Chapter -1

A) The American Marketing Association offers the following formal definition:

“Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing
customer relationships in ways that benefit the organization and its
stakeholders”.
B) Marketing management is the art and science of choosing target markets and
getting, keeping, and growing customers through creating, delivering, and
communicating superior customer value.
C) A social definition of marketing is that “marketing is a societal process by
which individuals and groups obtain what they need and want through
creating, offering, and freely exchanging products and services of value with
others.”
D) Marketing management is the art and science of choosing target
markets and getting, keeping and growing customers through
creating, delivering and communicating superior customer
values of management.” —Philip Kotler and Kevin Lane
E) In the words of Cundiff and Still – “Marketing is the term used to
describe collectively those business functions most directly concerned
with the demand stimulating and demand-fulfilling activities of the
business enterprise”

It includes a group of business activities in order to create and promote

consumer demand and to direct the flow of goods/services from the original
producer to the final consumer in the process of distribution.

Marketing includes those business activities which are involved in the flow
of goods and services from production to consumption.

“Marketing is the creation and delivery of standard of living; it is

finding out what customer wants, then planning and development of a
product or service that will satisfy those wants; and then determining
the best way to price, promote and distribute that product or service. It
is a toted system of business activities designed to produce and distribute
want satisfying goods and services to potential customers.” — W.J.
Stanton
What Are The Objectives Of Marketing?

The main objective of marketing is to fulfil customers’ demands while making

profits. Besides this, the other five objectives of marketing are –

1. Customer Satisfaction: Satisfying the needs, wants, and demands of the

customers.
2. Profitability: Earning profit for the business to support sustainable
growth.
3. Demand Creation: Develop demand for the offerings by communicating
about it to the target audience.
4. Brand Development: Building a brand out of the company and/or the
offering and differentiating it from other players in the market.
5. Create Goodwill And Public Image: Building up a public image of the
brand and increasing its equity by providing offerings with a consistent
brand promise.

Importance of marketing:

1) It enables the marketer to know the tastes and preferences of the

customers and accordingly make the product. As a result they are able to
sell their easily.
2) It fulfils the needs of the buyers by giving them what they want. The
buyers get their money’s worth.
3) Innovations in marketing have given the buyer superior goods at
affordable prices.
4) Marketing, today, has developed to such an extent that buyer are able
get international brands of goods at their doorstep.
5) In the past, the buyer had to buy what was available. The growth of
marketing has now given the buyers many alternatives. The buyers are
now in a position to select the best from among the many alternatives.
6) It has eliminated outdated or obsolete products over the years. It has
updated the technology in tune with the needs.
7) It helps the marketers in the matter of selection of the right
promotional tool.
8) It also guides the manufacturers in selecting the correct channel of
distribution for their products.
9) Marketing provides employment opportunities to many. There are
brokers, commission, agents, truck operators, salesmen, copywriters and
others who are engaged in the field of marketing.
 10) Marketing has certainly converted ‘yesterday’s luxuries into today’s
necessaries’. Goods that were once considered a beyond the reach of the
common man are now common household items.

What Is Marketed?
Marketing people are involved in marketing ten types of entities: goods, services,
events, experiences, persons, places, properties, organizations, information, and
ideas.
A) Goods
Physical goods constitute the bulk of production and marketing efforts.
B) Services
A growing portion of business activities are focused on the production of
services. The U.S. economy today consists of a 70–30 services to goods mix.
C) Events
Marketers promote time-based events such as trade shows, artistic
performances, and the Olympics.
D) Experiences
By orchestrating several services and goods, a firm can create and market
experiences such as Walt Disney World’s Magic Kingdom.
E) Persons
Celebrity marketing is a major business.
F) Places
Cities, states, regions, and whole nations compete actively to attract tourists,
factories, and new residents.
G) Properties
Are intangible rights of ownership of either real property (real estate) or
financial property (stocks and bonds).
H) Organizations
Actively work to build a strong, favorable, and unique image in the minds of
their target publics.
I) Information
Can be produced and marketed as a product. Schools, universities, and others
produce information and then market it.
J) Ideas
 Every market offering includes a basic idea. Products and services are
platforms for delivering some idea or benefit.

Functions of marketing

1) Gathering and Analysing Market Information:

What do the consumers want?

(b) In what quantity?

(c) At what price?

(d) When do they want (it)?

(e) What kind of advertisement do they like?

(f) Where do they want (it)

2)Marketing Planning:
In order to achieve the objectives of an organisation with regard to its
marketing, the marketeer chalks out his marketing plan. For example, a
company has a 25% market share of a particular product.

The company wants to raise it to 40%. In order to achieve this objective the
marketer has to prepare a plan in respect of the level of production and
promotion efforts. It will also be decided as to who will do what, when and
how. To do this is known as marketing planning.

3)Product Designing and Development:

Product designing plays an important role in product selling. The company
whose product is better and attractively designed sells more than the product of
a company whose design happens to be weak and unattractive.

In this way, it can be said that the possession of a special design affords a
company to a competitive advantage. It is important to remember that it is not
sufficient to prepare a design in respect of a product, but it is more important to
develop it continuously.

4)Packaging and Labelling:

Packaging aims at avoiding breakage, damage, destruction, etc., of the goods
during transit and storage. Packaging facilitates handling, lifting, conveying of
the goods. Many a time, customers demand goods in different quantities. It
necessitates special packaging. Packing material includes bottles, canister,
plastic bags, tin or wooden boxes, jute bags etc.

Label is a slip which is found on the product itself or on the package providing
all the information regarding the product and its producer. This can either be in
the form of a cover or a seal.

5) Branding:
Every producer/seller wants that his product should have special identity in the
market. In order to realise his wish he has to give a name to his product which
has to be distinct from other competitors.

Giving of distinct name to one’s product is called branding. Thus, the objective
of branding is to show that the products of a given company are different from
that of the competitors, so that it has its own identity.

6)Customer Support Service:

Customer is the king of market. Therefore, it is one of the chief functions of
marketer to offer every possible help to the customers. A marketer offers
primarily the following services to the customers:

7)Pricing of Products:
It is the most important function of a marketing manager to fix price of a
product. The price of a product is affected by its cost, rate of profit, price of
competing product, policy of the government, etc. The price of a product should
be fixed in a manner that it should not appear to be too high and at the same
time it should earn enough profit for the organisation.

8). Promotion:
Promotion means informing the consumers about the products of the company
and encouraging them to buy these products. There are four methods of
promotion: (i) Advertising, (ii) Personal selling, (iii) Sales promotion and (iv)
Publicity. Every decision taken by the marketer in this respect affects the sales.
These decisions are taken keeping in view the budget of the company.

9). Physical Distribution:

Under this function of marketing the decision about carrying things from the
place of production to the place of consumption is taken into account. To
accomplish this task, decision about four factors are taken. They are: (i)
Transportation, (ii) Inventory, (iii) Warehousing and (iv) Order Processing.
Physical distribution, by taking things, at the right place and at the right time
creates time and place utility.
Key Customer Markets
A) Consumer Markets
Consumer goods and services such as soft drinks and cosmetics, spend a
great deal of time trying to establish a superior brand image.
B) Business Markets
Companies selling business goods and services often face well-trained and
well-informed professional buyers who are skilled in evaluating competitive
offerings.
C) Global Markets
Companies face challenges and decisions regarding which countries to enter,
how to enter the country, how to adapt their products/services to the country,
and how to price their products.
D) Nonprofit and Governmental Markets
Companies selling to these markets have to price carefully because these
organizations have limited purchasing power.
Marketplaces, Marketspaces, Metamarkets
A) The marketplace is physical,
B) The marketspace is digital,
C) The metamarket is a cluster of complementary products and services that are
closely related in the consumer’s mind but spread across a diverse set of
industries.

Core Concepts of Marketing

Needs----A state of felt deprivation of some basic satisfaction

Human needs are the basic requirements and include food, clothing and shelter.
Without these humans cannot survive. An extended part of needs today has
become education and healthcare. Generally, the products which fall under
the needs category of products do not require a push.

Wants- A need directed towards a specific product.

Demand-A want backed by ability to purchase.

Customer Value-Customer value is the customer's perception of the worth
of your product or service. Worth can mean several things: the benefit these
products or services provide to your target market, or the value for money they
offer.
Understanding the value you provide customers can help you to better attract
potential customers and better service existing ones.

If, for example, a customer only values you for your low prices, offering a
higher-priced product might make them leave for a competitor. If your brand is
perceived to provide excellent quality products, offering items that appear of a
lower quality might lead to customer churn.

Figuring out why customers are coming to your brand, in particular, helps you
to better tailor your products and services to new audiences. It can also help
build stronger trust, and get existing customers purchasing more. Meeting
expectations and exceeding them in terms of experience, quality, service, and
more is easier when you know what standard you’re being held to and exactly
what your customers expect.

Customer Satisfaction,

Customer satisfaction is a measurement that determines how well a

company's products or services meet customer expectations. It's one of the
most important indicators of purchase intentions and customer loyalty. As such,
it helps predict business growth and revenue.
It is a measure of how products and services supplied by a company meet or
surpass customer expectation. Customer satisfaction is defined as "the number
of customers, or percentage of total customers, whose reported experience with
a firm, its products, or its services (ratings) exceeds
specified satisfaction goals."
Customers play an important role and are essential in keeping a product or
service relevant; it is, therefore, in the best interest of the business to ensure
customer satisfaction and build customer loyalty.
Customer satisfaction is a measure of how people feel when interacting
with your brand. It can be influenced by any number of factors, such as:

• perceived product quality

• perceived product value
• convenience
• customer expectations
• communication
• complaint handling

Customer Delight

Customer delight is surprising a customer by exceeding their expectations and

thus creating a positive emotional reaction. This emotional reaction leads
to word of mouth. Customer delight directly affects sales and profitability of a
company as it helps to distinguish the company and its products and services
from the competition.
This basically means to achieve customer delight, you need to provide a
remarkable experience by focusing on the users’ needs, wants, interests and
wishes. You need to make sure your consumers are happy and they stay that
way after buying your product or service.

The end goal of customer delight is to leave these people so satisfied and happy
that they go out of their way to shout about you - telling your best friend’s
colleague’s cousin’s great , next door neighbour just how good your brand,
product or service is.

Customer loyalty,
Customer loyalty describes an ongoing emotional relationship between
organization and its customer, manifesting itself by how willing a customer is
to engage with and repeatedly purchase from organization versus its
competitors. Loyalty is the by-product of a customer's positive experience with
organization and works to create trust.

Marketing Concepts

Production concept – an operations-based concept where the consumer expects

products that are easily available and affordable.Here the business focuses on
production efficiency, lowering costs and mass distribution. This concept works
in developing economies where the need is more for the product than the
features it offers.

Production Concept is a concept where goods are produced without taking into
consideration the choices or tastes of the customers. It is one of the earliest
marketing concepts where goods were just produced on the belief that they will
be sold because consumers need them. Managers focusing on this concept
concentrate on achieving high production efficiency, low costs, and mass
distribution. They assume that consumers are primarily interested in product
availability and low prices.

This orientation makes sense in developing countries, where consumers are

more interested in obtaining the product than in its features.Ford, considered as
one of the early champions of this concept once remarked that Americans can
get any car from Ford until it is black. This is one of the most famous quotes in
marketing stressing the importance of Production concept.In a production-
orientated business, the needs of customers are secondary compared with the
need to increase output.

It is natural that the companies cannot deliver quality products and suffer from
problems arising out of impersonal behavior with the customers. For example
Coke is widely available throughout the world A company manufactures sugar
because it knows that in the end consumers will surely buy sugar. But with the
continuous industrialization more and more players entered into the market, the
space available to sell the product squeezed because too many people were
selling the same product. That is why it became too obvious that the mass
production of goods which is the heart and soul of production concept can no
longer work because of too many me too products. Therefore, the focus slightly
shifted from Production concept to Customization concept where each and
every product is manufactured and delivered according the tastes and choices of
the customer. Dell is considered to be the pioneer of this field.

Product concept – a consumer oriented concept where consumers expect

products that are superior, high-performance and with unique features. This
concept assumes that customers are likelier to be loyal when the product meets
all their expectations and so, the business strives to offer innovative products
consistently.

The product concept proposes that consumers will prefer products that have
better quality, performance and features as opposed to a normal product.A
company should therefore focus on its product development and invest in
continuous product improvements. The concept is truly applicable in some
niches such as electronics and mobile handsets. Two companies which stand
apart from the crowd when we talk about the product concept are Apple and
Google. Both of these companies have strived hard on their products and deliver
us feature rich, innovative and diverse application products and people just love
these brands.
Managers focusing on this concept concentrate on making superior products and
improving them over time. They assume that buyers admire well-made products
and can appraise quality and performance. However, these managers are
sometimes so proud of their product that they do not realize what the market
needs. One of the advantages of product concepts is that marketers do not need
to carry out extensive research into their target audience. Products that a
marketer believe will ‗sell themselves‘ do not need a lot of well planned and
specifically driven marketing campaigns that can save a company a lot of
money.

Selling concept– where the business believes that its products will sell only
through active promotion and selling and the customer will not respond until
pushed.In short, it is a matter of the business trying to sell what it makes rather
than make products to meet the market’s needs.

The Selling Concept proposes that customers, be individual or organizations

will not buy enough of the organization‘s products unless they are persuaded to
do so through selling effort. So organizations should undertake selling and
promotion of their products for marketing success. The consumers typically are
inert and they need to be forced for buying by converting their inert need in to a
buying motive through persuasion and selling action. The consumers typically
show buying inertia or resistance and must be coaxed into buying. The aim is to
sell what they make rather than make what the markets wants. Such marketing
carries high risks. It focuses on creating sales transactions rather than on
building long term, profitable relationships with customers. This approach is
applicable in the cases of unsought goods like life insurance, vacuum cleaner,
fire fighting equipments including fire extinguishers. These industries are seen
having a strong network of sales force. This concept is applicable for the firms
having over capacity in which their goal is to sell what they produce

Marketing concept – This concept is radical, compared to the above and

focuses on the target market, its needs and wants and a desire to be better than
the competition while delivering value to its market. Unlike the earlier concepts
that rely on push marketing, it believes in pull marketing by creating brand
loyalty.

While the sales concept is seller-oriented, the marketing concept is buyer-

oriented.

Societal marketing concept – is the ideal situation where, along with the focus
on the target market’s wants and needs and delivering better value than its
competition, the business also strives to preserve the well-being of its target
market and the society as a whole.This takes into consideration environmental
and natural resource preservation and minimizing the carbon footprint.

Additionally, it holds that this all must be done in a way that preserves or
enhances the consumer‘s and the society‘s well-being. The organization
believes in giving back to the society by producing better products targeted
towards society welfare.They see it as affording an opportunity for companies
to enhance their corporate reputation, raise brand awareness, increase customer
loyalty, build sales, and increase press coverage.

They believe that customers will increasingly look for demonstrations of good
corporate citizenship.This concept is also referred as: ―The human concept‖,
―The intelligent consumption concept‖, ―The ecological imperative concept‖,
& ―Cause- related marketing. The societal marketing concept calls upon
marketers to balance three considerations in setting their marketing policies, viz.
• company profits • consumer satisfaction • public interest

Societal Marketing concept focuses on: Less Toxic Products More Durable
Products Products with Reusable or Recyclable Material

Globalization
• New transportation, shipping, and communication technologies have
made the world a smaller place.
• It certainly has made it easier for everyone to know the rest of the world,
to travel, and to buy/sell anywhere.
• Companies now have the opportunities to take lessons and marketing
ideas from one country and apply them to another.
• As a result of Globalization, countries have become increasingly
multicultural.

Social Responsibility
Socially responsible marketing is a concept based on the idea that market
offerings should not just be profit-driven. They also need to fortify social and
ethical values for the benefit of citizens. It’s an all benefiting strategy that
should always be taken into consideration. Problems like Pollution, poverty,
shortage of water, climate change, wealth concentration and wars demand our
attention.
Slowly the private sector is taking up some responsibility for the improvement
of living conditions. Firms all over the world have raised their role of corporate
social responsibility. Socially responsible marketing reproves excessive
consumerism and the damage that corporations cause to the environment.

THE NEW MARKETING REALITIES

Major societal Forces affecting marketing:
A) Network information technology
B) Globalization
C) Degregulation
D) Privatization
E) Heightened Competition
F) Industry Convergence
G) Consumer Resistance
H) Retail Transformation
I) Disintermediation
New Consumer Capabilities
A) A substantial increase in buying power
B) Greater variety of goods and services
C) Great deal of information available
D) Greater ease in interacting and placing orders
E) Ability to compare notes on products and services
F) Amplified voice to influence peer and public opinion

New Company Capabilities

A) Internet
B) Research
C) Speed of internal information
D) Speed of external information “buzz’
E) Better target marketing
F) Mobile marketing
G) Differentiated goods
Improved purchasing, recruiting, training, and communications
Holistic marketing

Approach looks at a business with all its connected components as a whole.

Customers, employees, suppliers and the community at large are carefully
considered. The strategy comprises of integrated activities with a focus on one
common goal.

According to holistic marketing concept, even if a business is made of various

departments, the departments have to come together to project a positive &
united business image in the minds of the customer. Holistic marketing concept
involves interconnected marketing activities to ensure that the customer is likely
to purchase their product rather than competition.

An organization will have different departments like sales and marketing,

accounting and finance, R&D and product development and finally HR
and operations. Thus, if you want to implement a holistic marketing concept in
your organization, you need to ensure that R&D and product development take
the feedback from marketing and sales to launch the product which is most
likely to attract customers.

On the other hand they need to work closely with accounting and finance to find
out the exact budget for the project. Sales and marketing need to communicate
to the HR the right kind of people that they need, and finally, admin and
operations need to devise a plan to retain these people.

Some key concepts which are important in Holistic marketing are

Internal marketing – Marketing between all the departments in an
organization
Relationship marketing – Building a better relationship with your customers,
internal as well as end customers is beneficial for holistic marketing.
Performance marketing – Driving the sales and revenue growth of an
organization holistically by reducing costs and increasing sales.
Integrated marketing – Products, services and marketing should work hand in
hand towards to growth of the organization.
‘Marketing myopia’

It is a term made up of two words: Marketing and Myopia which is used to

describe the short sighted (myopic) approach adopted by organizations which
often leads to their premature decay. The term was coined by ‘Theodore Levitt’
in a paper which was published in the Harvard Business Review in the year
1960.

Marketing myopia’ is a term made up of two words: Marketing and Myopia

which is used to describe the short sighted (myopic) approach adopted by
organizations which often leads to their premature decay. His theory suggests
that “most of the industries are restricted in their thought process and
implementation of their future endeavors”.

He felt that the world was living in the ‘selling concept’, where the objective
was to follow a push model instead of a pull model thereby forcing the customer
to buy whatever you produce. Profits earned in the short term were regarded as
a measure of success for the organisations. Organizations hence were hence
living a lie and failed to see the larger picture. This form of marketing could
fetch them profits in the short run; however, as time faded, this led to the
customer being dissatisfied accompanied with brand switching, tapering sales
figures, and eventually, closedown. Levitt also advised CEOs ‘to extend their
horizons, delimitate their corporate objectives, and most importantly have a
vision’.

The basic ideology was to broaden the vision from a product level to an industry
level or for that matter to a more generic level. The idea was well assimilated
among the organisations and finally realized that what they were missing was a
well defined vision which could serve them in the future.

Marketing myopia strikes in when the short term marketing goals are given
more importance than the long term goals. Some examples being:

• More focus on selling rather than building relationships with the

customers
• Predicting growth without conducting proper research.
• Mass production without knowing the demand.
• Giving importance to just one aspect of the marketing attributes without
focusing on what customer actually wants
• Not changing with the dynamic consumer environment
Marketing process

It involves of a series of steps by the help of which the organization is able to

identify the problems of the customers, analysis the
various market opportunities that are present in the market, and also is able to
create materials that are used for the marketing purpose so that company can
reach out to the desired audience.

Now four basic steps are involved in the marketing process which is as follow –

1. Analyzing the various opportunities that are present in the market

2. Selecting the targeted market
3. Developing a proper plan for the marketing mix
4. Managing the efforts of the marketing process

Now let us understand this in detail.

1) Analyzing the various opportunities that are present in the market

The benefit of analyzing the market is that by doing this, the companies can find
the right kind of opportunities that will help them in escalating their sales
growth.

Theses opportunities mainly are related to the demands of the customers,

focuses on what their needs and wants are! Mostly these needs and wants are so
increased in number probably because these are not satisfied by the other
competitors the market.

2) Selecting The Targeted Market

Now once the opportunities have been found out by the companies, are able to
understand on what segments of the market do they have to work on.

Thus once the opportunities of the markets have been analyzed, the companies
move toward the second step of the marketing process. This step involves the
function of selecting the targeted market.

This is also one of the most important steps of the entire marketing process as
the future of the business relies on this step to a much greater extent. Now to
perform this step, the companies analyze the markets they weren’t to target in
the future.
3)Segmenting the market
In this, the whole market has to be split up into several units of customers. One
must make sure that each of these units consists of a group of customers has got
similar wants and needs.

4) Market positioning

After the segmentation has been done, comes the positioning of the product.

But before specifying a product in the market, the companies first need to make
the competitive edge a little more specific, which would then offer a lot
of competitive advantage to their targeted customers.

5)Developing a proper plan for the marketing mix

he marketing mix consists of many different types of variables which the
company mixes up to obtain the desired result from their targeted segments.

Here certain activities influence the demand for the marketing mix. The
marketing mix generally consists of four things. These areas follow –

• Product – This means the offering that is made by the company to the
market in the form of the goods and services.
• Price – This refers to that one which the customer pays for buying a
specific product form any company.
• Place – This refers to the efforts that the company makes to make sure that
the products are available to the customers whenever they want to buy it.
• Promotion – This refers to the effort that the company puts in to make
sure for the fact that the sales of the products are carried out better
provisions to their customers.

In this way, the company is able to develop a suitable marketing program which
proves o be quite effective for the company in the long run.

6) Managing the efforts of the marketing process

Now, this is the last step of the marketing process. Even if all the above three
steps are carried out well if the management is not proper, the company will not
be able to maintain its growth.

Thus putting emphasis on the management is a must. Also, while all the above
stages were theoretical, this step is practically applied.
 This is the action phase where a suitable type of marketing mix is set up for the
targeted market. This step is all about implementing the strategies in the right
manner.

Companies should also be careful while taking risks and should try to take only
calculated risks. There are a few firms which can help the companies with this
step like the CRM which stands for Customer relationship management. And
with the help of the management can be carried out effectively.

The Impact of AI and Machine Learning

on Marketing Strategies
Today, we live in a period called the "big data" era. With the development
of Artificial Intelligence (AI) and Machine Learning (ML) in the world of
digital marketing, the rules of the game are changing rapidly. In this new
age, we have the technology to quickly collect information that is too much
for a person to process. The use of artificial intelligence for this purpose
provides serious convenience in many sectors such as banking,
technology, and entertainment, and especially marketing. These
technologies have greatly changed the way businesses communicate with
customers in the last decade. It enabled enhanced personalization, deeper
insights, and optimized marketing strategies.

The Transformative Role of Artificial Intelligence and

Machine Learning

• Artificial intelligence is the simulation of machines or systems that resemble

human intelligence and perform tasks such as reasoning, problem-solving, and
language understanding. Artificial intelligence in marketing; It involves the use of
intelligent systems to analyze data, automate tasks, and make data-driven
decisions. To be specific, artificial intelligence in digital marketing; can be used for
customer segmentation, personalized targeting, content creation, chatbot
interactions, and predictive analytics. Today, artificial intelligence; It is frequently
used by digital marketers for data analysis, reporting, market research, and access
to article summaries.
• Machine learning is a subset of artificial intelligence that enables computer
programs to learn and improve without being explicitly programmed. Machine
learning has the potential to revolutionize how marketers improve their performance.
With the help of machine learning, digital marketers can analyze historical data to
make strong predictions for future results and thus create personalized marketing
campaigns more easily. It can divide customers into various target groups with the
data it collects from social media interactions and website analysis.
 How Did It Affect Customer Engagement?
Artificial intelligence and machine learning are an important tool in transforming the
customer experience. It offers unique opportunities for today's consumers who
expect fast and personalized services. AI has the potential to quickly meet this
expectation with the insights it learns from customer data. With the data it collects, it
can be an effective tool in areas such as personalized product recommendations and
personalized marketing campaigns. Chatbots and virtual assistants can be used to
increase customer satisfaction by providing 24/7 support for customer questions. By
analyzing customer behavior, businesses can better know their target audience and
create marketing campaigns accordingly. Automated customer support systems
alleviate the workload of customer services by solving common problems, thus
allowing customer service teams to focus more on complex problems. And most
importantly, they never get sick, they always continue to work to help consumers and
fulfill their duties. These are all important steps to creating strong customer
engagement.

How do brands use these technologies?

Many well-known brands have contributed to the development of these technologies
by using them for different purposes.
• For example, Amazon's ML-powered recommendation engine generates 35% of its
total revenue by recommending products based on users' past behaviour and
preferences.
• Starbucks uses predictive analytics to personalize marketing efforts, predicting when
and if customers will make their next purchase. So it can send targeted offers and
recommendations. Segment its customers with machine learning; It sends
personalized offers to your phone based on your shopping habits and location.
• Coca-Cola uses sentiment analysis to track social media mentions, allowing the
company to quickly respond to customer feedback and trends. For any campaign,
what kind of music, movies, cuisine, etc. should customers choose? They easily
evaluate their interests in the fields and how they perceive the advertisements they
encounter. It aims to achieve maximum efficiency by combining this information with
easily analyzed trends. At the same time, in this way, it can produce various content
regarding the popularity of different topics in different countries.

The Impact of AI and Machine Learning on Marketing Strategies

Thanks to Artificial Intelligence (AI) and Machine Learning (ML), the marketing world
is changing fast. These tech advances are making big changes in how we do
marketing. They give us new insights, automate tough tasks, and let us personalize
customer experiences on a large scale. Let's look at how AI and ML are changing
marketing strategies and what this means for businesses.
1. Better Customer Insights and Personalization:

• AI and ML can look through lots of data to learn about consumer behaviors, likes, and
trends.
• We can use this info to make marketing campaigns that really speak to people,
sending the right message at the right time.

2. Predictive Analytics:

• AI can predict future customer actions using past data. This helps marketers know
what customers might want next so they can target products better.
• It also spots chances and risks in the market, helping with smart decision-making.

3. Automating Repetitive Tasks:

• AI takes over jobs like data analysis and content creation, letting marketers work on
bigger ideas.
• Chatbots and virtual assistants work all day and night to help customers, making
things smoother and more efficient.

4. Smarter Content Creation and Optimization:

• AI tools are now writing stuff, from email subjects to full articles.
• ML makes sure content is great for search engines and social media, getting more
people to see and interact with it.

5. Better Ad Targeting and ROI:

• AI and ML make ads work better by picking targets and prices on the fly.
• They check which ads do best and tweak the campaign to maximize every dollar
spent.

6. Voice Search and Conversational Marketing:

• With more people using voice to search, AI helps tailor content for those searches.
• AI-driven chat helps make shopping more interactive and personal.

7. Real-Time Customer Service and Feedback:

• AI gives instant help to customers, solving problems fast.

• ML analyzes feedback from different sources, giving quick insights into how happy
customers are and what can be improved.

8. Ethical Considerations and Transparency:

• As AI becomes more common in marketing, we need to think about ethics and how
we use customer data clearly.
• Marketers must follow privacy laws and be open about using AI.
 AI and ML aren't just ideas for the future; they're tools we're using right now in
marketing. By using these technologies, companies can better understand their
customers, save time, make marketing more personal, and stay ahead in the market.

Benefits of AI and ML in Digital Marketing

Now that we have understood what is Artificial intelligence (AI) and machine learning (ML) and
how they are revolutionizing digital marketing by offering a range of benefits, let’s explore how
they empower businesses to deliver personalized experiences, optimize campaigns, and
enhance customer engagement.

some of the key advantages of AI and ML in the realm of digital marketing.

▪ Personalization and Customer Engagement

AI and ML enable marketers to deliver personalized experiences to their target audience,
fostering stronger customer engagement and loyalty. By analyzing vast amounts of data, AI
algorithms can identify patterns, preferences, and behaviors, allowing marketers to segment their
audience more effectively.

This segmentation enables the delivery of tailored content, recommendations, and offers that
resonate with individual customers, increasing the likelihood of conversion. Personalized
chatbots powered by AI can also provide real-time assistance and engage customers in
interactive conversations, enhancing the overall customer experience.

▪ Predictive Analytics and Optimization

AI and ML excel in predictive analytics, enabling marketers to make data-driven decisions and
optimize their campaigns. By analyzing historical data and identifying patterns, ML algorithms
can predict future outcomes and trends with a high degree of accuracy.

This predictive power helps marketers understand customer behavior, anticipate their needs, and
optimize marketing strategies accordingly. For example, AI-powered demand forecasting can
assist in inventory management, reducing costs associated with stock-outs or overstocking. By
leveraging AI and ML, marketers can allocate resources more effectively, optimize ad spend, and
achieve better ROI.

▪ Content Creation
AI and ML have transformed content creation, making it faster, more efficient, and tailored to
specific target audiences. Natural Language Processing (NLP) algorithms can generate
compelling copy, headlines, and social media posts that align with brand voice and resonate with
customers.

AI-powered design tools can create visually appealing graphics, banners, and videos,
streamlining the creative process. Additionally, ML algorithms can analyze content performance
data, identifying patterns and preferences that inform content strategies and improve
engagement. With AI and ML, marketers can create engaging, relevant, and high-quality content
at scale.

▪ Customer Insights and Segmentation

AI and ML enable marketers to gain deeper insights into customer behavior and preferences. By
analyzing data from various sources, including browsing history, purchase behavior, and social
media interactions, AI algorithms can identify customer segments with distinct characteristics.

These insights enable marketers to create targeted campaigns, personalize messaging, and
deliver relevant content to specific customer segments. By understanding their customers better,
marketers can tailor their strategies and offerings, driving higher engagement and conversions.
▪ Real-time Optimization and Automation
AI and ML technologies enable real-time optimization and automation of marketing campaigns.
ML algorithms can analyze vast amounts of data in real-time, allowing marketers to adjust their
campaigns on the fly.

AI-powered tools can automate repetitive tasks such as email marketing, ad placement, and
social media scheduling, freeing up time for marketers to focus on strategic initiatives. This
automation leads to improved efficiency, better campaign performance, and increased
productivity.

By embracing AI and ML, businesses can gain a competitive edge, enhance customer
engagement, and drive growth in the digital landscape.

Real-World Examples of AI and ML in Digital Marketing

As we have seen above, businesses across various industries are leveraging the power of AI
and ML in their digital marketing strategies to drive growth, enhance customer experiences, and
achieve remarkable results.

Let’s check-out two real-world examples of companies that have successfully implemented AI
and ML in their marketing efforts.

▪ Disney
Disney, a global entertainment conglomerate, is harnessing AI and ML techniques to optimize its
media mix model. By aggregating data from various sources across the organization, including
partners, Disney gains valuable insights into its media mix and marketing effectiveness.
Machine learning algorithms are applied to fine-tune the model and achieve budget and media
mix optimization. The use of AI and ML enables Disney to make data-driven decisions, optimize
their marketing investments, and deliver targeted messaging to their audience. This approach
has helped Disney gain new insights and improve the effectiveness of its marketing strategies.

▪ Starbucks
Starbucks, a renowned coffee chain, embarked on a journey to become the world’s most
personalized brand by leveraging predictive analytics and machine learning. They faced the
challenge of targeting individual customers with their existing IT infrastructure and managing
personalization at scale across thousands of stores.

To overcome these challenges,STARBUCKS developed a real-time personalization engine that

integrated customer account information, the mobile app, customer preferences, third-party data,
and contextual data.
By leveraging predictive analytics and AI, Starbucks achieved remarkable results, including a
150% increase in user interaction and a threefold improvement in per-customer net incremental
revenues. The implementation of AI and ML enabled Starbucks to deliver personalized
experiences, recommend relevant products, and strengthen customer loyalty.

These real-world examples demonstrate the transformative impact of AI and ML in digital

marketing. By leveraging these technologies, businesses can gain valuable insights, optimize
marketing strategies, and deliver personalized experiences at scale.

AI and ML empower companies to make data-driven decisions, enhance customer engagement,

and achieve exceptional marketing performance. As more businesses recognize the potential of
AI and ML, we can expect further advancements and success stories in the realm of digital
marketing.
Marketing 1.0 to Marketing 6.0
In the rapidly evolving digital marketing landscape, understanding the progression
from Marketing 1.0 to Marketing 5.0 is crucial for businesses aiming to stay ahead.

Each stage represents a significant evolution in approach and strategy, from product-
focused tactics to sophisticated technology integration and personalized customer
experiences.

For this reason, evolution has introduced new benefits and opportunities for digital
marketers, making it a more effective and targeted campaign.

Therefore, understanding these benefits is crucial for businesses to stay ahead in the
competitive digital marketplace.

Today, we'll see the benefits of marketing strategies 1.0 to 5.0 for digital marketing.

Marketing 1.0: The Product-Centric Era

The dawn of Marketing 1.0 marked the beginning of the product-centric era. The
goal was to produce goods efficiently and ensure product availability to the masses.

For digital marketers, understanding Marketing 1.0 is crucial for appreciating the
roots of product-centric campaigns.

Marketing 1.0 lies in its simplicity and clarity, which can still be effective for certain
products and markets today.

Businesses can attract customers by highlighting product features, benefits, and

value propositions.

However, the Marketing 1.0 is limited by its one-size-fits-all approach. This strategy
often overlooks the nuanced needs and preferences of individual customers.

Marketing 2.0: The Customer-Oriented Approach

Transitioning to Marketing 2.0 marked a significant shift towards customer
orientation.
This strategy was born because the market situation became more crowded, and
consumer preferences became increasingly sophisticated.

The characteristics of this strategy are focusing on the customer's needs and wants.
In this case, Marketing 2.0 is more personalized, segmented and targeted.

For digital marketers, this era means leveraging data analytics and research to
understand consumer behaviour and preferences. business can tailor

As a result, businesses tailor their digital content, ads, and online experiences to the
preferences of individual consumers.

Moreover, it significantly improves customer engagement and satisfaction.

Marketing 2.0 introduced a new model of Information System which linked the
customers to the businesses in a much more effective manner. It starts with the
customer and introduces the “Web 2.0 Tools”. Web 2.0 Tools like WordPress,
Facebook, YouTube, Wikipedia, etc. . All the information collected through the
different instruments of Web 2.0, the businesses collect and systematically organize
the data

Web 2.0 also helps in identifying and satisfying the needs of the consumers,
highlighting their feelings and has the remarkable capacity to evaluate different
products or services. This is why Marketing 2.0 interacts with both the traditional
media and the interactive media that promote the participation of society and obtain
constant feedback. Due to this, this stage is focused on the 4 C’s of Communication
(clarity, coherence, control and credibility) instead of the four P’s. At the end of the
Marketing 2.0 stage, the focus was slowly shifting to the emotional benefits of a
product and treating the consumer as a human who has a mind and emotions that
can impact sales.

Marketing 3.0: Value-Driven Era

Marketing 3.0 was born from the introduced values-driven marketing concept.

This phase recognizes that consumers were more than looking for products or
services that meet their needs. They also wanted to buy from brands that reflect their
values and beliefs.

Therefore, these strategies integrate the brand with customers' social, ethical, and
environmental values.
In the digital space, Marketing 3.0 allows businesses to create deeper, more
meaningful connections with customers, leading to higher loyalty and brand
advocacy.

Therefore, social media and content marketing became the platforms for
communicating these values, creating a brand identity that resonated with
consumers personally.

The rapid appearance of Marketing 3.0 originated from the development of “new
wave technology” and the employment of computers and the internet. The
amalgamation of this change in technology and the shift of the focus from the
customers to the emotional needs and wants of the customers helped increase and
advance Marketing to unprecedented heights . It focuses on the type of technology
that interacts with individuals and groups. For Marketing 1.0, the catalyst was the
Industrial Revolution; in this case, the catalyst for Marketing 3.0 was the rapid
globalisation process, the concept of co-existence of humans and technology and
the emergence of a creative society. The idea of globalisation is directly linked to
technology as globalisation involves the exchange of goods and services, technology,
and flows of investment, people, and information.

Marketing 4.0: The Digital Integration

As technology advanced, Marketing 4.0 emerged, blending online and offline
interactions in a connected world.

This era leverages technology like mobile marketing, IoT (Internet of Things), and AI
(Artificial Intelligence) to create a seamless customer journey.

For digital marketers, the benefit lies in the ability to offer personalized and
interactive experiences at every touchpoint, greatly enhancing customer engagement
and conversion rates.

Marketing 4.0 can be explained as the “marketing approach that combines the online
and offline interaction between companies and consumers” (Kotler, P., 2017). At the
same time, it can also be explained as the approach that merges artificial intelligence
with other technologies to increase productivity and increase human-to-human
connectivity, thus improving the customer interaction process . It has led to an
increase in the outcome of different changes sourced from an extreme worldwide
challenge, other kinds of purchasers and quick advancements in innovations
 Marketing 5.0: The Technological Convergence
Marketing 5.0 combines the technological advancements of Marketing 4.0 with a
renewed focus on human-centric approaches.

It focuses on integrating technology such as artificial intelligence (AI), machine

learning, and the Internet of Things (IoT) to create even more personalized and
efficient marketing strategies.

This phase balances technology and human insight to create more inclusive,
empathetic, and personalized marketing strategies.

For digital marketers this era brings the ability to automate and optimize campaigns,
leading to more effective targeting, increased efficiency, and enhanced customer
experiences.

In conclusion, the journey from Marketing 1.0 to Marketing 5.0 offers a roadmap for
digital marketers looking to adapt and thrive in a rapidly changing digital landscape.

Each phase has brought new benefits, from the simplicity of product-focused
marketing to the sophistication of technology-enhanced, human-centric strategies.

Understanding and leveraging these benefits can help businesses create more
effective, engaging, and meaningful digital marketing campaigns

What is marketing 6.0?

Meta Marketing, a term derived from the Greek word “meta,” which means beyond or
transcending, is the central idea of Marketing 6.0. Customers can have an immersive
experience with meta-marketing that transcends traditional and digital barriers, making it
impossible for them to distinguish between the real and virtual worlds.
The building blocks of Marketing 6.0
Extended realities, metaverses, and technology enablers are the cornerstones of Marketing
6.0.
• The first layer is made up of technological enablers that connect digital and physical
experiences.
• The second layer is made up of two distinct environments: metaverses (virtual worlds that
mimic the actual world) and extended realities (digitally enhanced physical spaces).
• The top layer includes digital experiences, marketing in metaverses, multimodal customer
engagement and spatial 3D experiences.
Marketing 6.0 is powered by five advanced technologies.
With the help of cutting-edge technologies, Marketing 6.0 creates immersive experiences.
• Internet of Things (IoT) – Real-time data from physical surroundings is captured via the Internet
of Things (IoT), allowing for location-based and timely client engagement.
• Artificial intelligence (AI) – By mimicking human cognitive abilities, artificial intelligence (AI)
enables customized one-to-one marketing campaigns based on current data from Internet of Things
(IoT) sources.
• Spatial computing – The integration of digital and physical experiences is made possible by spatial
computing, which makes digital interaction possible in real-world settings.
• VR & AR – Virtual reality (VR) and augmented reality (AR) allow customers to examine products
through immersive and interactive experiences that revolutionize customer engagement.
• Blockchain Technology – Content creators now have ownership and control over their work
through blockchain technology, a revolutionary decentralized internet technology that paves the
way for community-driven metaverses with their currencies and trading networks.
 .

Chapter-2

Marketing Environment

According to Philip Kotler, “A company’s marketing environment consists of

the internal factors & forces, which affect the company’s ability to develop
& maintain successful transactions & relationships with the company’s
target customers”.

By conducting a regular and systematic environmental analysis, the

company can revise and adapt marketing strategies to cope with the new
challenges and opportunities in the marketplace.

The marketing environment is the combination of the microenvironment

and macro environment.

Macro Environment of Marketing

Macro environment factors which consist of external forces. These external
factors influence the company’s marketing strategy is a great length.

The external environment factors are uncontrollable and the company finds
it hard to tackle the external factors.

Elements of macro-environment of marketing are;

1. Demographic factors.
2. Economic factors.
3. Natural forces.
4. Technology factors.
5. Political factors.
6. Social and Cultural factors.
7. Legal Environment
Demographic Environment

Demography is the study of human populations in terms of size, destiny,

location, age, gender, race, occupation, and other statistics.

This is the very important factors that help the marketer to divide the
population into different market segments and target markets.

Demographic data also helps in preparing geographical marketing plans,

age, and sex-wise plans.

Economic Environment

Economic Environment is those macro factors that affect consumer buying

power and spending patterns.

It includes the level of income, policies, and nature of an economy,

economic resources, trade cycles, distribution of income and wealth.

When the income of a family or country (per capote income) changes it

also changes the buying behavior and spending pattern of the family or
country.

1 Agricultural trends

2. Industrial output trends

3. Per capita income trends

4. Pattern of income distribution

5. Pattern of savings and expenditures

6. Price levels

7. Employment trends
Natural Environment

Natural environment involves the natural resources that are needed as

inputs by marketers or they are affected by marketing activities.

So marketers should be aware of several trends in the natural environment.

Technological Environment

Technological forces are perhaps the most dramatic forces which are
changing rapidly. These macro-environmental forces create a new product,
new markets and marketing opportunities for marketers.

Political Environment

It includes government actions, government legislation, public policies, and

acts which affect the operations of a company or business.

These forces may affect an organization on a local, regional, national or

international level.

So marketers and business management pay close attention to the political

forces to judge how government actions which will affect their company.

Social and Cultural Environment

Cultural factors in heritage, living styles, religion, etc. also affect a

company’s marketing strategy. Social responsibility also becomes part of
marketing and slowly emerged in marketing literature.

Socially responsible marketing is that business firms should take the lead in
eliminating socially harmful products.

Legal Environment
Changes in the political environment often lead to changes in legal environment
and in the existing laws enforced.
 The legal environment sets the basic rules for how a business should operate in
society.

Some of the laws an organisation should be aware of are as follows:

• Protection of intellectual rights

• Consumer Protection act

• Companies Act

• Regulatory commission

• Environmental protection laws

• Code of takeovers and mergers.

• Laws with regard to media freedom and advertising

• Exchange control

Micro Marketing environment

The micro-environment refers to the forces that are close to the company
and affect its ability to serve its customers. It influences the organization
directly.

It includes the company itself, its suppliers, marketing intermediaries,

customer markets, competitors, and the public.

Micro-environment elements are close to the firm and incorporate the

suppliers, showcasing delegates, consumer markets, public, competition,
and marketing intermediaries. Micro-environment likewise concerns the
inward environment of the organization and influences marketing as well
as all the departments like management, R&D, finance, Human assets,
purchasing, operations, and bookkeeping.

Components of the micro environment of marketing are;

1) The company

2) Company’s Suppliers
3) Marketing Intermediaries

4) Customers

5) Competitors

6) Public

The Company:
In designing marketing plans, marketing management takes other
company groups into account – Finance, Research and
Development, Purchasing, Manufacturing, Accounting, Top
Management etc. Marketing manager must also work closely with
other company departments. Finance in concerned with funds and
using funds to carry out the marketing plans.

The R&D Department focuses on designing safe and attractive

product. Purchasing Department is concerned with supplies of
materials whereas manufacturing is responsible for producing the
desired quality and quantity of products. Accounts department has
to measure revenues and costs to help marketing know-how.
Together, all of these departments have impact on the marketing
plans and action.

Company’s Suppliers:
Suppliers provide the resources needed by the company to product
its goods and services. They are important links in the company’s
overall customer “value delivery system”. Supplier developments
can seriously affect marketing. Marketing managers must watch
supply availability – supply shortages or delays, labour strikes and
other events can cost sales in the short run and damage customer
satisfaction in the long run. Marketing Managers also monitor the
price trends of their key inputs. Rising supply costs may force price
increases that can harm the company’s sales volume

Marketing Intermediaries:
Intermediaries or distribution channel members often provide a
valuable link between an organisation and its customers. Large-
scale manufacturing firms usually find it difficult to deal with each
one of their final customers individually in the target markets. So
they chose intermediaries to sell their products.

Marketing intermediaries include resellers, physical distribution

firms, marketing service agencies, and financial intermediaries.
They help the company to promote, sell, and distribute its goods to
final buyers. Resellers are distribution channel firms that help the
company to find customers for goods. These include whole-sellers
and retailers who buy and resell merchandise. Selecting and
working with resellers is not easy. These organisations frequently
have enough power to dictate terms or even shut the manufacturer
out of large markets.

Physical distribution:
Firms help the company to stock and move goods from their points
of origin to their destinations. Working with warehouse and
transportation firms, a company must determine the best ways to
store and ship goods, and safety marketing services agencies are the
marketing research firms, advertising agencies, media firms, and
marketing consulting firms that help the company target and
promote its products to the right markets.
When the company decides to use one of these agencies, it must
choose carefully because those firms vary in creativity, quality,
service and price. Financial intermediaries include banks, credit
companies, insurance companies, and other businesses that help
finance transactions or insure against the risks associated with the
buying and selling of goods. Most firms and customers depend on
financial intermediaries to finance their transactions.

Customers:
Consumer markets consists of individuals and households that they
buy goods and services for personal consumption. Business markets
buy goods and services for further processing or for use in their
production process, whereas reseller markets buy goods and
services to resell at a profit.

Government markets are made up of government agencies that buy

goods and services to produce public services or transfer the goods
and services to others who need them. Finally, international
markets consist of the buyers in other countries, including
consumers, producers, resellers and governments. Each market
type has special characteristics that call for careful study by the
seller.

Competitors:
No single competitive marketing strategy is best for all companies.
The company’s marketing system is surrounded and affected by a
host of competitors. Each firm should consider its own size and
industry position compared to those of its competitors. These
competitors have to be identified, monitored and outmanouvered to
gain and maintain customer loyalty.
Industry and competition constitute a major component of the
micro-environment. Development of marketing plans and strategy
is based on knowledge about competitors’ activities. Competitive
advantage also depends on understanding the status, strength and
weakness of competitors in the market.

Large firms with dominant positions in an industry can use certain

strategies that smaller firms cannot afford. But being large is not
enough. There are winning strategies for large firms, but there are
also losing ones. And small firms can develop strategies that give
them better rate of return than large firms enjoy.
 CHAPTER-3

Market Segmentation

Philip Kotler: “Market Segmentation is the sub-dividing of a market into

homogeneous subsets of customers, where any subset may conceivably be
selected on a market target to be reached with a distinct marketing mix.

• According to William J. Stanton, “Market segmentation is the process of

dividing the total heterogeneous market for a good or service into several
segments. Each of which tends to be homogeneous in all significant aspects.”

Business organisations operate in different markets consist of all types of

existing and potential customers with their widely varying needs and wants. The
markets exhibit widely heterogeneous characteristics with widely differing and
scattered consumers. The buying practices are different and it is indeed difficult
for any organisation to operate and serve such markets effectively, both from
organization’s point of view as well as consumers’ interest.

The business organisation, instead of competing everywhere to cope with the

entire market, may decide to identify those markets or territories of markets
which can be served most effectively by offering them correct products and
matching their needs and long-term business and consumer interests are served
in the most desired manner.

Thus, the firm tries to break up the market into smaller units, club them so that
each submarket has more or less homogeneous characteristics. Therefore, it is
sub-dividing or breaking up the market into different cohesive and
homogeneous market characteristics with a distinct marketing programme and
effort.
 The process of dividing a market into smaller homogeneous markets with
similar characteristics is called market segmentation. The firm will focus only
on those submarkets which can be served most effectively on the basis of their
evaluation of market requirements. This is called target marketing.

We will highlight the benefits of segmentation, and these are:

• Market segmentation helps a company to exploit its market better by selecting

market niches (suitable segments) that are compatible with its resources.
• Market segmentation helps in focusing strategies more sharply on target groups.
• Market segmentation is more likely to result in instilling customer ‘loyalty’
since the firm’s offering is better matched to those in the segment.

Role of Market Segementation

Market segmentation plays an important role in identifying market
opportunities, effectively using market resources, evaluating competitors,
making strategic plans, specializing market, making effective marketing mix,
and making business organizations adaptable to the environment.

1. Identification of Market Opportunities

2. Effective use of marketing resources
3. Evaluation of competitors
4. Strategic planning
5. Market specialization
6. Effective marketing mix
7. Environmental adaptation

Segmentation Helps with Identification of Market Opportunities

To be able to identify market opportunities is an important aspect of market

segmentation. The size, development, and wants of each segment can be
analyzed by dividing the total market into several segments.

Besides, characters of the customers of each segment and possible profit also
can be analyzed by segmenting the market.

Market opportunities can be identified from such analysis. A more profitable

market segment can be chosen, leaving aside the less profitable one. As a result,
the business firm becomes able to achieve its goal.
Market Segmentation results in Effective Use of Marketing Resources

The other important aspect of market segmentation is to be able to use

marketing resources effectively. Marketing resources can be effectively used by
using separate marketing mixes for each segment.

Goods or services can be produced according to .the demand of the market

segment. The price of goods or services can be fixed according to the
purchasing power of the customers of each segment. Promotional activities also
can be conducted according to the market segment.

A proper distribution channel can be selected according to the demand and

wants of the segment. If the market is not segmented, it becomes difficult to
produce suitable goods or services to all segments, fix price, conduct
promotional activities, and select distribution channel.

Evaluate the Competitors, Find out which Segment They are Targeting.

The other important aspect of market segmentation is the successful evaluation

of competitors. It is necessary to get all information about competitors’ situation
of each segment from market segmentation.

Their weak and strong aspects can be identified through their evaluation. True
information about competitors’ strategy and marketing mix can be obtained.
Business success can be achieved by identifying weak aspects of competitors.

Strategic Marketing Plan Requires Market Segmentation

The other important aspect of market segmentation is to help in making

effective marketing strategic plans.

Strategic plans can be made for each market segment by segmenting the market.
Information about the number of customers, purchasing behavior of customers,
their purchasing power, and purchasing purpose should be obtained for making
strategic plans. Along with this, it is also necessary to get knowledge about the
market strategies of competitors.

If a detailed study is carried out of the market segment by the segmenting

market, information about all these matters can be acquired. Appropriate
strategic plans for each segment can be made based on this information.
Market specialization using segmentation

Market segmentation also helps in the market specialization. The total market
becomes vast. In a vast market, it becomes difficult to specialize in the market
by analyzing customers.

So, a business organization should divide the total market into different
segments, specialize market by studying and analyzing the customers of each
segment, and can specialize in market adjusting with marketing mix to satisfy
the customers.

Effective Marketing Mix with Market Segmentation

The other important aspect of market segmentation is to be possible for an

effective marketing mix. True information about customers’ interest, habit,
custom,- purchasing power, purchase behavior, buying motives, etc. can be
acquired from market segmentation. A proper marketing mix can be prepared
for each market segment.

Basis of such information and can be implemented effectively. Besides this, the
marketing mix can be changed according to necessity and time.

Environmental Adaptation using Market Segmentation

The environment is an important component to affect any business organization.

If the environment is made favorable to the organization, business success can
be easily achieved.
The 4 types of market segmentation

1. Demographic segmentation:

Demographic segmentation might be the first thing people think of when they
hear ‘market segmentation’. This is perhaps the most straightforward way of
defining customer groups, but it remains powerful. Demographic segmentation
looks at identifiable non-character traits such as:

• Age
• Gender
• Ethnicity
• Income
• Level of education
• Religion
• Profession/role in a company

For example. demographic segmentation might target potential customers based

on their income, so your marketing budget isn’t wasted directing your
messaging at people who likely can’t afford your product.
2. Psychographic segmentation:

Psychographic segmentation is focused on your customers’ personalities and

interests. Here we might look at customers and define them by their:

• Personality traits
• Hobbies
• Life goals
• Values
• Beliefs
• Lifestyles
• Attitudes
• Interests
• Psychological influences
• Motivations
• Priorities

3. Geographic segmentation:

By comparison, geographic segmentation is often one of the easiest to identify,

grouping customers with regards to their physical location. This can be defined
in any number of ways:

• Country
• Region
• City
• Postal code

4. Behavioral segmentation:

Behavioral segmentation is possibly the most useful of all for e-commerce

businesses. As with psychographic segmentation, it requires a little data to be
truly effective – but much of this can be gathered via your website itself. Here
we group customers with regards to their:

• Spending habits
• Purchasing habits
• Browsing habits
• Interactions with the brand
• Loyalty to brand
• Previous product feedback
 Criteria for Effective segmentation

Measurable

The size, purchasing power, and profiles of the segments can be measured.
Certain segmentation variables are difficult to

measure. For example, there are approximately 30.5 million lefthanded people
in the United States, which is nearly the entire population of Canada. Yet few
products are targeted toward this left-handed segment.

The major problem may be that the segment is hard to identify and measure.
There are no data on the demographics of lefties, and the U.S. Census Bureau
does not keep track of left handedness in its surveys. Private data companies
keep reams of statistics on other demographic segments but not on left-handers.

Accessible

The market segments must be effectively reached and served. Suppose a

fragrance company finds that heavy users of its brand are single men and
women who stay out late and socialize a lot. Unless this group lives or shops at
certain places and is exposed to certain media, its members will be difficult to
reach.

Substantial

The market segments are large or profitable enough to serve. A segment should
be the largest possible homogeneous group worth pursuing with a tailored
marketing program. It would not pay, for example, for an automobile
manufacturer to develop cars especially for people whose height is greater than
seven feet.
Differentiable

The segments are conceptually distinguishable and respond differently to

different marketing mix elements and programs.

If men and women respond similarly to marketing efforts for soft drinks, they
do not constitute separate segments.

Actionable
Effective programs can be designed for attracting and serving the segments.
For example, although one small airline identified seven market segments, its
staff was too small to develop separate marketing programs for each segment.

Different Levels of Market Segmentation

Marketers subdivide markets into segments, so they can do focus on marketing

plans. Each Level of market segmentation determines the strategy a company
will follow to promote, distribute and position its product in the market and
respectively target audience or its customers. Before developing a marketing
plan, one must know the what are the levels of market segmentation.

Mass Marketing

In Segemetation, Mass marketing refers to the strategy of targeting the entire

potential customer market by means of a single marketing message. The
marketing strategy used in this segmentation does not target the specific
requirements or needs of customers. Mass marketing strategy, instead of
focusing on a subset of customers, focuses on the entire market segment that
can be a probable customer of a product.

An example of mass marketing strategy is of Baygon cockroach spray or

Mortein mosquito repellent coils that target all its potential customers through a
single marketing message.

Segment Marketing
Segment marketing refers to a strategy where the company divides its target
audience into different segments based on their unique needs and requirements.
This way the company targets different messages to different segments,
appealing them towards the unique features the product offers. This strategy
creates product differentiation for customers with similar needs and preferences,
based on their gender, age, income and location.

The example of segment marketing within clothing industry may be men,

women, casual, fashionable and business clothing segments.

Niche Marketing
This strategy of marketing focuses on a narrower customer segmentation.
Customers may want or desire a product that is not met completely by the
products offered in a market. When companies move forward and develop
highly specialized products to offer these customers their specific needs, they
offer distinct products in a market that caters to specific customer segments
only.

Mountain bikes are an example of a niche marketing segment. where the market
segmentation will be individuals interested in mountain biking only. Since not
every bike manufacturing company caters to mountain bikers, it is a niche
segment. Companies that produce mountain bikes target the niche segment of
mountain bikers and cater to their specific needs, preferences and requirements.

Micro Marketing

Micro marketing follows an even narrower segmentation marketing strategy,

catering to the attribute of a much-defined subset of potential customers such as
catering to individuals of a specific geographical location or a very specific
lifestyle.
An example of niche marketing is luxury cars that are very high priced and offer
exceptional features such as high speed, customized look, etc. Since these cars
are very expensive and limited in number, the niche market for these vehicles
target rich, car lovers that are interested in the unique features and has the
financial capability to buy them.
Target Market

Target market represents a group of individuals who have similar needs,

perceptions and interests. They show inclination towards similar brands and
respond equally to market fluctuations. Individuals who think on the same lines
and have similar preferences form the target audience.

Target Marketing refers to a concept in marketing which helps the

marketers to divide the market into small units comprising of like minded
people. Such segmentation helps the marketers to design specific strategies and
techniques to promote a product amongst its target market. A target market
refers to a group of individuals who are inclined towards similar products and
respond to similar marketing techniques and promotional schemes.

Kellogg’s K Special mainly targets individuals who want to cut down on their
calorie intake. The target market in such a case would be individuals who are
obese. The strategies designed to promote K Special would not be the same in
case of any other brand say Complan or Boost which majorly cater to teenagers
and kids to help them in their overall development. The target market for
Kellogg’s K Special would absolutely be different from Boost or Complan.

A target market is a group of customers that the business has

decided to aim its marketing efforts and ultimately its merchandise
towards. A well-defined target market is the first element to a
marketing strategy. The marketing mix variables of product, place
(distribution), promotion and price are the four elements of a
marketing mix strategy that determine the success of a product in
the marketplace.
After segmentation of market, next step is targeting. A target
market is a group of customers at whom the sellers specifically aims
their marketing efforts. It is based on effective segmentation of the
market, which provides the marketer to define the segments clearly
and from which the marketer can pick one marketing segment that
is most appropriate for the organization.
Target marketing involves breaking a market into segments and then
concentrating your marketing efforts on one or a few key segments consisting
of the customers whose needs and desires most closely match your product
or service offerings. It can be the key to attracting new business, increasing
sales, and making your business a success.

The beauty of target marketing is that aiming your marketing efforts at specific
groups of consumers makes the promotion, pricing, and distribution of your
products and/or services easier and more cost effective and provides a focus
to all of your marketing activities.

For instance, suppose a catering business offers catering services in the

client’s home. Instead of advertising via a newspaper insert that goes out to
everyone, the caterer would first identify the target market for its services. It
could then target the desired market with a direct mail campaign, flyer delivery
in a particular residential area, or a Facebook ad aimed at customers in a
specific area, thereby increasing its return on investment in marketing and
bringing in more customers.

Criteria for selection of target market

These aspects are defined below:

The following criteria may be applied to determine the

attractiveness of segments:

i. Profitability:
While evaluating segments in rural areas, one should not be
impressed by size alone because in rural India, size may be large but
purchasing power is limited. So, marketers should considered the
cost and profit margin in rural markets.
Relevant information required for profitability includes:
a. Sales volume
b. Distribution cost
c. Promotion cost
d. Sales Revenue
e. Profit margins
ii. Growth Rate:
A segment’s attractiveness depends not only on its current
profitability but also future prospects. The growth rate of the
segment in terms of growth in population, rise in purchasing power
of the products is to be considered.

iii. Company Objective:

Company should evaluate the segment opportunity with reference
to their short term and long term objectives. If a company’s
objective is to achieve long term sustainable sales volume by
expanding its customer’s base, then it has to go rural instead of
expecting consumers to come to urban markets for products and
services. This has been demonstrated by companies like Asian
Paints, HUL and Colgate-Palmolive, who are now reaching rural
homes with their products.

iv. Resource Competencies of the Company:

The company should also examine its compatibility with resources
and capability to service rural markets. It should take calculated
risks small pilot projects, which will provide opportunities to
evaluate the target segment behaviour towards products and
services. Smart marketers in rural areas like HUL and ITC have
initiated “Project Shakti” and “e-Choupal” pilots which have been
transformed into rural marketing models.

v. Limitations:
Finally, a company should examine whether the entry into the
segment is acceptable to the society and government or not.

vi. Attractiveness:
Marketers should consider the attractiveness of the rural markets.
Smaller companies or new companies may lack the skills,
experience and resources needed to serve the larger segments.
Some segments may be less attractive when there is already more
competition.
Positioning - Concept of differentiation & positioning

Positioning is the place you hold in the mind's eye of your target
audience. Differentiation is how your firm is different or stands out from
your competitors on a non-price basis.

Marketers use the positioning process to identify the distinctive place they want
a product or service to hold in the minds of a target market segment. ...
Differentiation is the process companies use to make a product or service
stand out from its competitors in ways that provide unique value to the
customer.

Positioning is a strategic process that marketers use to determine the place or

“niche” an offering should occupy in a given market, relative to other customer
alternatives

Marketers use the positioning process to identify the distinctive place they want
a product or service to hold in the minds of a target market segment. Effective
positioning is always aimed at a specific target segment. In fact, positioning
tailors the generally focused value proposition to the needs and interests of a
particular target segment.

Positioning can be subtle and hard to detect, but it can also be easy to spot when
it conforms to your perceptions as a consumer. Perhaps one of the following
positions appeals to you:

Volvo, for example, positions itself as a family of premium vehicles that are
well designed for performance, innovation, and safety.

Kia strives to position itself as delivering practical, utilitarian vehicles that offer
high quality and value for the price. Cadillac is, well, the Cadillac of
automobiles: powerful, luxurious, and catering to every need of its well-heeled
drivers and passengers.
Different Positioning Strategies in Marketing
Product positioning is the process used to determine how to best communicate
product attributes to the target customers based on customer needs, competitor
products and how the company wants its products to be perceived by the
customers. Product positioning strategies are ways in which the company’s
product can be differentiated from the competition.

• Price and quality (e.g.Mercedes Bens)

• Target market (e.g. Johnson’s baby)
• Competitors (e.g. Pepsi)

Brand positioning refers to the rank in customers’ mind the

company’s brand possess in relation to the competition. The main purpose of
brand positioning is to create a unique impression of the brand in the customer’s
mind that makes them desirable to identify, prefer it over competition and
consume the brand. Following are a few ways that brand positions strategies can
be conducted based on respective attributes.

• Price and value (e.g. Rolls Royce)

• Gender (e.g. Gillette)
• Age (e.g. Disney)
• Cultural symbols (e.g. Air India)

Positioning is of utmost importance with regard to what the company stands for.
Thus, the way the company positions the brand and communicate it to the
customer should be precise and not confusing. How successfully the company
can position itself directly affects profitability and long-term survival of the
business

Various positioning strategies are:

1) Positioning By Product Attributes And Benefits

A common approach is setting the brand apart from competitors on the basis of
the specific characteristics or benefits offered. Sometimes a product may be
positioned on more than one product benefit. For example, • Maruti Suzuki
offers benefits of maximum fuel efficiency and safety over its competitors

• Ariel offers a specific benefit of cleaning even the dirtiest of clothes

2) Positioning By Price/ Quality

Marketers often use price/ quality characteristics to position their brands. One
way they do it is with advertisements that reflect the image of a high-
qualitybrand where cost, while not irrelevant, is considered secondary to the
quality benefits derived from using the brand

.For example: Parle Bisleri – “Bada Bisleri, same price”

3)Positioning By Use or Application

Another way to communicate a specific image or position for a brand is to

associate it with a specific use or application. For example: Surf Excel is
positioned as stain remover ‗Surf Excel Hai Na!

‘ Also, Clinic All Clear – ―Dare to wear Black‖.

4) Positioning By Product Class

Often the competition for a particular product comes from outside the product
class. For example, airlines know that while they compete with other airlines,
trains and buses are also viable alternatives. Manufacturers of music CDs must
compete with the cassettes industry. The product is positioned against others
that while not exactly the same, provide the same class of benefits.

5) Positioning By Product User

Positioning a product by associating it with a particular user or group of users is

yet another approach.

For example: o Fair and Lovely has made products both for men and women.

Esteem- What Men with Drive will drive

Cielo- A Chosen few will Steer the Cielo

Yamaha Bike- The Rugged Personality

Louis Phillipe- The Upper Crest , Raymond's- The Complete Man

Weekender- Wear your Attitude

6) Positioning By Competitor

Competitors may be as important to positioning strategy as a firm‘s own

product or services. In today‘s market, an effective positioning strategy for a
product or brand may focus on specific competitors. This approach is similar to
positioning by product class, although in this case the competition is within the
same product category.
Onida was positioned against the giants in the television industry through this strategy, Onida colour
TV was launched with the message that all others were clones and only Onida was the leader -
―Neighbour‘s Envy, Owners Pride‖

7) Positioning By Cultural Symbols

An additional positioning strategy where in the cultural symbols are used to

differentiate the brands.

Examples would be Hamara Bajaj, Tata Tea, Ronald McDonald. Each of these
symbols has successfully differentiated the product it represents from
competitors

Differentiation

It is closely related to positioning. Differentiation is the process companies

use to make a product or service stand out from its competitors in ways that
provide unique value to the customer. Differentiation identifies a set of
characteristics and benefits that make a product different and better for a target
audience. Ideally these qualities are things that 1) customers value when they
are evaluating choices in a purchasing decision, and 2) competitors cannot
easily copy. When both conditions exist, the offering is more attractive to target
customers.

Differentiation is at work any time you’re choosing between two products in the
same category. For example, when you’re buying a soft drink, why do you
choose Coke, Pepsi, Sprite, or Mountain Dew? Is it because of the taste? The
cost? The level of sugar or caffeine? Or is it something less tangible, like the
way you just want to smile when you drink Coke, or you feel amped up when
you drink Mountain Dew? These tangible and intangible qualities are what
differentiate one soft drink from another.

Differentiation
In order to achieve a strong position in the segment the company has chosen, it
has to find ways to set itself apart. To do so, it has to deal with competitive
advantages. In other terms, each firm must differentiate itself and its offer by
building a unique bundle of benefits. This bundle of benefits should appeal to a
substantial group within the chosen and targeted segment. You see that by
means of this differentiation, the right position in customers’ minds can be
achieved, leading to a strong correlation of differentiation and positioning.

What is Differentiation?

Differentiation is a marketing strategy companies use to make their product

unique to stand out from competitors. According to Michael Porter, industry is
less attractive when there are multiple substitutes. Thus, companies
continuously attempt to differentiate themselves from the competitors. In order
to practice differentiation, the company should have a competitive advantage
over similar competitors.

Differentiation Strategy in Marketing

A product or brand can be differentiated based on a number of attributes such

as:

• Features – E.g., Volvo

• Performance – E.g., Apple
• Timing – E.g., Zara
• Distribution – E.g., Coca Cola
• Experience – E.g., Starbucks
• Price – E.g., Ferrari

Interconnected Strategies

Positioning and differentiation are connected in important ways. Effective

positioning for a product or service is based on the differentiating characteristics
or qualities that make the product/service better than the competition in the
minds of the target segment. Positioning and differentiation are strategic
activities: marketers work to create a desired position for a product or service in
the market, rather than waiting for it to be created by customers, the public,
or competitors. The end result of positioning is the successful creation of a
market-focused value proposition: “This is the compelling reason why the target
segment should buy the product.” Positioning shapes key elements of the
marketing mix: which features matter most in the differentiation of a product or
service, what messages to communicate about the offering, how to price it
relative to competitors, and the role distribution might play in satisfying the
customer.
Value Proposition & Unique Selling Proposition.
A value proposition describes what your company is offering, to whom you are
offering it to, and how it solves your customer's problem. ... In comparison, a
unique selling proposition is a statement that explains how your product or
service uniquely solves your customer's needs

Example,

Volvo is just an automobile manufacturer

like Audi, BMW, Volkswagen, Toyota and others. However, it delivers more in
value because its USP is safety. A Lamborghini has the USP of its design and
speed. A Ferrari has its USP in it being a major status symbol. So, each of them
deliver value to the end customer, and each of them has a USP.

A unique selling proposition—or USP—is a statement of what makes your

business stand out from the competition. It’s also casually called a “selling
point.” Your USP might speak to a unique quality, feature, or price. (Allbirds is
particularly good at this.) Maybe it’s your customer service, speed, safety
features, convenience, customization, or environmental consciousness.
Whatever it is, your USP is generally focused on a singular quality that your
company does better than anyone else in your market.

Your Unique Selling Proposition (USP) is what sets you, your business and
your product or service apart from your competition. Your USP can be an
actual fact, or a perceived difference or specialty. On the other hand, your
Value Proposition (VP) is a fundamental business model decision that serves
as the core strategy a company chooses to separate themselves from the
competition.
The point of a USP is to focus on the niche or the need in the marketplace and
deliver a promise you can make. Your unique selling proposition (USP) is what
sets you and your product or service apart from your competition and clearly tells
your customer the benefits.
CHAPTER-3

CONSUMER BEHAVIOUR

“Individuals or groups acquiring, using and disposing of products, services,

ideas, or experiences Includes search for information and actual purchase
Includes an understanding of consumer thoughts, feelings, and actions.”

Business dictionary defines consumer behavior as,” The process by which

individuals search for, select, purchase, use, and dispose of goods and services,
in satisfaction of their needs and wants.”

American Marketing Association defines consumer behavior as, “The dynamic

interaction of affect and cognition, behavior, and the environment by which
human beings conduct the exchange aspects of their lives.”

The study of consumer behavior always focuses on the decision processes of the
individual consumer or consuming unit, such as the family. It includes all the
efforts to describe and explain one or more acts of choice either at a given time
or over a period of time.

In contrast, the study of consumption behavior is concerned with the description

and explanation of the behavior of aggregates of consumers or consuming units,
again at a given time or over a period of time. The subject matter of
consumption behavior parallels at the aggregate level to that of consumer
behavior at the individual level.

The area of consumer behavior includes activities of both ultimate and

industrial consumers. The former is the end-user of the product/service whereas
the further value to the product/service-before it is consumed by the end-user.
When behavior of both the kinds of buyers is under reference, the term used to
denote it is ‘buyer behavior’. When the behavior of only end-users is under
reference, the term ‘consumer behavior’ is used to denote it.

The determinants of consumer behaviour can be classified into:

1. Internal determinants, and

2. External environmental determinants.

The internal or individual factors that influence consumer behaviour are:

i. Motivation
ii. Needs

iii. Personality

iv. Self-Concept

v. Perception

vi. Learning

vii. Attitudes.

The external environmental factors are:

i. Culture

ii. Reference groups

iii. Family

iv. Social class.

Dimensions of Consumer Behavior

Consumer behavior is multidimensional in nature and it is influenced by the

following subjects −
• Psychology is a discipline that deals with the study of mind and behavior.
It helps in understanding individuals and groups by establishing general
principles and researching specific cases. Psychology plays a vital role in
understanding how consumers behave while making a purchase.
• Sociology is the study of groups. When individuals form groups, their
actions are sometimes relatively different from the actions of those
individuals when they are operating individually.
• Social Psychology is a combination of sociology and psychology. It
explains how an individual operates in a group. Group dynamics play an
important role in purchasing decisions. Opinions of peers, reference
groups, their families and opinion leaders influence individuals in their
behavior.
• Cultural Anthropology is the study of human beings in society. It
explores the development of central beliefs, values and customs that
individuals inherit from their parents, which influence their purchasing
patterns
Importance of consumer behaviour:
1) Production policies: The study of consumer behaviour effects production
policies of enterprise. Consumer behaviour discovers the habits, tastes and
preferences of consumers and such discovery enables and enterprise to
plan and develop its products according to these specifications. It is
necessary for an enterprise to be in continuous touch with the changes in
consumer behaviour so that necessary changes in products may be made.

2) Price policies: The buyer behaviour is equally important in having price

policies. The buyers of some products purchase only because particular
articles are cheaper than the competitive articles available in the market.

3) Decision regarding channels of distribution: The goods, which are sold

and solely on the basis of low price mast and economical distribution
channels. In case of those articles, which week T.V. sets, refrigerators etc.
Must have different channels of distribution. Thus, decisions regarding
channels of distribution are taken on the basis of consumer behaviour.

4) Decision regarding sales promotion: Study of consumer behaviour is also

vital in making decisions regarding sales promotion. It enables the
producer to know what motive prompt consumer to make purchase and
the same are utilised in promotional campaigns to awaken desire to
purchase.

5) Exploiting marketing opportunities: Study of consumer behaviour helps

the marketers to understand the consumers needs, aspirations,
expectations, problems etc. This knowledge will be useful to the marketers
in exploiting marketing opportunities and meeting the challenges of the
market.

6) Consumer do not always act or react predictably: The consumers of the

past used to react to price levels as if price and quality had positive
relation. Today, week value for money, lesser price but with superior
features. The consumers response indicates that the shift had occurred.

7) Highly diversified consumer preferences: This shift has occurred due to

availability of more choice now. Thus study of consumer behaviour is
important to understand the changes.

8) Rapid introduction of new products: Rapid introduction of new product

with technological advancement has made the job of studying consumer
behaviour more imperative. For example, the information Technologies are
changing very fast in personal computer industry.

9) Implementing the "Marketing concept": This calls for studying the

consumer behaviour, all customers need have to be given priority. Thus
identification of target market before production becomes essential to
deliver the desired customer satisfaction and delight.

Applications of consumer behaviour:

1) Analysing market opportunity: Consumer behaviour study help in
identifying the unfulfilled needs and wants of consumers. This requires
examining the friends and conditions operating in the Marketplace,
consumers lifestyle, income levels and energy influences. This may reveal
unsatisfied needs and wants. Mosquito repellents have been marketed in
response to a genuine and unfulfilled consumer need.

2) Selecting target market: Review of market opportunities often helps in

identifying district consumer segments with very distinct and unique wants
and needs. Identifying these groups, behave and how they make purchase
decisions enable the marketer to design and market products or services
particularly suited to their wants and needs. For example, please sleep
revealed that many existing and potential shampoo users did not want to
buy shampoo fax price at rate 60 for more and would rather prefer a low
price package containing enough quantity for one or two washers. This
finding LED companies to introduce the shampoos sachet, which become a
good seller.

3) Marketing-mix decisions: Once unsatisfied needs and wants are

identified, the marketer has to determine the right mix of product, price,
distribution and promotion. Where too, consumer behaviour study is very
helpful in finding answers too many preplexing questions. The factors of
marketing mix decisions are:
i) product ii) price iii) promotion iv) distribution

4) Use in social and non profits marketing: Consumer behaviour studies

are useful to design marketing strategies by social, governmental and not
for profit organisations to make their programmes more effective such as
family planning, awareness about AIDS.

Five steps -consumer buyer decision process

 Stage 1: Need recognition
In this first stage, the consumer recognizes that he has an unmet need and is
driven to action by a need or desire. Unsatisfied needs create discomfort to the
consumer, so that he begins to recognize that this need can be met by acquiring
or consuming goods and services.
This desire to meet this need over time becomes strong enough to motivate a
person to decide to make a purchase. This recognition of a need can arise
internally at any time

Stage 2: Information Search

In this second stage of the consumer buying decision process, the consumer
identifies alternative products and brands that are able to meet their needs, and
therefore proceeds to gather information about them from different sources.
Whether asking acquaintances or searching the internet.
Most commonly, alternative products are identified first and then alternative
brands. The following factors influence the search for alternatives:
• The amount of information that the consumer already has from experiences and
other sources.
• Consumer confidence in that information.
• The expected value of the additional information or, in other words, what other
information is considered worth acquiring.

Stage 3: Evaluation of Alternatives

In this third stage of the consumer buying decision process, the consumer
ponders the pros and cons of the identified alternatives.
When some satisfactory alternatives have been identified, the consumer
proceeds to evaluate them before making a decision. The evaluation may
involve a single or several criteria, with which the alternatives are compared.
For example, price, quality, ease of use, time, durability or color.
When multiple criteria are involved, it is common that not all criteria have equal
preponderance. Ease of use, for example, could be more important than price.
As experience is often limited and information from sources such as advertising
or friendships can be biased, evaluations may be incorrect from the point of
view of the facts.
That is, the consumer may believe that the price of the A brand is more
expensive than that of the B brand when in fact it is the opposite.
As business owners or marketers, we must closely observe consumers to
determine what criteria of choice they follow, to identify any changes that may
occur in their criteria or priorities, and to correct any unfavorable
misperceptions related to our product or service.
Stage 4: Purchase Decision
In this 4 stage of the consumer buying decision process, the consumer decides
to buy or not buy, and makes other decisions related to the purchase.
After searching and evaluating, the consumer has to decide whether or not to
buy. Thus, the first result is the decision to buy or not the alternative evaluated
as the most desirable. This part of the process the consumer can make the
decision in 1 hour or up to 1 month later. Everything will depend on the type of
product or service and how large the investment is to acquire said product or
service.
In this part of the process it can happen that the consumer does not make the
purchase after finding complicated the way to acquire said product or service.
What will make you consider other alternatives.
On the other hand, if the decision is to buy, you have to make a series of related
decisions related to the characteristics, where and when to make the actual
transaction, how to take possession or receive the delivery, the method of
payment and other issues. So the decision to make a purchase is actually the
beginning of an entirely new series of decisions that can be as time consuming
and as difficult as the initial one.
Once the consumer has made the decision, he proceeds to make the purchase
and feel happy for having satisfied an intrinsic desire or need.

Stage 5: Post Purchase Behavior

Finally, at this fifth stage of the consumer buying decision process, the
consumer seeks to ensure that the choice he made was correct.
What the consumer learns in his journey through the purchase process has an
influence on how he will behave the next time the same need is pressed.
Moreover, new opinions and beliefs have been formed and the old ones have
been corrected. Therefore, this time, we have a more expert consumer in the
field.
Therefore, as business owners and marketers, we must also assess how they
behave in consumer after making the purchase. Do you feel happy with the
product? Are you dissatisfied with the service? Were your product expectations
higher? For this, it is important to carry out market studies or surveys to be able
to determine if the product or service we offer meets expectations and meets
needs. When not, it is the ideal situation to consider improving our product or
service, or making changes in the way we market and promote our product or
service.
Those who supply goods and services to consumer markets are themselves in need of
goods and services to run their business. These organizations-producers, resellers, and
government-make up vast marketing organizations that buy a large variety of products,
including equipment, raw material, and labor and other services. Some organizations sell
exclusively to other organizations and never come into contact with consumer buyers.

Despite the importance of organizational markets, far less research has been conducted
on factors that influence their behavior than on factors that influence consumers.
However, we can identify characteristics that distinguish organizational buying from
consumer buying and typical steps in the organizational buying process.

Characteristics of Organizational Buying

Many elements of the sociocultural environment discussed earlier influence

organizational as well as consumer buying, but some additional forces are salient only in
the organizational setting. In particular, each organization has its own business
philosophy that guides its actions in resolving conflicts, handling uncertainty and risk,
searching for solutions, and adapting to change. For example, Peabody Coal, which is
part of a declining industry, relies on a conservative purchase strategy in an attempt to
maintain their status quo

Five characteristics mark the organizational buying process:

1. In organizations, many individuals are involved in making buying decisions,

2. The organization al buyer is motivated by both rational and quantitative criteria

dominant in organization al decisions; the decision makers are people, subject to many
of the same emotional criteria used in personal purchases.

3. Organizational buying decisions frequently involve a range of complex technical

dimensions. A purchasing agent for Volvo Automobiles, for example, must consider a
number of technical factors before ordering a radio to go into the new model. The
electronic system, the acoustics of the interior, and the shape of the dashboard are a few
of these considerations.

4. The organizational decision process frequently spans a considerable time, creating a

significant lag between the marketer's initial contact with the customer and the
purchasing decision. Since many new factors can enter the picture during this lag time,
the marketer's ability to monitor and adjust to these changes is critical.

5. Organizations cannot be grouped into precise categories. Each organization has a

characteristic way of functioning and a personality.
The first item in this list of characteristics has important implications. Unlike the
consumer buying process, organizational buying involves decision making by groups
and enforces rules for making decisions. These two characteristics greatly complicate the
task of under- standing the buying process. For example, to predict the buying behavior
of an organization with certainty, it is important to know who will take part in the buying
process, what criteria each member uses in evaluating prospective suppliers, and what
influence each member has. It is also necessary to understand something not only about
the psychology of the individuals involved but also how they work as a group. Who
makes the decision to buy depends in part on the situation. Three types of buying
situations have been distinguished: the straight rebuy, the modified rebuy, and the new
task.

The straight rebuy is the simplest situation: The company reorders a good or service
without any modifications. The transaction tends to be routine and may be handled
totally by the purchasing department. With the modified rebuy, the buyer is seeking to
modify product specifications, prices, and so on. The purchaser is interested in
negotiation, and several participants may take part in the buying decision. A company
faces a new task when it considers buying a product for the first time. The number of
participants and the amount of information sought tend to increase with the cost and
risks associated with the transaction. This situation represents the best opportunity for
the marketer.

Stages in Organizational Buying

The organizational buying process contains eight stages, or key phrases, which are listed
in Figure 4.3. Although these stages parallel those of the consumer buying process, there
are important differences that have a direct bearing on the marketing strategy. The
complete process occurs only in the case of a new task. Even in this situation, however,
the process is far more formal for the industrial buying process than for the consumer
buying process.

Most of the information an industrial buyer receives is delivered through direct contacts
such as sales representatives or information packets. It is unlikely that an industrial buyer
would use information provided through a trade ad as the sole basis for making a
decision.

1. Problem recognition. The process begins when someone in the organization

recognizes a problem or need that can be met by acquiring a good or service. Problem
recognition can occur as a result of internal or external stimuli. External stimuli can be a
presentation by a salesperson, an ad, or information picked up at a trade show.

2. General need description. Having recognized that a need exists, the buyers must add
further refinement to its description. Working with engineers, users, purchasing agents,
and others, the buyer identifies and prioritizes important product characteristics.. Armed
with extensive product knowledge, this individual is capable of addressing virtually all
the product-related concerns of a typical customer. To a lesser extent, trade advertising
provides valuable information to smaller or isolated customers. Noteworthy is the
extensive use of direct marketing techniques (for example, toll-free numbers and
information cards) in conjunction with many trade ad s. Finally, public relations plays a
significant role through the placement of stories in various trade journals.

3. Product specification. Technical specifications come next. This is usually the

responsibility of the engineering department. Engineers design several alternatives,
depending on the priority list established earlier.

4. Supplier search. The buyer now tries to identify the most appropriate vendor. The
buyer can examine trade directories, perform a computer search, or phone other
companies for recommendations. Marketers can participate in this stage by contacting
possible opinion leaders and soliciting support or by contacting the buyer directly.
Personal selling plays a major role at this stage.

5. Proposal solicitation. Qualified suppliers are next invited to submit proposals. Some
suppliers send only a catalog or a sales representative. Proposal development is a
complex task that requires extensive research and skilled writing and presentation. In
extreme cases, such proposals are comparable to complete marketing strategies found
in the consumer sector.

6. Supplier selection. At this stage, the various proposals are screened and a choice is made.
A significant part of this selection is evaluating the vendor. One study indicated that
purchasing managers felt that the vendor was often more important than the proposal.
Purchasing managers listed the three most important characteristics of the vendor as delivery
capability, consistent quality, and fair price. Another study found that the relative importance
of different attributes varies with the type of buying situations. For example, for routine-order
products, delivery, reliability, price, and supplier reputation are highly important. These
factors can serve as appeals in sales presentations and in trade ads.

7. Order-routine specification. The buyer now writes the final order with the chosen
supplier, listing the technical specifications, the quantity needed, the warranty, and so on.

8. Performance review. In this final stage, the buyer reviews the supplier's performance.
This may be a very simple or a very complex process.