3 Marketing

 

Unit 3.1

MARKETING AND MARKET

What is a market?

A market is a place where buyers and sellers come together to exchange products for money. Market may be a place, a country or worldwide.

What is marketing?

Marketing is the management activities to create awareness about the products.

The role of marketing (Mar 2018. Q no.3a P-2) (May/June 2023 Q.No3b P-2)

1. Identifying customer needs.

2. Satisfying customer needs

3. Maintaining customer loyalty.

4. Gain information about customers

5. Building customer relationships.

 

Marketing activities

1. Conducting market research

2. Developing products.

3. Packaging or safeguarding the product.

4. Branding the product

5. Pricing the product

6. Advertising and sales promotion

7. Distribution.

The Marketing department:

Marketing department consists of marketing manager, sales unit, research and development unit, promotion unit and distribution unit.

 

OBJECTIVES OF MARKETING MANAGEMENT (Mar 2016 Q.No-4e)

1. To increase sales revenue and profit

Increasing sales revenue and therefore profits is the most obvious objective for a marketing department.

2. To increase market share (market share is the percentage of total market sales held by one brand or business)

Business will also want to maintain its current share of the market, especially if the market is very competitive, or may even be trying to increase its share.

3. To maintain or improve reputation of product or a business:

This may be necessary if the image of the business has been harmed by bad publicity. For example, if a particular toy doll has harmed a child. Then the business will need to find ways to convince customers that the problem has been corrected.

4. To target new market or market segment:

Extending market to new area is not so easy. These could be markets in other countries or they could be different markets in their own country.

5. To develop new products or improve existing products:

Businesses may also need to bring out new products to keep the customers’ interest in their company. For example, Microsoft, which keeps on improving and developing its operating system.

6. Prepare marketing budget. (May/June 2016. Q no.2a)

Marketing budget is the proposed amount of money by a business to promote its products and services for a given period of time.

 

IMPORTANT TERMS RELATED WITH MARKETING

1. A market is a place where buyers and sellers come together to buy and sell goods and services.

2. The target market is when a business decides to produce products for a particular group of consumers.

3. Consumer market is where product sold to the final consumer. For examples, food items, TV and cars.

4. Industrial market is where products sold to other business for use in the production process. For example, machinery and equipment.

5. Niche market is a very small part of the whole market. It is a specialized market for particular product or service. For example- Lefty’s San Francisco- a retailer for left-handed people, Wedding cake manufacturers- among cake manufacturers.

6. Mass market is the opposite of niche market this is where a business sells the same product or service to the whole market. Example- rice.

7. Market share is the percentage of total sales held by one brand or business in a market. (Oct/Nov 2022 Q.No-1a)

 

Why consumers spending patterns change?

1. The price of the product.

2. The price of competitor’s product

3. Changes in consumer income.

4. Changes in population size and structure.

5. Changes in tastes and fashion

6. Spending on advertising and other promotional activities.

 

Why some markets become more competitive? (Oct/Nov 2017 Q.No-4a)

Almost all markets have some level of competition within them. However, some markets have seen a much greater increase in the level of competition than others.

1. Government intervention in markets.

            - Privatization- selling off public sector to private sector

            - Deregulation- reducing formalities to start the business

            - Financial aids- government provides help to start business

2. Growth of Trading blocs (Free trade between countries)

            Trading blocs are group of countries making agreement to trade without restrictions such as duty, quotas, exchange control, etc.

3. Developments in transport links

            Growth of transport helps the speedy delivery of resources across the borders; it creates more opportunities to enter business.

4. Development of e-commerce and social networks.

Many businesses have developed their own websites and use these to sell their goods so the development of e-commerce has increased the size of a business’s market but it has also greatly increased the level of competition in this market. Social network sites such as Facebook are also being used by businesses to promote their products.

5. Growth of Globalization

            Increased international trade brings more chances to the arrival of MNCs. Growth of MNCs create more competitive atmosphere for the local or small businesses.

 

How businesses can respond to changing spending patterns and increased competition?

1. Develop new products or services

• Introduce products that match new customer tastes
• Example: healthier food options, eco-friendly products

2. Improve existing products

• Better quality, new features, improved design
• Keeps customers interested and loyal

3. Change prices

• Offer discounts or lower prices if consumers are more price-sensitive
• Introduce premium pricing if demand for luxury goods rises

4. Use different distribution channels

• Sell online or use home delivery
• Reach more customers conveniently

5. Increase promotion

• Use social media advertising
• Highlight value for money or new features

6. Innovate

• Use new technology or methods
• Stay ahead of competitors

 

MARKET SHARE

Market share is the percentage of total market sales that a business controls.

Market share= (Business Sales/Total market sales​) x100

A market for soft drinks has total sales of 200,000 bottles per year.

Company A sells 50,000 bottles per year.

Marke share = (50000/200000) x 100 = 25%

 

NICHE MARKETING (Mar 2019 Q.No-1a) (Mar 2021 Q.No-1b) (Mar-2021 Q.No-2b P-2)

            Niche market is a very small part of the whole market. It is a specialized market for particular product or service. For example- Lefty’s San Francisco- a retailer for left-handed people, Wedding cake manufacturers- among cake manufacturers.

Benefits of niche marketing (May/June 2021 Q.No-1e) (May/June 2024 Q.No.1c) (Feb/March 2025 Q.No.1c)

1. Small firms are able to survive and earn high profit.

2. There is less competition in the markets.

3. Business can charge high price on their products

Limitations of niche marketing

1. The opportunity to earn high profits might attract competitors and this will reduce prices and future profits.

2. The size of the market is very small.

 

 

MASS MARKETING (May/June 2019 Q.No.2a) (Mar 2018 Q.No-3a) (Mar-2021 Q.No-2b P-2) (Feb/Mar 2023 Q.No-2e) (Oct/Nov 2023.Q.No.2e)

            Mass market is the opposite of niche market this is where a business sells the same product or service to the whole market. Example- rice.

 

Benefits of mass marketing (Mar 2019 Q.No-3d)

1. It requires large scale production. Larger firms often benefit from economies of scale which reduces unit costs.

2. A much larger market has the potential for high sales and profits.

Limitations of mass marketing

1. Much more competition in the market which lowers prices and profit margins.

2. Not all markets are large enough to support a mass marketing approach.

3. Consumers today are often looking for something slightly different from that offered by same product mass marketing. This has led to greater division of the whole market and reduced the scope for mass marketing.

 

MARKET SEGMENTATION (Feb/Mar-2021 Q.No-2a)

Market segment is a selected part of whole market.

Market segmentation is dividing the whole market into segments by consumer characteristics and then targeting different products to each segment.

 

Methods of Market segmentation (Feb/Mar-2024 Q.No-3c)

1. Geographic segmentation: It is dividing consumers in the market by geographic area.

a. Different regions within in the same country.

b. Different regions of the world.

c. Different countries in the world

2. Demographic segmentation: It is dividing consumers in the market by factor such as age, gender, income, ethnic background and social class.

a. By income group:

Here products are designed and sold by grouping people’s jobs according to how much they are paid.

b. By age:

The products bought by people in different age groups will not be the same. Young people buy different products to adults. The products bought for babies will vary from those bought by old people.

c. By gender:

Some products are bought only by women or only by men. For example, a shaving razor would normally be bought by a man, whereas perfume would normally buy by women.

d. By use of the product:

Products may be similar or same models but they will be marketed in a different way. For example, cars can be used by consumers for domestic use or for business use.

3. Psychographic Segmentation

Psychographic Segmentation represents people’s lifestyle and their individual pattern of behavior, made up of their attitudes, beliefs, interests, social status and habits. Also, a single person earning the same income as a married person with three children will spend that income differently, buying different products

 

BENEFITS OF MARKET SEGMENTATION TO BUSINESS (May/June 2020 Q.No-3e) (May/June 2016 Q.No-2c) (May/June 2015 Q.No-2a P-2) (Feb/Mar-2024 Q.No-2a.P-2) (May/June 2025 Q.No.1d) (May/June 2025 Q.No.1d)

1. Goods and services can be designed to meet the specific needs of consumers in each segment. This is likely to increase sales.

2. It spreads the risk of market failure. Small firms which may not be able to compete in the whole market are able to operate in one or two segments.

3. It helps the business to know market reaction quickly as the market is a small selected group.

4. This helps to save the cost of promotion because marketing strategies can be targeted at each segment. For example, posters can be used instead of TV advertisement for local market.

5. It may be possible to charge higher prices for very similar products in one segment than in other.  This is known as price discrimination.  For example, air travel will often have three types of passenger: first class, business class and economy class. They all travel on the same aeroplane, but pay very different prices. This enables the airline to earn higher profits from those passengers prepared to buy first or business class tickets.

 

Unit 3.2

MARKET RESEARCH

 

Market research (Mar 2020 Q.No-4a) (May/June 2017 Q.No-1a.) (Mar 2016 Q.No-4a)

            Market research involves collecting, recoding and analyzing data about customers, competitors, and the market for a product or service. It is a process of collecting information about a market.

 

IMPORTANCE OF MARKET RESEARCH (May/June 2018 Q.No-2c) (Oct/Nov 2016 Q.No-4a P-2) (Feb/Mar 2024 Q.No-2e) (May/June 2025 Q.No.3a. P-2)

1. It helps to identify the changes in marketing technologies

2. It helps to identify consumer tastes and preferences

3. It helps to decide the best promotion methods

4. It helps to identify the competitors and their strategies

5. It helps to predict the future demand for the product

6. It helps to fix the price of a newly introduced product.

7. It helps to reduce the risk of business or product failure

 

             MARKET RESEARCH DATA COLLECTION- METHODS (Oct/Nov 2020, Q.No-3d) (May/June 2016 Q.No-2b P-2)

1. Primary research, or Field research

2. Secondary research or Desk research.

1. PRIMARY RESEARCH:

Primary research or field research is the collection of original or first-hand data. It involves direct contact with potential or existing customers to collect data first time for own purposes.

 

Methods of Primary research (Oct/Nov 2018 2a. P-2) (Mar 2017 Q.No-3b) (May/June 2023 Q.No.2e) (Oct/Nov2024 Q.No-3e)

1. Focus group (Oct/Nov-2015 Q.No1a)

            In this method, a group of consumers they are familiar with the products are invited to discuss the topics such as quality, packaging, and advertisements. Eg: A Hair shampoo manufacture can find out what consumers think about colour, smell and packaging of a new shampoo.

Advantages of Focus group (Oct/Nov-2019 Q.No2e).

1. It helps to collect highly detailed responses form the customers.

2. Chance of errors are lower in targeted data collection.

3. It helps to get precise and confidential information to the business.

4. It helps to get current and updated information to the business when comparing with secondary research.

2. Observation.

            Here, the behavior of consumers is secretly observed by the market researchers. This type of method is often used by large supermarkets who observe the behavior of customers as they select their products from the displays.

3. Test Market

            In this method, a limited quantity of products is produced and sold in carefully selected area of the market. Here the feed backs of buyers will be observed to make changes in bulk production.

4. Sampling

            Sampling is possible if the market is wide and number of respondents are large. Here, instead of collecting the feedbacks from all consumers, a few consumers are selected randomly to collect the data.

5. Consumer surveys using questionnaires

            Surveys use to collect both quantitative and qualitative data with the help of questionnaire. Methods of surveys are,

            a. Interview:- A trained interviewer asks set of questions-questionnaires to the consumers and record the answers. Interview might face to face in the business premises or may be telephonic.

            b. Postal survey:-  Here, questionnaires are sent to the address of the customers requesting to answer and return.

            c. Online survey:- In this method, business use internet and the website to carry out surveys. People can give feedbacks or stars according to the products and qualities.

 

 

What is a questionnaire? (Oct/Nov 2019 Q.No-1b P-2) (Mar 2019 Q.No-1d)

            A questionnaire is a set of questions systematically prepared and arranged for collecting the feedback or response of consumers.

 

Features of a good questionnaire

1. Simple and familiar terms should be used in questions.

2. Give choice for answers

3. Do not focus to the privacy of people.

4. Order of the questions should be sequential

5. Questions should be logical and not be annoying.

 

Advantage of Questionnaire

1. Large amounts of information can be collected in a short period of time.

2. Many people can be asked the same questions it helps to collect information from different markets

3. Respondent has time to consider questions so more likely to answer the questions but they may not answer while in shop.

4. It is useful to collect genuine information if customers wish to answer anonymously.

 

Disadvantage of Questionnaire

1. Response may be poor if people interpret questions in a different way so business may take wrong decisions.

2. People may hide the truth if questions need lengthy response.

3. Simple questionnaires cannot tell the meaning behind a response example yes or no choice.

4. Business may need the help of expert to make the questionnaire attractive.

 

Benefits of sampling (Mar 2020 Q.No-2a P-2) (Feb/Mar 2023 Q.No-4c) (Oct/Nov 2023.Q.No.4c)

1. It helps to save the time to collect information because a few consumers are selected.

2. It helps to save the cost of preparing questionnaire because a few prints are required.

3. It helps to save the cost of travelling and data collection in the selected market.

4. It helps to get more accurate or relevant information – as potential customers can be targeted to collect data.

 

2. SECONDARY RESEARCH (Mar 2019 Q.No-4a) (May/Jun 2015, Q.No.3b) (Feb/March 2025 Q.No.1e)

Secondary research or desk research is the use of information that has already been collected and is available for use by others. The information may be from either internal or external sources.

a. Internal sources of information

This is when information is obtained from inside the company. Examples of internal sources of information include:

1. Sales records, pricing data, customer records, sales reports.

2. Opinions of distribution and public relations personnel.

3. Finance department

4. Customer Service department.

b. External source of information

This is when information is obtained from outside the company. Examples of external source of information include:

1. Internet: It offers wide flat form to collect information for the current purpose through different websites. However, care must be taken to check information as it is not always accurate.

2. Libraries: Public libraries offers facilities to the people to collect information through magazines, journals, publications of industries, etc.

3. Media reports or Newspaper:  These media help to share local, national and international information related with business and economies. Most of the newspapers have a special column for business news.

4. Government report and statistics: These are official information collected and publicized by the government organizations. Information such as population, growth of industry, national income, foreign reserves, leading business, etc. can be collected.

5. Market research agency’s reports: These are specialist agencies that carry out research on behalf of companies or anyone who commissions them. However, whilst the reports contain very detailed information about the market, they are expensive to buy.

 

Advantages of secondary research (Oct/Nov-2019 Q.No.2e).

1. Low-cost way to gain information- no need to spend money for questionnaires or appointing staffs.

2. Information is available anytime so can be collected anytime.

3. It saves time for collecting data-if primary research is preferred it would take more time.

Disadvantages of secondary research

1. Out dated data

2. Easy access of data would increase threats from the competitors

3. May not fit for the current trends of marketing

 

Factors affecting the accuracy of market research information (Oct/Nov-2018 Q.No-2c) (Mar-2021 Q.No-2c)

            The accuracy of research information is depending on the following factors.

1. Selected sample- Wrong sample selection, it may be too small or not representing the population

2. Type of questionnaire- may be used complex questions, calculations, time spending.

3. Method of data collection- not matching with purpose of research.

4. Languages used by the interviewer- not familiar to the interviewee

5. Attitude of interviewee- not ready to respond or ignore

6. Out dated data- if secondary method is preferred

 

PRESENTATION AND USE OF MARKET RESEARCH RESULTS

Presentation of data is important because it converts raw data into a form that is easier to understand. Information can be displayed as

1. Tables.

Tables could also be used to present data in situations such as when people are interviewed on why they like a product and they are given multiple choices.

2. Bar chart:

Charts are a more meaningful and attractive way to present data. They are normally used to compare two or more sets of stats with each other. 

3. Pictogram:

It is similar to a bar chart but uses symbols instead of columns. It becomes extremely effective if the data is short and simple.

4. Pie chart:

Pie charts are ways to show the proportion that each component take up compared to the total figure.

·         It is best use to present the proportion of a sample

·         It is most useful where one or two results dominate the findings

·         It can represent data expressed as actual numbers or percentage

5. Line graph:

Graphs show the relationship between two variables. It can be drawn in a straight or curved line. It is usually to compare things with time and to identify trends.

 

 

Unit 3.3

MARKETING MIX

 

Marketing Mix

The marketing mix is a term which is used to describe the four keys of marketing decisions- Product, Price, Promotion and Place needed for the effective marketing of a product.

 

THE ELEMENTS (FOUR Ps) OF THE MARKETING MIX (Oct/Nov 2020 Q.No-3b P-2) (May/June 2017.Q.No-4b P-2) (Oct/Nov 2016 Q.No-4b P-2) (May/June 2021 Q.No-1b) (Feb/Mar-2024 Q.No-2b.P-2)

“The right product at the right price with the right promotion in the right place”

1. Product: The term product represents goods or services. If goods, it highlights its design and quality.

2. Price: The term price shows the rate at which a product or service sold to the final consumers. Price is not cost or profit.

3. Promotion: The term promotion refers the methods used to boost the sales of a product. It describes how the product is advertised and promoted.

4. Place: The term place refers to the channels of distribution selected for a product. It describes the movement of products from producer to the consumers including warehousing.

 

1. MARKETING MIX: PRODUCT

The role of product in the marketing mix

              The term product includes goods or services. It is probably the most important element in the marketing mix. Without the product, the rest of the marketing mix is pointless. After developing the product, the other parts of the marketing mix- price, promotion and place will be determined.

    

Product development- Methods

Product development consists of the following methods

        1. Develop new products- fresh in the market.

        2. Changing an existing product to meet the changing tastes of customers

       3. Change an existing product to enter a new market

New product development can be very expensive. Even if a product is developed following market research, this does not guarantee success.

 

Benefits of new product development (Oct/Nov 2021 Q.No-3a. P-2) (May/June 2022 Q.No-3a.) (May/June 2025 Q.No.1e)

1. Market research helps to identify the changing needs and expectations of customers.

2. Developing a new unique product will bring competitive advantages. The business may be able to charge a high price and achieve high sales producing high profit.

3. New product developed for new markets increase potential sales, revenue and profit.

4. Developing new products reduces the risk related with the current products.

 

Costs of new product development (Oct/Nov 2021 Q.No-3a. P-2)

1. Market research may be very expensive

2. The development of a new product often requires large capital expenditure.

3. There is no guarantee that a new product will be a successful in market. Risk is high

4. Business may need to recruit specialists so it would increase cost.

 

BRANDING (May/Jun 2015, Q.No.2b)

A brand is the name given by a business to its product or range of products. It allows a business to distinguish its products from those of its competitors. Creating a brand image increases a business’s sales and revenue.

 

Brand Image (Oct-Nov 2020 Q.No-2b)

Brand represents the identity using a logo or unique name of a product that distinguishes it from other similar products.

Brand image is the general impression or reputation of a product held by consumers.

Brand loyalty

The mental attachment of people towards a particular brand is known as brand loyalty.

 

The importance of Branding (Mar 2017 Q.No-4a.P-2)

1. Branding helps to advertise the product.

2. Branding helps the consumers to recognize the product more easily from similar products

3. Branded products can be priced higher than less well-known brands

4. Branding helps to launch new products onto the market without further introduction.

5. Branding helps to expand the market.

6. It helps to give the product a USP (Unique Selling Proposition)- USP is the marketing strategy of informing customers about how one's own brand or product is superior to its competitors. 

PACKAGING

     Packaging is the process of wrapping or protecting the products using various materials.

 

Importance of packaging (Oct/Nov-2015 Q.No1b) (Oct/Nov 2022, Q.No-2a.P-2)(Oct/Nov 2023 Q.No1.c)

1. It provides safety and protection to the product without damage from external factors.

2. It helps to carry products from one place to another place.

3. It helps to provide information about the products as part of promotion.

4. It helps to label the brand name on the products.

5. It helps to indicate the details of contents of products.

 

THE PRODUCT LIFE CYCLE (May/June 2022 Q.No-3d.)

            The PLC shows the patterns of sales of a product from introduction to its withdrawal from the market. All products have life cycle. The life cycle represents the sales of the product overtime

The product life cycle is divided into four main stages. (May/June 2017.Q.No-4a P-2)

1. INTRODUCTION STAGE: In this stage the product is just introduced or launched on to the market.

Sales may be low at first because most consumers will not be aware of its existence. It might result loss to the producers due to high development cost- research and automation.

Business needs more budget as cost of advertising is higher. Informative advertising is preferred.

Eg:- Artificial intelligence, robotics, etc.

2. GROWTH STAGE:

            In this stage, sales start to grow rapidly. The advertising is changed to persuasive advertising to encourage brand loyalty. Sales are increasing so profits start to be made as the development costs are covered.

Eg:- Electric vehicles, Covid 19 medicines, etc.

3. MATURITY STAGE: 

            In this stage, sales now increase but very slowly. Competition becomes intense and business should consider new pricing strategies such as competitive or promotional pricing. A lot of advertising is used to maintain sales growth. Profits are at their highest.

Eg:- Coca-Cola, introducing diet cola, etc. 

4. SATURATION STAGE

In this stage sales remain high but becomes stable due to intense competition.

Profits fall as sales are static and prices have been reduced.

Eg:- N95 Masks- demand remains same but may substitute with local masks and forced to reduce price.

5. DECLINE STAGE: In this stage, sales of the product will decline as new products come along or because the product has lost its market. The product will usually be withdrawn from the market when sales become so slow and prices have been reduced so far that it becomes unprofitable to continue the production. Advertising is reduced and then stopped.

Eg:- VCR, Typewriter, Fax devices, etc.

     The exact length of the life cycle, in terms of time, is affected by the type of product, for example, fashionable items will go out of fashion quickly whereas food products may last a very long time. The life cycle of some very popular brands, such as Coca-Cola, is many years, whereas the life cycle of fashionable cloth is often less than a year. New developments in technology will make original product obsolete and their life cycle will come to a quick end as new products are purchased in preference to old technology.

 

EXTENSION STRATEGIES IN MATURITY STAGE

1. Finding new markets for the product – owners/managers will look to see if there are other markets for their product, perhaps entering foreign markets.

2. Finding new uses for the product – the research and development team might look to see if the product can be used for something other than what it was originally intended for, for example a fizzy drink which is promoted as having benefits as a sports drink.

3. Adding new features on the product – Making changes or redesigning the product or packaging would help to give it a ‘fresh’ and more up-to-date appeal.

4. Increased advertising and promotional activities – the marketing function looks at other ways of promoting the product to perhaps appeal to a new market, or to remind the existing market that the product is still available.

5. Rebrand the product and make it more appealing.

 

2. MARKETING MIX- PRICE

Price

Price is the amount paid by the customer to the supplier when buying a good or service. It denotes the value of the products. Price differs from cost. Price is the very important part of the marketing mix because it is often the most important influence on customer demand for a product

 

PRICING METHODS (Oct/Nov-2018 Q. No-2e) (Mar 2018. Q.No-3.e) (Oct/Nov 2017 Q.No.2b P-2) (Mar-2021 Q.No-2b) (Oct/Nov 2021 Q.No-3b P-2) (Feb/March 2025 Q.No.2e)

1.    Market skimming

2.    Penetration pricing

3.    Competitive pricing

4.    Promotional pricing

5.    Cost plus pricing

6.    Dynamic pricing

1. Market skimming

A business may decide to set a high price for a new product which is unique or very different from anything on the market, this is known as market skimming.

For example, when Google introduced their Google glasses, they were able to charge a very high price because it is a unique product and consumers are willing to pay more for the very latest technology. Consumers may also want the status of owing the latest version of a product and are prepared to pay a high price for this.

The profit earned when using market skimming is very high. Businesses sometimes need a large profit to get back the high costs of research and development of the product.

Eg:- Google glasses, Apple products- iPhone.

Advantages

1. The high price enables the firm to recover research and development costs.

2. The high price may help the firm to create a quality image for its products

Disadvantages

1. The high profits will eventually attract cheaper competitors.

2. Some customers who would like to buy the product are not able to do so because of the high price. This means a loss of sales.

2. Penetration pricing (Oct/Nov 2016 Q.No-2b)

Setting a low price to attract customers is known as penetration pricing. The price is set at lower level from similar products existing in the market. The low price may encourage consumers to try the product. Once the business has built up some customer loyalty for the product, it usually increases the price to a level similar to that of its main competitors.

Eg:- Netflix, TV channels etc.

Advantages

1. Attracts customers more quickly and helps the product to become established in the market.

2. Can increase market share in short run.

Disadvantages

1. Possible loss of revenue due to lower prices.

2. Cannot recover any development costs quickly and if the life cycle is too short then development costs might never be recovered.

3. Competitive pricing (Dynamic pricing) (May/June 2022 Q.No-1e.)

Setting a price similar to that of competitors’ products which are already established in the market is known as competitive pricing. If a business is to charge a higher price than its competitors it is likely that consumers will not buy their product because they can get similar for cheaper.

Some industries are dominated by large companies. These companies will set the market price for their products. Smaller firms, producing similar products, will find it very difficult to set a price that is very different to that of the market leader. This is sometimes called price leadership.

Eg:- Prices of accommodation in resorts.

Advantages

1. Prices are similar to competitors so business can compete on things they might be better at such as quality product, or customer service.

2. Flexible pricing, it can be adjusted with market situation.

Disadvantages

1. If the market has a price leader then this price would need to be followed otherwise customers and market share will be lost.

2. Still need to find ways of competing in order to attract sales.

4. Promotional pricing 

There are several methods of promotional pricing. They are used for different reasons but all involve pricing the product as low as possible for a limited period to get consumers to buy.

a. Loss-leader pricing- In this method sometimes sellers offer a few products sell below the normal price or cost price, sometimes even at a loss. These prices attract customers into the store who will also buy other products at their normal, profitable prices.

b. Buy-one-get-one-free- This pricing is used to create product awareness and develop customer and brand loyalty.

c. Discount- This is normal cut in selling price. It is also used to create product awareness and build up customer loyalty. Sometimes it is used by businesses wanting to sell off surplus stock.

            Eg: Prices offered for the short run. - New year, Ramazan, etc.

Advantages of promotional pricing

1. Good way to sell off unwanted inventory before it becomes out-of-date.

2. A good way of increasing short-term sales and market share.

Disadvantages of promotional pricing

1. Revenue on each item is lower so profits may also be lower.

2. Can only be used for a limited time.

5. Cost-plus pricing (May/June 2021 Q.No-1a)

Cost-plus pricing is based on the cost of making the product and the addition of a fixed percentage of profit. It also known as mark-up pricing. Here profit is added to the cost as fixed percentage and fixing a selling price together.

Eg:- Semi-finished goods such as tyre, steels, etc. sold to another industry based on cost-plus pricing.

Advantages of cost-plus pricing

1. Quick and easy to work out price.

2. Makes sure that the price covers all of the costs.

Disadvantages of cost-plus pricing

1. Price might be set higher than competitors or more than customers are willing to pay this reduces sales and profits.

6. Dynamic pricing

              When a business sets flexible prices for products/services based on supply, current market demand, competitor prices, time of day, customer behavior, and even weather. Examples: Airline tickets, hotel rooms, ride-sharing pricing (online- taxy), e-commerce sales.

Advantages

1. Business can optimize revenue by charging the highest price the market will bear at any given moment.

2.It helps business to be more competitive

3. It helps to manage inventories

Disadvantages

1. Consumer Hardship: Can disproportionately affect low-income consumers who can't afford sudden price spikes.

2. Unpredictable Budgets: Makes it hard for consumers to budget and plan purchases

3.It would create the risk of Price Wars: Aggressive price matching can reduce margins for all competitors

4. Need more technical staffs to monitor the market

 

FACTORS AFFECTING WHEN CHOOSING A PRICING METHOD (Mar 2020 Q.No-4c)

1. Type of product- New or existing.

            When a product is new to the markets it might be priced lower than a product in the growth or maturity stage. This is so it can gain sales and develop customer loyalty to the product. When a product enters the decline stage its price might be lowered to sell off the last remaining inventory.

2. Quality of the product.

A skimming strategy – charging a very high price – might be used for a product that has no close substitute. For example, the latest model of iPhone or iPad is often launched onto the market at a very high price. Once similar products enter the market, the competition will cause prices to fall.

3. Competition in the market.

Very competitive markets will result in most firms charging very similar prices for their product as consumers will buy the least expensive if there is little to choose between them.

3. Brand image of the business.

Companies such as Sony and Cadbury are able to charge a higher price of their products even though competitors have similar products on the market. This is because consumers trust the brand and consider the products to be of a better quality than cheaper alternatives.

4. Costs of production. 

Clearly, the price has to be greater than the cost of making and marketing the product so that the business can earn profit.

5. Marketing objectives of the business.

If the business wants to increase market share by volume of sales then it might charge a lower price than competitors. However, if the objective is to maximize profit, then they might have a different pricing strategy.

6. Economic conditions

            Pricing policies should be practiced based on the market or economic conditions such as recession, boom, etc. During recession the income of people may fall so it would affect the purchase too.

7. Government or legal control

            Government controls such as tax, duty, deductions, etc. would affect the price of the product.

 

PRICE ELASTICITY OF DEMAND (Mar 2018 Q.No-3b) (Mar 2016 Q.No-4b) (Oct/Nov 2022 Q.No-2d)

            The demand for some products may change according to the change in price, it is known as price elasticity of demand. Eg:- If price increases demand decreases and vice versa.

Price elastic demand- Products that are more responsive to changes in price.

Eg:-  A small decreases in price brings high demand for products.- Demand for cinema ticket, if price cut demand would increase.

Price inelastic demand- Products that are not very responsive to changes in price. Eg:- If price increases or decreases the demand and usage will be almost same. Demand for bottled water and Medicines.

 

3. MARKETING MIX- PLACE (DISTRIBUTION CHANNELS) (Mar 2020 Q.No.1b) (Mar 2016 Q.No-3b P-2) (Feb/Mar 2025 Q.No.3b P-2)

This element of the marketing mix involves how to get the goods from the producer to the final consumer, it is also known as the channel of distribution.

 

Channels of distribution

 

a. Channel-1- Producer to Consumer

In this channel of distribution, the producer sells the product directly to the consumer. This is known as direct selling. Producers may sell their own retail outlets or using online platforms.

Advantages

1. All the profit is earned by the producer as no middlemen to share the profit.

2.The producer controls all parts of the marketing mix.

3. It is the quickest method of getting the product to the consumer. For example, fresh fruit and vegetables.

4. The producer can sell the products at lowest price

Disadvantages

1. Consumers are not always able to check the product before they buy, for example if purchased online.

2. Delivery cost may be high.

3. All storage cost must be paid for by the producer.

4. All promotional activities must be carried out and financed by the producer.

b. Channel-2 Producer - Retailer – Consumer (Oct/Nov 2021 Q.No-2c)

            In this channel of distribution, the producer sells the product to retailers. The retailers then sell the goods in their shop to the final consumer. Mostly non-durable goods are sold in this channel to avoid the delay in distribution.

Advantages

1. Consumers can see and try the product before they buy.

2. The cost of holding inventories of the product is paid, in part, by the retailer.

3. The retailer also will pay for the advertising and other promotional activities.

4. Retailers are usually more conveniently located for consumers.

Disadvantages

1. The retailer takes some of the profit away from the producer.

2. Producers lose some control of the marketing mix.

3. The producer must pay delivery costs to the retailers.

4. Retailers usually sell competitors’ products as well.

c. Channel-3 Producer - Wholesaler -Retailer -Consumer (Oct/Nov 2023 Q.No.1e)

This channel of distribution uses two middlemen- wholesalers and retailers. The producer sells large quantities of the product to the wholesaler. The wholesaler then sells the product in small quantities to the retailer, who then sells the product to the final consumer. Durable goods are sold in this method.

Advantages

1. The wholesaler buys in bulk from the producer and then breaks this down into smaller quantities for retailers.

2. Wholesalers will advertise and promote the product to retailers.

3. The transport cost to the retailers is paid for by the wholesaler.

4. Wholesalers will pay for the storage costs of the products purchased from the producer.

5. Distribution of goods through wholesalers helps the producer to sell its goods to larger market.

Disadvantages

1. Another middleman – the wholesaler – takes part of the profit from the producer.

2. Increases price due to more middlemen

3. The producer loses even more control over the marketing mix.

d. Channel-4 Producer - Agent -  Wholesaler - Retailer – Consumer

This channel of distribution is most commonly used when a business enters into a foreign market for the first time. Foreign trade agents or freight forwarders are used in this channel. The agent has specialist knowledge about the country and markets and can help the producer to place their product with wholesalers and retailers abroad.

Advantages

1. The agents find wholesalers and retailers in foreign countries so risk of producers in marketing is reduced

2. Helps the producer in communication and documentation issues abroad.

3. Agents arrange transportation and warehousing abroad

Disadvantages

1. More middlemen in the channel of distribution may reduce the profit to the producer.

2. Price of the product would increase due to more middlemen

 

Advantages and disadvantages to the retailers buying from Manufactures (May-June 2021 Q.No-2b P-2) (May/June 2023 Q.No3e)

Advantages to the retailers

1. Manufactures may arrange free delivery so cost of transportation can be saved

2. Manufactures may offer trade discount for bulk purchase- Economies of scale

3. It would help the consumers to get the goods at low price when the retailer bypasses the wholesalers

4. It helps the quick availability of goods without more middlemen

   Disadvantages to the retailers

1. Marketing risk may be increased

2. Storage cost would increase as manufactures supply in bulk quantities and retailers should maintain the warehouse

3. Risk of wastage of products due to bulk quantity dealings

 

FACTORS INFLUENCING THE CHOICE OF METHOD OF DISTRIBUTION. (CHOOSING A METHOD OF DISTRIBUTION)

There are a number of factors that will influence the best method for the distribution of a business’s goods such as:

1. Cost of transport- the cost of transporting goods to the customer needs to be considered before selecting the mode of distribution, because, if a business uses their own delivery vehicles and employ their own drivers to deliver the goods, it can prefer a channel of distribution without more middlemen.

2. Nature of the product -some goods will need special delivery conditions, for example fresh fruits and vegetables need special transport vehicles to maintain the correct temperature. Perishable goods, such as milk, bread, etc. need to get to the final consumer as quickly as possible so a channel of distribution with more middlemen might not be appropriate.

3. The type of market - markets that cover a wide range geographical area are best served through wholesaler who can buy the product in bulk from the producer and then break this down into smaller units for retailers.

4. Distance from producer to market -Normally in international market, business may prefer agents such as freight forwarders but in domestic market, the business may prefer without more middlemen.

 

4. MARKETING MIX – PROMOTION

            Promotion involves all the methods used to boost the sales of goods or services. It tells consumers about a product and tries to persuade them to buy it.

The objectives of promotion (May/June 2025 Q.No.1b) (May/June 2025 Q.No.1b)

1.  Increase sales.

2. Attracting the attention of consumers by making them aware of the product, or reminding consumers that the product is still on the market.

3. Persuading consumers to buy the product

4. Explaining how a product is better than competitors’ products

5. Creating and developing brand image

6. Encouraging wholesalers and retailers to stock the product

 

 

 

The most common methods of promotion (May 2020 Q.No-2b P-2) (Mar 2020 Q.No-2b P-2) (Oct/Nov 2020 Q.No-4d) (Mar 2018. Q no 4.d) (May/June 2017 Q.No-1c.) (Oct/Nov-2015 Q.No1e)

 

A. ADVERTISING

Advertising is a form of communication by which information about goods, services and sellers are shared among the public.

Objectives of advertising/ Promotion. (Mar 2019 Q. No-3c) (Oct/Nov 2016 Q.No-2c)

1. Increase sales and revenue.

            The main purpose behind advertising is to increase sales by providing information about new services and goods to the public.

2. Persuade the public.

            The methods or techniques used in the advertising influence the public and force them to buy certain goods or services; this results in the overall increase in sales as well.

3. Share information about products

            The public get information about various services and new products through the advertising. It enables them to know how to use, where to purchase, price, benefits, etc.

4. Expansion of market.

           Advertising aims at maintaining or expanding markets for existing products too.  Advertising does it by highlighting the attractive features and the uses of existing products.

5. Creation of brand image.

            Advertising creates reputation for the company and its products. It brings attraction to particular brand or company.

 

TYPES OF ADVERTISING

1. Persuasive advertising.

In this advertisement the advertiser tries to persuade the public to buy his products or services by highlighting that their products or services are better than competitors’ products.

      Eg:- Lowest price, First in the market, Large car parking facilities, buy one get two,  20% discount, warranty, etc.

2. Informative advertising.

             In this advertisement various information about the products and sellers are passed to the public. It covers the general information of a particular product or shop.

Eg:- Name of the shop, Location of the shop, Contact details, New product or service, Advertising for employees, Warning and instructions,  New events such as exhibition, sports match, music shows, etc.

3. Competitive advertising

             This type of advertising is carried out by different producers of different brands of the same products. Each producer tries to compete with other producers in order to increase sales and market.

            Eg:- Advertisements of soap, cool drinks, etc.

4. Collective advertising (Generic advertising)

             When all the producers of the same industries join to advertise their products is called collective advertising. Here no any particular brand is considered for advertising. These advertisements are usually sponsored by trade associations.

            Eg:- Join the tea set, Drink more tea,  There is no substitute for coffee, etc 

5. Sponsorship advertising.

             In this advertising a sponsor conducts a particular cultural or sports event and meets all the expenses himself. He can advertise through the events about his products and services.

            Eg:- Coca cola conducts foot-ball match or cricket match, Ooredoo conducts cultural meet and musical programme, etc

 

Advertising media (May/Jun 2015, Q.No.4d)

1. Internet- Websites, popup adverting, social media, apps, email. etc.

2. TV

3. Radio

4. Newspaper

5. Poster

6. Leaflets

8. Trade journals and magazines (Oct/Nov 2022 Q.No-2e)

 

2. Sales promotion (May/June 2019 Q.No.1d) (Mar 2019 Q.No-3a P-2) (May/Jun 2015, Q.No.3c) (May/June 2015 Q.No-2b P-2) (May/June 2024 Q.No2b P.2) (Feb/March 2024 Q.No.4c)

Sales promotion involves the sum total of all the activities to boost the sales of particular product or service. It is a method of marketing to attract customers in short run.

Sales promotion include:

1. Money-off coupons or vouchers

2. Price discounts on special occasions- New year, Ramazan, etc.

3. Point of sales displays in shops

4. Loyalty card- Special cards issued to the regular customers and they gets benefits from the repeated purchases.

5. Competitions and games with cash or other prizes- Competitions for consumers

6. Loss leader- Selling goods below the cost price or zero profit.

7. After sales services- free service, installation, etc. in warranty period.

3. Personal selling

Here the salesperson has direct contact with the potential customer and will visit personally for selling products. This enables the seller to build a relationship with the customer that can last after the completion of sale and result in further sales in the future.

4. Direct mail

Direct mail involves posting leaflets or other printed materials directly to the business offices or homes of potential customers. These potential customers have usually been identified through market research.

5. Sponsorship

Sponsorship is where a business will pay to have its name linked to an event, or perhaps to an individual or group of individuals who are in the public eye.

 

Customer loyalty (Oct/Nov 2023 Q.No.4a)

           Customer loyalty represents the customer’s mental attachment towards particular business or brands. It is determined based on customer satisfaction and experiences.

 

Measures to increase customer loyalty/relationship/sales (May/June-2020 Q.No-4d) (Oct/Nov 2017. Q.No-1d) (May/June 2024 Q.No.1b) (Feb/March 2025 Q.No.2c)

1. Increase regular communication with customers. e.g. surveys to find out how/what they need to do to improve

2. Offer good quality after sales service.

3. Train staffs to offer a good quality customer support service.

4. Resolve complaints quickly so that customers don’t change to another option.

5. Offer rewards/ loyalty programs for regular customers.

6. Offer extra services such as online/mobile phone app assistance.

TECHNOLOGY AND THE MARKETING MIX

The development of technology has affected many areas of business activities. The growth of IT creates wide opportunities for marketing management.

E-commerce

E-Commerce is also known as electronic commerce. The traditional commercial activities are done with the help of electronic devices and technologies is known as e-commerce. Online trading and marketing are examples of e-commerce.

 

Opportunities and threats of e-commerce (May/June 2020 Q. No-3d) (May/June 2018 Q.No-3d) (Oct/Nov 2017. Q.No-1e) (March 2022 Q.No-2e) (May/June 2024 Q.No.3b P.2)

Opportunities of e-commerce to businesses

1. Increased market – the business is able to sell its goods and services consumers throughout the world- worldwide market

2. Reduced costs –Cost of recruitment, salary of staffs and other costs such as rent, etc. can be saved

3. Better information – Through website, business can provide all detailed information to customers as they need about goods and services available.

 

Threats of e-commerce for businesses

1. Increased competition – Competitors can now be from any part of the world, not just the local market.

2. Unfamiliarity – Consumers are less likely to buy products from new businesses they don’t know.

3. Increased cost of delivery and advertisement – Business should spend more on advertisement and delivery of goods

Opportunities of e-commerce to consumers. (Mar 2021 Q.No-1c)

1. Convenience – Consumers can order their products from the comfort of their own homes at any time of the day.

2. Wider choice – Consumers are now able to buy goods which they would not have had access to if they were not able to use their local shops.

3. Lower prices – Competition is worldwide and this reduces prices.

4. Better information – Consumers are aware about goods and services available through the websites of the different businesses and also read reviews from consumers who have bought products from businesses.

 

Threats of e-commerce for consumers

1. Fraudulent practices – A website might take a consumer’s money and not deliver the goods.

2. Hacking – Consumers personal details or bank account details might be ‘stolen’

3. No personal service – There is no face-to-face contact between the consumer and seller.

4. Returning items – It can be inconvenient and expensive to return goods which do not meet the consumer’s need e.g. clothing that does not fit.

 

SOCIAL MEDIA MARKETING (Oct/Nov 2018 Q. No 4d)

Apart from e-commerce, websites have other uses. They can be used to promote a business and its products. In addition to its own website, a business may pay to place banner advertisements, or ‘pop-ups’ on the websites of other businesses. This can advertise the business especially if the ‘pop-ups’ or banner is placed on a related product’s website.

Recently, businesses have seen the benefit of using social networks such as Facebook, Viber, WhatsApp, Twitter and YouTube to promote their business. This is known as social media marketing.

 

Advantages of Social media marketing (May/June 2024 Q.No.2d)

1. Cover wide area –Social media access bring wide area of market to the business comparing with traditional marketing.

2. Low cost method of advertising- So it saves the cost of marketing and can offer products at low price.

3. Easy to update the changes and notify customers- If any changes on price or products that can be notified to the customers at free of cost but it would be expensive if TV or newspaper advertisement.

4. Easy to create target group of customers- So business can offer products to individual based on the preferences of the group.

 

Disadvantages of Social media marketing.

1. It is not possible where there is no internet access or banned social media.

2. Anyone can alter the message or post against the business so it may affect the reputation of business.

3. Cost of network and devices for regular updates.

 

Marketing strategy (Oct/Nov 2016 Q. No-2a)

Marketing strategy is a systematic plan to achieve the marketing objectives using a given level of resources. Here the business combines the 4 marketing mixes for developing strategies.

 

Key Elements of a Marketing Strategy

1. Market Research

• Collects information about customers and competitors
• Helps identify customer needs and wants
• Reduces the risk of product failure

2. Target Market

• The specific group of customers a business aims to sell to
• Can be based on age, income, gender, location, or lifestyle

Example: A sports shoe company targets teenagers and young adults.

3. Marketing Objectives

• Increase sales
• Increase market share
• Enter new markets
• Improve brand awareness

4. Marketing Mix (4Ps)

Product

• Design, quality, features, packaging, branding
• After-sales service and warranties

Price

• Pricing strategies: penetration, skimming, competitive
• Discounts and special offers

Promotion

• Advertising (TV, social media, online)
• Sales promotion (BOGOF, coupons)
• Public relations and sponsorship

Place

• Distribution channels (shops, online, wholesalers)
• Availability and convenience

5. Budget

• Amount of money available for marketing
• Limits promotion and advertising choices

6. Monitoring and Review

• Check sales figures and market share
• Customer feedback
• Make changes if objectives are not met

 

Choosing a marketing strategy

A business produces a marketing strategy only after careful market research. The marketing strategy also contains details of the marketing budget.

 

Deciding marketing strategy

A business’s marketing strategy is a plan to achieve its marketing objectives using a given level of resources.

Once a business has set its objectives then it needs to take decisions about product, price, promotion and place to achieve them.  These decisions would depend to some extend on the available marketing budget and the stage of product life cycle.

 

OPPORTUNITIES AND PROBLEMS OF ENTERING NEW MARKETS ABROAD

E-commerce has enabled many businesses, of all sizes, to enter new markets abroad. However, this expansion does not have to be through e-commerce and there are many examples of businesses which now export their goods and services to other countries using traditional distribution channels.

 

Main Opportunities / Advantages

1. Increased Sales and Revenue

• More customers in overseas markets
• Higher sales volumes lead to higher revenue

2. Access to Larger Markets

• Foreign markets may have larger populations
• Greater potential demand than the domestic market

3. Economies of Scale

• Producing more can reduce average costs
• Allows businesses to lower prices and be more competitive

4. Reduced Risk or spreading risk

• Business is not dependent on one country
• Poor sales in one market may be offset by good sales in another

5. Growth Opportunities

• Useful when the home market is saturated
• Allows long-term business expansion

6. Improved Brand Recognition

• International presence increases brand awareness
• Enhances business reputation

 

PROBLEMS OF ENTERING IN FOREIGN MARKETS (Oct/Nov 2017 Q.No.3d) (Mar 2016 Q.No-4b P-2) (May/Jun 2025 Q.No.4a P-2)

 

Although entering new markets abroad offers huge marketing opportunities, there may also be problems for businesses entering foreign markets.

 

1. Communication issues (Differences in language)

Language and cultural differences can cause problems for a business wanting to sell its goods and services in another country. It results communication more difficult and expensive.

2. Increased expenses and hidden costs

            Countries are separated by long distances so it makes transport more expensive and issues due to late delivery or damage to the products. So, it brings extra costs such as insurance, middlemen, etc.

3. Social and cultural differences

Social and cultural changes make the foreign trade more difficult. Each country has their own cultural background so countries prefer to import from countries which produce goods which meet their social and cultural interests.

4. Differences in legal controls to protect consumers

            As mentioned above, countries have their own laws and regulations to protect consumers from unfair or dangerous business activity. This brings more legal complications and documentation for further trade. Each country should protect their home industries and consumers from importers.

5. Foreign exchange

            Unexpected exchange rate changes may bring loss to the traders in foreign exchange.

6. Lack of market knowledge

Entering new markets for the first time brings two problems for most businesses that the business does not know the market and the market (consumers) does not know the business.

7. Lack of capital and cost of new recruitment

            Business may need large capital investment to introduce new products or entering into a new market.

 

METHODS TO OVERCOME PROBLEMS IN FOREIGN MARKETS

1. Franchising

2. Licensing

3. Joint ventures

4. Appoint more agents

1. International franchising.

Franchise is an agreement allowing one business to trade under the name and logo of another existing business. The business granting the franchise license is called the franchiser and the business taking out the franchise is called the franchisee.

International franchising is similar to franchising in the same country. This method of entry into new markets in other countries is often used by Subway.

Eg:- McDonald, Kentuky Fried Chicken (KFC), etc. in restaurant business.

 

2. Licensing (Oct/Nov 2024 Q.No.2a)

Here a business in one country permits a firm in a foreign country to produce or sell its branded products under the license. It helps to reduce the risk of marketing in another country. However, the limitation of licensing is the risk of poor quality or other problems that could damage the reputation of the business whose product it is.

Eg:- Male’ Aerated Water Company Pvt.Ltd.

 

3. Joint Ventures (May/Jun 2015, Q.No.2d) (Oct/Nov 2024 Q.No.2d)

A joint venture is a strategic partnership (short, medium, or long-term) of a company or groups of companies to work closely together on a particular business opportunity.

            Eg:- Allied Insurance Company of the Maldives was established in 1985 as a joint venture Company between State Trading Organization and Commercial Union Assurance Company of the United Kingdom.

Merits of joint ventures

1. It helps to share risk of production, marketing and so cuts costs.

2. Each business brings different expertise to the joint venture

3. Market and product knowledge can be shared to the benefit of the businesses in the joint venture.

Demerits of joint ventures

1. Any mistakes made will reflect on all parties to the joint venture. This may damage the reputation of all firms in the joint venture, even if they were not the cause of mistake.

2. The decision-making process may be ineffective due to different business culture or different styles of leadership within each of the joint venture partners.

4. Foreign trade agents

            Foreign trade agents such as freight forwarders help the traders in foreign market in many ways by charging commission. They manage transport, warehousing and related documentation for the principals abroad.

           

Unit 3.4

LEGAL CONTROLS

Definition

Legal controls related to marketing are laws that regulate how businesses promote, price, and sell their products to protect consumers and ensure fair competition.

 

Why Legal Controls Are Important?

• Protect consumers from exploitation
• Ensure fair competition
• Maintain ethical business practices
• Build customer trust

 

Legal Controls Related to Marketing (Feb/Mar 2023 Q.No-4a) (Oct/Nov 2023.Q.No.4a)

1. Laws against misleading advertising

• Advertisements must be truthful and not misleading
• False claims about quality, price, or benefits are illegal

2. Consumer Protection Laws

• Products must be safe and of acceptable quality
• Customers have the right to refunds, repairs, or replacements

3. Product Labelling Laws

• Labels must show correct information such as:
• Ingredients
• Instructions for use
• Warnings
• Expiry dates (where required)

4. Pricing Laws

• Price fixing between competitors is illegal
• Businesses must not charge unfair or deceptive prices
• Laws against misleading discounts (fake sales)

5. Sales Promotion Laws

• Promotions must follow rules
• Conditions of offers must be clearly stated

6. Copyright and Trademark Laws

• Protect brand names, logos, and slogans
• Prevents copying of competitors’ branding

7. Copy right laws

• Customer data collected for marketing must be:
• Prevention of imitating brand name
• Prevention of making fake products.

 

EFFECTS OF LEGAL CONTROLS ON MARKETING

Positive Effects on Marketing

1. Protects Consumers

• Prevents false or misleading advertising
• Ensures products are safe and accurately described
• Builds customer trust in brands

2. Encourages Fair Competition

• Stops price fixing and unfair practices
• Ensures businesses compete fairly on quality and service

3. Improves Business Reputation

• Businesses that follow laws gain a positive image
• Ethical marketing attracts loyal customers

4. Standardizes Marketing Practices

• Clear rules make it easier to plan advertising and promotions
• Reduces confusion for consumers

Negative Effects on Marketing

1. Increases Costs

• Legal compliance, packaging changes, and correct labelling cost money
• Advertising may need approval or legal checks

2. Limits Promotion and Advertising

• Some claims cannot be made
• Certain products face strict advertising restrictions

3. Reduces Flexibility

• Promotions and discounts must follow legal rules
• Slower marketing decision-making

4. Risk of Fines and Legal Action

• Breaking laws can result in fines or bans on advertising
• Damages business reputation