MARKETING

MANAGEMENT

MB0046

SET I

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1. What is Marketing Information System? Explain its
characteristics, benefits and information types.

MIS is a computerized system that is designed to provide an organized flow of

information to enable and support the marketing activities of an organization.
The MIS serves collaborative, analytical and operational needs. In the
collaborative mode, the MIS enables managers to share information and work
together virtually. In addition, the MIS can enable marketers to collaborate with
customers on product designs and customer requirements. The analytical
function is addressed by decision support applications that enable marketers to
analyze market data on customers, competitors, technology and general market
conditions. These insights are becoming the foundation for the development of
marketing strategies and plans. The MIS addresses operational needs through
customer management systems that focus on the day-to-day processing of
customer transactions from the initial sale through customer service. MIS
systems are designed to be comprehensive and flexible in nature and to
integrate with each other functionally. They are formal, forward looking and
essential to the organization’s ability to create competitive advantage. The MIS
is the firm’s “window on the world” and, increasingly, it is the primary customer
interface.

Components of a marketing information system

A marketing information system (MIS) is intended to bring together disparate

items of data into a coherent body of information. An MIS is, as will shortly be
seen, more than raw data or information suitable for the purposes of decision
making. An MIS also provides methods for interpreting the information the MIS
provides. Moreover, as Kotler's1 definition says, an MIS is more than a system
of data collection or a set of information technologies:

"A marketing information system is a continuing and interacting structure of

people, equipment and procedures to gather, sort, analyze, evaluate, and
distribute pertinent, timely and accurate information for use by marketing
decision makers to improve their marketing planning, implementation, and
control".

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The explanation of this model of an MIS begins with a description of each of its
four main constituent parts: the internal reporting systems, marketing research
system, marketing intelligence system and marketing models. It is suggested
that whilst the MIS varies in its degree of sophistication - with many in the
industrialized countries being computerized and few in the developing countries
being so - a fully fledged MIS should have these components, the methods (and
technologies) of collection, storing, retrieving and processing data
notwithstanding.

Internal reporting systems: All enterprises which have been in operation for
any period of time nave a wealth of information. However, this information often
remains under-utilized because it is compartmentalized, either in the form of an
individual entrepreneur or in the functional departments of larger businesses.
That is, information is usually categorized according to its nature so that there
are, for example, financial, production, manpower, marketing, stockholding and
logistical data. Often the entrepreneur, or various personnel working in the
functional departments holding these pieces of data, does not see how it could
help decision makers in other functional areas. Similarly, decision makers can
fail to appreciate how information from other functional areas might help them
and therefore do not request it.

The internal records that are of immediate value to marketing decisions are:
orders received, stockholdings and sales invoices. These are but a few of the
internal records that can be used by marketing managers, but even this small
set of records is capable of generating a great deal of information. Below, is a
list of some of the information that can be derived from sales invoices.

· Product type, size and pack type by territory

· Product type, size and pack type by type of account
· Product type, size and pack type by industry
· Product type, size and pack type by customer
· Average value and/or volume of sale by territory
· Average value and/or volume of sale by type of account
· Average value and/or volume of sale by industry
· Average value and/or volume of sale by sales person

By comparing orders received with invoices an enterprise can establish the

extent to which it is providing an acceptable level of customer service. In the
same way, comparing stockholding records with orders received helps an
enterprise ascertain whether its stocks are in line with current demand patterns.

Marketing research systems: The general topic of marketing research has

been the prime ' subject of the textbook and only a little more needs to be
added here. Marketing research is a proactive search for information. That is,
the enterprise which commissions these studies does so to solve a perceived
marketing problem. In many cases, data is collected in a purposeful way to
address a well-defined problem (or a problem which can be defined and solved
within the course of the study). The other form of marketing research centers
not on a specific marketing problem but is an attempt to continuously monitor

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the marketing environment. These monitoring or tracking exercises are
continuous marketing research studies, often involving panels of farmers,
consumers or distributors from which the same data is collected at regular
intervals. Whilst the ad hoc study and continuous marketing research differs in
the orientation, yet they are both proactive.

Marketing intelligence systems: Whereas marketing research is focused, market

intelligence is not. A marketing intelligence system is a set of procedures and
data sources used by marketing managers to sift information from the
environment that they can use in their decision making. This scanning of the
economic and business environment can be undertaken in a variety of ways,
including

Unfocused scanning: The manager, by virtue of what he/she reads, hears and
watches expose him/herself to information that may prove useful. Whilst the
Behaviour is unfocused and the manager has no specific purpose in mind, it is
not unintentional.

Semi-focused scanning: Again, the manager is not in search of particular pieces

of information that he/she is actively searching but does narrow the range of
media that is scanned. For instance, the manager may focus more on economic
and business publications, broadcasts etc. and pay less attention to political,
scientific or technological media.

Informal search: This describes the situation where a fairly limited and
unstructured attempt is made to obtain information for a specific purpose. For
example, the marketing manager of a firm considering entering the business of
importing frozen fish from a neighboring country may make informal inquiries
as to prices and demand levels of frozen and fresh fish. There would be little
structure to this search with the manager making inquiries with traders he/she
happens to encounter as well as with other ad hoc contacts in ministries,
international aid agencies, with trade associations, importers/exporters etc.

Formal search: This is a purposeful search after information in some systematic

way. The information will be required to address a specific issue. Whilst this sort
of activity may seem to share the characteristics of marketing research it is
carried out by the manager him/herself rather than a professional researcher.
Moreover, the scope of the search is likely to be narrow in scope and far less
intensive than marketing research

Marketing intelligence is the province of entrepreneurs and senior managers

within an agribusiness. It involves them in scanning newspaper trade
magazines, business journals and reports, economic forecasts and other media.
In addition it involves management in talking to producers, suppliers and
customers, as well as to competitors. Nonetheless, it is a largely informal
process of observing and conversing.

Some enterprises will approach marketing intelligence gathering in a more

deliberate fashion and will train its sales force, after-sales personnel and
district/area managers to take cognizance of competitors' actions, customer
complaints and requests and distributor problems. Enterprises with vision will
also encourage intermediaries, such as collectors, retailers, traders and other
middlemen to be proactive in conveying market intelligence back to them.

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Marketing models: Within the MIS there has to be the means of interpreting
information in order to give direction to decision. These models may be
computerized or may not. Typical tools are:

· Time series sales modes

· Brand switching models

· Linear programming

· Elasticity models (price, incomes, demand, supply, etc.)

· Regression and correlation models

· Analysis of Variance (ANOVA) models

· Sensitivity analysis

· Discounted cash flow

· Spreadsheet 'what if models

These and similar mathematical, statistical, econometric and financial models

are the analytical subsystem of the MIS. A relatively modest investment in a
desktop computer is enough to allow an enterprise to automate the analysis of
its data. Some of the models used are stochastic, i.e. those containing a
probabilistic element whereas others are deterministic models where chance
plays no part. Brand switching models are stochastic since these express brand
choices in probabilities whereas linear programming is deterministic in that the
relationships between variables are expressed in exact mathematical terms.

The Strategic Role of the Marketing Information Systems

Historically, the role of the marketing function has been to support “make and
sell” business strategies that emphasized increases in market share over the
creation of long-term customer value. This view started to change after World
War II with the recognition that satisfying the customer’s needs and wants
should be the focus of a firm’s business activities. The emphasis on the
customer elevated the importance of marketing as a core business function on
a par with research and development and production. The marketing function
has become the firm’s window to the world in the sense that it must monitor the
marketing environment for changes in buyer behavior, competition, technology,
economic conditions, and government policies. Marketing is a “strategic”
function in that marketing activities enable organizations to identify and adapt
to changes in the market environment. The strategic function of marketing is
further emphasized as Internet-based technologies have enabled radically new
approaches to selling where information technology for the first time touches
customers and provides new means for collecting marketing information. In a
knowledge-intensive economy, the ability to collect, analyze and act upon
marketing information more rapidly than the competition is the core
competency from which competitive advantage flows. Marketing information
systems provide the information technology backbone for the marketing
organization’s strategic operations. In a broader sense, the MIS creates an

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organized and timely flow of information required by marketing decision
makers. It involves the equipment, software, databases, and also the
procedures, methodologies and people necessary for the system to meet its
organizational objectives. MIS encompasses a broad spectrum of activities from
simple transaction processing complex marketing strategy decision making.

2. a. Examine how a firm’s macro environment operates.

b. Mention the key points in Psychoanalytic model of
consumer behaviour.

a. The term macro-environment denotes all forces and agencies external to the
marketing firm itself. Some of these forces and agencies will be closer to the
operation of the firm than others, e.g. a firm’s suppliers, agents, distributors
and other distributive intermediaries and competing firms. These ‘closer’
external constituents are often collectively referred to as the firm’s proximate
macro-environment to distinguish them from the wider external forces found,
for example, in the legal, cultural, economic and technological sub-
environments.

This consists of people, organizations and forces within the firm’s immediate
external environment. Of particular importance to marketing firms are the sub-
environments of suppliers, competitors and distributors (intermediaries). These
sub-environments can each have a significant effect upon the marketing firm.

The supplier environment: This consists of other business firms or

individuals who provide the marketing firm with raw materials, product
constituents, services or, in the case of retailing firms, possibly the finished
goods they. Firms, whether they are retailers or manufacturers, will often
depend on numerous suppliers. The buyer/supplier relationship is one of mutual
economic interdependence, both parties relying on the other for their
commercial well-being. Although both parties are seeking stability and security
from their relationship, factors in the supplier environment are subject to
change, such as industrial disputes which will affect delivery of materials to the
buying company, or a sudden increase in raw material prices which forces
suppliers to raise their prices. Whatever the product or service being purchased
by the marketing firm, unexpected developments in the supplier environment
can have an immediate and potentially serious effect on the firm’s commercial
operations. Because of this, marketing management, by means of the
marketing intelligence component of its marketing information system, should
continually monitor changes and potential changes in the supplier environment
and have contingency plans ready to deal with potentially adverse
developments.

The distributive environment: Much reliance is placed on marketing

intermediaries such as wholesalers, factors, agents and distributors to ensure
that their products reach the final consumer. To a casual observer, it may seem
that the conventional method of distribution in any particular industry is
relatively static. This is because changes in the distributive environment occur
relatively slowly, and there is therefore a danger of marketing firms failing to
appreciate the commercial significance of cumulative change. Existing channels
may be declining in popularity over time, while new channels may be

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developing unnoticed by the marketing firm. Nowhere has this ‘creeping’
change been more apparent over recent years in the UK and other parts of the
world than in the retailing of fast moving consumer goods (fmcg). In the 1960s
well over half of all fmcg retail trade was accounted for in the independent
sector plus a further large proportion to the Co-operative Societies. Nowadays,
the sector represented by the larger food multiples has well in excess of this
proportion.

The competitive environment: Management must be alert to the potential

threat of other companies marketing similar and substitute product whether
they are of domestic or foreign origin. In some industries there may be
numerous world-wide manufacturers posing a potential competitive threat and
in others there may only be a few. Whatever the type, size and composition of
the industry, it is essential that marketing management has a full
understanding of competitive forces. Companies need to establish exactly who
their competitors are and the benefits they are offering to the market. Armed
with this knowledge, the company will have a greater opportunity to compete
effectively.

The wider macro-environment: Changes in the wider macro-environment

may not be as close to the marketing firm’s day-to-day operations, but they are
just as important. The main factors making up these wider macro-
environmental forces fall into four groups.

1. Political and legal factors

2. Economic factors
3. Social and cultural factors
4. Technological factors

(Often referred to as the ‘PEST’ factors in the marketing analytical context, a

useful aide-memoir, although in some texts it is sometimes referred to as
‘STEP’). To this is sometimes added ‘Competitive factors’ and although ‘PEST’
analysis relates to a specific organisation ‘Competitive factors’ tend to be
subsumed under ‘Economic factors’. Such a PEST analysis means listing all
possible points that may affect the organisation under review under each of the
P.E.S.T. headings. Recently, some texts have added ‘L’ (standing for legal) and
‘E’ (standing for environmental) to this classification, making the acronym
‘PESTLE’. Even more recently, some writers have incorporated yet another ‘E’
(standing for ecological) with the new acronym ‘STEEPLE’.

The political and legal environment

To many companies, domestic political considerations are likely to be of prime

concern. However, firms involved in international operations are faced with the
additional dimension of international political developments. Many firms export
and may have joint ventures or subsidiary companies abroad. In many
countries, particularly those in the so-called ‘Third World’ or more latterly
termed ‘Developing Nations’, the domestic political and economic situation is
usually less stable than in the UK. Marketing firms operating in such volatile
conditions clearly have to monitor the local political situation very carefully
.Many of the legal, economic and social developments, in our own society and in
others, are the direct result of political decisions put into practice, for example
the privatization of state industries or the control of inflation. In summary,
whatever industry the marketing firm is involved in, changes in the political and

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legal environments at both the domestic and international levels can affect the
company and therefore needs to be fully understood.

The economic environment

Economic factors are of concern to marketing firms because they are likely to
influence, among other things, demand, costs, prices and profits. These
economic factors are largely outside the control of the individual firm, but their
effects on individual enterprises can be profound. Political and economic forces
are often strongly related. A much quoted example in this context is the ‘oil
crisis’ caused by the Middle East War in 1973 which produced economic shock
waves throughout the Western world, resulting in dramatically increased crude
oil prices. This, in turn increased energy costs as well as the cost of many oil-
based raw materials such as plastics and synthetic fibres. This contributed
significantly to a world economic recession, and it all serves to demonstrate
how dramatic economic change can upset the traditional structures and
balances in the world business environment. As can be seen, changes in world
economic forces are potentially highly significant to marketing firms,
particularly those engaged in international marketing. However, an
understanding of economic changes and forces in the domestic economy is also
of vital importance as such forces have the most immediate impact. One such
factor is a high level of unemployment, which decreases the effective demand
for many luxury consumer goods, adversely affecting the demand for the
industrial machinery required to produce such goods. Other domestic economic
variables are the rate of inflation and the level of domestic interest rates, which
affect the potential return from new investments and can inhibit the adoption
and diffusion of new technologies. In addition to these more indirect factors,
competitive firms can also pose a threat to the marketing company so their
activities should be closely monitored. It is therefore vital that marketing firms
continually monitor the economic environment at both domestic and world
levels. Economic changes pose a set of opportunities and threats, and by
understanding and carefully monitoring the economic environment, firms should
be in a position to guard against potential threats and to capitalize on
opportunities.

The technological environment

Technology is a major macro-environmental variable which has influenced the

development of many of the products we take for granted today, for example,
television, calculators, video recorders and desk-top computers. Marketing firms
themselves play a part in technological progress, many having their own
research department or sponsoring research through universities and other
institutions, thus playing a part in innovating new developments and new
applications. One example of how technological change has affected marketing
activities is in the development of electronic point of sale (EPOS) data capture
at the retail level. The ‘laser checkout’ reads a bar code on the product being
purchased and stores information that is used to analyse sales and re-order
stock, as well as giving customers a printed readout of what they have
purchased and the price charged. Manufacturers of fast-moving consumer
goods, particularly packaged grocery products, have been forced to respond to
these technological innovations by incorporating bar codes on their product
labels or packaging. In this way, a change in the technological environment has
affected the products and services that firms produce and the way in which
firms carry out their business operations.

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Other macro-environmental factors

The macro-environmental factors discussed are not intended to be an

exhaustive list, but merely to demonstrate the main areas of environmental
change. Other sub-environments may be important to marketing management,
for example, in some countries the religious environment may pose an
important source of opportunities and threats for firms. In the UK, demographic
changes are considered important by a number of firms. In general, the UK
population has been stable at approximately 56 million for a number of years,
but the birth rate is falling, while people are living longer. Firms that produce
goods and services suitable for babies and small children (e.g. Mother care)
have seen their traditional markets remain static or decline slightly. Such
companies have tended to diversify, offering products targeted at older age
groups. A larger older sector of the population offers opportunities for firms to
produce goods and services to satisfy their particular needs. The over-55 age
group is the modern marketer’s current major opportunity. In all advanced
economies such as the Australia, UK and USA it is this age group that has the
largest disposable income, and special products and services such as holidays
and pension-related financial services are being marketed to this sector.

b. The psychoanalytical model: The psychoanalytical model draws from

Freudian psychology. According to this model, the individual consumer has a
complex set of deep seated motives which drive him towards certain buying
decisions. The buyer has a private world with all his hidden fears, suppressed
desires and totally subjective longings. His buying action can be influenced by
appealing to those desires and longings.

According to Mr. Freud, human personality has three parts namely, 1. the “ID”,
the source of all mental energy which drives one to an action. 2.the “Super
Ego”, the internal representation of what is socially approved—one’s
conscience.3. the “Ego”, the conscious director of ‘ID’ impulses for finding
satisfaction in socially acceptable manner. In other words, ‘ID’ represents one’s
animal or basic impulses, ‘instincts’ and cravings for immediate and total
satisfaction. These instincts might be even anti-social. The Super Ego or
conscience reflects one’s idealised or mended behaviour pattern a via media
between the extremes that is the, conflict between “ID” and “Super Ego” is
resolved by Ego. The Ego is the intermediary which mediates and processes the
dispute action as a rational control centre between the conflicting extreme
sides of ID and Super Ego. It is Ego that directs ones behaviour to satisfy both
the “ID” and “Super Ego”. Thus a person is interested in buying say KV-L34MFI
SONY TV with characteristics of Hi-black Trinitron Screen—super drum sound
system, 100system memory,1 tuner digital picture in picture, A/V Stereo, LD
compatibility casting say Rs.1,05,000 with remote control. Here his ‘ID’
demands the use of consumer credit liberally to buy that costly T.V. set. The
Super Ego dissuades him from heavy borrowing as credit beyond certain limits
is not acceptable. Here the Ego acts like a mediator and comes with a fine
compromise of instalment system without away strains and drain on his
financial position. Here self image of a consumer is a great motivating force
inducing him to buy certain products. This model can be presented as follows

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3. Explain the key roles played and various steps involved
in organizational buying.

Organization buying is the decision-making process by which formal

organizations establish the need for purchased products and services and
identify, evaluate, and choose among alternative brands and suppliers.
(Webster and Wind)

Some of the characteristics of organizational buyers are:

1. Consumer market is a huge market in millions of consumers where

organizational buyers are limited in number for most of the products.

2. The purchases are in large quantities.

3. Close relationships and service are required.

4. Demand is derived from the production and sales of buyers.

5. Demand fluctuations are high as purchases from business buyers magnify

fluctuation in demand for their products.

6. The organizational buyers are trained professionals in purchasing.

7. Several persons in organization influence purchase.

8. Lot of buying occurs in direct dealing with manufacturers.

Organizational Buying Situations

Straight rebuy

In this buying situation, only purchasing department is involved. That get an

information from inventory control department or section to reorder the
material or item and they seek quotations from vendors in an approved list.

The "in-suppliers" make efforts to maintain product and service quality. The
"out-suppliers" have to make efforts to get their name list in the approved
vendors' list and for this purpose they have to offer something new or find out

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any issues of dissatisfaction with current suppliers and promise to provide
better service.

Modified rebuy

In this buying situation, there is a modification to the specifications of the

product or specifications related to delivery. Executives apart from the
purchasing department are involved in the buying decisions. The company is
looking for additional suppliers or is ready to modify the approved vendors list
based on the technical capabilities and delivery capabilities.

New task buy

In this situation, the buyer is buying the product for the first time. As the cost
of the product or consumption value becomes higher, more number of
executives are involved in the process. The stages of awareness, interest,
evaluation, trial, and adoption will be there for the products of each potential
supplier. Only the products which pass all the stages will be on the approved list
and price competition will follow subsequently.

Systems buy

A system buying is a process in which the organization gives a single order to a

single organization for supplying a full system. The buying organization knows
that no single party is producing all the units in the system. But it wants the
system seller to engineer the system, procure the units from various vendors
and assemble, fabricate or construct the system.

Participants in the Business Buying Process

Users: The persons who use the item.

Initiators: The persons who request the purchase. The safety officer may initiate
the request for the purchase.

Influencers: Persons who held define specifications. In this case of safety gloves,
the safety officer may himself define specifications. If an industrial engineer is
in the organization, he may also be consulted. There can different gloves for
different working situations and industrial engineer may be more aware of
specific requirements due to his special nature of work - human effort
engineering.

Buyers: They are the person who actually does the buying transaction.

Gatekeepers: They control access to personnel in a company.

Deciders: People who decide on product requirements and suppliers. It is the

final approval for product specifications and suppliers' list.

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Approvers: Persons who approve the purchase. In the case of safety gloves, the
personal manager may have the power to approve.

Major Influencers on Business Buyers

Environmental factors: Expected demand for the product that the buying
organization is selling, expected shortages for the item, expected changes in
technology related to the item etc. are the environmental factors that will have
an effect.

Organizational factors: Changes in purchasing department organization like

centralized purchasing, decentralized purchasing and changes in purchasing
practices like long-term contracts, relationship purchasing, zero-based pricing,
vendor-performance evaluation are the organization factors of importance to
marketers.

Interpersonal factors: These factors are the relationship between buyers and
sales representatives of various competitor companies.

Individual factors: These factors related to the buyer. What sort of ways of
interacting and service are appreciated by the buyers and what ways are
considered as irritants? Marketers have to understand the reactions of buyers.

Organizational Buying Process - Steps involved

• Problem recognition
• General need description
• Product specification
• Supplier search
• Proposal solicitation
• Supplier selection
• Order routine specification
• Supplier performance review

4. Explain the different marketing philosophies and its

approach.

The marketing concept and philosophy evolved as the last of three major
philosophies of marketing. These three philosophies are the product, selling,
and marketing philosophies. Even though each philosophy has a particular time
when it was dominant, a philosophy did not die with the end of its era of
dominance. In fact, all three philosophies are being used today.

PRODUCT PHILOSOPHY

The product philosophy was the dominant marketing philosophy prior to the
Industrial Revolution and continued to the 1920s. The product philosophy holds
that the organization knows its product better than anyone or any organization.
The company knows what will work in designing and producing the product and

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what will not work. For example, the company may decide to emphasize the low
cost or high quality of their products. This confidence in their ability is not a
radical concept, but the confidence leads to the consumer being overlooked.
Since the organization has the great knowledge and skill in making the product,
the organization also assumes it knows what is best for the consumer.

This philosophy of only relying on the organization's skill and desires for the
product did not lead to poor sales. In much of the product philosophy era,
organizations were able to sell all of the products that they made. The success
of the product philosophy era is due mostly to the time and level of technology
in which it was dominant. The product era spanned both the pre-Industrial
Revolution era and much of the time after the Industrial Revolution.

The period before the Industrial Revolution was the time when most goods were
made by hand. The production was very slow and few goods could be produced.
However, there was also a demand for those goods, and the slow production
could not fill the demand in many cases. The importance for management of
this shortage was that very little marketing was needed.

An example illustrates the effects of the shortages. Today, the gunsmith shop in
Williamsburg, Virginia, still operates using the product philosophy. The
gunsmiths produce single-shot rifles using the technology available during the
1700s. They are only able to produce about four or five rifles every year, and
they charge from $15,000 to $20,000 for each rifle. However, the high price
does not deter the demand for the guns; their uniqueness commands a waiting
list of three to four years. Today's Williamsburg Gunsmith Shop situation was
typical for organizations operating before the Industrial Revolution. Most goods
were in such short supply that companies could sell all that they made.
Consequently, organizations did not need to consult with consumers about
designing and producing their products.

When mass production techniques created the Industrial Revolution, the volume
of output was greatly increased. Yet the increased production of goods did not
immediately eliminate the shortages from the pre-industrial era. The new mass
production techniques provided economies of scale allowing for lower costs of
production and corresponding lower prices for goods. Lower prices greatly
expanded the market for the goods, and the new production techniques were
struggling to keep up with the demand. This situation meant that the product
philosophy would work just as well in the new industrial environment.
Consumers still did not need to be consulted for the organization to sell its
products.

One of the many stories about Henry Ford illustrates the classic example of the
product philosophy in use after the Industrial Revolution. Henry Ford pioneered
mass production techniques in the automobile industry. With the techniques, he
offered cars at affordable prices to the general public. Before this time, cars
were hand made, and only the very wealthy could afford them. The public
enthusiastically purchased all the Model T Fords that the company could
produce. The evidence that the product philosophy was alive and well in Ford
Motor Company came in Henry Ford's famous reaction to consumer requests for
more color options. He was said to have responded that "you can have any
color car you want as long as it is black." Realizing that different colors would
increase the cost of production and price of the Model T's, Henry Ford, using the
product philosophy, decided that lower prices were best for the public

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SELLING PHILOSOPHY

The selling era has the shortest period of dominance of the three philosophies.
It began to be dominant around 1930 and stayed in widespread use until about
1950. The selling philosophy holds that an organization can sell any product it
produces with the use of marketing techniques, such as advertising and
personal selling. Organizations could create marketing departments that would
be concerned with selling the goods, and the rest of the organization could be
left to concentrate on producing the goods. The reason for the emergence of
the selling philosophy was the ever-rising number of goods available after the
Industrial Revolution. Organizations became progressively more efficient in
production, which increased the volume of goods. With the increased supply,
competition also entered production. These two events eventually led to the
end of product shortages and the creation of surpluses. It was because of the
surpluses that organizations turned to the use of advertising and personal
selling to reduce their inventories and sell their goods. The selling philosophy
also enabled part of the organization to keep focusing on the product, via the
product philosophy. In addition, the selling philosophy held that a sales or
marketing department could sell whatever the company produced.

The Ford Motor Company is also a good example of the selling philosophy and
why this philosophy does not work in many instances. Ford produced and sold
the Model T for many years. During its production, the automobile market
attracted more competition. Not only did the competition begin to offer cars in
other colors, the styling of the competition was viewed as modern and the
Model T became considered as old-fashioned. Henry Ford's sons were aware of
the changes in the automobile market and tried to convince their father to
adapt. However, Henry Ford was sure that his standardized low-price
automobile was what the public needed. Consequently, Ford turned to
marketing techniques to sell the Model T. It continued to sell, but its market
share began to drop. Eventually, even Henry Ford had to recognize consumer
desires and introduce a new model.

The selling philosophy assumes that a well-trained and motivated sales force
can sell any product. However, more companies began to realize that it is easier
to sell a product that the customer wants, than to sell a product the customer
does not want. When many companies began to realize this fact, the selling era
gave way to the marketing era of the marketing concept and philosophy.

MARKETING PHILOSOPHY

The marketing era started to dominate around 1950, and it continues to the
present. The marketing concept recognizes that the company's knowledge and
skill in designing products may not always be meeting the needs of customers.
It also recognizes that even a good sales department cannot sell every product
that does not meet consumers' needs. When customers have many choices,
they will choose the one that best meets their needs.

MARKET CONCEPT AND PHILOSOPHY

The marketing concept and philosophy states that the organization should
strive to satisfy its customers' wants and needs while meeting the
organization's goals. The best way to meet the organization's goals is also by
meeting customer needs and wants. The marketing concept's emphasis is to

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understand the customers before designing and producing a product for them.
With the customer's wants and needs incorporated into the design and
manufacture of the product, sales and profit goals are far more likely to be met.
With the customer's satisfaction the key to the organization, the need to
understand the customer is critical. Marketing research techniques have been
developed just for that purpose. Smaller organizations may keep close to their
customers by simply talking with them. Larger corporations have established
methods in place to keep in touch with their customers, be it consumer panels,
focus groups, or third-party research studies. Whatever the method, the desire
is to know the customers so the organization can better serve them and not
lose sight of their needs and wants.

The idea of keeping close to the organization's customers seems simple. In

reality, it is very easy to forget the customer's needs and wants. Sometimes the
management is so involved with the product that their own desires and wants
begin to take dominance, even though they have adopted the marketing
concept.

Yet it is easy for managers to forget the marketing concept and philosophy. For
example, many years ago—before there was a Subway on every corner—a
college student opened a small submarine sandwich shop near his university's
campus. The sub shop was an immediate success. By using the marketing
concept, the young entrepreneur had recognized an unmet need in the student
population and opened a business that met that need. Unfortunately, the story
does not end at this point. The sub shop was so successful that it began to
outgrow its original location after about three years. The shop moved to a larger
location with more parking spaces, also near the university. At the new sub
shop, waiters in tuxedos met the students and seated them at tables with
tablecloths. Besides the traditional subs, the shop now served full meals and
had a bar. Within a few months the sub shop was out of business. The owner of
the shop had become so involved with his business vision that he forgot the
customers' needs and wants. They did not want an upscale restaurant—there
were other restaurants in the area that met that need, they just wanted a quick
sub sandwich. By losing sight of the customers' wants and needs, the owner of
the sub shop lost his successful business.

5. What are the various stages involved in decision process

when a consumer is buying new product? Also, explain
the adoption process.

Buyer decision processes are the decision making processes undertaken by

consumers in regard to a potential market transaction before, during, and after
the purchase of a product or service. More generally, decision making is the
cognitive process of selecting a course of action from among multiple
alternatives. Common examples include shopping and deciding what to eat.
Decision making is said to be a psychological construct. This means that
although we can never "see" a decision, we can infer from observable behaviour
that a decision has been made. Therefore we conclude that a psychological
event that we call "decision making" has occurred. It is a construction that
imputes commitment to action. That is, based on observable actions, we
assume that people have made a commitment to effect the action.

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In general there are three ways of analyzing consumer buying decisions. They
are:

• Economic models - These models are largely quantitative and are based
on the assumptions of rationality and near perfect knowledge. The
consumer is seen to maximize their utility. Game theory can also be
used in some circumstances.
• Psychological models - These models concentrate on psychological and
cognitive processes such as motivation and need recognition. They are
qualitative rather than quantitative and build on sociological factors like
cultural influences and family influences.
• Consumer behaviour models - These are practical models used by
marketers. They typically blend both economic and psychological
models.

The Buyer Decision Process Consists Of Five Stages.

1. Need Recognition
2. Information Search
3. Evaluation Of Alternatives
4. Purchase Decision
5. Post Purchase Behaviour

Need Recognition:-The first stage of the buyer decision process in which the
consumer recognizes a problem a need.e.g. The need can be triggered by
internal stimuli when one of the person’s normal needs – hangers, thirst, Sex –
rises to a level – high enough to become a drive. The need can be triggered by
external stimuli.

Information Search:-The stage of the buyer decision process in which the

consumer is around to search for more information. The consumer may simply
have heightened attention or may go into active information search. The
consumer can obtain information from any of several sources. I.e. personal
sources (family, friends, and neighbours) commercial sources (advertising sales
people’s dealers, packaging, and displays). Public sources (mass media etc.)

Evaluation of Alternatives:-The stage of the buyer decision process in which

the consumer uses information to evaluate alternative bounds in the choice set.

Purchase Decision:-The stage of buyer decision process in which the

consumer actually buys the product. Two factors can come between the
purchase intention and the purchase decision. The first factor is attitudes of
others. The second factor is unexpected situational factor.

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Post Purchase Behaviour:-The stage of the buyer decision process in which
consumers take further action after purchase based on their satisfaction or
dissatisfaction.

ADOPTION PROCESS IN MARKETING

The adoption process is the mental and behavioral procedure an individual

consumer goes through when learning about and purchasing a new product.
The process consists of these stages:

• Knowledge: A person learns of a product's existence and gains some

understanding of how it functions.
• Persuasion: A person forms a favorable or unfavorable attitude about a
product.
• Decision: A person engages in actions that lead to a choice to adopt or
reject a product.
• Implementation: A person uses a product.
• Confirmation: A person seeks reinforcement and may reverse a decision
if exposed to conflicting messages.

The rate (speed) of adoption depends on consumer traits, the product, and the
firm's marketing effort. Adoption will be faster if consumers have high
discretionary income and are willing to try new offerings; the product presents
little physical, social, or financial risk; the product has an advantage over other
items already on the market; the product is a modification of an existing idea
and not a major innovation; the product is compatible with current consumer
life-styles; the attributes of the product can be easily communicated; the
importance of the product is low; the product can be tried in small quantities;
mass advertising and distribution are used; the product is consumed quickly; or
the product is easy to use.

The diffusion process describes the manner in which different members of the
target market often accept and purchase a product. It spans the time from
product introduction until market saturation:

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Innovators are the first consumers to buy a new product. They are
venturesome, willing to accept risk, socially aggressive, communicative, and
cosmopolitan. It is necessary to determine which innovators are opinion
leaders? Those who influence others to purchase. This group represents 2.5 per
cent of the target market.

Early adopters are the next consumers to buy a new product. They enjoy the
leadership, prestige, and respect that early purchases bring. These consumers
tend to be opinion leaders. They adopt new ideas but use discretion. This group
represents 13.5 per cent of the market.

The early majority is the first part of the mass market to buy a product. They
have status in their social class and are outgoing, communicative, and attentive
to information cues. This group represents 34 per cent of the target market.

The late majority is the second part of the mass market to buy a product.
They are less cosmopolitan and responsive to change. The late majority
includes people with lower economic and social status, those past middle age,
and skeptics. This group represents 34 per cent of the market.

Laggards are last to purchase. They are price conscious, suspicious of change,
low in income and status, tradition bound, and conservative. Laggards do not
adopt a product until it reaches maturity. Some firms ignore them because it
can be difficult to market a product to this small group. However, a market
segmented may do well by concentrating on products for laggards. This group
represents 16 per cent of the market.

6. Explain briefly the marketing mix elements for an

automobile company giving sufficient examples.

A Marketing mix is the division of groups to make a particular product by

pricing, product, branding, place, and quality. Although some Day1 marketers
have added other P's, such as personnel, packaging and physical evidence, the
fundamentals of marketing typically identifies the four P's of the marketing mix
as referring to:

"Marketing Mix" is set of correlated tools that work together to achieve

company's objectives, they are: product, price, promotion, and place. The set of

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controllable tactical marketing tools, product, price, place and promotion - that
the firm blends to produce the response it wants in the target market:

• Product - A tangible object or an intangible service that is mass

produced or manufactured on a large scale with a specific volume of
units. Intangible products are often service based like the tourism
industry & the hotel industry. Typical examples of a mass produced
tangible object are the motor car and the disposable razor. A less
obvious but ubiquitous mass produced service is a computer operating
system.
• Price – The price is the amount a customer pays for the product. It is
determined by a number of factors including market share, competition,
material costs, product identity and the customer's perceived value of
the product. The business may increase or decrease the price of product
if other stores have the same product.
• Place – Place represents the location where a product can be purchased.
It is often referred to as the distribution channel. It can include any
physical store as well as virtual stores on the Internet.
• Promotion – Promotion represents all of the communications that a
marketer may use in the marketplace. Promotion has four distinct
elements - advertising, public relations, word of mouth and point of sale.
A certain amount of crossover occurs when promotion uses the four
principal elements together, which is common in film promotion.
Advertising covers any communication that is paid for, from television
and cinema commercials, radio and Internet adverts through print media
and billboards. One of the most notable means of promotion today is the
Promotional Product, as in useful items distributed to targeted audiences
with no obligation attached. This category has grown each year for the
past decade while most other forms have suffered. It is the only form of
advertising that targets all five senses and has the recipient thanking the
giver. Public relations are where the communication is not directly paid
for and includes press releases, sponsorship deals, exhibitions,
conferences, seminars or trade fairs and events. Word of mouth is any
apparently informal communication about the product by ordinary
individuals, satisfied customers or people specifically engaged to create
word of mouth momentum. Sales staff often plays an important role in
word of mouth and Public Relations

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MAHINDRA SCORPIO

Rational benefits: World class vehicle, good looks, car like comfort, great
value Emotional benefits: Ownership experience of thrill, excitement and
power .Relational benefits: Young modern, premium, city companion / extension
of lifestyle.Pricing Strategy: to be a premium brand yet having universal
appeal .Scorpio was to compete with the midsize cars like Hyundai Accent, Ford
Fiesta, Chevrolet Aveo, Maruti Suzuki SX4 on the one side and SUVs like Toyota
Quails, Tata Safari and the Tata Sumo Grande on the other. Scorpio adopted the
penetrative pricing strategy positioned in the psychological price barrier of Rs. 7
– 13 Lakhs.

Brand Promise: ‘Luxury of a car. Thrill of an SUV’ this brand positioning

addresses the key consumer Insight and the product delivers the promise. The
position is also a unique proposition, which will help the brand have a distinct
image in the consumers’ mind. The baseline captures the essence of the brand,

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which is superiority and uncompromising attitude. It also summarizes the spirit
behind the making of the Scorpio.

Media Strategy
*Dramatic and high impact launch
* High visibility
* Push brand image even by the media vehicle

Building impact through multiple-media

* PR, Mass Media, Direct Marketing, Events

Public Relations
Pre-launch excitement and buzz was created by a full blown PR program. Media
coverage on the IDAM process, the people behind the Scorpio, the obsession,
the world class technology, etc set the tone for the hyped up launch. PR was
also the first tool used for launching the Scorpio. The coverage of the launch
was massive. It got four cover stories

Mass Media
‘While the media targets would be achieved through the right selection of the
media mix, the Scorpio media posture was to ensure that Scorpio was present
on the decided media but ‘with a difference.’ Scorpio would use media
innovations to create differentiation on the traditional media and do things in a
‘bigger and better’ manner.

Customer Relationship Management (CRM)

CRM as a tool was used to create positive word-of-mouth, to monitor customer
experiences and generate referrals. A series of CRM activities were
implemented with regular direct communication, events and customer research.
The CRM plan included a welcome Pack on filling up Scorpio Club (Top Gear)
form, satisfaction surveys, Events, Festive offers, Rewards Program, etc.

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 Since the Scorpio was targeted at an urban clientele it needed a stronger
distribution presence in Metros and urban areas. Hence, the distribution channel
had to focus on providing an appealing experience for modern car buyers and
on offering international standards of auto retail.

The Scorpio was launched in a phased manner - first in Metros Mumbai, Delhi,
Bangalore, Chennai. Twenty cities were included over a period of 4 months and
within a year 50 cities were covered. This ensured attention to main markets
and to ensure that initial production of the vehicle could match demand.
Dealerships were revamped prior to launch in a particular city.

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