MS 204 Marketing Management

MBA II Semester

Dr. Vibhuti Tripathi

Quota System, production driven market

Liberalized Economy

Demand driven market; Informed and Demanding

Customers

Focus on: Value Creation, Relationships, Retention,

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

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and

Inexpensive.
and

Consumers are primarily interested in product availability and

low prices.
 Product Concept:

Assumption:

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

Selling Concept:

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

Assumptions:

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

Consumer typically show buying dis-interest or resistance and

must be coaxed into buying.
Marketing Concept:

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

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

Assumption:

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

• Customer is the King.

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

Involves:

• Customer Orientation.

• Integration and unification of company operations.

Focus:

• Customer is important.

• Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

• Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term

relationships.

- Integrated Marketing: all departments work together to serve

the customers’ interest

- Internal Marketing: recruiting, motivating and retaining staff

who want to serve customers well.

- Social Responsibility: focus on delivering desired satisfaction

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

• Has wider implications

• Customers
• Stake Holders
• Business Partners
• Competitors

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

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

• American Marketing Association: The performance of

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

• “Marketing is a process by which companies create value

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

Attempt is made to convert societal needs into profitable

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

Sales:

An activity which involves order taking and delivery of

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

Advertising:

Paid form of non personal communication of goods / services

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

• Perceived tangible and intangible benefits offered by the

products / services and its cost to the customers.

Customer Value Triad, QSP

Quality
(Product, Features, Ingredients, Service Components)

Value

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

Company Reflects in the cost of the product/ services and

the revenue generated in the selling process.

Value = Benefits / Costs

Benefits: Functional + Emotional

Costs: Monetary + Time + Energy + Psyche

• Raise Benefits at same price

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

Needs: State of felt deprivation. Physical, Social and

Individual Needs.

Physical: Basic to Survival

Social: Desire to Belong
Individual: Self Expression

Wants: Needs directed towards specific satisfiers.

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

Demand: Wants + Purchasing Power.

 Maslow’s Hierarchy of Needs

Self
Actualisation

Esteem

Social

Safety Radial Tyres Ply Tyres

McDonald’s Canteen
Physiological
Peter England Local Brand

Companies focus on wants and loose sight of needs and

purchasing power
 Market Segmentation and Target Market

• Marketers can not satisfy everyone in the market.

• Marketers start by dividing the market.

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

a similar set of wants.

• Or fall into similar demographic, psychographic or behavioral

patterns.

• Target Market: Lucrative for conducting business; resources

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

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

3. Create a strategy delivering superior value.

4. Build profitable customer relationships and creating customer delight.

5. Reap the rewards.

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

• Positioning: Tailoring a product's image and presentation

to appeal to a selected market segment.

• Marketing Mix; includes a combination of tools like;

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

to pursue the marketing objective of the company and

fulfilling needs and wants of the customers.

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

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

Warranty, Guarantee

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

Credit Terms

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

Transportation

4. Promotion: Sales Promotion, Advertising, Public

Relations
Robert Lauterborn suggested 4 Cs

4 Ps Correspond to the Customer’s 4 Cs

Product Customer Solution

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

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

3 Additional Tools:

5. People: All people directly involved in the

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

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

services are rendered and consumed.

7. Physical Evidence: Communication, Performance and Experience of

existing customers, atmosphere
 Scope and Functions of Marketing

Functions of Research:

Marketing Research

Product Planning and Development

Functions of Exchange:

Buying and Assembling

Selling

Functions of Physical Treatment:

Standardization, Branding

Packaging

Storage and Transportation

Functions of Facilitating :

Salesmanship

Advertising

Pricing

Financing

Insurance
 Company Orientations and Philosophy
towards market place

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and

Inexpensive.
and

Consumers are primarily interested in product availability and

low prices.
 Product Concept:

Assumption:

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

Selling Concept:

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

Assumptions:

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

Consumer typically show buying dis-interest or resistance and

must be coaxed into buying.
Marketing Concept:

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

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

Assumption:

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

• Customer is the King.

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

Involves:

• Customer Orientation.

• Integration and unification of company operations.

Focus:

• Customer is important.

• Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

• Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term

relationships.

- Integrated Marketing: all departments work together to serve

the customers’ interest

- Internal Marketing: recruiting, motivating and retaining staff

who want to serve customers well.

- Social Responsibility: focus on delivering desired satisfaction

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

Marketing Environment

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

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

Business Cycle

Recession

Recovery

Prosperity Depression
Legal and Governmental Factors:

• Political Leadership

• Stability of Government

• Rules and Regulations

• Monetary and Fiscal Policies

• Patents, IPR, MRTP

Demographic and Socio-Cultural Factors:

• Age Structure (composition of population Age-wise)

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

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

•Physical Fitness and Health;

Geographical Shift in Population;

Strategies: Product Development

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

Bargaining Power of Suppliers Threat of New Entrants

Competitive
Environment

Threat of Substitute Bargaining Power of Buyers

Technology:

• Technological breakthroughs can affect markets:

• By starting new industries;

• By radically altering or virtually eliminating

existing industries;

• By stimulating markets and industries not related

to new technology;

• Accelerating pace of technological changes

Analysing External Micro- Environment:

• Customers:
- Needs
- Purchasing power
- Buying Behaviour

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

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

• Company Image;

• Location;

• Production Facility;

• R & D Capability;

• Financial Resource;

• Human Resource;
Developing Marketing Strategies

Segmentation, Targeting & Positioning

 Market Segmentation

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

• Customers differ widely in terms of

• Perception
• Values
• Preferences
• Buying habits

• Potential Market;

• A company has different alternatives; according to their

products or objectives.
Mass Marketing;

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

program.

• Companies consider large potential markets.

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

• One Marketing Mix Strategy will satisfy them.

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

• Major objective is to maximize sales

• Single Marketing Mix Strategy consists of:

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

Maruti 800 in 1980s, News Papers, Surf

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

• Companies are turning to micro marketing by adopting

different approaches based on Segmentation, Target
Identification and Positioning.

• Market Segmentation: Process of identifying smaller groups

of people that exist within a larger market.

• Market Segment : consists of a group of customers who

share a similar set of wants, tastes and preferences.

A marketer does not create segment.

• Effective Segments are;

• Measurable;

• Accessible;

• Substantial;

• Actionable;

• Differentiable;

• The purpose is to design a Marketing Mix that more

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

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

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

communicate.

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

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

moderate size.

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

Automobiles: luxury, low segment, Sporty, Spacious

 Process of Market Segmentation

Analyse the needs of customers

Analyse the characteristics of consumers

Dis-integrate the viable, profitable, lucrative segments

Formulate different market mix for different segments

Feedback of various segments

Select the higher potential segments

 Market Segmentation Strategies

Concentration Strategy:

A single market segment with one Marketing Mix.

Segment A

Marketing Segment B
Mix

Segment C

Segment D
 Multi-segment strategy

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

segment, different marketing plan for each segment.

Marketing
Mix A Segment A

Marketing Segment B
Mix B

Segment C

Marketing
Mix D Segment D
 Bases for segmenting Markets.

• Two Broader groups of variables used by companies.

• Consumer Characteristics: Geographic,

Demographic and Psychographic.

• Different attitudes of professionals and

workers for a product.

• Looking at customer responses to benefits, use

occasion or brands.

• May examine whether people who want

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

• Geographic: Companies can operate in one or few

geographic areas, or

• operate in all areas with separate Marketing Mix Regionally.

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

• Demographic: most popular basis. Easier to measure.

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

etc.

• Psychographic: refers to as lifestyle analysis.

• Behavioural: buyers are divided on the basis of their

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

• A company can adopt alternative Targeting Strategies.

Alternative Strategies

Narrow Coverage
Broad Coverage
Differentiated Marketing

Micro Marketing
Undifferentiated Marketing
Single Segment Concentration / Concentrated Strategy:

• Selecting a single segment and one marketing mix.

• Choice of Smaller companies with limited resources.

M1 M2 M3 M4

P1

P2

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

M1 M2 M3 M4

P1

P2

P3
Product Specialisation:

• Company Specialising in a single product.

• Company builds up strong reputation.

M1 M2 M3 M4

P1

P2

P3
Market Specialisation:

• Serving many needs of particular segment groups.

M1 M2 M3 M4

P1

P2

P3
Full Market Coverage:

• A company attempts to serve the entire market,

• Single undifferentiated marketing strategy, or

• Separate marketing mix for each segment.

M1 M2 M3 M4

P1

P2

P3
 Benefits of Segmentation

Opportunity for rapid growth; specially for medium size

companies

Opportunity for rapid growth

More focused; increases profitability

Helpful in formulating strategies

Minimising the risk of failure

Broadens the loyalty base of satisfied customers

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

• End result of positioning is the successful creation of a

customer Value Proposition.

• Product Positioning Vs. Brand Positioning.

Steps Involved in Positioning Task ?

 Steps Involved in Positioning Task:

1. Identifying Competitive advantage

2. Choosing right competitive advantage

3. Selecting an overall Positioning Strategy

4. Developing a positioning statement

5. Communicating and delivering chosen positioning.

 1. Identifying Competitive Advantage

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

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

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

d. Image;

e. Channels; coverage, expertise, performance

 2. Choosing right competitive
advantage
• How many differences to choose?
• USP Unique Selling Proposition

• More differentiators; useful in intense competition

• Which differences to promote?

• Criteria to select differences;
• Importance
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
 3. Selecting an overall strategy

More Same Less

More

Benefits
Marginal
Same Loosing Proposition
Proposition

Loosing Loosing
Less Proposition Proposition

Price
 4. Developing a Positioning Statement

Reflected in;

Need Recognition:

Target Segment:

Solution:

Concept:

Differentiation:
 5. Communicating and delivering the chosen position

More Same Less

More COMPETITIVE
QUALITY VALUE

Same

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

• Double Benefit Positioning: more distinctive

• Triple Benefits Positioning: challenging to communicate

and convince; COUNTER SEGMENTED

Brands transit in different directions many times

Positioning may go wrong

 Characteristics of A Good Positioning Strategy
elevant to contemporary customers, if they find it not relatable to their needs and wants they may

m Floppy Disks to External Hard Discs

2.Clear : The message communicated to the consumers should be clear and easy to
comprehend

What functional (Related to product performance, attributes or features)/ emotional

(Related to Social acceptance, status, achievement, self identity etc.) benefits are being
offered.

Example: Bathing Soaps by HUL Dove (Moisturiser Content) , Liril (Freshness), Lux
(Fragrance), Pears (Glycerine), Hamam (Natural Ingredients)
3. Unique : Uniqueness of the brand should be created in the mind of the customers
which is reliable, credible and sustainable.

USP or Multiple Benefits - Choose Wisely and make a Unique Value Proposition

Example Maruti Suzuki (Fuel Efficient Cars- Value for Money) Tata (Rugged Cars Mainly for
off road driving)
4. Desirable : The Value Proposition offered should be desirable

Right combination of Functional / Emotional Benefits and the Cost to be paid in terms of
Money, time, efforts, Psyche

The proposition should be easy to evaluate

Non-desirable benefits may be a losing proposition like - Pepsi Blue, Vanila Coke, Dettol
Kitchen.

5. Deliverable : The promises communicated to customers should be deliverable

False / unachievable promises may lead to create negative brand equity.

of difference - customer should be able to differentiate the brand from that of the competitors.

ed by the customer - Customer has to validate the offering by making purchase decision in the favou
 Types of Positioning

multiple factors including

of competitors, Market Share, Revenue Generation, Innovations

duct, Attributes, Features, its acceptance by the consumers, innov

eir products.

y want their product to be seen by the customers in future

yle based solution, Brand is associated with a life style rather than the functional benefits.

e one desires to live)

tions to the needs identified by them.

e product)

blishing a brand promise and a reputation of the parent brand. All the products and sub-brands und

ent market segments, the position different products differently for specific needs of different segm

ury, Fuel Efficiency etc.

Brands tend to transit in different directions

shortsightedness of the organisations

Confusion of the customers due to complexed products

Wrong perception of the consumers

Brands become generic - Any packaged water bottle became

BISLERI or any vegetable oil became DALDA

In such a case right strategy followed by Brands is Repositions

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

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

market’s understanding of the product.

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

branded products.

Firms may consider repositioning a product due to

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

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

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

Pepsi in Vanilla Flavour

2. Over Positioning: Narrow image of the brand.

Tanishque

3. Confused Positioning: Confused image in the mind of

customers.

Maruti Versa and Maruti Omni VAN

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

 Analysing Consumer Markets and Buying Behaviour

Why People Shop ?????

Consumers Mind is a Black Box

Any individual who purchases goods and services from
the market for his/her end-use is called a consumer.

In simpler words a consumer is one who consumes

goods and services available in the market.

Behaviour is defined as “the series of innumerable responses

portrayed by individuals in response to efforts of company
and experience to ones he knows.

Consumer Behaviour is a sum total of all the actions directly

involved in obtaining, consuming and disposing off products
both goods & services including the decision making process
which proceeds
and follow these actions.
Consumer Behaviour is a branch which deals with the various stages a
consumer goes through before purchasing products or services for his
end use.

There are several factors which influence buying decision of a

consumer ranging from psychological, social, economic and so on.
The study of consumer behaviour explains as to:

▪ Why and why not a consumer buys a product? (Necessity, for

releasing stress, for status, for socialising etc.)

▪ When a consumer buys a product ? (Occasions, Festivals, Monthly,

Frequently, Less frequently)

▪ How a consumer buys a product ? (During Sale, High Quantities, Only

Branded, Only through organised retailers, from flee markets, different
products from different places in different quantities etc. )
• The buyer/consumers may not follow any rigid rules while taking the
purchase decisions.

• Everyday they are exposed to a world full of information -

Sources of information could be:

▪ Personal Sources- (Friends, Family, Relatives, Colleagues)

▪ Commercial Sources - (Advertisements, Press Conferences,

other Marketing Communication Modes)

▪ Public Sources - (Opinion of the public in news, shows, other

forums)

▪ Personal Experience- (Satisfaction, Dissatisfaction, Delight)

• Due to this human behaviour is changing constantly affecting an

individual’s purchase decision.
The main catalyst which triggers the buying decision of an individual is
need for a particular product/service. Consumers purchase
products and services as and when need arises.

For satisfying them it is important for an organisation to analyse

consumers’ behaviour for

• Consumers’ reactions to a firms marketing strategy. (Segmentation,

Targeting, Positioning)

• The marketing concept stresses that a firm should create a Marketing

Mix (7 Ps) that satisfies (gives utility to) customers, therefore there is
a need to analyse the what, where, when and how consumers buy.

• Marketers can better predict how consumers will respond to

marketing strategies if they know -

• How Consumers make purchase decision

• What influences their purchase decision
Decision Making Decision Making
Consumers have
certain beliefs
about how their
needs can be
satisfied
Needs/ Wants Beliefs

Consumers have certain

Customer’s experience &
Disposition experience of others
notions due to their
to Buy which play an important
culture subculture/
role in purchase decision

Buying Without Wanting Buying Without Deciding Deciding Before Buying

Impulse Purchase We plan to buy but don’t We plan to buy specific brands/
Sometime we don’t plan have specific brands/ styles/ styles/ colours/ quantities in
to purchase yet we buy colours/ quantities in mind mind
• When making a decision to buy a product from many
competing products, a consumer unknowingly passes
through a few stages of the decision process.

• Consumers does not pass through all the stages

before purchasing a product.

• The need for a given product is activated by

• Internal stimuli - Personality, experience

•External stimuli - Advertising, culture,

sub-culture
 Model of Consumer Behaviour

Organizations can control the stimuli through managing their strategies (STP) and
tactics (7Ps), also there are uncontrollable stimuli related to external business
environment and socio-cultural environment of an individual.

They are always striving to understand the buyers black box (like an aircraft carries all
information) which contains the reasons why consumers buy or don’t buy

Buyers response is an out come of VALUE they receive, satisfaction and dissatisfaction,
usually uncontrollable yet can be managed through ensuring satisfaction or delight
 Firm’s Marketing Efforts Socio Cultural Environment
INPUT 1. Product 1. Family
2. Promotion 2. Informal Sources
3. Price 3. Non Commercial Sources
4. Channels of Distribution 4. Social Class, Culture

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

Purchase
Trial
Repeat Purchase
OUTPUT
Post Purchase Evaluation
 Consumer Decision Making Process
The Consumer or Buyer Decision Making Process is a method used
by marketers to identify and track the decision making process of a
customer journey from start to finish.

There are FIVE stages identified through which a consumer transits

1.Need Recognition 1. Need

2. Information Search 2. Alternatives

3. Best for Me (The brand

3. Information Evaluation and drink type)

4. Purchase
4. Purchase

5. Post Purchase Behaviour 5. Satisfaction /Dissatisfaction

 Need Recognition
The realization by the consumer that there is a difference
between “what is” and “what should be”.

The customer feels like something is missing and needs to

address it to get back to feeling normal.

Organisations should determine when the target demographic

develops these needs or wants.

The needs and wants are influenced by marketing stimuli and

internal stimuli
 Information Search
Stage in the consumer decision-making process in which the consumer
perceives a need and actively seeks out information concerning products
that will help satisfy that need.
Information is not only gathered about the products via marketing
communication but also from people via recommendations and through
previous experiences.

In this stage a customer is also thinks about risk management.

A customer makes a pro’s vs. con’s list to help make their decision.

People often don’t want to regret to make a decision so they take extra time
in information search.

Organizations should ensure to disseminate information

about their offerings through every possible communication
Vehicle like TV, News Paper, Magazines, Hoardings,
Internet, Emails, SMS, Calls etc.
 Information Evaluation

s determine the criteria to be used for evaluation of products.

ss the relative importance of each criteria and,

each alternative based on the identified criteria.

customer has determined what will satisfy their want or need

egin to seek out the best deal.

be based on price, quality, or other factors that are important to them.

s read many reviews and compare prices, ultimately choosing the one that satisfies most of their pa

ons should ensure to understand the parameters on which consumers evaluate their purchase.
 Purchase
er quantity and it would be also termed as Exploratory phase.
mples, offer testers, sell small quantities to induce trials. (There could be many other cr

elated to brand loyalty, which firms try to encourage because it contributes to greater s

ectations
 Purchase sub-decisions
• Brand Decision Creating right positioning and
brand image

Neighbourhood shop,
•Vendor Decision Exclusive Showroom,
Mall, Multibrand outlet
Location
Ensure different pack
• Quantity Decision sizes to cater to different
Target markets with the
same product

Recognise occasions
• Timing Decision when your product
Is bought most

Cash
Credit Card
• Payment Methods Debit Card
Cheque
 DECISION MAKING SET
CHOICE SET
TOTAL SET Best preferred choices
CONSIDERATION SET
All brands and out of consideration set
After evaluation of all
variety available in
alternatives few are
the market
matching the specific needs
or expected value and
would be chosen in case of
non-availability of the one
of the chosen brands

DECISION
 Post Purchase Behaviour

The purchasing process does not end when a consumer buys a product .
After the purchase consumers tend to evaluate their experience to decide if
theyThere
are satisfied or criteria
are multiple dissatisfied.
to evaluate
According to expected benefits and value
perceptions (functional & Emotional benefits
And monetary & non-monetary costs)

The information is used for future reference and for passing on information
to others who seek advice.
Outcomes of
Satisfaction

Loyalty Repeat Purchases Referrals

What influences consumer behaviour ?
1. Cultural Factors

People’s shared customs, beliefs, values that

are generated from generation to
generation.

Includes religion, language, history, artefacts,

ethnicity
smaller groups within cultural
framework with common life
experiences and situations.

relatively homogeneous and

enduring divisions in a society.
Division of members of the society into
hierarchy of distinct status classes

Members of each class have same status

while other members of different groups may
have higher or lower status
 Influence of Cultural Factors on Buying Behaviour

Example- Food, Apparels, Lifestyle

It affects what consumers need and how
they perceive that need

Example - Authenticity of
How consumers are likely to search for various information sources
information like friends, family, experts
etc.
Example- Colour,
Importance placed on certain attributes Technology Acceptance,
of products /services Size

Example - Perception of value

Price negotiations during purchase for Money, More purchases
process during SALE time

Example - International cuisines/

How consumers use or consume food but with Indian taste
products
 2. Social Factors

Factors that are prevalent in the society where a consumer lives. 

The society is composed of several individuals that have different

preferences and behaviors.

These varied behaviors influence the personal preferences of the

other set of individuals as they tend to perform those activities
which are acceptable to the society.

Reference Group

Family

Roles & Status

 A. Reference Group

e over each other.

Primary Membership Group Primary Membership Group

Childhood Friends Colleagues

Informal and Frequent Interactions Formal and less frequent interactions

Aspirational Group
Higher social status
Celebrities
A Professional group
Dissociative Groups - A group to which one never wishes to belong to

Dissociative Group
Lower Social Status
Certain groups within reference group

The marketers should try to identify the roles within the reference group that influences
the behavior of others.

Opinion Leaders - a well-known/ popular individual that has the ability to influence the
opinion of those who are in the reference group.

There could be different opinion leaders within the group for different product
categories like fashion, mobile phones, gadgets, holidays etc.

Opinion leadership depends on the expertise / interest of an

individual about different product categories.
 B. Family
Persons related by blood, marriage or adoption who
reside together is a family

The family members play a crucial role in designing one’s

preferences and behavior.

It offers an environment wherein the individual evolves, develops

personality and acquire values.

A child develops his buying behavior and preferences by watching

his parents and tend to buy the same products or services even
when he
grows old.

Different individuals in the family play different consumption roles

Influencers, deciders, buyers/ purchasers, users, maintainers

 Role of family members in case of buying a refrigerator
There seems to be a need to change the refrigerator for a long time but parents are
ignoring it.

Son or daughter of the family may become an INFLUENCER by highlighting the need and
collecting information on latest refrigerators available in the market

Mother or Father may decide that it is high time the refrigerator is changed

Mother the DECIDER generally would decide about the capacity and other features of the
refrigerator like convertible selves / water dispenser on the door etc.

Mother or Father may BUY / PURCHASE

Entire family USES

On any fault in the refrigerator the children may call

Engineers or learn through manuals in order to maintain
 C. Roles and Status
oles and status throughout the life.

e society also influences his buying behavior.

ultiple roles like at her organization she may have a responsibility as senior manager but at home

-Law etc.

sibilities change.

ent roles an individual in their target group plays

ormulate more targeted marketing mix.

Such a woman will have different

needs to play different roles
 3. Personal Factors

s that strongly influence their buying behavior.

person that results in a different set of perceptions, attitudes and behavior tow

Basically personal factors define the

individuality of a person alongside few
psychological factors
 A. Age & Lifecycle

Age and life-cycle have potential impact on the consumer buying

behavior.

It is obvious that the consumers change the purchase of goods and

services with the passage of time.

Young Single professional will have different spending pattern and

consumption preferences in comparison to when he/she gets married

The choice of products, leisure, entertainment, saving patterns

everything change with the transition of life cycle stages.

Organizations should keep a continuous watch on the demographic shift

in their earlier defined target population in order to make relevant and
necessary changes in their market offerings.
 B. Occupation
The occupation of a person has significant impact on his
buying behavior.

The people tend to buy those products and services that

advocate their profession and role in the society.

For example, the buying patterns of the lawyer will be

different from the other groups of people such as doctor,
architect, businessman, etc.

C. Economic Situation
Product Choice is greatly affected by economic circumstances
an individual like:

stability, time duration and level of income, Spendable

income,Savings, credit availability, Family Income
 D. Lifestyle
Lifestyle is a person’s pattern of living in the world reflected in activities,
interests, opinions and shapes his whole pattern of acting and interacting in
the world.

Lifestyle could be unique to an individual irrespective of belonging to a

Family/ Reference Group/ Social Class/ Culture.

Choice of products/services is influenced according to lifestyle

Healthy lifestyle could be the choice of an

Individual .

Not influenced by other influencing factors like

 E. Personality

Personality: individual’s distinguishing psychological

Characteristics like - self confidence, dominance, sociability,
adaptability, introvert, extrovert etc.

Personality is not what one wears; rather it is the totality of behavior of a

man in different circumstances.

Consumers buy products which will match their personality

 3. Psychological Factors

The Psychological Factors are the factors that talk about the
psychology of an individual that drive his actions to seek satisfaction.

Motivation - a drive, which propels a person

towards achieving his goals

Perception -the process by which an individual selects,

organizes and interprets information inputs to create
a meaningful picture.

Learning - involves changes in an individual’s behavior

arising from experience. It is a continuous process

Attitude & Belief - these are the tendency to respond to a

given situation in a particular way.
 A. Motivation
A need becomes a motive when sufficiently backed with intensity.

There are different motives for which consumers buy.

The level of motivation influences the buying behavior of the consumers.

Maslow’s need hierarchy theory comprising of basic needs, security

needs, social needs, esteem needs and self-actualization needs.

People satisfy their most important needs first. The needs are placed in a
hierarchical order.

Freud’s Theory: Psychological forces shaping up peoples’ behavior are largely

unconscious and that a person can not fully understand his or her own
motivation.

Organizations must identify the needs and latent motives behind buying their
products to ensure creating value accordingly - Functional or emotional benefits
 B. Perception
Perceptions can vary widely among individuals exposed to same situation.

Three perceptual processes;

1. Selective Attention- People pay attention to those things

which in which they are interested

2. Selective Distortion- People comprehend the

information or situations according to their background
knowledge

• Selective Retention- People tend remember those

things / situations which are of interest / relevance to
them.

Organizations should understand the perception of targeted consumers and

the perceptual process they go through to ensure effective marketing
communication
 C. Learning
Consumers can be made to learn the desired behaviour.

The individual’s learning depends on the skills, knowledge and intention.

The skills are developed through practice while the knowledge and
intention are acquired with the experience.

Organisations introducing innovative products/ new usages of the same

product / adding new users may make the consumers learn

1.About benefits of the product / service

•How to use the product
•What kind of people use the product
•Change the wrong perception about the product
 D. Attitudes & Beliefs
Attitudes and Beliefs are the tendency to respond to a given situation in a
particular way.

These are developed by doing and learning.

Attitudes tend to be enduring, and because they are based on people’s values
and beliefs, they are hard to change.

Consumers purchase products/services based on their opinions which they

form towards them.

A product might be really good but if the consumer feels it is not worth, he
would never buy it.
 Types of Buying Behaviours
• Consumers would demonstrate different buying behaviour
based on;

Involvement- Interest in buying

Nature of Products - Less/more frequently purchased,

Socially visible/ closely consumed

Toothpaste / Brush / Soap etc. - Low Involvement

Car / Bike - High Involvement - less frequently purchased,

Socially visible

Apparels - High Involvement - Socially visible

• Complex and expensive purchases are likely to involve more

buyer deliberation and more participants.
 Different types of Buyers.
• Ones who know exactly what they want.

•Visitors who some what know what they want.

• The window shoppers,

• Non-Prospects
 Experts have suggested FOUR types of buying behaviours which
depend on involvement a consumer has with the product and
differentiation offered by the organization.

High involvement:- when the consumer is highly involved while

buying a product. Generally this situation happens in case of expensive
or luxury goods.

Low involvement:- when the consumer is not highly involved while

buying a product. It happens in case of low price goods.

Significant differences between brands:- when there are significant

differences between brands.

Few differences between brands:- it means when there are very little
differences between brands.
 Types of Buying Behaviours

High Involvement Low Involvement

Significant Differences
Between Brands Complex Buying Variety Seeking
Behaviour Buying
Behaviour
Dissonance
Few Differences Reducing Buying Habitual Buying
Between Brands Behaviour Behaviour
 Complex Buying Behaviour

Complex buying behaviour:- when the consumer is highly

involved in the buying and there is significant differences between
brands then it is called complex buying behavior.

Consumer makes cautious efforts to collect sufficient information

about the product features through various sources
(advertisements, internet, reference groups).

Organisations must provide detailed information regarding the

product attributes/ benefits/Value proposition they offer through
various sources.

For eg. Consumer while buying a motor cycle is highly involved in

the purchase and has the knowledge about significant differences
between brands.
 Variety Seeking Buying Behaviour
Variety seeking behaviour:- in this case consumer involvement is
low while buying the product but there are significant differences
between brands.

Consumers generally buy different products not due to

dissatisfaction from the earlier product but in order to seek variety.

Like every time they may buy different flavours of snacks/

fragrances/ styles/ designs etc. to break monotony.

Organizations should ensure to retain consumers by way of

introducing complete product lines like - oral care solutions (Tooth
paste, mouthwash/ tooth brush)/ skin care solutions.

Organizations continuously launch new variety in same product

category (Line extension) or they also launch new products in new
related product categories with the same brand name (Brand
extension)
 Dissonance Reducing Buying Behaviour
Dissonance buying behavior:- Consumer is highly involved in
the purchase but there are few differences between brands.

Dissonance is anxiety or conflict of pre or post purchase decision.

Consumers many times are unsure about their purchase decision

organisations in such cases should pass on relevant information through
all possible marketing communication channels to reduce pre-purchase
dissonance

Similarly in order to reduce post purchase dissonance they should

repeatedly advertise and ensure to have robust Customer Relationship.
 Habitual Buying Behaviour
Habitual buying behavior:- in this case there is low involvement of the
consumer and there are few differences between brands.

The consumer buys the product quickly without making information

search or making extra effort to travel to a specific location/ waiting for
the availability. There is no strong attitudes for any brand.

They buy brands because -

1.They have been using that brand for extended period of time thus being
familiar with the brand

2. There is only a particular brand available in their neighbourhood

conveniently.

Organizations must ensure availability of their products from where

consumers generally buy the product.

They should be having a widespread distribution network.

Business Buying Behaviour
 Business/ Industrial Buying Behaviour
• Business market consist of all individuals and organisations
that buy goods and services for one or more purposes;

• The activity of marketing goods and services to business

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

• A firm performing the activity is a business marketer.

• Primary Distinction Usage not the Product

• Many transactions are required to produce and market a

product.
 Leather Shoes

Metal Eyelets

Cattle Hide Tanner Heels / Soles

Shoelaces
Packaging

Shoe Manufacturer

Wholesaler / Distributor

Retailer

End Consumer
 Nature of Business Market

–To make other goods and services;

manufacturing units

–To resell to other business users or to consumers;

Retailers, Used Cars

–To conduct the organisation’s operations;

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

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

• Information and guidelines are available from various

agencies.

4. Services Market: marketing research, advertising,

accounting, Legal consultancy etc.

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

• Conduct marketing campaigns

 Characteristics of Business Market Demand

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

Steel Automobiles / Refrigerators

2. Demand is relatively inelastic

3. Market is well informed

Determinants of Business Market Demand

1. Number of Buyers

2. Size of Business Users

3. Regional Concentration of Business Users

4. Number of Intermediaries
 Business Buying Decision Process

Types of Need Recognition Buying

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

Buyer –Seller Relationship

Supply Chain
Loyalty
 Problem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Specification

Performance Review
• New Task Buying:

• Most difficult and complex buying

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

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

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

• Users; people who actually use the product.

• Influencers; people who set the specifications and other aspects of buying
decision.

• Deciders; people who make the actual buying decision.

• Gatekeepers; people who control the flow of purchasing information within

the organisation and between the firm and potential vendors.

• Buyers; people who interact with the suppliers, arrange the terms, process the
actual purchase orders.
Influencers on Business Buyer Behaviour

• Environmental Factors;

• Organisational Factors;

• Interpersonal Factors

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

                                       
Goods
                                       

Service
 
                             
Event
                                           

Person

                    
Business or Organization

Combination
Experience
 The Good/Service Continuum

Pure Tangible Goods Hybrid Services with Pure

Tangible with Offer accompanying Services
Goods accompanying Minor Goods
Service

 
Soap
Automobile
With Repair
Services
Restaurant
With
Airline Trip

Accompanying
Snacks
Financial
Consultant
                                                                                                                       

Experience, a new dimension added to product and services

 Levels of Goods and Services

                                                                                                                         
 Goods and Services Classifications

CONSUMER PRODUCTS

INDUSTRIAL PRODUCTS

ORGANISATIONS PLACES AND IDEAS

  
 
  Convenience Products
 
 
• Bought Frequently
 
• Low Priced  
 
• Many Purchase  Locations
 
• Includes:  
  Staple goods
 
  Impulse Goods
 
  Emergency Goods
 
 
 
 
 
 
 
 Shopping Products

• Bought Less Frequently

• Indulge in Information Search

• Fewer Purchase Locations

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

• Special Purchase Efforts

• Unique Characteristics

• Brand Identification

• Few Purchase Locations

 Unsought Products

• New Innovations

• Products consumers don’t want to think about

• Require much advertising and personal selling.

 Industrial Products
• Materials and Parts:

• Raw Material
• Manufacture Material
• Parts

• Supplies and services:

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

Space Selling

Event Marketing

Social Advertising

Concept Selling

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

Ability to perform its core functions and

Product levels & consistency
Quality

Product Differentiates the product from

Features Competitors

Product Process of designing products style

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

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

• Branding:

• Packaging and Labeling:

• Product Support Services:

 Product Line Decisions:

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

• Decisions Involve:

• Product Line Length:

• Line Stretching: going beyond current range

• Downward or upward Stretching can be done.

• Product Line Filling: adding more items within present range

 Product Mix Dimensions:

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

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

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

 Product Mix Decisions

                                                                                                                                   

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

Functions:
Contain
Safety ……………………….

Primary Container

Secondary
Container

Shipping Package
Main purposes to packaging:

• Utilitarian

• Implement Strategy

• To Increase Profit

Packaging is an important tool in Marketing Mix

Steps in Developing a good package:

• Packaging Concept

• Develop specific elements of package

 
• Elements must support product’s position
and marketing strategy.

                                                           
 Product Support Services

1. After Sales Services

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

Customer Delight and Company Profits

Branding ???
 Branding Strategy: Building Strong Brands

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

• Intended to identify the goods or services of seller.

• Differentiate from competitors.

• Legal Protection for product

 Classification of Brands

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

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

Hindustan Unilever Limited

• Home and Personal Care Category:

Lux Dove Liril

Surf Excel Wheel Rin

Fair & Lovely Pond’s Vaseline

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

Dabur India Limited :

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

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

Dabur Lal Tail, Shankh Pushpi etc.

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

Food Products: Real Juices, Coolers, Homemade

 GENERIC BRANDS

DALDA, SURF, NIRMA, XEROX

PRIVATE LABELS

KORYA, Tasty Treat, Star and Sitara : BIG BAZAR

Life, Kashish and Vittorio Fratini : SHOPPER’S STOP

Brand Equity ???

 Brand Equity

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

large effect on the price that customers will pay.

• Brands add value to a basic product or service.

• Brand equity is an intangible asset that depends on

associations made by the consumer.

• Negative Brand Equity:

 Implications:

• Financial - One way to measure brand equity is to

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

• Facilitates a more predictable income stream.

• Increases cash flow by increasing market share, reducing

promotional costs, and allowing premium pricing.

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

platform to launch related products.

• Leveraging of existing brand awareness

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

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

 Brand Development

• Four Options for developing a brand.

Existing New

Line Brand
Existing Extension Extension
Brand
Multi New
New
Brands Brands

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

1. Low cost, low risk

2. Consumers desire for variety

3. use excess capacity

4. command more shelf space

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

1. Instant Recognition

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

1. Catering to different segments and motives

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

3. Resources are spread up

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

Managing the Brand ??

Product Life Cycle
• A product can not sell forever at the same levels

• Its sales volume and revenues generated follow a

typical pattern

• The length of the life cycle, the duration of each phase

can vary widely for different products.

Product
Sales

Introduction Growth Maturity Decline

• Product Life cycle (PLC) can be useful framework for
describing how products and markets work.

• Introduction Stage:

• Sales ---- Low

• Profits --- Minimal or Negative
• Investments ----- High
• Product ------- Limited Models
• Price ------ Premium / Competitive
• Distribution
Network ------ Selective / Scattered

• Intensive personal selling to retailers and

wholesalers is required.
 • Promotions ----- High Media Pressure, Repetitive
• Focus ----- Early Adopters, Product Benefits,
• Developing Product Awareness.

• Growth Stage:
• Sales ---------
• Profits -------------
• Investments -----------
• Promotions ---------------------
• Focus ------------------
• Maturity Stage:

• Consider Modifying the markets, Products,

Marketing Mix.

• Modifying The Market:

• Increase consumption
• New Users or Market Segments
• Repositioning

• Modifying The Product:

• Change characteristics of the product
• improve performance
• improve attractiveness

• Modifying the Marketing Mix:

• Decline Stage:

• Management may decide to Harvest the product .

• May Decide to drop the product

• May Sell the product to another company.

 Some Dimensions of the Product Life Cycle

1. Length of the Product Life Cycle

• There is no exact time that a product takes to move

through its life cycle

• consumer products usually have shorter life cycles

than business products

• Rate of technological change shortens product life

cycles.
2. Shape of the Product Lifecycle:

 
• Significant education of the customer
is required.

• Extended introductory period.

                                                

       
  
• Sales begin immediately

• Little learning is required by the

consumer

• Benefits of purchase are readily                                                     

understood.
       

 
• Most often appear in apparels

• Length of the cycles may be very long

• It could be repetitive                                    

       
• Rapid sales on introduction

 
• Equally rapid decline.

• Often novelties and have a

short life                                                       
cycle.
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Innovators 2.5% •Eager to try new ideas and products
•Have higher incomes

Early •Much more reliant on group norms

13.5%
Adopters •Oriented to the local community
•Tend to be opinion leaders.

•Collect more information

Early •Evaluate more brands than early adopters.
34%
Majority •Rely on friends, neighbors, and opinion leaders
for information and norms.

•Adopt because most of their friends have already

done so.
LateMajority 34% •For them, adoption is the result of pressure to
conform.
•Are older than the others
 •Do not rely on the norms of the group.
Laggards 16%
•Independent because they are tradition-bound

•Are suspicious of new products