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MARKETINGMANAGEMENT

Topic Title 1. MarketingConcepts 2. ApproachestotheStudyofMarketing 3. MarketSegmentation 4. MarketingEnvironment
Topic
Title
1.
MarketingConcepts
2.
ApproachestotheStudyofMarketing
3.
MarketSegmentation
4.
MarketingEnvironment
5.
ConsumerPurchaseProcess
6.
ConsumerBehaviour
7.
MarketingInformationSystemandMarketingResearch
8.
ProductMix
9.
NewProductPlanningandDevelopment
10.
Product–MarketIntegrationStrategies
11.
BrandingandPackagingDecisions
12.
PricingDecisions
13.
ChannelDecisions
14.
Advertising
15.
SalePromotion
16.
PersonalSelling
LESSON-1
LESSON-1

MARKETINGCONCEPTS

LearningObjectives
LearningObjectives

Afterreadingthislesson,youshouldbeabletounderstand-

Meaningandimportanceofmarketing;

Thedifferentconceptofmarketing;
Thedifferentconceptofmarketing;

Themodernmarketingconcept.

Thesocialmarketingconcept.

Marketing has been deferent by different authors differently. A popular definition is that “marketing is
Marketing has been deferent by different authors differently. A
popular definition is that “marketing is the performance of business
activitiesthatdirecttheflowofgoodsandservicesfromproducerto
consumer or user”. Another notable definition is that “marketing is
gettingtherightgoodsandservicestotherightpeopleattherightplace
attherighttimeattherightpricewiththerightcommunicationand
promotion”.Yetanotherdefinitionisthat‘marketingisasocialprocess
bywhichindividualsandgroupsobtainwhattheyneedandwantthrough
creatingandexchangingproductsandvalueswithothers’.Thisdefinition
ofmarketingrestsonthefollowingconcepts:

(i)

Needs,wantsanddemands;

(ii)

Products;
Products;

(iii)

(iv)

(v)

Valueandsatisfaction;
Valueandsatisfaction;

(iii) (iv) (v) Valueandsatisfaction; Exchange Markets. NEEDS,WANTSANDDEMANDS A human need is a state of felt deprivation

Exchange

(iii) (iv) (v) Valueandsatisfaction; Exchange Markets. NEEDS,WANTSANDDEMANDS A human need is a state of felt deprivation

Markets.

NEEDS,WANTSANDDEMANDS

A human need is a state of felt deprivation of some basic
A human need is a state of felt deprivation of some basic
satisfaction.Peoplerequirefoods,clothing,shelter,safety,belonging,
esteemetc.theseneedsexistintheverynatureofhumanbeings.
Humanwantsaredesiresforspecificsatisfiersoftheseneeds.For example,clothisaneedsbutRaymondssuitingmaybewant. While
Humanwantsaredesiresforspecificsatisfiersoftheseneeds.For
example,clothisaneedsbutRaymondssuitingmaybewant. While
people’sneedsarefew,theirwantsaremany.
Demandsarewantsforspecificproductsthatarebackedupbyan ability and willingness to buy them. Wants become demands when
Demandsarewantsforspecificproductsthatarebackedupbyan
ability and willingness to buy them. Wants become demands when
backedupbypurchasingpower.
Products
Products
Productsaredefinedasanythingthatcanbeofferedtosomeone tosatisfyaneedorwant.
Productsaredefinedasanythingthatcanbeofferedtosomeone
tosatisfyaneedorwant.

ValueandSatisfaction

Consumerschooseamongtheproducts,aparticularproductthat givethemmaximumvalueandsatisfaction.
Consumerschooseamongtheproducts,aparticularproductthat
givethemmaximumvalueandsatisfaction.
Value is the consumer’s estimate of the product’s capacity to satisfytheirrequirements.
Value is the consumer’s estimate of the product’s capacity to
satisfytheirrequirements.

ExchangeandTransactions

Exchangeistheactofobtainingadesiredproductfromsomeone byofferingsomethinginreturn.Atransactioninvolvesatleasttwothing
Exchangeistheactofobtainingadesiredproductfromsomeone
byofferingsomethinginreturn.Atransactioninvolvesatleasttwothing
ofvalue,conditionsthatareagreedto,atimeofagreementandaplace
ofagreement.
Market
A market consist of all the existing and potential consumers sharing a particular need or
A market consist of all the existing and potential consumers
sharing a particular need or want who might be willing and able to
engageinexchangetosatisfythatneedorwant.
Thus,all theabove conceptsfinally bringsusfull circleto the conceptofmarketing.
Thus,all theabove conceptsfinally bringsusfull circleto the
conceptofmarketing.

IMPORTANCEOFMARKETING

circleto the conceptofmarketing. IMPORTANCEOFMARKETING 1.Marketing processbringsgoodsandservicestosatisfytheneeds

1.Marketing processbringsgoodsandservicestosatisfytheneeds andwantsofthepeople.

andwantsofthepeople. 2.Ithelpstobringnewvarietiesandqualitygoodstoconsumers. 3.By

2.Ithelpstobringnewvarietiesandqualitygoodstoconsumers.

2.Ithelpstobringnewvarietiesandqualitygoodstoconsumers. 3.By making goods available at al places, it brings

3.By making goods available at al places, it brings equipment distribution.

available at al places, it brings equipment distribution. 4.Marketingconvertslatentdemandintoeffectivedemand.

4.Marketingconvertslatentdemandintoeffectivedemand.

brings equipment distribution. 4.Marketingconvertslatentdemandintoeffectivedemand. 5.Itgiveswideemploymentopportunities.

5.Itgiveswideemploymentopportunities.

6.Itcreatestime,placeandpossessionutilitiestotheproducts.

6.Itcreatestime,placeandpossessionutilitiestotheproducts.

6.Itcreatestime,placeandpossessionutilitiestotheproducts. 7.Efficient marketing results in lower cost of marketing and

7.Efficient marketing results in lower cost of marketing and ultimatelylowerpricestoconsumers.

responsible to keep the wheel of production and consumption constantlymoving.
responsible to keep the wheel of production and consumption
constantlymoving.

8.Itisvitallinkbetweenproductionandconsumptionandprimarily

8.Itisvitallinkbetweenproductionandconsumptionandprimarily 9.Itcreatestokeepthestandardoflivingofthesociety.

9.Itcreatestokeepthestandardoflivingofthesociety.

MARKETINGMANAGEMENT

Marketing management is defined as “the analysis, planning,
Marketing management is defined as “the analysis, planning,
implementationandcontrolofprogrammesdesignedtocreatebuildand
purposeofachievingorganizationalobjectives”.
Marketingmanageshavetocarrymarketingresearch,marketing planning, marketing implementation and marketing control. Within
Marketingmanageshavetocarrymarketingresearch,marketing
planning, marketing implementation and marketing control. Within
marketingplanning,marketermustmakedecisionsontargetmarkets,
market postphoning product development, pricing channels of
distribution,physicaldistribution,communicationandpromotion.Thus,
themarketingmanagersmustacquireseveralskillstobeeffectivein
marketplace.

CONCEPTSOFMARKETING

Therearefivedistinctconceptsunderwhichbusinessorganisationcan conducttheirmarketingactivity.
Therearefivedistinctconceptsunderwhichbusinessorganisationcan
conducttheirmarketingactivity.
ProductionConcept
ProductionConcept

ProductConcept

SellingConcept
SellingConcept
MarketingConcept
MarketingConcept

SocietalMarketingConcept

PRODUCTIONCONCEPT

Inthisapproach,afirmisconsideredasthecentralpointandallgoods andcommoditiesproducedweresoldinthemarket.Themajoremphasis
Inthisapproach,afirmisconsideredasthecentralpointandallgoods
andcommoditiesproducedweresoldinthemarket.Themajoremphasis
wasontheproductionprocessandcontrolonthetechnicalperfections
whileproducingthegoods.
Theproductionconceptholdsthatconsumerswillfavourthoseproducts that are widely available andlow in cost. Managementin
Theproductionconceptholdsthatconsumerswillfavourthoseproducts
that are widely available andlow in cost. Managementin production
oriented organisation concentrates on achieving high production
efficiencyandwidedistributioncoverage.
Marketingisanativeforminthisorientationanditwasassumedthata
Marketingisanativeforminthisorientationanditwasassumedthata
goodproductsellsbyitself.Onlydistributionandsellingwereconsidered
tobe‘marketing’.Thetechnologiststhoughtsthatamenabilityandlow
costoftheproductsduetothelargescalesofproductionwouldbethe
right‘MarketingMix’fortheconsumers.
But,theydonotthebestofcustomerpatronage.Customersareinfact
But,theydonotthebestofcustomerpatronage.Customersareinfact
motivatedbyavarietyofconsiderationsintheirpurchase.Asaresult,the
productionconceptfailstoserveastherightmarketingphilosophyfor
theenterprise.
PRODUCTCONCEPT
PRODUCTCONCEPT
Theproductconceptissomewhatdifferentfromtheproduction concept.
Theproductconceptissomewhatdifferentfromtheproduction
concept.
The product concept holds that consumer’s will favour those products that offer the most quality,
The product concept holds that consumer’s will favour those
products that offer the most quality, performance and features.
Managementintheseproduct-orientedorganizationsfocustheirenergy
onmakinggoodproductsandimprovingthemovertime.
Yet,inmanycases,theseorganizationsfailinthemarket.Theydonot bothertostudythemarketandtheconsumerin-depth.Theygettotally
Yet,inmanycases,theseorganizationsfailinthemarket.Theydonot
bothertostudythemarketandtheconsumerin-depth.Theygettotally
engrossedwiththeproductandalmostforgettheconsumerforwhom
theproductisactuallymeant;theyfailtofindourwhattheconsumers
actuallyneedandwhattheywouldaccept.

MarketingMyopia

Atthisstage,itwouldbeappropriatetoexplainthephenomenon
Atthisstage,itwouldbeappropriatetoexplainthephenomenon
of‘marketingmyopia’.Theterm‘marketingmyopia’istobecreditedto
ProfessorTheodoreLevitt.Inoneofhisclassicarticlesbearingthesame
title, in the Harvard Business Review, Professor Levitt has explained
‘marketingmyopia’asacolouredorcrookedperceptionofmarketingand
ashort-sightednessaboutbusiness.Excessiveattentiontoproductionor
productorsellingaspectsatthecostofthecustomerandhisactual
needs, creates this myopia. It leads to a wrong or inadequate
understandingofthemarketandhencefailureinthemarketplace.The
myopiaevenleadstoawrongorinadequateunderstandingofthevery
natureofthebusinessinwhich agivenorganisation isengagedand
therebyaffectsthefutureofthebusiness.Hefurtherexplainedthatwhile
business keep changing with the times, there is some fundamental
business keep changing with the times, there is some fundamental
characteristicineachbusinessthatmaintainsitselfthroughthechanging
times, which invariably relates to the basic human need which the
businessseekstoserveandsatisfythroughitsproducts.Awisemarketer
shouldunderstandthisimportantfactanddefinehisbusinessintermsof
thisfundamentalcharacteristicofthebusinessratherthanintermsofthe
productsandservicesmanufacturedandmarketedbyhim.Forinstance,
the Airways should define their business as transportation the Movie
makersshoulddefinetheirbusinessasentertainment,etc.

SALESCONCEPT

Thesalesconceptmaintainsthatacompanycannotexpectitsproducts togetpickedupautomaticallybythecustomers.Thecompanyhasto
Thesalesconceptmaintainsthatacompanycannotexpectitsproducts
togetpickedupautomaticallybythecustomers.Thecompanyhasto
consciously push its products. Aggressive advertising, high-power
personalselling,largescalesalespromotion,heavypricediscountsand
strong publicity and public relations are the normal tools used by
organisation that rely on this concept. In actual practice, these
organizationstoodonotenjoythebestofcustomerpatronage.
The selling concept is thus undertaken most aggressively with
The selling concept is thus undertaken most aggressively with
‘unsoughtgoods’,i.e.thosegoodsthatbuyersnormallydonotthinkof
buying, such as insurance, encyclopedias. These industries have
perfectedvarioustechniquestolocateprospectsandwithgreatdifficulty
sellthemasthebenefitsoftheirproducts.

Evidently,thesalesconcepttoosuffersfrommarketingmyopia.

DifferencebetweenSellingandMarketing Themarketingandsellingareconsideredsynonymously.Butthere
DifferencebetweenSellingandMarketing
Themarketingandsellingareconsideredsynonymously.Butthere
isgreatofdifferencebetweenthetwo.TheodoreLevittinhissensational
articles ‘Marketing Myopia’ draws the following contrast between
marketingandselling.
Sellingfocusesontheneedsoftheseller;marketingontheneeds ofthebuyer.Sellingispreoccupiedwiththeseller’sneedtoconverthis
Sellingfocusesontheneedsoftheseller;marketingontheneeds
ofthebuyer.Sellingispreoccupiedwiththeseller’sneedtoconverthis
productintocash;marketingwiththeideaofsatisfyingtheneedsofthe
customer by mean of the product and the whole cluster of thing
associatedwithcreatingdeliveringandfinallyconsumingit.
Selling Marketing 1 Selling starts with the seller, Sellingfocuseswiththeneeds of the seller. Seller is the
Selling
Marketing
1
Selling starts with the seller,
Sellingfocuseswiththeneeds
of the seller. Seller is the
center
of
the business
universe. Activities start with
seller’sexistingproducts.
Marketing starts with the buyers.
Marketingfocusesontheneedsof
thebuyer.Buyeristhecentreofthe
businessuniverse.Activitiesfollow
thebuyerandhisneeds.
2
Sellingemphasizesonprofit.It
seeks to quickly convert
Marketing emphasizes
on
identification
of
a
market
‘products’
into
‘cash’;
concernsitselfwiththetricks
andtechniquesofpushingthe
opportunity. It seeks to convert
customer ‘needs’ into ‘products’
and emphasizes on fulfilling the
producttothebuyers.
needsofthecustomers.
3
Selling views business as a
‘goodsproducingprocesses’.
Marketing views business as a
‘customersatisfyingprocess’.
4 It over emphasizes the ‘exchange’ aspect without caring for the ‘value Itconcernsprimarilywiththe‘vale
4
It over
emphasizes
the
‘exchange’ aspect without
caring
for
the
‘value
Itconcernsprimarilywiththe‘vale
satisfactions’ that should flow to
thecustomerfromtheexchange
satisfactions’tothebuyers.
5
Seller’s
convenience
Buyerdeterminestheshapeofthe
dominates the formulation of
the‘marketingmix’.
‘marketingmix’.
6.
The firm makes the product
firstthethendecideshowto
sellitandmakeprofit.
Thecustomerdetermineswhatisto
beofferedasa‘product’andthe
firm makes a ‘total product
offering’ that would match the
needsofthecustomers.
7
Emphasizes accepting the
existing technology
and
reducing
the
cost
of
Emphasis’s on innovation of
adopting the most innovative
technology.
production.
8.
Seller’s motives dominate
marketingcommunications.
Marketingcommunicationsactsas
the tool for communicating the
benefits/ satisfactions of the
producttotheconsumers
9
Costsdetermineprice.
Consumerdeterminesprice.
10
Transportation, storage and
other distribution functions
are perceived as mere
extensions of the production
function.
Theyareseenasvitalservicesto
provideconveniencetocustomers.
11
There is no coordination
amongthedifferentfunctions
ofthetotalmarketingtask.
Emphasis
is
on
integrated
marketingapproach.
12 Different departments of the businessoperateseparately. All departments of the business operate in a highly
12 Different departments of the
businessoperateseparately.
All departments of the business
operate in a highly integrated
manner with view to satisfy
consumers.
13 The firms which practice
‘sellingconcept’,productionis
thecentralfunction.
The
firms
which practice
‘marketing concept’, marketing is
thecentralfunction.
14. ‘Selling’viewsthecustomeras
‘Marketing’viewsthecustomeras
thelastlinkinthebusiness.
theverypurposeofthebusiness.
MARKETINGCONCEPT
MARKETINGCONCEPT
The Marketing concept was born out of the awareness that marketingstartswiththedeterminationofconsumerwantsandends
The Marketing concept was born out of the awareness that
marketingstartswiththedeterminationofconsumerwantsandends
withthesatisfactionofthosewants.Theconceptputstheconsumerboth
atthebeginningandattheendofthebusinesscycle.Thebusinessfirms
recognizethat“thereisonlyonevaliddefinitionofbusinesspurpose:to
createacustomer”.Itproclaimsthat“theentirebusinesshastobeseen
fromthepointofviewofthecustomer”.Inacompanypracticingthis
concept,alldepartmentswillrecognizethattheiractionshaveaprofound
impact on the company’s to create and retain a customer. Every
departmentandeveryworkerandmanagerwill‘thinkcustomer’and‘act
customer’.
The marketing concept holds that the key to achieving organizationalgoalsconsistsindeterminingtheneedsandwantsofthe
The marketing concept holds that the key to achieving
organizationalgoalsconsistsindeterminingtheneedsandwantsofthe
targetmarketsanddeliveringthedesiredsatisfactionsefficiently,than
competitors.Inotherwords,marketingconceptisaintegratedmarketing
effortaimedatgeneratingcustomersatisfactionasthekeytosatisfying organizationalgoals.
effortaimedatgeneratingcustomersatisfactionasthekeytosatisfying
organizationalgoals.
Itisobviousthatthemarketingconceptrepresentsaradicallynew approachtobusinessandisthemostadvancedofallideasonmarketing
Itisobviousthatthemarketingconceptrepresentsaradicallynew
approachtobusinessandisthemostadvancedofallideasonmarketing
thathaveemergedthroughtheyears.Onlythe marketing conceptis
capableofkeepingtheorganisationfreefrom‘marketingmyopia’.
Thesalientfeaturesofthemarketingconceptare:
Thesalientfeaturesofthemarketingconceptare:
Thesalientfeaturesofthemarketingconceptare: 1)Consumerorientation 2)Integratedmarketing

1)Consumerorientation

1)Consumerorientation 2)Integratedmarketing 3)Consumersatisfaction

2)Integratedmarketing

1)Consumerorientation 2)Integratedmarketing 3)Consumersatisfaction 4)Realizationoforganizationalgoals.

3)Consumersatisfaction

2)Integratedmarketing 3)Consumersatisfaction 4)Realizationoforganizationalgoals. 1.ConsumerOrientation

4)Realizationoforganizationalgoals.

3)Consumersatisfaction 4)Realizationoforganizationalgoals. 1.ConsumerOrientation

1.ConsumerOrientation

Themostdistinguishingfeatureofthemarketingconceptisthe importanceassignedtotheconsumer.Thedeterminationofwhatis
Themostdistinguishingfeatureofthemarketingconceptisthe
importanceassignedtotheconsumer.Thedeterminationofwhatis
tobeproducedshouldnotbeinthehandsofthefirmsbutinthe
hands of the consumers. The firms should produce what
consumerswant.Allactivitiesofthemarketersuchasidentifying
needs and wants, developing appropriate products and pricing,
distributingandpromotingthenshouldbeconsumeroriented.If
thesethingsaredoneeffectively,productswillbeautomatically
boughtbytheconsumers.
thesethingsaredoneeffectively,productswillbeautomatically boughtbytheconsumers. 2.IntegratedMarketing

2.IntegratedMarketing

The second feature of the marketing concept is integrated marketingi.e.integratedmanagementaction.Marketingcannever be
The second feature of the marketing concept is integrated
marketingi.e.integratedmanagementaction.Marketingcannever
be an isolated management function. Every activity on the
marketing side will have some bearing on the other functional
areasofmanagementsuchasproduction,personnelorfinance.
Similarlyanyactioninaparticularareaofoperationinproduction
on finance will certainly have an impact on marketing and
ultimately in consumer. Therefore, in an integrated marketing
set-up,thevariousfunctionalareasofmanagementgetintegrated
withthemarketingfunction.Integratedmarketingpresupposesa
proper communication among the different management areas,
withmarketinginfluencingthecorporatedecisionmakingprocess.
Thus,whenthefirmsobjectiveistomakeprofit–byproviding
consumer satisfaction, naturally it follows that the different
departmentsofhecompanyarefairlyintegratedwitheachother
andtheireffortsarechannelizedthroughtheprincipalmarketing
departmenttowardstheobjectivesofconsumersatisfaction.
departmenttowardstheobjectivesofconsumersatisfaction. 3.ConsumerSatisfaction Third feature of the marketing is

3.ConsumerSatisfaction

Third feature of the marketing is consumer satisfaction. The marketingconceptemphasizesthatitisnotenoughifafirmahs
Third feature of the marketing is consumer satisfaction. The
marketingconceptemphasizesthatitisnotenoughifafirmahs
consumerorientation;itisessentialthatsuchanorientationleads
toconsumersatisfaction.

Forexample,whenaconsumerbuysatinofcoffee,heexpectsa

purposetobeserved,aneedtobesatisfied.Ifthecoffeedoesnot
purposetobeserved,aneedtobesatisfied.Ifthecoffeedoesnot
providehimtheexpectedfiavour,thetasteandtherefreshments hispurchasehasnotservedthepurpose;ormoreprecisely,the
providehimtheexpectedfiavour,thetasteandtherefreshments
hispurchasehasnotservedthepurpose;ormoreprecisely,the
marketerwhosoldthecoffeehasfailedtosatisfyhisconsumer.
Thus,‘satisfaction’istheproperfoundationonwhichaloneany
businesscanbuilditsfuture.
businesscanbuilditsfuture. 4.RealizationofOrganizationalGoalsincludingProfit If a

4.RealizationofOrganizationalGoalsincludingProfit

If a firmhassucceeded in generating consumer satisfaction, is implies that the firm has given a
If a firmhassucceeded in generating consumer satisfaction, is
implies that the firm has given a quality product, offered
competitive price and prompt service and has succeeded in
creatinggoodimage.Itisquiteobviousthatforachievingthese
results,thefirmwouldhavetrieditsmaximumtocontrolcostsand
simultaneouslyensurequality,optimizeproductivityandmaintain
a good organizational climate. And in this process, the
organizationalgoalsincludingprofitareautomaticallyrealized.The
marketingconceptneversuggeststhatprofitisunimportanttothe
firm. The concept is against profiteering only, but not against
profits.

BenefitsofMarketingConcept

The concept benefits the organisation that practices it, the consumeratwhomitisaimedandthesocietyatthesocietyatlarge.
The concept benefits the organisation that practices it, the
consumeratwhomitisaimedandthesocietyatthesocietyatlarge.
consumeratwhomitisaimedandthesocietyatthesocietyatlarge. 1. Benefitstotheorganisation:

1.Benefitstotheorganisation:Inthefirstplace,ofthepracticeof

the conceptbringssubstantialbenefits tothe organisation that

practicesit.Forexample,theconceptenabletheorganisationto keepabreastofchanges.Anorganisatoinprécisingtheconcept keeps
practicesit.Forexample,theconceptenabletheorganisationto
keepabreastofchanges.Anorganisatoinprécisingtheconcept
keeps feeling the pulse of the market through continuous
marketingaudit,marketresearchandconsumertesting.Itisquick
torespondtochangesinbuyerbehaviour,itrectifiesanydrawback
in its these products, it gives great importance to planning,
researchandinnovation.Alltheseresponse,inthelongrun,prove
extremelybeneficialtothefirm.Anothermajorbenefitsisthat
profitsbecomemoreandcertain,asitisnolongerobtainedatthe
costoftheconsumerbutonlythroughsatisfyinghim.Thebaseof
consumersatisfactionguaranteeslong–termfinancialsuccess.
consumersatisfactionguaranteeslong–termfinancialsuccess. 2. Benefits to Consumers: The consumers are in fact the

2.Benefits to Consumers: The consumers are in fact the major beneficiary of the marketing concept. The attempts of various competing firms to satisfy the consumer put him an enviable position.Theconceptpromptstoproducestoconstantlyimprove theirproductsandtolaunchnewproducts.Alltheseresultsin benefits to the consumer such as: low price, better quality, improved/newproductsandreadystockatconvenientlocations. Theconsumercanchoose,hecanbargain,hecancomplainandhis complaintwillalsobeattendedto.Hecanevenreturnthegoodsif not satisfied. In short, when organizations adopt marketing concept,asnaturalcorollary,theirbusinesspracticeschangein favouroftheconsumer.

favouroftheconsumer. 3. Benefitstothesociety: Thebenefitfromthemarketingconceptis

3.Benefitstothesociety:Thebenefitfromthemarketingconceptis

notlimitedtotheindividualconsumerofproducts.Whenmoreand

moreorganizationsresorttothemarketingconcept,thesocietyin

Totobenefits.Theconceptguaranteesthatonlyproductsthatare requiredbytheconsumersareproduced;therebyitensuresthat the
Totobenefits.Theconceptguaranteesthatonlyproductsthatare
requiredbytheconsumersareproduced;therebyitensuresthat
the society’s economic resources are channelized in the right
direction.Italsocreatesentrepreneursandmanagersinthegiven
society.Moreover,itactsasa‘changeagent’anda‘valueadder’;
improvesthestandardoflivingofthepeople;andacceleratesthe
paceofeconomicdevelopmentofthesocietyasawhole.Italso
makeseconomicplanningmoremeaningfulandmorerelevantto
thelifeofthepeople.
In fact, the practice of consumer oriented marketing benefits societyinyetanotherwaybyenablingbusinessorganizationsto
In fact, the practice of consumer oriented marketing benefits
societyinyetanotherwaybyenablingbusinessorganizationsto
appreciatethesocietalcontentinherentinanybusiness.Whenthe
organisationsmoveclosertothecustomers,theyseeclearlythe
validityofthefollowingobservationofDrucker,“Thepurposeof
any business lies outside the business – in society.” And this
awareness of the societal content of business often enthuses
organizationstomakeanotablecontributiontotheenrichmentof
society.

SocietalMarketingconcept

Now the question is whether the marketing concept is an appropriateorganizationalgoalinanageofenvironmentaldeterioration,
Now the question is whether the marketing concept is an
appropriateorganizationalgoalinanageofenvironmentaldeterioration,
resourceshortages,explosivepopulationgrowthetc.andwhetherthe
firmisnecessarilyactinginthebestlongruninterestsofconsumersand
society.Forexample,manymoderndisposablepackingmaterialscreate
problemofenvironmentaldegradationSituationslikethis,callforanew concept,whichiscalled‘SocialMarketingConcept’.
problemofenvironmentaldegradationSituationslikethis,callforanew
concept,whichiscalled‘SocialMarketingConcept’.
Thesocietalmarketingconceptholdsthattheorganization’stask istodeterminetheneeds,wantsandinterestsoftargetmarketsandto
Thesocietalmarketingconceptholdsthattheorganization’stask
istodeterminetheneeds,wantsandinterestsoftargetmarketsandto
deliver the desired satisfaction more effectively and efficiently than
competitorsinawaythatpreservesorenhancestheconsumer’sandthe
society’swellbeing.
A-fewmagazinessuchasKalki,AnandaVikadan,donotacceptany advertisementsforCigarettesoralcoholicliquorsthoughitislossof
A-fewmagazinessuchasKalki,AnandaVikadan,donotacceptany
advertisementsforCigarettesoralcoholicliquorsthoughitislossof
revenueforthem.Thisisatypicalexampleofsocietalmarketingconcept.
Thesocietalmarketingconceptcallsuponmarketerstobalance three considerations in setting their marketing policies namely
Thesocietalmarketingconceptcallsuponmarketerstobalance
three considerations in setting their marketing policies namely firm’s
profits,consumerwantsatisfactionandsocietyinterest.
META–MARKETING
META–MARKETING
Likesocietalmarketing,theconceptofmeta-marketingisalsoof recentorigin.Ithasconsiderablyhelpedtodevelopnewinsightintothis
Likesocietalmarketing,theconceptofmeta-marketingisalsoof
recentorigin.Ithasconsiderablyhelpedtodevelopnewinsightintothis
excitingfieldoflearning.Theliteralmeaningoftheterm‘meta’is“more
comprehensive”andis“usedwiththenameofadisciplinetodesignatea
newbutrelateddisciplinedesignedtodealcriticallywiththeoriginalone”.
Inmarketing,thistermwasoriginallycoinedbyKellywhilediscussingthe
issuesofethicsandscienceofmarketing.Kotlergavethebroadened
applicationofmarketingnationstonon-businessorganisations,persons,
causes etc. In broadening the concept of marketing, marketing was
assignedamorecomprehensiverole.Heusedthetermmeta-marketing todescribetheprocessesinvolvedinattemptingtodevelopormaintain
assignedamorecomprehensiverole.Heusedthetermmeta-marketing
todescribetheprocessesinvolvedinattemptingtodevelopormaintain
exchangerelationsinvolvingproducts/servicesorganizations,persons,
placesorcauses.
Theexamplesofnon-businessmarketingormeta-marketingmay includeFamilyWelfareProgrammesandtheideaofprohibition.
Theexamplesofnon-businessmarketingormeta-marketingmay
includeFamilyWelfareProgrammesandtheideaofprohibition.
DEMARKETING
DEMARKETING
Thedemarketingconceptisalsoofrecentorigin.Itisaconcept whichisofgreatrelevancetodevelopingeconomieswheredemandsfor
Thedemarketingconceptisalsoofrecentorigin.Itisaconcept
whichisofgreatrelevancetodevelopingeconomieswheredemandsfor
products/servicesexceedsupplies.
Demarketinghasbeendefinedas“thataspectofmarketingthat deals with discouraging customer, in general, or a certain class
Demarketinghasbeendefinedas“thataspectofmarketingthat
deals with discouraging customer, in general, or a certain class of
customersinparticularoneitheratemporaryorpermanentbasis.The
demarketingconceptespousesthatmanagementofexcessdemandisas
muchamarketingproblemasthatofexcesssupplyandcanbeachieved
by the use of similar marketing technology as used in the case of
managingexcesssupply.Itmaybeemployedbyacompanytoreducethe
level of total demand without alienating loyal customers (General
Demarketing),todiscouragethedemandcomingfromcertainsegments
ofthemarketthatareeitherunprofitableorpossessthepotentialof
injuring loyal buyers (Selective Demarketing), to appear to want less
demandforthesakeofactuallyincreasingit(OstensibleDemarketing).
Whatevermaybetheobjective,thereisalwaysadangerofdamaging
Whatevermaybetheobjective,thereisalwaysadangerofdamaging
customerrelationsinanydemarektingstrategy.Therefore,tobecreative,
everycompanyhastoensurethatitslong-runcustomerrelationsremain
undamaged.

REVIEWQUESTIONS:

undamaged. REVIEWQUESTIONS: 1.Definemarketing.Bringoutitsimportance

1.Definemarketing.Bringoutitsimportance

REVIEWQUESTIONS: 1.Definemarketing.Bringoutitsimportance 2.Brieflydiscussthevariousconceptofmarketing.

2.Brieflydiscussthevariousconceptofmarketing.

2.Brieflydiscussthevariousconceptofmarketing. 3.Discussindetailthemodernmarketingconcept. *****************

3.Discussindetailthemodernmarketingconcept.

*****************
*****************
LESSON–2
LESSON–2

APPROACHESTOTHESTUDYOFMARKETING

LearningObjectives
LearningObjectives

Afterreadingthislesson,youshouldbeabletounderstand–

Theapproachestothestudyofmarketing.
Theapproachestothestudyofmarketing.

Thesignificanceofdifferentapproaches.

Therearedifferentapproachesstothestudyofmarketing.These approacheshaveimmenselycontributedtotheevolutionofthemodern
Therearedifferentapproachesstothestudyofmarketing.These
approacheshaveimmenselycontributedtotheevolutionofthemodern
approachandtheconceptofmarketing.Tofacilitatethestudy,these
approachesmaybebroadlyclassifiedasfollows:
approachesmaybebroadlyclassifiedasfollows: (i)Commodityapproach (ii)Functionalapproach (iii)

(i)Commodityapproach

(i)Commodityapproach (ii)Functionalapproach (iii) Institutionalapproach

(ii)Functionalapproach

(i)Commodityapproach (ii)Functionalapproach (iii) Institutionalapproach (iv)Managerialapproach;and

(iii) Institutionalapproach

(ii)Functionalapproach (iii) Institutionalapproach (iv)Managerialapproach;and (v)Systemsapproach

(iv)Managerialapproach;and

(iii) Institutionalapproach (iv)Managerialapproach;and (v)Systemsapproach CommodityApproach The first approach is

(v)Systemsapproach

CommodityApproach

The first approach is the commodity approach under which a specific commodity is selected and
The first approach is the commodity approach under which a
specific commodity is selected and then its marketing methods and
environmentsarestudiedinthecourseofitsmovementfromproducerto
consumer. In this approach, thesubject matter of discussion centres
consumer. In this approach, thesubject matter of discussion centres
aroundthespecificcommodityselectedforthestudyandincludesthe
sources and conditions of supply,nature and extent of demand, the
distributionchannelsused,promotionalmethodsadoptedetc.
FunctionalApproach
FunctionalApproach
Thesecondapproachisthefunctionalapproachunderwhichthe studyconcentratesonthespecializedfunctionsorservicesperformedby
Thesecondapproachisthefunctionalapproachunderwhichthe
studyconcentratesonthespecializedfunctionsorservicesperformedby
the marketers and the problems faced by them in performing those
functions. Such marketing functions include buying, selling, storage,
standardizing,transport,finance,risk-bearing,marketinformationetc.
This approach certainly enables one to gain detailed knowledge on
variousfunctionsofmarketing.

InstitutionalApproach

Thethirdapproachistheinstitutionalapproachunderwhichthe maininterestcentresaroundtheinstitutionsoragenciesthatperform
Thethirdapproachistheinstitutionalapproachunderwhichthe
maininterestcentresaroundtheinstitutionsoragenciesthatperform
marketing functions. Such agencies include wholesalers, retailers,
mercantileagentsandfacilitatinginstitutionsliketransportundertakings,
banks,insurancecompaniesetc.Thisapproachhelpsonetofindoutthe
operating methods adopted by these institutions and the various
problemsfacedbythemandtoknowhowtheyworktogetherinfulfilling
theirobjectives.
ManagerialApproach
ManagerialApproach
Inthemanagerialapproach,thefocusofmarketingstudyisonthe decision-making process involved in the performance of marketing
Inthemanagerialapproach,thefocusofmarketingstudyisonthe
decision-making process involved in the performance of marketing
functionsatthelevelofafirm.Thestudyencompassesdiscussionofthe
different underlying concepts, decision influencing factors; alternative
strategies – their relative importance, strengths and weaknesses, ad
techniquesandmethodsofproblem-solving.Thisapproachentailsthe
study of marketing at the micro-level of a business firm – of the
managerialfunctionsofanalysis,planning,implementation,coordination
andcontrolinrelationtothemarketingfunctionsorcreating,stimulating,
facilitatingandvaluingtransactions.

SystemsApproach

facilitatingandvaluingtransactions. SystemsApproach Modern marketing is complex, vast and sophisticated and it

Modern marketing is complex, vast and sophisticated and it influencestheentireeconomyandstandardoflivingofpeople.Hence marketingexpertshavedevelopedonemoreapproachnamely‘System approach’. Under this approach, marketing itself is considered as a sub-systemofeconomic,legalandcompetitivemarketingsystem.The marketingsystemoperatesinanenvironmentofbothcontrollableand uncontrollableforcesoftheorganisation.Thecontrollableforcesinclude allaspectsofproducts,price,physicaldistributionandpromotion.The uncontrollableforcesincludeeconomic,sociological,psychologicaland politicalforces.Theorganisationhastodevelopasuitablemarketing programme by taking into consideration both these controllable and uncontrollableforcestomeetthechangingdemandsofthesociety.The systems approach, in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,

in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
in fact, examines this aspect and also integrates commodity,functionalinstitutionalandmanagerialapproaches.Further,
this approach emphasis the importance of the use of ‘market information’inmarketingprogrammes.
this approach emphasis the importance of the use of ‘market
information’inmarketingprogrammes.
Thus,fromtheforegoingdiscussion,onecouldeasilyunderstand thatthemarketingcouldbestudiedinanyoftheaboveapproachandthe
Thus,fromtheforegoingdiscussion,onecouldeasilyunderstand
thatthemarketingcouldbestudiedinanyoftheaboveapproachandthe
systemsapproachisconsideredtobethebestapproachasitprovidesa
strongbaseforlogicalandorderlyanalysisandplanningofmarketing
activities.
REVIEWQUESTIONS
REVIEWQUESTIONS
activities. REVIEWQUESTIONS 1.Discussthevariousapproachestothestudyofmarketing.

1.Discussthevariousapproachestothestudyofmarketing.

REVIEWQUESTIONS 1.Discussthevariousapproachestothestudyofmarketing. 2.Explain‘SystemsApproach’tothestudyofmarketing.

2.Explain‘SystemsApproach’tothestudyofmarketing.

LESSON–3
LESSON–3

MARKETSEGMENTATION

LearningObjectives
LearningObjectives

Afterreadingthislesson,youshouldtoabletounderstand-

The meaning, bases and benefits of the concept of market segmentation;
The meaning, bases and benefits of the concept of market
segmentation;

Theconceptoftargetmarket;

Meaningandtypesofpositioninganditsimplications
Meaningandtypesofpositioninganditsimplications
Allfirmsmustformulateastrategyforapproachingtheirmarkets.Onthe one hand, the firm may choose to provide one product to
Allfirmsmustformulateastrategyforapproachingtheirmarkets.Onthe
one hand, the firm may choose to provide one product to all of its
customer;ontheotherhand,itmaydeterminethatthemarketisso
heterogeneousthatithasnochoicebuttodivideorsegmentpotential
usersintosubmarkets.
Segmentationisthekeytothemarketingstrategyofmanycompanies. Segmentationisademand-orientedapproachthatinvolvesmodifyingthe
Segmentationisthekeytothemarketingstrategyofmanycompanies.
Segmentationisademand-orientedapproachthatinvolvesmodifyingthe
firm’sproductand/ormarketingstrategiestofittheneedsofindividual
marketsegmentsratherthanthoseoftheaggregatemarket.
AccordingtoWilliamStanton,“Marketsegmentationistheprocessof dividing the total heterogeneous market for a product into
AccordingtoWilliamStanton,“Marketsegmentationistheprocessof
dividing the total heterogeneous market for a product into several
sub-marketsorsegmentseachofwhichtendtobehomogeneousinall
significantaspects.
Market segmentation is basically a strategy of ‘divide and rule’. The
Market segmentation is basically a strategy of ‘divide and rule’. The
strategyinvolvesthedevelopmentoftwoormoredifferentmarketing
programmes for a given product or service, with each marketing
programmeaimingateachsegment.Astrategyofmarketsegmentation
requiresthatthemarketerfirstclearlydefinethenumberandnatureof
the customer groupings to which he intends to offer his product or
service. This is a necessary condition for optimizing efficiency of
marketingeffort.

RATIONALEFORMARKETSEGMENTATION

Therearethreereasonswhyfirmsusemarketsegmentations:

Becausesomemarketsareheterogeneous
Becausesomemarketsareheterogeneous
Because market segments respond differently to different promotionalappeals;and
Because market segments respond differently to different
promotionalappeals;and

Becausemarketsegmentationconsiderwiththemarketingconcept.

HeterogeneousMarkets:
HeterogeneousMarkets:
Marketisheterogeneousbothinthesupplyanddemandside.On supply side, many factors like differences in production equipments,
Marketisheterogeneousbothinthesupplyanddemandside.On
supply side, many factors like differences in production equipments,
processingtechniques,natureofresourcesorinputsavailabletodifferent
manufactures, unequal capacity among the competitors in terms of
designandimprovementanddeliberateeffortstoremaindifferentfrom
otheraccountfortheheterogeneity.Similarly,thedemandside,which
constituteconsumers–isalsodifferentduetodifferencesinphysicaland
psychologicaltraitsofconsumer.Modernbusinessmanagersrealizethat
undernormalcircumstancestheycannotattractallofthefirm’spotential
customerstooneproduct,becausedifferentbuyerssimplyhavedifferent needsandwants.Toaccommodatethisheterogeneity,
customerstooneproduct,becausedifferentbuyerssimplyhavedifferent
needsandwants.Toaccommodatethisheterogeneity, thesellermust
provide different products. For example, in two wheelers, the TVS
CompanyfirstintroducedTVS50Moped,butlateronintroducedavariety
oftwowheelers,suchasTVSXL,TVSPowerport,TVSChamp,TVSSport,
TVSScooty,TVSSuzuki,TVSVictor,tosuittherequirementsofdifferent
classesofcustomers.

2.VariedPromotionalAppeals:

Astrategyofmarketsegmentationdoesnotnecessarilymeanthat thefirmmustproducedifferentproductsforeachmarketsegment.If
Astrategyofmarketsegmentationdoesnotnecessarilymeanthat
thefirmmustproducedifferentproductsforeachmarketsegment.If
certain promotional appeals arelikely to affect each market segment
differently,thefirmmaydecidetobuildflexibilityintoitspromotional
strategy rather than to expand its product line. For example, many
politicalcandidateshavetriedtosellthemselvestothe electorateby
emphasizingonemessagetolabour,anothertobusiness,andathirdto
farmers.
Asanotherexample,theSheratonHotelservesdifferentdistrict marketsegments,suchasconventioneers,businesspeopleandtourists.
Asanotherexample,theSheratonHotelservesdifferentdistrict
marketsegments,suchasconventioneers,businesspeopleandtourists.
Eachsegmentshasdifferentreasonsforusingthehotel.Consequently,
Sheratonusesdifferentmediaanddifferentmessagestocommunicate
withthevarioussegments.
3.ConsistencywiththeMarketingConcept
3.ConsistencywiththeMarketingConcept
A third reason for using market segmentation is that it is consistentwiththemarketingconcept.Marketsegmentationrecognizes
A third reason for using market segmentation is that it is
consistentwiththemarketingconcept.Marketsegmentationrecognizes
theexistenceofdistinctmarketgroups,eachwithadistinctsetofneeds.
Through segmentation, the firm directs its product and promotional
effortsatthosemarketsthatwillbenefitmostfromorthatwillgetthe
greatest enjoyment from its merchandise. This is the heart of the
marketingconcept.
Overtheyears,marketsegmentationhasbecomeanincreasingly popularstrategictechniqueasmoreandmorefirmshaveadoptedthe
Overtheyears,marketsegmentationhasbecomeanincreasingly
popularstrategictechniqueasmoreandmorefirmshaveadoptedthe
marketing concept. Other historical forces being the rise of market
segmentationincludeneweconomiesofscale,increasededucationand
affluence, greater competition, and the advent of new segmentation
technology.

BasesofMarketSegmentation

Thereareanumberofbasesonwhichafirmmaysegmentitsmarket

Thereareanumberofbasesonwhichafirmmaysegmentitsmarket 1.Geographicbasis a. Nations b.States c. Regions

1.Geographicbasis

a.

Nations
Nations
1.Geographicbasis a. Nations b.States c. Regions 2.Demographicbasis a. Age

b.States

c.

Regions
Regions
1.Geographicbasis a. Nations b.States c. Regions 2.Demographicbasis a. Age

2.Demographicbasis

a.

Age
Age
b.Sex c. Income d.SocialClass e. MaterialStatus f. FamilySize g.Education h.Occupation 3.Psychographicbasis a. Lifestyle

b.Sex

c.

Income
Income
b.Sex c. Income d.SocialClass e. MaterialStatus f. FamilySize g.Education h.Occupation 3.Psychographicbasis a. Lifestyle

d.SocialClass

e.

MaterialStatus
MaterialStatus

f.

FamilySize
FamilySize
b.Sex c. Income d.SocialClass e. MaterialStatus f. FamilySize g.Education h.Occupation 3.Psychographicbasis a. Lifestyle

g.Education

d.SocialClass e. MaterialStatus f. FamilySize g.Education h.Occupation 3.Psychographicbasis a. Lifestyle

h.Occupation

e. MaterialStatus f. FamilySize g.Education h.Occupation 3.Psychographicbasis a. Lifestyle b.Personalities c.

3.Psychographicbasis

a.

Lifestyle
Lifestyle
g.Education h.Occupation 3.Psychographicbasis a. Lifestyle b.Personalities c. Loyaltystatus d.Benefitssought e. f.

b.Personalities

c.

Loyaltystatus
Loyaltystatus
a. Lifestyle b.Personalities c. Loyaltystatus d.Benefitssought e. f. Usagerate(volumesegmentation)

d.Benefitssought

e.

f.

Usagerate(volumesegmentation)

Buyerreadinessstages(unaware,aware,informed,interested, desired,intendtobuy)
Buyerreadinessstages(unaware,aware,informed,interested,
desired,intendtobuy)
desired,intendtobuy) g.Attitude stage (Enthusiastic, positive, indifferent,

g.Attitude stage (Enthusiastic, positive, indifferent, negative, hostile)

METHODSOFSEGMENTATION

On the basis of the bases used for the market segmentation,
On the basis of the bases used for the market segmentation,
variouscharacteristicsofthecustomersandgeographicalcharacteristics
etc.,commonmethodsofmarketsegmentationscouldbedone.Common
methodsusedare:

GeographicalSegmentation

When the market is divided into different geographical unit as
When the market is divided into different geographical unit as
region,continent,country,state,district,cities,urbanandruralareas,it
iscalledasgeographicalsegmentation.Evenonthegeographicneeds
andpreferenceproductscouldbemade.EventhroughTataTeaissoldon
a national level, it is flavoured accordingly in different regions. The
strength of the tea differs in each regions of the country. Bajaj has
sub-dividedtheentirecountryintotwodistinctmarkets.Owingtothe
betterroadconditionsin thenorth,thesuper FESectorispromoted
betterwithsmallwheels;whereasinthecaseofsouth,Bajajpromotes
ChetakFEwithlargewheelsbecauseofthebadroadconditions.

DemographicSegmentation

Demographics is the most commonly used basis for market segmentation.Demographicvariablesarerelativelyeasytounderstand
Demographics is the most commonly used basis for market
segmentation.Demographicvariablesarerelativelyeasytounderstand
andmeasure,andtheyhaveproventobeexcellentsegmentationcriteria
for many markets. Information in several demographic categories is
particularlyusefultomarketers.
demographic categories is particularlyusefultomarketers. Demographic segmentation refers to dividing the market into

Demographic segmentation refers to dividing the market into groupsonthebasisofage,sex,familysizecycle,income,education,

Demographic segmentation refers to dividing the market into groupsonthebasisofage,sex,familysizecycle,income,education,
occupation, religion, race, cast and nationality. In better distinctions among the customer groups this segmentation
occupation, religion, race, cast and nationality. In better distinctions
among the customer groups this segmentation helps. The above
demographic variables are directly related with the consumer needs,
wantsandpreferences.
Age:Marketsegmentsbasedonagearealsoimportanttomany organizations.Someaspectsofageasasegmentationvariablearequite
Age:Marketsegmentsbasedonagearealsoimportanttomany
organizations.Someaspectsofageasasegmentationvariablearequite
obvious.Forexample,childrenconstitutetheprimarymarketfortoysand
people65yearsandolderaremajorusersofmedicalservices.Ageand
lifecycleareimportantfactors.Forinstanceintwowheelermarket,as
Bajajhas‘Sunny’forthecollegegirls; ‘BajajChetak’foryoungsters;
‘BajajChetak’fortheofficegoingpeopleandBajajM80forruralpeople.
Inappealingtoteenagers,forexample,themarketingexecutive
Inappealingtoteenagers,forexample,themarketingexecutive
mustcontinuallymonitortheirever-changingbeliefs,politicalandsocial
attitudes,aswellsastheentertainersandclothingthataremostpopular
withyoungpeopleataparticulartime.Suchfactorsareimportantin
developing effective advertising copy and illustrations for a product
directedtotheyouthmarket.
Sexsegmentationisappliedtoclothing,cosmetics,magazinesand hairdressing.ThemagazineslikeWomen’sEra,Femina,(inMalayalam),
Sexsegmentationisappliedtoclothing,cosmetics,magazinesand
hairdressing.ThemagazineslikeWomen’sEra,Femina,(inMalayalam),
MangaiyarMalar(inTamil)aremainlysegmentedforwomen.Recently
evenacigaretteexclusivelyforwomenwasbroughtout.BeautyParlours
arenotsynonymsfortheladies.

Incomesegmentation:Ithaslongbeenconsideredagoodvariable

forsegmentingmarkets.Wealthypeople,forexample,aremorelikelyto
forsegmentingmarkets.Wealthypeople,forexample,aremorelikelyto

buyexpensiveclothes,jewelleries,cars,andtoliveinlargehouses.In

addition, income has been shown to be an excellent segmentation correlate for an evenwiderrange of
addition, income has been shown to be an excellent segmentation
correlate for an evenwiderrange of commodity purchasedproducts,
including householdtoiletries,paperandplasticitems,furniture,etc.
SocialClasssegmentation:Thisisasignificantmarketsegment. For example,membersofdifferentsocialclassesvarydramaticallyin
SocialClasssegmentation:Thisisasignificantmarketsegment.
For example,membersofdifferentsocialclassesvarydramaticallyin
theiruseofbankcreditcards.Peopleinlowe4rsocialclassestendtouse
bank credit cards as installment loans, while those in higher social
classes use them for convenience purposes. These differences in
behaviourcanbesignificantwhensegmentingamarketanddevelopinga
marketingprogramtoserveeachsegment.

PsychographicSegmentation

Onthebasisofthelifestyle,personalitycharacteristics,buyersare
Onthebasisofthelifestyle,personalitycharacteristics,buyersare
dividedandthissegmentationisknownaspsychographicssegmentation.
Certain group of people reacts in a particular manner for an appeal
projected in the advertisements and exhibit common behavioural
patterns. Marketers have also used the personality variables as
independent,impulsive,masculine,aggressive,confident,naïve,shyetc.
formarketingtheirproducts.Oldspicepromotestheiraftershavelotion
forthepeoplewhoareselfconfidentandareveryconsciousoftheir
dress code. These advertisements focus mainly on the personality
variablesassociatedwiththeproduct.

BehaviouralSegmentation

Buyer behavioural segmentation is slightly different from psychographicsegmentation.Herebuyersaredividedintogroupsonthe
Buyer behavioural segmentation is slightly different from
psychographicsegmentation.Herebuyersaredividedintogroupsonthe
basisoftheirknowledge,attitude,useorresponsetoaproduct.
Benefit segmentation: The assumption underlying the benefit segmentationisthatmarketscanbedefinedonthebasisofthebenefits
Benefit segmentation: The assumption underlying the benefit
segmentationisthatmarketscanbedefinedonthebasisofthebenefits
thatpeopleseekfromtheproduct.Althoughresearchindicatesthatmost
peoplewouldliketoreceiveasmanybenefitsaspossiblefromaproduct,
ithasalsobeenshownthattherelativeimportancethatpeopleattachto
particular benefits varies substantially. Thesedifferences can then be
suedtosegmentmarkets.
Oncethekeybenefitsforaparticularproduct/ marketsituation aredetermined,theanalystmustcompareeachbenefitsegmentwiththe
Oncethekeybenefitsforaparticularproduct/ marketsituation
aredetermined,theanalystmustcompareeachbenefitsegmentwiththe
restofthemarkettodeterminewhetherthatsegmenthasuniqueand
identifiabledemographiccharacteristics,consumptionpatterns,ormedia
habits. For example, themarket fortoothpastecanbesegmentedin
termsoffourdistinctproductbenefits;flavourandproductappearance,
brightnessofteeth,decaypreventionandprice.
Themajoradvantageofbenefitsegmentationisthatitisdesigned to fit the precise needs of the market. Rather than trying to
Themajoradvantageofbenefitsegmentationisthatitisdesigned
to fit the precise needs of the market. Rather than trying to create
markets, the firm indentifies the benefit or set of benefits that
prospective customers want from their purchases and then designs
productsandpromotionalstrategiestomeetthoseneeds.Asecondand
related advantage is that benefit segmentation helps the firm avoid
cannibalizingitsexistingproductswhenitintroducesnewones.
cannibalizingitsexistingproductswhenitintroducesnewones. Buyerscanbedividedbasedontheirneeds,topurchaseproduct

Buyerscanbedividedbasedontheirneeds,topurchaseproduct foranoccasion.Thenumberoftimesaproductisusedcouldbealso consideredasasegmentationpossibility.A tooth paste manufacturer urgesthepeopletobrushtheteethtwiceadayforavoidingtoothdecay andfreshness.Eitheracompanycanpositioninsinglebenefitordouble

urgesthepeopletobrushtheteethtwiceadayforavoidingtoothdecay andfreshness.Eitheracompanycanpositioninsinglebenefitordouble
urgesthepeopletobrushtheteethtwiceadayforavoidingtoothdecay andfreshness.Eitheracompanycanpositioninsinglebenefitordouble
urgesthepeopletobrushtheteethtwiceadayforavoidingtoothdecay andfreshness.Eitheracompanycanpositioninsinglebenefitordouble
urgesthepeopletobrushtheteethtwiceadayforavoidingtoothdecay andfreshness.Eitheracompanycanpositioninsinglebenefitordouble
benefit whichtheproduct offers. Thestatusof thebuyersusing the productandthenumberoftimestheyusetheproductcanalsoreveal
benefit whichtheproduct offers. Thestatusof thebuyersusing the
productandthenumberoftimestheyusetheproductcanalsoreveal
thatbehaviouralpatternsofconsumersvaryonalargescale.
Life-StyleSegmentation
Life-StyleSegmentation
Life-stylesegmentationisarelativelynewtechniquethatinvolves lookingatthecustomerasa“whole”personratherthanasasetof
Life-stylesegmentationisarelativelynewtechniquethatinvolves
lookingatthecustomerasa“whole”personratherthanasasetof
isolatedparts.Itattemptstoclassifypeopleintosegmentsonthebasis
ofabroadsetofcriteria”.
Themostwidelyusedlife-styledimensionsinmarketsegmentation are an individual’s activities, interests, opinions, and
Themostwidelyusedlife-styledimensionsinmarketsegmentation
are an individual’s activities, interests, opinions, and demographic
characteristics.Individualsareanalyzedintermsof(i)howtheyspend
theirtime,(ii)whatareasofinteresttheyseeasmostimportant,(iii)their
opinionsonthemselvesandoftheenvironmentaroundthem,and(iv)
basicdemographicssuchasincome,socialclassandeducation.
Unfortunately,thereisnoonebestwaytosegmentmarkets.This facts has caused a great deal of frustration for some marketing
Unfortunately,thereisnoonebestwaytosegmentmarkets.This
facts has caused a great deal of frustration for some marketing
executives who insist that a segmentation variable that has proven
effectiveinonemarket/productcontextshouldbeequallyeffectivein
othersituations.Thetruthisthatavariablesuchassocialclassmay
describethetypesofpeoplewhoshopinparticularstores,butprove
uselessin definingthe marketforaparticularproduct.Therefore,in
usingasegmentationcriteriainordertoidentifythosethatwillbemost
effectiveindefiningtheirmarkets.

UNDERSTANDINGMARKETING

Herethecompanyoperatesinmostofthesegmentsofthemarket by designing separate programmes for each different segment. Bajaj,
Herethecompanyoperatesinmostofthesegmentsofthemarket
by designing separate programmes for each different segment. Bajaj,
TVS-Suzuki, Hero Cycle are those companies following this strategy.
Usually differentialted marketing creaters mreo sales than
undifferentiated marketing, but the production costs, product
modification and administrative costs, inventory costs, and product
promotionalbudgetsandcostswouldbeveryhigh.Themainaimofthis
typeofmarketingisthelargevolumeturnoverforaparticularbrand.
Requirementsforeffectivesegmentations
Requirementsforeffectivesegmentations
ofthesegmentscanbemeasured.
ofthesegmentscanbemeasured.

1.Measurability–thedegreetowhichthesizeandpurchasingpower

reachedandserved.
reachedandserved.

2.Accessibility–thedegreetowhichthesegmentscanbeeffectively

profitableenough.
profitableenough.

3.Substantiality–thedegreetowhichthesegmentsarelargeand/or

formulatedforattractingandservingthesegments.
formulatedforattractingandservingthesegments.

4.Actionability–thedegreetowhicheffectiveprogrammescanbe

BENEFITSOFMARKETSEGMENTATION

BENEFITSOFMARKETSEGMENTATION Marketsegmentationgivesabetterunderstandingofconsumerneeds,

Marketsegmentationgivesabetterunderstandingofconsumerneeds, behaviourandexpectationstothemarketers.Theinformationgathered willbepreciseanddefinite.Ithelpsforformulatingeffectivemarketing mixcapableofattainingobjectives.Themarketerneednotwastehis marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches consumer

marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches
marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches
marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches
marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches
marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches
expectationsandpromotionalprogrammesareintunewithconsumer
expectationsandpromotionalprogrammesareintunewithconsumer
willingnesstoreceive,assimilateandpositivelyreacttocommunications.
Specifically,segmentationanalysishelpsthemarketingmanager.
Todesignproductlinesthatareconsistentwiththedemandsofthe marketandthatdonotignoreimportantsegments.
Todesignproductlinesthatareconsistentwiththedemandsofthe
marketandthatdonotignoreimportantsegments.

Tospotthefirstsignsofmajortrendsinrapidlychangingmarkets.

Todirecttheappropriatepromotionalattentionandfundstothe mostprofitablemarketsegments.
Todirecttheappropriatepromotionalattentionandfundstothe
mostprofitablemarketsegments.
Todetermine theappeals that will be most effectivewith each marketsegments.
Todetermine theappeals that will be most effectivewith each
marketsegments.
To select the advertising media that best matches the communicationpatternsofeachmarketsegment.
To select the advertising media that best matches the
communicationpatternsofeachmarketsegment.
Tomodifythetimingofadvertisingandotherpromotionalefforts sothattheycoincidewiththeperiodsofgreatestmarketresponse.
Tomodifythetimingofadvertisingandotherpromotionalefforts
sothattheycoincidewiththeperiodsofgreatestmarketresponse.
Inshort,thestrengthofmarketsegmentationliesinmatchingproducts
Inshort,thestrengthofmarketsegmentationliesinmatchingproducts
toconsumerneedsthataugmentconsumersatisfactionandfirm’sprofit
position.However,themajorlimitationofmarketsegmentationisthe
inability of a firm to take care of all segmentation bases and their
innumerous variables. Still, the strengths of market segmentation
outweigh its limits and offers considerable opportunities for market
exploitation.

FEATURESOFCONSUMERMARKETING

Consumer goods are destined for use by ultimate consumers or house-holdsandinsuchformthattheycanbeusedwithoutcommercial
Consumer goods are destined for use by ultimate consumers or
house-holdsandinsuchformthattheycanbeusedwithoutcommercial
processing.
Consumer goods and services are purchased for personal consumption.
Consumer goods and services are purchased for personal
consumption.

Demandforconsumergoodsandservicesaredirectdemand.

Consumerbuyersareindividualsandhouseholds.

Impulsebuyingiscommoninconsumermarket.
Impulsebuyingiscommoninconsumermarket.

Manyconsumerpurchasesareinfluencedbyemotionalfactors.

Thenumberofconsumerbuyersisrelativelyverylarge.
Thenumberofconsumerbuyersisrelativelyverylarge.
The number of factors influencing buying decision-making is relativelysmall.
The number of factors influencing buying decision-making is
relativelysmall.

Decision-makingprocessisinformalandoftensimple.

Relationshipmarketingislesssignificant.
Relationshipmarketingislesssignificant.
Technicalspecificationsarelessimportant.
Technicalspecificationsarelessimportant.

Ordersizeisverysmall.

Serviceaspectsaregenerallylessimportant.
Serviceaspectsaregenerallylessimportant.

Directmarketingandpersonalsellingarelessimportant.

Consumermarketingdependsheavilyonmassmediaadvertising.

Salespromotionisverycommon.

Supplyefficiency,isnotascriticalasinindustrialmarketing.

Distributionchannelsaregenerallylengthy and thenumbersof resellersareverylarge.
Distributionchannelsaregenerallylengthy and thenumbersof
resellersareverylarge.

Systemssellingisnotimportant.

Thescopeforreciprocityisverylimited.

Vendorloyaltyisrelativelylessimportant.
Vendorloyaltyisrelativelylessimportant.

Lineextensionsareverycommon.

Brandingplaysagreatrole.

Packagingalsoplaysapromotionalrole.
Packagingalsoplaysapromotionalrole.

Consumersaredispersedgeographically.

Demandforconsumergoodsispriceelastic.

FEATURESOFINDUSTRIALMARKETING

In industrial marketing, the markets is concerned with the marketingofindustrialgoodstoindustrialusers.Theindustrialgoods
In industrial marketing, the markets is concerned with the
marketingofindustrialgoodstoindustrialusers.Theindustrialgoods
arethoseintendedforuseinproducingofothergoodsroerenderingof
someserviceinbusiness.Theindustrialusersarethoseindividualsand
organizationswhobuytheindustrialgoodsforuseintheirownbusiness.
Thesegmentsforindustrialgoodsincludemanufacturing,miningand
quarrying,transportation,communication,agriculture,forestry,finance,
insurance,realestateetc.
Industrialgoodsareservicesareboughtforproductionofother goodsandservices.
Industrialgoodsareservicesareboughtforproductionofother
goodsandservices.

Demandforindustrialgoodsandservicesisderiveddemand

Industrialbuyersaremostlyfirmsandotherorganizations.

Impulsebuyingisalmostabsentinindustrialmarket.

Industrialbuyingdecisionsarebasedonrational,economicfactors.

Thenumberofbusinessbuyersisrelativelysmall.

The number of factors influencing buying decision-making is relativelylarge.
The number of factors influencing buying decision-making is
relativelylarge.

Decision-makingprocesstendstobecomplexandformal.

Relationshipmarketingismorerelevantandsignificant.
Relationshipmarketingismorerelevantandsignificant.
Technicalspecificationsaremoreimportant.
Technicalspecificationsaremoreimportant.

Ordersizeisoftenverylarge.

Serviceaspectsandperformanceguaranteesareveryimportant.

Directmarketingandpersonalsellingarehighlyimportant.

Specificmedialiketradejournalsaremoreimportantforindustrial marketing.
Specificmedialiketradejournalsaremoreimportantforindustrial
marketing.

Salespromotionisnotcommon.

Supplyefficiencyisverycriticalbecausesupplyproblemcaneven causesuspensionoftheentirebusiness.
Supplyefficiencyisverycriticalbecausesupplyproblemcaneven
causesuspensionoftheentirebusiness.
Distributionchannelsaregenerallytendtobedirectorshortand thenumberofresellersaresmall.
Distributionchannelsaregenerallytendtobedirectorshortand
thenumberofresellersaresmall.

Systemssellingisveryimportant.

Thescopeforreciprocityisverylarge.
Thescopeforreciprocityisverylarge.

Vendorloyaltytendstobehigh.

Lineextension islimitedby justification of clearbenefitto the buyer.
Lineextension islimitedby justification of clearbenefitto the
buyer.
Conformity to product specifications and reputation of the manufacturersupplieraremoreimportant.
Conformity to product specifications and reputation of the
manufacturersupplieraremoreimportant.
Packaginghardlyhasapromotionalrole.
Packaginghardlyhasapromotionalrole.

Businessbuyersinmanycasesaregeographicallyconcentrated.

Pricesensitivityofdemandforindustrialgoodsislow.
Pricesensitivityofdemandforindustrialgoodsislow.

FEATURESOFSERVICESMARKETING

Service market is represented by activities, benefits and
Service market is represented by activities, benefits and
satisfactionsofferedforsalebyprovidersofservices.Theseservicesmay
be labour services, personal services, professional services or
institutional services. The peculiar characteristics of services create
challenges and opportunitiesto theservice markets. These aregiven
below:

INTANGIBILITY

Services are essentially intangible. Because services are performanceoractionsratherthanobjects,theycannotbeseen,felt,
Services are essentially intangible. Because services are
performanceoractionsratherthanobjects,theycannotbeseen,felt,
tasted,ortouchedinthesamemannerthatwecanseesensetangible
goods. For example, health-care services are actions (e.g. surgery,
diagnosis,examinations,treatment)performedbyprovidersanddirected
towardpatientsandtheirfamilies.Theseservicescannotactuallybeseen
ortouchedbythepatientmaybeabletoseenandtouchcertaintangible,
componentsoftheservices(e.g.equipment,hospitalroom).Infact,many
servicessuchashealthcarearedifficultfortheconsumertograspeven
mentally. Even after a diagnosis or surgery has been completed the
patientmaynotfullycomprehendtheserviceperformed.

INSEPARABILITY

Servicesarecreatedandconsumedsimultaneouslyandgenerally they cannotbe separatedfrom theprovider ofthe service.Thus the
Servicesarecreatedandconsumedsimultaneouslyandgenerally
they cannotbe separatedfrom theprovider ofthe service.Thus the
serviceprovider–customerinteractionisaspecialfeatureofservices
marketing.
Unlike the tangible goods, services cannot be distributedusing conventional channels. Inseparability makes direct sales
Unlike the tangible goods, services cannot be distributedusing
conventional channels. Inseparability makes direct sales as the only
possiblechannelofdistributionandthusdelimitsthemarketsforthe
seller’sservices.Thischaracteristicsalsolimitsthescaleofoperationof
theserviceprovider.Forexample,adoctorcangivetreatmenttolimited
numberofpatientsonlyinaday.
Thischaracteristicalsoemphasizestheimportanceofthequalityof
Thischaracteristicalsoemphasizestheimportanceofthequalityof
provider–clientinteractioninservices.Thisposesanothermanagement
challenge to the service marketer. While a consumer’s satisfaction
dependsonthefunctionalaspectsinthepurchaseofgoods,inthecase ofservicestheabovementionedinteractionplaysanimportantrolein
dependsonthefunctionalaspectsinthepurchaseofgoods,inthecase
ofservicestheabovementionedinteractionplaysanimportantrolein
determining the quality of services and customer satisfaction. For
example,anairlinecompanymayprovideexcellentflightservice,buta
discourteousonboardstaffmaykeepoffthecustomerpermanentlyfrom
thatcompany.
Thereareexemptionsalsototheinseparabilitycharacteristic.A televisioncoverage,travelagencyorstockbrokermayrepresentandhelp
Thereareexemptionsalsototheinseparabilitycharacteristic.A
televisioncoverage,travelagencyorstockbrokermayrepresentandhelp
marketingtheserviceprovidedbyanotherservicefirm.
HETEROGENEITY
HETEROGENEITY
ThischaracteristicisreferredtoasvariabilitybyKotler.Wehave already seen that services cannot be standardized. They are
ThischaracteristicisreferredtoasvariabilitybyKotler.Wehave
already seen that services cannot be standardized. They are highly
variabledependingupontheproviderandthetimeandplacewherethey
areprovided.Aserviceprovidedonotheroccasions.Alsothestandardof
quality perceived by different consumers may differ according to the
orderofpreferencegiven bythemtothevariousattributeofservice
actuality.Forexample,thetreatmentsgivenbyahospitaltodifferent
personsondifferentoccasioncannotbeofthesamequality.Consumers
ofservicesareawareofthisvariabilityandbytheirinteractionwithother
consumerstheyalsoessenefluncedorinfluenceothersintheselectionof
serviceprovider.
PERISHABILITYANDFLUCTUATINGDEMAND
PERISHABILITYANDFLUCTUATINGDEMAND
serviceprovider. PERISHABILITYANDFLUCTUATINGDEMAND Perisbabilaty refers to the fact that services cannot be

Perisbabilaty refers to the fact that services cannot be saved, stored,resoldorreturned.Aseatonanairplaneorinarestaurant,an houroralawyer’stime,ortelephonelinecapacitynotusedcannotbe

stored,resoldorreturned.Aseatonanairplaneorinarestaurant,an houroralawyer’stime,ortelephonelinecapacitynotusedcannotbe
stored,resoldorreturned.Aseatonanairplaneorinarestaurant,an houroralawyer’stime,ortelephonelinecapacitynotusedcannotbe
reclaimedandusedorresoldatlatertime.Thisisincontracttogoods thatcanbestoredininventoryorresoldanotherday,orevenreturnedif
reclaimedandusedorresoldatlatertime.Thisisincontracttogoods
thatcanbestoredininventoryorresoldanotherday,orevenreturnedif
theconsumerisunhappy.

TARGETMARKETING

Target marketing refers to selection of one or more of many marketsegmentsanddevelopingproductsandmarketingmixessuitedto
Target marketing refers to selection of one or more of many
marketsegmentsanddevelopingproductsandmarketingmixessuitedto
eachsegments.

STEPSINTARGETMARKETING

Targetmarketingessentiallyconsistofthefollowingsteps:

Targetmarketingessentiallyconsistofthefollowingsteps: 1.Definetherelevantmarket The market has to be defined in

1.Definetherelevantmarket

The market has to be defined in terms of product category, the productformandthespecificbrand.
The market has to be defined in terms of product category, the
productformandthespecificbrand.
of product category, the productformandthespecificbrand. 2.Analyzecharacteristicsandwantsofpotentialcustomers The

2.Analyzecharacteristicsandwantsofpotentialcustomers

The customers wants and needs are to be analyzed in terms of geographic location, demographics,
The customers wants and needs are to be analyzed in terms of
geographic location, demographics, psychographics and product
relatedvariable.
demographics, psychographics and product relatedvariable. 3.Identifybasesforsegmentingthemarket

3.Identifybasesforsegmentingthemarket

Fromtheprofilesavailableidentifythosehasstrengthadequatetoa segmentandreflectionthewantstokjdfgkjsdfgjsdkgjsfdkgjsf
Fromtheprofilesavailableidentifythosehasstrengthadequatetoa
segmentandreflectionthewantstokjdfgkjsdfgjsdkgjsfdkgjsf
segmentandreflectionthewantstokjdfgkjsdfgjsdkgjsfdkgjsf 4.Defineanddescribemarketsegments

4.Defineanddescribemarketsegments

4.Defineanddescribemarketsegments Asanyonebasis,sayincomeismeaninglessbyitself,acombination of

Asanyonebasis,sayincomeismeaninglessbyitself,acombination of various bases has to be arrived as such that each segment is

Asanyonebasis,sayincomeismeaninglessbyitself,acombination of various bases has to be arrived as such that each segment is
distinctly different from other segments in buying behaviour and wants.
distinctly different from other segments in buying behaviour and
wants.
from other segments in buying behaviour and wants. 5.Analyzecompetitor’spositions

5.Analyzecompetitor’spositions

Insuchsegmentgdfkgjxfkgnfdkgdxngmdfgkdfjgkdfjdfkjgdfkbythe consumersaretofoundourkjgfksjdfgdsfgs consumersandthelist
Insuchsegmentgdfkgjxfkgnfdkgdxngmdfgkdfjgkdfjdfkjgdfkbythe
consumersaretofoundourkjgfksjdfgdsfgs consumersandthelist
ofattributeswhichtheyconsiderimportantisdetermined.
ofattributeswhichtheyconsiderimportantisdetermined. 6.Evaluatemarketsegments

6.Evaluatemarketsegments

Themarketsegmentshavetobeevaluatedintermsofrevenue potential and cost of the marketing effort. The former involves
Themarketsegmentshavetobeevaluatedintermsofrevenue
potential and cost of the marketing effort. The former involves
estimatingthedemandfortheproductwhilethelatterisanestimate
ofcostsinvolvedinreachingeachsegment.
ofcostsinvolvedinreachingeachsegment. 7.Selectthemarketsegment

7.Selectthemarketsegment

Choosingdfkjgdfkjgfdtheavailablesegmentsinthemarketonehas to bear in mind theksdfjgksjgkjd and resources, the presence or
Choosingdfkjgdfkjgfdtheavailablesegmentsinthemarketonehas
to bear in mind theksdfjgksjgkjd and resources, the presence or
absenceofcompetitorsinthesdkjgksjdfandthecapacityofthegrow
insize.
insize. 8.Finalisethemarketingmix

8.Finalisethemarketingmix

Thisinvolvesdecisionsonproduct,distribution,promotionsandprice.
Thisinvolvesdecisionsonproduct,distribution,promotionsandprice.
Productdecisionswillgkjsdfintoaccountproductattributedfdgkdjf
wantedbyconsumers,choiceofappropriatebrandnameandimage
willhelpinpromotingtheproducttothechosensegmentandpricing
canbedonekeepingthepurchasebehaviourinmind.
Hence, it can be seen that targeted marketing consists of segmenting the market, choosing which
Hence, it can be seen that targeted marketing consists of
segmenting the market, choosing which segments to serve and
designingthemarketingmixinsucha waythatitisattractivetothe
chosensegments.Thethirdsteptakesintoaccounttheuniquenessof
acompany’smarketingmixinarelationtothatofcompetitors.The
uniquenessordifferentiationmaybetangibleorintangibledepending
upon the physical attributes or the psychological attributes of the
product.Establishingandcommunicatingthesedistinctiveaspectsis
termedpositioning.

MARKETINGMIX

Marketingmixisoneofthemajorconceptsinmodernmarketing. It is the combination of various elements which constitutes the
Marketingmixisoneofthemajorconceptsinmodernmarketing.
It is the combination of various elements which constitutes the
company’s marketing system. It is set of controllable marketing
variablesthatthefirmblendstoproducetheresponseitwantsinthe
targetmarket.Thoughtherearemanybasicmarketingvariables,itis
McCarthy,whopopularizedafour-factorclassificationcalledthefour
Ps:Product,Price,PlaceandPromotion.EachPconsistsofalistof
particularmarketingvariables.

ThefirstP–Productconsistsof

(i)

Productplanninganddevelopment;

 

(ii)

Productmixpoliciesandstrategies;and

(iii)

Brandingandpackagingstrategies.

 

ThesecondP–Priceconsistsof

(i)

Pricingpoliciesandobjectives;and

 

(ii)

Methodsofsettingprices.

 

ThethirdP–Placeconsistsof

(i)

Differenttypesofmarketingchannels;
Differenttypesofmarketingchannels;

(ii)

Retailingandwholesalinginstitutions;and
Retailingandwholesalinginstitutions;and

(iii)

Managementofphysicaldistributionsystems.

ThefourthP–Promotionconsistsof
ThefourthP–Promotionconsistsof

(i)

Advertising;

 

(ii)

Salespromotion;and

(iii)

Personalselling.

 

AdetaileddiscussiononeachoftheabovefourP’sfollowsnow:

PRODUCT

Product stands for various activities of the company such as
Product stands for various activities of the company such as
planninganddevelopingtherightproductand/orservices,changingthe
existingproducts,addingnewonesandtakingotheractionsthataffect
theassortmentsofproducts.Decisionsarealsorequiredintheareas
suchasquality,features,styles,brandnameandpackaging.
suchasquality,features,styles,brandnameandpackaging. Aproductissomethingthatmustbecapableofsatisfyinganeed or

Aproductissomethingthatmustbecapableofsatisfyinganeed or want, it includes physical objects, services, personalities places, organisationandideas.Thus,atransportservice,asitsatisfiershuman

includes physical objects, services, personalities places, organisationandideas.Thus,atransportservice,asitsatisfiershuman
includes physical objects, services, personalities places, organisationandideas.Thus,atransportservice,asitsatisfiershuman
needisaproduct.Similarly,placeslikeKashmirandKodaikanal,asthey satisfyneedtoenjoythecoolclimatearealsoproducts.
needisaproduct.Similarly,placeslikeKashmirandKodaikanal,asthey
satisfyneedtoenjoythecoolclimatearealsoproducts.
Thesecondaspectofproductisproductplanninganddevelopment.
Thesecondaspectofproductisproductplanninganddevelopment.
Productplanningembracesallactivitiesthatdetermineacompany’slike
ofproducts.Itinclude-

a)

Planninganddevelopinganewproduct;
Planninganddevelopinganewproduct;
ofproducts.Itinclude- a) Planninganddevelopinganewproduct; b)Modificationofexistingproductlines;and c)

b)Modificationofexistingproductlines;and

c)

Eliminationofunprofitableitems.

Product development encompasses the technical activities of productresearch,engineeringanddecision.
Product development encompasses the technical activities of
productresearch,engineeringanddecision.

Thethirdaspectofproductisproductmixpoliciesandstrategies.

Productmixreferstothecompositeofproductsofferedforsalebya company.ForexampleGodrejcompanyofferscosmetics,steelfurnitures,
Productmixreferstothecompositeofproductsofferedforsalebya
company.ForexampleGodrejcompanyofferscosmetics,steelfurnitures,
officeequipments,locksetc.withmanyitemsineachcategory.
Theproductmixisfourdimensional.Ithasbreadth,length,depth andconsistency. Yetanotherintegralpartofproductispackaging.
Theproductmixisfourdimensional.Ithasbreadth,length,depth
andconsistency.
Yetanotherintegralpartofproductispackaging.
PRICE

Thesecondelementofmarketingmixisprice.Pricestandsforthe

monetaryvaluethatcustomerspaytoobtaintheproduct.Inpricing,the

companymustdeterminetherightpriceforitsproductsandthendecide
companymustdeterminetherightpriceforitsproductsandthendecide
on strategies concerning retail and wholesale prices, discounts, allowancesandcreditterms.
on strategies concerning retail and wholesale prices, discounts,
allowancesandcreditterms.
Beforefixingpricesfortheproduct,thecompanyshouldbeclear aboutitspricingobjectivesandstrategies.Theobjectivesmaybesetlow
Beforefixingpricesfortheproduct,thecompanyshouldbeclear
aboutitspricingobjectivesandstrategies.Theobjectivesmaybesetlow
initialpriceandraisingitgraduallyorosethighinitialpriceandreducing
itgraduallyorfixingatargetrateofreturnorsettingpricestomeetthe
competitionetc.Buttheactualpricesettingisbasedonthreefactors
namelycostofproduction,levelofdemandandcompetition.
Regardingretailpricing,thecompanymayadopttwopolicies.One policy is that he may allow the retailers to fix any price
Regardingretailpricing,thecompanymayadopttwopolicies.One
policy is that he may allow the retailers to fix any price without
interferinginhisright.Anotherpolicyisthathemaywanttoexercise
controlovertheproducts.Discountsandallowancesresultinadeduction
fromthebaseprice.
PLACE Thethirdelementofmarketingmixisplaceorphysicaldistribution. Placestandsfor the variousactivitiesundertaken by
PLACE
Thethirdelementofmarketingmixisplaceorphysicaldistribution.
Placestandsfor the variousactivitiesundertaken by thecompany to
maketheproductaccessibleandavailabletotargetcustomers.Thereare
four different level channels of distribution. The first is zero-level
channel which means manufacture directly selling the goods to the
consumers.
manufacture directly selling the goods to the consumers. Thesecondisone-levelchannelwhichmeanssupplyingthegoods to

Thesecondisone-levelchannelwhichmeanssupplyingthegoods to the consumer through the retailer. The third is two-level channel whichmeanssupplyingthegoodstotheconsumerthroughwholesaler andretailer.Thefourthisthree-levelchannelwhichmeanssupplying

whichmeanssupplyingthegoodstotheconsumerthroughwholesaler andretailer.Thefourthisthree-levelchannelwhichmeanssupplying
whichmeanssupplyingthegoodstotheconsumerthroughwholesaler andretailer.Thefourthisthree-levelchannelwhichmeanssupplying
whichmeanssupplyingthegoodstotheconsumerthroughwholesaler andretailer.Thefourthisthree-levelchannelwhichmeanssupplying
goods to the consumers through wholesaler-jobber-retailer and consumer.
goods to the consumers through wholesaler-jobber-retailer and
consumer.
There are large-scale institutions such as departmental stores, chain stores, mail order business, super-market etc.
There are large-scale institutions such as departmental stores,
chain stores, mail order business, super-market etc. and small-scale
retail institutions such as small retail shop, automatic vending,
franchisingetc.Thecompanymustchosetodistributetheirproducts
throughanyoftheaboveretailinginstitutionsdependinguponthenature
oftheproducts,areaofthemarket,volumeofscaleandcostinvolved.
The actual operation of physical distribution system required company’s attention and decision-making in the areas
The actual operation of physical distribution system required
company’s attention and decision-making in the areas of inventory,
location of warehousing, materials handling, order processing and
transportation.
PROMOTION
PROMOTION
Thefourthelementofthemarketingmixispromotion.Promotion stands for the various activities undertaken by the company to
Thefourthelementofthemarketingmixispromotion.Promotion
stands for the various activities undertaken by the company to
communicatethemeritsofitsproductsandtopersuadetargetcustomers
tobuythem.Advertising,salespromotionandpersonalsellingarethe
majorpromotionalactivities.Aperfectcoordinationamongthesethree
activitiescansecuremaximumeffectivenessofpromotionalstrategy.
Forsuccessfulmarketing,themarketingmanagerahstodevelopabest marketingmixforhisproduct.
Forsuccessfulmarketing,themarketingmanagerahstodevelopabest
marketingmixforhisproduct.

REVIEWQUESTIONS:

marketingmixforhisproduct. REVIEWQUESTIONS: 1.Whatismarketsegmentation?Whatareitsbases?

1.Whatismarketsegmentation?Whatareitsbases?

2.Whatarethebenefitsofmarketsegmentation? 3.Define marketing mix. Briefly explain different elements of marketingmix.

2.Whatarethebenefitsofmarketsegmentation?

2.Whatarethebenefitsofmarketsegmentation? 3.Define marketing mix. Briefly explain different elements of marketingmix.

3.Define marketing mix. Briefly explain different elements of marketingmix.

LESSON–4
LESSON–4

MARKETINGENVIRONMENT

LearningObjectives
LearningObjectives

Afterreadingthislesson,youshouldbeabletounderstand–

The various micro environmental factors that affect the marketingsystem;
The various micro environmental factors that affect the
marketingsystem;
The various macro environmental forces that affect the system;and
The various macro environmental forces that affect the
system;and
Thestrategiestobeadoptedbythemarketingexecutiveson thefaceofchallengesposedbytheseenvironmentalforces.
Thestrategiestobeadoptedbythemarketingexecutiveson
thefaceofchallengesposedbytheseenvironmentalforces.
One of the major responsibilities of marketing executives is to monitorandsearchtheenvironmentwhichisconstantlyspinning
One of the major responsibilities of marketing executives is to
monitorandsearchtheenvironmentwhichisconstantlyspinning
outnewopportunities.Themarketingenvironmentalsospinsout
newthreatssuchasfinancial,economicpoliticalandenergycrisis
andfirmsfindtheirmarketscollapsing.Recenttimeshavebeen
markedbysuddenchangesinthemarketingenvironment,leading
Druckertodubitan‘AgeofDiscontinuityandTofflertodescribeit
asatimeof‘FeatureShock’.
Company marketers need to constantly monitor the changing environmentmorecloselysothattheywillbeabletoaltertheir
Company marketers need to constantly monitor the changing
environmentmorecloselysothattheywillbeabletoaltertheir
marketingstrategiestomeetnewchallengesandopportunitiesin
theenvironment.
Themarketingenvironmentcomprisesthe‘noncontrollable’actors and forces in response to which organizations design their
Themarketingenvironmentcomprisesthe‘noncontrollable’actors
and forces in response to which organizations design their
marketingstrategiesSpecifically,
‘Acompany’smarketingenvironmentconsistsoftheactors andforcesexternaltothemarketingmanagementfunctionofthe firm that
‘Acompany’smarketingenvironmentconsistsoftheactors
andforcesexternaltothemarketingmanagementfunctionofthe
firm that impinge on the marketing management’s ability to
develop and maintain successful transactions with its target
customers’.
The company’s marketing environment consists of micro environment and macro environment. The micro environment
The company’s marketing environment consists of micro
environment and macro environment. The micro environment
consistsoftheactorsinthecompany’simmediateenvironment
thataffectsitsabilitytoservethemarkets:thecompany,suppliers,
market intermediaries, customers, competitors and publics. The
macroenvironmentconsistsofthelargersocietalforcesthataffect
all of the actors in the company’s micro environment the
demographic,economic,physical,technological,political,legaland
socio-culturalforces.
ACTORSINTHECOMPANY’SMICROENVIRONMENT
ACTORSINTHECOMPANY’SMICROENVIRONMENT
socio-culturalforces. ACTORSINTHECOMPANY’SMICROENVIRONMENT Everycompany’sprimarygoalistoserveandsatisfyaspecifiedset

Everycompany’sprimarygoalistoserveandsatisfyaspecifiedset ofneedsofachosentargetmarket.Tocarryoutthistask,thecompany linksitselfwithasetofsuppliersandasetofmarketingintermediariesto reach its target customers. The suppliers – company – marketing

reach its target customers. The suppliers – company – marketing
reach its target customers. The suppliers – company – marketing
reach its target customers. The suppliers – company – marketing
intermediaries–customerschaincomprisesthecoremarketingsystemof
intermediaries–customerschaincomprisesthecoremarketingsystemof
thecompany.Thecompany’ssuccesswillbeaffectedbytwoadditional
groups namely, a set of competitors and a set of publics. Company
managementhastowatchandplanforallthesefactors.
SUPPLIERS
SUPPLIERS
Suppliersarebusinessfirmswhoprovidetheneededresourceto thecompanyanditscompetitorstoproducetheparticulargoodsand
Suppliersarebusinessfirmswhoprovidetheneededresourceto
thecompanyanditscompetitorstoproducetheparticulargoodsand
services. For example Bakery Desotta must obtain sugar, wheat,
cellophanepaperandothermaterialstoproduceandpackageitsbreads.
Labour,equipment,fuelelectreicityandotherfactorsofproductionare
alsotobeobtained.Nowthecompanymustdecidewhethertopurchase
ormakeitsown.Whenthecompanydecidestobuysomeoftheinputs,it
mustmakecertainspecificationcallfortenderetc.andthenitsegregates
thelistofsuppliers.Usuallycompanychoosethesupplierswhoofferthe
bestmixofquality,deliveryschedulecredit,guaranteeandlowcost.
bestmixofquality,deliveryschedulecredit,guaranteeandlowcost. Any sudden change in the ‘suppliers’ environment will

Any sudden change in the ‘suppliers’ environment will have a substanceimpactonthecompany’smarketingoperations.Sometimes someoftheinputstothecompanymightcostmoreandhencemanagers have continuously monitored the fluctuations in the suppliers side. Marketingmanagerisequallyconcernedwithsupplyavailability.Sudden supplyshortagelabourstrikesandothereventscaninterferewiththe fulfillmentofdeliverypromisecustomersandlosesalesintheshortrun and damage customer goodwill in long run. Hence many companies prefertobuyfrommultiplesourcestoavoidoverdependenceonanyone supplier.Sometimesevenfortheappendageservicestomarketinglike marketing research, advertising, sales training etc. the company use

marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
marketing research, advertising, sales training etc. the company use
servicefromoutside.Thisdependencymayalsocreatesomebottlenecks,
servicefromoutside.Thisdependencymayalsocreatesomebottlenecks,
attimes,duetothebehaviouroftheseagenciesandconsequentlyaffect
themarketingoperationsofthecompany.
COMPANY
COMPANY
Marketing management at any organisation, while formulating marketing plans have to take into consideration other
Marketing management at any organisation, while formulating
marketing plans have to take into consideration other groups in the
company, such as top management, finance, R&D, purchasing,
manufacturingandaccounting.Financedepartmenthastobeconsulted
forthefundsavailableforcarryingoutthemarketingplanapartfrom
others.R&Dhastobecontinuouslydoingnewproductdevelopment.
Manufacturinghastobecoordinatedbasedonthemarketdemandand
supplyoftheproducts.Accordinghastomeasurerevenuesandcoststo
helpmarketinginachievingitsobjectives.Usuallymarketingdepartment
has to face the bottlenecks put up by the sister departments while
designingandimplementingtheirmarketingplans.

MARKETINGINTERMEDIARIES

Channel members are the vanguard of the marketing implementationpart.Theyarethepeoplewhoconnectthecompanywith
Channel members are the vanguard of the marketing
implementationpart.Theyarethepeoplewhoconnectthecompanywith
thecustomers.Therearenumberofmiddlemenwhooperateinthiscycle.
Agentmiddlemenlikebrokersandagentsfindcustomersandestablish
contacts,merchantmiddlemenarethewholesalers,retailers,whotake
titletoandresellthemerchandise.Apartfromthesechannelmembers,
therearephysicaldistributionfirmswhoassistinstockingandmoving
goodsfromtheoriginallocationstotheirdestinations.Warehousefirms
storeandprotectgoodsbeforetheymovetothenextdestinations.There
storeandprotectgoodsbeforetheymovetothenextdestinations.There
arenumberoftransportingfirmsconsistsofrail,road,truckers,ship,
airline etc. that mover goods from one location to another. Every
companyhastodecideonthemostcost–effectivemeansoftransport
considering the costs, delivery, safety and speed. There are financial
intermediaries like banks, insurance companies, who support the
companybyprovidingfinanceinsurancecoveretc.
The behaviour and performance of all these intermediaries will affect the marketing operations of the
The behaviour and performance of all these intermediaries will
affect the marketing operations of the company and the marketing
executiveshavetoprudentlydealwiththem.

COMPETITORS

Ifonecompanyplansamarketingstrategyatoneside,thereare number of other companies in the same industry doing such other
Ifonecompanyplansamarketingstrategyatoneside,thereare
number of other companies in the same industry doing such other
calculations. Coke has competitors in Pepsi. Maruti has competitions
fromTataIndica,Santroetc.Notonlythatthecompetitioncomesfrom
thebrandedsegmentbutalsofromthegenericmarket,wherethereare
onlyfewbrandedproductsofricebuttherearenumerousgenericvariety
of rice according to the local tastes in each region the country.
Sometimes competition comes from different forms. Airlines have to
overcomecompetitionsnotonlyfromtheotherAirlinesbutalsofrom
Railways and Ships. Basically every company has to identify the
competitor,monitortheiractivitiesandcapturetheirmovesandmaintain
customer loyalty. Hence every company comes out with their own
marketingstrategies.
PUBLICS Apubliccanfacilitateorseriouslyaffectthefunctioningofthe
PUBLICS
Apubliccanfacilitateorseriouslyaffectthefunctioningofthe
company,PhilipKotlerdefinespublicasanygroupthathasanactualor
potential interest or impact on a company’s ability to achieve its
objectives. Kotler notes that there are different types of publics,
Governmentpublics,citizenactionpublics,localpublics,generalpublic
andinternalpublics.Since,thesuccessofthecompanywillbeaffected
byhowvariouspublicsviewtheiractivity,thecompanieshavetomonitor
thesepublics,anticipatetheirmovesdealingwiththeminconstructive
ways.

CUSTOMERS

Customersarethefulcrumaroundwhomthemarketingactivities oftheorganisationrevolve.Themarketerhastofacethefollowingtypes
Customersarethefulcrumaroundwhomthemarketingactivities
oftheorganisationrevolve.Themarketerhastofacethefollowingtypes
ofcustomers.

CustomerMarkets:Marketsforpersonalconsumption.

IndustrialMarkets:Goodsandservicesthatcouldbecomethepart ofaproductinthoseindustry.
IndustrialMarkets:Goodsandservicesthatcouldbecomethepart
ofaproductinthoseindustry.
InstitutionalBuyers:Institutionslikeschools,hospital,whichbuyin bulk.
InstitutionalBuyers:Institutionslikeschools,hospital,whichbuyin
bulk.
ResellerMarkets:Theorganizationsbuygoodsforresellingtheir products.
ResellerMarkets:Theorganizationsbuygoodsforresellingtheir
products.
GovernmentMarkets:Theypurchasetheproductstoprovidepublic services.
GovernmentMarkets:Theypurchasetheproductstoprovidepublic
services.
InternationalMarkets:ConsistsofForeignbuyersandGovernments.
InternationalMarkets:ConsistsofForeignbuyersandGovernments.

MACROENVIRONMENT

Macroenvironmentconsistsofsixmajorforcesviz,demographic,
Macroenvironmentconsistsofsixmajorforcesviz,demographic,
economic,physical,technological,political/legalandsocio-cultural.The
trendsineachmacroenvironmentcomponentsandtheirimplicationson
marketingarediscussedbelow:

DEMOGRAPHICENVIRONMENT

Demographyisthestudyofhumanpopulationintermsofsize, density, location, age, gender, occupation etc. The demographic
Demographyisthestudyofhumanpopulationintermsofsize,
density, location, age, gender, occupation etc. The demographic
environmentisofmajorinteresttomarketersbecauseitinvolvespeople
thepeoplemakeupmarkets.
thepeoplemakeupmarkets. Theworldpopulation andtheIndianpopulation in particularis

Theworldpopulation andtheIndianpopulation in particularis growingatanexplosiverate.Thishasmajorimplicationsforbusiness.A growing population means growing human needs. Depending on purchasingpowers,itmayalsomeangrowingmarketopportunities.On theotherhand,declineinpopulationisathreatsosomeindustrialand theboontoothers.Themarketingexecutivesoftoy-makingindustry spendalotofenergyandeffortsanddevelopedfashionabletoys,and evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly

evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
evenadvertise“Babiesareourbusiness-ouronlybusiness”,butquietly
dropped this slogan when children population gone down due to
dropped this slogan when children population gone down due to
decliningbirthrateandlatershiftedtheirbusinesstolifeinsurancefor
oldpeopleandchangedtheiradvertisementsloganas“thecompanyhas
notbabiestheover50s”.
Theincreaseddivorcerateshallalsohavetheimpactonmarketing decisions.Thehigherdivorcerateresultsinadditionalhousingunits,
Theincreaseddivorcerateshallalsohavetheimpactonmarketing
decisions.Thehigherdivorcerateresultsinadditionalhousingunits,
furniture,appliancesandotherhouse-holdappliances.Similarly,when
spouses work at two different places, that also results in additional
requirementforhousing,furniture,betterclothing,andsoon.
Thus, marketers keep close tract of demographic trends developments in their markets and accordingly evolve
Thus, marketers keep close tract of demographic trends
developments in their markets and accordingly evolve a suitable
marketingprogramme.

ECONOMICENVIRONMENT

Markets require purchasing power as well as people. Total purchasingpowerisfunctionsofcurrentincome,prices,savingsand
Markets require purchasing power as well as people. Total
purchasingpowerisfunctionsofcurrentincome,prices,savingsand
creditavailability.Marketersshouldbeawareoffourmaintrendsinthe
economicenvironment.
economicenvironment. (i)DecreaseinRealIncomeGrowth

(i)DecreaseinRealIncomeGrowth

Althoughmoneyincomerpercapitakeepsraising,realincomeper capitahasdecreasedduetohigherinflationrateexceedingthe
Althoughmoneyincomerpercapitakeepsraising,realincomeper
capitahasdecreasedduetohigherinflationrateexceedingthe
moneyincomegrowthrate,unemploymentrateandincreaseinthe
taxburden.
taxburden. These developments had reduced disposable personal income;

These developments had reduced disposable personal income; whichistheamountpeoplehaveleftaftertaxes.Further,many

These developments had reduced disposable personal income; whichistheamountpeoplehaveleftaftertaxes.Further,many
people have found their discretionary income reduced after meeting the expenditure for necessaries. Availability of
people have found their discretionary income reduced after
meeting the expenditure for necessaries. Availability of
discretionary income shall have the impact on purchasing
behaviourofthepeople.
shall have the impact on purchasing behaviourofthepeople. (ii)ContinuedInflationaryPressure

(ii)ContinuedInflationaryPressure

Thecontinuedinflationarypressurebroughtaboutasubstantial increase in the prices of several commodities. Inflation leads
Thecontinuedinflationarypressurebroughtaboutasubstantial
increase in the prices of several commodities. Inflation leads
consumerstoresearchforopportunitiestosavemoney,including
buyingcheaperbrands,economysizes,etc.

(iii)

LowSavingsandHighDebt

Consumer expenditures arealso affected byconsumers savings anddebt patterns. Thelevel of savingsandborrowings among
Consumer expenditures arealso affected byconsumers savings
anddebt patterns. Thelevel of savingsandborrowings among
consumersaffectthemarketing.Whenmarketersmakeavailable
highconsumercredit,itincreasesmarketopportunities.

(iv)

ChangingConsumerExpenditurePatterns

(iv) ChangingConsumerExpenditurePatterns Consumption expenditure patters in major goods and services

Consumption expenditure patters in major goods and services categorieshavebeenchangingovertheyears.Forinstance,when familyincomerises,thepercentagespentonfooddeclines,the percentagespentonhousingandhouseholdoperationsremain

familyincomerises,thepercentagespentonfooddeclines,the percentagespentonhousingandhouseholdoperationsremain
familyincomerises,thepercentagespentonfooddeclines,the percentagespentonhousingandhouseholdoperationsremain
familyincomerises,thepercentagespentonfooddeclines,the percentagespentonhousingandhouseholdoperationsremain
constant,andthepercentagespentonothercategoriessuchas transportationandeducationincrease.
constant,andthepercentagespentonothercategoriessuchas
transportationandeducationincrease.
Thesechangingconsumerexpenditurepatternshasanimpacton marketing and the marketing executives need to know such
Thesechangingconsumerexpenditurepatternshasanimpacton
marketing and the marketing executives need to know such
changesineconomicenvironmentfortheirmarketingdecisions.
PHYSICALENVIRONMENT
PHYSICALENVIRONMENT
There are certain finite renewable resources such as wood and otherforestmaterialswhicharenowdearthincertainpartsofworld.
There are certain finite renewable resources such as wood and
otherforestmaterialswhicharenowdearthincertainpartsofworld.
Similarly there are finite non-renewable resources like oil coal and
variousminerals,whicharealsonotshortinsupply.Insuchcases,the
marketershavetofindoutsomealternativeresources.Forinstance,the
marketersofwoodenchairs,duetoshortageandhighcostofwood
shiftedtosteelandlateronfiberchairs.Similarlyscientistsalloverthe
worldareconstantlytryingtofindoutalternativesourcesofenergyfor
oilduetodearthinsupply.
Therehasbeenincreaseinthepollutionlevelsinthecountrydue to certain chemicals. In Mumbai-Surat-Ahemedabed area, are facing
Therehasbeenincreaseinthepollutionlevelsinthecountrydue
to certain chemicals. In Mumbai-Surat-Ahemedabed area, are facing
increasedpollutionduetothepresenceofdifferentindustries.
Marketers should be aware of the threats and opportunities
Marketers should be aware of the threats and opportunities
associatedwiththephysicalenvironmentandhavetofindouralternative
sourcesofphysicalresources.

SOCIOCULTURALENVIRONMENT

The socio-cultural environment comprises of the basic beliefs, valuesandnormswhichshapesthepeople.Someofthemaincultural
The socio-cultural environment comprises of the basic beliefs,
valuesandnormswhichshapesthepeople.Someofthemaincultural
characteristicsandtrendswhichareofinteresttothemarketersare:
characteristicsandtrendswhichareofinteresttothemarketersare: (i)CoreCulturalValues

(i)CoreCulturalValues

Peopleinagivensocietyholdmanycorebeliefsandvalues,that willtendtopersist.People’ssecondarybeliefsandvaluesaremore open
Peopleinagivensocietyholdmanycorebeliefsandvalues,that
willtendtopersist.People’ssecondarybeliefsandvaluesaremore
open to change. Marketers have more chances of changing
secondaryvaluesbutlittlechanceofchangingcorevalues.
secondaryvaluesbutlittlechanceofchangingcorevalues. (ii)EachCultureConsistsofSub-Cultures Each society contains

(ii)EachCultureConsistsofSub-Cultures

Each society contains sub-cultures, i.e. groups of people with shared value systems emerging out of
Each society contains sub-cultures, i.e. groups of people with
shared value systems emerging out of their common life
experiences,beliefs,preferencesandbehaviors.Totheextentthat
sub-cultural groups exhibit different wants and consumption
behaviour, marketers can choose sub-cultures as their target
markets.
Secondaryculturalvaluesundergochangesovertime.Forexample
Secondaryculturalvaluesundergochangesovertime.Forexample
‘video-games’,‘playboymagazines’andotherculturalphenomena
haveamajorimpactonchildrenhobbies,clothingandlifegoals.
Marketers have a keen interest in anticipating cultural shiftsin
ordertoidentifynewmarketingopportunitiesandthreats.

TECHNOLOGICALENVIRONMENT

Technologyadvancementhasbenefitedthesocietyandalsocaused damages.Openheartsurgery,satellitesallweremarvelsoftechnology,
Technologyadvancementhasbenefitedthesocietyandalsocaused
damages.Openheartsurgery,satellitesallweremarvelsoftechnology,
buthydrogenbombwasonthebittersideoftechnology.Technologyis
acceleratingatapacethemanyproductsseenyester-yearshavebecome
obsoletenow.AlvinTofflerinhisbook‘TheFutureShock’hasmadea
remark on the accelerative thrust in the invention, exploitation and
diffusionofnewtechnologies.Therecouldbeanewrangeofproducts
andsystemsduetotheinnovationsintechnology.
This technology developments has tremendous impact on marketing and unless the marketing manager cope up
This technology developments has tremendous impact on
marketing and unless the marketing manager cope up with this
developmentbecannotsurvivein thecompetitivemarket.

POLITICALANDLEGALENVIRONMENT

Marketingdecisionsarehighlyaffectedbychangesinthepolitical/ legalenvironment.Theenvironmentismadeupoflawsandgovernment
Marketingdecisionsarehighlyaffectedbychangesinthepolitical/
legalenvironment.Theenvironmentismadeupoflawsandgovernment
agencies that influence and constraint various organizations and
individualsinsociety.
constraint various organizations and individualsinsociety. Legislations affecting business has steadily increased over

Legislations affecting business has steadily increased over the years. The product the consumes and the society against unethical business behaviour and regulates the functioning of the business organizations. Removal of restrictions to the existing capabilities, enlargementof thespheresopentoMRTPandFEMAcompaniesand broadbandingofindustriallicensesweresomeoftheschemesevolved by the government. The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems and

The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems
institutionsinthecountry.Someoftheactswhichhavedirectbearingon the marketing of the company include, the Prevention of
institutionsinthecountry.Someoftheactswhichhavedirectbearingon
the marketing of the company include, the Prevention of Food
Adulteration Act (1954), The Drugs and Cosmetics Act (1940), The
Standard Weights and Measures Act (1956) etc. The Packaged
Commodities(Regulative)Order(1975)providesforclearlymakingthe
pricesonallpackagedgoodssoldinretailexcludingcertainitems.
Similarly, when the government changes, the policy relating to
Similarly, when the government changes, the policy relating to
commerce,trade,economyandfinancealsochangesresultinginchanges
inbusiness.Veryoftenitbecomesapoliticaldecisions.Forinstance,one
Government introduce prohibition, and another government lifts the
prohibition.Also,oneGovernmentadoptsrestrictivepolicyandanother
Governmentadoptsliberaleconomicpolicies.Allthesewillhaveimpact
onbusiness.
Hence,themarketingexecutivesneedsagoodworkingknowledge ofthemajorlawsaffectingbusinessandhavetoadaptthemselvesto
Hence,themarketingexecutivesneedsagoodworkingknowledge
ofthemajorlawsaffectingbusinessandhavetoadaptthemselvesto
changinglegalandpoliticaldecisions.
Alltheabovemicroenvironmentalactorsandmacroenvironmental forces affect the marketing systems individually and
Alltheabovemicroenvironmentalactorsandmacroenvironmental
forces affect the marketing systems individually and collectively. The
marketingexecutivesneedtounderstandtheopportunitiesandthreats
caused by these forces and accordingly they must be able to evolve
appropriatemarketingstrategies.

REVIEWQUESTIONS:

1.Explain theimpact of micro environmental actorson marketing managementofafirm. ofafirm.

1.Explain theimpact of micro environmental actorson marketing managementofafirm.

ofafirm.
ofafirm.

2.Discusshowthemacroenvironmentforcesaffecttheopportunities

LESSON–5
LESSON–5

CONSUMERSPURCHASEPROCESS

LearningObjectives
LearningObjectives

Afterreadingthislesson,youshouldbeabletounderstand-

Thedifferentstagesinvolvedinpurchasedprocess;

Thesuitablestrategytobeevolvedbythemarketateachstageof purchaseprocess.
Thesuitablestrategytobeevolvedbythemarketateachstageof
purchaseprocess.
In order to understand consumer behaviour, it is essential to understand the buying process. Numerous
In order to understand consumer behaviour, it is essential to
understand the buying process. Numerous models of consumer
behaviourdepictingthebuyingprocessweredevelopovertheyears.
AmongallthesemodelstheonegivenbyHowardandShethisthe
mostcomprehensiveandlargely approvedmodel. However,as the
Howard-Sheth model is a very sophisticated model based on it a
simplifiedisgivenbelow:
A simple model of consumer decision-making given the figure
reflectsthenotionofthecognateorproblem-solvingconsumer.This
modelhasthreecomponents:Input,ProcessandOutput.
Input:
The input component of consumer decision-making model comprisesofmarketing-mixactivitiesandsocio-culturalinfluences.
The input component of consumer decision-making model
comprisesofmarketing-mixactivitiesandsocio-culturalinfluences.
Process The process component of model is concerned with ‘how’ consumer make decisions. This involves
Process
The process component of model is concerned with ‘how’
consumer make decisions. This involves understanding of the
influences of psychological factors on consumer behaviors. The
processcomponentofaconsumerdecision-makingmodelconsistsof
threestages:Needrecognition,informationsearchandevaluationof
alternatives.

AModelofConsumerDecision-Making

Input ExternalInfluences
Input
ExternalInfluences
Process ConsumerDecision-making
Process
ConsumerDecision-making
Output Post-decision B ehaviour
Output
Post-decision
B
ehaviour

Purchase

Firm’sMarketing

Efforts

1. Product

2. Price

3. Place

4. Promotion

Socio-Cultural

Environment

1. Family

2. SocialClass

Need

Recognition Information Search
Recognition
Information
Search

Evaluationof

Alternativene

Recognition Information Search Evaluationof Alternativene Psychological Factors 1. Trial 2. Repeat Purchas e Post

Psychological

Factors

1. Trial

2. Repeat

Purchas

e

Psychological Factors 1. Trial 2. Repeat Purchas e Post Purchase Evaluation 1. Motivatio n 2. Perceptio

Post

Purchase

Evaluation

1. Trial 2. Repeat Purchas e Post Purchase Evaluation 1. Motivatio n 2. Perceptio n 3.

1. Motivatio

n

2.

Perceptio

n

e Post Purchase Evaluation 1. Motivatio n 2. Perceptio n 3. Learning Experien ce 4. Personalit

3.

Learning

Experien ce 4. Personalit

y

Purchase Evaluation 1. Motivatio n 2. Perceptio n 3. Learning Experien ce 4. Personalit y ss

ss

3. Cultureand

Sub-culture

Output: Theoutputcomponentoftheconsumerdecision-makingmodel concerns two more stages of purchase process activity:
Output:
Theoutputcomponentoftheconsumerdecision-makingmodel
concerns two more stages of purchase process activity: Purchase
behaviourandpost-purchasebehaviour.
Thebuyingprocessthus,iscomposedofanumberofstagesandis influencedbyaindividual’spsychologicalframeworkcomposedofthe
Thebuyingprocessthus,iscomposedofanumberofstagesandis
influencedbyaindividual’spsychologicalframeworkcomposedofthe
individual’spersonality,motivations,perceptionsandattitudes.The
variousstagesofthebuyingprocessare:
variousstagesofthebuyingprocessare: 1.NeedRecognition 2.InformationSearch

1.NeedRecognition

variousstagesofthebuyingprocessare: 1.NeedRecognition 2.InformationSearch 3.EvaluationofAlternatives

2.InformationSearch

1.NeedRecognition 2.InformationSearch 3.EvaluationofAlternatives 4.PurchaseBehaviour

3.EvaluationofAlternatives

2.InformationSearch 3.EvaluationofAlternatives 4.PurchaseBehaviour 5.Post-PurchaserEvaluation

4.PurchaseBehaviour

3.EvaluationofAlternatives 4.PurchaseBehaviour 5.Post-PurchaserEvaluation 1.NeedRecognition

5.Post-PurchaserEvaluation

4.PurchaseBehaviour 5.Post-PurchaserEvaluation 1.NeedRecognition

1.NeedRecognition

5.Post-PurchaserEvaluation 1.NeedRecognition Therecognitionofneeditslikelytooccurwhenaconsumerisfaced

Therecognitionofneeditslikelytooccurwhenaconsumerisfaced withaproblem,andiftheproblemisnotsolvedorneedsatisfied,the consumerbuildsuptension.Example:Aneedforacookinggasfor busyhousewife. The needs can be triggeredby internal(hunger, thirst, sex) and external stimuli (neighbor’s new Car or TV). The marketers need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach

need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach
need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach
need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach
need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach
need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach
need is to identify the circumstance that trigger the particularneedorinterestinconsumers.Themarketersshouldreach
consumerstofindoutwhatkindsoffeltneedsorproblemarose,what broughtthemabouthowtheyledtothisparticularproduct.
consumerstofindoutwhatkindsoffeltneedsorproblemarose,what
broughtthemabouthowtheyledtothisparticularproduct.
broughtthemabouthowtheyledtothisparticularproduct. 2.InformationSearch

2.InformationSearch

Theconsumerwillsearchforrequiredinformationabouttheproduct tomakearightchoice.How muchsearchheundertakesdepends
Theconsumerwillsearchforrequiredinformationabouttheproduct
tomakearightchoice.How muchsearchheundertakesdepends
uponthestrengthofhisdrive,theamountofinformationheinitially
has,theeaseofobtainingadditionalinformation,thevalueheplaces
onadditionalinformationandthesatisfactionhegetsfromsearch.

Thefollowingarethesourcesofconsumerinformation:

PersonalSources : Family, friends, neighbours, past experience.
PersonalSources :
Family,
friends, neighbours,
past
experience.
CommercialSources:Advertising,salespeople,dealers,displays
CommercialSources:Advertising,salespeople,dealers,displays
PublicSources: Massmedia,consumerwelfareorganisation.
PublicSources:
Massmedia,consumerwelfareorganisation.
Thepracticalimplicationisthatacompanydesignitsmarketing mixtogetitsbrandintotheprospect’sawarenessset,consideration
Thepracticalimplicationisthatacompanydesignitsmarketing
mixtogetitsbrandintotheprospect’sawarenessset,consideration
set and choice set. If the brand fails to get into these sets, the
companylossesitsopportunitytoselltotheconsumer.
Asforthesourcesoftheinformationusedbytheconsumer,the marketershouldidentifythemcarefullyandevaluatetheirrespective
Asforthesourcesoftheinformationusedbytheconsumer,the
marketershouldidentifythemcarefullyandevaluatetheirrespective
importanceassource ofinformation.
importanceassource ofinformation. 3.EvaluationofAlternatives

3.EvaluationofAlternatives

When evaluatingpotentialalternatives,consumerstendtousetwo typesofinformation(i)alistofbrandsfromwhichtheyplantomake
When evaluatingpotentialalternatives,consumerstendtousetwo
typesofinformation(i)alistofbrandsfromwhichtheyplantomake
theirselection (the evokeset)and(ii)thecriteriatheywilluseto
evaluateeachbrand.Theevokesetisgenerallyonlyapart–asubject
ofallthebrandsofwhichtheconsumerisawares.
Thecriteriausedbytheconsumersinevaluatingthebrandsare usuallyexpressedintermsofproductattributesthatareimportantto
Thecriteriausedbytheconsumersinevaluatingthebrandsare
usuallyexpressedintermsofproductattributesthatareimportantto
them.Theattributesofinteresttobuyersinsomefamiliarproducts
are:
Two-wheeler : Fueleconomy,pullingcapacity,price
Two-wheeler
:
Fueleconomy,pullingcapacity,price
Computers : Memorycapacity,graphiccapability, software availability
Computers
:
Memorycapacity,graphiccapability,
software
availability
Mouthwash : capacity,price, Colour, effectiveness, germ-killing, taste/flavour
Mouthwash
:
capacity,price,
Colour, effectiveness, germ-killing,
taste/flavour
Consumerswillpaythemostattentiontothoseattributesthatare concernedwiththeirneeds.
Consumerswillpaythemostattentiontothoseattributesthatare
concernedwiththeirneeds.
concernedwiththeirneeds. 4.PurchaseBehaviour

4.PurchaseBehaviour

Consumersmaketwotypesofpurchasestrialpurchasesandrepeat purchases. If he product is found satisfactory during trial,
Consumersmaketwotypesofpurchasestrialpurchasesandrepeat
purchases. If he product is found satisfactory during trial,
consumers are likely to repeat the purchase. Repeat purchase
behaviouriscloselyrelatedtotheconceptofbrandloyalty.For
certainproductssuchaswashingmachineorrefrigerator,trialis
not feasible and the consumer usually moves directly from evaluationtoactualpurchase.Aconsumerwhodecidestopurchase
not feasible and the consumer usually moves directly from
evaluationtoactualpurchase.Aconsumerwhodecidestopurchase
willmakebranddecision,quantitydecision,dealerdecision,timing
decisionandpaymentmethoddecision.
decisionandpaymentmethoddecision. 5.Post-PurchaseEvaluation

5.Post-PurchaseEvaluation

Theconsumer’ssatisfactionordissatisfactionwiththeproductwill
Theconsumer’ssatisfactionordissatisfactionwiththeproductwill
influencesubsequentbehaviour.Therearethreepossibleoutcomesof
post-purchaseevaluationsbyconsumersinlightoftheirexperience
withtheproducttrialpurchase.
thattheactualperformancematchesthestandardleadingto neutralfeeling;
thattheactualperformancematchesthestandardleadingto
neutralfeeling;
thattheperformanceexceedsthestandardsleadingtopositive disconfirmation,i.e.satisfaction;and
thattheperformanceexceedsthestandardsleadingtopositive
disconfirmation,i.e.satisfaction;and
thattheperformanceisbelowthestandard,causingnegative disconfirmation,i.e.dissatisfaction.
thattheperformanceisbelowthestandard,causingnegative
disconfirmation,i.e.dissatisfaction.
Iftheproductlivesuptoexpectationsoftheconsumers,theywill probablybuyitagain.Iftheproductsperformanceisdisappointing, the
Iftheproductlivesuptoexpectationsoftheconsumers,theywill
probablybuyitagain.Iftheproductsperformanceisdisappointing,
the will search for more suitable alternative brand. Whether
satisfiedordissatisfiedwiththeproduct,theconsumerwillpasson
theiropiniononothers.
The marketers can send a letter congratualating the consumers for having selected a fine product.
The marketers can send a letter congratualating the
consumers for having selected a fine product. They can place
advertisements showing satisfied owners. They can solicit
customerssuggestionsforimprovements.Atlast,themarketers
canalsohelptheconsumerstodisposeoftheusedbrand,for
example,byBuy-back-method.
Anillustration:
Anillustration:
To illustrate the consumer’s purchase decision process, considerthestagesofanewcarpurchase.Thedecisionprocessbegins
To illustrate the consumer’s purchase decision process,
considerthestagesofanewcarpurchase.Thedecisionprocessbegins
when the consumer experiences a need or desire for new car. This
problem recognition phase may be initiated for any one of several
reasons–becauserecentrepairbillshavebeenhigh,becausethepresent
car needsanewsetoftires,becausethepresentcarhasbeeninan
accident,orbecausetheneighborhasjustbroughtanewcar.Whatever
thestimulus,theindividualperceivesadifferencesorconflict,between
theidealandtheactualsaleofaffairs.
When he decided to go in for a new car, he starts searching for information.
When he decided to go in for a new car, he starts searching for
information. The consumer may collect information through various
sources such as, automobile magazine, fiends, family members,
automobilecompanies,automobileadvertisementsandsoon.
Aftercollectingtheinformationaboutdifferentautomobiles,heevaluates thealternativebrands
Aftercollectingtheinformationaboutdifferentautomobiles,heevaluates
thealternativebrands andmodelsofcars.Atthispoint,theconsumer
mustdecideonthecriteriathatwillgoverntheselectionofthecar.These
criteria may include price, kilometer per liter, options available,
availabilityofservicenetwork,andfinally,optionoffamilyandfriends.
Duringthepurchasedecisionstage,theconsumeractuallymakesthe purchase decision – whether to buy or not to buy. If the
Duringthepurchasedecisionstage,theconsumeractuallymakesthe
purchase decision – whether to buy or not to buy. If the consumer
decidestobuythecar,thenadditionaldecisionsmustbemaderegarding
typesormodelofcar,whentheformwhomthecarshouldbepurchased
andhowthecarcouldbepaidfor.Hopefullytheoutcomeispositiveand
theconsumerfeelsthattherightdecisionshavebeenmade.
Duringthepost-purchasestage,asatisfiedcustomerismorelikelyto takeaboutthejoysofanewcarpurchase.Ontheotherhand,problems
Duringthepost-purchasestage,asatisfiedcustomerismorelikelyto
takeaboutthejoysofanewcarpurchase.Ontheotherhand,problems
maydeveloportheconsumermaybegintofeelawrongdecisionhas
beenmade.Adissatisfiedconsumerwillprobablyattempttodissuade
friendsandassociatesfrombuyinganewcar,oratleastwillcaution
themagainstmakingthesamemistake.
PurchaseDecisionProcessActivitiesofCar
PurchaseDecisionProcessActivitiesofCar
Problem RecognitionStage
Problem
RecognitionStage
Information SearchStage
Information
SearchStage
Alternative EvaluationStage
Alternative
EvaluationStage
Purchase DecisionStage
Purchase
DecisionStage
NeedforaNewCar
NeedforaNewCar
NeedforaNewCar
NeedforaNewCar
NeedforaNewCar
NeedforaNewCar
NeedforaNewCar
EvaluationStage Purchase DecisionStage NeedforaNewCar Information Collectionaboutthe Cars Criteriafor Selection
EvaluationStage Purchase DecisionStage NeedforaNewCar Information Collectionaboutthe Cars Criteriafor Selection
EvaluationStage Purchase DecisionStage NeedforaNewCar Information Collectionaboutthe Cars Criteriafor Selection
Information Collectionaboutthe Cars
Information
Collectionaboutthe
Cars
NeedforaNewCar Information Collectionaboutthe Cars Criteriafor Selection PurchaseDecision WhatTypeofCar Yes
Criteriafor Selection
Criteriafor
Selection
Information Collectionaboutthe Cars Criteriafor Selection PurchaseDecision WhatTypeofCar Yes No Automobile
PurchaseDecision
PurchaseDecision
Cars Criteriafor Selection PurchaseDecision WhatTypeofCar Yes No Automobile magazines Automobile
WhatTypeofCar
WhatTypeofCar
Yes No Automobile magazines Automobile companies Promotionliterature and advertisements friendsandfamily
Yes
No
Automobile
magazines
Automobile
companies
Promotionliterature
and advertisements
friendsandfamily
Price Colour and appearance Kilometersperlitre Expertopinion
Price
Colour
and
appearance
Kilometersperlitre
Expertopinion
Buy Donotbuy
Buy
Donotbuy
Economy Deluxeversion Luxuryversions
Economy
Deluxeversion
Luxuryversions
Now TimingofPurchase Later ModelA WhichCar ModelB ModelC Other DealerA WheretoPurchase DealerB Decisions
Now
TimingofPurchase
Later
ModelA
WhichCar
ModelB
ModelC
Other
DealerA
WheretoPurchase
DealerB
Decisions
HowtoFinance
HowtoFinance
Ownfunds Loanablefunds Satisfied
Ownfunds
Loanablefunds
Satisfied
Degreeof
Degreeof
Degreeof
Degreeof
Satisfaction REVIEWQUESTIONS:
Satisfaction
REVIEWQUESTIONS:
dissatisfied
dissatisfied
Satisfaction REVIEWQUESTIONS: dissatisfied 1.Explainthevariousstepsinvolvedinpurchaseprocess.

1.Explainthevariousstepsinvolvedinpurchaseprocess.

toformulatemarketingstrategy?
toformulatemarketingstrategy?

2.Howdoesanunderstandingofpurchaseprocesshelpthemarketer

LESSON–6
LESSON–6
CONSUMERBEHAVIOURS
CONSUMERBEHAVIOURS
LearningObjectives
LearningObjectives

Afterreadingthislesson,youshouldbeabletounderstand–

Thefactorsinfluencingconsumerbehaviour;

Theirimplicationsonmarketingdecisions-making.

CONSUMERBEHAVIOUR

Underthemodernmarketing‘Consumer’isthefulcrum;heisthe lifeblood;heisverypurposeofthebusinessandhencethebusiness
Underthemodernmarketing‘Consumer’isthefulcrum;heisthe
lifeblood;heisverypurposeofthebusinessandhencethebusiness
firmshavetolistenconsumervoices,…….Understandhisconcerns.His
needshavetobefocusedandhisrespecthastobeearned.Hehastobe
closelyfollowed–whathewants…….when,whereandhow.Thenew
businessphilosophyisthattheeconomicandsocialjustificationoffirm’s
existenceliesinsatisfactionofconsumerwants.CharlesGMortimerhas
rightlypointedourthat,‘insteadoftryingwhatiseasiestforustomake,
wemustfindourmuchmoreaboutwhattheconsumeriswillingto
buy…….wemustapplyourcreativenessmoreintelligentlytopeopleand
theirwantsandneedsratherthantoproducts”.Toachieveconsumer
satisfactions,themarketershouldknow,understandconsumerbehaviour
– their characteristics, needs, attitudes and so on. But, the study of
– their characteristics, needs, attitudes and so on. But, the study of
consumersbehaviourisnotaneasytaskastoinvolvescomplexsystem
ofinteractionofvariousfactorsnamelysociological,cultural,economical
andpsychological.

FACTORSINFLUENCINGCONSUMERBEHAVIOUR

Consumersarestimulatedbytwotypesofstimuli–internaland environmental. The internal influences comprise of motivation,
Consumersarestimulatedbytwotypesofstimuli–internaland
environmental. The internal influences comprise of motivation,
perception,learningandattitudes–allconceptsdrawnfromthefieldof
psychology. The environmental influences include cultural, social and
economical. Experts in these areas attempts to explain why people
behave as they do as buyers. All these influences interact in highly
complexways,affectingtheindividual’stotalpatternsofbehaviouras
wellashisbuyingbehaviour.
CulturalFactors
CulturalFactors
wellashisbuyingbehaviour. CulturalFactors Cultureisthemostfundamentaldeterminantofaperson’swants

Cultureisthemostfundamentaldeterminantofaperson’swants andbehaviour.Itencompassessetofvalues,ideas,customs,traditions and any other capabilities and habits acquired by an individual as a member of the society. Each culture contains smaller groups of subculturessuchasnationalculture,religiouscultureandsocialclass culturethatprovidesmorespecificidentificationandsocializationforits members. A subculture is a distinct cultural group existing as an

members. A subculture is a distinct cultural group existing as an
members. A subculture is a distinct cultural group existing as an
members. A subculture is a distinct cultural group existing as an
members. A subculture is a distinct cultural group existing as an
members. A subculture is a distinct cultural group existing as an
members. A subculture is a distinct cultural group existing as an
identifiablesegmentwithinalargerculture.Themembersofasubculture
identifiablesegmentwithinalargerculture.Themembersofasubculture
tendtoadheretoomanyoftheculturalmoresoftheoverallsociety,yet
theyalsoprofessbeliefs,valuesandcustomerswhichsetthemapart.An
understandingofsubcultureisimportanttomarketingmanagersbecause
the members of each subculture tend to show different purchase
behaviourpatterns.
Thus,theJapanesecultureprovidesforcertainmannersofdressing whiletheIndiancultureprovidesfordifferentpatterns.Inthesameway
Thus,theJapanesecultureprovidesforcertainmannersofdressing
whiletheIndiancultureprovidesfordifferentpatterns.Inthesameway
one’sreligiousaffiliationmayinfluenceone’smarketbehaviour.
The religious groups such as Hindus, Christians and Muslims
The religious groups such as Hindus, Christians and Muslims
possesdistinctculturalpreferences.Forinstance,Hindusconsiderwhite
andblackcoloursinauspiciousforbridesduringmarriage;whereasfor
Christianswhiteisaauspiciousbridaldressandblackisauspiciousfor
Muslims.
Social class may be brought of as a rather permanent and homogenousgroupofindividualswhohavesimilarbehaviour,interests
Social class may be brought of as a rather permanent and
homogenousgroupofindividualswhohavesimilarbehaviour,interests
andlife-styles.Sincepeoplenormallychoosetheirfriendsandassociate
onthebasisofcommonalityofinterests,socialclasseshaveatendency
to restrict interactions, especially with regard to social functions. In
addition,socialclassesarehierarchicalinnature;thuspeopleusually
positiontheirsocialfunctions.Inaddition,socialclassesarehierarchical
innature;thuspeopleusuallypositiontheirsocialgroupeitheraboveor
belowothergroups.Usuallysocialclassesaredividedintosix–upper,
lower-upper,upper-middle,lower-middle,upper-lowerandlower-lower.
Several research studies have pointed out that differences in consumer behaviour are largely an function
Several research studies have pointed out that differences in
consumer behaviour are largely an function of social class. The
differencesinbehaviourscanbetracesincommunicationskills,shopping
behaviours,leisureactivities,savingandspendinghabits.
Eachcultureevolvesuniquepatternofsocialconduct.Theprudent marketerhastoanalyzethesepatternstounderstandtheirbehaviourto
Eachcultureevolvesuniquepatternofsocialconduct.Theprudent
marketerhastoanalyzethesepatternstounderstandtheirbehaviourto
evolveasuitablemarketingprogramme.

SociologicalFactors

Thesociologicalfactorsareanothergroupoffactorsthataffectthe behaviourofthebuyers.Theseincludereferencegroups,familyandthe
Thesociologicalfactorsareanothergroupoffactorsthataffectthe
behaviourofthebuyers.Theseincludereferencegroups,familyandthe
roleandstatusofthebuyers.Thereferencegrouparethosegroupsthat
haveadirectorindirectinfluenceontheperson’sattitudes,opinionsand
values.Thesegroupsincludepeergroup,friendsandopinionleaders.For
instance, an individual’s buying behaviour for a footwear could be
influencedbyhisfriend,colleagueorneighbours.Similarly,Cinestars
andSportsheroesarealsoactingasreferencegroupstoinfluencebuyers.
WhileCinestarsareusedtoadvertisetoiletsoaps, softdrinks etc.,
Sportsheroesarefocusedtorecommendedtheproductsoftwowheelers
andfourwheelerstoinfluenceconsumers.Alsothephysiciansareused
asrefereesforinfluencingtheconsumersoftoothpaste.
A more direct influence on buying behaviour is one’s family members namely, spouse and children.
A more direct influence on buying behaviour is one’s family
members namely, spouse and children. The person will have certain
positioninhisfamily,thatiscalledastatusandhasadutyassigned–
thatisroleandthisstatusandrolealsodeterminebuyingbehaviour.For
instance,whilebuyingT.V.,clothingandotherhouse-holdappliances,
family members have a tremendous role in influencing the buyer
behaviour.Forexample,whilebuyingclothingmaterials,childrenmay
influenceparentsandparentsmayinfluencechildren.
The marketers, therefore, aim their marketing efforts to reach reference groups and through them reach
The marketers, therefore, aim their marketing efforts to reach
reference groups and through them reach the potential buyers. The
marketerneedstodeterminewhichmemberofafamilyhasthegreater
influenceonthepurchaseofaparticularproductandshouldtrytoreach
tothecustomertomarkethisproduct.

PersonalCharacteristics

An individual’s buying is also influenced by his personal
An individual’s buying is also influenced by his personal
characteristicssuchashisageandlifecyclestage,occupation,invome
andpersonality.Forexample,ifthetargetmarketiskids,theirfoodand
otherrequirementswillcertainlybedifferentfromagedpeople.Similarly,
behaviourandneeddiffersdependingonthenatureofoccupationofthe
buyers.Forexample,factoryworkersandotherdefencepeoplerequire
footwear of mainly durable type that could withstand serve strain,
whereas people with white color jobs require footwear of light and
fashionabletype.Hence,marketersshouldbytoidentifytheoccupational
groupsthathaveinterestintheirproductsandservices.Anorganisatoin
canevenspecializeinmanufacturingproductsneededbyaparticular occupationalgroup.
canevenspecializeinmanufacturingproductsneededbyaparticular
occupationalgroup.
Basically it is the level of income, its distribution and the
Basically it is the level of income, its distribution and the
consequentpurchasingpowerthatdeterminesone’sbuyingbehaviour.
Outoftheone’stotalincome,apartmaybesavedandtheremaining
partisavailableforspending.Againoutofthis,asizableparthastobe
reservedformeetingessentialexpensesanditisonlythebalance–the
individualhasthediscretiontospend.Anintelligentmarketerhasto
watchtheincome–savingtrendofhisconsumerandbasingonthat
evolveamarketingprogramme.
Eachpersonhasadistinctpersonalitythatwillinfluencehisbuying
Eachpersonhasadistinctpersonalitythatwillinfluencehisbuying
behaviour.Aperson’spersonalityisusuallydescribedintermsofsuch
traits as self-confidence, dominance, autonomy and adaptability.
Personalitycanbeausefulvariableinanalyzingconsumerbehaviour.

PsychologicalFactors

Psychologicalcharacteristicsplaythelargestandmostenduring rilein influencingthebuyerbehaviour.A person’sbuyingchoices
Psychologicalcharacteristicsplaythelargestandmostenduring
rilein influencingthebuyerbehaviour.A person’sbuyingchoices re
influenced by four major psychological processes – motivation,
perception,learningandattitudes.
processes – motivation, perception,learningandattitudes. Motivation is the ‘why’ of behaviour. According to one

Motivation is the ‘why’ of behaviour. According to one writer, “motivationsreferstothedrives,urges,wishesordesirewhichinitiate the sequence of the events knows as behaviour”. Motivation may be consciousorsubconscious–aforcethatunderlinesabehaviour.Itisthe complexnetworkofpsychologicalandphysiologicalmechanism.Motives can be instinctive or learned; conscious or unconscious, rational or

can be instinctive or learned; conscious or unconscious, rational or
can be instinctive or learned; conscious or unconscious, rational or
can be instinctive or learned; conscious or unconscious, rational or
can be instinctive or learned; conscious or unconscious, rational or
can be instinctive or learned; conscious or unconscious, rational or
irrational.Themostpopularhumanmotivationtheoriesareprofounded byMaslow’s,FreudsandHerzberg.
irrational.Themostpopularhumanmotivationtheoriesareprofounded
byMaslow’s,FreudsandHerzberg.
Maslowhasclassifiedhumanneedsintofivetypesintheorderof importance–basic,safety,social,esteemandselfactualizationneeds.
Maslowhasclassifiedhumanneedsintofivetypesintheorderof
importance–basic,safety,social,esteemandselfactualizationneeds.
The most urgent motive is acted upon first. If this is fulfilled, the
individualproceedstofulfillthenexthigherneed.Itisimportantforthe
marketer to understand the motives that lead consumers to make
purchasesandhemustbeabletoexplaintheprospectivebuyershow
besthisproductcansatisfyaparticularneed.Buthemustbesurethat
thetargetconsumershavealreadyfulfilledthepreviousneed.
Freud’sTheorydealswithsub-consciousfactors.Heassertsthat peoplearenotleakytobeconsciousoftherealmotiveguidingtheir
Freud’sTheorydealswithsub-consciousfactors.Heassertsthat
peoplearenotleakytobeconsciousoftherealmotiveguidingtheir
behaviour because these motives are often repressedfrom their own
consciousness.ThemostimportantimplicationofheFreudianmodelof
marketingisthathumanbeingsthemotivatedbysymbolicaswellasby
economicandfunctionalconcerns.Attimes,themarketinganalystmust
lookbeyondtheapparentreasonwhyanindividualpurchasedaproduct
inordertofindtherealreason.Onlythroughspecialmethodsofprobing
such as in-depth interviews, projective techniques their motives can
reallybediscoveredandunderstood.Themarketershouldbeawareof
theroleofvisualandtactileelementsintriggeringdeeperemotionsthat
canstimulateorinhibitpurchase.

FrederickHerzbergdevelopedatwotheoryofmotivationwhich

distinguishesbetweendissatisfiersandsatisfies.Theimplicationofthis
distinguishesbetweendissatisfiersandsatisfies.Theimplicationofthis
theoryisthatthemarketersshoulddotheirbesttopreventdissatifiers
theoryisthatthemarketersshoulddotheirbesttopreventdissatifiers
fromaffectingthebuyersandthenheshouldcarefullyidentifythemajor satisfiersormotivatorsofpurchase.
fromaffectingthebuyersandthenheshouldcarefullyidentifythemajor
satisfiersormotivatorsofpurchase.
Perceptionistheprocessbywhichindividualsbecomeawareof (thoughanyofthefivesenses)andgivemeaningtotheirenvironment.
Perceptionistheprocessbywhichindividualsbecomeawareof
(thoughanyofthefivesenses)andgivemeaningtotheirenvironment.
Several technical factors affect the way an object is perceived.
Several technical factors affect the way an object is perceived.
Thesefactorsdonotrefertotheproduct’stechnologyitself,butratherto
howtheindividualseestheobjects.Researchstudies,forexample,have
indicatedthatalargeandmulticolouredadvertisementisperceivedmore
quickly and remembered longer than a small black-and-white
advertisement.
Asecondimportantfactoristheindividual’smentalreadinessto perceive aproduct.Research has shown that buyers tend to
Asecondimportantfactoristheindividual’smentalreadinessto
perceive aproduct.Research has shown that buyers tend to become
“fixed”onamentalimage.Forexample,aconsumermaycontinueto
purchaseaparticularbrandevenaftertheconsumerknowsthatabetter
productcanbeboughtatalowerprice.Mentalreadinessisalsoaffected
by the buyer’s level of attention. Generally speaking, people have a
limitedattentionspan.Thatis,humanbeingsonlycomprehendalimited
numberofobjectsormessagesinagivenamountoftime.Also,people’s
attentiontendstoshiftquicklyformoneobjecttoanother.Theseaspects
ofperceptionsuggesttheimportanceofkeepingcommercialssimpleand
brief.
Social and cultural factors also shape perception. As already
Social and cultural factors also shape perception. As already
mentioned,cultureandsocialclasshaveasignificanteffectonhowand
whatconsumerspurchase.Asanillustration,consumersdifferastohow
important“upwardmobility”istothem.Personsinterestedinclimbing
thesocialladderswillperceivecertainproductsasinferioriftheyfeelthe membersoftheupperclassdonotpurchasethoseproducts.
thesocialladderswillperceivecertainproductsasinferioriftheyfeelthe
membersoftheupperclassdonotpurchasethoseproducts.
Past experience is a fourth factor influencing perception. To
Past experience is a fourth factor influencing perception. To
illustrate,apersonmayperceiveabrandoftoothpasteofhighquality
simplybecauseofpastfavourableexperiencewiththeproduct.Finally,
themoodoftheindividualisanimportantdeterminantofperception;a
personwhoisunhappy ordepressed mayfinditdifficulttosee the
positivesideof aproduct.
Perceptionhasthreebasiccharacteristics:itissubjective,selective
Perceptionhasthreebasiccharacteristics:itissubjective,selective
andsummative.Itissubjectivebecausenotwoindividualsperceivethe
sameobjectinthesameway.Peopletendtoseewhattheywanttoseen
andtohearwhattheywanttohear.
Perceptionisselectiveinthatonlyafewofthesignalsthatpeople receiveeachdayareconvertedintomessages.Wereceivebetween1,500
Perceptionisselectiveinthatonlyafewofthesignalsthatpeople
receiveeachdayareconvertedintomessages.Wereceivebetween1,500
and2,000advertisingsignalsperdaythroughexposuretobillboards,
storesigns.Andotherformsofmassmedia.Sinceitisnotpossibleto
dealmentallywithsomanymessages,ourmindseliminatemostofthem
fromconsciousawareness.Becauseofselectiveperception,advertising
managers must carefully choose their media and the timing and
placementofadvertise4mentsinordertomaximizeexposure.Inaddition,
iftheadvertisementisclutteredwithmanymessages,prospectivebuyers
willprobablynotbeabletorememberanyofthem.
Perception is summative in the sense that the reception and
Perception is summative in the sense that the reception and
recognitionofasignalisfrequentlyafunctionofthecumulativeeffectof
multiplesignals.Themoreoftenasignalisreceived,thegreaterthe chancethatitwillbeunderstood.
multiplesignals.Themoreoftenasignalisreceived,thegreaterthe
chancethatitwillbeunderstood.
Also,theprobabilitythatareceiverwillcorrectlyinterpretasignal
Also,theprobabilitythatareceiverwillcorrectlyinterpretasignal
isenhancedifthesignalissentthroughtwoormorechannels.Thesetwo
points suggest why television advertisers repeat their commercials
frequently.Alsothesalespersonwhowantstoensurethatamessageis
understoodmaysendthecustomeradirect-mailpromotionandthen
visitthecustomerpersonallytodemonstratetheproduct.
Learningis the changes thatoccur in an individual’sbehaviour
Learningis the changes thatoccur in an individual’sbehaviour
arisingfromexperience.Learningisproducedthroughtheinterplayof
drives,stimuli,cues,responsesandreinforcement.Adriveisastrong
internalstimulusimpellingactionsanditsbecomesamotivewhenit’s
directedtowardaparticulardrive-reducingstimulusobjects.Cuesare
minorstimulithedeterminewhen,whereandhowthepersonresponds.
Advertisementsfrequentlyserveascues.Ifapersonisthirty(drive),a
softdrinkadvertisementmayencouragetheviewertoreducethediveby
takingasoftdrinkeitherfromthefridge,orvisitingnearbycool-drink
bar.Thesecuescaninfluenceresponse,andiftheresponseifpositive,
theconsumerlearnsabouttheproductandbuysit,whichmeanshis
responseisreinforced.
Learningisbeststudiedfromtheperspectiveofstimulus-response theoryandcognitivetheory.
Learningisbeststudiedfromtheperspectiveofstimulus-response
theoryandcognitivetheory.
Stimulus-Response Theory: Stimulus response theory had its
Stimulus-Response Theory: Stimulus response theory had its
beginningwiththeRussianpsychologistPavlov.Inhisfamousexperiment,
Pavlovrangeabellimmediatelybeforefeedingadog.Eventually,thedog,
associatingthesoundofthebellwiththearrivalofdinner,learnedto
associatingthesoundofthebellwiththearrivalofdinner,learnedto
salivatewhenthebellwasrungregardlessofwhetherfoodwassupplied.
As result, Pavlov concluded that learning was largely an associative
process.
Thestimulus-responsemodelhastwoimportantimplicationsfor marketing. First, when a new product is introduced, the firm
Thestimulus-responsemodelhastwoimportantimplicationsfor
marketing. First, when a new product is introduced, the firm should
realize that if may have to extinguish brand habits and preferences
beforeattemptingtoformnewbuyinghabits.Inthislight,thefirmwill
wishtoseriouslyconsiderthestrengthofitscues.
Thesecondimplicationsformarketingisthatbecausepeopleare conditionedthroughrepetitionandreinforcement,asinglecue,suchasa
Thesecondimplicationsformarketingisthatbecausepeopleare
conditionedthroughrepetitionandreinforcement,asinglecue,suchasa
televisionadvertisement,maynotbesufficienttopenetrateanindividual’
s consciousness. Therefore, it is often necessary to repeat at
advertisementanumberoftimes.
Cognitive Theory: Cognitive theorists believe that habits are acquiredbyinsight,thinkingandproblemsolvingaswellasthrougha
Cognitive Theory: Cognitive theorists believe that habits are
acquiredbyinsight,thinkingandproblemsolvingaswellasthrougha
stimulus-response mechanism. From this perspective, the central
nervoussystemandthebrainbecomeveryimportantintermediatriesin
thelearningprocess.
Cognitive theory has several implications for marketing. For example,whenthefirmisdesigningasalesstrategy,itcannotassume
Cognitive theory has several implications for marketing. For
example,whenthefirmisdesigningasalesstrategy,itcannotassume
thattheconsumerisgoingtobuytheproductsimplybecauseofprevious
satisfaction with the firm. If the consumer has had successful
transactionsinthepast.Thiswillhelptheseller,butthebuyercanalso
beexpectedtoevaluatethefirm’sproductwithrespecttoitsmeritsas
well as compare it to competitor’s offerings. Therefore, in situations
well as compare it to competitor’s offerings. Therefore, in situations
wherecognitivelearningislikelytotakeplace,thesellermustdevelop
logical presentations which help the potential buyer to evaluate the
productinafavourablelight.
Thepracticalimportanceoflearningtheoryformarketersisthat theycanbuildupdemandforaproductbyassociatingitwithstrong,
Thepracticalimportanceoflearningtheoryformarketersisthat
theycanbuildupdemandforaproductbyassociatingitwithstrong,
drives,usingmotivatingcuesandprovidingpositivereinforcement.
A brief is a descriptive thought that a person hgksdj fjghdkf something. These beliefs may
A brief is a descriptive thought that a person hgksdj fjghdkf
something. These beliefs may be based on knowledge, fghj fghddgd
dfgdfgdfdgdfgdverymuchinterestedinthebeliefsofpeopleabouttheir
frgdgdffgdservicebecausetheyinfluencetheirbuyingbehaviour.Isome
of the fgdfgdf are wrong and inhibit purchase, the marketer should
launchacampaigntocorrectthesebeliefs.
An attitude describes a person’s enduring favourable or unfavorable cognitive evaluations, emotional feelings and
An attitude describes a person’s enduring favourable or
unfavorable cognitive evaluations, emotional feelings and actions
tendenciestowardsomeobjectoridea.Attitudesputthemintoaframe
ofmindoflikinganddislikinganobject,movingtowardorawayfromit.
This leads people to behave in fairly consistent way towards similar
objects.Hence,themarketershouldtrytofirhisproductintoexisting
attitudesratherthantotrytochangepeopleattitudes.
Fromtheabovediscussions,itbecomesobviousthatconsumer behaviour is influenced by economic, sociological and psychological
Fromtheabovediscussions,itbecomesobviousthatconsumer
behaviour is influenced by economic, sociological and psychological
factors.Butitiswrongtoassumethatconsumerbehaviourisinfluenced
byany‘one’ofthesefactors.Thefactisthatatapointoftimeandina
givensetofsituations,itisinfluencedbyasumtotalofthesediverseyet
interrelated factors. When a consumer is in the process of taking a
interrelated factors. When a consumer is in the process of taking a
purchasedecision,allthesefactorsareprovetoworksimultaneouslyand
influencehischoice.Butitispossiblethattherelativeimportanceof
these factors vary in a given situation. It is the intelligence of the
marketertofindoutthenatureandintensityoftheinfluenceexertedby
thesefactorsandtoformulateappropriatemarketingprogramme.

REVIEWQUESTIONS:

REVIEWQUESTIONS: 1.Bringouttheimportantofstudyingconsumerbehaviour. 2.Discuss

1.Bringouttheimportantofstudyingconsumerbehaviour.

1.Bringouttheimportantofstudyingconsumerbehaviour. 2.Discuss the influence of socio-cultural factors in

2.Discuss the influence of socio-cultural factors in determining consumerbehaviour.

of socio-cultural factors in determining consumerbehaviour. 3.Whatarethepsychologicalfactorsthatinfluencebuyersbehaviour?

3.Whatarethepsychologicalfactorsthatinfluencebuyersbehaviour?

LESSON7
LESSON7
MARKETINGINFORMATIONSYSTEMANDMARKETING
MARKETINGINFORMATIONSYSTEMANDMARKETING
LearningObjectives
LearningObjectives

RESEARCH

Afterreadingthislesson,youshouldbeabletounderstand–

Themeaningandtheneedformarketinginformationsystem;

Thecomponentsofthemarketinginformationsystem;
Thecomponentsofthemarketinginformationsystem;
Themeaningandimportanceofmarketingresearch;
Themeaningandimportanceofmarketingresearch;

Thescopeofmarketingresearch;

Theprocedureofdoingmarketingresearch.

To carry out marketing analysis, planning, implementation and control, the marketing manager needs to monitor
To carry out marketing analysis, planning, implementation and
control, the marketing manager needs to monitor and analyze the
behaviourofcustomers,competitors,dealersandtheirownsalesand
costdata.Inordertopursuemarketopportunitiesaswellasanticipate
marketing problems, they need to collect comprehensive and reliable
information.MarionHarperputitthisway:“Tomanageabusinesswellis
tomanageitsfuture;andtomanagethefutureistomanageinformation.
Many companies are studying the information needs of their executivesanddesigntheirMarketingInformationSystem(MKIS)tomeet
Many companies are studying the information needs of their
executivesanddesigntheirMarketingInformationSystem(MKIS)tomeet
thoseneeds.MarketingInformationSystemsisdefinedasfollows:
“Amarketinginformationsystemisacontinuingandinteracting structureofpeople,equipmentandprocedurestogather,sort,analyze,
“Amarketinginformationsystemisacontinuingandinteracting
structureofpeople,equipmentandprocedurestogather,sort,analyze,
evaluate,anddistributepertinent,timelyandaccurateinformationfor
usebymarketingdecisionmakerstoimprovetheirmarketingplanning,
implementationandcontrol.

Analysis

Planning

Implementati

on

Organisation

MarketingInformationSystems

Assessing Internal MarketingInformation Records IntelligenceNeeds

Internal MarketingInformation Records IntelligenceNeeds Distribution Information MarketingInformation Analysis
Internal MarketingInformation Records IntelligenceNeeds Distribution Information MarketingInformation Analysis
Internal MarketingInformation Records IntelligenceNeeds Distribution Information MarketingInformation Analysis

Distribution Information MarketingInformation

Analysis

Research

Marketing

Environmen

TargetM

channels

Competitor

s

Publics

Macro

Environmen

F

tchannels Competitor s Publics Macro Environmen F Marketing ASSESSINGINFORMATIONNEEDS

MarketingCompetitor s Publics Macro Environmen F t ASSESSINGINFORMATIONNEEDS

s Publics Macro Environmen F t Marketing ASSESSINGINFORMATIONNEEDS

ASSESSINGINFORMATIONNEEDS

Thecompanybeginstofindoutwhatinformantthemangerswould liketohave.Butmanagersdonotalwaysneedalltheinformationthey
Thecompanybeginstofindoutwhatinformantthemangerswould
liketohave.Butmanagersdonotalwaysneedalltheinformationthey
askforandtheymaynotaskforalltheyreallyneed.

DEVELOPINGINFORMATION

Theinformationneededbymarketingmanagerscanbeobtained from internal company records, marketing intelligence and marketing
Theinformationneededbymarketingmanagerscanbeobtained
from internal company records, marketing intelligence and marketing
research.Theinformationanalysissystemprocessesthisinformationto
makeitmoreusefultomanagers.

INTERNALRECORDSSYSTEM

Most marketing managers use internal records and reports regularlyespeciallyformakingday-to-dayplanning,implementationand
Most marketing managers use internal records and reports
regularlyespeciallyformakingday-to-dayplanning,implementationand
controldecisions.Internalrecordsinformationconsistsofinformation
gathered from sources within the company to evaluate marketing
performanceandtodetectmarketingproblemsandopportunities.

MARKETINGINTELLIGENCE

Marketingintelligenceiseverydayinformationaboutdevelopments in the marketing environment. The marketing intelligence
Marketingintelligenceiseverydayinformationaboutdevelopments
in the marketing environment. The marketing intelligence system
determines what intelligence is needed, collects it by searching the
environment and delivers it to marketing managers who need it.
Marketingintelligencecanbegatheredfromcompanyexecutives,dealers,
sales force, competitors, the accounts and annual reports of other
organizations etc. thathelpsmanagersprepare and adjust marketing
plans.
MARKETINGRESEARCH
MARKETINGRESEARCH
Marketing Research is used to identify and define marketing
Marketing Research is used to identify and define marketing
opportunitiesandproblems:togenerate,refineandevaluatemarketing
actions; to monitor marketing performance and to improve
understandingofthemarketingprocess.
INFORMATIONANALYSIS
INFORMATIONANALYSIS
Informationgatheredbythecompany’smarketingintelligenceand
Informationgatheredbythecompany’smarketingintelligenceand
marketingresearchsystemsrequiredetailedanalysis.Thisincludeuseof
advancedstatisticalanalysis. Informationanalysismightalsoinvolvea
collectionofmathematicalmodelsthatwillhelpmarketersmakebetter
decisions.Eachmodelrepresentssomerealsystem,process,oroutcome.
Thesemodelscanhelpanswerthequestionsofwhat,ifandwhichisbest.

DISTRIBUTINGINFORMATION

The information gathered through marketing intelligence and marketingresearchmustbedistributedtothemarketingmanagersatthe
The information gathered through marketing intelligence and
marketingresearchmustbedistributedtothemarketingmanagersatthe
right time. Most companies have centralized marketing information
systems that provide managers with regular performance reports,
intelligenceupdates,andreportsofresearchstudies.Mangersneedthese
routinereportsformakingregularplanning,implementation,andcontrol
decisions.
decisions. Developmentsininformationtechnologyhavecausedarevolution

Developmentsininformationtechnologyhavecausedarevolution ininformationdistribution.Withrecentadvancesincomputers,software and telecommunication, most companies are decentralizing their marketinginformationsystems.Inmanycompaniesmarketingmanagers have direct access to the information network through personal computers and other means. From any location, they can obtain

direct access to the information network through personal computers and other means. From any location, they
direct access to the information network through personal computers and other means. From any location, they
direct access to the information network through personal computers and other means. From any location, they
direct access to the information network through personal computers and other means. From any location, they
direct access to the information network through personal computers and other means. From any location, they
information from internal records or outside information services,
information from internal records or outside information services,
analyzetheinformationusingstatisticalpackagesandmodels,prepare
reports on a work processor or desk-top publishing system, and
communicate with orders in the network through electronic
communications.
Suchsystemsoffersexcitingprospects.Theyallowthemanagersto gettheinformationtheyneededdirectlyandquicklyandtotailoritto
Suchsystemsoffersexcitingprospects.Theyallowthemanagersto
gettheinformationtheyneededdirectlyandquicklyandtotailoritto
theirownneeds.

MARKETINGRESEARCH

Marketing basically consists of identifying the consumers and
Marketing basically consists of identifying the consumers and
satisfyingtheminthebestpossibleway.Marketingresearchplaysakey
roleinthisprocess.Marketingresearchhelpsthefirmtoacquireabetter
understanding of the consumer, the competition and the marketing
environment.Italsohelpstheformulationofrightmarketingmix,which
includedecisionsonproduct,price,placeandpromotion.
Theconductofmarketingresearchhasbecomesocomplexdueto increasingcomplexityofmarketingandhencerequiresspecializedskills
Theconductofmarketingresearchhasbecomesocomplexdueto
increasingcomplexityofmarketingandhencerequiresspecializedskills
andsophisticatedtechniques.
Marketing research has been variously defined by marketing researches.
Marketing research has been variously defined by marketing
researches.
Richard Crisp defined marketing research “as the systematic,
Richard Crisp defined marketing research “as the systematic,
objectiveandexhaustivesearchforandstudyofthefactsrelatingtoany
probkeminthefieldofmarketing”.
AccordingtoGreenandTull,marketingresearchis“thesystematic and objective search for and analysis of information relevant
AccordingtoGreenandTull,marketingresearchis“thesystematic
and objective search for and analysis of information relevant to the
identificationandsolutionofanyprobleminthefieldofmarketing’.
AmericaMarketingAssociationdefinedmarketingresearch,“asthe systematicgathering,recordingandanalyzingofdataaboutproblems
AmericaMarketingAssociationdefinedmarketingresearch,“asthe
systematicgathering,recordingandanalyzingofdataaboutproblems
relatingtothemarketingofgoodsandservices.
An analysis of above definitions clearly highlights the salient featuresofmarketingresearch:
An analysis of above definitions clearly highlights the salient
featuresofmarketingresearch:
It is a search for data which are relevant to marketing problems;
It is a search for data which are relevant to marketing
problems;

Itiscarriedoutinasystematicandobjectivesmanner;

Itinvolvesaprocessofgathering,recordingandanalysisof data.
Itinvolvesaprocessofgathering,recordingandanalysisof
data.
Noneofthedefinitionsisexplicitaboutthemanagerialpurposesof marketing research, except saying that data are required for
Noneofthedefinitionsisexplicitaboutthemanagerialpurposesof
marketing research, except saying that data are required for solving
marketingproblem.
Abetterdefinitionofmarketingresearchis,thatitisanobjective,
Abetterdefinitionofmarketingresearchis,thatitisanobjective,
andsystematiccollections,recordingandanalysisofdata,relevantto
marketingproblemsofabusinessinordertodevelopanappropriate
informationbasefordecisionmakinginthemarketingarea.
MARKETRESEARCH
MARKETRESEARCH
Market research is different from marking research. Market
Market research is different from marking research. Market
researchisasystematicstudyof‘factsaboutmarketonly–who,what,
where,when,why,andhowofactualandpotentialbuyers.
Ontheotherhandthescopeofmarketingresearchistowidethat itincludesallfunctionalareasofmarketingincludingmarket.
Ontheotherhandthescopeofmarketingresearchistowidethat
itincludesallfunctionalareasofmarketingincludingmarket.

IMPORTANCEOFMARKETINGRESEARCH

The emergence of buyer’s market requires continuous need of marketingresearchtoidentifyconsumer’needandensuretheir
The emergence of buyer’s market requires continuous need of
marketingresearchtoidentifyconsumer’needandensuretheir
satisfaction.
Theeverexpandingmarketsrequirelargenumberofmiddlemen andintensivedistribution.Marketingresearchshouldhelpidentify
Theeverexpandingmarketsrequirelargenumberofmiddlemen
andintensivedistribution.Marketingresearchshouldhelpidentify
andsolvetheproblemsofmiddlemenanddistribution.
There is always a change in the market conditions and the requirements of consumers. Marketing
There is always a change in the market conditions and the
requirements of consumers. Marketing research enables to
anticipateandmeetanysuchchanges.
Marketingresearchcanhelpbringaboutpromptadjustmentsin productdesignandpackaging.
Marketingresearchcanhelpbringaboutpromptadjustmentsin
productdesignandpackaging.
Itcanhelpfindouteffectivenessofpricing.
Itcanhelpfindouteffectivenessofpricing.
It can help find out the effectiveness of sales promotion and advertisement.
It can help find out the effectiveness of sales promotion and
advertisement.

Itcanhelpidentifythestrengthandweaknessofsalesforce.

Theimpactofeconomicandtaxationpoliciesonmarketingcould alsobeknownthroughmarketingresearch.
Theimpactofeconomicandtaxationpoliciesonmarketingcould
alsobeknownthroughmarketingresearch.
Inshort,marketingresearchenablesthemanagementtoidentify and solve any problem in the area of marketing and help better
Inshort,marketingresearchenablesthemanagementtoidentify
and solve any problem in the area of marketing and help better
marketingdecisions.

SCOPEOFMARKETINGRESEARCH

Thescopeofmarketingresearchstretchesfromtheidentification ofconsumerwantsandneedstotheevaluationofconsumersatisfaction.
Thescopeofmarketingresearchstretchesfromtheidentification
ofconsumerwantsandneedstotheevaluationofconsumersatisfaction.
It comprises of research relating to consumer, products, sales,
distribution,advertising, pricingandsalesforecasting.Aclearviewof
the scope of marketing research may be obtained by the following
classificationofmarketingresearchactivity.

MarketResearch

Thepurposeofmarketresearchistogatherfactsaboutmarkets andtheforcesoperatingtherein.Theareasofmarketresearchbroadly
Thepurposeofmarketresearchistogatherfactsaboutmarkets
andtheforcesoperatingtherein.Theareasofmarketresearchbroadly
include:

Studyofthemarketsize/potential

Studyofthemarketprofile

Marketshareanalysis

Studyofmarketsegments

Markettrends

Salesforecasting
Salesforecasting
Studyofseasonaltrends
Studyofseasonaltrends
ConsumerResearch
ConsumerResearch
Theaim ofthisresearchistodevelopan understanding about presentandpotentialconsumersandthelevelofsatisfactionexpected and
Theaim ofthisresearchistodevelopan understanding about
presentandpotentialconsumersandthelevelofsatisfactionexpected
and derived by them from company’s products. The broad areas of
consumerresearchare:

Studyofconsumerprofile

Studyofconsumerbrandpreferences,tastesandreactions

Studyofconsumersatisfaction/dissatisfaction,reasons,etc.

Studyofshiftsinconsumptionpatterns.
Studyofshiftsinconsumptionpatterns.
ProductResearch
ProductResearch
Reviewingproductline,productquality,productfeatures,product designetc.
Reviewingproductline,productquality,productfeatures,product
designetc.
Studyontheactualusesofagivenproduct
Studyontheactualusesofagivenproduct

Studyonnewusesofanexistingproduct

Testingofnewproducts

Studyofrelatedproducts
Studyofrelatedproducts

Studyofpacking,packagingdesign

Studyofbrandname/brandmark/itsimpact
Studyofbrandname/brandmark/itsimpact

DistributionResearch

The purpose of this research is to identify the appropriate
The purpose of this research is to identify the appropriate
distributionchannelsforintermediaries,storage,transportproblemsetc.
Theboardareasinclude:

Assessingthegeneralpatternofpricingfollowedbytheindustry

Measuringpriceelasticityofdemand

Evaluatingthepricingstrategyofthefirm

AdvertisingandPromotionResearch

The purpose of this research is to develop most appropriate
The purpose of this research is to develop most appropriate
advertisingandpromotionschemesandevaluatetheireffectiveness.The
broadareasinclude:

Advertisingcopyresearch

Mediaresearch
Mediaresearch
Assessingtheeffectivenessofadvertising
Assessingtheeffectivenessofadvertising

Assessingtheefficacyofsalespromotionalmeasures.

SalesResearch
SalesResearch
Thepurposeistofindoutthesalespotentialandappraisesales performanceofcompany’sproducts.Thebroadareasinclude:
Thepurposeistofindoutthesalespotentialandappraisesales
performanceofcompany’sproducts.Thebroadareasinclude:

Testingnewsalestechniques

Analyzingofsalesmen’straining

Measuringsalesman’seffectiveness
Measuringsalesman’seffectiveness

Studyofsalescompensation

Analyzingmethodsofsettingsalesquotaandsalesterritories.

ResearchonCompetition

Thepurposeofthisresearchistofindouttheintensityandeffect ofcompetitiontothefirm.Thebroadareasinclude:
Thepurposeofthisresearchistofindouttheintensityandeffect
ofcompetitiontothefirm.Thebroadareasinclude:
Study of competitive structure of the industry and individual competitors.
Study of competitive structure of the industry and individual
competitors.

Studyofcompetitorsmarketingstrategies.

Thescopeofmarketingresearchdescribedaboveisonlyindicative andnotexhaustive.Further,theaboveresearchareasarenotwatertight
Thescopeofmarketingresearchdescribedaboveisonlyindicative
andnotexhaustive.Further,theaboveresearchareasarenotwatertight
compartments.Theyarecloselyinterrelated.Theactualscopedepends
ontheneedsofacompanyandthemarketingsituations.

BENEFITSOFMARKETINGRESEARCH

Itisapparentthatthescopeofmarketingresearchactivityisvery wide.Itcoversalmostallaspectsofmarketing.Themajorcontributionof
Itisapparentthatthescopeofmarketingresearchactivityisvery
wide.Itcoversalmostallaspectsofmarketing.Themajorcontributionof
marketingresearchisthatitaugmentstheeffectivenessofmarketing
decisions. Marketing research uncovers facts from both outside and
within the company relevant to marketing decisions and provides a
sustainableandlogicalbaseformakingdecisions.
The specific contributions of marketing research to the effectivenessofthemarketingprogrammeofafirmareasfollows:
The specific contributions of marketing research to the
effectivenessofthemarketingprogrammeofafirmareasfollows:
thedemandandpricesreasonably.
thedemandandpricesreasonably.

1.Withtheguidanceofresearch,productsshouldbebettersuitedto

identified.
identified.

2.Specificmarketshavingthegreatestsalespotentialitiescouldbe

thebestwayofreachingthepotentialbuyersandthemostsuitable timingofpromotionetc.
thebestwayofreachingthepotentialbuyersandthemostsuitable
timingofpromotionetc.

3.Researchcanhelptoidentifythebestsalesappealoftheproducts,

3.Researchcanhelptoidentifythebestsalesappealoftheproducts, 4.Research can also help minimize marketing costs by making

4.Research can also help minimize marketing costs by making marketingeffortsmoreefficientandeffective.

costs by making marketingeffortsmoreefficientandeffective. 5.Research can also find out the effectiveness of sales

5.Research can also find out the effectiveness of sales force managementsuchasrightselectionprocedure,effectivetraining programmes, scientific compensation schemes and effective controlmechanisms.

Thecontributionsofmarketingresearchareconsiderable.Itfacilitates both the decision-making and the operational tasks of
Thecontributionsofmarketingresearchareconsiderable.Itfacilitates
both the decision-making and the operational tasks of marketing
management effective and efficient and thereby contributes to
consumerssatisfactionandorganization’sefficiency.

LIMITATIONSOFMARKETINGRESEARCH

Themarketingresearchisnotwithoutitsshareoflimitations.

1.Marketing Research cannot provide complete answer to the problemsbecausetherearemanyinterveningvariableswhichare

1.Marketing Research cannot provide complete answer to the problemsbecausetherearemanyinterveningvariableswhichare difficulttobecontrolled.

conclusionsduetolimitationsoftoolsandtechniquesinvolved. There are many intangible and variables operating which are
conclusionsduetolimitationsoftoolsandtechniquesinvolved.
There are many intangible and variables operating which are
difficulttobemeasured.

2.Somemarketingproblemsdonotlendthemselvestovalidresearch

soonandtheresearchfindingsbasedonthemwillbecomelittle use.
soonandtheresearchfindingsbasedonthemwillbecomelittle
use.

3.Inafastchangingenvironment,thedatacollectedbecomeobsolete

3.Inafastchangingenvironment,thedatacollectedbecomeobsolete 4.It only provides a base for predicting future events; it

4.It only provides a base for predicting future events; it cannot guaranteewithanycertaintytheirhappening.

isveryoftensaidthatmarketingresearchischeaperthancostly marketingmistakes.
isveryoftensaidthatmarketingresearchischeaperthancostly
marketingmistakes.

5.Marketingresearchinvolvesmoretime,effortandhighcost.Butit

PROCEDUREINCONDUCTINGMARKETINGRESEARCH

Inmarketingresearch,thefollowingprocedureisgenerallyadopted.

Inmarketingresearch,thefollowingprocedureisgenerallyadopted. 1.Definingtheproblemanditsobjectives

1.Definingtheproblemanditsobjectives

1.Definingtheproblemanditsobjectives 2.Determinetheinformationneededandthesourcesofinformation

2.Determinetheinformationneededandthesourcesofinformation

2.Determinetheinformationneededandthesourcesofinformation 3.Decidingonresearchmethods

3.Decidingonresearchmethods

3.Decidingonresearchmethods 4.AnalysisandInterpretationofdata 5.Preparingresearchreport

4.AnalysisandInterpretationofdata

3.Decidingonresearchmethods 4.AnalysisandInterpretationofdata 5.Preparingresearchreport