PACKAGE AND LABELLING Functions Meaning and Definition
According to Philip Kotler, Packagingis an activity of designing andproducing the container for aproduct. Labelling involves attaching a smallpiece of paper, fabric, plastic, orsimilar material that is part of thepackage, to identify it or giveinstructions or details concerning itsownership, use, nature, destination,etc. Protection and preservation Information transmission Containment Product Promotion Product Identification Convenience Product Positioning Enhances product imageandAppeal Packing Decisions Multiple Packing Reuse Family Packing Packing
Ecological Packing Steps in price determination
Develop Pricing Objectives: Estimating demand, cost and revenue Anticipate competition Determining expected market share Choose a Pricing Strategy Implementation and review Methods of Pricing or Pricing strategies & tactics
Based on Customer Odd-even pricing Psychological pricing Prestige pricing Dual pricing Price lining Based on competition Penetration pricing Skimmed Pricing Monoploy pricing Admisitrated Cost and Demand Cost based pricing Demand based pricing Target rate pricing Geography Pricing FOB Pricing Zone Pricing Basic point pricing 2. Psychological pricing
1.Odd-even pricing The odd-even pricing method lowers the rounded-up price of a product by apaise or so, which people perceive as significantly lower than the rounded-upprice. For example, if the top price range for a jeans pant is Rs. 500 then themarketer would probably reduce it to Rs because most customersthink this price is much cheaper. 2.Psychological pricing In Psychological pricing marketer uses the customer's emotional response toencourage sales. Consumer often assumes that a higher product price indicates a higher level of qualityand vice versa. 3. Prestige pricing Prestige pricing, also known as premium pricing, in prestige pricing strategy prices areset higher than normal to create an image of superior quality and social status. The strategy behind prestige pricing is not tied to its quality but more to its image. 4. Dual pricing 5. Price Lining
In dual pricing marketers sell the same or identical product at different pricesin different markets. Dual pricing is not necessarily an illegal pricing practice as it done with anobjective of dumping in different markets or due to government regulations. 5.Price Lining Price lining, also referred to as product line pricing, is pricing processwherein prices are set with certain price points believed to be attractiveto customer. The objective behind this is to appeal to different segments of the market. For example, a car sellers in India come up three variants in the same model: avalue model, a standard model and a limited model. While each model has adifferent price point, the costlier model is seen as higher-end when comparedto the base model, while both retain the same brand name. Similarly a movie theatre offer tickets at three levels of prices, such as Rs (for Balcony), Rs. 150 (middle class) and Rs. 75(front stall)three distinct areaswithin the theatre offered for the customers to match the range they canafford. B: Based on Competition
Penetration pricing A pricing strategy in which a firm introduces a new product at a very low price toencourage more customers to purchase it. Skimmedpricing Price skimming is a pricing strategy in which a marketer charges a very highpremium price for a given product or service. Monopolypricing A monopoly is when a business dominates the entire business segment with nocompetitors, monopolies are usually bad for an economy because they restrict freetrade, which allows the market itself to set prices. Administeredpricing In administered pricing the price of a products or services is set by government orregulatory bodies, instead of being determined by regular market forces of supplyand demand. B: Based on Competition C: Based on Costs and Demand
Cost plus pricing method In this method of setting prices in which the seller totals all the costs for theproduct and then adds an amount to arrive at the selling price. Target return pricing Target rate of return pricing is a pricing method in which firm determines theprice that would yield its target rate of return on investment (ROI). Demand based pricing method In this method prices are based on demand for the product, if the demand ishigh then the prices are raised and if the demand is low the prices are cut off. C: Based on Costs and Demand D: Based on Geographical Location
FOB pricing (Free on Board) FOB pricing means a price which includes goods plus the services of loadingthose goods onto some vehicle or vessel at a named location. Zone pricing Zone pricing strategy involves setting prices of goods or services based on thelocation where they will be offered for sale to customers. Base point pricing Base point pricing is a pricing system under which marketers set on the basis ofa base point cost plus transportation costs to a given market. D: Based on Geographical Location Role & Importance of pricing
Profitability depends on pricing Price is determinant of buying decision Price influences customer perception Price is weapon to fight competition Price is an important part of sales promotion Role & Importance of pricing Place/Physical Distribution
In order to move goods from the producer to the consumer, a channel ornetwork of intermediaries are required. Physical distribution in marketing implies to set of activities dealing with Handling, movement, and storage of goods from the point of origin to the point of consumption. Scope of Physical Distribution The Supply Chain Logistics The Supply Chain Supply chain refers to set of activities that control flow of goods amongst network of interconnected businesses to maximize total profitability. Logistics is the managing, designing and improving flow of resources between the point of origin and the point of destination through the supply chain. Logistics Scope and Function of Logistics management Order Management Order management is a process of dealing with purchase requests of customers, this includesorder entry, picking, packing, shipping, and billing. Warehousing Once the stock is procured and assembled the next important process is to preserve the stocksystematically for which proper storage and warehousing is required. Transportation It is important to note the availability of resources required by industries such as labour, rawmaterials are scattered or concentrated in certain geographical regions and in order to integratethese resourcestransportation plays an instrumental role. Material Management Materials management is an important part of logistics that deals withplanning, organizing, andcontrolling flow offrom the suppliers up to the end of production process. Inventory Control Inventory control is the process of monitoringand coordinatingsupply, storage, distribution, andrecording of materials in order to insure an adequate supply without excessive oversupply. Types of Channels of Distribution Functions of Channel Intermediaries
Procurement & Assembling Warehousing and storing Grading and Packing: Selling Assumption of Risk: Financing: Supply of Market Information: Advertising & Communication Factors affecting choice of Distribution Channel
A: Product Factors Factors affecting choice of Distribution Channel Physical Nature Physical nature of the product signifies perishability, sizes & weight of the product. Perishable products (E.g. milk, butter, cheese, fish, etc.) should have a short distributionchannel as products getsdecay or spoiled very fast. Technicality of product The technicality requirement confines special training and expertise to practically handleand use the products. Therefore product with technical nature are usually sold directly bythe producer to consumers Product range A product a variety products of the same product platform that appeal to differentmarket segments manufactured by a single company. In case producer offer a narrowproduct range then it is ideal to distribute through wholesalers and retailers Factors affecting choice of Distribution Channel
Product Price Products with low unit price (e.g. salt, sugar, wheat, rice etc.)are generally consumedon very large scale and therefore it should be sold through middlemen (through a longchannel) as producer cannot bear the cost of direct selling. On the other hand products with high unit price (e.g. gold, silver) involves lowturnover and therefore a smaller distribution channel is required. Factors affecting choice of Distribution Channel
B: Market Factors Factors affecting choice of Distribution Channel Government Regulations In case of some products Government regulations influences choice of distribution channel. Forinstance products liquor, arms and ammunition, drugs etc. can be distributed only through licensedshops. Buyer's Behaviour Buyers may or may not intend to apply time and effort on shopping, buyers have different expectationlike personal attention, one-stop shopping, customized service, credit facilities and some prefer self- service. Depending on these expectation the most appropriate trade channel should be selected. Composition of target market If the customers is very large, then requires services of the middlemen. In contrast limited customerbase requires direct marketing as it is easy to manage limited customers. Availability of channel Finally the Choice of a channel is also influenced by the availability of distribution partners. Onaccount ofnon-availability ofdesired type of middlemen producer may have to set up self owneddistribution system. Factors affecting choice of Distribution Channel
Institutional Factors Organisational Factors Financing Capacity Promotional Ability After sales service Channel Cost Financial Resources Reputation Marketing Policy Distribution approach
Type Description Example Intensive Distribution In this approach Marketers sells its products through as many outlets as possible (wholesalers or retailers that are willing to stock and sell the product), so that the consumers encounter the product everywhere they go. Soft drinks, Biscuits and films Exclusive Distribution In this approach a product is sold only through a single outlet in a particular region. Usually, exclusive distribution is undertaken when the manufacturer desires more aggressive selling from channel partners. Cars, Bikes and Premium apparel Selective Distribution In selective distribution, the number of outlets that may carry a product is limited, but more than exclusive distribution. Clothing, Home furnishings Promotion Promotion is a set of activities designed to inform and persuade consumersabout the products or services offered by the marketer. Objectives of Promotion Objective How it is Done? Create Awareness Frequent advertisements, Slogans and jingles and Publicity stunts Educate customer Brochures, websites, newsletters and Personal selling Persuade Celebrity endorsements, Status appeals and Sex appeals Reinforce to buy Coupons, Discounts, offers and Samples Retain customer Follow and feedback, reward and recognition Elements or Methods of Sales Promotion
Advertising Sales promotion Public relations Personal selling Publicity Advertising According to John E. Kennedy, Advertising is simple way of selling something inthe most effective methods possible. Good advertising creates sales and not justattention In the words of R.H. Colley, Advertising is mass period communication theultimate purpose of which is to impart information, develop attitudes and induceaction beneficial t the advertiser American Marketing Association says, Any paid form of non-personalpresentation of ideas, goods or services by an identified sponsor. Medias or Methods of Advertisements
Media of Advertisement Broadcast Media Television Radio Non-Broadcast Media Cinema Cable TV Discs Outdoor Media Hoardings Boards Posters Direct Response Mailers Pamphlets Telemarketing Internet Social Networks Search Engines Youtube Pros and Cons of various Methods of Advertisements
Television Pros Cons TV is extremely creative and flexible. Network TV is the most cost-effective wayto reach a mass audience. Cable and satellite TV allow the advertiser toreach a selected group at relatively low cost. A prestigious way to advertise. Can demonstrate the product in use. Can provide entertainment and generateexcitement. Messages have high impact because of theuse of sight and sound. The message is quickly forgotten unless it is repeatedoften. The audience is increasingly fragmented. Although the relative cost of reaching the audience islow, prices are still high on an absolute basis often too high for smaller companies. A 30-second spoton a prime-time TV sitcom costs well over Rs1,50,000. Fewer people view network television. People switch from station to station and zapcommercials. Rising costs have led Pros and Cons of various Methods of Advertisements
Radio Pros Cons Good for selectively targeting an audience. Is heard outside the home. Can reach customers on a personal andintimate level. Can use local personalities. Relatively low cost, both for producing a spotand for running it repeatedly. Because of short lead time, radio ads can bemodified quickly to reflect changes in themarketplace. Use of sound effects and music allows listenersto use their imagination to create a vivid scene. Listeners often dont pay full attention to what theyhear. Difficulty in buying radio time, especially for nationaladvertisers. Not appropriate for products that must be seen ordemonstrated to be appreciated. The small audiences of individual stations means adsmust be placed with many different stations and mustbe repeated frequently. Pros and Cons of various Methods of Advertisements
Newspapers Pros Cons Wide exposure provides extensive marketcoverage. Flexible format permits the use of colour,different sizes, and targeted editions. Provides the ability to use detailed copy. Allows local retailers to tie in with nationaladvertisers. Readers are in the right mental frame toprocess advertisements about new products,sales, etc. Timeliness, i.e., short lead time betweenplacing ad and running it. Most people dont spend much time reading thenewspaper. Readership is especially low among teens and youngadults. Short life spanpeople rarely look at a newspapermore than once. Offers a very cluttered ad environment. The reproduction quality of images is relatively poor. Not effective to reach specific audiences. Pros and Cons of various Methods of Advertisements
Outdoor Pros Cons Most of the population can be reached atlow cost. Good for supplementing other media. High frequency when signs are located inheavy traffic areas. Effective for reaching virtually all segments ofthe population. Geographic flexibility. Hard to communicate complex messages because ofshort exposure time. Difficult to measure advertisements audience. Controversial and disliked in many communities. Cannot pinpoint specific market segments. Role and importance of Advertising
Persuades customer Provides information Image creation Motivates distribution partners A tool to fight competition Advertisement a boon or Bane
Helps in promotion of products orservices Assist channels partners to sell Creates brand awareness Encourages salesman Provides information to the customers Advertising increases sales,employment and profits. Source of entertainment for thepeople Increases product costs Misleads the Consumer Advertisements are annoying andstupid Influences purchasing power Creates unwanted desires Encourage monopoly Vulgar advertisements offend publicdecency Wastage of national resources Personal Selling According to Philip Kotler, "Personal Selling: face to faceinteraction with one or more perspective purchasers for thepurpose of making presentations, answering questions, andprocuring orders" Personal Selling adds personal touch to promotionalactivities, personal selling is usually adopted by firm that usesa push strategy in which the objectives is to push or sellthe product through channel partners such as retailers, salespersonnel. Steps in Personal Selling
Prospecting Identify potential buyers andpreparing a list of prospects or sales leads (potential buyers) Preapproach Learn as much as possible about the prospect prospective customers andplanning the salesinterview Approach Making initial contact with the potential customerand creating afavorableimpression about theproduct Presentation Sales presentation is to attract the prospect's attention, stimulate interestand desire for theproduct. It is also important to invite the customers involvement in the conversation. Handle Objections Clear the doubts that the customer may have with a positive approach and asks the buyer to clarifythe objection.A good sales man turns the objection into a reason for buying. Close the Sale Climax of selling process in which salesperson actually asks the customer to buy the product. Follow up Activities after the sale that provide important services to customers. Role, Benefits and importance of Personal Selling
Provides flexibility: Salesman can tailor his sales presentation to fit the needs,motives and attitudes of prospective customer. Builds Relationships: Personal touch, extensive care and customized servicemakes the most for building strong customer relationships. Persuasive impact: By comprehending effectively a salesman attracts theattention of customer and drives the customer to take up the product. Educates Customer: By providing information and guidance to customers asalesman assists customers in satisfying their wants. Interactive: Personal selling involves two-way flow of communication betweenthe salesman and prospective customer which helps in understanding the needsand behaviour customers. personal selling suffers from the following drawbacks:
Widely misunderstood: Customers perceives most of the salespeopleas arrogant, aggressive, greedy and manipulative. High cost: To attract top-quality sales reps, the company has to developan attractive salary package and further spend huge money on formaltraining programs. Labour intensive: It is difficult to build and develop a professional salesforce. Limited Reach: Cannot reach as many customers as quickly throughpersonal sales. Sales Pressure: Most sales jobs bear a striking resemblance to apressure cooker.