Marketing is very essential through strenuous.docx

7/27/2019 Marketing is very essential through strenuous.docx

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Marketing Management

In

Small Scale Industries

(SSI)

Submitted by:

Sanjana 1234110127

Kirthi 1234110128

Ameer 1234110130

Mourya 1234110132

Parimal Manoj 1234110133

Santosh 1234110134


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Marketing is very essential through strenuous, in developing countries like India. The

importance of Small Scale Industries (SSIs) is such that their development is concomitant

with the balanced growth of Indian economy. Small, Medium or Large scale industries

prospects depend upon how well they market their products in the dynamic competitive

markets. So with the importance of marketing management in small scale industries

increasing and sell the products effectively in the markets. In other words, effectivemarketing of small scale industrial products would ensure higher level of income,

consumption, and employment which increases the standard of living of the people.

Marketing is demanding greater attention not only from planners and economists. It also

covers the socio-economic conditions, marketing strategies of SSIs and identifies the

marketing problems of SSIs.

The objective of all business enterprises is to satisfy the needs and wants of the society.

Marketing is, therefore, a basic function of all business firms.

Marketing may be narrowly defined as a process by which goods and services are exchanged

and values determined in terms of money prices. That means marketing includes all thoseactivities carried on to transfer the goods from the manufacturers or producers to the

consumers.

The marketing concept holds that the key to achieving organizational goals consists in

determining the needs and wants of target markets and delivering the desired satisfactions

more effectively and efficiently than competitors. Under marketing concept, the emphasis is

on selling satisfaction and not merely on the selling a product. The objective of marketing is

not the maximization of profitable sales volume, but profits through the satisfaction of

customers. The consumer is the pivot point and all marketing activities operate around this

central point. It is, therefore, essential that the entrepreneurs identify the customers, establish

a rapport with them, identify their needs and deliver the goods and services that would meettheir requirements.

The components of marketing concept are as under:

a. Satisfaction of Customers: In the modern era, the customer is the focus of the

organization. The organization should aim at producing those goods and services, which will

lead to satisfaction of customers.

b. Integrated marketing: The functions of production, finance and marketing should be

integrated to satisfy the needs and expectations of customers.

c. Profitable sales volume: Marketing is successful only when it is capable of maximizingprofitable sales and achieves long-run customer satisfaction.

MARKETING VERSUS SELLING

The basic difference between marketing and selling lies in the attitude towards business. The

selling concept takes an inside-out perspective. It starts with the factory, focuses on the

companys existing products, and calls for heavy selling and promoting to produce profitable

sales. The marketing concept takes an outside-in perspective2. It starts with a well-defined

market, focuses on customer needs, coordinates all the activities that will affect customers,

and produces profits through creating customer satisfaction.


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Starting point Focus Means Ends

Selling Concept

Factory Products Selling and

Promoting

Profits through

sales volume

MarketingConcept

Market Customer Needs Coordinated

Marketing

Profits through

customer

satisfaction

Marketing vs. Selling

Marketing Selling

Focuses on Customers needs Focuses on sellers needs

Customer enjoys supreme importance Product enjoys supreme importance

Converting customers needs into product Converting product into cash

Profits through customer satisfaction Profits through sales volume

Emphasis is given on product planning Emphasis is placed on sale of products

already produced

Integrated approach to marketing is

practiced

Fragmented approach to selling is

practiced

The principle of caveat vendor (let the

seller beware) is followed

The principle of caveat emptor (let the

buyer beware) is followed

Importance of Marketing in Small Business

Since marketing is consumer oriented, it has a positive impact on the business firms. It

enables the entrepreneurs to improve the quality of their goods and services. Marketing helps

in improving the standard of living of the people by offering a wide variety of goods and

services with freedom of choice, and by treating the customer as the most important person.Marketing generates employment both in production and in distribution areas. Since a

business firm generates revenue and earns profits by carrying out marketing functions, it will

engage in exploiting more and more economic resources of the country to earn more profits.

A large scale business can have its own formal marketing network, media campaigns, and

sales force, but a small unit may have to depend totally on personal efforts and resources,

making it informal and flexible. Marketing makes or breaks a small enterprise. An enterprisegrows, stagnates, or perishes with the success or failure, as the case may be, of marketing.

Nirma is an appropriate example of the success of small scale enterprise.


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Salient features of Marketing

I. It is a creative function.II. It promotes business and employment.

III. It co-ordinates finance, production and distribution, and determines and directs thescale and value of the total efforts.IV. There is an emphasis on what the customer or borrower wants.

V. There is an emphasis on the social goods, on increasing employment, by giving thecustomer or consumer the change to decide.

VI. It is a process of exchange between seller and buyer. It may be a commodity orservice.

The Principal Marketing Functions

Specific Function Activities Involved

Marketing Information and

Research

Economic, business, trade, industry, consumer, user,

product, sales and advertising research and analysis.

Information handling and data processing, Marketing

operation research and Competitive intelligence.

Product Planning Determining and developing the companys product mix.

Matching the products specifications, packaging, pricing,

performance and servicing to customer needs through

product and services improvements and new product

development.

Sales and distribution Field Selling, Selection of distribution Channels,

Warehousing, Transport, Sales Analysis, Sales reporting,

Sales forecasting, Sales budget and quotas, merchandising

and Sales communications.Advertising and Promotions Advertising to the customer or user in all media (press,

television, cinema, radio, outdoor posters, etc.)

Market Research (MR)

The success of any business venture lies in the existence of markets. Unless the entrepreneur

identifies the existing needs or potential needs of the market he cannot translate these needs

into products or services that would be acceptable by the market. In the past, the intuitive

ability of the entrepreneur was a good enough method for understanding the needs of the

consumer, but in todays changing times with cut-throat competition, globalization, changing

preferences of consumers, customer diversity and internationalization, a thorough market

research has become the precursor to introduction of any product or services in the market.

Marketing research is the process of collecting information on any facts relevant to market.

Market research is a systematic collection of information, its analysis and interpretation to

strategise some relevant business decision like whether one should enter new markets,

whether one should charge premium prices, what kind of discounts would be more attractive

to the customer etc.


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Steps involved in conducting the market research are:

a) Formulating Objective: The research should spend enough time in assessing theneed for research and hence decide on the extent of descriptiveness of the research.

Research objectives should be clearly defined. The objective should be able to have

linkage with the existing problem or explore opportunities available in the market.The research objective should be concise and provide a clear direction to the

research.

b) Research Design: the next step is the research design, which is like a blueprint ofthe entire market research. There are three types of research designs:

(i) Exploratory Research Design: Exploratory research is a formof research conducted for a problem that has not been clearly defined.

Exploratory research helps determine the best research design, data

collection method and selection of subjects. It should draw definitive

conclusions only with extreme caution. Given its fundamental nature,

exploratory research often concludes that a perceived problem does not actually

exist.(ii) Descriptive Research Design: it is based on primary data collection. It collects

first-hand information about the focus group: age, education, income. Ex: To

study and analyse the consumption pattern of the middle class in the

metropolitan cities in India.

(iii) A Casual Research: The objective of casual research is to study the cause andeffect relationship between two or more variables. Ex: To study the effect of

decrease in price of Pepsi on its sale during summer.

(c) Data Collection and Tabulation: the data collection can be both primary data and

secondary data. The decisions that are to be taken for data collection include:

(i) Type of data collection: primary or secondary

(ii) Method of data collection

(iii)Type of sampling techniques used.

Segmentation

Any business venture has limited resources and hence it cannot satisfy the needs and wants of

all the customers. It is for this reason that segments are drawn. Segmentation is the process of

dividing the market or customers into similar characteristics or behaviour. There are number

if variables in which markets can be segmented:

1. Demographic Segmentation: When the target market is divided on the basis of

population it is called as demographic segmentation. This can be further divided into

following segments:

(a)Age: The needs and wants of people change with the age and hence theentrepreneur needs to identify the segment to which his products belong. The

product or services are designed to satisfy the needs and wants of a particular age

group like health drink for growing children, diapers for infants and babies,

fashion accessories for teenagers, etc.

(b)Income Segmentation: When the population is divided on the basis of income itis called income segmentation. For example, economy class is for commonerswhereas business class or executive class is for high income group. The premium


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price charged by the branded product is positioned for high-end group whereas the

low prices of the Big Bazaar Mega Malls are meant to target the burgeoning

middle class in the country.

(c)Gender Segmentation: When the population is divided on the basis of gender itis called as gender segmentation. This is done because of choices and preferences

vary between male and females on products like cosmetics, magazines andclothes.

(d)Educational Qualification: When segmentation is done on the basis of education,For example, laptops or computers would be demanded by computer literate

individuals and CAD/CAM would be desired/ required by individuals with

engineering backgrounds only.

2. Psychographic Segmentation: Segmentation that is based on lifestyle or personality

of individual is called psychographic segmentation.

(a)Lifestyle Segmentation: Segmentation drawn on the basis of interest, urgency orday to day activities, beliefs, opinions and attitude. For example, working women

having young kids, upon coming back after a hectic day, would like to dial-and-order services from Dominos, where as people who avoid pork would prefer to

buy from shop that keeps pork and chicken in separate refrigerators.

(b)Personality: the customers associate personality with products. Like Five Star isassociated with ambition, Santro is associated with tall boy cars.

3. Geographic Segmentation: When the segmentation is drawn on the basis ofgeographical region it is called geographic segmentation. It can be northern, southern,

western, eastern, city or metro, urban or rural. For example: Lifeboy is more common

in rural areas than in urban areas, whereas Dove and liquid soaps are more common in

the urban areas.

4. Behavioural Segmentation: When the segmentation is drawn on the basis ofbehavioural attitude of consumer it is called behavioural segmentation. The behaviour

or attitude varies on occasion, usage rate, benefits, loyalty status, buyers readiness,

user status.

Market Targeting is the process of evaluating various segments and identifying the number

and type of segments that the business venture would target. The process of market targeting

includes the following steps:

1. Market Evaluation:It is a process of evaluating or assessing all the segments. This

assessment is done on the following criteria:

(i) Assessment of the size of each segment: the size of the segmentwould determine its attractiveness to the entrepreneur. The bigger the

better.

(ii) Assessment of segment growth: The market may not exist but thelatent demand does, so it can lead to the growth or development of the

product. Again the same rule- the bigger the better.

(iii) Companies strengths and weakness to suffice the needs of thesegment: If a market segment is very large say in Maharashtra but the

manufacturing is taking place in UP and the transportation cost is

eating up the margin. It is then better to shift to a smaller market like

Uttaranchal. So the rule is not always the bigger the better, but the

more profitable the better.


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(iv) Potential opportunities and threats from the competitors,substitutes, buyers, suppliers, government: this would also affect

the target. The rule is the lesser the threat and more the opportunity,

the better would be the attractiveness. The best strategy is to club the

strengths of all to draw on overall target market for the product.

2. Target Market Selection: After the target market evaluation is complete the

company has to decide which segments and how many segments it would target. It

would depend on several factors like economies of scale, profitability, growth, size,

lesser risk of loss, entrepreneurial competency. There are five patterns available for

selecting the target market:

(a)Single Segment Concentration: If the company decides to concentrate on asingle segment only. Like Junior Horlicks is targeted for kids.

(b)Selective Specialization: Selecting a number of segments that are attractive.Archies target youth, middle age and elderly people.

(c)Product Specialization: The product that the company makes can be sold toseveral segments. Like computers can be sold to household, PSU, hospitals,educational institutes, etc.

(d)Market Specialisation: When the organization satisfies many needs of aparticular group. Like Big Bazaar sells products ranging from vegetables,

grocery, furniture, etc to middle class.

(e)Full market leverage: When the business tries to satisfy all customers withthe entire product needs. The business might satisfy all the needs of a builder,

from CAD/CAM software, to expert skills of architects, to supplying building

materials, etc.

Market Positioning: After segmentation of the population, selecting the attractive target

markets is the next in positioning the product or service.

Market positioning can be defined as the act of projecting the companys product or service

in such a way that it appears attractive to them. It is an image making exercise which helps

the company to portray to the targeted segment in such a way that it appears attractive to the

customers. The end result of market positioning should yield a successful creation of value

proposition- a logical reason for why should the target markets buy the products from them.

For example, Sony which charges approximately 20% premium on its products, projects

value proposition of quality to its product.

The following variables should b assured for positioning the product or service:

1. What image the company wants to project

2. The pricing strategy

3. The packaging of the product

4. How competitors project themselves

5. The type of product

6. Product Lifecycle

DEVELOPING MARKETING MIX STRATEGIES

Marketing Mix is one of the most fundamental concepts in marketing management. For

attracting consumers and for sales promotion, every manufacturer has to concentrate on four

basic elements/components. These are: product, pricing, distributive channels (place) andsales promotion techniques. A fair combination of these marketing elements is called


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Marketing Mix. It is the blending of four inputs (4 Ps) which form the core of marketing

system. This marketing mix is marketing manager's tool for achieving marketing

objectives/targets. He has to use the four elements of marketing mix in a rational manner to

achieve his marketing objectives in terms of volume of sales and consumer support. Meaning

of the term 'marketing mix' is made clear with reference to the following points:

1. Marketing mix is the combination of four basic elements/ingredients under one head.Product itself is the most important element of marketing mix. Price, place and promotion are

the other supporting elements. Marketing mix indicates an appropriate combination of four Ps

for achieving marketing objectives.

2. James Culliton, the American marketing expert, coined the expression Marketing Mix and

described the marketing manager as 'mixer of ingredients" as he has to establish fair balance

among the four elements of marketing mix in order to achieve marketing targets. He is also a

'decider', 'artist' of marketing mix formula.

3. The four components of marketing mix are also called "marketing mix variables" or

"controllable variables" as they emanate from within the enterprise and the marketingmanager can use them freely as per his desire or need of the situation.

4. The elements of marketing mix constitute the core of marketing system of a firm. It is

a profitable formula for successful marketing operations.

Features of Marketing Mix

1. Combination of four marketing variables: Marketing mix is a combination/integration

of four basic marketing variables namely, product, price, promotion and place. These

variables are interdependent.

2. Useful for achieving marketing targets: Marketing mix aims at achieving marketing

targets in terms of sales, profit and consumer satisfaction. It is rightly said that marketing mix

is the marketing manager's instrument for attainment of marketing objectives/targets.

3. Flexible and dynamic concept: Marketing mix is not a rigid combination of four

variables. It is in fact a flexible combination of variables. It is necessary to adjust the

variables in the mix from time to time as per the changes in the marketing environment. It is

the continuous monitoring of the marketing mix which facilitates appropriate changes in the

mix.

4.Periodical adjacent of variables necessary

: Marketing mix variables are interrelated and

need suitable adjustments from time to time. Updating of marketing mix is essential for

making it a powerful tool for achieving marketing targets. Updating is also essential due to

environmental changes taking place within the firm.

5. Marketing manager acts as a mixer of ingredients: A marketing manager has to

function as a mixer of marketing ingredients and has to achieve desired results through skilful

combination of four Ps. He needs maturity, imagination and intelligence for appropriate

blending of the variables.

6. Customer is the focus point: The main focus of marketing mix is the customer. His

satisfaction and support are important. Variables of marketing mix are for giving more

satisfaction and pleasure to consumers.


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7. Variables are interrelated: Marketing mix variables are interrelated. Decisions in one

area affect action in the other areas. An integrated approach is needed while making changes

in the marketing mix variables.

8. Consumer-oriented activity: Marketing mix is a consumer-oriented activity as its purpose

is to give satisfaction and pleasure to consumers. Here, the needs and expectations ofconsumers are given special attention and 4 Ps are adjusted accordingly.

9. Four Ps of sellers correspond to four Cs of customers: Four Ps in the marketing mix

represent the sellers' view of the marketing tools available for influencing buyers. Each tool is

designed to deliver a customer benefit.

Elements of Marketing Mix


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1. Product: Product is the article which a manufacturer desires to sell in the open market. It

is the first element in the marketing mix. The product mix includes the following variables.

01. Product line and range,

02. Style, shape, design, colour, quality and other physical features of a product,

03. Packaging and labelling of a product,

04. Branding and trade mark given to the product,

05. Product innovation, and

06. Product servicing

Managing product component involves product planning and development. Here, the

decisions are required to be taken regarding product range, branding, packaging, labelling

and other features of the product. The product manufactured for market should be as per the

needs and expectations of consumers.

Product is the most powerful competing instrument in the hands of the marketing manager. It

is the heart of whole marketing mix. If the product is not sound /attractive to the customers,

no amount of sales promotion, appropriate channel selection or price reduction will help toachieve the marketing target. Hence, durability, quality, uses, etc. of the product are

important from the marketing point of view.

Various Aspects of Product Decisions in Marketing: In the marketing process, various

decisions regarding the product are required to be taken. Marketing will be easy and quick if

the decisions taken on various aspects of a product are appropriate. AU such decisions need

to be taken by the marketing division of the Organisation. Such decisions should be based on

current marketing environment, nature of market competition, consumer expectations,

information available through marketing research and so on. Cooperation of other

departments is also necessary in marketing decision-making.

Production or product is rightly treated as the heart of the marketing mix. Customers

purchase a product because of its attributes, features and benefits. These are the selling points

of a product. They should be adjusted to the buying motives of consumers. A

consumer/customer considers the total package of benefits available from the product and

takes a decision to purchase the product. This suggests that various decisions regarding the

product to be marketed need to be taken correctly. As a result, the product offered in the

market will be a quality product. In addition, it will be utility oriented, attractive, convenient,

property designed and branded. Even attractive packaging decision facilitates sales

promotion.

The following aspects of a product need careful attention in marketing decision-making.

01. Product line and range,

02. Style, shape, design, colour, quality and other physical features of a product,

03. Packaging and labelling of a product,

04. Branding and trade mark given to a product.

05. Product servicing and channel of distribution.

06. Product pricing.

07. Guarantees and warranties of the product.

08. Product innovation.

09. Special features of the product from the marketing point of view


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Decisions on these aspects of a product are important as marketing is directly related to these

aspects. Sales promotion measures will be useful but their role will be supplementary/

supportive. Such measures may not be effective if the product to be marketed is not of

standard quality or if the brand or package is not attractive or if the product is not as per the

requirements/expectations of consumers. This suggests that decisions relating to product are

important /crucial in the marketing of a product.

2. Distribution channel (Place): Physical distribution is the delivery of goods at the right

time and at the right place to consumers. Physical distribution of product is possible through

channels of distribution which are many and varied in character.

Physical distribution (place mix) includes the following variables:

01. Types of intermediaries available for distribution,

02. Distribution marketing channels available for distribution, and

03. Transportation, warehousing and inventory control for making the product available to

consumers easily and economically.

For large-scale distribution, the services of wholesalers, retailers and other marketing

intermediaries are required. A marketing manager has to select a channel which is

convenient, economical and suitable for the distribution of a specific product. For instance,

large numbers of outlets are required for the distribution of products of mass consumption

such as soaps and oils. On the other hand, for the marketing of speciality products like

refrigerators and TV sets, selective distribution through authorized dealers is quite

convenient.

3. Promotion: Promotion is the persuasive communication about the product offered by the

manufacturer to the prospect.

Promotion mix includes the following variables:

01. Advertising and publicity of the product,

02. Personal selling techniques used,

03. Sales promotion measures introduced at different levels,

04. Public relations techniques used for keeping cordial relations with dealers and consumers,

05. Display of goods for sales promotion.

Promotional activities are necessary for large scale marketing and also for facing market

competition effectively. Such activities are varied in nature and are useful for establishing

reasonably good rapport with the consumers.

Advertising gives information and guidance to consumers. Brand names are made popular

through advertising. Along with advertising, personal selling is also useful for motivating the

customers to buy a specific product.

In addition to advertising and personal selling, a manufacturer has to use other sales

promotion techniques at the consumer level and at the dealer level. The techniques at

consumer level include displays, exhibitions, discount coupons, small gifts and free samples,

attractive container and consumer contests. Consumer psychology is favourable for extensive

use of such sales promotion techniques. After-sales services are also useful for promoting

sales of durable goods.


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4. Price: Price is one more critical component of marketing mix. It is the valuation of the

product mentioned by the seller on the product.

Price mix includes the following variables:

01. Pricing policies,

02. Discounts and other concessions offered for capturing market,03. Terms of credit sale,

04. Terms of delivery, and

05. Pricing strategy selected and used.

Pricing has an important bearing on the competitive position of a product. The marketing

manager may use pricing as a tool for achieving the targeted market share or sales volume.

Pricing can also be used for capturing market and also for facing market competition

effectively. Pricing decisions and policies have direct influence on the sales volume and

profits of the firm. Market price of a product also needs periodical review and adjustments.

The price charged should be high enough to give adequate profit to the company but low

enough to motivate consumers to purchase product. It should also be suitable to face marketcompetition effectively.

Distribution Channel is the process through which the product is physically delivered to the

customer. Most companies need intermediaries or middlemen to deliver the goods to the final

customers and these intermediaries are called distribution channel.

The intermediaries can be divided into the following types:

(a)Merchants: They buy or take delivery of physical goods and resell like retailers,

distributors.

(b)Agents: They act as manufacturers representative and sell goods on their behalf anddo not take little goods, Example: sales agent.

(c)Facilitator: They assist in the distribution of the product but neither takes little of

goods nor negotiable sale. Example: transporters, warehouses.

Functions of distribution channel:

They stimulate customers to purchase the product

They gather information about customers (their existing and potential needs,

competitors)

Negotiate with customers on price

Monitor transfer of goods to the customers Arrange for storage of goods

Risk their finances by operating as a channel

Place orders with the manufacturer or supplier

Implementing, Monitoring and Review

The strategies formed are finally implemented and regular monitoring and evaluation is

required, so that the strategies yielding positive results are further strengthened and strategies

not giving good results are diluted. It is also important to periodically review the marketing

strategies considering the dynamic nature of external environment and hence the vulnerability

of the internal environment.


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Some of the factors which contribute to the marketing problems of the small scale

industry in recent days are:

Increasing competition from within the small scale sector as well as from large

industries with established brand names and marketing setup

Consumer awareness, even in rural and semi urban areas, for quality goods The need to set up distribution networks for reaching out widely dispersed markets

Inability of the SSI units to exploit the export markets

Marketing Problems Faced

S. No. Marketing Problems Percentage

1 Low Quality 71.05%

2 Price Fixation 60.03%

3 Improper Positioning 42.11%

4 Improper Segmentation 50%

5 High Cost of Marketing Personnel 55.26%

6 Sales Promotion 60.53%

7 Distribution Channels 73.68%

8 Non Availability of Packing Material 65.79%

9 Competitors 89.47%

(SOURCE: Asian Journal of Marketing & Management Research Vol.1 Issue 1, September 2012)

71.05 percent of the sample units have faced heavy problems regarding the quality of their

products. 60.53 per cent of the units have faced moderately the problems of fixing he price

for their product 42.11 per cent of the sample units have faced heavily the problems regarding

the untimely introduction of their products into the markets. 50 per cent of the sample unitshave faced moderately the problems of improper segmentation. 55.26 per cent of sample

units have faced heavily the problems of high cost of marketing personnel. 73.68 per cent of

the sample units have heavily experienced the problems of distribution of their products.

60.53 per cent of the sample units have faced heavily problems in sales promotion. 89.47 per

cent of the sample units have faced heavily problems with their competitors. 65.79 per cent of

the sample units in the district have experienced moderately the problems grouped as other.

A very high percentage (89.47) of the sample units faced heavily the problems created by

their competitors. Other problems like lack of awareness of product design, packaging,

branding, Indian Standard Institution (ISI) mark, and non availability of packaging materials

etc., were faced moderately by 65.79 percent of the small units.

Marketing is very essential through strenuous.docx

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