U.E.

S COLLEGE OF MANAGEMENT &

TECHNOLOGY, URAN
1. Marketing
1.1 Concept & Definition
1.2 Nature & Features
1.3 Importance
1.4 Functions
1.5 Evolution
1.6 Strategic v/s Traditional marketing
 Marketing includes those business activities that are designed to satisfy
consumer needs and wants through the exchange process. The marketing
concept involves identifying consumer needs and wants and then producing
products (which can be goods, services, or ideas) that will satisfy them while
making a profit.

Marketing is the process of “creating, communicating, delivering, and

exchanging offerings that have value for customers, clients, partners, and society
at large,” according to the American Marketing Association.
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. ... Marketing is the messages and/or actions that cause
messages and/or actions.

American Marketing Association (AMA) defines it as “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.”
Salient Features of Marketing are as follows:

1. Systematic Process
Marketing concept, is systematic in nature. The main aim of marketing is to satisfy the needs and
wants of the customers by bringing into the right products.
The following is the process of marketing involves:
The product is design as per customer requirements.
The right price of product is fixed.
Effective promotion strategy of the product is defined.
Distribution of the products at the right place and at the right time is planned.
The marketing process is taken on to accomplish organizational objectives (profits, market share,
etc.), and to generate customer satisfaction.
The marketing process is continuous in Nature. Firstly, it starts with the marketing research. Then
after the sale of the product it comes on to customer feedback and later on sales and services of the
product.
Salient Features of Marketing are as follows:

2. Ideas, Goods and Services

Marketing sells new ideas and it also sells goods and services. The marketing process involved
following things:
The perceptible goods like FMCG products and consumer durables are dispensed and plan by the
marketers.
Airlines, hotels, insurance, banks, etc. are sold by the marketers.
Furthermore, ideas are marketed by social and Govt. organizations, which includes campaigns
relating to anti-drugs, AIDS awareness, anti-corruption, etc.
In fact, every market offering includes a basic idea. A marketer of a face cream sells the idea of a
beautiful person and that of a soft drink sells the idea of refreshment.
Salient Features of Marketing are as follows:

3. Target Markets
Marketing is bothered with target markets. No one can sell everything to anyone. Therefore, the
marketer should be conclusive in selecting the targeted clients or buyers. A marketer needs to design
goods and services to a particular target segment or market.
Examples of features of marketing are given below.
A marketer cannot design and sell a particular model of a car to all prospective buyers. He has to
design distinct models to different segments of the market depending upon their income, status,
preferences, etc.

4. All Pervasive
The marketing process is not only applicable to business organization but as well as to non-business
organizations.
Examples of features of marketing are given below.
An educational institution may adopt marketing approach to:
Suggest the right courses to the students (product).
Charge the appropriate fees to the students (price).
Promotion of courses to the students (if so required).
Provide the courses to the student at the right time and place.
Salient Features of Marketing are as follows:

5. Customer Satisfaction
These days marketer plans to target on customer satisfaction. It has an association between product
performance and customer anticipation.
The consumers gets pleased when product performance matches with customer expectation.
When product performance is below customer expectation, the customers are dissatisfied.
When product performance exceeds customer expectation, the customers are delighted.
When product performance exceeds very much more than expectation, the customers get
astonished.

6. Competitive Advantage
Because of competitive market the strategies should be perfect. The marketers should find unique
ideas and innovation to compete in today's market. The marketers should be proactive and should
have decision-making skills. They should come with:
New innovative designs or models.
Advanced Creative promotion plans.
Effective customer relationship techniques, etc.
The pro-active decisions give the competitive advantage to professional marketers.
Salient Features of Marketing are as follows:

7. Corporate Image
An effective marketing strategy ensures the development of the firm, and it also improves its
corporate image in the society. Because of effective marketing strategy, the firm's turnover in terms
of profit, share and sales in the market improves. Therefore, corporate image improves in the
minds of Employees, Customers, Dealers, Suppliers, Shareholders and other stakeholders.
A good corporate image in the minds of stakeholders helps a firm to expand and grow. For
instance, firms that have good corporate image:
Develop trust and confidence of the customers.
Get support from the Shareholders and financial institution.
Get cooperation from dealers and suppliers, etc.

8. Expansion of Business
Marketing facilitates expansion of the firm. Due to effective marketing, the performance of the
organization improves in terms of sales, profits and market share. Therefore, a firm may adopt
expansion strategy. For expansion, the firm undertakes various activities such as:
Market Penetration: increase in marketing activities in the existing market.
Market Development: entry into brand new marketplaces.
Product Development: development of new products for existing / modern markets.
Salient Features of Marketing are as follows:

9. Organizational Objectives
Objectives of the firm are achieved due to efficient marketing.
The marketing objectives are as follows:
Increase in the profits of the firm by leap and bounds.
Increase in the market stake, improves corporate image.
It enhanced the brand loyalty of the customer and also improves the brand image of the firm.

10. Marketing Environment

Marketing is affected by number of factors such as:
Government policies,
Economic conditions,
Customer preferences,
International environment,
Competitors strategies,
Financial climate, etc.
Marketers should actively scan the environment. For instance, a marketer must analyze
the marketing-mix adopted by the competitors. Accordingly, he has to design products that offer a
differential advantage to the consumers, which may bring higher returns to the firm.
Importance of Marketing is as follows:

1. Organizational objectives: -Marketing helps to achieve organizational objectives. Systematic

activities such as effective product designs, pricing, promotion and distribution helps a firm to
increase its sales and generate profits, brand image, market shares, corporate image etc.

2. Customer satisfaction:- Nowadays. Marketers place focus on customer satisfaction. Customer

satisfaction has a connection between product performance and customer expectation.

3. Competitive advantage: -Effective marketing helps to face competition in the market.

Professional marketers are proactive in decision-making. They need to come up with; 1. Innovative
design or models. 2. Creative promotion schemes. 3. Effective customer relationship techniques,
etc.

4. Corporate image: -Effective marketing enables a firm to develop and enhance its corporate
image. Due to effective marketing (right product, price, etc.,) the firm achieves higher
performance. A good corporate image in the minds of customers, employees, shareholders,
suppliers, dealers, etc., helps a firm to expand and grow.
Importance of Marketing is as follows:

5. Brand Loyalty: - Effective marketing helps to develop brand loyalty. Brand loyalty refers to;
· Repeat purchase by satisfied customers
· Recommendations by existing customers to friends, neighbors’ and others.
· Marketing guru A1 Ries says that customer word of mouth is the best alternative to advertising.

6. Brand Equity: -Marketing activities develop brand equity. Brand equity is the incremental value
of brand over and above its physical qualities. Customers are willing to pay premium price for
effectively marketed brands.

7. Business Expansion: -Marketing enables a firm to expand its business from local level to
national and even at international level. A firm can expand its business with the help of market
related activities brands.

8. Brand Image: -Marketing activities improves brand image. Brand image is the perception
(awareness) of the brand in the mind of customers. Good brand image gives competitive edge to
the firm in the market.
Importance of Marketing is as follows:

9. Helps to introduce new product: -Reputed firms find it easier to introduce new products in the
market, this is because; they enjoy confidence and support of the loyal customers. They also
provide unsolicited (unwelcome) feedback.

10. Motivation to employees: -Marketing helps to motivate employees, especially, that of the
marketing department. Due to effective marketing, the company may get higher performance in
terms of market share, profits, etc. therefore, the employees may be motivated by giving higher
incentives, monetary incentives and non-monetary incentives.

11. Higher returns to share holders: -Effective marketing may bring in more returns in terms of
profit to the firm; therefore, the shareholders may be rewarded in terms of regular and higher
dividend, bonus shares. Etc.

12. Benefits to other stake holders: - Effective marketing may bring in higher returns to the firm.
Not only the employees and shareholders are benefited, but also the other stakeholders,
like 1. Government may get higher tax revenue, 2. Dealers may get extra incentives. 3. Suppliers
may get more orders and payment on time. 4. Society may be benefited to social development
activities by profitable firms.
Following are the functions of marketing:

1. Marketing research- Marketing research is a systematic process of gathering data for analysis
and solving the marketing problems. Marketing research helps in gathering information related
to size of market, competitors, consumer preference, their requirement etc. Marketing research
may include research about the products, consumers, competitors, requirement etc. The data
gathered may help in solving various marketing problems, designing effective marketing
strategies, identifying needs of consumers, taking important decisions etc.
2. Branding – Branding means establishing a unique identity of the brand. This can be achieved
by developing a brand name, a symbol or even a tag line. Branding helps in creating an image
in the market. E.g. Coca-cola has started a series of ad campaigns with a tag line “Open
Happiness”.
3. Packaging and labeling – Packaging and labeling is also called as “silent salesmen”.
Packaging is important for protection of the product and the purpose of labeling is to provide
instructions to consumers. However, attractive packaging and innovative labeling techniques
attract consumers. E.g. Kinderjoy has established itself as a brand for children. It’s packaging
and labeling is attractive for kids specially because of the unique egg shaped package and the
free toys inside.
Following are the functions of marketing:

4. Advertisement Strategy- Advertising is the marketing revolution. It is that aspect of marketing

which has the potential of maximum market coverage and creating brand awareness. Advertising is
a non-personal form of marketing. Apart from creating awareness, advertising helps in enhancing
brand image and customer loyalty, influencing the market, developing an edge over the
competitors, creating awareness etc. E.g. Fevikwik launched its advertisement with a tag-line of
“Todo nahin, jodo” during India-Pakistan world cup match. The advertisement presented a
humorous way of presenting the message of human bonding.

5. Customer Care Services- Customer care or after sale services are the services offered by
organizations after the sale of product. The aim is to resolve customer grievances. It helps to
establish customer loyalty, build a good brand image and develop healthy relationship with
customers. The customers find it easier to rely on brands that provide services even after sale. E.g.
Nokia Care centers are set up at various places that provide repair services for Nokia mobile
phones. All the electronic companies provide services even after they have sold the goods.
Following are the functions of marketing:

6. Developing the Design of the Product- Designing decisions comprise of decisions regarding
the appearance aspect of the product. The consumers tend to get attracted to appealing products.
The package design adds uniqueness to the product and also gives it an edge over its competitors.
E.g. Apple has introduced its new phone Iphone 6 which is one of the slimmest phones in the
market. Along with features, the design of the cell phone is extremely appealing.

7. Pricing Decisions- Price is one the most important factors that affect the success of any
organization. Price is the amount a consumer is willing to pay for the goods or services offered by
the organization. Similarly, it is also an amount which an organization expects for the goods or
services offered to consumer. The price should be set such that all the costs of production,
distribution, marketing etc are covered. An organization should also be able to earn sufficient
profits. However, prices should be set keeping in mind the income levels in the market, the quality
of the product and also the competitive prices of other products.
Following are the functions of marketing:

8. Personal Selling- Personal selling is a tool of marketing that is used by organizations who want
to maintain a personal touch with its consumers. This technique is used usually for new products or
for technical / electronic products. Also for services like insurance, it is important to explain the
terms and conditions to the consumers and so personal selling is important.

9. Physical Distribution- Physical distribution is the process of actual distribution of goods. It

comprises of warehousing, inventory management, decisions regarding selection of the appropriate
distribution channel etc.

10. Test Marketing Test marketing, as the name suggests, is the process wherein the organizations
launch the product but in small segments only. After studying the market response, decision is
made whether the product should be launched on a large scale or whether it requires to be further
developed. E.g. Pepsico recently launched an ad campaign for Slice called “Slice Aamsutra”
wherein 4 new flavors were launched but on a small scale. The consumers were asked to vote for
their choice of flavor.
1. The Exchange Concept (Seller’s market)- When a product is sold or service is offered for a
certain value, exchange takes place. Exchange can be in the form of barter or for money. This
concept revolves around the exchange process only. It is a narrow concept of marketing. The
motive is profit maximization only. The sellers do not consider the requirements of the
consumers. They believe that as long as there are commodities in the market, the consumer
will buy them. This is a traditional concept. It is in practice only in certain third world
countries.

2. The Production Concept (Seller’s market)- The production concept revolves around the
production process. It is based on the concept that buyers will buy the product if it is available
at a cheaper price. This concept works on the idea that if the production is efficiently increased
then per unit cost of production will reduce. The motive is profit maximization only. This
concept is applicable only in a sellers’ market as it ignores quality of product, consumer needs,
customer relations, market research, competition etc. It can be applicable for products whose
features are not an important deciding factor for purchase.
3. The Product Concept (Seller’s market)- The product concept was more advanced as compared
to the initial concepts of marketing. This concept is product centric. The idea is to improve the
product quality to increase the demand. Although the quality is improved, it does not consider
the requirements of the consumers. The motive is profit maximisation.

4. The Selling Concept (Buyer’s market)- The selling concept initiated the emphasis on the
selling aspect of marketing. The main idea of this concept is to use more aggressive
promotional techniques. This will help in pushing the product in the market and attract
consumers. Publicity, sales promotion and other selling techniques are put to use. However this
concept revolves around the seller and not the consumer. The motive here is profit
maximization only.

5. The Marketing Concept (Buyer’s market)- In this concept, the attention finally shifted to
consumers. This concept is consumer centric. The purpose is to identify wants of consumers
and satisfying them as efficiently as possible. The organizations realized that it is important to
earn consumer loyalty in order to survive in the market. Although profit maximization is a
motive, other aspects are also taken into consideration. These include customer satisfaction,
market research, consumer relationship, target market etc. According to this concept, consumer
welfare and satisfaction is the key to success.
6. The Societal Concept (Buyer’s market)- This concept was developed when the organizations
realized the importance of social welfare. The focus is on three factors. Along with profit
motive and consumer welfare it is equally important to consider the aspect of societal welfare.
This concept encouraged the use of eco-friendly methods of production. Also, it gave birth to
various research and development projects in order to make goods which are eco-friendly
along with being consumer friendly.

7. The Relationship Marketing Concept (Buyer’s market)- The relationship marketing concept
basically concentrates on building healthy and long lasting relationships with all the
stakeholders. The stakeholders include employees, dealers, suppliers, distributors, financers,
shareholders, society and also consumers. The stakeholders of an organization are the main
strength of the organization. Without support of the stakeholders, the organization will
collapse. For the success and prosperity of an organization it is necessary to build strong
relations with all the stakeholders.
2. Marketing Research
2.1 Concept & Definition
2.2 Features
2.3 Process
Marketing Research
 Market research is defined as the process of evaluating the feasibility of a new product or
service, through research conducted directly with potential consumers. This method allows
organizations or businesses to discover their target market, collect and document opinions
and make informed decisions.

 Market research can be conducted directly by organizations or companies or can be

outsourced to agencies which have expertise in this process.

 The process of market research can be done through deploying surveys, interacting with a
group of people also known as sample, conducting interviews and other similar processes.

 Primary purpose of conducting market research is to understand or examine the market

associated with a particular product or service, to decide how the audience will react to a
product or service. The information obtained from conducting market research can be used
to tailor marketing/ advertising activities or to determine what are the feature
priorities/service requirement (if any) of consumers.
Nature/Features of Marketing Research

1. Continuous process:
 Marketing research is not only continuous but also a scientific and systematic process. It is
scientific and systematic because it has well-defined procedures. It is a process of generating
and evaluating data, and then refining it. It is professionally organized. It is a continuous
process because every firm is faced with problems and opportunities.

2. Wide scope:
 Marketing is a specialized activity. It encompasses several functions. Thus, marketing
research has a wide scope. It includes product research, market research, consumer research,
promotion research, international market research, price research and distribution research.

3. Aid to decision-making:
 It helps the managers take practical decisions. Decisions based on experience and research is
better than decisions based on intuition. Functions such as description, evaluation,
explanation and prediction by the marketing researcher help in practical decision-making.
Thus, it an essential tool not only for marketing managers but also for other functional
managers.
Nature/Features of Marketing Research

4. Uncertainty of conclusions:
 Consumer is the focal point of marketing research. However, consumer behaviour is difficult
to judge precisely. It is not a physical science, but social science. Due to this inherent nature,
it suffers from certain levels of inaccuracy.

5. Applied research:
 Marketing research is not a fundamental research because it does not reveal conceptual
aspects. It is an applied research, as it begins with defining or identifying a problem or
opportunity, and ends with a follow-up of recommendations made from research. Moreover,
it is related to the commercial aspects.

6. Commercial intelligence:
 Marketing research is equivalent of military intelligence. It provides vital insights and
information of product, price, place and promotional aspects. It is the soul of modem
marketing management.
Nature/Features of Marketing Research

7. Statistical tools:
 Various mathematical and statistical tools are used for data analysis and interpretation.
Percentages, ratios, averages, z-test, t-test, chi-square tests, etc. are used for presentation and
interpretation of findings. The use of computer software has made it more convenient for in-
depth analysis, cross-sectional studies, detection of errors in sampling and questionnaires.

8. Research approaches:
 A researcher has several options of research methodology. Methods include the field survey
method, the observation method and the experimental research. The choice depends on
factors such as time availability, funds, number of respondents to be covered, location of
respondents and literacy levels.

9. Links a company to the consumers and public:

 Marketing research is a function that links a company to the consumers, customers and
public, through information. It evaluates marketing actions, marketing performances and
marketing processes. This evaluation results in collection of information that brings company
closer to its customer and society.
3. Marketing Information System
3.1 Concept
3.2 Features
3.2 Components
 Definition: The Marketing Information System refers to the systematic collection,
analysis, interpretation, storage and dissemination of the market information, from both the
internal and external sources, to the marketers on a regular basis.
 The marketing information system distributes the relevant information to the marketers who
can make the efficient decisions related to the marketing operations viz. Pricing, packaging,
new product development, distribution, media, promotion, etc.
1. Continuous flow:
 A well-designed MIS provides a continuous flow of information for decision making.
Electronic cash registers and computer systems connect the retailers directly with the
suppliers. Thus, continuous consumer purchase data are made available.

2. Decision-making:
 MIS is structured to provide information for decision-making. It helps in practical decision-
making, as it includes real-time data. It generates regular reports and conducts studies as
needed.

3. Use of computer:
 Computers are widely used in MIS. They are used as a tool to collect, store and manipulate
large amounts of data. They integrate old and new data to provide information and identify
trends.

4. Complex process:
 Designing and operating a MIS is a complex process, especially with the firms involved in
global trade. It requires convincing each unit of the firm about the value of timely and
accurate information. Structured reports and control over the information make the process
more complicated. Thus, computer specialists are used.
5. Economical:
 Creating large database is easy with a computer. However, MIS is concerned with needed and
timely information. Hence, only relevant data is stored. This reduces cost and efforts in data
collection.

6. Variety:
 MIS uses data from a variety of sources both within and outside the organization. Thus, it helps the
marketing managers in exploratory research. It uncovers useful relationships and developments.
Ordinarily, such meaningful relationships would have been overlooked by the managers.

7. Future-oriented:
 Marketing environment is dynamic. Thus, MIS is devised to collect information for solving
problems and anticipate future changes. MIS is both present- and future-oriented. Selective: MIS
gathers and sorts information that is useful to the firm. It is adjusted according to the manager’s
decision-making needs. Thus, it is selective.

8. Flexible:
 The system should be flexible. New changes should be incorporated easily, quickly and smoothly.
Information technology is changing rapidly. When such new techniques are used, accuracy and
utility of information improve.
Internal Records:
 The Company can collect information through its internal records comprising of sales data,
customer database, product database, financial data, operations data, etc. The detailed
explanation of the internal sources of data is given below:
 The information can be collected from the documents such as invoices, transmit copies,
billing documents prepared by the firms once they receive the order for the goods and
services from the customers, dealers or the sales representatives.
 The current sales data should be maintained on a regular basis that serves as an aide to a the
Marketing Information System. The reports on current sales and the inventory levels help the
management to decide on its objectives, and the marketers can make use of this information
to design their future sales strategy.
 The Companies maintain several databases such as
*Customer Database- wherein the complete information about the customer’s name,
address, phone number, the frequency of purchase, financial position, etc. is saved.
*Product Database- wherein the complete information about the product’s price, features,
variants, is stored.
*Salesperson database, wherein the complete information about the salesperson, his name,
address, phone number, sales target, etc. is saved.
 The companies store their data in the data warehouse from where the data can be retrieved
anytime the need arises. Once the data is stored, the statistical experts mine it by applying
several computer software and techniques to convert it into meaningful information that
gives facts and figures.
Marketing Intelligence System:
The marketing intelligence system provides the data about the happenings in the market, i.e. data related to
the marketing environment which is external to the organization. It includes the information about the
changing market trends, competitor’s pricing strategy, change in the customer’s tastes and preferences,
new products launched in the market, promotion strategy of the competitor, etc. In order to have an
efficient marketing Information System, the companies should work aggressively to improve the marketing
intelligence system by taking the following steps:
 Providing the proper training and motivating the sales force to keep a check on the market trends, i.e. the
change in the tastes and preferences of customers and give suggestions on the improvements, if any.
 Motivating the channel partners viz. Dealer, distributors, retailers who are in the actual market to provide
the relevant and necessary information about the customers and the competitors.
 The companies can also improve their marketing intelligence system by getting more and more
information about the competitors. This can be done either by purchasing the competitor’s product,
attending the trade shows, reading the competitor’s published articles in magazines, journals, financial
reports.
 The companies can have an efficient marketing information system by involving the loyal customers in the
customer advisory panel who can share their experiences and give advice to the new potential customers.
 The companies can make use of the government data to improve its marketing Information system. The
data can be related to the population trends, demographic characteristics, agricultural production, etc. that
help an organization to plan its marketing operations accordingly.
 Also, the companies can purchase the information about the marketing environment from the research
companies who carry out the researches on all the players in the market.
 The Marketing Intelligence system can be further improved by asking the customers directly about their
experience with the product or service via feedback forms that can be filled online.
Marketing Research:

The Marketing Research is the systematic collection, organization, analysis and

interpretation of the primary or the secondary data to find out the solutions to the marketing
problems. Several Companies conduct marketing research to analyze the marketing
environment comprising of changes in the customer’s tastes and preferences, competitor’s
strategies, the scope of new product launch, etc. by applying several statistical tools. In order
to conduct the market research, the data is to be collected that can be either primary data (the
first-hand data) or the secondary data (second-hand data, available in books, magazines,
research reports, journals, etc.)The secondary data are publicly available, but the primary
data is to be collected by the researcher through certain methods such as questionnaires,
personal interviews, surveys, seminars, etc.
 A marketing research contributes a lot in the marketing information system as it provides the
factual data that has been tested several times by the researchers.
Marketing Decision Support System:

It includes several software programs that can be used by the marketers to analyze the data,
collected so far, to take better marketing decisions. With the use of computers, the marking
managers can save the huge data in a tabular form and can apply statistical programs to
analyze the data and make the decisions in line with the findings.
 Thus, the marketers need to keep a check on the marketing environment, i.e. both the internal
(within the organization) and the external (outside the organization), so that marketing
policies, procedures, strategies can be designed accordingly.
4. Data Mining
4.1 Concept & Importance
4.2 Data Mining Process
 Data Mining is a process of extracting useful data from a larger set of raw data for the
purpose of effective decision making. Data Mining is useful in various fields such as
 Business (Insurance, Banking, Retail, Consultancy Services, Communication)
 Scientific Research (Astronomy, Engineering, Medicine)
 Government Security (Detection of Terrorist & Criminals)

 Investopedia states Data Mining is a process used by companies to turn raw data into
useful information.
 Britannica.com states “Data Mining, (also called Knowledge Discovery in database, in
Computer Science) is the process of discovering interesting & useful patterns & relationships
in large volume of data”

CRM Analyst develop data warehouses & use data mining techniques to develop & maintain
long term relationships with valuable customers.
 Importance of Data Mining:
• Consumer Behavior
• Customer Loyalty
• Competitive Advantage
• Corporate Image
• Customized Market Offerings
• Lower Operation Cost
• Lower Customer Defection
• Higher Customer Equity
• Higher Returns
• Promotion Mix
• Pricing of Products
• Distribution Strategies
• Improved Service to Customers
Data Mining involves the following steps:

1. Collection of data & loading it in data warehouse.

2. Store & manage the data in multidimensional databases such as on in-house servers or the
cloud.
3. Provide data access to business analysts using application software.
4. Application software sorts the data based on the user’s requirements.
5. End user presents the data in easily understandable forms such as a graph or a table.
5. Consumer Behavior
5.1 Concept
5.2 Factors Influencing Consumer Behavior
5.3 Buying Decision Process
 Consumer behavior is the study of consumers and the processes they use to choose, use
(consume), and dispose of products and services, including consumers’ emotional, mental,
and behavioral responses.

Definitions:

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

2. According to Louden and Bitta, ‘Consumer Behavior is the decision process and physical
activity, which individuals engage in when evaluating, acquiring, using or disposing of goods
and services’.
 A large number of factors influence our behavior. Kotler and Armstrong (2008) classify these
as:
https://youtu.be/UL6imegssbQ

 Marketing Factors (product, pricing, place, promotion)

 Psychological (motivation, perception, learning, beliefs and attitudes)
 Personal (age and life-cycle stage, education, occupation, income level, economic
circumstances, lifestyle/status in society, personality and self concept)
 Social (reference groups, family, roles and status)
 Cultural (culture, subculture, social class system).
 Situational Influences (Physical surroundings, social surroundings, time factor, momentary
conditions)

 https://youtu.be/a9lpVg54u-k
 https://youtu.be/1f5LD6V_Gb0
 https://youtu.be/Rn5a03Xp0Kc
Consumer Decision Making Process
6. Market Segmentation
6.1 Concept
6.2 Benefits
6.3 Bases of Market Segmentation
We have two definitions of a Market Segment that is given below :

 “Market segmentation is the subdividing of customers into a homogeneous subset of

customers where any subset may conceivably select as a market target to be reached with a
distinct marketing mix.” – Philip Kotler
 “Market segmentation consists of taking the total heterogeneous market for a product and
dividing it into several submarkets of segment each of which tends to be homogeneous is full
of significant aspects.” – William Stanton
Benefits and Limitations of Market Segmentation

Benefits
The organization gets to know its customer better
Provides guidelines for resources for resource allocation.
It helps to focus on the strategy of the organization

Limitation
Target multiple segments increase marketing costs if a company has one market segment then it
has low cost but as the segment increases budget also increases.
Segmentation can lead to proliferation(large no.) of products. So the problem that creates is that
it becomes hard to manage that.
Narrowly segmenting a market can hamper the development of broad brand equity .when we
manage small areas broader hamper badly.
Also, Sometimes don’t achieve the desired goal.
 It divides the segmentation into geographic units like nations, countries, cities, or
neighborhoods.
 So, The company operates in a few units.in this way, it can operate its marketing
program.
 Grass root success was responsible for Nike initial success.
 Retail Firms such as Starbucks, Costco, trader, Joc’s get their success by targeting
the local market.
 Geographic Segmentation Examples
 ZIP code
 City
 Country
 Radius around a certain location
 Climate
 Urban or rural
 We can understand it by taking an example if any company of luxury car wants to
sell the car and the company decided to establish its plant in the local area where
the condition of the road is not good .and people don’t spend their money on a
luxury item then it would be a bad decision.
 Choosing a geographic location for the business is a very serious decision that is
taken by a proper concern from the expert.
 So, It is associated with market needs, wants. Another important thing is that it is easy to measure.
 Age and Life Cycle Stage
 Consumers need change with age. So, the Toothpaste brand launches different products for different
age groups like it has products for children, adults, and old people.
 Hence, Market of pampers divide into prenatal (0-5) months. Baby (6-12) ,toddler (13-23) month,
and preschooler (24 month +)
 So, We can see an example of a Honda which run adds shows sexy college student do party near the
car at the beach.
 Life Stage
 Many life stages that are not pre-define life such as getting through a divorce, going to involve in
the second marriage want to care for their old parents, take a new home.
 So, On the data shows that average US couple spend almost 27000 $
 Also, On of the data shows that newlyweds couples in the US spend 70 billion $ in the house in the
first six months.
 Gender
 So, Women are more communal minded, girls are love to do talk and are curious about their
environment. Men first read about the product while women bring it by relating it to a personal
level.
 So, Major areas of gender differentiation are clothing, hairstyle, cosmetics, Avon.
 Generation
 Hence, Each generation is influenced by their time. also, It may be movie, politics, song, and any
unique incident of that time.
 Psychographic is the science of using psychology and demographics to better understand
consumers.
 So, People who are the in same demographic group and have different psychographic profiles.
 Also, Psychographic segmentation buyers are divide into groups based on psychological
/personality traits, lifestyle, or values.
 So, Consumers are inspired by one of three primary motivations: ideal achievement, and self-
expression.
Example of Psychographic Segmentation
 Personality traits
 Social Class
 Personality
 Belief
 Values
 Attitudes
 Interests
 Lifestyles
 Psychological influences
 Subconscious and conscious beliefs
 Motivations
 Priorities
 Behavior segmentation divides consumers into a group according to their observed behavior.
Also, Many believe that behavior variables are superior to demographic and geographic for
building market segment and some analysts have suggested that behavior segmentation is
killing off demographic.

Typical behavior variables and their descriptors include :

 Purchase /Usage occasion: Regular occasion, Special occasion, Festive occasion, Gift
giving
 Benefit Sought: Economy, Quality, Service, Level, Convenience, Access,
 User status: First Time User, Regular User, Non User
 Usage rate/Purchase frequency: Light user, Moderate user, Heavy user
 Loyalty status: Loyalty switcher , Non-loyal , Lapsed
 Buyer readiness: Unaware, Aware, Intention, To Buy
7. Customer Relationship Management
7.1 Concept/Definition
7.2 Techniques of CRM
 According to Philip Kotler: Customer Relationship Management (CRM) is the process of
carefully managing detailed information about individual customers and all customer “touch
points” to maximize customer loyalty. It is a strategy to capitalize on all the customers needs
and the touch points to identify potential customers.

 “CRM …an enterprise wide business strategy designed to optimize profitability, revenue and
customer satisfaction by organizing the enterprise around customer segments, fostering
customer-satisfying behaviors and linking processes from customers through suppliers.”

 CRM is the business strategy that aims to understand, anticipate, manage and personalize the
needs of an organization’s current and potential customers” PWC Consulting
Techniques of Building CRM:
1. One-to-one Marketing:
 Some firms adopt one-to-one marketing strategy. Such firms treat their customers as partners,
especially in the case of B2B markets firms solicit the help of customers to design new
products or to improve their services. If the customer gets involved with the firm, then they
are more likely to remain with the firm.

2. Loyalty Programs:
 Firms may use variety of loyalty programs to retain customers. For example, airlines may
offer special discount for frequent fliers. Firms may also provide gifts and other benefits to
the loyal customers. But it is to be noted that all loyal customers need not be profitable, and
all profitable customers need not be loyal.
 Therefore, the firm must be selective. In order to enhance marketing efficiency, a firm has to
find out which of its customers are worth retaining and which are not, and which customers
should be given extra care and attention. In other words, the firm has to determine the value
of its customers, and focus on MVCs accordingly.
Techniques of Building CRM:
3. Priority Customer Programs:
 Some firms introduce priority customer programs. The priority customers are the MVCs.
They are given priority in after-sales service, delivery and resolving complaints. The priority
customer programs are followed by several organizations, especially in the banking industry.
 For example, Citibank maintains a list of priority customers and provides them with
additional facilities special offers such as free ticket to concerts, movies, and so on. Some
banks, such as Syrian Catholic Hank provide personalized services to the important
customers.

4. Data Warehousing and Data Mining:

 CRM analysts develop data warehouses and use data-mining techniques to develop and
maintain long- lasting relationships with the valuable customers.
 A data warehouse is a company-wide electronic database of detailed customer information.
The purpose of data warehouse is not just to gather information, but to place it into a central
location for easy access.
 Once the data warehouse locates the data at a central place, the data analysts use data mining
techniques to examine the mounds of data to find out interesting facts of the customers.
Techniques of Building CRM:

The mined data can be utilized for various marketing decisions such as the following:
1. Product design and modification
2. Product pricing
3. Promotion mix
4. Selection of channels of distribution
5. Maintaining dealer relationships.
8. Market Targeting
8.1 Concept & Definition
8.2 Five Patterns of Target Market Selection
Definition:
 Market targeting is a process of selecting the target market from the entire market. Target
market consists of group/groups of buyers to whom the company wants to satisfy or for
whom product is manufactured, price is set, promotion efforts are made, and distribution
network is prepared.

Introduction:
 A company cannot concentrate on all the segments of the market. The company can satisfy
only limited segments. The segments the company wants to serve are called the target
market, and the process of selecting the target market is referred as market targeting. Market
segmentation results into dividing total market into various segments or parts.
 Such segments may be on the basis of consumer characteristics or product characteristics or
both. Once the market is divided into various segments, the company has to evaluate various
segments and decide how many and which ones to target. It is simply an act or process of
selecting a target market.
 Company may opt for any one of the following strategies for market targeting based on
the situations:
1. Single Segment Concentration:
 It is the simplest case. The company selects only a single segment as target market and offers
a single product. Here, product is one; segment is one. For example, a company may select
only higher income segment to serve from various segments based on income, such as poor,
middleclass, elite class, etc. All the product items produced by the company are meant for
only a single segment.
Single segment offers some merits like:
 (1) Company can gain strong knowledge of segment’s needs and can achieve a strong market
position in the segment.
 (2) Company can specialize its production, distribution, and promotion.
 (3) Company, by capturing leadership in the segment, can earn higher return on its
investment.
It suffers from following demerits like:
 (1) Competitor may invade the segment and can shake company’s position.
 (2) Company has to pay high costs for change in fashion, habit, and attitude. Company may
not survive as risk cannot be diversified.
 Mostly, company prefers to operate in more segments. Serving more segments minimizes the
degree of risk.
 Company may opt for any one of the following strategies for market targeting
based on the situations:

2. Selective Specialization:
 In this option, the company selects a number of segments. A company selects several
segments and sells different products to each of the segments. Here, company selects many
segments to serve them with many products. All such segments are attractive and appropriate
with firm’s objectives and resources.
 There may be little or no synergy among the segments. Every segment is capable to promise
the profits. This multi-segment coverage strategy has the advantage of diversifying the firm’s
risk. Firm can earn money from other segments if one or two segments seem unattractive.
For example, a company may concentrate on all the income groups to serve.

3. Product Specialization:
 In this alternative, a company makes a specific product, which can be sold to several
segments. Here, product is one, but segments are many. Company offers different models and
varieties to meet needs of different segments. The major benefit is that the company can
build a strong reputation in the specific product area. But, the risk is that product may be
replaced by an entirely new technology. Many ready-made garment companies prefer this
strategy.
 Company may opt for any one of the following strategies for market targeting
based on the situations:
4. Market Specialization:
 This strategy consists of serving many needs of a particular segment. Here, products are
many but the segment is one. The firm can gain a strong reputation by specializing in serving
the specific segment. Company provides all new products that the group can feasibly use.
But, reduced size of market, reduced purchase capacity of the segment, or the entry of
competitors with superior products range may affect the company’s position.

5. Full Market Coverage:

 In this strategy, a company attempts to serve all the customer groups with all the products
they need. Here, all the needs of all the segments are served. Only very large firm with
overall capacity can undertake a full market coverage strategy.
 Methods of Full Market Coverage:
Philip Kotler identifies two broad ways for full market coverage strategy as under:
Undifferentiated Marketing and Differentiated Marketing
 Company may opt for any one of the following strategies for market targeting
based on the situations:

Undifferentiated Marketing:
 Company sells the same products to all the customer groups. It does not consider difference
among buyers. Product and marketing program remain common for all the segments. The
firm relies on mass production, mass distribution, and mass advertising. So, it can
considerably reduce production, distribution, and promotional costs. Similarly, reduced costs
result into low price and the price-sensitive consumers can be attracted. This method is
followed by pharmaceutical companies.
 However, many experts and practicing managers have expressed strong doubts about the
strategy. It is erroneous to believe that all the segments have similar needs. It is a rare case.
Such strategy may invite competition to serve larger groups of buyers, and smaller groups are
neglected. People, in different segments, differ significantly in terms of needs, preference,
and advertising appeal.
 Company may opt for any one of the following strategies for market targeting based on
the situations:

Differentiated Marketing:
 Here, company operates in several segments and designs different marketing programs for each of
the segments. Various groups of customers are targeted by several types of products and marketing
strategies. It is based on the notion that each group needs different products. This strategy is used by
the most of automobile companies. This strategy creates more total sales, but costs of doing
business also on increase.
 Following costs are likely to be higher in differentiated marketing strategy:
 i. Marketing research cost
 ii. Administrative costs
 iii. Manufacturing costs
 iv. Inventory costs
 v. Promotional costs
 vi. Product modification costs
Here, costs and sales both increase. So, profitability is doubtful. However, it is less risky. Loss in
one segment can be offset against profitable segments. Most of companies prefer this option. Thus,
market targeting is an essential aspect of marketing program.

END