FYBMS SEM2 UNIT 2

1. UNIT 2
M A R K E T I N G E N V I R O N M E N T
J Y O S T N A J A I N

2. MARKETING ENVIRONMENT
• The term Marketing Environment refers to the forces and factors that affects the organisation
ability to built and maintain good relationship with its customers.

3. TYPES OF MARKETING ENVIRONMENT
Micro
• Company
• Customers
• Competitors
• Suppliers
• Middlemen
• Society
Macro
 Demographic environment
 Economic environment
 Natural environment
 Technological environment
 Political environment
 Cultural environment

4. Market research is the process of assessing the
viability of a new good or service through
research conducted directly with the consumer
which allows a company to discover the target
market and record opinions and other input
from consumers regarding interest in the
product
MARKETING RESEARCH

5. FEATURES OF MARKETING RESEARCH
• Systematic process: marketing research is a systematic process to identify and to
solve marketing problems
• Specific in nature: it is undertaken to solve a specific problem
• Scope: it attempts to solve problems in a wide range of areas such as product
research,promotion research,pricing research, etc
• Bridges company-customer gap: the company comes to knowmore about the
consumers- their likes,dislikes,tastes,preference and buying patterns
• Continous in nature: as long as the firm exists,there is a need of marketing research
• Marketing mix decisions: it provides necessary information to arrive at appropriate
solutionsto solve marketing problems

6. Importance
of
marketing
research
Marketing-
mix
decisions
Brand
loyalty
Optimum
use of
resources
Customer
satisfaction
Corporate
image
Forecasting
sales

7. Consumer research
 Studying the consumer profile
 Studying likes,dislikes,tastes,preferences of
consumers
 Studying the buying pattern
 Studying consumers reaction to company
products against competitors products
AREAS OF MARKETING RESEARCH

8. Dealer research
 Studying the expectations of dealer
 Incentives provided by the competitors to
the dealers
 Studying dealers contribution in increasing
sales

9. Product research
 Testing new products
 Reviewing product quality and features
 Analyzing competitors products
 Study of packaging design and packaging
material

10.  Promotion research
 Studying competitors sales promotion
strategies
 Studying the impact of promotion

11. Pricing research
 Market price trends
 Competitors pricing strategies
 Company’s pricing vis-à-vis consumer’s
price perception

12. Place research
 Studying the efficiency of the existing
channels
 Assessing dealers contribution in sales
promotion

13. Market research
 Size of the market and its potential
 Market profile in terms of demand
 Market segmentation
 Market- share analysis

14. Sales research
 Sales analysis
 Establishment of sales quotas, and
territories
 Studying seasonal trends
 Sales forecasting

15. MARKETING INFORMATION SYSTEM
• A marketing information system (MIS) is a management information
system designed to support marketing decision making. It brings together many
different kinds of data, people, equipment and procedures to help an organization
make better decisions .

16. FEATURES OF MIS
1. Continuous flow : A well-designed MIS provides a continuous flow of information for
decision making. Electronic cash registers and computer systems connect the retailers
directly with the suppliers. Thus, continuous consumer purchase data are made
2. Decision-making: MIS is structured to provide information for decision-making. It
helps in practical decision-making, as it includes real-time data. It generates regular
reports and conducts studies as needed.
3. Use of computer: Computers are widely used in MIS. they are used as a tool to
collect, store and manipulate large amounts of data. They integrate old and new data
provide information and identify trends.
4. Complex process: Designing and operating a MIS is a complex process, especially
with the firms involved in global trade. It requires convincing each unit of the firm
the value of timely and accurate information. Structured reports and control over the
information make the process more complicated. Thus, computer specialists are used.

17. 5. Economical: Creating large database is easy with a computer. however, MISis
concerned with needed and timely information. hence, only relevant data is stored.
this reduces cost and efforts in data collection.
6. Variety:MIS uses data from a variety of sources both within and outside the
organization. thus, it helps the marketing managers in exploratory research. it
uncovers useful relationships and devel opments.
7. Future-oriented:Marketing environment is dynamic. thus, MIS is devised to
collect information for solving problems and anticipate future changes. MIS is both
present- and future-oriented. selective: it is adjusted according to the manager ’s
decision-making needs. thus, it is selective.
8. Flexible: The system should be flexible. new changes should be incorporated
easily, quickly and smoothly. information technology is changing rapidly. when
such new techniques are used, accuracy and utility of information improve.

18. Components
of MIS
Internal
records
Marketing
intelligence
Marketing
research
Marketing
decision
support
system

19. Internal records
• These records provide current information about sales, costs, inventories, cash flows and
account receivable and payable.
• Many companies maintain their computerized internal records.
• Inside records help marketing managers to gain faster access to reliable information.

20. Marketing Intelligence
• It collects information from external sources.
• It provides information about current marketing-environment and changing conditions in
the market.
• This information can be easily gathered from external sources like; magazines, trade journals,
commercial press, so on
• The information which is collected from the external sources cannot be used directly. It must
be first evaluated and arranged in a proper order.
• It can be then used by the marketing manager for taking decisions and making policies about
marketing.

21. Marketing research
• MR is conducted to solve specific marketing problems of the company
• It collects data about the problem
• This data is tabulated, analyzed and conclusions are drawn. Then the recommendations are
given for solving the problem
• MIS and MR are not substitutes of each other.
• The scope of MIS is very wide.
• It includes ‘MR’. However, the scope of MR is very narrow.

22. Marketing Decision Support System
• These are the tools which help the marketing managers to analyze data and to take better
marketing decisions.
• They include hardware, i.e. computer and software programs.
• Computer helps the marketing manager to analyze the marketing information.
• It also helps them to take better decisions
• There are many software programs, which help the marketing manager to do market
segmentation, price fixing, advertising budgets, etc.

23. Importance of MIS
Helps to
recognize
trends
Quick supply
of
information
Quality of
decision
making
Facilitates
marketing
planning and
control
Tapping of
business
opportunity
Help
managers to
recognize
change

24. MARKETING RESEARCH VS MIS
MARKETING RESEARCH
• Systematic process of collecting and analyzing
data to solve specific marketing problems
• May involve lower cost
• In MR a specific problem is solved
• MR is a one time activity to solve a specific
problem
• MR requires less data as compared to MIS
MIS
• Structure of people,equipment, and procedures
to gather,sort and transmit data to decision
makers
• MIS involves huge cost
• MIS is more general in nature
• MIS is a continuous activity. There is no
definite period to collect the data
• MIS requires huge bank of data

25. CONSUMER BEHAVIOUR
Consumer behaviour is the study of individuals, groups, or organizations and the
processes they use to select, secure, use, and dispose of products, services, experiences,
or ideas to satisfy their needs and wants.

26. • Product , pricing , promotion, place
Marketing factors
• Age factor , gender , education ,income level , status in society
Personal factors
• Learning, attitude, motives, perception
Psychological factors
• Physical surrounding,social surrounding,time factor, momentary
conditions
Situational factors
• Reference groups , family , roles and status
Social factors
• Religion,sub-cultures
Cultural factors
Factors influencing Consumer Behaviour

27. FEATURES OF CONSUMER BEHAVIOUR
• Undergoes a constant change:Consumer behaviour is not static. It undergoes a change
over a period of time depending on the nature of products. For example, kids prefer
colourful and fancy footwear, but as they grow up as teenagers and young adults, they
prefer trendy footwear, and as middle-aged and senior citizens they prefer more sober
footwear.
• Varies from consumer to consumer : All consumers do not behave in the same manner.
The differences in consumer behaviour are due to individual factors such as the nature of
the consumers, lifestyle and culture. For example, some consumers are technoholics. They
go on a shopping and spend beyond their means.
• Varies from region to region and country to county : The consumer behaviour varies
across states, regions and countries. The rich rural consumers may think twice to spend
luxuries despite having sufficient funds, whereas the urban consumers may even take
loans to buy luxury items such as cars and household appliances

28. • Information on consumer behaviour is important to the marketers:Marketers need to have a
good knowledge of the consumer behaviour. They need to study the various factors that influence
the consumer behaviour of their target customers.
• A positive consumer behaviour leads to a purchase decision. A consumer may take the decision
of buying a product on the basis of different buying motives. The purchase decision leads to higher
demand, and the sales of the marketers increase
• Improves standard of living:The more a person buys the goods and services, the higher is the
standard of living. But if a person spends less on goods and services, despite having a good income,
they deprives themselves of higher standard of living.
• Reflects status:The consumer behaviour is not only influenced by the status of a consumer, but it
also reflects it. The consumers who own luxury cars, watches and other items are considered
belonging to a higher status. The luxury items also give a sense of pride to the owners.

29. BUYING DECISION PROCESS
Need identification
Information search
Evaluation of alternatives
Purchase decision
Post-purchase behaviour

30. NEED IDENTIFICATION
• Need recognition occurs when a consumer is
faced with a difference between an actual
a desired state.
• A need can be activated through internal or
external motivations
• Needs related to basic instincts like
hunger,sex,thirst, are the needs that have the
capacity of self arousal.
• Whereas social needs like ownership of
products and services related to social class
belongingness and status are aroused by
customer’s socialization process.
• Example:
House wife will feel the need to
buy washing machine either to reduce the
burden of work or she may be influenced by
her neighbor using washing machine

31. INFORMATION SEARCH
• After the consumer has developed a want or
a need, he or she needs to start
an information search about the different
alternative selections that they ca.n purchase
to satisfy their need.
• He will look both internally and externally for
his information to help him make a decision.
An internal information search consists of
utilizing information from memory, such as
past experiences with the
product.An external information search is
the process of seeking information in the
outside environment.
• Example :
Here the housewife will recollect
information from her memory box.
Also she will collect information from external
sources such as friends,advertisements, etc
She may look for further information about
these machines once she becomes aware of
such machines.
The kind of information she may look for are the
alternative washing machines available in the
market place,their relative prices,operational
efficiency and warranty and service facilities

32. EVALUATION OF ALTERNATIVES
• At this stage on the basis of alternative
product attributes – those which have the
ability to deliver the benefits the customer is
seeking.
• A factor that heavily influences this stage is
the customer’s attitude.
• Involvement is another factor that influences
the evaluation process.
• For example, if the customer’s attitude is
positive and involvement is high, then they
will evaluate a number of companies or
brands; but if it is low, only one company or
brand will be evaluated.
• Example
After arousal of her interest in washing
machine,She will compare the stock of
information she has accumulated about the
different washing machines in the market and
then evaluate the value of each one of them
before she develops the intention to buy
• However if she feels that a washer-man/
woman would serve the need then she may
altogether reject the idea of buying any
washing machine

33. PURCHASE DECISION
• At this point, the customer has explored
multiple options, they understand pricing and
payment options and they are deciding
whether to move forward with the purchase
or not.
• At this point they could still decide to walk
away.
• If a customer walks away from the purchase,
this is the time to bring them back.
• Retargeting or simple email reminders that
speak to the need for the product in question
can enforce the purchase decision, even if the
opportunity seems lost.
• Example:
Here the housewifes purchase decisions
can be one of the three that is no buying,buying
later and buy now.

34. POST PURCHASE BEHAVIOUR
• After a purchase is made, it’s inevitable that
the customer must decide whether they are
satisfied with the decision that was made or
not.
• If a customer feels as though an incorrect
decision was made, a return could take place.
• . However, even if the customer is satisfied
with his or her decision to make the purchase,
whether a future purchase is made from your
brand is still in question.
• Because of this, sending follow-up surveys
and emails that thank the customer for
making a purchase are critical.
• Example :
• If the washing machine matches her
expectations,the housewife is satisfied.
• If the performance of the product exceeds
expectations,the housewife will be delighted
• If the performance falls short of
expectations,she will be dissatisfied

35. WHAT IS A NEW PRODUCT ?
• A product that opens an entirely new market. Eg : Flat screen TV
• A product that adopts or replaces an existing product eg Introduction of mobile phones replaced landline
phones
• An old product introduced in a new market eg : fair and lovely
• An old product packaged in a different way eg : lifebuoy soap
• An old product marketed in a different way eg :

36. New product can be used to
• Increase/defend market share by offering more choice or updating older products
• Appeal to new segments
• Diversify into new markets
• Improve relationship with distributors
• Maintain the firm’s reputation a leading edge company
• Make better use of the organization's resources

37. Why develop new product ?
• To create stars and cash cows for the future
• To replace declining product
• To take advantage of new technology
• To defeat rivals
• To maintain/increase market share
• To maintain competitive advantage
• To fill gap in the market

38. New product development
• New product development is a process which is designed to develop, test and consider
the viability of products which are new to the market in order to ensure the Growth or
survival of the organisation.

39. Stages in new product
developmentIdea
generation
Idea screening
Concept
development
and testing
Market strategy
development
Business
analysis
Test
marketing
commercialisation

40. Step 1:Idea generation
• Idea generation is continuous, systematic search for new product opportunities. It
involves delineating sources of new ideas and methods for generating them.
• Ideas for new products can be obtained from basic research using a SWOT analysis
(OPPORTUNITY ANALYSIS), Market
and consumer trends, company's R&D department, competitors, focus groups,
employees, salespeople, corporate spies,

41. STEP 2: IDEA SCREENING
The object is to eliminate unsound concepts prior to devoting resources to them.
The screeners must ask these questions:
• Will the customer in the target market benefit from the product?
• What is the size and growth forecasts of the market segment/target market?
• What is the current or expected competitive pressure for the product idea?
• What are the industry sales and market trends the product idea is based on?
• Is it technically feasible to manufacture the product?
• Will the product be profitable when manufactured and delivered to the
customer at the target price?

42. STEP 3: CONCEPT TESTING
• Concept testing present the consumer with a proposed product and measure attitudes
and intention at this early stage of development.
• Concept testing of prototypes
can help avoid costly mistakes.

43. STEP 4 : MARKET STRATEGY
DEVELOPMENT
• Includes development of three part strategy plan
1.Describe the market’s size, structure, and behaviour, the planned product positioning,
and the sales, market share, and profit goals for first few years.
2. Outlines the planned price, distribution strategy, and marketing budget for the first
year.
3. Describes thelong-run sales and profit goals and marketing-mix strategy over time

44. STEP 5: BUSINESS AND FINANCIAL
ANALYSIS
• Estimate likely selling price based upon competition and customer feedback
• Estimate sales volume based upon size of market
• Estimate profitability and breakeven point

45. STEP 6 : TEST MARKETING
• Test marketing involves placing a product for sale in one or more selected areas and
observing its actual performance under the proposed marketing plan

46. STEP 7: COMMERCIALISATION
• Commercialization involves implementing a total marketing plan and
full production
 Launch the product
 Produce and place advertisements and other promotions
 Fill the distribution pipeline with product
 Critical path analysis is most useful at this stage

47. IDEA GENERATION OF NANO
“I saw families ridding around on scooters with
kids standing up and mother carrying a baby
and sitting Pillion and decided to do something about . It
started as an quest for an
affordable transportation solutions.”

48. A vision to build worlds cheapest car

49. IDEA SCREENING
 A scooter with two extra wheels at the back for better stability?
 An Auto-rickshaw with four wheels?
 A three wheeled car like a closed auto- rickshaw??
 A four wheeled car made of Engineering Plastics?
 A Four wheeled rural car?
 Rolled up Plastic curtains in place of windows?
 Openings like Auto rickshaws from the side
 A four wheeled open car with safety side bars?

50. But Market needed a people’s car……..
Car or Auto Rickshaw
,“ Ah! That’s just a scooter with four wheels or an auto -rickshaw with four wheels &
not really a Car.”

51. CONCEPT DEVELOPMENT
• Mr. Girish wagh, Leader of TATA Engineering Team
• Did something nobody at TATA motors ever did
• Talked to its customer ! Why. why. why.???
• They Insisted on a cheap, Dependable truck.
• Final Ans. : Better Marriage Prospects in the Village

52. Car to cost Rs. 1 lakh on road
Car to be built on different platform than conventional ones
It must meet all the safety and regulatory requirements
It has to be built on a scale which is double than the earlier launches
A Truly People’s car: Low cost, Safe, Fuel Efficient

53. BUSINESS ANALYSIS
Rivalry with
Existing Competitors
TATA produce a Cheapest car Because..
 Mother plant
 Manufacture the complete car.
 Having best engine technology (FIAT)

54. • Bargaining Power of buyers
No one other competitors are there because TATA is only one company which are providing
cheapest car ,so low bargaining power of buyers

55. Bargaining Power of supplier
Low Bargaining power of Suppliers because…..
97% parts locally sourced.
Only 20 companies to supply 70% of components.

56. The Threat of Potential Entrants
Less possibility of threat of potential Entrant

57. Product Substitutes
Bikes
Rickshaws

58. Now the question was, “how much to produce”
 It was estimated that the demand for the people’s car shall be at least twice the demand for
Maruti 800, the lowest end car. Initial projections were at about 500 K cars per year.

59. PRODUCT DEVELOPMENT
• Engine Capacity Bosch 624 c.c. twin cylinder
• Low capacity, Lighter, sufficient with better Power Rear Engine to reduce the
transmission length using a balancer shaft.
• 4 Speed Manual Gear Box
• All Aluminum Engine
• Higher thermal conductivity than cast iron, Lighter and so better mileage
• Engine Management System by Bosch
• Superb control over emission and smooth acceleration.

60.  Better ride than Maruti 800.
 Safety requirements are adequately met.
 Single Wiper in place of two.
 Cost effective yet functionality is met
 Tube less Tires
 Less length but more inner cabin space due to height. Comfortable leg room.

61. TEST MARKETING
Crash testing
Testing On Torture Tracks

62. Commercialization

63. PRODUCT FAILURE
• The inability of a product to realize the required market share to sustain its presence
in the market; The inability of a product to achieve the anticipated life cycle
as defined by the organization due to any reason; or, The ultimate failure of a
product to achieve profitability

65. REASONS FOR PRODUCT FAILURE
1. Faulty product idea:
The product often fail because faulty of product idea.
2. A good idea can revolutionize the market but a bad idea may prove bitter to the firm or
may backfire
3. Eg: Polar industries in 1991 launched "COOL CATS" fan - decorated with cartoon
characters meant primarily for children. The fan was priced at premium; the idea was
children's were increasingly becoming influensors in purchase decisions and to attract
kids with the cartoon creatures and to position the product exclusively for kids.
4. The product failed miserably inspite of its huge advertising budget because when the
was put on it didn't have any colour effect and the customer did not justify its premium
price.

66. • 2. Distribution related problems:
The new product fails if the product is unable to meet the channel requirements.
• While developing the product the channel requirements must be given adequate consideration.
• Eg: when NESTLE launched its new chocolates the product and promotion was ok but the
product failed in the distribution side because the company stipulated the product to be stored
in refrigerators.
• The product faced two problems in the distribution side because it meant excluding a number
of retail outlets as they didn't have this facility and secondly the chocolate was not picked by
the customers as it was not seen upfront in the retail shops.
• Finally Nestle had to reformulate the product according to channel requirements.

67. • 3. Poor timing of launch:
Too early or late entry into the market is a common cause of failure. Kinetic Merlin was
launched in pune in 1991
• .It was a 3 in 1 set consisting of a colour television, a stereo with detachable speakers and a
home computer
• . The product was targeted at the Indian consumers who are fond of sophisticated gadgets to
immediately adopt such an innovative idea but in reality the idea was too advanced for the
customers to digest at that time because they were not exposed to such type of products before.

68. • 4. Improper Positioning:
Positioning means putting the product into the predetermined orbit.
• Improper positioning may affect the product success. Eg: Titan Tanishq introduced their 18
carat jewellery and the product was positioned at elite segment but there was a contradiction as
to why these elite segment should go in for a low carat gold because the norms for gold in
India at that time was 22 carat.
• The product failed miserably in retrospect Titan had to introduce 22-carat jewelry.

69. • Some other reasons for product failure are:
* Lack of differential advantage
* Poor planning
* Technical problems in the product
* Competitors fighting back harder than expected
* Poor market research

70. LEVELS OF PRODUCT
Potential product
Augmented
product
Expected product
Generic
product
Core
product
Reason of purchase
utilities
Attributes and conditions
Services and cues
Differentiation

71. 1. Core Product: This is the basic product and the focus is on the purpose for which the product
is intended. For example, a warm coat will protect you from the cold and the rain.
2. Generic Product: This represents a5ll the qualities of the product. For a warm coat this is
about fit, material, rain repellent ability, high-quality fasteners, etc.
3. Expected Product:This is about all aspects the consumer expects to get when they purchase a
product. That coat should be really warm and protect from the weather and the wind and be
comfortable when riding a bicycle.
4. Augmented Product:This refers to all additional factors which sets the product apart from
that of the competition2. And this particularly involves brand identity and image. Is that warm
coat in style, its colour trendy and made by a well-known fashion brand? But also factors like
service, warranty and good value for money play a major role in this.
5. Potential Product:This is about augmentations and transformations that the product may
undergo in the future. For example, a warm coat that is made of a fabric that is as thin as paper
and therefore light as a feather that allows rain to automatically slide down.

72. PRICING
• Pricing is the process whereby a business sets the price at which it will sell its products
and services, and may be part of the business's marketing plan

73. Profit related objectives
Maximum current profit
Target return on investment
Sales related objectives
Sales growth
Target market share
Increase in market share
Competition related
objectives
To keep competitors away
To achieve quality leadership by pricing
To remove competitiors
Customer related objectives
To win confidence of customer
To satisfy customer
Pricing
objectives

74. PROFIT RELATED OBJECTIVES
• Maximum Current Profit:
• One of the objectives of pricing is to maximize current profits. This objective is aimed
at making as much money as possible. Company tries to set its price in a way that
more current profits can be earned. However, company cannot set its price beyond
limit. But, it concentrates on maximum profits.
• Target Return on Investment:.Target return may be:(1) fixed percentage of sales, return
on investment, or(3) a fixed rupee amount.Company sets its pricing policies and
strategies in a way that sales revenue ultimately yields average return on total
investment.
For example, company decides to earn 20% return on total investment of 3 crore
It must set price of product in a way that it can earn 60 lakh rupees.

75. SALES RELATED OBJECTIVES
• Sales Growth: It sets its price in such a way that more and more sales can be achieved. It
is assumed that sales growth has direct positive impact on the profits. So, pricing
are taken in way that sales volume can be raised. Setting price, altering in price, and
modifying pricing policies are targeted to improve sales.
• Target Market Share: Pricing decisions are taken in such a manner that enables the
company to achieve targeted market share. Market share is a specific volume of sales
determined in light of total sales in an industry. For example, company may try to achieve
25% market shares in the relevant industry.
• Increase in Market Share: Sometimes, price and pricing are taken as the tool to increase
its market share. When company assumes that its market share is below than expected, it
can raise it by appropriate pricing; pricing is aimed at improving market share.

76. COMPETITORS RELATED OBJECTIVES
• To Keep Competitors Away: The phase ‘prevention is better than cure’ is equally applicable here. If
competitors are kept away, no need to fight with them. To achieve the objective, a company keeps
price as low as possible to minimize profit attractiveness of products. In some cases, a company
offensively to prevent entry of competitors by selling product even at a loss.
• To Achieve Quality Leadership by Pricing: The quality leadership is the image in mind of buyers that
high price is related to high quality product. In order to create a positive image that company’s
product is standard or superior than offered by the close competitors; the company designs its
policies accordingly.
• To Remove Competitors from the Market: The pricing policies and practices are directed to remove
the competitors away from the market. This can be done by forgoing the current profits – by
price as low as possible – in order to maximize the future profits by charging a high price after
removing competitors from the market. Price competition can remove weak competitors.

77. CUSTOMER RELATED OBJECTIVES
• To Win Confidence of Customers : Company sets and practices its pricing policies to
win the confidence of the target market. Company, by appropriate pricing policies,
establish, maintain or even strengthen the confidence of customers that price
for the product is reasonable one. Customers are made feel that they are not being
cheated.
• To Satisfy Customers: Company sets, adjusts, and readjusts its pricing to satisfy its
target customers. In short, a company should design pricing in such a way that
into maximum consumer satisfaction.

78. PRICING STRATEGIES
• Skimming the cream pricing: High price at initial stage.
• Market penetration pricing strategy: Low price at initial stage .
• Psychological pricing: Customer is led to believe that his paying less than what he actually
should.
• Differential pricing strategy: Different prices are charged in different markets.
• One price strategy: Uniform prices in all markets
• Premium pricing strategy: Market price higher than the cost of production
• Discount pricing strategy: Market price lower than cost of production
• Promotional pricing strategy: Several pricing strategies to encourage customers for early
purchase

79. TYPES OF MARKETING/DISTRIBUTION
CHANNELS
Manufacturer
Consumer
Manufacturer Manufacturer Manufacturer
Retailer
Consumer
Wholesaler
Retailer
Consumer
Agent
Wholesaler
Retailer
Consumer

80. SALES PROMOTION
•
Definition:
Sales promotions are the set of marketing activities undertaken to boost sales of the
product or service.

81. SIGNIFICANCE OF SALES PROMOTION
1. Importance of sales promotion to producers
• Sales promotion is very important as well as effective method for manufacturers to
supply products to target market
• . It attracts prospective customers to new products along with the increase in
for old products. Increase in volume of production and sales decreases per unit cost.
• As a result, profit increases.
• Sales promotion also increases effectiveness of personal selling , advertisement and
goodwill of the firm.

82. 2. Importance of sales promotion to intermediaries
• Intermediaries/middlemen also get benefits from sales promotion.
• It becomes easy for wholesalers, retailers,agents and dealers to sell goods, because it is not
needed to inform consumers about the features, utility, price, using information, etc of the
products
• . This saves labor and time.
• As the businessmen get trade discount, gift, bonus, etc from producers. It results sales volume
resulting in more profit.
• Demand and supply of products continues by which capital invested in stock of goods can be
effectively mobilized.

83. 3. Importance of sales promotion to consumers
• The consumers also get adequate benefits from sales promotion
• . They can get direct benefits from the programs such as free distribution of
samples, reduction in price, coupon, participation in competition etc.
• Besides this, the consumers get various indirect benefits from sales promotion. It increases
their loyalty to the product and firm, knowledge about the products, improvement in their
living standards etc.
• Facilities to select products, availability of goods at cheaper price, possibility of self-services
etc. increase good understanding and confidence between businessmen and consumers.

84. tools