buyers into segments based on their knowledge, attitudes, uses, or responses to a product.
➢Many marketers believe that behavior variables are the best starting point for building market segments.
Occasions. Buyers can be grouped according to occasions when they get the idea to buy, actually make
their purchases, or use the purchased items. Occasion segmentation can help firms build up product
usage.
➢A powerful form of segmentation is grouping buyers according to the different benefits that they seek from
a product. Benefit segmentation requires finding the major benefits people look for in a product class, the
kinds of people who look for each benefit, and the major brands that deliver each benefit.
Source : Marketing Management by Philip Kotler, pg no 227
Segmenting Business Markets
• Consumer and business marketers use many of the same variables to segment their markets. Business
buyers can be segmented geographically, demographically (industry, company size), or by benefits sought,
user status, usage rate, and loyalty status.
• Yet business marketers also use some additional variables, such as customer operating characteristics,
purchasing approaches, situational factors, and personal characteristics. Almost every company serves at
least some business markets
• For example, Starbucks has developed distinct marketing programs for each of its two business segments:
the office coffee segment and the food service segment.
• The Starbucks Foodservice division teams up with businesses and other organizations—ranging from
airlines, restaurants, colleges, and hospitals to baseball stadiums—to help them serve the well-known
Starbucks brand to their own customers.
• Starbucks provides not only the coffee, tea, and paper products to its food service partners but
also equipment, training, and marketing and merchandising support
• Many companies establish separate systems for dealing with larger or multiple-location customers. For
example, Steelcase, a major producer of office furniture systems, first divides customers into several
segments: health-care, education, hospitality, legal, U.S. and Canadian governments, and state and
local governments.
• Next, company salespeople work with independent Steelcase dealers to handle smaller, local, or regional
Steelcase customers in each segment. But many national, multiple-location customers, such as ExxonMobil
or IBM, have special needs that may reach beyond the scope of individual dealers. Therefore, Steelcase
uses national account managers to help its dealer networks handle national accounts.

Segmenting International markets
• International markets can be segmented based on geographic, economic, political, cultural, and
other factors presuming that segments should consist of clusters of countries.
• However, as new communications technologies, such as satellite TV and online and social media,
connect consumers around the world, marketers can define and reach segments of like-minded
consumers no matter where in the world they are.
• Using intermarket segmentation (also called cross-market segmentation), they form segments of
consumers who have similar needs and buying behaviors even though they are located in different
countries.

SEC classification - 2011
The SEC classification is the classification of consumers on the basis of parameters. Traditionally the two
parameters used to categorize consumers were occupation and Education of the chief wage earner (head) of
the households.
The older version, the SEC classification consists of two grids-
• The urban SEC grid, which uses education levels and occupational criteria of the chief wage earner (CWE) of
a household as measures to determine socio-economic classification, and segments urban India into 7
groups (A1 to E2) and
• The rural SEC grid, which uses education and type of house (pucca, semi-pucca, and kaccha) as measures of
socio-economic class, and segments rural India into 4 groups (R1, R2, R3, R4)
Source : Wikipedia & mruc.net

There are 12 grades in the new system starting from A1 to E3. It divides the population into 3 classes:
• Upper most segment of the consuming class-A1, A2 and B1
• Middle segment- B2 and C
• The lower most segment—D, E1, and E2..

• This is based on the assumption that higher education leads to higher income thus higher
consuming potential. But that this may not always be true. A trader or a retailer with no qualification can
earn more income than a post-graduate executive, but SEC will categorize the traders/retailers not as SEC
A1or A2.
• In order to combat this problem, the Government came up with the new SEC system on 3 May 2011.
• The new SEC system is based on two variables:
• Education of the chief earner. The options are illiterate, literate but no formal schooling or schooling unto 4
years, schooling between 5–9 years, high school pass, some college (including a diploma but not a
graduate), graduate / post-graduate (general), graduate / post-graduate (professional)
• The number of consumer durables (pre-decided from a list of 11 items) owned by the family. The list of 11
items are: electricity connection, ceiling fan, LPG stove, two wheeler, color TV, refrigerator, washing
machine, personal computer/laptop, car/jeep/van, air conditioner, agricultural land
Advantages Drawbacks
• More discrimination as compared • We need to be better prepared to handle
with current systems minor changes to the system, because
• A single system for urban and and rural “consumer durables” penetration will change
India faster than education or occupation
• Less subjectivity- as we no longer • The questioning can appear intrusive to
use occupation people who are unaccustomed to market

research. It’s not a problem elsewhere
• It’s simple - easy to answer, not very
time consuming, easy to classify

Targeting
• Target market segments are often ones whose buying needs, wants and habits match the products or
services a company offers
• Marketers have a range or continuum of possible levels of segmentation that can guide their target
market decisions.
• As the figure shows, at one end is a mass market of essentially one segment; at the other are individuals
or segments of one person. Between lie multiple segments and single segments.
Source : Marketing Management by Philip Kotler, Pg 233

1. FULL MARKET COVERAGE
• With full market coverage, a firm attempts to serve all customer groups with all the products they might
need. market), General Motors (vehicle market), and Coca-Cola (nonalcoholic beverage market) can
undertake a full market coverage strategy. Large firms can cover a whole market in two broad ways:
through differentiated or undifferentiated marketing.
• In undifferentiated or mass marketing, the firm ignores segment differences and goes after the whole
market with one offer. It designs a marketing program for a product with a superior image that can be
sold to the broadest number of buyers via mass distribution and mass communications.
• In differentiated marketing, the firm sells different products to all the different segments of the market.
Differentiated marketing typically creates more total sales than undifferentiated marketing. However, it
also increases the costs of doing business. Because differentiated marketing leads to both higher sales
and higher costs, no generalizations about its profitability are valid.

2. MULTIPLE SEGMENT SPECIALIZATION
• With selective specialization, a firm selects a subset of all the possible segments, each objectively
attractive and appropriate. There may be little or no synergy among the segments, but each promises to
be a moneymaker.
• When Procter & Gamble launched Crest Whitestrips, initial target segments included newly engaged
women and brides-tobe as well as gay males. The multisegment strategy also has the advantage of
diversifying the firm’s risk.
• With product specialization, the firm sells a certain product to several different market segments.

3. SINGLE-SEGMENT CONCENTRATION
• With single-segment concentration, the firm markets to only one particular segment.
• Through concentrated marketing, the firm gains deep knowledge of the segment’s needs and achieves a
strong market presence.
• It also enjoys operating economies by specializing its production, distribution, and promotion. If it
captures segment leadership, the firm can earn a high return on its investment.
• A niche is a more narrowly defined customer group seeking a distinctive mix of benefits within a
segment. Marketers usually identify niches by dividing a segment into subsegments.
• Customers have a distinct set of needs; they will pay a premium to the firm that best satisfies them; the
niche is fairly small but has size, profit, and growth potential and is unlikely to attract many competitors;
and the niche gains certain economies through specialization.
• As marketing efficiency increases, niches that were seemingly too small may become more profitable.

4. INDIVIDUAL MARKETING
• The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one
marketing.”
• Today, customers are taking more individual initiative in determining what and how to buy. They log onto the
Internet; look up information and evaluations of product or service offerings; conduct dialogue with
suppliers, users, and product critics; and in many cases design the product they want.
• Customerization combines operationally driven mass customization with customized marketing in a way that
empowers consumers to design the product and service offering of their choice.
• The firm no longer requires prior information about the customer, nor does it need to own manufacturing. It
provides a platform and tools and “rents” to customers the means to design their own products.
Differentiation
• It is the process of developing and promoting differences between one's products or services and those of
competitors to make them more appealing to a target market. It's about creating a perceived value that sets
a product or service apart in the minds of customers.
• in many cases, two or more firms will go after the same position. Then each will have to find other ways to
set itself apart. Each firm must differentiate its offer by building a unique bundle of benefits that appeal to a
substantial group within the segment
• To build profitable relationships with target customers, marketers must understand customer needs and
deliver more customer value better than competitors do. To the extent that a company can differentiate and
position itself as providing superior customer value, it gains competitive advantage
• An alert company can find ways to differentiate itself at every customer contact point. It can differentiate
along the lines of product, services, channels, people, or image.
Ways to differentiate itself at every customer contact point in detail are as follows:
• Through Product differentiation, brands can be differentiated on features, performance, or style and design.
• Beyond differentiating its physical product, a firm can also differentiate the services that accompany the
product. Some companies gain Services differentiation through speedy, convenient service
• Firms that practice Channel differentiation gain competitive advantage through the way they design their
channel’s coverage, expertise, and performance
• Companies can also gain a strong competitive advantage through People differentiation—hiring and training
better people than their competitors do. People differentiation requires that a company select its customer-
contact people carefully and train them well.
• Even when competing offers look the same, buyers may perceive a difference based on company or brand Image
differentiation. A company or brand image should convey a product’s distinctive benefits and positioning.
Developing a strong and distinctive image calls for creativity and hard work.
Source : Marketing Management by Philip Kotlerpg 329

Positioning
• Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds
of the target market.
• The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm.
• A good brand positioning helps guide marketing strategy by clarifying the brand’s essence, identifying the
goals it helps the consumer achieve, and showing how it does so in a unique way.
• Everyone in the organization should understand the brand positioning and use it as context for making
decisions.

• A good positioning has a “foot in the present” and a “foot in the future.” It needs to be
somewhat aspirational so the brand has room to grow and improve.
• Positioning on the basis of the current state of the market is not forward-looking enough, but, at the
same time, the positioning cannot be so removed from reality that it is essentially unobtainable.
• The real trick in positioning is to strike just the right balance between what the brand is and what it
could be. The result of positioning is the successful creation of a customer-focused value proposition,
a cogent reason why the target market should buy the product.

Positioning requires that marketers define and communicate similarities and differences
between their brand and its competitors. Specifically, deciding on a positioning requires:
1. Determining a frame of 2. Identifying the optimal

3. Creating a brand mantra to
reference by identifying the points of parity and points of
summarize the positioning
target market and relevant difference brand associations
and essence of the brand.
competition given that frame of reference

Positioning Strategies
Marketers can follow several positioning strategies. These strategies use associations to change consumers'
perception of products. A few examples are positioning by:
• Product attributes and benefits: Associating your brand/product with certain characteristics or with
certain beneficial value.
• Product price: Associating your product with competitive pricing.
• Product quality: Associating your product with high quality.
• Product use and application: Associating your product with a specific use.
• Competitors: Making consumers think that your product is better than that of your competitors.

Selecting an Overall Positioning Strategy
• The full positioning of a brand is called the brand’s value proposition. The full mix of benefits on which
a brand is differentiated and positioned. It is the answer to the customer’s question “Why should I buy
your brand?”
• BMW’s “ultimate driving machine/ designed for driving pleasure” value proposition hinges on
performance but also includes luxury and styling, all for a price that is higher than average but seems
fair for this mix of benefits.

Possible value propositions
• More-for-more positioning involves providing the most upscale product or service and charging a higher
price to cover the higher costs. A more-for-more market offering not only offers higher quality, it also gives
prestige to the buyer. It symbolizes status and a loftier lifestyle.
• The Same for Less. Offering the same for less can be a powerful value proposition—everyone likes a good
deal. Discount stores such as Walmart and “category killers” such as Best Buy, PetSmart, and DSW Shoes use
this positioning. They don’t claim to offer different or better products.
• Instead, they offer many of the same brands as department stores and specialty stores but at deep discounts
based on superior purchasing power and lower-cost operations. Other companies develop imitative but
lower-priced brands in an effort to lure customers away from the market leader.

• Less for Much Less is a market almost always exists for products that offer less and therefore cost less. Few
people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will
gladly settle for less-than-optimal performance or give up some of the bells and whistles in exchange for a
lower price.
• More for Less - Companies will find it very difficult to sustain such best of-both positioning. Offering more
usually costs more, making it difficult to deliver on the “for-less” promise. Companies that try to deliver both
may lose out to more focused competitors.

• Perceptual maps are a valuable aid to product positioning.
These maps use multidimensional scaling of perceptions
and preferences that portray psychological distance
between products and segments, using many dimensions.
Perceptual • They contrast with conventional maps that use two
Mapping dimensions to show the physical distance between objects.
• Physical and psychological maps of the same items can be

quite different.

Example of Perceptual map – OTT Platform
Marketing Mix
Marketing Mix
• After determining its overall marketing strategy, the company is ready to begin planning the
details of the marketing mix, one of the major concepts in modern marketing.
• The marketing mix is the set of tactical marketing tools that the firm blends to produce the
response it wants in the target market.
• The marketing mix consists of everything the firm can do to influence the demand for its
product. The many possibilities can be collected into four groups of variables—the four Ps
1. Product
2. Price
3. Place
4. Promotion

• Product means the goods-and-services combination the company offers to the target market. E.g.
Ford Escape consists of nuts and bolts, spark plugs, pistons, headlights, and thousands of other parts.
Ford offers several Escape models and dozens of optional features. The car comes fully serviced and
with a comprehensive warranty that is as much a part of the product as the tailpipe.
• Price is the amount of money customers must pay to obtain the product. E.g. Ford calculates
suggested retail prices that its dealers might charge for each Escape. But Ford dealers rarely charge the
full sticker price. Instead, they negotiate the price with each customer, offering discounts, trade-in
allowances, and credit terms. These actions adjust prices for the current competitive and economic
situations and bring them into line with the buyer’s perception of the car’s value.

• Place includes company activities that make the product available to target consumers. E.g. Ford partners
with a large body of independently owned dealerships that sell the company’s many different models.
Ford selects its dealers carefully and strongly supports them. The dealers keep an inventory of Ford
automobiles, demonstrate them to potential buyers, negotiate prices, close sales, and service the cars
after the sale.
• Promotion means activities that communicate the merits of the product and persuade target customers
to buy it. E.g. Ford spends more than $1.5 billion each year on U.S. advertising to tell consumers about the
company and its many products. Dealership salespeople assist potential buyers and persuade them that
Ford is the best car for them. Ford and its dealers offer special promotions—sales, cash rebates, and low
financing rates—as added purchase incentives

• The Four Ps of the Marketing Mix
• This theory holds that the four Ps concept takes the seller’s view of the market, not the buyer’s view.
From the buyer’s viewpoint, in this age of customer value and relationships, the four Ps might be
better described as the four As.

• Acceptability is the extent to which the product exceeds customer expectations
• Affordability the extent to which customers are willing and able to pay the product’s price
• Accessibility the extent to which customers can readily acquire the product
• Awareness the extent to which customers are informed about the product’s features, persuaded to try
it, and reminded to repurchase
• The four As relate closely to the traditional four Ps. Product design influences acceptability, price
affects affordability, place affects accessibility, and promotion influences awareness
• Marketers would do well to think through the four As first and then build the four Ps on that platform.

• Packaging
➢ Many marketers have called packaging a fifth P, along with price, product, place, and promotion
➢Packaging includes all the activities of designing and producing the container for a product
➢Packaging is important because it is the buyer’s first encounter with the product. A good package
draws the consumer in and encourages product choice. In effect, it can act as a “five-second
commercial” for the product.
➢Formally, packaging must achieve a number of objectives:

1. Identify the brand.
2. Convey descriptive and persuasive information.
3. Facilitate product transportation and protection.
4. Assist at-home storage.
5. Aid product consumption
Source : Marketing management by Kotler ( 15 edition ) page no. 412

Product vs service
➢ Product and service has vast experience although service is product
➢ For eg, Retail industry is about service because it gives experience
➢ Product or services also depends upon state of economy
➢ There are certain differences between product and services as stated below
Product Service
Product is tangible Service is intangible
Product can be inventoried Service cannot be inventoried
Product is Homogenous Service is heterogenous
Product carries Ownership Production and consumption happens
simultaneous in service
Product is not perishable i.e Service is perishable
Source – class notes

Services Marketing
• Many experts are of the view that services marketing need a larger and extended marketing mix consisting
of 7Ps instead of the regular 4Ps, the additional 3Ps refer to People, Process and Physical evidence
People :
• People matter the utmost in service marketing. In services, quality depends on people who
perform/deliver the service
• Services are highly people intensive unlike physical products, which are material intensive.
• In the case of physical product, a bad product can be taken back or replaced. A bad service cannot be
taken back or replaced. So, a service has to be performed right, every time.
• Customers have a liking for service personnel who make them feel important. Good interpersonal skills
on the part of the employees can pamper this universal human need.
Source : Marketing Management By Ramaswamy (6 E) page no. 708

• Mainly three factors viz., competence, behavior and attitude, of the person providing the service
determine services quality. This in turn, demands that the service marketers bestow close attention
to are selection, motivation, training of their personnel and team development.
• Service marketers have to invest heavily in their service staff. By handling the human
elementappropriately, they can enhance service quality and customer satisfaction.
Process :
• The arrangement by which the customer receives delivery of the service constitutes the process.
• For e.g. in a fast food outlet, the service process comprises buying of coupon/token at the counter and
picking up the food item at the delivery desk. In an air travel, the process involves many more steps from
booking the tickets up to reaching the destination, clearing luggage and exit.
• The success of the final delivery of the service will depend upon the customer satisfaction generated at
every step in the process. They are the customer touch points of the service business.

Physical Evidence
• In most service situations, the customer is present while the service is actually produced/deliverd.
Because of this, the surroundings in which the customer is actually served becomes important
in a service business.
• The surroundings constitute the physical evidence of the service; they can be seen, touched or heard
or felt.
• For e.g. the appearance, décor and cleanliness of a restaurant influence the customer perception of
the service.

Demand Forecasting
Demand Forecasting
• The marketers first step in evaluating market opportunities Is to estimate total market demand.
• Market demand for a product is the total volume that would be bought by a defined customer group in a
defined geographical area in a defined time period in a defined marketing environment under a defined
marketing program.
• Market demand is a function. This function measures market demand to industry marketing expenditure.
• Only one level of industry experience actually occurs. The level of market demand at this point is called as
Market Forecast
• Marketing Potential is a level of market demand at an infinite level of industry expenditure.
• Company Demand is the firms estimated share of demand in the entire market demand.
SOURCE: Marketing management by Philip Kotler pg no. 108-115

Demand Forecasting
Estimated Current Demand : To estimate current demand, companies attempt to determine the following three criteria:
• Total Market Potential:
A common way to estimate total market potential is to multiply the potential number of buyers by the average quantity of each
purchase and then by the price
• Area Market Potential
All firms must allocate their marketing budget optimally among their best segments. There are 2 methods how a firm can do this
1. Market-Buildup method
2. Multiple-factor index method
• Industry sales and market shares
Apart from total market and area market potentials, a firm also needs to know the actual industry sales taking place in the market.
This means identifying competitors and estimating their sales.

Demand Forecasting
Estimating Future Demand
In most markets, good forecasting is key for success. Companies usually prepare a macroeconomic forecast first. They then
do research based on: What people say, What people do, What people have done. Future demand can be forecasted using
the following tools.
1. Survey of Buyers Intentions
2. Composite of Sales Force opinions
3. Expert opinion
4. Past Sales Analysis
5. Market-test method

Product Mix
Product Levels: the Customer-Value hierarchy
➢In planning its market offering, the marketer needs to address five product levels. Each level adds more
customer value, and together the five constitute a customer-value hierarchy
1) Core Benefit
➢ The fundamental level is the core benefit: the service or benefit
the customer is really buying. A hotel guest is buying rest and
sleep. The purchaser of a drill is buying holes. Marketers must
see themselves as benefit providers.
2) Basic Product
➢ At the second level, the marketer must turn the core benefit into
a basic product. Thus, a hotel room includes a bed, bathroom,
towels, desk, dresser, and closet.
Marketing Management by Philip Kotler – 15 edition pg no. 389 to 391

3) Expected Product
➢At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers
normally expect when they purchase this product. Hotel guests minimally expect a clean bed, fresh towels,
working lamps, and a relative degree of quiet.
4) Augmented Product
➢At the fourth level, the marketer prepares an augmented product that exceeds customer expectations.
In developed countries, brand positioning and competition take place at this level. In devel oping and
emerging markets such as India and Brazil, however, competition takes place mostly at the expected
product level.
5) Potential Product
➢At the fifth level stands the potential product, which encompasses all the possible augmentations and
transformations the product or offering might undergo in the future. Here companies search for new ways
to satisfy customers and distinguish their offering
Marketing Management by Philip Kotler – 15 edition pg no. 389 to 391

The Product Hierarchy
The product hierarchy stretches from basic needs to particular items that satisfy those needs. We can identify
six levels of the product hierarchy, using life insurance as an example:
1. Need family
➢ The core need that underlies the existence of a product family. Example: security.
2. Product family
➢ All the product classes that can satisfy a core need with reasonable effectiveness. Example: savings and
income.
3. Product class
➢ A group of products within the product family recognized as having a certain functional coherence, also
known as a product category. Example: financial instruments.
Marketing Management by Philip Kotler - 15 edition page no 402

4. Product line
➢A group of products within a product class that are closely related because they perform a similar
function, are sold to the same customer groups, are marketed through the same outlets or channels, or
fall within given price ranges. A product line may consist of different brands, a single family brand, or an
individual brand that has been line extended. Example: life insurance.
5. Product type
➢A group of items within a product line that share one of several possible forms of the product. Example:
term life insurance.
6. Item (also called stock-keeping unit or product variant)
➢A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other
attribute. Example: Prudential renewable term life insurance
Marketing Management by Philip Kotler - 15 edition page no 402

Product Mix
➢ Beyond decisions about individual products and services, product strategy also call for building a product
line.
➢ A Product line is a group of products that are closely related because they function in a similar manner, are
sold to the same customer groups, are marketed through the same types of outlets, or fall within given
price ranges.
➢ For example - Nike products several lines of athletics shoes and apparel, and Marriot offers several lines of
hotels.
➢ The major product line analysis involves product line length-the numbers of itmes inn the product line. A
company can expand its product line in two ways: by line filling or line stretching. Product line filling
involves adding more items within the present range of the line.
Principles of Marketing by Philip Kotler & Gary Armstrong page no 234

➢Product line stretching occurs when a company lengthens its product line beyond its current range. The
company can stretch its line downward, upward, or both ways. Companies located at the upper end of the
market can stretch their downward.
➢Companies can also stretch their product lines upward. sometimes, companies stretch upward to add
prestige to their current products or to reap higher margins.
Product mix decisions
➢ An organization with several product lines has a product mix. A product mix or product portfolio consists of
all the product lines and items that a particular seller offers for sale. A company Product Mix has important
dimensions Product width, product length, product depth, Product Consistency.

➢ Product mix width - Product mix width refers to the number of different product lines the company
carries.
➢ Product mix length - Product mix length refers to the total number of items a company carries within its
product lines
➢ Product mix depth - Product mix depth refers to the number of versions offered for each product in the
line.
➢ Product mix consistency - the consistency of the product mix refers to how closely related the various
product lines are in end use, production requirements, distribution channels, or some other way.
➢ These product mix dimensions provide the handles for defining the company’s product strategy. The
company can increase its business in four ways.

(1) It can add new product lines, widening its product mix. In this way, its new lines build on the
company’s reputation in its other lines.
(2) The company can lengthen its existing product lines to become a more full-line company.
(3) It can add more versions of each product and thus deepen its product mix.
(4) The company can pursue more product line consistency—or less—depending on whether it wants to
have a strong reputation in a single field or in several fields.
Principles of Marketing by Philip Kotler & Gary Armstrong 236

Product mix example of Colagte-palmolive
• Colgate-Palmolive is perhaps best known for its toothpaste and other oral care products. But, in
fact Colgate is a $17.3 billion consumer products company that makes and markets a full product
mix consisting of dozens of familiar lines and brands.
• Each product line consists pf many brands and items
Source – Principles of Marketing by Philip kotler & gary armstrong. 17th edition 235
New Product
Development
New product development strategy
➢In the realm of acquiring new products, firms have two primary avenues: acquisition and internal
development.
➢Acquisition involves purchasing an entire company, acquiring a patent, or obtaining a license to produce
someone else's product.
➢Internal development involves the firm's own efforts in creating new products.
➢New products encompass original creations, product enhancements, modifications, and the introduction
of new brands resulting from the firm's research and development initiatives.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong Page 260
New product development process
Companies face a problem: They must develop new

products, but the odds weigh heavily against success.
To create successful new products, a company must
understand its consumers, markets, and competitors
and develop products that deliver superior value to
customers. It must carry out strong new-product
planning and set up a systematic, customer-
driven new- product development process for finding
and growing new products.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong &

Marketing Management by S Namakumari 4th edition page - 469
Major Stages
in New-
Product
Development
• Source: Principles of Marketing by Philip Kotler & Gary

Armstrong
Idea Generation:
• New-product development starts with idea generation the systematic search for new- product ideas. A
company typically generates hundreds of ideas, even thousands, to find a few good ones. Major sources of
new-product ideas include internal sources and external sources such as customers, competitors,
distributors and suppliers, and others.
➢Internal Idea Sources
• Formal R&D: One traditional internal source of new product ideas is formal research and development
within the company.
• Employee Contributions: Employees at all levels, from executives to salespeople, can be a valuable source
of innovative ideas. Intrapreneurial programs encourage employees to envision and develop new-product
ideas.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong page no 261 to 268
➢External Idea Sources:
• Distributors and Suppliers: Distributors and suppliers, being close to the market, can provide insights into
consumer problems and new-product opportunities.
• Competitors: Companies closely monitor competitors, analyze their advertising and products, and may
develop their own products based on competitive intelligence.
• Trade Magazines and Events: Trade magazines, shows, seminars, government agencies, and advertising
agencies can provide insights and ideas.
• Marketing Research Firms: External entities like marketing research firms, university and commercial
laboratories, and inventors can also be sources of new product ideas.
• Customer Suggestions: Inviting customers to share suggestions and ideas can be a rich source of innovation.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong 261 to 268
Crowdsourcing:
➢ Many companies are now embracing crowdsourcing and open innovation for new product ideas.
This involves inviting a wide community, including customers, employees, independent researchers,
and the public, to participate in the innovation process.
➢ Crowdsourcing can generate a flood of innovative ideas but may require effective mechanisms to sift
through and evaluate the ideas.
➢ It can involve a wide range of participants, including experts and the general public, making it a
powerful tool for tapping into diverse perspectives.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong 261 to 268
Idea Screening
➢ Idea Screening is a crucial stage in the new product development process where the purpose is to filter out less
promising ideas and focus on those with the potential to become profitable products.
➢ The primary goal of idea screening is to identify and prioritize the most promising new product ideas while
eliminating less viable ones.
➢ Evaluation Criteria - Some experts propose the use of the "R-W-W" framework, which stands for Real, Win, Worth
Doing. This framework involves asking three key questions:
1. Is It Real?-This question assesses whether there is a genuine need and desire for the product in the market.
2. Can we win?-This question evaluates whether the product offers a sustainable competitive advantage.
3. Is it worth doing?-This question examines if the product aligns with the company's growth strategy and offers
sufficient profit potential.
4. All Three Questions Must Receive a Yes.
➢ Concept Development and Testing - It is a critical phase in the new product development (NPD) process. It
involves further refining and validating the product concept that has passed through the initial idea
screening stage. The goal is to create a well-defined and market-tested concept that serves as the foundation
for the development of the actual product.
➢ Marketing strategy development - Itis a critical component of the overall marketing plan. It involves the
process of creating a detailed and comprehensive strategy for achieving the marketing objectives of a
product, service, or company. This strategy outlines how the marketing goals will be achieved, considering
factors such as target audience, competitive landscape, pricing, distribution, and promotional tactics.
➢ Business Analysis - A thorough business analysis is conducted to assess the potential profitability of the
product. This involves estimating costs, pricing, sales projections, and financial viability..
➢ Product Development - If the product concept passes the business analysis, it moves into the
development stage. Product design, engineering, and prototyping take place during this phase.
➢ Test Marketing -Before a full-scale launch, a test market is used to evaluate the
product's performance in a real market environment. It helps identify any issues and gather real-
world feedback.
➢ Commercialization - Once the product has been refined and is ready for the market, it is launched.
This stage involves setting a marketing strategy, distribution plans, and sales efforts.
Product Life Cycle
Product life cycle
➢The product life cycle (PLC) is a concept in marketing that describes the stages a product goes through from
its introduction to the market until its eventual decline and removal. It provides a framework to understand
the dynamics of a product's sales and profitability over time.
➢The typical product life cycle consists of four main stages:
• Introduction - This is the initial stage when a new product is launched into the market. Sales are typically
low at the beginning as the product gains awareness, and the company incurs high costs in terms of
research, development, and marketing. Profitability is usually low or even negative.
• Growth - In the growth stage, the product gains momentum. Sales start to increase, and consumer
awareness and demand grow. The product may become more widely available, and competitors might
enter the market. Profitability often improves during this phase.
• Maturity - The maturity stage is characterized by stable sales and a high level of competition. The
market is saturated, and most potential customers who want the product have already purchased
it. Companies may focus on product variations, cost reduction, and marketing to maintain market
share. Profit margins may stabilize or decline.
• Decline - In the decline stage, sales begin to decrease, often due to market saturation, changing
consumer preferences, or the emergence of newer, more innovative products. Companies may
decide to discontinue the product, reduce marketing efforts, or target niche markets. Profitability
generally decreases during this phase.
Source: Principles of Marketing by Philip Kotler & Gary Armstrong page no 273
Product life cycle graph

Introduction stage key characteristics
➢ Low Sales and Slow Growth: During the introduction stage, a new product is just being introduced to the market,
and as a result, sales are typically low. Growth is slow, and the product may not yet have gained much traction
with consumers.
➢ High Marketing and Promotion Costs: Companies invest heavily in marketing and promotional activities to create
awareness and generate interest in the new product.
➢ Distribution Challenges: Establishing distribution channels for the product can be challenging. Companies need to
determine the most effective ways to get the product into the hands of consumers, whether through retail stores,
online platforms, or other channels.
➢ Innovators: Innovators, who are typically more willing to try new products, are the primary target market during
this stage. These customers are essential in providing feedback and generating positive word-of-mouth.
➢ High Risk: The introduction stage is inherently risky, as there is no guarantee that the product will gain market
acceptance
Growth stage key characteristics
➢Customer retention: Customer retention remains an important consideration during the growth stage of the
product life cycle . This phase often follows the introduction stage.
➢Rapid Sales Growth: In the growth stage, a product experiences a significant increase in sales as it gains
wider acceptance among consumers.
➢Increasing Profits: As sales grow rapidly, companies begin to see improved profitability.
➢Pricing Stability: Prices tend to remain stable or may even rise slightly during the growth stage, as customers
are willing to pay a premium for a popular and in-demand product.
➢Distribution Expansion: Companies work on expanding their distribution networks to reach a wider
geographic area and make the product more accessible to consumers.

Maturity stage key characteristics
➢ Stable Sales: During the maturity stage, product sales reach a stable level. The product has achieved widespread market
acceptance, and it is no longer experiencing rapid growth, but sales have not yet started to decline significantly.
➢ Intense Competition: The maturity stage is marked by intense competition. Multiple companies or brands may offer similar
products, and companies may compete on price, product features, and marketing efforts to maintain or increase their market
share.
➢ Saturation: The market for the product may be close to saturation, meaning that most potential customers have already
purchased it. Market growth is limited because there are fewer new customers to target.
➢ Price Stability or Decline: Prices tend to stabilize or even decline during this stage. Companies often engage in price wars to
maintain their market share, which can lead to price reductions.

➢Profit Margins: Profit margins can become narrower as company's lower prices to remain competitive.
Companies may need to find ways to cut costs to maintain profitability.
➢Product Life Extension: Companies may explore strategies to extend the product's life cycle by
introducing updates, improvements, or packaging changes to keep it fresh and appealing.
➢Harvest or Exit Considerations: Some companies may choose to gradually reduce investment in the product
and "harvest" profits as they prepare for its eventual decline. Others may decide to exit the market or
discontinue the product.

Decline stage key characteristics
➢Declining Sales: Sales of the product start to decrease, often due to various factors such as changing
customer preferences, technological advancements, or the emergence of better alternatives in the
market.
➢Reduced Profitability: As sales decline, profitability also decreases. Companies may experience declining
profit margins as they often need to lower prices to maintain any remaining customer base.
➢Limited Marketing and Promotion: Companies tend to reduce marketing and promotional efforts since
the product's market potential is shrinking. They may allocate marketing resources to other products in
their portfolio.
➢Inventory Management: Companies need to manage inventory carefully to avoid overstocking or

understocking. Overstocking can lead to losses, while understocking may result in missed sales
opportunities.
➢End of Product Variants: Companies may discontinue various product variants and focus on the core
product to simplify operations.
➢Transition to New Products: Companies should focus on developing and launching new products to
replace the declining product and maintain a competitive position in the market.

The PLC concept also can be applied to what are known as styles, fashions, and fads.
➢ Style - A style is a basic and distinctive mode of expression. For example,

styles appear in homes (colonial, ranch, transitional), clothing (formal,
casual), and art (realist, surrealist, abstract). Once a style is invented, it
may last for generations, passing in and out of vogue. A style has a cycle
showing several periods of renewed interest.
➢ Fashion - A fashion is a currently accepted or popular style in a given
field. For example, the more formal “business attire” look of corporate
dress of the 1980s and 1990s gave way to the “business casual” look of
the 2000s. Fashions tend to grow slowly, remain popular for a while, and
then decline slowly.
Source - Principles Of Marketing By Philip Kotler & Gary Armstrong page no 274
➢Fabs - Fads are temporary periods of unusually high sales driven by consumer
enthusiasm and immediate product or brand popularity. A fad may be part of
an otherwise normal life cycle, as in the case of recent surges in the sales of
poker chips and accessories. Or the fad may comprise a brand’s or product’s
entire life cycle
Source - Principles Of Marketing By Philip Kotler & Gary Armstrong page no 274
Boston
Consultancy
Group Matrix
Boston Consulting group Approach
• It is a portfolio-planning method that evaluates a company’s SBUs in terms of its market growth
rate and relative market share.
Principles of marketing management 17th Edition – Philip Kotler & Marketing

Management by S.H.kazmi
➢On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis,
relative market share serves as a measure of company strength in the market.
➢An SBU can be a company division, a product line within a division, or sometimes a single product or brand.
➢The growth-share matrix defines four types of SBUs:
1)Star :-
stars are high growth, high share businesses or products. They often need heavy investments to finance their
rapid growth. Eventually their growth slow down, and they will turn into cash cows.
2) Cash Cows :-
Cash Cows are low Growth, High share Businesses or Products. These established and successful SBUs need
less Investment to hold their market share. Thus, they produce a lot of the cash that the company uses to pay
its bills and support other SBUs that need investment.
Principles of marketing management 17th Edition – Philip Kotler page no 42 to 44

3) Questions marks :-
➢Questions Marks are low share business unit in high growth markets. They require a lot of cash to hold their
share, let alone increase it. Investments in question marks are typically funded by cash flows from the cash
cow quadrant.
4) Dogs :-
➢Dogs are low growth, low share businesses and products. They may generate enough cash to maintain
themselves but do not promise to be large sources of cash.
➢SBUs move around in the growth-share matrix over time. If they are successful, many SBUs begin as
question marks and advance to the star category. They eventually go extinct or change into dogs toward the
end of their lives and later become cash cows as market growth declines life span. The business must
consistently add new units and goods such that some of them will turn into stars and, eventually, cash cows
that will help support future SBUs.

➢The areas of the circles are proportional to the SBU’s dollar sales. This company is in fair shape, although not
in good shape. It wants to invest in the more promising question marks to make them stars and maintain the
stars so that they will become cash cows as their markets mature. Fortunately, it has two good-sized cash
cows.
➢Income from these cash cows will help finance the company’s question marks, stars, and dogs. The company
should take some decisive action concerning its dogs and its question marks.
➢Once it has classified its SBUs, the company must determine what role each will play in the future. It can
pursue one of four strategies for each SBU.

➢It can harvest the SBU, milking its short-term cash flow regardless of the long-term effect. Finally, it can
divest the SBU by selling it or phasing it out and using the resources elsewhere.
➢As time passes, SBUs change their positions in the growth-share matrix. Many SBUs start out as question
marks and move into the star category if they succeed. They later become cash cows as market growth falls
and then finally die off or turn into dogs toward the end of their life cycle.
➢The company needs to add new products and units continuously so that some of them will become stars
and, eventually, cash cows that will help finance other SBUs.

GE Matrix
GE Matrix
• GE matrix is made to overcome drawbacks of BCG matrix .
• It has two components – INDUSTRY ATTRACTIVENESS on vertical axis and BUSINESS UNIT STRENGTH on
horizontal axis.
• Industry attractiveness indicates how hard or easy it will be for a company to compete in the market and
earn profits. The more profitable the industry is the more attractive it becomes. Example – Market size ,
annual growth rate , government policy etc.
• Along the X axis, the matrix measures how strong, in terms of competition, a particular business unit is
against its rivals. Example –market share , brand image , product quality etc.
Marketing Management by Rajan Saxena page 252 ( 5th edition)

➢ The nine-box matrix plots the SBUs on its 9
cells that indicate whether the company
should invest in a product, harvest/divest it or
do a further research on the product and
invest in it if there’re still some resources left.
➢ GREEN BOX indicates develop the SBU and

support it.
➢ YELLOW BOX indicates SBU requires careful

monitoring and selective investment.
➢ RED BOX indicates SBU needs to be dropped
Marketing Management by Rajan Saxena page 252 ( 5th edition)

Branding
Brand
• A brand is a name, term, sign, symbol or design or a combination of
them intended to identify the goods and services of one seller or group
of sellers and differentiate them from those of competition.
• It is a strategic tool and an asset that needs to be managed well by the
firm.
• A good brand can serve as a powerful competitive advantage for a firm.
• It is a valuable, renewable and lasting asset capable of working and
earning for the company for years.
Marketing Management by Rajan Saxena, page no 129

The main tasks in managing a brand
• Selecting name and logo, giving the product an identity and enhancing its visual recognition.
• Differentiation: investing the brand with the attributes necessary to compete, giving it a unique
image.
• Positioning the brand: developing the right value proposition for the brand and lodging it as the
best choice for the target customer.
• Providing the right distribution and promotion support, in tune with the brand's positioning.
• Brand rejuvenation, brand relaunches, brand extensions, packaging innovations: keeping the
brand live and active.
Marketing Management: VS Ramaswamy S Namakumari Pg no. 311

Marketing Management: VS Ramaswamy S Namakumari Pg no. 312
Branding
Branding is the process of endowing products and services with the power of a brand. It’s all about
creating differences between products. Marketers need to teach consumers “who” the product is—by giving
it a name and other brand elements to identify it—as well as what the product does and why consumers
should care.
Branding creates mental structures that help consumers organize their knowledge about products and
services in a way that clarifies their decision making and, in the process, provides value to the firm.
Reference: Rajan Saxena Marketing Management

Brand Image
Brand Image – Brand image refers to rational measurements like quality, strength, flavour. Image means
personality, Brand personality explains why people like some brands more than others even when there is no
physical difference between them.
The brand image represents the essence of all the impressions or imprints about the brands that have been
made on the consumers mind. It includes impressions about its physical features and performance;
impressions about the functional benefits from using it.
The brand image is indeed the totality of the brand in the perception of the consumer. It is truly a complex
symbol and defies over-simplifications that equate it to one of its bits like its physical features.
Brand Positioning (2nd Edition) by Subroto Sen Gupta

Branding Strategy
A branding strategy for a firm identifies which brand elements a firm chooses to apply across
the various products it sells. In a brand extension, a firm uses an established brand name to
introduce a new product. Potential extensions must be judged by how effectively they
leverage existing brand equity to a new product, as well as how effectively the extension, in
turn, contributes to the equity of the existing parent brand.
Types of Branding Strategy
Individual Branding Strategy
• Companies often use different brand names for different quality lines within the same product class. A
major advantage of individual branding is that if a product fails or appears to be of low quality, the
company has not tied its reputation to it.
• Consumer packaged-goods companies have a long tradition of branding different products by different
names. General Mills largely uses individual brand names, such as Bisquick, Gold Medal flour, Nature
Valley granola bars, Old El Paso Mexican foods, Progresso soup, Wheaties cereal, and Yoplait yogurt. If a
company produces quite different products, one blanket name is often not desirable. Swift & Company
developed separate family brand names for its hams (Premium) and fertilizers (Vigoro).
Marketing Management 15th Edition by Philip Kotler

Umbrella Branding Strategy
• Umbrella branding is referred to as a marketing practice which

involves selling several related products under the name of a
single brand. Umbrella Branding (umbrella brand) also known as
(family branding) involves creating good brand equity for a single
brand.
• There are huge cost advantages since the investment is made

only in a single brand name. The customers feel comfortable
buying a new product with a familiar brand name.
Reference: Rajan Saxena Marketing Management

Co - Branding
• Co-branding—also called dual branding or brand bundling occurs two or more well-known brands are
combined into a joint product or marketed together in some fashion.
Advantages:
• A product can be convincingly positioned by virtue of the multiple brands.
• It can generate greater sales from the existing market and open opportunities for new consumers and
channels.
• It can also reduce the cost of product introduction because it combines two well-known images and speeds
adoption.
• Co-branding may be a valuable means to learn about consumers and how other companies approach them.
• Disadvantage:
• The risks and lack of control in becoming aligned with another brand in consumers’ minds.
• Consumer expectations of co-brands are likely to be high, so unsatisfactory performance could have
negative repercussions for both brands.
• The most important requirement of co-branding is a logical fit between the two brands, to maximize
the advantages of each while minimizing disadvantages.
• Consumers are more apt to perceive co-brands favorably if they are complementary and offer unique
quality, rather than being overly similar and redundant.
Source – principles of marketing Management by philip kotler

House of Brands Versus a Branded House
House of Brands:
• The use of individual or separate family brand names has been referred to as a “house of brands” strategy.
• A good example of a house of brands strategy is United Technologies.
Branded House:
• The use of an umbrella corporate or company brand name is a “branded house” strategy.
• With a branded house strategy, it is often useful to have a well-defined flagship product.
• A flagship product is one that best represents or embodies the brand as a whole to consumers.
❑ These two strategies represent two ends of a continuum.
❑ A sub-brand strategy falls somewhere between, depending on which component of the sub-brand
receives more emphasis.

• Brand equity should be defined in terms of marketing effects uniquely
attributable to a brand. That is, brand equity relates to the fact that different
outcomes result in the marketing of a product or service because of its
brand, as compared to the results if that same product or service was not
identified by that brand.
• Building brand equity depends on three main factors:
Brand Equity (1) The initial choices for the brand elements or identities making up the
brand
(2) the way the brand is integrated into the supporting marketing program
(3) the associations indirectly transferred to the brand by linking the brand
to some other entity (e.g., the company, country of origin, channel of
distribution, or another brand).
• Brand equity is the added value endowed to products and services with consumers. It may be reflected in
the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share,
and profitability it commands.
• Brand equity arises from differences in consumer response. If no differences occur, the brand-name
product is essentially a commodity, and competition will probably be based on price.
• Differences in response are a result of consumers’ brand knowledge, all the thoughts, feelings, images,
experiences, and beliefs associated with the brand. Brands must create strong, favorable, and unique
brand associations with customers, as have Toyota (reliability), Hallmark (caring), and Amazon.com
(convenience and wide selection).
Marketing Management: Philip Kotler and Kevin Lane Keller

• Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the
marketing of a brand. Stronger brands earn greater revenue.
• Energized differentiation measures the degree to which a brand is seen as different from others as well
as its pricing power. Relevance measures the appropriateness and breadth of a brand’s appeal. •
Esteem measures perceptions of quality and loyalty, or how well the brand is regarded and respected.
• Knowledge measures how aware and familiar consumers are with the brand and the depth of
their experience.
• Energized differentiation and relevance combine to determine brand strength—a leading indicator that
predicts future growth value. Esteem and knowledge together create brand stature, a “report card” of
past performance and a lagging indicator of current operating value.

Brand equity Model
• To build a positive brand equity, a
brand needs to be managed carefully.
• Besides actual proprietary

assets such as patents and
trademarks, the four major
elements determining brand equity
are
I. Brand awareness
II. Brand's perceived value
III. Positions association with a brand
IV. Brand loyalty among consumers
Marketing Management by Rajan Saxena Pg No. 133

Brand’s perceived value
Perceived quality is the benchmark by which the customers evaluate different brands on quality.
Brand Awareness
Brand awareness is the ability of a potential buyer to recognize/ recall that a brand is part of
a product category.
Positions association with a brand

Customers associate different dimensions of the product , including its use and use situations , to the
brands.
Brand Loyalty among customers

Brand loyalty among the customers is described using the brand loyalty pyramid.
Brand Loyalty Pyramid
Rajan Saxena: Marketing Management

Brand Positioning
• Positioning is the act of designing a company’s offering and image to occupy a distinctive
place in the minds of the target market. The goal is to locate the brand in the minds of
consumers to maximize the potential benefit to the firm.
• A good brand positioning helps guide marketing strategy by clarifying the brand’s
essence, identifying the goals it helps the consumer achieve, and showing how it does so
in a unique way.
• One result of positioning is the successful creation of a customer-focused value

proposition, a cogent reason why the target market should buy a product or service

Brand Repositioning
• When a brand is initially positioned in a market, the company may have to reposition it later
because of the following reasons:
o A competitor may launch a I brand position next to the company's brand and cut into its
market share
o Customer wants may shift, leaving company's brand with less demand
• Marketers should consider repositioning existing brands before introducing new ones. In this way,
they can build on existing brand recognition and consumer loyalty.
Principles of Marketing by PHILIP Kotler - 15th Edition

Perceptual maps are visual representations of consumer perceptions and
preferences. They provide quantitative pictures of market situations and the
way consumers view different products, services, and brands along various
dimensions.
• For example, Figure (a) shows a hypothetical perceptual map for a

beverage category.
Perceptual • The four brands—A, B, C, and D—vary in terms of how consumers view
Mapping their taste profile (light versus strong) and personality and imagery
(contemporary versus modern).
• Also displayed on the map are ideal point “configurations” for

three market segments (1, 2, and 3).
• The ideal points represent each segment’s most preferred (“ideal”)

combination of taste and imagery.
Marketing Management 15th Edition by Philip Kotler page no 304-306

• Consumers in Segment 3 prefer beverages with a
strong taste and traditional imagery.
• Brand D is well positioned for this segment because
the market strongly associates it with both these
benefits.
• Given that none of the competitors is seen as
anywhere close, we would expect Brand D to attract
many of the Segment 3 customers
• Brand A, on the other hand, is seen as more balanced
in terms of both taste and imagery
• Unfortunately, no market segment seems to really
desire this balance. Brands B and C are better
positioned with respect to Segments 2 and 3,
(a) Hypothetical Beverage Perceptual
Map: Current Perceptions respectively.
• By making its image more contemporary, Brand
A could move to A’ to target consumers in
Segment 1 and achieve a point-of-parity on
imagery and maintain its point-of-difference on
taste profile with respect to Brand B
• By changing its taste profile to make it lighter,
Brand A could move to A’’ to target consumers
in Segment 2 and achieve a point-of-parity on
taste profile and maintain its point-of-
difference on imagery with respect to Brand C.
• Deciding which repositioning is most promising,
A’ or A’’, would require detailed consumer and
competitive analysis on a host of factors—
including the resources, capabilities, and likely
intentions of competing firms—to identify the
markets where consumers can profitably be
served
(b) Hypothetical Beverage Perceptual Map:
Possible Repositioning for Brand A
Pricing
Pricing
• Price is the one element of the marketing mix that produces revenue; the other elements produce costs.
It also communicates the company’s intended value positioning of its product or brand.
• Pricing decisions are complex and must take into account many factors—the company, the customers,
the competition, and the marketing environment. Holistic marketers know their pricing decisions must
also be consistent with the firm’s marketing strategy and its target markets and brand positions
• Price is not just a number on a tag. It comes in many forms and performs many functions. Rent, tuition,
fares, fees, rates, tolls, retainers, wages, and commissions are all the price you pay for some good or
service.
Source : Marketing management by Kotler ( 15 edition ) page no. 483-484

Pricing in a Digital World
• Traditionally, price has operated as a major determinant of buyer choice
• Consumers and purchasing agents who have access to price information and price discounters put
pressure on retailers to lower their prices. Retailers in turn put pressure on manufacturers to lower
their prices.
• The result can be a marketplace characterized by heavy discounting and sales promotion
• But for some years now, the Internet has been changing the way buyers and sellers interact.
• We will discuss a short list of how the Internet allows sellers to discriminate between buyers and
buyers to discriminate between sellers

Buyers can :
• Get instant price comparisons from thousands of vendors
• Check prices at the point of purchase
• Name their price and have it met.
• Get products free
Sellers can :
• Monitor customer behavior and tailor offers to individuals
• Give certain customers access to special prices
Both buyers and sellers can :
• Negotiate prices in online auctions and exchanges or even in person

Pricing Methods
• In small companies, the boss often sets prices. In large companies, division and product line managers
do. Even here, top management sets general pricing objectives and policies and often approves lower
management’s proposals
• Many companies do not handle pricing well and fall back on “strategies” such as: “We calculate our
costs and add our industry’s traditional margins.”
• Other common mistakes are not revising price often enough to capitalize on market changes; setting
price independently of the rest of the marketing program rather than as an intrinsic element of market-
positioning strategy; and not varying price enough for different product items, market segments,
distribution channels, and purchase occasions.
• For any organization, effectively designing and implementing pricing strategies requires a thorough
understanding of consumer pricing psychology and a systematic approach to setting, adapting, and
changing prices
Consumer Psychology and Pricing
• Marketers recognize that consumers often actively process price information, interpreting it from the
context of prior purchasing experience, formal communications , informal communications , point-of-
purchase or online resources, and other factors
• Purchase decisions are based on how consumers perceive prices and what they consider the current
actual price to be—not on the marketer’s stated price.
• Understanding how consumers arrive at their perceptions of prices is an important marketing priority.
Here we consider three key topics—reference prices, price–quality inferences, and price endings

• Reference Prices
➢ Although consumers may have fairly good knowledge of price ranges, surprisingly few can accurately
recall specific prices.
➢ When examining products, however, they often employ reference prices, comparing an observed
price to an internal reference price they remember or an external frame of reference such as a posted
“regular retail price.”
➢ Consumer expectations can also play a key role in price response. On Internet auction sites such as
eBay, when consumers know similar goods will be available in future auctions, they will bid less in the
current auction
➢ Fair price (what consumers feel the product should cost), typical price, last price paid, upper-bound
price, lower bound price, historical competitors prices, expected future price, usual discounted price

• Price-Quality Inferences
➢Many consumers use price as an indicator of quality. Image pricing is especially effective with ego-
sensitive products such as perfumes, expensive cars, and designer clothing.
➢Price and quality perceptions of cars interact. Higher-priced cars are perceived to possess high quality.
➢When information about true quality is available, price becomes a less significant indicator of quality.
When this information is not available, price acts as a signal of quality.
➢Some brands adopt exclusivity and scarcity to signify uniqueness and justify premium pricing. Luxury-
goods makers of watches, jewelry, perfume, and other products often emphasize exclusivity in their
communication messages and channel strategies

• Price Endings
➢Many sellers believe prices should end in an odd number. Customers perceive an item priced at $299 to
be in the $200 rather than the $300 range; they tend to process prices “left to right” rather than by
rounding.
➢Price encoding in this fashion is important if there is a mental price break at the higher, rounded price.
One study showed that demand actually increased one-third when the price of a dress rose from $34 to
$39 but was unchanged when it rose from $34 to $44
➢Prices that end with 0 and 5 are also popular and are thought to be easier for consumers to process and
retrieve from memory. “Sale” signs next to prices spur demand, but only if not overused.
➢Pricing cues such as sale signs and prices that end in 9 are more influential when consumers’ price
knowledge is poor, when they purchase the item infrequently or are new to the category, and when
product designs vary over time, prices vary seasonally, or quality or sizes vary across stores.

Setting the Price
• A firm must set a price for the first time when it develops a new product, when it introduces its
regular product into a new distribution channel or geographical area, and when it enters bids on new
contract work.
• The firm must decide where to position its product on quality and price.
• Most markets have three to five price points or tiers.
• Marriott Hotels is good at developing different brands or variations of brands for different price
points : Marriott Vacation Club—Vacation Villas (highest price), Marriott Marquis (high price),
Marriott (high-medium price), Renaissance (medium-high price), Courtyard (medium price),
TownePlace Suites (medium-low price), and Fairfield Inn (low price).
• Firms devise their branding strategies to help convey the price-quality tiers of their products or
services to consumers.

Steps in Setting a Pricing Policy
1.Selecting the 2.Determining

3.Estimating Costs
Pricing Objective Demand
4.Analyzing
5.Selecting a 6.Selecting the
Competitors’ Costs,
Pricing Method Final Price
Prices, and Offers

Step 1: Selecting the Pricing Objective
• The company first decides where it wants to position its market offering. The clearer a firm’s objectives,
the easier it is to set price.
• Five major objectives are: survival, maximum current profit, maximum market share, maximum market
skimming, and product-quality leadership.
• SURVIVAL :
➢ Companies pursue survival as their major objective if they are plagued with overcapacity, intense
competition, or changing consumer wants
➢ As long as prices cover variable costs and some fixed costs, the company stays in business. Survival is a
short-run objective; in the long run, the firm must learn how to add value or face extinction.

• MAXIMUM CURRENT PROFIT :
➢ Many companies try to set a price that will maximize current profits. They estimate the demand
and costs associated with alternative prices and choose the price that produces maximum
current profit, cash flow, or rate of return on investment.
➢ In emphasizing current performance, the company may sacrifice long-run performance by
ignoring the effects of other marketing variables, competitors’ reactions, and legal restraints on
price.
• MAXIMUM MARKET SHARE
➢ Some companies want to maximize their market share. They believe a higher sales volume will
lead to lower unit costs and higher long-run profit, so they set the lowest price, assuming the
market is price sensitive

➢ The following conditions favor adopting a market-penetration pricing strategy: (1) The market is
highly price sensitive and a low price stimulates market growth; (2) production and distribution
costs fall with accumulated production experience; and (3) a low price discourages actual and
potential competition
• MAXIMUM MARKET SKIMMING

➢ Companies unveiling a new technology favor setting high prices to maximize market skimming
➢ This strategy can be fatal, however, if a worthy competitor decides to price low.
➢ Market skimming makes sense under the following conditions: (1) A sufficient number of buyers
have a high current demand; (2) the unit costs of producing a small volume are high enough to
cancel the advantage of charging what the traffic will bear; (3) the high initial price does not attract
more competitors to the market; and (4) the high price communicates the image of a superior
product.

• PRODUCT-QUALITY LEADERSHIP
➢ A company might aim to be the product-quality leader in the market.
➢ Many brands strive to be “affordable luxuries”—products or services characterize

by high levels of perceived quality, taste, and status with a price just high enough not to be out of
consumers’ reach.
• OTHER OBJECTIVES
➢ Nonprofit and public organizations may have other pricing objectives. A university aims for partial
cost recovery, knowing that it must rely on private gifts and public grants to cover its remaining
costs.
➢ A nonprofit hospital may aim for full cost recovery in its pricing.
➢ Whatever the specific objective, businesses that use price as a strategic tool will profit more than
those that simply let costs or the market determine their pricing.

Step 2: Determining Demand
• Each price will lead to a different level of demand and have a different impact on a company’s
marketing objective.
• Normally, the inverse relationship between price and demand is captured in a demand curve (as
shown in below figure) : The higher the price, the lower the demand.
• For prestige goods, the demand curve sometimes slopes upward. Some consumers take the
higher price to signify a better product. However, if the price is too high, demand may fall.

Price Sensitivity
• The demand curve shows the market’s probable purchase quantity at alternative prices, summing
the reactions of many individuals with different price sensitivities.
• The first step in estimating demand is to understand what affects price sensitivity.
• Generally speaking, customers are less price sensitive to low-cost items or items they buy
infrequently.
• They are also less price sensitive when
(1) There are few or no substitutes or competitors (4) They think the higher prices are justified
(2) They do not readily notice the higher price (5) Price is only a small part of the total cost
(3) They are slow to change their buying habits of obtaining, operating,
and servicing the product over its lifetime.
• Companies prefer customers who are less price-sensitive

Factors That Reduce Price Sensitivity
• The product is more distinctive.
• Buyers are less aware of substitutes.
• Buyers cannot easily compare the quality of substitutes.
• The expenditure is a smaller part of the buyer’s total income.
• The expenditure is small compared to the total cost of the end product.
• Part of the cost is borne by another party.
• The product is used in conjunction with assets previously bought.
• The product is assumed to have more quality, prestige, or exclusiveness.
• Buyers cannot store the product

Estimating Demand Curves
• Most companies attempt to measure their demand curves using several different methods such
as
• SURVEYS can explore how many units consumers would buy at different proposed prices
• PRICE EXPERIMENTS can vary the prices of different products in a store or of the same product
in similar territories to see how the change affects sales
• STATISTICAL ANALYSIS of past prices, quantities sold, and other factors can reveal their
relationships. The data can be longitudinal (over time) or cross-sectional (from different
locations at the same time).

Price Elasticity of Demand
• Marketers need to know how responsive, or elastic, demand is to a change in price.
• The higher the elasticity, the greater the volume growth resulting from a 1 percent price reduction. If
demand is elastic, sellers will consider lowering the price to produce more total revenue
• Price elasticity depends on the magnitude and direction of the contemplated price change. It may be
negligible with a small price change and substantial with a large price change
• Long-run price elasticity may differ from short-run elasticity. Buyers may continue to buy from a
current supplier after a price increase but eventually switch suppliers. Here demand is more elastic in
the long run than in the short run
• Reverse can also happen: Buyers may drop a supplier after a price increase but return later.
• The distinction between short-run and long-run elasticity means that sellers will not know the total
effect of a price change until time passes.

Step 3: Estimating Costs
• Price ceiling is set by the demand and price floor is set by the cost.
• The company wants to charge a price that covers its cost of producing, distributing, and selling the
product, including a fair return for its effort and risk
• Yet when companies price products to cover their full costs, profitability isn’t always the net result
Types of Costs and Levels of Production
• A company’s costs take two forms, fixed and variable.

• Fixed costs, also known as overhead, are costs that do not vary with production level or sales revenue
• Variable costs vary directly with the level of production
• Total costs consist of the sum of the fixed and variable costs for any given level of production.
• Average cost is the cost per unit at that level of production; it equals total costs divided by production
• Management wants to charge a price that will at least cover the total production costs at a given level
of production
Accumulated Production
• Suppose Samsung runs a plant that produces 3,000 tablet computers per day. As the company gains
experience producing tablets, its methods improve. Workers learn shortcuts, materials flow more
smoothly, and procurement costs fall. The result, as Figure shows, is that average cost falls with
accumulated production experience.
• Experience-curve pricing nevertheless carries major risks. Aggressive pricing might give the product
a cheap image.
• The strategy leads the company to build more plants to meet demand, but a competitor may choose
to innovate with a lower-cost technology. The market leader is now stuck with the old technology
Target Costing
• Costs change with production scale and experience. They can also change as a result of a concentrated
effort by designers, engineers, and purchasing agents to reduce them through target costing.
• Market research establishes a new product’s desired functions and the price at which it will sell, given
its appeal and competitors’ prices. This price less desired profit margin leaves the target cost the
marketer must achieve
• The firm must examine each cost element—design, engineering, manufacturing, sales—and bring
down costs so the final cost projections are in the target range
• Cost cutting cannot go so deep as to compromise the brand promise and value delivered.

Step 4: Analyzing Competitors’ Costs, Prices, and Offers
• Within the range of possible prices identified by market demand and company costs, the firm must
take competitors’ costs, prices, and possible reactions into account.
• If the firm’s offer contains features not offered by the nearest competitor, it should evaluate their
worth to the customer and add that value to the competitor’s price
• If the competitor’s offer contains some features not offered by the firm, the firm should subtract their
value from its own price.
• VALUE-PRICED COMPETITORS
➢ Companies offering the powerful combination of low price and high quality are capturing the
hearts and wallets of consumers all over the world
➢ Companies should set up their own low-cost operations to compete with value priced
competitors only if: (1) their existing businesses will become more competitive as a result and (2)
the new business will derive some advantages it would not have gained if independent
Step 5: Selecting a Pricing Method
• Given the customers’ demand schedule, the cost function, and

competitors’ prices, the company is now ready to select a price.
• There are three major considerations in price setting: (1) Costs set a
floor to the price. (2) Competitors’ prices and the price of substitutes
provide an orienting point.(3) Customers’ assessment of unique
features establishes the price ceiling.
• Companies select a pricing method that includes one or more of

these three considerations.
• There are seven price-setting methods that are markup pricing,

target-return pricing, perceived-value pricing, value pricing, EDLP,
going-rate pricing, and auction-type pricing.

• Markup Pricing
➢It is the most elementary pricing method that add a standard markup to the product’s cost.
➢The manufacturer’s markup price is given by :
Markup price = unit cost /(1 - desired return on sales)
• Target-Return Pricing
➢ In target-return pricing, the firm determines the price that yields its target rate of return on
investment
➢ The target-return price is given by the following formula :
Target-return price = unit cost + desired return * invested capital/unit sales

• Perceived-Value Pricing
➢ Perceived value is made up of a host of inputs, such as the buyer’s image of the product
performance, the channel deliverables, the warranty quality, customer support, and softer attributes
such as the supplier’s reputation, trustworthiness, and esteem.
➢ Companies must deliver the value promised by their value proposition, and the customer must
perceive this value. Firms use the other marketing program elements, such as advertising, sales force,
and the Internet, to communicate and enhance perceived value in buyers’ minds.
➢The key to perceived-value pricing is to deliver more unique value than competitors and to
demonstrate this to prospective buyers.

• Value Pricing
➢Companies that adopt value pricing win loyal customers by charging a fairly low price for a high-
quality offering.
➢Value pricing is thus not a matter of simply setting lower prices; it is a matter of reengineering the
company’s operations to become a low-cost producer without sacrificing quality to attract a large
number of value-conscious customer
• EDLP
➢ A retailer using everyday low pricing (EDLP) charges a constant low price with little or no price
promotion or special sales. Constant prices eliminate week-to-week price uncertainty and the
high-low pricing of promotion-oriented competitors.
➢ In high-low pricing, the retailer charges higher prices on an everyday basis but runs frequent
promotions with prices temporarily lower than the EDLP level.

• Going-Rate Pricing
➢In going-rate pricing, the firm bases its price largely on competitors’ prices.In oligopolistic industries
that sell a commodity such as steel, paper, or fertilizer, all firms normally charge the same price.
➢ Smaller firms “follow the leader,” changing their prices when the market leader’s prices change
rather than when their own demand or costs change.
➢Going-rate pricing is quite popular. Where costs are difficult to measure or competitive response is
uncertain, firms feel it is a good solution because they believe it reflects the industry’s collective
wisdom.

• Auction-Type Pricing
➢ Auction-type pricing is growing more popular, especially with scores of electronic marketplaces
selling everything from pigs to used cars as firms dispose of excess inventories or used goods.
➢ These are the three major types of auctions and their separate pricing procedures:
➢ English auctions (ascending bids) have one seller and many buyers. The highest bidder gets the
item
➢ Dutch auctions (descending bids) feature one seller and many buyers or one buyer and many
sellers. In the first kind, an auctioneer announces a high price for a product and then slowly
decreases the price until a bidder accepts. In the other, the buyer announces something he or she
wants to buy, and potential sellers compete to offer the lowest price.
➢ Sealed-bid auctions : let would-be suppliers submit only one bid; they cannot know the other bids..
A supplier will not bid below its cost but cannot bid too high for fear of losing the job. The net effect
of these two pulls is the bid’s expected profit.

Step 6: Selecting the Final Price
• Pricing methods narrow the range from which the company must select its final price.
• In selecting that price, the company must consider additional factors, including the impact of other
marketing activities, company pricing policies, gain-and-risk-sharing pricing, and the impact of price on
other parties.
• Impact of Other Marketing Activities : The final price must take into account the brand’s quality and
advertising relative to the competition.
• Company Pricing Policies : The price must be consistent with company pricing policies. Many companies
set up a pricing department to develop policies and establish or approve decisions. The aim is to ensure
salespeople quote prices that are reasonable to customers and profitable to the company,

• Gain-and-Risk-Sharing Pricing : Buyers may resist accepting a seller’s proposal because they perceive
a high level of risk, such as in a big computer hardware purchase or a company health plan. The seller then
has the option of offering to absorb part or all the risk if it does not deliver the full promised value.
• Impact of Price on Other Parties : The proposed price could impact stakeholders: distributors may hesitate
due to low profits, the sales force may be reluctant, competitors could adjust prices, and suppliers might
raise their prices. Government intervention is possible if the pricing is seen as anticompetitive or violating
regulations, potentially preventing the intended price.

Price adjustment strategies
• Discount and Allowance Pricing
➢Most companies adjust their basic price to reward customers for certain responses, such as the early
payment of bills, volume purchases, and off-season buying. These price adjustments— called discounts
and allowances—can take many forms.
➢Discounts - The many forms of discounts include a cash discount, a price reduction to buyers who pay
their bills promptly
➢Allowance - Allowances are another type of reduction from the list price.
• Segemented Pricing
➢Companies will often adjust their basic prices to allow for differences in customers, products, and
locations. In segmented pricing, the company sells a product or service at two or more prices,
even though the difference in prices is not based on differences in costs.
• Psychological Pricing
➢ Price says something about the product. For example, many consumers use price to judge quality. A $100
bottle of perfume may contain only $3 worth of scent, but some people are willing to pay the $100
because this price indicates something special
➢ Reference prices - Another aspect of psychological pricing is reference prices—prices that buyers carry in
their minds and refer to when looking at a given product. The reference price might be formed by noting
current prices, remembering past prices, or assessing the buying situations.
• Promotional Pricing
➢With promotional pricing, companies will temporarily price their products below list price and
sometimes even below cost to create buying excitement and urgency.
➢Loss-leader pricing : Supermarkets and department stores often drop the price on well-known brands to
stimulate additional store traffic. This pays if the revenue on the additional sales compensates for the
lower margins on the loss-leader items. Manufacturers typically object because this practice can dilute
the brand image and bring complaints from retailers who charge the list price.
➢Special event pricing : Sellers will establish special prices in certain seasons to draw in more customers.
➢Special customer pricing : Sellers will offer special prices exclusively to certain customers
➢Cash rebates : Auto companies and other consumer-goods companies offer cash rebates to encourage
purchase of the manufacturers’ products within a specified time period. Rebates can help clear
inventories without cutting the stated list price
➢Low-interest financing : Instead of cutting its price, the company can offer low-interest financing
➢Longer payment terms : Sellers, especially mortgage banks and auto companies, stretch loans over
longer periods and thus lower the monthly payments. Consumers often worry less about the cost (the
interest rate) of a loan and more about whether they can afford the monthly payment
➢Warranties and service contracts : Companies can promote sales by adding a free or low-cost warranty
or service contract
➢Psychological discounting : This strategy sets an artificially high price and then offers the product at
substantial savings
➢Promotional-pricing strategies are often a zero-sum game. If they work, competitors copy them and
they lose their effectiveness. If they don’t work, they waste money that could have been put into other
marketing tools, such as building up product quality and service or strengthening product image
through advertising.
• Geographical Pricing
➢Setting prices for customers located in different parts of the country or world. Five types of geographical
pricing
➢FOB-origin pricing - A geographical pricing strategy in which goods are placed free on board a carrier; the
customer pays the freight from the factory to the destination.
➢Uniform-delivered pricing - A geographical pricing strategy in which the company charges the same price
plus freight to all customers, regardless of their location
➢Zone pricing - A geographical pricing strategy in which the company sets up two or more zones. All
customers within a zone pay the same total price; the more distant the zone, the higher the price.
➢Basing-point pricing - A geographical pricing strategy in which the seller designates some city as a
basing point and charges all customers the freight cost from that city to the customer

➢Freight-absorption pricing - A geographical pricing strategy in which the seller absorbs all or part
of the freight charges to get the desired business
• Dynamic Pricing
➢Adjusting prices continually to meet the characteristics and needs of individual customers and situation.
➢For example, think about how the Internet has affected pricing. From the mostly fixed pricing practices of the
past century, the Internet seems to be taking us back into a new age of fluid pricing. The flexibility of the
Internet allows Web sellers to instantly and constantly adjust prices on a wide range of goods based on
demand dynamics (sometimes called real-time pricing)
• International Pricing
➢Companies that market their products internationally must decide what prices to charge in the
different countries in which they operate.

➢ The price that a company should charge in a specific country depends on factors like economic
conditions, competitive situations, laws and regulations, and the development of the wholesaling and
retailing system.
➢ Consumer perceptions and preferences also may vary from country to country, calling for different prices
• Differentiated Pricing
➢Price discrimination occurs when a company sells a product or service at two or more prices that do not
reflect a proportional difference in costs
➢In first-degree price discrimination, the seller charges a separate price to each customer depending on the
intensity of his or her demand.
➢In second-degree price discrimination, the seller charges less to buyers of larger volumes.
➢In third-degree price discrimination, the seller charges different amounts to different classes of buyers, as
in the mentioned cases

➢Customer-segment pricing : Different customer groups pay different prices for the same product or service
➢Product-form pricing : Different versions of the product are priced differently, but not in proportion to their
costs
➢Image pricing : Some companies price the same product at two different levels based on image differences
➢Channel pricing : Coca-Cola carries a different price depending on whether the consumer purchases it from a
fine restaurant, a fast-food restaurant, or a vending machine
➢Location pricing : The same product is priced differently at different locations even though the cost of offering
it at each location is the same
➢Time pricing : Prices vary by season, day, or hour. Restaurants charge less to “early bird” customers, and some
hotels charge less on weekends

• Product Bundle Pricing
➢Using product bundle pricing, sellers often combine several products and offer the bundle at a reduced
price
➢For example, fast-food restaurants bundle a burger, fries, and a soft drink at a “combo”
price. Microsoft Office is sold as a bundle of computer software, including Word, Excel, PowerPoint,
and Outlook
➢Price bundling can promote the sales of products consumers might not otherwise buy, but the
combined price must be low enough to get them to buy the bundle.
Source : Principle of marketing by Kotler ( 17 edition ) page no. 335

Pre-GST Taxation System
Indian
Taxation
System
Direct Tax Indirect Tax
Income Tax Wealth Tax Sales Tax Excise Duty Custom Duty Service Tax
https://www.iosrjournals.org/iosr-jbm/papers/Conf.18010-2018/Volume%201/9.%2037-40.pdf
• Indirect Tax:
➢ In case of indirect taxes, tax is imposed on one person and burden is on another person.
• Direct taxes:
➢ The burden directly falls on the taxpayers.
• Income Tax:
➢ According to the Income Tax Act 1961, every person who is an assessee and whose total income
exceeds the maximum exemption limit. It shall be chargeable to the income tax at the rate or
rates prescribed in the Finance Act.
• Sales Tax:
➢ Sales tax which is levied on the sale of all goods generally is payable by a dealer during trade
whether it is inter-state, outside a state or in the case of import into or export from India.
• Value Added Tax (VAT):
➢ It is a system of multi-stage tax on goods introduced wherein tax is levied across various stages
of supply and production with credit given for tax already paid at each stage of its value addition.
• Excise Duty:
➢ Central excise duty is an indirect tax levied on goods manufactured in India.
• Customs Duty:
➢ Custom duty also known as import duties are levied by the central government of India on the
imported goods to into India.
• Service Tax:
➢ Service tax in India was introduced way back in year 1994. It was started with mere three basic
services viz, stock broking, general insurance and telephone
GST – Goods & Services Tax
• In 1st July, 2017, GST laws were implemented, replacing a complex web of Central and State taxes.
• The implementation of GST has brought about a fundamental shift in the financial relations between the
Central Government and the State Governments in India. GST is a unified tax system that replaced multiple
indirect taxes levied by both the Central and State Governments. Under GST, both the Central and State
Governments share the authority to levy and collect taxes on goods and services. This has led to greater
harmonization and uniformity in the tax structure across States, promoting economic integration.
• The GST system follows a dual structure, comprising Central GST (CGST) and State GST (SGST), levied
concurrently by the Central and State governments, respectively. Additionally, an Integrated GST (IGST) is
levied on interstate supplies and imports, which is collected by the Central Government but apportioned to
the destination state.
https://gstcouncil.gov.in/brief-history-gst
• Under the Indian GST, goods and services are categorized into different tax slabs, including 5%, 12%, 18%,
and 28%. Some essential commodities are exempted from GST, Gold and job work for diamond attract low
rate of taxation. Compensation Cess is being levied on demerit goods and Certain in luxury items.
❖ Salient features of GST
➢One Nation, One Tax
➢Dual Structure
➢Destination-based Tax
➢Input Tax Credit (ITC)
➢Threshold Exemption
➢Increased Compliance and Transparency
➢Composition Scheme
https://gstcouncil.gov.in/brief-history-gst
https://gstcouncil.gov.in/overview-gst-english
https://gstcouncil.gov.in/overview-gst-english
Distribution
Distribution
• A set of interdependent organizations that help make a product or service available for use or consumption
by the consumer or business user
• Distribution channel decisions often involve long-term commitments to other firms.
• For example, companies such as Ford, McDonald’s, or Nike can easily change their advertising, pricing, or
promotion programs.
• They can scrap old products and introduce new ones as market tastes demand.
• But when they set up distribution channels through contracts with franchisees, independent dealers, or large
retailers, they cannot readily replace these channels with company-owned stores or internet sites if the
conditions change.
• Therefore, management must design its channels carefully, with an eye on both today’s likely selling
environment and tomorrow’s as well.
SOURCE: Principles of Marketing 17th edition by Philip Kotler pg no 360
How Channel Members Add Value
• In making products and services available to consumers, channel members add value by bridging the major
time, place, and possession gaps that separate goods and services from those who use them. Members of the
marketing channel perform many key functions. Some help to complete transactions:
• Information. Gathering and distributing information about consumers, producers, and other actors and forces
in the marketing environment needed for planning and aiding exchange.
• Promotion. Developing and spreading persuasive communications about an offer.
• Contact. Finding and engaging customers and prospective buyers.
• Matching. Shaping offers to meet the buyer’s needs, including activities such as manufacturing, grading,
assembling, and packaging.
• Negotiation. Reaching an agreement on price and other terms so that ownership or possession can be
transferred.
Others help to fulfill the completed transactions:
• Physical distribution. Transporting and storing goods.
• Financing. Acquiring and using funds to cover the costs of the channel work.
• Risk taking. Assuming the risks of carrying out the channel work.
How a Distributor Reduces the Number of Channel Transactions

Number of Channel Levels
• Each layer of marketing intermediaries that performs some work in bringing the product and its ownership
closer to the final buyer is a channel level. Because both the producer and the final consumer perform some
work, they are part of every channel
• A direct marketing channel, has no intermediary levels—the company sells directly to consumers.
• For example, Mary Kay Cosmetics and Amway sell their products through home and office sales parties and
online websites and social media; companies ranging from GEICO insurance to Omaha Steaks sell directly to
customers via internet, mobile, and telephone channels.

• Indirect marketing channels contains one or more intermediaries.
• The business marketer can use its own sales force to sell directly to business customers. Or it can sell to
various types of intermediaries, which in turn sell to these customers.
• Although consumer and business marketing channels with even more levels can sometimes be found,
these are less common. From the producer’s point of view, a greater number of levels means less control
and greater channel complexity
• Moreover, all the institutions in the channel are connected by several types of flows. These include the
physical flow of products, the flow of ownership, the payment flow, the information flow, and the
promotion flow. These flows can make even channels with only one or a few levels very complex.

Channel Behavior and Organization
• Distribution channels are more than simple collections of firms tied together by various flows. They are
complex behavioral systems in which people and companies interact to accomplish individual, company,
and channel goals.
• Some channel systems consist of only informal interactions among loosely organized firms.
• Others consist of formal interactions guided by strong organizational structures. Moreover, channel
systems do not stand still, new types of intermediaries emerge and whole new channel systems evolve
• Each channel member plays a specialized role in the channel. Ideally, because the success of individual
channel members depends on the overall channel’s success, all channel firms should work together
smoothly.
• They should understand and accept their roles, coordinate their activities, and cooperate to attain
overall channel goals.
SOURCE: Principles of Marketing 17th edition by Philip Kotler, pg no 363
• However, individual channel members rarely take such a broad view. Cooperating to achieve overall
channel goals sometimes means giving up individual company goals. Although channel members
depend on one another, they often act alone in their own short-run best interests.
• They often disagree on who should do what and for what rewards. Such disagreements over goals,
roles, and rewards generate channel conflict.
• Horizontal conflict occurs among firms at the same level of the channel and Vertical conflict is
conflict between different levels of the same channel is even more common.
SOURCE: Principles of Marketing 17th edition by Philip Kotler

Vertical marketing system
• It consists of producers, wholesalers, and retailers acting as a unified system. One channel
member owns the others, has contracts with them, or wields so much power that they must all
cooperate.
• The VMS can be dominated by the producer, the wholesaler, or the retailer. There are three major
types of VMS's: corporate, contractual, and administered. Each uses a different means for setting
up leadership and power in the channel.

Types of VMS
1. Corporate VMS – It integrates successive stages of production and distribution under single
ownership. Coordination and conflict management are attained through regular organizational
channels.
2. Contractual VMS - It consists of independent firms at different levels of production and distribution
that join together through contracts to obtain more economies or sales impact than each could
achieve alone. Channel members coordinate their activities and manage conflict through contractual
agreements.
3. Franchise organization - A contractual vertical marketing system in which a channel member, called a
franchisor, links several stages in the production-distribution process.
4. Administered VMS - A vertical marketing system that coordinates successive stages of production
and distribution through the size and power of one of the parties.

Horizontal marketing system
• A channel arrangement in which two or more companies at one level join together to follow a
new marketing opportunity
• Companies might join forces with competitors or noncompetitors. They might work with each
other on a temporary or permanent basis, or they may create a separate company.
• Horizontal channel arrangements also work well globally

Multichannel distribution system
• A distribution system in which a single firm sets up two or more marketing channels to reach one or
more customer segments.
• Multichannel distribution systems offer many advantages to companies facing large and complex
markets. With each new channel, the company expands its sales and market coverage and gains
opportunities to tailor its products and services to the specific needs of diverse customer segments.

Omnichannel Distribution Channels
• Companies are increasingly employing digital distribution strategies, selling directly online to
customers
• They are also selling through e-merchants that have their own websites
• In doing so, these companies are seeking to achieve omnichannel marketing
• In Omnichannel Distribution Channels multiple channels work seamlessly together and match
each target customer’s preferred ways of doing business, delivering the right product information
and customer service regardless of whether customers are online, in the store, or on the phone.
Marketing Management 15th Edition by Philip Kotler pg 520

Market Logistics
Major Logistics functions
• Warehousing
• Inventory management
• Transportation
• Logistics Information Management

Integrated Marketing Logistics
• Today, more and more companies are adopting the concept of integrated logistics management.
• This concept recognizes that providing better customer service and trimming distribution costs
require teamwork, both inside the company and among all the marketing channel organizations.
• Inside, the company’s various departments must work closely together to maximize its own
logistics performance.
• Outside, the company must integrate its logistics system with those of its suppliers and
customers to maximize the performance of the entire distribution network.
Principles of marketing by Philip Kotler and Gary Armstrong pg 363

Integrated
Marketing
Communication
Integrated Marketing
Communications
• Integrated Marketing Communications

(IMC) is a strategic marketing approach
that seeks to unify all aspects of
marketing communication to create a
consistent and seamless experience for
the target audience.
• Carefully integrating and coordinating
the company’s many communications
channels to deliver a clear, consistent,
and compelling message about the
organization and its products.
Why IMC is needed ?
• Brand-building: IMC helps with brand-building by creating a cohesive and immersive brand experience.
When marketing messages are consistent and interconnected across various channels, customers experience
a seamless journey, enabling them to form a more comprehensive understanding of the brand and its
offerings
• Effective marketing: IMC helps businesses manage their marketing programs more effectively by connecting
them with their target audience and giving them the best possible experience. Identifying the customer by
their behavior, categorizing them, and targeting them with specific campaigns increases the marketing
strategy's success rate
• Adaptability and agility: IMC provides businesses with the agility and adaptability needed to respond to
changing market trends and consumer demands. The integrated nature of an IMC strategy allows
organizations to pivot quickly and adjust their messaging across multiple channels in real-time
• Boosts sales: IMC gives an organization an edge over competitors and boosts sales. While communicating
with the customer, the brand builds a relationship with them and creates a seamless buying experience,
eventually leading to a lifelong, loyal client base

• Advertising: Traditional advertising includes print (newspapers, magazines), broadcast (TV, radio), outdoor
(billboards, transit ads), and digital (online banners, video ads) advertising. Advertising is a paid form of
promotion that reaches a broad audience.
• Personal Selling: Personal selling involves one-on-one communication between a salesperson and a
potential customer. This method is particularly effective for high-involvement or complex products and
services.
• Public Relations (PR): PR activities include press releases, media relations, events, and sponsorships. PR
helps manage a company's image, reputation, and relationships with the public, media, and stakeholders.
• Direct Marketing: Direct marketing includes email marketing, direct mail, telemarketing, and other forms
of personalized marketing communication to reach customers directly. It aims to elicit a direct response.
• Sales Promotion: This includes short-term incentives like discounts, coupons, contests, sweepstakes, and
loyalty programs designed to stimulate immediate sales or customer engagement.

Advertising
• Advertising is a form of communication that aims to promote or sell a product, service, idea, or brand.
It involves creating and disseminating messages through various channels to reach a target audience
and influence their behavior.
• The primary objectives of advertising include raising awareness, generating interest, creating desire,
and ultimately driving action, such as making a purchase or adopting a particular behavior.
➢ Types of Advertisements
• Print media – Newspapers, magazines, pamphlets, posters, banners, etc.
• TV ads
• Outdoor advertising – billboards, advertising on public transportation.
• Radio advertising
• Digital advertising
Planning of Advertising

Advantages and Limitations

• A Sales promotion is a marketing
strategy in which a business uses a
temporary campaign or offer to increase
interest or demand in its product or
service.
Sales • Sales promotion, a key ingredient in
Promotion marketing campaigns, consists of a
collection of incentive tools, mostly short
term, designed to stimulate quicker or
greater purchase of particular products
or services by consumers or the trade.
Types of Sales promotion
COUPONS DISCOUNTS BUY ONE, CONTESTS LOYALTY

GET ONE PROGRAM
CASHBACK FREE
OFFERS SAMPLES
Advantages Disadvantages
Increased Sales Impact on Profit Margins
Clearing Excess Inventory Brand Image
Customer Acquisition and Retention Stockpiling
Customer Engagement Customer Expectations
Competitive Advantage Temporary Boost

Application of
marketing
management
basics on Lipton
green tea
Market size of
tea in India
➢India is the second-largest producer of tea globally. Indian tea is one of the finest in the world owing to strong
geographical indications, heavy investment in tea processing units, continuous innovation, augmented product
mix, and strategic market expansion.
➢India is also among the world's top tea-consuming countries, with 80% of the tea produced in the country
consumed by the domestic population. India's total tea production for the calendar year 2020 was 1,257.52
million kg and for the financial year 2020-21, it was 1,283 million kg.
➢In May 2022, India’s tea production stood at 127.11 million kgs, and it was at 91.77 million kg in April 2022.
From January-September 2022, India’s tea production stood at 984.67 million kg. The expected tea production
in February 2023 stood at 16.22 million kgs.
➢India is among the top 5 tea exporters in the world making about 10% of the total exports. From April-October
2021-22, the total value of tea exports from India stood at US$ 423.83 million.
➢Black tea, regular tea and green tea make up approximately 80%, 16% and 3.5% of the total tea exported from
India.
Source - https://www.ibef.org/exports/indian-tea-industry
Market size of
tea - global
• The global tea market was valued at around 122.2 billion U.S. dollars in 2022, and is expected to
rise to 160 billion dollars by 2028.
• Developing and emerging economies have been driving the growth in demand, with East Asia,
Africa, Latin America and the Caribbean, and the Near East leading the expansion.
• Based on a new report by Vantage Market Research, the global green tea market was valued at
US$13.41 billion in 2021 and is projected to reach US$26.16 billion by 2028.
Source - https://www.statista.com/statistics/326384/global-tea-beverage-
market https:/www.worldteanews.com/issues-trends/global-tea-market-experiencing-rapid-growth-
new-repor
Some aspects to
consider while
doing
Environmental
scanning from
Lipton Green Tea:
• Market Trends: Analyze trends in the tea industry, such as the increasing demand for healthier
beverage options and the growing popularity of green tea for its health benefits.
• Consumer Preferences: Understand changing consumer preferences, including their interest in

natural and organic products, sustainability, and flavor variations.
• Competitor Analysis: Examine competitors in the green tea market to identify their strategies,
product offerings, pricing, and market share.
• Regulatory Environment: Keep track of any regulations related to tea production, labelling, and
health claims to ensure compliance.
• Supply Chain: Assess the availability and cost of tea leaves and other ingredients, considering
potential supply chain disruptions.
https://www.mbaskool.com/
• Sustainability: Evaluate Lipton's sustainability initiatives and how they align with evolving
environmental and social concerns.
• Technological Advances: Stay updated on advancements in tea processing techniques

and packaging technologies that can impact product quality and shelf life.
• Economic Factors: Monitor economic conditions, currency exchange rates, and inflation
rates, as they can affect production costs and pricing strategies.
• Social and Cultural Factors: Consider cultural trends, lifestyle changes, and social
influences that may impact tea consumption habits.
• Global Events: Be aware of global events like pandemics or trade disputes that can affect
the supply chain and consumer behaviour
https://www.mbaskool.com/
POLITICAL FACTORS OF LIPTON
The tea industry benefits from favorable import policies and free trade agreements
➢ India is the 2nd largest tea producer, largest black tea producer, 4th largest tea exporter besides catering
to a large number of domestic consumers, largest consumer of black tea and consumes around 18% of
the total World tea consumers.
Government regulations and policies related to the tea industry.
➢ Of the entire tea production the majority comes from the north-eastern region of the country with
Assam and West Bengal being the leading producers. The state of Assam is the world’s single largest tea-
growing region. Among southern states of the country, Tamil Nadu was the highest producer of tea,
most of which was grown in the hills of the Nilgiris district in the southern Western Ghats. The other tea-
growing districts were Munnar and Wayanad in the south.
➢ Government of India through Tea Board had helped in formation of 352 Self Help Group (SHG), 440
Farmer Producer Organization (FPO) and 17 Farmer Producer Companies (FPCs). Assistance
towards procurement of pruning machines and mechanical harvesters. Setting up of Mini tea
factories to encourage entrepreneurs and unemployed youth. Tea Board has suggested further
amendments in the “Tea Development and Promotion Scheme, 2021-26.
Political Stability can positively impact the supply chain and manufacturing process
• 25% of HUL’s Revenues, 21% of Earnings Before Interest and Tax comes from food and refreshments
category.
• To address the rising consumer need for healthier nutrition choices, HUL is reshaping its portfolio and
investing in categories of the future. They offer functional tea such as Lipton Green tea, an all-natural
zero-calorie drink rich in catechins to help improve body metabolism. This year we also introduced the
Lipton Sip N Digest, a soothing blend of green tea, with power-packed natural ingredients like Ginger,
Tulsi, and Rock salt, traditionally known to improve metabolism and aid digestion, helping consumers feel
light after meals.
Source:
https://pib.gov.in/Pressreleaseshare.aspx?PRID=1903590#:~:text=Tea%20Board%20had%20devised%20a,their%20liv
elihood%20and%20education%20needs.&text=During%20the%20year%202022%2D23,this%20component202845%
20Nos%20benefitting%.
https://www.statista.com/statistics/870829/india-consumption-volume-of-tea/
https://www.hul.co.in/files/92ui5egz/production/6a9122377e0712e70bfb04f0336bf84f84b518ef.pdf
ECONOMIC FACTORS OF LIPTON
Currency fluctuations
• Annual retail inflation eased to 5.66% in March from 6.44% in the previous month, government data
showed. Inflation plays a significant role in determining consumer spending and their per capita
consumption. India’s consumer market is set to become the world’s third largest by 2027 as the number of
middle to high-income households rise, according to a report by BMI.
• The country currently ranks fifth, but the Fitch Solutions company predicts a 29% increase in real household
spending will push India up two spots. BMI estimates India’s household spending will exceed $3 trillion as
disposable income rises by a compounded 14.6% annually until 2027. By then, a projected 25.8% of Indian
households will reach $10,000 in annual disposable income. In fact, the report forecast that the growth in
India’s household spending per capita will outpace that of other developing Asian economies like Indonesia,
the Philippines and Thailand at 7.8% year-on-year.
Favorable economic environment:
• During the current FY till December, 2022, tea exports registered 188.76 Million Kg of volume along with
value realization of 641.34 Million USD, an increase by 33.37 M. Kgs in volume (21.47% increase YoY) and
70.93 Mill USD in value (12.43%increase YoY).
• Black tea, regular tea and green tea make up approximately 80%, 16% and 3.5% of the total tea exported
from India. India’s consumer market is set to become the world’s third largest by 2027 as the number of
middle to high-income households rise, according to a report by BMI.
• The country currently ranks fifth, but the Fitch Solutions company predicts a 29% increase in real
household spending will push India up two spots. BMI estimates India’s household spending will exceed $3
trillion as disposable income rises by a compounded 14.6% annually until 2027.
• By then, a projected 25.8% of Indian households will reach $10,000 in annual disposable income
Market growth and demand for green tea products depend upon the following dimensions
➢ Market Consumer preference towards green tea has five components to it: Marketing
Promotion and Price Affordability( Advertising, Price affordability, Packaging, Sales offer),
Product Quality and Availability, Safety(Taste, Aroma, Quality, Availability), Health
benefits(Anti –oxidant and nutritional value), Medicinal benefits and chemical
components(Medicinal properties, less caffeinated). Lipton has established itself in all these
dimensions. Consumers are seeking healthier, organic, and sustainable products, which can
impact Lipton’s sale and revenue.
Source: https://www.drishtiias.com/daily-updates/daily-news-analysis/tea-industry-of-
indiahttps://economictimes.indiatimes.com/news/economy/indicators/indias-march-retail-inflation-eases-below-rbis-upper-tolerance-
level/articleshow/99439720.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst https://iaeme.com/MasterAdmin/Journal_uploa
ds/IJM/VOLUME_11_ISSUE_11/IJM_11_11_121.pdf
SOCIAL FACTORS OF LIPTON
According to a survey conducted in June 2022 in India, 73 percent of Indians preferred branded health and beauty
products over supermarkets' labels. Similarly, more than 60 percent of consumers chose branded coffee, tea, fruit juices,
and soft drinks. Importance of branded product, coffee and tea is at 68%.
Health and wellness trends
Consumers are looking for teas that not only taste good but also offer health benefits, such as antioxidant properties,
immune-boosting effects, and stress relief. Tea accelerated its journey of making India fitter, through communicating its
proposition of how exercise, when supplemented with green tea can work wonders for weight loss with hashtag” Chalo
Fit Rahe”
Cultural Attitudes towards tea
Tea brands often have a compelling story to tell, whether it’s about the origin of their tea leaves, the traditional methods
they use to produce their tea, or the unique health benefits of their blends. Greater Emphasis on Health and Wellness,
Innovative Packaging, Increased Focus on Sustainability. Price and quality are two key factors that drive consumer
preferences for tea brands. Value proposition is something a consumer seeks in the first instance.
SOCIAL FACTORS OF LIPTON
Consumer’s behavioural pattern: Wide consumption consumer behavioral pattern changes from time and
this behavior change is influenced by many factors like popularity of a brand, loyalty, aroma colour, price and
many more. HUL launched Lipton Matcha Green Tea on e-commerce to capture the growing health and
wellness trend amongst millennials and the urban population that are over-indexed on such e-commerce
platforms.
Consumer Demographics: As per the statista 2021, Female comprises of 41.2% and male comprises of 58.8%
of tea consumption. As per the income division, low income group is 30%, medium income group is 36.6%
and High income group is 33.5%.
TECHNOLOGICAL FACTORS OF LIPTON TEA
INNOVATION IN GREEN TEA AND

OTHER VARIANTS Lipton has tried to
bring innovation to its variation.
SipnDigest is one of the few examples.
Innovation in Green Tea or product variants
https://www.hul.co.in/news/2023/putting-sustainability-into-action/#:~:text=We%20have%20
committed%20to%20a,69%25%20of%20our%20tea%20
https://hul-performance-highlights.hul.co.in/performance-highlights-fy-2021-2022/reimagine-hul.html
Image source: HUL website

ENVIRONMENTAL FACTORS OF LIPTON
CLIMATE IMPACT
• Tea contributes to climate change and is also vulnerable to the impacts of climate change.
Future-proofing tea production involves increasing the use of drought and flood-tolerant
tea plants, reducing the use of agrochemicals to cut carbon and costs, and protecting
biodiversity.
• Erratic climatic condition, irregular monsoon pattern, all these affect tea cultivation.
Science-based Greenhouse gas (GHG) emission reduction targets ensure that companies
reduce their emissions at a rate that is consistent with the level of decarbonisation
required to limit global warming to 1.5°C or well-below 2°C.
SUSTAINABLE PRACTICES
➢ HUL committed to a deforestation-free supply chain in palm oil, paper and board, tea, soy
and cocoa by 2023. Through focused programs, they have achieved sustainable sourcing for
95% of our total paper and board, 82% of our tomatoes and 69% of our tea procured. Since
its inception, HUF has delivered a cumulative and collective water potential of over 2.6
trillion litres; over 1.7 million tonnes of additional agricultural and biomass products.
https://ethicalteapartnership.org/strategy2030/environmentally-sustainable-tea/
LEGAL FACTORS OF LIPTON
COMPLIANCE WITH REGULATORY NORMS

“Date of manufacture” , “Best before”, “Date of packaging”, “Prepackaged” , etc. should be clearly printed on
the package. All the guidelines mentioned under FSSAI needs to be followed. FSSAI mark should be printed
on the package. Lipton as a brand takes immense care of all the regulations(Food Safety and Standards
Authority of India (FSSAI).
ADVERTISING AND MARKETING REGULATIONS
Central Consumer Protection Authority (CCPA) under the Department of Consumer Affairs aim to curb
misleading advertisements and protect the consumers.
EMPLOYMENT AND LABOUR LAWS
Various seminars/interactions are made with the STGs for quality plucking, capacity building, rush crop
management etc. Assistance towards procurement of pruning machines and mechanical harvesters. Setting
up of Mini tea factories to encourage entrepreneurs and unemployed youth.
LEGAL FACTORS OF LIPTON
BRIDGING THE GAP
• Tea Board floated a tender for Price Sharing Formula for fixation of price of green leaves
supplied between manufacturers and growers which will benefit a large number of
people in a scientific method. The same is under process.
• A mobile app “Chai Sahyog”, is also being developed to help Small Tea Growers in terms
of better price realisation and information. Tea Board had devised a scheme of
“Assistance of education stipend to the wards of Small Tea Growers” to improve their
livelihood and education needs.
Compendium_Packaging_Labelling_Regulations_04_01_2022.pdf
https://blog.forumias.com/regulation-of-advertisements-in-india/
SWOT Analysis of Lipton
Strengths
• Wide product range : Lipton has a huge product range which includes 3 flavours of iced teas
a variety of green teas, traditional black tea, etc.
• Quality Products: Lipton has always offered good quality teas sourced from the best tea
Plantations across the world
• Strong marketing and advertising: The ‘Adat Laga Lo’ campaign for instance always stays
In the mind of a consumer.
• Global: Lipton is a global brand and is operational in over a 100 countries
Weaknesses
• Low market share: Although it is a global brand Lipton has only a 11.6% market share
• Perceived as a mass product: Because of this it fails to cater to a population that wants
a premium tea experience
• Less Innovation: There isn’t enough differentiation in the products that lipton offers.
SWOT Analysis of Lipton
Opportunities
Health awareness: A lot of people are now shifting there preferences to healthier teas such as
Herbal and green teas.
E-commerce presence: Although Lipton has its own website, it is very disorganized and it
does
not offer e-commerce services. They can make a B2C website
Tie-ups: Lipton can make tie-ups with different hotel groups and offer their products in these
hotels
Threats
Changes in consumer preferences: Changing consumer preferences from healthy tea to
Traditional tea or coffee or other beverages is a threat.
Raw material costs: Prices of tea leaves always fluctuate in India because of different
Changes in government policies
Competition: Smaller speciality tea brands may attract consumers seeking unique and
premium tea experience.
TOWS MATRIX
INTERNAL STRENGTHS WEAKNESSES
1. Wide product range 1. Low market share
2. Quality products 2. Mass product
EXTERNAL 3. Global
OPPORTUNITIES SO WO
1. Health awareness • S3 O2 • W1 O2
2. E-commerce presence • S2 O3 • W2 O3
3. Tie-ups
THREATS ST WT
1. Competition • S2 T1 • W2 T3
2. Raw material costs • S1 T3
3. Changes in preferences
Strategies formed by TOWS matrix
SO Strategy
• Aggressive
• Capitalize S and Grab O
In the case of Lipton and as shown in the TOWS matrix before a good SO strategy would be to go global by
developing an e-commerce platform
Another SO strategy would be to offer quality products to hotels with whom we have tie ups.
ST strategy
• Conservative
• Minimize T by using S
Lipton has used the ST strategy and Sold the good quality products at high rates to minimize
The risk of raw material pricing spikes.
Strategies formed by TOWS matrix
WO strategy
• Competitive
• Overcome W by exploiting O
• Lipton ensured getting more market share by exploiting the market that preferred healthy teas
Such as green tea and herbal tea
WT Strategy
• Defensive
• Minimize W and avoid T
Effect of Porter’s Five Force Model on Lipton
Green Tea
• Competition Threat in the Industry
Lipton being one of the oldest brands of tea faces wide competition with many
international brands example
• Twining : whose primary activities are the procurement, blending, and selling of tea, coffee and
malt goods.
• Tata Consumer Product Limited: traded, produced, and distributed consumer goods, primarily
tea, coffee, water, salt, pulses, spices, snacks, and ready-to-eat packaged foods
• Due to this rivalry there is a sense of market power distribution and hence better options for
buyers and suppliers to get a good deal.
Source: https://www.portersfiveforces.org/lipton-porters-5-five-forces/
Threat of New Entrants
• Lipton as a tea brand found its entry into the market as it started when purchase value of tea
declined, but the brand adopted different action to fill and sell tea which was imported from Sri
Lanka, famous for its quality.
• The global tea companies hold very small percentage of tea market as compared to Lipton’s share
Bargaining Power of Supplier
• Due to its substantial purchasing power and the availability of substitute suppliers, Lipton has
a significant negotiation advantage over its suppliers when sourcing its raw materials from
them.
Bargaining Power of Buyer
• Lipton has largest buying pool.

• Supermarkets, convenience stores, cafes, and restaurants are among Lipton’s principal clients
• The business is also present on websites for online shopping like Amazon, Walmart, and Target
• Additionally, a variety of Lipton products are sold at conventional retail locations like pharmacies and
grocery shops.
Threat of Substitute Product
• Product Differentiation: When Unilever acquired Lipton in 1971, it made the tea
business segment one of the largest in the world and it has remained one of the largest ever since.
• Consumers of Lipton are highly brand-conscious, and the company has enjoyed special status
for centuries.
• Growth Of Coffee Market: Coffee is a common alternative for tea, and its market has been
expanding more quickly than the worldwide tea market.
• The global tea market is expected to generate US$247.20 billion in revenue in 2023, growing at a
compound annual growth rate of 4.22%, while the global coffee market is anticipated to generate
US$495.50 billion in revenue in 2023, growing at a compound annual growth rate of 4.47%,
outpacing the growth of the tea market.
• Therefore, if the trend persists, the tea business could see a larger share of sales go to other
beverages.
Black box model for Lipton green tea
1. Stimuli
➢Product: Lipton green tea is a high-quality product that is known for its taste and health benefits. It is
also available in a variety of flavors and packaging options to appeal to a wide range of consumers. For
example - a variety of different flavors, such as pure green tea, match green tea, and green tea with
other flavors like lemon or mint.
➢Promotion: Lipton green tea is promoted through a variety of channels, including television, print, and
online advertising. Lipton also uses social media to connect with consumers and promote its products.
➢Social influences: We are often influenced by the opinions and behaviors of others, such as our friends,
family, and colleagues. If we see other people drinking Lipton green tea, we may be more likely to try it
ourselves.
➢Perceptions: Consumers' perceptions of a product can have a major impact on their decision to purchase it.
Lipton green tea is often perceived as a healthy and refreshing beverage, which can appeal to consumers
who are looking for ways to improve their health and well-being
2. Black box
Buying decision process
a.Problem Recognition: The consumer identifies a need or problem, which could be a desire for a healthy
beverage, relaxation, or even a craving.
b. Information Search: The consumer gathers information about green tea and its benefits. This can happen
through various channels, such as online research, recommendations from friends, or advertising.
c. Evaluation of Alternatives: The consumer considers different options, which might include various brands
of green tea or other beverages.
d. Purchase Decision: The consumer decides to buy Lipton Green Tea based on the information and
evaluation.
e. Post-Purchase Evaluation: After purchase, the consumer assesses whether the product met their
expectations and if they are satisfied with their decision.
3) the response
Purchase: The ultimate output of the black box model is the consumer's decision to purchase Lipton green
tea.
1.Segementation
•Geographic segmentation of markets is according to
nations, states, regions, countries, cities, and
neighborhood.
•Demographic segmentation for Lipton is age, occupation,
and income of the market as customers are closely linked
to variables such as age and income.
•Behavioral Segmentation is based on the behavior and
purchasing habits of the customer.
•Psychographic segment consumers are divided according
to their personality, lifestyle, values, and social class.
Lipton applies Undifferentiated marketing or mass
marketing as it focusses on equal benefits for everybody
and follows one market with one offer strategy. The reason
is to become a market leader in the future
2. Targeting
• Lipton Green Tea is positioned as a healthy beverage, and therefore, health-conscious consumers are a
key target audience. This includes people of various age groups more of young adults and working
professionals.
• This segment is interested in the potential antioxidant properties, metabolism support, and overall
well-being associated with green tea consumption.
• People who are focused on weight management, fitness, and maintaining a healthy lifestyle are a
significant target audience.
Source : https://www.hul.co.in/brands/nutrition/lipton/ & www.marketing91.com/marketing-

strategy-of-lipton-tea
3. Differentiation
•Lipton, with its global presence and long-standing history, leverages its brand heritage to instill trust
and reliability in consumers. It's often perceived as a brand with a rich tea tradition.
•It is power-packed with 4.5x catechins, which are natural plant nutrients known to improve your
body’s metabolism and help reduce belly fat differentiating it as a wellness beverage.
•Lipton emphasizes its commitment to quality, sourcing premium green tea leaves from carefully
selected gardens. This commitment to quality differentiates Lipton from lower-quality competitors.
•Lipton provides educational content about green tea, its origins, and brewing techniques. This helps
consumers appreciate the product more and positions Lipton as an informative and trusted source.
Source : https://www.hul.co.in/brands/nutrition/lipton/
4. Positioning
Lipton Green tea: Feel Light Feel Active
• •Lipton Green Tea has positioned its beverages as a healthy brand highlighting its main features such as
quality, affordability.
• •Suitable for daily consumption, it encourages consumers to incorporate green tea into their routines,
whether as a morning energizer or an evening relaxation ritual.
• •Lipton leverages its long-standing heritage and global presence to position itself as a brand that
consumers can trust. It emphasizes its commitment to quality, including the sourcing of premium green
tea leaves.
• • Brand positions itself among the consumers with slogans such as “Direct from the tea gardens to the
teapot”, “100% Natural and 100% Real tea” and “Lipton gets into hot water than anything”.
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Marketing

16 Product life Cycle 190 - 202

• Goods - Physical goods like smartphones, clothing, food, and electronics.

• Services - Intangible offerings such as consulting, healthcare, education, and insurance.

Source – Class notes

1) Barter System(Exchange System)

2) The Production Concept

3) The Product Concept

4) The Selling Concept

5) The Marketing Concept

6) Societal Marketing Concept

Source - Principles of marketing management 17th Edition – Philip Kotler page no 10

➢ Unless there is actual or potential exchange, there is no marketing.

Marketing Management by S.H.kazmi Page no. 8

Marketing Management by S.H.kazmi page no 8

Source - Principles of marketing management 17th Edition – Philip Kotler page no 9 to 11

Source - Principles of marketing management 17th Edition – Philip Kotler page no 9 to 11

Selling concept Marketing concept

Source – class notes

Source - Principles of marketing management 17th Edition – Philip Kotler page no 9 to 11

Source: Principles of Marketing by Philip Kotler & Gary Armstrong ch 1 Page-6

Marketing management by kotler​ page no 187-191

Marketing management by kotler​ page no 187-191

Source: Marketing Management by Philip kotler 15 edition 31 page no. 31

5.Secret needs - Refers to the unspoken or often unrecognized desires and

Source: Marketing Management by Philip kotler 15 edition 31 page no. 31

Source: Principles of Marketing by Philip Kotler & Gary Armstrong

Marketing management Rajan Saxena Pg No. 24-25

Ramaswamy V.S, Namakumari S. Pg No. 30

Purchasing power of an individual depends upon :

Ramaswamy V.S, Namakumari S. Pg 29

Other Social Factors

Marketing management by Rajan Saxena Pg 26-28

Marketing management by Rajan Saxena Pg 26-28

Ramaswamy V.S, Namakumari S. Pg No. 30

Strategic planning initiatives and key business

Traditionally, businesses strived to generate value for

Making a positive impact on the planet.

Marketing management by Rajan Saxena

Marketing management by Rajan Saxena

Marketing management by Rajan Saxena

Source: S Namakumari and notes pg 162

Source: ICAI Module

SOURCE: Marketing Management 15th Edition by Philip Kotler pg 72, 73

• A company may make a buying process more convenient or efficient.

• A company can customize a product or service.

• A company can introduce a new capability.

• A company may be able to deliver a product or service faster.

• A company may be able to offer a product at a much lower price.

SOURCE: Marketing Management 15th Edition by Philip Kotler pg 72, 73

SOURCE: Marketing Management 15th Edition by Philip Kotler pg 72, 73

Threats Max-Min Min-Min

Source: S. H. H. Kazmi and Rajan Saxena

Medium Competitive Rivalry:

Low Competitive Rivalry:

Source: Kotler & Keller Marketing Management 15edition Page No 285

Source: Kotler & Keller Marketing Management 15edition Page No 285

Source - Marketing management by Philp Kotler 15edition page no 121 to 136

Source - Marketing management by Philp Kotler 15edition page no 121 to 136

2) Developing a research plan

Marketing management by kotler page no 187-191

Marketing management by kotler page no 187-191

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 134

Source : Marketing management by kotler (15 E) page no. 187

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 144-147

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Source : Marketing management by kotler (15 E) page no. 187 - 191

Principle of marketing by Kotler 15 E page no 187-191

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 135

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 151-152

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 151-152

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 151-152

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 152-156

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 152-156

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 152-156

Source : Principle of Marketing by Kotler ( 14 edition ) page no. 152-156