Fundamentals of Marketing

Marketing environment is the sum of all internal and external actors and forces that affect a firm's ability to build and maintain successful relationships with its target customers. It has a micro environment (the company, suppliers, intermediaries, customers, competitors, publics) and a macro environment (demographic, economic, natural, technological, political-legal and socio-cultural forces). The firm can control the former partly but must adapt to the latter.

Proactive marketing means anticipating future customer needs, market changes and opportunities and acting before they appear, for example launching a new product ahead of demand. It creates leadership and a first-mover advantage.

Reactive marketing means responding to customer demands, competitor moves or environmental changes only after they occur, for example cutting prices after a rival does. It is safer and cheaper but leaves the firm following the market rather than leading it.

The main areas of marketing research are:

• Market research (market size, share, trends, potential)
• Consumer or buyer behaviour research (motives, attitudes, buying habits)
• Product research (new product testing, design, packaging, branding)
• Pricing research (price sensitivity, competitor prices)
• Distribution research (channel selection, location, logistics)
• Promotion or advertising research (media, message and copy testing, effectiveness)
• Sales research (sales forecasting, territory and quota analysis)
• Competitor and environmental research

Service marketing is the marketing of intangible activities or benefits offered for sale that do not result in ownership of anything, such as banking, education, hotels, insurance and transport. Because services are intangible, inseparable, variable and perishable, marketers must manage extra elements, namely people, physical evidence and process, in addition to the usual 4Ps, giving the 7Ps of services marketing.

Product positioning means designing the company's offer and image so that it occupies a distinct and valued place in the minds of target customers relative to competing products. It answers the question of how customers perceive the product against rivals on important attributes such as quality, price, or prestige, for example Volvo positioned on safety. A clear position is communicated through the marketing mix.

Brand equity is the added value that a brand name gives to a product beyond its functional benefits. It is the set of brand assets and liabilities, such as brand awareness, perceived quality, brand associations and customer loyalty, that increases (or reduces) the value of the product to the firm and its customers. A brand with high equity commands a price premium, loyal customers and stronger bargaining power with distributors.

The main tools of public relations are:

• News (press releases and stories in media)
• Speeches and interviews by company officials
• Special events (launches, exhibitions, seminars, anniversaries)
• Publications (annual reports, brochures, newsletters, magazines)
• Community involvement and sponsorships
• Corporate identity materials (logo, stationery, uniforms)
• Social responsibility and public service activities
• Audio-visual material and websites or social media

Price adjustment decisions are the changes a firm makes to its basic (list) price to suit different customers and situations. The main types are:

• Discount and allowance pricing: cash, quantity, functional and seasonal discounts, trade-in allowances.
• Segmented pricing: different prices for different customers, places, times or product forms.
• Psychological pricing: for example Rs 99 instead of Rs 100, or prestige pricing.
• Promotional pricing: temporary price cuts, loss leaders, special events.
• Geographical pricing: FOB, uniform delivered and zone pricing.
• International pricing.

Challenges faced by marketers in the 21st century

1. Rapid technological change and digitalisation: the internet, mobile, social media, AI and e-commerce change how customers search, buy and talk about brands.
2. Globalisation and intense competition: firms compete with foreign and online rivals, and products are easily copied.
3. Changing, better-informed customers: customers are more demanding, price-sensitive, and less loyal, and expect personalisation.
4. Changing demographics and lifestyles: ageing, small families, working women, migration and a young urban market.
5. Economic uncertainty: slow growth, inflation, volatile exchange rates and tighter budgets.
6. Ethical, social and environmental concerns: sustainability, consumerism, data privacy, social responsibility.
7. Fragmented media and rising costs: mass media is losing its reach while promotion costs rise.

Ways firms respond

• Customer focus: build long-term relationships through CRM and customer value and satisfaction.
• Digital and integrated marketing: use websites, social media, e-commerce and data analytics along with traditional channels.
• Innovation and differentiation: continuous new product development and brand building.
• Partnerships and networks: with suppliers, distributors and even competitors, plus outsourcing and strategic alliances.
• Global orientation: entering overseas markets and adapting offers locally.
• Socially responsible marketing: green products, ethical practices, community programmes.
• Cost control and agility: efficient operations and quick responses to change.

The marketing environment in Nepal consists of the forces that shape marketing decisions within the country.

Micro environment: local firms and importers, suppliers, dealers and retailers, a very large number of small competitors and traders, customers, and publics such as media, government agencies, consumer forums and financial institutions.

Macro environment

• Demographic: a young population (a large share below 40), rapid urbanisation, growing migration abroad, and small but growing nuclear families.
• Economic: a remittance-driven economy, low per capita income, high import dependence on India and China, inflation, a trade deficit and limited industrial base; yet the middle class is growing.
• Natural: hydropower and water, biodiversity, scenic tourism resources, but vulnerability to earthquakes, floods and landslides, and pollution.
• Technological: fast mobile and internet spread, digital wallets (eSewa, Khalti), online shopping and social media, though infrastructure remains weak.
• Political and legal: political instability and frequent policy change, but laws such as the Consumer Protection Act, Competition Promotion and Market Protection Act, and Advertising regulations; load-shedding is largely resolved.
• Socio-cultural: diversity of castes, religions and languages; festivals (Dashain, Tihar) drive seasonal demand; strong family influence, brand consciousness rising.

Marketers in Nepal must therefore adapt to a small, price-sensitive, diverse and rapidly digitalising market.

A Marketing Management Information System (MKIS) is a structure of people, equipment and procedures to gather, sort, analyse, evaluate and distribute needed, timely and accurate information to marketing decision makers. Its key components are:

1. Internal records system: information from within the firm, such as orders, sales, prices, inventory, receivables and costs. It is quick and cheap.
2. Marketing intelligence system: everyday information about developments in the marketing environment (competitors, customers, trends), gathered from employees, distributors, media, the internet and competitors' publications.
3. Marketing research system: the systematic design, collection, analysis and reporting of data for a specific marketing problem, such as surveys, experiments and observation.
4. Marketing decision support system (analytical system): statistical tools, models and software that help managers analyse data and make better decisions, for example forecasting and what-if analysis.

Together these provide the information that managers need for planning, implementing and controlling marketing.

The consumer buying decision process has five steps.

1. Need (problem) recognition: the buyer senses a difference between the actual and desired state, triggered by internal stimuli (hunger) or external stimuli (advertisements).
2. Information search: the consumer searches personal sources (family, friends), commercial sources (ads, salespeople), public sources (media, reviews) and experiential sources (trial). Search ends with an awareness set and a smaller consideration set.
3. Evaluation of alternatives: brands are compared on attributes such as price, quality and features, weighted by importance, with beliefs and attitudes shaping the outcome.
4. Purchase decision: the consumer chooses a brand, but attitudes of others and unexpected situational factors may change the intention before the actual purchase (brand, dealer, quantity, timing and payment method are decided).
5. Post-purchase behaviour: the buyer is satisfied or dissatisfied depending on how performance compares with expectations; dissatisfaction can cause cognitive dissonance, returns or negative word of mouth, while satisfaction leads to repeat purchase and loyalty.

For routine, low-involvement purchases some of these steps are skipped or reversed.

Price is the only element of the marketing mix that produces revenue; the others produce costs. Pricing is therefore a critical task for the following reasons.

1. Determines revenue and profit: a small change in price causes a large change in profit.
2. Affects demand and sales volume: too high a price loses customers; too low a price may not cover costs.
3. Shapes brand image and positioning: a high price signals quality and prestige, a low price signals economy.
4. Competitive weapon: price influences market share and the reaction of rivals, and price wars can damage the whole industry.
5. Influences other mix elements: the choice of channels, promotion budget and product quality depend on the price.
6. Complex decision: it must balance costs, customer perceived value, competitors' prices, legal limits and company objectives, and it must be reviewed repeatedly as conditions change.
7. Customers' sensitivity: buyers compare prices easily, especially online, and are highly price-conscious in markets like Nepal.
8. Survival and growth: wrong pricing can drive a firm out of business, while correct pricing helps recover investment and fund growth.

Channel selection is influenced by the following factors.

1. Market factors: the number, location and concentration of customers, the size of orders, buying habits and whether the market is consumer or industrial. Many scattered customers need longer channels.
2. Product factors: perishable, bulky or technical products need short, direct channels; standardised, low-priced goods need long channels with intensive distribution; unit value and newness also matter.
3. Company factors: financial strength, size, experience, desire for control, and the services the firm can provide itself. A strong firm may sell directly.
4. Middlemen factors: the availability, willingness, cost and services of intermediaries, and their attitude to the firm's policies.
5. Competitive factors: the channels used by competitors; some firms follow the same outlets, others avoid them.
6. Environmental factors: economic conditions, laws and regulations, and technology such as e-commerce.
7. Cost and control: the cost of each channel against its sales volume, and the degree of control over price and image.
8. Customer service needs: the expected delivery speed, credit, after-sales service.

Marketing communication is the process of conveying messages about the firm and its products to target audiences to inform, persuade and remind them.

Communication process

1. Sender (source): the firm originating the message.
2. Encoding: converting the idea into words, symbols, pictures.
3. Message: the content that is sent.
4. Media (channel): television, radio, print, digital, salespeople.
5. Decoding: the receiver interpreting the message.
6. Receiver: the target audience.
7. Response and feedback: the audience's reaction, returned to the sender.
8. Noise: any distortion or interference that disrupts the message.

Communication is effective when the sender's and receiver's fields of experience overlap.

Communication system (promotion mix)

The system uses the promotion tools in an integrated way:

• Advertising
• Personal selling
• Sales promotion
• Public relations and publicity
• Direct and digital marketing

The steps in developing it are identifying the target audience, determining the objective (awareness, knowledge, liking, preference, conviction, purchase), designing the message, selecting the channels, setting the budget, deciding the promotion mix, measuring results and managing integrated marketing communication.

Distribution as the other half of marketing

Marketing has two halves: making the product desirable (product, price, promotion) and making it available (place or distribution). Creating demand is useless unless the product reaches the customer in the right place, at the right time, in the right condition and quantity. This is why distribution is called the other half of marketing.

Reasons

1. Creates place, time and possession utility: products have value only when customers can obtain them where and when they want.
2. Completes the exchange: a sale takes place only when the goods reach the buyer.
3. Bridges the gap between producers and consumers: middlemen reduce the number of transactions, bring assortment, break bulk, store, finance, take risk and provide information.
4. Affects the other mix elements: channel choice determines price levels, promotion support and the product image.
5. Competitive advantage: a strong channel network is hard to copy and brings market coverage and loyalty.
6. Large share of cost: physical distribution is often 20 to 30 per cent of the product's cost, so efficiency raises profit.
7. Customer satisfaction: timely delivery, availability and service drive repeat purchase.

Marketing logistics functions

Marketing logistics is planning, implementing and controlling the physical flow of materials, final goods and related information from the points of origin to the points of consumption, to meet customer requirements at a profit. Its functions are:

• Order processing: receiving, checking and fulfilling orders quickly and accurately.
• Warehousing: storing goods in strategically located warehouses or distribution centres.
• Inventory management: balancing the cost of holding stock against stock-out loss (reorder point, EOQ, just-in-time).
• Transportation: choosing the mode (road, rail, air, water, pipeline) by speed, cost, reliability and capability.
• Materials handling and packaging: protecting goods and reducing damage and cost.
• Customer service and reverse logistics: returns, delivery commitments and after-sales support.

Critical view

Distribution has traditionally been neglected compared with advertising, yet in Nepal, with difficult geography, poor roads and many small retailers, a firm's reach and cost depend heavily on the channel and logistics. Good logistics lowers cost, speeds up delivery and raises customer satisfaction, while poor logistics causes stock-outs and loses sales despite excellent products and promotion. Hence the argument is justified: distribution and logistics are not a back-office support but an equal and strategic partner of the other P's.

A consumer movement is an organised social effort by citizens, groups and governments to protect and promote the rights and interests of buyers against unfair, unsafe or deceptive business practices. Consumer protection means the laws, institutions and practices that safeguard consumers from such practices and give them a way to seek redress.

Evolution of global consumer movements

• Early phase (late 1800s to early 1900s): Consumer leagues in the USA and Britain campaigned against adulterated food, unsafe drugs and exploitative labour. Upton Sinclair's The Jungle (1906) led to the Pure Food and Drug Act and the Meat Inspection Act.
• 1930s to 1950s: Consumer testing organisations grew, such as Consumers' Union (the US publisher of Consumer Reports) and the Consumers' Association (Which? in the UK).
• 1960s: On 15 March 1962 President John F. Kennedy declared the four basic consumer rights: safety, to be informed, to choose and to be heard. Ralph Nader's Unsafe at Any Speed (1965) exposed car safety defects and strengthened the movement.
• 1960 onwards: The International Organization of Consumers Unions (now Consumers International) was formed in 1960. It now links more than 200 consumer groups in over 100 countries.
• 1985: The United Nations adopted the Guidelines for Consumer Protection, revised in 1999 and 2015. They urge governments to adopt consumer protection policies.
• Today: 15 March is celebrated as World Consumer Rights Day. Current concerns include online and data privacy, e-commerce fraud, product recalls and sustainable consumption.

Basic consumer rights (Consumers International)

1. Right to basic needs
2. Right to safety
3. Right to be informed
4. Right to choose
5. Right to be heard
6. Right to redress
7. Right to consumer education
8. Right to a healthy environment

Forms of consumer protection

• Legislation: laws on product safety, weights and measures, labelling, advertising, pricing and competition.
• Government agencies: regulators and consumer courts or tribunals that receive complaints.
• Consumer organisations: they test products, publish comparisons, lobby for laws and educate buyers.
• Business self-regulation: codes of conduct, warranties, helplines and standards bodies such as ISO.
• Media and consumer education: awareness campaigns and warning against unsafe goods.

Nepal context

The Consumer Protection Act, 2075 (2018) provides for the Consumer Protection Council, the Department of Commerce, Supply and Consumer Protection, and consumer complaint and compensation provisions. The Consumer Rights Forum Nepal and other groups support the movement.

Marketing significance

Consumer movements push firms toward honest advertising, safe products, fair prices and responsive service. They are a main force behind societal marketing, which treats consumer welfare as part of long-term business success.

Yes, I agree. The product life cycle (PLC) describes the stages a product passes through from launch until it leaves the market: introduction, growth, maturity and decline. It is a strategic tool because it tells managers which stage a product is in and so which marketing mix and objectives fit that stage.

Stages and strategies

Why PLC is a strategic tool

1. Planning: it links the product's position to marketing objectives and the marketing mix.
2. Portfolio management: firms balance products at different stages, so that profitable mature products fund the launch of new ones.
3. Forecasting: it gives a pattern for expected sales, profit and cash flow.
4. Competitive insight: it predicts when competitors will enter and when price competition will intensify.
5. Timing decisions: it signals when to relaunch, modify or delete a product.
6. Resource allocation: budgets are shifted to products with the best prospects.

Limitations

The stages are not of fixed length, and not every product follows the curve (fads, styles). Management can change the curve itself, and it is hard to tell which stage a product is in. The PLC is therefore a guide rather than a rule.

Conclusion

Despite these limits, the PLC helps managers anticipate change and adapt strategy, which is why it is regarded as a strategic tool of marketing management.

Market segmentation is dividing a heterogeneous market into smaller groups of buyers with similar needs, characteristics or behaviour, so that each group can be reached with a suitable marketing mix. Modern marketing management follows the segmentation, targeting and positioning (STP) process.

Steps in the segmentation process

1. Define the market and objectives: decide which broad product-market is to be studied and why (growth, entry into a new area, better targeting).
2. Survey and collect data: gather information on customers' needs, attitudes, usage, demographics and lifestyle through research.
3. Analyse and identify bases: choose segmentation bases and look for groups that differ meaningfully.
   • Geographic: region, climate, urban or rural, density.
   • Demographic: age, gender, income, family size, occupation, education.
   • Psychographic: lifestyle, personality, social class, values.
   • Behavioural: benefits sought, usage rate, loyalty, occasion, buyer readiness.
4. Develop segment profiles: describe each segment's size, needs, behaviour and buying power.
5. Evaluate segments: a segment is useful only if it is measurable, substantial, accessible, differentiable and actionable.
6. Select target markets: choose among undifferentiated (mass), differentiated, concentrated (niche) or micromarketing strategies, based on resources, product variability, competitors and the stage of the product life cycle.
7. Position the offer: create a clear, distinct image of the product in the minds of the target segment, for example through attributes, benefits, price or quality.
8. Design the marketing mix: develop product, price, place and promotion to match each target segment.
9. Monitor and review: segments change over time, so track results and adjust.

Benefits

Segmentation allows better matching of products to needs, more efficient use of resources, easier identification of opportunities and stronger competitive positions.

(a) Reasons for using golf stars in promotion

• Credibility and endorsement: a top professional using the shoes and gloves signals quality and performance, which serious golfers trust.
• Aspiration and identification: golfers want to play like Ernie Els or Freddie Jacobsen, so they transfer the stars' image to the brand.
• Attention in a niche medium: well-known faces stand out in golf magazines and improve recall of the advertisement.
• Support for premium pricing: celebrity association justifies prices that are "far from cheap" and lets the firm avoid price competition.
• Overcoming sales resistance: wealthy buyers resist hard selling, so a respected expert's implied advice is more persuasive.
• Brand reputation: the stars reinforce Golfjoy's position as market leader.

(b) Other promotional media Golfjoy could use

• Advertising: specialist golf television programmes and tournament broadcasts (not mass TV), golf websites, social media and YouTube with targeted ads, and billboards near golf courses.
• Personal selling: trained staff in pro shops and golf clubs who demonstrate and advise.
• Sales promotion: free samples, bundles (shoes plus gloves), loyalty cards, club-member discounts and demonstrations at tournaments.
• Public relations and sponsorship: sponsor tournaments, clubs and players, run press events and publish success stories.
• Direct and digital marketing: emails to club members, a website with online sales and golf-community content.
• Events: product-trial days and golf clinics with professionals.

An integrated mix is cost-effective because the audience is small and well defined.

(c) Star golfers shown as shopkeepers

The advertisements show the pros arranging Golfjoy shoes in a pro shop and ask "what would you do if your favourite players were your local pros?".

• It creates a fantasy that is easy to imagine, so the reader puts himself in the shop and pays attention.
• It links the product directly to the point of purchase, so the reader remembers the brand when actually in the pro shop.
• It makes the stars appear to recommend the product personally ("buy Golfjoy"), which gives trust without hard selling.
• It is novel and humorous, so it differs from ordinary endorsements and stands out.
• Its risk: it depends on the stars' reputation, and the idea may lose impact over time. Overall the approach was successful, since sales reached new highs.

(d) Why Golfjoy specialises in a narrow segment

• Focused strategy: golf is a minority sport, and concentrating on golfers lets a relatively small company serve a niche better than large rivals.
• Profitable customers: golfers are often professionals with high disposable income, who pay premium prices.
• Easy targeting: magazines and clubs reach the segment cheaply, avoiding wasteful mass advertising.
• Expertise and reputation: specialising builds product knowledge, quality, loyalty and market leadership.
• Lower competition: the segment is less attractive to big generalist brands.
• Support from the Acushnet group: being part of a golf group provides distribution and complementary products.
• Risks: dependence on a single sport, and limited growth potential, which can be reduced by adding related products.

The core concepts of marketing are:

• Needs, wants and demands: the basic requirements of people, their shaped desires, and wants backed by buying power.
• Products (market offerings): goods, services, experiences, ideas, places and other offers that satisfy needs.
• Value, satisfaction and quality: the customer's judgement of benefits against cost, and the fulfilment of expectations.
• Exchange and transactions: obtaining a desired object by offering something in return.
• Relationships and networks: long-term ties with customers, suppliers and distributors.
• Markets: the actual and potential buyers of an offer.
• Marketers and prospects: the parties who seek a response from others.

The components of the micro environment are the actors close to the company that affect its ability to serve customers:

• The company itself (top management, finance, R&D, purchasing, production, accounting)
• Suppliers
• Marketing intermediaries (resellers, physical distribution firms, marketing service agencies, financial intermediaries)
• Customers
• Competitors
• Publics (financial, media, government, citizen-action, local, general and internal publics)

A marketing information system (MIS) is a structured, continuing arrangement of people, equipment and procedures to gather, sort, analyse, evaluate and distribute timely and accurate information to marketing decision makers. It assesses managers' information needs, develops the needed information and distributes it, so that marketing planning, implementation and control are based on facts.

Its main components are the internal records system, the marketing intelligence system, the marketing research system and the analytical (decision-support) system.

Consumer behaviour is influenced by four main groups of factors:

• Cultural: culture, subculture (religion, nationality, region) and social class.
• Social: reference groups, family, and roles and status.
• Personal: age and life-cycle stage, occupation, economic situation, lifestyle, and personality and self-concept.
• Psychological: motivation, perception, learning, and beliefs and attitudes.

Product positioning can be based on:

• Attribute or feature positioning: emphasising a feature, such as size or longevity.
• Benefit positioning: the product leads on a benefit, such as safety or speed.
• Use or application positioning: the product is best for a particular use.
• User positioning: aimed at a class of users, such as students or athletes.
• Competitor positioning: compared directly or indirectly with a rival.
• Product category positioning: the product is a leader in its category.
• Quality or price positioning: best value, or highest quality at a premium price.

The types of brand are:

• Manufacturer's (national) brand: owned by the producer, such as Coca-Cola.
• Private (distributor, store) brand: owned by a wholesaler or retailer.
• Generic brand: no brand name, only the product description, sold cheaply.
• Individual (family) brand: a separate name for each product, or one name for all products.
• Corporate brand: the company name is used, such as Samsung.
• Licensed brand: a name or character used under licence.
• Co-brand: two brands combined on one product.

A good package should be:

• Protective: keeps the product safe from damage, theft, spoilage and contamination.
• Convenient: easy to handle, carry, store, open, use and dispose of.
• Economical: cost-effective and not unduly raising the price.
• Attractive and distinctive: its colour, shape and design catch attention and fit the product's image.
• Informative: gives labelling about contents, ingredients, price, usage, manufacture and expiry dates.
• Promotional: supports branding and acts as a "silent salesman".
• Eco-friendly and legal: recyclable or biodegradable, and meeting legal requirements.

In value-based pricing the price is set according to the customer's perceived value of the product rather than the seller's cost. The steps are:

1. Study customers to find the benefits they perceive and what they would pay for them.
2. Set the target price at the level of perceived value relative to competing offers.
3. Design the product and its cost to deliver that value at the target price and still earn a profit.

For example, a firm with a quality or service advantage can charge a premium price, and a firm can charge a fair low price for a good-value product ("good-value pricing").

The objectives of advertising are:

• To inform customers about a new product, its features, price or availability.
• To persuade them to prefer the brand, switch to it, and buy now.
• To remind them about the product and keep it in their minds.
• To build and maintain brand image and goodwill.
• To increase sales and market share.
• To support other promotion elements, such as personal selling and sales promotion.
• To counter competitors' advertising.

Direct marketing is the use of direct communication channels, such as mail, telephone, email, catalogues, television and the internet, to reach individual consumers, get a measurable response and, often, build a lasting relationship without using marketing intermediaries. Examples are direct mail, telemarketing, catalogue marketing, direct-response television and online or mobile marketing. Its features are targeting, personalisation, interactivity and measurable results.

Because services are intangible, inseparable, variable and perishable, the marketing mix is extended from the 4Ps to 7Ps.

1. Product: the service offering, its range, quality, features, brand, warranty and after-sales support (for example, a bank's account types).
2. Price: fees, rates, discounts, credit terms and payment conditions, which signal quality since the buyer cannot judge the service in advance.
3. Place: location, channels and accessibility, including online delivery, branches and opening hours.
4. Promotion: advertising, personal selling, publicity and sales promotion, using testimonials and tangible cues to reduce uncertainty.
5. People: employees and customers who take part in delivery. Their skill, attitude and behaviour determine service quality, so selection, training and motivation matter.
6. Physical evidence: the tangible environment, such as building, furnishing, equipment, uniforms, brochures and website, which makes the intangible service visible.
7. Process: the procedures, flow and systems by which the service is delivered, such as waiting time, steps and automation.

The last three Ps are especially important in services because customers experience the delivery itself.

The macro environment consists of larger societal forces that affect the whole micro environment. Its main components are:

1. Demographic environment: population size, age structure, gender, household types, migration, education and urbanisation. These show the size and character of the market.
2. Economic environment: income, inflation, interest rates, savings, credit availability, employment and the stage of the business cycle, which govern purchasing power and spending patterns.
3. Natural environment: raw material shortages, energy costs, pollution and environmental regulation, which push firms toward green marketing.
4. Technological environment: new inventions and innovation, such as the internet, automation and mobile technology, which create new products and markets and make others obsolete.
5. Political and legal environment: laws, government policy, regulatory agencies and pressure groups, such as consumer protection and tax law, which govern business conduct.
6. Socio-cultural environment: values, beliefs, customs, lifestyles and attitudes of society, which shape what people buy.

Marketing research is the systematic design, collection, analysis and reporting of data relevant to a specific marketing situation. Its main areas are:

1. Market research: market size, potential, trends, segments, and share of competitors.
2. Product research: new product concepts, testing, design, brand name, packaging, and improvements.
3. Pricing research: price sensitivity, demand elasticity, cost-price analysis and competitors' prices.
4. Distribution research: channel selection, location of outlets, dealers' performance and logistics.
5. Promotion (advertising) research: media selection, message effectiveness, copy testing and sales promotion results.
6. Consumer (buyer behaviour) research: needs, attitudes, motives, buying habits and satisfaction.
7. Sales research: sales analysis, forecasting, territory design and sales force performance.
8. Competitor and environmental research: strengths, strategies, and legal, social and economic changes.

The steps in the market segmentation process are:

1. Define the market: identify the broad product-market to be segmented.
2. Choose segmentation bases: geographic, demographic, psychographic and behavioural variables that describe buyer differences.
3. Collect data and group buyers: survey customers and cluster those with similar needs.
4. Profile the segments: describe the size, needs, behaviour and attractiveness of each segment.
5. Evaluate the segments: test whether they are measurable, substantial, accessible, differentiable and actionable.
6. Select the target segment(s): choose the segments the firm can serve best and most profitably.
7. Position the product: create a distinct place in the target customers' minds.
8. Develop the marketing mix for each target segment, then monitor and revise it.

Sales promotion consists of short-term incentives that encourage the purchase or sale of a product or service. Examples are coupons, samples, discounts, contests, rebates, premiums, trade allowances and point-of-purchase displays.

Nature of sales promotion

1. Short-term and temporary: campaigns run for a limited period to prompt immediate action.
2. Supplementary: it supports advertising and personal selling and is rarely used alone.
3. Incentive-based: it offers extra value, such as a price cut, gift or chance to win, to attract buyers.
4. Targets consumers, trade and the sales force: consumer promotions (samples, coupons), trade promotions (allowances, dealer contests) and sales force promotions (bonuses).
5. Action-oriented: it stimulates trial, repeat buying, bulk buying and quick sales, rather than long-term image.
6. Flexible and measurable: it can be tailored to a situation, and the response can be measured.
7. Non-routine: it is used for particular purposes such as launching a product, clearing stock or meeting competition.
8. Risks: it can lower brand image if used too often, and may attract only deal-prone buyers.

Marketing logistics (physical distribution) is planning, implementing and controlling the physical flow of materials, final goods and related information from points of origin to points of consumption to meet customer requirements at a profit. It aims to deliver the right goods, to the right place, at the right time, at the lowest cost.

Components

1. Order processing: receiving, checking, invoicing and passing orders quickly and accurately.
2. Warehousing: storing goods until sold, using storage and distribution centres to bridge production and demand.
3. Inventory management: holding stock that balances customer service against carrying cost, deciding when to order and how much.
4. Transportation: choosing a mode (road, rail, air, water, pipeline) by cost, speed, reliability and capacity.
5. Materials handling and packaging: moving, loading and protecting goods in storage and transit.
6. Logistics information management: data systems that coordinate all these activities.

Good logistics improves customer satisfaction and gives a competitive advantage.

Pricing practices in Nepal are shaped by the market, the government and the type of product.

1. Cost-plus pricing: many manufacturers, traders and small retailers add a mark-up to cost.
2. Competition-based pricing: firms in competitive goods, such as noodles, soft drinks, telecom and banking, follow rivals' prices, for example Nepal Telecom against Ncell.
3. Government-controlled and regulated prices: the Nepal Oil Corporation fixes petroleum prices, the Nepal Electricity Authority sets tariffs, and medicines and some essential goods have regulated or maximum prices. The Department of Commerce, Supply and Consumer Protection monitors prices.
4. Negotiation and bargaining: widespread in local markets, with unmarked prices for items such as vegetables, clothes and gold ornaments.
5. Psychological pricing: odd prices such as Rs 99 or Rs 999 are common in retail and online trade.
6. Discount and promotional pricing: festival sales (Dashain, Tihar), cash and quantity discounts and free offers.
7. Credit-based pricing: credit to dealers and instalment schemes for vehicles and appliances.
8. Price taxes and duties: the final price includes VAT, excise and customs duty, especially on imported goods.
9. Geographical pricing: prices are higher in remote hill areas because of transport costs.

Weak price monitoring means that some traders overprice or form syndicates, so consumer protection remains an issue.

Marketing management orientations (marketing philosophies) are the concepts under which an organisation plans and conducts its marketing. There are five.

1. Production concept

Consumers prefer products that are widely available and cheap, so the firm concentrates on production efficiency, low cost and mass distribution. It suits situations where demand exceeds supply or cost must fall to expand the market. Example: early Nepali cement or sugar producers. Its weakness is neglect of customer needs.

2. Product concept

Consumers favour products that offer the best quality, performance and features, so the firm improves the product continuously. The risk is "marketing myopia": loving the product more than the customer's need.

3. Selling concept

Consumers will not buy enough unless the firm uses heavy selling and promotion. It is typical for unsought goods (insurance, encyclopaedias) and for firms with overcapacity. It focuses on sales volume rather than satisfaction, so it risks dissatisfied buyers and poor repeat business.

4. Marketing concept

Success depends on finding the needs and wants of target markets and delivering satisfaction better than competitors. It is "customer-centred": the focus is on the target market, customer needs, integrated marketing and profit through satisfaction. It starts with the customer rather than the factory.

5. Societal marketing concept

The firm should meet customers' needs while preserving or improving the well-being of consumers and society. It balances company profit, consumer wants and society's interests, such as environmental protection, health and ethics. Example: eco-friendly packaging and responsible advertising.

Comparison

Modern firms are expected to follow the marketing and societal concepts.

Organisational (business) market segmentation divides firms, institutions and governments that buy goods for production, resale or operations into groups with similar needs. Many of the bases used for consumer markets also apply, but business markets also have their own.

1. Demographic (firmographic) bases

• Industry: which industries to serve, for example manufacturing, banking, hotels.
• Company size: large, medium and small buyers differ in volume and service needs.
• Location: geographic concentration of industries, region or country.

2. Operating variables

• Technology: which customer technologies to emphasise.
• User or non-user status and usage rate: heavy, medium, light users.
• Customer capabilities: need for many or few services.

3. Purchasing approaches

• Organisation of the purchasing function (centralised or decentralised).
• Power structure (engineering, finance or purchasing dominates).
• Nature of existing relationships.
• General purchasing policies (leasing, service contracts, sealed bidding).
• Purchasing criteria: quality, service, price.

4. Situational factors

• Urgency of delivery.
• Specific application of the product.
• Size of the order.

5. Personal characteristics of buyers

• Buyer-seller similarity.
• Attitudes toward risk.
• Loyalty to suppliers.

6. Other bases

• End use: segment by the final application of the product.
• Buying situation: straight rebuy, modified rebuy, new task.
• Benefits sought: price, quality, service, reliability.

Combining these bases gives clearer segments, for example "small, urgent, service-seeking hotel buyers in Kathmandu". The best segments are measurable, accessible, substantial and actionable.

Products are classified by durability and tangibility (non-durable goods, durable goods, services) and by the type of consumer (consumer or industrial goods).

A. Consumer goods

1. Convenience goods are bought frequently, immediately and with little effort or comparison. They include staples (rice, soap), impulse goods (sweets) and emergency goods (umbrella in rain). Marketing considerations: low price, wide and intensive distribution, heavy advertising and a strong brand, mass promotion, and packaging.

2. Shopping goods are compared on quality, price and style (furniture, clothes, appliances). Marketing considerations: selective distribution, fewer but well-located outlets, personal selling, high advertising to inform, moderate to high price, and after-sales service.

3. Specialty goods have unique characteristics or brand identity and buyers make a special purchase effort (luxury cars, designer watches). Marketing considerations: exclusive distribution, high price, prestige image, targeted promotion, careful service.

4. Unsought goods are those consumers do not know about or do not normally consider buying (insurance, funeral services, smoke detectors). Marketing considerations: aggressive personal selling and advertising to create awareness, and persistent follow-up.

B. Industrial goods

1. Materials and parts (raw materials, manufactured materials and parts). Considerations: price and service matter, direct selling, long-term contracts.

2. Capital items (installations, accessory equipment). Considerations: personal selling, technical service, financing, negotiation of price, direct channels.

3. Supplies and services (maintenance supplies, advisory services). Considerations: convenience-type marketing, intermediaries, low price, service quality.

Conclusion

Product classification guides the marketing mix: the less effort buyers will make, the wider the distribution and the lower the price. For specialty goods the opposite holds, with exclusive distribution and a premium price.

Business buyer behaviour is the buying behaviour of organisations that buy goods and services for use in producing other products, for resale, or for supplying to others (manufacturers, resellers, government and institutions). It refers to how these organisations decide what to buy, and how they evaluate and choose among brands and suppliers. It is more complex than consumer behaviour, with larger purchases, more people involved, formal policies, technical specifications and long-term supplier relationships.

Steps in the business buying decision process

1. Problem recognition: a need is recognised, either internally (new product, machinery breakdown) or externally (a sales representative's offer).
2. General need description: the buyer determines the characteristics and quantity of the needed item, working with engineers and users.
3. Product specification: a technical specification is prepared, often through value analysis, to find the best design at the lowest cost.
4. Supplier search: the buyer finds the best vendors through directories, trade shows, internet searches and referrals.
5. Proposal solicitation: qualified suppliers are invited to submit proposals, catalogues or quotations.
6. Supplier selection: proposals are evaluated on price, quality, delivery, reliability, service and reputation, and sometimes negotiated.
7. Order-routine specification: the final order is issued with technical specifications, quantity, delivery time, return policies and warranties.
8. Performance review: the buyer measures supplier performance and decides whether to continue, modify or drop the supplier.

In a straight rebuy many steps are skipped, in a modified rebuy some are, while a new task requires all eight steps.

(a) Major issues and problems

• The Apple Watch failed to please customers: short battery life was a common complaint.
• Difficulty in configuring it to personal preferences, which means poor ease of use.
• Weak differentiation: analysts felt it did not stand out from other smart watches and wearables.
• It did not repeat the success of the iPod, iPhone and iPad, which damaged expectations of Apple's innovation.
• Early versions had limited apps, connectivity and an unconvincing design, with the product not yet working as a standalone gadget.
• The company must decide whether to continue investing and how to improve the next versions (Series 3 and 4).

(b) Differentiation strategies used

• Product (feature) differentiation: Digital Crown for scrolling and zooming without covering the display, the taptic engine that signals notifications with subtle vibrations, and sensors that monitor vital signs such as heart rate.
• Functional differentiation: communication from the wrist (messages, calls through iPhone), plus health and fitness applications.
• Design and personal positioning: introduced as "the most personal product" Apple ever made, with later versions designed to look like an actual wristwatch.
• Ecosystem and brand differentiation: integration with the iPhone and Apple's strong brand and image.
• Planned improvement: new versions with better apps, connectivity and a standalone design.

The case suggests these have not yet been enough, since battery life and customisation remain weak.

(c) Competitive market of Apple Watch

• Direct competitors are smart watches and wearables from Samsung (Galaxy Watch), Fitbit, Garmin, Huawei, Xiaomi and others, plus Android Wear devices.
• Indirect competitors include fitness bands, traditional watches (Fossil, Casio, Titan) and smartphones, which perform many of the same functions.
• The market is competitive and growing, with rapid technological change, falling prices and low-cost entrants.
• Apple competes with premium positioning and ecosystem strength, while rivals compete on price, battery life and features.
• Threats: substitutes, buyers' price sensitivity and easy imitation. Strengths: brand loyalty, an installed base of iPhone users and a vast app store.

(d) Promotion mix for Nepal

Target: urban, young, higher-income professionals, students, and health- and technology-conscious buyers in Kathmandu, Pokhara and other cities.

• Advertising: social media (Facebook, Instagram, YouTube, TikTok) and online video, FM radio and selected TV, plus billboards and magazines in cities. The message stresses health, fitness, convenience and status.
• Personal selling: trained sales staff in authorised dealers and shopping malls, who give demonstrations and setup help.
• Sales promotion: launch offers, exchange offers, instalment or EMI plans with banks, free straps or bundles, and festival (Dashain and Tihar) discounts.
• Public relations: launch event, tech reviews by bloggers and influencers, press coverage and sponsorship of fun runs and marathons.
• Direct and digital marketing: emails, SMS and messaging apps to existing Apple customers, and an online store with delivery.
• After-sales service: warranty, service centres and battery support, to build trust where Apple has no official store.

An integrated mix, led by digital media and demonstration, fits the limited, well-defined target market.