EAST WEST

INSTITUTE OF TECHNOLOGY

DEPARTMENT
OF
MBA & RESEARCH CENTRE

MARKETING MANAGEMENT
Subject Code: 20MBA15

SANTHOSH KUMAR V
Assistant Professor
 Marketing Management (20MBA15)

MODULE - 01
INTRODUCTION TO MARKETING

Marketing V/s Selling, Customer value, Components of customer value and

components of customer cost, Marketing Ethics- green marketing and green
economy. Marketing Myopia, Marketing Environment - Components of
Environment to be analyzed Micro/ Macro Environment, Technological
environment, Socio cultural environment, Economic Environment, Legal
Environment,
Module 1 Consumer/demographic environment, Government policies,
Political environment. Techniques used in Environment Analysis, Contemporary
Indian Marketing Environment, Cause and Social Marketing alternate concepts
like 3V concepts of Nirmalaya Kumar, Social Responsibility of marketing- new
marketing realities, new responsibilities, new-age marketing, societal marketing
concept, Corporate Social Responsibility, Emerging areas- Neuro Marketing ,
Sensory Marketing concepts only.

Introduction

Production and marketing of goods and services are the essence of economic life in any
society. All organizations perform these two basic functions to satisfy their commitments to
their stakeholders – the owners, the customers and the society, at large. They create a benefit
that economists call utility which is the want-satisfying power of a good or service. There are
four basic kinds of utility – form, time, place and ownership utility.

Form utility is created when the firm converts raw materials and component inputs into
finished goods and services. Although marketing provides important inputs that specify
consumer preference, the organization’s production function is responsible for the actual
creation of form utility. Marketing function creates time, place and ownership utilities.

Time and place utility occur when consumers find goods and services available when and
where they want to purchase them. Online retailers with 24*7 formats emphasize time utility.
Vending machines focus on providing place utility for people buying snacks and soft drinks.
The transfer of title to goods or services at the time of purchase creates ownership utility

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Marketing management is a business process, to manage marketing activities in profit

seeking and non-profit organizations at different levels of management. Marketing
management decisions are based on strong knowledge of marketing functions and clear
understanding and application of supervisory and managerial techniques.

Marketing is managing profitable customer relationships. The basic objective of marketing is

to attract new customers by promising and offering superior value and to retain and grow
current customers by delivering satisfaction. Marketing deals with customers more than any
other business function, and deals mainly with customers. Building customer relationships
based on customer value and satisfaction is at the very core of modern marketing. Highly
successful companies know that if they take care of their customers, market share and profits
will follow. Sound marketing is essential for the success of every company, whether large or
small, global or national. Marketing is practiced by large profit making companies like
Microsoft, IBM, Reliance, HUL, Godrej, etc. It is also used by non-profit organizations like
churches, colleges, hospitals and charitable trusts like CRY, Help Age, etc.

Marketing is something which is going on all around us. Marketing people are busy calling
for our attention always, to try a product or service. We see the results of marketing in the
abundance of consumer products in our nearby supermarkets like Nilgiri’s or FabMall.

We see marketing in the advertisements that flash very frequently on our TV, spice up our
magazines and newspapers, decorate the sides of highways, and nowadays reach you even
through cell phones and e-mails. Marketing has become all-pervading and we see it in
everything we do. But there is much more to marketing than meets the consumer’s casual
eye. Behind it all is a massive network of people and activities competing for our attention
and purchases

The Evolution of Marketing

Production Era

• Consumers favour products that are available and highly affordable

• Improve production and distribution
• ‘Availability and affordability is what the customer wants’

Product Era

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• Consumers favour products that offer the most quality, performance and innovative
features
• ‘A good product will sell itself’

Sales Era

• Consumers will buy products only if the company promotes/ sells these products
• ‘Creative advertising and selling will overcome consumers’ resistance and convince
them to buy’

Marketing Era

• Focuses on needs/ wants of target markets and delivering satisfaction better than
competitors
• ‘The consumer is king! Find a need and fill it’

Relationship marketing Era

• Focuses on needs/ wants of target markets and delivering superior value

• ‘Long-term relationships with customers and other partners lead to success’

Definitions of Market and Marketing

Market - A market is the set of actual and potential buyers of a product. It may exist in a
physical environment as a marketplace or in a virtual environment (on the internet platform)
as a market space.

A market is a place where buyers and sellers meet to buy or sell products, as in the case of a
fish market, vegetable market or grain market. But in marketing, a market refers to the
different groups of consumers for a product or service. Market need not be a place as in the
traditional sense. Here, the sellers or marketers are treated as the industry and the buyers as
the market. Examples are the general consumer market, business market, global market and
specific markets like teenagers’ market, children’s market, working women’s market,
insurance market, healthcare market and education market.

A market is the set of actual and potential buyers of a product. Such buyers or customers
share a particular need or want that can be satisfied through exchange relationships. The size
of the market will depend on the number of people who exhibit the need, have the buying
power, and are willing to exchange their resources for what they want.

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Marketing

According to American Marketing Association, "Marketing is an organizational function and

a set of processes for creating, communicating and delivering value to customers and for
managing customer relationships in ways that benefit the organization and its stakeholders."

Academic and Professional marketers, defines marketing as: “Marketing is the process of
planning and executing the conception, pricing, promotion and distribution of ideas, goods
and services to create exchanges that satisfy individual and organizational objectives”

“Marketing is a societal process by which individuals and groups obtain what they need and
want through creating, offering, and freely exchanging products and services of value with
others.” (Philip Kotler)

Another definition goes as ‘process by which individuals and groups obtain what they need
and want through creating and exchanging products and value with others

Marketing means managing markets to bring about profitable exchange relationship by

creating value and satisfying needs and wants. Therefore, it is defined as a process by which
individuals and group obtain what they need and want by creating and exchanging products
and values with others

Marketing involves activities such as searching for customers, product development, market
research, communication, sales promotion distribution, channel management, service, etc.

Management

According to Harold Koontz, "Management is the art of getting things done through and with
people in formally organized groups."

Management consists of the interlocking functions of creating corporate policy and

organizing, planning, controlling, directing an organization’s resources in order to achieve the
objectives of the policy.

Marketing Management

According to Philip Kotler, "Marketing Management is the analysis, planning,

implementation and control of programmes designed to bring about desired exchanges with

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target audiences for the purpose of personal and of mutual gain. It relies heavily on the
adoption and coordination of product, price, promotion and place for achieving responses."

Marketing management is the art and science of choosing target markets and getting,
keeping, and growing customers through creating, delivering, and communicating superior
customer value.

Difference in Selling and Marketing

1. Marketing is about customer satisfaction. It starts with customer needs and demand
and ends with customer satisfaction. It is a customer oriented approach. Sales, on the
other hand, are about selling what the company produces. It doesn’t care about the
need of the customer but about the profits.
2. Marketing is about providing quality products and consumer satisfaction. Selling is
about generating by maximising sales and is a money oriented approach.
3. In marketing, emphasis is given on the wants of the consumer. Whereas in selling,
emphasis is on the company’s products.
4. Marketing is different from selling because here the company first determines
customers’ needs and wants and then decides how to deliver a product to satisfy these
wants. In selling, it is the other way round.
5. In marketing the emphasis is on innovation in existing technology and providing
better value to the customer by adopting a superior technology. Selling emphasizes on
staying with existing technology and reducing costs.
6. Marketing views the customer as the very purpose of the business. Selling views
customer as a last link in business.
7. Planning in marketing is long-term-oriented in today’s products and in terms of new
products, tomorrow’s markets and future growth. Planning in selling is short-term-
oriented in terms of today’s products and markets.
8. Marketing follows customer oriented approach and selling uses production oriented
approach.
9. Consumer determines price and price determines cost of marketing. In selling, cost
determines price.
10. Marketing makes use of long-term strategies to get sales – examples, value-added
service, and customer education, meeting objectives. Selling makes use of short-term
tactics to get sales – examples are free gifts, discounts, rebates, bribes, etc.

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Customer Value - Consumers have a wide choice of products and services which
promise satisfaction of a particular need. They normally decide on their choices based on
their perceptions of the value and satisfaction that different products and services deliver,
or offer. Customer value is the difference between the value the customer gains from
buying and using a product and the cost of buying the product. They normally form
expectations about the value of different marketing offers and buy accordingly. This
involves the customers’ mental process of judging the value of the product and is called
customer perceived value.

Value in business markets is the worth in monetary terms of the technical, economic,
service, and social benefits a customer company receives in exchange for the price it pays
for a market offering.

First, we express value in monetary terms, such as dollars per unit, guilders per liter, or
kroner per hour. Economists may care about “utils,” but we have never met a manager
who did! Second, by benefits, we mean net benefits, in which any costs a customer incurs
in obtaining the desired benefits, except for purchase price, are included. Third, value is
what a customer gets in exchange for the price it pays.

Value elements are anything that affects the costs and benefits of the offering in the
customer’s business. These elements may be technical, economic, service or social in
nature and will vary in their tangibility.

Functions of Marketing

Marketing function Description

A. Exchange functions
1. Buying Ensuring that product offerings are available in
sufficient quantities to meet customer demands

2. Selling Using advertising, personal selling and sales

promotion to match goods and services to customer
needs
B. Physical distribution functions
3. Transporting Moving products from their points of production to
locations convenient for purchasers

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4. Storing Warehousing products until needed for sale

C. Facilitating functions
5. Standardizing and grading Ensuring that product offerings meet
established quality and quantity control
standards of size, weight and so on

6. Financing Providing credit for channel members or

consumers

7. Risk taking Dealing with uncertainty about consumer purchases

resulting from creation and marketing of goods and
services that consumers may purchase in the future

Collecting information about consumers,

8. Securing marketing information competitors and channel members for use in
marketing decision making

Customer Satisfaction

Customer satisfaction with a purchase depends on how well the product’s performance lives
up to the customer’s expectations. Customer satisfaction is a key influence on the future
buying behavior of the people. Satisfied customers will buy the product again and tell the
others about their good buying experiences. Dissatisfied customers, on the other hand, switch
to a competitor’s products and also discourage others from buying the product. Marketers
must be careful to set the right level of expectations. If they set expectations too low, they
may satisfy those who buy but fail to attract enough customers. If they raise expectations too
high, customers will be disappointed. Customer value and customer satisfaction are key
building blocks for developing and managing customer relationships.

Marketing Orientations OR Concepts

The marketing function or activities are conducted by various companies based on six
alternative concepts or orientations. They are:

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1. The Production Concept

2. The Product Concept

3. The Selling Concept

4. The Marketing Concept

5. The Customer Concept

6. The Societal Marketing Concept

The Production Concept. This concept is the oldest of the concepts in business. It holds
that consumers will prefer products that are widely available and inexpensive. Managers
focusing on this concept concentrate on achieving high production efficiency, low costs, and
mass distribution. They assume that consumers are primarily interested in product
availability and low prices. This orientation makes sense in developing countries, where
consumers are more interested in obtaining the product than in its features

The Product Concept. This orientation holds that consumers will favor those products that
offer the most quality, performance, or innovative features. Managers focusing on this
concept concentrate on making superior products and improving them over time. They
assume that buyers admire well-made products and can appraise quality and performance.
However, these managers are sometimes caught up in a love affair with their product and do
not realize what the market needs.

For example;

Suppose a company makes the best quality Floppy disk. But a customer does really need a
floppy disk?

She or he needs something that can be used to store the data. It can be achieved by a USB
Flash drive, SD memory cards, portable hard disks, and etc.

So that company should not look to make the best floppy disk. They should focus to meet the
customer’s data storage needs.

The Selling Concept. This is another common business orientation. It holds that consumers
and businesses, if left alone, will ordinarily not buy enough of the selling company’s
products. The organization must, therefore, undertake an aggressive selling and promotion

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effort. This concept assumes that consumers typically sho9w buyi8ng inertia or resistance
and must be coaxed into buying. It also assumes that the company has a whole battery of
effective selling and promotional tools to stimulate more buying. Most firms practice the
selling concept when they have overcapacity. Their aim is to sell what they make rather than
make what the market wants.

The Marketing Concept. This is a business philosophy that challenges the above three
business orientations. Its central tenets crystallized in the 1950s. It holds that the key to
achieving its organizational goals (goals of the selling company) consists of the company
being more effective than competitors in creating, delivering, and communicating customer
value to its selected target customers. The marketing concept rests on four pillars: target
market, customer needs, integrated marketing and profitability.

The Marketing Concept represents the major change in today’s company orientation
that provides the foundation to achieve competitive advantage. This philosophy is the
foundation of consultative selling.

The Marketing Concept has evolved into a fifth and more refined company
orientation: The Societal Marketing Concept. This concept is more theoretical and will
undoubtedly influence future forms of marketing and selling approaches.

The Societal Marketing Concept. This concept holds that the organization’s task is to
determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors (this is the original Marketing
Concept). Additionally, it holds that this all must be done in a way that preserves or
enhances the consumer’s and the society’s well-being.

Old Concept or Product-oriented Concept

A firm employing a product orientation is chiefly concerned with the quality of its product. A
firm such as this would assume that as long as its product was of a high standard, people
would buy and consume the product. Under the product orientation, management focuses on
developing high quality products which can be sold at the right price, but with insufficient
attention to what it is that customers really need and want.

• Consumers buy products more than solutions.

• Consumers are interested in product quality.

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• Consumers recognize product quality and differences in the performance of

alternative products.
• Consumers choose between different products based on getting the best quality for the
price paid.

The main task of an organization utilizing the product orientation approach is to continue
improving quality and reducing costs as key factors in the fight to maintain and attract
customers.

Adopting the product orientation can be advantageous to a company, due to the fact that the
cost of determining consumer preferences and the development of new products and services
are minimized or eliminated because consumers are in some way captive.

A product orientated company believes that its product's high quality and functional features
make it a superior product. Such a company believes that if they have a superior product
customers will automatically like it as well. The problem with this approach is that
superiority alone does not sell products; superior products will not sell unless they satisfy
consumer wants and needs.

New or Modern or Customer- oriented Concept

The modern marketing concept is a concept that embraces an understanding that marketing
activities focus on consumer oriented or we can say customer oriented business. This concept
is very popular, because of the marketing activities of this concept is built on assumptions of
the customer management services as follows:

1. More customers know what they need.

2. Orientation to customer needs as the main target for the success of marketing activities.

3. Marketing research helps in determining customer needs exactly.

4. Satisfied customers will appreciate the producers with a repeat purchase.

5. The difference bidding which is competitive is important for customers in identifying

products of interest.

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Customer oriented is business activities which is focusing on and related to needs/interest of

customer. In other words, it is an approach to focus on helping customer to provide their
needs and wants for satisfying and retaining customers.

So, customer oriented marketing is defined as a marketing approach with customer in mind.
Therefore customer oriented marketing approach must perform marketing activities from
customer's point of view

Marketing Myopia

Marketing Myopia is a condition where marketers fail to view the broader scope of
marketing. According to Theodre Levitt, marketing myopia is management’s failure to
recognize the scope of its business. In marketing, customers the central focus of the
organization. Customers are crucial part of having a successful business, whose negligence
leads to marketing myopia.

For example : Coca Cola company focused on its soft drink products and avoided the
demands of consumers for coffee and fresh fruit juices, because of which, the business of soft
drink was largely affected.

Marketing Environment

Marketing Environment concerns the influences or variables of the external and internal
environment of a firm that controls the marketing management’s capability to construct and
preserve the flourishing relationships with the consumer. An assortment of environmental
forces affects a company’s marketing arrangement. A few of them are governable while
others are unmanageable. It is the task of the marketing manager to modify the company’s
policies together with the shifting environment. Macro and micro environment comprise the
structure of the marketing environment.

Marketing activities do not take place in a vacuum, isolated from all external forces. In fact
all marketing operations are conducted in a highly complex, dynamic and changing
environment.

According to Philip Kotler, “A company’s marketing environment consists of the factors

and forces outside marketing that affect management’s ability to build and maintain
successful relationships with target customers”.

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The marketing environment offers both opportunities and threats. Successful companies
know the vital importance of constantly watching and adapting to the changing environment.
A company’s marketers take the major responsibility for identifying significant changes in
the environment.

First, the environment can be considered in terms of those elements that affect all firms
within the industry (the macro environment), as opposed to those elements that affect only
the individual firm (the micro environment). In general, the macro environment is difficult to
influence or control, whereas the micro environment is much more within the firm’s control.

The environment can also be classified as internal or external. The internal environment
comprises those factors that operate within the firm (the corporate culture and history, staff
behavior and attitudes, the firm’s capabilities) and the external environment comprises those
elements that operate outside the firm (competition, government, customers).

Environment scanning is a constant, important activity of successful companies. This process

includes gathering, filtering and analyzing information related to the marketing environment.
It also includes monitoring the changes taking place in the environment and forecasting
future status of each factor.

Such analysis helps to spot opportunities and threats in the environment, and pinpoints the
ones that are specifically relevant to the company. The company’s marketing people have the
responsibility for scanning and identifying significant changes or trends in the marketing
environment.

Marketing Environment- consists of the actors and forces outside marketing that affect
marketing management’s ability to develop and maintain successful relationships with its
target customers

Types of the marketing environment:

❖ Micro environment - forces close to the company that affect its ability to serve its
customers

❖ Macro environment - larger societal forces that affect the whole macro environment.

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1. Micro-environment:

The micro-environment of the company consists of various forces in its immediate

environment that affects its ability to operate effectively in its chosen markets.

This includes the following:

(a) The company

(b) Company’s Suppliers

(c) Marketing Intermediaries

(d) Customers

(e) Competitors

(f) Public

The Company: In designing marketing plans, marketing management takes other company
groups into account – Finance, Research and Development, Purchasing, Manufacturing,
Accounting, Top Management etc. Marketing manager must also work closely with other
company departments. Finance in concerned with funds and using funds to carry out the
marketing plans.

The R&D Department focuses on designing safe and attractive product. Purchasing
Department is concerned with supplies of materials whereas manufacturing is responsible for
producing the desired quality and quantity of products. Accounts department has to measure
revenues and costs to help marketing know-how. Together, all of these departments have
impact on the marketing plans and action.

Company’s Suppliers: Suppliers provide the resources needed by the company to product its
goods and services. They are important links in the company’s overall customer “value
delivery system”. Supplier developments can seriously affect marketing.

Marketing managers must watch supply availability – supply shortages or delays, labor
strikes and other events can cost sales in the short run and damage customer satisfaction in
the long run. Marketing Managers also monitor the price trends of their key inputs. Rising
supply costs may force price increases that can harm the company’s sales volume.

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Marketing Intermediaries: Intermediaries or distribution channel members often provide a

valuable link between an organization and its customers. Large-scale manufacturing firms
usually find it difficult to deal with each one of their final customers individually in the target
markets. So they chose intermediaries to sell their products.

Marketing intermediaries include resellers, physical distribution firms, marketing service

agencies, and financial intermediaries. They help the company to promote, sell, and distribute
its goods to final buyers. Resellers are distribution channel firms that help the company to
find customers for goods. These include whole-sellers and retailers who buy and resell
merchandise. Selecting and working with resellers is not easy. These organizations frequently
have enough power to dictate terms or even shut the manufacturer out of large markets.

Physical distribution: Firms help the company to stock and move goods from their points of
origin to their destinations. Working with warehouse and transportation firms, a company
must determine the best ways to store and ship goods, and safety marketing services agencies
are the marketing research firms, advertising agencies, media firms, and marketing consulting
firms that help the company target and promote its products to the right markets.

Customers: Consumer markets consist of individuals and households that they buy goods
and services for personal consumption. Business markets buy goods and services for further
processing or for use in their production process, whereas reseller markets buy goods and
services to resell at a profit.

Government markets are made up of government agencies that buy goods and services to
produce public services or transfer the goods and services to others who need them. Finally,
international markets consist of the buyers in other countries, including consumers,
producers, resellers and governments. Each market type has special characteristics that call
for careful study by the seller.

Competitors: No single competitive marketing strategy is best for all companies. The
company’s marketing system is surrounded and affected by a host of competitors. Each firm
should consider its own size and industry position compared to those of its competitors.
These competitors have to be identified, monitored and out maneuvered to gain and maintain
customer loyalty.

Industry and competition constitute a major component of the micro-environment.

Development of marketing plans and strategy is based on knowledge about competitors’

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activities. Competitive advantage also depends on understanding the status, strength and
weakness of competitors in the market.

Large firms with dominant positions in an industry can use certain strategies that smaller
firms cannot afford. But being large is not enough. There are winning strategies for large
firms, but there are also losing ones. And small firms can develop strategies that give them
better rate of return than large firms enjoy.

Public: General public do take interest in the business undertaking. The company has a duty
to satisfy the people at large along with competitors and the consumers. A public is defined
as “any group that has an actual or potential interest in or impact on a company’s ability to
achieve its objectives.

Public relations is certainly a broad marketing operation which must be fully taken care of
Goodwill, favorable reactions, donations and hidden potential fixture buyers are a few of the
responses which a company expects from the public. Kotler in this regard has viewed that
“companies must put their primary energy into effectively managing their relationships with
their customers, distributors, and the suppliers, their overall success will be affected by how
other publics in the society view their activity. Companies would be wise to spend time
monitoring all their public’s understanding their needs and opinions and dealing with them
constructively”.

Every company is surrounded by seven types of public, as shown below:

1. Financial—banks, stock-brokers, financial institutions.

2. Media—Newspaper, magazines, TV.

3. Government—Government departments.

4. Citizen—Consumer Organizations; environment groups.

5. Local—neighborhood residents, community groups.

6. General—General Public, public opinions.

7. Internal—Workers, officers, Board of Directors

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Macro Environment:

The macro-environment consists of broader forces that not only affect the company and the
industry, but also other factors in the micro-environment.

The components of a macro-environment are:

(a) Demographic Environment

(b) Economic Environment

(c) Physical Environment

(d) Technological Environment

(e) Political Environment

(f) Legal Environment

(g) Social and Cultural Environment

A. Demographic Environment: Demography is the study of population characteristics that

are used to describe consumers. Demographics tell marketers who are the current and
potential customers, where are they, how many are likely to buy and what the market is
selling. Demography is the study of human populations in terms of size, density, location,
age, sex, race, occupation and other statistics.

Marketers are keenly interested in studying the demography ethnic mix, educational level and
standard of living of different cities, regions and nations because changes in demographic
characteristics have a bearing on the way people live, spend their money and consume.

For example, one of the demographic characteristic is the size of family. With the number of
small families increasing in India, the demand for smaller houses and household items has
increased significantly. Similarly, the number of children in a family has reduced
significantly over the years. So, per child spending in a family has increased significantly.

Income: Income determines purchasing power and status. Higher the income, higher is the
purchasing power. Though education and occupation shapes one’s tastes and preferences,
income provides the means to acquire that.

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Life-style: It is the pattern of living expressed through their activities, interests and opinion.
Life-style is affected by other factors of demography as well. Life-style affects a lot on the
purchase decision and brand preferences.

Gender: Gender has always remained a very important factor for distinction. There are many
companies which produce products and services separately for male and female.

Education: Education implies the status. Education also determines the income and
occupation. With increase in education, the information is wider with the customers and
hence their purchase decision process is also different. So the marketers group people on the
basis of education.

Social Class: It is defined as the hierarchical division of the society into relatively distinct and
homogeneous groups whose members have similar attitudes, values and lifestyle.

Occupation: This is very strongly associated with income and education. The type of work
one does and the tastes of individuals influence one’s values, life-style etc. Media
preferences, hobbies and shopping patterns are also influenced by occupational class.

Age: Demographic variables help in distinguishing buyers, that is, people having
homogenous needs according to their specific wants, preferences and usages. For instance,
teenagers usually have similar needs. Therefore, marketers develop products to target specific
age groups.

The youth are being targeted through advertisements and promotional campaigns, stores are
being designed with ‘youthful’ features, youth events are being sponsored, and even new
technology is developed with their tastes in mind.

B. Economic Environment:

Economic environment is the most significant component of the marketing environment. It

affects the success of a business organization as well as its survival. The economic policy of
the Government, needless to say, has a very great impact on business. Some categories of
business are favorably affected by the Government policy, some adversely affected while
some others remain unaffected. The economic system is a very important determinant of the
scope of private business and is therefore a very important external constraint on business.

The economical environmental forces can be studied under the following categories:

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(i) General Economic Conditions:

General Economic Conditions in a country are influenced by various factors. They are:

• Agricultural trends
• Industrial output trends
• Per capita income trends
• Pattern of income distribution
• Pattern of savings and expenditures
• Price levels
• Employment trends
• Impact of Government policy
• Economic systems.

(ii) Industrial Conditions:

Economic environment of a country is influenced by the prevalent industrial conditions as

well as industrial policies of a country.

A marketer needs to pay attention to the following aspects:

• Market growth
• Demand patterns of the industry
• Its stage in product life cycle.

(iii) Supply sources for production:

Supply sources required for production determines inputs which are available required for
production.

They are:

• Land
• Labour
• Capital
• Machinery and equipment etc.

Economic environment describes the overall economic situation in a country and helps in
analysis GNP per capita rate of economic growth, inflation rate, unemployment problems etc.

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C. Physical Environment:

The physical environment or natural environment involves the natural resources that are
needed as inputs by marketers or those that are affected by marketing activities.
Environmental concerns have grown steadily in recent years. Marketers should be aware of
trends like shortages of raw materials, increased pollution, and increased governmental
intervention in natural resources management. Companies will have to understand their
environmental responsibility and commit themselves to the ‘green movement’.

Potential shortages of certain raw materials, for examples, oil, coal, minerals, unstable cost of
energy, increased levels of pollution; changing role of Government in environment protection
are a few of the dangers the world is facing on physical environment forces. Other aspects of
the natural environment which may increasingly affect marketing include the availability and
cost of raw materials, energy and other resources, particularly if those resources and energy
come from non-renewable sources.

D. Technological Environment:

The technological environment is the most dramatic force now facing our destiny.
Technological discoveries and developments create opportunities and threats in the market.
The marketer should watch the trends in technology. The biggest impact that the society has
been undergoing in the last few years is the technological advancement, product changes and
its effects on consumers.

Technology has brought innumerable changes in human lives, be it in the field of science,
medicine, entertainment, communication, and travel or office equipment. Name any field, and
one can see changes in product or efficiency and faster services.

Instead of moving into the new technologies, many old industries fought or ignored them and
their business declined. Yet it is the essence of market capitalism to be dynamic and tolerate
the creative destructiveness of technology as the price of progress.

Technology essentially refers to our level of knowledge about ‘how things are done’. That
understands this aspect of the marketing environment is much more than simply being
familiar with the latest hi-tech innovations. Technology affects not only the type of products
available but also the ways in which people organize their lives and the ways in which goods
and services can be marketed.

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Ex: Computer-aided design (CAD) and computer-aided manufacturer (CAM)

E. Political Environment:

The political environment consists of factors related to the management of public affairs and
their impact on the business of an organization. Political environment has a close relationship
with the economic system and the economic policy. Some Governments specify certain
standards for the products including packaging.

Some other Governments prohibit the marketing of certain products. In most nations,
promotional activities are subject to various types of controls. India is a democratic country
having a stable political system where the Government plays an active role as a planner,
promoter and regulator of economic activity.

Businessmen, therefore, are conscious of the political environment that their organization
faces. Most Governmental decisions related to business are based on political considerations
in line with the political philosophy following by the ruling party at the Centre and the State
level.

Substantial number of laws has been enacted to regulate business and marketing to protect
companies from each other, to protect consumers from unfair trade practices, to protect the
larger interests of society against unbridled business behavior. Changing Government agency
enforcement and growth of public interest groups also bring in threats and challenges.

F. Legal Environment:

Marketing decisions are strongly affected by laws pertaining to competition, price-setting,

distribution arrangement, advertising etc. It is necessary for a marketer to understand the
legal environment of the country and the jurisdiction of its courts.

The following laws affected business in India:

• Indian Contract Act 1872

• Factories Act 1948
• Minimum Wages Act 1948
• Essential Commodities Act 1955
• Securities Contracts Regulation Act 1956 (SEBI Act)
• The Companies Act 1956

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• Trade and Merchandise Act 1958

• Monopolies and Restrictive Trade Practice Act 1969
• The water (Prevention and Control of Pollution) Act 1974
• The Air (Prevention and Control of Pollution) Act 1981
• Sick Industrial Companies (Special Provisions) Act 1985
• Environment Protection Act 1986
• Consumer Protection Act 1986
• Securities and Exchange Board of India Act 1992
• Different Taxation Laws.

G. Social and Cultural Environment:

Socio-cultural forces refer to the attitudes, beliefs, norms, values, lifestyles of individuals in a
society. These forces can change the market dynamics and marketers can face both
opportunities and threats from them. Some of the important factors and influences operating
in the social environment are the buying and consumption habits of people, their languages,
beliefs and values, customs and traditions, tastes and preferences, education and all factors
that affect the business.

Understanding consumer needs is central to any marketing activity and those needs will often
be heavily influenced by social and cultural factors. These cover a range of values, beliefs,
attitudes and customs which characterize societies or social groups. Changes in lifestyle of
people affect the marketing environment.

As health problems in people have increased because of significant changes in their lifestyle,
they have become concerned about their food. They prefer to eat low fat, low or no
cholesterol food. This is especially true for people above 40 years. To a great extent, social
forces determine what customers buy, how they buy, where they buy, when they buy, and
how they use the products.

In India, social environment is continuously changing. One of the most profound social
changes in recent years is the large number of women entering the job market. They have
also created or greatly expended the demand for a wide range of products and services
necessitated by their absence from the home. There is a lot of change in quality-of-lifestyles
and people are willing to have many durable consumer goods like TV, refrigerator, washing

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machines etc. even when they cannot afford them because of their availability on hire-
purchase or installment basis.

Culture influences every aspect of marketing. Marketing decisions are based on recognition
of needs and wants of the customer, a function of customer perceptions. These help in
understanding of lifestyles and behavior patterns as they have grown in the society’s culture
in which the individual has been groomed. Thus a person’s perspective is generated, groomed
and conditioned by culture.

Marketing activities do not take place in a vacuum, isolated from all external forces. In fact
all marketing operations are conducted in a highly complex, dynamic and changing
environment. According to Philip Kotler, “A company’s marketing environment consists of
the factors and forces outside marketing that affect management’s ability to build and
maintain successful relationships with target customers”.

Environment analysis

The marketing environment offers both opportunities and threats. Successful companies
know the vital importance of constantly watching and adapting to the changing environment.
A company’s marketers take the major responsibility for identifying significant changes in
the environment.

More than any other groups in the company, marketers must be the trend trackers and
opportunity seekers. Although every manager in an organization needs to observe the outside
environment, marketers have two special aptitudes. They have disciplined methods –
marketing intelligence and marketing research – for collection of information about the
marketing environment.

They also spend time in the customer and competitor environment. By conducting systematic
environmental scanning, marketers are able to revise and adapt marketing strategies to meet
new challenges and opportunities in the market place.

Marketing as a function is basically all about matching the offerings of the organization to the
outside world, in particular, the market-place. Not surprisingly, many functions within
marketing, such as selling, product development and market research, concern themselves
with issues, problems and opportunities outside the organization, and focus on responding to
outside events and circumstances. Kotler identifies in this external role the need for marketers

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to develop an ‘outside- in’ perspective, an ability to work on external cues and stimuli to the
profit of the whole organization.

Environment scanning is a constant, important activity of successful companies. This process

includes gathering, filtering and analyzing information related to the marketing environment.
It also includes monitoring the changes taking place in the environment and forecasting
future status of each factor.

Such analysis helps to spot opportunities and threats in the environment, and pinpoints the
ones that are specifically relevant to the company. The company’s marketing people have the
responsibility for scanning and identifying significant changes or trends in the marketing
environment.

As we know that marketing research and marketing intelligence system are the methods used
by companies for environment scanning and gathering vital information about changes.
Customers’ behavior and competitors’ activities are also important factors to be watched in
the environment. Successful companies know the vital importance of constantly scanning and
adapting to the changing environment. The environment continues to change at a rapid pace.

Importance of Environment Analysis:

The following are the benefits of environment analysis:

1. It helps in marketing analysis.

2. It can assess the impact of opportunities and threats on the business.

3. It facilitates the company to increase general awareness of environmental changes.

4. It is possible to develop effective marketing strategies on the basis of analysis.

5. It helps to capitalize the opportunities rather than losing out to competitors.

6. It facilitates to understand the elements of the environment.

7. It helps to develop best strategies, in the light of analyzing “what is going around the
company”.

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Techniques used in environment analysis

1. SWOT Analysis

It is a technique of environment analysis which evaluates organisation’s strengths and

weaknesses, environmental opportunities and threats and helps to formulate strategies and
achieve objectives by:

1. Exploiting organizational strengths,

2. Exploiting environmental opportunities,

3. Minimizing and correcting the weaknesses, an

4. Minimizing environmental threats.

SWOT analysis compares organization’s strengths and weaknesses (company profile) with
external threats and opportunities (environmental analysis). “A company profile depicts the
quantity and quality of a company’s principal resources and skills. It seeks to determine the
firm’s performance capabilities on the basis of its existing and accessible resources and
skills” and “environmental analysis is the systematic assessment of information about the
firm’s external environment during the strategic planning process to identify strategic
opportunities for the company as well as major threats, problems, or other possible
impediments.”

2. ETOP

ETOP means environmental threat and opportunity profile. It is a technique of environment

analysis where organizations make a profile of their external environment. It analyses
information about environmental threats and opportunities and their impact on strategic
planning process.

It helps to identify strategic opportunities for the company. Environmental opportunities

indicate new lines of business and threats restrain them from entering into new business lines.
A firm that wants to manufacture shoes, for example, will prepare an ETOP to analyze
demand for shoes in the market, purchasing power of consumers, gender composition of
market (male-female ratio), government regulations, technology used etc. On analyzing the
environment, if it finds there is demand for shoes, it will venture into this business.

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3. Management Information System (MIS):

MIS is “a formal method of making available to management the accurate and timely
information necessary to facilitate the decision-­making process and enable the organization’s
planning, control and operational functions to be carried out effectively.”

MIS provides timely, accurate, concise, complete and relevant information based on
computer technology about present and future environmental changes. It facilitates decision-
making process and helps in making decisions based on future environment

4. PESTLE analysis consists of various factors that affect the business environment.
Each letter in the acronym signifies a set of factors. These factors can affect every
industry directly or indirectly

The letters in PESTLE, also called PESTEL, denote the following things:

• Political factors
• Economic factors
• Social factors
• Technological factors
• Legal factors
• Environmental factor

The 3Vs of marketing mix

The 3V marketing mix represents an alternative approach to the marketing mix concept. It is
a method which aids in determining a company´s product strategy as well as product
portfolio. In contrast to the traditional 4P mix, Mr. Kumar defined his marketing mix with
the help of 3 Vs:

Valued customer– seeking the answer to the question – Who to serve?

Value proposition – seeking the answer to the question – What to offer?

Value network– seeking the answer to the question – How to offer?

1. Valued customers:

• Who are the customers?

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• Are there customers who are dissatisfied with the current offer of the branches on the
market?
• Are there customers who are not served by the branches of the market?
• How to address customers who do not feel the need for the products of the
organisation?
• Who uses buys, pays and influences? What are their selection criteria?
• Is the target segment broad enough to achieve profit?

2. Value proposition (offer):

• Which main needs does the proposition of the organisation fulfil?

• Does the company´s value proposition fulfil the needs of the valued customers?
• What benefits does the organisation really offer to the customers?
• Is the value proposition of the organisation sufficiently different from that of the
competition?
• Do the value pronouncements of the company have real support from the company´s
products?
• Is the positioning of the organisation based on attributes which will bear comparison
with the competition?
• Is the positioning too highly branched to appear trustworthy?

3. Value network:

• Is the organization capable to serve valued customers with the valued proposition with
profit?
• Does the organisation have the abilities which correspond and are essential to the
valued proposition?
• If not, where or with whom can it obtain them? With whom can it cooperate?
• Can the servicing of new customers have a negative effect on the existing customers?
• If yes, can the effect be eliminated?
• Which items of the valued proposition which are too costly can be eliminated, limited
or outsourced?
• What is the revenue from the scope of the value network?
• Is the scope of the value network sustainable without a loss of flexibility?
• How does the value network differ from the rest of the branch?

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• What is the break even point of the organisation?

• Is it possible to lower it through a slight limitation of the scope of the value network?

Social Responsibility of Marketing

Social responsibility in marketing involves focusing efforts on attracting consumers who

want to make a positive difference with their purchases. Many companies have adopted
socially responsible elements in their marketing strategies as a means to help a community
via beneficial services and products.

Social responsibility means that businesses, in addition to maximizing shareholder value,

must act in a manner that benefits society. Social responsibility has become increasingly
important to investors and consumers who seek investments that are not just profitable but
also contribute to the welfare of society and the environment.

Social responsibility takes on different meanings within industries and companies. For
example, Starbucks Corp. and Ben & Jerry's Homemade Holdings Inc. have blended social
responsibility into the core of their operations.

Both companies purchase Fair Trade Certified ingredients to manufacture their products and
actively support sustainable farming in the regions where they source ingredients. Big-box
retailer Target Corp., also well known for its social responsibility programs, has donated
money to communities in which the stores operate, including education grants.

The key ways a company embraces social responsibility include philanthropy, promoting
volunteering, and environmental changes. Companies managing their environmental impact
might look to reduce their carbon footprint and limit waste. There's also the social
responsibility of ethical practices for employees, which can mean offering a fair wage, which
arises when there are limited employee protection laws

How Social Responsibility in Marketing Works

Recyclable packaging, promotions that spread awareness of societal issues and problems, and
directing portions of profits toward charitable groups or efforts are examples of social
responsibility marketing strategies. For example, a clothing company's marketing team may
launch a campaign that encourages consumers to buy a bundle of socks versus just one pair.
Using this model, the company can donate a bundle of socks to military personnel overseas or
to local homeless shelters for each bundle sold. As a result of these donations, the company

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brands itself as socially responsible and charitable, which ultimately attracts customers who
are motivated by socially responsible commitments and who want to support the welfare of
the community.

ETHICS

According to the Josephson Institute, “Ethics is defined as standards of conduct that indicate
how one should behave based on moral duties and virtues”. Thus ethics means code of
conduct. When any marketing activity creates a feeling of being cheated or wrongly treated in
customers or managers, then a state of unethical marketing is said to be created.

Ethical norms and values for marketers

Previously established standards or code of conduct which ire to be followed by the society
and/or the professional entities are called Norms, whereas, the set of assumptions and beliefs,
through which people find thin6 important, necessary and morally correct, are called Values.
People lend to .judge the actions of others on the basis of their acquired values.

The following points need to he kept in mind by marketers:

1) Responsibility of the Marketer: Marketers must be engaged in identifying and satisfying

the needs and requirements of the individuals, society and the organizations by their
respective actions and decisions. They must be accountable for all their actions.

2) Honesty, Integrity and Quality: In spite of focusing on the short-term profits, marketers
must be engaged in incorporating integrity, honesty and quality in production as well as
distribution processes.

3) Organizational Relationships: Marketers also need to understand that they influence the
behavior of other individuals in many ways. They should not indulge in any activity which
incites unethical behavior from other people.

4) Conducting Business to Build Long-term Loyalty: The idea should be to build a customer
for lifetime and not just have a transactional relationship with them. Customers should also
give referrals for the business.

5) Abandoning Harmful Marketing: In this, marketers genuinely use the marketing strategies
to attract the customers and fulfill organizational objectives in the most effective manner.

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They also follow all the concerned laws and regulations along with maintaining ethical
standards in all their decisions.

6) Fostering Trust in the Marketing System: This means that the products that are being
marketed should fulfill the need(s) for which they have been created. The communications
surrounding the product should be true and not try to mislead the customer by making false
claims. It also implies making lasting and sustainable relationships with all the stakeholders
of the marketing process. It also means having fair and equitable processes.

Ethical issues in marketing

The marketing mix of the organization happens through a process of interaction with the
various environmental factors environmental, political, economic and legal. The ethical
aspects relating to these environmental factors have been explained below

1. Ethical Issues Relating to Product: The first ingredient of the marketing mix is product.
If various aspects concerned with product are product quality, safety features of the product,
packaging, branding issues and warranties all these aspects are important and different ethical
considerations are attached with it. These are as follows:

i) Quality of Product: The product should be of hill quality with all the
specifications being fulfilled. It should be as per the requirement of the
consumers and its quality should be genuinely the same as claimed.
ii) Safety of Product: The safety aspect of the product is another consideration.
However, the businesses normally always consider the cost implications of
the safety features.
iii) Packaging and Branding Issues: The packaging and branding are also
important parameters to consider. The manufacturer has to ensure that all the
relevant information is provided to the consumers in the packages/labels of
the product.

2) Ethical Issues Relating to Price: Different pricing strategies are utilized by different
entities like Governments, NGOs or businesses. In general, marketers use stimulating pricing
strategies so as to induce particular consumer behavior or to attract potential buyers. But
others present the product offering in such a way so as to fool the customers. Sometimes,
legal operations within the organization influence the behavior of the buyers and the

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distributors. It may result in unpredicted outcomes. Different ethical considerations

associated with pricing are as follows:

i) Price Fixing: In price fixing the business competitors agree to sell the product or
service at the same price. Though price fixing is illegal, there are many developing
economies which allow it.

ii) Price Skimming: In this pricing method, the manufacturer keeps a high price of the
product initially and then brings it down subsequently. This is done to transact the
brand image or the-novelty value of the product.

iv) Price Discrimination: In price discrimination, the manufacturer charges

different prices_ for different markets or different segments of consumers.

3. Ethical issues relating to Promotion: ethical issues can also arise from promotion:

a. Prompts People to buy more than 'they can afford: Marketers through heavy promotion
prompts customers to buy unnecessary products or service, which they do not actually need
and it costs them.

b. Perpetuates Stereotyping: Marketers also face the criticism of, promoting, negative
stereotyping of women and minorities. They generally highlight women as care taker of the
home or children or as sex objects. Also the aged women are shown as helpless and dumb.
Overall, marketers in their promotions highlight women as weaker section of the society.

c. Creates Offensive Advertisements: Advertisements are increasingly becoming offensive

and insulting to social norms. Sex and nudity are dominant themes to attract the attention of
customers.

For example, advertisements of Calvin Klein brand increasingly propagate a culture of sexual
permissiveness.

4) Ethical Issues Relating to Place: Different ethical issues relating to place are as follows:

a. Collusion: Retailers and manufacturers may collude and limit the competition. For
example, the three main laundry services in a town may collude and agree to charge a single
price to the consumers. This type of practice is unethical in respect to the consumers.

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b. Discriminatory Pricing: Many manufacturers give a better buying rate to large buyers
because of the volume that they buy. For example, Wal-Mart gets a much better rate from its
suppliers than its competitors. This is because of the larger volume of purchase by Wal-Mart
and also the lower cost of overheads involved because of greater economies of scale.

c. Territorial Restrictions: Some firms operate only in particular regions. Their services are
not offered to other territories.

GREEN MARKETING

Green marketing refers to the process of selling products and/or services based on their
environmental benefits. Such a product or service may be environmentally friendly in it or
produced and/or packaged in an environmentally friendly way.

Green marketing is a category of marketing where products and services are promoted on the
basis of their environmental benefits.

Green marketing can be defined as the marketing of eco-friendly products which are not
harmful to the environment and are also produced using eco-friendly production process

Green marketing is a unique category of marketing in which products are promoted based on
their environmental benefits. The purpose of using the word “Green” is that the production of
products is done without causing any damage to the environment, and also ingredients and
packaging of products are environmental-friendly.

Importances of green marketing are,

• It ensures sustained long-term growth along with profitability.

• It saves money in the long run, though initially the cost is more.
• It helps companies market their products and services keeping the environment
aspects in mind. It helps in accessing the new markets and enjoying competitive
advantage.
• Most of the employees also feel proud and responsible to be working for an
environmentally responsible company.
• Green marketing helps in making the earth a healthy and beautiful planet. If we don’t
adopt green methods, then we will not be living the right place for our future
generations to live.

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• Green marketing helps in reducing the use of plastic and plastic-based products.
Plastic is not suitable for our earth as it is non-biodegradable. That means one piece of
plastic is going to stay on earth forever. Just think if people keep using plastic as they
use now, then there will be piles of plastic all around. We will get to see oceans and
forests full of plastic rather than the beauty of nature.
• People demand natural and eco-friendly products. If you want to stay in business for a
long time, then it is advisable for you to start adopting eco-friendly methods.
• You will get a competitive edge over your competitors the credibility of your
organization will improve, and you can expand your business in foreign lands

Examples

1. Starbuck’s marketing campaign - Starbucks is one of the few companies which not only
adopted but also remained committed to using environment-friendly methods to conduct their
business and to attract consumers. Starbucks uses solar energy in its stores to minimize the
use of electricity.

In addition to this, they have been committed to using responsible building material in their
stores to reduce carbon footprint. One of their most popular Facebook campaigns was to urge
people to join their campaign to plant trees and paint streets for the sake of the streets.

That campaign became very popular and was appreciated by people everywhere. At present,
they are working on to use recyclable cups in order to reduce the waste created by them.

2. Apple’s marketing initiative - In 2019, when Apple launched its new MacBook Air and
MacBook Mini. They made the announcement that these products were created by using
100% recycled aluminum. This year their slogan was, “Truly Innovative products leave their
mark on the world but not on the planet.”

The meaning of this statement is that they are making efforts to reduce the waste of
electronics produced by them and to develop new products. In addition to this, Apple uses
materials and chemicals in its products, which are not only safe for the person who uses them
but are also safe for the environment.

For example, the claim to minimize the exposure of nickel-metal, which can become the
reason for allergic reactions? Apple has a long way to go to adopt green methods, but it has
already come a long way ahead.

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3. Johnson & Johnson’s marketing initiative - Johnson & Johnson, a well-known company of
Band-aid and baby’s products. It is also famously known for its efforts to establish internal
environmental-friendly practices in which they provide on the job training to their employees
for adopting environmental-friendly practices.

The company has set a goal for the reduction of carbon emission by 20% by 2020 and to
maximize product recycling. They are so sure of their initiative that people can track their
progress online on their official website.

The company has gained recognition and honor because of its efforts to minimize waste and
saving energy. Johnson & Johnson’s company is an inspiration for many other companies.

4. IKEA marketing campaign - IKEA is a Swedish furniture brand that has established its
own strategy for environment-friendly practices named “People & Planet Positive”. IKEA
offers its customers stylish furniture at affordable prices along with sustainability.

IKEA makes the use of solar energy in 90% of its stores in the United States of America.
They deliver products in flat packing, which customers are required to assemble later. Along
with this, they are also investing in wind energy for the production of electricity.

5. Unilever - Unilever, one of the giant companies around the world, has made green
investments and made a sustainable living plan as an essential part of their programs. The
company is making changes to save energy, water, and to reduce waste.

The CEO of the company won the Champion of earth award in 2015 for their green efforts.

GREEN ECONOMY

A green economy is an economy that aims at reducing environmental risks and ecological
scarcities, and that aims for sustainable development without degrading the environment. It is
closely related with ecological economics, but has a more politically applied focus.

A green economy can be viewed as a path to sustainable development that results in

improved human well-being and social equity, while significantly reducing environmental
risks and ecological scarcities.

According to United Nations Environment Programme Green economy is one that results in
improved human well-being and social equity, while significantly reducing environmental
risks and ecological scarcities”

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Green economy Principles

The most common green economy principles identified from a review of eight published sets
of principles or characteristics:

1. The green economy is a means for achieving sustainable development.

2. The green economy should create decent work and green jobs.

3. The green economy is resource and energy efficient.

4. The green economy respects planetary boundaries or ecological limits or scarcity.

5. The green economy uses integrated decision making.

6. The green economy measures progress beyond GDP using appropriate indicators/metrics.

7. The green economy is equitable, fair and just – between and within countries and between
generations.

8. The green economy protects biodiversity and ecosystems.

9. The green economy delivers poverty reduction, well-being, livelihoods, social protection
and access to essential services.

10. The green economy improves governance and the rule of law. It is inclusive; democratic;
participatory; accountable; transparent; and stable.

11. The green economy internalises externalities

Societal Marketing Concept

Societal Marketing is based on the principle of societal welfare. It emphasizes that an

organization must make strategic marketing decisions keeping in mind the consumer wants,
the organizational needs and most important the long term interests of the society.

Societal Marketing is nothing but an outgrowth of the principles of Corporate Social

Responsibility and Sustainable development. It underlines that an organization should not
ignore the society’s long term welfare so as to achieve its mission and vision. An
organization should have moral and environmentally friendly strategies and should ensure
that proper acts and laws are implemented.

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The Societal marketing concept is significant because of the following advantages it has:

• It ensures that all the economic resources are channelized in the right direction.
• It develops entrepreneurs as well as managers in a specified society.
• It raises the living standard of the people.
• It increases the speed of economic development of society.
• It makes economic planning more significant and more fruitful to people’s life.

The societal marketing concept holds that a company should make good marketing decisions
by considering consumers’ wants, the company’s requirements, and society’s long-term
interests.

Philip Kotler defines it as “the societal marketing concept holds that the organization’s task is
to determine the needs, wants, and interests of target markets and to deliver the desired
satisfactions more effectively and efficiently than competitors in a way that preserves or
enhances the consumer’s and the society’s well-being.”

Societal Marketing creates a favorable image for the company increases sales. It is not the
same as the terms of social marketing and social media marketing. It is a term closely related
to CSR and sustainable development. It emphasizes social responsibilities and suggests that
to sustain. It calls for sustainable marketing, socially and environmentally responsible
marketing that meets consumers and businesses’ present needs while also preserving or
enhancing future generations’ ability to meet their needs.

Societal Marketing emphasizes on social responsibilities and suggests that to sustain long-
term success, the company should develop a marketing strategy to provide value to the
customers to maintain and improve both the customers and society’s well being better than
the competitors.

The societal marketing concept has developed out of the conflict between individual
consumers’ short-term needs and society’s long-run well-being.

Objectives of Societal Marketing Concept

• To maintain a long-term relationship with customers.

• To create a better image in the society for the company than it’s competitors.
• To carry out its social responsibilities.

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• Developing community awareness towards its brands.

• To carry out its social responsibilities.
• To increase the consumer base and market share.

Societal Marketing Concept Advantages and Benefits

• It helps to build a better image for the company.

• It gives a competitive advantage over the competitors.
• Useful in customer retention and long-term relationships.
• Increases sales and market share.
• Facilitate expansion and growth in the long term.
• Products and company policies should prioritize social welfare and society in general.
• Economic resources are properly used.
• Societal marketing raises the living standard of people in society.
• It ensures economic planning more significant and more fruitful to society.

Examples of Societal Marketing

The most recent examples of societal marketing are the super bowl 2017 ads of several
companies.

Most ads took on issues like the environment and immigration. These come after President
Donald Trump implemented executive orders that raised controversies.

• Kia’s “Hero’s Journey” commercial starring Melissa Mccarthy is the prime example
of societal marketing.
• Coca-Cola releases an ad that shows people of different ethnicities and singing
“America is Beautiful” in different languages.
• Airbnb’s #WeAccept super bowl 2017 ad.
• Budweiser ad showing how its immigrant founder founded a company.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility is a management concept whereby companies integrate

social and environmental concerns in their business operations and interactions with their
stakeholders. CSR is generally understood as being the way through which a company
achieves a balance of economic, environmental and social imperatives (“Triple-Bottom-Line-

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Approach”), while at the same time addressing the expectations of shareholders and
stakeholders.

Key CSR issues: environmental management, eco-efficiency, responsible sourcing,

stakeholder engagement, labour standards and working conditions, employee and community
relations, social equity, gender balance, human rights, good governance, and anti-corruption
measures.

Corporate social responsibility (CSR) is a self-regulating business model that helps a

company be socially accountable—to itself, its stakeholders, and the public. By practicing
corporate social responsibility, also called corporate citizenship, companies can be conscious
of the kind of impact they are having on all aspects of society, including economic, social,
and environmental.

A properly implemented CSR concept can bring along a variety of competitive advantages,
such as enhanced access to capital and markets, increased sales and profits, operational cost
savings, improved productivity and quality, efficient human resource base, improved brand
image and reputation, enhanced customer loyalty, better decision making and risk
management processes.

Examples of Corporate Social Responsibility in Action

Corporate social responsibility comes in many forms. Even the smallest company impacts
social change by making a simple donation to a local food bank. Some of the most common
examples of CSR include:

• Reducing carbon footprints

• Improving labour policies
• Participating in fair-trade
• Charitable giving
• Volunteering in the community
• Corporate policies that benefit the environment
• Socially and environmentally conscious investments

1. Innovation: Johnson & Johnson - An excellent example of CSR is global giant Johnson &
Johnson. They have focused on reducing their impact on the planet for three decades. Their
initiatives range from leveraging the power of the wind to providing safe water to

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communities around the world. Its purchase of a privately-owned energy supplier in the
Texas Panhandle allowed the company to reduce pollution while providing a renewable,
economical alternative to electricity. The company continues to seek out renewable energy
options with the goal to procure 35% of their energy needs from renewable sources.

2. Google - Google is trusted not only for its environmentally friendly initiatives but also due
to their outspoken CEO Sundar Pichai. He stands up against social issues including President
Donald Trump’s anti-Muslim comments. Google also earned RI’s highest CSR score much in
part due to their data center using 50% less energy than others in the world. They also have
committed over $1 billion to renewable energy projects and enable other businesses to reduce
their environmental impact through services such as Gmail.

3. Coca-Cola - Coca-Cola’s massive fleet of delivery trucks contributed 3.7 million metric
tons of greenhouse gases to the world. They have made major changes to their supply chain
practices including investing in new alternatively fueled trucks. Their initiatives are intended
to create a 25% reduction in their carbon footprint by 2020.

4. Ford Motor Company - Ford plans to reduce their greenhouse gas emissions using their
Eco Boost engine to increase fuel efficiency. It also plans to introduce 40 electrified vehicles
(electric and hybrid) by 2022, in an investment of $11 billion. According to Ford: “We’re all
in on this and we’re taking our mainstream vehicles, our most iconic vehicles, and we’re
electrifying them. If we want to be successful with electrification, we have to do it with
vehicles that are already popular.”

In addition, American Ford dealerships rely on wind sail and solar PV systems to power their
locations greatly reducing their use of electricity.

5. Bosch - Half of Bosch’s research and development budget is invested in creating

environmental protection technology. By 2021 the company will have invested €50 million to
support universities and research programs that are focused on the environment, energy and
mobility in Germany, India, the U.S and China through Bosch Energy Research Network,
otherwise known as BERN.

6. GE - It's been more than a decade since General Electric launched Ecomagination, its
renewable business strategy with a mission to double down on clean technology and generate
$20 billion in revenue from green products. In those ten years, it has manufactured its

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Evolution Series Tier 4 Locomotive, which will reduce emissions by more than 70% and
launched the Digital Wind Farm which can boost a wind farm’s energy production by 20%.

7. Starbucks - With an eye to hiring, Starbucks is looking to diversify their workforce and
provide opportunities for certain cohorts. By 2025 it has pledged to hire 25,000 veterans by
2025 as part of their socially responsible efforts. This hiring initiative will also look to hire
younger people with the aim of "helping jump-start careers by giving them their first job'.
While globally the company has joined with the UN Refugee Agency to scale up the
company’s support and efforts to reach refugee candidates to hire 10,000 refugees by 2022.

8. The Walt Disney Company - Disney is committed to reducing their carbon footprint with
goals for zero net greenhouse gas emissions, zero-waste, and a commitment to conserve
water. They are actively ensuring that they set strict international labor policies to protect the
safety and rights of their employees.

They are also active in the community and encourage employees to do the same. They also
have healthy living initiatives to promote healthy eating habits amongst employees.

Social responsibility in marketing involves focusing efforts on attracting consumers who

want to make a positive difference with their purchases. Many companies have adopted
socially responsible elements in their marketing strategies as a means to help a community
via beneficial services and products

EMERGING AREAS IN MARKETING

NEUROMARKETING

“Neuro marketing” loosely refers to the measurement of physiological and neural signals to
gain insight into customers’ motivations, preferences, and decisions, which can help inform
creative advertising, product development, pricing, and other marketing areas. Brain
scanning, which measures neural activity, and physiological tracking, which measures eye
movement and other proxies for that activity, are the most common methods of measurement.

Neuro marketing is the application of neuroscience to marketing. Neuro marketing includes

the direct use of brain imaging, scanning, or other brain activity measurement technology to
measure a subject's response to specific products, packaging, advertising, or other marketing
elements.

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Neuro marketing is a new field of marketing which uses medical technologies such as
functional Magnetic Resonance Imaging (fMRI) to study the brain’s responses to marketing
stimuli. Neuro marketing will inform the marketer what the consumer reacts to, whether it
was the colour of the packaging, the sound the box makes when shaken, or the idea that they
will have something their co-consumers do not

The two primary tools for scanning the brain are FMRI and EEG. The former (functional
magnetic resonance imaging) uses strong magnetic fields to track changes in blood flow
across the brain and is administered while a person lies inside a machine that takes
continuous measurements over time. An EEG (electroencephalogram) reads brain-cell
activity using sensors placed on the subject’s scalp; it can track changes in activity over
fractions of a second, but it does a poor job of pinpointing exactly where the activity occurs
or measuring it in deep, sub cortical regions of the brain (where a lot of interesting activity
takes place). An fMRI can peer deep into the brain but is cumbersome, and it tracks activity
only over the course of several seconds, which may miss fleeting neural incidents.

Companies Using Neuro marketing

Several companies representing a wide range of product offerings and industries are already
taking advantage of Neuro marketing’s interdisciplinary and comprehensive approach.

Here are four top brand names that have relied on Neuro marketing to conduct market
research, run focus groups and designing marketing campaigns:

1. PepsiCo - Women were the focus for the Baked Lays product, and their biometric
responses helped create the idea for single-serve packaging and corresponding ad campaign.

2. The Weather Channel - This source for all things meteorological was able to successfully
gauge the emotional reactions that viewers had while watching promotional videos by
measuring skin responses, monitoring eye tracking, and utilizing EEG technology.

3. Ebay - Using a strategy based in tests measuring brain activity and emotional responses,
Neuro marketing industry leader Neuro Focus helped Ebay with its brand identity makeover.

4. Daimler - The bellwether automaker is known for quality inside and out, from cutting-edge
engineering to its sleek, modern aesthetics. The industry giant made the decision to redesign
its headlights to more closely resemble human largely based on Neuro marketing research.

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For example, fMRI results indicated an emotional reaction strongly tied to the reward center
with regard to the more humanoid design.

SENSORY MARKETING

Sensory marketing is the techniques that are used to reach your customer’s senses and
influence their behavior based on how your brand and tactics make them feel.

This strategy of engaging the senses to sell products is referred to as sensory marketing:
marketing that influences consumers’ perception of brands by using multi-sensory
experiences to establish positive emotional connections with them

As we know, the five senses are sight, hearing, taste, touch and smell. Sensory marketing is
simply the process of winning a customer’s trust and attention by appealing to each of these
five senses.

The main use for sensory branding is to appeal to your customer's senses: sight, smell, sound,
taste and touch. To understand sensory marketing, it's important to know a bit more about
how perception and consumption relate. may often conflict, for example between smell and
taste or touch and sound.

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Module -2

Analysing Consumer Behaviour

Buyer Behaviour Analysis: Meaning and Characteristics, Importance, Factors

Influencing Consumer Behaviour, Consumer Purchase Decision Process,
Buying Roles, Buying Motives, Buyer Behaviour Models, The black box model
of consumer behaviour, B2B marketing Vs Consumer Marketing, Connecting
with consumers and consumer in sighting, Factors influencing Consumer
Behaviour, Consumer characteristics influencing buying behaviour- personal
factors and cultural factors. Consumer Buying Decision Process, Buying Roles,
Buying Motives The black box model of consumer behaviour. Psychological
Processes underlying consumer behaviour. Market Segmentation: Concept of
Market Segmentation, Benefits, Requisites of Effective Segmentation, Bases for
Segmenting Consumer Markets, Market Segmentation Strategies Segmentation
method – Geographic segmentation and Demographic segmentation,
psychographic segmentation, behavioural segmentation, volume segmentation,
deep segmentation. Indian Consumer- Features about consumer India,
Classifying Indian consumer by Income B2B marketing Vs Consumer
Marketing.

INTRODUCTION

Though similar, consumers are unique in themselves; they have needs and want which are
varied and diverse from one another; and they have different consumption patterns and
consumption behavior. The marketer helps satisfy these needs and wants through product and
service offerings. For a firm to survive, compete and grow, it is essential that the marketer
identifies these needs and wants, and provides product offerings more effectively and
efficiently than other competitors. A comprehensive yet meticulous knowledge of consumers
and their consumption behavior is essential for a firm to succeed. Herein, lies the essence of
Consumer Behavior, an interdisciplinary subject, that emerged as a separate field of study in
the 1960s

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Consumer behavior is the study of when, why, how, and where people do or do not buy a
product. It blends elements from psychology, sociology, social anthropology and economics.
It attempts to understand the buyer decision making process, both individually and in groups.

It studies characteristics of individual consumers such as demographics and behavioral

variables in an attempt to understand people's wants. It also tries to assess influences on the
consumer from groups such as family, friends, reference groups, and society in general.

Customer behavior study is based on consumer buying behavior, with the customer playing
the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset
for customer behavior analysis as it has a keen interest in the rediscovery of the true meaning
of marketing through the re- affirmation of the importance of the customer or buyer. A
greater importance is also placed on consumer retention, customer relationship management,
personalization, customization and one-to-one marketing. Social functions can be categorized
into social choice and welfare functions.

Consumer Behavior is a branch which deals with the various stages a consumer goes through
before purchasing products or services for his end use.

DEFINING CONSUMER BEHAVIOR:

Consumer Behavior may be defined as “the interplay of forces that takes place during a
consumption process, within a consumers’ self and his environment.

-this interaction takes place between three elements viz. knowledge, affect and behavior

-it continues through pre-purchase activity to the post purchase experience

-it includes the stages of evaluating, acquiring, using and disposing of goods and services

The “consumer” includes both personal consumers and business/industrial/organizational

consumers.

Consumer behavior explains the reasons and logic that underlie purchasing decisions and
consumption patterns; it explains the processes through which buyers make decisions. The
study includes within its purview, the interplay between cognition, affect and behavior that
goes on within a consumer during the consumption process: selecting, using and disposing of
goods and services

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“The behavior that consumers display in searching for, purchasing, using, evaluating and
disposing of products and services that they expect will satisfy their needs.”- Schiffman and
Kanuk

“the decision process and physical activity engaged in when evaluating, acquiring, using or
disposing of goods and services." - Loudon and Bitta

“The study of consumers as they exchange something of value for a product or service that
satisfies their needs”- Wells and Prensky

“Those actions directly involved in obtaining, consuming and disposing of products and
services including the decision processes that precede and follow these actions”.- Engel,
Blackwell, Miniard

“The dynamic interaction of effect and cognition, behavior and the environment by which
human beings conduct the exchange aspects of their lives”- American Marketing
Association

NEED OR IMPORTANCE OF CONSUMER BEHAVIOUR

• The study of consumer behaviour for any product is of vital

importance to marketers in shaping the fortunes of their organisations.
• It is significant for regulating consumption of goods and thereby maintaining
economic stability.
• It is useful in developing ways for the more efficient utilisation of resources of
marketing. It also helps in solving marketing management problems in more effective
manner
• Today consumers give more importance on environment friendly products. They are
concerned about health, hygiene and fitness. They prefer natural products. Hence
detailed study on upcoming groups of consumers is essential for any firm.
• The growth of consumer protection movement has created an urgent need to
understand how consumers make their consumption and buying decision.
• Consumers’ tastes and preferences are ever changing. Study of consumer behaviour
gives information regarding colour, design etc.
• To design the best possible product or service that fully satisfies consumer's needs and
demands.

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• To decide where the service or product would be made available for easy access of
consumers.
• To decide the price at which the consumers would be ready to buy that product or
service.
• To find out the best method of promotion that will prove to be effective to attract
customers to buy a product.
• To understand why, when, how, what and other factors that influence buying decision
of the consumers.

FACTORS AFFECTING CONSUMER BEHAVIOR

Consumer behavior refers to the selection, acquisition and consumption of goods and services
to meet their needs. There are different processes involved in consumer behavior. Initially,
the consumer tries to find what products you would like to consume, and then select only
those products that promise greater utility. After selecting the products, the consumer makes
an estimate of available funds that can happen. Finally, the consumer looks at the current
prices of commodities and makes the decision about which products to consume. Meanwhile,
there are several factors that influence consumer purchases, such as social, cultural, personal
and psychological. The explanation of these factors is as follows.

1. CULTURAL FACTORS

Consumer behavior is deeply influenced by cultural factors, such as buyer’s culture,

subculture and social class.

• Culture - Essentially, culture is the share of each company and is the major cause of the
person who wants and behavior. The influence of culture on the purchasing behavior varies
from country to country; therefore sellers have to be very careful in the analysis of the culture
of different groups, regions or even countries.

Cultural factors comprise of set of values and ideologies of a particular community or group
of individuals. It is the culture of an individual which decides the way he/she behaves. In
simpler words, culture is nothing but values of an individual. What an individual learns from
his parents and relatives as a child becomes his culture

• Subculture - Each culture has different subcultures, such as religions, nationalities,

geographical regions, racial, etc. marketing groups may use these groups, segmenting the

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market in several small portions. For example, marketers can design products according to
the needs of a specific geographical group.

• Social Class - Every society has some kind of social class is important for marketing
because the buying behavior of people in a particular social class is similar. Thus marketing
activities could be adapted to different social classes. Here we should note that social class is
not only determined by income, but there are several other factors such as wealth, education,
occupation etc.

2. SOCIAL FACTORS

Social factors also influence the purchasing behaviour of consumers. Human beings are
social animals. We need people around to talk to and discuss various issues to reach to better
solutions and ideas. We all live in a society and it is really important for individuals to adhere
to the laws and regulations of society.

Social Factors influencing consumer buying decision can be classified as under:

• Reference Groups
• Immediate Family Members
• Relatives
• Role in the Society
• Status in the society

• Reference groups - Reference groups have the potential for the formation of an attitude or
behaviour of the individual. The impact of reference groups vary across products and brands.
For example, if the product is visible as clothing, shoes, car etc., the influence of reference
groups will be high. Reference groups also include opinion leader (a person who influences
others by his special skill, knowledge or other characteristics).

• Family - Buyer behaviour is strongly influenced by a family member. So vendors are trying
to find the roles and influence of the husband, wife and children. If the decision to purchase a
particular product is influenced by the wife of then sellers will try to target women in their ad.
Here we should note that the purchase of roles change with changing lifestyles of consumers.

• Roles and Status - An individual from an upper middle class would spend on luxurious
items whereas an individual from middle to lower income group would buy items required
for his/her survival.

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Each person has different roles and status in society in terms of groups, clubs, family, etc.
organization to which it belongs. For example, a woman working in an organization as
manager of finance. Now she is playing two roles, one of the chief financial officer and the
mother. Therefore, purchasing decisions will be influenced by their role and status.

Role in the Society - Each individual plays a dual role in the society depending on the group
he belongs to. An individual working as Chief Executive Officer with a reputed firm is also
someone’s husband and father at home. The buying tendency of individuals depends on the
role he plays in the society.

3. PERSONAL FACTORS

Personal factors may also affect consumer behavior. Some of the important factors that
influence personal buying behavior are: lifestyle, economic status, occupation, age,
personality and self-esteem.

• Age - Age and life cycle have a potential impact on the purchasing behavior of consumers.
It is obvious that consumers change the purchase of goods and services over time. Family life
cycle consists of different stages as young singles, married couples, and unmarried couples
etc. that help marketers to develop suitable products for each stage. Age and human lifecycle
also influence the buying behavior of consumers. Teenagers would be more interested in
buying bright and loud colors as compared to a middle aged or elderly individual who would
prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties,
and clubs and so on. A young single would hardly be interested in buying a house, property,
insurance policies, gold etc. An individual who has a family, on the other hand would be
more interested in buying something which would benefit his family and make their future
secure.

• Occupation - The occupation of a person has a significant impact on their buying behaviour.
For example, a marketing manager of an organization is trying to buy business suits, while a
low level worker in the same organization buy-resistant clothing works. The occupation of an
individual plays a significant role in influencing his/her buying decision. An individual’s
nature of job has a direct influence on the products and brands he picks for himself/herself.

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• Economic situation - economic situation of the consumer has a great influence on their
buying behaviour. If income and savings a customer is high, then going to buy more
expensive products. Moreover, a person with low income and savings buy cheap products.

The buying tendency of an individual is directly proportional to his income/earnings per

month. How much an individual brings home decides how much he spends and on which
products?

Individuals with high income would buy expensive and premium products as compared to
individuals from middle and lower income group who would spend mostly on necessary
items. You would hardly find an individual from a low income group spending money on
designer clothes and watches. He would be more interested in buying grocery items or
products necessary for his survival.

• Lifestyle - Lifestyle clients is another factor affecting import purchasing behaviour of

consumers. Lifestyle refers to the way a person lives in a society and express things in their
environment. It is determined by the client’s interests, opinions, etc. and activities shape their
whole pattern of acting and interacting in the world.

Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way
an individual stays in the society. It is really important for some people to wear branded
clothes whereas some individuals are really not brand conscious. An individual staying in a
posh locality needs to maintain his status and image. An individual’s lifestyle is something to
do with his style, attitude, perception, his social relations and immediate surroundings.

• Personality - Personality changes from person to person, time to time and place to place.
Therefore, it can greatly influence the buying behaviour of customers. In fact, personality is
not what one has, but is the totality of the conduct of a man in different circumstances. Has a
different characteristic, such as dominance, aggression, confidence etc. that may be useful to
determine the behaviour of consumers to the product or service.

An individual’s personality also affects his buying behaviour. Every individual has his/her
own characteristic personality traits which reflect in his/her buying behaviour. A fitness freak
would always look for fitness equipment’s whereas a music lover would happily spend on
musical instruments, CDs, concerts, musical.

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4. PSYCHOLOGICAL FACTORS

There are four major psychological factors that affect the purchasing behaviour of consumers.
These are: perception, motivation, learning, beliefs and attitudes.

• Motivation - The level of motivation also affects the purchasing behaviour of customers.
Each person has different needs, such as physiological needs, biological needs, social needs,
etc. The nature of the requirements is that some are more urgent, while others are less
pressing. Therefore, a need becomes a motive when it is most urgent to lead the individual to
seek satisfaction.

• Perception - Select, organize and interpret information in a way to produce a meaningful

experience of the world is called perception. There are three different perceptual processes
which are selective attention, selective distortion and selective retention. In the case of
selective attention, sellers try to attract the attention of the customer. Whereas in case of
selective distortion, customers try to interpret the information in a way that supports what
customers already believe. Similarly, in the case of selective retention, marketers try to retain
information that supports their beliefs.

• Beliefs and Attitudes - Client has specific beliefs and attitudes towards different products.
Because such beliefs and attitudes shape the brand image and affect consumer buying
behaviour so traders are interested in them. Marketers can change beliefs and attitudes of
customers with special campaigns in this regard.

DECISION MAKING

A decision is defined as choosing an option of the few/many available. Decision making is

the process of choosing between two or more alternatives; it is the selection of an alternative
out of the few/many choices that are available.

Decision making is:

a) A goal oriented process.

b) It is a problem solving process: helps take advantage of opportunities and fight threats.

Decisions making can be of two types,

a) Programmed decision making, and,

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b) Non-programmed decision making.

a) Programmed decision making: This is applied for problems that are routine and regular.
Such problems are simple to deal with and guidelines to sort out such problems exist. Such
decisions are made without much thought. With respect to marketing, these are decisions
related to day to day purchases or convenience and shopping goods; these are generally low
involvement purchases. They may also be habitual in nature, and brand loyalty could easily
develop. Examples: Purchases made for staples, toiletries etc.

b) Non-programmed decision making: This is applied for problems that arise suddenly and
are unique or novel. As the problem is sudden and novel, it is complex and requires a lot of
information gathering, deliberation and thought. With respect to marketing, these are
decisions related to infrequent purchases or specialty goods and emergency goods; these are
high involvement purchases. Examples: Purchases made for laptops, real estate etc.

CONSUMER PURCHASE DECISION PROCESS

1. Problem/need recognition

This is often identified as the first and most important step in the customer’s decision process.
A purchase cannot take place without the recognition of the need. The need may have been
triggered by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising
or word of mouth).

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2. Information search

Having recognised a problem or need, the next step a customer may take is the information
search stage, in order to find out what they feel is the best solution. This is the buyer’s effort
to search internal and external business environments, in order to identify and evaluate
information sources related to the central buying decision. Your customer may rely on print,
visual, online media or word of mouth for obtaining information.

3. Evaluation of alternatives

As you might expect, individuals will evaluate different products or brands at this stage on
the basis of alternative product attributes – those which have the ability to deliver the benefits
the customer is seeking. A factor that heavily influences this stage is the customer’s attitude.
Involvement is another factor that influences the evaluation process. For example, if the
customer’s attitude is positive and involvement is high, then they will evaluate a number of
companies or brands; but if it is low, only one company or brand will be evaluated.

4. Purchase decision

The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the
final purchase decision may be ‘disrupted’ by two factors: negative feedback from other
customers and the level of motivation to accept the feedback

5. Purchase

A need has been created, research has been completed and the customer has decided to make
a purchase. All the stages that lead to a conversion have been finished. However, this doesn’t
mean it’s a sure thing. A consumer could still be lost. Marketing is just as important during
this stage as during the previous.

6. Post-purchase behaviour

In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can
greatly affect the decision process for similar purchases from the same company in the future,
having a knock-on effect at the information search stage and evaluation of alternatives stage.
If your customer is satisfied, this will result in brand loyalty, and the Information search and
Evaluation of alternative stages will often be fast-tracked or skipped altogether.

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On the basis of being either satisfied or dissatisfied, it is common for customers to distribute
their positive or negative feedback about the product. This may be through reviews on
website, social media networks or word of mouth. Companies should be very careful to create
positive post-purchase communication, in order to engage customers and make the process as
efficient as possible.

BUYING ROLES

Consumer decision making is a complex process. It is interplay of reactions amongst a

consumer and his cognition, affect and behaviour on the one hand, as well as the
environmental forces on the other hand. The actual transaction/ exchange are preceded by
considerable amount of thought processes and influences.

This could be explained in terms of the five “Buying Roles” viz., Initiator, Influencer,
Decider, Buyer and, User.

The marketer needs to understand these roles so as to be able to frame suitable strategies to
target them.

a) Initiator: The person who identifies a need and first suggests the idea of buying a
particular product or service.

b) Influencer: The person(s) who influences the buyer in making his final choice of the
product.

c) Decider: The person who decides on the final choice: what is to be bought, when, from
where and how?

d) Buyer: The person who enters into the final transaction and exchange process or is
involved in the physical activity of making a purchase.

e) User: The person(s) who actually consumes the product or service offering.

The various buying roles can be illustrated through examples:

Example: 1

A kindergarten girl needs to buy colour crayons to use in class.

i) Initiator: The girl

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ii) Influencer: Her teacher or her classmates

iii) Decider: Either of the parents
iv) Buyer: Either of the parents or a sibling.
v) User: The girl herself.

Example: 2 - The mother of the house is a housewife; she loves watching TV when her
husband and children go for work. She has been complaining that the present TV set at home
has been giving problem. She also says that the model is now an old one and that that the
family should own a new model.

i) Initiator: The lady

ii) Influencer: Her neighbours and friends.
iii) Decider: Joint: Her husband, she herself and the children.
iv) Buyer: Husband or son or daughter or she herself.
v) User: The family

BUYING MOTIVES

Buying motive is the urge or motive to satisfy a desire or need that makes people buy goods
or services. Behind every purchase there is a buying motive.

It refers to the thoughts, feelings, emotions and instincts, which arouse in the buyers a desire
to buy an article. A buyer does not buy because s/he has been persuaded by the salesman, but
s/he buys for the aroused desire in him or her. Motives should be distinguished from instincts.

A motive is simply a reason for carrying out a particular behaviour and not an automatic
response to a stimulus, whereas instincts are pre-programmed responses, which are inborn in
the individual and involuntary. Thus hunger is an instinct whereas desire to purchase pizza is
a buying motive. According to Prof. D. J. Duncan, “Buying Motives are those influences or
considerations which provide the impulse to buy, induce action and determine choice in the
purchase of goods and services.” Buying motives are can be divided by the following way:

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Classification of Buying Motives: Product Buying and Patronage Buying

Product Buying Motives: Product buying motives refer to those influences and reasons,
which prompt (i.e. induce) a buyer to choose a particular product in preference to other
products. They include the physical attraction of the product (i.e. the design, shape,
dimension, size, colour, package, performance, price etc. of the product) or the psychological
attraction of the product (i.e. the enhancement of the social prestige or status of the purchaser
through its possession), desire to remove or reduce the danger or damage to life or body of
the possessor, etc. In short, they refer to all those characteristics of a product, which induce a
buyer to buy it in preference to other products.

Product buying motives may be sub-divided into two groups, viz., (1) emotional product
buying motives and (2) rational product buying motives.

A. Emotional Product Buying Motives:

When a buyer decides to purchase a product without thinking over the matter logically and
carefully (i.e., without much reasoning), she is said to have been influenced by emotional
product buying motives. Emotional product buying motives include the following:

1. Pride or Prestige: Pride is the most common and strongest emotional buying motive. Many
buyers are proud of possessing some product (i.e., they feel that the possession of the product
increases their social prestige or status). In fact, many products are sold by the sellers by
appealing to the pride prestige of the buyers. For instance, diamond merchants sell their
products by suggesting to the buyers that the possession of diamonds increases their prestige
or social status.

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2. Emulation or Imitation: Emulation, i.e., the desire to imitate others, is one of the important
emotional buying motives. For instance, a housewife may like to have a silk saree for the
simple reason that all the neighbouring housewives have silk sarees.

3. Affection: Affection or love for others is one of the stronger emotional buying motives
influencing the purchasing decisions of the buyers. Many goods are purchased by the buyers
because of their affection or love for others. For instance, a husband may buy a costly silk
saree for his wife or a father buy a costly watch for his son or daughter out of his affection
and love.

4. Comfort or desire for comfort: Desire for comfort (i.e., comfortable living) is one of the
important emotional buying motives. In fact, many products are bought comfort. For
instance, fans, refrigerators, washing machines, cushion beds, etc. is bought by people
because of their desire for comfort.

5. Ambition: Ambition is one of the emotional buying motives. Ambition refers to the desire
to achieve a definite goal. It is because of this buying motive that, sometimes, customers buy
certain things. For instance, it is the ambition that makes many people, who do not have the
facilities to pursue their college education through regular colleges, pursue their education
through correspondence courses.

6. Desire for distinctiveness or individuality: Desire for distinctiveness, i.e., desire to be

distinct from others, is one of the important emotional buying motives. Sometimes, customers
buy certain things, because they want to be in possession of things, which are not possessed
by others. Purchasing and wearing a particular type of dress by some people is because of
their desire for distinctiveness or individuality.

7. Desire for recreation or pleasure: Desire for recreation or pleasure is also one of the
emotional buying motives. For instance, radios, musical instruments, etc. are bought by
people because of their desire for recreation or pleasure.

8. Hunger and thirst: Hunger and thirst are also one of the important emotional buying
motives. Foodstuffs, drinks, etc. are bought by the people because of this motive.

9. Habit: Habit is one of the emotional considerations influencing the purchasing decision of
the customers. Many customers buy a particular thing because of habit, (i.e. because they are

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used to the consumption of the product). For instance, many people purchase cigarettes,
liquors, etc. because of sheer habit.

B. Rational Product Buying Motives:

When a buyer decides to buy a certain thing after careful consideration (i.e. after thinking
over the matter consciously and logically), s/he is said to have been influenced by rational
product buying motives. Rational product buying motives include the following:

1. Safety or Security: Desire for safety or security is an important rational buying motive
influencing many purchases. For instance, iron safes or safety lockers are bought by the
people because they want to safeguard their cash, jewelleries etc., against theft. Similarly,
vitamin tablets, tonics, medicines, etc., are bought by the people because of this motive, i.e.
they want to safeguard their health and protect themselves against diseases.

2. Economy: Economy, i.e. saving in operating costs, is one of the important rational buying
motives. For instance, Hero Honda bikes are preferred by the people because of the economy
or saving in the operating cost, i.e. petrol costs.

3. Relatively low price: Relatively low price is one of the rational buying motives. Most of
the buyers compare the prices of competing products and buy things, which are relatively
cheaper.

4. Suitability: Suitability of the products for the needs is one of the rational buying motives.
Intelligent buyers consider the suitability of the products before buying them. For instance, a
buyer, who has a small dining room, naturally, goes in for a small dining table that is suitable,
i.e. that fits in well in the small dining room.

5. Utility or versatility: Versatility or the utility of a product refers to that quality of the
product, which makes it suitable for a variety of uses. Utility of the product is one of the
important rational buying motives. People, often, purchase things that have utility, i.e. that
can be put to varied uses.

6. Durability of the product: Durability of the product is one of the most important rational
buying motives. Many products are bought by the people only on the basis of their durability.
For instance, buyers of wooden furniture go in for teak or rosewood table, though they are
costlier, as they are more durable than ordinary wooden furniture.

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7. Convenience of the product: The convenience of the product (i.e. the convenience the
product offers to the buyers) is one of the important rational product buying motives. Many
products are bought by the people because they are more convenient to them. For instance,
automatic watches, gas stoves, etc., are bought by the people because of the convenience
provided by them.

Patronage Buying Motives:

Patronage buying motives refer to those considerations or reasons, which prompt a buyer to
buy the product wanted by him from a particular shop in preference to other shops. In other
words, they are those considerations or reasons, which make a buyer, patronize a particular
shop in preference to other shops while buying a product.

Patronage buying motives also may be sub-divided into two group’s viz. a) Emotional
patronage buying motives and b) Rational patronage buying motives.

A. Emotional Patronage Buying Motives:

When a buyer patronizes a shop (i.e. purchases the things required by him from a particular
shop) without applying his mind or without reasoning, he is said to have been influenced by
emotional patronage buying motives. Emotional patronage buying motives include the
following:

1. Appearance of the shop: Appearance of the shop is one of the important emotional
patronage buying motives. Some people make their purchases from a particular shop because
of good or attractive appearance of the shop,

2. Display of goods in the shop: Attractive display of goods in the shop also makes the buyers
patronize a particular shop.

3. Recommendation of others: Recommendation of others also constitutes one of the

important emotional patronage buying motives. Some people purchase their requirements
from a particular shop because that shop has been recommended to them by others, i.e., by
their friends and relatives.

4. Imitation: Imitation also is one of the emotional patronage buying motives influencing the
purchases of buyers. Some people make their purchases from a particular shop just because
other people make their purchases from that shop.

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5. Prestige: Prestige is one of the emotional patronage buying motives of the buyers. For
instance, some people consider it a prestige to take coffee from a five-star hotel.

6. Habit: Habit is also one of the important emotional patronage buying motives. Some
people make their purchases from a particular shop for the simple reason that they have been
habitually making their purchases from that shop.

B. Rational Patronage Buying Motives: When a buyer patronizes a shop after careful
consideration (i.e. after much logical reasoning and careful thinking) he is said to have been
influenced by rational patronage buying motives. Rational patronage buying motives include
the following:

1. Convenience: Convenient location proximity of a shop is one of the considerations

influencing the purchases of many buyers from a particular shop. Many buyers, usually, buy
their requirements from a near-by shop, as it is convenient to them to make their purchases.

Similarly, convenient working hours of the shop also influence the purchases of good many
buyers. For instance, if a shop works for a longer period of time every day and even on
Sundays, it will be very convenient to the buyers. As such, many buyers may make their
purchases from such a shop.

2. Low price charged by the shop: Price charged by the shop also influences the buyers to
patronize a particular shop. If the price charged by a shop for a particular product is relatively
cheaper, naturally, many people will make their purchases from that shop.

3. Credit facilities offered: The credit facilities offered by a store also influence the buying of
some people from a particular shop. People who do not have enough money to make cash
purchases every time prefer to make their purchases from a shop which offers credit facilities.

4. Services offered: The various sales and after-sale services, such as acceptance of orders
through phone, home delivery of goods, repair service, etc., offered by a shop also induce the
buyers to buy their requirements from that shop. Rational buyers are, often, influenced by the
various services or facilities offered by the shop.

5. Efficiency of salesmen: The efficiency of the salesmen employed by a shop also influences
the people in patronizing a particular shop. If the employees are efficient and are capable of
helping the buyers in making their purchases, people naturally would flock to such a shop.

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6. Wide choice: Wide choice of goods offered by a shop is one of the rational considerations
making the buyers patronize a particular shop. People generally prefer to make their
purchases from a shop, which offers wide choice (i.e. wide varieties of goods).

7. Treatment: The treatment meted out by a shop to the customers is one of the rational
considerations influencing the buyers to patronize a particular shop. Usually, people would
like to purchase their requirements from a shop where they get courteous treatment.

8. Reputation of the shop: Reputation of the shop for honest dealings is also one of the
rational patronage buying motives. Usually, people would like to make their purchases from a
store having reputation for fair dealings

The black box model of consumer behaviour

The buying behaviour of final consumers is influenced by various factors. These factors or
characteristics determine what is going on in the so-called black box of the consumer. The
buyer black box is the consumer’s head.

The buying behaviour is based on stimuli, coming from the environment. The stimuli then go
through the buyer black box, where a decision is formed. The black box consists of two parts.
This reaction on stimuli is based on

1) The buyer’s characteristics, as well as

2) The buyer’s decision process

The black box is the central element of the consumer buying behavior.

When a person is given certain input or stimulus, that stimulus affects the person's actions.
What happens in the person's mind to cause that behavior has remained mostly a mystery --
hence the name "black box."

Cultural Factors in the Buyer Black Box

Culture - Culture is the software of the mind. In other words, the set of basic values,
perceptions and behaviors that distinguishes one group from another. These values and
behaviors are learned by a member of society from family and other institutions. They are so
deep-seated that they steer a person in any situation. Therefore, culture is the most
fundamental cause of a person’s wants and behaviors.

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Subculture
Each culture consists of several smaller subcultures. These subcultures are groups of people
who share value systems. This may be based on common experiences and situations.
Subcultures can be nationalities, religions, but also geographic regions. Often, single
subcultures make up a market segment that marketers aim add by tailoring a product to the
subculture’s needs

Social Class
Social classes exist in nearly every society. The term social class refers to a certain permanent
division in a society. The social class is an important factor in the buyer black box as it
determines what the consumer’s response will be. A combination of several factors such as
income, occupation and education determine the social class structure. Worthy of note is the
fact that in some societies, it is easier to move between social classes than in other societies.

Social Factors in the Buyer Black Box

Next to cultural factors, social factors influence the Buyer Black Box.

Reference Groups
Reference groups influence a buyer’s behaviour. In particular, reference groups are direct or
indirect points of comparison (reference). In other words, a buyer orientates him/herself by
means of a reference group. If the group wears Nike shoes, the buyer must have them as well.
If the reference group prefers certain brands, the buyer will do as well. Therefore, reference
groups expose a person to new lifestyles and new behaviours.

Family
As do reference groups, families strongly influence the buyer black box. In fact, the family is
often the most powerful influence on consumer buying behaviour. For instance, the husband-
wife relationship and involvement may greatly affect an individual’s buying behaviour.

Roles and Status

The role refers to the activities that the person is expected to perform according to the group
members. Also, each role carries a certain status that reflects the general esteem given to it by
society. Since people usually choose products based on their roles and status, as the above
mentioned example shows, this factor can greatly influence the buyer black box.

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Personal Factors in the Buyer Black Box

The Buyer Black Box is greatly influenced by personal characteristics.

Age and lifecycle stage

People do not buy the same goods over their lifetimes. Instead, tastes in food, clothes,
furniture and style are often related to age. In addition, buying behaviour is also influenced
by the family life cycle. Marrying, having children, purchasing a home, divorcing etc. may
change the factors in the buyer black box.

Occupation
Without doubt, the buyer black box is strongly influenced by the person’s occupation. For
instance, blue-collar workers will tend to buy more rugged clothes for work. On the contrary,
executives will prefer business suits. Furthermore, a farmer will probably like a cool beer
more after work than a lawyer, who would go for the wine. Marketers must try to identify
these occupational groups. They should find the one which has the highest interest in their
products.

Economic situation
Even more evidently, the buyer’s economic situation affects the buyer black box. It will
affect his/her product and store choices. For instance, personal income, savings and other
factors influence what a buyer will purchase where, when, and how much.

Lifestyle
Lifestyle refers to a person’s pattern of living. This pattern can be expressed in the person’s
activities, interests and opinions, the so-called AIO dimensions. Activities refer to work,
hobbies, sports and similar things. Interests are linked to food, fashion, family etc. Opinions
can be about the person him/herself, social issues, businesses and products.

Personality
The buyer black box is also affected by his or her personality. Personality means nothing else
than the unique psychological characteristics distinguishing one person from another. It is
often described in terms of traits. These can be self-confidence, dominance, aggressiveness
and so further. As is the case with lifestyles, the idea is that brands also have personalities.
Consumers will therefore be likely to choose brands which have personalities matching their
own.

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Psychological Factors in the Buyer Black Box

Finally, the Buyer Black Box is influenced by psychological factors.

Motivation
Motives are needs that are sufficiently pressing to direct the person to seek fulfilment of the
need. Needs can be of various natures. And those needs can become a motive when they are
sufficiently intensive. The most popular theory that addresses needs is Abraham Maslow’s
Hierarchy of Needs. The latter explains that human needs are arranged in a hierarchy, from
the most pressing one to the least pressing one. According to Maslow, a person tries to satisfy
the most important need first. Not before that need is satisfied is will stop being a motivator.
Then, the person will try to satisfy the next most important need. To understand how
motivation works is crucial for marketers. The reason is that motivation steers the buyer
black box, by directing the decision for and against products.
Perception
Every person has an individual picture of the world. That is a result of perception, which
plays a major role in the buyer black box. Perception is the process by which a person selects,
organises and interprets information. By that process, a meaningful picture of the world is
generated.

Therefore, people often have different perceptions of the same stimulus. To understand these
perceptions is important in order to understand the buyer black box.

Learning
Learning is another factor contributing to the stimulus-transformation in the buyer black box.
Every time a person acts, he or she learns. This means a change in his or her behaviour
arising from experience. Imagine a consumer buys a Mercedes-Benz. If the experience is
rewarding, which it will probably be, the consumer’s response will be reinforced. Then, the
next time that consumer buys a car; the probability is greater that he or she will buy a
Mercedes again. Thus, learning can be the decisive factor in the buyer black box.

Beliefs and Attitudes

Through all the doing and learning, a person acquires beliefs and attitudes. These factors, in
turn, influence the buyer black box. If a buyer has negative beliefs about a product based on
learning, it is unlikely that he or she will buy it in the future. Also, the person will have a
negative attitude towards the product. Certainly, beliefs and attitudes of a person are quite

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difficult to change. Therefore, marketers should concentrate on trying to fit the products into
existing attitudes instead of attempting to change them.

B2B marketing Vs Consumer Marketing

B2C is the type of marketing people most know. The “B” is the business (that is, the
product/company/service selling the thing) and the “C” is the consumer. That’s us, folks –
individual buyers or prospects.

B2B is, quite literally, “business to business.” It is marketing by one company to another.

For example, at Act-On, our clients are other businesses. We sell our product to marketing
agencies and companies who want to improve their time to market, embrace marketing
automation, and work smarter and faster.

B2B services are all around us ― think about manufacturers who sell RFID technology to
warehouses, or freight carriers who sell their transportation services to businesses to transport
goods. Even farmers who sell produce to restaurants are B2B

10 Key Differences in B2B vs. B2C Marketing

1. Marketers can use industry jargon to excellent effect on B2B platforms, but on
B2C, the voice must be at least relatable to the majority of consumers — meaning
fewer buzzwords and (usually) simpler language.
2. Drivers matter. The B2B audience is seeking efficiency and expertise, while the
consumer audience is more likely to be seeking deals and entertainment. Accordingly,
the B2B purchase process tends to be rationally and logically driven, while consumer
choices are typically emotionally triggered (whether by hunger, desire, status or cost).
3. B2B clientele want to be educated and provided with expertise. They often want to
look like the workplace rock stars or heroes thanks to their excellent decisions. B2C
customers just want to enjoy themselves, be happy with their purchase and have it
adequately fulfil the needs mentioned in No. 2.
4. Highly detailed content is required for B2B marketing. It’s an audience that
expects to be catered to by a sales and marketing team. On the other hand, B2C social
media activities simply need to meet the basic needs of being useful, humorous and
shareable, which admittedly, can be just as complicated.

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5. Lengthy content tends to work for B2B since a brand or business has to prove its
expertise and give its target audience a reason to buy in. Consumers tend to prefer
something short and snappy, especially for lower-priced B2C products.
6. A B2C consumer following your brand isn’t necessarily looking to build a close
relationship with it. Inversely, the B2B crowd wants information and the ability to
build a close relationship with brands.
7. B2B marketers have a much longer chain of command to deal with since
procurement, accounting and their superiors often need to approve purchases. On the
other hand, an individual typically makes their own speedy B2C purchase choices —
possibly with the slight influence of others via recommendations or suggestions.
8. The B2B buying cycle is often much longer than the B2C decision
process. Therefore, it requires much more nurturing and close attention. B2C buys
tend to satisfy immediate needs, while B2B decisions are meant to complete long-
term goals.
9. A contract for a B2B purchase tends to last months or even years, making it a
much more significant decision. On the contrary, the total B2C cycle can be as short
as a few minutes depending on the product.
10. The two types of marketers have distinctive problems. Often, the largest problem
that B2B marketers have is a lack of content and time to create it. This differs from
B2C marketers who would rather have a bigger advertising budget and other ways to
spread the word about their products. Naturally, this has a significant effect on tactical
executions.

Concept of Market Segmentation

In older days, many business firms viewed all their consumer population as a single market
with uniform characteristics and requirements. Hence the developed a single brand and a
common marketing programme to satisfy all their consumer population. However, in the
recent years with the increase in the competition this old approach of firms does not yield the
desired results. Hence the modern firms subdivide their target market into different groups
and subgroups of consumer population on the basis of their identifiable distinct and
homogeneous characteristics. Each of these groups is called a market segment. Further the
firms use distinct marketing mix for each of these market segments, in order to increase

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consumer satisfaction and profits of the business. Thus market segmentation is a recent idea
that helps the firms in framing their marketing strategy

Markets consist of buyers who differ in one or more respects. They may differ in their wants,
resources, geographical locations, attitudes and buying practices. It is therefore necessary for
a marketer to segment his/her market.

Market segmentation is a marketing concept which divides the complete market set up into
smaller subsets comprising of consumers with a similar taste, demand and preference. A
market segment is a small unit within a large market comprising of likeminded market
segment is totally distinct from the other segment. A market segment comprises of
individuals who think on the same lines and have similar interests. The individuals from the
same segment respond in a similar way to the fluctuations in the market

Market segmentation is the process of dividing a total market into market groups consisting
of people who have relatively similar product needs, there are clusters of needs.

Segmentation refers to a process of bifurcating or dividing a large unit into various small
units which have more or less similar or related characteristics

Segmentation refers to the process of creating small segments within a broad market to select
the right target market for various brands. Market segmentation helps the marketers to devise
and implement relevant strategies to promote their products amongst the target market.

A market segment consists of individuals who have similar choices, interests and preferences.
They generally think on the same lines and are inclined towards similar products. Once the
organizations decide on their target market, they can easily formulate strategies and plans to
make their brands popular amongst the consumers.

The process of grouping customers in markets with some heterogeneity into smaller, more
similar or homogeneous segments. The identification of target customers groups in which
customer groups in which customers are aggregated into groups with similar requirements
and buying characteristics.

Market segment – A group of individuals, groups or organizations sharing one or more

similar characteristics that cause them to have relatively similar product needs and buying
characteristics.

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Definitions

(1) Marketing segmentation is a process of dividing a market into distinct groups of buyers
on the basis of needs, characteristics or behaviour who might repaired separate products or
marketing mixes”.- Philip Kotler- The American Marketing Association

(2) Market segmentation consists of taking the total heterogeneous market for a product and
dividing it into served sub markets or segments each of which tends to be homogeneous in all
significant aspects. - William A. Stanton

Examples:

Nokia offers wide range of handsets for both males as well as females.

The handset for females would be sleeker and more colourful as compared to sturdy handsets
for males. Males generally do not prefer stylish handsets.

The organizations can’t have similar products for all individuals.

Perfumes and deodorants for females have a sweet fragrance whereas perfumes for males
have a strong fragrance.

A marketer can’t have similar strategies for all consumers.

The process of creating small segments comprising of likeminded individuals within a broad
market refers to market segmentation. Market segmentation helps in the division of market
into small segments including individuals who show inclination towards identical brands and
have similar interests, attitudes and perception.

Features

On careful analysis of the above definitions, we may obtain the following characteristic
features of market segmentation.
(1) Process: Market segmentation is a process of subdividing the target market for firm’s
goods and services into subgroups of consumer population.
(2) Segments: Consumers of products of services of a firm differ in their wants, resources,
geographical location, buying attitudes, buying practices, etc. Hence, they are divided into
homogeneous groups and subgroups having distinct features. Each of these subgroups are

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called segments. Thus, a marketing segment is a meaningful consumer group having distinct
feature and similar want.
(3) Object: The object of doing market segmentation is to enable the business firm to focus
properly on the specific consumer needs of each segment and to maximize the consumer
satisfaction and profits of business. Market segmentation also helps small business firms to
identify the most attractive segments that they can serve effectively instead of running after
all varieties of consumer’s indifferent segments without giving proper justice to any of them.
(4) Special market mix: By doing market segmentation firms attempt to fulfill the needs of
different consumer groups through proper marketing mix consisting of products, price,
promotion and distribution.
(5) Use of bases: For segmenting the firm’s market various bases are used, such as region,
age, sex income levels, occupation, religion, consumption level, culture, etc. of consumers.
(6) Target marketing: Market segmentation helps a firm to do target marketing. A firm can
identify the most attractive market segments that can be effectively served through
appropriate products, prices, promotion, and price and distribution channel. Thus the firms,
instead of scattering their marketing efforts, are focusing on consumers, who have greater
interest in the values they create best.
(7) Flexible: The segmentation of markets in flexible in nature as it goes on changing with
the change in business environment and market conditions.
(8) Strategy: Market segmentation is a consumer oriented strategy, whereby a business firm
devices a special market mix as per the needs of consumers in each market segment in a
target market of the firm.
Need for Market Segmentation

• Market Segmentation helps the marketers to devise appropriate marketing strategies

and promotional schemes according to the tastes of the individuals of a particular
market segment. A male model would look out of place in an advertisement
promoting female products. The marketers must be able to relate their products to the
target segments.
• Market segmentation helps the marketers to understand the needs of the target
audience and adopt specific marketing plans accordingly. Organizations can adopt a
more focussed approach as a result of market segmentation.
• Market segmentation also gives the customers a clear view of what to buy and what
not to buy. A Rado or Omega watch would have no takers amongst the lower income

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group as they cater to the premium segment. College students seldom go to a Zodiac
or Van Heusen store as the merchandise offered by these stores are meant mostly for
the professionals. Individuals from the lower income group never use a Blackberry. In
simpler words, the segmentation process goes a long way in influencing the buying
decision of the consumers.
• An individual with low income would obviously prefer a Nano or Alto instead of
Mercedes or BMW.
• Market segmentation helps the organizations to target the right product to the right
customers at the right time. Geographical segmentation classifies consumers
according to their locations. A grocery store in colder states of the country would
stock coffee all through the year as compared to places which have defined winter and
summer seasons.
• Segmentation helps the organizations to know and understand their customers better.
Organizations can now reach a wider audience and promote their products more
effectively. It helps the organizations to concentrate their hard work on the target
audience and get suitable results

Benefits of Market Segmentation - There are a number of reasons organizations undertake -

segmentation

• Products are designed to be responsive to the needs of the marketplace. – segmenting

markets facilitates a better understanding of customer’s needs, wants and other
characteristics
• Increase profits – different consumer segments react in contrasting ways to prices,
some are far less price sensitive than others. Segmentation allows an organization to
gain from the best price it can in every segment, effectively raising the average price
and increasing profitability.
• Effective Resource Allocation - organizations are more capable of making products
that customers want and can afford.
• There is product differentiation – Various products are made to meet the needs of
each customer segment.
• Better matching of customer needs: Customer needs differ. Creating separate products
for each segment makes sense

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• Enhanced profits for business: Customers have different disposable incomes and vary
in how sensitive they are to price. By segmenting markets, businesses can raise
average prices and subsequently enhance profits
• Better opportunities for growth: Market segmentation can build sales. For example,
customers can be encouraged to "trade-up" after being sold an introductory, lower-
priced product
• Retain more customers: By marketing products that appeal to customers at different
stages of their life ("life-cycle"), a business can retain customers who might otherwise
switch to competing products and brands.
• Target marketing communications: Businesses need to deliver their marketing
message to a relevant customer audience. By segmenting markets, the target customer
can be reached more often and at lower cost
• Gain share of the market segment : Through careful segmentation and targeting,
businesses can often achieve competitive production and marketing costs and become
the preferred choice of customers and distributors

Requirements of Good Market Segments - In addition to having different needs, for

segments to be practical they should be evaluated against the following criteria:

Identifiable -The marketer should be able to identify which consumers are members of a
particular market segment. The consumers in the segment should respond in the same way to
a particular marketing mix. There must be some common characteristics that the consumers
have

Measurable - The characteristics that are common to the groups of consumers should be
measured in terms of size, purchasing power and other characteristics.

Substantial -The segment should be large enough to generate sales volume that ensures
profitability; otherwise it will not be economical to design a unique marketing mix for it. Is
the market worth the effort?

Accessible: the segments must be reachable through communication and distribution

channels.

Durable: the segments should be relatively stable to minimize the cost of frequent changes.

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Responsive - Market segments must be defined in their willingness to purchase a product in

response to variations in the marketing mix.

Compatible with corporate image -The market must be compatible with the firm’s
objectives and corporate image

Importance of Market Segmentation

Market segmentation strategy offers several benefits to the organization as well as to the
consumers. The important benefits enjoyed by the organization using this strategy are:
1. Improves Knowledge of Market: Market segmentation improves organization’s
understanding of the market. While doing market segmentation, the marketing manager
studies the profile of consumers, their needs, wants and preferences.
2. Identifies Market Opportunities: Marketing manager is in a better position of identify,
compare and evaluate the marketing opportunities for his organization. He examines the level
of satisfaction of different subgroups of consumers regarding the current marketing mix
offered by various firms. The subgroups indicating lower level of satisfaction with the
existing goods and services offered by various competing firms represent excellent marketing
opportunities for his firm.
3. Better Assessment of Competitors: Market segmentation strategy helps the business firm
is judging the strength and weaknesses of the competitors. If some of the market segments are
served efficiently by the competitors, the firm may give up those segments and concentrate
on other segments, which are not served properly by the competitors and take full advantage
of market opportunities.
4. Better Utilization of Firm’s Resources: By doing market segmentation the business firm,
targets only those consumer groups, which are neglected. This helps in minimizing the
wastages and making optimum utilization of firm’s resources
5. Consumer Orientation: By doing market segmentation, a business firm targets the
consumer population to be served. Then it plans a systematic and matching marketing mix
and programme to serve the needs of those consumers. This helps the firm to serve its target
consumers in a better way rather than trying to satisfy diverse needs of all varieties of
consumers in market

Bases for Market Segmentation Market segmentation involves grouping and sub grouping
of consumers on the basis of similar buying characteristics. There are a number of bases on
which such segmentation or grouping of consumers can be done. These bases are as under.

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(A) Consumer Characteristics -

(1) Geographic

(2) Demographic & Socio Economic

(3) Psychographic

(B) Consumer Responses -

(1) Benefits

(2) Usage

(3) Loyalty

(4) Occasion

(A) Consumer Characteristics Approach: Under this approach, person characteristics of

consumers as to where they live, who they are, how they behave, etc. are considered for
making segmentation of markets. Following is the brief explanation of these bases.

(1) Geographic Segmentation: Geographic segmentation is the most traditional basis of

market segmentation, which is used widely even today. The market is divided into different
geographical units as continents, countries, states, districts, regions and areas, etc. As the
consumers in different areas have different preferences and tastes for products, marketing
managers distinguish carefully among the regions, in which they may operate and select only
those where they have comparative advantage. Sometimes, they may even operate in all those
regions paying attention to the geographical needs and preferences of consumers in those
regions.

In geographic segmentation, markets are divided into different geographic units. These units
may include cities, regions, countries, or continents. Sometimes consumers may have
different buying habits, needs and expectations depending on where they live.

(2) Demographic and Socio-economic Segmentation: Demography means the study of

population. Demographic segmentation is based on demographic variables, such as age, sex
marital status, family size, place of residence, etc. Socio-economic segmentation is based on
socio-economic characteristics, such as income level, education, occupation, social class,
religion and culture, family life cycle, etc. demographic segmentation, markets are divided

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into segments on the basis of demographic criteria like age, sex, family size, education,
income, and social class. Consumers with similar demographic variables tend to have similar
expectations, preferences and usage habits. The demographic variables can be compared to
other segmentation variables, relatively easy to obtain and evaluate

For example, the market for consumer goods in India is segmented into 3 segments - high
income group, middle class and lower income group. The middle class is further segmented
husband and wife working, young family with only husband working etc. Such a type of
segmentation helps in developing on demographic variables is the most popular for two
reasons; firstly consumer wants, preferences and usage rates are highly associated with these
variables, and secondly, these variables are easier to measure than most other types of
variables.

(3) Psychographic Segmentation: Psychographic tries to describe the human character of

consumers that has influence on their responses to products, packings, and advertising and
public relations efforts of the firm. Psychographic characteristics include variable like -
personality, attitudes, and life-style.

(i) Personality - Personality means the individual’s consistent reaction to world around him.
Personality reflects the behaviour of people. The personality variables are - dominance,
aggressiveness, objectivity, achievement motivation, etc. These influence the buying
behaviour.

According to personality study conducted by a study group in U.S.A., it was revealed that
Ford cars attracted the personalities with features like ‘independent, impulsive, masculine,
alert to change and self-confident, whereas Chevrolet cars are used by people who are
conservative, thrifty, prestige conscious, less masculine and seeking to avoid extremes. Thus,
personality has impact on buying behaviour.

(ii) Life-style - Life-style indicates the person’s living and spending of time and money. It
influences a person’s allocation of income across his needs and among different brands of
products. Thus, the customers can be grouped as Pleasure Seekers (or hedonistic), who try to
purchase the latest varieties of goods and services without caring for their prices; Status
Seekers, who try to buy the goods and services of superior quality that will reflect a high
status in the society; and Plan People, who go for economical and normal quality goods and
services that do their job quite decently.

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(iii) Attitude - Attitude describes a person’s predisposition and perception towards objects,
individuals and events. It describes the positive or negative feeling of consumers towards the
market mix offered to him by a firm and the firm it. Attitudes are developed among the
people out of beliefs, knowledge and thinking.

(B) Consumer Response Approach: Consumer characteristics approach focuses on who

will be the consumer, whereas the consumer response approach pays attention to why the
consumers buy the products and services. Consumer response to the market offerings
provides significant bases for market segmentation. These responses are - benefits, usage,
loyalty and occasion. A brief description of these base goes as under:

(1) Benefits Response: Benefit segmentation divides the market into groups according to the
benefits they expect from goods and services of the firm. These benefits differ from product
to product. These benefits are durability, efficiency, economy, resale value, prestige, etc.

For example, in case of toothpaste, the benefits expected by the customers may be bright
teeth, prevention of tooth decay, mouth freshness, taste, low price, etc. In case of an
automobile, the benefits expected may be look of the vehicle, fuel efficiency, after sale
services, status, resale value, price, quality, size of vehicle, etc. Benefit segmentation proves
useful, because the company can choose the benefits expected by the customers, it can do the
product planning and publicity accordingly. It can create the product providing the benefits
expected by its customers and deliver those by a direct message to the group seeking those
benefits.

(2) Usage Response: Usage response or Volume response segmentation classifies the
consumers as HEAVY, MEDIUM and LIGHT and NON-USERS of the product or service.
NON-USERS are further classified as NON-POTENTIAL USERS and POTENTIAL
USERS. These groups are further subdivided on the basis of other demographic and
psychographic factors and geographical areas. Many business firms design special marketing
efforts focused on heavy users or potential users. Thus, treatment to consumers in different
usage segments differs.

(3) Loyalty Response: Loyalty segmentation divides buyers into different groups according to
their degree of loyalty, as under:

(i) Hard core loyals - Customers who go for one brand all the time.

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(ii) Soft core loyals - Customers who prefer two to three brands only.

(iii) Shifting loyals - Customers who often change loyalty from one to another over a period
of time

iv) Brand switchers - Customers who are not loyal to any brand. They accept product with
any brand. The customers in each of the above segments are further divided on the basis of
demographic, socio-economic, geographical and psychographic patterns. Marketing
strategies, advertising and product appeals are specially designed for each of these loyalty
based segments to convert them into hard core loyals.

(4) Occasion Response: Occasion response segmentation determines which situations

produce optimum consumption pattern for a given product. For example, local rice is used for
daily consumption, but when special occasions arrive, consumers prefer branded rice. Thus,
the above bases can be used to segment the market for the convenience of marketing. Markets
are segmented using two or more of the above bases and proper market mix is provided for
target market segments Targeting After the most attractive segments are selected, a company
should not directly start targeting all these segments -- other important factors come into play
in defining a target market. Four sub activities form the basis for deciding on which segments
will actually be targeted.

The four sub activities within targeting are:

1. Defining the abilities of the company and resources needed to enter a market

2. Analyzing competitors on their resources and skills

3. Considering the company’s abilities compared to the competitors' abilities

4. Deciding on the actual target markets.

The first three sub activities are described as the topic competitor analysis. The last sub
activity of deciding on the actual target market is an analysis of the company's abilities to
those of its competitors. The results of this analysis lead to a list of segments which are most
attractive to target and have a good chance of leading to a profitable market share.

Obviously, targeting can only be done when segments have been defined, as these segments
allow firms to analyze the competitors in this market. When the process of targeting is ended,
the markets to target are selected, but the way to use marketing in these markets is not yet

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defined. To decide on the actual marketing strategy, knowledge of the differential advantages
of each segment is needed.

Geographic Segmentation - While typically a subset of demographics, geographic

segmentation is typically the easiest. Geographic segmentation creates different target
customer groups based on geographical boundaries. Because potential customers have needs,
preferences, and interests that differ according to their geographies, understanding the
climates and geographic regions of customer groups can help determine where to sell and
advertise, as well as where to expand your business.

Demographic Segmentation - Demographic segmentation sorts a market by demographic

elements such as age, education, income, family size, race, gender, occupation, nationality,
and more. Demographic segmentation is one of the simplest and most commonly used forms
of segmentation because the products and services we buy, how we use those products, and
how much we are willing to spend on them is most often based on demographic factors.

Firmographic Segmentation - Firmographic segmentation is similar to demographic

segmentation. The difference is that demographics look at individuals while firmographics
look at organisations. Firmographic segmentation would take into consideration things like
company size, number of employees and would illustrate how addressing a small business
would differ from addressing an enterprise corporation.

Behavioural Segmentation - Behavioural segmentation divides markets by behaviours and

decision-making patterns such as purchase, consumption, lifestyle, and usage. For instance,
younger buyers may tend to purchase body wash, while older consumer groups may lean
towards soap bars. Segmenting markets based off purchase behaviours enables marketers to
develop a more targeted approach.

Psychographic Segmentation - Psychographic segmentation takes into account the

psychological aspects of consumer behaviour by dividing markets according to lifestyle,
personality traits, values, opinions, and interests of consumers. Large markets like the fitness
market use psychographic segmentation when they sort their customers into categories of
people who care about healthy living and exercise.

Volume Segmentation - Consumers are classified light, medium and heavy users of a
product. In some cases, 80 per cent of the product may be sold to only 20 per cent of the

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group. Marketers can decide product features and advertising strategies by finding common
characteristics among heavy users.

For example, airlines having ‘Frequent Flyer’ are using user rate as the basis of market
segmentation. Generally, marketers are interested in the heavy user group.

But marketers should pay attention to all the user groups because they represent different
opportunities. The non-users may consist of two types of people— those who do not use the
product and those who might use it. Some may change over time from a non-user to a user.

Those who do not use due to ignorance may be provided extensive information. Repetitive
advertising may be used to overcome inertia or psychological resistance. In this way non-
users can gradually be converted into users.

Semantic segmentation or Deep Segmentation refers to the process of linking each pixel in
an image to a class label. ... We can think of semantic segmentation as image classification at
a pixel level. For example, in an image that has many cars, segmentation will label all the
objects as car objects.

Semantic segmentation is the task of assigning a class to every pixel in a given image. Note
here that this is significantly different from classification. Classification assigns a single class
to the whole image whereas semantic segmentation classifies every pixel of the image to one
of the classes.

This is a classic example of semantic segmentation at work. Every pixel in the image belongs
to one a particular class – car, building, window, etc. And all pixels belonging to a particular
class have been assigned a single color. ... Semantic segmentation is the task of assigning a
class to every pixel in a given image.

Indian Consumer

Consumers in India are very heterogeneous in composition, both in terms of social and
cultural aspects and economic status.

Indian consumers are largely, poor, illiterate, ignorant and apathetic and always remain at the
receiving end. A small section of the population is very modem in its outlook and behavior,
comparable even to the most sophisticated consumer in the world, while a great majority is
still on the extreme side of traditionalism leaving about 10% of the population, belonging to

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middle or upper middle classes of urban segment in between the two extremes. Consumers in
this segment are slow in accepting change and their risk taking ability is low

Features about consumer India

1. Bargaining – A trend of bargaining is often found in the behavior of buyers. They prefer
buying goods by reducing the price as told by the seller. Indian buyers too do not frame
uniform price policy. The trend of bargaining is still in vogue in the Indian markets.

2. Quality vs. Price – Buyers focus on price instead of the variety of the goods. They
therefore, prefer high price goods. A little bit change has come now because the consumers
have now begun purchase of quality goods on higher price.

3. Brand or Trademark Consciousness – It is the characteristic of the behaviour of buyer that

he appears now aware of the brand of items and considers these goods authentic and of higher
quality.

4. Changing Consumption Patterns – Owing to widespread education, increase in income and

standard of living as also desire of more comforts, the pattern of consumption is now being
changed. The low income group and high income group are increasingly buying fridge, tape
recorder, cooler, sewing machines etc.

5. Role of Women – The role of women is increasing day to day in the manner of decisions
for purchase. The women do purchase of all kinds particularly in families where the husbands
earn the bread.

6. Credit and Guarantee – New motives for purchase are getting their way rapidly because of
having credit and guarantee facility available in the market. Such facilities are developing the
trade and commerce.

7. Complaining – Buyers are gradually being aware of their rights. They have started
exhibiting their complaints through media and the representations before the concerned
authorities and the forums. They can lodge their complaint before consumer forum and thus,
can receive the compensation against the damage/loss so sustained

8. Indian consumer is getting more materialistic - Indian consumer is getting more

materialistic Almost 50% of Indian urban population had adopted work hard and get rich
policy by 1996 and another 9% had done so by 2006 Gallop Survey: Indians are more

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motivated than ever by personal ambition and a desire for material success with an average
work-week of 50 hours. India is the hardest working nation globally.

9. Comfort level with Technology: Comfort level with Technology InfoTech awareness
InfoTech driven employment opportunities mushrooming of call centers E-choupal Cyber
grandma and grandpa!! Washing machines with fuzzy logic….and much more.

10. Consumerism: A way of life: Consumerism: A way of life Indians desire to set money
aside for electronics and durables. Here and Now attitude increasing Travel and
entertainment Trend applicable to 15 to 55 age group all pervasive-urban and rural. 1600%
growth in usage of mobile phones….3million subscribers a month Advt of designer jewellery
, LCD, watches….. BPO - first time market entrants.

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