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Marketing Management The core layer of the product explains the reasons for which the customer is making the purchase. This layer explains the reason 'why' of buying the product. At the second layer, the consumer looks at the basic utilities, like physical features, tangible elements of the product. The expected layer is a set of attributes and conditions buyers normally expect out of the product. Whereas the basic product is the 'given thing' in the product, in expected level, consumers use their anticipations and utility expectations for defining the product. The augmented part of the product is the associated services and cues, which help the product to deliver beyond the expectation level of the consumer. Brand positioning and competition starts at farm level when all the products in a market look similar. In developing nations, the competition originates at the level of expected product. The last layer is the potential layer of the product where all the possible augmentations and transformations the offer may undergo in the future. Here the marketer is always on

Marketing Management Concept

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Page 1: Marketing Management Concept

Marketing Management

The core layer of the product explains the reasons for which the customer is making the purchase. This layer explains the reason 'why' of buying the product. At the second layer, the consumer looks at the basic utilities, like physical features, tangible elements of the product. The expected layer is a set of attributes and conditions buyers normally expect out of the product. Whereas the basic product is the 'given thing' in the product, in expected level, consumers use their anticipations and utility expectations for defining the product.

The augmented part of the product is the associated services and cues, which help the product to deliver beyond the expectation level of the consumer. Brand positioning and competition starts at farm level when all the products in a market look similar. In developing nations, the competition originates at the level of expected product. The last layer is the potential layer of the product where all the possible augmentations and transformations the offer may undergo in the future. Here the marketer is always on constant search for new methods and processes to differentiate the offer on the basis of product features and services that will satisfy the customer and create the desired differentiation.

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Marketing Management

PRODUCT MIX DECISIONSA product mix is also called product assortment, which is the set of all products and items a particular seller offers for sale. It consists of various product lines. Godrej has multiple product lines namely soaps, office equipments, edible oil, computers and other products through different manufacturing processes and targeted towards different markets.

ORGANISATIONAL GOALS AND PRODUCT MIXFour ways in which product mix can be adjusted to achieve organizational goals: Market Penetration, under which market share is increased by expanding salesof present products in existing uses; Market Development, under which markets are expanded by creating new usesof present products; Product Development, where market share is increased by developing newproducts to satisfy existing needs; Diversification, where market is expanded by developing new products to satisfynew consumer needs.

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Marketing ManagementMANAGING PRODUCT LINES

Major product line strategies are:Expansion of Product Mix - Increasing the number of lines and/or the depth within a line can help in expansion of the present product mix. Such new lines may be related or unrelated to the present products. For example, a large supermarket with provisions may add drugs, cosmetics and house wares (width) while at the same time increase their assortments of dry fruits, baby foods and detergents (depth).

Contraction of Product Mix – The product may be consolidated with several others in the line so that fewer styles, sizes, or added benefits are offered. Alternatively, the marketing manager can simplify the position within a line. Even after this pruning if the product fails, then the company may stop it altogether.

Alteration of Existing Product - Alterations may be made either in the design, size, color, texture, or flavor or in the packaging, or in the use of raw materials or in the advertising appeal, or the brand manager may bring a change in quality level. This strategy is to be followed regardless of the width and depth of the product mix.

Development of New Uses for Existing Product - When people find new usesof an existing product, for example a detergent being used for cleaning clothes, floors, utensils and even glass products.

Trading-Up and Trading Down- Trading Up refers to the adding of a higher priced, prestige product to the existing lines with the intention of increasing sales of the existing low-priced product. Under trading up, the seller continues to depend upon the older, low priced product for the major portion of the sales. Ultimately he may shift the promotional emphasis to the new product so that larger share of sales may go to the new product.

Trading Down refers to the adding of low priced items to its line of prestige products, with the expectation that the people who cannot buy the original product may buy these new ones because they carry some of the status of the higher priced goods. An instance in point is that of LG Electronics, which attempted to broaden its market for color televisions by introducing frilled down version of television called "Sampoorna" for rural markets in India.

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Marketing Management

ELEMENTS OF BRANDINGBrands are unique in many ways. Each brand has its position in the customer's mind and delivers a set of values perceived higher than those of other competing brands.

Four key concepts in elements of brandingbrand identitybrand imagebrand position brand equity

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Marketing ManagementBrand IdentityThe concept of brand identity helps in building brand equity. Aaker defines brand identity as a set of five categories of brand assets and liabilities linked to a brand that add or subtract from the value provided by a product or service to a firm and also to the firm‘s customers. These categories of brand assets include brand loyalty, brand awareness, perceived quality, brand associations and other propriety assets such as patents, trademarks and channel relationships. These are a unique set of brand associations that represents what the brand stands for and what it promises to customers.

Brand ImageEvery brand has got a distinct brand image in the customer's mind. In simple words, what the customer perceives about the brand is called the brand image. A brand may aspire to communicate a lot through its brand communication strategy but what the customers receive and perceive as the brand is termed as the brand image. It is a combination of brand associations and brand personality. It includes a set of brand associations usually structured in a logical fashion. Consumers express them in the form of descriptive thoughts by using similes and metaphors. It is important to see if consumers see themselves as 'fit’ for the brand and vice versa. For example, Horlicks is perceived as a great nourisher whereas Boost is perceived as an energy drink for the sportsman due to its typical positioning and celebrity endorsement.

Brand PositionBrand position is that part of brand identity and value proposition that is to be actively communicated to the target audience which depicts advantages of the brand over competitors. Once the brand position decision is made, brand identity and value proposition can be translated into a suitable execution strategy in the form of an integrated advertising campaign. A customer related benefit is part of the value proposition and forms a basis for brand customer relationship. For example, the positioning statement of Titan as a 'Tata Product' explains the core identity in the form of a brand position statement whereas the brand positioning statement of DHL couriers explain the service component with 'Nobody delivers like us'.

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Marketing Management

BRAND EQUITY

Brand equity is a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm's customers. These equity components can be grouped into five categories, namely brand loyalty, brand name awareness, perceived quality, brand association, in addition to the perceived quality and other proprietary brand assets like patents, trademarks, and channel relationships. Brand equity is the added value that the consumer assigns to products and services. It is based over what the consumer thinks, feels and acts with respect to the brand and is often reflected in company's sales performance, market share and profitability

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Marketing Management

Case: Haier Brand

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Marketing ManagementNew Product Decisions

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Marketing ManagementIdea Generation

Steps towards new products

Market Structure AnalysisSales PotentialConcept ScreeningAdvertising DevelopmentProduct Formulation and TestingTesting the new product

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Marketing Management

REASONS FOR ADDING A NEW PRODUCT

Excess Capacity as a Reason for Expanding Product-line Profit as a Criterion of Optimum Product-lineDiversification as Response to ChangeDiversification as Response to Restrictive Government Regulations - To avoid the rigors of the various restrictive regulations, many multinational companies and those belonging to big houses have decided to diversify. Associated Cement Companies have diversified into high technology areas like cast refractory. BASF, the German multinational, has diversified to include leather chemicals in its product-line because they were compatible with the technological and marketing expertise of the company. Reliance Group has diversified into retail business with an investment of 12000 crores, as the opportunity for growth lies in emerging retail sector.

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Marketing Management

Awareness: During the first stage of adoption process, consumers are explained the product innovation. It gives information about the new product or service.Interest: When consumers develop an interest in the product or product category, theysearch for information about how the innovation can benefit them.Evaluation: The evaluation stage represents a kind of ‘mental trial’ of the product innovation. Only if the consumers’ evaluation of the innovation is satisfactory will they actually try the product. In case the evaluation is unsatisfactory, the product is automatically rejected.Trial: At this stage, consumers use the product on a limited basis. Their experiencewith the product provides them with the critical information that they need to adopt orreject it.

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Marketing Management

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Marketing ManagementDistribution Chanels and Logistics

Companies do not sell all their products directly to consumers. There are two ways of marketing products viz. direct marketing without using the channel and indirect marketing though a set of intermediaries.The intermediaries who provide a link between the manufacturers and the ultimate consumers or users are known as middlemen.Intermediaries help in different kinds of flows in the market between the producer and the end consumer. They help in physical flow, title flow, information flow and cash flow The design of a channel starts with understanding the customer’s service expectations.It should help in setting objectives and constraints for the channel.A company may pursue exclusive, selective and intensive distribution strategy for reaching markets.Once the channel design decisions are taken and intermediaries are decided upon, the big task is to manage the selected channel. The marketing manager should select appropriate channel by evaluating product, market and producer related factors.Channel management is a dynamic process as it involves participants not directly under the control of the organization.There are three types of primary channel participants, namely manufacturer, wholesaler and retailer.Howsoever strong the channel design and management decisions may be there is likely to be channel conflict. It is impossible to eliminate channel conflict, so managers should try to resolve and manage the conflict.Conflict management for building cooperation among intermediaries can be done by identifying the nature and cause of conflict and developing strategies for resolving these conflicts through mediation, arbitration, joint membership and mutual goal sharing across the channel.

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Marketing Management

Direct Marketing

Indirect Marketing

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Marketing ManagementROLE OF DISTRIBUTION CHANNELS

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Marketing Management

OBJECTIVES OF CHANELSAvailability of product in the target market Smooth movement of the product from the producer to the customer Cost effective and economic distribution Information communication from the producer to the consumer.

Identification of Major Channel AlternativesWhile evaluating channel alternatives, there are three issues to be addressed viz. the overall business environment, types and number of intermediaries needed and the terms and responsibilities of each channel member.

Types of IntermediariesCompany Sales ForceMiddlemenAgent or BrokerWholesalerRetailerDistributorDealerValue Added ResellersMerchantsCarrying & Forwarding Agents (C & F)

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Marketing Management

Selection of Channel Members

Market Factors: Customer Preferences, Organizational Customers, Geography (Location) and CompetitorsProduct Factors: Life Cycle, Product Complexity, Product Value, Product Size and Weight and Consumer PerceptionsProducer/Manufacturer Factors: Company Objective, Company Resources, Desire for Control and Breadth of Product Life

Training Channel Members - The training programs can be on selling skills, on business processes and other soft skills required to serve the end customer. The training programs should cover customer contact and interaction management, selling skills, relationship building skills and business development skills.Motivating Channel Members - The idea of developing a channel motivational program is to build their capability to perform better and take additional responsibility. It should also improvise its channel offering to provide superior value to consumers and channel members.

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Marketing Management

LOGISTICS

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Customer logistic involves a seven ’R’ framework namely, it should be a process of right quantity of the right product or service to the right place in the right conditions at the right cost and at the right time with the right impression. If these seven aspects are taken care of, customer logistics process will be able to create higher levels of customer satisfaction.

Case: Oceanic Needs to Cut Distribution Costs

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Marketing Management

Companies do not sell all their products directly to consumers. There are two ways of marketing products viz. direct marketing without using the channel and indirect marketing though a set of intermediaries.The intermediaries who provide a link between the manufacturers and the ultimate consumers or users are known as middlemen.Intermediaries help in different kinds of flows in the market between the producer and the end consumer. They help in physical flow, title flow, information flow and cash flow.The design of a channel starts with understanding the customer’s service expectations.It should help in setting objectives and constraints for the channel.A company may pursue exclusive, selective and intensive distribution strategy for reaching markets.Once the channel design decisions are taken and intermediaries are decided upon, the big task is to manage the selected channel. The marketing manager should select appropriate channel by evaluating product, market and producer related factors.Channel management is a dynamic process as it involves participants not directly under the control of the organization.There are three types of primary channel participants, namely manufacturer, wholesaler and retailer.Howsoever strong the channel design and management decisions may be there is likely to be channel conflict. It is impossible to eliminate channel conflict, so managers should try to resolve and manage the conflict.Conflict management for building cooperation among intermediaries can be done by identifying the nature and cause of conflict and developing strategies for resolving these conflicts through mediation, arbitration, joint membership and mutual goal sharing across the channel.

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Marketing Management

PRICING DECISIONS

Pricing Decision involves the following: Decide the price objectives Determine the demand Estimate the costs Analyze the competitors cost, prices and offers Select the final price

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Marketing ManagementOBJECTIVES OF PRICING

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Marketing ManagementOBJECTIVES OF PRICING

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Marketing ManagementFACTORS INFLUENCING PRICING DECISIONS

Formulating price policies and setting the price are the most important aspects ofmanagerial decision-making. It is the most important device a firm can use to expand its market share. The pricing decision is critical not only in the beginning but it must be reviewed and reformulated from time to time.

The factors governing prices may be divided into external factors and internal factors.The external factors include elasticity of supply and demand, goodwill of the company, extent of competition in the market, trend of the market, purchasing power of the buyers, and the government policy towards prices. The internal factors include the costs and the management policy towards gross margin and sales turnover. The following are the general considerations for formulating pricing strategy.

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Marketing ManagementThe price of the product of a firm constitutes an extremely important element in its marketing-mix. Pricing is of great importance to both the producer/seller and the consumer.

The price of a product affects other components of the marketing-mix of a firm.

A firm will improve the quality of a product, increase the number of accompanying services and spend more on promotion and distribution, if it feels that it can sell its product at a price high enough to cover the cost of these expenses.

Prices are also important from the consumer point of view. To the consumer, prices determine his purchasing power and standard of living. Goods and services offered by various producers at different prices help the consumer to make buying decisions andsatisfy his wants in a better way.

The price structure of a firm is a major determinant of its success as it affects the firm’scompetitive position and its market share. If prices are too high, business is lost; if pricesare too low, the firm may not make enough to run the business in the long term.

It has an important bearing on the firm’s revenue and net profit. With the help of price, the firm can make an estimate of its revenue and profit. Profit is equal to revenue over cost.

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Marketing Management

Price also helps in determining the quantum of production that a firm should carry.

The management of a firm can make estimates of profits at various levels of productionand prices to choose the best possible action for long-term goals of the organization.

Prices can be decided by analyzing the firm’s costs through different pricing methodslike full cost methods, target return pricing method and marginal cost method. These methods do not take care of the market condition and current market structure for making a decision.

However the second category of methods is competition based or market based methods, in which the prices are decided on the prevailing market condition and customary pricing methods.

There are specific pricing methods like value pricing, sealed bid pricing, price-quality based pricing and psychological pricing.

The marketer needs to initiate price changes as well as respond to competitor’s price changes, failing which he cannot manage the emerging market opportunity or the threat raised due to competitor’s moves.

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Marketing ManagementMARKETING COMMUNICATION

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Marketing ManagementDeveloping an integrated marketing communication program involves eight steps, namely identification of target audience, determination of communication objectives, design of communication message, selection of the channel of communication, establishing the total communications budget, deciding on the communication mix, measurement of communication results and managing the integrated marketing communication process.

Identification of Target Audience - It is necessary to identify the target audience before developing any integrated marketing communication program. It should include current customers, target customers, potential customers, past users, influencers, and general public at large.

Determining the Communication Objective - The next task is to determine the communication objectives. Firms have different kinds of communication objectives depending on which communication tool is used and which stage of the product life cycle the current brand is passing through. The marketer aims to communicate information about products and brands in such a way that it influences consumer's mind, develops positive attitude towards products and brands and prompts consumers to act in favor of the brand.

Designing the Communication Message- The next stage involves designing of communication message. The message is what the marketing communicator tries to communicate to the customers to attract his attention and interest, arouse desire and elicit action in the form of purchase. The message should be developed in a way that it has the ability to integrate a common theme from the awareness stage to the stage of purchase and satisfaction. The message formulation involves message content (what to say), message structure (how to put the message),message format (how to say it symbolically), and message source (who should say it).

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Marketing ManagementSelection of Media Channel

After the message decision is taken, the marketing manager searches for the appropriate media for communicating with the customers. Research reveals that even when there are great communication ideas and propositions if the media vehicle chosen is wrong, then the message effectiveness diminishes. The presentation made through personal channels should be crisp, logical and quick and should be responsive to customer queries. Therefore communication channels are of two types, namely personal communication channels and non-personal communication channels.

The personal communication channel involves direct interaction and communication between two or more people. For example, a company like Eureka Forbes has understood that to market vacuum cleaners it needs to use the personal channel, so that both demonstration and customer objection handling can be done at the time of communicating with the customers and during sales presentation.

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Marketing ManagementSelection of Media Channel

The non-personal communication channels include all those conventional channels used by marketing communicators known as mass media channels. The non-personal communication channels include media, atmosphere and events. The media consist of print media like newspapers, magazines, and direct mail; the out of home media include billboards, wall paintings, hoardings, bulletins, kiosks, display boards, signage and posters; the electronic media include radio, television, Internet, CDROMs, audio and video tapes. Many companies like McDonalds, Café Coffee Day give more attention to the atmosphere for attracting their customers.

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Marketing ManagementDeciding the Total Communication BudgetDeciding of the Marketing Communication MixMeasurement of Marketing Communication Results

Managing and Coordinating the Integrated Marketing Communication

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Marketing Management

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Marketing Management

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Marketing Management

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Marketing Management

Sales Promotions Directed at Consumers

Prize SchemesFairs and ExhibitionsFree SamplesCorrespondenceCataloguesAdvertising NoveltiesEntertainment of CustomersSales ContestPrice-offRefundPoint-of-Purchase MaterialCouponsPrice PacksPremiumsFree TrialsPatronage Awards

Sales Promotions Directed at Trade Partners

Sales CompetitionBoosters for DealersPrice OffsFree MerchandiseAllowancesTradeshows and ConventionsSpecialty Advertising

Sales Promotions Directed at Sales Force

Sales and ContestsConferences and SeminarsCommissionsIncentives/ Bonus International tours

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Marketing Management

Objectives of Public Relations Program•Presenting a favourable image and its benefits•Promotion of products or services•Detecting and dealing with its publics•Determining the organization's posture in dealing with its publics•Goodwill of the employees or members•Prevention and solution of labor problems•Fostering the goodwill of communities in which the organization has units•Goodwill of the stockholders or constituents•Overcoming misconceptions and prejudices•Forestalling attacks•Goodwill of suppliers•Goodwill of the government•Goodwill of the rest of the industry•Goodwill of dealers and attracting other dealers•Ability to attract the best personnel•Education of the public in the use of a product or service•Education of the public regarding a point of view•Goodwill of customers or supporters•Investigation of the attitude of various groups towards the company formulation•and guidance of policies•Fostering the viability of the society in which the organization functions•Directing the course of change.

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Marketing ManagementTools of Public RelationsPress Releases: The press release is the basic building block of a publicity program concerned with story placement.

Fact Sheets: Fact sheets include more detailed information on the product, itsorigins, and its particular features.

Press Kits: The press kit pulls together all the press releases, fact sheets, andaccompanying photographs about the product into one neat package.

Video News Releases: The Video News Release (VNR) is the video equivalentof a press release.

Employee/Member Relation Program: Corporate public relations people oftenspend a great deal of time developing employee communication programs, includingregular newsletters, informational bulletin boards, and internet postings.

Community Relations Program: Many companies actively encourage theiremployees to take part in community organizations, and local corporations are oftenmajor sponsors of community events and activities such as art presentations, blooddonation drives, and educational activities.

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Marketing ManagementTools of Public RelationsFinancial Relations Programs: Financial relations people are responsible for establishing and maintaining relationships with the investment community, including industry analysers stockbrokers, and journalists specializing in financial reporting.

Industry Relations Programs: The primary public that industry relations specialistsdeal with is other businesses operating within the same industry, as well as tradeAssociations.

Development/Fund-Raising Program: This is a particularly important area for not-for-profit organizations such as art organizations, educational institutions, and community service programs.

Special Events: Event marketing is rapidly gaining popularity. Besides linking theirbrands to existing events, marketers are also creating events of their own, designedto reach special targets.

House Ads: A company uses various media like newspapers, magazines and broadcast stations to prepare advertisements for the internal public. Public relations program manages these house advertisements.

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Marketing ManagementTools of Public Relations

Public Service Announcements: These are ads for charitable and civic organizations that run free of cost on television or radio or in the print media. These are called public service announcements.

Corporate Advertising: This kind of advertising promotes corporate image or corporate viewpoints. These advertisements do not talk about products and services.

Publications: Companies publish various publications in the form of pamphlets, booklets, annual reports, books, bulletins, newsletters, inserts and enclosures and position papers.

Speakers, Photos and Films: Many companies use speaker bureaus to communicate with people about topics of public's interest. Some publics like news media also want pictures and video films for use in their media.

Displays, Exhibits, Events and Tours: Exhibits, displays, tours and events are important tools for public relations. Companies use displays and point of purchase materials for image building.

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Marketing ManagementPUBLICITY

Non-Personal/Mass Media: Like advertising, publicity also reaches a very large number of people at the same time through mass media such as newspapers, magazines, radio, TV, etc (hence, non-personal)

Commercially Significant News: This is one of the features that distinguishes publicity from advertising. When information about a product or company is considered newsworthy, mass media tend to communicate that information free of cost. Since most publicity appears in the form of news items or articles originating from the media, rather than the advertiser, it has higher credibility (believability).

No Sponsor: Since the information originates from the media, there is no sponsor, which means the messages are unsigned. This is another point of difference between advertising and publicity.

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Marketing ManagementPUBLICITY

Not Paid for this: Since the sponsor is not identified in publicity and the information is not disseminated at his behest, he does not pay for it. This is the an additional feature that differentiates publicity from advertising.

Purpose (Demand Stimulation): In some situations, where publicity is properly planned, it may lead to the creation or reinforcement of a favorable impression about the company and its products in the minds of people receiving the message. This may lead to a favorable attitude towards the product or company and, thus,leads to an increased demand for the product.

Note : Negative publicity can damage the company's or product's image, resulting in reduced demand for the product. For instance, a great deal of adverse publicity was generated when different media condemned the Union Carbide's negligence in Bhopal gas tragedy through articles and editorials.

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Techniques of Personal Selling

ProspectingPre-approach

ApproachAsk Questions: Questions should preferably be relevant to sales presentationUse a Referral: Preferably someone favourably known to the potential customerOffer a Benefit or Service: This can be quite effective if relevant to customer's needComplement the Prospect: It is a good way to establish rapport if there is anything the prospect has achieved

Sales PresentationHandling of Customer's ObjectionsClosing the DealFollow Up

Case : Pizza Hut