Unit 3 (till Managing Relationships), 4 & 5

Organizational Buying refers to the process through which businesses purchase goods and
services for their operations, production, or resale. Unlike consumer buying, organizational
buying involves larger quantities, more complex decision-making, and longer sales cycles.

Participants in the Business Buying Process

● Initiators: Those who recognize the need for a product or service.

● Users: Individuals who will use the product or service.
● Influencers: People who provide information or criteria for evaluating options.
● Deciders: Those who make the final purchase decision.
● Buyers: Individuals responsible for negotiating and finalizing the purchase.
● Gatekeepers: Those who control the flow of information or access to decision-makers.

Example
A company, Feni-Man Antonio Electronics, needs to purchase new laptops for its employees.

● The IT department (Initiators) identifies that the current laptops are outdated and need
replacement.
● The employees (Users) will use the new laptops on a daily basis.
● The IT team (Influencers) provides technical specifications, such as the need for high
processing power and specific software compatibility.
● The company’s management team (Deciders) decides which brand and model of laptops
to purchase based on the specifications provided by the IT department.
● The purchasing department (Buyers) handles the negotiations, pricing, and order
placement with the chosen supplier.
● The procurement manager (Gatekeepers) controls access to the decision-makers and
ensures that only relevant suppliers are considered.

B2B Buying Process

● Need Recognition: The business identifies a need for a product or service.

● Product Specification: Defining the characteristics of the product or service.
 ● Supplier Search: Looking for potential suppliers.
● Proposal Solicitation: Requesting proposals or quotes from suppliers.
● Supplier Selection: Choosing the supplier based on criteria such as price, quality, and
reliability.
● Order-Routine Specification: Finalizing order details and terms.
● Performance Review: Evaluating the supplier’s performance after the purchase.

Institutional Markets: These include organizations like hospitals, schools, and charities that
buy goods and services to support their operations, often with a focus on long-term relationships
and cost-efficiency.

Government Markets: Governments at various levels (local, state, national) are significant
buyers of products and services. These purchases are often regulated by laws and procedures,
focusing on transparency, fairness, and compliance with public policy.

Managing Relationships
IIn B2B markets, managing long-term relationships is crucial. It involves maintaining effective
communication, trust-building, collaboration, and providing value over time. Strong relationships
lead to repeat business, referrals, and greater customer loyalty. Effective relationship
management also involves addressing customer needs, resolving issues quickly, and adapting
to changing demands.

5 Levels of a Product

Product Level Examples

Core Benefit: The key need or benefit that For a hotel, the core benefit is providing a
the product satisfies. It's the fundamental place to stay. For a smartphone, it’s
reason the product exists. communication.

Basic Product: The basic version of the A basic hotel room with a bed and bathroom.
product that delivers the core benefit. It’s the A basic smartphone that allows calls and
minimum product needed to satisfy the texts.
customer’s need.

Expected Product: The set of attributes or For a hotel, an expected product would
characteristics that buyers normally expect include clean rooms, a comfortable bed, and
 when they purchase the product. These are basic amenities like Wi-Fi. For a smartphone,
the standard features or services expected. it would include features like a touchscreen,
camera, and battery life.

Augmented Product: The additional For a hotel, this could include a pool, gym,
features, services, or benefits that exceed free breakfast, or concierge service. For a
customer expectations. These are designed smartphone, it could include exclusive apps,
to differentiate the product and add extra enhanced camera features, or extended
value. warranty services.

Potential Product: The future developments For a hotel, potential products might include
or innovations that could be added to the advanced smart room technology or
product to enhance its value. It represents all eco-friendly initiatives. For a smartphone, it
the possible augmentations or improvements could include the development of new
that could be made to the product. technologies like foldable screens or
advanced AI features.

Kotler's 5 Product Levels

New Product Development (NPD) is the process of bringing a new product to market. It
involves several stages that help companies design, create, and introduce new products that
meet customer needs and stand out in the marketplace.

8 Stages of NPD

Stages Example

Idea Generation: This is the first stage, where new A company might generate the
ideas for products are created. Ideas can come from idea for a smart home device after
various sources like customers, competitors, employees, noticing the growing demand for
research and development, or market trends. connected home technology.

Idea Screening: In this stage, ideas are evaluated to The smart home device idea might
determine their feasibility, market potential, and be assessed for its technical
alignment with the company’s goals. The goal is to feasibility, potential customer
eliminate unviable ideas early. demand, and how it fits into the
company’s product portfolio.

Concept Development and Testing: Once a viable idea The company could create a
is selected, it is developed into a detailed product prototype of the smart home
concept. The concept is then tested with a sample of the device and test it with a focus
target market to gather feedback. group to gather opinions on
features, design, and usability.

Business Analysis: This stage involves assessing the The company will calculate the
product’s potential profitability. Companies analyze the cost of manufacturing the smart
cost of production, pricing strategy, expected sales, and home device, set a price point,
return on investment. and forecast sales to ensure the
product will be profitable.

Product Development: In this stage, the product is The company would create a
designed and developed. Prototypes are built, and the working prototype of the smart
product is refined based on feedback from testing and home device, incorporating user
analysis. feedback and refining the design
for mass production.

Market Testing: The product is introduced to a small The smart home device might be
segment of the market to test its performance in a tested in a limited geographic area
real-world environment. This helps companies gauge or with a select group of early
customer reactions, fine-tune marketing strategies, and adopters to gather insights on
identify any issues before a full launch. market reception.

Commercialization: After successful market testing, the The smart home device is now
product is launched to the broader market. This stage available for sale online and in
involves full-scale production, distribution, and stores, supported by marketing
marketing. campaigns to raise awareness
and drive sales.

Post-Launch Review and Evaluation: After the product The company tracks sales of the
is launched, companies monitor its performance, gather smart home device, gathers
customer feedback, and make adjustments as needed. customer reviews, and makes
This stage helps identify any issues and areas for updates or improvements to the
improvement. product based on feedback.
Key Factors in New Product Development

● Technology: Advances in technology often drive new product development by enabling

new features, capabilities, or entirely new product categories.

Example: The introduction of 4G and 5G technologies allowed smartphones to offer

faster internet speeds, transforming how people use mobile devices

● Innovation: It refers to creating new ideas, products, or improvements that add value to
the customer or solve a problem in a new way. It can be incremental (small
improvements) or radical (entirely new concepts).

Example: The Tesla Model S is an example of radical innovation in the electric vehicle
(EV) market. Tesla introduced electric cars with long-range capabilities, advanced
autopilot features, and over-the-air software updates, revolutionizing the EV industry and
challenging traditional automakers.

● Disruption: Disruptive innovation refers to products or services that create new markets
or radically change existing ones, often replacing traditional solutions. These innovations
typically start at the lower end of the market and later move up to challenge established
players.

Example: Netflix started as a DVD rental service but later disrupted the traditional video
rental industry (e.g., Blockbuster) by offering streaming services.

● Market Demand: New products are often developed in response to market needs or
gaps. Understanding customer pain points and desires helps companies create products
that people are willing to buy.

Example: By identifying a demand for wearable technology that could monitor physical
activity, sleep patterns, and heart rate, Fitbit created a product that appealed to fitness
enthusiasts and health-conscious consumers.
 ● Consumer Trends: Consumer behavior and trends often influence the direction of new
product development. These trends can be based on changing preferences, societal
shifts, or new lifestyle choices.

Example: The rise of plant-based diets led to the development of products like Beyond
Meat and Impossible Foods.

● Competitive Pressure: The competitive landscape can drive companies to develop new
products in order to stay ahead of or differentiate from competitors.

Example: Apple introduced Face ID as a feature in response to the success of Android’s

fingerprint scanning technology.

Product Line refers to a group of related products that function in a similar way, are sold to the
same customer segment, or are marketed under the same brand.

● Products in a line usually share a common purpose or target market.

● They may vary in terms of features, size, color, or price.

Example: Apple's iPhone series is a product line. It includes different models like the iPhone 15,
iPhone 15 Pro, and iPhone 15 Plus, all serving the same purpose (smartphones) but varying in
features and price.

Product Mix (or Product Assortment) refers to the total range of products a company offers
for sale. It encompasses all the product lines the company carries.

● The product mix includes various product lines, each with its own depth (number of
variants).
● A company’s product mix can be broad (covering many product categories) or narrow
(focusing on a specific category).

Example: Procter & Gamble (P&G) has a broad product mix that includes product lines like Tide
(laundry detergent), Pampers (baby products), and Gillette (shaving products).
Product Mix Dimensions

● Width: The number of product lines a company offers. Example: P&G’s product mix
width includes categories like beauty, health, home care, and baby care.

● Length: The total number of items within the product mix (sum of all products in all
lines). Example: The length of P&G’s product mix would include all variants of each
product line (e.g., all types of Tide detergent).

● Depth: The number of versions of each product in a product line. Example: The depth
of the Tide product line might include liquid detergent, powder detergent, and pods.

● Consistency: How closely related the product lines are in terms of use, production, and
distribution.

Example: Coca-Cola’s product mix is consistent because all its products are beverages,
while a company like P&G has a less consistent mix because it offers products across
diverse categories (beauty, health, home care, etc.).

Product Line Extension refers to the addition of new products to an existing product line to
address different customer needs or expand market reach.

Example: Toyota extending its product line to include hybrid models like the Prius, alongside its
regular gasoline-powered cars.

Product Mix Extension involves adding new product lines to a company’s existing product mix,
diversifying into new categories or markets.

Example: Apple extends its product mix by introducing new product lines such as the Apple
Watch and AirPods, in addition to its original product line of iPhones, iPads, and Macs.

Product Line Filling occurs when a company adds more items within the existing range of a
product line to fill gaps or target specific customer segments.
Example: Coca-Cola introducing new flavors like Cherry Coke or Vanilla Coke to fill gaps in its
product line and attract a broader audience.

Product Mix Strategies

● Expansion: Adding new product lines or increasing the depth of existing lines to reach
new customers or markets.

Example: Samsung expanding its product mix by entering the home appliance market.

● Contraction: Reducing the number of product lines or eliminating certain products to

focus on more profitable or strategic areas.

Example: Sony reducing its product mix by discontinuing certain electronics lines to
focus on more profitable areas like gaming consoles and entertainment.

The Product Life Cycle (PLC) refers to the stages a product goes through from its introduction
to the market until its eventual decline and removal. Understanding the PLC helps companies
manage their product strategies, marketing, and innovation efforts.

4 Stages of PLC
Stages Strategies Examples

Introduction Stage ● Heavy promotion to When Tesla first

build awareness. launched the Model S, it
● The product is launched faced high development
into the market. ● Distribution channels costs and low sales
● Sales are low because the are limited as the initially, as electric
product is new and product is still being vehicles were a new
awareness is still building. introduced. concept for many
● Marketing efforts focus on consumers.
creating awareness and ● Pricing can be high
educating consumers. (skimming) or low
● Profits are minimal or (penetration)
negative due to high depending on the
development and strategy.
marketing costs.

Growth Stage ● Expand distribution The smartphone market

channels. experienced rapid growth
● Sales increase rapidly as during the iPhone 3G
the product gains ● Improve product and iPhone 4 releases,
acceptance and features or add new with increasing adoption
recognition. variants. and new competitors like
● More competitors enter Samsung entering the
the market, attracted by ● Increase marketing to market.
the growing demand. reinforce brand
● Profits begin to rise as positioning.
economies of scale are
achieved and production
costs decrease.
● Marketing focuses on
differentiating the product
 from competitors.

Maturity Stage ● Focus on Coca-Cola has reached

differentiation and the maturity stage in
● Sales growth slows as the brand loyalty. many markets, where
product reaches sales are stable, and it
widespread market ● Explore new market competes with many
penetration. segments or other beverage brands.
● The market becomes geographical areas. The company focuses on
saturated, and competition brand loyalty,
is intense. ● Reduce prices or offer promotions, and
● Profits may start to decline promotions to remain introducing new flavors
due to increased competitive. to maintain interest.
competition and price
reductions.
● The product may undergo
modifications or
improvements to maintain
interest.

Decline Stage ● Decide whether to DVD players have

discontinue the reached the decline
● Sales and profits begin to product, sell it to stage with the rise of
decline as consumer another company, or streaming services like
interest wanes or new, harvest it (reduce Netflix and digital
more innovative products costs while continuing downloads. Many
replace the existing one. to sell it at a lower companies have stopped
● The market may shrink, level). manufacturing them, and
and the product may no the remaining market is
longer be relevant or ● Explore niche markets small.
competitive. or use the product in
● Companies may stop a new context.
production or reduce
marketing efforts.
Consumer Psychology & Pricing

Consumer psychology refers to how consumers perceive prices and how their behavior is
influenced by those perceptions.

Key Concepts

● Price Perception: Consumers often use price as an indicator of quality. A higher price
may signal higher quality, while a lower price may suggest value or affordability.

● Price Sensitivity: Some consumers are more sensitive to price changes, while others
are willing to pay a premium for perceived value or brand.

● Reference Pricing: Consumers compare prices to a reference point (e.g., the original
price or a competitor’s price) to determine if a price is fair.

● Psychological Pricing: This involves using pricing techniques like $9.99 instead of $10
to create the perception of a better deal.

Example: Apple uses premium pricing for its products, appealing to consumers who
associate higher prices with better quality and innovation.

Pricing Methods are strategies used to determine the price of a product or service. Different
methods are used depending on the company’s goals, market conditions, and consumer
behavior.

Common Pricing Methods

● Cost-Plus Pricing: Adding a fixed percentage (markup) to the cost of producing the
product. Example: A manufacturer may calculate the cost of making a t-shirt and add a
50% markup to set the retail price.
 ● Value-Based Pricing: Setting the price based on the perceived value to the customer
rather than the cost of production. Example: Rolex prices its watches based on the
brand’s perceived luxury value, not just the cost of materials.

● Penetration Pricing: Setting a low initial price to attract customers and gain market
share, then gradually increasing the price. Example: Netflix initially offered a low
subscription price to attract users, then raised prices after gaining a large customer
base.

● Skimming Pricing: Setting a high price initially and gradually lowering it over time as
the product moves through its life cycle. Example: Sony often uses skimming pricing for
new technology products like gaming consoles.

Differential pricing (or price discrimination) involves charging different prices to different
customers for the same product or service based on various factors like demand, location, or
customer characteristics.

Types of Differential Pricing

● Geographic Pricing: Different prices are charged in different locations due to varying
costs or market conditions. Example: Gasoline prices can vary by region due to local
taxes or transportation costs.

● Time-Based Pricing: Prices vary depending on the time of purchase or usage.

Example: Airlines often charge higher prices for flights during peak seasons or times.

● Customer-Based Pricing: Different prices are charged to different customer segments

(e.g., students, seniors). Example: Movie theaters often offer discounted tickets for
students or seniors.

● Volume-Based Pricing: Offering lower prices for larger quantities or bulk purchases.
Example: Costco offers discounts for bulk buying.

Factors to Consider while Setting Price

 ● Cost of Production: Ensuring the price covers the cost of producing the product and
allows for a profit margin.
● Market Demand: Analyzing consumer demand and willingness to pay.
● Competitive Landscape: Considering competitors' pricing strategies to remain
competitive.
● Brand Positioning: Aligning the price with the brand’s value proposition (luxury vs.
budget).
● External Factors: Economic conditions, regulations, and market trends can influence
pricing decisions.

Example: Tesla sets the price of its electric vehicles based on production costs,
consumer demand for eco-friendly cars, and its positioning as a premium brand.

Price adaptations refer to changes in the price to suit different market conditions, customer
segments, or geographic locations.

Types of Price Adaptations

● Discounts and Allowances: Reductions in price for early payment, bulk buying, or
promotional offers. Example: Amazon often offers discounts or deals like "Prime Day" to
attract more customers.

● Dynamic Pricing: Prices are adjusted in real-time based on market demand, competitor
pricing, or other factors. Example: Uber uses dynamic pricing (surge pricing) during
peak hours or in high-demand areas.

Reasons for Initiating Price Changes

● Cost Increase: Rising production or supply chain costs may lead to price increases.
● Market Conditions: Changes in market demand or competitive pressure may prompt
price adjustments.
● New Product Features: Adding new features or improvements to a product may justify
a price increase.
 ● Brand Positioning: A company may adjust prices to reposition itself in the market (e.g.,
premium or budget).

Generic Price Changing Strategies

● Price Increase: Can be done subtly (e.g., through bundling or reducing product size
while maintaining price).
● Price Decrease: Often used to boost sales, clear inventory, or respond to competition.

Example: Coca-Cola raised its prices to cover higher production costs due to inflation
and rising raw material prices.

Responding to Competitors’ Price Changes

● Match the Price: Lowering or raising the price to match a competitor’s price, often used
in highly competitive markets. Example: McDonald's might adjust its prices to match a
competitor’s discount or promotional offer.

● Undercut the Price: Offering a lower price to gain market share, often used by new
entrants or aggressive competitors. Example: Xiaomi offers smartphones at lower prices
than competitors like Samsung or Apple to capture price-sensitive customers.

● Differentiate with Value: Instead of matching or undercutting, companies may focus on

offering superior value through added features, customer service, or branding. Example:
Apple maintains its premium pricing strategy, focusing on product quality and brand
loyalty to justify higher prices compared to competitors.

Place and Promotion Mix: Marketing Channels and Value Networks

The Place and Promotion elements of the marketing mix focus on how products are distributed
and communicated to customers. Marketing channels and value networks play a crucial role in
delivering products and services to consumers, as well as in promoting them effectively.
Marketing channels are the pathways through which products or services flow from the
producer to the final consumer. These channels connect businesses to their customers and are
essential for product distribution, promotion, and sales.

Functions of Marketing Channels

● Facilitating Exchange: Channels help move products from manufacturers to end

consumers.
● Creating Time, Place, and Ownership Utility: They ensure that products are available
at the right time, in the right place, and with ownership transferred to consumers.
● Reducing Transaction Costs: Marketing channels help reduce the complexity and
costs of distribution by acting as intermediaries between producers and consumers.

Example: Amazon acts as a marketing channel for numerous brands, allowing them to
reach customers directly via its online platform.

Channel design refers to the process of selecting the most appropriate distribution channels to
reach target customers effectively.

Key Decisions

● Channel Length: The number of intermediaries between the producer and the
consumer. Channels can be direct (producer to consumer) or indirect (involving
intermediaries like wholesalers or retailers).
● Channel Type: Choosing the type of intermediary to use, such as retailers, wholesalers,
agents, or online platforms.
● Channel Intensity: The number of outlets through which a product is distributed. It can
be:
○ Intensive Distribution: Aiming for maximum exposure by distributing through as
many outlets as possible.
○ Selective Distribution: Using a limited number of intermediaries to maintain a
certain level of control.
○ Exclusive Distribution: Limiting distribution to a single intermediary or a few
select ones to create exclusivity.
 Example: Nike uses selective distribution for its premium products, distributing them
through authorized retailers and its own stores, while it uses intensive distribution for its
lower-priced products.

Channel procurement involves selecting, contracting, and managing the relationships with
channel partners.

Key Activities

● Identifying Potential Partners: Finding suitable intermediaries (distributors, retailers,

etc.) who can effectively deliver products to the target market.
● Negotiating Contracts: Setting up agreements that define roles, responsibilities, and
expectations for each channel partner.
● Building Relationships: Ensuring that the channel partners are aligned with the
company’s goals and that they understand the value proposition.

Example: Apple selects and negotiates contracts with major retailers like Best Buy and
Walmart, as well as online platforms, to distribute its products globally.

Channel management refers to the ongoing process of managing and optimizing relationships
with channel partners to ensure smooth distribution and alignment with business objectives.

Key Decisions

● Channel Conflict Management: Resolving conflicts that may arise between different
channel members, such as price disagreements or territorial disputes.
● Performance Evaluation: Regularly assessing the performance of channel partners
based on sales, customer satisfaction, and adherence to brand standards.
● Training and Support: Providing training, marketing materials, and incentives to
motivate channel partners to promote and sell the product effectively.

Example: Coca-Cola provides training and marketing support to its bottling partners to
ensure consistent branding and product quality across its distribution network.
Channel integration refers to aligning and coordinating all distribution channels to work
seamlessly together, often using technology to improve efficiency and reduce friction.

Types of Channel Integration

● Vertical Integration: When a company controls multiple levels of the distribution

channel (e.g., manufacturing, distribution, and retail). Example: Tesla controls the entire
distribution process, from manufacturing its cars to selling them directly through its own
stores.

● Horizontal Integration: Expanding across different types of distribution channels or

geographic regions to increase reach. Example: Amazon offers a mix of direct sales and
third-party sellers on its platform to expand its reach.

Channel Systems: The use of technology (e.g., Enterprise Resource Planning (ERP),
Customer Relationship Management (CRM), or supply chain management systems) to integrate
and streamline the flow of information and products across different channels.

Example: Walmart uses an integrated supply chain management system to track inventory and
ensure that products are available in stores and online.

Omnichannel refers to a seamless customer experience across multiple channels, both online
and offline. It integrates physical stores, websites, mobile apps, and other touchpoints, allowing
customers to interact with the brand in a unified way.

● Consistency Across Channels: Ensures that the customer experience is consistent

whether they shop online, in-store, or via a mobile app.
● Customer-Centric: Focuses on providing customers with the flexibility to choose how
they want to shop and interact with the brand.

Example: Starbucks allows customers to order via its mobile app, pick up their coffee
in-store, or have it delivered, providing a seamless experience across multiple channels.
E-commerce refers to the buying and selling of products and services over the internet. It is a
critical component of modern marketing channels, especially as online shopping continues to
grow.

Key Features

● Convenience: Customers can shop 24/7 from anywhere with internet access.
● Personalization: E-commerce platforms use data analytics to provide personalized
recommendations and promotions.
● Global Reach: E-commerce allows businesses to reach a global audience without the
need for physical stores.

Example: Amazon is a prime example of e-commerce, offering a wide range of

products, personalized recommendations, and convenient delivery options.

The Marketing Communications Mix refers to the various tools and strategies used by
companies to communicate with their target audience, build brand awareness, and influence
customer behavior. This mix includes a range of communication methods (9 given below) that
work together to create a cohesive marketing message.

1. Word of Mouth (WOM) is the process by which information about a product or service is
shared informally between individuals, typically through personal conversations.

WOM is considered one of the most effective forms of marketing because it is trusted
more than traditional advertising. Positive WOM can significantly influence consumer
decisions.

Example: A customer recommending a restaurant to a friend after a great experience is

an example of WOM marketing.

WOM Marketing Strategies

● Referral Programs: Encouraging customers to refer others in exchange for rewards

(e.g., discounts, free products).
 ● Influencer Marketing: Leveraging individuals with large followings to spread positive
messages about a brand.

2. Integrated Marketing Communications (IMC) is a strategic approach to marketing that

integrates all communication tools and channels to deliver a consistent and unified
message to the target audience.

IMC ensures that all marketing messages across different channels (advertising, PR,
sales, etc.) are aligned, creating a cohesive brand experience.

Example: Coca-Cola uses a consistent message across TV ads, social media, and
packaging, promoting happiness and togetherness.

Key Elements of IMC

● Consistency: All messages are consistent across different media.

● Coordination: Different marketing activities (advertising, PR, etc.) are coordinated to
reinforce the same message.
● Effectiveness: IMC improves the overall impact of marketing efforts by ensuring that all
communication efforts are working toward the same goal.

3. Cultural Aspects of Marketing Communication refer to how cultural differences

influence the way marketing messages are received and interpreted by different
audiences.

Marketers must understand cultural nuances to ensure that their messages resonate
with diverse audiences and avoid misunderstandings or offense.

Examples: McDonald's adapts its menu and marketing strategies based on local
cultures, such as offering vegetarian options in India or a teriyaki burger in Japan.

4. Advertising is a paid form of communication aimed at persuading or influencing

consumers to take a specific action, such as purchasing a product.
Types of Advertising

● Traditional Media: TV, radio, print ads.

● Digital Media: Social media, search engine ads, banner ads.

Example: Nike’s "Just Do It" campaign is an iconic example of effective advertising that
appeals to emotions and encourages consumers to take action.

5. Sales Promotions are short-term incentives or activities designed to encourage

immediate action or purchase by consumers.

Benefits of Advertising

● Wide Reach: Advertising can reach a large audience quickly.

● Brand Awareness: Effective advertising helps build brand recognition and recall.

Types of Sales Promotions

● Coupons: Discounts or offers that can be redeemed on future purchases.

● Contests and Sweepstakes: Giving consumers a chance to win prizes.
● Samples: Offering free samples of a product to encourage trial.
● Flash Sales: Offering significant discounts for a limited time to create urgency.

Example: Amazon’s Prime Day offers discounts and limited-time deals to boost sales.

Benefits of Sales Promotions

● Immediate Impact: Sales promotions can quickly boost short-term sales.

● Customer Engagement: Encourages customers to take immediate action, such as
purchasing or signing up for a service.

6. Personal Selling involves direct interaction between a sales representative and a

potential customer with the goal of persuading the customer to make a purchase.
Characteristics

● One-on-One Communication: Personal selling allows for tailored communication

based on the customer’s needs and preferences.
● Relationship Building: Salespeople can build long-term relationships with customers,
increasing loyalty.

Example: Real estate agents use personal selling to understand the needs of potential
buyers and guide them through the buying process.

Benefits of Personal Selling

● Customization: Sales representatives can tailor the message to the specific needs of
the customer.
● Trust Building: Direct interaction helps build trust and rapport with customers.

7. Direct Marketing involves communicating directly with potential customers through

various channels, such as email, direct mail, telemarketing, or SMS, with the goal of
generating a response or sale.

Types of Direct Marketing

● Email Marketing: Sending targeted emails to potential or existing customers.

● Telemarketing: Reaching out to potential customers via phone calls.
● Direct Mail: Sending physical promotional materials to consumers.

Example: Amazon uses personalized email marketing to recommend products based on

a customer's past purchases.

Benefits of Direct Marketing

● Targeted Messaging: Direct marketing allows for highly personalized and targeted
communication.
 ● Measurable Results: Marketers can easily track responses and adjust campaigns
accordingly.

8. Public Relations (PR) involves managing the spread of information between an

organization and the public, often to build a positive image and handle crisis situations.

Key Activities

● Press Releases: Announcing news or updates about the company.

● Media Relations: Building relationships with journalists and media outlets to get
coverage.
● Event Sponsorships: Associating the brand with charitable events or high-profile
causes.

Example: Tesla uses PR strategies to build its brand image through media coverage of
its innovative products and CEO Elon Musk’s activities.

Benefits of PR

● Credibility: PR can build trust and credibility by leveraging third-party endorsements.

● Brand Image: Helps shape how the public perceives the company.

9. Permission Marketing involves obtaining consent from consumers before sending them
marketing messages, ensuring that they are interested in receiving communications.

Key Characteristics

● Opt-In: Consumers voluntarily choose to receive marketing messages (e.g., subscribing

to an email list).
● Relevant Content: The messages are tailored to the consumer’s preferences or
behavior.

Example: Spotify allows users to opt-in to receive personalized music recommendations

and ads based on their listening habits.
Benefits of Permission Marketing

● Higher Engagement: Consumers are more likely to engage with content they have
opted into.
● Respect for Privacy: Permission marketing respects consumer privacy and
preferences, leading to stronger brand loyalty.

9 Steps to Create A Promotion Plan

Steps Example

1. Define Objectives: Identify clear goals for Increase sales by 20% in the next quarter.
the promotion, such as increasing sales,
improving brand awareness, or launching a
new product.

2. Identify Target Audience: Determine who Targeting young professionals aged 25-35
the promotion is aimed at, considering who are tech-savvy.
demographics, preferences, and buying
behavior.

3. Choose Promotion Type: Select the type Offering a 10% discount on the first purchase
of promotion that aligns with your objectives for new customers.
(e.g., discounts, giveaways, contests, loyalty
programs).

4. Set a Budget: Allocate resources for the A $5,000 budget for a two-week digital ad
promotion, considering costs for advertising, campaign.
discounts, prizes, and other expenses.

5. Plan the Promotion Timeline: Set the The promotion will run from January 1 to
start and end dates, and determine any key January 15.
milestones or deadlines.

6. Select Marketing Channels: Choose the Promoting through Instagram, Facebook ads,
channels through which you will promote the and email newsletters.
offer (e.g., social media, email, in-store,
online ads).

7. Develop Promotional Materials: Create Designing eye-catching social media posts

compelling content (e.g., ad copy, visuals, with a clear call-to-action.
videos) that communicates the offer and its
benefits.

8. Launch and Monitor: Implement the Monitoring sales data and engagement
 promotion and track its performance in metrics daily to gauge success.
real-time to ensure it’s meeting objectives.

9. Evaluate and Adjust: Assess the results If sales didn’t meet the target, analyze why
of the promotion once it ends, comparing and adjust strategies for future promotions.
actual outcomes to objectives.

Branding is the process of creating a unique name, design, symbol, or combination of these
elements to identify and differentiate a product or company from others in the market.

Key Elements of Branding

● Brand Name: The name given to a product or company (e.g., Nike, Apple).
● Logo and Design: Visual elements that represent the brand, such as logos, color
schemes, and fonts.
● Brand Voice: The tone and style of communication the brand uses in its messaging
(e.g., friendly, professional, humorous).
● Brand Values: Core principles that guide the brand’s behavior and messaging (e.g.,
sustainability, innovation, customer-centricity).
● Brand Experience: The overall experience customers have with the brand across all
touchpoints (e.g., in-store experience, customer service, online interactions).

Importance of Branding

● Differentiation: Helps a brand stand out in a crowded marketplace.

● Trust and Loyalty: Builds consumer trust and encourages repeat business.
● Emotional Connection: Creates an emotional bond with consumers, influencing their
purchasing decisions.

Example: Coca-Cola has built a strong brand identity with its iconic red and white logo,
"Share a Coke" campaign, and consistent messaging about happiness and
togetherness.
Brand Positioning refers to the process of positioning a brand in the minds of consumers
relative to competitors. It’s about defining how a brand wants to be perceived in the marketplace
and differentiating it from others.

Key Elements of Brand Positioning

● Target Audience: Identifying the specific group of consumers the brand wants to reach.
● Unique Value Proposition (UVP): The unique benefit or value that the brand offers to
its target audience, which competitors don’t.
● Competitive Differentiation: How the brand stands out from competitors in terms of
features, benefits, or emotional appeal.
● Brand Promise: The commitment the brand makes to its customers, outlining the
experience or benefit they can expect.

4 Steps in Brand Positioning

1. Identify Target Market: Understand who the brand is for (e.g., millennials, luxury
buyers, budget-conscious shoppers).
2. Analyze Competitors: Understand how competitors position themselves and identify
gaps or opportunities for differentiation.
3. Define Brand’s Unique Benefits: What makes the brand different? This could be
quality, price, innovation, or emotional appeal.
4. Create a Positioning Statement: A concise statement that clearly articulates the
brand’s unique position in the market.

Example: Tesla positions itself as a premium, eco-friendly electric vehicle brand that
combines innovation with sustainability. Their unique value proposition is the
combination of cutting-edge technology and environmentally conscious driving.

Key Differences Between Branding and Brand Positioning

Branding is about creating an identity and emotional connection with consumers, while brand
positioning is about strategically placing that brand in the market relative to competitors.
Branding focuses on the internal aspects of a brand, such as values, visuals, and messaging.
Brand Positioning focuses on how the brand is perceived externally by its target audience and
competitors.

A perceptual map is a valuable tool used in marketing to visually represent how consumers
perceive different brands or products within a specific market. By understanding these
perceptions, businesses can effectively position their brands to stand out from the competition.

Creating a Perceptual Map

● Identify Relevant Attributes: Determine the key attributes that consumers consider
when making purchasing decisions within the specific market. These could be price,
quality, features, brand image, or other relevant factors.
● Select Two Key Attributes: Choose two of the most important attributes to serve as the
axes of your map. These axes should be at right angles to each other.
● Gather Consumer Data: Collect data from target consumers through surveys, focus
groups, or other research methods to understand their perceptions of different brands
based on the selected attributes.
● Plot Brands on the Map: Position each brand on the map based on how consumers
perceive it in relation to the two selected attributes. Brands that are perceived similarly
will be clustered together.
● Analyze the Map: Examine the map to identify gaps in the market, areas of competition,
and potential opportunities for brand differentiation.

Example: A Perceptual Map for the Automotive Industry

In this example, the two axes are "Price" and "Performance." Luxury brands like BMW and
Mercedes-Benz are positioned in the upper-right quadrant, indicating high performance and
high price. Budget-friendly brands like Hyundai and Kia are positioned in the lower-left quadrant,
representing lower price and performance.

Using Perceptual Maps for Brand Positioning

● Identify Target Market: Perceptual maps can help you identify the specific segment of
the market you want to target.
● Differentiate Your Brand: By understanding how consumers perceive your brand, you
can identify areas where you can differentiate yourself from competitors.
● Develop Marketing Strategies: Perceptual maps can guide your marketing efforts by
helping you tailor your messaging and positioning to appeal to your target audience.
● Track Brand Perception: By creating perceptual maps over time, you can track
changes in consumer perception and adjust your brand positioning accordingly.

Units 1, 2 & 3 (till Theories of Consumer Decision Making)

Marketing goes beyond just promoting a product. It encompasses the full process of
understanding consumer needs, crafting valuable products, and building long-term
relationships. For smartphone companies, effective marketing helps brands connect with users,
respond to changing preferences, and ultimately drive growth.

Importance of Marketing

● Connecting with Consumers: Marketing helps brands understand what users need,
such as better battery life, camera quality, or data security in smartphones. By
responding to these needs, companies can develop products that align with consumer
expectations.
● Building Brand Loyalty: Consistent marketing builds brand loyalty, crucial for customer
retention in a highly competitive market. For instance, Apple has a strong brand identity
that creates loyal customers who are likely to upgrade to the latest model.
● Driving Growth: Marketing boosts visibility and attracts customers, increasing a
company's reach and sales. When Samsung introduces a new Galaxy model, its
promotional campaigns are designed to captivate both existing customers and new
buyers.
● Agility: Marketing enables companies to adapt to market shifts. For instance, during the
pandemic, smartphone brands focused on online shopping experiences and offered
discounts to boost sales during challenging times.

Scope of Marketing

● Market Research: Studying consumer behavior, technology trends, and competitors.

Before launching a new model, a smartphone company might research what features
are most in demand.
● Product Development: Creating products that meet user demands, such as foldable
screens or enhanced night-mode photography.
● Pricing Strategies: Setting prices that attract different market segments, like budget
models, mid-range devices, and premium phones.
● Promotion: Using digital ads, influencer marketing, and launch events to increase brand
awareness. For example, OnePlus engages with tech influencers on social media to
promote new releases.
● Distribution: Ensuring product availability through e-commerce and retail channels to
maximize customer reach.
Core Marketing Concepts

1. Needs, Wants, and Demands

● Needs: Essential requirements (e.g., connectivity, productivity).

● Wants: Personal preferences shaped by culture (e.g., desire for a high-end phone with
an advanced camera).
● Demands: Wants backed by the willingness and ability to purchase. For example,
consumers who can afford flagship phones seek advanced technology and are willing to
pay a premium for it.

2. Market Offering

This includes the smartphone itself, bundled services, and any after-sale support.
Brands differentiate their offerings with unique features, like Google’s Pixel phones
known for computational photography.

3. Value and Satisfaction

Value is the perceived benefit of a product versus its cost. Satisfaction occurs when the
product meets or exceeds expectations. A user who buys a phone with a highly rated
camera expects excellent photos; if this is achieved, they’re satisfied.

4. Exchange and Transactions

Marketing facilitates transactions by making it easy for consumers to purchase products.

For instance, when a customer buys a smartphone through an e-commerce site, they
exchange money for the value provided by the device.

5. Customer Relationships

Building strong customer relationships ensures loyalty. Many brands offer perks like
trade-in programs, discounts, and exclusive offers to retain customers over time.

Company Orientations Toward the Marketplace

1. Production Orientation: Focuses on high efficiency and low production costs. For
instance, brands like Xiaomi emphasize affordable pricing by prioritizing cost-effective
production.
 2. Product Orientation: Prioritizes quality and innovation. Apple’s focus on design,
materials, and technology exemplifies a product-oriented approach.

3. Sales Orientation: Focuses on aggressive sales tactics, often seen with high discounts
and limited-time offers.

4. Market Orientation: Emphasizes understanding and meeting customer needs.

Samsung, for example, offers a variety of smartphone models at different price points,
catering to different consumer segments.

5. Societal Orientation: Considers societal impact. Many brands, such as Fairphone,

design eco-friendly phones with sustainable sourcing and a focus on reducing electronic
waste.

Analyzing the Marketing Environment

To develop effective strategies, smartphone companies must analyze external factors impacting
their ability to reach customers. This involves understanding both macro and
micro-environmental components.

● Components of the Environment: The environment can be divided into the

macro-environment and micro-environment.

● Macro Environment: Broad forces affecting the industry, including:

○ Demographic Factors: Trends like urbanization or an aging population may

affect smartphone features; for example, larger screens and accessibility options
for older users.
○ Economic Factors: Consumer purchasing power influences demand. In
economic downturns, budget and mid-range smartphones typically see higher
demand.
○ Natural/Environmental Forces: Growing awareness of environmental impact
has led to an increase in sustainable smartphone models or recyclable
packaging.
○ Technological Factors: Rapid advancements impact product development and
user expectations. Foldable screens and 5G are recent innovations impacting the
industry.
○ Political and Legal Factors: Trade restrictions, tariffs, and data privacy laws
influence where and how smartphones can be sold.
 ○ Cultural and Social Trends: Social factors like the “right to repair” movement
influence brand strategies as customers seek products they can easily repair.

● Micro Environment: Involves factors closer to the company that directly impact its
ability to serve customers. These include:

○ Customers: Understanding customer preferences helps shape product features.

For example, younger users prioritize camera quality, while professionals may
focus on performance.
○ Competitors: Constantly analyzing competitors is essential. When Apple
introduces a new iPhone, competitors like Samsung and Google often respond
with unique features or new launches.
○ Suppliers: Reliable suppliers are key, especially for securing high-quality
components such as processors and displays.
○ Intermediaries: Retailers, e-commerce platforms, and carriers help distribute
phones to consumers. Smartphone brands partner with these intermediaries to
reach a broader audience.
○ Publics: Different publics, such as media and consumer groups, influence a
company’s reputation. If a smartphone brand faces criticism over data privacy
issues, it can impact public trust.

Real-Life Example: Smartphone Industry

Let’s look at how a brand like Apple navigates these concepts.

● Market Research revealed demand for larger screens, better cameras, and privacy
features, leading Apple to develop products like the iPhone 14 Pro with these attributes.
● Product Development focuses on innovation, from the latest camera technology to
privacy-focused features.
● Promotion involves high-profile product launches and social media campaigns, where
Apple showcases new features to build excitement.
● Pricing positions iPhones as premium products, yet Apple also offers trade-in programs
to make upgrades more affordable.

Market Segmentation, Targeting & Positioning (STP)

The STP process—Segmentation, Targeting, and Positioning—helps companies create tailored
marketing strategies to serve specific customer groups effectively. By breaking down a diverse
market into smaller, more manageable segments, businesses can understand their audience
better, focus on the most promising groups, and position their offerings effectively.

Levels/Bases for Segmenting Markets

To effectively divide the market, businesses use various segmentation bases. These are criteria
used to create customer groups with shared characteristics, making them more receptive to
tailored marketing efforts.

1. Geographic Segmentation: Divides the market based on location—such as countries,

regions, cities, or neighborhoods. Example: Clothing brands often adapt collections
based on climate differences, offering warmer clothing in colder regions.

2. Demographic Segmentation: Uses variables such as age, gender, income, education,

occupation, and family size.

● Age and Life-Cycle Stage: Brands often create products based on age group,
like baby products for infants, or smartphones for Gen Z.
● Gender: Some products, like fragrances, are marketed specifically for men or
women.
● Income: Car manufacturers often have different models targeting various income
brackets, from budget to luxury vehicles.
● Education & Occupation: Publishing companies may produce educational
content for students and professionals separately.

3. Psychographic Segmentation: Divides the market based on lifestyle, personality traits,

social class, and values.

● Lifestyle: Fitness brands like Nike target an active, health-conscious audience

by focusing on promoting an active lifestyle.
● Personality: Some brands target customers based on personality traits; for
example, Jeep targets adventure-seekers who value ruggedness and durability.
 ● Social Class: Luxury brands like Gucci and Rolex cater to consumers who
identify with a higher social status.

4. Behavioral Segmentation: Groups customers based on their behavior, knowledge, and

attitude toward products.

● Occasion-Based: Companies may create campaigns for specific events, such

as holidays or special occasions. For instance, Hallmark targets holidays with
customized greeting cards.
● Benefit-Based: Segmenting based on the specific benefits consumers seek,
such as anti-aging properties in skincare products or fuel efficiency in cars.
● Usage Rate: Dividing customers into groups of heavy, medium, and light users.
Fast-food chains like McDonald’s offer loyalty rewards to frequent customers.
● Loyalty Status: Brands identify and cater to loyal customers through rewards or
exclusive offers. For instance, Starbucks offers exclusive benefits to loyal
customers through its loyalty program.

5. Firmographic Segmentation (B2B Markets): This segmentation is used in

business-to-business (B2B) marketing, dividing companies based on factors like
industry, company size, and location.

● Industry: Software companies offer different solutions for healthcare, finance,

and education sectors, catering to each industry’s specific needs.
● Company Size: Small businesses may need more affordable software
packages, while larger firms might need comprehensive enterprise solutions.
● Location: Some B2B firms may focus on providing localized solutions to
companies operating in specific regions.

Targeting

Once a business has identified potential market segments, it evaluates each segment to
determine its attractiveness and selects one or more segments to target.
 1. Evaluating Market Segments: A company considers the segment’s size, growth
potential, competition, and alignment with its objectives.

Targeting Strategies Examples

Mass Marketing: Also called undifferentiated Coca-Cola initially used mass marketing to
marketing, mass marketing ignores market sell its flagship drink to a broad audience.
segment differences and targets the entire They focused on appealing to as many
market with one offering. people as possible without significant
variation in the product.

Segment Marketing: The market is divided In the smartphone industry, companies like
into segments, and each segment is targeted Samsung offer different models targeting
with a specific marketing mix. Also called specific customer groups (e.g., Galaxy A
differentiated marketing. series for budget-conscious consumers and
Galaxy S series for high-end users).

Niche Marketing: This focuses on smaller, Tesla initially targeted a niche market of
more specialized market segments. Niche environmentally conscious luxury buyers
marketing involves targeting a narrow group before expanding to a wider audience.
of customers who have distinct needs. Also
called concentrated marketing.

Micromarketing: Involves tailoring products McDonald's offers unique menu items in

and marketing programs to suit the tastes of different countries to reflect local tastes, like
specific individuals or locations. Under Local the McAloo Tikki in India.
Marketing, companies customize offerings for
specific cities or regions.

Individual Marketing (One-to-One Amazon’s personalized product

Marketing): Tailors products and messages recommendations are a form of individual
to individual customers. marketing, showing each customer
recommendations based on their purchase
history.

Positioning

Positioning is the process of establishing a brand or product’s identity within the minds of the
target market, relative to competitors.

1. Developing a Positioning Strategy: A company identifies what sets it apart from

competitors and creates a value proposition to communicate that uniqueness. Example:
Volvo positions itself as a safe and reliable car brand, differentiating itself from
competitors by emphasizing safety features.
 2. Positioning Statements: A positioning statement is a concise description of the target
market, the brand’s unique value, and how it differs from competitors.
Example Positioning Statement: "For busy professionals who need reliable and fast
coffee on the go, Starbucks offers quality coffee with a variety of customizations and
rewards, unlike generic coffee shops."

3. Positioning Map: A positioning map visually displays consumer perceptions of

competing products on two dimensions, such as price vs. quality. Brands use these
maps to see how they’re positioned relative to competitors and identify potential gaps in
the market.

Real-life Example: The SUV Market

Let’s say an automaker is introducing a new SUV and wants to use the STP approach.

Segmentation Targeting Positioning

The automaker could use After evaluating, the company The automaker positions the
demographic segmentation might use differentiated luxury model as a premium,
by targeting families (age marketing by developing family-friendly SUV focused
group: 30-50) needing more different SUV models: a on comfort, while the
space. luxury version for affluent affordable model is
families and an affordable positioned as reliable and
Behavioral segmentation can version for budget-conscious value-driven. Through clear
also be applied by targeting families. messaging, it communicates
customers who value safety the unique benefits of each
features, such as parents or model to its respective target
adventure-seekers needing segments.
all-terrain capabilities.

Consumer and Business Markets

Understanding the differences between consumer and business markets is crucial, as each type
has unique characteristics, decision-making processes, and needs.

Consumer Markets Business Markets

Definition: Consumer markets consist of Definition: Business markets involve

individuals or households purchasing organizations purchasing goods or services
 products and services for personal use, to use in operations, incorporate into other
enjoyment, or consumption. products, or resell.

Characteristics: Characteristics:

● Individual Buying: Buying decisions ● Complex Buying Process: Business

are often influenced by personal purchases often involve multiple
tastes, emotions, lifestyle, and cultural decision-makers (e.g., purchasing
factors. manager, finance team) and detailed
evaluation criteria such as
● Varied Needs and Preferences: cost-effectiveness, supplier reliability,
Each consumer has unique needs, so and long-term partnerships.
products often target specific groups
based on factors like age, income, or ● Larger Quantities: Businesses buy in
interests. bulk to meet operational needs, such
as raw materials or equipment for
● Shorter Purchase Cycles: manufacturing.
Consumer purchases are typically
made more frequently and involve ● More Rational Buying: Decisions are
smaller quantities. typically based on objective factors
like ROI, product specifications, and
performance.

Example: A young professional buys a Example: A technology company buying

smartphone primarily for personal use, driven hundreds of computers for employee use,
by features like camera quality, brand where decision-makers focus on factors like
reputation, and design. performance, technical support, and warranty.

Developing and Communicating a Positioning Strategy (Deeper Dive)

Positioning is how a brand wants to be perceived in the minds of its target audience, relative to
competitors. Effective positioning can establish a clear, unique, and favorable place in the
market.

Developing a Positioning Strategy

● Identify Differentiators: Determine what makes the product or brand unique compared
to competitors. This could be based on product attributes, pricing, or target benefits.
Example: Tesla’s differentiator is its electric vehicle innovation, offering environmental
benefits and advanced technology.

● Create a Unique Value Proposition (UVP): A UVP clearly states the primary benefits of
the product and why it’s better suited to the target audience than competing products.
 Example: “Tesla—Drive the future with a sustainable, high-performance electric vehicle
that’s fun to drive.”

● Define Positioning Statement: The positioning statement includes the target audience,
the product’s main category, key benefits, and a differentiating factor. Example: "For
environmentally conscious professionals, Tesla is the electric vehicle that combines
sustainability with cutting-edge technology, unlike conventional gasoline cars."

Positioning Approaches

1. Product Attributes: Emphasizes specific features, like safety, durability, or battery life.
Example: Volvo emphasizes safety, aiming to attract families and safety-conscious
buyers.

2. Price/Quality: Positions the brand based on price level or quality, appealing to

budget-conscious or luxury-seeking customers. Example: Rolex focuses on high quality,
aligning with a luxury price point.

3. Application/Use Case: Focuses on specific scenarios in which the product excels,

making it relevant to customers with that need. Example: Gatorade positions itself as a
drink for athletes needing hydration during intense physical activity.

4. Competitor-Based: Positions the brand by differentiating it directly from competitors.

Example: Pepsi often contrasts itself with Coca-Cola, especially in taste tests and flavor
campaigns.

Communicating the Positioning

● Messaging Consistency: Use a unified message across all marketing channels to

reinforce the positioning. Example: Apple consistently promotes its products as premium
and user-friendly, evident in its minimalist design and high-quality advertising.

● Customer Touch Points: Reinforce the positioning through every customer interaction,
from website design and customer service to product packaging and advertisements.
 Example: Starbucks consistently communicates a high-quality coffee experience,
reflected in its store ambiance, barista service, and personalized drink options.

● Positioning Map: A positioning map visually represents where a product stands relative
to competitors on specific attributes, like price and quality. It helps identify market gaps
or assess alignment with target customers’ perceptions.

Example: In a positioning map of the car industry, brands like Mercedes and BMW might
be in the high-quality, high-price quadrant, while Toyota might be positioned in the
high-quality, moderate-price quadrant.

Factors Influencing Consumer Behavior

Understanding consumer behavior is essential for creating effective marketing strategies. The
factors influencing consumer behavior can be categorized into four main types:

1. Cultural Factors:

● Culture: The set of values, beliefs, and customs that shapes a person’s
preferences and behavior. Cultural factors strongly influence what people buy,
especially in different regions or countries.
● Subculture: Smaller groups within a culture, such as religious groups,
ethnicities, and geographic regions. For instance, in the U.S., consumers from
different ethnic backgrounds might prefer specific foods or fashion styles.
● Social Class: People’s social status, often influenced by income, education, and
occupation, can affect purchasing power and preferences. Luxury brands, for
example, often appeal to higher-income consumers.

2. Social Factors:

● Reference Groups: Groups like family, friends, and social networks influence
individuals by setting trends or endorsing products.
● Family: Family members have a strong influence on buying decisions, especially
for products used by the whole household, like groceries or furniture.
 ● Roles and Status: A person’s role and position in society (e.g., student, parent,
manager) influence buying decisions. For example, a professional may invest in
high-quality business attire to reflect their status.

3. Personal Factors:

● Age and Life Cycle: People’s needs and spending habits vary across life
stages, from students and young professionals to families and retirees.
● Occupation: A person’s profession often determines what they need and can
afford, influencing their buying behavior.
● Lifestyle: A person’s way of living, shaped by their interests, activities, and
opinions, guides their buying choices. For instance, a fitness-focused lifestyle
may lead to buying healthy foods and workout equipment.
● Personality and Self-Concept: People buy products that match their
personalities or reflect their self-image. A creative person might prefer unique or
trendy clothing.

4. Psychological Factors:

● Motivation: The internal drive that compels someone to fulfill a need, based on
models like Maslow’s hierarchy of needs.
● Perception: How consumers interpret information can affect how they view a
product, especially through selective attention, distortion, and retention.
● Learning: Experience with products influences future buying decisions. Positive
or negative experiences can shape brand loyalty.
● Beliefs and Attitudes: People develop beliefs and attitudes over time, which can
influence their responses to products or brands.

Buying Decision Process

Step 1 Need Recognition: The Example: A person notices

process begins when a their phone is outdated,
consumer recognizes a need prompting a desire to buy a
or problem that requires a new one.
solution. This need may arise
 from internal stimuli (hunger,
thirst) or external stimuli
(advertisements, social
influence).

Step 2 Information Search: The Example: The person

consumer gathers information researches the latest
about potential products or smartphone models,
services that can fulfill their comparing features and
need. This can be an internal prices.
search (recalling previous
experiences) or external
(researching online, asking
friends).

Step 3 Evaluation of Alternatives: Example: After comparing

Consumers compare the features, the person narrows
available options based on down their choices to two or
criteria like price, quality, three smartphones.
features, and brand
reputation. Each person has
their own way of weighing
these factors.

Step 4 Purchase Decision: The Example: The person

consumer selects a product decides to purchase a
and decides where to buy it. specific smartphone model
Factors like timing, discounts, from an online retailer that
and stock availability can offers a discount.
influence the final decision.

Step 5 Post-Purchase Behavior: Example: If the smartphone

After making a purchase, the meets the person’s
consumer evaluates their expectations, they are likely
satisfaction. A positive to stay loyal to the brand in
experience can lead to brand the future.
loyalty, while dissatisfaction
may result in returns or
complaints.

Theories of Consumer Decision Making

1. Economic Man Theory: Assumes consumers are rational decision-makers who seek to
maximize their satisfaction with each purchase. They carefully weigh costs and benefits,
aiming for the most economical choice.
 Limitations: This theory often doesn’t hold up in real-world scenarios, as people are
influenced by emotions, social factors, and impulsive behaviors.

2. Psychodynamic Theory: Developed by Sigmund Freud, this theory suggests that

unconscious psychological forces (such as inner desires and fears) significantly affect
decision-making. This theory emphasizes the role of subconscious motivations in
consumer choices.

Example: A person may purchase luxury goods driven by a subconscious desire for
status, even if it strains their budget.

3. Cognitive Theory: This theory views consumers as problem-solvers who actively seek
information and evaluate it logically before making decisions. It involves mental
processes, such as perception, memory, and reasoning.

Example: A consumer researching various car models, reading reviews, and analyzing
technical specifications before buying reflects cognitive decision-making.

4. Learning Theory: This theory explains that consumer behavior is shaped by prior
experiences. Consumers learn from past purchases, especially through reinforcement
(satisfaction) or punishment (dissatisfaction), which influences future choices.

Example: If a consumer had a positive experience with a certain skincare brand, they
are more likely to repurchase products from that brand.

5. Socio-Cultural Theory: This theory emphasizes the influence of societal and cultural
factors, suggesting that decisions are shaped by social norms, cultural background, and
group affiliations.

Example: A consumer may choose organic products due to cultural values of health and
sustainability promoted within their community.

4 Types of Consumer Behavior

1. Complex Buying Behavior: This type of behavior occurs when consumers are highly
involved in the purchase decision, often due to significant differences among brands and
high perceived risk. The product is typically expensive, infrequently purchased, and
carries a lot of social or personal significance.

Characteristics

● High involvement and extensive information search.

● Consumers evaluate various alternatives before making a decision.
● Often involves considerable emotional investment.

Example: Purchasing a car. Consumers research multiple brands, compare features,

read reviews, take test drives, and consider factors like financing options, safety ratings,
and fuel efficiency before making a final decision.

2. Dissonance-Reducing Buying Behavior: Dissonance-reducing buying behavior occurs

when consumers are highly involved in a purchase but see little difference between
brands. The decision can lead to post-purchase dissonance (regret) if the consumer is
not satisfied with the choice made.

Characteristics

● High involvement due to perceived risk but low differentiation among alternatives.
● Consumers may experience buyer's remorse after the purchase.
 Example: Buying a washing machine. Consumers may be overwhelmed by choices, but
once they select a model, they may question if they made the right decision, especially
regarding price and features compared to other models.

3. Habitual Buying Behavior: Habitual buying behavior is characterized by low consumer

involvement and low differentiation among brands. Consumers often make habitual
purchases without much thought or evaluation because the products are frequently
bought and perceived as low-risk.

Characteristics

● Low involvement and minimal information search.

● Purchases are often based on habit rather than brand loyalty.

Example: Purchasing household items like toothpaste or detergent. Consumers may

choose the same brand they have always used without considering alternatives, as
these products are low-cost and frequently purchased.

4. Variety-Seeking Buying Behavior: Variety-seeking behavior occurs when consumers

have low involvement in a purchase but seek to try new products or brands for the sake
of variety, even if they are satisfied with their current choice.

Characteristics

● Low involvement but high interest in exploring new options.

● Consumers switch brands frequently to experience something different.

Example: Snack foods or beverages. A consumer who regularly buys a particular brand
of chips may choose a different flavor or brand on occasion to satisfy a desire for variety,
even if they are satisfied with their usual choice.
For Decision Sheet

Concepts Probable Criteria Possible Decision

Alternatives

- Implementing Behavioural 1. Greater Positive 1. Implementing Incentives

change Behavioral Shift for Eco-Friendly Purchases
- Leveraging sustainable
marketing 2. Enhanced Sustainability 2. Launching Awareness
Levels Campaigns on Sustainability

3. Increased Consumer 3. Establishing Partnerships

Engagement with Sustainable Brands

4. Improved Transparency in 4. Creating Interactive Digital

Messaging Experiences for Engagement

5. Stronger Measurable 5. Organizing

Outcomes Community-Based
Sustainability Initiatives

- Market Segments 1. Expanded Potential in 1. Targeting Emerging Market

- Segment Profitability Market Segments Segments
- Target Marketing
2. Boosted Profitability of 2. Implementing Tiered
Target Segments Pricing Strategies for
Profitability
3. Stronger Alignment with
Brand Goals 3. Developing Tailored
Marketing Campaigns for
4. Optimized Fit with Specific Segments
Customer Needs
4. Conducting In-Depth
5. Enhanced Competitive Customer Insights Research
Differentiation
5. Enhancing Product
Offerings Based on Segment
Needs

- Importance of Segmentation 1. Clearer Segmentation and 1. Developing

and Positioning Positioning Strategies Comprehensive
- Consumer Psychology and Segmentation Models
Personality 2. Richer Insights into
- Value creation for market Consumer Psychology 2. Conducting Behavioral and
segments Psychographic Consumer
3. Enhanced Value Offerings Research
for Target Segments
3. Creating Customized Value
4. Deeper Emotional Propositions for Each
 Connection with Consumers Segment

5. More Distinct Competitive 4. Implementing Emotional

Positioning Branding Strategies

5. Refining Competitive
Positioning Tactics in
Marketing

- Consumer behaviour 1. Alignment with Emerging 1. Leveraging Data Analytics

- Changing consumer Consumer Trends for Consumer Insights
landscape
2. Flexibility in Adapting to 2. Implementing Agile
Consumer Preferences Marketing Strategies

3. Effectiveness in Boosting 3. Enhancing Personalization

Consumer Engagement in Customer Interactions

4. Utilization of Consumer 4. Adopting Omnichannel

Research Insights Engagement Approaches

5. Capacity to Build 5. Creating

Long-Term Consumer Loyalty Community-Centric Marketing
Initiatives

- B2B buying process 1. Decision-Maker Influence 1. Account-Based Marketing

- Organisational buying Approach
situations 2. Procurement Complexity
- B2B Buying Cycle 2. Content Marketing
3. Supplier Relationship Focused on Industry Insights
Strength
3. Developing Strong
4. Innovation Adoption Rate Customer Success Programs

5. Purchase Volume & 4. Leveraging Technology for

Frequency Sales & Marketing Alignment

5. Building a Robust Sales

Enablement Program

Product and Pricing 1. Market Penetration 1. Premium Pricing Strategy

Strategies Potential
2. Skimming Pricing Strategy
2. Competitive Advantage
3. Penetration Pricing
3. Profitability and ROI Strategy

4. Brand Equity Impact 4. Bundle Pricing Strategy

5. Customer Value 5. Value-Based Pricing

 Proposition Strategy

New Product Development 1. Market Demand and Size 1. Product Line Extension

2. Technical Feasibility 2. Brand Extension

3. Competitive Landscape 3. Disruptive Innovation

4. Resource Availability 4. Acquisition of New

Technology
5. Return on Investment
(ROI) 5. Open Innovation Approach

- Brand Positioning 1. Target Audience Alignment 1. Influencer Marketing

- Promotion plan Campaign
2. Competitive Differentiation
2. Content Marketing
3. Brand Value Proposition Strategy
Clarity
3. Public Relations Campaign
4. Budget Efficiency
4. Search Engine Marketing
5. Measurable ROI (SEM)

5. Social Media Advertising