m
m  m

BY
PROF. R B TANDAN
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Ê
÷. Overview of marketing.
2. Marketing management.
3. Marketing environment.
4. Customer demand & Market Segmentation.
5. Buyer behavior.
6. Demand & Sales forecasting.
7. Marketing information & Research process.
8. Marketing planning & Strategy.
9. Consumerism & Consumer protection act.
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÷ . Product plan.
÷÷. Product related strategies.
÷2. Price.
÷3. Promotion.
÷4. Personal selling.
÷5. Sales management.
÷6. Advertising.

 
 
= Marketing Management
By Philip Kotler, Kevin Lane Keller, Abraham
Koshy, Mithileshwar Jha.
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0The aim of marketing is to meet and satisfy the
target customerǯs needs and wants better than
competitors. Marketers are always looking for
emerging customer trends that suggest new
marketing opportunities. For example, the
emergence of the mobile phone, especially with
teens and young adults, has marketers rethinking
their practices.dz
p   m 

Marketing is everywhere. Formally or
informally, people and organizations engage
in a vast number of activities that we could call
marketing. Good marketing has become an
increasingly vital ingredient for business
success. Marketing profoundly affects our day
to day lives. It is embedded in every thing we
do Ȃ from the clothes we wear, to the web sites
we click on, to the ads we seeǥǥ.
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Good marketing is no accident, but a result of
careful planning and execution. It is both an
art and a science Ȃ thereǯs a constant tension
between its formulated side and its creative
side. Itǯs easier to learn its formulated side,
but we will also study how real creativity and
passion operate in many companies.
Ê
 m 

To prepare to be a marketer, you need to
understand what marketing is, how it
works, what is marketed, and who does
the marketing?
What is Marketing?
Marketing is about identifying and meeting
human and social needs. It is also defined as 0
Meeting needs profitably.dz
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The American Marketing Association offers the
following definition Ȃ
0 Marketing is an organizational function and a set
of processes for creating, communicating and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.dz
Thus, we see Marketing management as the art and
science of choosing target markets and getting,
keeping and growing customers through creating,
delivering, communicating superior customer
value.
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Managers sometimes think of marketing as 0 the art
of selling products,dz but selling is not the most
important part of marketing. Peter Drucker put it
this way Ȃ
0 There will always, one can assume, be need for
some selling. But the aim of marketing is to make
selling superfluous. The aim of marketing is to
know and understand the customer so well that
the product or service fits him and sells itself.
Ideally, marketing should result in a customer
who is ready to buy. All that should be needed
then is to make the product or service available.dz
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0 Marketing originates with the recognition of a
need on the part of a consumer and terminates
with the satisfaction of that need by the delivery
of a usable product at the right time, right place
and at an affordable price. The consumer is found
both at the beginning and at the end of the
marketing process.dz

Customer Integrated Product thru

Mktng. CS
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What is Marketed?
Marketing people market ÷ types of entities:
Goods, services, events, experiences, persons, places,
properties, organizations, information and ideas.
Goods
Physical goods constitute the bulk of most countries
production and marketing efforts.
Services
As economies advance a growing proportion of their
activities focuses on production of services. Service
includes airlines, hotels, care rentals bankers ,
lawyers, etc.
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ëvents
Marketers promote time bound events such as
trade shows, sporting events, exhibitions, etc.
ëxperiences
By orchestrating several services and goods, a
firm can create, stage, and market
experiences. ëx. A theme park or a theme
restaurant.
Persons
Celebrity marketing is big business.
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Places
Cities, states, regions and whole nations compete
actively to attract tourists, companies, factories, etc.
Properties
They are either intangible( real estate) or financial
property( stocks and bonds). Properties are bought
and sold and the require marketing.
Organizations
They work to build a strong, favorable, and unique
image in the mind of their target publics. Corporate
identity campaigns are result of intensive market
research programs.
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Information
Information is essentially what books, schools and
universities produce, market and distribute to
parents, students and communities. The production ,
packaging and distribution of information are some
of our societyǯs major industries. For ex. CëO of
Siemens Medical Systems Tom McCausland says, 0 our
product is not X-Ray or MRI, but information.
Ideas
ëvery market offering includes a basic idea. Charles
Revson of Revlon once observed, In the factory, we
make cosmetics, in the store we sell Hope.
 m 
Marketers and Prospects
A marketer is someone who seeks a response Ȃ
attention, a purchase, a vote, a donation Ȃ from
another party, called the prospect. If two parties
are seeking to sell something to each other, we
call them both marketers.
ëight demand states are possible:
Negative demand -consumers dislike the product
and may even pay a price to avoid it.
Nonexistent demand - consumers may be unaware
of or uninterested in the product.
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Latent demand - consumers may share a strong
need that cannot be satisfied by an existing
product.
Declining demand - consumers begin to buy the
product less frequently or not at all.
Irregular demand - consumers purchases vary
on a seasonal, monthly, weekly, daily or even
hourly basis.
Full demand - consumers are adequately buying
all products put into the market place.
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Overfull demand - more consumers would like
to buy the product then can be satisfied.
Unwholesome demand - consumers may be
attracted to products that have undesirable
social consequences.
m 
j


Different concepts of marketing:
÷. The ëxchange Concept.
2. The Production Concept.
3. The Product Concept.
4. The Sales Concept.
5. The Marketing Concept.
We will study and understand each og these
concepts individually.
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= The exchange concept - exchange of a product
between a seller and a buyer.
= The production concept - production dominates
in the company.
= The product concept - Product dominates in the
company.
= The sales concept Ȃ promote and push the product
aggressively. Products donǯt sell automatically.
= The marketing concept - Drucker says Ȃ 0 the
essence here is that the entire business has to be
seen from the point of view of the customer.dz
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Marketing Myopia
Prof. Theodore Levitt explained that- 0 A
colored or crooked perception of marketing
and a short sightedness about business with
excessive attention to production or product
or selling aspects at the cost of customer and
his actual needs creates Marketing Myopia.dz
He further says, 0 They donǯt get so excited about
their customers in their own backyard as
about the oil in the distant Sahara.dz
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Difference between Selling and Marketing.
Marketing is much wider than selling and more dynamic.
Selling revolves around the needs and interests of the
seller; Marketing revolves around the needs and interests
of the buyer.
Selling starts with the existing products and views business
as a task of somehow promoting these products.
Marketing on the contrary starts with the customers Ȃ
present and potential Ȃ and views the business as a task of
meeting the needs of the customer.
Marketing views the entire business as consisting of a tightly
integrated effort to discover, create, arouse an satisfy
customer needs.
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In other words marketing concept represents a
shift in orientation;- From
Production Marketing orientation
Product Customer orientation
Supply Demand orientation
Sales Satisfaction orientation
Internal ëxternal orientation.
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Definition of marketing concept.
0 Marketing concept is essentially a point of view
about business. It enunciates that business is
basically a need satisfying process and that
business must be managed keeping the consumer
and his need as the focus. The concept prescribes
that all goals of business, including profit, must
be realized through consumer orientation and
generation of consumer satisfaction.dz
Creating and delivering better consumer value is
the only route by which firms implement
marketing concept.
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The marketing concept holds that the key to achieving
organizational goals is being more effective than
competitors in creating, delivering, and
communicating superior customer value to your
chosen target markets.
Theodore Levitt drew a perspective contrast between
the selling and marketing concepts:
0 Selling focuses on the needs of the seller; marketing
on the needs of the buyer. Selling is preoccupied with
the sellerǯs need to convert his product into cash;
marketing with the idea of satisfying the needs of the
customer by means of the product and the whole
cluster of things associated with creating, delivering
and finally consuming it.dz
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This brings us to the Modern definition of Marketing .
It is a total system of business, an ongoing process of Ȃ
 Discovering and translating consumer needs and
desires into products and services.
 Creating demand for these products and services.
 Serving consumer demand with the help of marketing
channels, and
 ëxpanding the market even in the face of competition.
Marketing is a system of integrated business activities
designed to develop strategies and plans to the
satisfaction of customer wants of selected market
segments or targets.
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= Marketing Functions
 Contractual Ȃ searching of buyers and sellers.
 Merchandising Ȃ matching products to customer needs.
 Pricing.
 Promotion.
 Physical distribution.
Marketing functions are performed by the manufacturers
middlemen. The marketing process has four components Ȃ
÷. Marketing management.
2. Marketing channels.
3. Marketing functions.
4. Market demand.
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The Old Concept

Products Selling & Profit thru

Promotion Sales vol.

The New Concept

Customers Integrated Profits thru

Marketing CS.
 
 
 
The market place is not what it used to be. Marketers must
attend and respond to a number of significant
developments.
Major Societal Forces.
 Network information technology.
 Globalization.
 Deregulation.
 Privatization.
 Heightened competition.
 Industry convergence.
 Consumer resistance.
 Retail transformation.
 Disintermediation.

 

Customers today perceive fewer real product differences and
show less brand loyalty, and they are becoming more price
and quality sensitive in their search for value. Consider
what customers have today over the past Ȃ
* A substantial increase in buying power.
* A greater variety of available goods and services.
* A great amount of information about practically any thing.
* Greater ease in interacting and placing and receiving
orders.
* An ability to compare notes on products and services.
* An amplified voice to influence peer and public opinion


  

÷. The company is not sufficiently market
focused and customer driven.
2. Th company does not fully undersatnd its
target customers.
3. The company needs to better define and
monitor its competitors.
4. The company has not properly managed its
relationship with its stakeholders.
5. The company is not good at finding new
opportunities.
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6. The companyǯs marketing plans and planning
process are deficient.
7. The companyǯs product and service policies
need tightening.
8. The companyǯs brand building and
communication skills are weak.
9. The company is not well organized to carry an
effective and efficient marketing.
÷ . The company has not made maximum use of
technology.

 

  

÷. The company segments the market, chooses the best
segments and develops a strong position in each chosen
segment.
2. The company maps its customerǯs needs, perceptions,
preferences and behavior and motivates its stakeholders
to obsess about serving and satisfying the customers.
3. The company knows its major competitors and their
strengths and weaknesses.
4. The company builds partners out of its stakeholders and
generously rewards them.
5. The company develops systems for identifying
opportunities, ranking them and choosing the best ones.
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6. The company manages a marketing planning system
that leads to insightful long-term and short-term
plans.
7. The company exercises strong control over its product
and service mix.
8. The company builds strong brands by using the most
effective communication and promotion tools.
9. The company builds marketing leadership and a team
spirit among its various departments.
÷ . The company constantly adds technology that gives it
a competitive advantage in the market place.
à 

= 0Donǯt fear pressure, for pressure is what turns

rough stones into diamonds.dz

= 0Our greatest glory is not in never falling but

in rising every time we fall.dz



m 

A key goal of marketing is to develop deep,
enduring relationships with people and
organizations that could directly or indirectly
affect the success of the firmǯs marketing
activities.
Relationship marketing aims to build mutually
satisfying long-term relationships with key
constituents in order to earn and retain their
business.



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Î





 


 

 

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Four key components for relationship marketing are:
* Customers.
* ëmployees.
* Marketing partners( channels, suppliers, distributors,
dealers, agencies)
* Members of the financial community( shareholders,
investors, analysts).
The ultimate outcome of relationship marketing is a unique
company asset called a marketing network. A marketing
network consists of the company and its supporting
stakeholders Ȃ customers, employees, suppliers,
distributors, retailers, ad agencies, and others Ȃ with whom
it has built mutually profitable business relationships.

  

The Marketing Mix.
The marketers task is to devise marketing activities
and assemble fully integrated marketing
programs to create, communicate, and deliver
value for consumers.
McCarthy classified these activities as marketing Ȃ
mix tools of four broad kinds, which he called the
four Pǯs of marketing Ȃ
Product
Place
Promotion
Price
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Product
Product variety
Quality
Design
Features Price Promotion Place
Brand name List price Sales promotion Channels
Packaging Discounts Advertising Coverage
Sizes Allowances Sales force Assortments
Services Payment period Public relations Locations
Warranties Credit terms Direct marketing Inventory
Returns Transport


m 

Holistic marketing incorporates internal marketing,
ensuring that everyone in the organization embraces
appropriate marketing principles. Internal marketing
is the task of hiring, training and motivating able
employees who want to serve customers well.
Internal marketing must take place on two levels. At
one level the various marketing functions Ȃ sales
force, advertising, customer service, product
management, marketing research Ȃ must work
together from the customers point of view.
At the second level, other departments must embrace
marketing, they must also think customer.
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Holistic marketing incorporates performance
marketing and understanding the returns to the
business from marketing activities and programs, as
well as addressing broader concerns and their legal,
ethical, social and environmental effects.
Management is going beyond sales revenue to
examine the marketing scorecard and interpret what
is happening to market share, customer loss rate,
customer satisfaction, product quality, distributor
and other measures.
Financial Accountability.
Social responsibility marketing.
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ënvironment plays a crucial role in marketing and that
securing the right fit between the firm and the
environment using the marketing mix as the tool is
the crux of Marketing.
Opportunities and Threats is the starting point and
spotting them is important as it is their that the
economy achieves its growth objectives.
Purpose of marketing environment analysis Ȃ
 To know where the environment is heading?
 To discern which events are favorable.
 To assess scope of various opportunities.
 To help secure the right fit between environment and
business unit Ȃ crux of marketing.
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Mega/Macro ënvironment Factors.
 Demographic environment.
 Socio-cultural environment.
* Culture Ȃ religion, language, education,
* Social class.
 ëconomic ënvironment.
* General economic conditions
* ëconomic conditions of different segments of the
population.
* Rate of growth of each sector.
* Credit availability and interest rates, tax rates.
* Savings, inflation, foreign exchange reserves, etc.
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Facts of Indian ëconomy
* 6% plus growth
* Per capita still low
* Industrial growth Ȃ 6.2%
* Capital markets Ȃ healthy trend
 Political trend - stable
 Natural ënvironment
* ëcology
* Natural Resources
* Climate
 Technology ënvironment
 Legal environment/ Business Legalization
* corporate affairs, consumer protection, employee protection.
 
  





ëconomic System Ȃ
We find that millions are engaged in work, a few of
which work for pleasure, but, the vast majority work
to earn a living and to secure an income needed for
satisfying their wants.
Human wants are unlimited but resources are limited.
This applies to individuals and society as a whole.
Societies Resources - land, labor and capital which are
scarce. Thus, this creates a need for economizing
resources or from an economists point of view it
means Ȃ 0 making the best use of what is available.dz
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ëconomics thus deals fundamentally with choices in the
use of resources. It develops principles for making the
best use of available resources. These principles can
be used for making policy.
Professor Lionel Robbins defined economics as a Ȃ
0 Science which studies human behavior as a
relationship between ends and scarce means which
have alternative uses.dz
ëconomic Organization
It refers to the arrangement by which the basic
problems of an economy Ȃ allocation of resources,
fuller employment and growth of resources Ȃ are
settled.
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Capitalism Ȃ
Capitalism has been defined as an economic system
in which commodity production is dominant, ie.
Goods are produced with hired labor for sale in
the market to earn profits.
It prevails in many countries. It was frist developed
in ëngland and later spread. It now embraces
North America( USA & Canada), Western ëurope,
Japan, New Zealand & Australia.
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Some of the features are:
 Private Property Ȃ
* Dominant in capitalist countries.
* Land, capital and business enterprises are privately owned.
* Management maybe in the hand of professional managers.
 Profit making the motivating force.
 Role of the price mechanism.
* Basic question of what, how, for whom are decided by price
mechanism.
* It guides resources into production where profit is high.
* Prices are determined by the market forces of supply and
demand.
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 Inequalities of income and wealth -
Such capitalist societies tell us that while 0growth is necessary, it has to be
growth with social justice.dz
Socialism
 Public ownership in property.
* State ownership Ȃ industry
* Collective ownership Ȃ agriculture
 Planned economy
Four basic ways by which product of society is used Ȃ
* Private consumption of workers who participate in production.
* Collective consumption of people in the form of health, education and
other services.
* Maintenance of the state.
* Investment or creation of physical capital assets.
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 Income inequalities Ȃ
Two sources Ȃ private property and wages/salaries.
A socialist society has only the latter.
Mixed ëconomy
Defined as an economy in which the state or the
public sector exists side by side with the private
sector.
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Market Segmentation implies that the entire
market is broken down into smaller groups
having similar wants.
The concept of divide and rule applies to the
market segmentation. You divide the market,
choose your target market and then master it.
If the marketing effort is spread over a wide area
it does not have that effect but if it is
concentrated on a point it can go much further
and can be more effective.
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Companies cannot connect with all customers in
large, broad, or diverse markets. But they can
divide such markets into groups of consumers or
segments with distinct needs or wants. A company
then needs to identify which market segments it
can serve effectively. This decision requires a keen
understanding of consumer behavior and careful
strategic thinking. To develop the best marketing
plans, management need to understand what
makes each segment unique and different.
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Market segmentation is a process of dividing a
potential market into distinct sub-sets of
consumers with common needs and
characteristics and selecting one or more
segments to target with a distinct marketing mix.
Thus, market segmentation has proved to be a
positive force for both consumers and markets
alike.
Today every product category in the consumer
market is highly segmented.
ëx. Vitamin market, hotels, automobiles, etc.
j  
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To compete more effectively, many companies are now
embracing target marketing. Instead of scattering
their marketing efforts , theyǯre focusing on those
consumers they have the greatest chance of satisfying.
ëffective target marketing requires Ȃ
÷. Identify and profile distinct group of buyers who
differ in their needs and preferences(market
segmentation).
2. Select on or more market segments to enter(target
marketing).
3. For each target segment, establish and communicate
the distinctive benefits of the companyǯs market
offering(market positioning).
m Ê 


The market for any product is normally made up of several
segments. A market is the aggregate of consumers of a
given product, and, consumers who make a market are
seldom one homogenous lot. They vary in their
characteristics and buying behavior. It is thus natural that
many differing segments occur within a market. Market
segmentation rests on the recognition that Ȃ
÷. Any market is made up of several sub-markets or sub-
groups of consumers, distinguished from one another by
their varying needs and buying behavior.
2. It is feasible to disaggregate the consumers into segments
in such a manner that in needs, characteristics and
buying behavior the members would vary significantly
among/across segments. But would be homogenous
within each segment.
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Why segment the market?
÷. Facilitates proper choice of target market.
2. Facilitates tapping of the market, adapting the
offer to the market.
3. Helps to divide the market and conquer them.
4. Makes the marketing effort more efficient and
economic.
5. Helps identify less satisfied segments and
concentrate on them.
6. Benefits the customer as well.
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Advantages of market segmentation Ȃ
* Helps distinguish one customer group from another within a
given market.
* Facilitates proper choice of target market.
* Helps crystallize the needs of the target buyers and elicit more
predictable responses.
* Helps develop marketing programs on a more predictable basis.
* Helps develop marketing offers that are most suited to each
group.
* Helps achieve specialization required in product distribution,
promotion and pricing for matching the customer group and
develop marketing offers and appeals that match needs of such
groups.
* Makes the marketing efforts more efficient and economic.
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Bases for segmenting consumer markets.
The major basis that marketers use for
segmenting markets are Ȃ
* Geographic Ȃ South, West, North, ëast India
State, District, Rural/Urban, Race.
* Demographic Ȃ Age, sex, education, religion,
language, income, illiterate, etc
Among demographics purchasing
capacity/price preference forms a major base.
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ëx. Passenger cars Ȃ based on price preference Ȃ
Segment Car
Budget car 8 /omni Ȃ 6 % market
Compact car Zen. Santro, Indica -÷5%
Family car ësteem, Ford, Swift Ȃ ÷ %
Premium car Honda, Lancer - ÷ %
Super Luxury Mercedes, Audi - 5%
Psychographic
Personality traits, attitude, lifestyle, value system.
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= Psychographic Segmentation
a. Needs Motivationǥ.... safety, shelter, security,
affection, sense of self-worth.
b. Personalityǥǥǥëxtrovert, introvert, aggressive,
compliants.
c. PerceptionǥǥLow risk, moderate, high risk.
d. Learning InvolvementǥǥLow, High
e. Attitudesǥǥ.Positive, Negative
f. Psychographic( lifestyle)ǥǥSwingers, straights,
conservatives, status seekers
Y 
 
Ê 


0 It is your attitudes, interests and opinions that project your
lifestyledz

Introduction
It is defined simply as how one lives and spends money. It is
determined by our past experiences, innate characteristics
and current situations. The products we consume are
related to our lifestyle.
Lifestyles segmentation is based on activities and interests
and opinions of groups.
Demographic and Psychographic lifestyles are
complimentary and work best together. Demographic
variables help to locate the target markets, and
psychographics provide insights into the segments.
j   

÷. Lifestyle is a group phenomenon which
influences others in the society. A person
having a particular lifestyle can influence
others in a social group.
2. Lifestyle influences all areaǯs of oneǯs activities.
A person having a certain lifestyle shows
consistency of behavior in other areas as well.
You can always predict that a person shopping
from elite or specialty stores, would not shop
from common places. The same applies to
eating habits and other habits as well.
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3. Lifestyle implies a certain life interest. A
person may have interest in education,
leisure, adventure work, sexual exploits, etc.
which may become their main interest in life.
4. Social changes in society affect lifestyles: For
example, as the society becomes more
affluent, lifestyles of people change,
sometimes drastically. As one would become
richer ones lifestyle changes accordingly.

Ê 


This is known as lifestyle segmentation and was introduced
in ÷978 by Arnold Mitchell. It provides a systematic
segmentation of adults into nine segments. These were
widely used. VALS( value & life style segmentation).
They can be described as follows:
÷. Survivors Ȃ They are disadvantaged people who are poor,
depressed, and withdrawn. Their purchases are price
dominant and they like to buy products which are
economical and suit their pocket. They are not very
knowledgeable.
2. Sustainers Ȃ They are motivated by brand names. They
look for guarantee and are impulse buyers. These people
are disadvantaged and want to get out of poverty.
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3. Belongers Ȃ They buy products which are popular. They are
careful and brand loyal shoppers. They are people who are
conventional, conservative and unexperimental.
4. ëmulators Ȃ They are status conscious and upwardly
mobile. They emulate others, and buy products to impress
other people. They have high aspirations in life.
5. Achievers Ȃ They buy top of the line products. They are
brand conscious and loyal. They are leaders and make
things happen. They want to enjoy a good life.
6. I am me Ȃ These people are typically young, self engrossed
and given to whims. They go after fads and do not mind
taking the lead.
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7. ëxperimental Ȃ These people pursue a rich inner
life and want to directly experience what life has
to offer.
8. Societal conscious people Ȃ They are simple,
frugal persons, who read labels carefully and seek
information. They are conscious of society and
social responsibility. They want to improve
conditions in society.
9. Integrated Ȃ These are fully matured people and
constitute the best of outer and inner directed.
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These segments did not appeal to many marketers and
therefore, VALS Ȃ 2 was introduced in ÷989.
This system has more of psychological base than the
original, which was more activity and interest based.
VALS Ȃ 2 is based on attitudes and values.
It has identified three primary self orientations:
÷. Principle oriented Ȃ they are guided by their beliefs
and principles.
2. Status oriented Ȃ these individuals are heavily
influenced by actions, approval and opinion of others.
3. Action oriented Ȃ they desire social and physical
activity, variety and risk taking.
j

These three orientations determine the types of goals and
behaviors that consumers will pursue and the goods they
will get interested in.
This classification is based on Maslowǯs hierarchy of needs.
÷.Strugglers Ȃ These are poor people, struggling for
existence. ëducation is low, low skilled, without strong
social bonds. They are despairing and have a low status
in society. Their chief concern is to fulfill their primary
needs of physiological security and safety needs. They
represent a modest market and are loyal to their favorite
brands.
2. Makers Ȃ They are in the action oriented category. They
have construction skills and value self sufficiency. They
buy stuff which helps them in achieving their purpose.
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3. Strivers Ȃ They are a status oriented category, but have a low
income as they are striving to find a secure place in life.
They are low in economic, social, and psychological
resources. They are concerned about the opinion of others.
They see success with money. They like to be stylish. They
wish to be upwardly mobile and strive for more.
4. Believers Ȃ They are in the principle oriented category.
They are conservative, conventional people with their
needs, strong faiths, and beliefs. Have modest resources
sufficient to meet their needs. Use established brands.
5. ëxperiencerǯs Ȃ They are action oriented, young,
enthusiastic, impulsive, and rebellious. They have enough
resources and experiment in new ventures. They are avid
consumers and spend much on entertainment, clothes,
food, music, videos, movies, etc.
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6. Achievers Ȃ They are also placed high in the Maslowǯs
hierarchy of needs and are career and work oriented.
They make their dreams come true. Work provides
them with a sense of duty, material rewards and
prestige. They live conventional lives, authority and
image is important to them.
7. Fulfilled Ȃ They are satisfied and mature people who
are well educated, value order, knowledge and
responsibility. They are practical consumers. They
look for products which are durable, have value and
function properly.
8. Actualiserǯs Ȃ They have abundant resources and are
sophisticated in their taste and habits. They are active
and have high self-esteem.
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= Sociocultural Segmentation
a. Cultureǥǥ..American, Italian, Chinese,
Mexican.
b. Subculture ReligionǥǥJewish, Catholic,
protestant, Hindu, Muslim,
c. Race/ëthnicityǥǥ..oriental, Hispanic, upper,
lower, Brahmin SC/OBC
d. Social ClassǥǥLower, middle, upper
e. Family lifestyleǥǥ.bachelor, young married
j

= Use-Related Segmentation
a. Usage rateǥǥHeavy, medium, light, non-users.
b. Awareness statusǥǥunaware, aware, interested,
enthusiastic.
c. Brand LoyaltyǥǥNone, some, strong.
* Use-Situational Segmentation
a. Timeǥǥ.work, rush, morning, night.
b. Objectiveǥǥgift. Fun, snack, personal.
c. Locationǥ..home, work, friendǯs home.
d. Personǥǥ self, friends, boss, peer.
j

= Benefit Segmentation
Convenience, prestige, economy, value-for-the
money.
* Hybrid Segmentation
a. Demographic / Psychographic Profileǥǥǥ
Combination of their characteristics.
Geodemographicsǥǥ..young suburbia, blue estate.
VALS 2ǥǥ..Actualizer, believer, achiever, striver,
fulfilled.
j

Behavioral.
Different customer groups epect different benefits
from the same product and accordingly they will
be different in their motives in owning it and
their behavior in buying it.
Benefits Ȃ quality, service, economy, speed
Usage rate Ȃ light, heavy, medium
Loyalty status Ȃ none, medium, strong, absolute.

 
 


* Assessing the difference between one customer group
and the other in terms of their needs and their likely
responses to the product and other marketing mix
elements.
* Finding out by what descriptive characteristics can
consumers of a particular disposition be tagged on to
a specified segment.
* Disaggregating the consumers into suitable segments
based on above.
* Analyzing whether it is possible to formulate separate
marketing program/marketing mix for different
segments.
j

* Finding out which segments will be particularly
happy with the offerings of the firm and can,
therefore, be considered as the natural targets of
the firm.
* ëstimating the likely levels of purchase by each of
the segments.
* Selecting those segments which offer higher
potential and which will also be amiable to the
offerings of the firm.
j

Attributes of ëffective Segmentation.
For segments to be effective they must be Ȃ
* Distinguishable from one another.
* Measurable(potential of the segments as well as effect
of a specific marketing mix on them should be
measurable).
* Accessible
* Sizable
* Growing
* Profitable
* Compatible with the firms resources and capabilities.
m  

Once the firm has identified its market segment
opportunities, it must decide how many and
which ones to target. Marketers are increasingly
combining several variables in an effort to
identify smaller, better defined target groups.
This has led some market researchers to advocate a
needs based market segmentation approach.
ëffective segmentation criteria Ȃ
To be useful, market segments must rate favorably
on five key criteria -
j

* Measurable - the size, purchasing power and
characteristics of the segments can be measured.
* Substantial - the segments are large and
profitable enough to serve. A segment should be
the largest possible homogenous group worth
going after with a tailored marketing program. It
would not pay, for example, for an automobile
manufacturer to develop cars for people who are
less than four feet tall.
* Accessible - the segments can be effectively
reached and served.
j

= Differentiable - the segments are conceptually
distinguishable and respond differently to
different marketing mix elements and programs.
If married and unmarried woman respond
similarly to a sale on perfume, they do not
constitute separate segments.
= Actionable - effective programs can be formulated
for attracting and serving the segments.
 

Ê
m Ê 

In evaluating different market segments, the firm must
look at two factors, the segmentǯs overall
attractiveness and the companyǯs objectives and
resources Ȃ
´ How well does a potential segment score on the five
criteria?
´ Does a potential segment have characteristics that
make it generally attractive- such as size, growth,
profitability, scale economics and low risk.
´ Does investing in the segment make sense given the
firmǯs objectives, competencies and resources?
j

= Single segment concentration - through
concentrated marketing, the firm gains a strong
knowledge of the segmentǯs needs and achieves a
strong market presence. Furthermore, the firm
enjoys operating economies through specializing
its production, distribution and promotion.
However there are risks. A particular market
segment can turn sour or a competitor may invade
the segment.
ëx. Mahindra tractors, Zodiac on formal shirts,
specialty hospitals, etc.
j

= Selective Specialization - a firm selects a number of
segments, each objectively attractive and appropriate.
There may be little or no synergy between the
segments, but each promises to be a money maker.
This multi segment strategy has the advantage of
diversifying the firmǯs risk.
ëx. Fair and lovely Ȃ both males and females use it.
* Product Specialization - the firm makes a certain
product that it sells to several different market
segments.
ëx. Microscopes Ȃ sold to university, govt. and
commercial labs.
The downside risk is a new technology.
j

= Market Specialization - the firm concentrates on
serving many needs of a particular customer group.
ëx. An assortment of products only to university labs.
The downside risk is the customer group may suffer
budget cuts or shrink in size.
* Full market coverage - the firm attempts to serve all
customer groups with all the products they might
need. Large firms can cover a whole market in two
broad ways through undifferentiated marketing or
differentiated marketing.
j

= In undifferentiated marketing - the firm ignores
segment differences and goes after the whole market
with one offer. It designs a product and a marketing
program that will endow the product with a superior
image and appeal to the broadest number of buyers,
and it relies on mass distribution and advertising. The
narrow product line keeps down the cost of research
and development, production, inventory,
transportation, marketing research, advertising and
product management. The company can turn its lower
costs into lower prices to win the price sensitive
segments of the market.
j

= In differentiated marketing - the firm operates in
several market segments and designs different
products for each. Differentiated marketing
typically creates more total sales than
undifferentiated marketing. However, it also
increases costs of doing business.
ëx. HUL Ȃ wide range of products for all segments.
m  
j 
 m 
= Choosing the target market is relegated to, but not
synonymous with market segmentation.
= Segmentation is the means or the tool, choosing the target
market is the purpose.
= Segmentation can also be viewed as the prelude to target
market selection.
= Choosing the target market usually follows multi-level
segmentation using different bases.
= Choosing the target market involves several other tasks in
addition to segmentation.
= Looking at each segment as a distinct marketing
opportunity.
= Selecting those segments which are most appropriate for
the firm.
j

= ëvaluating the worth of each segment.
= ëvaluating whether the segment is Ȃ distinguishable,
measurable, sizable, accessible, growing, profitable,
compatible with firms resources.
= ëxamining whether it is better to choose whole market or
only a few segments and deciding which ones should be
chosen.
= Looking for segments which are relatively less satisfied by
the current offers in the market from competing brands.
= ëvaluating the firms resources and checking whether it is
possible to put in the marketing programs required for
capturing the spotted segments with these resources.
p   
   
0Customer is profit, all else is overloadǥ..dz

All of us are consumers. We consume things of daily use, we

also consume and buy these products according to our
needs, preferences and buying power. These can be
consumable goods, durable goods, specialty goods or,
industrial goods.
What we buy, how we buy, where and when we buy, in how
much quantity we buy depends on our perception, self-
concept, social and cultural back-grounds and our age and
family cycle, our attitudes, beliefs, values, motivation,
personality, social class and many other factors that are
both internal and external to us.
j

While buying, we also consider whether to buy or
not to buy and, from which source or seller to buy.
In some societies, there is a lot of affluence and,
these societies can afford to buy in greater
quantities and at shorter intervals. In poor
societies, the consumer can barely meet his barest
needs.
Consumer behavior can be defined as the decision
making process and physical activity involved in
acquiring, evaluating, using and disposing of
goods and services.
j

Some consumer behavior roles:
Initiator
The individual who determines that certain
need or want is not being fulfilled and
purchases a product to fulfill the need.
Influencer
A person who by some intentional or
unintentional word or action influences the
purchase decision.
j

Buyer
The individual who actually makes the purchase
transaction mostly is the head of the family.
User
The person or persons who consume or use the
purchased product.
j

Reasons for studying consumer behavior.
The most important reason for studying consumer
behavior is the role that it plays in our lives.
Consumer decisions are affected by their behavior.
Therefore, consumer behavior is said to be an
applied discipline. This leads to the micro
perspective and societal perspective.
j

Micro Perspective
It involves understanding consumer for the purpose
of helping a firm or organization to achieve its
objectives.
Societal Perspective
It is on the macro level. Consumers collectively
influenced economic and social conditions within
a society. Consumers strongly influence what will
be the product, what reasons will be used and it
affects our standard of living.
j

Management is the youngest of sciences and oldest
of arts and Consumer Behavior in management is
a very young discipline.
Marketing starts with the needs of the customer
and ends with his satisfaction. When everything
revolves around the customer then the study of
consumer behavior becomes a necessity.
To understand the likes and dislikes of the
consumer extensive research studies are being
conducted. They try to find out:
j

÷. What the consumer thinks of the companyǯs
products and those of its competitors?
2. How can the product be improved in their
opinion?
3. How the customers use the product?
4. What is the customerǯs attitude towards the
product and its advertising?
5. What is the role of the customer in his
family?
j

Consumer behavior is a complex, dynamic,
multi-dimensional process, and all marketing
decisions are based on assumptions about
consumer behavior.
Marketing strategy is the game plan which the
firms must adhere to, in order to outdo the
competitor or the plans to achieve the desired
objective. In formulating the marketing
strategy, to sell the product effectively, cost-
benefit analysis must be undertaken.




   
 
÷) Consumer behavior knowledge is applied in
Marketing Management. A sound understanding of
the consumer behavior is essential to the long term
success of any marketing program.
2) Consumer behavior is also important in non-profit
and social organization.
3) Consumer behavior is applied to improve the
performance of govt. agencies as well.
4) Consumer behavior also helps in marketing of
various goods which are in scarcity.
5) Consumer benefit from the investigation of their
own behavior.
m 
  

  
= Marketing Analysis
a) Consumer
b) Company
c) Competition
d) Condition.
. Marketing Segmentation
a) Identify product related needs.
b) Group customers with similar need sets.
c) Describe each group.
d) Select target market.
j

= Marketing Strategy
a) Product.
b) Price.
c) Distribution.
d) Communication.
e) Service.
. Consumer Decision Process
a) Problem recognition.
b) Information search Ȃ internal, external.
c) Alternative evaluation.
d) Purchase.
e) Use.
f) ëvaluation.
. Outcomes
a) Customer satisfaction
b) Sales
c) Product / Brand image.
m 

Market analysis requires an understanding of the 4
Cs which are:
Consumer, Conditions, Competitor and Company.
Consumer - Is anyone who engages himself in
physical activities of evaluating, acquiring, using
or disposing of goods and services.
Customer - Is one who actually purchases a product
or service from a particular organization or shop.
A customer is always defined in terms of a specific
product or company.
m Ê 


The market is divided into segments which are a portion of a
larger market whose needs are similar and, they are
homogenous in themselves. Such segments are identified
with similar needs.
Need sets Ȃ It is meant that there are products which satisfy
more than one need. ëx. An automobile.
Demographic and psychographic characteristics Ȃ these
groups are identified and they are described in terms of
their demographic and psychographic characteristics. The
company finds out how and when the product is purchased
and consumed.
Target Segment Ȃ the target customer group known as the
target segment is chosen. Different target segments require
different marketing strategies.
m 
  
Strategies are formulated to provide superior
customer value. In formulating marketing
strategies, the 4 Ps are directed at the Target
market.
Product - product is any thing that is offered to
the consumer which is tangible and can satisfy
a need and has some value.
Price - Price is the amount of money one must
pay to obtain the right to use the product.
j

Distribution ( Place ) - The goods can be distributed
by many channels. These can be retailers,
wholesalers, agents, or by direct selling.
Promotion - Is the means of changing the attitude of
the consumer, so that it becomes favorable
towards the companyǯs products. Various means
of promotion are advertising, personal selling,
sales promotion and publicity.
Service - It refers to the auxiliary service that
enhances the value of the product or the service.
ëx. Car service
j

Buyerǯs skills come from an innate selfishness
that when we are spending money we should
get the moneyǯs worth. The term Value for
money is born out of this desire. It is said that
no one buys a product. They buy the benefits,
which they derive from the product. If the
benefits outweigh the cost the buyers have
paid then they have received value for money.
j

Let us define Customer Value as follows:
 Total customer value Ȃ The sum total of all the
benefits the customer is likely to derive from the
product.
 Total customer cost Ȃ The sum of money the
customer is to spend while selecting, buying,
using and disposing off the product.
 Product perceived value Ȃ The difference of total
customer value and total customer cost
represents the customerǯs idea of the usefulness
of the product.
j

The product purchase decisions are taken on
the basis of :
 Product brand image / brand equity.
 Buyerǯs usage value.
 Value of the service provided with the
product.
 Intrinsic value of the product.
 The above add-up to the total customer value
of the product.
j

The other aspect of decision to buy comes from
the following :
 Product price.
 Product search expensive.
 Decision time delay cost.
 Cost while using the product.
 The above add-up to total customer costs for
the purchase of the product.
j

Customer satisfaction from the usage of the product is
measured as follows :
 Actual benefit derived as compared to the benefit
perception the customer had before the product was
purchased.
 Benefits derived as compared to those obtained from a
competitive product.
 Benefits get enlarged if the product cost are in consonance
with the perceived benefits and in such cases the
customers derive a sense of pride besides satisfaction,
which in todayǯs marketing technology is stated as
customer delight.
 Customerǯs delight also comes from being known as an
intelligent buyer among the peer group.
    
Buyers are of two types Ȃ
* Individual consumer.
* Business buyer.
In the two buyers motivation, attitude and purchase behavior are
different.
Individual behavior
What motivates?
What induces?
Why does he buy a specific brand?
Why does he buy from a specific shop?
Why does he shift brand or shop?
How does he react to a new product?
What are the stages he travels through before making a buying
decision?
j

All these need to be understood that there is no unified, tested
established theory to study buyer behavior.
Influence of social sciences on buyer behavior.
Influence of economics Ȃ
As per economists man is a rational buyer. Price is regarded as the
strongest motivation for the economic manǯs behavior.
Influence of psychology Ȃ
Any human activity is directed towards meeting certain needs.
Maslow has categorized it as Ȃ
Physiological needs
Safety needs
Social needs
ësteem needs
Self-actualization needs.
j

* Influence of sociology and anthropology Ȃ
According to scholars group, pressure is the motive
force behind buying.

Buyer Behavior Models.

÷. Maslowǯs hierarchy of needs.
2. The economic model - buyer is a rational man
and buying decisions are totally governed by the
concept of utility.
j

3. The learning model - this takes it cue from the
Pavlovian stimulus-response theory. Buyer behavior
can be influenced by manipulating the drives, stimuli,
and responses of the buyer. The model rests on manǯs
ability at learning, forgetting and discriminating.
4. The psychoanalytical model - it draws mainly from
Freudian psychology. The individual customer has a
complex set of deep seated motives that drive him
towards certain buying decisions.
5. The sociological model Ȃ the buyer is influenced by
society, by intimate groups as well as social classes.
His buying decisions are not totally governed by
utility; he has a desire to emulate, follow and fit in
with his immediate environment.
j

6. The Nicosia Model - this model was developed by
Nicosia in ÷966. It establishes a link between the
firm and the buyer. It groups the activity of
buying into four basic fields.
Field One Ȃ has two sub fields Ȃ the firms attributes
and the consumers attributes.
* An advertising message from the firm reaches the
consumers attributes.
* Depending on the way the message is received by
the customer a certain attitude develops and this
becomes input for field two.
j

* Field Two Ȃ is the area of search and evaluation of
the advertised product and other alternatives. If
the process results in a motivation to buy it
becomes input for field three.
* Field three Ȃ consists of act of purchase.
* Field four consists of the use of the product item.
There is an output from field four Ȃ feedback of
sales results to the firm.
j

6. The Howard Sheth Model Ȃ
John Howard and Jagdish Sheth put forward this
model in ÷969. The logic of the model is Ȃ
There are inputs in the form of stimuli and there
are outputs beginning with attention to a given
stimuli and ending with purchase. In between the
inputs and the outputs, there are variables
affecting perception and learning. These variables
are considered Ǯ Hypo ethicalǯ since they cannot
be measured at the time of occurrence.
? 


     
A number of factors influence buyer behavior. They can
be grouped under three broad categories Ȃ
÷.Factors that are part of the buyer as an individual Ȃ
* We have three categories Ȃ
a. Personal factors - age, status, education, etc.
b. Cultural factors Ȃ religion, language, etc.
c. Psychological factors Ȃ beliefs, attitudes, etc.
2. Buyer social environment Ȃ( group influence) -
* Influence if intimate group.
* Influence of broad social class.
3. Information from a variety of sources -
 
m  
Buying motives can be defined as 0 all the impulses,
desires and considerationsdz which induce a buyer to
purchase a given product. Why does a person buy?
What are his motives?
Product motives and Patronage motives.
It is often said that dissatisfaction of human beings
creates new products and new markets. Those
impulses, desires and considerations that make
people buy a given product are called Ǯ product
motivesǯ. The influences that explain why they buy
from particular shops/firms are called Ǯpatronage
motivesǯ.
j

Product motives Ȃ two categories
* ëmotional product motives.
* Rational product motives.

ëmotional motives are those that appeal to the

buyers pride or ego, his urge to imitate others, or
his desire to be distinctive.
Rational product motives involve a logical analysis
of the intended purchase.
j

Alternative classification Ȃ Operational and
Psychological product motives.
This is a more meaningful classification of product
motives. Products have a utility dimension as well
as a prestige dimension. A buyer can gain
satisfaction from the functional or physical utility
of a product and/or the socio-psychological
significance he attaches to the product. The
former is the operational product motive and the
latter the socio-psychological product motive.
j

Patronage motives Ȃ
Why does the buyer patronize specific shops? What are the
considerations or impulses that persuade him to do so?
Here also they can be grouped into
ëmotional
Rational categories.
Buying Habits
Buying habits vary depending on types of goods Ȃ ex.
Consumer goods are classified as Ȃ
* Convenience goods Ȃ daily consumption type
* Shopping goods Ȃ clothes, shoes, etc.
* Specialty goods Ȃ cars, ornaments, etc.
 
Y 
÷. Problem recognition( Need recognition).
2. Awareness for the product.
3. Comprehension( evaluation) Ȃ
This comes out of his ability to reason with information. The
awareness and comprehension stages represent the
information processing stage. These two stages
constitute the cognitive field of the purchase process.
Cognition refers to acquisition of knowledge.
4. Attitude Ȃ it is the sum total of the individuals faith and
feelings towards the product. As a result of his awareness
and comprehension. The consumer develops an attitude
Ȃ favorable or unfavorable. The purchase process will
continue only if he develops a favorable attitude or a
liking.
j

5. Legitimization Ȃ the buyer must be convinced that the
purchase of the product is the legitimate course of action.
Attitude and legitimization constitute the attitude field of
the purchase process.
6. Trial Ȃ conviction leads to try the product on a small scale.
7. Adoption Ȃ successful trial leads him to buy/adopt the
product. Trial and adoption stages constitute the
behavioral field in the buying process.
8. Post purchase behavior Ȃ usually creates restlessness in the
mind of the individual. He is not sure about the product
and feels other brands are better. He will seek by himself
all means to recover his conviction and poise.
Stages in buying process may vary depending on buyers
personality.
?  
 j 
ëverett Rogers in his book ǮDiffusion of
Innovationsǯ discusses how new products spread
through societies and how at what rate different
segment of people adopt them. He classifies
people into 5 categories Ȃ
* Innovators
* ëarly adopters
* ëarly majority
* Late majority
* Laggards.
Î 
  

One of the most active academic research areas in
marketing is behavioral decision theory(BDT).
Researchers have uncovered many fascinating
influences and outcomes in consumer decision
making often challenging predictions from economic
theory and assumptions about rationality.
* Consumers are most likely to choose an alternative( a
home bread bakery) after a relatively inferior option(
a slightly better but significantly expensive bakery) is
added to the choice set
* Consumers are more likely to choose an alternative
that appears to be a compromise in the particular
choice set under consideration.
j

= The choices that consumers make influence their
assessment of their own tastes.
= Shifting attention to one of two considered
alternatives tends to enhance the perceived
attractiveness and choice probability of that
alternative.
= The manner in which consumers compare products
that vary in terms of price and perceived quality(
features, brand name) and the way those products are
displayed in the store( by brand or by model type)
affect their willingness to pay more for additional
features or a better known brand.
j

= Consumers who think about the possibility that their
purchase decision will turn out to be wrong are more
likely to choose well known brands.
= Consumers for whom possible feelings of regret are
made more relevant are more likely to choose a
product that is currently on sale rather than wait for a
better sale or buy a higher priced item.
= Consumers choices are influenced by subtle and
theoretically inconsequential changes in the way
alternatives are described.
= Consumers who make purchases for later
consumption appear to make systematic errors in
predicting their future preferences.
j

= Consumers predictions of their future tastes are not
accurate Ȃ they do not really know how they will feel
after consuming the same flavor of yogurt or ice-
cream several times.
= Consumers often overestimate the duration of their
overall emotional reactions to future events( movies,
financial windfalls, out-comes of sporting events).
= Consumers often overestimate their future
consumption, especially if there is limited
availability( which may explain why mangoes have
higher sales when availability is limited to several
months per year than they are offered year round).
j

= In anticipating future consumption opportunities
consumers often assume they will want or need
more variety then they actually do.
= Consumers are less likely to choose alternatives
with product features or promotional premiums
that have little or no value, even when these
features and premiums are optional( like the
opportunity to purchase a collectorǯs item) and do
not reduce the actual value of the product in any
way.
j

= Consumers are less likely to choose products selected by
other consumers for reasons that they find irrelevant, even
though these other reasons would not suggest anything
positive or negative about the products values.
= Consumers interpretations and evaluations of past
experiences are greatly influenced by the ending and
trend of events. A positive event at the can end of a service
experience can color later reflections and evaluations of
the experience as a whole.
What all these and other studies reinforce is that consumer
behavior is very constructive and that the context of
decisions really matter. Understanding how these effects
show up in the market place can be crucial for marketers.