MS 204 Marketing Management

MBA II Semester

Dr. Vibhuti Tripathi

Quota System, production driven market

Liberalized Economy

Demand driven market; Informed and Demanding

Customers

Focus on: Value Creation, Relationships, Retention,

company and customer interface, integrated
Marketing programs
 Company Orientations and Philosophy
towards market place

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and

Inexpensive.
and

Consumers are primarily interested in product availability and

low prices.
 Product Concept:

Assumption:

Consumers will favour those products that offer the most quality, performance or innovative
features .

Selling Concept:

Companies not only produce the product but also try to convince
customers to buy them.

Assumptions:

If consumers are left alone they will ordinarily not buy enough
of Organization's products. and

Consumer typically show buying dis-interest or resistance and

must be coaxed into buying.
Marketing Concept:

Matching a company’s capabilities with customer’s wants.

“Make –and-sell” to “Sense-and-respond”

Assumption:

Key to achieve its organisational goals consists of a company being more effective than
competitors.

• Customer is the King.

• You are the Boss.
• Putting people first.
Marketing Concept contd.

Involves:

• Customer Orientation.

• Integration and unification of company operations.

Focus:

• Customer is important.

• Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

• Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term

relationships.

- Integrated Marketing: all departments work together to serve

the customers’ interest

- Internal Marketing: recruiting, motivating and retaining staff

who want to serve customers well.

- Social Responsibility: focus on delivering desired satisfaction

effectively and efficiently that competitors, at same time preserving
consumers’ and society’s well being.
 Defining Marketing
• Term ‘Market’ originates from Latin Word ‘Marcatus’,
“Physical place where business is conducted”

• Has wider implications

• Customers
• Stake Holders
• Business Partners
• Competitors

• William J. stanton: A total system of interacting business

activities designed to plan, promote and distribute
want-satisfying products and services.

• American Marketing Association: The performance of

business activities that direct the flow of goods and
services through producers to consumers or users.
• Philip Kotler: A social and managerial process by which
individuals and groups obtain what they need and want
through creating, offering and exchanging products of
value with others.

• “Marketing is a process by which companies create value

for customers and build strong Customer Relationships in
order to capture value from customers in return.”
 Marketing:

Attempt is made to convert societal needs into profitable

Opportunities. In the process activities involved create time,
place and possession utilities. And a Value Proposition

Sales:

An activity which involves order taking and delivery of

Products. In the process it builds goodwill, generates
Demand and does problem solving

Advertising:

Paid form of non personal communication of goods / services

 VALUE
• A Ratio between what a customer gets and what he gives.

• Perceived tangible and intangible benefits offered by the

products / services and its cost to the customers.

Customer Value Triad, QSP

Quality
(Product, Features, Ingredients, Service Components)

Value

Price Service
(Low, Competitive) (After Sales, Embedded, Extra Efforts
Customers Reflects in the perceived tangible and intangible
benefits offered by the product and its cost to
the customers.

Company Reflects in the cost of the product/ services and

the revenue generated in the selling process.

Value = Benefits / Costs

Benefits: Functional + Emotional

Costs: Monetary + Time + Energy + Psyche

• Raise Benefits at same price

• Reduce Cost at same benefits
• Raise benefits reduce price
Marketing is not only facilitating selling of a product but also
creation of demand.

Needs: State of felt deprivation. Physical, Social and

Individual Needs.

Physical: Basic to Survival

Social: Desire to Belong
Individual: Self Expression

Wants: Needs directed towards specific satisfiers.

Shaped by one’s cultural influence, individual personality and the society.

Demand: Wants + Purchasing Power.

 Maslow’s Hierarchy of Needs

Self
Actualisation

Esteem

Social

Safety Radial Tyres Ply Tyres

McDonald’s Canteen
Physiological
Peter England Local Brand

Companies focus on wants and loose sight of needs and

purchasing power
 Market Segmentation and Target Market

• Marketers can not satisfy everyone in the market.

• Marketers start by dividing the market.

• Market Segment: consists of a group of customers who share

a similar set of wants.

• Or fall into similar demographic, psychographic or behavioral

patterns.

• Target Market: Lucrative for conducting business; resources

and company objectives.
 Marketing Process
1. Analyse and understand Markets and Prospective Customers’ needs and wants. (Market
Segmentation, Target Marketing)

2. Design a customer driven marketing strategy with the goal of acquiring, retaining and
growing target customers.
(Differentiation and Positioning; Marketing Mix)

3. Create a strategy delivering superior value.

4. Build profitable customer relationships and creating customer delight.

5. Reap the rewards.

• Differentiation: Developing unique differences with the
intent to influence demand.

• Positioning: Tailoring a product's image and presentation

to appeal to a selected market segment.

• Marketing Mix; includes a combination of tools like;

Product,
Packaging,
Price,
Channels of distribution,
Advertising,
Promotion and
Personal selling

to pursue the marketing objective of the company and

fulfilling needs and wants of the customers.

•
 Tools of Marketing Mix
McCarthy classified the marketing mix tools into four broad categories; 4 Ps of Marketing

1. Product: Variety, Quality, Features, Packaging, Sizes,

Warranty, Guarantee

2. Price: MRP, Discounts, Allowances, Payment Options,

Credit Terms

3. Place: Channels, Coverage, Locations, Inventory,

Transportation

4. Promotion: Sales Promotion, Advertising, Public

Relations
Robert Lauterborn suggested 4 Cs

4 Ps Correspond to the Customer’s 4 Cs

Product Customer Solution

Price Customer Cost
Place Convenience
Promotion Communication
 7 Ps of Marketing Mix or Extended Marketing Mix

Coined by Booms and Bitner, more useful for services industry .

3 Additional Tools:

5. People: All people directly involved in the

consumption of services. Consultant, Employees,
Management and Customers.

6. Process: Procedures, Mechanisms and Flow of Activities by which

services are rendered and consumed.

7. Physical Evidence: Communication, Performance and Experience of

existing customers, atmosphere
 Scope and Functions of Marketing

Functions of Research:

Marketing Research

Product Planning and Development

Functions of Exchange:

Buying and Assembling

Selling

Functions of Physical Treatment:

Standardization, Branding

Packaging

Storage and Transportation

Functions of Facilitating :

Salesmanship

Advertising

Pricing

Financing

Insurance
 Company Orientations and Philosophy
towards market place

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and

Inexpensive.
and

Consumers are primarily interested in product availability and

low prices.
 Product Concept:

Assumption:

Consumers will favour those products that offer the most quality, performance or innovative
features .

Selling Concept:

Companies not only produce the product but also try to convince
customers to buy them.

Assumptions:

If consumers are left alone they will ordinarily not buy enough
of Organization's products. and

Consumer typically show buying dis-interest or resistance and

must be coaxed into buying.
Marketing Concept:

Matching a company’s capabilities with customer’s wants.

“Make –and-sell” to “Sense-and-respond”

Assumption:

Key to achieve its organisational goals consists of a company being more effective than
competitors.

• Customer is the King.

• You are the Boss.
• Putting people first.
Marketing Concept contd.

Involves:

• Customer Orientation.

• Integration and unification of company operations.

Focus:

• Customer is important.

• Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

• Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term

relationships.

- Integrated Marketing: all departments work together to serve

the customers’ interest

- Internal Marketing: recruiting, motivating and retaining staff

who want to serve customers well.

- Social Responsibility: focus on delivering desired satisfaction

effectively and efficiently that competitors, at same time preserving
consumers’ and society’s well being.
Analysing Marketing Environment:

Marketing Environment

External Internal
- Company Image
- Location
Macro Micro - R&D Capability
• Economic Conditions - Customers -Financial Capability
• Political and Legal
• Demographic - Intermediaries -Human Resource
• Competition - Suppliers -Production Facilities
• Technology
Economic Conditions:

• Business Cycle
• Purchasing Power of Customers
• Inflation
• Interest Rates

Business Cycle

Recession

Recovery

Prosperity Depression
Legal and Governmental Factors:

• Political Leadership

• Stability of Government

• Rules and Regulations

• Monetary and Fiscal Policies

• Patents, IPR, MRTP

Demographic and Socio-Cultural Factors:

• Age Structure (composition of population Age-wise)

• Gender Distribution
• Life Expectancy
• Population Density
• Household Size (Family Size)
• Marital Status
• Income and wealth distribution
• Employment
• Education
• Occupation
• Value System
• Consumption Patterns and attitudes
• Changing Gender Roles:
• Related to family
• Jobs
• Recreation
• Buying Behaviour

• A Premium on Time:
• Paucity of time
• Attitude towards gaining more free time
• Convenience

•Physical Fitness and Health;

Geographical Shift in Population;

Strategies: Product Development

Distribution Arrangements
Pricing Policies
Promotion
Competitive Environment:
Identify Competitive Advantage
1. What is the basis of present advantage?
2. Can these advantages be sustained?

Bargaining Power of Suppliers Threat of New Entrants

Competitive
Environment

Threat of Substitute Bargaining Power of Buyers

Technology:

• Technological breakthroughs can affect markets:

• By starting new industries;

• By radically altering or virtually eliminating

existing industries;

• By stimulating markets and industries not related

to new technology;

• Accelerating pace of technological changes

Analysing External Micro- Environment:

• Customers:
- Needs
- Purchasing power
- Buying Behaviour

• Suppliers:
- Raw Materials / Finished Goods
- Cooperative Relationships

• Intermediaries:
- Value Creation; facilitating organisations
- Channels of distribution
Analysing Internal Environment:

• Company Image;

• Location;

• Production Facility;

• R & D Capability;

• Financial Resource;

• Human Resource;
Developing Marketing Strategies

Segmentation, Targeting & Positioning

 Market Segmentation

• A company can not serve all customers in a category.

• Customers differ widely in terms of

• Perception
• Values
• Preferences
• Buying habits

• Potential Market;

• A company has different alternatives; according to their

products or objectives.
Mass Marketing;

A company appeals to a broad range of consumers through a single basic marketing

program.

• Companies consider large potential markets.

• Assumptions;
1. People have similar characteristics and wants for a product category.

2. One Marketing Mix Strategy will satisfy them.

3. People do have different characteristics and wants but it is not worth to develop
separate marketing mix.
• The elements of the marketing mix do not change for
different consumers, all elements are developed for all
consumers.

• Major objective is to maximize sales

• Single Marketing Mix Strategy consists of:

1 Pricing strategy
1 Promotional program aimed at everybody
1 Type of product with little/no variation
1 Distribution system aimed at entire market

Maruti 800 in 1980s, News Papers, Surf

• Pure Mass Marketing approach is dying rapidly due to….
•Intense Competition
•Much Aware Customer
•Technological Up-gradations
•Process
•Information

• Companies are turning to micro marketing by adopting

different approaches based on Segmentation, Target
Identification and Positioning.

• Market Segmentation: Process of identifying smaller groups

of people that exist within a larger market.

• Market Segment : consists of a group of customers who

share a similar set of wants, tastes and preferences.

A marketer does not create segment.

• Effective Segments are;

• Measurable;

• Accessible;

• Substantial;

• Actionable;

• Differentiable;

• The purpose is to design a Marketing Mix that more

precisely matches the needs of individuals in a selected
market segment.
• Approaches to build Market Segment:

• Homogeneous Demand- uniform, everyone demands the product for the same
reason

• Diffused Demand- Product differentiation more costly and more difficult to

communicate.

Cosmetic market, need to offer hundreds of shades of lipstick.

Firms try to modify consumer demand to develop clusters of at least a moderate

size.

• Clustered Demand- consumer demand classified in 2 or more identifiable

clusters.

Automobiles: luxury, low segment, Sporty, Spacious

 Process of Market Segmentation

Analyse the needs of customers

Analyse the characteristics of consumers

Dis-integrate the viable, profitable, lucrative segments

Formulate different market mix for different segments

Feedback of various segments

Select the higher potential segments

 Market Segmentation Strategies

Concentration Strategy:

A single market segment with one Marketing Mix.

Segment A

Marketing Segment B
Mix

Segment C

Segment D
 Multi-segment strategy

2 or more segments are sought with a Marketing Mix for each

segment, different marketing plan for each segment.

Marketing
Mix A Segment A

Marketing Segment B
Mix B

Segment C

Marketing
Mix D Segment D
 Bases for segmenting Markets.

• Two Broader groups of variables used by companies.

• Consumer Characteristics: Geographic,

Demographic and Psychographic.

• Different attitudes of professionals and

workers for a product.

• Looking at customer responses to benefits, use

occasion or brands.

• May examine whether people who want

quality in buying a product differ in their geographic,
demographic and psychographic makeup.
 Major Segmentation Variables

• Geographic: Companies can operate in one or few

geographic areas, or

• operate in all areas with separate Marketing Mix Regionally.

• Cities, Regions
• Retailers, Fast Food Chains, Tyres

• Demographic: most popular basis. Easier to measure.

Age, Gender, Income, Family Size, Education, Occupation

etc.

• Psychographic: refers to as lifestyle analysis.

• Behavioural: buyers are divided on the basis of their
knowledge
attitude
use
response to a product.
Occasions: Life events, transitions, festivals
Benefits: people vary in the benefits they seek from the
same product
User Status: non users, ex-users, potential users, first time
Users
Usage Rate: light, medium and heavy usage.
Loyalty Status: Hard core, split, shifting, switchers.
 Attractiveness of a Market Segment
• Size of the segment
• Growth Rate of the segment
• Competition in the segment
• Brand Loyalty of existing customers
• Required market share to break even
• Whether the company can offer superior value to the
customers
• Impact of catering to the specific segment on companies
image
• Access to distribution channels
 Identifying Target Markets.

• A company can adopt alternative Targeting Strategies.

Alternative Strategies

Narrow Coverage
Broad Coverage
Differentiated Marketing

Micro Marketing
Undifferentiated Marketing
Single Segment Concentration / Concentrated Strategy:

• Selecting a single segment and one marketing mix.

• Choice of Smaller companies with limited resources.

M1 M2 M3 M4

P1

P2

P3
Selective Specialisation Strategy / Differentiated Strategy:
• Multiple segments catered.
• Different Marketing Mix to different segments.
• Product itself may or may not be different.
• Some of the Marketing Mix Tools may vary.

M1 M2 M3 M4

P1

P2

P3
Product Specialisation:

• Company Specialising in a single product.

• Company builds up strong reputation.

M1 M2 M3 M4

P1

P2

P3
Market Specialisation:

• Serving many needs of particular segment groups.

M1 M2 M3 M4

P1

P2

P3
Full Market Coverage:

• A company attempts to serve the entire market,

• Single undifferentiated marketing strategy, or

• Separate marketing mix for each segment.

M1 M2 M3 M4

P1

P2

P3
 Benefits of Segmentation

Opportunity for rapid growth; specially for medium size

companies

Opportunity for rapid growth

More focused; increases profitability

Helpful in formulating strategies

Minimising the risk of failure

Broadens the loyalty base of satisfied customers

Positioning
• Positioning: is the act of designing the company’s offering
and image to occupy a distinctive place in the mind of the
target market.

• End result of positioning is the successful creation of a

customer Value Proposition.

• Product Positioning Vs. Brand Positioning.

Steps Involved in Positioning Task ?

 Steps Involved in Positioning Task:

1. Identifying Competitive advantage

2. Choosing right competitive advantage

3. Selecting an overall Positioning Strategy

4. Developing a positioning statement

5. Communicating and delivering chosen positioning.

 1. Identifying Competitive Advantage

a. Product; Features; Performance; Durability; Reliability; Reparability; Style; Design; Quality

b. Service; Delivery; After Sales Services; Customer Care; Installation;

c. People; Competence; Courtesy; Credibility; Responsiveness; Communication.

d. Image;

e. Channels; coverage, expertise, performance

 2. Choosing right competitive advantage

• How many differences to choose?

• USP Unique Selling Proposition

• More differentiators; useful in intense competition

• Which differences to promote?

• Criteria to select differences;
1. Importance
2. Distinctive
3. Superior
4. Communicable
5. Preemptive
6. Affordable
7. Profitable
 3. Selecting an overall strategy

More Same Less

More

Benefits
Marginal
Same Loosing Proposition
Proposition

Loosing Loosing
Less Proposition Proposition

Price
 4. Developing a Positioning Statement

Reflected in;

Need Recognition:

Target Segment:

Solution:

Concept:

Differentiation:
 5. Communicating and delivering the chosen position

More Same Less

More
QUALITY COMPETITIVE VALUE

Same

Less
• Single Benefit Positioning: rare to find in intense
competition

• Double Benefit Positioning: more distinctive

• Triple Benefits Positioning: challenging to communicate

and convince; COUNTER SEGMENTED

Brands transit in different directions many times

Positioning may go wrong

Why Repositioning ?
Repositioning refers to the major change in positioning for the brand/product.

To successfully reposition a product, the firm has to change the target

market’s understanding of the product.

This is sometimes a challenge, particularly for well-established or strongly

branded products.

Firms may consider repositioning a product due to

1. declining performance or
2. due to major shifts in the environment.

Many firms choose to launch a new product (or brand)

instead of repositioning because of the effort and cost
required to successfully implement the change.
1. Under Positioning: Vague idea about the brand.

Pepsi in Vanilla Flavour

2. Over Positioning: Narrow image of the brand.

Tanishque

3. Confused Positioning: Confused image in the mind of

customers.

Maruti Versa and Maruti Omni VAN

4. Doubtful Positioning: hard to believe the brand claims.

Analysing Consumer Markets and Buying Behaviour
• Every Marketing Activity starts and ends with consumers.

• Marketers Identify decision makers.

•The field of consumer behavior studies how individuals,

groups, and organizations select, buy, use and dispose of
goods, services, ideas, or experiences to satisfy their
needs and wants.

• Understanding consumer behavior and knowing customers

is very complex.

• Marketing and environmental stimuli enter the buyer’s

consciousness.
The buyer’s characteristics and decision processes lead to certain purchase decisions.

The marketer’s task is to understand what happen in the buyer’s consciousness

between the arrival of outside stimuli and the purchase decisions.

• It is important to know :

when they buy where they buy

who are the people that play a role in buying decisions

consume the product

why they take certain

decisions
 Decision Making

Needs/ Wants Beliefs

Customer’s
Disposition
to Buy

Buying Without Buying Without Deciding Before Buying

Wanting Deciding
Influencers on Consumers’ Buying Behaviour:

1. Cultural Factors; Culture, Sub-culture, Social Class

Culture: People’s shared customs, beliefs, values that are generated from generation to
generation.

Sub-culture: smaller groups within cultural framework with common life experiences and
situations.

Social Class: relatively homogeneous and enduring divisions in a society.

2. Social Factors; Reference Groups, Family, Roles and \
Status.

Reference Groups: Small Social Groups to which an individual belongs or aspires to belong.

• Membership Groups; Primary and Secondary

• Aspirational Groups

• Dissociative Groups

Opinion Leaders;
Family : Persons related by blood, marriage or adoption who
reside together.

• Family is a major influencer on buying behaviour.

• Consumption Roles:

• Influencers;
• Deciders;
• Buyers;
• Users;
• Maintainers;

• Involvement and roles vary by products.

Stages in Family Life cycle:

1. Bachelor Stage
2. Newly Married Couples
3. Full Nest I
4. Full Nest II
5. Full Nest III
6. Empty Nest I
7. Empty Nest II
8. Solitary Survivor
• At each stage of Family Life Cycle a person behaves differently; consumption patterns are
also shaped up accordingly.
Roles and Status: A person enters and exists different roles and status throughout the life.

3. Personal Factors: Age and Life Cycle Stage, Occupation,

Economic Situation, Lifestyle, Personality.

Age and Life Cycle Stage: Preferences to purchase goods and

Render services vary over the life time.

Occupation: Occupation influences consumption patterns.

Economic Situation: Product Choice is greatly affected by

economic circumstances like:

Spendable income (stability, time duration, level),

savings, credit availability, Family Income
Lifestyle: a person’s pattern of living in the world reflected in
activities, interests, opinions.

Personality: individual’s distinguishing psychological

Characteristics;

self confidence, dominance, sociability, adaptability.

Brand Personality:

4. Psychological factors: Motivation, Perception, Learning and Beliefs and Attitude.

Motivation: is a drive, which propels a person towards achieving his goals.

A need becomes a motive when sufficiently backed with intensity

Why do People Shop?
Freud’s Theory: Psychological forces shaping up peoples’ behavior are largely unconscious and
that a person can not fully understand his or her own motivation.

Some consumers resist prune (dried plum) because prunes are wrinkled looking and remind
of old age.

Maslow’s Theory: People satisfy their most important needs first. The needs are placed in a
hierarchical order.
Herzberg’s Two Factor Theory: Satisfiers and Dissatisfiers.

• The absence of dissatisfiers is not enough for a person to be

motivated to purchase there must be presence of satisfiers to
motivate a purchase.

• A marketer should avoid the presence of dissatisfiers and

absence of satisfiers.

• Presence of a good packaging style would not act as satisfier or

the motivation for purchase.

• At the same a shabby packaging may lead to dissatisfaction.

• Quality or the utility could be a satisfier

Perception: is the process by which an individual selects,
organizes and interprets information inputs to create a
meaningful picture.

Perceptions can vary widely among individuals exposed to same situation,

Three perceptual processes;

1. Selective Attention
2. Selective Distortion
3. Selective Retention
 Learning: involves changes in an individual’s behavior arising
from experience.

Learning is a continuous process,

Consumers can be made to learn the desired behaviour.

Beliefs and Attitudes: are developed by doing and learning.

• Marketers are interested in understanding beliefs that consumers

have the product, and try to change negative beliefs.
Buying Decision Process
• When making a decision to buy a product from many
competing products, a consumer unknowingly passes
through a few stages of the decision process.

• Need Arousal is the first stage of a buying decision

process.

• the consumer does not pass through all the stages

before purchasing a product.

• The need for a given product is activated by internal

and external stimuli.
 Need/Want Recognition Stimuli: Internal
Deciding there is, in fact, a need or a want to be filled. External

Information Search
Personal, Commercial,
Trying to determine what's available. Experimental

Evaluation
Eliminating products/services/companies
and deciding who's best.

Purchase
Actually buying your product/service

Post Purchase Behaviour

Re-evaluate: Cognitive Dissonance
 Firm’s Marketing Efforts Socio Cultural Environment
INPUT 1. Product 1. Family
2. Promotion 2. Informal Sources
3. Price 3. Non Commercial Sources
4. Channels of Distribution 4. Social Class, Culture

P
R Psychological Field
O Need Recognition Motivation
C Perception
E Pre Purchase Search Learning, Personality
S
S Evaluation of Alternatives
Experiences

Purchase
Trial
Repeat Purchase
OUTPUT
Post Purchase Evaluation
 Steps Between Evaluation and Purchase Decision

Evaluation of
Alternatives

Purchase Intention

Attitudes of Others Unanticipated situational

Factors

1. Intensity of Others Attitudes

2. Motivation to comply

Evaluation of
Alternatives
 DECISION MAKING SET
TOTAL SET CONSIDERATION CHOICE SET
SET

DECISION
Purchase sub-decisions:
• Brand Decision

• Vendor Decision

• Quantity Decision

• Timing Decision

• Payment Methods
 Types of Buying Behaviours

• Consumers would demonstrate different buying behaviour

based on;

Involvement
Nature of Products

• Toothpaste / Brush / Soap etc.

• Car / Bike
• Apparels

• Complex and expensive purchases are likely to involve more

buyer deliberation and more participants.
 Different types of Buyers.

• Ones who know exactly what they want.

• Visitors who some what know what they want.

• The window shoppers,

• Non-Prospects
 Types of Buying Behaviours

High Involvement Low Involvement

Significant Differences
Between Brands Complex Buying Variety Seeking
Behaviour Buying
Behaviour
Dissonance
Few Differences
Reducing Habitual Buying
Between Brands Buying Behaviour
Behaviour
Complex Buying Behaviour: Significant Differences, High Involvement - Highly self expressive
products, Lengthy Learning Process, infrequent purchases

Dissonance Reducing Buying Behaviour: Few differences, High Involvement - anxiety or conflict
of pre or post purchase decision.

Habitual Buying Behaviour: Few Differences, Low Involvement - frequently purchased, Brand
familiarity, no strong attitude towards a brand.

Variety Seeking Buying Behaviour: Significant Differences, Low - Involvement frequent brand
switching, breaking the monotony.
 Factors Likely to Increase Pre-Purchase Search
Product Factors:
• Long inter-purchase time
• Frequent changes in product styling
• Frequent price changes
• Volume Purchase
• High Price
• Many Alternatives
• Much Variation in features

Situational Factors:
• First Time Purchase
• No Past Experience
• Unsatisfactory past experience
• Purchase for gift
• Product is socially visible
• Many sources of conflicting information
Business Buying Behaviour
 Business/ Industrial Buying Behaviour
• Business market consist of all individuals and organisations
that buy goods and services for one or more purposes;

• The activity of marketing goods and services to business

users, rather than to ultimate consumers is Business-
Marketing.

• A firm performing the activity is a business marketer.

• Primary Distinction Usage not the Product

• Many transactions are required to produce and market a

product.
 Leather Shoes

Metal Eyelets

Cattle Hide Tanner Heels / Soles

Shoelaces
Packaging

Shoe Manufacturer

Wholesaler / Distributor

Retailer

End Consumer
 Nature of Business Market

– To make other goods and services;

manufacturing units

– To resell to other business users or to consumers;

Retailers, Used Cars

– To conduct the organisation’s operations;

office supplies, computer software
 Components of Business Markets
1. Agriculture Market; Capital Investments in Farming are
increasing; Retail Fresh, ITC
• Agribusiness – Contract Farming, Food Processing
• Farmers are looking at increasing their productivity,
cut their expenses, mobilising their cash flows.

2. Intermediary Market; buying from suppliers and reselling these essentially in the same
form.
• Resellers create time, place, and information utilities.
• Retailers are also business buyers.
• Team of Purchasers and Merchandisers
3. Government Market: Buying is based on competitive bidding
• Protection for certain sections of entrepreneurs

• Information and guidelines are available from various

agencies.

4. Services Market: marketing research, advertising,

accounting, Legal consultancy etc.

5. Non-business Market: Non-profit organisations,

• Conduct marketing campaigns

 Characteristics of Business Market Demand

1. Demand is derived from the demand for the consumer products.

Steel Automobiles / Refrigerators

2. Demand is relatively inelastic

3. Market is well informed

Determinants of Business Market Demand

1. Number of Buyers

2. Size of Business Users

3. Regional Concentration of Business Users

4. Number of Intermediaries
 Business Buying Decision Process

Types of Need Recognition Buying

Decisions Practices
Identification of Alternatives
New Task Frequency
Straight Rebuy Evaluation Order Size
Modified Rebuy Negotiations
Purchase and Related decisions Service
Dependability
Post purchase Behaviour

Buyer –Seller Relationship

Supply Chain
Loyalty
 Problem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Specification

Performance Review
• New Task Buying:

• Most difficult and complex buying

• Risk is high
• Information needs are high
• Little Experience with the product
• Sellers too have a challenge to identify specific needs.

• Straight Re-buy:
• Routine
• Low-involvement
• Minimal Information Required
• No consideration for Alternatives

• Modified Re-buy:
• Average involvement of time and people.
 Buying Roles

• Users; people who actually use the product.

• Influencers; people who set the specifications and other aspects

of buying decision.

• Deciders; people who make the actual buying decision.

• Gatekeepers; people who control the flow of purchasing

information within the organisation and between the firm and
potential vendors.

• Buyers; people who interact with the suppliers, arrange the

terms, process the actual purchase orders.
Influencers on Business Buyer Behaviour

• Environmental Factors;

• Organisational Factors;

• Interpersonal Factors

• Individual Factors
Product
 Product
A product is anything that might satisfy a want or need,
whether it is a

Goods Service Event Person

Business or Organization

Combination
Experience
 The Good/Service Continuum

Pure Tangible Goods Hybrid Services with Pure

Tangible with Offer accompanying Services
Goods accompanying Minor Goods
Service

Automobile Restaurant Airline Trip Financial

With Repair With Consultant
Soap Services Accompanying
Snacks

Experience, a new dimension added to product and services

Levels of Goods and Services
Goods and Services Classifications

CONSUMER PRODUCTS

INDUSTRIAL PRODUCTS

ORGANISATIONS PLACES AND IDEAS

 Convenience Products

• Bought Frequently

• Low Priced

• Many Purchase Locations

• Includes:
Staple goods

Impulse Goods

Emergency Goods
 Shopping Products

• Bought Less Frequently

• Indulge in Information Search

• Fewer Purchase Locations

• Compare for
» Suitability
» Quality
» Price and
» Style
 Specialty Products

• Special Purchase Efforts

• Unique Characteristics

• Brand Identification

• Few Purchase Locations

 Unsought Products

• New Innovations

• Products consumers don’t want to think about

• Require much advertising and personal selling.

 Industrial Products
• Materials and Parts:

• Raw Material
• Manufacture Material
• Parts

• Supplies and services:

• Installations
• Operating Supplies
• Repair and maintenance items
 Organizations, Places and Ideas

Space Selling

Event Marketing

Social Advertising

Concept Selling

Destination Selling
Developing a Product or Service Involves Defining
The benefits it will offer:

Ability to perform its core functions and

Product levels & consistency
Quality

Product Differentiates the product from

Features Competitors

Product Process of designing products style

Style & & design
Design
 Developing and Marketing a Product:
Important Considerations

•Product Attributes: what makes it distinct from other products. Attributes include things
like size, color, flavor, package type and other features that are relevant to the category.

• Branding:

• Packaging and Labeling:

• Product Support Services:

 Product Line Decisions:

• The group of related company products that are similar in their target markets, pricing, and
distribution channels

• Decisions Involve:

• Product Line Length:

• Line Stretching: going beyond current range

• Downward or upward Stretching can be done.

• Product Line Filling: adding more items within present range

 Product Mix Dimensions:

Product Mix Width: Number of different product lines a company offers.

Product Mix Length: Total number of items a company carries within its product line.

Product Mix Depth: Number of versions offered in each product in line.

Product Mix Decisions
Packaging: involves designing and producing container or wrapper for a product.

Functions:
Contain
Safety ……………………….

Primary Container

Secondary
Container

Shipping Package
Main purposes to packaging:

• Utilitarian

• Implement Strategy

• To Increase Profit

Packaging is an important tool in Marketing Mix

Steps in Developing a good package:

• Packaging Concept

• Develop specific elements of package

• Elements must support product’s position

and marketing strategy.
 Product Support Services

1. After Sales Services

2. Distribution
3. Customer Care
Marketer must periodically asses the;
• The value of current services to obtain new ideas
• The cost of providing the services

Customer Delight and Company Profits

Branding ???
 Branding Strategy: Building Strong Brands

Brand: a name, term, sign, symbol or design OR a combination of all these.

• Intended to identify the goods or services of seller.

• Differentiate from competitors.

• Legal Protection for product

 Classification of Brands

Individual Brands: •Separate brand names are used For different items
by a single company
•Attract various segments.
•These brands have distinct images and appeals and
marketed differently

Family / Blanket •One brand name is used for two or more individual
Brands : products.
•Family branding is more effective for specialised
companies
• Positive fall out on other products.
Generic Brands : •Buyers refer the type of product they want by
producers’ brand name.
•Dangerous for the company.
Private Labels: •Retailers are creating their own brands.
 INDIVIDUAL BRANDS

Hindustan Unilever Limited

• Home and Personal Care Category:

Lux Dove Liril

Surf Excel Wheel Rin

Fair & Lovely Pond’s Vaseline

Sunsilk Clinic
Pepsodent Closeup
Axe Rexona
Lakme
Ayush
 FAMILY / BLANKET BRANDS

Dabur India Limited :

Quality Ayurvedic and nature-based Health care, Personal Care, Food Products

Health Care: Chyawanprash, Glucose D, Hajmola, Pudin hara,

Dabur Lal Tail, Shankh Pushpi etc.

Personal Care: Amla Hair Oil, Vatika hair oil, Vatika Face Pack,
Dabur Lal Toothpaste and Dant Manjan, Babool, Meswak.

Food Products: Real Juices, Coolers, Homemade

 GENERIC BRANDS

DALDA, SURF, NIRMA, XEROX

PRIVATE LABELS

KORYA, Tasty Treat, Star and Sitara : BIG BAZAR

Life, Kashish and Vittorio Fratini : SHOPPER’S STOP

Brand Equity ???

 Brand Equity

• In a market where products are similar, branding can have a

large effect on the price that customers will pay.

• Brands add value to a basic product or service.

• Brand equity is an intangible asset that depends on

associations made by the consumer.

• Negative Brand Equity:

 Implications:

• Financial - One way to measure brand equity is to

determine the price premium that a brand commands over
a competitor.

• Facilitates a more predictable income stream.

• Increases cash flow by increasing market share, reducing

promotional costs, and allowing premium pricing.

• Brand extensions - A successful brand can be used as a

platform to launch related products.

• Leveraging of existing brand awareness

 • Consumer-based - A strong brand increases the consumer attitude toward the product
associated with the brand.

• Brand equity is an asset that can be sold or leased.

 Brand Development

• Four Options for developing a brand.

Existing New

Line Brand
Existing Extension Extension
Brand
Multi New
New
Brands Brands

Product Categories
Line Extension: introducing additional items in a given product category under same brand
name.

1. Low cost, low risk

2. Consumers desire for variety

3. use excess capacity

4. command more shelf space

Brand Extension: using successful brand name to introduce new or modified products in a
new category.

1. Instant Recognition

2. Saves costs
Multi Brands: introducing new brands or additional brands in the same category.

1. Catering to different segments and motives

2. Each brand may obtain only a small market share none may be very
profitable

3. Resources are spread up

New Brands: Company may create a new brand in a new product category.

Managing the Brand ??