MARKETING MANAGEMENT

UNIT-1
Introduction: Nature, Scope and Importance of Marketing, Evolution of
Marketing; Core marketing concepts; Company orientation - Production concept,
Product concept, selling concept, Marketing concept, Holistic marketing concept;
Marketing Environment: Demographic, Economical, Political, Legal, Socio-
cultural, Technological environment (Indian context); Market and competition
analysis, Market Analysis and Creating and Delivering Customer Value. types of
marketing (B2C, B2G, B2B, C2C)

Introduction to Marketing:

Definitions:

According to the American Marketing Association (AMA) Board of Directors, Marketing is

the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large.

Dr. Philip Kotler defines marketing as “the science and art of exploring, creating, and
delivering value to satisfy the needs of a target market at a profit. Marketing identifies
unfulfilled needs and desires. It defines, measures and quantifies the size of the identified
market and the profit potential. It pinpoints which segments the company is capable of serving
best and it designs and promotes the appropriate products and services.”

Marketing is making connections between customers with your products, brand(s) and business,
such that they are likely to buy from you.

Or as Regis McKenna said, “Marketing is everything.”

Marketing is about identifying and meeting human and social needs. One of the shortest good
definition of marketing is "meeting needs profitably."

What is marketed?

Goods:

Physical goods constitute the bulk of most countries production and marketing effort.
Companies market billions of cars ,refrigerator, television sets machines and various other
mainstays of a modern economy.

Services:

As economies advances a growing proportion of their activist is focused on the production of

services. Service include the work of airlines, hotels, car rental firms, barbers and beauticians,
maintenance and repair people, as well as professionals working within or for companies ,such
as accountants, bankers, lawyers, engineers, doctors, software programmers and management
consultants.

Events:

Marketing promote time based events, such as major trade shows, artistic performance, and
company anniversaries. Global sporting events such as the Olympic or world cup are promoted
aggressively to both companies and fans.
Experiences:
By orchestrating several services and goods, a film can create, stage and market experiences.
Disney Worlds represents experiential marketing for entertainment.

Persons: Celebrity market is a major business. Today , every major film star has an agent, a
personal manager, and ties to public relations agency. Celebrity marketers market themselves
(self branding)-think of Madonna, Oprah Winfrey, Shaharuk Khan.

Places: cities, states region and whole nation’s compare actively to attract tourist, factories
company headquarters, and new residents. Place marketers include economic and advertising
and public relations agencies.

Properties:
Properties are intangible rights of ownership of either real property (real estate) or financial
property (stocks and bonds). Properties are bought and sold and this requires marketing.

Organizations:

Organizations actively work to build a strong, favorable and unique image in the minds of their
target publics. Companies spend money on corporate identity ads.

Information:
Information can be produced and marketed as a product. This is essentially what schools and
universities produce and distribute at a price to parents students and communities.

Ideas:

Every market offering includes a basic idea. Products and services are platforms for delivering
some idea or benefit.

THE MARKETING EXCHANGE:

A marketer is someone who seeks a response—attention, a purchase, a vote, a donation—from

another party. Marketers are skilled at stimulating demand for their products; however, that’s
a limited view of what they do. They also seek to influence the level, timing, and composition
of demand to meet the organization’s objectives.

Traditionally, a “market” was a physical place where buyers and sellers gathered to buy and
sell goods. Economists describe a market as a collection of buyers and sellers who negotiate
transactions that involve a particular product or product class (such as the housing market or
the grain market).
There are five basic markets: resource markets, manufacturer markets, consumer markets,
intermediary markets, and government markets. The five basic markets and their connecting
flows of goods, services, and money are shown in Figure 1

Figure 1

Fig.-1 Structure of Goods, Services, and Money Flows in a Modern Exchange Economy

Types of Market

Consumer market

Companies selling mass consumer goods and services such as soft drink, cosmetics, air travel,
and athletic shoes and equipment spend a great deal of time trying to establish a superior brand
image.

Business market
Companies selling business goods and services often face well-trained and well informed
professional buyers who are skilled in evaluating competitive offerings.

Global markets

Companies selling goods and services in the global marketplace face additional decisions and
challenges. They must decide which countries to enter. Developing global market strategies for
local products involves expanding the reach of products that have traditionally been marketed
and sold within a specific local or regional context. When companies aim to take local products
to global markets, they must adapt their strategies to accommodate cultural, economic, legal,
and competitive differences.

What are the different Types of Product Classifications?

1. Convenience Products

Convenience products refer to frequently purchased items and services that customers buy
without much consideration. Customers typically stick to their preferred brands when it comes
to convenience goods unless they are swayed by advertising or product availability.

For example, items such as groceries, over-the-counter medications, and household products
like cleaning supplies.

Marketing Convenience Products and Services

When promoting convenience goods, marketers might use tactics that disparage other brands
more frequently. This is because customers could be persuaded to change their purchasing
habits if they are swayed, for example, by a comparative advertisement.
If you want to promote a convenience product, you should also focus on both price and
convenience. You need to make sure that the purchasing process is as seamless as possible,
with minimal effort required from the customer.

2. Shopping Goods

Shoppers usually spend more time researching and comparing shopping goods before
purchasing since they are not impulse buys, unlike convenience goods. Affordable items such
as clothes and home decor can be purchased while shopping. Higher-end goods, such as cars
and houses, can have a significant economic impact even if they are only purchased once.

Some examples of shopping goods can be furniture, smartphone, jewelry, etc.

Marketing of Shopping Goods

When it comes to marketing shopping goods, marketers have to focus more on the product’s
features and benefits. Consumers need to be convinced of the purchase, so they will often
compare different brands and models to find the one that fits their needs.

When it comes to shopping goods, product quality, and pricing have a greater strategic
importance than for convenience goods. Customers carefully consider their choices, so
providing an attractive value is crucial for companies. This means that you can either sell a
product that is of higher quality than your competitors’ products at the same price or sell a
product that has similar quality but at a lower price. Promoting shopping goods requires
emphasizing the unique features of a product to differentiate it from its competitors, unlike
promoting convenience goods which focuses on creating brand awareness.

3. Specialty Goods

Specialty goods often include high-end features and a higher price tag. They are distinct
products that marketers can promote to a specific group of consumers without facing
competition. Customers anticipate a high-quality product when they buy specialty products
since they do it often out of passion or pastime.

Examples of specialty goods include watches, luxury cars, high-end appliances, etc.

Marketing Specialty Goods

The difficulty for marketers when it comes to advertising specialty items is to concentrate on
the product’s distinctive qualities and emphasize them. Specialty product marketers often
utilize focused marketing instead of mainstream media efforts to reach their target clientele.

You may not need to persuade customers that your product is superior to rivals when marketing
specialist brands. Customers often crave these things since they are frequently uncommon
purchases with strong brand recognition. Concentrate on product innovation and development
to retain the strong demand for specialty items. As a result, consumers continue to support your
brand.

4. Unsought Goods

Products that consumers aren’t often eager to purchase are known as unsought goods. Although
these items are useful, buying them is often not enjoyable. Out of a sensation of dread, danger,
or need, people often purchase these types of products.

Some examples of unsought goods are insurance, medical services, safety products, etc.

Marketing of Unsought Goods

To successfully market unsought goods, it is important to raise awareness about the product
and persuade consumers to buy it by demonstrating how it can prevent future difficulties. The
company might create a commercial that appeals to emotions by portraying how the customer’s
unexpected death could lead to financial difficulties for their family. Advertising is crucial to
convince customers to purchase insurance and safeguard their families, as people rarely buy
such products without being encouraged.

Core Marketing concepts

A core set of concepts creates a foundation for marketing management and a holistic
marketing orientation.

Needs

Needs are the basic human requirements. People need food , air, water, clothing, and shelter
to survive.

Need, in terms of marketing can be divided into the following five types:

1. Stated Need

Stated Needs are the ones which are specified clearly by the customer or the market.
They are also the expected needs for a particular product or service. These needs are at
the most basic level without which the need cannot be qualified. e.g. I need food to eat
and i feel like having a sandwich.

2. Real Needs

Real needs are at one level above the stated needs and put a boundary on the above.
Real needs define the parameter which are immediate to defining and fulfilling the need.
e.g. I need a cheese sandwich at affordable price.

3. Unstated Needs
 Unstated needs are which are not obvious but are expected by the customer. These are
the needs which can be used to differentiate by the companies while designing the
products to fulfil the needs of the customer. e.g. I need basic vegetables to be added as
part of my sandwich. It should not be just a single slice cheese plain sandwich.

4. Delight Needs

Delight needs are the needs which provide the 'wow' factor. These needs like unstated
needs can make some products more popular than the other if they meet these needs.
e.g. The quality of the cheese used to be the best one with special sauce but still the
price of the sandwich would be below 2$.

5. Secret Needs

These are the needs which a customer might not state or realize but can be one of the main
reasons for choosing a particular product to fulfil the basic stated need. e.g. i need this
sandwich to quickly eat my food and look cool.

Wants

People have strong needs for recreation, education, and entertainment. These needs become
wants when they are directed to specific objects that might satisfy the need. Wants are shaped
by one’s society.
Demands

Demands are wants for specific products backed by an ability to pay. How many customers are
actually willing and able to buy a product?

Marketing Strategies For Various Types of Demand

Marketing management has the task of influencing the level, timings and composition of
demand in a way that will help the organization to achieve its objectives. Also, a marketer has
to take into consideration different types of demand for his product before he comes up with a
strategy. Here are some effective marketing strategies for various types demand

Negative Demand

Most or even all important segments in a market dislike the product, even to the extent of being
prepared to pay a price to avoid it - for example, some people have a negative demand for
dental care, and others have a negative demand for air travel.

Marketing Strategy: The task of marketing in this situation is generally to identify the cause of
negative demand and attempt to counter it. For example, if the product has a poor reputation
or image, or its features or performance are inadequate, then marketing managers will need to
consider how to alter the reputation of the product, whether to change its features and generally
determine how to ensure that the correct image is created for that product. The marketing task
is to analyze, why the market dislikes the products?

No Demand

This usually covers products with no perceived value in a particular market. In relatively crime
free areas, for example, there may be no demand for security systems because consumers may
not appreciate the need for such products.

Marketing Strategy: The marketing task is to find ways to connect the benefits of the products
to the person’s natural needs and interests. The task of marketing then becomes one of
stimulating demand for that product. In practice, this often means persuading consumers to buy
or use a particular product or service. This element of persuasion means that stimulation
marketing is often subject to criticism for being manipulative, but of course we must

remember that it may be beneficial in many cases such as encouraging vaccination and
encouraging health screening.

Latent Demand

One of the demand states that company may face in certain situations. This happens because
consumers may share a strong need that cannot be satisfied by any existing product. There is a
strong latent demand for a specific product.

Marketing Strategy: The marketing task is to measure the size of the potential market and
develop effective goods and services that would satisfy the demand.

Declining Demand

In this case, the demand for a product is declining and this decline represents something more
serious than a temporary drop in sales. Examples might include rail travel in the US, vinyl
records or mechanical watches.

Marketing Strategy: The task of marketing is to identify causes of decline and to reassess the
nature of the product, its features, its target market and the marketing campaign with a view to
either reviving demand for the product or deleting it. We should perhaps note that attempts to
revive a product go beyond simply relying on large scale advertising and promotional efforts
since these often act as an indication to the consumer that the particular product is experiencing
difficulties.

Irregular Demand

Irregular demand is arguably one of the most common situations facing anyone involved in
marketing in the service sector. It involves a situation where the pattern of demand is based on
seasonal factors or other sources of volatility such as short term economic fluctuations. There
are many examples of this type of demand in food markets, holiday markets and travel markets.

Marketing Strategy: The task of marketing management in this situation is concerned with
attempting to synchronies demand and supply. Marketing may tend to focus primarily on the
demand side by discouraging use when demand is at its strongest, encouraging use when
demand is at its weakest or finding alternative markets with counter cyclical patterns of demand.
However, there may need to be some consideration of the supply side and the potential to which
supply can be increased by the holding of larger stocks, improved distribution or increased
output.

Full Demand

Demand is currently at a desirable level and one that is consistent with the existing corporate
and marketing objectives.

Marketing Strategy: The main concern in this situation is to maintain this level of demand by
continuously monitoring and adjusting marketing campaign as and when attitudes change or
competitive threats appear.

Over Full Demand

Some organizations face a demand level that is higher then they can or want to handle.
Marketing task is De-marketing which requires finding ways to reduce the demand temporarily
or permanently.

Marketing Strategy: The marketing task is to reduce but not remove demand - perhaps by
making the product less available to less attractive market segments or by making it generally
less available by reduced promotions, increased price or limited distribution.

Unwholesome Demand

Any positive level of demand is regarded as excessive because of the undesirable qualities of
the product. This situation is probably most commonly associated with 'vice' products such as
drugs, smoking and other 'social cause' products. However, counter-marketing may also be
relevant in the business community when it may be used to phase out firms existing products.
This may involve ending promotions, raising price or even, for some products, the
implementation of legal restrictions.

Marketing Strategy: These categories of demand demonstrate that the task of marketing
management is much broader than simply creating and maintaining demand - rather it involves
responding to and managing patterns of demand within the market place. However, it is
important to stress that this demand management does not take place in isolation. Marketing
must manage demand more effectively than the competition in order to be successful and must
be prepared to respond and react to what happens in the marketplace, not only in terms of
existing and potential consumers but also in terms of competitor’s activities.

As markets become more and more competitive and customers become more sophisticated and
quality conscious, the adoption of a marketing orientation becomes increasingly important in
ensuring organizational success. This marketing orientation requires that the consumer be seen
as central to the business and that the organization focuses its attention on identifying and
responding to consumer needs as they are at present, as well as trying to anticipate future needs.
However, the type of products which can be developed will be affected by the organization’s
own capabilities. The key principle of marketing is to be able to meet consumer needs more
effectively than competitors.

Segmentation, Targeting and Positioning

Segmentation:

Segmentation is the first step of the STP strategy. Segmentation is the process of dividing
the whole market into small subgroups based on shared characteristics like age, gender, taste,
preferences, etc. Customers having similar needs and behaviours are to be put together. A
market segment is a portion of the whole market that is expected to respond similarly to a given
situation. Segmentation helps the business identify what type of customers they should target
to sell their product/service. For these reasons, a company should properly do the segmentation
process. Market segmentation can be done based on:

Market segmentation can be done based on:

• Demographics (age, gender, etc.)

• Geographic Attributes (location)
• Behavioural attributes (habits)
• Psychographic Attributes (lifestyle preferences)

Targeting

The process of evaluating market segments and choosing the best to target comes under Market
Targeting. Market Targeting undertakes the decision of choosing the best target audience and
the degree to which the target market should be targeted. In simple terms, it is a process of
choosing the best target audience for the product/service and declaring the other segments
to be useless for a particular kind of product/service.

A business must determine the target audience after thorough research; otherwise, the business
is going to end up wasting time and resources with no return on investment. Generally, a new
product/service is first made available to a single target, and if it remains optimal, the business
takes up other segments as well. Market targeting also depends on the size of the company.
Besides, the more the target markets, the more will the cost of targeting.

Positioning
The activity of positioning involves placing the product/service in the minds of the target
customers and making the image of the product/service superior as compared to other similar
products. Various factors affect the process of positioning such as:

• The larger the size of the target market, the more it will be difficult to position the
product/service.
• If there is no competition in the market, then the business can create a completely
different and new market positioning strategy.
• If the product has already a good brand value, then it will be of advantage to the business
to position any new product/service.
• If the company decides to offer fewer prices for its product/service than the rival firms,
then the business can have an advantage in market positioning.

Offerings and Brands

Companies address needs by putting forth a value proposition, a set of benefits that they
offer to customers to satisfy their needs. The intangible value proposition is made physi cal
by an offering, which can be a combina tion of products, services, information, and
experiences.

A brand is an offering from a known source. A brand name such as McDonald's carries
many associations in people's minds that make up the brand image: hamburgers, fun,
children, fast food, convenience, and golden arches. All companies strive to build a strong,
favorable, and unique brand image.

Value and Satisfaction

The offering will be successful if it delivers value and satisfaction to the target buyer. The
buyer chooses between different offerings based on which she perceives to deliver the most
value. Value reflects the sum of the perceived tangible and intangible benefits and costs to
customers. It's primarily a combination of quality, service, and price ("qsp"), called the
"customer value triad." Value increases with quality and service and decreases with price,
although other factors can also play an important role in our perceptions of value. Value is
a central marketing concept. We can think of marketing as the identification, creation,
communication, delivery, and monitoring of customer value. Satisfaction reflects a person's
judgments of a product's perceived performance (or outcome) in relationship to expectations.
If the performance falls short of expectations, the customer is dissatisfied and disappointed.
If it matches expectations, the customer is satisfied. If it exceeds them, the customer is
delighted.

Marketing Channels

To reach a target market, the marketer uses three kinds of marketing channels.
Communication channels deliver and receive messages from target buyers and include
newspapers, magazines, radio, television, mail, telephone, billboards, posters, fliers, CDs,
audiotapes, and the Internet. Beyond these, just as we convey messages by our facial
expressions and clothing, firms communicate through the look of their retail stores, the
appearance of their Web sites, and many other media. Marketers are increasingly adding
dialogue channels such as e-mail, blogs, and toll-free numbers to familiar monologue
channels such as ads.
The marketer uses distribution channels to display, sell, or deliver the physical product or
service(s) to the buyer or user. They include distributors, wholesalers, retailers, and agents.

The marketer also uses service channels to carry out transactions with potential buyers. Service
channels include warehouses, transportation companies, banks, and insurance companies that
facilitate transactions. Marketers clearly face a design challenge in choosing the best mix of
communication, distribution, and service channels for their offerings.

Supply Chain

The supply chain is a longer channel stretching from raw materials to components to final
products that are carried to final buyers. The supply chain for women's purses starts with hides
and moves through tanning, cutting, manufacturing, and the marketing channels to bring
products to customers. Each company captures only a certain percentage of the total value
generated by the supply chain's value delivery system. When a company acquires com petitors
or expands upstream or downstream, its aim is to capture a higher percentage of supply chain
value.

Competition

Competition includes all the actual and potential rival offerings and substitutes a buyer might
consider. Suppose an automobile company is planning to buy steel for its cars. There are several
possible levels of competitors. The manufacturer can buy steel from U.S. Steel in the United
States, it can buy from a foreign firm in Japan or Korea, it can buy from a minimill such as
Nucor at a cost savings, or it can buy aluminum from Alcoa for certain parts to reduce the car's
weight or engineered plastics from Saudi Basic Industries Corporation (SABIC), purchasers of
GE Plastics, for bumpers instead of steel. Clearly, U.S. Steel would be thinking too narrowly
about its competition if it thought only of other integrated steel com panies. In fact, in the long
run U.S. Steel is more likely to be hurt by substitute products than by other steel companies.

EVOLUTION OF MARKETING PHILOSOPHIES/ EVOLUTION MARKETING

CONCEPT

The Production Concept

The production concept is one of the oldest concepts in business. It holds that consumers will
prefer products that are widely available and inexpensive. Managers of production-oriented
businesses concentrate on achieving high production efficiency, low costs, and mass
distribution. This orientation makes sense in developing countries such as China, where the
largest PC manufacturer, Lenovo, and domestic appliances giant Haier take advantage of the
country's huge and inexpensive labor pool to dominate the market. Marketers also use the
production concept when a company wants to expand the market.

The Product Concept

The product concept proposes that consumers favour products that offer the most quality,
performance, or innovative features. Managers in these organizations focus on making superior
products and improving them over time. However, these managers are sometimes caught up in
a love affair with their products. They might commit the "better-mousetrap" fallacy, believing
that a better mousetrap will lead people to beat a path to their door. A new or improved product
will not necessarily be successful unless it's priced, distributed, advertised, and sold properly.

The Selling Concept

The selling concept holds that consumers and businesses if left alone, won't buy enough of the
organization's products. The organization must, therefore, undertake an aggressive selling and
promotion effort. The selling concept is expressed in the thinking of Sergio Zyman, Coca-
Cola's former vice president of marketing, who said: "The purpose of marketing is to sell more
stuff to more people more often for more money to make more profit."

The selling concept is practiced most aggressively with unsought goods, goods that buyers
normally do not think of buying, such as insurance, encyclopedias, and cemetery plots. Most
firms also practice the selling concept when they have overcapacity. They aim to sell what they
make, rather than make what the market wants. However, marketing based on hard selling
carries high risks. It assumes that customers who are coaxed into buying a product will like it,
and that if they don't, they not only won't return or bad-mouth it or complain to consumer
organizations, but they might even buy it again.

The Marketing concept

The marketing concept emerged in the mid-1950s. Instead of a product-centred, "make-and-

sell" philosophy, the business shifted to a customer-centred, "sense-and-respond" philosophy.
The job is not to find the right customers for your products but to find the right products for
your customers. Dell Computer doesn't prepare a perfect computer for its target market.

Rather, it provides product platforms on which each person customizes the features he desires
in the computer.

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. Several scholars have found that companies that embrace the
marketing concept achieve superior performance. This was first demonstrated by companies
practicing a reactive market orientation understanding and meeting customers' expressed needs.
Some critics say this means companies develop only very basic innovations. Narver and his
colleagues argue that more advanced, high-level innovation is possible if the focus is on
customers' latent needs. Narver calls this a proactive marketing orientation.! Companies such
as 3M, Hewlett Packard, and Motorola have made a practice of researching latent needs
through a "probe-and-learn" process. Companies that practice both a reactive and a proactive
marketing orientation are implementing a total market orientation and are likely to be the most
successful.

Theodore Levitt of Harvard drew a perceptive contrast between the selling and marketing
concepts:

Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is
preoccupied with the seller's need to convert his product into cash; marketing is 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.
The Holistic Marketing Concept

Without question, the trends and forces defining the 21st century are leading business firms
to a new set of beliefs and practices. Today's best marketers recognize the need to have a
more complete, cohesive approach that goes beyond traditional applications of the marketing
concept. "Marketing Memo: Marketing Right and Wrong" suggests where companies go
wrong-and how they can get it right in their marketing.

Wrong" suggests where companies go wrong-and how they can get it right in their marketing.

The holistic marketing concept is based on the development, design, and implementation of
marketing programs, processes, and activities that recognizes their breadth and
interdependencies. Holistic marketing recognizes that "everything matters" in marketing-and
that a broad, inte grated perspective is often necessary. Holistic marketing is thus an approach
that attempts to recognize and reconcile the scope and complexities of marketing activities.
Figure provides a schematic overview of four broad components characterizing holistic
marketing: relationship marketing, integrated marketing, internal marketing, and performance
marketing. We'll examine these major themes throughout this book. Successful companies will
be those that can keep their marketing changing with the changes in their marketplace and
marketspace. "Breakthrough Marketing: Nike" describes how that company has successfully
changed and thrived through the years.

Relationship marketing

Relationship marketing has the aim of building mutually satisfying long term relationships with
key parties –customers, suppliers, distributors, another market patterns-in order o earn and
retain their business. Relationship marketing builds strong economic, technical, and social ties
among the parties.

Integrated marketing
The marketer’s task is to devise marketing activities and assemble fully integrated marketing
programs to create, communicate, and deliver value for consumers. The marketing program
consists of numerous decisions on value enhancing marketing activities to use. Marketing
activities come in all forms.

Internal marketing

Holistic marketing incorporates internal marketing, ensuring that everyone in the organization
embraces appropriate marketing principles, especially senior management. Internal marketing
is

the task of hiring, training, and motivating able employees who want to serve customers well.

Social Responsibility Marketing/ Societal Marketing Concept

Holistic marketing incorporates social responsibility marketing and understanding broader

concerns and the ethical, environmental, logical, and social context of marketing activities and
programs. The cause and effects marketing clearly extend beyond the company and the
consumer to society as a whole. Social responsibility also requires that marketers carefully
consider the role that they are playing and could play in terms of social welfare.

MARKETING ENVIRONMENT

Marketing Environment

The marketing environment consists of the task environment and the broad environment. The
task environment includes the actors engaged in producing, distributing, and promot ing the
offering. These are the company, suppliers, distributors, dealers, and the target customers. In
the supplier group are material suppliers and service suppliers, such as marketing research
agencies, advertising agencies, banking and insurance companies, transportation companies,
and telecommunications companies. Distributors and dealers include agents, brokers,
manufacturer representatives, and others who facilitate finding and selling to customers.
The broad environment consists of six components: demographic environment, eco nomic
environment, physical environment. technological environment, political-legal environment,
and social-cultural environment. Marketers must pay close attention to the trends and

developments in these environments and make timely adjustments to their marketing strategies.

Identify the major forces

Companies and their suppliers, marketing intermediaries, customers, competitors, and publics
all operate in a macroenvironment of forces and trends, increasingly global, that shape
opportunities and pose threats. These forces represent "noncontrollable," which the company
must monitor and to which it must respond.

Within the rapidly changing global picture, the firm must monitor six major forces:
demographic, economic, social-cultural, natural, technological, and political-legal. We'll
describe these forces separately, but marketers must pay attention to their interactions because
these will lead to new opportunities and threats. For example, explosive population growth
(demographic) leads to more resource depletion and pollution (natural), which leads consumers
to call for more laws (political-legal), which stimulate new technological solutions and
products (technological), which, if they are affordable (economic), may change attitudes and
behavior (social-cultural). "Breakthrough Marketing: Google" describes how that company has
successfully capitalized on the new marketing environment.
External factors/environment are classified into two parts:
MICRO ENVIRONMENT: Example- Customers, Public, Suppliers and competitors etc.

MACRO ENVIRONMENT: Example- Political factors, Legal Factors, Economic factors,

Technological Factors, Social factors and Natural factors etc.
 Analyzing the macro environment for marketing

COMPETITION ANALYSIS

Competition Analysis in Marketing is a strategic process where businesses evaluate their

current and potential competitors to understand the market landscape, identify opportunities,
and make informed decisions. It helps a company determine its competitive advantage,
develop better strategies, and anticipate market shifts.

Why It Matters

• Helps identify strengths and weaknesses of competitors.

• Reveals market gaps and opportunities.
• Aids in positioning your brand effectively.
• Supports pricing, product development, and promotion strategies.
• Prepares businesses for market threats.

Key Components of Competition Analysis

1. Identify Competitors

v Direct competitors: Offer the same products/services.

v Indirect competitors: Offer alternative solutions that meet the same customer
need.
v Emerging competitors: Startups or disruptive players entering the market.
 2. Analyze Competitor Strategies

v Product offerings
v Pricing models
v Marketing and promotion tactics
v Distribution channels
v Customer service

3. Assess Market Position

v Market share
v Brand reputation
v Customer loyalty
v Unique selling propositions (USPs)

4. SWOT Analysis (for competitors)

v Strengths
v Weaknesses
v Opportunities
v Threats

5. Understand Customer Perception

v What do customers say about competitors?

v Analyze reviews, social media mentions, and customer feedback.

Tools & Techniques

• Porter's Five Forces
• Social Media Anlalytics

Steps in Conducting Competitive Analysis

v Define your objectives (e.g., market entry, pricing strategy).
v Identify competitors and segment them.
v Gather data (online research, reports, customer reviews).
v Analyze competitors' strengths, weaknesses, and strategies.
v Compare with your own company.
v Develop strategic actions based on insights.

Benefits
 • Better decision-making
• Improved product offerings
• Competitive pricing
• More targeted marketing campaigns
• Increased customer satisfaction

Example
If you're a new coffee shop:

• Direct competitors: Other coffee shops in the area.

• Indirect competitors: Fast food chains with coffee options, energy drinks.
• Research their pricing, menu, ambiance, loyalty programs, and social media
engagement.
• Identify what they do well (great loyalty app) and where they fall short (slow service).
• Position yourself to fill those gaps (faster service, unique ambiance).

B2B B2C D2C Business Models with Example

1. B2B (Business-to-Business)

B2B(business-to-business) refers to a business model in which a company sells its products or

services to other businesses. This is in contrast to a business-to-consumer (B2C) model, where
a company sells its products or services directly to consumers. B2B sales typically involve
larger transactions and longer sales cycles compared to B2C sales. B2B sales can be more
complex as it requires understanding the needs of the client, their industry, and how the product
or service will be used within their organization. It also requires building trust and providing a
high level of service and support.

a. Examples of B2B Companies and Industries

B2B (Business-to-Business) companies are businesses that sell their products or services to
other businesses rather than to consumers. Here are some examples of B2B companies and
industries:

Manufacturing: Companies that manufacture industrial equipment, machinery, and other

products for other businesses to use.
- Wholesale: Companies that buy products in bulk from manufacturers and resell them to
other businesses at a higher price.

- Technology: Companies that provide technology solutions such as software, hardware, and
IT services to other businesses.

Consulting: Companies that provide expertise and advice to other businesses in areas such as
management, finance, and marketing.

Logistics and Supply Chain: Companies that provide transportation, warehousing, and other
logistics services to other businesses.

Professional Services: Companies that provide services such as accounting, legal, and
engineering services to other businesses.

Examples of B2B companies include

v Caterpillar (Manufacturing)
v Dell Technologies (Technology)
v Accenture (Consulting)
v FedEx (Logistics)
v PwC (Professional services)
v IBM (Technology)

Note that some companies can be both B2B and B2C, as they can sell to both businesses and
consumers.

b. Advantages of B2B (Business-to-Business)

Higher Profit Margins: B2B companies often have higher profit margins compared to B2C
companies, as they can charge more for their specialized products and services.

Long-term Relationships: B2B companies often build long-term relationships with their
customers, leading to more predictable and consistent revenue streams.

Fewer Customers: B2B companies typically have fewer customers than B2C companies, but
those customers tend to make larger and more frequent purchases.

Complex Products and Services: B2B companies often provide specialized and complex
products and services that require a high level of expertise and knowledge.

Specialized Marketing: B2B companies can target specific industries and businesses, allowing
for more specialized and effective marketing efforts.

c. Disadvantages of B2B (Business-to-Business)

Longer Sales Cycles: B2B transactions often involve multiple decision-makers and require
more time to close a sale.

Higher Costs: B2B companies may have higher costs associated with providing specialized
products and services, as well as higher marketing and sales expenses.

Greater Competition: B2B companies may face greater competition from other businesses
that provide similar products or services to other businesses.

Dependence on Key Customers: B2B companies may be more dependent on a small number
of key customers, which could be a risk if they were to lose those customers.

2. B2C (Business-to-Consumer)

B2C(business-to-consumer) refers to a business model in which a company sells its products

or services directly to consumers. This is in contrast to a business-to-business (B2B) model,
where a company sells its products or services to other businesses. B2C sales typically involve
smaller transactions and shorter sales cycles compared to B2B sales. B2C sales can be more
straightforward as it requires understanding the needs and preferences of the end consumer. It
also requires an easy and convenient buying process, good customer service, and a clear and
effective marketing strategy.

a. Examples of B2C Companies and Industries

B2C (Business-to-Consumer) companies are businesses that sell their products or services
directly to consumers. Here are some examples of B2C companies and industries

Retail: Companies that sell physical goods such as clothing, electronics, and home goods to
consumers.

E-commerce: Online businesses that sell products to consumers through the internet.

Food and Beverage: Companies that produce and sell food and beverages to consumers.

Entertainment: Companies that provide entertainment services such as movies, music, and live
events to consumers.

Hospitality: Companies that provide accommodation, food and drink, and other services to
travellers.

Personal Services: Companies that offer personal services such as salons, spas, and fitness
centres to consumers.

Examples of B2C companies include

- Amazon (E-commerce)

-McDonald’s (Food and beverage)

- Netflix (Entertainment)

- Marriott (Hospitality)

- Lululemon (Retail)

- Uber (Transportation)

Note that some companies can be both B2B and B2C, as they can sell to both businesses and
consumers.

b. Advantages of B2C (Business-to-Consumer)

- High Volume of Sales:B2C companies can sell to a large number of consumers, resulting in
high sales volume.

- Short Sales Cycles: B2C transactions are typically quick and easy, with a shorter sales cycle
compared to B2B.

- Simplified Decision-Making Process: B2C transactions usually involve a single consumer

making the decision to buy, making the decision-making process simpler.

- Lower Costs: B2C companies often have lower costs due to the smaller number of
intermediaries involved in the transaction.

- Simplified Marketing: B2C companies can target consumers directly, simplifying their
marketing efforts.

c. Disadvantages of B2C (Business-to-Consumer)

- Lower Profit Margins: B2C companies often have lower profit margins compared to B2B
companies, due to the need to price products competitively for consumers.

- Greater Competition: B2C companies face greater competition from other businesses that sell
similar products or services to consumers.

- Greater Marketing Expenses: B2C companies may need to invest more in advertising and
marketing to reach and attract consumers.

- Customer Support Expenses: B2C companies may face higher expenses associated with
providing customer support and addressing customer complaints and issues.

3. D2C (Direct-to-Consumer)
Direct-to-consumer (D2C) refers to a business model in which a company sells its products
directly to consumers, bypassing traditional retail channels such as department stores,
supermarkets, and other physical retailers. This typically means that a company will sell its
products online, either through its own website or through e-commerce platforms. The
company may also sell its products through its own physical store or showroom, but the focus
is on cutting out middlemen and reaching customers directly. This business model allows
companies to have more control over the sales process and to build a direct relationship with
their customers, which can help to increase brand loyalty and customer satisfaction.

B2G MARKET

If your business is looking for sales prospects, consider the federal government. It is,
quite simply, the largest business prospect around, with the federal discretionary budget
exceeding $1.6 trillion.

B2G includes an extremely wide range of opportunities. A small business may provide
services to a local municipality. Or when a top defense contractor delivers billions of
dollars worth of equipment to the Department of Defense, that too is B2G.

The B2G market is huge. The federal government alone spends $18.2 to $42.6 billion
per day with outside contractors. The General Services Administration (GSA) regulates
and coordinates federal B2G transactions, and a government contract is commonly
awarded following bids submitted in response to a request for proposal (RFP).

Small businesses secure a decent proportion of local, state, and federal spending. At the
federal level, the current goal is to direct 23% of prime contracting to small businesses.

In many situations, the law requires a government entity to select the lowest bid.
However, the agency must screen prospects to ensure that the winning bidder is indeed
capable of providing the product or service.

GOVERNMENT AGENCIES PROCURE GOODS AND SERVICES

At every level of government, almost all departments and agencies must procure goods
and services.

B2G examples include:

• Construction of buildings, highways, and infrastructure

• Cloud-based or on-premises software solutions
• Installation of a unified communications solutions
• Maintenance of everything from parks to government buildings
At every government level, IT infrastructure is continually updated and often expanded.
Smaller businesses enjoy myriad IT opportunities, particularly at the state and local
levels.

Every year, the Veterans Administration (VA) spends billions of dollars on its
community care network. The VA spends much of this money on professional services.
VA projects often grant special status to veteran-owned businesses.

a. Examples of D2C Companies and Industries

D2C (Direct-to-Consumer) companies are businesses that sell their products or services
directly to consumers, bypassing traditional retail channels. Here are some examples of D2C
companies and industries

- E-commerce: Online businesses that sell products to consumers through their own website
or online marketplace.

- Subscription Services: Companies that offer recurring deliveries of products such as meal
kits, beauty products, and clothing.

- Digital Products: Companies that sell digital products such as music, e-books, and software
to consumers.

- Personalized Products: Companies that offer products customized to the individual

consumer’s preferences and needs.

- Home Care: Companies that sell home cleaning, maintenance and home services directly to
consumer.

- Health and Wellness: Companies that sell health-related products and services directly to
consumers

Examples of D2C companies include

- Dollar Shave Club (Subscription services)

- Blue Apron (Subscription services)

- Spotify (Digital products)

- Quip (Personalized products)

- HelloFresh (Subscription services)

- Casper (Home Care)

- Hims (Health and wellness)

D2C companies are also known as “digital native” companies, as they were built from the
ground up to sell directly to consumers online.

b. Advantages of D2C (Direct-to-Customer)

- Greater Control over the Customer Experience: D2C companies can create a stronger
connection with their customers by controlling the entire purchasing process, from product
development to delivery.

- Increased Profitability: By cutting out intermediaries, D2C companies can increase their
profit margins and retain more control over pricing.

- Data Collection and Analysis: D2C companies can gather valuable data on their customers
through direct interactions and online tracking, which can inform product development and
marketing decisions.

- Faster Time-to-Market: D2C companies can bypass traditional retail channels, which can
allow them to bring new products to market more quickly.

c. Disadvantages of D2C (Direct-to-Customer)

- Limited Distribution: D2C companies must rely on their own distribution channels, which
can limit their reach and make it harder for them to reach new customers.

- Greater Marketing Costs: D2C companies must rely on digital marketing to reach customers,
which can be expensive and competitive.

- Higher Costs for Customer Acquisition: D2C companies must spend more on customer
acquisition to build a direct relationship with customers, which can be costly.

- Lack of Established Brand: D2C companies may not have the same level of brand recognition
as established retail brands, which can make it harder to attract customers.
UNIT-2
Segmentation, Targeting and Positioning: Concept; Levels of Market
Segmentation, Basis for Segmenting Consumer Markets; Consumer Behavior,
The Rise of Consumer Democracy, Stimulus Response Model of Consumer
Behavior, Buyer’s Cultural, Social, Personal, and Psychological Characteristics
particularly in Indian context, Consumer Buying Decision Process, Business
Customer’s Buying Decision Process, and Traditional vs. Experiential
Marketing’s View of Customer

Segmentation, Targeting and Positioning

Manarket segmentation involves dividing the market of potential customers into

homogeneous subgroups. These subgroups may be distinguished in term of their behaviour
pattern, attitudes, demographic characteristics, psychographic profile and the like.
Brian Sternthal & Alice M. Tybout.

How to segment the market/ Bases of market segmentation

1. Demographic Segmentation:

(a) Age
Infant- new born to 1 yr. Child- 1-12 yr. Adolescent- 12 to 15 Teens- 16-19

Youth- 20-35

Middle aged- 36-50

Senior citizens- above 60.

Examples:

(b) Income

Low income
Low middle income
Middle income
Upper middle income and high income group
(b) Gender (Raymond, Femina and Titan Raga etc.) (c) Occupation (Banks)

(d) Education (newspapers)

(e) Marital Status (Shaadi.com)

(f) Family size (Joint vs Nuclear family and the purchasing power)

(e) Socio-economic Status

2. Geographic Segmentation
Here the market divided into countries, states, regions, and cities. Example:
LG & Samsung
MTR
Nirma & Ghari detergent

2. Psychographic Segmentation
AIO (Activities Interests & Opinions)

Psychographies is the science of using psychology and demographics to better understand

consumers. In psychographic segmentation, buyers are divided into different groups on the
basis of psychological/personality traits, lifestyle, or values. People within the same demo
graphic group can exhibit very different psychographic profiles.

4. Behavioural Segmentation

Buyers are divided into 4 groups and Buyer’s Purchase decision role

Product or Brand Usage Occasions

User status
Usage rate

based on:
Targeting

There is only one winning strategy. It is to carefully define the target market and direct a
superior offering to that target market." - Philip Kotler

The process of choosing one or more market segment to maximize the profit is called
targeting. In the process of market targeting a company can choose the following marketing
patterns.

1. Single Segment Concentration

2. Multi-segment specialization

3. Product specialization (Carl Zeiss)

Positioning

Positioning is creating an identity in the minds of the target market. The concept of
popularized by advertising professionals Al Ries and Jack Trout through their best seller
book “Positioning- a battle for your mind”.Positioning starts with a product. A piece of
merchandise, a service, a company an institution or even a person.......But positioning is not
what you do to a product. Positioning is what you do to the minds of the prospect. That is
your position the product in the mind of the prospect.

Positioning is the act of designing the company's offering and image to occupy a distinctive
place in the minds of the target market. The goal is to locate the brand in the minds 01
consumers to maximize the potential benefit to the firm. A good brand positioning helps
guide marketing strategy by clarifying the brand's essence, what goals it helps the consumer
achieve, and how it does so in a unique way. Everyone in the organization should under,
stand the brand positioning and use it as context for making decisions.
The result of positioning is the successful creation of a customer-focused value proposition, a
cogent reason why the target market should buy the product. Table 10.1 shows how three
companies-Perdue, Volvo, and Domino's-have defined their value proposition given their
target customers, benefits, and prices. Positioning requires that similarities and differences
between brands be defined and communicated. Specifically, deciding on a positioning
requires determining a frame of reference by identifying the target market and the
competition and identifying the ideal points- of-parity and points-of-difference brand
associations. "Breakthrough Marketing: UPS" chronicles how UPS has successfully
positioned itself against a formidable opponent, FedEx.

Benefits of product positioning

1. Identifying key benefits of a product and matching them with customers’ needs.

2. finding a competitive advantage even when the market changes.

3. meeting customers’ expectations.

4. reinforcing brand’s name and its products.

5. winning customer loyalty;

6. creating an effective promotional strategy.

7. attracting different customers.

8. improving competitive strength.

9. launching new products.
10.presenting new features of existing products.

Five product positioning strategies

1 Characteristics-based positioning. Brands give certain characteristics to their products

that aim at creating associations. It’s done to make consumers choose based on brand image
and product characteristics. Let’s take the automobile industry, for example. A person who
worries about safety will probably choose Volvo because of the brand’s positioning. At the
same time, another customer who pays attention to reliability would prefer Toyota.

2 Pricing-based positioning. This strategy involves associating your company with

competitive pricing. Brands often position themselves as those that offer products or services
at the lowest price. Let’s take supermarkets, for example. They can afford to provide
customers with products for lower prices because of the lower costs they pay for shipping and
distribution, huge turnover, and a large procurement of goods. As a result, many consumers
already know the supermarkets with attractive prices and choose them without considering
other options.
3 Use or application-based positioning.
Companies can also position themselves by associating with a certain use or application.
People who adhere to a healthy lifestyle create a great demand for products that help increase
performance in the gym. Hence, many businesses offer nutritional supplements. These brands
sell supplements that are high in calories, vitamins, and minerals. Another example can be
Dettol, which is highly used as antiseptic in liquid form and whenever it comes to hygiene
and cleanness we definitely remember it because of its successful user based positioning.

4 Quality or prestige-based positioning.

The brands we are talking about now don’t concentrate on their price point; they focus on
their prestige or high quality instead. Sometimes, it’s the reputation that makes a brand attract
customers. Let’s take Rolex, for example. This famous watch brand is associated with
achievement and excellence in sport and is popular among powerful and wealthy people.

5 Competitor-based positioning.

The strategy involves using competitors’ alternatives to differentiate products and highlight
their advantages. It helps brands distinguish their products and show their uniqueness.
Example: Dettol Vs Savlon, Medimix soap Vs Margo soap, Hamam soap Vs Rexona soap,
Maruti Breeza Vs Hyundai Creta.

Difference

Market segmentation divides your customers into subgroups based on demographic,

geographic, psychographic, or behavioural characteristics. Once the segmentation is
complete, you need to decide which customer segment to target with your product or service.
We call this targeting. Positioning involves

determining where your brand or product stands concerning other brands or products on the
market.
Market segmentation divides the market into different subgroups. A market segment consists
of customers who have similar needs and wants. Targeting involves deciding which customer
segment or market the firm should target. Positioning determines where your brand or
product stands concerning others on the market. Positioning is a vital part of marketing
strategy, as it influences how customers perceive your product offering. Segmentation,
targeting, and positioning make up the STP marketing model.

Introduction to Consumer Behavior

What is Consumer Behaviour in Marketing?

Consumer behaviour in marketing is a comprehensive study of how individuals make decisions

to fulfil their needs and desires. It delves into the intricate factors influencing purchasing
choices, encompassing psychological, social, cultural, and personal elements. This field of
study recognises that buying decisions are not random; internal and external forces shape them.

Understanding consumer behaviour in marketing management is crucial for businesses seeking

to tailor their products, services, and marketing strategies to effectively connect with their
target audience and meet the ever-changing demands and expectations of the market.

What Affects Consumer Behaviour?

Understanding consumer behaviour is pivotal for businesses aiming to tailor their products,
services, and marketing strategies to meet their target audience's evolving needs and
preferences. Numerous factors influence consumer behaviour, shaping the decision-making
process. Here are key elements that play a significant role:

1. Cultural Influences:

o Subcultures and Social Classes: Individuals often identify with specific subcultures or social
classes that impact purchasing decisions. Cultural norms, values, and societal expectations
contribute to shaping consumer preferences.

2. Social Factors:

o Reference Groups: People are influenced by those around them, including family, friends,
colleagues, and social media connections. Reference groups contribute to shaping opinions and
influencing purchasing choices.

3. Personal Factors:

o Lifestyle and Personality: Consumer lifestyle, interests, and personality traits influence the
products and brands they choose. Marketers often segment audiences based on lifestyle choices
to create targeted campaigns.

4. Psychological Factors:

Motivation and Perception: Consumers are motivated by various needs, and factors like
advertising, packaging, and personal experiences shape their perception of products.
Understanding these psychological elements helps businesses create compelling marketing
messages.

5. Economic Factors:

o Income and Economic Conditions: Economic factors, such as income levels and economic
stability, significantly impact purchasing power. Changes in economic conditions can influence
consumer spending habits and choices.

6. Marketing Strategies:

o Advertising and Promotions: The way products are marketed, including advertising messages,
promotions, and branding, has a direct impact on consumer perceptions. Effective marketing
strategies can create a positive image and influence purchasing decisions.

7. Technological Advancements:

o Digital Influence: The rise of digital platforms and e-commerce has transformed consumer
behaviour. Online reviews, social media recommendations, and the ease of online shopping
significantly impact how consumers research and make purchasing decisions.

8. Cognitive Dissonance:

o Post-Purchase Evaluation: Consumers may experience cognitive dissonance, discomfort or

uncertainty about their decision after making a purchase. Marketers can address this by
providing post-purchase support and enhancing customer satisfaction and loyalty.

9. Environmental Concerns:

Sustainability and Ethical Practices: Consumers are Increasingly considering the

environmental and ethical impact of their purchases. Brands adopting sustainable practices and
ethical values often appeal to consumers with a sense of responsibility.

10. Crisis and External Events:

o Global Events and Crises: External events, such as economic downturns, pandemics, or
natural disasters, can profoundly impact consumer behaviour. Responses to these events may
lead to shifts in spending patterns and priorities.

Type of Consumer Behaviour in Marketing Complex Buying Behavior

Consumers engage in extensive research, deliberate evaluation, and consideration of multiple

factors before purchasing. High-involvement products often prompt complex buying behaviour.

Dissonance-Reducing Buying Behaviour

Post-purchase doubts may occur after a significant purchase. Marketing efforts focus on
minimising dissonance by reassuring buyers of their wise choices.

Habitual Buying Behaviour

Routine purchases of familiar products characterise habitual buying behaviour. Brands often
aim to secure customer loyalty through consistent quality and positive experiences.

Variety-Seeking Buying Behaviour

Consumers exhibiting variety-seeking behaviour enjoy trying new products. Marketing

strategies here focus on innovation, promotions, and creating a sense of novelty.

Role of Consumer Behaviour in Marketing Strategy

Learn about the role of consumer behaviour in marketing strategy below.

Market Segmentation

Understanding consumer behaviour aids in effective market segmentation, allowing businesses

to target specific consumer groups with tailored products and messages.

Product Development

Consumer insights guide product development by aligning features, pricing, and positioning
with the preferences and needs of the target audience.

Advertising and Promotion

Crafting compelling advertising and promotional campaigns requires a deep understanding of

consumer behaviour. Messaging resonates best when it aligns with consumer values and
aspirations. Advertising in marketing management plays an important role ensuring your
campaigns effectively capture audience attention and drive desired outcomes.

Brand Loyalty and Customer Retention

Building brand loyalty hinges on grasping consumer preferences and evolving with changing
trends. Successful businesses use consumer behaviour insights to foster lasting relationships.
Enrolling in an Effective Communication Course can further enhance your ability to connect
with consumers on a deeper level. This course provides the skills to craft compelling messages
and engage your audience, ensuring your brand remains relevant and trusted amidst changing
market dynamics.

Pricing Strategies

Consumer behaviour influences pricing decisions, determining whether a market can sustain
premium pricing, value-based pricing, or penetration pricing strategies.

Distribution Channels

Consumer behaviour influences the preferred channels for product acquisition. Businesses
optimise distribution networks based on where and how consumers prefer to make purchases.
Five- Stage Model of the Consumer Buying Process
Stage 1: Need recognition

The buying process starts when the buyer recognizes a problem or need triggered by internal
or external stimuli. The first stage in the consumer decision-making process for a consumer is
to figure out what they need. The most important thing that leads someone to buy a product
or service is their need for it. All buying decisions are based on what people need.

Finding out what the customer needs is the first move to evaluating the Consumer Decision
Making Process. Finding out what needs and wants the target market has can help with many
marketing decisions.

Stage 2: Information Search

People are usually skeptical when they have to choose between options. So they need all the
facts before they spend their money. After figuring out their need, the potential consumer
moves on to the second stage: searching for and gathering information.

The buyer considers all the benefits and drawbacks of the purchase at this stage of their
decision- making process. Because of changing styles and online shopping sites, consumers
know much more about what they want to buy and can make better choices.

Consumers can get information from many different places, like books, magazines, the
Internet, and reviews of products by other people. It’s important to make a purchase decision,
so the consumer shouldn’t be in a hurry when learning about the products and brands on the
market.

You may also check out this guide to learn how to build your own Customer Journey Map.
Here are some places where you can find information:

• Commercial Information Sources: Important types include digital media, newsletters, TV

ads, salespeople, and public

• Previous Purchase Experiences: It is consumers’ past experiences with using a product.

• Personal Contacts: This is a very reliable source of information and impacts the
consumer’s mind the most. Consumers usually talk to their friends, family, coworkers, and
acquaintances about their needs and interests in different products and then use their
advice to decide what to buy.

Stage 3: Evaluation of Alternatives

The third stage in the consumer decision-making process is to carefully look at all the
alternatives and substitutes on the market. Once consumers know what they need and
where to get it, they will start looking for the best deals or options.

At this stage, the consumer compares options based on price, product quality, quantity,
value-added features, or other essential factors. Before choosing the product that best
meets your needs, look at customer reviews and compare prices for the alternatives.

After finding helpful information, the consumer chooses the best product on the market
based on their taste, style, income, or preference.

Stage 4: Purchase Decision

After going through the above stages, the customer decides what to buy and where to buy
it. The consumer makes a smart choice to buy a product based on his needs and wants
after he has looked at all the facts.

Needs and wants are often sparked by marketing campaigns, recommendations from
friends and family, or sometimes by both.

Stage 5: Post-purchase Behavior

In the last stage of the consumer decision-making process, the consumer evaluates or
analyzes the product they bought. They look at how helpful the product is, how satisfied
they are with it, and how much it is worth to meet their needs.

If consumers know that the product they bought was worth what they paid for and met
their expectations, they will stick with that product.

8 Steps of Business Buying Process/ Organizational Buying

Process
Business Buying is the process in which the need for buying products and services is
determined and then the most suitable supplier or brand from among the available
alternatives is selected by identifying and evaluating them. Other names for Business
Buying are Organisational Buying and Industrial Buying. Sometimes it is also referred as
the B2B buying process.
 Business Buying Process

The processes for making decisions for organisations and consumers are quite different from
each other. There are eight stages in a business buying process:

Step 1: Problem Recognition

Problem recognition is the first and most essential step of the business buying process. In this
step, a company recognises a problem or need that requires to be solved by acquiring a
particular product or service. This step can be a result of internal or external factors.

(i) Internal Factor Responsible for Organisational Problem:

• It can arise as a result of the company’s choice to launch a new product in response to market
demand. This will require the procurement of new materials and machinery.
• The company may have breakdowns, which calls for the procurement of new parts for
machine repairs. Even while machinery has a lifespan, it eventually needs to be replaced.
Sometimes the procured material is rejected because it is of poor quality. This causes the
business to procure from a different provider urgently.

(ii) External Factor Responsible for Organisational Problem:

The marketers that the organisation places in the market should act as the external fact-
informers; i.e., they should inform the organisation about the performance of the product in
the market and any improvements that need to be made immediately, as well as details
about the products of its competitors. This will serve as an external motivator for the
business to make rational purchases in order to maintain its level of competition.

Step 2: General Need Description

The second step involves determining the quantity and quality of the product and thus
preparing a general need description. If the items are standard, the business buying process
presents limited problems. However, in the case of complex products, to define them, the
buyer may have to work with other people like engineers, consultants, users, etc. The team
defining the item may want to rank the importance of price, durability, reliability, and other
attributes required in it. Thus, in the second step of the business buying process, the buyers
can get help from the alert business marketer in defining their needs by providing them
information regarding the value of characteristics of different products.

Step 3: Product Specification

After receiving input from the second step, the buying organisation must prepare technical
specifications for the required parts. At this step, the technical and other value- related
specifications of the productare examined. These requirements need to matchthe
organisational needs. The suppliers may offer products with broader applications but at a
higher price. The product value analysis helps in reviewing product requirements and
actual specifications to reduce waste. The marketer must collaborate with his technical and
financial partners to assess the feasibility of the project and to explain the services they can
provide to create and supply the product.

For instance, The 100 cc bike “Freedom” was designed and developed by LML’s Kanpur
factory, which invited the help of various companies for the design and supply of many
parts. In addition to Daclin designing and providing the frame, Sriram provided the piston,
Borg Warner of Germany provided the cam chain, and MRF was enlisted to create the tires.
The technology components for changes to the gear system were given by the British
company Prodrine.

Step 4: Supplier Search

The next step in buying for a business is to identify the most suitable vendors. The
organisational buyers evaluate the potential vendors and suppliers based on the
effectiveness and quality of their products and services. In general, the vendors’
dependability, market standing, and financial situation are taken into consideration. Some
vendors are removed from the consideration list because they can’t deliver by the specified
time or have a bad reputation for their brands. Finally, the approved list, from which the
final suppliers are chosen, contains the qualified vendors. It is necessary to distribute
 brochures and place advertisements in particular media, such as trade publications. This
stage consists only of compiling a list of qualified vendors.

Step 5: Solicitation of Proposals

In the fifth stage, vendors are invited to submit their price quotes. To provide their
quotations, the suppliers employ catalogues or sales representatives. When purchasing
expensive and complex things, it is possible to ask vendors for written proposals, compare
those proposals and choose the best vendor based on the results. The requested proposal
from vendors should include both technical and marketing information. The effectiveness of
the oral presentations depends on the vendor’s ability to gain the organisation’s buyer’s
trust by showcasing their capabilities and possibilities.

For instance, A well-known multinational corporation (MNC) that produces soaps wants
potential vendors to go through three stages: qualified vendor, approved vendor, and chosen
vendor. The provider must exhibit expertise in technology, good financial health, cost
efficiency, following high-quality standards, and innovation to be approved. When a vendor
meets these requirements, they submit a sample lot for approval. When a supplier receives
approval and displays high product uniformity, ongoing quality improvement, and JIT
delivery capabilities, the vendor is designated as a “select supplier.”

Step 6: Supplier Selection

During this step in business buying process, several ideas are evaluated based on their
relevance. The buying centre is prepared tochoose the vendor for organisational buying
after carefully examining the various vendor proposals. It is usually done with the
compilation of a list of the necessary vendor attributes and their significance.

Some of the attributes include:

• Nature of technical support services

• Method and speed of delivery
• Nature of addressing customer needs
• Quality of products supplied
• Reputation in the market
• Price of the products supplied
• Credit Facility

At this point, the vendor analysis not only focuses on the technical aspects but also considers
reliability, punctuality, price, credit offers, etc.

Step 7: Order-routine Specification

The purchaser places an order with the chosen vendor by listing technical specifications,
required quantity, expected time of delivery, return policies, and warranties. However,
in the case of repair, maintenance, and operating products, the buyer instead of using
periodic purchase orders, may use blanket contracts. A blanket contract is a contract
that creates a long-term relationship under which the supplier makes a promise to the
buyer to resupply goods when required at agreed prices for a determined time period.
In present times, various large buyers are practising vendor-managed inventory. Under this,
the buyers turn over ordering and inventory responsibilities to their suppliers. Here, the
buyers share information related to sales and inventory, directly to the major suppliers.
After that, the suppliers monitor inventories and automatically replenish the stock as
per the requirement. Such a system is used by various suppliers and retailers such as
Croma, Big Bazaar, E-Zone, Walmart, etc.

Step 8: Performance Review/ Post-Purchase Evaluation

The final step in an organisation’s purchasing process is post-purchase evaluation. Buyers

create an evaluation based on factors like cost, quality, delivery schedule, after- sale
service, etc. After routine departmental discussions, an overall rating is provided. It
helps in making the choice of whether to work with the vendor going ahead or to look
for another. The assessment sheet is also distributed to them in order to provide vendors
with a chance to get better.

The Stimulus-Response Model

Another model of consumer behavior, called the stimulus-response or “black box” model,
focuses on the consumer as a thinker and problem solver who responds to a range of external
and internal factors when deciding whether or not to buy. These factors are shown in Figure
1, below:

Figure 1. Black Box Model

As illustrated in the figure above, the external stimuli that consumers respond to include the
marketing mix and other environmental factors in the market. The marketing mix (the four
Ps) represents a set of stimuli that are planned and created by the company. The
environmental stimuli are supplied by the economic, political, and cultural circumstances of a
society. Together these factors represent external circumstances that help shape consumer
choices.

The internal factors affecting consumer decisions are described as the “black box.” This
“box” contains a variety of factors that exist inside the person’s mind. These include
characteristics of the consumer, such as their beliefs, values, motivation, lifestyle, and so
forth. The decision-making process is also part of the black box, as consumers come to
recognize they have a problem they need to solve and consider how a purchasing decision
may solve the problem. As a consumer responds to external stimuli, their “black box” process
choices based on internal factors and determine the consumer’s response–whether to
purchase or not to purchase.

Like the economic man model, this model also assumes that regardless of what happens
inside the black box (the consumer’s mind), the consumer’ response is a result of a conscious,
rational decision process. Many marketers are skeptical of this assumption and think that
consumers are often tempted to make irrational or emotional buying decisions. In fact,
marketers understand that consumers’ irrationality and emotion are often what make them
susceptible to marketing stimuli in the first place.

For this reason, consumer purchasing behavior is considered by many to be a mystery or

“black box.” When people themselves don’t fully understand what drives their choices, the
exchange process can be unpredictable and difficult for marketers to understand.

Buyer Behavior As Problem Solving

A common way for marketers to think about consumer behavior today is as a set of activities
a person goes through in order to solve problems. This problem-solving process is triggered
when a consumer identifies some unmet need. For instance, a family consumes all of the milk
in the house, or a birthday party is coming up and a gift is needed, or a soccer team is
planning an end-of-season picnic. Each buying scenario presents a problem the buyer must
solve. These problems can involve two types of needs: physical (such as a need for milk, a
birthday gift, or picnic food) or psychological (for example, the need to feel secure, the need
to be loved, or the need to have fun).

This problem-solving process also involves needs and wants. A need is a basic deficiency for
an essential item. You need food, water, air, security, and so forth. A want places specific,
personal criteria on how a need must be fulfilled. To illustrate, when we are hungry, food is a
need. When we have a specific food item in mind, that item is a want. That difference is
illustrated by the familiar scenario of standing in front of a full refrigerator and complaining
that there is nothing to eat.

Most of marketing is in the want-fulfilling business, not the need-fulfilling business. Swatch
and Timex do not want you to buy just any watch. They want you to want their brands of
watches. Likewise, H&M wants you to desire their brand of clothing when you shop for
clothes. On the other hand, the American Cancer Association markets to you in the hope that
you will feel the need to get a checkup, and it doesn’t care which doctor you go to. But in the
end, marketing is mostly about creating and satisfying wants.
This model of consumer behavior acknowledges that both rational and irrational factors may
shape a buyer’s purchasing decisions. It also recognizes that internal and external factors play
a role in the decision process. In fact, the problem-solving model helps us map a consistent
process individuals go through as they make buying decisions. When marketers understand
this process and the factors that influence it, they can take action to influence buyer
perceptions and behavior at various stages of the process.

The Rise of Consumer Democracy in Marketing

Consumer Democracy in marketing refers to the increasing power and influence of

consumers in shaping brands, products, and marketing strategies. In the digital age,
consumers are no longer passive recipients of marketing messages—they are active
participants who can co-create, critique, and control brand narratives.

What’s Driving the Rise of Consumer Democracy?

1. Digital Transformation & Social Media

o Platforms like Instagram, TikTok, and X (formerly Twitter) give consumers a
voice and reach like never before.
o Anyone can influence public perception, whether through reviews,
testimonials, or viral posts.
o Example: Hashtags like #BoycottBrand or #BrandLove can make or break
reputations overnight.
2. Access to Information
o Consumers are better informed about products, prices, ethics, and
alternatives.
o They can compare brands instantly and make empowered decisions.
o Transparency is no longer optional—brands are held accountable.
3. Co-Creation & Collaboration
o Brands invite consumers to participate in product development, advertising
campaigns, or feedback loops.
o Example: LEGO Ideas lets fans design new sets, and the best ones get
produced.
4. Rise of Consumer Advocacy
o People trust peer reviews and influencer endorsements more than traditional
ads.
o Word-of-mouth and online reviews are critical in buying decisions.
o Example: TripAdvisor and Yelp can make or break a restaurant’s reputation.

Implications for Marketing Strategy

Aspect Traditional Marketing Consumer Democracy

Consumers co-create and share the
Control Brand controls the message.
message.
Aspect Traditional Marketing Consumer Democracy
One-way communication (brand Two-way conversation and
Communication
➡ consumer). engagement.
Consumers generate reviews,
Content Creation Brands create content.
videos, memes.
Trust built through authority & Trust earned through transparency
Trust
ads. & dialogue.
Product Consumers influence what’s
Brands decide what to launch.
Development developed or improved.

Strategies for Brands in the Age of Consumer Democracy

1. Engage, Don’t Broadcast

o Create authentic conversations rather than pushing messages.
o Example: Nike’s campaigns highlight real stories and user-generated
content.
2. Transparency & Authenticity
o Be open about company practices, sourcing, and values.
o Patagonia shares its sustainability practices and encourages responsible
consumption.
3. Empower User-Generated Content (UGC)
o Encourage fans to share experiences, reviews, and creativity.
o Example: GoPro built a brand on UGC by showcasing customer videos.
4. Customer-Centric Innovation
o Use crowdsourcing to develop new ideas.
o Example: Doritos’ “Crash the Super Bowl” let fans create ads that aired
during the game.
5. Influencer and Community Marketing
o Work with micro-influencers and brand communities.
o Example: Glossier grew by engaging its community of beauty enthusiasts,
not just traditional media.

Real-World Examples

• Coca-Cola’s “Share a Coke” Campaign: Personalized bottles put the consumer in

the spotlight, increasing engagement.
• Starbucks “My Starbucks Idea”: Crowdsourced innovation platform that resulted in
popular menu items.
• Fenty Beauty by Rihanna: Developed an inclusive product line by listening to
diverse customer needs.

The rise of Consumer Democracy means:

• Power has shifted from brands to consumers.

• Transparency, authenticity, and engagement are the new rules.
• Brands that listen, collaborate, and respect consumer voices win loyalty and trust.
 Buyer’s Cultural, Social, Personal, and Psychological Characteristics particularly in
Indian context

Let's break down Buyer’s Cultural, Social, Personal, and Psychological Characteristics
with a focus on the Indian context. These factors heavily influence consumer buying
behavior in India, given its diverse cultures, social systems, and economic segments.

1. Cultural Factors

These are the deep-rooted values, traditions, and beliefs that guide consumer behavior.

Religion and Traditions:

• India is a multi-religious country; religion influences buying decisions (e.g.,

vegetarianism among Hindus, halal products for Muslims).
• Festivals like Diwali, Eid, Pongal, and Christmas significantly boost consumer
spending on electronics, clothing, gold, and automobiles.

Regional Cultures:

• Preferences vary by region. For example, South Indian consumers often favor gold
jewelry, while Punjabis may prefer luxury cars and high-end fashion.

Cultural Shift:

• Urbanization and Western influences are changing buying patterns, especially among
millennials and Gen Z.
• Rise in health-conscious buying (organic food, fitness products).

2. Social Factors

Social influences come from family, reference groups, social roles, and status.

Family:

• Indian families are often joint or extended, with collective decision-making,

especially for high-value items (homes, cars, weddings).
• Parents and elders often influence decisions about education, careers, and marriages.

Reference Groups:

• Peer groups, influencers, and celebrities (Bollywood stars, cricketers) play a huge
role in shaping preferences, especially in fashion, gadgets, and automobiles.
Social Class:

• Rising middle class and aspirational lower-income groups are key drivers of
consumption.
• Luxury brands appeal to upper-class status-seeking consumers in metros

3. Personal Factors

These include age, occupation, lifestyle, economic status, and personality traits.

Age & Life Cycle:

• Young consumers (18-35 years) are tech-savvy, favoring e-commerce, gadgets, and
fast fashion.
• Older consumers (50+) focus more on security, health products, and traditional
investments like gold or property.

Occupation:

• Professionals and business owners often opt for luxury products and branded
goods.
• Students lean toward affordable technology, fast food, and fashionable clothing.

Lifestyle:

• Rapid urbanization and nuclear families have increased demand for convenience
products, ready-to-eat meals, and domestic appliances.
• Health and wellness have led to growth in organic food, fitness wearables, and yoga
classes.

Income Levels:

• Rising disposable incomes in Tier 2 and Tier 3 cities have made them new growth
hubs for FMCG, automobiles, and mobile phones.

4. Psychological Factors

These relate to motivation, perception, learning, beliefs, and attitudes.

Motivation:

• Maslow’s hierarchy applies well:

o Basic products (food, shelter)
o Security (insurance, healthcare)
o Social belonging (social media platforms, fashion)
o Esteem (luxury cars, branded clothes)
o Self-actualization (donating to causes, eco-friendly buying)
Perception:

• Advertisements featuring celebrities and emotional appeals are highly effective in

India.
• Price sensitivity plays a huge role; discounts and deals (like Big Billion Days) drive
perception of value.

Beliefs and Attitudes:

• Ethical concerns (sustainability, cruelty-free products) are gaining traction among

urban consumers.
• Traditional beliefs still impact choices (e.g., vastu-friendly homes, auspicious buying
dates).

In India, buying decisions are influenced by a complex mix of tradition and modernity,
with regional, religious, and cultural diversity shaping behavior. Understanding these factors
helps businesses design better marketing strategies, customize products, and engage
specific consumer segments.

Traditional vs. Experiential Marketing Traditional Marketing

Traditional marketing refers to conventional methods of promoting products and services through
offline channels. These methods have been widely used for decades and continue to play a role in
marketing strategies.

Key Characteristics:

• • Relies on mass media such as television, radio, newspapers, and billboards.

• • One-way communication, where businesses push messages to consumers without direct
interaction.
• • Focuses on product features and benefits rather than customer experience.
• • Targeting is often broad, aiming at large groups of consumers.
• • Examples: Print advertisements, direct mail, cold calling, event sponsorships.

Advantages:

• • High reach and visibility through TV and print media.

• • Established credibility, as traditional media is often trusted.
• • Suitable for brand-building and mass-market campaigns.

Disadvantages:

• • Expensive compared to digital marketing.

• • Difficult to measure return on investment (ROI).
• • Less personalized and interactive.

Experiential Marketing

Experiential marketing, also known as engagement marketing, focuses on creating immersive

and memorable brand experiences for consumers. It emphasizes emotional connections and
interactive customer participation.
 Key Characteristics:

• • Engages consumers through events, brand activations, and interactive experiences.

• • Encourages two-way communication between the brand and customers.
• • Focuses on creating emotional and sensory experiences.
• • Often integrates digital and social media components for greater reach.
• • Examples: Pop-up events, brand-sponsored concerts, interactive social media campaigns,
virtual reality experiences.

Advantages:

• • Builds strong customer relationships and brand loyalty.

• • Encourages word-of-mouth marketing and social media sharing.
• • Provides real-time feedback and insights from consumers.

Disadvantages:

• • Can be costly to execute large-scale experiential campaigns.

• • Requires careful planning and creativity to be effective.
• • Limited scalability compared to digital campaigns.

Comparison of Traditional and Experiential Marketing

Feature

Communication Focus
Medium Targeting Measurability Cost

Traditional Marketing

One-way (business to consumer)

Product and brand awareness TV, radio, print, billboards Broad, mass audience Difficult to track ROI

High (ad placements, production)

Experiential Marketing

Two-way (interactive)

Customer experience and engagement

Events, social media, immersive experiences

Niche and highly targeted

Measurable through digital metrics and feedback

Variable (event execution, technology costs)

*THE END*