Marketing Management Class 12 Notes

Marketing is the process of identifying the needs of the customer and satisfying them profitably, and the word that does the work in this definition is the identifying, because the enterprise that starts with what it can make rather than with what the customer needs has misunderstood the function.

• Marketing is concerned with the discovery of the consumer needs, and this is the starting point, and the needs of the customers are not always the same as the wants, since a want is a need plus the ability and the willingness to pay.
• It is concerned with the satisfaction of these needs, and the satisfaction must be complete, and a need that is half satisfied produces a customer who is not loyal and who has to be won again at a cost.
• It must be profitable, and this is the qualification on the whole definition, since a business that satisfies the needs and earns nothing is not a business, and the profit is the measure of how well the resources were used.
• The functions of the marketing are the buying and the selling, the packaging and the branding, the transportation and the storage, the financing of the goods, the risk-bearing, the demand creation and the demand stimulation, the market information and the communication, and the grading and the standardisation.
• The functions may be split into the exchange functions, which are the buying, the selling and the distribution, and the facilitating functions, which are the transport, the storage, the finance, the risk-bearing, the packaging and the information, and the distinction is that the exchange is the core and the rest only helps the exchange to happen.

The marketing mix is the set of the controllable variables that the firm uses to create the demand, and the syllabus names four of them, the product, the price, the place and the promotion, and they are set in that order in almost every answer.

• The product is what the firm offers, and it is the whole of it, the design, the quality, the features, the brand, the packaging and the services that go with it, and the product is the base of the mix because nothing else matters if the product does not satisfy the need.
• The price is what the customer pays, and it is the most flexible of the four, and it is the one that changes fastest, and the decision is not only what to charge but the method of the payment, the credit terms, the discounts and the differentials.
• The place is how the product reaches the customer, and it is the channel and the distribution, and it includes the intermediaries, the retail outlets, the transportation, the storage and the location, and the decision is the length of the channel and the intensity of the coverage.
• The promotion is how the customer is told, and it is the communication, and it is the advertising, the personal selling, the sales promotion and the public relations, and the promotion does not create the demand, it only informs the customer about the demand that already exists.
• The word controllable is the one that has to be understood, because the four elements are the variables that the marketer can decide, while the environment of the marketing, the customer, the competition, the law and the economy, is not controllable, and the whole of the work of the marketer is to fit the four into the environment.

The product is the first P, and the chapter works through the levels of the product, the branding and the packaging, and then the life cycle and the new product development.

• The core product is the need that the product satisfies, and it is the product at its most basic, and the actual product is the physical form in which the core is delivered, and the augmented product is the actual product together with the services, the warranty, the delivery and the support that come with it, and the three levels are the three things a customer is buying at once.
• The product can be a good, a service or an idea, and a good is tangible, a service is intangible and the customer buys the benefit and not the object, and an idea is what a public relations campaign sells, since nobody buys the awareness, they act on it.
• The branding is the name, the term, the symbol or the design that identifies the product, and the branded product carries a reputation, and the advantages are the customer recognition, the price premium and the repeat purchase, and the danger is that a bad name cannot be changed once it is established.
• The packaging is the container and the wrapper of the product, and its functions are the protection, the convenience, the economy, the promotion and the information, and the level of the packaging ranges from the primary package to the secondary and to the tertiary, and the last of these is the shipping case.
• The product life cycle has four stages, the introduction, the growth, the maturity and the decline, and the introduction has a high cost per unit and a low sales volume, the growth has the sales rising fast, the maturity has the sales at the peak and the profits are competed away through the promotion, and the decline has the sales falling as the substitutes arrive.
• The new product development process is the need identification, the idea generation, the idea screening, the concept development and testing, the business analysis, the product development, the test marketing and the commercialisation, and the number of the ideas that survive each stage falls, so the funnel is narrow at the end.

The second P and the third P are taken together here, and both of them are concerned with the exchange, while the first P and the fourth P are concerned with the offering and with telling the customer about it.

• The price is the amount of money that the customer must pay, and the factors that determine it are the cost, the demand, the competition, the objectives of the marketer and the channel, and the marketer cannot set it in isolation from the other three Ps, since a price that is too low for the product devalues it.
• The pricing factors are internal, the cost, the objectives and the strategy, and external, the demand, the competition and the economy, and the objectives may be survival, where the price is set low to keep the business running, the maximisation of the profit, the market share, or the skimming, in which the price is high at first and is reduced later.
• The price also has a mix, the place utility, the time utility, the risk utility, the credit utility and the service utility, and these explain why a customer will pay more at a shop near the station and more for the one that gives the credit, and this is the basis of the price differentials.
• The place is the distribution, and the two decisions are the channel and the coverage, and the channel may be direct, from the producer to the consumer, or indirect, with one or more intermediaries, and the choice depends on the nature of the product, the market coverage required, the competition and the cost of the distribution.
• The types of the channel are the zero level, the producer to the consumer; the one level, the producer to the retailer to the consumer; the two level, the producer to the wholesaler to the retailer to the consumer; and the three level, the producer to the agent or the broker to the wholesaler to the retailer to the consumer, and the longer the channel the larger the reach and the higher the cost.
• The coverage may be intensive, where the product is available almost everywhere, which suits the mass products, selective, where the product is in a few chosen outlets, which suits the shopping goods, or exclusive, where the product is in a single outlet in the area, which suits the luxury goods and it gives the prestige.

The promotion is the fourth P, and the chapter treats it as the communication with the customer, and it separates the four tools of the promotion and explains what each can and cannot do.

• The promotion is the process of communicating to the customers what the firm is offering, and the tools are the advertising, the personal selling, the sales promotion and the public relations, and the mix of the four is the promotional mix.
• The advertising is the paid and the non-personal communication through the mass media, and it is used to create the awareness, to inform the customer, to persuade and to remind, and its limitation is that it cannot measure the response and it cannot be personalised.
• The personal selling is the oral communication by a representative, and it is the most effective because it can be personalised, it can be adapted and it can take an objection on the spot, and it is the most expensive, and it suits the industrial goods and the expensive consumer durables.
• The sales promotion is the set of the short-term activities that are designed to stimulate the purchase, such as the free samples, the coupons, the discounts, the gifts and the displays, and it is a support to the other three and not a substitute for them, since the discount stops the sales only until the competitor matches it.
• The public relations is the management of the relations with the public through the news and the press releases, and it is the cheapest of the four, and its effect on the sales cannot be measured directly, and it is the tool that is used to build the image rather than to sell the product.
• The limitation of the promotion as a whole is that it cannot create the demand, and it can only inform the customer of a demand that already exists, so a promotion that is successful in a declining market only makes the fall faster, and the product and the price have to be right before the promotion is attempted.

The last section gathers the two elements that the earlier sections leave open, the labelling and the packaging on the product side, and the channels of distribution on the place side, and both are standard three-mark questions.

• The labelling is the printed information on the pack or the container, and its functions are the identification of the product, the description of the contents so that the customer knows what he is buying, the instructions for the use, the date of the manufacture and the date of the expiry, the name and the address of the manufacturer, and the statutory warnings, and the labelling carries the legal requirements as well as the promotional ones.
• The functions of the packaging are the protection of the goods from damage and from decay, the convenience of the handling and the transport, the economy of the packaging, the promotion of the product, and the information for the buyer, and the levels of the packaging are the primary package that holds a single unit, the secondary package that holds a number of the primary units, and the tertiary package or the shipping case that is used for the transport.
• The choice between the branding and the labelling is the choice between a name that the customer remembers and the facts the customer needs, and a brand builds a loyalty while a label satisfies a legal requirement, so a good pack does both.
• The physical distribution is the set of the institutions and the services that move the product from the producer to the customer, and its two elements are the places of the channel, the wholesalers and the retailers and the warehouses, and the services that move the goods, the transport, the storage, the information and the finance.
• A direct channel has no intermediary, so the producer sells to the consumer, and the shortest indirect channel has one intermediary, the producer to the retailer to the consumer, and the longer ones add the wholesaler or the agent or the online platform, and the number of the intermediaries is what makes a channel short or long.
• The choice of the channel turns on the size of the market and the geography, the nature of the product and its demand, whether the product is a convenience or a shopping or a speciality product, the cost of the distribution, and the finance and the risk that the intermediary can carry for the producer, and a firm that uses a shorter channel earns a higher margin per unit but also bears the cost of the distribution itself.