• What is Marketing

▪ Marketing is about identifying and meeting human and social needs in a way that harmonizes with the
goals of the organization.

▪ Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large.

▪ Source: American Marketing Association

▪ The process of delivering the right products or services at the right place, right time, and right price.

• What is Marketing Management?

•
The Marketing Process

a) Understand the marketplace and customer needs and wants

b) Design a customer value-driven marketing strategy

c) Construct an integrated marketing program that delivers superior value

d) Engage customer,build profitable relationships and create customer delight

e) Capture value from customers to create profit and customer equity

• Core Marketing Concepts

• Needs, Wants and Demands

• Markets

• Market Offerings

• Customer Value and Satisfaction

• Exchanges

• Need

• Need : felt sense of deprivation of some basic necessities

• Needs are the basic human requirements. It is necessary for survival.

• They include basic physical needs for food, clothing , warmth and safety

• Social needs for belonging and affection

• Individual needs for knowledge and self expression

• These needs were not created by marketers. They are the basic part of human make up.

• “Needs Pre-exists” (can’t be created).

• Wants

• Wants that are desire for specific products that are not necessary for survival.

• An Indians need foods but wants a bowl of rice and fish curry, biryani, masala dosa, shahi paneer, nan
roti

• An American needs food but wants a Big Mac, fries, and a soft drink.
• Wants are shaped by one’s society, culture and individual personality.

• Demand

• Demands are wants for a particular product backed by an ability to pay.

• Example: Many people want a Rolls Royce but are they able to buy the one.

• Wants become demand when backed by buying power.

• Only a few are willing to buy because able to buy one.

• i.e. I have money to buy a BMW, a Mont Blanc pen, Channel cosmetics

• Markets

▪ “A market consists of all actual and potential customers of a product or service. Kotler

▪ The market consists of people or organizations with needs to satisfy, money to spend, and the
willingness to spend it. -Stanton

• What is Marketed? Market Offerings

• Goods

• Services

• Events

• Experiences

• Persons

• Places

• Properties

• Organizations

• Information

• Ideas

• Value and Satisfaction

• Value is the difference between the benefits that the customer gains from owning or using a product
and the costs of obtaining the product.

✓ Example: Shampoo sachet. Cross Word also provide book reading ambience, Pizza Hut Deliver Pizza
on time, Ritz Carlton gives free breakfast to overnight travelers, FedEx fast delivery

• Satisfaction : it reflects a persons’ judgment of a products perceived performance (outcome ) in

relationship to expectation.

✓ Example: You do repeat purchase when you are satisfied, Samsung handset, Honda bike, dove soap,
Sagar Ratna etc.

• Exchange

• An Exchange is the process of obtaining a desired product from someone by offering something in
return.

• It can be economic (monetary) as well as barter

• Conditions of exchange
a) There must be at least two parties.

b) Each party has something that might be of value to the other party.

c) Each party is free to accept or reject the exchange offer.

d) Each party believes it is appropriate or desirable to deal with the other party.

• Marketing Philosophy

• Production Concept:

• Focus on producing great volumes at low cost, sell at low cost

• Focuses on internal capabilities of a firm rather than the desire and needs of market place.

• Example : Lenovo dominates the highly competitive, price sensitive Chinese market through low labour
costs, high production efficiency and mass distribution

• Useful in some situations but it can lead to marketing myopia

• Company loose sight of real objectives- satisfying customer needs and building customer relationships.

• Marketing Philosophy

• Product Concepts:

• Product excellence is supreme thing.

• Obsessed with quality and features of product more the consumers and their needs.

• It holds the consumer will favor products that offer the most in quality, performance and innovative
features.

• Focus on making continuous product improvements.

• It can also lead to marketing myopia.

• Product should be properly priced, be customer oriented and properly marketed.

• Marketing Philosophy

• Selling Concept:

• It holds that consumers will not buy enough of the firm’s product unless it undertakes a large scale
selling and promotion efforts.

• This concept is typically practiced with unsought goods which buyers do not normally think of buying,
like insurance, umbrella, encyclopedias, fire extinguisher, reference book etc.

• Most firms also practice the selling concept when they have overcapacity.

• It focuses on creating sales transactions rather than building long term profitable customer
relationships.

• The aim is often to sell what company make rather than making what the market wants.

• Marketing Philosophy

– Marketing Concepts:

• This concepts holds that achieving organizational goals depends on knowing the needs and wants of
target markets and delivering the desired satisfactions better than competitors do.

• Under this concept customer focus and value are paths to sales and profits.
• It is a customer centered sense and respond philosophy.

• The job is to find the right products for your customers.

• HOLISTIC MARKETING

• Relationship Marketing

• Integrated marketing

• Internal marketing

• Performance marketing

• What is Sales ?

• Sales refers to the exchange of goods or services for an amount of money or its equivalent in kind.

• Sales Versus Marketing

• Social Marketing

▪ Social Marketing concept holds that the organization should deliver the desired satisfaction in a way
that improves consumers’ and society’s well being.

✓ Examples:

✓ “ Say no to drugs” or “ Exercise more and eat better for good health”.

✓ Family planning campaign in India

✓ Stop smoking /Alcohol, Pulse Polio campaign, Awareness about breast cancer, Aids and hepatitis,
Preservation of environment.

✓ Sunfeast promotion for girl child , CRY efforts for poor children.

• Marketing Myopia

• It is a narrow short term thinking and a short sighted view of business.

• It is caused by an excessive emphasis by the firm on the product.

• Firm forget the existence of customers.

• Marketing shortsightedness – management’s failure to recognize the scope of its business.

✓ Example: Small car Vs Big car, Pager Vs Mobile, Radio Vs TV

✓ Example: India Railways: “We are in the railways business.” or “We are in the transportation business.”

✓ Example: BSNL: “We are a telephone company.” or “We are a communications company.”

• What Is a Marketing Plan?

◆ Plan: a detailed proposal for doing or achieving something. An intention or decision about what one is
going to do.

◆ Planning – the process of anticipating future events and determining strategies to achieve
organizational objectives in the future.

◆ Marketing Planning – designing activities relating to marketing objectives and the changing marketing
environment.

◆ Marketing Plan – a written document that acts as a guidebook of marketing activities for the marketing
manager.
• Why Write a Marketing Plan?

◆ Provides a basis for comparison of actual and expected performance.

◆ Provides clearly stated activities to work toward common goals.

◆ Provides an examination of the marketing environment.

◆ Serves as a reference for the success of future activities.

◆ Allows entry into the marketplace with awareness of possibilities and problems.

• Importance of Marketing Planning

✓ How do companies go about strategic marketing planning?

✓ How do employees know to implement the long-term goals of the firm?

✓ The answer is a marketing plan.

• It helps in

• Achieving objectives

• Avoiding future uncertainties

• Coordination and communication among departments

• Effective utilization and application of marketing intelligence

• Monitoring and Controlling marketing activities

• Customer getting complete satisfaction

• Defining the Business Vision and Mission

❖ Business Vision

❖ Vision guides a business and its intentions for the future. A vision is where a company expect to be
in future.

❖ “Our vision is to create a better every-day life for many people.” IKEA

• A mission statement is a short statement of why an organization exists, what its overall goal is, what
kind of product or service it provides, its primary customers or market, and its geographical region of
operation.

• “To help people find better ways to do great works”- Xerox

• Conducting a Situation Analysis

• Components of a SWOT Analysis

• Environmental Scanning

• Identifying and Evaluating opportunities

✓ Identify growth potential

✓ Evaluate opportunities for increasing sales and profit

✓ Determine which segments to target and positioning accordingly

• Example: Coke has Diet Coke, Cheery Coke, Minute Maid, Kinley, Georgia Coffee etc.
•
Ansoff’s Strategic Opportunity Matrix

• Selecting a Strategic Alternative

• The BCG Matrix for Pepsi

• Setting Marketing Plan Objective

• Before the details of a marketing plan can be developed, objectives for the plan must be stated.

• Without objectives, there is no basis for measuring the success of marketing plan activities. A
marketing objective is a statement of what is to be accomplished through marketing activities

• Describing the Target Market

• Marketing strategy involves the activities of selecting and describing one or more target markets and
developing and maintaining a marketing mix that will produce mutually satisfying exchanges with
target markets.

• Marketing Mix: The “Four Ps”

• Product : tangible goods, ideas and service etc

✓ Example: Tanishq’s jewellery design were considered too western during initial year . Later added
Indian ethnicity to be popular.

• Price is what a buyer must give up to obtain a product.

• Promotion: includes personal selling, advertising, sales promotion, and public relations.

• Example: Celebrity dramatically impact on consumer behavior

• Place: Ensure product availability where and when customers want them

• Example: you will buy Kiwi fruit at your local super market or you will fly to Australia to pick up your
own?

• Implementation, Evaluation, and Control

• Implementation consists of the processes involved in readying the company’s offering for sale.
Implementation includes developing the offering and deploying the offering in the target market.

• Evaluation entails gauging the extent to which marketing objectives have been achieved during the
specified time period.

• Control measures the success of the company’s activities over time by monitoring the company’s
performance and the changes in the market environment in which the company operates.

• Following Up on the Marketing Plan

• One of the keys to success overlooked by many businesses is to actively follow up on the marketing
plan.

• The time spent researching, developing, and writing a useful and accurate marketing plan goes to
waste if the plan is not used by the organization.

• One of the best ways to get the most out of a marketing plan is to correctly implement it. Once the
first steps to implementation are taken, evaluation and control will help guide the organization to
success as laid out by the marketing plan
  Module 2
Marketing Environment
Analyzing Marketing Opportunities

 Marketing Environment Analysis

 Basics of Marketing Research.

 Meaning and scope of marketing research

 The marketing research process

 Marketing Information System.

 INDIAN BUSINESS ENVIRONMENT

✓ The present Indian business environment is full of opportunities and challenges.

✓ The country has a young and growing population, a rapidly expanding middle class, and a government
that is supportive of business.

✓ However, there are also some challenges that businesses need to be aware of, such as complex
regulations, infrastructure bottlenecks, and a shortage of skilled workers.

 The Micro Environment

➢ The Company

➢ Suppliers

➢ Marketing intermediaries

➢ Customers

➢ Competitors

➢ Publics

 The Company

 In designing marketing plans, marketing management takes other company groups into account—
groups such as top management, finance, research and development (R&D), information technology,
purchasing, operations, human resources, and accounting.

 All of these interrelated groups form the internal environment.

 Top management—including the company’s top marketers—sets the company’s mission, objectives,
broad strategies, and policies.

 Marketing managers make decisions within these broader strategies and plans.

 Suppliers

 Suppliers provide the resources needed to produce its goods and services.

 Marketing managers must watch supply availability and costs.

 Supply shortages or delays, natural disasters, and other events can cost sales in the short run and
damage customer satisfaction in the long run.

 Rising supply costs may force price increases that can reduce sales volume.

 Most marketers today treat their suppliers as partners in creating and delivering customer value
 Intermediaries

 Marketing intermediaries help the company promote, sell, and distribute its products to final buyers.

 They include resellers (retailers, wholesalers), physical distribution firms, marketing services agencies,
and financial intermediaries.

 Resellers are distribution channel firms that help the company find customers or make sales to them

 Physical distribution firms help the company stock and move goods from their points of origin to their
destinations.

 The competitors

 The marketing concept states that, to be successful, a company must provide greater customer value
and satisfaction than its competitors do.

 Thus, beyond simply adapting to the needs of target consumers, marketers must gain strategic
advantage by positioning their offerings strongly against competitors’ offerings in the minds of
consumers.

 No single competitive marketing strategy is best for all companies or all situations. Each firm should
consider its size and industry position relative to those of its competitors.

 New Competitive Environment.

 Deregulation.

 Privatization.

 Retail transformation.

 Disintermediation

 Private labels.

 Mega-brands.

 Publics

 The company’s marketing environment also includes various publics, i.e, stakeholders.

 A public is any group that has an actual or potential interest in or impact on an organization’s ability to
achieve its objectives.

 Examples, financial institution, government, general publics etc.

 A company can prepare marketing plans and programs for major publics as well as for customer
markets.

 The Customers

 Customers are the most important actors in the company’s microenvironment.

 The aim of the entire value delivery network is to engage target customers and create strong
relationships with them.

 The company might target any or all of five types of customer markets.

 Consumer markets

 Business markets

 Reseller markets
 Government markets

 International markets

 MACRO Environment

 Demographic environment

 Economic environment

 The natural environment

 Technological environment

 Political and legal environment

 Social Environment

 Cultural Environment

 Demographic environment

 Demography is the study of human populations in terms of size, density, location, age, gender, race,
occupation, and other characteristics.

 The demographic environment is of major interest to marketers because it involves people, and people
ultimately make up markets.

 The world population is growing rapidly. It now exceeds 7.9 billion people and is expected to grow to
more than 8.6 billion by the year 2030.

 The world’s large and highly diverse population poses both opportunities and challenges.

 Urban India is more populous than US

 Indian population is young

 Growing middle class

 A growing middle class

 Indian population consists of several income groups.

 According to the Bost Consulting Group (BCG) Matrix report, the Indian population can be divided into
five economic classes based on real annual disposable income

 Strugglers,

 Next billion,

 Aspirers,

 Affluent.

 Economic Environment

 Markets require buying power as well as people.

 The economic environment consists of economic factors that affect consumer purchasing power and
spending patterns.

 For example, the Great Recession of 2008 to 2009 and the COVID-19 pandemic caused severe
unemployment and income losses in several sectors of the economy.
 New economic realities have forced consumers to bring their consumption back in line with their
incomes and to rethink their buying priorities

 Natural Environment:

 The natural environment involves the physical environment and the natural resources that are needed
as inputs by marketers or that are affected by marketing activities.

 Unexpected happenings in the physical environment—anything from weather and natural disasters to
health crises such as the global COVID-19 pandemic—can affect companies and their marketing
strategies.

 Technological Environment

 The technological environment is perhaps the most dramatic force reshaping our world.

 Technology has enabled such wonders as antibiotics, air travel, the internet, smartphones, artificial
intelligence, and driverless cars.

 It also has enabled such horrors as nuclear missiles and massive, privacy-shredding database breaches.

 Our attitude toward technology depends on whether we are more impressed with its wonders or its
blunders.

 The unending barrage of digital advances is affecting every aspect of how consumers learn about, shop
for, buy, and experience brands.

 Political and Legal Environment

 Marketing decisions are strongly affected by developments in the political environment.

 The political environment consists of laws, government agencies, and pressure groups (Environmental,
Civil rights, Business, Labor unions groups) that influence or limit various organizations and individuals
in a given society.

 Intended to protect companies and maintain competitive markets, protect and inform consumers, and
protect national and societal interest.

 Social Environment

 Every aspect of marketing involves ethics and social responsibility issues

 Industrial and professional trade associations have codes of ethics

 Companies are developing policies and guidelines to help shape their responses to complex social
responsibility issues.

 The boom in online, mobile, and social media marketing has created a new set of social and ethical
issues.

 Critics worry most about online privacy issues.

 Laws related to 4 p’s

 Prevention of food adulteration act, 1954

 Patents acts 1970

 Cigarettes Acts, 1975

 Essential Commodity Acts, 1981

 Bureau of Indian Standard Act, 1986

 Consumer Protection Acts, 1986

 Trade marks acts, 1999

 Competition Act, 2002

 Legal Metrology acts, 2009, (governs the standard units of weights, measure etc.)

 GST Act, 2017

 Cultural Environment

 The cultural environment consists of forces that affect a society’s basic values, perceptions,
preferences, and behaviors.

 The Indian cultural environment is highly diverse, with a wide range of languages, religions, customs
and traditions.

 People grow up in a particular society that shapes their basic beliefs and values.

 They absorb a worldview that defines their relationships with others.

 It impacts consumer behavior, preferences, and purchasing decisions.

 Barbie when launched in India in 2011 gave katrina kaif look

 What is Marketing Research?

 “Marketing research refers to the systematic gathering, recording and analyzing of data about
problems relating to the marketing of goods and services.”

 It is used to identify and understand the needs, wants, and motivations of consumers, as well as the
competitive landscape.

 It can be used to identify new opportunities, develop new products and services, improve existing
products and services, and measure the effectiveness of marketing campaigns.

 Market Research and Marketing Research

 Market research is the process of collecting and analyzing data about a specific market or industry. It
can be used to understand the market size, demographics, competitive landscape, customer needs and
preferences, growth potential and trends.

 Marketing research delves into the specific strategies and tactics needed to promote a product or
service within a market. It focuses on understanding consumer preferences, purchasing behavior,
product features, pricing, and promotional efforts.

 Qualitative and Quantitative Research

 Qualitative research is an exploratory method that aims to understand human behavior, emotion,
motivations, beliefs, and experiences.

 It typically involves collecting non-numerical data (text, images, or videos) through techniques such as
interviews, focus groups, observations, and content analysis.

 Quantitative research involves collecting numerical data and analyzing it through statistical methods
to identify patterns, trends, and relationships.

 It often employs structured surveys, questionnaires, and experiments to gather data from a large
sample.

 What are the uses of Marketing Research?

 Identify marketing opportunities and problems

 Forecast the sales of existing and new product

 Refine new product concept

 Develop a new strategy for an existing product

 Understanding competitors

 Understand how customers in different market segments make buying decisions.

 Evaluate how customers in the target audience react to various advertising messages.

 Determine what price to charge.

 Understand how customers perceive the product and company.

 The Marketing Research Process

 Step 1: Define Problem and the research objective

 The first step in the research process is to determine explicitly why the research is needed and what it
is to accomplish.

 Define the problem clearly, as an ill-defined problem result in an unproductive solution.

 Determine what information is needed and how that information can be obtained efficiently.

 Discuss with decision makers, interviews with industry experts, analyze secondary data, conduct focus
groups analysis.

 Finding a suitable solution for a problem.

 Example: If your new chocolate bar isn’t selling well, you don’t automatically do market research on
the “taste” - because the reason maybe the packaging as well.

 Developing Research Objectives

 Researchers needs a clear idea of what they are trying to learn - the objective of the research project.

 Usually the objective is to solve the problem, better understand or define a problem or opportunities.

 Example: Samsung has been enjoying a steady increase in sales volume over a period. Management
decided to conduct a sales analysis. The research project uncover the fact that company sales volume
are growing but its market share has declined because the industry was growing even faster.

 Step 2: Develop the Research Plan

 Data Sources: Secondary Data

 Advantage

1) Low costs.

2) Speed.

3) Diverse sources.

4) Access to hard-to-obtain data.

5) Helpful for exploratory research.

 Disadvantage
1) Lack of suitability.

2) Obsolescence.

3) Unknown methodology.

4) Undisclosed findings.

5) Unknown reliability.

 Data Sources: Primary Data

 Advantage

1. Precision

2. Currency

3. Controlled and known methodology

4. Secrecy, Reliability determined

 Disadvantage

1. Time consuming

2. High costs

3. Inability to gather certain types of information

4. Limited perspective

 Research Approaches

 Primary data can be gathered in five ways:

 Observation Research: researcher can gather fresh data during consumer’s shopping and consumption
of products, talk to consumer informally

 Ethnographic Research: understand how people live and work, uncover unarticulated desire, IBM,
Intel, GE, Nokia

 Focus Group: helps to understand consumers belief, attitude and behavior

 Survey Research: it is best suited for descriptive research, helps to understand consumers’ knowledge,
beliefs, preferences and satisfactions

 Behavioral Research: consumers’ actual purchase reflects preferences and are normally more reliable
than memory based statements made in the survey.

 Experiment: capture cause and effect relationships

 Research Instruments

➢ Questionnaires: close ended, open ended

➢ Qualitative Measures:

✓ Word association , what does Timex word mean to you?

✓ Projective techniques: when I choose a business school the most important consideration in my
decision is …

✓ Visualization
✓ Brand personification

✓ Laddering

➢ Measurement Devices.

➢ Example: Galvanometer, eye camera, skin sensor, brain wave scanner and full body scanner, auto-
meter attached to television sets to know the channel surfing details

 Questionnaire Design

 Open-Ended Question: An interview question that encourages an answer phrased in the respondent’s
own words.

 Closed-Ended Question: An interview question that asks

 the respondent to make a selection from a limited list of responses

 Scaled- Response Question: A closed-ended question designed to measure the intensity of a

respondent’s answer

 Step 3: Collecting the Information:

Sampling Plan

 The data collection phase of marketing research is generally the most expensive and error prone.
Some respondents will be away from home, offline, or otherwise inaccessible and must be contacted
again or replaced. Others will refuse to cooperate or will give biased or dishonest answers. In order to
control costs while maintaining high-quality responses, a company must develop a meaningful
sampling and data collection plan.

 A sample is a subset of a unit or a population collected as a representation of it.

 If we select about a hundred telephone numbers of a particular area from a telephone directory to
study a particular research problem it is called a sample.

 Collection of sample is called sampling.

 Sampling unit: Who is to be surveyed?

 Sample size: How many people should be surveyed?

 Sampling procedure: How should the respondents be chosen?

 Types of Samples

 Contact Method:

 Online interview

 In person interview

 Mail, email Questionnaire

 Telephone Interview

 Step 4: Analyzing the Information and present the finding

 After data is collected, the next step is to analyze data. The purpose of data analysis is to interpret and
draw conclusions from the collected data.

 Collected data is edited, coded and tabulated for evaluation.

 Statistical tools are used to evaluate the data

 Step 5: Make the Decision

 Use the research findings for decision making

 If there is any ambiguity in the finding further research can be initiated

 Rigorously done research provides insight into the problems and their solutions

 Online Marketing Research

 Today about 20% of the world population is online

 Under appropriate conditions, can represent the entire population

 Suitable for quantitative research

➢ Methods of Collecting Online Surveys

➢ Online surveys, online panels, experiment and online focus group

➢ Use email, web links or web pop-ups

➢ Online panel provides regular feedback or conduct live discussions

➢ Marketers can experiment with different prices, or different product features on different websites
at different times to learn the relative effectiveness of their offers.

➢ Online focus group: gathering a small group of people online with a moderator to chat about a
product, service or organization to gain qualitative insight about consumer attitudes and behavior.

 Marketing Information System

 An organised way of continually gathering and analysing information from every source relevant to the
organisation

 MIS consist of people, equipment, and procedures to gather, sort, analyse, evaluate and distribute
needed information to the marketing decision makers.

 Application of Marketing Information System

➢ It helps in

➢ Order generation, processing, delivery and payment cycle.

➢ Sales management information giving details on firm’s sales

➢ Monitor market share, profitability and trends in each market

➢ Payment history

➢ Orders Lost/Won

➢ Brand Monitors

➢ Distribution Audit Reports

➢ Service Monitor Reports

➢ Product Performance Reports

 Demand Forecasting

 Good strategic planning rests on the foundation of good forecasting.

 It is forward projection of data

 It is essential tools in developing new products, scheduling production, determining necessary
inventory levels and creating distribution systems.

 It essence is estimating future events according to the past patterns and applying judgments to those
projections.

 Business firms can estimate and minimize the future risk and uncertainty.

 National Council of Applied Economic Research prepares macro demand forecasts for a number of
products. These help in forecasting industry demand, company demand and market segment demand.

 Total Market Demand Forecast

 Sony wants to estimate the total annual sales of Pen Drives. A common way to estimate total market
demand is as follows:

✓ Q=n*q*p

✓ Where Q= Total market demand

n = Numbers of buyers in the market

q = quantity purchase by average buyer per year

p = Price of an average unit

✓ If there are 10000 buyers of pen drive each year, the average buyers buys 6 pen drive a year and the
average price is Rs. 500 then the total market demand is = ?

 Demand Forecasting Methods

 Industry Sales and Market Shares

 Survey of Buyers’ Intentions.

 Composite of Sales Force Opinions.

 Expert Opinion.

 Past-Sales Analysis.

 Market-Test Method.

 Consumer Buying Behavior and STP

Understanding Consumer Buying Behavior

 Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and
dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

 It helps marketers to come up with innovative product mixes.

 It is influence by cultural, social, and personal factors.

 Cultural factors exert the broadest and deepest influence.

 Factors Influencing Buying Decisions

 A consumer’s buying behavior is influenced by cultural, social, and personal factors. Of these, cultural
factors exert the broadest and deepest influence on people’s perceptions and desires and on how they
go about fulfilling their needs and wants.

 Cultural Factors

 Social Factors

 Personal Factors

 Psychological Factors

 Culture Factors

 A culture is a way of life among a group of people—the behaviors, beliefs, values, and symbols that
they accept, generally without thinking about them, and that are passed along by communication and
imitation from one generation to the next.

 Evolves over centuries and passed from one generation to other

 Culture, subculture, and social class are particularly important influences on consumer buying
behavior. Culture is a fundamental determinant of a person’s wants and behavior.

 Subculture – is a culture followed by a group of people within a culture that provide members with
more specific identification and socialization.

 Subcultures include nationalities, religions, racial groups, and geographic regions.

 When subcultures grow sufficiently large and affluent, companies often design specialized marketing
programs to serve them.

 Values

 Values - the enduring beliefs shared by society that a specific mode of conduct is preferable to
another mode of conduct.

 Value system of a growing child

 US: Achievement and success, efficiency, practicality, progress, material comfort, individualism,
freedom, humanitarianism and youthfulness,

 India: Respect and care for elder, honesty and integrity, hard work, achievement and success,
humanitarianism, and sacrifice

 Social Class

 Social Class can be defined as ranking of people in society into hierarchy of distinct status classes like
upper, middle, lower.

 The members of each class have relative the same status.

 Social class is measured as a combination of occupation, income, education, wealth and other
variables.

✓ Example: social class show distinct product and brand preferences.

✓ Media preferences, language, Income, wealth, education and value orientation

✓ Example: marketers of designer wear target upper class and upper middle class people.

 India’s Social Classes



Social Factors

 Many consumers seek out the opinions of others to reduce their search and evaluation efforts or
uncertainty, especially as the perceived risk of the decisions increases.

 Seek out guidance on new products, image related attributes or products for which attribute
information is lacking.

✓ Reference Groups

✓ Opinion Leaders

✓ Family

✓ Roles and Status

Personal Factors

 A buyer’s decisions are influenced by unique personal characteristics.

✓ Gender

✓ Occupation

✓ Age and life Cycle Stage

✓ Environmental Situation

✓ Values and Lifestyle

✓ Personality and self concept

Personal Factors

 Every person has a personality characteristics that influence the buying behavior. It is a useful variable
in analyzing consumer’s brand choices.

 Brands have personality and consumers are likely to choose brand whose personality match their own.

 Example: Levi’s- youthful, MTV- excitement, CNN- competence

 Self Concept is how consumers perceive themselves. It includes attitudes, perceptions, beliefs, and self
respect.

 Example: Someone who sees herself as a trend setter would not buy clothing that does not project a
contemporary image.

 Lifestyles

 A lifestyle is a mode of living as identified by a person’s activities, interests, and opinions. Marketer
search for product which matches the lifestyles.

 Are the customers time or money, multitasking focused?

 Example: Most I-Pad buyers are achievement oriented. Marketers accordingly position their product.

 Psychological Factors
✓ Motivation,

✓ Perception,

✓ Learning

✓ Belief and Attitude

 Motivation

 Motivation: A motive is a strong urge that drives a person’s activities towards unfulfilled needs and
wants.

 Psychoanalyst Sigmund Freud suggested that a person’s buying decisions are affected by subconscious
motives that even the buyer may not fully understand.

 Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious
motivations.

 Maslow explains why people are driven by particular needs at particular times. He determined that
human needs are arranged in a hierarchal fashion.

 Hierarchy of Needs

 Perception

 Perception is the process by which people select, organize, and interpret information to form a
meaningful picture of the world.

✓ It is influenced by various factors such as color, size, packaging, shock value, brand past experiences.

 Example: Consumers will pay more for candy in expensive looking foil packages. But shiny labels on
wine bottles signify less expensive wine.

 Brand names give various signal to consumers, close up toothpaste, Vanish stain remover, Eveready
batteries.

 Deep color package of orange juice signify sweet juice inside

 Learning

 Learning describes changes in an individual’s behavior arising from experience.

 Learning is produced through the interplay of drives, stimuli, cues, discrimination and hedonic bias.

 Example: Maggi Soups relies on familiarity with Maggi noodles

 Dove Shampoo on Dove soap

 Example: Dettol relies on consumers familiarity with it antiseptic to sell soaps, liquid hand wash and
shaving cream.

 Belief and Attitude

 A belief is an organized pattern of knowledge that an individual holds as true about his or her world.

 A person’s attitude is a set of his feelings and the way in which he reacts to a given idea or thought.
Attitudes are difficult to change.

 Example: A customer with a negative attitude towards a product not only stop purchasing but also
influence his reference group to refrain from buying.

 Beliefs and attitudes are closely linked to values.



Buying Decisions Roles

 Initiator: A person who initiates the idea of purchasing the product.

 Influencer : A person who gives his / her views and advice which influences the buyer’s decision
making process.

 Decider: A person who decides where, when, why, and how to buy the products.

 Buyer: A person who actually purchases the product.

 User: A person who actually uses the product.

 Maintainer : A person who repairs or services the product.

 Disposer : A person who disposes the product.


Types of Buying Decisions

 Complex buying behavior

 Dissonance Reducing Buying Behavior

 Habitual Buying Behavior

 Variety seeking behavior

 Impulse Buying

 The Consumer Buying Process


Need Recognition

➢ Need recognition is triggered when a consumer is exposed to either an internal or an external

Stimulus.

➢ Internal Stimulus: you experience hunger, thirst

➢ External Stimulus: are influences from outside source like your friend recommend a new restaurant,
color of car, design of a package, brand name or an ad

 The process of buying starts when a person realizes that he has an unsatisfied need.

 When a current product is performing poorly

 When the stock is running out

 When another product seems superior to the one being used


Information Search

 Customer try to gather information after recognizing his need or want

 Information search helps to understand the features of a product and competing brands better.

 Source of Informations:

 Personal sources: Family, friends, neighbors, acquaintances

 Commercial sources: Advertisements and marketing sources like department stores and retail outlets

 Public sources: Articles in newspapers and journals, and consumer rating organizations.

 Experiential sources: Recall information in memory, free trials, etc.

Evaluation of Alternatives

 Purchase Decision

 This is the stage when the actual purchase is made.

 This stage also accounts for many sub decisions about purchasing a product such as

 Location of Store

 Time of purchase

 Place of purchase

 Price

 Delivery and warranty

 Payment method

 Services offered

 Post Purchase Behavior

 The customer evaluate the performance and compare with competitor’s product

 Seeking information that reinforces positive ideas about the purchase

 Avoiding information that contradicts the purchase decision

 Revoking the original decision by returning the product

 Customer satisfied when the product meets the customer expectations

 Post-purchase dissonance could arise when the customer does not get all the desired features,
benefits and satisfaction.


Post purchase use and disposal

➢ Reusing the product’s package helps the company reduce packaging, waste disposal cost and improves
ergonomics

➢ Example People in Punjab used the single tub washing machines for making the summer drink "lassi".

 Example : Hewlett Packard offers a discount to its customers who return empty cartridges back to the
company.

 Example : Kodak recycles acetate films and other manufacturing solvents, uses recycled paper, and jute
for packing its products.

 Consumer Adoption Process

✓ Awareness : individuals first learn of the new product, but they lack full information about it

✓ Interest : potential buyers begin to seek information about it

✓ Evaluation: they consider the likely benefits of the product.

✓ Trial: they make trial purchases to determine its usefulness.

✓ Adoption/rejection: decide whether to use the product regularly.

➢ Example: Act II gave away samples of its Popcorns to move buyers through the evaluation and trial
stages.

 Business Buying Behavior

 It is the decision making process by which the organization establish the need for products and
services and identify, evaluate and choose among alternatives brands and suppliers.

 Organizational purchases are costly and complex

 It involves group of personnel from all the departments

 Buyers are technically expert in buying

 To avoid financial risks organizations seek proposal, quotation and purchase contact.

 Example: factors such as quality specifications, assurance of prompt delivery, price, term of credit,
warranty and post sale service etc. are some of the criteria that influence buyers

 Consumer Buying Vs Business Buying Behavior

 Business Products

➢ The key in classification as a business product is intended use.

• Are used to manufacture other products

• Become part of another product

• Aid the normal operations of an organization

• Are acquired for resale without change in form

 Major Categories of Business Customers

 The business market consists of four major categories of customers: producers, resellers, governments,
and institutions.

1. Producers include profit-oriented organizations that use purchased goods and services to produce or
incorporate into other products.

2. The reseller market includes retail and wholesale businesses that buy finished goods to resell at a
profit.

3. Government organizations include thousands of central, state, and local buying units.

4. Institutions: Institutions are non-profit organizations that provide services to the public, such as
schools, colleges, university, hospitals, and non business organizations etc.. Institutions also purchase
goods and services from businesses. For example, a school may purchase textbooks, furniture, and
cafeteria supplies from businesses.

 Buying Situations

 Business buyers faces many decisions in making a purchase.

 It depends on the buying situations like complexity of problem is being solved, newness of buying
requirement, number of people involved and time required.
  Buying situation are

 Straight Buy

 Modified Re-buy

 New buy

 The Buying Center

 All those people in an organization who become involved in the purchase decision. Number of people
involved varies with each purchase decision. buying centers do not appear on formal organization
charts.

1. Initiator: the person who suggests the purchase.

2. Influencers/Evaluators: help define specifications and provide information for evaluating options.

3. Gatekeepers: group members who regulate the flow of information, often the purchasing agent.

4. Decider:/ approvers the person with the power to choose or approve the selection.

5. Purchaser:/ buyers the person who negotiates the purchase.

6. Users: members of the organization who actually use the product.

 STAGES IN THE BUYING PROCESS

1. Problem Recognition

2. Need Description

3. Product Specification

4. Supplier Search

5. Proposal Solicitation

6. Supplier selection

7. Contract Negotiation

8. Performance Review

 Market Segmentation, Targeting & Positioning

 Introduction

 A family man looking to buy a motor cycle might pay more attention to features like longevity,
sturdiness and mileage.

 A college going lad might prefer a brand of motor cycle of its style, image and appearance.

 Ever wondered why Maruti Udyog Limited is providing different models such as Alto, Zen, Wagon R,
Versa, Esteem, Baleno, etc., to customers?

 Example, Intel launched a cheaper mobile processor, Celeron M, Atom, which is targeted at the ‘value
market’ segment.

 Market Segmentation

Market Segment
 ✓ A subgroup of people or organizations sharing one or more characteristics that cause them to have
similar product needs.

Market Segmentation

✓ The process of dividing a market into meaningful, relatively similar, identifiable segments or groups
with common needs, characteristics or behaviors.

 The purpose of market segment is to enable the marketers to tailor marketing mixes to meet the
needs of one or more specific segments.

 Advantages of Segmentation

 Helps to ...

 Define customers needs and want more precisely

 Define marketing objectives and better allocation of resources

 Understand marketing environment

 Identify gaps in market

 Establish market size

 Identify the rapid changes in consumer taste

 Leverage competitive advantages

 Create “mini-monopoly”

Example: W, target women aged 25-55 who like to wear comfortable and stylish clothing

 Criteria for Successful Segmentation

 Segment must have measurable size and purchasing power and profile

 Segment must be sufficiently large to offer good sales and profit potential.(Substantiality)

 Marketers must find a way to promote effectively to reach and serve the market segment. (accessible)

 Differentiable: Segment should respond differently to a marketing mix

 Actionable : Effective programs can be developed to attract and serve the segment

 Firm must aim for segments that match its marketing capabilities.

 Segmenting Business Markets

 Industry Type

 Company Size

 Geographic Location

 Purchase Behaviour

 Customer Needs and Preferences

 Usage/Application

 Purchasing Power and Budget

 Target Marketing
  A target market is group of people and organizations sharing common needs or
characteristics that the company decides to serve.

 The segment(s) that the company can most profitably serve, given its resources and
capabilities.

 It helps to deliver superior value to customers.

 Example: A fitness and beauty centre that targets young women who are figure and health conscious is
likely to earn more profits than just offering services to women of all ages.