CHAPTER 2 COMPONENTS OF MARKETING 1.

MEANING OF MARKET The word Market is derived from Latin word MARCATUS which means trading place where business is conducted. In simple term, Market refers to a convenient place where buyers and sellers meet together for exchanging goods and services for their mutual satisfaction. But in Economics, it may be a place, perhaps may not be. In Economics, market can exist even without direct contact of buyer and seller. This fact can be explained with the help of the following statement. "Market refers to arrangement, whereby buyers and sellers come in contact with each other directly or indirectly, to buy or sell goods." Thus, above statement indicates that face to face contact of buyer and seller is not necessary for market. E.g. in stock or share market, buyer and seller can carry on their transactions through internet. So internet, here forms an arrangement and such arrangement also is included in the market. 2. CONCEPT OF MARKET Market means a place where buyer and seller meets together in order to carry on transactions of goods and services. The following concept can be studied to clear about the meaning of the term Market. 1. Place Concept: According to the place concept, Market is the place where buyer and seller meet together for buying and selling. Eg Asan, Kalimati fruit and vegetable market, Mangal bazar etc. This is very narrow concept of marketing but nowadays the term market does not represent only a certain place. 2. Commodity Concept: According to this concept, The process of buying and selling goods or services that take place between a buyer and seller is called Market . It is the act of buying and selling of article of merchandise. One commodity makes one market, Eg Jute market, grain market, car market etc 3. Area Concept: It is economic concept. Any area providing a set of pricingmaking forces may become market. It is a group of potential buyers and sellers spread over an area connected by the modern means of communication. The exchange can be take place continuously without direct contact or face to face contact between buyer and sellers.

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4. Demand Concept: It is also known as customer concept. According to this concept, Market is regarded as total demand by potential customers of a product. In this sense, Market means customers with needs to satisfy, the money to spend and willingness or desire to spend that money to satisfy their wants. 5. Space or digital Concept: This is the newly concept of marketing. Space which is also known as digital concept of marketing is based on internet. This market uses information communication technology which requires the means such as telephone, computers and internet connection. In this market buyer and seller can establish close and continuous relations to carry on transactions without direct contact or face to face meeting.

3. TYPES OF MARKETS: Markets of the product or services can be classified into different types. It can be classified on the basis of following ways: 1. On the basis of Geographic Area: On the basis of geographic area, market can be classified into the following four types. a. Local Market: When the buying and selling is limited to among the local buyers and sellers, it is known as local market. It may locate in the limited area such as town or village. Perishable goods such as vegetable, fruits, and milk are marketed in local market. b. Regional Market: The marketing activities are limited to regions of the country. Like eastern region, terai region etc , It is known as regional market. It is the market where buyers and sellers from different village and towns or even districts come into contact. c. National Market: The marketing activities performed within the boundaries of a country are known as national market. It is also called domestic market. Nationwide selling and buying of goods or services take place in national market. eg Nebico Biscuit, Wai Wai noodles etc. d. International Market: The market activities performed beyond the boundaries of nation is called international market. Such market covers whole world. Buyers and sellers are located in various countries. It consists of exports and imports. This is also known as global market. Eg Toyota, Gulf oil, etc. 2. On the basis of Time: On the basis of time market can be classified as following: a. Very Short-term Market :The market where shortly perishable goods are sold is called very short-term market. The market of milk, fish, meat, fruits

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and other perishable goods is called very short-term market. The price of short goods is determined according to the pressure of demand. When the demand for such goods is high, price rises and when demand declines, the price falls down. If the supply is low and the demand is high, the price rises higher. In such market supply cannot be increased. b. Short-term Market: In the short term market, supply of products can be increased using the maximum capacity of installed machines of the firm. The goods cannot be produced according to the demand for adjustment of supply by expanding or changing the existing machines and equipment. In short-term market, price of the goods is determined on the basis of interaction between demand and supply. But, as the supply cannot meet the demand, demand affects price determination in short-term market. c. Long-term Market :In long-term market, adequate time can be found for supply of products according to demand. New machines and equipment can be installed for additional production to meet demand. As supply can be decreased or increased according to demand situation, price is determined by interaction between demand and supply in long-term market. Market of durable products is ling-term market. d. Very Long-term Market Or Secular Market: In secular market, produces can get adequate time to use new technology in production process and bring new changes in products. They become able to produce and supply goods according to changed needs, interest, fashion etc. of customers. Market research becomes helpful in doing so. 3. Classification Of Market On The Basis Of Volume Of Business: On the basis of volume of business, type and size, market can be classified in wholesale market and retail market. a. Wholesale Market :If a large quantity of products are purchased from producers and sold to different retailers, this is called wholesale market. In wholesale market, the products are not sold directly to ultimate consumers. But, if consumers want to buy in large quantity, they can buy from wholesaler. b. Retail Market : The market that sells small quantity of products directly to ultimate consumers is called retail market 4. Classification Of Market On The Basis Of Nature Of Product :On the basis of nature of product, market can be classified in two types as follows: a. Commodity Market :The market where consumer and industrial commodities like clothes, rice, machines, equipment, tea, soap, fruits, vegetables etc. are bought or sold is called commodity market. In some market only certain special commodities are bought and sold and in some other different consumer commodities are bought and sold.

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b. Financial Market : The market and financial instruments is called financial market. In such market, money, shares, debentures, treasury bills, commercial papers, security exchanges, loan giving or taking etc are dealt. Dealing of short term fund is called money market and dealing of long-term fund is called capital market. 5. Classification Of Market On The Basis Of Consumption : On the basis of consumption of products, market can be divided as follows: a. Consumer Market: The market of products, which the people buy for consumption, is called consumer market. The customers buy consumer goods, luxury goods etc. for daily consumption or meeting their daily needs from such market. c. Industrial Market: Generally, raw materials, machines and equipment, machine parts are dealt in industrial market. Domestic consumer goods are produced using them. 6. Classification Of Market On The Basis Of Competition: On the basis of competition, market can be classified into monopoly market, perfect market and imperfect market. a. Monopoly Market: If there is full control of producer over market, then such market is called monopoly market. In such market, the producer determines price of his products in his own will. In such market, only one producer or seller controls market. In practice, the producer or seller can supply products or achieve monopoly on price only in small or limited area, but in wide area it becomes impossible. b. Perfect Market :The market where the number of buyers and sellers is large, homogeneous of products are bought and sold, same price of similar type products is determined from free interaction between demand and supply is called perfect market. Perfect competition takes between consumers and producers or buyers and sellers, but in practice perfect market can be rarely found. c. Imperfect Market: The market where there is no perfect competition between buyers and seller is called imperfect market. In this type of market, customers are affected by product discrimination. Post-sale services, packaging, price, nearness of market, credit facility, discount etc make product discrimination. Customers can buy same types of products from different sellers according to their desires and comfort. In practice, mostly products are bought and sold in imperfect market. 7. Classification Of Market On The Basis Of Seller's Position: On the basis of seller's position, market can be divided into primary market, secondary market and terminal market.

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8.

9.

a.

b.

a. Primary Market: In primary market, primary goods are bought and sold. Producers sell primary goods such as agricultural products, food grains, livestock, raw materials etc. to wholesalers or commission agents in such market. b. Secondary Market: Primary goods are bought from producers and sold to retailers in secondary market. Generally, wholesalers buy secondary products and sell them to retailers. c. Terminal Market: In this type of market, retailers sell products to final consumers. Classification Of Market On The Basis Of Nature Of Transaction: On the basis of nature of transaction, market can be classified into spot market and future market a. Spot Market: The market where delivery or handling over of the good is made immediately after sales is called spot market. In such market, price of product is paid immediately at the spot and ownership of the product is transferred to buyer at the same time. b. Future Market: In this type of market contract is signed for sale of products in future, but no delivery of product is made. In this market, buyer and seller sign a contract for buying and selling products at certain rate of price or on condition to determine the price in future. Classification Of Market On The Basis Of Control: On the basis of control, law, rules and regulations, market can be classified into regulated market and Non-regulated market. Regulated Market: If trade association, municipality or government controls buying, selling, price of products etc. it is called regulated market. Such market must follow the established rules, regulations and legal process and provisions. Otherwise, the businessmen are fined or punished. Non-regulated Market: If a market is freely functioning and is not under control of any government body or any organization, it is called non-regulated market. In such market, price is determined through interaction between demand and supply of products and buying and selling takes place. This market has not to follow any rules, regulations and legal provisions

4. FEATURES OF NEPEALES MARKET There are several features/ characteristics of Nepalese market. Among them major features are as follows: 1. Rural Orientation: Nepal has a large rural market. About 80% of its population lives in rural villages. It is a scattered market. The demand is seasonal and irregular. It is tied up with festivals, fairs and harvesting seasons.

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2.

3.

4.

5.

6.

7.

8.

Weekly markets ( Haat Bazaar) have important roles. Transportation and communication facilities are poor. Sellers Market: Nepalese market is still a sellers market is supply- driven and controlled by the sellers. Sellers want and interest get importance compared to consumers. Most of the sellers give more emphasis on their needs and preferences than the customers. Several Intermediaries: In the Nepalese market, there are presences of too many intermediaries in the distribution of product. They are regional distributors, local distributors, agent, wholesalers, retailers etc. As a result consumers have to pay higher prices than actual price for the products. Low Consumer Awareness: Nepalese market suffers from low consumer awareness. Consumers are sensitive to price of the product. Brand and quality awareness is low. Consumer association are not very active. Consumer protection laws are poorly implemented. Missing Market Information: Nepalese market suffers from lack of market system. They rely mostly on internal records. Marketing intelligence is poor. Marketing research is regarded as a waste of time and money. Emphasis on the product: Most of the product and sellers give more emphasis to the product rather than consumers satisfaction. Similarly, customers also give more priority to the price rather than quality. So, producers or sellers think more how to produce the goods than the meet the requirement of target market. No Standardization and grading: There is no standardization and grading of product in Nepalese market However, there is provision of using NS marks ( Nepal Standard mark) but most of the producers do not consider about it. The adulteration of low quality product with high quality product is very common in Nepal. Credit Transaction: Usually , Nepalese market practice credit transaction. The producers have to provide their products to distributors or dealers on credit for long time. Similarly, a credit facility also has to be given to retailers. Hence, manufacturers are suffering from long payment cycle.

5. CONCEPTS OF CUSTOMERS AND THEIR TYPES The person or group of persons who buy the goods or services are called customers. They buy goods or services either for consumptions or resale purpose. Customers can be classified mainly into two categories as

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a. Non Intuitional Customers: The customers who buy the goods for their personal daily domestic use are called non-institutional consumers. They are also called individual or ultimate customers. They buy variety of products in small quantities and their number is large. CHARATERISTISTICS OF NON-INTUITIONAL CUSTOMERS i) Buying objectives: Non- intuitional customers buy the product for personal or household use. They consume products for personal satisfaction. The buying objective of such customer is not to earn a profit by reselling the goods or services. Demand: Individuals buy products in small quantity. It can be for daily or weekly use. The demand is elastic. It varies with change in price. Variety of Need: Non- Intuitional customers have a variety of needs. Varieties of products are needed to satisfy their needs. The products are in different quality, size, design, colour and price. They are attractively, packaged, branded and promoted. Number of Customers: These consumers are large in number. These consumers are geographically dispersed. Even their number is large they purchase lesser amount of product. Purchase Decision: Non- Intuitional customers take decision by themselves and need not to follow formal rules and regulations. They make decision after consulting with friends and family. Their buying is emotional. Their purchase decision is affected by their age, occupations, income level, education, gender etc.

ii) iii)

iv) v)

vi)

6. BUYING PROCESS OF NON- INSTITUTIONAL CUSTOMERS A rational customer normally follows following process while buying products; 1. Need Recognition: Need recognition means awareness of wants, a desire or a consumption problem without the satisfaction of which the consumer becomes dissatisfied and normally builds tension. A need can be activated through internal source such as hunger, thirst, their memory and past experiences etc as well as through external sources such as advertisement, sales promotions, friends & relatives, window display etc. 2. Searching Information: The second stage of purchasing process is searching for information. After the recognition of need, the customers try to find goods for satisfying such needs. Customer collects information regarding features,

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advantages and benefit etc. Information can be internal search or external search. Internal search includes information from past experience, memory as well as external information consists of friends & families, relatives, advertising, internet, testing etc. 3. Evaluating Alternatives: This the third stage of buying process. Various point of information collected from different sources are used in evaluating different alternatives and their attractiveness. Generally, the consumers evaluate the alternatives on the basis of attributes of product, degree of importance, belief in brand, satisfaction, price of product, warranty, service and maintenance etc to choose correctly. 4. Purchase Decision: Once the alternative products are properly evaluated the consumers make a purchase decision. A purchase decision means selecting one best alternative among different alternatives available. Purchase decision is influenced by others attitudes that are close to consumers such as friends, families, neighbours etc. Normally, consumers purchase decision done on the basis of their income, degree of necessity, product available etc. 5. Post-Purchase Evaluation: The consumers continue to make evaluation after the purchase has been made. If the consumer is fully satisfied with the performance of product that they consumed, consumer create positive attitude towards the product and will make repurchase the same brand. Otherwise consumer form negative attitude towards products. They stop purchasing and search for other brands. b. INSTITUTIONAL CUSTOMERS: The customers who buy the goods for further processing, selling, production, industrial or office use is known as institutional customers. These customers are also known as organisation or industrial customers. Middlemen, producers, business houses are the examples of institutional custimers. FEATURES OF INSTITUTIONAL CUSTOMERS 1. Buying objectives: Institutional customers purchase the goods for business purpose. Mostly they buy the goods for processing, for further production, for organizational use or reselling purposes. 2. Derived Demand: Organizational buying is based on derived demand. Derived demand refers the demand created by third parties.The demand made by the ultimate consumers creates a demand for industrial goods and services. 3. Rational Buying: Organizational buyers are rational. They dont take decision emotionally. Their buying is organised, systematic and

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professional. They gather all related information such as features & quality of products, technical use, utility , delivery , price and terms and condition of sale etc of product before they make rational decision. 4. Professional Buying: The buying is formal and should follow basic formalities that lay by organization. All the legal aspects of buying should be taken into considerations. Trained and professional employees are appointed who make rational, systematic and professional actions. 5. Few Buyers, Large Volume: The numbers of institutional buyers are less they are remains concentrated in a certain geographical area. Even they are few in numbers, they perform huge volume of transaction. Their buying is direct. They mostly do not use middlemen. BUYING PROCESS OF INSTITUTIONAL CUSTOMERS The organizations buy goods for business use, resale, produce other goods or provide services, and the behaviour of an organization shown in buying goods are known as buying process which are as follows: 1. Need Recognition: The organisation buying process starts with the identification of need or a problem that can be solved with the procurement of product or service. The need problem may starts from diminishing inventory levels, breakdown in current operation, from new product development, expansion of organization operation and other reasons. 2. Product Specification: Once the need identification next step is to prepare detail specifications about the product or service. This task is generally done by technical personnel by whom the value of goods is analysed. While describing need, features of needed goods and needed quantity should be described. 3. Searching Supplier: The purchase committee conduct a search for potential suppliers for the required product or service who can supply the goods according to their requirement. A list of suppliers is prepared. This is prepared by looking at trade directory, searching in internet. 4. Proposal Solicitation: The purchase manager solicits (seeks) proposal from potential suppliers of the product or service. The proposal is required to quote price, quality, delivery and other terms and conditions of supply. Proposal can be based on competitive bidding, Tenders and quotations etc. 5. Evaluation of Alternatives: All the proposals must be properly evaluated to meet the product specification when proposal are evaluated several criteria may be adopted such as past performance of supplier, regularity, punctuality, quality, price, terms of delivery, reliability and capability.

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6. Purchase Decision: On the basis of proposal evaluation, a suitable supplier is selected. Selected supplier is called for negotiation. Negotiation is made for price, mode of payment, service requirement etc. Contract is also done for long-term purchasing. 7. Post-Purchase Behaviour: This is the final stage in buying process. Actual product performance and product specification are matched. Behaviour of supplier is also judged. If performance is not satisfactory repeat orders are not placed with suppliers. If the performance is satisfactory or delighted, it can be used for future as well.

BUYING MOTIVES A buying motive is the reason why the customers purchase the goods. Motive is the driving force behind to purchase the goods. So, motive refers to thought, urge, feeling, emotion and drive which make the buyer to react in the form of a decision. It is the thought, feelings, emotions and instincts which arises a desire to buy a product in the buyer. CLASSIFICATION OF BUYING MOTIVES Different authors have classified buying motives in different ways. According to Malvin S.Hatrick, there are two classifications. a. Primary buying motives: Primary buying motives are related to the basic needs of human being such as hunger, thirst, sleep, sex etc. Due to these needs people get motivated to purchase the goods. b. Secondary buying motives: Secondary buying motives are those, which are influenced by the society where he is born and lives. It is created after fulfilling the basic needs. These motives are curiosity, comfort, security, love and affection. It can be further classified under three main headings. 1. Emotional Buying Motives: Buying motives based on feelings or passions are known as emotional buying motives. These motives are not based on judgement, but they purchase on the basis of emotion. There are some motives/elements which are as follows. a. Love and affection: It is an important buying motive which includes the buyers to purchase the goods. Due to love and affection to the children, we

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buy toys, dress biscuits etc. A husband may buy saris and cosmetics for his wife due to the love and affection. b. Curiosity: Curiosity is the desire for new experience which motivates the people to buy the specific goods. Thus, to get the new experience, customers purchase the goods. c. Fashion: It is an important motive that can change the mind of the customers. Generally, customers try to copy particularly the movie stars, sportsmen and athletes etc. So, all the producers advertise their products with the help of these popular personalities. d. Fear: People are generally afraid of losing their health, wealth and life. Thus, it motivates to purchase the goods such as insurance policy, hiring lockers in bank and membership of health club etc. These goods or services help them to avoid their fear. e. Pride and prestige: Due to the pride and prestige in the society, customers purchase expensive and luxuries goods in- order to maintain their status. They purchase toyota car, Karizma motorcycle, fifty-nine inch LED colour television etc. to get the high position in the society 2. Rational Buying Motives: Rational buying motives are those which are based on sound judgement. They purchase the goods through proper testing, comparing and observing the goods on the basis of price, quality, durability etc. This motive is important to the customers because it helps them to save the unnecessary cost. It includes the following motives. a. Economy: Under this motives, the customer prefer that products which are more economy or cheap in price. To get more profit and discount, customers purchase such goods. This element attracts and encourages the customers to buy such goods in large quantities. b. Utility: Customers want to purchase those goods which have more or higher utility. Utility satisfies the wants of the customers. c. Comfort and convenience: Every people have the desire to live in comfort and convenient way as a result they get motivated to purchase such goods which provide comfort and convenience. Customers purchase T.V., DVD, motorcycle, washing machines, heater, cooler, sofa set etc. for their pleasure and comfort. d. Durability: It is another element of rational buying motive. Due to the durability of the products, customers are motivated to purchase the goods for example Toyota car, pulsar motorcycle; Sony TV etc are purchased due to their durability to use.

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e. Security: It is important to the people and their security of their life and properties. People are not feeling secure from the floods, earthquakes, theft, dacoits etc. in the society. So, the customers purchase the key lockers, open the bank A/c and keep the watchman etc to be secured.

3. Patronage Buying Motive: When the customers purchase the goods or services on the basis of particular place, special discount, present price, decoration, behaviour and behaviour and other facilities are known as patronage buying motives. Following points are discussed under this motive. a. Service motive: Service is an important motive which inspires the customers to purchase the goods. Customers purchase the goods to get the services, such as credit facility, home delivery facility, free installation, free repair and maintenance services. b. Quality or Brand loyalty: Due to the quality of the goods, customers are motivated to purchase certain goods or services. If products assure the quality, the customers are even ready to pay the higher price of such goods. c. Location: Location also affects to purchase the goods. Customers prefer to buy those goods which are easily available near their home or locality. d. Store loyalty: Store loyalty is another important element which plays significant role in buying motive. We purchase different goods due to the loyalty of the store such as attractive appearances, trust in weight, quality, price etc. e. Friendliness behaviour: Friendliness behaviour of salesman also affects the customers FACTORS AFFECTING NON-INTITUTIONAL BUYING DECISION Non-institutional buying is also known as individual buying. Individual buyers buy to fulfil their and family needs. Consumers buyer behaviour and the resulting purchase decision are strongly influenced by cultural, social, personal and psychological characteristics. An understanding of the influence of these factors is essential for marketers in order to develop suitable marketing mixes to appeal to the target customer. 1. CULTURAL FACTORS: Cultural factors that influence a consumer's purchasing include basic values, behaviours and ideals. Culture is the most basic reason for an individual's wants, and specific behaviour in satisfying those wants. Cultural influences on purchasing vary from country to country. In the main culture are

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subcultures and social classes. Subcultures are made up of groups sharing value systems based on common life situations, for example nationalities, religions, geographic regions. In the subculture is a form of social structure or social class. These classes share similar interests and behaviours that determine purchasing habits. The underlying principle is conformity to social class and culture. 2. SOCIAL FACTORS: This explains the outside influences of others on our purchase decisions either directly or indirectly. Social factors that influence consumer purchasing include family, peers, roles and status. Family members such as a spouse, children and parents can exert strong influence on the consumer's purchasing behaviour. Peer pressure is also a strong factor that determines a consumer's purchasing choices. Everyone belongs to a group of some sort, from friends to neighbours and coworkers. Rather than get left out, people purchase products that make them fit in. A person's role in life, for example as a manager and the status that comes with the position, determine certain purchasing choices 3. PERSONAL FACTORS: include such variables as age and lifecycle stage, occupation, economic circumstances, lifestyle (activities, interests, opinions and demographics), personality and self-concept. These may explain why our preferences often change as our `situation' changes. Personal Factors that influence consumer purchasing include the consumer's age, occupation, economic status, lifestyle, personality and self-concept. Age determines the changes in purchasing choices made over a lifetime. For example, personal tastes in clothing, food, furniture and recreation change over the years and shape the buying habits of the consumer. Occupation and economic status determine where a person shops and the types of products she chooses. Lifestyle is another factor that determines the kinds of products purchased. Personality and self-concept are unique to the individual as demonstrated in the person's buying behaviour patterns. 4. PSCHOLOGICAL FACTORS: Psychological factors that influence consumer purchasing include factors such as perception, motivation, learning, beliefs and attitudes. Perception is the process by which people select and interpret information to form purchasing decisions. Motivation is the drive that pushes a person to seek satisfaction through the purchase of a product. Learning refers to the changes that occur in a consumer's purchasing choices, arising from experience. Beliefs are the descriptive thoughts a person has about a product, and attitudes are the person's feelings and tendencies toward a product. Factor Affecting Institutional Buying Decision

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1. Regulatory Changes: Any changes in the corporate laws, rules and regulations will also influence how, when and what the organizations buy. There are also regulatory changes that may affect only a particular industry and accordingly the related organizations will change their buying patterns to stay in-line with the new regulations. 2. Political Environment: A change of the government or policy has a direct impact on the economic scenario, and this ultimately translates into a shift in the organizational buying patterns as well. 3. Social Environment: Societies and cultures are ever evolving, and every business has to change its practices and procedures to meet up with the societal changes. For instance with the rise in the number of animal lovers, pure leather suppliers have seen a slump in their business. The clothing and footwear manufacturers have shifted to artificial leather suppliers. This points out how the social environment can affect the buying patterns of organizations. 4. Competition: Todays business is all about beating competition and staying ahead. So when an organization's competitors move on to a newer product or service, or if they get to enjoy a competitive edge because of their suppliers, it's very likely for the organization to change its trends too and thus its buying pattern will change accordingly. CONCEPT OF NEEDS, WANTS AND DEMAND NEEDS : The necessity of something is need. Food is needed when one is hungry, Water is needed when one is thirsty. Human needs are of complex in nature. When one need is fulfilled another need is felt. Human needs may be physical needs like food, shelter and clothes, Security need such as free from fear, security of job etc, It may be social needs like giving importance to society, involvement in social activities, ego needs such as respected post, honour, praise etc, similarly , it may be self-actualization need such as creativeness, expectation of challenging task, etc. WANTS: Expectation of the things for meeting the need is called want. There are various types of wants of human being. Such wants are influenced by level of income of consumers, family, educations, friends, and personality, religious, cultural and social components. Eg A hungry Nepalese wants to eat bitten rice, momo, curry and rice etc whereas A hungry American wants Hamburger, coke and French Fries etc.

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DEMANDS: The want with willingness and ability to pay is called demand. If a poor man wants to buy a car, it is not a demand because he cannot have ability to pay the price of the car even if he has willingness. Similarly, if rich persons who has ability to pay the price of car but he might not have willingness to buy a car. So, it is compulsory to be both willingness and ability to pay the price to be a demand. DEMAND CREATION The task of motivating potential customers to buy the goods or services giving them information about goods and services is called demand creation. It is all the special efforts to stimulate a desire for product with the ultimate objective of sale at a profit. There is variety of promotional tools to create and maintain demand against competition. They are as follows; 1. Advertising: The persuasive (convincing) communication which give detailed information about importance, quality, utility, price etc of goods and services to potential customers through different communication media like TV, radio, newspaper, booklet, internet is called Advertising. This is most popular way to create demand in the market. 2. Sales Promotion: Short term encouragement used to create demand for the goods intended to sell is called sale promotion. It includes incentive tools, schemes designed to stimulate demand. Various methods such as free sample distribution, rebate, coupon, price reduction, gift, decoration, fair, premium, display etc. can be used. Some producer keep cash prize into packets of goods 3. Personal Selling: The task of convincing and persuading customer to buy product through personal contacting or face to face talks is called personal selling. In other word, the task of having direct contact and talks with the customers and encouraging them, assuring, giving confidence, etc to buy product is personal selling. It is oldest and popular media as well as expensive than other type of promotion mix. 4. Publicity: Publicity is any promotional communication about an organization or its products that is presented by the media but is not paid for by the organization. It is company related information in which firm does not have control over media. It helps to build favourable images for the firm and its products through the coverage by the media in the form of news or special feature stories. Publicity is not made by the firm but through outside sectors.

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MARKETING PROCESS Marketing is the managerial process by which products are manufactured according to the need, demand and the requirement of the consumers and after production their ownership is passed on to the final consumer for whom it is produced. In this way the work of marketer starts long before the organization's production work starts and continues long after their sales achieved. It is a matching process by which the producers offer marketing mix such as product, price, place and promotion that can meet the demand of a target market. It involves a set of interacting and interdependent activities in the flow of product from the producers to the ultimate consumers. It is a step wise work of marketing involving, concentration, dispersion and equalization. 1. Concentration: Concentration means bringing the goods at some important and convenient centres to make possible effective and economical distribution. Goods are collected from small producers at central points to enable the retailers to have adequate stocks of products of various qualities to meet the numerous requirements of their customers. 2. Dispersion: It is a marketing activity through which the goods and services are delivered to their real customer at the right time, at right place, at right price, in right quantity through effective channel of distribution. This work is done by the wholesaler who first stores the goods and sells them to the retailer in small quantities. And these retailers again sell the products to the actual consumer. Thus, the distribution activity involves many tasks i.e. Sales, Storage, Classification, Transportation, Financing . 3. Equalization: It is the process of adjustment of supply to the actual demand of a particular place. After concentration, it has to be seen that the right kind of goods in right quantity are being taken to a particular market according to the demand. If the equilibrium between the supply and demand is diminished, it is quite possible that it may cause heavy loss either on the part of supplier or to the buyers. It may also go against the interest of the consumers who might not get right type of products in right or stipulated quantity. In this way the process market goes on simultaneously. The wholesaler procures the goods and the make available to retailer as the demand in different market as per the requirement. In this way, in their activity of the dispersion they look to the equalization.

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Exercise A. Give very short answers: 1. Define market. 2. Give the meaning of buying motives. 3. Who are the customers? 4. What is Demand? 5. Point out the stages of buying process of individual customers. 6. What are the types of market on the basis of geographical area? 7. What is demand creation? 8. Point out the promotional tools that create the demand in the market.

B. Give short answers: 1. Explain the concepts of market. 2. What are the features of Nepalese market? Explain in detail. 3. Define the characteristics of institutional customers. 4. Show the different between institutional customers and non-institutional customers. 5. What is marketing process? Explain the three activities of marketing process ?

C. Give the comprehensive answer: 1. Classify and explain the various types of market. 2. Explain the buying process of non-institutional customers. 3. Explain the buying process of institutional customers. 4. Explain the factors affecting individual buying decision. 5. What do you mean by buying motives? Define its classification. ***********************

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Chapter- 2, Components of Marketing