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Unit II
Consumer Behavior: Meaning and Nature
Consumer behavior is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to
the actions of the consumers in the marketplace and the underlying motives for those actions.

Marketers expect that by understanding what causes the consumers to buy particular goods
and services, they will be able to determine—which products are needed in the marketplace,
which are obsolete, and how best to present the goods to the consumers.

The study of consumer behavior assumes that the consumers are actors in the
marketplace. The perspective of role theory assumes that consumers play various roles in the
marketplace. Starting from the information provider, from the user to the payer and to the
disposer, consumers play these roles in the decision process.
The roles also vary in different consumption situations; for example, a mother plays the role of
an influencer in a child’s purchase process, whereas she plays the role of a disposer for the
products consumed by the family.

Some selected definitions of consumer behavior are as follows:

According to Engel, Blackwell, and Mansard, ‘consumer behavior is the actions and decision
processes of people who purchase goods and services for personal consumption’.

According to Louden and Bitta, ‘consumer behavior is the decision process and physical
activity, which individuals engage in when evaluating, acquiring, using or disposing of goods
and services’.

Nature of Consumer Behavior

1. Influenced by various factors

The various factors that influence the consumer behaviour are as follows:
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 Marketing factors such as product design, price, promotion, packaging, positioning and dis-
tribution.
 Personal factors such as age, gender, education and income level.
 Psychological factors such as buying motives, perception of the product and attitudes towards
the product.
 Situational factors such as physical surroundings at the time of purchase, social surroundings
and time factor.
 Social factors such as social status, reference groups and family.
 Cultural factors, such as religion, social class—caste and sub-castes.

2. Undergoes a constant change

Consumer behavior is not static. It undergoes a change over a period of time depending on the
nature of products. For example, kids prefer colourful and fancy footwear, but as they grow up
as teenagers and young adults, they prefer trendy footwear, and as middle-aged and senior
citizens they prefer more sober footwear. The change in buying behavior may take place due
to several other factors such as increase in income level, education level and marketing
factors.

3. Varies from consumer to consumer

All consumers do not behave in the same manner. Different consumers behave differently.
The differences in consumer behavior are due to individual factors such as the nature of the
consumers, lifestyle and culture. For example, some consumers are technoholics. They go on a
shopping and spend beyond their means.

They borrow money from friends, relatives, banks, and at times even adopt unethical means to
spend on shopping of advance technologies. But there are other consumers who, despite
having surplus money, do not go even for the regular purchases and avoid use and purchase of
advance technologies.

4. Varies from region to region and country to county

The consumer behavior varies across states, regions and countries. For example, the behavior
of the urban consumers is different from that of the rural consumers. A good number of rural
consumers are conservative in their buying behaviors.
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The rich rural consumers may think twice to spend on luxuries despite having sufficient funds,
whereas the urban consumers may even take bank loans to buy luxury items such as cars and
household appliances. The consumer behavior may also varies across the states, regions and
countries. It may differ depending on the upbringing, lifestyles and level of development.

5. Information on consumer behavior is important to the marketers

Marketers need to have a good knowledge of the consumer behavior. They need to study the
various factors that influence the consumer behavior of their target customers.

6. Leads to purchase decision

A positive consumer behavior leads to a purchase decision. A consumer may take the decision
of buying a product on the basis of different buying motives. The purchase decision leads to
higher demand, and the sales of the marketers increase. Therefore, marketers need to influence
consumer behavior to increase their purchases.

7. Varies from product to product

Consumer behavior is different for different products. There are some consumers who may
buy more quantity of certain items and very low or no quantity of other items. For example,
teenagers may spend heavily on products such as cell phones and branded wears for snob
appeal, but may not spend on general and academic reading. A middle- aged person may
spend less on clothing, but may invest money in savings, insurance schemes, pension
schemes, and so on.

8. Improves standard of living

The buying behavior of the consumers may lead to higher standard of living. The more a
person buys the goods and services, the higher is the standard of living. But if a person spends
less on goods and services, despite having a good income, they deprives themselves of higher
standard of living.

9. Reflects status
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The consumer behavior is not only influenced by the status of a consumer, but it also reflects
it. The consumers who own luxury cars, watches and other items are considered belonging to a
higher status. The luxury items also give a sense of pride to the owners.

Factors Affecting Consumer Behaviour

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.

 Subculture

Each culture has different subcultures, such as religions, nationalities, geographical regions,
racial, etc. marketing groups may use these groups, segmenting the market in several small
portions. For example, marketers can design products according to the needs of a specific
geographical group.

 Social Class
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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 behavior of consumers. Social factors are: the
reference groups, family, the role and status.

 Reference groups

Reference groups have the potential for the formation of an attitude or behavior 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 behavior 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

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.

3. PERSONAL FACTORS
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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, unmarried couples etc that
help marketers to develop suitable products for each stage.

 Occupation

The occupation of a person has a significant impact on their buying behavior. 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 work.

 Economic situation

Economic situation of the consumer has a great influence on their buying behavior. 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.

 Lifestyle

Lifestyle clients is another factor affecting import purchasing behavior 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 shapes their whole pattern of
acting and interacting in the world.

 Personality

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

4. PSYCHOLOGICAL FACTORS

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

 Motivation

The level of motivation also affects the purchasing behavior 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 behavior so traders are interested
in them. Marketers can change beliefs and attitudes of customers with special campaigns in
this regard.
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Industrial consumer
Unlike the final consumer, who is a person that buys products and services for personal use,
the industrial consumer is an entity that buys to use them in their own business
operations. As such, it has its own particularities.

BEHAVIOUR OF THE INDUSTRIAL BUYER

Business consumers today have a number of characteristics that make the B2B buying
decision process complex. They are specialised, demanding, informed and negotiating
professionals. Thus, marketing to them must necessarily be more sophisticated.

They are permanently connected and know their company, product and sector in depth, also
on a technical level.

They require personalised customer service and increasingly demand high quality products
at attractive prices, with exclusive promotions.

They are always on the lookout for a better price, better conditions and more favourable
promotions.

Industrial purchasing decision process

The industrial consumer does not make purchasing decisions on impulse. The entire
process can involve up to eight phases, which we detail below.

1. Problem or need recognition

The B2B buying process starts when someone in the company identifies a problem or
need. For example, it may be that a new product launch requires the use of new raw materials
or technologies. Or it may be that customers are demanding an improvement in the quality of
an existing product.

From a marketing point of view, this moment is fundamental, because if we do not know
the real problem or need of the industrial consumer in detail, it will be very difficult to
determine which product or service is the right one for them.
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2. Identification of possible solutions

Once the problem has been identified, it is time to look for products whose characteristics
match the organisation's needs. The industrial consumer first selects possible solutions, before
determining the most appropriate one.

At this stage it is key to have worked on brand awareness, to ensure that we are in the
minds of the buyer(s).

3. Identification of the specific product type

Once the general characteristics of the needed product or service are known, the industrial
consumer goes into detail. In many companies this process is carried out by technicians using
instruments such as value analysis.

4. Sourcing suppliers

Once the industrial consumer has identified the product that can meet his needs, he searches
for the most qualified suppliers and asks them to present their proposals and quotations.

5. Analysis of proposals and quotations

The higher the volume of purchase or the greater the strategic importance is, the longer this
phase of the buying process will take.

It is common for industrial consumers to purchase goods and services on a large scale. In this
way they obtain better prices and discounts.

6. Supplier selection

At this point, the industrial consumer carries out an analysis of the attributes that he considers
most important. On the basis of these attributes, he makes a weighting to determine which of
the suppliers is the most suitable for him. The main criteria are usually performance,
economy, integration, adaptability, legality and quality.

7. Placing the order

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This phase covers the final negotiations with the selected supplier, the signing of the contract
according to the established purchasing and sales policies.

8. Commissioning and performance evaluation

In this phase, the workers who use the product play a major role. The extent to which we can
maintain and expand our relationship with the company as a supplier depends to a large extent
on their evaluation. It is therefore key to take care of a good after-sales service.

The BCM Marketing team, as specialists in designing Industrial Marketing strategies, we

know the behaviour of the industrial buyer and how to accompany them during their
purchasing process. Contact us and one of our consultants will help you to solve your doubts
about how to implement your strategy to capture new leads or potential customers.

Online Consumer
With the evolution of online communication through internet, customers now see online
advertisements of various brands. It is fast catching up with the buying behavior of consumers
and is a major source of publicity for niche segments and also for established brands. This is
the new way of digital revolution and businesses worldwide have realized their worth.

Examples − Online catalogues, Websites, or Search engines. When customers have sufficient
information, they will need to compare with the choices of products or services.
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Online Customer Behavior Process

According to the above figure, in the search stage, they might look for the product reviews or
customer comments. They will find out which brand or company offers them the best fit to
their expectation.

During this stage, well-organized web site structure and attractive design are important things
to persuade consumers to be interested in buying product or service.

Stage 1

The most useful characteristic of internet is that it supports the pre-purchase stage as it helps
customers compare different options.

Stage 2

During the purchasing stage, product assortment, sale services and information quality seem to
be the most important point to help consumers decide what product they should select, or what
seller they should buy from.

Stage 3

Post-purchase behavior will become more important after their online purchase. Consumers
sometimes have a difficulty or concern about the product, or they might want to change or
return the product that they have bought. Thus, return and exchange services become more
important at this stage.

Factors of Online Customer Behavior

The first elements to identify are factors that motivate customers to buy products or services
online. They are divided into two categories − external factors and internal factors.

 The External Factors are the ones beyond the control of the customers. They can divide into
five sectors namely demographic, socio-economic, technology and public policy; culture; sub-
culture; reference groups; and marketing.
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 Internal Factors are the personal traits or behaviors which include attitudes, learning,
perception, motivation, self image.
 The Functional Motives is related to the consumer needs and include things like time,
convenience of shopping online, price, the environment of shopping place, selection of
products etc.
 The Non-Functional Motives related to the culture or social values like the brand of the store
or product.

Modern Marketing Concept

Modern approach to marketing is referred to as the marketing concept which has developed
gradually passing through different stages called Marketing Management Philosophies

1. The Production Concept

This concept lays emphasis on production and assumes that consumers will always respond to
products that are made available to them. This concept developed when there was a period of
manufacturing dominance and there was no competition. It was producers market and hence
production problems were of more importance than anything else.

The major task of the management was to strive constantly to increase production and there
were no selling or marketing problems. The production concept may boost the sales in the
initial stages but it invites the criticism that it is impersonal in its approach and ignores the
interests of the consumers.

2. The Product Concept

With the passage of time, it was realized that it is not only the quantity of production but also
the quantity of the product that is important. The product concept assumes that the consumers
will respond favourably to the best quality products that are reasonably priced and hence the
major task of the management is to improve the quality of the product it offers to successfully
attract and hold customers. Enterprises which rely too much upon the product concept may
face difficulties due to the tendency on the part of such enterprises “to look to often in a mirror
when they should be looking out of the window.”
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3. The Sales Concept

With the development in technological field, the competition had grown and the market had
become more complex. During 1920’s and 30’s the selling activity became more important
and marketing was regarded merely as a selling activity, giving rise to the sales concept. The
selling concept assumes that the consumers will generally not buy enough of the firm’s
products unless their interest is stimulated in its products through substantial selling and
promotional activities. In this concept the focus is on the product, the means are selling and
promoting and the objective is maximization of profits through sales volume. The drawback of
the sales concept is that it ignores the customer’s interest and a firm which follows this
concept may face difficulties in the long run.

4. The Marketing Concept

The modern approach to marketing is referred to as the marketing concept. The essence of the
marketing concept is that the customer and not the product is the centre of entire business
activity. It is also referred to as the customer-oriented approach to business. This concept
explains the rationale for a firm’s existence in terms of its ability to satisfy some aspects of
consumer needs and recognizes the purpose of the business as to ‘create a customer’.

In the words of Stanton, “the marketing concept is a philosophy, an attitude, or a course of

business action. The customers want satisfaction in the economic and social justification of a
company’s existence. Consequently all company’s activities in production, engineering and
finance, as well as marketing, must be devoted to, first, determining what the customers wants
are and then, satisfying these wants while making a reasonable profit.

According to the marketing concept, the main task of the enterprise is:

(i) To determine the actual needs, wants and preferences of customers, and

(ii) To adopt the enterprise in such a way so as to deliver the desired satisfaction more
effectively and efficiently than its rivals.

In this concept, the focus is on the customer needs, the means are integrated marketing and the
objective is maximization of profits through customer satisfaction.
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5. The Social Marketing Concept

In the words of Philip Kotler, the social marketing concept is a management orientation that
holds that the key task of the organization is to determine the needs and wants to target
markets and to adopt the organization to delivering the desired satisfaction more effectively
and efficiently than its competitors in a way that preserves or chances the consumer’s and
society’s well being.

The societal marketing concept aims at serving the target markets in such a way as to deliver
not only maximum customer satisfaction, but also long-run individual and social benefits. It
must concentrate on customer’s needs and interests in addition to their wants and desires.
Thus, this concept lays more emphasis on the social responsibilities of business as the latest
trend in marketing.

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 itself or
produced in an environmentally friendly way, such as:

 Being manufactured in a sustainable fashion

 Not containing toxic materials or ozone-depleting substances
 Able to be recycled and/or is produced from recycled materials
 Being made from renewable materials (such as bamboo, etc.)
 Not making use of excessive packaging
 Being designed to be repairable and not “throwaway”

This type of marketing can be more expensive, but it can also be profitable due to the
increasing demand. For example, products made locally in North America tend to be more
expensive than those made overseas using cheap labour, but they have a much smaller carbon
footprint because they don’t have to fly across the globe to get here. For some consumers and
business owners, the environmental benefit outweighs the price difference.

A model green marketing mix contains four “P’s”:

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Product: A producer should offer ecological products which not only must not contaminate
the environment but should protect it and even liquidate existing environmental damages.

Price: Prices for such products may be a little higher than conventional alternatives. But target
groups like for example LOHAS are willing to pay extra for green products.

Place: A distribution logistics is of crucial importance; main focus is on ecological packaging.

Marketing local and seasonal products e.g. vegetables from regional farms is more easy to be
marketed “green” than products imported.

Promotion: A communication with the market should put stress on environmental aspects, for
example that the company possesses a CP certificate or is ISO 14000 certified. This may be
publicized to improve a firm’s image. Furthermore, the fact that a company spends
expenditures on environmental protection should be advertised. Third, sponsoring the natural
environment is also very important. And last but not least, ecological products will probably
require special sales promotions

Impacts or Importance of Green Marketing:

Green marketing affects positively the health of people and the ecological environment.
People are aware of pure products and pure methods of producing, using, and disposing the
products. It encourages integrated efforts for purity in production and consumption as well.

We can witness following impacts of green marketing:

1. Now, people are insisting pure products – edible items, fruits, and vegetables based on organic
farming. The number of people seeking vegetarian food is on rise.
2. Reducing use of plastics and plastic-based products.
3. Increased consumption of herbal products instead of processed products.
4. Recommending use of leaves instead of plastic pieces; jute and cloth bags instead of plastic
carrying bags.
5. Increasing use of bio-fertilizers (made of agro-wastes and wormy-composed) instead of
chemical fertilizers (i.e. organic farming), and minimum use of pesticides.
6. Worldwide efforts to recycle wastes of consumer and industrial products.
7. Increased use of herbal medicines, natural therapy, and Yoga.
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8. Strict provisions to protect forests, flora and fauna, protection of the rivers, lakes and seas
from pollutions.
9. Global restrictions on production and use of harmful weapons, atomic tests, etc. Various
organisations of several countries have formulated provisions for protecting ecological
balance.
10.More emphasis on social and environmental accountability of producers.
11.Imposing strict norms for pollution control. Consideration of pollution control efforts and eco-
technology in awarding IS), ISO 9000, or ISO 14000 certificates and other awards.
12.Declaration of 5thJune as the World Environment Day.
13.Strict legal provisions for restricting duplication or adulteration.
14.Establishing several national and international agencies to monitor efforts and activities of
business firms in relation pollution control and production of eco-friendly products.

Digital Marketing: Meaning and Types

Digital marketing encompasses all marketing efforts that use an electronic device or the
internet. Businesses leverage digital channels such as search engines, social media, email, and
their websites to connect with current and prospective customers.

Marketing has always been about connecting with your audience in the right place and at the
right time. Today, that means you need to meet them where they are already spending time: on
the internet.
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Digital marketing is defined by the use of numerous digital tactics and channels to connect
with customers where they spend much of their time: online. From the website itself to a
business’s online branding assets — digital advertising, email marketing, online brochures,
and beyond — there’s a spectrum of tactics that fall under the umbrella of “digital marketing.”

A content marketer, for example, can create a series of blog posts that serve to generate leads
from a new ebook the business recently created. The company’s social media marketer might
then help promote these blog posts through paid and organic posts on the business’s social
media accounts. Perhaps the email marketer creates an email campaign to send those who
download the ebook more information on the company.

Scope and Importance

Digital Marketing industry is booming not just in India but all parts of the world. The year
2016 took the industry by surprise with over 1.5 lakh job opportunities in the Digital
Marketing domain. Well, the following was a bigger surprise when only the first quarter of
2017 marked for 8 lakh job opportunities.

The surveys conducted by several forums have predicted this number to grow with
Digitalisation in the nation. Our Prime Minister has been actively promoting the idea of
Digital India. PM Modi’s digital India campaign gained massive popularity. The initiative of
Government of India is aimed at providing easy services to its natives.

Now imagine when a nation’s government is promoting the digital interaction, what do you
think will be the Digital Marketing scope in that nation.

Types of Digital Marketing

We’ve arrived! It’s time to dive head first into 9 types of digital marketing. Types of online
digital marketing include:

1. Search Engine Optimization

Search Engine Optimization or SEO refers to the process of growing your online visibility in
non-paid (organic) search engine results. SERPs or search engine results pages appear to users
after they search for a given set of keywords using a search engine like Google or Bing. Each
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user receives an individualized results page based on keywords, the user’s location at the time
of searching, and their browsing history.

2. Search Engine Marketing

Search Engine Marketing or SEM covers the ground SEO ignores, paid traffic from search
engines. With SEM you purchase advertisement space that appears on a user’s SERP. The
most common paid search platform is Google AdWords.

3. Social Media Marketing

By now you know that social media is a crucial part of your marketing strategy. But do you
know the ins and outs of social media marketing? Social media marketing gives you increased
exposure. It allows you to connect with your consumers in a more intimate way. From this
interaction, you can gain valuable customer feedback that allows you to improve your
customer service, product, or service.

Using social media marketing you’ll gain more reach when you post quality content.
Everything you do to increase traffic or business on your social media channels is social media
marketing. Whether you’re on Facebook, Twitter, Snapchat, or LinkedIn these efforts all
amount to social media marketing.

4. Content Marketing

Content marketing refers to the practice of delivering a quality piece of content to your users
to generate sales and leads. This content can live anywhere online. Tweets, a YouTube video,
and blogs on your website all comprise content marketing. Content Marketing works because
it melds together exceptional content with other types of digital marketing like SEO and
Social Media Marketing.

5. Affiliate Marketing

Affiliate marketing refers to the process of paying for conversions. Think of it like hiring a
sales person for your product or service. That affiliate earns a commission. You determine the
rate for affiliate marketing. You only pay for conversions. This means there is no upfront cost
to affiliate marketing. Many bloggers or e-commerce websites use affiliate marketing.
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6. Influencer Marketing

Influencer marketing is among the newer types of digital marketing. Influencer marketing uses
people with an enormous online reach considered experts by your target market to drive traffic
and sales.

Influencer marketing is popular on social media channels like Instagram and Snapchat.
Companies hire Instagrammers with large followings to promote their brand by posting one or
more photos with the product. Companies now engage in Instagram or Snapchat “takeovers”
where the hired influence controls the company’s social media platform for a given amount of
time, most often a day. These social media takeovers drive the influencer’s following to your
social media channels increasing your new followers and unique views.

7. Email Marketing

Email marketing allows you to update your email subscribers on a regular basis about your
company. This fosters a relationship unlike any of the other types of digital marketing. Your
email updates provide value to your consumer. As a result, you build brand trust and brand
loyalty.

The best email marketing campaigns involve a list of subscribers earned by your content and
company, not paid for by your company. People who opt-in to your email subscription prove
more likely to become active buyers.

8. Viral Marketing

Viral marketing refers to a post of some sort that is trendy, funny, or strange enough to garner
a massive amount of shares online. Viral marketing causes an enormous spike in website
traffic over a short period of time. This is hard to do but the benefits alone make the effort
worth your time.

B2C companies stand to gain the most from viral marketing. B2C companies can use social
media to reach an enormous audience across all of their active platforms.

9. Mobile Phone Advertising

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Each of the types of digital advertising can happen on a mobile device. Some types of
marketing using a mobile phone do not fit the above types of digital marketing.

These include SMS advertising which could prove an asset to local marketing efforts. You can
prompt your consumers to use SMS to receive special offers, coupons, and updates from your
company.

Relationship Marketing, Principles, Strategies, Benefits, Challenges, Implementing,

Examples
Relationship marketing is a customer-centric approach that focuses on building and nurturing
long-term relationships with customers, rather than viewing them as one-time transactions. It
involves understanding and fulfilling the needs and desires of customers, and creating a
positive emotional connection with the brand. Relationship marketing goes beyond traditional
marketing methods that solely focus on acquiring new customers, and instead emphasizes the
importance of retaining and satisfying existing customers.

Principles of Relationship Marketing:

Relationship marketing is guided by several key principles that form the foundation for
building and nurturing customer relationships. These principles include:

1. Customer Focus: Placing the customer at the center of all marketing efforts. Understanding
their needs, preferences, and expectations is essential for delivering personalized experiences
and building long-term relationships.
2. Trust and Commitment: Building trust and fostering commitment between the brand and the
customer is crucial for establishing and maintaining strong relationships. Trust is earned
through consistent delivery of promises, reliability, and transparency.
3. Two-Way Communication: Encouraging open and ongoing communication between the
brand and customers. Actively listening to customers, seeking feedback, and responding
promptly helps in understanding their needs and addressing concerns.
4. Personalization: Tailoring marketing efforts and interactions to meet the individual needs and
preferences of customers. Personalization helps create a unique and memorable experience,
strengthening the relationship.
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5. Long-Term Perspective: Adopting a long-term perspective rather than focusing solely on

short-term gains. Building enduring relationships requires patience, continuous effort, and a
commitment to adding value over time.

Strategies for Relationship Marketing:

To effectively implement relationship marketing, businesses can employ several strategies.

These strategies are designed to foster engagement, loyalty, and advocacy among customers.
Some key strategies include:

1. Customer Segmentation: Segmenting customers based on their needs, preferences, behavior,

and value to the business. This allows for targeted and personalized marketing efforts that
resonate with specific customer segments.
2. Customer Experience Management: Managing the customer journey to ensure consistent,
positive experiences at every touchpoint. This involves mapping the customer journey,
identifying pain points, and implementing measures to enhance the overall experience.
3. Loyalty Programs: Implementing loyalty programs to reward and incentivize customers for
their repeat purchases and engagement. These programs can include point systems, exclusive
discounts, personalized offers, or VIP treatment.
4. CRM Systems: Utilizing Customer Relationship Management (CRM) systems to gather and
manage customer data. CRM systems help in tracking customer interactions, preferences,
purchase history, and enable personalized communication and service.
5. Personalized Communication: Sending targeted and personalized messages to customers
based on their preferences, behavior, and lifecycle stage. This can include personalized emails,
recommendations, and relevant content.
6. Social Media Engagement: Actively engaging with customers on social media platforms to
build relationships and foster conversations. Responding to customer inquiries, addressing
concerns, and sharing valuable content helps create a sense of community and connection.
7. Customer Feedback and Surveys: Seeking regular feedback from customers to understand
their satisfaction levels, expectations, and areas for improvement. Conducting surveys and
using customer feedback loops can provide valuable insights for enhancing the customer
experience.
8. Relationship Building Activities: Organizing events, webinars, or workshops to engage with
customers and build personal connections. These activities provide opportunities for face-to-
face interactions and deeper engagement.
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9. Referral Programs: Encouraging satisfied customers to refer their friends, family, or

colleagues to the business. Referral programs can offer incentives or rewards to both the
referrer and the new customer, fostering loyalty and expanding the customer base.

Benefits of Relationship Marketing:

Relationship marketing offers numerous benefits for businesses that prioritize long-term
customer relationships. Some key benefits include:

1. Increased Customer Loyalty: By focusing on building relationships, businesses can foster

customer loyalty. Satisfied and loyal customers are more likely to continue purchasing from
the brand, recommend it to others, and provide positive reviews and testimonials.
2. Higher Customer Retention: Relationship marketing strategies help in reducing customer
churn and increasing customer retention rates. Long-term customer relationships result in
repeat business, reducing the need for constant acquisition of new customers.
3. Enhanced Customer Lifetime Value: Loyal customers who continue to engage with the
brand over time contribute significantly to the customer lifetime value. Repeat purchases,
cross-selling, and upselling opportunities with loyal customers result in higher revenue and
profitability.
4. Positive Word-of-Mouth and Brand Advocacy: Satisfied customers are more likely to share
their positive experiences with others, leading to positive word-of-mouth. They become brand
advocates, promoting the brand to their social circles and influencing potential customers.
5. Competitive Advantage: Relationship marketing helps differentiate the brand from
competitors by providing a unique and personalized customer experience. Building strong
relationships with customers creates a barrier to entry for competitors and increases customer
switching costs.
6. Improved Customer Insights: Engaging with customers on a deeper level through
relationship marketing strategies provides valuable insights into their preferences, needs, and
behavior. These insights can inform product development, marketing campaigns, and overall
business strategies.
7. Cost Savings: Acquiring new customers can be more expensive than retaining existing ones.
Relationship marketing helps in reducing customer acquisition costs by focusing on customer
retention and maximizing the value of existing customer relationships.
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Challenges of Relationship Marketing:

While relationship marketing offers significant benefits, it also presents challenges that
businesses need to address. Some common challenges include:

1. Data Management and Privacy: Effective relationship marketing relies on collecting and
managing customer data. Businesses need to ensure compliance with data protection
regulations, maintain data security, and address customer concerns regarding privacy.
2. Resource Allocation: Implementing relationship marketing strategies requires investment in
resources, technology, and skilled personnel. Businesses need to allocate sufficient budgets
and allocate resources effectively to implement and sustain relationship marketing efforts.
3. Consistency across Channels: Maintaining consistency in messaging, branding, and
customer experience across multiple marketing channels can be challenging. Businesses need
to ensure a seamless experience regardless of the channel through which customers interact
with the brand.
4. Cultural Shift: Adopting a relationship marketing approach often requires a cultural shift
within the organization. All departments and employees need to be aligned with the customer-
centric mindset and committed to delivering exceptional customer experiences.
5. Customer Expectations and Demands: Customers today have higher expectations for
personalized experiences, timely responses, and seamless interactions. Meeting these demands
can be challenging for businesses, requiring ongoing efforts to stay ahead and continuously
improve.
6. Measuring ROI: Measuring the return on investment (ROI) of relationship marketing
initiatives can be complex. It is crucial to establish appropriate metrics and tracking
mechanisms to evaluate the effectiveness of relationship marketing efforts. However,
accurately attributing the impact of relationship marketing to specific financial outcomes can
be challenging.
7. Evolving Technology: The rapid advancement of technology and digital platforms presents
both opportunities and challenges for relationship marketing. Businesses need to stay updated
with technological trends and leverage them effectively to enhance customer experiences.
However, keeping pace with evolving technology can be demanding and require continuous
adaptation.
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Implementing Relationship Marketing:

To implement relationship marketing successfully, businesses should consider the following

steps:

1. Customer Segmentation: Divide the customer base into segments based on demographics,
behavior, preferences, and value to the business. This enables targeted and personalized
marketing efforts.
2. CRM Implementation: Invest in a robust Customer Relationship Management (CRM)
system to collect, manage, and analyze customer data. A CRM system helps track customer
interactions, preferences, and purchase history, enabling personalized communication and
service.
3. Integrated Communication Channels: Create a seamless and consistent customer experience
across all communication channels. Integrate marketing channels, such as social media, email
marketing, and offline channels, to deliver a cohesive message and experience.
4. Personalization: Tailor marketing messages, offers, and interactions to the individual
preferences and needs of customers. Leverage customer data to provide personalized
experiences at every touchpoint.
5. Ongoing Engagement: Engage with customers regularly through various channels to build
and nurture relationships. Encourage two-way communication, seek feedback, and respond
promptly to inquiries and concerns.
6. Continuous Improvement: Regularly evaluate and optimize relationship marketing
strategies. Analyze customer feedback, track key performance indicators, and adapt strategies
to enhance the customer experience continually.
7. Training and Collaboration: Provide training and guidance to employees to foster a
customer-centric culture. Encourage collaboration between different departments, such as
marketing, sales, and customer service, to ensure consistent and coordinated customer
interactions.

Examples of Successful Relationship Marketing:

Several businesses have successfully implemented relationship marketing strategies. Here are
a few examples:
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1. Starbucks: Starbucks has built a strong customer relationship by personalizing the customer
experience. They use their loyalty program, “Starbucks Rewards,” to offer customized
recommendations, rewards, and exclusive offers based on customers’ preferences and
purchase history.
2. Amazon: Amazon leverages customer data to provide personalized product recommendations
and offers. They also excel in customer service by prioritizing timely and efficient order
fulfillment, easy returns, and proactive communication.
3. Nike: Nike has established a community-driven relationship marketing approach. They engage
with customers through social media, sponsor athletic events, and create fitness apps to foster
a sense of belonging and inspire customer loyalty.
4. Apple: Apple has built a loyal customer base by focusing on product quality, user experience,
and customer support. They provide personalized recommendations, offer exclusive deals for
existing customers, and maintain a strong brand community.